Exclusive: Apple Recently Acquired Low-Energy Chipmaker Passif

As the smartphone wars heat up, Apple has acquired a key technology in the arms race.

The company in recent months purchased Silicon Valley-based wireless chip developer, Passif Semiconductor, according to people briefed on the deal. Passif develops communication chips that use very little power. Its technology, which includes a radio that works with a low-energy version of Bluetooth called Bluetooth LE, is promising for health-monitoring and fitness devices that need extra-long battery life. (Apple, of course, is working on one of those.) 

It isn’t clear how much Apple paid. The people said Apple tried to buy Passif a few years earlier for a price in the mid-tens-of-millions of dollars. Presumably it would be higher now.

An Apple spokeswoman said “Apple buys small technology companies from time to time.”

It’s easy to see why Apple wanted Passif, which was founded several years ago by Ben Cook and Axel Berny, who were PhD students at the University of California, Berkeley.  As technology companies pack more battery-draining features into smartphones, technologies that preserve and extend battery life are critical. Radios are some of the biggest battery drainers.

The need is particularly acute for wearable devices, like activity-tracking watches. One of the reasons Apple and its rivals haven’t launched such devices yet is how hard it is to shrink screens, batteries and radios to fit into them.

Venture capital firm Khosla Ventures invested in Passif and still lists it on its website. How much the firm invested isn’t clear, although some trade publications announced it had invested $1.6 million in 2008.

There is no doubt that Apple has been picking up the pace of small tech acquisitions. (CEO Tim Cook said so in May.) Apple recently purchased indoor Wi-Fi company Wifislam and mapping data providers Locationary and Hopstop.

Some deals have been designed to land key talent in areas where the company is weak, like mapping and data science.

But the Passif deal is right in Apple’s wheelhouse: components for next generation devices. Apple has been ruthless about getting access to new technologies on favorable terms. The company years ago purchased two semiconductor companies to diversify from Samsung Electronics, its rival that supplies a lot of its components. In that effort, Passif too could help.


Big Moto X Phone Launch Has Low Stakes for Google

Moto X (via @evleaks)

By Amir Efrati

Google’s Motorola Mobility unit is busy briefing analysts and reporters in New York about the Moto X, its high-end, flagship smartphone. The device is scheduled to launch in the U.S., Canada, Latin America, Europe and elsewhere starting this month.

You should expect full reports on the device to surface online this afternoon. You also should expect to soon see advertisements for the Moto X all over TV and the websites you visit, per my earlier report about the hefty marketing budget of up to $500 million for the device. And because of the promised ad spending, all major wireless carriers in the U.S. are expected to sell it.

But for Google, frankly, the stakes aren’t very high. The Internet behemoth’s Android mobile operating system powers the vast majority of new smartphones being shipped and shows no sign of slowing down, regardless of how Motorola performs. Android handsets are preloaded with Google’s revenue-generating software, including its Web-search engine.

At Motorola, of course, executives are eager to make a dent in the smartphone market that has been dominated by Samsung and Apple while other hardware manufacturers fight for the scraps. Moto’s short-term goal: become No. 3 smartphone seller, a spot now occupied by LG, according to IDC. 

And Google does hope the cell phone pioneer can stem its operating losses. The unit, which Google snapped up for $12.5 billion last year, has been a drag on its earnings over the past year.

Motorola believes several key features of the Moto X will resonate with consumers. First: speed. The Moto X is “always ready for you” in that its microphone will always been “on,” letting the owner quickly operate it by giving voice commands. And with the shake of a wrist, the owner can bring up the camera app without fussing around. Despite the always-on sensors in the device, its battery is supposed to last a full day, according to a person who has used the device.

Second: “It’s designed by you.” In what is possibly an industry first, Motorola is giving people the ability to personalize their smartphone hardware with back-panel colors, engravings (a la iPod) and other features, especially when they order the device online. And Motorola hopes to appeal to domestic consumers by promoting the fact that it’s assembling their devices in the U.S.A.

Third: The device will be “almost pure Google,” according to the person who has used it. In the U.S. market, the devices won’t have lots of preinstalled add-on apps made by wireless carriers, also known as “bloatware.” In other words, owners are supposed see a dozen or so preinstalled Google apps, such YouTube and Google+ — but not much else.

With more than 900 million smartphones expected to be sold this year worldwide, there is opportunity for a strong No. 3 to rise up.

That could be difficult for Motorola for a number of reasons, not the least of which is its focus on a relatively small number of markets for its new devices.

So far there is little evidence that Google will eat the hardware costs and price the Moto X well below the competition. Earlier this summer, a person with knowledge of Motorola’s strategy told me that the price of the Moto X is expected to be roughly in line with the Apple iPhone and Samsung Galaxy S4. In the U.S., such devices can cost $600 without a wireless contract and about $200 with a contract.

No matter what happens with the Moto X, Motorola – and thus Google – will learn a lot from this experience. And the acquisition of Motorola is looking smarter by the day as other Android-device manufacturers such as HTC struggle, leaving Samsung as the dominant player.

Even Motorola employees realize that they are part of an expensive insurance policy in case Samsung becomes a bigger threat to Google. But they’re confident they will earn Google’s respect in the meantime

A Motorola spokesman declined to comment.

Star Google Reporter Amir Efrati Joins Our Team!

photo (6)I am absolutely thrilled to announce that Amir Efrati is joining our team as a senior reporter.

Amir needs no introduction to anyone who follows technology news. For the past three years he’s broken major stories about Google, Yahoo and other Internet companies, including Google’s creation of a social-networking service, its plans to develop wireless networks abroad and its increasingly complicated relationship with Samsung. He also was first to write about Motorola’s “X” phone, which will be unveiled next week.Before that, he wrote about the Justice Department, federal courts and white-collar crime for the Journal, where he broke news of numerous financial fraud probes, led the paper’s exhaustive coverage of the Bernard Madoff fraud, and saw his work cited by federal judges. His 2007 front-page article on the surprisingly troubled legal job market forced some law schools to change their shady marketing practices and, more importantly, helped convince some college graduates not to attend law school.

He joined the Journal in 2004 after graduating from the University of Iowa.

A year later, I joined the paper and began turning to Amir for advice on matters like how to get a story on the front page and good bars for an after-work drink. Since then, Amir has been an invaluable colleague and friend. We’ve been a great team on numerous stories about clashing technology titans—including this investigation into Apple’s decision to break from Google’s mapping technology. We can’t wait to continue our streak.

Amir is the killer combination of a scoop maven and a smart, analytical thinker.

He will start in mid-August. Please welcome him, and if you don’t already follow him, you can do so here, here, here and here.

Welcome Eric Newcomer!

photo (4) copy

I couldn’t be more excited to announce that Eric Newcomer is joining our team as a staff reporter!

Eric most recently covered City Hall for the Washington Examiner, where he scrutinized the District’s budget and monitored local elections. Before that, he was a prolific metro intern at the New York Times. (Check out his article about dissatisfaction with the Department of Environmental Protection.)

I first got to know Eric through his work at the Harvard Crimson, where he was associate managing editor before he graduated in 2012.  As a senior writer, he scrutinized campus life, co-writing an award-winning series on sexual assault and a prescient analysis of academic dishonesty at Harvard.

Eric is already hard at work reporting and sourcing in the Valley and putting his technology know-how to good use. (Warning: He’s a philosophy major. Don’t get him started on Thomas Nagel.)

You can find him and links to his awesome work here, here and here. I can’t wait to share more updates about our team soon.

Exclusive: Apple Pitches Ad-Skipping for New TV Service

Apple has a new trick up its sleeve as it tries to launch a long-awaited television service: technology that allows viewers to skip commercials and that pays media companies for the skipped views.

For more than a year, Apple has been seeking rights from cable companies and television networks for a service that would allow users to watch live and on-demand television over an Apple set-top box or TV.

Talks have been slow and proceeding in fits and starts, but things seem to be heating up.

In recent discussions, Apple told media executives it wants to offer a “premium” version of the service that would allow users to skip ads and would compensate television networks for the lost revenue, according to people briefed on the conversations.

Consumers, of course, are already accustomed to fast-forwarding through commercials on their DVRs, and how Apple’s technology differs is unclear.

It is a risky idea. Ad-skipping would disrupt the entrenched system of television ratings—the basis for buying TV ads. In fact, television broadcasters sued Dish Network when it introduced similar technology last year.

On the other hand, it is no secret that fewer and fewer people are watching commercials thanks to DVRs; networks may very well be eager to make, rather than lose, money off the practice.

Television-rights owners have been reluctant to embolden Apple’s push into the living room, and compensation for skipped ads seems unlikely to be enough to convince them.

What other carrots and sticks Apple is offering in the negotiations remains unclear.

Apple wants to strike deals with cable companies like Time Warner Cable to allow cable subscribers to watch television using an Apple device as a set-top box and with a software interface designed by Apple.

But the company has also been talking to television networks, which sell cable companies rights to their content, about rights for the service and issues such as ad-skipping. 

A patent Apple was granted last year may offer a clue about Apple’s ad-skipping system. The patent describes technology that could swap in a different stream of video during a commercial break.

Apple already sells a $99 set-top box for watching iTunes and Internet video but has been trying to launch a more ambitious service that offers live television for some time.

Discussions have been highly secretive. CEO Tim Cook and senior vice president Eddy Cue held talks with some media companies last week at a conference in Sun Valley hosted by investment bank Allen & Co., the people briefed on the discussions said.

When asked about the talks at the time, Cue quipped: “There are cable companies here?” Apple’s marketing chief Phil Schiller has also been involved, a sign that the effort is broadening.

An Apple spokesman declined to comment. 

Rupert Murdoch Says He Wanted To Keep Hulu All Along

SUN VALLEY, Idaho–Here at Sun Valley everyone is buzzing about video site Hulu’s announcement today it isn’t selling.

In recent days, the video site, jointly owned by 21st Century Fox, Walt Disney and Comcast Corp., was considering bids from DirecTV and AT&T and media mogul Peter Chernin.

We found 21st Century Fox Chief Executive Rupert Murdoch relaxing in the Sun Valley Lodge and asked him what changed.

He said Hulu’s owners decided not to sell the site because they “got on the same page about the business.”

“I was always on that page,” of wanting to keep the business, he said. “But Disney wavered but now are very pleased.”

He declined to comment further and walked off into the gift shop.

We will update if we hear more from Disney. Comcast didn’t have a formal say in the decision due to regulatory conditions on its purchase of NBCUniversal.

Sun Valley “Q&A” with Apple’s Eddy Cue

SUN VALLEY, IDAHO– Apple Senior Vice President Eddy Cue is here attending his first Allen & Co. media mogul conference. We cornered him and here’s what ensued: (Spoiler alert: you don’t rise as far as he has at Apple without learning to say nothing.)

JL: Do you have any comment on today’s antitrust ruling finding Apple guilty of colluding to raise the price of digital books?

Cue: (Smiles and shakes his head.)

JL: Are you talking to any cable guys here?

Cue: There are cable guys here?

JL: How is Apple doing?

Cue: Great. We just launched iOS 7. It is in my pocket. It has a great new design. Makes your everyday life better.

(Smiles, flashes a peace sign and walks away).

Apple Delivered First Major Antitrust Loss

In a big rebuke, a federal judge just ruled that Apple colluded with publishers to raise the price of e-books. An Apple spokesman said the company will appeal, meaning this will drag on. But a few quick thoughts.

1) Lawyers previously told me that this could have big implications for how Apple negotiates media deals, and Apple itself argued during the trial that a ruling against it would chill dealmaking.

2) During years of covering Google, and reading up on Microsoft’s antitrust history, industry experts repeatedly told me that antitrust cases build over time and that smaller cases lead to bigger cases. Apple hasn’t faced much formal antitrust scrutiny so far. But if history is a guide, this could open the door to more inquiries into areas like the app store, particularly if competitors sense blood in the water. 

Amid Some Signs of Life for M&A, Moguls Head to Sun Valley

Media and technology bigwigs are packing their hiking boots and tennis racquets and heading to Sun Valley, Idaho Tuesday for the start of investment bank Allen & Co.’s annual conference.

It could be opportune timing. The deal value of U.S. tech and media M&A so far this year is up 58% from the same period in 2012, reaching $122 billion, according to Dealogic, a research firm. The number of deals, however, is down 19% to 1,329. The data suggest companies are willing to write bigger checks, even while remaining cautious.

Overall, U.S. M&A is up 27% from the same period last year. But it is down from the same period in 2011, and the number of deals has declined. The trends are similar globally, according to Dealogic.

Mergers and acquisitions have been sluggish for years, as acquirers have remained anxious about consumer and corporate spending and tax uncertainty.

There are some signs that’s changing, particularly in the technology sector. Salesforce.com, Yahoo and Google all announced acquisitions of a billion dollars or more this year, although multi-billion dollar deals have remained elusive.

In the near term, technology bankers say data-analytics technologies are likely targets along with mobile-payments companies. Some of those bankers predict that larger private companies, such as file-sharing service Dropbox and Square, a mobile payments company, could still be acquired, according to those people. Those companies, which have been valued by investors at more than $4 billion and $3 billion respectively, are widely considered to be on paths for initial public offerings. The companies did not return requests for comment.

In recent years, Sun Valley has been more a place for casually chatting about deals rather than finalizing them. In addition to deal talk, here are some other topics on our reporting agenda.

Hulu: The on-again-off again sale of this video site draws outsized attention because of the big personalities involved.  21st Century Fox CEO Rupert Murdoch and Walt Disney chief Bob Iger are selling. AT&T and the Chernin Group, a media company run by former News Corp. chief operating officer Peter Chernin, DirecTV, and Guggenheim Digital, an investment firm run by News Corp. veteran Ross Levinsohn, are among the suitors, according to people familiar with the matter. With final bids due last Friday, no big announcements are expected. But with many key players in attendance, we expect talks and maybe some curveballs. (For a blast from the past, here’s a Sun Valley walk-up I wrote in 2011 from when as many as ten bidders were circling Hulu. The owners decided not to sell.) 

Apple: The intense speculation that follows Apple around the globe follows its chief, Tim Cook, to Sun Valley. Last year, the freshman CEO mingled casually with Wendi Murdoch, former FCC Chairman Julius Genachowski and others. Each hushed conversation, including a few with Twitter CEO Dick Costolo, prompted intense speculation among reporters and even attendees. If he shows up, expect this year to be the same. In particular, we’re tuned into Apple’s talks with cable operators about running live and on-demand television programming on new Apple television hardware. (Tim is too smart to have those conversations in public.)  

Dell: Dell CEO Michael Dell’s saga to get shareholders to support a $24.4 billion buyout for the company doesn’t touch too many media moguls directly. But the megadeal, in which Dell and private-equity firm Silver Lake are proposing shareholders take the company private, is a cliffhanger likely to have attendees talking as investor Carl Icahn has launched a competing shareholder proposal.

Malone: Liberty Media Chairman John Malone often comes to Sun Valley with a colorful Hawaiian shirt and a deal idea or two. Two years ago, he was bidding for control of embattled bookseller Barnes & Noble. Last year, he was in pursuit of control of Sirius XM. Now, he has been hatching a plan to merge Charter Communications, a cable company in which Liberty owns a stake, with Time Warner Cable, say people familiar with the matter. The status of the talks is unclear. But Malone doesn’t give up easily. A Liberty spokeswoman says Malone will be attending.

Spokespeople for the other companies declined or did not return requests for comment.