MacRumors

The Digital Reader points to reports that Apple's iBooks Digital Rights Management (DRM) copy protection has been cracked for the first time:

Reports are coming in today that the latest version of Requiem, an app that removes Fairplay DRM from music and videos sold via iTunes, will now also remove the DRM from iBooks ebooks.

The news is notable in that it's the first time that iBooks DRM has been circumvented. This would allow iBooks downloaded from iTunes to be used on other platforms besides Apple's iBooks reader.

Apple's DRM for music and movies have been circumvented in the past, and resulted in a cat and mouse game of updates to iTunes to disable these hacks. Apple will likely respond in a similar fashion to this hack.

The New York Times today addressed Apple's record growth in both revenue and stock price in the context of the "law of large numbers".

Apple is so big, it’s running up against the law of large numbers.

Also known as the golden theorem, with a proof attributed to the 17th-century Swiss mathematician Jacob Bernoulli, the law states that a variable will revert to a mean over a large sample of results. In the case of the largest companies, it suggests that high earnings growth and a rapid rise in share price will slow as those companies grow ever larger.

If Apple’s share price grew even 20 percent a year for the next decade, which is far below its current blistering pace, its $500 billion market capitalization would be more than $3 trillion by 2022. That is bigger than the 2011 gross domestic product of France or Brazil.

Put another way, to increase its revenue by 20 percent, Apple has to generate additional sales of more than $9 billion in its next fourth quarter. A company with only $1 billion in sales has to come up with just another $200 million.

Apple has posted annual revenue growth of 16%, 56%, and 69% over the past three years respectively, with sales rising from $39 to $61 to $103 billion. Staggering growth for a company this large, but Apple seems to be continuing the trend for fiscal 2012. Apple reported more than $46 billion in revenue for the first quarter, and provided guidance of $32.5 billion in revenue for the second quarter.

This $78 billion in revenue for the first half of fiscal 2012 (which will likely be higher, as Apple traditionally underestimates on guidance) represents yet another massive increase in revenue from the year-previous quarters. The Q1 2012 number is a rise of more than 73% over the prior year, and the Q2 guidance would represent a 32% increase growth.

The enormous growth Apple has shown in recent years is largely on the backs of two products: the iPhone and the iPad.

The iPhone, as a product category, has grown from a mere $630 million in sales in 2007, to more than $47 billion in fiscal 2011. The iPad, for its part, tallied more than $20 billion of Apple's revenue last year. Between the two of them, Apple's main iOS devices account for more than 65% of Apple's total sales. Remove those two and Apple is a much different company.

It's all a bit of a theoretical exercise, of course. The iPhone and iPad halo effects are real, and have had a beneficial impact on other parts of Apple's businesses -- but the point remains: Apple's astounding growth is the direct result of the company's move into new product categories.

As the above chart shows, Apple's overall year-over-year revenue growth is impressive, but if the iPhone or iPad is backed out, the revenue growth is much less awe-inspiring. Without the iOS devices, Apple only showed 12% and 8% revenue, versus 56% and 69% otherwise.

To continue doubling its total revenue every two years, there are two main possibilities:

Apple would need to show extraordinary -- perhaps impossible -- growth in its iPad and iPhone divisions. Massive sales growth from the iPhone (which has grown more than 90% each of the past three years) and iPad can drive Apple's revenue growth for quite a while, but not forever.

If the iPhone were to continue its 90% annual growth for two more years (which would count 5 consecutive years of near 90% annual sales increases), in 2013 Apple would have nearly $170 billion in revenue coming just from the iPhone. The iPad, which grew an astounding 330% from 2010 to 2011, would report $78 billion in sales that same year -- $248 billion between the two.

Impressive (hypothetical) growth, and given Apple's astounding first quarter numbers, perhaps doable. But follow those numbers out to 2015 and the numbers begin to grow to improbable sizes.

The more likely prospect is for Apple to launch into yet another product category, in addition to the growth of its existing businesses. The possibilities are endless, but there is one new product that seems to be getting more attention than the others.

One thing is for sure: whatever is coming out of Apple's Cupertino R&D labs next is key to the company's continued explosive growth.

Associated Press reports that an iPhone user in California has been awarded $850 in a small claims lawsuit filed against AT&T over throttling of data speeds. The user, who was on a grandfathered unlimited data plan, saw his data speeds drastically slashed once he reached 1.5-2 GB in a given month, even as other users on limited 3 GB plans at the same price see no similar restrictions at those levels.

Pro-tem Judge Russell Nadel found in favor of Matt Spaccarelli in Ventura Superior Court in Simi Valley. Spaccarelli filed a small claims case against AT&T last month, arguing the communications giant unfairly slows speeds on his iPhone 4's unlimited data plan.

Nadel's ruling could pave the way for others to follow suit. AT&T has some 17 million customers with "unlimited data" plans that can be subject to throttling, representing just under half of the company's smartphone users.

There is no word yet on whether AT&T will appeal the decision, but the sales manager representing AT&T in the case has argued that the carrier reserved the right to "modify or cancel" or cancel customer contracts if their usage is adversely affecting the company's network capabilities. The article notes that a class action suit might be the normal evolution of such a complaint, but AT&T's subscriber contract prohibits class action or jury trials, leaving arbitration and small claims as the options.

AT&T began throttling unlimited data customers ranking in the top 5% of data users last October. But while early reports of throttling came mostly from high-volume users consuming in excess of 10 GB of data per month, reports of users being throttled at much lower levels in the neighborhood of 2 GB have been increasing. AT&T notes that the throttling is done on a case-by-case basis and only if there are network capacity issues in the customer's area, but for those who are affected, the throttled speeds are slow enough to make their devices nearly unusable.

Update: AT&T issued this statement to MacRumors: "This is a small claims matter. We are evaluating next steps, including appeal. But at the end of the day, our contract governs our relationship with our customers."

Today would have been Steve Jobs' 57th birthday, and a number of Apple fans are taking the opportunity to commemorate his life and legacy, with the topic currently appearing on Twitter's list of top trending topics worldwide.

Jobs passed away on October 5, 2011 following a long battle with pancreatic cancer.

A pair of Apple fans in New York City are planning a party in Jobs' honor at outside Apple's flagship Fifth Avenue store in Manhattan.

To fete what would have been Jobs’ 57th birthday, dancers will gyrate to Bob Dylan songs while vegetarian birthday cake is served and black turtlenecks are handed out to hundreds of Apple fans, according to the event’s organizers, Brendan McElroy and Seth Rogers. [...]

“If you want to respect his memory, the best way of doing it is focusing on a lot of the positive memories we have of him,” [Rogers] said.

The party is planned to take place from 3:00 PM to 5:00 PM today, and CNBC earlier today aired an interview with the two organizers about their plans.

Coincidentally, today also marks the 12th birthday of MacRumors. The site has grown along with Apple and now reaches over 9.5 million unique visitors per month with roughly 70 million monthly page views. As always, we are grateful to our readers, contributors, sponsors, and all those for whom MacRumors is an online home or a regular stop.

Foxconn's efforts to bring iPhone and iPad production to Brazil have seen significant attention in recent months, with the move being part of a strategy to diversify manufacturing locations and make the devices more affordable in the world's fifth most populous country by eliminating high import taxes. While much of the focus has been on getting iPad production up and running in Brazil, the company has already been working on iPhone production there, with an 8 GB iPhone 4 having leaked in late November.

The iPhone 4S and 8 GB iPhone 4 debuted in Brazil in mid-December, but early models were manufactured in China and carried very high pricing with the iPhone 4S starting at the equivalent of over $1400. With exchange rate fluctuations that figure is now over $1500, while the cheaper 8 GB iPhone 4 still comes in at a hefty $1050. The unlocked iPhone 4 is priced at $549 in the United States.

As noted by Meio Bit [Google translation], Apple has indeed begun selling the Brazilian-made 8 GB iPhone 4 through its online store in that country, as evidenced by manufacturing information on the box and the phone itself.

Apple's online store is also now referring to the black and white models as MD128BR/A and MD198BR/A respectively, with the MD198BR number having been seen on the previously-leaked iPhone 4 from Brazil. The Chinese-made 8 GB iPhone 4 had originally launched in Brazil with MD128BZ/A and MD198BZ/A model numbers. It is not clear exactly when Apple made the transition to selling Brazilian-manufactured iPhone 4 units, but it appears to have been at least several weeks ago.

But while Apple has now transitioned to selling domestically-manufactured iPhone 4 units in Brazil, pricing has yet to come down. It is unclear whether Apple and Foxconn have yet to meet all requirements or receive certification from the Brazilian government that would make the devices exempt from the hefty import taxes or if there are other factors in play.

Notably, the iPhone 4S does not yet appear to be being manufactured in Brazil, with those devices continuing to carry "BZ" model numbers identifying them as manufactured in China for the Brazilian market. The same appears to be true of the iPhone 3GS, which is priced at the equivalent of $700. Consequently, any adjustment in pricing for the Brazilian-made iPhone 4 would create inconsistencies across the company's iPhone line there due to the significant difference in import taxes, but it is unclear how Apple and Foxconn are planning to deal with this issue.

Last year, we profiled a Mac trojan horse known as "Flashback" that was masquerading as a Flash Player installer. While Apple has taken steps to protect users from the threat using its File Quarantine system under which users' computers initiate daily checks for updated malware definitions, the malware's authors have continued to tweak the trojan to improve its ability to both infect systems and evade detection.

Security firm Intego has issued a report on a new variant of the trojan, known as Flashback.G, which adopts a multi-pronged strategy in attacking users' systems. The first two methods rely on vulnerabilities in Java, and while the vulnerabilities are patched in systems running up-to-date versions of Java, outdated systems can be silently infected through these security holes.

On up-to-date systems lacking the Java vulnerabilities, Flashback.G presents a self-signed certificate claiming to be from Apple in an attempt to fool users into allowing the trojan to be installed on their systems. Once installed, the trojan begins searching for user names and passwords it can relay to the malware's authors.

This malware patches web browsers and network applications essentially to search for user names and passwords. It looks for a number of domains – websites such as Google, Yahoo!, CNN; bank websites; PayPal; and many others. Presumably, the people behind this malware are looking for both user names and passwords that they can immediately exploit – such as for a bank website – as well as others that may be reused on different sites.

Notably, Intego reports that the trojan aborts its own installation if it detects the presence of any of several antivirus applications on a user's Mac, presumably seeking to remain below the radar while focusing on vulnerable systems.

Intego recommends that users on Mac OS X Snow Leopard make sure that Java is fully up-to-date by running a check through Software Update, and for all users to be aware of the social engineering trick the trojan uses in attempting to gain permission for installation. The company of course also recommends that users equip their systems with antivirus software.

While malware has not been a tremendous threat to Mac users so far, its presence has been growing. Apple has stepped up its efforts to combat malware by enhancing its File Quarantine system to provide for the daily definition checks. OS X Mountain Lion will see another significant step with the introduction of Gatekeeper, a system by which users can limit installation of apps to sources such as the Mac App Store and developers who have registered with Apple as "identified developers".

Apple's Developer-ID program will utilize digital signatures on applications to link applications with a specific developer. If the developer is later discovered to be distributing malware or otherwise behaving improperly, installations of its existing apps can be deactivated by Gatekeeper. Gatekeeper does have its limitations, however, as it only scans applications downloaded through a handful of mechanisms such as browsers and can not detect applications that are modified by malware after their initial launch.

As noted by Engadget, Apple has informed customers that Push email service has been suspended for iCloud and MobileMe customers in Germany due to successful patent litigation by Motorola Mobility.

Affected customers will still receive iCloud and MobileMe email, but new messages will be downloaded to their devices when the Mail app is opened, or when their device periodically fetches new messages as configured in iOS Settings. Push email service on desktop computers, laptop computers, and the web is unaffected, as is service from other providers such as Microsoft Exchange ActiveSync.

Mail services are otherwise available for both iCloud and MobileMe, but mail must be fetched manually or at a certain interval of time.

Motorola won the injunction in early February, and was able to enforce it by posting a 100 million euro bond. Apple is appealing the decision and Motorola may be liable for some amount of damages if it is later overturned. Apple states in the support document that it believes Motorola's patent is invalid and is appealing the decision.

Reuters reports that the dispute over the iPad trademark in China has taken an interesting turn, with Proview Technology filing suit against Apple in the United States over alleged deception related to the deal between the two companies.

Apple set up a dummy corporation known as IP Application Development Ltd (IPAD) to conduct negotiations with Proview over the trademark back in 2009, and Proview's suit alleges that Apple's efforts to keep its identity secret amounted to fraud.

In its filing, Proview alleged lawyers for IPAD repeatedly said it would not be competing with the Chinese firm, and refused to say why they needed the trademark.

Those representations were made "with the intent to defraud and induce the plaintiffs to enter into the agreement," Proview said in the filing dated February 17, requesting an unspecified amount of damages.

The use of dummy corporations is not particularly unusual in business negotiations, with companies sometimes seeking to keep their identities secret as they work to acquire intellectual property and other assets in support of products under development. By keeping their identities secret, high-profile companies hope to avoid having their plans become public while also looking to strike more favorable deals with companies who think they are dealing with a small business rather than a deep-pocketed industry leader.

MacRumors discovered in the weeks leading up to the introduction of the original iPad in January 2010 that Apple had used a similar dummy corporation with a nearly identical name of IP Application Development LLC to register its own iPad trademarks.

Apple claims that its IPAD dummy corporation purchased the rights to the iPad trademark from Proview in ten countries back in December 2009. Proview has claimed that the transaction did not include the Chinese rights, and the two companies are currently facing off in a number of Chinese courts over the matter. A Hong Kong court ruled last year that Proview and several of its subsidiaries and associated companies had conspired to extort millions of dollars of Apple's by refusing to turn over the Chinese rights to the trademark, but Chinese courts have in several cases sided with Proview.

iMore claims that Apple may be transitioning away from the standard 30-pin dock connector to something more compact in the very near future.

An updated “micro dock” could make room for bigger batteries, 4G radios, and other components far more important to the iPhone and iPad in a PC free world.

As the site points out, Apple has worked hard to miniaturize other components in their iOS devices. Apple was one of the first to adopt the micro-SIM and has even proposed an even smaller SIM card design so they could make even thinner designs.

As iMore points out, the current dock connector isn't huge, but as devices continue to get smaller and thinner, every little bit counts.

Moving away from such a ubiquitous connector, however, would be walking away from an enormous ecosystem of existing 3rd party products. Still, Apple's constant desire to make smaller/thinner designs will naturally put pressure on the size of all their components. Apple's recent move to PC-free computing with iCloud syncing may have also diminished the importance of the dock connector.

We reached out to iMore's Editor-in-Chief Rene Ritchie who said that the report came from a "solid source". iMore also made headlines recently by predicting the date for the iPad 3 launch, which is believed to be accurate.

Apple is acquiring three-year old startup Chomp and plans to use the company's technology and expertise to improve the App Store's search and app discovery technology, according to a report from TechCrunch.

We first covered Chomp in November 2009 to announce their seed funding. Since then, they’ve grown their scope to include not only iPhone apps, but Android apps as well. In fact, Chomp currently has a deal with Verizon to power all of their Android-based app searches. That relationship, obviously, is going to get a bit awkward with this acquisition.

My understanding is that such deals will remain intact for now but are likely to end once the Chomp team and product transitions over to Apple. The same is likely true for Chomp’s stand-alone products.

The terms of the deal haven't been disclosed, but TechCrunch reports that the deal isn't merely about talent -- Apple wants Chomp's technology as well. Chomp has raised more than $2.5 million in funding and apparently all investors are very pleased with the outcome. Chomp's 20 or so employees are reportedly all headed for Apple.

Apple generally prefers to make small to medium size acquisitions of talent and technology, rather than spending huge sums of its $100 billion cash hoard. Earlier this year, Apple paid some $390 million to acquire Israeli flash memory firm Anobit.

Update: Apple has confirmed the purchase to AllThingsD.

Update 2: Apple "paid about $50 million" for Chomp, according to Bloomberg.

Apple's annual shareholder meeting has just concluded at its headquarters in Cupertino, California, with the company declining to make any major announcements related to its operations. One of the biggest questions on the stock side has been speculation about a dividend, buyback, or stock split, and while Apple has indicated that it is continually evaluating the best uses for its cash stockpile, the company has not decided to adopt any of those strategies so far.

CNBC posted a live blog of the meeting, outlining the formal agenda, brief statements from Tim Cook, and a brief Q&A session with shareholders. One change the company did announce is its adoption of a measure that will require members of Apple's board of directors to obtain majority votes from shareholders in order to be elected. The company had previously operated under a plurality vote standard in which directors need to obtain only a majority of the votes cast, omitting those who failed to vote their shares. Under the new policy, directors who do not receive a majority of outstanding voting shares will voluntarily step down. All current directors were easily re-elected.

Majority voting has increasingly become the standard among major companies, and major shareholders have been attempting to push Apple in that direction for several years. A non-binding proposal from shareholders on the topic was approved last year, but Apple declined to adopt it. The proposal was set to be revisited at this year's meeting, and while Apple opposed it in its proxy materials sent to shareholders, the company agreed to implement it even before today's vote results were released.

Tim Cook faced several other questions from shareholders today, touching on topics such as Apple's commitment to education and the company's lack of interest in owning music labels or television studios. Other topics included Apple's advertising on controversial television shows, its relationship with Facebook (Cook called Facebook a "friend"), and the possibility of an Apple television set (no comment from Cook).

Last week, we reported that we had been able to obtain a 9.7-inch display claimed to be for the iPad 3, confirming through microscopic analysis that the display offers twice the linear resolution and four times the total number of pixels as the iPad 2.

We've since shared the display with our friends at iFixit to see if they could power the screen and otherwise take a closer look at it. Unfortunately, with the different connector on the new display, iFixit was unable to directly hook the display up to the guts of an iPad 2. Meanwhile, efforts to map the pins of the two displays in an attempt to jury-rig the iPad 3 display were believed to be too substantial to undertake with the limited time and no guarantees of success. iFixit was, however, able to confirm our findings of an ultra-high resolution display that quadruples the number of pixels over the previous-generation iPads.

In this new video overview of the iPad 3 display, iFixit confirms the higher (2048x1536) resolution, the modified connector, and tweaked retaining clips as compared to the iPad 2 display.

Apple is expected to introduce the iPad 3 with a media event on March 7. Beyond the display, photos of a number of claimed parts for the device, including the logic board and front glass/digitizer, have leaked in recent weeks, offering some reasonable evidence of what can be expected in the updated models.