Apple has more cash than the federal government

Paul Sakuma (AP)

Who's ready for iAmerica?

As the BBC has reported, the software company Apple has more cash on hand than the United States federal government, according to the company's financial records.

Apple's quarterly financial report shows that the company responsible for the iPad, iPod and the iPhone now has $76.4 billion in reserve cash, while the Treasury Department is sitting on just $73.7 billion.

The feds could probably learn a thing or two from Apple's success. Congress remains embroiled in a debate over spending and whether the federal government, which currently owes trillions in debt, should be allowed to borrow even more. International credit rating agencies have threatened to downgrade the national debt for the first time in the nation's history if Washington doesn't come up with a solution to lift the $14.3 trillion debt ceiling while implementing a concrete plan to get the nation's financial house in order.

Meanwhile, Apple's financial report shows that the company's profits, even through the last recession, are booming.

People sue Apple over 'overheating' iPads

(ArsTechnica) -- Three iPad users claim that because the iPad will shut itself off after remaining in direct sunlight for long enough, it fails to meet the promises Apple made about using the device as an e-book reader.

The group has filed a federal class-action lawsuit in the Northern California district to "redress and end this pattern of unlawful conduct."

When the iPad's operating temperature reaches a critical level, it will force itself to shut down and display a message warning the user to let the device cool down before trying use it again. This warning is the same that iPhones and iPod Touches give before shutting down when they overheat, often after being left in direct sunlight.

The lawsuit alleges that the iPad "does not live up to reasonable consumer's expectations created by Apple insofar as the iPad overheats so quickly under common weather conditions." Apple lists the iPad's operating temperature as 32° to 95° F (0° to 35° C), so it's not hard to see that using it out in the hot sun can quickly heat up the device over the maximum temperature.

The plaintiffs seem to take particular issue with Apple claiming that "reading on the iPad is just like reading a book." This claim is patently false, according to the lawsuit, because a real book can be used in "the sunlight or other normal environmental conditions" without shutting off.

Most consumer electronic devices can be damaged from overheating if used in direct sunlight for long periods of time; not all of them have the automatic shutoff capability that the iPad does. (Sadly, my boom box from 1986 didn't have an automatic shutoff, and my Quiet Riot tape melted all over the inside when I left it playing by the pool on a hot summer day.)

However, during my hours-long marathon "Plants vs Zombies" sessions -- both indoors and in the shade of an apartment deck on a sunny, 82° day -- my iPad never became even warm to the touch.

The iPad may not work "just like a book" at the beach or out in the hot sun. Does that fact truly make Apple guilty of fraud, negligent misrepresentation, deceptive advertising, unfair business practices, breach of express or implied warranty, intentional misrepresentation or unjust enrichment?

The plaintiffs are seeking class-action status and asking for an injunction against Apple's "false" promises as well as "real" and punitive damages.

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The gambling man who co-founded Apple and left for $800

Pahrump, Nevada (CNN) -- Ron Wayne is usually just another gambler at the Nugget Hotel & Casino in Nevada. He comes here a couple of days a week to try his luck on the video poker machine. But on this trip, he drew some curious onlookers, as he was escorted by a CNN camera crew. A gift-shop worker asked him if he's famous.

"Well, I'm one of the founders of Apple Computer," Wayne responded.

Wayne, 76, is used to the puzzled looks. He said people assume that he must be living in a mansion.

"I'm living off my Social Security and I do a modest trade in collectors' stamps and coins," he said.

The irony of being inside a casino is not lost on Wayne. After all, if his short-lived career at Apple had gone differently, he would be holding a different kind of winnings: 10 percent of Apple's stock.

Today, that stock would be worth $22 billion.

Wayne left Apple for only $800.

"What can I say? You make a decision based on your understanding of the circumstances, and you live with it," he said.

Wayne's tenure at Apple began on April 1, 1976. His name is signed on the legal document that established Apple -- next to those of Steve Jobs and Steve Wozniak, the Silicon Valley giants most people associate with the popular tech company, which makes the iPhone and iPad.

Jobs and Wayne had become friends a few years earlier while both were working for the Atari Corporation.

"We did get fairly chummy, had lunch together, dinner together and had conversations," he said.

As Wayne tells it, Jobs asked for his help in drafting documents and mediating a dispute between Jobs and Wozniak. He also drafted the company's first logo and operating manual. For this work, Wayne was awarded a 10 percent stake in Apple.

"What Jobs had in mind was that he and Woz [as Wozniak is sometimes called] should each have 45 percent and I would have 10 percent as mediator in any dispute that would come up," he said.

That account is backed up by other reports.

In Steve Wozniak's autobiography, "iWoZ," he described Wayne as "one of those people who seemed to have a quick answer for everything."

"He seemed to know all the things we didn't," Wozniak wrote. "Ron ended up play a huge role in those very early days at Apple."

But Wayne had early misgivings. He had been unsuccessful in starting a slot-machine manufacturing business. He racked up thousands of dollars in debt.

With Apple, he was concerned history would repeat itself.

"I could see myself getting into this situation again, and I was really getting too old for that kind of thing," Wayne said, noting that his partners at Apple were 20 years younger than he was.

"The way these guys were going, they were going to bulldoze through anything to make this company succeed. But it was going to be very rough ride, and if I wasn't careful, I was going to be the richest man in the cemetery."

Eleven days after Apple was formed, Wayne removed himself from the company charter. He eventually was given $800 for his stake in Apple, and he let go of that valuable Apple stock, which has exploded in value since.

Wayne said he doesn't let himself wonder how things could have been different if he had chosen to stay with Apple.

"Obviously he [Wayne] didn't have the foresight to know what Apple would become. Like any company in the very early stages, there's a risk associated and you've got to be willing to take it, or you're not," said Ben Bajarin, a technology industry analyst for Creative Strategies.

Wayne, whose net worth is mostly tied up in his extensive coin and stamp collection, said he's as "enamored with money as anybody else."

"But when you're at a focal point of history, you don't realize you're at a focal point of history," he said.

A retired engineer, who has worked at various companies since his departure, Wayne said he never has owned an Apple product.

"I never had a real use for computers," he said. He recently purchased a Dell, saying he's too familiar with Microsoft Windows to want to switch.

What is a tablet, anyway?

For all the buzz about "tablet computers" in recent weeks, one fundamental question about this supposedly break-through computer category remains unanswered:

What exactly is a tablet?

Computer industry representatives here at the massive and hype-heavy Consumer Electronics Show can't seem to agree.

Some say a computer just needs a touch-sensitive screen to be a tablet. Others say a person should be able to write on it with a pen. Still others say it's screen size that's important -- tablets must fit somewhere between phones and laptops. For Philip McKinney, vice president and chief technology officer at Hewlett-Packard, it's partly the keyboard -- a tablet should have one of those.

Break off the keyboard, leaving only a touch-screen device, he said, and the gadget falls into another buzz-worthy category: the slate.

Others say the terms slate and tablet are synonymous.

So what's a confused consumer to do? And how can anyone judge the many products here that claim to be from tabletland when there's no consensus on what one is?

Simple. Just get over the name, said Steve Baker, vice-president of industry analysis at the NDP Group, a market research firm.

Computer makers are introducing a shotgun spray of newish -- or at least newly named -- products in hopes that one will be a big recession-era hit with consumers, he said. None of these new devices, which he said are characterized only by their medium size, fix any obvious problem consumers have with their current computers, he said.

Companies are releasing these new products without knowing exactly why consumers would want to use them, he said.

"That's the problem, but the exciting part of it is that we really don't know what the right product is for people -- what they want to do with this."

Hot products

The tablet buzz at CES is somewhat overshadowed by a tablet that Apple is rumored to announce later this month. Still, the array of tablet-esque devices here is getting tons of attention from show attendees.

The two most talked-about tablets at CES are Lenovo's IdeaPad U1, which the company refers to not as a tablet but as a "hybrid-notebook;" and a yet-to-be named and largely unseen "slate" tablet from HP.

Lenovo's device looks like a smallish laptop on first glance. But the screen on the gadget pops off of a plastic shell and can be carried around separately from its keyboard. That's the tablet part of the hybrid.
Asus was among several companies offering touch-screen tablet computers at the Consumer Electronics Show.
Asus was among several companies offering touch-screen tablet computers at the Consumer Electronics Show.

When separated from its keyboard home, the slender touch-screen tablet -- which looks like a stretched-out iPhone -- is well suited for watching movies, browsing photos and reading books, said Michael Littler, who markets the device. The touch-sensitive screen, made possible by Microsoft's Windows 7, lets users spin photos and scroll through text with their fingers, which might seem more intuitive than a pushing a computer mouse. Watch CES attendees get acquainted with the dual laptop-tablet

That product will debut in six months and will cost less than $1,000, Littler said.

Microsoft CEO Steve Ballmer briefly trotted out HP's unnamed "slate" device during his opening keynote address at the show, stirring up lots of interest. The device was thin and flat, without a keyboard, and with a touch-sensitive screen. HP decided not to show off the unnamed product at CES, however.

McKinney, the company's CTO, said the HP slate has been in development for five years and will be sold to consumers sometime in 2010. He would not discuss the product's price or provide further specifics.

Tablet origins

Part of the tablet confusion comes from the fact that the term is not new.

In the 90s, Microsoft and others introduced tablet PCs with swivel-around screens and keyboards. Consumers couldn't touch the screens with their fingers to control the tablets, but many had stylus pens that let people write on the screen.

While popular in niche markets, those older-generation tablets never took off like expected, said Lance Ulanoff, editor in chief of PC Magazine.

"I think major companies are still a little hesitant to go all-in," he said.

Why now?

The current resurgence of the tablet term -- and the mid-sized, touch-screen gadgets that go with it -- appears to have several precipitating factors.

First, said Ulanoff, is the popularity of the iPhone. Apple's smartphone showed people how helpful touch-screen technology can be.

"I think people got the idea that -- 'Well, what if [the iPhone] was bigger?" he said.

Next is the recession. Consumer electronics sales were down considerably in 2009. That gives computer companies an incentive to try some potentially wacky ideas in an effort to differentiate themselves from competitors, said Baker, the industry analyst.
This touch-screen "clamshell" style device from viliv falls loosely within the tablet computer category.
This touch-screen "clamshell" style device from viliv falls loosely within the tablet computer category.

Technological advances are also pushing the idea. Windows 7, which Microsoft released last year, incorporates touch-screen technology, and many people consider to be a cornerstone of the tablet experience.

Also throw in a truckload of hype about Apple's rumored tablet. Tech blogs have been drooling over the supposed announcement for months.

And, while tablet makers here say they've been working on the technology for years, several admitted the Apple tablet buzz doesn't hurt their efforts.

People expect everything Apple makes to be sexy and popular. And that could rub off on an entire category of devices.

What's in a name?

The flurry of newly named computer products, however, could have negative consequences for the tablet computer industry, said Ken Lee, vice-president of sales and marketing at viliv, another tablet maker exhibiting at CES.

The industry is on the verge of confusing consumers so much that they won't know what products they do or don't want, he said.
I think people got the idea that -- 'Well, what if [the iPhone] was bigger?"
--Lance Ulanoff, editor in chief of PC Magazine.
RELATED TOPICS

* Consumer Electronics
* Apple Inc.
* Microsoft Corporation
* Hewlett-Packard Company

Still, he added, it's exciting to work in a time of experimentation. Viliv is focusing on a number of mid-size computing devices -- from its $500 N5 "clamshell" device, which looks like a sunglasses case when it's closed and is small enough to fit in a coat pocket; to a $550 S10 tablet with a swivel touch-screen and a keyboard; and, finally, a soon-to-be-unveiled "media slate," which has an 10-inch touch-screen and no keyboard.

The names are important from a marketing perspective, he said. Viliv didn't call its "media slate" a tablet because that name sounds expensive, he said. The company didn't want to call it a plain old slate either, he said, because that sounded heavy, like slate rock, when the media slate is actually rather light. Slate also sounds industrial, he said, and he wants this media-consumption device to be fun.

"We tried to give it a little bit more of a casual, lighter feeling," he said.

Other companies have introduced mid-sized, pseudo-tablet products under a host of names -- smartbooks, mini-notes, touch-screen netbooks, dual-book e-readers that also surf the Web.

At its CES product office this week, Littler, from Lenovo, was commenting on this development when a woman abruptly joined the conversation.

"I just call it a computer," she said.