Deal Professor: Few Winners in Cellphone Wars

If you are wondering who will be your cellphone provider next year, so are the cellphone companies. Maneuvers by American cellphone providers to acquire one another are threatening to erupt into all-out war. And the question is not only which ones will survive, but whether the survivors will be ruined by the prey they are rushing to swallow, leaving consumers by the wayside.

The first move occurred in 2011, when AT&T made a bid to acquire T-Mobile U.S.A., the American subsidiary of Deutsche Telekom, which had been looking to sell it for a long time. AT&T's move was brave, considering the well-known antitrust concerns. As part of the deal, T-Mobile was put in the awkward position of arguing to antitrust regulators that it might not survive if it wasn't acquired because of its smaller size and its annual revenue of only $21 billion.

It was a bad move for AT&T. Regulators blocked the deal, and the company walked away poorer by about $6 billion - the $4 billion it was required to pay over the failed acquisition plus the estimated value of the broadband licenses it was required to grant T-Mobile.

The failure should have made other carriers wary. Instead, the message was that unless you acted soon to get bigger, you were not likely to be in the cellphone business for long. And bigger means big enough to challenge AT&T and Verizon Wireless, the two 800-pound gorillas in the wireless arena, with about two-thirds of the United States market, according to Strategy Analytics, and more than 200 million subscribers combined.

The runners-up in the market, Sprint and T-Mobile, knew they had to scramble to get bigger. And behind them were the poor cousins, Leap Wireless and Metro PCS, regional wireless services also looking to grow.

The stage was set to unleash the investment bankers.

Sprint and Metro PCS came close to a merger this year, but Sprint's board scrapped a deal at the 11th hour.

Metro PCS then went down t he short list of other targets and agreed to a deal with T-Mobile, announcing a combination this month. If completed, joining the two would create the third-largest mobile phone operator with 42.5 million subscribers. And the combination is really an acquisition of T-Mobile by Metro PCS with a $1.5 billion dividend kicker paid to Metro PCS shareholders.

This dividend is much less than Metro PCS shareholders could get in a sale. But this is the price that management is paying to get larger. Expect Deutsche Telekom, which will own 74 percent of the combined entity, to sell its shares quickly when, and if, the deal closes.

MetroPCS, however, was thinking broadly when it announced a combination with T-Mobile. According to people close to Metro PCS, it is also trying to nudge Sprint to make a “put up or shut up” move to acquire it - either now or after it combines with T-Mobile. Sprint's alternative is to become the odd man out, left behind by bigger and fiercer c ompetitors.

Many expected Sprint to immediately take the bait and start a counterbid for Metro PCS. Instead, Sprint responded last week with an out-of-the-box move, announcing that SoftBank, the Japanese telecommunications behemoth, would acquire 70 percent of the company for $20.1 billion.

The money would be used to buttress Sprint's finances, presumably for more deal-making and expansion.

Flush with potential cash, Sprint quickly agreed to spend about $100 million to acquire a stake from Craig O. McCaw in Clearwire, the broadband service provider. This would raise Sprint's stake to 50.09 percent of the votes from 48.6 percent. Clearwire's stock slid on the news, as the market concluded that Sprint would now be uninterested in acquiring the remaining shares.

Such an acquisition didn't make sense, because Sprint already controlled the board and appointed seven of 13 directors. But what is clear is that Clearwire has become just another pawn in the cel lphone wars.

Let's all acknowledge at this point that I'm dizzy trying to keep track of everything.

Left out of this deal-making party so far is Leap Wireless. In August, its chief financial officer acknowledged that the company might sell itself. Leap's stock fell 18 percent the day of the announcement that Metro PCS and T-Mobile were combining under the assumption that it no longer was an attractive acquisition target and would not be part of the deal-making.

That may be true - for now. Yet it is unlikely that Leap will be left out.

That is because we are heading to a place where there are likely to be three big wireless companies in the United States, but not many more. And the big will continue to get bigger as they scoop up telecommunications companies with access to excess broadband spectrum.

While the endgame may be apparent, one has to wonder whether the wireless industry is in danger of entering the fog of deal-making.

We've seen this story before - in the battle over RJR Nabisco that was made famous by “Barbarians at the Gate” and in deal-making frenzy during the dot-com boom. When faced with a changing competitive landscape, executives spend billions because they believe they have no other choice. The cost to the company - and to shareholders - can be immense. In this world, executive hubris tends to dominate as overconfidence and the need to be the biggest on the block cloud reason.

Witness the comments of SoftBank's chief, Masayoshi Son, who told Jim Cramer on CNBC after the announcement of his company's investment in Sprint that “I am a man, and every man wants to be No. 1, not No. 2 or No. 3.”

Not so coincidentally, the deal would make SoftBank only the third-largest global wireless carrier.

AT&T has already lost an estimated $6 billion in the cellphone wars. This is no small change.

The rush to complete deals is an investment banker's dream.

But the hunt m ay lead these companies to not only overpay but acquire companies that are underperforming or otherwise don't fit well. Then they have to find a way to run them profitably.

And it may be that it is not being large that is crucial to winning in this game, but technical innovation. That is what Apple found out to great success. So far in the cellphone wars, these other considerations appear meaningless.

For consumers, this means that there is likely to be less choice as wireless carriers disappear. And whether service will improve or large carriers will simply occupy more space is unknown. Regulators, meanwhile, are likely to stand aside from these smaller deals, instead buying the argument that AT&T and Verizon need a bigger third competitor to stand up to it.

It remains to be seen if that is true, but in the heat of the moment, cellphone executives believe there is no choice but to acquire one another. And in these wars, it is all about making a deal. Consu mer concerns are secondary.

A version of this article appeared in print on 10/24/2012, on page B9 of the NewYork edition with the headline: Heated Cellphone Wars Are Producing Few Winners.

Ai Weiwei Covers \'Gangnam Style\' Video

Ai Weiwei, via Instagram An image circulated on Twitter by Ai Weiwei, the Chinese artist and dissident, shows him performing in a cover version of the “Gangnam Style” music video.

As my colleagues Jeff DelViscio and Shreeya Sinha reported last month, “Gangnam Style,” a music video by a South Korean rapper known as PSY with more than 530 million views on YouTube, has been “remixed and redone by motivated fans” around the globe. On Wednesday, Ai Weiwei, the Chinese dissident and artist, joined in, uploading his own cover version of the rap video to YouTube.

A cover version of the rap hit “Gangnam Style,” by Ai Weiwei, the Chinese artist and dissident, recorded at his studio in Beijing.

The artist, who mimics the mock horse-riding dance moves of the original while wearing handcuffs in his remix, calls his version “Grass-Mud Horse Style,” a reference to a Chinese Internet meme that employs a pun on an obscene phrase to mock government censorship of the Web.

As my colleague Michael Wines wrote in a thorough explication of the meme in 2009, the grass-mud horse is “a mythical creature whose name, in Chinese, sounds very much like an especially vile obscenity.” Chinese bloggers invented the alpaca-like creature to demonstrate the absurdity of censorship by embedding foul language in an innocent-l ooking video for a children's song about its adventures. That same year, Mr. Ai took part in the anti-censorship protest by posting a self-portrait on his blog in which he was naked, with a stuffed animal described as a grass-mud horse covering his genitals.

Last week, Mr. Ai explained what he sees as the “beautiful” side of the Internet in a video interview with Evan Osnos of The New Yorker, recorded in the artist's Beijing studio on Oct. 9.

TimesCast Media + Tech: Apple\'s Smaller Tablets

Apple reveals the iPad Mini. David Pogue reviews the Microsoft Surface in 60 seconds. The Mr. GIF artist collective.

Facebook Posts Largest Single-Day Gain After Third-Quarter Earnings Call

In an earnings call with financial analysts on Tuesday, Mark Zuckerberg, Facebook's chief executive, talked not about changing the world, but about making money. He talked a lot about making money - through ads, through commerce and, crucially, through the mobile phone. And he presented numbers that signaled his company was increasing profits faster.

On Wednesday morning, Wall Street seemed to hear the message. Facebook's stock price soared by about 20 percent by 12:30 p.m. Eastern time, to $23.63. It was the biggest single-day gain in the stock's nascent history. The ascent was as sharp as the fall. Facebook shares had lost half their value since the company's ambitious public offering in May.

The swing suggested what a conundrum Facebook can be to Wall Street. It is not a conventional business. It has a billion users, but its principal stream of revenue comes not from directly selling them goods and services, but by offering marketers a chance to target tail ored advertisements to them, based on what they reveal about themselves.

Revenue growth had slowed in the first two quarters. But the third-quarter numbers showed that the company was keeping pace, growing by 32 percent. Crucially, the numbers showed that of the roughly $1 billion that the company took in from advertising - its principal revenue source - 14 percent came from showing ads to Facebook users on mobile devices. The challenges involved in the world's shift to mobile computing is roiling the tech industry, and Facebook is no exception; six out of 10 of its users log in on their smartphones.

Facebook still trails Google in online advertising, both on desktop and mobile. Analysts say that like Google, Facebook will most likely have to roll out an ad network that allows marketers to reach Facebook users wherever they are - whether they are browsing the Web or downloading a mobile application. Facebook is experimenting with this notion, on desktop and mobil e. Marketers can target Giants fans in San Francisco not only on their Facebook newsfeeds, but also by floating an ad when they're on an unrelated mobile application.

“Clearer corporate narrative conveyed on earnings call as focused on mobile, platforms and monetization,” Brian Wieser, an analyst with Pivotal Research Group, wrote in a report Wednesday morning.

Mr. Zuckerberg, in contrast to the past, repeatedly suggested that he was keen on delivering returns to Wall Street. “I want to dispel this myth that Facebook can't make money on mobile,” he said early on in his 10-minute opening remarks. He pointed to advertising products that make it “easier for marketers to reach their customers.”

He also dangled the possibility of “more commerce” on Facebook, citing a new product that allows people to buy gifts for their Facebook friends on their birthdays. That, he said, provides Facebook “an opportunity to learn how people buy things.”

They were all nods to the market. He may not have shed his hoodie for an Hermès tie, but Mr. Zuckerberg seemed to suggest that he understands what it means to lead a public company.

In Contest for Rescue Robots, Darpa Offers $2 Million Prize

The Pentagon's advanced research agency said on Wednesday that it will offer a prize of $2 million to the winners of a contest testing the performance of robots that could be used in emergencies like the Fukushima nuclear crisis in Japan.

The Defense Advance Research Projects Agency, which is responsible for helping the nation avoid unpleasant technological surprises, had previously announced its Robotics Challenge, but on Wednesday it added details and announced the selection of teams that will compete in separate “tracks” of the contest.

In one competition the contestants will build their own robots, while in a second they will design software to control a humanoid-style robot supplied by the government and developed by Boston Dynamics, a developer of advanced mobile robots. Boston Dynamics is known for the Big Dog robot it developed for Darpa, which walks on four legs and is able to carry heavy loads on uneven ground. More recently it has gotten Intern et attention for a robot named Cheetah. In a video, Cheetah runs on an indoor track at 28.3 miles per hour, faster than Usain Bolt, the world's fastest human. One Boston Dynamics video shows a robot that stands on two legs and avoids obstacles.

Two other contests will take place in a computerized simulation system and are intended to be broadly open to a range of entrants from around the world.

Gill Pratt, the Darpa program manager who is directing the Robotics Challenge, said in a telephone press conference on Monday that the program was not intended to develop futuristic robot war fighters.

Currently the United States military has both airborne and undersea robotic weapons systems, but it has made less progress in ground-based weapons. Thousands of robots are now used in Iraq and Afghanistan to deal with land mines, and there are some experimental vehicles that carry equipment being used in war zones. But the military has done little to design robotic sol diers for use on the ground.

“We're aiming for a challenge on a different technical problem right now,” Dr. Pratt said. One of the missions of the United States military is to respond with humanitarian assistance to events like natural and manmade disasters, and in situations like the Fukushima disaster. In that emergency, robots were sent to the plant but its technical experts had to be trained to use them, which took valuable time. Dr. Pratt said that a generation of robots that were simpler to operate and had the capability to use tools that are often already available at disaster sites would make a big difference in speeding the response to a future crisis.

Darpa has sponsored a number of similar challenges. The highest-profile contests focused on autonomous vehicles in 2004, 2005 and 2007. They are widely seen to have served as a catalyst that has jump-started commercial development of self-driving cars. A number of automobile manufacturers as well as G oogle are now nearing commercialization of self-driving technologies.

In one of the new Robotics Challenge tracks, the agency has chosen Carnegie Mellon University's National Robotics Engineering Center, Drexel University, Raytheon, Schaft, Virginia Tech, NASA's Johnson Space Center and NASA's Jet Propulsion Laboratory to design their own systems. The robots are not required to be humanoid forms, and several of the competitors are creating machines that look anything but human. For example, a prototype from JPL has three legs and one arm.

Teams from these organizations will be supplied with an advanced robot from Boston Dynamics and will be required to program it in the contest: Lockheed Martin's Advanced Technology Laboratories, RE2, University of Kansas, Carnegie Mellon University, Massachusetts Institute of Technology, TRAC Labs, University of Washington, the Florida Institute for Human and Machine Cognition, Ben-Gurion University, NASA's Jet Propulsion Labor atory and TORC Robotics.

The robots will be required to do things like drive vehicles, climb over debris, operate power tools and control machines and valves.

The agency is also organizing a separate contest inside an online virtual world that will allow a wider range of contestants to design software avatars to perform rescue missions, Dr. Pratt said.

“There has been tremendous work in the gaming field, and we believe that a lot of the talent in that field can be brought in to play here,” he said.

In the real-world version of the challenge, it will not be mandatory for the robots to be autonomous, but systems that are designed to operate without direct human control will be scored higher, Dr. Pratt said. The agency will adjust the wireless bandwidth available to control the robots in an effort to simulate real world conditions. For example, in the Fukushima disaster, thick walls made it difficult to control robots that were designed to communica te wirelessly with human operators.

The issue of autonomous weapons systems has been controversial because of the Pentagon's use of airborne drones in Afghanistan and Pakistan. Earlier this year a report issued by the Pentagon's Defense Science Board said the military had been slow in deploying technologies that would allow weapons more autonomy. It noted that in some cases, it requires teams of several hundred weapons operators to support a single airborne drone mission.

Big Data in More Hands

Business people, Big Data is coming for you.

Software that captures lots of data and uses it to make predictions has mostly been the province of engineers skilled in arcane databases and statisticians capable of developing complex algorithms. As the business gets bigger, however, software makers are domesticating their products in the hope they will prove attractive to a broader population.

Cloudera, which offers a popular version of the open source database called Hadoop, released software on Wednesday that makes it possible to run queries from a more mainstream SQL programming language interface. SQL, thanks to its adoption by Oracle, Microsoft and others, is known to millions of business analysts.

“This enables us to talk to a whole other class of customer,” said Mike Olson, the chief executive of Cloudera. “The knock against Hadoop was that it is too complex.”

There is a reason for that. Hadoop is one of several so-called unstructured d atabases that were created at Yahoo and Google, after those two companies found they had previously unimaginable amounts of data about activities like people's Web-surfing habits. Put into databases designed to handle this unstructured behavior, then analyzed, this information was valuable for figuring out things like what advertisement to put in front of each individual Web surfer.

Now, with more commerce, content and social behavior online, Hadoop-like systems are valuable to mainstream corporations. Cloudera, which was formed by veterans of Google, Yahoo and Oracle, was among the first to make a commercial management product to go with Hadoop, which is an open source product.

Cloudera's new SQL offering, named Impala, is based on an open source project called Dremel that began inside Google. Mr. Olson said Google had released papers on Dremel, but Cloudera was the first to make a public version.

Like Hadoop itself, Impala will be open source, and Clouder a will make money from subscriptions to its management software. The Hadoop product was also improved, Mr. Olson said, so complex queries could now be performed up to 30 times faster.

This is not the only way companies are trying to reach more Big Data customers. Last week Teradata released a no-cost trial version of a combination database-analysis program that is capable of handling traditional SQL queries as well as larger data analysis work.

The product, which comes from Teradata's acquisition of Aster Data, has more than 50 analytical functions, including social network analysis and fraud detection. The target audience includes business analysts as much as highly trained data scientists. It comes with tutorials, presumably in the hope that prospective customers will love the test product enough to buy a full-featured production version.

Google Shifts Pitch for Its New Chromebooks

Two years ago, when Google first advertised Chromebooks - laptops that store everything online, without a hard drive or desktop software - the tagline at the end of the ad was, “Ready when you are.”

Two years later, Google has apparently decided that people are ready. In the new ads for the latest Chromebooks, which run Google's Chrome operating system, the tagline is, “For everyone.”

Google has a new Chromebook. Although it looks like a laptop, Google's Chromebook is competing with many other devices, including two announced this week, Apple's iPad Mini and Microsoft‘s Surface, not to mention Google's own Nexus 7 tablet and Amazon.com‘s Kindle Fire. The Chromebooks were hastily announced Thursday, before this week's big product events by Apple and Microsoft.

The ads, which have begun airing nationally on television during the baseball playoffs, also reveal a shift in strategy for Chromebooks, after Google failed to sell the original ones in large numbers. At first, Google trumpeted their usefulness for businesses, but corporations are often the slowest to adopt new technology and business buyers couldn't wrap their heads around a computer without desktop software.

So Google's new tactic - revealed in a series of sweet clips of home and family life in the TV ad - is to sell the $249 Chromebooks as a family's second, at-home computer, the one they turn to when they want to search for a recipe, play a game or watch a movie.

Google's ads show Chromebooks at the kitchen table (“for homework”), on the deck (“for working at home”), in the kitchen (“for goo”), in bed (“for lazy Sundays”) and on the couch (“for movie Fridays”).

“What excites us most is how we see Chromebooks being used in day-to-day life,” said Sundar Pichai, senior vice president of Chrome at Google. “Of the people who bought it, the most common use case is people just use this as an additional computer at h ome.”

The new silvery Samsung-made laptop is lighter (2.43 pounds), thinner (0.8 inches) and, at $250, less expensive than the original Chromebook, which was black and clunky. That is partly because they use a chip that is typically found in smartphones and tablets, not laptops.

The idea behind Chromebooks, named after Google's Chrome browser, is that people can now live on the Web, storing everything in the cloud, and no longer need desktop software and hard drives or all the inconveniences that come with them, like I.T. support, software and security updates and computer back-ups.

People use only Web services on Chromebooks, like Google's Gmail and Picasa and Microsoft's Office 365. Google Web apps like Gmail, YouTube and Hangouts are built in. In a world overrun with Chromebooks, as imagined by Google, people could walk up to a computer anywhere in the world, log in and access all their stuff.

To start people off, Google is offering new Chromeboo k owners 100 gigabytes of free file storage on Google Drive for two years. That amount of space typically costs $5 a month. (So the $250 Chromebook feels like it is really only $130.) Google also links a user's activity on a Chromebook with the same person's Android phone, for instance, so if you search for a pizza place on the laptop Google will automatically show you directions on your phone.

“Above all, it brings all of Google services, built straight into the device,” Mr. Pichai said.

Move to the Cloud in the Least Expensive iPad Mini

Now that the Apple iPad Mini is here, I'm fielding one particular question from several friends, family and readers: Which model should I buy?

This could be a potentially expensive decision. The iPad Mini starts at $330 for the 16-gigabyte Wi-Fi version and goes all the way to a high-altitude $670 for the 64-gigabyte version with 3G data.

So what do all the extra Benjamin Franklins get you? Not much, really. Each rung higher on the iPad Mini ladder will cost you $100 for a slight memory upgrade. It's obvious that Apple is making hefty margins from these upgrades. The company charges $100 to go from 16 gigabytes to 32 gigabytes with the iPad Mini. Compare that to the same upgrade from a 16-gigabyte thumb drive to a 32-gigabyte thumb drive:the larger drive is a whopping $10 more.

But fear not, dear iPad Mini owner-to-be. The cloud is here to help save you money.

As a technology reporter, I jump between gadgets a lot to test out the latest offering from the Apples and Googles of the world. Rather than download everything to each device, I've found that I can keep most of my life in the cloud and pluck out what I need when I need it. In doing this, I have found, almost by accident,  that I keep most of the memory free on my devices.

For music I use the online music services Rdio, at $15 a month, and Pandora, which has a free ad-supported version or a $36-a-year option. These services allow me to stream my favorite music from the Internet. Although the music doesn't need to be stored on my device, Rdio has the option to sync specific albums to your phone or tablet to listen to offline. I do the same thing with books, mostly buying them from Amazon and getting them using the free Kindle software. When I'm done with a book, I catapult it back into the Kindle cloud.

I rent movies and TV shows from Apple for offline use, then delete them when I'm done. I stream others from Netflix, YouTube or Hulu. My photos ar e all stored in the cloud, too, either on Facebook, Flickr, Google Picasa or Apple iCloud. All of these photo services have free options.

Personal files can be stored in DropBox, Box or Apple iCloud, which all have free options, too. Since the cloud can go down - ahem, Amazon - I back up all of my important files on one of those inexpensive 16-gigabyte thumb drives that cost $10.

When you know you're entering the real cloud, on an airplane, just be sure to download the things you need for the trip before departing. I've personally made this part of my packing routine: socks, underwear, download a movie, toothpaste, T-shirts, sync my digital books.

Keep in mind, you're not necessarily paying for the memory on the iPad Mini. You're paying for your time. Here's how I do it.

It takes a little time and effort to move to the cloud, and there isn't a moving service that helps you do it in one swoop, yet. But as I've found, it's worth the effort, and if i t means you can buy a new iPad Mini for $330, not $670, it will pay for itself in no time at all.

Daily Report: How Aramco Got Hacked

On Aug. 15, more than 55,000 Saudi Aramco employees stayed home from work to prepare for one of Islam's holiest nights of the year - Lailat al Qadr, or the Night of Power - celebrating the revelation of the Koran to Muhammad.

That morning at 11:08, Nicole Perlroth reports in The New York Times, a person with privileged access to the Saudi state-owned oil company's computers unleashed a virus to initiate what is regarded as among the most destructive acts of computer sabotage on a company. The virus erased data on three-quarters of Aramco's corporate PCs - documents, spreadsheets, e-mail, files - replacing all of it with an image of a burning American flag.

United States intelligence officials say the attack's real perpetrator was Iran, although they offered no specific evidence to support that claim. But Defense Secretary Leon E. Panetta, in a recent speech warning of the dangers of computer attacks, cited the Aramco sabotage as “a significant escalation of the cyber threat.” In the Aramco case, hackers who called themselves the “Cutting Sword of Justice” and claimed to be activists upset about Saudi policies in the Middle East took responsibility.

But their online message and the burning flag were probably red herrings, say independent computer researchers who have examined the code of the virus.

After analyzing the software code from the Aramco attack, security experts say the event involved a company insider, or insiders, with privileged access to Aramco's network. The virus could have been carried on a USB memory stick that was inserted into a PC.

Aramco's attackers posted blocks of I.P. addresses of thousands of Aramco PCs online as proof of the attack. Researchers say only an Aramco employee or contractor with access to the company's internal network would have been able to grab that list from a disconnected computer inside Aramco's network.

Neither researchers nor o fficials have disclosed the names of the attackers involved. Saudi Aramco said in a statement that it was inappropriate to comment during an investigation, adding that the company had a policy of not commenting on rumor or speculation.

Pogue: Surface Tablet Is Sleek Hardware, Weak Software

Sleek Tablet, but Clumsy Software

Microsoft's First Tablet: David Pogue reviews Microsoft's Surface, which goes on sale on Oct. 26.

How would you like to move into a stunning mansion on a bluff overlooking the sea - in Somalia? Or would you like the chance to own a new Ferrari - that has to be refueled every three miles? Would you take a job that pays $1 million a year - cutting football fields with toenail clippers?

The Surface tablet has a 10.6-inch screen with a Touch Cover, attached by magnets, that contains a full keyboard.

That's the sort of choice Microsoft is asking you to make with the spectacularly designed, wildly controversial Surface tablet.

Now, for the very first tablet it has ever manufactured (in fact, its very first computer), Microsoft could have just made another iPad ripoff. But it aimed much higher. It wanted to build a tablet that's just as good at creating work as it is at organizing it.

On the hardware front, Microsoft has succeeded brilliantly. Read the specs and try not to drool on your keyboard.

The Surface shares some measurements with the full-size iPad (1.5 pounds, 0.4 inches thick). But at 10.8 by 6.7 inches, it's a wider, thinner rectangle, a better fit for movie playback. It has stereo speakers instead of mono. Both front and back video cameras are 720p high definition.

It has ports and jacks that iPad owners can only dream about: a memory-card slot to expand the storage, a video output jack and a USB 2.0 jack. You can connect almost any USB device: keyboard, mouse, flash drive, speakers, hard drive and so on.

Each Surface model has double the storage of the same-price iPad. For example, the $500 Surface offers 32 gigabytes; the 64-gig Surface is $600.

There are some disappointments on the spec sheet. The battery life is advertised as eight to 10 hours, less than the iPad. There's no cellular version; it's Wi-Fi only. The screen is very sharp (1,366 by 768 pixels), but it doesn't approach the iPad's Retina screen clarity (2,048 by 1,536 pixels).

And you can charge the Surface only from its wall adapter - not from a computer's USB jack. Microsoft's reasoning is that you won't have a computer to charge from, since your days of carrying both a tablet and a laptop are over. Besides, a wall outlet recharges far faster than USB can.

The front is all touch screen. The edges of the black magnesium body are angled and crisp, like a prop from a Batman movie.

Then there's the kickstand. The lower half of the back is a hinged panel, held shut magnetically until you pop it out with a fingernail. It snaps to a 22-degree angle, ready to prop the tablet sturdily upright.

A lesser kickstand would add weight, bulk or ugliness. But this one is razor-thin and disappears completely when you're not using it.

You do use it, though - especially when you flip open the optional keyboard.

Yes, keyboard. You know Apple's magnetically hinged iPad cover? Microsoft's Touch Cover is the same idea - same magnet hinge - except that on the inside, there are key shapes, and even a trackpad, formed from slightly raised, fuzzy material. Flip the cover open, flip out the kickstand and boom: you have what amounts to a 1.5-pound PC that sets up anywhere.

This is nothing like those Bluetooth keyboard cases for the iPad. First, the Touch Cover is much, much thinner, 0.13 inches, cardboard thin. Second, it's not Bluetooth; there's no setup and no battery hit. The magnet clicks, and keyboard is ready for typing. Third, when you want just a tablet, the keyboard flips around against the back. The Surface automatically disables its keys and displays the on-screen keyboard when it's time to type.

You can buy this cover, in a choice of colors, with the Surface for $100, or later for $120.

It's an incredibly slick idea, but the keys don't move. You're pounding a flat surface. If you type too fast, the keyboard skips letters. (“If you type 80 words a minute on a keyboard and 20-30 on glass, you should be in the 50s on the Touch Cover,” says a Microsoft representative.)

E-mail: pogue@nytimes.com

A version of this article appeared in print on October 24, 2012, on page B1 of the New York edition with the headline: Sleek Tablet, But Clumsy Software.

Credit Card Data Breach at Barnes & Noble Stores

WASHINGTON - Hackers have stolen credit card information for customers who shopped as recently as last month at 63 Barnes & Noble stores across the country, including stores in New York City, San Diego, Miami and Chicago, according to people briefed on the investigation.

The company discovered around Sept. 14 that the information had been stolen but kept the matter quiet at the Justice Department's request so the F.B.I. could determine who was behind the attacks, according to these people.

The information was stolen by hackers who broke into the keypads in front of registers where customers swipe their credit cards and enter their personal identification numbers, or PINs.

In response to questions about the attack, the company acknowledged the security breach, saying that as a precaution customers who used their cards at any of the 63 Barnes & Noble where information was stolen should change their PINs and scan their accounts for unauthorized transactions.

A high-ranking official for the company said that hackers had used information from some customers' credit cards to make unauthorized purchases, but that activity had mainly occurred in September and had declined in recent weeks.

The official defended the company's decision not to tell its customers about the attack, saying that the company had informed credit card companies that certain accounts might have been compromised.

“We have acted at the direction of the U.S. government and they have specifically told us not to disclose it, and there we have complied,” said the official, who asked not to be identified because the investigation was continuing.

The company has received two letters from the United States attorney's office for the Southern District of New York that said it did not have to report the attacks to its customers during the investigation, according to the official. At least one of the letters said that the company could wait until Dec. 24 to tell the customers.

As the company tried to determine how the attack occurred, it turned off all 7,000 keypads in its several hundred stores and had them shipped to a site where the company could examine them.

The company determined that only one keypad in each of the 63 stores had been hacked. Nevertheless, the company has not reinstalled the devices.

“Right now, we have no PIN pads in any stores and we are O.K. with that,” the company official said.

Customers who want to use credit and debit cards now have to ask cashiers to swipe their cards on the readers connected to the registers.

The company said that purchases at its college bookstores and on BarnesandNoble.com, Nook, Nook mobile apps and its member database were not affected by the hacking. It did not say, however, whether it would now be telling individual customers that their information had been stolen.

While specifics differ, most states, including California, require that companies notify customers of a breach if their names are compromised in combination with other information such as a credit card, a Social Security number or a driver's license number.

But states make an exception for encrypted information. As long as companies wrap consumer information in basic encryption, laws do not require them to tell customers about a breach.

“If you had a breach that included name plus credit card information, but the credit card information was encrypted, you would not have to provide notice,” said Miriam H. Wugmeister, a lawyer with Morrison & Foerster.

Computer security experts say such an attack entails a multilayered assault.

“This is no small undertaking,” said Edward Schwartz, the chief security officer at RSA, a security company. “An attack of this type involves many different phases of reconnaissance and multiple levels of exploitation.”

Barnes & Noble did not offer more information on how its network was penetrated. Security experts said a company insider could have inserted malicious code, or criminals could have persuaded an unsuspecting employee to click on a malicious link that installed malware, giving the perpetrators a foothold into Barnes & Noble's point-of-sale systems.

“Attacks on point-of-sale systems are growing exponentially,” said Tom Kellermann, a vice president at the security company Trend Micro. Mr. Kellermann said this was, in large part, because encryption no longer provided a deterrent for skilled hackers.

Michael S. Schmidt reported from Washington and Nicole Perlroth from San Francisco.

A version of this article appeared in print on October 24, 2012, on page A3 of the New York edition with the headline: Credit Card Data Breach at Barnes & Noble Stores.

Patent Office Overturns Apple Patent

U.S. Disavows Patent at Center of Apple-Samsung Dispute

The United States Patent and Trademark Office has decided that one of the smartphone patents at the center of the legal dispute between Apple and Samsung Electronics - which resulted in a jury award to Apple of $1.05 billion - should never have been granted.

The patent office decision is an initial ruling, in a document dated Oct. 15, and filed electronically on Monday, and probably will be challenged by Apple. It affects the patent for Apple's “rubber-banding” or “bounce” feature, which makes the digital page bounce when a user pulls a finger from the top of the touch screen to the bottom.

If the patent office ruling withstands challenges by Apple, it could be used to roll back the $1.05 billion in damages in the California case and strengthen Samsung's hand in settlement talks with Apple, said James E. Bessen, a lecturer at the Boston University School of Law. The patent office's action, patent specialists say, shows that the office, and not only courts around the world, will be an important front in the smartphone patent wars. These legal clashes mainly pit Apple against companies that use Google's Android software for smartphones, including Samsung, HTC and Motorola Mobility, which Google acquired last year.

The patent office ruling was first reported Tuesday by Florian Müeller, a patent analyst and blogger based in Germany.

The decision to invalidate the Apple patent was made under longstanding procedures for re-examining previously granted patents.

Under the America Invents Act, which was passed last year, the post-grant review process is being strengthened and applies to patent re-examination requests filed after Sept. 16.

Patent specialists say the new rules will make it more likely that courts will wait until the patent office has finished studying whether a patent should be invalidated. And the new law gives the director of the patent office the power to order that a patent be re-examined.

“The patent office now has the opportunity to actually take the lead rather than following the courts,” said Arti K. Rai, a professor at Duke University School of Law and a former external affairs administrator at the patent office. “This has the potential to be a really important way to try to curb the problems with existing patents.”

A major problem, according to patent specialists, is that the patent office grants patents too easily in the first place. That is particularly the case, they say, with certain kinds of patents, including those on software. Unlike pharmaceuticals, where a single clearly defined molecule can be the patented invention, software patents often describe digital concepts carried out in code. In software, the boundaries are less clear, and innovation tends to be step-by-step, building on years, sometimes decades of work.

Big technology companies, patent specialists say, have exploited the complexity and uncertainty of software to amass large portfolios of patents.

Frontline patent examiners, working under tight time pressure, they say, tend to be outmatched by wealthy companies when patents are filed. But post-grant review affords another, more painstaking look. “It gives the patent office the ability to focus on the patents that really matter,” said Colleen Chien, an assistant professor at the Santa Clara University Law School.

The patent office's re-examination team issued its invalidation decision on patent 7,469,381. It was one of the six patents that formed the basis of the jury verdict against Samsung in a federal court in San Jose, Calif.

The patent is at the center of Apple's intellectual property strategy in smartphones and tablets of patenting user-experience software. Upon review, the patent office determined that the idea and the bounce feature had been invented earlier, even if the pointing device was not a finger on a touch screen.

Before the California trial, Samsung had made a change to sidestep the Apple patent on its newest smartphones. The same finger stroke brings a blue glow at the bottom of the screen, not a bounce.

This week, Samsung filed a copy of the patent office's initial invalidation ruling on the Apple patent with the judge in the California case, Judge Lucy Koh. Samsung has asked that Judge Koh overrule the jury. And the company is appealing the entire verdict.

The Android camp has filed other requests to re-examine Apple smartphone patents with the patent office.

In a statement, Allen Lo, Google's deputy general counsel, said: “The patent office plays a critical role in ensuring that overly broad patents cannot be used to limit consumer choice. We appreciate the care the patent office has taken in re-examining dubious software claims."

Apple did not respond to an e-mail request for comment.

How the Presidential Campaign Is Being Viewed Around the World

Dmitry Kostyukov for The New York TimesThe latest presidential debate played on televisions at Moscow State University.

As our Moscow correspondent Ellen Barry reports, the way news organizations in other countries portray the United States' presidential campaign “reveals as much about how they see themselves as it does about the American political process.”

The same can be said for much of the global conversation on social media platforms during Monday night's final presidential debate on foreign policy. Some noted on Twitter that their countries were not visible at all, as neither President Obama nor Mitt Romney discusse d the debt crisis in Europe; India; South Africa; or the thousands of people killed in the drug war in Mexico.

In the Middle East and North Africa, others, including this blogger from Beirut, commented that both candidates bestowed much attention on Israel without discussing Palestinians.

Okay if I am an Israeli u convinced me to elect u as a president (both of u), if I am an #Arab do u even care abt my opinion? #debate

- Beirutiyat (@Beirutiyat) 23 Oct 12

Elsewhere around the world, our correspondents shared these reports about how the campaign is being viewed in Brazil, China, Germany, Japan, Poland and South Korea.

The View From Brazil

The main newspapers in São Paulo and Rio de Janeiro feature daily coverage of the race, analyzing every shift in the polls and sending correspondents to interview voters in states including Colorado, Nevada and New Hampshire.< /p>

Shock emerged in Brazil and other countries, for instance, over Mr. Romney's assertion in the Oct. 3 debate that he would end the subsidy for PBS, as previously reported on The Lede. The claim by Mr. Romney focused attention not only on the issue of government assistance for public broadcasting, an idea that enjoys broad support in Brazil, but also the deep cultural ties between the United States and Brazil. After all, a Brazilian version of “Sesame Street,” called “Vila Sésamo,” was first broadcast in the 1970s, including a character in the prominent role of Garibaldo, or Big Bird.

Reflecting a broad current of support in Brazil for President Obama, Brazilian news media appeared to be relieved when the Obama campaign released ads attacking Mr. Romney for suggesting that PBS could lose its funding.

Yet while American campaigns still provoke interest in Brazil, other issues are gaining prominence. This week's issue of Veja, Brazil's most influential news magazine, offered an example of this shift in its cover article. It had nothing to do with Mr. Obama or Mr. Romney; instead, it discussed the ushering in of new political leadership in China, which has surpassed the United States as Brazil's largest trading partner. -SIMON ROMERO

The View From China

The timing of the American presidential vote - just two days before the opening of the 18th Communist Party Congress - has meant that despite the campaign's anti-China themes, it has attracted little attention in China. But there is no doubt that the government is monitoring the election, and officials in top financial institutions are well informed, and concerned, about the combat against China in the campaign, experts say.

After the debate last week when the candidates vied for anti-China barbs, the Chinese Foreign Ministry chided the candidates, suggesting that they raise the level of their discourse. “We hope the U.S. Republican and Democratic cand idates will get rid of the impact of election politics and do more things conducive to China-U.S. mutual trust and cooperation,” said a Foreign Ministry spokesman, Hong Lei.

Until the first debate between Mr. Obama and Mr. Romney, when the president fared poorly, the Chinese took it almost for granted that Mr. Obama would be re-elected. But political experts say that China would find a way to work with Mr. Romney, whose business background is considered a plus by some. Though his threat to name China a currency manipulator for keeping the renminbi at an artificially low level is not appreciated, analysts say he would find it difficult to follow through on his pledge because the value of China's currency against the dollar has risen substantially in recent years. Meanwhile, Mr. Obama's record on China has been viewed with increasing skepticism.

“There has been a downturn in the relationship in the last two years because he and Hillary Clinton announced the reb alancing,” a plan to deploy more military assets to Asia, said Sun Zhe, director of the Center for U.S.-China Relations at Tsinghua University in Beijing. -JANE PERLEZ

The View From Germany

A lot has changed since Mr. Obama's race to the White House electrified the world, overturning expectations about race at home and abroad and bringing “Yes, we can,” into the political lexicon around the world.

At the start of the presidential primary season in December 2007, Christoph von Marschall, Washington bureau chief for Germany's daily Tagesspiegel newspaper, published a book titled “Barack Obama - The Black Kennedy.” When primary season rolled around this year, Mr. Marschall brought out a book with a very different name and a very different feel.

“What's Wrong With the Amis,” the book was called, using the German nickname for Americans, with the subtitle “Why They Hate What We Love About Barack Obama.” When he returns home for rea ding tours and other public events, the two most frequent questions he receives illustrate the gap between Germans and Americans on the president, Mr. Marschall says: Why didn't Mr. Obama close Guantánamo Bay, and what do Americans have against health care?

Christoph von Marschall being interviewed by Manouchehr Shamsrizi, a blogger working for a Bertelsmann Foundation project, at the America Center in Hamburg.

Andreas Etges, an expert on American history at Ludwig Maximilians University in Munich, said the 2008 campaign broke precedents in the German news media, with front-page articles in daily newspapers about state primary victories by Hillary Rodham Clinton or Mr. Obama. This year, Mr. Etges said, despite the disillusionment factor, the coverage started early again, wit h German news media keeping people abreast of every fluctuation in the race for the Republican nomination.

“It's definitely way more than Germans report on any other elections internationally, even on our neighbors,” Mr. Etges said. In Berlin, many Germans pride themselves on their fluency in the nuts and bolts of the horse race - the breaking polls in the swing states, the intricacies of the Electoral College. “In spite of all the talk about American influence going down, the interest Germans have shown still illustrates what importance they think the American elections will have,” Mr. Etges said. -NICHOLAS KULISH

The View From Japan

Interest in American presidential elections is always high in Japan, which relies on the United States to be both its military protector and an important market for exports.

As in past elections, the major newspapers and television news programs have run daily reports on the campaign that can rival those of Ame rican news media in their level of analysis and detail.

However, political and media analysts say the interest is much lower this time than in the 2008 election, which mirrored events in Japan at the time. In 2009, Japan held a historic election of its own, when an opposition party took power, ending almost six decades of virtually uninterrupted one-party rule by the Liberal Democrats.

Analysts said that as Japan gropes toward a stronger multiparty system, interest is high in how the United States' system works, and particularly in party primaries. Parties in Japan choose their leaders by an internal party vote, and although internal votes have become more public and transparent in recent years, Japanese voters still feel they want a bigger voice in the process.

“In Japan, the election of party heads is still not open to the people,” said Takeshi Suzuki, a communications professor at Meiji University in Tokyo. “There is intense attention here in how A merica, our senior colleague in democracy, chooses its presidents.”

Mr. Suzuki said this was particularly apparent in one way that coverage this time has been different than in the past: Japanese reporters are spending more time on the campaign trail, particularly in closely fought states like Ohio. In the past, reports often dealt with abstract polling data and general observations, he said. This time, Mr. Suzuki said, reporters have done more on-the-ground coverage of whether the candidates have succeeded in wooing women or minorities, and the prospects for states' going red or blue.

Analysts said interest was also keen in economic policy, largely because growth in the Japanese economy still relies heavily on whether American consumers buy its cars and electronics. This has led to close attention of the candidates' economic agendas, and particularly on issues important to Japan like whether the United States will prop up the dollar, which is near historic low s against the yen.

“The only chance in the short term for the yen to go down is for the United States economy to pick up,” said Tatsuhiko Yoshizaki, chief economist at the Sojitz Research Institute. “The expectations are high, so people in the market are watching this one very closely.”

Initial reaction in Japan to the final debate, on foreign policy, was dominated by unease at the focus on the Middle East.

“Too many topics went ignored, including the euro crisis, the Guantánamo base, immigration, nuclear nonproliferation, global warning. And of course, relations with Japan and the U.S. troops in Okinawa,” Daisuke Nakai, a New York-based staff writer for the daily Asahi Shimbun, wrote on Twitter. Okinawans have long been upset at what they see as their disproportionate burden in hosting more than half of the American troops in Japan; their grievances spiked recently with reports that a woman was raped there by two American sailors.

“Mr. Obama reiterated that the United States is a Pacific nation, but at least judging from this debate, I don't get the sense that the region is a priority,” Mr. Nakai said.

Japan has become increasingly concerned about China's growing power in the region, including its claims to an island chain controlled by Japan.
-MARTIN FACKLER, HISAKO UENO, MAKIKO INOUE AND HIROKO TABUCHI

The View From Poland

In Poland, one of Mr. Romney's stops on his overseas tour this past summer, all the major newspapers, magazines, online platforms and television stations are giving the election considerable air time, although there too the intensity of the coverage has dipped since the frenzy of attention after the last campaign. That has not stopped leading outlets from throwing manpower at the race.

On Twitter, Mr. Romney's criticism about the decision to remove missile systems in Poland prompted discussion in both Poland and the United States, with a commentator s aying the move was intended to win Polish-American votes.

Romney: pulling our missile systems out of #Poland was unfortunate #debate

- Anna Zamejc (@stell7) 23 Oct 12

Mitt makes a beeline for Polish-American voters in Ohio on missile defense …in #Poland. #debate #2012debate #RCWdebate #tcot

- Tom Nichols (@TheWarRoom_Tom) 23 Oct 12

The state-run television network TVP will send five additional correspondents to the United States for Election Day and will operate with six film crews. The evening news will be broadcast from Washington on Nov. 6 and 7. The biggest commercial television station, TVN, is sending three additional correspondents to help its usual correspondent cover Election Day.

In spite of the serious repercussions that Mr. Romney's tough stance on Russia could have for Poland, many people there are more focused on enjoying the gaffe s and the jokes. Less earnest news outlets are running items about light subjects like cookies with the candidates' faces on them or a poll of which candidates' wives looked better when they both wore pink to the debate. -HANNA KOZLOWSKA

The View From South Korea

After the second presidential debate, some newspapers in South Korea dedicated a full page or two to the subject, displaying photos and graphics and charts and describing how President Obama turned more aggressive. The daily Chosun Ilbo reported that “China,” as well as “jobs” and “economy,” were key words in presidential debates, and that that seemed to reflect American unease over China rising as a “superpower” and what it called a populist political need to “blame the American economic crisis on China.”

Still, South Koreans are preoccupied with their own presidential election in December, and they see little difference between Mr. Obama and Mr. Romney on North Korea - the one issue in the American election that really interests many South Koreans.

“In the past, people here believed that there was a clear difference between the Republican and Democratic Parties on North Korea,” said Koh Yu-hwan, a political scientist and North Korea expert in Dongguk University in Seoul. “But after Obama came into office, such a difference was gone and in South Korean eyes, Obama was not that different from Bush when it comes to North Korea.”

Mr. Koh said the outcome of the election could affect Korea's vote, because “liberals and conservatives here will argue that their candidate can work better with the new U.S. president. People here don't like a discord between Washington and Seoul on their North Korea policies.” -CHOE SANG-HUN

For some, the debate raised more questions than answers.

Anne-Marie Slaughter, a professor of politics and international affairs at Princeton University, posted on Twitter:

Unbelievable. An entire fopo debate with NO mention of Europe, Eurozone, Africa, anywhere in Asia other than China.

- Anne-Marie Slaughter (@SlaughterAM) 23 Oct 12

Stayed up the Obama v Romney debate & suffered all day at work. Didn't help i despise coffee. Was it worth it ? Aint got a clue. Just had to

- Stuart (@The_Benevolent) 23 Oct 12

Apple Only Has One Place to Go: Your Wall

Apple sure does sell a lot of different-sized rectangles.

People can buy a 2.5-inch iPod, 4.5-inch iPhone, 10-inch iPad, 11-inch MacBook Air, 13-inch MacBook Pro, 27-inch iMac, and plenty more variant sizes in-between. Now, with the introduction of the iPad Mini, which fits snuggly between the iPhone and iPad, the company is adding a new 7.9-inch screen to its collection.

It seems all Apple is missing is one really important rectangle: an Apple television.

It wouldn't be a stretch for the company to do this. It could simply take the ultra-thin iMac that it introduced on Tuesday, and well, stretch out the screen. Call it the iTV and voila, we're done!

The company has said in the past that it is not working on a television, but it also said it wouldn't make an iPad Mini, too. Given that Apple dominates all the other personal electronics it makes, it's quickly running out of places to dominate. The company has the fastest growing line of PCs, the most popular tablet computer, the best selling portable music player and don't forget about the little iPhoneâ€"the single most popular phoneâ€"which also doubles as one of the most popular point-and-shoot cameras.

I have no doubt that in the coming years Apple will start moving into entirely new types of businesses. The company has patented a slew of products for wearable computers. Its executives have also talked about building a car. Who knows?

But before it does that, it seems the company has one more place to go before it enters an entirely new market: your living room wall.

Zynga Announces Layoffs and Closing of Older Games

Zynga, the social gaming company that has seen its fortunes slide over the last six months, announced cutbacks Tuesday just before what promises to be a dismal earnings report. The retrenching includes the dismissal of about 5 percent of Zynga's work force, or 150 people, and the closing of 13 older games.

“We've had to make some tough decisions around products, teams and people,” Mark Pincus, Zynga's chief executive, said in a note to
employees that was released by the company.

The company is closing its Boston development studio and sharply reducing its staff in Austin. In addition, it plans to shutter studios in Japan and Britain. In another cost-saving move, it also intends to advertise less. The company declined to list the games it was closing because it said it wanted to tell the players first. Most Zynga games are played on Facebook.

Like other tech companies, Zynga is seeing its users quickly migrate to the mobile Internet, a transition that requires a new business strategy. But Zynga also has some problems particular to itself, including a paucity of new hits. In many ways, Zynga is equivalent to a Hollywood studio - not among the most predictable of ventures.

Zynga will announce its quarterly results on Wednesday. The company has already warned that they will be bad. The stock, which fell 5 percent Tuesday, rose 4 percent in after-hours trading on news of the cutbacks. Since the company's public offering last winter, share are down about 75 percent.