Anything for an Apple gadget in China - even kidney

So strong is the appeal of the Apple brand in China, some Chinese are willing to sell a kidney to pay for its gadgets.

Apple Inc's iPads, iPhones and iMacs have been a smash hit in China, especially with the affluent, and upwardly mobile, middle classes and fashion-conscious urban youth who are snapping up the slinky, easy-to-use goods with gusto.

The apparently insatiable appetite for Apple goods in the world's second largest economy is good news for the Cupertino, California-based firm, which reported forecast-smashing results this week, helped by massive growth in Asia, and China in particular.

It's also created a sizable market for knock-offs in the world's prime manufacturer of imitation goods, where pirates set up a fake Apple Store in the southwestern city of Kunming that is so good that even the employees believe it's the real deal.

"Apple is a very well-known brand in China, and that's reason enough for some people to buy," said Xu Ziqing, a 23-year-old Beijing hotel receptionist.

"Chinese people these days care very much about brands. They might not know whether the product is truly good or bad, but if it's a good brand, they will want it."

Desperation to get hold of Apple computers can lead to extreme behaviour.

Last month, state media reported that a teenager from the poor inland province of Hunan had sold one of his kidneys to be able to afford an iPad 2.

The tablet computer is also becoming the must-have accessory on Beijing's notoriously crowded, stifling subway, a transport network used mainly by middle-income white collar workers and eschewed by the wealthy.

Apple executives have said they have just scratched the surface in China, and the company is in the process of opening more stores there.

Apple's two Beijing stores -- in the shopping districts of Xidan and Sanlitun -- heave with people, even on weekdays, and on weekends, queues can stretch around the block. For many customers, Apple products are a tangible sign of belonging to a certain social strata.

"All of my friends use Apples. I thought it was time we found out what the fuss was all about," said Annie Xue, browsing a 13,000 yuan ($2,015) 27-inch iMac with her husband at one of Apple's two bustling official retail stores in Beijing.

"I've only used Windows before, and I am a little worried I won't be able to find my way around an Apple. But it seems so easy and intuitive," she added.

At the company's official Beijing stores, Apple employees claim to have heard nothing of the fake shop in Kunming.

"I can assure you that there are only four official Apple stores in China, and you're standing in one of them right now," said one employee at the crowded Sanlitun branch.

Many Chinese are attracted to Apple goods precisely because they are made by a reputable foreign company, and are not tainted with the suspicion of shoddiness that comes with many local brands.

The fact that Apple computers are all assembled in China doesn't seem to matter to many customers. Some could not believe that their country has anything to do with the gadgets they craved.

"It's made in China? Really? I had no idea," said travel agent Xiao Wang, fiddling with a shop display iPad.

"No Chinese company could make something as cool as this," she added, upon being assured it was actually designed in California. "It's money well spent."

Entire Apple stores being faked in China

China, long known for producing counterfeit consumer gadgets, software and brand name clothing, has reached a new piracy milestone — fake Apple stores.

An American who lives in Kunming in southern Yunnan province said Thursday that she and her husband stumbled on three shops masquerading as bona fide Apple stores in the city a few days ago.

She took photos and posted them on her BirdAbroad blog that show staff in blue T-shirts with the Apple logo chatting to customers in a white-walled shop with minimalist decor and signs advertising the iPad 2.

The three stores are not among the authorized resellers listed on Apple Inc.'s website. The maker of the iPhone and other hit gadgets has four company stores in China — two in Beijing and two in Shanghai — and various official resellers. Apple's Beijing office declined to comment.

The proliferation of the fake stores underlines the slow progress that China's government is making in countering a culture of a rampant piracy and widespread production of bogus goods that is a major irritant in relations with trading partners.

China's Commerce Minister promised American executives earlier this year that the latest in a string of crackdowns on product piracy would deliver lasting results.

The 27-year-old blogger, who spoke on condition of anonymity, said the set-up of the stores was so convincing that the employees themselves seemed to believe they worked for Apple.

"It looked like an Apple store. It had the classic Apple store winding staircase and weird upstairs sitting area. The employees were even wearing those blue T-shirts with the chunky Apple name tags around their necks," she wrote on her blog.

"But some things were just not right: the stairs were poorly made. The walls hadn't been painted properly. Apple never writes 'Apple Store' on its signs — it just puts up the glowing, iconic fruit."

A worker at the fake Apple store on Zhengyi Road in Kunming, which most of the photos of the BirdAbroad blog show, told The Associated Press that they are an "Apple store" before hanging up.

The manager of an authorized reseller in Kunming, who gave only his surname, Zhang, said most customers have no idea the stores are fake.

Some of the staff in the stores "can't even operate computers properly or tell you all the functions of the mobile phone," he said.

"There are more and more of these fake stores in Kunming. Although they may sell real Apple products, some of those products were not imported through legal means. And they cost more."

Security holes discovered in iPhones, iPads

A new security hole has opened up in Apple Inc.'s iPhone, iPad and iPod Touch devices, raising alarms about the susceptibility of some of the world's hottest tech gadgets to hacker attacks.

Flaws in the software running those devices came to light after a German security agency warned that criminals could use them to steal confidential data off the devices. Apple, the world's largest technology company by market value, said Thursday that it is working on a fix that will be distributed in an upcoming software upgrade.

With the security hole, an attacker can get malicious software onto a device by tricking its owner into clicking an infected PDF file. Germany's Federal Office for Information Security called the flaws "critical weaknesses" in Apple's iOS operating system.

Internet-connected mobile devices are still subject to fewer attacks than personal computer, but they could eventually prove a juicy target for hackers because they are warehouses of confidential banking, e-mail, calendar, contact and other data.

Software vulnerabilities are discovered all the time. What makes the latest discovery alarming is that the weaknesses are already being actively exploited — albeit in a consensual way.

The latest concerns were prompted by the emergence of a new version of a program to allow Apple devices to run any software and circumvent the restrictions that Apple notoriously retains over software distributed through its online store. There are security risks of doing so, but many people find it liberating to install their own software.

Although this program is something people would seek out, the weaknesses that its authors discovered could easily be used for malice, security experts say.

There is an irony in the controversy: The site distributing the program offers a fix for the problem, but to get the fix, a user has to first install the program in question. So a user must defy Apple's restrictions to get the protection until Apple comes up with a fix of its own.

Charlie Miller, a prominent hacker of Apple products, said it likely took months to develop the program to break Apple's restrictions, but a criminal might need only a day or two to modify it for nefarious purposes.

Apple Inc. spokeswoman Bethan Lloyd said Thursday the company is "aware of this reported issue and developing a fix." She would not say when the update will be available.

One reason for gadget owners to take heart: Attacks on smartphones and other Internet gadgets are still relatively rare. One reason is PC-based attacks are still highly lucrative. Still, vulnerabilities such as the ones Apple is confronting show that consumers should take care of securing their mobile devices as they would their home computer.

"These things are computers — they're just small, portable computers that happen to have a phone tacked onto them," said Marc Fossi, manager of research and development for Symantec Security Response. "You've got to treat them more like a computer than a phone. You have to be aware of what's going on with these devices."

tabloid's hacker targeted dead soldiers AP

A published report says that the telephone numbers of relatives of dead military personnel have been found in files amassed by a detective employed by a Sunday tabloid newspaper.

The Daily Telegraph's report in Thursday's edition could not be independently verified, and the newspaper did not identify the source of its information. There was no indication whether any of those telephones had been hacked.

The BBC reported that relatives of some soldiers say they have not been contacted by police, but that a newspaper had asked them about possible hacking.

The News of the World, the newspaper which is the focus of a criminal investigation, issued a statement saying it would be "absolutely appalled and horrified" if there was any truth in the allegation.

China's Baidu, Microsoft to cooperate in search

Chinese search giant Baidu Inc. will use Microsoft's Bing for some English-language results as the software giant tries to expand its small share of China's search market.

China has the world's biggest population of Internet users, with more than 450 million people online. Global e-commerce, search and other Internet brands have struggled to gain a foothold against aggressive local competitors in a heavily regulated market.

No financial details of the tie-up between Microsoft Corp. and Baidu were released. The Chinese company has been looking at possible expansion abroad.

Google Inc., which competes against Bing and Baidu, closed its China search engine last year after saying it no longer wanted to cooperate with government censorship. Chinese users can reach Google's site in Hong Kong, a Chinese territory without censorship, but government filters can make access sluggish and its China market share has declined.

Baidu has 75.8 percent of China's search market while Google has 19.2 percent, according to Analysys International, a Beijing research firm. Bing's China market share is so small that Analysys counts it among "others" that have a total of 2.2 percent.

Baidu, long seen as a Google imitator, has launched a series of video and other services in an effort to differentiate itself.

In a statement, Baidu vice president Samuel Shen said the agreement with Bing will improve English search for Baidu users and raise Bing's profile in China. Baidu says its site already handles about 10 million English searches daily.

Industry analysts say a big share of future growth in Chinese search will be in the countryside, where users speak little English.

Beijing encourages Web use for business and education but tries to block access to material considered subversive or pornographic. Search engines in China are required to block results for banned sites abroad.

China's top Internet companies are profitable and growing fast but are only beginning to expand abroad.

A major Chinese portal, Sina Corp., said last month it will launch an English-language version of its popular Weibo microblog for users abroad, entering a market dominated by U.S.-based Twitter.

Other competitors including Chinese state media outlets have jumped into China's search market since Google's departure. The government's Xinhua News Agency and state-owned phone carrier China Mobile Ltd. launched their own search engine, www.panguso.com, in February.

Baidu still makes nearly all its revenue in China. Its profit for the first quarter of 2011 more than doubled from a year earlier to 1.07 billion yuan ($163.5 million).

Baidu launched its first site abroad in 2007 in Japan and analysts expect more sites in other countries to follow.

Last month, Baidu announced it was investing $306 million in Qunar, a Chinese travel search engine, to become the company's majority shareholder.

Google has said its advertising revenue in China is growing despite the closure of its mainland search engine.

The company was allowed to keep sales offices in China and says its biggest opportunities are in selling advertising for local websites or to companies that want to reach customers abroad through Google's global sites.

a pioneer of technology, 100 years of IBM

oogle, Apple and Facebook get all the attention. But the forgettable everyday tasks of technology — saving a file on your laptop, swiping your ATM card to get 40 bucks, scanning a gallon of milk at the checkout line — that's all IBM.

International Business Machines turns 100 on Thursday without much fanfare. But its much younger competitors owe a lot to Big Blue.

After all, where would Groupon be without the supermarket bar code? Or Google without the mainframe computer?

"They were kind of like a cornerstone of that whole enterprise that has become the heart of the computer industry in the U.S.," says Bob Djurdjevic, a former IBM employee and president of Annex Research.

IBM dates to June 16, 1911, when three companies that made scales, punch-clocks for work and other machines merged to form the Computing Tabulating Recording Co. The modern-day name followed in 1924.

With a plant in Endicott, N.Y., the new business also made cheese slicers and — significantly for its future — machines that read data stored on punch cards. By the 1930s, IBM's cards were keeping track of 26 million Americans for the newly launched Social Security program.

These old, sprawling machines might seem quaint in the iPod era, but they had design elements similar to modern computers. They had places for data storage, math processing areas and output, says David A. Mindell, professor of the history of technology at the Massachusetts Institute of Technology.

Punch cards carted from station to station represented what business today might call "data flow."

"It was very sophisticated," Mindell says.

The force behind IBM's early growth was Thomas J. Watson Sr., a demanding boss with exacting standards for everything from office wear (white shirts, ties) to creativity (his slogan: "Think").

Watson, and later his son, Thomas Watson Jr., guided IBM into the computer age. Its machines were used to calculate everything from banking transactions to space shots. As the company swelled after World War II, IBM threw its considerable resources at research to maintain its dominance in the market for mainframes, the hulking computers that power whole offices.

"When we did semiconductors, we had thousands and thousands of people," says Donald Seraphim, who worked at IBM from 1957 until 1986 and was named a fellow, the company's highest honor for technical achievement. "They just know how to put the force behind the entrepreneurial things."

By the late '60s, IBM was consistently the only high-tech company in the Fortune 500's top 10. IBM famously spent $5 billion during the decade to develop a family of computers designed so growing businesses could easily upgrade.

It introduced the magnetic hard drive in 1956 and the floppy disk in 1971. In the 1960s, IBM developed the first bar code, paving the way for automated supermarket checkouts. IBM introduced a high-speed processing system that allowed ATM transactions. It created magnetic strip technology for credit cards.

For much of the 20th century, IBM was the model of a dominant, paternalistic corporation. It was among the first to give workers paid holidays and life insurance.

It ran country clubs for employees generations before Google offered subsidized massages and free meals.

"The model really was you joined IBM and you built your career for life there," says David Finegold, dean of the School of Management and Labor Relations at Rutgers University. Transfers to other cities were still common enough that employees joked IBM really stood for "I've Been Moved."

The origins of the company's nickname, Big Blue, are something of a mystery. It may simply derive from IBM's global size and the color of its logo.

IBM's gold-plated reputation was based in part on ubiquity and reliability, as well as a relentless sales force. But its fortunes began to change as bureaucracy stifled innovation. Information-technology managers used to joke that nobody ever got fired for buying IBM. But by the 1980s, Big Blue found itself adrift in a changing technology environment.

IBM had slipped with the rise of cheap microprocessors and rapid changes in the industry. In an infamous blunder, IBM introduced its influential personal computer in 1981, but it passed on buying the rights to the software that ran it — made by a startup called Microsoft.

IBM helped make the PC a mainstream product, but it quickly found itself outmatched in a market it helped create. It relied on Intel for chips and Microsoft for software, leaving it vulnerable when the PC industry took off and rivals began using the same technology.

The PC's casing wasn't as important as the technology inside it, and IBM didn't own the intellectual property inside its own machines. In addition, the rise of smaller computers that performed some of the same functions as mainframes threw IBM's main moneymaking business into disarray.

With its legacy and very survival at stake, the company was forced to embark on a wrenching restructuring.

One of its major achievements turned out to be re-engineering itself during the upheavals of the 1990s. Viewed as too bureaucratic to compete in fast-changing times, IBM tapped an outsider as CEO in 1993 to help with a turnaround.

Louis Gerstner, a former executive with American Express and RJR Nabisco, had little knowledge of technology or IBM culture. In his first meeting with top IBM executives, he was the only one in the room with a blue shirt.

But he broke up old fiefdoms, slashed prices and eliminated jobs. IBM, which had peaked at 406,000 employees in 1985, shed more than 150,000 in the 1990s as the company lost nearly $16 billion over five years.

Gerstner resisted pressure to break up the company and instead focused on services, such as data storage and technical support. Services could be sold as an add-on to companies that had already bought IBM computers. Even barely profitable pieces of hardware were used to open the door to more profitable deals.

The shift allowed IBM to ride out two recessions: When times are tough, businesses pay IBM to help them find ways to cut costs and handle technology chores that would be more expensive to perform in-house.

The change in strategy was risky for a company that helped create the PC industry, yet IBM rose to become the world's biggest technology services provider.

With around $100 billion in annual revenue today, IBM is ranked 18th in the Fortune 500. It's three times the size of Google and almost twice as big as Apple. Its market capitalization of around $200 billion beats Google and allowed IBM last month to briefly surpass its old nemesis, Microsoft.

Though transformed, IBM remains a pioneer, the envy of the technology industry. Hewlett-Packard Co.'s new CEO, Leo Apotheker, says one of his primary goals is to strengthen the company's software and services businesses to compete better with IBM.

Some things haven't changed. The company still spends heavily on research, about $6 billion a year. It still comes up with flashy feats of computing prowess, most recently when its Watson computer system handily defeated the world's best "Jeopardy!" players.

And, just as in 1911, it's still in the business of finding data solutions.

While IBM's Watson attracted buzz by beating two human "Jeopardy!" champions, the company wants to put it to real-world use as a medical diagnostic tool that can understand plain language and analyze mountains of information. That's in line with IBM's focus on other big data projects, such as analyzing traffic patterns citywide to predict and stave off traffic jams.

The company that built its success making sense of millions of punch card records sees future innovations in the analysis of the billions and billions of bits of data being transmitted in the 21st century.

"The scale of that enables you to do discovery, whether it's in the case of drugs, medicine, crime — you name it," says Bernard Meyerson, IBM's vice president for innovation.

Facebook lost US users in May

Facebook is approaching 700 million members but its growth is slowing and it lost users in the United States and Canada last month, the Inside Facebook website said.

Facebook had 687 million members at the start of June, said Inside Facebook, which closely tracks developments and trends at the Palo Alto, California-based social network.

Facebook itself does not regularly release membership figures except to announce milestones such as when it crossed 500 million users in July of last year.

Inside Facebook said overall growth at the social networking giant "has been lower than normal for the second month straight, which is unusual."

Facebook gained 11.8 million members in May and 13.9 million in April -- down from the usual 20 million new users a month seen in previous months, it said.

"While there have been a few months that have registered lower growth numbers, they have not been back to back," it said.

The United States lost nearly six million users in May, Inside Facebook said, falling from 155.2 million at the start of May to 149.4 million at the end of it.

Canadian users fell 1.52 million to 16.6 million during the month and Britain, Norway and Russia all posted losses of more than 100,000, Inside Facebook said.

Web users worry about snooping businesses

It's not Big Brother, but "big business" that Internet users are more worried about.

A new survey found that nearly half of Internet-connected Americans age 16 and older worry about businesses checking what they do online. By comparison, 38 percent worry about the government doing so.

Not that those concerns are stopping people from using the Internet for shopping, social networking and a smattering of other activities.

The latest study from the Center for the Digital Future at the University of Southern California found that 82 percent of Americans use the Internet, the same as in 2009.

On average, they spend more than 18 hours a week online — for browsing the Web (79 percent), for banking (47 percent) and for social networking and video-sharing (46 percent).

In the decade that the Digital Future researchers have been tracking Americans' Internet use, social networks were born, and many of them all but died (anyone remember Friendster?). People have gotten used to migrating more of their activities online and accessing the Internet from more devices than ever.

"When we started our work 11 years ago, the Internet was almost completely PC-based. We used to compare it with TV," said Jeffrey Cole, director of the Center for the Digital Future.

People would use the Internet — dial-up service, back then — the way they watched TV: sitting down in front of the screen for 30, 60 minutes at a time.

Not any more.

"We think PCs are slowly going away" except for the heaviest users, such as those using it for computer-assisted design, editing or heavy writing, Cole said. "Wireless, mobile Internet is becoming the Internet for most people."

Among other findings in the survey, conducted from April 27 to Aug. 30, 2010:

• Of the 18 percent of Americans who are not using the Internet, 7 percent cited cost as a reason. A quarter said they don't go online because they don't find it useful or have no interest. And 37 percent said they didn't have a computer or Internet connection.

• 21 percent of non-users said they were excluded from communications among their friends and disadvantaged in obtaining information for work, studies or hobbies as a result of not going online. Still, 66 percent of them said they are not likely to go online within the next year.

• 68 percent of adult Internet users go shopping online. Books and gifts are the most popular categories, followed by clothes and travel.

• People are still worried about privacy when shopping online, though fewer respondents said they were very concerned or extremely concerned than the year before: 48 percent compared with 54 percent in 2009.

• Email is still nearly universal. Even the texting generation uses this somewhat antiquated method of communication: 98 percent of Internet users under 17 said they email, compared with 95 percent of those aged 18 to 24. The lowest level of email usage, 94 percent, was among 45 to 54-year-olds.

The latest survey of 1,926 people aged 12 and older has a margin of error of plus or minus 2.2 percentage points.

A separate survey, from the Pew Internet & American Life Project, found recently that 13 percent of adult Internet users have used Twitter, up from 8 percent in November 2010. A higher percentage of African Americans and Latinos use Twitter than white people — 25 percent, 19 percent and 9 percent, respectively.

The Pew survey was conducted April 26 to May 22 among 2,277 adults and had a margin of error of plus or minus 3.7 percentage points.