The United States and Pakistan reached tacit agreement in September on a don't-ask-don't-tell policy that allows unmanned Predator aircraft to attack suspected terrorist targets in rugged western Pakistan, according to senior officials in both countries. In recent months, the U.S. drones have fired missiles at Pakistani soil at an average rate of once every four or five days.
The officials described the deal as one in which the U.S. government refuses to publicly acknowledge the attacks while Pakistan's government continues to complain noisily about the politically sensitive strikes.
The arrangement coincided with a suspension of ground assaults into Pakistan by helicopter-borne U.S. commandos. Pakistani President Asif Ali Zardari said in an interview last week that he was aware of no ground attacks since one on Sept. 3 that his government vigorously protested.
Officials described the attacks, using new technology and improved intelligence, as a significant improvement in the fight against Pakistan-based al-Qaeda and Taliban forces. Officials confirmed the deaths of at least three senior al-Qaeda figures in strikes last month.
Zardari said that he receives "no prior notice" of the airstrikes and that he disapproves of them. But he said he gives the Americans "the benefit of the doubt" that their intention is to target the Afghan side of the ill-defined, mountainous border of Pakistan's Federally Administered Tribal Areas (FATA), even if that is not where the missiles land.
Civilian deaths remain a problem, Zardari said. "If the damage is women and children, then the sensitivity of its effect increases," he said. The U.S. "point of view," he said, is that the attacks are "good for everybody. Our point of view is that it is not good for our position of winning the hearts and minds of people."
A senior Pakistani official said that although the attacks contribute to widespread public anger in Pakistan, anti-Americanism there is closely associated with President Bush. Citing a potentially more favorable popular view of President-elect Barack Obama, he said that "maybe with a new administration, public opinion will be more pro-American and we can start acknowledging" more cooperation.
The official, one of several who discussed the sensitive military and intelligence relationship only on the condition of anonymity, said the U.S-Pakistani understanding over the airstrikes is "the smart middle way for the moment." Contrasting Zardari with his predecessor, retired Gen. Pervez Musharraf, the official said Musharraf "gave lip service but not effective support" to the Americans. "This government is delivering but not taking the credit."
From December to August, when Musharraf stepped down, there were six U.S. Predator attacks in Pakistan. Since then, there have been at least 19. The most recent occurred early Friday, when local officials and witnesses said at least 11 people, including six foreign fighters, were killed. The attack, in North Waziristan, one of the seven FATA regions, demolished a compound owned by Amir Gul, a Taliban commander said to have ties to al-Qaeda.
Pakistan's self-praise is not entirely echoed by U.S. officials, who remain suspicious of ties between Pakistan's intelligence service and FATA-based extremists. But the Bush administration has muted its criticism of Pakistan. In a speech to the Atlantic Council last week, CIA Director Michael V. Hayden effusively praised Pakistan's recent military operations, including "tough fighting against hardened militants" in the northern FATA region of Bajaur.
"Throughout the FATA," Hayden said, "al-Qaeda and its allies are feeling less secure today than they did two, three or six months ago. It has become difficult for them to ignore significant losses in their ranks." Hayden acknowledged, however, that al-Qaeda remains a "determined, adaptive enemy," operating from a "safe haven" in the tribal areas.
Along with the stepped-up Predator attacks, Bush administration strategy includes showering Pakistan's new leaders with close, personal attention. Zardari met with Bush during the U.N. General Assembly in September, and senior military and intelligence officials have exchanged near-constant visits over the past few months.
Pakistan's new intelligence chief, Lt. Gen. Ahmed Shuja Pasha, traveled to Washington in late October, and Gen. David H. Petraeus, installed on Oct. 31 as head of the U.S. Central Command, visited Islamabad on his third day in office. On Wednesday, Hayden flew to New York for a secret visit with Zardari, who was attending a U.N. conference.
Zardari spoke over the telephone with Sen. John F. Kerry (D-Mass.), a conversation Pakistani officials said they considered an initial contact with the incoming Obama administration. Although Kerry has been mentioned as a possible secretary of state, the officials said he indicated that he expects to continue in the Senate, where he is in line to take over Vice President-elect Joseph R. Biden Jr.'s position as chairman of the Foreign Relations Committee.
Despite improved relations with the Bush administration, Zardari said, "we think we need a new dialogue, and we're hoping that the new government will . . . understand that Pakistan has done more than they recognize" and is a victim of the same insurgency the United States is fighting. Pakistan hopes that a $7.6 billion loan from the International Monetary Fund, announced yesterday, will spark new international investment and aid.
Pakistan, whose military has received more than $10 billion in direct U.S. payments since 2001, also wants the United States to provide sophisticated weapons to its armed forces, Zardari said. Rather than using U.S. Predator-fired missiles against Pakistani territory, he asked, why not give Pakistan its own Predators? "Give them to us. . . . we are your allies," he said.
Last month, officials confirmed, Predator strikes in the FATA killed Khalid Habib, described as al-Qaeda's No. 4 official, and senior operatives Abu Jihad al-Masri and Abu Hassan al-Rimi. Three other senior al-Qaeda figures -- explosives expert Abu Khabab al-Masri, Abu Sulayman al-Jazairi and senior commander Abu Laith al-Libi --were killed during the first nine months of the year.
Current and former U.S. counterterrorism officials said improved intelligence has been an important factor in the increased tempo and precision of the Predator strikes. Over the past year, they said, the United States has been able to improve its network of informants in the border region while also fielding new hardware that allows close tracking of the movements of suspected militants.
The missiles are fired from unmanned aircraft by the CIA. But the drones are only part of a diverse network of machines and software used by the agency to spot terrorism suspects and follow their movements, the officials said. The equipment, much of which remains highly classified, includes an array of powerful sensors mounted on satellites, airplanes, blimps and drones of every size and shape.
Before 2002, the CIA had no experience in using the Predator as a weapon. But in recent years -- and especially in the past 12 months -- spy agencies have honed their skills at tracking and killing single individuals using aerial vehicles operated by technicians hundreds or thousands of miles away. James R. Clapper Jr., the Pentagon's chief intelligence officer, said the new brand of warfare has "gotten very laserlike and very precise."
"It's having the ability, once you know who you're after, to study and watch very steadily and consistently -- persistently," Clapper told a recent gathering of intelligence professionals and contractors in Nashville. "And then, at the appropriate juncture, with due regard for reducing collateral casualties or damage, going after that individual."
Two former senior intelligence officials familiar with the use of the Predator in Pakistan said the rift between Islamabad and Washington over the unilateral attacks was always less than it seemed.
"By killing al-Qaeda, you're helping Pakistan's military and you're disrupting attacks that could be carried out in Karachi and elsewhere," said one official, speaking on the condition of anonymity. Pakistan's new acquiescence coincided with the new government there and a sharp increase in domestic terrorist attacks, including the September bombing of the Marriott hotel in Islamabad.
"The attacks inside Pakistan have changed minds," the official said. "These guys are worried, as they should be."
Saturday, November 15, 2008
MI5 Discover Al-Qaeda Buying Ambulances on Ebay by Gordon Thomas
MI5 have warned Britain’s cash-strapped National Health Services that dozens of ambulances–along with old police cars and fire engines past their sell-by date–are being snapped up by al-Qaeda operatives in the United Kingdom to mount suicide bomb attacks. So serious is the problem that counter-terrorism officials at the Home Office have written to eBay, the Internet auctioneer, asking them to stop selling emergency service vehicles, equipment and uniforms.
But eBay has insisted it can only halt the sales if a new law is passed by Parliament. That could take many months to enact. The use of ambulances is of particular concern to Britain’s terrorist chiefs. They say the tactic has already been used in Iraq with devastating effects.
A report by Lord Carlisle–the government terrorist czar who last month warned about the possibility of private planes being used for an attack on London–has been issued to all of Britain’s 48 police forces warning of the danger of selling-off emergency service vehicles. Lord Carlisle, who works closely with the Terrorism Analysis Centre in London set up since the 9/11 attacks, said ambulances were the ideal weapon of choice for terrorists.
“It is almost rare that police will stop such vehicles on suspicious grounds. An ambulance rigged with high explosives could drive into any ultra-sensitive target like a nuclear power station or even Whitehall”, said a senior MI5 source. The Association of Chief Police Officers has warned that the risk could be “highly significant” if the law is not tightened.
Every year dozens of police cars, ambulances and even fire engines are sold on eBay for as little as £1,500 ($2,230). Many are still in working order. Those that need repair can be easily fixed to pass as genuine emergency service vehicles. “An ambulance could carry half a ton of explosives. A rigged police car could carry half that amount. So could a fire engine”, states the MI5 report. MI5 counter-terrorism officers say such attacks have been successfully carried out in Iraq and Israel. The report reveals that an al-Qaeda attack in Baghdad last February involved a stolen ambulance, which was driven by a suicide bomber into an Iraqi police station. The report states: “Terrorists have been using ambulances to transport bombs in Israel since at least 2002. The Israelis have told us that Hamas are using ambulances to ferry men and rocket launchers around Gaza”.
A national security committee has been set up in London with MI5 and police chiefs drawing up plans to deal with the threat. Chairman of the committee, Steve Watts, said: “There is a need of urgent legislation becoming available to the police which adequately addresses the threat of pseudo-emergency service vehicles being used by terrorists”. Lord Carlisle has suggested all service vehicles to be sold must be clearly decommissioned so they cannot be used to imitate emergency services. Manufacturers of all such vehicles are being asked to urgently inspect vehicles taken out of service to see how this can be done.
But eBay has insisted it can only halt the sales if a new law is passed by Parliament. That could take many months to enact. The use of ambulances is of particular concern to Britain’s terrorist chiefs. They say the tactic has already been used in Iraq with devastating effects.
A report by Lord Carlisle–the government terrorist czar who last month warned about the possibility of private planes being used for an attack on London–has been issued to all of Britain’s 48 police forces warning of the danger of selling-off emergency service vehicles. Lord Carlisle, who works closely with the Terrorism Analysis Centre in London set up since the 9/11 attacks, said ambulances were the ideal weapon of choice for terrorists.
“It is almost rare that police will stop such vehicles on suspicious grounds. An ambulance rigged with high explosives could drive into any ultra-sensitive target like a nuclear power station or even Whitehall”, said a senior MI5 source. The Association of Chief Police Officers has warned that the risk could be “highly significant” if the law is not tightened.
Every year dozens of police cars, ambulances and even fire engines are sold on eBay for as little as £1,500 ($2,230). Many are still in working order. Those that need repair can be easily fixed to pass as genuine emergency service vehicles. “An ambulance could carry half a ton of explosives. A rigged police car could carry half that amount. So could a fire engine”, states the MI5 report. MI5 counter-terrorism officers say such attacks have been successfully carried out in Iraq and Israel. The report reveals that an al-Qaeda attack in Baghdad last February involved a stolen ambulance, which was driven by a suicide bomber into an Iraqi police station. The report states: “Terrorists have been using ambulances to transport bombs in Israel since at least 2002. The Israelis have told us that Hamas are using ambulances to ferry men and rocket launchers around Gaza”.
A national security committee has been set up in London with MI5 and police chiefs drawing up plans to deal with the threat. Chairman of the committee, Steve Watts, said: “There is a need of urgent legislation becoming available to the police which adequately addresses the threat of pseudo-emergency service vehicles being used by terrorists”. Lord Carlisle has suggested all service vehicles to be sold must be clearly decommissioned so they cannot be used to imitate emergency services. Manufacturers of all such vehicles are being asked to urgently inspect vehicles taken out of service to see how this can be done.
The IMF Gains an Identity from Financial Crisis by Thomas Barnett
ARTICLE: “Emerging markets: All fall down; Firms in developing countries struggle to escape their roots,” The Economist, 11 October 2008.
WORLD NEWS: “IMF Regains Some Global Clout: Once-Scorned Lender Fashions Rescue Package for Those With No Alternatives,” by Bob Davis, Wall Street Journal, 23 October 2008.
ARTICLE: “Trouble Without Borders: As Crisis Spreads, Emerging Nations Become Vulnerable,” by Martin Fackler, New York Times, 24 October 2008.
The emerging markets become the submerging markets.
I have a slide I often use in the brief where I note that Bush-Cheney sold the West on a war of survival with radical Islam when no such threat exists. Instead, it’s the emerging markets for whom this struggle against violent extremists intent on torpedoing globalization’s embrace of their traditional societies is actually a war of survival. Because if globalization really goes down the tubes, the West is still rich and the emerging are submerged and put at true risk of regime legitimacy.
So like I suggest in Great Powers, the IMF finds new life by moving down the development chain just a bit and focusing more on those New Core and Gap economies that—if not for the crisis—would be on the upswing and thus should be prioritized for saving in this moment. Seriously made countries like Brazil believe they’re beyond this, and maybe they are, but the tier just below (like Ukraine, Hungary, Pakistan) definitely need this sort of help.
WORLD NEWS: “IMF Regains Some Global Clout: Once-Scorned Lender Fashions Rescue Package for Those With No Alternatives,” by Bob Davis, Wall Street Journal, 23 October 2008.
ARTICLE: “Trouble Without Borders: As Crisis Spreads, Emerging Nations Become Vulnerable,” by Martin Fackler, New York Times, 24 October 2008.
The emerging markets become the submerging markets.
I have a slide I often use in the brief where I note that Bush-Cheney sold the West on a war of survival with radical Islam when no such threat exists. Instead, it’s the emerging markets for whom this struggle against violent extremists intent on torpedoing globalization’s embrace of their traditional societies is actually a war of survival. Because if globalization really goes down the tubes, the West is still rich and the emerging are submerged and put at true risk of regime legitimacy.
So like I suggest in Great Powers, the IMF finds new life by moving down the development chain just a bit and focusing more on those New Core and Gap economies that—if not for the crisis—would be on the upswing and thus should be prioritized for saving in this moment. Seriously made countries like Brazil believe they’re beyond this, and maybe they are, but the tier just below (like Ukraine, Hungary, Pakistan) definitely need this sort of help.
Finance 101 - The Real Economic Problem
"We view them as time bombs both for the parties that deal in them and the economic system .. In our view ... derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal." - Warren Buffett - 2003
Asset-backed securities are created by pooling something of value, like mortgages, barrels of oil, bushels of corn, piles of wheat, money, or anything else that has value, and then selling shares of the pools of assets. These are not, in themselves, bad things, but you are betting that the value of the assets backing the securities will go up. They do allow you to invest in things like mortgages with a few thousand dollars instead of hundreds of thousands of dollars.
Derivatives are nothing more than a piece of paper, a contract, which promises to buy or sell things at a certain price on a certain date. Unlike asset-backed securities, stocks or bonds, derivatives are only as valuable as the signature on the contract. When you buy or sell a derivative you are buying or selling a promise to convey ownership of the asset, rather than the asset itself. The sellers of the pieces of paper do not actually even have ownership of the things being sold. They are betting that when they have to convey ownership, their buying price will be below their selling price. The buyers of the pieces of paper do not even have the money to buy the things that will be sold to them. They are betting that when they have to buy the assets, what they have to pay for them will be less than what they can sell them for and they are also betting that they will have the credit to buy the things temporarily while they resell them.
Sometimes, the betters bet that the prices will go up so they sell derivatives guaranteeing the assets at higher prices than what they are currently. The buyers of these derivatives bet that the actual future value of the assets will be even higher. Sometimes, the betters bet that the prices of the assets will go down so they sell derivatives guaranteeing assets at a lower price than they currently are. The buyers of these derivatives are betting that the prices of the assets will actually go up.
These bets, the derivatives, are mostly not regulated so, most of them are made in secret. As a result, no one knows for sure who has bought the bets and who has sold the bets. The buyers and sellers watch the prices of the assets that they have agreed to sell or buy all day, every day, constantly recalculating the amount of money that they are going to make or lose. It’s like watching a basketball game with your heart jumping with joy or sinking with despair with each made or missed basket when you have millions of dollars bet on the outcome.
While sub-prime mortgage backed securities are getting all of the attention as the current culprit, what really caused the problem was that derivatives based on these securities were a really hot product. Wall Street and bankers wanted more and more. As a result, they placed extreme pressure on lenders to create more and more sub-prime mortgages so that these could be converted into securities and more derivatives could be created to be sold. Then, people who had been approved for loans started defaulting and everyone started getting stuck with their bets.
When something happens like the burst of the housing bubble, all the betters get nervous that the dropping home prices and foreclosures that are killing the value of mortgage backed securities will have an adverse effect on other assets and they immediately start trying to recover their perceived future losses by betting that the value of everything will go down. This betting causes the actual price of the stock sold to go down along with the value of the companies that the stock represents. When a company’s value goes down, its lines of credit get reduced or cancelled. It is no longer able to buy inventory or make payroll even though it may be very profitable. A company’s profits have normally been extended to its customers in the form of credit. So, unless the company is able to get its customers to pay their bills ahead of time, the company has to close. Many times the customers are also companies and they have used the credit to finance their customers so, they don’t have the money to pay.
Since the derivatives have been sold and purchased in secret, the banks are not even willing to loan each other money because the borrowing bank may have bet to much with derivatives and might go out of business. If banks can’t borrow money, they can’t loan money. Banks get so nervous that they are not even willing to loan you money because they start to imagine that you may be overextended, may overextend yourself, might lose your job, or commit suicide over the economic crisis. Besides, the banks might need the money before this is over, so they hoard it. If you can’t borrow money, you can’t buy things like houses, cars, furniture, airplane trips, or whatever else you would use your credit cards for. This means that all of the companies that make or sell these things can’t sell them and the economy’s downward spiral quickens.
In the saga that is currently unfolding, the collapse of the housing market and value of mortgage backed securities is not even the tip of the iceberg. This is a problem that could be managed solely by the banks. The problem is that the total amount of derivatives that have been sold, bets that have been placed, worldwide to sell assets is around $520 trillion. The value of all the GDPs, real estate, and company stocks in the world is around $225 trillion. Bankers and Wall Street have agreed to sell the world for over twice what it is worth and they don't even have the money to buy the world in the first place. Just buying and selling the the entire world wasn't enough for them. They had to have more. They know this and they are very nervous now that the mortgage crisis has exposed their greedy gambling.
$700 billion given to the banks is not going to fix this. $10 trillion given to the banks is not going to fix this. All of this money just devalues the currency and makes things worse. A meeting is not going to fix this. Neither Obama nor McCain will fix this. This is why the bank bailout was just an exercise in futility. Just wasted your money, your children’s money, and your grandchildren’s money and you and your country are very likely to need this money before this is over. They would have protected you and the economic well being of the country, by passing a law that made derivatives illegal long ago. Instead they are busy trying to accomodate banking greed.
"We view them as time bombs both for the parties that deal in them and the economic system .. In our view ... derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal." - Warren Buffett - 2003
Asset-backed securities are created by pooling something of value, like mortgages, barrels of oil, bushels of corn, piles of wheat, money, or anything else that has value, and then selling shares of the pools of assets. These are not, in themselves, bad things, but you are betting that the value of the assets backing the securities will go up. They do allow you to invest in things like mortgages with a few thousand dollars instead of hundreds of thousands of dollars.
Derivatives are nothing more than a piece of paper, a contract, which promises to buy or sell things at a certain price on a certain date. Unlike asset-backed securities, stocks or bonds, derivatives are only as valuable as the signature on the contract. When you buy or sell a derivative you are buying or selling a promise to convey ownership of the asset, rather than the asset itself. The sellers of the pieces of paper do not actually even have ownership of the things being sold. They are betting that when they have to convey ownership, their buying price will be below their selling price. The buyers of the pieces of paper do not even have the money to buy the things that will be sold to them. They are betting that when they have to buy the assets, what they have to pay for them will be less than what they can sell them for and they are also betting that they will have the credit to buy the things temporarily while they resell them.
Sometimes, the betters bet that the prices will go up so they sell derivatives guaranteeing the assets at higher prices than what they are currently. The buyers of these derivatives bet that the actual future value of the assets will be even higher. Sometimes, the betters bet that the prices of the assets will go down so they sell derivatives guaranteeing assets at a lower price than they currently are. The buyers of these derivatives are betting that the prices of the assets will actually go up.
These bets, the derivatives, are mostly not regulated so, most of them are made in secret. As a result, no one knows for sure who has bought the bets and who has sold the bets. The buyers and sellers watch the prices of the assets that they have agreed to sell or buy all day, every day, constantly recalculating the amount of money that they are going to make or lose. It’s like watching a basketball game with your heart jumping with joy or sinking with despair with each made or missed basket when you have millions of dollars bet on the outcome.
While sub-prime mortgage backed securities are getting all of the attention as the current culprit, what really caused the problem was that derivatives based on these securities were a really hot product. Wall Street and bankers wanted more and more. As a result, they placed extreme pressure on lenders to create more and more sub-prime mortgages so that these could be converted into securities and more derivatives could be created to be sold. Then, people who had been approved for loans started defaulting and everyone started getting stuck with their bets.
When something happens like the burst of the housing bubble, all the betters get nervous that the dropping home prices and foreclosures that are killing the value of mortgage backed securities will have an adverse effect on other assets and they immediately start trying to recover their perceived future losses by betting that the value of everything will go down. This betting causes the actual price of the stock sold to go down along with the value of the companies that the stock represents. When a company’s value goes down, its lines of credit get reduced or cancelled. It is no longer able to buy inventory or make payroll even though it may be very profitable. A company’s profits have normally been extended to its customers in the form of credit. So, unless the company is able to get its customers to pay their bills ahead of time, the company has to close. Many times the customers are also companies and they have used the credit to finance their customers so, they don’t have the money to pay.
Since the derivatives have been sold and purchased in secret, the banks are not even willing to loan each other money because the borrowing bank may have bet to much with derivatives and might go out of business. If banks can’t borrow money, they can’t loan money. Banks get so nervous that they are not even willing to loan you money because they start to imagine that you may be overextended, may overextend yourself, might lose your job, or commit suicide over the economic crisis. Besides, the banks might need the money before this is over, so they hoard it. If you can’t borrow money, you can’t buy things like houses, cars, furniture, airplane trips, or whatever else you would use your credit cards for. This means that all of the companies that make or sell these things can’t sell them and the economy’s downward spiral quickens.
In the saga that is currently unfolding, the collapse of the housing market and value of mortgage backed securities is not even the tip of the iceberg. This is a problem that could be managed solely by the banks. The problem is that the total amount of derivatives that have been sold, bets that have been placed, worldwide to sell assets is around $520 trillion. The value of all the GDPs, real estate, and company stocks in the world is around $225 trillion. Bankers and Wall Street have agreed to sell the world for over twice what it is worth and they don't even have the money to buy the world in the first place. Just buying and selling the the entire world wasn't enough for them. They had to have more. They know this and they are very nervous now that the mortgage crisis has exposed their greedy gambling.
$700 billion given to the banks is not going to fix this. $10 trillion given to the banks is not going to fix this. All of this money just devalues the currency and makes things worse. A meeting is not going to fix this. Neither Obama nor McCain will fix this. This is why the bank bailout was just an exercise in futility. Just wasted your money, your children’s money, and your grandchildren’s money and you and your country are very likely to need this money before this is over. They would have protected you and the economic well being of the country, by passing a law that made derivatives illegal long ago. Instead they are busy trying to accomodate banking greed.
"We view them as time bombs both for the parties that deal in them and the economic system .. In our view ... derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal." - Warren Buffett - 2003
Friday, November 14, 2008
First Unofficial Obama Positions on New War Strategies: A Discussion by Walid Phares
In an effort to engage in an early discussion of the forthcoming Administration's policies regarding the War Strategies, I have reviewed and analyzed comments made by sources representing the national security team to the Washington Post about the "new strategies" to be explored regarding Afghanistan and Iran. Since the transition is taking place during an ongoing global conflict, it is important to discuss the propositions made by the forthcoming Administration, including at an exploration stage, because of the severe impact a finalized policy would have over the next four to eight years. Hence, the community is invited to be fully involved in the early stage analysis as a contribution to the finalization of the so-called new strategies. Following is my article published today in various outlets.
As the transition in the United States between the administrations of George W. Bush and Barack Obama is moving forward feverishly while world crises escalate, observers of conflicts are focusing on the messages emanating from the next foreign policy team in Washington.
The smooth passing of the torch from one leadership to another in the middle of unfinished wars and gigantic counterterrorism efforts is critical, especially if a strategic change of direction is on its way.
Analysts wonder about the nature of change to come: is it about managing battlefields or reducing them?
The first post election statements made by Obama sources - incorporated into a Washington Post article by Karen DeYoung published on Nov. 11, "Obama to Explore New Approach in Afghanistan War" - are very revealing.
Although these "conversations" with aides are still unofficial positions at the formal level, one must read them as the first salvo in setting the tone and guidelines for early 2009.
Thus, and in order to engage in a national discussion on what seems to be the near future, we must analyze these propositions one by one and contrast them with the intensity of the evolving threat.
Therefore, the following are early comments on the emerging new policies.
The Washington Post article began by stating that the Obama administration is planning on "exploring a more regional strategy to the war in Afghanistan including possible talks with Iran." Citing Obama national security advisers, the Post added that the new strategy "looks favorably on the nascent dialogue between the Afghan government and 'reconcilable' elements of the Taliban."
These two so-called strategic components of the forthcoming administration's plan to end the conflict in central Asia deserve a high level of attention and thorough examination. In a post Sept. 11, 2001 environment - meaning seven years into a confrontation with jihadist forces - not only experts but a large segment of the American public has developed a higher awareness of the threat of the enemy and of its long-term objectives. Arguments in foreign policy analysis are not as alien as they were to citizens prior to the 2001 attacks. Many Americans know who the Taliban are and what their goals are, and they know as well of the dangerous fantasies of the mullah regime in Tehran.
A new strategy in the region covering Pakistan and Iran is indeed needed to achieve advances in defeating the jihadis and in empowering the democracy forces in Afghanistan.
If the Bush administration was too slow in reaching that conclusion, then one would expect the Obama foreign policy team to bridge the gap and quickly arrive at a successful next stage.
But the "regional" proposition unveiled by the Washington Post defies logic, instead of consolidating it.
For I wonder on what grounds the Iranian regime would shift from a virulent anti-U.S. attitude to a favorable team player in stabilizing Afghanistan? Even the gurus of classical realism would wonder.
If a deal is possible with Iranian Supreme Leader Ayatollah Ali Khamenei, it cannot be on establishing a democratic government in Kabul. It simply doesn't add up knowing the essence of the Islamic Republic of Iran and its oppressive nature.
Therefore, and before the new administration even begins to sell the idea, it is important for all to realize that any Afghan deal cut with Iran must assume that the next regime in Kabul will satisfy the agenda in Tehran: meaning non-democratic. This is the first hurdle.
Amazingly, the second proposition simultaneously would invite the Taliban (postulating that a milder wing indeed exists) to share power in the country as a way to end the conflict. More problems emerge here: first, if the "good" Taliban are brought to the deal (assuming this is even feasible), what happens with the "bad" Taliban? Will the latter just "go away" or will there be a fight between the "good and the bad" factions? And how can the new strategy end the new Afghan war and will we come to the rescue of the nice jihadists against the ugly ones? Obviously, it doesn't add up either.
Second, assuming there would be a partial re-Talibanization of Afghanistan, how could this co-exist with the Iranians? The same Washington Post article quoted the same advisers, underscoring that "The Iranians don't want Sunni extremists in charge of Afghanistan any more than we do."
How can the architects reconcile bringing in the Iranians for help and, at the same time, inviting the "Sunni extremists" to be sitting in Kabul? This construct doesn't fly on mere logic.
As I wondered in an interview with Fox News the same day, are the new foreign policy planners talking about changing the strategy or changing the enemy?
The most logical ally against most of the Taliban should be the democratically-elected government in Pakistan, which is already waging a campaign against al-Qaida and its Taliban allies. Why would Washington replace this potential ally (regardless of all mishaps) with two foes: the non-democratic regime of Iran and a faction of the totalitarian Taliban?
In this dizzying maze a la 1990s, one begins to wonder if we are flipping the enemy into an ally, and vice versa, merely so that the slogan of "change" is then materialized. My feeling is that post electoral political pressures are so intense that it may produce a recipe for greater confusion and even disaster.
The problem is not the idea of "talking" to any of the players, including the current foes; engaging in contacts is always an option and has always been practiced. The problem is the perception by the new U.S. officials (and even current ones) that we can simply and naively "create" the conditions that we wish, regardless of the intentions of the other side. When reading these suggestions, one concludes that they were conceived on paper as unilateral designs lacking any strategic understanding of the enemy.
Take two examples as a starter: first, if you want to engage the so-called "acceptable" Taliban into a national unity government in Kabul (which is not an impossible idea theoretically), did you incorporate what their minimal demands are? And can your analysis of the jihadis' long-term strategy produce a projection over four to six years of a return of these jihadis to power? I don't think so.
Second, if you wish to enlist Iran as a partner in Afghanistan, will you be able to continue with the sanctions over its nuclear program? Obviously not. Thus the bottom line is that the price for befriending Tehran in Kabul is to allow it to reach its nuclear military ambitions. If it is otherwise, the upcoming foreign policy team has a lot of explaining to do.
Another interesting statement made by an adviser, according to the Washington Post, was that "the incoming administration intends to remind Americans how the fight "against Islamist extremists" began - on Sept. 11, 2001, before the Afghanistan and Iraq wars - and to underscore that al-Qaida remains the nation's highest priority. "This is our enemy," one adviser said of Bin Laden, "and he should be our principal target."
Although as a reader I am not sure if DeYoung was discussing the new strategies in the war with the same "source," the latter, stronger sentence is of great value for future inquiries. For if indeed the incoming administration intends to remind U.S. citizens that the fight is "against Islamist extremists," then this would be a good bridge to the Bush administration's bold rhetoric, which ended in 2006.
If the Obama administration "change" in strategy is to redefine the confrontation in the precise manner the adviser did, then we will be lucky. If that is the case, then we would hope and expect the new administration to repel the irresponsible "lexicon" disseminated by bureaucrats within the Bush administration and instead issue a strong document identifying the threat as stated in the Washington Post article, explaining once and for all the ideology of bin Laden so that indeed we can understand "our principal target."
These early remarks are aimed at helping the Obama administration from its inception to clearly strategize and target so that the next four, and maybe eight years, will be a leap forward in protecting this country and in defending democracy worldwide.
This is only a glimpse of conversations to come about America's national security and the hope to see a real qualitative change for the best.
As the transition in the United States between the administrations of George W. Bush and Barack Obama is moving forward feverishly while world crises escalate, observers of conflicts are focusing on the messages emanating from the next foreign policy team in Washington.
The smooth passing of the torch from one leadership to another in the middle of unfinished wars and gigantic counterterrorism efforts is critical, especially if a strategic change of direction is on its way.
Analysts wonder about the nature of change to come: is it about managing battlefields or reducing them?
The first post election statements made by Obama sources - incorporated into a Washington Post article by Karen DeYoung published on Nov. 11, "Obama to Explore New Approach in Afghanistan War" - are very revealing.
Although these "conversations" with aides are still unofficial positions at the formal level, one must read them as the first salvo in setting the tone and guidelines for early 2009.
Thus, and in order to engage in a national discussion on what seems to be the near future, we must analyze these propositions one by one and contrast them with the intensity of the evolving threat.
Therefore, the following are early comments on the emerging new policies.
The Washington Post article began by stating that the Obama administration is planning on "exploring a more regional strategy to the war in Afghanistan including possible talks with Iran." Citing Obama national security advisers, the Post added that the new strategy "looks favorably on the nascent dialogue between the Afghan government and 'reconcilable' elements of the Taliban."
These two so-called strategic components of the forthcoming administration's plan to end the conflict in central Asia deserve a high level of attention and thorough examination. In a post Sept. 11, 2001 environment - meaning seven years into a confrontation with jihadist forces - not only experts but a large segment of the American public has developed a higher awareness of the threat of the enemy and of its long-term objectives. Arguments in foreign policy analysis are not as alien as they were to citizens prior to the 2001 attacks. Many Americans know who the Taliban are and what their goals are, and they know as well of the dangerous fantasies of the mullah regime in Tehran.
A new strategy in the region covering Pakistan and Iran is indeed needed to achieve advances in defeating the jihadis and in empowering the democracy forces in Afghanistan.
If the Bush administration was too slow in reaching that conclusion, then one would expect the Obama foreign policy team to bridge the gap and quickly arrive at a successful next stage.
But the "regional" proposition unveiled by the Washington Post defies logic, instead of consolidating it.
For I wonder on what grounds the Iranian regime would shift from a virulent anti-U.S. attitude to a favorable team player in stabilizing Afghanistan? Even the gurus of classical realism would wonder.
If a deal is possible with Iranian Supreme Leader Ayatollah Ali Khamenei, it cannot be on establishing a democratic government in Kabul. It simply doesn't add up knowing the essence of the Islamic Republic of Iran and its oppressive nature.
Therefore, and before the new administration even begins to sell the idea, it is important for all to realize that any Afghan deal cut with Iran must assume that the next regime in Kabul will satisfy the agenda in Tehran: meaning non-democratic. This is the first hurdle.
Amazingly, the second proposition simultaneously would invite the Taliban (postulating that a milder wing indeed exists) to share power in the country as a way to end the conflict. More problems emerge here: first, if the "good" Taliban are brought to the deal (assuming this is even feasible), what happens with the "bad" Taliban? Will the latter just "go away" or will there be a fight between the "good and the bad" factions? And how can the new strategy end the new Afghan war and will we come to the rescue of the nice jihadists against the ugly ones? Obviously, it doesn't add up either.
Second, assuming there would be a partial re-Talibanization of Afghanistan, how could this co-exist with the Iranians? The same Washington Post article quoted the same advisers, underscoring that "The Iranians don't want Sunni extremists in charge of Afghanistan any more than we do."
How can the architects reconcile bringing in the Iranians for help and, at the same time, inviting the "Sunni extremists" to be sitting in Kabul? This construct doesn't fly on mere logic.
As I wondered in an interview with Fox News the same day, are the new foreign policy planners talking about changing the strategy or changing the enemy?
The most logical ally against most of the Taliban should be the democratically-elected government in Pakistan, which is already waging a campaign against al-Qaida and its Taliban allies. Why would Washington replace this potential ally (regardless of all mishaps) with two foes: the non-democratic regime of Iran and a faction of the totalitarian Taliban?
In this dizzying maze a la 1990s, one begins to wonder if we are flipping the enemy into an ally, and vice versa, merely so that the slogan of "change" is then materialized. My feeling is that post electoral political pressures are so intense that it may produce a recipe for greater confusion and even disaster.
The problem is not the idea of "talking" to any of the players, including the current foes; engaging in contacts is always an option and has always been practiced. The problem is the perception by the new U.S. officials (and even current ones) that we can simply and naively "create" the conditions that we wish, regardless of the intentions of the other side. When reading these suggestions, one concludes that they were conceived on paper as unilateral designs lacking any strategic understanding of the enemy.
Take two examples as a starter: first, if you want to engage the so-called "acceptable" Taliban into a national unity government in Kabul (which is not an impossible idea theoretically), did you incorporate what their minimal demands are? And can your analysis of the jihadis' long-term strategy produce a projection over four to six years of a return of these jihadis to power? I don't think so.
Second, if you wish to enlist Iran as a partner in Afghanistan, will you be able to continue with the sanctions over its nuclear program? Obviously not. Thus the bottom line is that the price for befriending Tehran in Kabul is to allow it to reach its nuclear military ambitions. If it is otherwise, the upcoming foreign policy team has a lot of explaining to do.
Another interesting statement made by an adviser, according to the Washington Post, was that "the incoming administration intends to remind Americans how the fight "against Islamist extremists" began - on Sept. 11, 2001, before the Afghanistan and Iraq wars - and to underscore that al-Qaida remains the nation's highest priority. "This is our enemy," one adviser said of Bin Laden, "and he should be our principal target."
Although as a reader I am not sure if DeYoung was discussing the new strategies in the war with the same "source," the latter, stronger sentence is of great value for future inquiries. For if indeed the incoming administration intends to remind U.S. citizens that the fight is "against Islamist extremists," then this would be a good bridge to the Bush administration's bold rhetoric, which ended in 2006.
If the Obama administration "change" in strategy is to redefine the confrontation in the precise manner the adviser did, then we will be lucky. If that is the case, then we would hope and expect the new administration to repel the irresponsible "lexicon" disseminated by bureaucrats within the Bush administration and instead issue a strong document identifying the threat as stated in the Washington Post article, explaining once and for all the ideology of bin Laden so that indeed we can understand "our principal target."
These early remarks are aimed at helping the Obama administration from its inception to clearly strategize and target so that the next four, and maybe eight years, will be a leap forward in protecting this country and in defending democracy worldwide.
This is only a glimpse of conversations to come about America's national security and the hope to see a real qualitative change for the best.
Facing Obama, Iran Suddenly Hedges on Talks by Thomas Erdbrink
Since 2006, Iran's leaders have called for direct, unconditional talks with the United States to resolve international concerns over their nuclear program. But as an American administration open to such negotiations prepares to take power, Iran's political and military leaders are sounding suddenly wary of President-elect Barack Obama.
"People who put on a mask of friendship, but with the objective of betrayal, and who enter from the angle of negotiations without preconditions, are more dangerous," Hossein Taeb, deputy commander of Iran's Revolutionary Guard Corps, said Wednesday, according to the semiofficial Mehr News Agency.
"The power holders in the new American government are trying to regain their lost influence with a tactical change in their foreign diplomacy. They are shifting from a hard conflict to a soft attack," Taeb said.
For Iran's leaders, the only state of affairs worse than poor relations with the United States may be improved relations. The Shiite Muslim clerics who rule the country came to power after ousting Shah Mohammad Reza Pahlavi, a U.S.-backed autocrat, in their 1979 Islamic revolution. Opposition to the United States, long vilified as the "great Satan" here in Friday sermons, remains one of the main pillars of Iranian politics.
President Mahmoud Ahmadinejad sent Obama a congratulatory letter last week, but by Wednesday his welcoming tone had dissipated. "It doesn't make any difference for us who comes and who goes," he said in a speech in the northern town of Sari. "It's their actions which are studied by the Iranian and world nations."
On Wednesday, Iran test-fired a two-stage, solid-fuel rocket, Defense Minister Mostafa Mohammed Najjar announced on state television. He said the missile had a range of 1,200 miles -- meaning that it could reach Israel and U.S. targets in the Middle East.
In Washington, Pentagon spokesman Bryan Whitman said that he could not "independently confirm media reports indicating an Iranian missile launch," but added that "Iran's missile program is a concern that poses a threat to its neighbors in the region and beyond."
In recent interviews, advisers to Ahmadinejad said the new U.S. administration would have to pull U.S. troops out of Iraq, show respect for Iran's system of rule by a supreme religious leader, and withdraw its objections to Iran's nuclear program before it can enter into negotiations with the Iranian government.
"The U.S. must prove that their policies have changed and are now based upon respecting the rights of the Iranian nation and mutual respect," said Mojtaba Samareh Hashemi, the president's closest adviser.
Ahmadinejad's media adviser, Mehdi Kalhor, said that "in fair circumstances" Iran would be open to talks. "But that is not when you have a bayonet pressed at your artery," he added, referring to the U.S. forces deployed in Iraq, Afghanistan and the Persian Gulf.
Iran's leaders have long said they want to resolve the international concerns over the country's nuclear program through negotiations. Western governments have expressed concern that Iran's enrichment of uranium and other nuclear activities have been part of a weapons program.
The Bush administration has demanded that Iran suspend uranium enrichment before talks can take place, a precondition that Iran has rejected on the grounds that the nuclear program is for peaceful purposes. In 2006, Ahmadinejad said that Iran "is after negotiations, but fair and just negotiations. They must be without any conditions."
Obama has advocated "direct tough presidential diplomacy with Iran, without preconditions," according to his campaign Web site, and has said a nuclear-armed Iran would be unacceptable.
Two weeks ago, in comments that may have set the tone for some of the rhetoric being used to describe the incoming U.S. administration, Ayatollah Ali Khamenei, Iran's supreme leader, said the conflicts between the two countries were deep-rooted and went beyond political differences.
"This is because of the numerous conspiracies of the U.S. government against the Iranian country and nation throughout the last 50 years, and not only have they not apologized for this but they have continued their arrogant actions," said Khamenei, speaking at a commemoration of the taking of 52 hostages at the U.S. Embassy in Tehran in 1979. Khamenei has final say in all matters of foreign policy.
Kalhor, Ahmadinejad's media adviser, said Iran's "policies and position towards America have not changed at all." He added: "Our problems with America are strategic."
The list of outstanding issues between the two governments is long. Apart from suspicions over Iran's nuclear program and concerns about its development of missiles, the United States opposes Iran's support for the Palestinian Hamas movement and Hezbollah in Lebanon, two organizations branded as "terrorist" by the Bush administration.
Iranian leaders see themselves as flag-bearers in a struggle against what they call the "global imperialist system," meaning the United States and Israel. Iran's nuclear program has become a test case to prove its independence from the West. The Iranian leadership does not recognize Israel as a state and refuses all contact with the country.
In comments during his first news conference, Obama set some Iranian leaders on edge. "Iran's development of a nuclear weapon, I believe, is unacceptable. We have to mount an international effort to prevent that from happening," Obama said. "Iran's support of terrorist organizations, I think, is something that has to cease."
Ali Larijani, speaker of Iran's parliament and a political rival to Ahmadinejad, heard echoes of the past. "Obama's words were tantamount to moving on the previous wrong track," Larijani told reporters.
In 2007, Iran and the United States held direct ambassador-level talks on the security situation in Iraq. A year later, Larijani said it was wrong to say improvements in Iraqi security were thanks to the U.S. "surge" in troop numbers. "Credit should go to the Iraqi government and its neighbors," he said.
Iran is increasingly worried by a possible security pact between the United States and Iraq that would provide a legal basis for American combat troops to remain in the country until the end of 2011.
"Any pact that would guarantee the presence of U.S. forces in the region would not be regarded as valid by Iran," Kalhor said.
Samareh Hashemi said Obama's campaign promises regarding Iraq were one of the reasons that Ahmadinejad sent his congratulatory letter.
"Mr. Obama has mentioned a program for the withdrawal of U.S. forces in Iraq. He explicitly said that he does not support U.S. troops remaining in Iraq. He said he would have a specific program and timetable to get the troops out. This all deserved Iran's attention," Samareh Hashemi said.
He also said Obama drew support from American voters because of his positions on foreign policy.
"Generally, all of these issues were merged into one slogan: change. But that must mean change of current policies, change of militaristic policies, change in the unacceptable meddling in the affairs of other countries," he said.
"If these policies really change, then the deep gap, the distance between Iran and the U.S., will become less. If these promises are acted upon, there will be more chance for closeness between the two nations," Samareh Hashemi said.
Obama would not be welcome in Iran as president, were he to decide to come here, Kalhor said. "He can come as a tourist."
"People who put on a mask of friendship, but with the objective of betrayal, and who enter from the angle of negotiations without preconditions, are more dangerous," Hossein Taeb, deputy commander of Iran's Revolutionary Guard Corps, said Wednesday, according to the semiofficial Mehr News Agency.
"The power holders in the new American government are trying to regain their lost influence with a tactical change in their foreign diplomacy. They are shifting from a hard conflict to a soft attack," Taeb said.
For Iran's leaders, the only state of affairs worse than poor relations with the United States may be improved relations. The Shiite Muslim clerics who rule the country came to power after ousting Shah Mohammad Reza Pahlavi, a U.S.-backed autocrat, in their 1979 Islamic revolution. Opposition to the United States, long vilified as the "great Satan" here in Friday sermons, remains one of the main pillars of Iranian politics.
President Mahmoud Ahmadinejad sent Obama a congratulatory letter last week, but by Wednesday his welcoming tone had dissipated. "It doesn't make any difference for us who comes and who goes," he said in a speech in the northern town of Sari. "It's their actions which are studied by the Iranian and world nations."
On Wednesday, Iran test-fired a two-stage, solid-fuel rocket, Defense Minister Mostafa Mohammed Najjar announced on state television. He said the missile had a range of 1,200 miles -- meaning that it could reach Israel and U.S. targets in the Middle East.
In Washington, Pentagon spokesman Bryan Whitman said that he could not "independently confirm media reports indicating an Iranian missile launch," but added that "Iran's missile program is a concern that poses a threat to its neighbors in the region and beyond."
In recent interviews, advisers to Ahmadinejad said the new U.S. administration would have to pull U.S. troops out of Iraq, show respect for Iran's system of rule by a supreme religious leader, and withdraw its objections to Iran's nuclear program before it can enter into negotiations with the Iranian government.
"The U.S. must prove that their policies have changed and are now based upon respecting the rights of the Iranian nation and mutual respect," said Mojtaba Samareh Hashemi, the president's closest adviser.
Ahmadinejad's media adviser, Mehdi Kalhor, said that "in fair circumstances" Iran would be open to talks. "But that is not when you have a bayonet pressed at your artery," he added, referring to the U.S. forces deployed in Iraq, Afghanistan and the Persian Gulf.
Iran's leaders have long said they want to resolve the international concerns over the country's nuclear program through negotiations. Western governments have expressed concern that Iran's enrichment of uranium and other nuclear activities have been part of a weapons program.
The Bush administration has demanded that Iran suspend uranium enrichment before talks can take place, a precondition that Iran has rejected on the grounds that the nuclear program is for peaceful purposes. In 2006, Ahmadinejad said that Iran "is after negotiations, but fair and just negotiations. They must be without any conditions."
Obama has advocated "direct tough presidential diplomacy with Iran, without preconditions," according to his campaign Web site, and has said a nuclear-armed Iran would be unacceptable.
Two weeks ago, in comments that may have set the tone for some of the rhetoric being used to describe the incoming U.S. administration, Ayatollah Ali Khamenei, Iran's supreme leader, said the conflicts between the two countries were deep-rooted and went beyond political differences.
"This is because of the numerous conspiracies of the U.S. government against the Iranian country and nation throughout the last 50 years, and not only have they not apologized for this but they have continued their arrogant actions," said Khamenei, speaking at a commemoration of the taking of 52 hostages at the U.S. Embassy in Tehran in 1979. Khamenei has final say in all matters of foreign policy.
Kalhor, Ahmadinejad's media adviser, said Iran's "policies and position towards America have not changed at all." He added: "Our problems with America are strategic."
The list of outstanding issues between the two governments is long. Apart from suspicions over Iran's nuclear program and concerns about its development of missiles, the United States opposes Iran's support for the Palestinian Hamas movement and Hezbollah in Lebanon, two organizations branded as "terrorist" by the Bush administration.
Iranian leaders see themselves as flag-bearers in a struggle against what they call the "global imperialist system," meaning the United States and Israel. Iran's nuclear program has become a test case to prove its independence from the West. The Iranian leadership does not recognize Israel as a state and refuses all contact with the country.
In comments during his first news conference, Obama set some Iranian leaders on edge. "Iran's development of a nuclear weapon, I believe, is unacceptable. We have to mount an international effort to prevent that from happening," Obama said. "Iran's support of terrorist organizations, I think, is something that has to cease."
Ali Larijani, speaker of Iran's parliament and a political rival to Ahmadinejad, heard echoes of the past. "Obama's words were tantamount to moving on the previous wrong track," Larijani told reporters.
In 2007, Iran and the United States held direct ambassador-level talks on the security situation in Iraq. A year later, Larijani said it was wrong to say improvements in Iraqi security were thanks to the U.S. "surge" in troop numbers. "Credit should go to the Iraqi government and its neighbors," he said.
Iran is increasingly worried by a possible security pact between the United States and Iraq that would provide a legal basis for American combat troops to remain in the country until the end of 2011.
"Any pact that would guarantee the presence of U.S. forces in the region would not be regarded as valid by Iran," Kalhor said.
Samareh Hashemi said Obama's campaign promises regarding Iraq were one of the reasons that Ahmadinejad sent his congratulatory letter.
"Mr. Obama has mentioned a program for the withdrawal of U.S. forces in Iraq. He explicitly said that he does not support U.S. troops remaining in Iraq. He said he would have a specific program and timetable to get the troops out. This all deserved Iran's attention," Samareh Hashemi said.
He also said Obama drew support from American voters because of his positions on foreign policy.
"Generally, all of these issues were merged into one slogan: change. But that must mean change of current policies, change of militaristic policies, change in the unacceptable meddling in the affairs of other countries," he said.
"If these policies really change, then the deep gap, the distance between Iran and the U.S., will become less. If these promises are acted upon, there will be more chance for closeness between the two nations," Samareh Hashemi said.
Obama would not be welcome in Iran as president, were he to decide to come here, Kalhor said. "He can come as a tourist."
Wednesday, November 12, 2008
Apple's Persuasive Arguments Against Psystar, End Could be Near by John Martellaro
Apple's legal team, lead by James G. Gilliland, Jr. has provided the Northern District of California Court with a persuasive response brief in support of its motion to dismiss Psystar's counterclaims. Psystar's counterclaim, based on antitrust arguments against Apple is also its defense, so if the counterclaim is dismissed, Apple's case against Psystar gains considerable momentum.
An attorney who is following the Apple v. Psystar case, and wishes to remain anonymous, has provided TMO with analysis of Apple's "Reply Brief in Support of Apple Inc.'s Motion to Dismiss Psystar's Counterclaims."
At issue is Psystar's counter claims is that Apple has a monopoly in Mac OS X and they should be allowed to compete in that market. The claim is similar to a claim that General Motors has a monopoly in its Buick "brand" and that other companies should be able to copy and sell Buicks.
Psystar's Problem
In the opinion of the attorney who contacted TMO, Psystar's antitrust claims are fatally flawed and fail to meet the standard set forth by the Supreme Court ruling in Twombly. Single brands within a competitive market are not recognized by the courts as a monopoly unless the brand has "market power. "Other federal courts have held that the Mac OS X is one OS in a market that consist of other competing operating systems and that Apple does not have market power, because its market share is less than 30%," he said.
In fact, Psystar itself confirms the competitive market by installing Linux and Windows on its "Open Computers"
Accordingly, it appears that Apple has sufficient grounds for an immediate dismissal of the counterclaim, according to the attorney monitoring this case for TMO:
1. "The U.S. Supreme Court and numerous lower federal courts have held that an implausibly defined relevant product market is sufficient grounds for dismissal. Apple cites an impressive list of authority.
2. "Several lower federal courts, including the Ninth Circuit, have held that an attempt to define a single brand product market is implausible and is, therefore, sufficient grounds for dismissal."
Apple's Reply Brief cites an impressive and compelling number of previous cases that support their argument and undermine Psystar's antitrust claim.
The problem now faced by Psystar is that a potential dismissal of their counterclaim, which also constitutes their defense in Apple's original suit, severely damages Psystar's legal position.
The Court's Choices
Judge Alsup has two choices. "In its motion to dismiss, Apple has moved the court to dismiss the the essential core of Psystar's defenses and its counterclaims on the grounds that they don't state a violation of antitrust law."
If the judge does dismiss Psystar's counterclaim, he could then proceed to find immediately for the original plaintiff, Apple, because Psystar's counterclaim, also its defense, has been repudiated. The court is mindful that an ensuing trial would be expensive and time consuming, and if Apple's arguments are as persuasive as they appear to be, it could all end rather quickly.
On the other hand, Judge Alsup could allow the case to continue, move into discovery and an eventual trial. However, if Psystar's counterclaim is dismissed, Psystar would be unable to defend its antitrust claim and would be in a vastly weakened legal position during a trial.
Judge Alsup could pass on "summary judgment [for Apple] so as to insulate his judgement from any chance of reversal on appeal. In any event, it appears that the law and the pleadings favor Apple, and I would expect Apple to ultimately prevail," he concluded.
Apple has asked for 1) an injunction to stop Psystar from shipping computers with Mac OS X, 2) actual damages or, barring that, statutory damages, 3) courts costs and attorney fees and 4) that all computers shipped with Mac OS X be recalled by Psystar. If Psystar is found to have intentionally deceived the public, damages could be treble.
An attorney who is following the Apple v. Psystar case, and wishes to remain anonymous, has provided TMO with analysis of Apple's "Reply Brief in Support of Apple Inc.'s Motion to Dismiss Psystar's Counterclaims."
At issue is Psystar's counter claims is that Apple has a monopoly in Mac OS X and they should be allowed to compete in that market. The claim is similar to a claim that General Motors has a monopoly in its Buick "brand" and that other companies should be able to copy and sell Buicks.
Psystar's Problem
In the opinion of the attorney who contacted TMO, Psystar's antitrust claims are fatally flawed and fail to meet the standard set forth by the Supreme Court ruling in Twombly. Single brands within a competitive market are not recognized by the courts as a monopoly unless the brand has "market power. "Other federal courts have held that the Mac OS X is one OS in a market that consist of other competing operating systems and that Apple does not have market power, because its market share is less than 30%," he said.
In fact, Psystar itself confirms the competitive market by installing Linux and Windows on its "Open Computers"
Accordingly, it appears that Apple has sufficient grounds for an immediate dismissal of the counterclaim, according to the attorney monitoring this case for TMO:
1. "The U.S. Supreme Court and numerous lower federal courts have held that an implausibly defined relevant product market is sufficient grounds for dismissal. Apple cites an impressive list of authority.
2. "Several lower federal courts, including the Ninth Circuit, have held that an attempt to define a single brand product market is implausible and is, therefore, sufficient grounds for dismissal."
Apple's Reply Brief cites an impressive and compelling number of previous cases that support their argument and undermine Psystar's antitrust claim.
The problem now faced by Psystar is that a potential dismissal of their counterclaim, which also constitutes their defense in Apple's original suit, severely damages Psystar's legal position.
The Court's Choices
Judge Alsup has two choices. "In its motion to dismiss, Apple has moved the court to dismiss the the essential core of Psystar's defenses and its counterclaims on the grounds that they don't state a violation of antitrust law."
If the judge does dismiss Psystar's counterclaim, he could then proceed to find immediately for the original plaintiff, Apple, because Psystar's counterclaim, also its defense, has been repudiated. The court is mindful that an ensuing trial would be expensive and time consuming, and if Apple's arguments are as persuasive as they appear to be, it could all end rather quickly.
On the other hand, Judge Alsup could allow the case to continue, move into discovery and an eventual trial. However, if Psystar's counterclaim is dismissed, Psystar would be unable to defend its antitrust claim and would be in a vastly weakened legal position during a trial.
Judge Alsup could pass on "summary judgment [for Apple] so as to insulate his judgement from any chance of reversal on appeal. In any event, it appears that the law and the pleadings favor Apple, and I would expect Apple to ultimately prevail," he concluded.
Apple has asked for 1) an injunction to stop Psystar from shipping computers with Mac OS X, 2) actual damages or, barring that, statutory damages, 3) courts costs and attorney fees and 4) that all computers shipped with Mac OS X be recalled by Psystar. If Psystar is found to have intentionally deceived the public, damages could be treble.
Tuesday, November 11, 2008
The Genius Behind Steve: Could operations whiz Tim Cook run the company someday? by Adam Lashinsky
Let's start with some uncomfortable truths. We wouldn't be publishing an article about the under-the-radar guy who's most likely to succeed Steve Jobs as chief executive of Apple if Jobs himself hadn't shown up at a company event in San Francisco in June looking frightfully skinny and pale.
Jobs, after all, is a pancreatic-cancer survivor, having beaten a treatable form of the disease in 2004. Since that appearance last summer, Apple's excitable investor base and blogosphere have spun full tilt wondering about their hero's health, a topic that - other than the pithy retort here and the acerbic talk-to-the-hand comment there - Apple's CEO has declined to address.
Then there's the widespread opinion inside and out of Apple (AAPL, Fortune 500) that the Magician of 1 Infinite Loop simply can't be replaced.
There is only one Steve Jobs, one table-pounding visionary who can refashion whole industries with a wave of his hand. The mere hint of a Jobs health scare knocks billions of dollars off Apple's market value. (Temporary hit from a false web post in early October about a Jobs heart attack: $10 billion.)
The most influential promoter of Steve Jobs' indispensability, of course, is Steve Jobs. But another person who is very much with that program is the one executive who has actually filled in for Jobs as CEO. That would be Tim Cook, Apple's chief operating officer and its interim chief executive for two months in 2004, when Jobs was recovering from cancer surgery.
"Come on, replace Steve? No. He's irreplaceable," Cook said recently, according to a person who knows him well. "That's something people have to get over. I see Steve there with gray hair in his 70s, long after I'm retired."
Cook may be right; we simply don't know the status of Jobs' health. Yet succession plans at giant corporations typically aren't built on hope. Apple's plan to replace the 53-year-old CEO is known for sure only to Jobs and the company's seven other board members.
Though he is highly regarded as a business-operations maestro, few people outside of Apple have any sense of whether Cook (who, for the record, turns 48 in November and is a fitness nut) would be a good chief executive, much less a suitable replacement for Steve Jobs. Even careful Apple watchers don't quite know what to think.
"By default Tim Cook would be the logical guy," says Toni Sacconaghi, an influential Apple analyst at brokerage firm Sanford C. Bernstein. "Yet that hasn't been spelled out. And the stakes are just higher at Apple, because Steve is larger than life, and Tim isn't a known quantity."
So the "logical" heir to the throne of one of the coolest - never mind most successful - companies on the planet right now is a blank slate. That is reason enough to find out who the man is. In interviews with two dozen people who have dealt directly with Cook, a picture emerges that is reassuring if unanticipated. It turns out that although Cook and Jobs are in many ways opposites, the No. 2 exec is equally obsessive and exacting about his work.
An intensely private Alabaman and Auburn University engineering grad (class of 1982), Cook is also a workaholic whose only interests outside of Apple appear to be cycling, the outdoors, and Auburn football. (Talk about tough years: Apple's stock is down 50% year to date; the Tigers, nationally ranked early in the season, were 4-5 at presstime.) What's more, there's every reason to believe that Apple would at least be stable for some years to come if Cook were to find himself at the helm. The reason: He's essentially been running much of the company for years.
Demanding and Even-keeled
Tim cook arrived at Apple in 1998 from Compaq Computer. He was a 16-year computer-industry veteran - he'd worked for IBM (IBM, Fortune 500) for 12 of those years - with a mandate to clean up the atrocious state of Apple's manufacturing, distribution, and supply apparatus. One day back then, he convened a meeting with his team, and the discussion turned to a particular problem in Asia.
"This is really bad," Cook told the group. "Someone should be in China driving this." Thirty minutes into that meeting Cook looked at Sabih Khan, a key operations executive, and abruptly asked, without a trace of emotion, "Why are you still here?"
Khan, who remains one of Cook's top lieutenants to this day, immediately stood up, drove to San Francisco International Airport, and, without a change of clothes, booked a flight to China with no return date, according to people familiar with the episode. The story is vintage Cook: demanding and unemotional.
Almost from the time he showed up at Apple, Cook knew he had to pull the company out of manufacturing. He closed factories and warehouses around the world and instead established relationships with contract manufacturers. As a result, Apple's inventory, measured by the amount of time it sat on the company's balance sheet, quickly fell from months to days. Inventory, Cook has said, is "fundamentally evil," and he has been known to observe that it declines in value by 1% to 2% a week in normal times, faster in tough times like the present.
"You kind of want to manage it like you're in the dairy business," he has said. "If it gets past its freshness date, you have a problem." This logistical discipline has given Apple inventory management comparable with Dell's, then as now the gold standard for computer-manufacturing efficiency.
We know what you're thinking: Why dwell on the backroom aspects of such a sexy company? Because that seemingly dull stuff is as important to Apple's success as the gorgeous designs and ultracool marketing. Forecasting demand, for example, and executing against that forecast, are critical in the computer industry, especially when new products quickly cannibalize the old.
Consider what befell Palm (PALM) in 2001. The company torpedoed an entire quarter's performance by announcing a new version of its mainstay PDA - which helped dry up sales of the old version - and then failing to deliver the new product when the company said it would.
Those kinds of flubs just don't happen at Apple, which routinely pulls off the miraculous: unveiling revolutionary products that have been kept completely secret until they magically appear in stores all over the world. The iPhone, the iPod, any number of iMacs and MacBooks - the consistently seamless orchestration of Apple's product introductions and delivery is nothing short of remarkable.
A classic example: In 2006 Apple transitioned its entire computer line to running on processors made by Intel (INTC, Fortune 500). For lots of technical reasons we won't go into here, doing that was not easy. But Cook's team somehow made sure there was nary a blip in sales.
Think of Cook's contribution like this. There are two basic ways to get great profit margins: Charge high prices or reduce costs. Apple does both. The marketing and design drive consumers wild with desire and make them willing to pay a premium; Cook's operational savvy keeps costs under control. Thus Apple is a cash-generating machine. Cook has called the company a place that is "entrepreneurial in its nature but with the mother of all balance sheets." At last count that meant $24.5 billion in cash and no debt.
That balance sheet is a potent strategic weapon: It allows Cook to lock in suppliers and club competitors. In 2005, Apple introduced a new iPod, the Nano, a music player that was revolutionary because it used far more flash memory than existing products on the market. Cook's team accurately predicted tremendous demand for the Nano, and prepaid $1.25 billion to suppliers like Samsung and Hynix to effectively corner the market through 2010 on a specific kind of memory.
"That's the sort of thing they wouldn't have thought of in the days before Tim Cook," says Kevin O'Marah, chief strategist at the Boston consulting firm AMR Research, which specializes in supply-chain analysis.
The memory purchase also shows that Apple's operations strategy isn't only about cost cutting. "Way too much of the supply-chain world has been about taking the last cent out," says Blake Johnson, a consulting assistant professor of management science and engineering at Stanford University, who has deep contacts in Apple's operations group. "Apple doesn't do that."
To make Apple's innards run more smoothly, Cook relies on a tight-knit team of operations executives who have been with him since he joined the company. They are Jeff Williams, who executed the flash-memory purchase; Deirdre O'Brien, a longtime Apple employee who handles demand forecasting; Bill Frederick, who heads customer support; and Sabih Khan, the notebook operations executive Cook once dispatched to China. This year Cook hired Rita Lane, who used to work for him at IBM, to run desktop operations.
Over the years, Cook has assumed duties beyond making the trains run on time. In 2000 he took over the sales force as well as customer support. Back then, "selling" at Apple meant dealing with retailers and other resellers of Macs. Under Cook, Apple began replacing store employees in outlets like Best Buy with Apple's own well-trained salespeople. It was a precursor of the popular "Geniuses" in Apple's retail stores today.
In 2004, the year Cook filled in for Jobs, he also took control of the Macintosh division. The next year, Jobs named Cook chief operating officer. Today his purview extends to iPhone sales and operations, including responsibility for negotiating with wireless carriers who sell the devices in 51 countries. The heads of important departments like legal, finance, design, and marketing report directly to Jobs. But no other executive touches as much of Apple as Cook.
A Brush with Death
Though he's capable of mirth, Cook's default facial expression is a frown, and his humor is of the dry variety. In meetings he's known for long, uncomfortable pauses, when all you hear is the sound of his tearing the wrapper of the energy bars he constantly eats.
Like everyone else at Apple, Cook dresses casually in jeans, his graying hair cropped close in the style of Lance Armstrong, whom he idolizes. (Through a friend, Armstrong says he doesn't know Cook, though he's "heard he's a good dude.") Perhaps Cook's only notable sartorial flourish is that he always wears shoes from Nike, where he's on the board of directors. (Jobs, another sneaker wearer, is a New Balance man.)
Cook's stamina is the stuff of legend at Apple. He often begins e-mailing the executives who work for him at 4:30 a.m.; worldwide conference calls can take place at any time of day. For years, Cook held a standing Sunday night staff meeting by telephone in order to prepare for yet more meetings on Monday morning.
Mike Janes, who worked with Cook for five years, ultimately as head of Apple's online store, recalls a Macworld conference in New York when Cook convened a meeting in the afternoon after one of Jobs' mesmerizing morning keynotes. "A number of us had tickets to see the Mets that night," says Janes, now CEO of an event ticket site called FanSnap. "After hours, he was still drilling us with question after question, while we were watching the clock like kids in school. I still have this vision of Tim saying, 'Okay, next page,' as he opened yet another energy bar. Needless to say, we missed the Mets game."
For those who can take it, working for Cook is an edifying experience. "He'll ask you ten questions. If you answer them right, he'll ask you ten more. If you do this for a year, he'll start asking you nine questions. Get one wrong, and he'll ask you 20 and then 30," says Steve Doil, who worked in Cook's operations group before moving to Texas for family reasons.
Cook can be brutal in meetings. "I've seen him shred people," says a former executive who now works for another consumer electronics company and refused to be quoted by name. "He asks you the questions he knows you can't answer, and he keeps going and going. It isn't funny, and it's not fun."
While a select group can claim to understand Cook at work, almost nobody claims to know much about his life outside Apple. A lifelong bachelor, he lives in a rented house in Palo Alto, vacations in places like Yosemite and Zion national parks, and shows few visible signs of wealth despite having sold more than $100 million of Apple stock over the years. He's known for being the first in and last out of the office and for his grinding international travel schedule, and when he isn't working he tends to be in the gym, on a hiking trail, or riding his bike.
Cook's aversion to ostentation may be rooted in his background. He grew up in Robertsdale, Ala., a small town "on the road to the beach," he told an Auburn University alumni magazine in 1999. His father is a retired shipyard worker, his mother a homemaker. Like Steve Jobs, Cook had his own brush with mortality: In 1996 he was told he had multiple sclerosis, which turned out to be a misdiagnosis. "You see the world in a different way" after such an experience, he told the Auburn magazine.
The health scare also fueled Cook's passion for cycling; he often completes in grueling fundraising rides for MS. Cook has told others that he gives away large amounts of money, though he leaves hardly a trace. An exception is a scholarship he funds in his name at Auburn's engineering school. Even at Auburn, though, where he rates high on lists of distinguished alumni, he keeps his head down. "Let's just say we have our fair share of alumni who like the recognition," says Debbie Shaw, head of Auburn's alumni association. "Tim's not one of them."
Many consider Cook aloof, though it's just as likely he's off-the-charts shy. Gina Gloski, a Boston-based semiconductor consultant, graduated from Auburn the same year and in the same industrial and systems engineering program. She was one of just a handful of women and therefore rather popular, if she does say so herself. Yet Gloski didn't know Cook until years later, when they served together on an alumni council.
"Tim's just not a real social person," says Gloski. "He's not antisocial, either. He just never seemed that interested in other people. I'm a hugger and a kisser, but I'd never feel comfortable giving Tim a hug or a kiss."
The most common observation about Cook is how temperamentally different he is from Jobs. Cook is cool, calm, and never, ever raises his voice. Jobs - well, he's not any of those things. A former Apple executive says he used to have a rehearsed line in his head on the off chance he ended up in an elevator with Jobs, who can be spontaneously fearsome. Did he have a similar canned speech for Cook? "No, because he wouldn't talk to you."
After graduating from Auburn, Cook spent the next dozen years at IBM in Research Triangle Park, N.C., picking up an MBA from Duke along the way. He showed his single-minded devotion to work, remembers Richard Daugherty, a boss from the time, by volunteering to work in the plant between Christmas and New Year's so that the company could fill all its orders for the year.
Another IBM supervisor, Ray Mays, says it was clear that Cook made for an unusual IBMer in those days. "There was an old joke at IBM," says Mays, who was a manufacturing executive in the company's PC division. "'What's the difference between IBM and a cactus? The cactus has its pricks on the outside.' Tim was exactly the opposite. He had a manner that really caused people to enjoy working with him. He was smarter than anyone else, more aggressive in a positive way than anyone else, and worked harder than anyone else."
Cook left IBM in 1994 to join the computer-reseller division of a wholesaler called Intelligent Electronics. He became COO of that division before selling it to Ingram Micro in 1997. He then went to Compaq, but had stayed for only six months when Steve Jobs hired him in early 1998. Jobs gave the new hire an office near his own.
Today that office is decorated with Auburn paraphernalia, as well as a photo of a favorite singer, Bob Dylan. A photo of Bobby Kennedy reveals another side of Cook, the idealist. Cook has said he is "tormented" at times by thinking what would have happened if R.F.K. had become President.
"He had a way of touching and relating to people of all walks of life," Cook confided recently, according to someone who knows him well. "He was one of the people who got close enough to the presidency who really loved people, who wanted to raise people up." (Cook was a registered Republican when he lived in North Carolina. More recently he donated money to Barack Obama's campaign.)
Cook also admires the way Kennedy "was comfortable standing in his brother's shadow and doing what he thought was right." Coming from a man whose most critical career phase has been almost completely overshadowed by a charismatic leader with an uncommon ability to relate to the hopes and dreams of the masses, it's a telling comment.
Lacking Jobs' Design Creativity
So now we know Tim Cook is impressive. But does he really have a chance of succeeding Jobs? And if he doesn't, who would?
Outside Apple, many observers, informed and otherwise, assume Cook can't be Apple's next chief executive. "Nobody would make Tim Cook CEO," says a Silicon Valley investor who travels in the Apple orbit. "That's laughable. They don't need a guy who merely" gets stuff done. "They need a brilliant product guy, and Tim is not that guy. He is an ops guy - at a company where ops is outsourced."
Michel Mayer, who was CEO of Freescale Semiconductor when it supplied Apple with microprocessors, has a slightly more positive take. "I'm not sure he'd be able to replace Steve's design creativity," Mayer says. "Then again, I could argue that it's not the role of the next CEO to do that."
Mayer is clearly onto something. So Cook would need some help with design and marketing. What CEO doesn't have a gap or at least a soft spot in the résumé? "If Tim were to be CEO of Apple, he'd need to have different people around him to make up for his weaknesses, just as Steve has Tim around to make up for his," says John Thompson, vice chairman of search firm Heidrick & Struggles, who placed Cook at Apple in 1998.
Another factor that would help Cook - or any successor, frankly - is that Jobs has been on such a creative tear: It's well known that Apple maintains a top-secret pipeline of products it intends to roll out in the next few years. Were Jobs no longer around, Apple could live off those products for some time.
It's not as if Cook is ignorant about products and marketing; he's getting an education in those fields at Nike. John Connors, a fellow Nike director, says Cook contributes to the Nike board on e-commerce initiatives and the "customer experience" in Nike's stores - as well as in overall perceptiveness. "Almost invariably he'll have an insight where, after he shares it with you, you'll say, 'Huh, why didn't I think of that?'" he says. Connors, a Seattle venture capitalist and a former chief financial officer of Microsoft, calls Cook the "General Petraeus of the corporate world," the "kind of guy who lets his results speak for themselves."
Cook has been known to express awe that he has been exposed to two iconic founders, the other being Nike's Phil Knight. "The Nike thing is a privilege," Cook has said. "When I walk on the campuses of both companies I have a shiver that goes up my spine."
As for how Cook deals with Jobs, there is evidence that the No. 2 executive is able to ignore his goose bumps long enough to negotiate well for himself. Cook gets more leeway than any other Apple executive. (Apple declined numerous requests to make Jobs, Cook, or any of Apple's board members available for this article.)
In October 2005, when Jobs named him COO, he noted that Cook "has been doing this job for over two years," so it made sense to recognize him with a promotion. The next month, Cook became a Nike director, a move Jobs approved. No other member of the Apple management team - other than Jobs, who is Disney's largest shareholder and a director - is on the board of any outside company.
Cook also gets a bigger paycheck than any other Apple executive - including Jobs, a multibillionaire and a dollar-a-year-man in terms of salary. Cook's salary, though peanuts compared to his stock grants, is $700,000, about $100,000 more than that of CFO Peter Oppenheimer and retail chief Ron Johnson. And when the company doles out restricted stock, Cook gets the biggest pile; in September that came to 200,000 shares, a bigger grant than anyone else at Apple got.
Jobs has seen to it that Cook is getting public exposure, especially on Wall Street. He is a fixture on Apple's quarterly earnings calls, and he speaks at select investment conferences. "Operationally, when you think about what they've done - a massive retail-stores ramp, an expanded sales-channel presence, delivering new products without glitches, and managing huge seasonality - all speak to a company that is exceedingly well run," says Sacconaghi, the Sanford Bernstein analyst, referring almost wholly to aspects of the company that Cook oversees.
For all that, it isn't difficult to imagine Cook being passed over, especially by someone Jobs might deem to be more in his own mold. Two executives whose stature has risen because of their close association with Jobs' pet areas of focus are design chief Jonathan Ive, 41, and Johnson, 50, the ex-Target executive who runs the retail stores.
Ive, for example, made an appearance in a company video about the manufacturing of Apple's new notebook computers, a signal dissected in the same manner Kremlinologists once used to analyze the placement of Politburo officials at May Day parades. Johnson, because he comes from outside the computer industry, already had a high pre-Apple profile, and he is closely associated with the stunning success of the stores. Neither man, though, has Cook's breadth of responsibility, nor have they demonstrated his combination of business and technical acumen.
A third powerful Apple executive is Oppenheimer, the chief financial officer and a 12-year veteran of the company. Important though Oppenheimer is, most Apple watchers consider it even less likely that a finance executive would head Apple than an operations wonk.
It's notable that Apple's newest senior executive, iPod hardware head Mark Papermaster, reports to Jobs, not Cook. Papermaster, who is 47 and spent 26 years at IBM, may someday emerge as a candidate for the top job. (He replaced Tony Fadell, who recently resigned but remains an advisor to Jobs.)
One astute observer of the board believes it's possible for Jobs to become chairman one day, with Cook as CEO. (Apple's board currently has no chairman. Rather, it has two co-lead directors, Intuit chairman Bill Campbell and Genentech CEO Art Levinson.)
Apple isn't the only company in Silicon Valley without a publicly identified heir apparent. HP's (HPQ, Fortune 500) Mark Hurd hasn't announced a successor, nor have Oracle's (ORCL, Fortune 500) Larry Ellison or Intel's Paul Otellini. But none of those CEOs is the global brand that Jobs is. The guessing game puts Jobs in a quandary. He hates sharing the spotlight, yet he obviously detests the constant speculation about his health - chatter intensified by the lack of transparency about who would replace him.
There's also the question of whether Cook even wants to be CEO - such a high-profile job would attract the kind of public scrutiny he has carefully avoided - or if he'd accept a job elsewhere if one were offered. People who know Cook say he professes a genuine love for Apple. "To me the company is about putting together pieces of the puzzle," Cook told someone recently, "not about getting personal visibility."
As long as Jobs stays healthy, Cook won't need to worry about personal visibility. He can just keep doing his thing, grinding away offstage. But if he does get tapped for the CEO job someday, Apple may not suffer from acute Stevelessness as much as the world seems to think.
Jobs, after all, is a pancreatic-cancer survivor, having beaten a treatable form of the disease in 2004. Since that appearance last summer, Apple's excitable investor base and blogosphere have spun full tilt wondering about their hero's health, a topic that - other than the pithy retort here and the acerbic talk-to-the-hand comment there - Apple's CEO has declined to address.
Then there's the widespread opinion inside and out of Apple (AAPL, Fortune 500) that the Magician of 1 Infinite Loop simply can't be replaced.
There is only one Steve Jobs, one table-pounding visionary who can refashion whole industries with a wave of his hand. The mere hint of a Jobs health scare knocks billions of dollars off Apple's market value. (Temporary hit from a false web post in early October about a Jobs heart attack: $10 billion.)
The most influential promoter of Steve Jobs' indispensability, of course, is Steve Jobs. But another person who is very much with that program is the one executive who has actually filled in for Jobs as CEO. That would be Tim Cook, Apple's chief operating officer and its interim chief executive for two months in 2004, when Jobs was recovering from cancer surgery.
"Come on, replace Steve? No. He's irreplaceable," Cook said recently, according to a person who knows him well. "That's something people have to get over. I see Steve there with gray hair in his 70s, long after I'm retired."
Cook may be right; we simply don't know the status of Jobs' health. Yet succession plans at giant corporations typically aren't built on hope. Apple's plan to replace the 53-year-old CEO is known for sure only to Jobs and the company's seven other board members.
Though he is highly regarded as a business-operations maestro, few people outside of Apple have any sense of whether Cook (who, for the record, turns 48 in November and is a fitness nut) would be a good chief executive, much less a suitable replacement for Steve Jobs. Even careful Apple watchers don't quite know what to think.
"By default Tim Cook would be the logical guy," says Toni Sacconaghi, an influential Apple analyst at brokerage firm Sanford C. Bernstein. "Yet that hasn't been spelled out. And the stakes are just higher at Apple, because Steve is larger than life, and Tim isn't a known quantity."
So the "logical" heir to the throne of one of the coolest - never mind most successful - companies on the planet right now is a blank slate. That is reason enough to find out who the man is. In interviews with two dozen people who have dealt directly with Cook, a picture emerges that is reassuring if unanticipated. It turns out that although Cook and Jobs are in many ways opposites, the No. 2 exec is equally obsessive and exacting about his work.
An intensely private Alabaman and Auburn University engineering grad (class of 1982), Cook is also a workaholic whose only interests outside of Apple appear to be cycling, the outdoors, and Auburn football. (Talk about tough years: Apple's stock is down 50% year to date; the Tigers, nationally ranked early in the season, were 4-5 at presstime.) What's more, there's every reason to believe that Apple would at least be stable for some years to come if Cook were to find himself at the helm. The reason: He's essentially been running much of the company for years.
Demanding and Even-keeled
Tim cook arrived at Apple in 1998 from Compaq Computer. He was a 16-year computer-industry veteran - he'd worked for IBM (IBM, Fortune 500) for 12 of those years - with a mandate to clean up the atrocious state of Apple's manufacturing, distribution, and supply apparatus. One day back then, he convened a meeting with his team, and the discussion turned to a particular problem in Asia.
"This is really bad," Cook told the group. "Someone should be in China driving this." Thirty minutes into that meeting Cook looked at Sabih Khan, a key operations executive, and abruptly asked, without a trace of emotion, "Why are you still here?"
Khan, who remains one of Cook's top lieutenants to this day, immediately stood up, drove to San Francisco International Airport, and, without a change of clothes, booked a flight to China with no return date, according to people familiar with the episode. The story is vintage Cook: demanding and unemotional.
Almost from the time he showed up at Apple, Cook knew he had to pull the company out of manufacturing. He closed factories and warehouses around the world and instead established relationships with contract manufacturers. As a result, Apple's inventory, measured by the amount of time it sat on the company's balance sheet, quickly fell from months to days. Inventory, Cook has said, is "fundamentally evil," and he has been known to observe that it declines in value by 1% to 2% a week in normal times, faster in tough times like the present.
"You kind of want to manage it like you're in the dairy business," he has said. "If it gets past its freshness date, you have a problem." This logistical discipline has given Apple inventory management comparable with Dell's, then as now the gold standard for computer-manufacturing efficiency.
We know what you're thinking: Why dwell on the backroom aspects of such a sexy company? Because that seemingly dull stuff is as important to Apple's success as the gorgeous designs and ultracool marketing. Forecasting demand, for example, and executing against that forecast, are critical in the computer industry, especially when new products quickly cannibalize the old.
Consider what befell Palm (PALM) in 2001. The company torpedoed an entire quarter's performance by announcing a new version of its mainstay PDA - which helped dry up sales of the old version - and then failing to deliver the new product when the company said it would.
Those kinds of flubs just don't happen at Apple, which routinely pulls off the miraculous: unveiling revolutionary products that have been kept completely secret until they magically appear in stores all over the world. The iPhone, the iPod, any number of iMacs and MacBooks - the consistently seamless orchestration of Apple's product introductions and delivery is nothing short of remarkable.
A classic example: In 2006 Apple transitioned its entire computer line to running on processors made by Intel (INTC, Fortune 500). For lots of technical reasons we won't go into here, doing that was not easy. But Cook's team somehow made sure there was nary a blip in sales.
Think of Cook's contribution like this. There are two basic ways to get great profit margins: Charge high prices or reduce costs. Apple does both. The marketing and design drive consumers wild with desire and make them willing to pay a premium; Cook's operational savvy keeps costs under control. Thus Apple is a cash-generating machine. Cook has called the company a place that is "entrepreneurial in its nature but with the mother of all balance sheets." At last count that meant $24.5 billion in cash and no debt.
That balance sheet is a potent strategic weapon: It allows Cook to lock in suppliers and club competitors. In 2005, Apple introduced a new iPod, the Nano, a music player that was revolutionary because it used far more flash memory than existing products on the market. Cook's team accurately predicted tremendous demand for the Nano, and prepaid $1.25 billion to suppliers like Samsung and Hynix to effectively corner the market through 2010 on a specific kind of memory.
"That's the sort of thing they wouldn't have thought of in the days before Tim Cook," says Kevin O'Marah, chief strategist at the Boston consulting firm AMR Research, which specializes in supply-chain analysis.
The memory purchase also shows that Apple's operations strategy isn't only about cost cutting. "Way too much of the supply-chain world has been about taking the last cent out," says Blake Johnson, a consulting assistant professor of management science and engineering at Stanford University, who has deep contacts in Apple's operations group. "Apple doesn't do that."
To make Apple's innards run more smoothly, Cook relies on a tight-knit team of operations executives who have been with him since he joined the company. They are Jeff Williams, who executed the flash-memory purchase; Deirdre O'Brien, a longtime Apple employee who handles demand forecasting; Bill Frederick, who heads customer support; and Sabih Khan, the notebook operations executive Cook once dispatched to China. This year Cook hired Rita Lane, who used to work for him at IBM, to run desktop operations.
Over the years, Cook has assumed duties beyond making the trains run on time. In 2000 he took over the sales force as well as customer support. Back then, "selling" at Apple meant dealing with retailers and other resellers of Macs. Under Cook, Apple began replacing store employees in outlets like Best Buy with Apple's own well-trained salespeople. It was a precursor of the popular "Geniuses" in Apple's retail stores today.
In 2004, the year Cook filled in for Jobs, he also took control of the Macintosh division. The next year, Jobs named Cook chief operating officer. Today his purview extends to iPhone sales and operations, including responsibility for negotiating with wireless carriers who sell the devices in 51 countries. The heads of important departments like legal, finance, design, and marketing report directly to Jobs. But no other executive touches as much of Apple as Cook.
A Brush with Death
Though he's capable of mirth, Cook's default facial expression is a frown, and his humor is of the dry variety. In meetings he's known for long, uncomfortable pauses, when all you hear is the sound of his tearing the wrapper of the energy bars he constantly eats.
Like everyone else at Apple, Cook dresses casually in jeans, his graying hair cropped close in the style of Lance Armstrong, whom he idolizes. (Through a friend, Armstrong says he doesn't know Cook, though he's "heard he's a good dude.") Perhaps Cook's only notable sartorial flourish is that he always wears shoes from Nike, where he's on the board of directors. (Jobs, another sneaker wearer, is a New Balance man.)
Cook's stamina is the stuff of legend at Apple. He often begins e-mailing the executives who work for him at 4:30 a.m.; worldwide conference calls can take place at any time of day. For years, Cook held a standing Sunday night staff meeting by telephone in order to prepare for yet more meetings on Monday morning.
Mike Janes, who worked with Cook for five years, ultimately as head of Apple's online store, recalls a Macworld conference in New York when Cook convened a meeting in the afternoon after one of Jobs' mesmerizing morning keynotes. "A number of us had tickets to see the Mets that night," says Janes, now CEO of an event ticket site called FanSnap. "After hours, he was still drilling us with question after question, while we were watching the clock like kids in school. I still have this vision of Tim saying, 'Okay, next page,' as he opened yet another energy bar. Needless to say, we missed the Mets game."
For those who can take it, working for Cook is an edifying experience. "He'll ask you ten questions. If you answer them right, he'll ask you ten more. If you do this for a year, he'll start asking you nine questions. Get one wrong, and he'll ask you 20 and then 30," says Steve Doil, who worked in Cook's operations group before moving to Texas for family reasons.
Cook can be brutal in meetings. "I've seen him shred people," says a former executive who now works for another consumer electronics company and refused to be quoted by name. "He asks you the questions he knows you can't answer, and he keeps going and going. It isn't funny, and it's not fun."
While a select group can claim to understand Cook at work, almost nobody claims to know much about his life outside Apple. A lifelong bachelor, he lives in a rented house in Palo Alto, vacations in places like Yosemite and Zion national parks, and shows few visible signs of wealth despite having sold more than $100 million of Apple stock over the years. He's known for being the first in and last out of the office and for his grinding international travel schedule, and when he isn't working he tends to be in the gym, on a hiking trail, or riding his bike.
Cook's aversion to ostentation may be rooted in his background. He grew up in Robertsdale, Ala., a small town "on the road to the beach," he told an Auburn University alumni magazine in 1999. His father is a retired shipyard worker, his mother a homemaker. Like Steve Jobs, Cook had his own brush with mortality: In 1996 he was told he had multiple sclerosis, which turned out to be a misdiagnosis. "You see the world in a different way" after such an experience, he told the Auburn magazine.
The health scare also fueled Cook's passion for cycling; he often completes in grueling fundraising rides for MS. Cook has told others that he gives away large amounts of money, though he leaves hardly a trace. An exception is a scholarship he funds in his name at Auburn's engineering school. Even at Auburn, though, where he rates high on lists of distinguished alumni, he keeps his head down. "Let's just say we have our fair share of alumni who like the recognition," says Debbie Shaw, head of Auburn's alumni association. "Tim's not one of them."
Many consider Cook aloof, though it's just as likely he's off-the-charts shy. Gina Gloski, a Boston-based semiconductor consultant, graduated from Auburn the same year and in the same industrial and systems engineering program. She was one of just a handful of women and therefore rather popular, if she does say so herself. Yet Gloski didn't know Cook until years later, when they served together on an alumni council.
"Tim's just not a real social person," says Gloski. "He's not antisocial, either. He just never seemed that interested in other people. I'm a hugger and a kisser, but I'd never feel comfortable giving Tim a hug or a kiss."
The most common observation about Cook is how temperamentally different he is from Jobs. Cook is cool, calm, and never, ever raises his voice. Jobs - well, he's not any of those things. A former Apple executive says he used to have a rehearsed line in his head on the off chance he ended up in an elevator with Jobs, who can be spontaneously fearsome. Did he have a similar canned speech for Cook? "No, because he wouldn't talk to you."
After graduating from Auburn, Cook spent the next dozen years at IBM in Research Triangle Park, N.C., picking up an MBA from Duke along the way. He showed his single-minded devotion to work, remembers Richard Daugherty, a boss from the time, by volunteering to work in the plant between Christmas and New Year's so that the company could fill all its orders for the year.
Another IBM supervisor, Ray Mays, says it was clear that Cook made for an unusual IBMer in those days. "There was an old joke at IBM," says Mays, who was a manufacturing executive in the company's PC division. "'What's the difference between IBM and a cactus? The cactus has its pricks on the outside.' Tim was exactly the opposite. He had a manner that really caused people to enjoy working with him. He was smarter than anyone else, more aggressive in a positive way than anyone else, and worked harder than anyone else."
Cook left IBM in 1994 to join the computer-reseller division of a wholesaler called Intelligent Electronics. He became COO of that division before selling it to Ingram Micro in 1997. He then went to Compaq, but had stayed for only six months when Steve Jobs hired him in early 1998. Jobs gave the new hire an office near his own.
Today that office is decorated with Auburn paraphernalia, as well as a photo of a favorite singer, Bob Dylan. A photo of Bobby Kennedy reveals another side of Cook, the idealist. Cook has said he is "tormented" at times by thinking what would have happened if R.F.K. had become President.
"He had a way of touching and relating to people of all walks of life," Cook confided recently, according to someone who knows him well. "He was one of the people who got close enough to the presidency who really loved people, who wanted to raise people up." (Cook was a registered Republican when he lived in North Carolina. More recently he donated money to Barack Obama's campaign.)
Cook also admires the way Kennedy "was comfortable standing in his brother's shadow and doing what he thought was right." Coming from a man whose most critical career phase has been almost completely overshadowed by a charismatic leader with an uncommon ability to relate to the hopes and dreams of the masses, it's a telling comment.
Lacking Jobs' Design Creativity
So now we know Tim Cook is impressive. But does he really have a chance of succeeding Jobs? And if he doesn't, who would?
Outside Apple, many observers, informed and otherwise, assume Cook can't be Apple's next chief executive. "Nobody would make Tim Cook CEO," says a Silicon Valley investor who travels in the Apple orbit. "That's laughable. They don't need a guy who merely" gets stuff done. "They need a brilliant product guy, and Tim is not that guy. He is an ops guy - at a company where ops is outsourced."
Michel Mayer, who was CEO of Freescale Semiconductor when it supplied Apple with microprocessors, has a slightly more positive take. "I'm not sure he'd be able to replace Steve's design creativity," Mayer says. "Then again, I could argue that it's not the role of the next CEO to do that."
Mayer is clearly onto something. So Cook would need some help with design and marketing. What CEO doesn't have a gap or at least a soft spot in the résumé? "If Tim were to be CEO of Apple, he'd need to have different people around him to make up for his weaknesses, just as Steve has Tim around to make up for his," says John Thompson, vice chairman of search firm Heidrick & Struggles, who placed Cook at Apple in 1998.
Another factor that would help Cook - or any successor, frankly - is that Jobs has been on such a creative tear: It's well known that Apple maintains a top-secret pipeline of products it intends to roll out in the next few years. Were Jobs no longer around, Apple could live off those products for some time.
It's not as if Cook is ignorant about products and marketing; he's getting an education in those fields at Nike. John Connors, a fellow Nike director, says Cook contributes to the Nike board on e-commerce initiatives and the "customer experience" in Nike's stores - as well as in overall perceptiveness. "Almost invariably he'll have an insight where, after he shares it with you, you'll say, 'Huh, why didn't I think of that?'" he says. Connors, a Seattle venture capitalist and a former chief financial officer of Microsoft, calls Cook the "General Petraeus of the corporate world," the "kind of guy who lets his results speak for themselves."
Cook has been known to express awe that he has been exposed to two iconic founders, the other being Nike's Phil Knight. "The Nike thing is a privilege," Cook has said. "When I walk on the campuses of both companies I have a shiver that goes up my spine."
As for how Cook deals with Jobs, there is evidence that the No. 2 executive is able to ignore his goose bumps long enough to negotiate well for himself. Cook gets more leeway than any other Apple executive. (Apple declined numerous requests to make Jobs, Cook, or any of Apple's board members available for this article.)
In October 2005, when Jobs named him COO, he noted that Cook "has been doing this job for over two years," so it made sense to recognize him with a promotion. The next month, Cook became a Nike director, a move Jobs approved. No other member of the Apple management team - other than Jobs, who is Disney's largest shareholder and a director - is on the board of any outside company.
Cook also gets a bigger paycheck than any other Apple executive - including Jobs, a multibillionaire and a dollar-a-year-man in terms of salary. Cook's salary, though peanuts compared to his stock grants, is $700,000, about $100,000 more than that of CFO Peter Oppenheimer and retail chief Ron Johnson. And when the company doles out restricted stock, Cook gets the biggest pile; in September that came to 200,000 shares, a bigger grant than anyone else at Apple got.
Jobs has seen to it that Cook is getting public exposure, especially on Wall Street. He is a fixture on Apple's quarterly earnings calls, and he speaks at select investment conferences. "Operationally, when you think about what they've done - a massive retail-stores ramp, an expanded sales-channel presence, delivering new products without glitches, and managing huge seasonality - all speak to a company that is exceedingly well run," says Sacconaghi, the Sanford Bernstein analyst, referring almost wholly to aspects of the company that Cook oversees.
For all that, it isn't difficult to imagine Cook being passed over, especially by someone Jobs might deem to be more in his own mold. Two executives whose stature has risen because of their close association with Jobs' pet areas of focus are design chief Jonathan Ive, 41, and Johnson, 50, the ex-Target executive who runs the retail stores.
Ive, for example, made an appearance in a company video about the manufacturing of Apple's new notebook computers, a signal dissected in the same manner Kremlinologists once used to analyze the placement of Politburo officials at May Day parades. Johnson, because he comes from outside the computer industry, already had a high pre-Apple profile, and he is closely associated with the stunning success of the stores. Neither man, though, has Cook's breadth of responsibility, nor have they demonstrated his combination of business and technical acumen.
A third powerful Apple executive is Oppenheimer, the chief financial officer and a 12-year veteran of the company. Important though Oppenheimer is, most Apple watchers consider it even less likely that a finance executive would head Apple than an operations wonk.
It's notable that Apple's newest senior executive, iPod hardware head Mark Papermaster, reports to Jobs, not Cook. Papermaster, who is 47 and spent 26 years at IBM, may someday emerge as a candidate for the top job. (He replaced Tony Fadell, who recently resigned but remains an advisor to Jobs.)
One astute observer of the board believes it's possible for Jobs to become chairman one day, with Cook as CEO. (Apple's board currently has no chairman. Rather, it has two co-lead directors, Intuit chairman Bill Campbell and Genentech CEO Art Levinson.)
Apple isn't the only company in Silicon Valley without a publicly identified heir apparent. HP's (HPQ, Fortune 500) Mark Hurd hasn't announced a successor, nor have Oracle's (ORCL, Fortune 500) Larry Ellison or Intel's Paul Otellini. But none of those CEOs is the global brand that Jobs is. The guessing game puts Jobs in a quandary. He hates sharing the spotlight, yet he obviously detests the constant speculation about his health - chatter intensified by the lack of transparency about who would replace him.
There's also the question of whether Cook even wants to be CEO - such a high-profile job would attract the kind of public scrutiny he has carefully avoided - or if he'd accept a job elsewhere if one were offered. People who know Cook say he professes a genuine love for Apple. "To me the company is about putting together pieces of the puzzle," Cook told someone recently, "not about getting personal visibility."
As long as Jobs stays healthy, Cook won't need to worry about personal visibility. He can just keep doing his thing, grinding away offstage. But if he does get tapped for the CEO job someday, Apple may not suffer from acute Stevelessness as much as the world seems to think.
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