Apple saw what looked like a return to growth in Q1 2017, thanks to record iPhone and Mac sales, but is it possible that a “leap week” skewed the results? Also on the business front, Josh Centers tells the story of the Airwalk shoe company and how it illustrates the importance of the professional market to Apple. Apple silently updated the AirPods firmware to fix minor bugs, so we explain how you can be sure to get the update. Finally, we have the next installment in our “A Prairie HomeKit Companion” series, getting into the actual control of your home automation devices. Notable software releases this week include Airfoil 5.5.2 and CleanMyMac 3.7.2.

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Apple Silently Updates AirPods Firmware to 3.5.1

  by Josh Centers: josh@tidbits.com, @jcenters

Apple has silently updated the AirPods firmware from version 3.3.1 to 3.5.1. We’re not sure what changed, but an Apple source told AppleInsider that it features minor bug fixes.

First, check to see if you need the firmware update. Connect your AirPods to your iPhone and go to Settings > General > About > AirPods. If the AirPods item doesn’t appear, open the AirPods charging case until the charge status alert appears at the bottom of the screen and then check again. Under Settings > General > About > AirPods, your firmware version should be listed. If you still don’t see the AirPods item, make sure they’re connected in Settings > Bluetooth.

If the firmware is old, plug a Lightning cable connected to a power source into the AirPods charging case to charge them while they’re connected to the iPhone. Wait a few minutes, and then check the firmware version again — the update should happen automatically.

Unfortunately, the firmware update has done nothing to fix the VoIP issues Julio Ojeda-Zapata and I experienced during testing, including the awful jackhammer noise when trying to use the AirPods for a Slack call in iOS (see “Apple’s Wireless AirPods Were Worth the Wait,” 20 December 2016).

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Apple Sees Apparent Return to Growth with Q1 2017’s Record Results

  by Josh Centers: josh@tidbits.com, @jcenters, Michael E. Cohen: mcohen@tidbits.com, @lymond

Reporting on its Q1 2017 financial results for the quarter ending on 31 December 2016, Apple has announced net profits of $17.9 billion ($3.39 per diluted share) on record revenues of $78.4 billion, beating the company’s guidance for the quarter. These results mark a return to growth for Apple after it fell short last quarter (see “Despite $9 Billion Profit, Apple Revenues Slump Again in Q4 2016,” 25 October 2016). The company took in revenues that were up 3 percent compared to the year-ago quarter (see “Apple’s Q1 2016 Sets Records, but Just Barely,” 26 January 2016).

However, as Jeff Johnson of Lap Cat Software points out, Apple omitted the fact that Q1 2017 was one week longer than Q1 2016, due to the necessity of occasional “leap quarters.” Johnson estimates, based on weekly averages, that Apple would have had another down quarter if not for the extra week. Daring Fireball’s John Gruber thinks Johnson dings Apple a bit much, but agrees that some correction is needed. We’re curious to see if Apple maintains growth in Q2 2017, or if Q1 was an anomaly.

Apple shareholders will receive a dividend of $0.57 per share on 16 February 2017 as part of Apple’s $250 billion capital return program, which also includes $140 billion in stock buybacks.

The iPhone delivered happy news for Apple, as unit sales and revenues increased by 5 percent year over year, with 78.3 million units sold. Sales were spurred by the availability of the new iPhone 7 models and the holiday shopping season. In Q4 2016, Apple had seen a 5 percent year-over-year drop in unit sales (the iPhone 7 models had been available for pre-order for only two weeks), so this increase should help alleviate investor fears. Of special note, and one which Cook referred to several times during the call, was the “exceptional demand” for the iPhone 7 Plus models, even though supplies were constrained throughout the quarter and came into balance only after the quarter ended. Customer satisfaction ratings for all iPhone models reached 97 percent, and Apple achieved an extraordinary customer satisfaction rating of 99 percent for the iPhone 7 models.

Sadly for Apple, after appearing to stabilize in Q4 2016, the iPad’s decline in unit sales and revenue continued this quarter. iPad revenues fell by a whopping 22 percent year over year, and unit sales were down by 19 percent. That’s especially painful given the resources Apple has poured into the iPad, especially with the iPad Pro models. Although it has been accorded prominent placement at the Apple Store, that hasn’t seemed to boost sales.

Wall Street had expected a sales and revenue upturn for the iPad, so the continued decline may trouble investors. Steve Milunovich of UBS asked Cook to comment about that, and Cook responded with a number of excuses about channel inventory and a lack of new products. That said, it appears that a supplier shortage leading to constrained shipments was a real factor in the iPad’s disappointing quarterly results.

Apple CFO Luca Maestri added that the iPad does have an 85 percent share of tablets over $200, and purchase intentions for the iPad are four times higher than for competitors, with the iPad Pro in the lead. However, there isn’t much movement on the tablet front as a whole, so it might be a category in decline for all manufacturers.

Mac sales, however, were yet another bright spot. In a market segment that has been declining for years among most technology manufacturers, Apple nonetheless saw a revenue increase of 7 percent year-over-year for its desktop and laptop lines. Despite the complaints about the new MacBook Pro models, they appear to be a hit, perhaps due to pent-up demand. These results raise the question of how the Mac could have done had Apple updated other models as well. Cook said that the Mac generated its highest revenue growth ever, and it saw double-digit growth in the international and education markets.

Apple’s Services segment, which includes AppleCare, the App Store, Apple Music, iCloud, and third-party subscription services, tallied an impressive revenue increase of 18 percent year over year. The Services category is becoming increasingly important each quarter, and we don’t expect that to change: the Services business is driven by the installed base, which grew by double-digits worldwide. Tim Cook reported that the App Store saw $3 billion in sales in December 2016 alone and that AppleCare and iCloud storage subscriptions are at all-time records. Over 150 million customers subscribe either to Apple services or to third-party subscriptions provided through the App Store. Apple expects Services alone to be the size of a Fortune 500 company this year. Cook also took pains to point out that App Store revenues were more than double the revenue of Google Play, and that’s despite Android’s significantly higher market share.

Thanks in part to expansion into four new countries, Apple Pay use continues to grow, with a 500 percent increase in transaction volume and three times as many users compared to last year. Apple also announced that Comcast would soon allow its customers to pay their bills with Apple Pay.

Apple predicted that Services revenue would double over the next four years, considering App Store growth (particularly in China), plans to grow the developer community in international markets, the success of Apple Music, increased demand for iCloud storage, the growth of AppleCare, and an ever-larger installed base of Apple devices.

In contrast to its growing Services revenues, however, Apple reported an 8 percent year-over-year decline in Other Products revenues, which include products like the Apple Watch, Apple TV, AirPods, iPods, Beats headphones and speakers, and various accessories. The reason for the decline may be a collapse in Apple TV sales — Maestri told Tim Bradshaw of the Financial Times that year-over-year sales for the set-top device were down. In contrast, Cook stated that the Apple Watch set an all-time revenue record and that Apple could not produce enough of them to meet demand in the quarter. Cook also spoke glowingly about the AirPods, as well as the continued success of Beats. We’d like to see Apple break out more details about the Other Products category so we can better understand how each product family is performing.

On the CarPlay front, Apple reports that over a million people are now using it, with every major automaker committed to supporting the platform. Although that may seem high, U.S. car sales topped 7 million in 2016 and worldwide the number exceeded 76 million last year, so the claim of 1 million CarPlay users isn’t as impressive as you might think.

Cook mentioned HomeKit, but only in the context of saying that it’s unmatched in home automation security, and he went on a long digression about the many ways he uses HomeKit in his own home. He also mentioned new accessories in the pipeline, such as a water leak sensor, something we’ve discussed internally as a no-brainer addition to any home automation setup.

Other optimistic notes include enterprise growth, which increased 70 percent over the previous quarter, and international sales increases “despite a very challenging environment” caused by the stronger U.S. dollar.

Apple closed out the quarter with $241 billion in cash, with 92 percent of that money held outside of the U.S. Asked whether more of that cash might return to the U.S., Cook mentioned the possibility of “some type of tax reform this year.” In addition, he alluded to Apple’s growing efforts to create original content for its music and television businesses.

Overall, Apple seems to be starting 2017 on solid footing, with successes for the iPhone, Mac, Apple Watch, AirPods, and the company’s various services. However, the iPad continues to be a sore point, and the Apple TV results are distressing. However, the Apple TV is in no danger, since Cook mentioned its importance to Apple’s overall content strategy. And no matter what, Apple seems committed to pushing the iPad as the next step in technology. Since Apple is committed to these products, it needs to do more to make them the best they can be.

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What Apple Can Learn from Airwalk

  by Josh Centers: josh@tidbits.com, @jcenters

When I was a teenager in the 1990s, Airwalk shoes were all the rage. They were a mandatory accessory for grunge-oriented youths, along with plaid shirts and corduroy pants. The company was founded in 1986, and in its heyday in the 1990s, it had grown to be the third-largest sneaker brand, behind only Nike and Adidas. Today’s teens have undoubtedly never even heard of Airwalk sneakers, which are now found on the bargain rack at Payless Shoesource. What happened?

Wait, this is TidBITS, not a fashion magazine, so why am I talking about shoes? Keep reading. I’m about to tell you a story that may sound chillingly familiar.

Airwalk began as a niche shoe for professional skateboarders. Skating legend Tony Hawk (who starred in an eponymous video game that ran on the Mac, along with many other platforms) was one of their first customers, and actually suggested the name. Much of Airwalk’s early popularity was due to getting input from skaters to create superior skateboarding shoes that wouldn’t cause blisters or crashes.

Airwalk had a healthy business, but it didn’t hit the big time until it hired advertising firm Lambesis to run an ultra-chic, counter-cultural ad campaign. As Malcolm Gladwell wrote in “The Tipping Point,” Airwalk was a $16 million company in 1993. In 1994, it was a $44 million company. In 1995, it was a $150 million company.

To satisfy the vast influx of teenage customers while keeping skateboarders and boutique shops happy, Airwalk developed a two-tier strategy. It sold cheaper, consumer-grade shoes to mainstream retailers like Footlocker while continuing to provide pricier, professional-grade shoes to boutique shops.

But Airwalk’s success didn’t last. The company’s troubles began in 1997 as production problems led to limited back-to-school supplies. Meanwhile, its lineup had become stale, with few new models. Worst of all, Airwalk abandoned its professional line of shoes. Serious skaters dropped Airwalk, causing the brand to lose its cachet with teens, and it wasn’t long before Airwalk’s time in the sun was over.

A smallish company exploding due to quality products and a hip ad campaign. A product line that split into both consumer and professional tiers to provide different price points and features. A company that was later plagued by production problems, stagnant product designs, and ignoring its professional market. Does that sound like another company you can think of?

Airwalk might have skated along for a while with its old designs and made peace with retailers, but abandoning its key market of hardcore skaters was what drove it into market irrelevance.

In terms of managing supply chains and industrial design, Apple has a pair of superstars in Tim Cook and Jony Ive (to the extent Ive is still involved in product design, anyway). And Apple no longer worries about disappointing retailers, having opened hundreds of its own stores. More concerning is how Apple is treating its professional users. Let’s itemize a few of the ways Apple has moved away from the professional market over the past five years:

We’re not alone in saying that Apple is now the iPhone company (see “Understanding Apple’s Marginalization of the Mac,” 21 November 2016). That’s where most of its profit comes from, and so that’s where most of its resources go. Fair enough.

But, here’s the thing: the Mac and the capabilities it provides to professionals are the foundation of that iPhone business. Die-hard Mac users kept Apple afloat in the dark years before the iPod and then iPhone. And even now, regardless of all other professional uses of the Mac, developers need Xcode on the Mac to create iOS apps.

Apple still has many things in its favor: $241 billion in cash, massive profits every quarter, one of the most popular brands in the world, and nearly 500 successful retail stores. And it might seem odd to criticize Apple now, especially when the company just broke a quarterly record with the most iPhone and Mac sales ever (helped by new iPhone and MacBook Pro models, plus the holiday shopping season, see “Apple Sees Apparent Return to Growth with Q1 2017’s Record Results,” 31 January 2017). But as we saw with Airwalk, things could go downhill fast if professional users were to leave the platform, taking with them all the people and organizations they currently keep loyal to Apple products.

I don’t want to be too hard on Apple. The company is still incredibly strong and is doing better in some areas where it has been weak. By many accounts, Final Cut Pro X has improved greatly since its initial release, and some professional movie makers are giving it a chance. App Store review times are plummeting, and Apple is planning to allow developers to respond directly to App Store reviews. Swift is an exciting new programming language with a bright future, and it’s suitable for both compiled apps and scripts.

You might argue that Apple and Airwalk aren’t comparable. For instance, although it may have gotten its start providing athletic shoes, Airwalk ultimately became a fashion company. But isn’t Apple similar in many respects? Apple opened its doors with the Apple I hobby kit, and by the mid-2000s, the iPod and its white earbuds were fashion mainstays. The Apple Watch is clearly intended to be a fashion item today. Even the MacBook, with its prominent usage in coffee shops, airports, and other public places, makes its own fashion statement.

Despite these similarities, Apple is a much, much larger company than Airwalk ever was. Plus, Apple is making so much money and has so much cash that it can afford many more missteps than a plucky young footwear company. Perhaps most important, Apple can learn from the example of companies like Airwalk that fell from grace after losing sight of their most influential users. Here’s hoping Apple realizes the danger of diverting too much attention away from the Mac and its professional users.

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A Prairie HomeKit Companion: Controlling Accessories

  by Josh Centers: josh@tidbits.com, @jcenters

In “A Prairie HomeKit Companion: Setting Up Accessories and Rooms” (16 January 2017), I explained how to set up Accessories and Rooms, which are the fundamental building blocks of HomeKit, Apple’s system for home automation. But that article was a bit of a tease, since it left you hanging with a set-up system that you hadn’t used. In this installment, I’ll explain how you control your Accessories with Apple’s Home app, as well as Control Center, Siri, and even your Apple Watch.

Controlling Accessories in the Home App -- To access an Accessory (which, you’ll remember, generally maps to a particular device), go to the Rooms screen, tap the hamburger button, and choose the Room that contains the Accessory.

In the Room’s listing, you’ll see all the Accessories associated with that Room. For things like smart bulbs and smart plugs, you can tap the Accessory icon to turn it on or off. That’s simple to say, but it’s actually one of the key uses of the Home app, since it gives you remote control over any Accessory that turns on and off. (For some other devices, like room sensors, tapping their icons will have no effect because they’re always on.)

To work with Accessories in additional ways, either press and hold or 3D Touch an Accessory icon. That brings up a screen that shows more details and controls. For example, a room sensor shows its current status, a smart plug has a simple on/off switch, and a smart bulb offers a brightness slider.

If a smart bulb supports multiple colors, a Color button appears too; tapping it brings up buttons that let you choose a color for the light. Tapping Edit in the center of a button brings up a detailed color wheel. Choosing a color there replaces one of the circles in the main color selector with that color. The Color screen also has a Temperature tab, which is the same thing, but with various degrees of white light.

Frustratingly, Apple’s Home app doesn’t let you copy your color selections between devices, so if you want to be sure that all your bulbs have the same color, you’ll need a third-party HomeKit app with finer control, like Matthias Hochgatterer’s Home app. But if you’re dealing with lights that should work together anyway, you can group them, which you do from the Details screen.

It’s All in the Details -- When you tap and hold or 3D press a HomeKit Accessory, you can also access its Details screen, which presents a few Accessory options, like name and location. You might remember some of these options from initial Accessory setup, as I detailed in “A Prairie HomeKit Companion: Setting Up Accessories and Rooms.”

I want to focus on two options in the Details screen. The first is the Include in Favorites switch. You should enable this for any Accessory you plan to use with any regularity because it adds a shortcut for that Accessory to the Home screen of the Home app, to Control Center, and to the Home app on the Apple Watch. Note that Control Center won’t display more than nine Accessories at a time, so it pays to be picky.

The second is the Group with Other Accessories option, which combines your Accessories so that they act as one — their individual Accessory icons will be replaced by a single new icon. This is useful if you have multiple smart bulbs in a single light fixture or multiple lights in the same room that you want to be in sync. I use it to group our living room floor lamps to keep their brightness and color settings the same.

To group Accessories, tap Group with Other Accessories. On the next screen, give your group a name and select the other Accessories to add to the group. Tap Done when you’re finished.

The icons for those Accessories will be replaced by a single icon for the group. To ungroup Accessories, go to the Details screen for the group and tap Ungroup Accessories. Remember, if you plan to use the group frequently, don’t forget to set it as a favorite!

If you want to adjust one Accessory in a group independently, go to the Details screen for the group and tap Accessories to reveal individual icons for the Accessories. From that screen, you can adjust each Accessory on its own.

Setting Scenes -- Tinkering with Accessories constantly gets tiresome. Thankfully, HomeKit offers shortcuts, called Scenes, that combine actions together. For example, you could have a Scene called Good Morning that turns on all of your lights, a Scene called I’m Leaving that turns off your lights and turns down the thermostat, and a silly party Scene that turns your living room red.

To create a Scene, tap the plus icon in the upper-right of the Home or Rooms screens and choose Add Scene. Home will suggest some Scene names, or you can create your own name by tapping Custom.

Once your Scene is named, tap Add Accessories, and then tap individual Accessories to add them to the Scene. Tap Done to move on.

Next, you’ll be taken to a screen with the Scene name, and the Accessories included in the Scene. Adjust the Accessories as you normally would. For instance, tap a smart bulb icon to turn it on in the Scene, or press and hold to adjust its brightness and color.

Finally, at the bottom are options to Test This Scene, which activates it temporarily; Add Accessories, where you can modify the Accessories included in the Scene; and Show in Favorites, which I recommend enabling for essential Scenes.

Suggested Scenes -- I recommend three Scenes to everyone: Good Morning, Good Night, and Scenes to quickly adjust the brightness in your primary living areas.

For instance, I have three favorited living room Scenes for adjusting brightness: Living Room Bright, Living Room Dim, and Living Room Night, which set my living room Hue lights to 100 percent, 40 percent, and 0 percent (very dim, but not off), respectively. With these Scenes, I can easily dim the living room to watch a movie, but also quickly brighten it up if I need to find the remote or change my son’s diaper.

Adjust these scenes as you see fit, but I recommend using my names, as they’re easy to identify and Siri has no trouble understanding them.

When configuring the Good Morning and Good Night Scenes, the settings will depend on your Accessories and living situation. Think carefully about what to activate and why.

My Good Morning Scene does three things. It turns on the smart plug that controls the lamp in the laundry and music rooms and sets the living room lamps to 40 percent brightness. During the Christmas season, it also turned on the plug that controlled the Christmas tree lights. My Good Night Scene does the opposite, though it dims the living room lamps to 0 percent instead of turning them completely off.

These Scenes are set up in such a way to light up the house sufficiently to navigate in the morning, without being painfully bright. Even though we have Hue bulbs in our bedrooms, these Scenes don’t touch them at all. Why not?

All that said, I don’t recommend that you create Scenes right away. Instead, experiment with your Accessories and figure out which settings you like and which devices you use most. Setting up Scenes will be easier once you have a sense of what you’re doing regularly.

But if you just want to create some goofy Scenes to turn your living room blue or whatever, go for it! That’s part of the fun of home automation. (If I ever install a HomeKit-equipped thermostat, I’ll probably create a Game of Thrones-inspired scene that turns my lights blue and drastically lowers the temperature. Because I’m a huge dork.)

Once you’ve created a Scene, you can find it in two places in the Home app. If you set it as a favorite, it’ll be available from the Home app’s Home screen (and in Control Center). Otherwise, look in any Room with which the Scene is associated. If a Scene is split between multiple Rooms, you can find it in any of its Rooms.

Control with Control Center, the Apple Watch, and Siri -- Jumping in and out of the Home app every time you want to turn on a light is more work than flicking a switch on the wall. Thankfully, Apple offers some quicker ways to activate your Accessories.

I usually use Control Center on my iPhone to manipulate my HomeKit devices. In iOS 10, Apple redesigned Control Center with multiple pages, and if you have any HomeKit devices favorited, swipe to the left twice to reveal an additional Control Center page that lets you control both Accessories and Scenes.

In the Home page of Control Center, a button in the upper right lets you switch between controlling favorite Accessories and Scenes. Tapping an Accessory or Scene turns it on or off. As with the Home app, you can press and hold or 3D Touch Accessories in Control Center to see more advanced settings like brightness and color.

Control Center can display only nine Scenes and nine Accessories, so while you should favorite the items you use the most, you also want to be selective.

If you own an Apple Watch, the Home app built into watchOS 3 also lets you control favorite Accessories and Scenes. I recommend adding it to your Dock for quick access. Tapping an Accessory or Scene activates it, while the … button lets you adjust things like brightness — which you do with the digital crown. That said, I don’t use the Apple Watch Home app often, as I find it unreliable. It frequently throws No Response error messages for all of my Accessories. Like many Apple Watch activities, I can perform the same task on my iPhone more quickly.

Of course, you can also control HomeKit with Siri, which is a big win when it works. If everything is set up correctly, you can use a number of commands, such as:

For the most part, Siri controls work well, even with Hey Siri on the Apple Watch (though my watch usually takes longer to recognize the command). You can even use these same Siri commands with the fourth-generation Apple TV, assuming it’s running tvOS 10 or higher and it’s signed into the same iCloud account as your other HomeKit devices.

That’s about all you need to know about controlling HomeKit devices for now. In the next installment of this series, I’ll explain how to set up a hub so you can operate your HomeKit devices when you’re out of the house and how to set up Automations to make your devices work on their own (see “A Prairie HomeKit Companion: Controlling Accessories,” 16 January 2017).

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TidBITS Watchlist: Notable Software Updates for 6 February 2017

  by TidBITS Staff: editors@tidbits.com

Airfoil 5.5.2 -- Rogue Amoeba has released Airfoil 5.5.2, updating the Instant On component to version 8.4.1 to provide full support for macOS 10.12 Sierra. The wireless audio broadcasting app also enhances its support for streaming audio to Google’s Chromecast Ultra, avoids problems due to sporadic network issues, fixes a bug that prevented the Pause control from working properly with Hermes, and improves handling of missing audio devices. ($29 new with a 20 percent discount for TidBITS members, free update, 14.4 MB, release notes, 10.9+)

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CleanMyMac 3.7.2 -- MacPaw has released CleanMyMac 3.7.2 with support for the Touch Bar on the 2016 MacBook Pro. The all-purpose cleaning and maintenance app (which is now available as part of the Setapp software subscription service; see “Setapp Offers Numerous Mac Apps for One Monthly Subscription Fee,” 25 January 2017) also introduces Document Versions cleanup as part of System Junk (removing unnecessary intermediate versions of documents) and improves the Large & Old Files module to work with iTunes and Photos. ($39.95 new, free update, 35 MB, 10.8+)

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ExtraBITS for 6 February 2017

  by TidBITS Staff: editors@tidbits.com

In ExtraBITS this week, LG admits to interference problems with its UltraFine 5K Display, and Apple is reportedly adding more ARM-based chips to the Mac.

LG Raises Shields on UltraFine 5K Display -- LG has confirmed to TechCrunch that its UltraFine 5K Display can suffer interference when placed near a Wi-Fi router. The company recommends keeping the screen at least two feet away from routers. If that isn’t possible for you, or if that doesn’t solve the interference problems, LG advises you to contact your nearest LG customer center. LG told TechCrunch that monitors made after this month would include better shielding. If all else fails, you could try wrapping the back of the display in aluminum foil — just make sure not to cover any cooling vents!

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Apple Working on ARM-Based Power Nap Chip -- Mark Gurman and Ian King have reported in Bloomberg that Apple is working on a new ARM-based chip for future Macs that would manage Power Nap functionality. Power Nap enables recent Macs to perform certain tasks even while asleep, such as checking for new email messages, syncing iCloud data, and updating software, and the rumored new chip would reduce Power Nap’s already low energy usage. This story has fueled speculation that Apple will dump Intel CPUs for ARM-based processors like those it makes for its many non-Mac devices. However, nothing in this news indicates such a significant shift yet — this chip would merely supplement the core Intel processor’s capabilities, much like the ARM chip that controls the Touch Bar in the 2016 MacBook Pro.

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