What The Citi iPhone Security Flaw Says About Mobile Security

Yesterday, the Wall Street Journal reported that Citigroup’s iPhone electronic banking app contained a security flaw that had been fixed. According to the article, a new version of the app has been made available to customers through Apple’s App Store. The Citi app was developed in conjunction with mobile app specialist mFoundry and allows customers to view their banking and/or credit card statements and make bank payments. From the Journal article:

“Citi said its iPhone app accidentally saved information—including account numbers, bill payments and security access codes—in a hidden file on users’ iPhones. The information may also have been saved to a user’s computer if it had been synched with an iPhone. The issue affected the approximately 117,600 customers who had registered the iPhone app with Citi since its launch in March 2009, a person familiar with the matter said. The bank doesn’t believe any personal data was exposed by the flaw.”

Forrester customers who are also Citi banking or credit card customers should immediately update their iPhone app. They should also change their account password if their phones have been stolen or lost.

I have not spoken to Citi about this matter, and I do not have inside knowledge about the nature of the vulnerability. However, it stands to reason that:

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The Future Of Application Stores

Apple reinvented the distribution of products and services on mobile phones, opening up direct-to-consumer opportunities for nontelecom companies. The numbers look impressive — more than 5 billion downloads and $1 billion paid to developers in the two years since the launch of the Apple App Store.

However, it also generated $429 million for Apple itself in two years. These revenues are not meaningful to Apple’s core revenues. Due to the limited number of paid apps and their significant concentration among games and navigation apps, it is likely that a significant number of independent developers have not recouped their investments via the current revenue-sharing model. The recent launch of iAd is a way for Apple to maintain the attractiveness of its platform, allowing third parties that provide free apps to develop sustainable business models.

But, despite all the hype around apps, only a minority of consumers download them monthly. A recent Forrester survey of more than 25,000 European adults shows that only 4% of all mobile users and 15% of smartphone users report downloading apps at least once per month. However, the fact that 21% of all European mobile users consider apps to be an important feature when choosing a new mobile handset highlights the large gap between today’s limited usage of apps and consumer awareness and interest.

The application store market is still nascent, but it is evolving quickly. However, in the longer run, few players will be able to address the key factors that will make them a success:

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Amazon Makes It Clear It Will Survive iPadmania

This is a phenomenal week to be covering the publishing industry. Tuesday, Apple released its quarterly earnings. Big surprise, another record-breaking quarter for the folks in Cupertino. A few billion here, a few billion there, blah, blah. How amazing is it that we're not really surprised by such overperformance in an otherwise still-troubling economic environment? Of great interest to me, the eReader guy, was the final iPad tally for the quarter ending June 26th: 3.27 million units worldwide. Still no good guidance on what the US split is, but no matter how you slice it, iPads are hot. (And, no, I still have not bought one, still holding out for iPad 2.0).

And if you follow the implications of that success, as many in the media have, Amazon should just concede the eReader business, pack up its cream-colored Kindle and go home, right? 

Wrong. And to prove it, Amazon made a point of announcing some news of its own, the day before Apple's results were public. Amazon flaunted its own success in selling both Kindle devices and eBooks. That's right, despite that iPad upstart, the Kindle is still flying off the shelves, selling more units each month than the month before it all through Q2, when the iPad challenger was supposedly pummeling it. And it's dominating the eBook business as well, selling as much as eight in ten of the eBooks of major bestsellers, seeing its eBook sales rate triple over last year. Oh, and Amazon indicated it sells 1.8 eBooks for every hardback book it sells. That's right, even though it discounts hardbacks to paperback prices for many bestsellers.

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