An incredibly significant group of consumers is NOT buying iPhone 6 (AAPL) | ||
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If you want to get an idea of just how huge Apple's iPhone 6 is going to be globally, then the latest investor note from Citi Research analyst Jim Suva is a must-read. It provides more evidence that the iPhone 6 is fundamentally different from previous iPhones, because of the way it is going to rearrange market share for mobile handsets. Previously, Apple was content to take about 15% of the global phone market for iPhone, and Android took the rest — generally about 80%. The theory was that Apple doesn't want more market share than that, because the 15% it owned was made of the most profitable customers and that going downmarket might dilute its profitability. But the iPhone 6 is different. It is now the No.1 phone in both the US and China, and is powering its way to that spot in other markets too. It looks as if the iPhone 6 is going to grab much more market share than it normally does. That poses huge problems for Google's Android system, which is losing a lot of customers to Apple. Now, Apple normally sells a lot of phones right after a launch. But those sales tend to die off a few months later as the Apple customer base is fully penetrated. This time around, according to Citi, that has not happened. In fact, Apple's current customers are NOT the main buyers of iPhone 6. Rather, everyone else is. Citi says:
Here's a chart:
That is hugely significant because it suggests that current iPhone users have yet to step in and actually buy a new iPhone 6. Apple customers have a high likelihood of buying a new iPhone if they already have one. About 12% of the iPhone customer base gets a new iPhone each quarter. So the sales cycle for iPhone 6 is going to be much bigger than previous cycles once current iPhone users have upgraded. That will shift market share in Apple's favour, and again pose a difficult question to Google: If most people in a given market — the US and China most obviously — end up with iPhones, then is there still room left for Android? Join the conversation about this story » NOW WATCH: Kids settle the debate and tell us which is better: an Apple or Samsung phone  | ||
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People are having serious doubts about the security researcher who allegedly hacked a plane | ||
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Security researcher Chris Roberts made headlines after an FBI report alleged he had hacked a plane mid-flight and taken over the controls — but now serious doubts are growing over the entire affair. In an interview with a special agent earlier this year about potential vulnerabilities in in-flight software, Roberts apparently made the claim that he could hack a plane using the passenger entertainment system. These comments then came to light after Roberts was banned from United Airlines flights in a high-profile incident after tweeting about potential vulnerabilities. A search warrant was then issued for the researcher's devices as part of an FBI investigation — and the comments were included in the warrant, which was made public. Here are the relevant parts of the warrant (emphasis ours):A special Agent with the FBI interviewed Chris Roberts on February 13, 2015 and March 5, 2015 to obtain information about vulnerabilities with In Flight Entertainment (IFE) systems on airplanes. Chris Roberts advice that he had identified vulnerabilities with IFE systems of Boeing 737-800, 737-900, and Airbus A-320 aircraft. Chris Roberts furnished the information because he would like the vulnerabilities to be fixed. During these conversations, Mr. Roberts stated the following: That he had exploited vulnerabilities with IFE systems on aircraft while in flight. He compromised the IFE systems approximately 15 to 20 times during the time period 2011 through 2014... ...That he was about to exploit/gain access to, or "hack" the IFE system after he would get physical access to the IFE system through the Seat Electronic Box (SEB) installed under the passenger seat on airplanes... ...After remove the cover... he would use a Cat6 ethernet cable with a modified connector to connect his laptop computer to the IFE system while in flight... ...He then connected to other systems of the airplane network... He stated that he then overwrote code on the airplane's Thurst Management Computer while aboard a flight. He stated that he successfully commanded the system he had accessed to issue the "CLB" or climb command. He then stated he thereby caused one of the airplane engines to climb resulting in a lateral or sideways movement of the plane during one of these flights.
In short: Roberts allegedly hacked into planes between 15 and 20 times over several years via the in-flight entertainment system using modified cables and his laptop. On one occasion, he apparently gained direct control of one of the engines, and made the plane move sideways. However, multiple news reports are casting doubts over the claims. First, a post by Mary Kirby on aviation industry website Runway Girl Network points out that Boeing says that entertainment systems are "isolated from flight and navigation systems" on commercial aircraft. Industry expert Peter Lemme told Kirby that "the IFE ARINC 429 interfaces are not capable of changing automatic flight control modes," and that "the claim that the Thrust Management System mode was changed without a command from the pilot through the mode control panel, or while coupled to the Flight Management System is inconceivable." Industry consultant Michael Planey also told Kirby that given Roberts' alleged method of access, the story seems suspect. "We have seen multiple instances of passengers being restrained by fellow passengers or flights diverted because a passenger is behaving abnormally. I find it nearly impossible to believe Roberts could have done this type of an act over a dozen times and never had a flight crew or fellow passenger notice – that part stretches the imagination. "Furthermore," Planey adds, "in the event that what he claims about monkeying with the Thrust Management System occurred, that would have been noted by the flight crew; they would have noticed the aircraft was moving not by command from the cockpit. There would have been many ways in engine monitoring and flight control management systems to detect this sort of event, and I would have expected the pilots would have written it up and there would have been an investigation. So I don’t believe what he says to be true." Writing for Forbes, Thomas Fox-Brewster points out further criticism. Security researcher and pilot Dr Phil Polstra previously criticised a US government report earlier this year warning of potential aircraft hacks as "irresponsible" and "deceptive." And Roberts himself has apparently changed his tune, now telling Fox-Brewster that his comments have been "totally taken out of context and misinterpreted." Join the conversation about this story » NOW WATCH: Mesmerizing video shows an airplane pilot pulling off extreme tricks in the air  | ||
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Kerry warns 'provocative' N. Korea of fresh sanctions | ||
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Seoul (AFP) - US Secretary of State John Kerry warned North Korea Monday of possible fresh sanctions as he slammed Kim Jong-Un's "egregious" leadership with its reliance on reckless provocation and "grotesque" executions. Speaking in the South Korean capital Seoul, Kerry said the recent test of a new submarine-launched ballistic missile (SLBM) showed that North Korea had no genuine interest in engaging with the international community. "Instead, it continues to pursue nuclear weapons and ballistic missiles, it continues to break promises and make threats, and it continues to show flagrant disregard for international laws," he told a joint press conference with South Korean Foreign Minister Yun Byong-Se. "That is why it is important for us to ramp up international pressure for North Korea to change its behaviour," he added, adding that the US and China were discussing methods for "boosting sanctions and other things". The impoverished but nuclear-armed state is already heavily sanctioned following a series of nuclear and missile tests staged in violation of UN resolutions. Just over a week ago the North said it had successfully test-fired an SLBM, defying a UN ban on its use or testing of ballistic missile technology. A fully-developed SLBM capability would take the North Korean nuclear threat to a new level, allowing deployment far beyond the Korean peninsula and the potential to retaliate in the event of a nuclear attack.
- Disregard for human rights -
In a scathing attack on Kim Jong-Un, Kerry said his leadership was one of the most "egregious displays... anywhere on the planet" of reckless disregard for human rights. He specifically cited "stories of grotesque, grisly, horrendous public displays of executions" carried out on a personal whim by Kim -- often against those closest to him. South Korea's intelligence agency reported last week that North Korea's defence minister, Hyon Yong-Chol, had been purged and most likely executed for insubordination and dozing off during a formal military rally. The agency said it had unverified reports that the execution had been carried out at close range with a high-calibre anti-aircraft gun. A previous agency report said Kim had ordered the execution of 15 other senior officials so far this year. Kerry said it was "absolutely critical" for the international community to keep shedding light on human rights violations, after a UN report last year detailed widespread abuses and recommended Pyongyang be referred to the International Criminal Court in The Hague. "If their horrific conduct continues, it's hard to see how that referral to the criminal court would not take place," Kerry said.
- Alliance 'stronger than ever' -
Kerry, who held talks earlier in the morning with President Park Geun-Hye, insisted that the US-South Korea military alliance was "stronger than ever" in the face of the North's belligerence. South Korea hosts a permanent deployment of almost 30,000 US troops and holds annual joint exercises that rehearse numerous conflict scenarios with the North. A recent report by US researchers warned that North Korea appeared poised to expand its nuclear programme over the next five years and, in a worst-case scenario, could possess 100 atomic weapons by 2020. It carried out nuclear tests in 2006, 2009 and 2013.
- Cyber-attacks -
Later Monday, in a foreign policy speech on the use of cyber-space, Kerry again pilloried North Korea for its "provocative, destabilising and repressive actions", including last year's cyber-attack on Sony Pictures. Pyongyang denied US allegations that it had orchestrated that attack in revenge for Sony's satire "The Interview" about a fictional plot to assassinate Kim Jong-Un. Those responsible for destructive cyber-attacks "will be held accountable", said Kerry, adding that North Korea represented the polar opposite of the Internet access championed by South Korea and Japan. North Korea has a domestic Intranet, allowing its very limited number of users to exchange state-approved information and little more. Access to the full-blown Internet is for the super-elite only, meaning a few hundred people or maybe 1,000 at most. "It is no coincidence that many governments that have poor records on Internet freedom also have questions on their commitment to human rights in general," Kerry said. Join the conversation about this story »  | ||
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Myanmar acknowledges 'concern' over migrant exodus | ||
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Yangon (AFP) - Myanmar Monday acknowledged international "concerns" about waves of boatpeople, many of whom are fleeing from persecution, but denied it is solely to blame as thousands languish in dire straits at sea. The comments came as fresh details emerged from migrants of brutal fighting with metal bars and knives that left at least 100 dead as food and water dwindled on their rickety vessel as it drifted in Indonesian waters. Southeast Asia is gripped by an escalating migrant boat crisis that has seen nearly 3,000 migrants swim to shore or be rescued off Indonesia, Malaysia and Thailand over the past week. Others have been turned back to sea, sparking international outrage and fears that time is running out to rescue thousands still believed to be trapped with scarce supplies on the unwanted boats. Tens of thousands of Rohingya Muslims, a minority who face daily prejudice and a raft of restrictions in western Myanmar, have long fled in barely sea-worthy boats across the Bay of Bengal. In recent years they have been joined by growing numbers of economic migrants from neighbouring Bangladesh looking to escape grinding poverty. Myanmar's part in the grim and often deadly exodus had been largely ignored by its neighbours. But the former army-run nation has faced growing international pressure this month after thousands of migrants were abandoned in overcrowded boats by people smugglers following a crackdown on the trade in Thailand, a key transit point. Myanmar Information Minister Ye Htut said his country understood "the concerns (of) the international community on the people in the sea". "Instead of blaming Myanmar for all these problems... all these issues should be solved by the regional partners," he added in English following a briefing between government officials and diplomats in Yangon.
- Time running out -
Myanmar has yet to confirm whether it will attend a regional summit called by Thailand for May 29. The migrant crisis has sorely tested the Association of Southeast Asian Nations's policy of not interfering in member nations' internal affairs. The regional bloc secretariat said it was "concerned about the issue of Rohingya exodus and Bangladesh economic refugees" in a statement Monday. Myanmar does not recognise the estimated 1.3 million Rohingya as an official minority, instead viewing them as mostly illegal immigrants from Bangladesh. In a move that may complicate efforts to repatriate those people discovered at sea, Ye Htut said Myanmar would accept returning migrants only if they "have enough evidence to prove" their nationality. European Union Ambassador Roland Kobia said most nations had urged swift regional dialogue as a way of tackling the boat crisis in talks with Myanmar officials Monday. "These people can't wait too long," he told reporters after the meeting in Yangon. "I think there was a wide agreement around the table that things need to be done now," he added.
- Murder at sea -
Grim tales have emerged of deadly fights between migrants on board boats washing into Indonesian waters in recent days. Some described a vicious brawl breaking out as desperation exploded into bloodshed on their sinking boat, which was discovered off Aceh, on the Indonesian island of Sumatra on Friday. "Suddenly the Bangladeshis came out of the deck, and they attacked all of us who were on the top of the boat," said Rohingya migrant Hasina Begun. "Those who wanted to save their lives, had to jump in the sea, but my brother could not. When they found him, they beat him and then they slaughtered him. After that they threw him into the sea," the 22-year-old told AFP. Bangladeshi migrants, who are now being kept separately from the Rohingya in an Indonesian shelter, claim that they were kept below deck by Myanmar people smugglers, who denied them food and water. Those interviewed put the number of dead between 100-200 from a boat carrying around 1,000 but precise figures are difficult to obtain. The horrific testimony will do little to allay fears for those still stuck on vessels in the Andaman Sea, currently being bounced between countries in what rights groups have described as "human ping-pong". The Indonesian navy said it had stopped a boat believed to be carrying migrants from entering its waters Sunday after the vessel was spotted heading across the Malacca Strait from the direction of Malaysia. In Bangladesh local coastguard rescued seven nationals who said they were thrown off a Thai fishing trawler packed with migrants. Coast guard station commander Dickson Chowdhury told AFP the men had seen three boats packed with migrants off Myanmar's shores.
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What are traders chatting about this morning? Greece and a busy week for the economy ... | ||
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Via Dave Lutz at JonesTrading, here's a quick look at what traders are chatting about this morning. Good Morning! US Futures are retreating from all-time highs this AM, with Nasdaq off 25bp despite M&A headlines (ENDO/PRX for $9B and NY Post saying ALTR/INTC heating up again). Europe is soft despite a bid from Autos and commodity producers – with the EU Stoxx off 50bp as Financials are broadly lower on more Greek headaches (“Endgame nears for Tsipras” headlines have Athens off 3%). The DAX is up small with the Autos running higher – but volumes are light – most markets pacing 20% lighter than last week). Over in Asia, China hit on rapidly deteriorating house prices – Shanghai lost 60bp, and Hong Kong 90bp - Tokyo neared a 3week high on solid earnings from Japanese banks – and Aussie lost 1.3% as eyes were on South32, a global mining company spun off by BHP Billiton, opened toward the lower end of market expectations and closed just off lows.. The US 10YY is higher, following an upward move in German yields – seeing both global benchmarks adding about 3bp. The US$ has a nice bid to it, gaining against Euro, Yen and Aussie – causing a headwind for commodities. Crude Oil is higher, led by a 1% pop in WTI – but both well off highs of the overnight. Headlines “Islamic State seized control of Ramadi” has Brent up 2% early, but it has surrendered all of those gains. Despite the higher $ Gold is holding last week’s bid, and Silver is adding 40bp as CFTC data shows speculators getting more bullish on those metals. Watch Wheat – it’s jumping 1.5% and we have a very crowded short position in the grains. ECB Publishes Asset-Purchase Data at 9:45 – and we get the start of heavy housing data this week with NAHB Housing Market Index at 10. This week brings Heavy Fed Speakers, including Janet on Friday; the BOJ meeting + Kuroda Presser; Fed, BoE and Aussie Minutes; Germany’s ZEW and IFO Surveys, plus their GDP – and Graduation at the US Naval Academy in Annapolis. SEE ALSO: Here's your complete preview of this week's big economic events Join the conversation about this story » NOW WATCH: This simple exercise will work out every muscle in your body  | ||
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HEDGE FUND TITAN: Do something more creative than intern at Goldman Sachs | ||
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Hedge fund titan Michael Novogratz, the president of Fortress Investment Group, wants kids he hires to do something else other than just intern at Goldman Sachs or a top consulting firm. "We interview a lot of kids and they always want to have an internship and Goldman Sachs, an internship at McKinsey. And I was like, 'Go do something different. Get on a motorcycle, travel through India, and take photographs. Create a story where you learn something," Novogratz said on the latest episode of "Wall Street Week."
The show's host Anthony Scaramucci, the founder of SkyBridge Capital and a fellow Goldman alum, agreed about the "gap year" concept. "I think it makes sense too because it gives you a little more maturity," he said. Of course, there's nothing wrong with interning at Goldman. That's not what he's saying at all. But it's important to do something outside of finance, too. Novogratz would know this first hand. After graduating from Princeton, he served in the US Army National Guard as a helicopter pilot before landing a job at Goldman in 1989. He rose through the ranks there and was made a partner in 1998. He joined Fortress in 2002. Goldman's CEO Lloyd Blankfein has told interns before that it's important to be "interesting." "I think you also have to be a complete person. You have to be interesting. You have to be somebody who is interesting to yourself," he told the bank's interns a few summers ago. Bottom line: Think beyond just filling out Excel sheets for a summer. Get out and explore the world first. That will make you interesting when you go to interview for a Wall Street job. Join the conversation about this story » NOW WATCH: 6 shortcuts in Excel that will save you a ton of time  | ||
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10 things you need to know before the opening bell (DIA, SPY, SPX, QQQ, PBR) | ||
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Before markets open to start the week, here's what you need to know. Greece's endgame is near. June is shaping up as a difficult month for the Greek government as it owes more than 1.5 billion euros between June 5 and June 19. The Greek newspaper Kathimerini reports that Prime Minister Alexi Tsipras had written Christine Lagarde, the International Monetary Fund managing director, to inform her the government might miss its May debt payment, which it ended up paying. Pension and civil-servant pay packets are also due at the end of the month. Greece's two-year yield is at fresh cycle highs, up 323 basis points at 23.64%. Chicago Fed president says a June rate hike is possible. Charles Evans spoke in Stockholm and argued for a 2016 rate increase but said: "You could imagine a case being made for a rate increase in June." He also suggested the Fed wouldn't reach its 2% inflation target until 2018. The US 10-year yield is higher by 2 basis points at 2.17%. Chinese home prices might be bottoming. Chinese home prices tumbled 6.1% year-over-year in April across the 70 major cities. The number was little changed versus last month, however, a sign prices might be bottoming. The major cities outperformed as prices in Beijing and Shanghai and Beijing fell 3.2% and 4.7%, respectively. China's yuan was little changed at 6.2041 per dollar. Petrobras announced a mixed quarter. The company earned 0.41 real per share, easily topping the 0.23 real per share that was expected. Revenue of 74.4 billion real missed the 79.4 billion real that Wall Street was anticipating. According to CNBC: "An end to fuel subsidies helped overcome a plunge in crude prices." Endo International is acquiring privately held Par Pharmaceutical for $8.05 billion. The takeover is made up of 18 million shares of Endo stock and a $6.50 billion cash consideration to Par Pharmaceutical's shareholders. The deal is expected to be accretive to Endo within the first 12 months. Japan's core machinery orders jumped. Orders rose 2.9% month-over-month, topping the 1.8% MoM advance that was expected. Monday's number marked the first gain in two months, and it is a sign business investment is beginning to pick up. Japan's yen is weaker by 0.4% at 119.68 per dollar. Iran says an OPEC production cut is unlikely. Rokneddin Javadi, Iran's deputy oil minister, responded "I don't think so" when asked whether OPEC would cut oil production at the June meeting. The isolated economy is hoping its oil production will return to pre-sanction levels in about three months, once the embargo is lifted. West Texas Intermediate crude oil is higher by 0.7% at $60.08 per barrel. Gold trades at a 3-month high. Gold touched $1,232.00 per ounce, marking its best level since the middle of February. Recent strength has been supported by disappointing US economic data, which has caused some traders to speculate the Fed will not be hiking rates anytime soon. The yellow metal now trades up 0.3% at $1,229.10 per ounce. Global stock markets are mixed. Italy's MIB (-1.5%) paces the decline in Europe, while Germany's DAX (+0.2%) outperforms. Overnight in Asia, Japan's Nikkei (+0.9%) led and Australia's ASX (-1.3%) lagged. US economic data is light. The NAHB Housing Market Index is due out at 10 a.m. ET. Join the conversation about this story » NOW WATCH: This animated map shows how European languages evolved  | ||
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An incredibly significant group of consumers is NOT buying iPhone 6 (AAPL) | ||
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If you want to get an idea of just how huge Apple's iPhone 6 is going to be globally, then the latest investor note from Citi Research analyst Jim Suva is a must-read. It provides more evidence that the iPhone 6 is fundamentally different from previous iPhones, because of the way it is going to rearrange market share for mobile handsets. Previously, Apple was content to take about 15% of the global phone market for iPhone, and Android took the rest — generally about 80%. The theory was that Apple doesn't want more market share than that, because the 15% it owned was made of the most profitable customers and that going downmarket might dilute its profitability. But the iPhone 6 is different. It is now the No.1 phone in both the US and China, and is powering its way to that spot in other markets too. It looks as if the iPhone 6 is going to grab much more market share than it normally does. That poses huge problems for Google's Android system, which is losing a lot of customers to Apple. Now, Apple normally sells a lot of phones right after a launch. But those sales tend to die off a few months later as the Apple customer base is fully penetrated. This time around, according to Citi, that has not happened. In fact, Apple's current customers are NOT the main buyers of iPhone 6. Rather, everyone else is. Citi says:
Here's a chart:
That is hugely significant because it suggests that current iPhone users have yet to step in and actually buy a new iPhone 6. Apple customers have a high likelihood of buying a new iPhone if they already have one. About 12% of the iPhone customer base gets a new iPhone each quarter. So the sales cycle for iPhone 6 is going to be much bigger than previous cycles once current iPhone users have upgraded. That will shift market share in Apple's favour, and again pose a difficult question to Google: If most people in a given market — the US and China most obviously — end up with iPhones, then is there still room left for Android? Join the conversation about this story » NOW WATCH: Kids settle the debate and tell us which is better: an Apple or Samsung phone  | ||
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Here's your complete preview of this week's big economic events | ||
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Stocks are back at all-time highs. After spending about a month trading just off record levels, the S&P 500 powered back to an all-time high on Thursday and fractionally improved on this to end the week, closing at 2,122.73 on Friday. Meanwhile, economic data has continued to disappoint, with readings on retail sales in April and consumer confidence in May both disappointing this week, putting the spring economic recovery in doubt. The Atlanta Fed's GDPNow tracker, which was spot-on in predicting the initial reading 0.2% growth reading for first quarter GDP, now forecasts that the economy is on pace to grow just 0.7% in the second quarter. Here's your Monday Scouting Report: Top Stories The spring economic recovery is in doubt. "Our forecast for GDP growth continues to slide," write Bank of America Merrill Lynch economists Michelle Meyer and Alex Lin. "We are now tracking -1.2% for 1Q and 2.5% for 2Q, implying 0.7% growth in the first half of the year. This is not the bounce we were hoping for." This past week, data on retail sales and consumer confidence disappointed, leading some in the market to throw the word "recession" out there. The general softness in the economy has largely been attributed to the decline in oil prices and the rise of the US dollar, pressuring import and other prices as well as investment from the oil and gas industry. But the surprising absence so far this year has been the consumer. "The consumer was supposed to be the bright spot this year given the tailwinds of lower gasoline prices, healthier job growth, continued wealth gains and improving sentiment," Meyer and Lin write. "We have not yet seen this strength materialize, as core control retail sales have been essentially flat since last November."
Meyer and Lin add: "Why the weakness? With a windfall of cash from lower gasoline prices, consumers are either being cautious, choosing to add a large portion to savings, or there is a longer lag to spending than we had expected. It could also be that consumers have learned from the crisis and have become more conservative about utilizing their wealth gains and managing debt." And writing in The New York Times this weekend, economist Tyler Cowen asks if the repeated economic disappointments we've seen in the last several years are part of a larger economic reorientation that the US could be facing for years to come. Economic Calendar
Market Commentary The only thing left to earn in stocks may be the dividend. Writing in a note to clients over the weekend, David Kostin, chief US equity strategist at Goldman Sachs, said, "With the S&P 500 trading at an all-time high, we expect its 2% dividend yield will be the sole contributor to total return during the next 12 months. The market will rise to 2150 by mid-year but fade after the Fed raises interest rates in September for the first time in nine years. Our year-end forecast is 2100 and our 12-month target equals 2125." Kostin notes that 165 S&P 500 firms have raised dividends so far this year, with Apple and Exxon serving as major contributors to this growth. "The historical relationship between the cyclically-adjusted P/E multiple (currently 23.4x) and forward equity returns suggest the prospective 10- year annualized total return for the S&P 500 will be 5%. Dividend levels implied by the swap market suggest that 46% of the total return during the next ten years will be derived from dividends, and 54% from price gain." For more insight about the middle market, visit mid-marketpulse.com. SEE ALSO: Wall Street is starting to wonder: What if everything is going to be okay? Join the conversation about this story » NOW WATCH: How to invest like Warren Buffett  | ||
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People are having serious doubts about the security researcher who allegedly hacked a plane | ||
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Security researcher Chris Roberts made headlines after an FBI report alleged he had hacked a plane during flight and taken over the controls — but now serious doubts are growing over the entire affair. In an interview with a special agent earlier this year about potential vulnerabilities in in-flight software, Roberts apparently made the claim that he could hack a plane using the passenger entertainment system. These comments then came to light after Roberts was barred from United Airlines flights in a high-profile incident after tweeting about potential vulnerabilities. A search warrant was then issued for the researcher's devices as part of an FBI investigation — and the comments were included in the warrant, which was made public. Here are the relevant parts of the warrant (emphasis ours):A special Agent with the FBI interviewed Chris Roberts on February 13, 2015 and March 5, 2015 to obtain information about vulnerabilities with In Flight Entertainment (IFE) systems on airplanes. Chris Roberts advice that he had identified vulnerabilities with IFE systems of Boeing 737-800, 737-900, and Airbus A-320 aircraft. Chris Roberts furnished the information because he would like the vulnerabilities to be fixed. During these conversations, Mr. Roberts stated the following: That he had exploited vulnerabilities with IFE systems on aircraft while in flight. He compromised the IFE systems approximately 15 to 20 times during the time period 2011 through 2014... ...That he was about to exploit/gain access to, or "hack" the IFE system after he would get physical access to the IFE system through the Seat Electronic Box (SEB) installed under the passenger seat on airplanes... ...After remove the cover... he would use a Cat6 ethernet cable with a modified connector to connect his laptop computer to the IFE system while in flight... ...He then connected to other systems of the airplane network... He stated that he then overwrote code on the airplane's Thurst Management Computer while aboard a flight. He stated that he successfully commanded the system he had accessed to issue the "CLB" or climb command. He then stated he thereby caused one of the airplane engines to climb resulting in a lateral or sideways movement of the plane during one of these flights.
In short: Roberts allegedly hacked into planes between 15 and 20 times over several years via the in-flight entertainment system using modified cables and his laptop. On one occasion, he apparently gained direct control of one of the engines, and made the plane move sideways. However, multiple news reports are casting doubts over the claims. First, a post by Mary Kirby on aviation industry website Runway Girl Network points out that Boeing says that entertainment systems are "isolated from flight and navigation systems" on commercial aircraft. Industry expert Peter Lemme told Kirby that "the IFE ARINC 429 interfaces are not capable of changing automatic flight control modes," and that "the claim that the Thrust Management System mode was changed without a command from the pilot through the mode control panel, or while coupled to the Flight Management System is inconceivable." Industry consultant Michael Planey also told Kirby that given Roberts' alleged method of access, the story seems suspect. "We have seen multiple instances of passengers being restrained by fellow passengers or flights diverted because a passenger is behaving abnormally. I find it nearly impossible to believe Roberts could have done this type of an act over a dozen times and never had a flight crew or fellow passenger notice – that part stretches the imagination. "Furthermore," Planey adds, "in the event that what he claims about monkeying with the Thrust Management System occurred, that would have been noted by the flight crew; they would have noticed the aircraft was moving not by command from the cockpit. There would have been many ways in engine monitoring and flight control management systems to detect this sort of event, and I would have expected the pilots would have written it up and there would have been an investigation. So I don’t believe what he says to be true." Writing for Forbes, Thomas Fox-Brewster points out further criticism. Security researcher and pilot Dr Phil Polstra previously criticised a US government report earlier this year warning of potential aircraft hacks as "irresponsible" and "deceptive." And Roberts himself has apparently changed his tune, now telling Fox-Brewster that his comments have been "totally taken out of context and misinterpreted." Join the conversation about this story » NOW WATCH: Mesmerizing video shows an airplane pilot pulling off extreme tricks in the air  | ||
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