(Reuters) - A surge in imports lifted the U.S. trade deficit in March to its highest level in nearly 6-1/2 years, suggesting the economy contracted in the first quarter.

 

Growth, however, is regaining momentum as other data on Tuesday showed activity in the services sector, which accounts for more than two-thirds of the economy, accelerated to a five-month high in April.

 

"It looks like we are going to have negative GDP for the first quarter, just based on trade, but we expect a robust rebound in the second quarter. A lot of the headwinds we saw in the first quarter have unwound," said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York.

 

The Commerce Department said the trade deficit jumped 43.1 percent to $51.4 billion in March, the largest since October 2008. The percent rise was the biggest since December 1996. The surge came as imports snapped back after being held down by a now-settled labor dispute at key West Coast ports.

 

Economists had forecast the trade deficit rising to only $41.2 billion. When adjusted for inflation, the gap widened to $67.2 billion in March, the largest in eight years, from $51.2 billion in February.

 

U.S. stocks and Treasury debt prices were trading lower. The dollar fell against a basket of currencies.

 

March's trade gap was far larger than the $45.2 billion deficit the government assumed in its snapshot of first-quarter gross domestic product last week.

 

In that report, the government estimated trade sliced off 1.25 percentage points from GDP, helping to pull down growth to a 0.2 percent annual pace. The economy expanded at a 2.2 percent rate in the fourth quarter.

 

Economists said growth could be lowered by at least six-tenths of a percentage point when the government publishes its second GDP estimate later this month.

 

NO SERIOUS DOWNTURN

 

The West Coast ports labor dispute, a strong dollar, deep spending cuts by energy companies reeling from lower oil prices, and bad weather hampered growth in the first quarter. But some of that drag on growth is fading.

 

In a separate report, the Institute for Supply Management said its services sector index rose to 57.8 last month, the highest since November, from 56.5 in March. A reading above 50 indicates expansion in the vast services sector.

 

"There is little reason to believe that the potential contraction in first-quarter GDP is the start of a serious downturn in the U.S. economy," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

 

Companies reported an increase in new orders and order backlogs. Export orders, however, contracted sharply, reflecting the dollar's impact. The greenback has gained about 12 percent against the currencies of the United States' main trading partners since last June, making American goods and services less competitive on the international market.

 

The trade report showed imports jumping 7.7 percent in March, the largest increase on record.

 

Some of the imported goods likely ended up as inventories, which in the first quarter recorded their biggest increase since the third quarter of 2010. That inventory overhang could spell bad news for second-quarter GDP.

 

Imports of capital and consumer goods were the highest on record in March, while imports of industrial supplies and materials slumped to an all-time low.

 

Read more: U.S. trade data points to first-quarter economic contraction

Like many people with a sensitivity to gluten, Kristen Sweet avoids the protein in wheat that can make her sick. But when she eats at a friend’s house or a restaurant, she cannot be certain that the food is absolutely gluten-free.

 

“There’s this risk every time you do go out and trust your health in someone else’s hands,” said Ms. Sweet, 29, who has the gluten-related condition known as celiac disease. “When I do get sick I am curled up in a ball for days and there is nothing I can do. There is nothing you can take.”

 

Now, however, pharmaceutical companies are racing to develop the first drugs for celiac disease, which researchers say is much more common than previously thought.

 

No drugs are expected to reach the market until 2018 at the earliest, but a couple of them have shown hints of promise in small clinical trials and might soon advance to the final stage of testing. With that in mind, the Food and Drug Administration held a daylong public workshop recently to discuss something it has not had to ponder before: How to measure the effectiveness of celiac disease drugs in clinical trials.

 

Most of the drugs in development would not eliminate the need for a gluten-free diet, but would help alleviate symptoms when some gluten does leak into food.

 

They are being developed mainly by small companies, though some larger pharmaceutical companies are now also showing interest. AbbVie paid $70 million for an option to acquire the global rights to a drug being developed by Alvine Pharmaceuticals. GlaxoSmithKline and Avalon Ventures, a venture capital firm, created a new company, Sitari Pharmaceuticals, which is pursuing celiac treatments.

 

Drug development has lagged, experts say, in part because the illness was once thought to be a rare condition among children. In the last 15 years or so, however, studies have found that around 1 percent of the population, both adults and children, have the disease, meaning it affects about three million Americans. But most of them do not have a diagnosis, in part because the symptoms — which include abdominal pain, bloating, diarrhea, headaches, fatigue and cognitive problems — can have many other causes. And not all gluten sensitivity is related to celiac.

 

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Celiac is now believed to be an autoimmune disease, in which the body’s immune system attacks its own tissue, particularly the lining of the small intestine, through which nutrients are absorbed. The attack is triggered in genetically susceptible people by gluten, a protein in wheat, barley and rye that imparts favorable properties for cooking but cannot be readily digested.

 

“It’s the first autoimmune disease for which the antigen was identified,” said Dr. Francisco Leon, co-founder of Celimmune, a new celiac drug development company. He said celiac disease might serve as a test bed for drug companies developing products for autoimmune diseases because it is easy to get a quick read on whether a drug works by feeding people gluten.

 

It also suggests drugs for other autoimmune diseases might work for celiac disease. Celimmune licensed rights to a drug Amgen had tested for rheumatoid arthritis and will study it for hard-to-treat cases of celiac disease.

 

The advent of the gluten-free diet has been a major advance for those with celiac disease, but it is not a cure-all. One study, for instance, showed that the small intestines of two-thirds of adults were still damaged two years after starting a gluten-free diet.

 

That could be because it takes time to heal. Or it could be that people are still being exposed to gluten that seeps into food in small amounts. Gluten can also be in lipstick, prescription drugs and other places that might not be expected. And adhering to the diet can be difficult for some people, specialists say, particularly teenagers who want to have pizza with their friends.

 

“There’s a whole degree of anxiety and social isolation that comes along with this,” said Dr. Daniel A. Leffler, director of research at the Celiac Center at Beth Israel Deaconess Medical Center in Boston, who has been a consultant to companies developing celiac drugs.

 

Drug developers are taking various approaches.

 

Alvine’s drug, ALV003, consists of two enzymes that are meant to break down gluten before it can get into the small intestine and cause a reaction. The drug is a powder dissolved in water that is taken before meals.

 

In one small study, volunteers deliberately ate bread crumbs every day for six weeks. The intestines of those who took the drug were not damaged, unlike the intestines of those who took a placebo. But there was not a statistically significant difference in symptoms.

 

Read more: As Celiac and Gluten Sensitivities Gain Prominence, Drug Companies Race to Find Treatments

There were chaotic scenes at the Indonesian port of Cilacap this morning as the families of Australian drug smugglers Andrew Chan and Myuran Sukumaran arrived for what is expected to be their final visit to the condemned men.

 

Chan, Sukumaran and seven other death row criminals have entered what could be the last day of their lives, with the 72-hour notification period expiring at midnight.

 

Family and friends embarked at Cilacap for the first trip to the Nusakambangan prison island today, assuming they may never see the prisoners alive again.

 

Media mobbed the families and Sukumaran's sister had to be carried through as cameras pressed in on all sides.

 

Shortly afterwards an ambulance carrying nine coffins arrived at the ferry terminal for the short trip to the island.

 

Those close to Chan and Sukumaran have told the ABC they fear the men will be shot by firing squad in the early hours of tomorrow morning.

 

Indonesian attorney-general Muhammad Prasetyo is expected to make an announcement on the timing of the executions later today.

 

The impending executions prompted a group of Australian actors to make a last-ditch bid for clemency.

 

After a prison visit yesterday Sukumaran's brother, Chintu, urged Indonesian president Joko Widodo to show mercy.

 

"I spent the last five hours watching young children playing with their parents and I ask the president to not make orphans out of children, widows," he said.

 

"There are family members just crying inside the prison as we count down the hours.

 

"Please step up and show mercy."

 

A spokesman for the Indonesian attorney-general, Tony Spontana, said the executions would most likely take place this week.

 

"I have the feeling that it will happen this week because the preparation is 100 per cent ready," he said.

 

Mr Prasetyo said it was not necessary for him to go to the president to advise when the executions would take place, but he was considering it.

 

One of Chan and Sukumaran's lawyers, Julian McMahon, said that "realistically, there's not much hope".

 

"In many legal systems if someone was making allegations ... about the sentencing process being affected by people allegedly seeking bribes and so on culminating in a death penalty, then you wouldn't think of any execution would proceed. But that's the current state of play," he said.

 

"Looking around, I saw most of the people who are going to be executed today ... and it's just shameful.

 

Read more: Bali Nine: Families of Andrew Chan, Myuran Sukumaran mobbed as they arrive for potential last visit before executions

(Reuters) - Sony Corp on Monday unveiled a new high-end Xperia handset featuring an aluminium frame and a 5.2-inch screen, showing it is still in the smartphone race even as it scales down its struggling mobile operations.

 

The launch of the new flagship model comes amid a painful restructuring at the Japanese consumer electronics giant which has thrown the future of its smartphone division into doubt, with top executives saying an exit cannot be ruled out.

 

But as the company focuses on cutting costs rather than growing its mobile market, the division still needs investment in new products and marketing to maintain Sony's brand and hold off a more rapid deterioration.

 

Sony said the Xperia Z4 would be available in Japan around the middle of the year, though it did not provide a launch date, details on carrier partners or price. The handset would be available in four colours and was slightly thinner than the previous Z3.

 

Hiroki Totoki, who was appointed last year to turn around the mobile unit, said Sony was targeting the upper end of the market where rivals such as Samsung Electronics Co Ltd and Apple Inc dominate.

 

"There's a broad variety in the prices of smartphones, from around $100 to $1,400 at the upper end," he told a news conference. "We want to focus in the upper half of that."

 

Sony's mobile division has fallen far behind high-end rivals such as Samsung and Apple, while at the low end it is battling pricing pressure from Asian manufacturers such as China's Xiaomi Inc.

 

The company whose Walkman and Trinitron TV once played a critical role in the global entertainment industry has struggled in recent years to come up with trend-setting gadgets.

 

Sony announced in February that it would scale down its weaker operations such as TVs and mobile phones to focus instead on more successful products such as video games and camera sensors.

 

Read more: Sony unveils new Xperia phone even as it retrenches in mobile

FALL RIVER, Mass.   — Even after he was convicted of first-degree murder and sentenced to life in prison without parole, former New England Patriots star tight end Aaron Hernandez is nowhere near done with his legal troubles. He still faces double murder charges in Boston, as well as civil lawsuits over the killings and a lawsuit in Florida from a former friend who said he was shot in the face and left for dead after arguing with Hernandez.

 

A jury on Wednesday found Hernandez guilty of the June 2013 killing of Odin Lloyd, who was dating the sister of Hernandez's fiancee. Lloyd was killed — shot six times in a deserted industrial park less than a mile from Hernandez's home — for reasons that still remain unclear. Hernandez's lawyer acknowledged his client witnessed the crime but insisted he did not do it.

 

After the verdict, Hernandez was brought to a state prison less than a 4-mile drive from Gillette Stadium, the place where he once used to catch touchdown passes by Tom Brady in front of tens of thousands of fans. He will eventually be moved to another maximum-security institution.

 

A first-degree murder conviction in Massachusetts automatically triggers an appeal to the Supreme Judicial Court. A date for the Hernandez appeal wasn't immediately set.

 

Hernandez also is charged in a 2012 double killing in Boston. His alleged connection to that slaying emerged as the Lloyd investigation unfolded. Prosecutors in Boston say that Hernandez killed two men, Daniel de Abreu and Safiro Furtado, after one of them accidentally bumped into him and spilled Hernandez's drink at a nightclub. Hernandez has pleaded not guilty to two counts of murder.

 

Hernandez told a friend he thought the man was "trying" him, and surveillance video outside the club showed Hernandez pacing back and forth while his friend tried to calm him down.

 

Later, Hernandez drove around until he saw the men get in a car, followed them and shot at them from a silver SUV at a stop light, prosecutors said. A third man in their car also was shot but survived.

 

The judge in the Lloyd case barred prosecutors from telling jurors about the Boston double killing. Jurors in the Lloyd case on Wednesday said that after the verdict the judge told them about the 2012 case, information they said only affirmed to them that they had made the right decision.

 

About six weeks after that shooting, Hernandez signed a five-year, $40 million contract with the Patriots, and he went on to play for another season before Lloyd was killed. He was cut from the team soon after being arrested in Lloyd's killing in June 2013.

 

Suffolk County prosecutors said Wednesday they don't have an estimate on when Hernandez could stand trial for the double homicide. The trial had been scheduled to begin May 28, but a judge agreed in November to delay the case indefinitely so Hernandez's lawyers could focus on the Lloyd case. The first step will be to hold a pre-trial status hearing.

 

"We expect to go in to court in the coming days with defense counsel to set a new court date and from there set a new trial track," Jake Wark, a spokesman for Suffolk County District Attorney Daniel Conley, said a few hours after Hernandez was convicted and sentenced.

 

Hernandez's legal team, James Sultan, Michael Fee and Charles Rankin, left the courthouse Wednesday without commenting.

 

Lloyd's mother, Ursula Ward, has a civil lawsuit against Hernandez seeking an unspecified amount of money. That lawsuit was put on hold during the criminal case. Her lawyer, Doug Sheff, said Wednesday he did not know whether he had to wait for the appeal in the criminal matter to press the lawsuit.

 

Read more: After conviction, many court cases left for Aaron Hernandez

During primary season, such questions are often answered in New Hampshire barns. So on one recent freezing afternoon, Rubio stood amid the rough-hewn beams of a pretty red barn in a postcard-quaint New Hampshire town as a crowd of Republican Yankees sized him up.

 

Rubio’s youth is written all over his moon-shaped face, with soft, boyish features framed by the neatly parted haircut of an altar boy. But now, wearing a casual black pullover and open-neck shirt, Rubio worked to project gravitas and position himself as the bearer of the kind of wise common sense that plays well in New England.

 

And he told his parents’ immigration story, how they came from Cuba with a grade-school education. It’s the central pillar of his political narrative, and at every stop he talks about the “exceptionalism” of America, a country where the son of a bartender and a maid grew up knowing that there were no limits to his future.

 

“They lived the American Dream,” Rubio said. Now, he said, the nation’s urgent challenge is to make sure the next generation can also say “our future can be better than our past.”

 

Jack Hanover, 69, a small business owner, was impressed. He liked Rubio’s “youth” and “vitality” and said the Florida senator just might be what the Republicans need in 2016.

 

But others needed more convincing that this up-and-comer was ready to be commander-in-chief.

 

“I personally think he is a little bit young,” said Ed Stebbins, 57, an insurance agent. “He could use a bit more government — or some other — experience. Being president is not exactly an easy job, and you want somebody who has been in the trenches.”

 

As the New Hampshire folks kept talking, Rubio was already on the move, barreling down a snowy road toward the next crowd, itching to pitch himself again.

 

Read more: A man in a hurry

 

At the age of 100, Dr. Ellsworth Wareham still drives on the freeway, putters around the house and takes care of his yard. He was still assisting in open heart surgeries until four years ago.

 

Wareham suspects that his lifestyle, like those of the other Seventh-Day Adventists living in Loma Linda, California, is at least partially responsible for his good health at such an advanced age.

 

“I really don’t feel any different than I did when I was, say, 30,” he tells explorer and National Geographic fellow, Dan Buettner. “I feel like I could live another 25 years, but I know that’s not realistic.”

 

Wareham and the community of Loma Linda are exactly what Buettner was looking for when he set out to find spots where people lived the longest and the healthiest. Buettner dubbed those places “Blue Zones.”

 

From studying those zones of longevity, Buettner came up with a list of lifestyle modifications that seemed to improve not only lifespan, but also health near the end of life. Among his recommendations are an emphasis on greater activity and the switch to a more plant-based diet. He described these and other lifespan extending modifications in his new book “The Blue Zone Solution: Eating and Living Like the World’s Healthiest people.”

 

From its outward appearance, Loma Linda doesn’t seem to have much in common with another Blue Zone, Sardinia, an Italian island where the men live longer than anywhere else on the planet. Loma Linda seems just like many other small town in the United States, right down to its McDonald’s restaurant.

 

But step into the local grocery store and you’ll start to see some resemblance to the Mediterranean island.

 

As in Sardinia, the bread is made with lactobacillus instead of yeast, which lowers the glycemic load after a meal, Buettner says. “So you can eat this and actually the sugars will burn more slowly than if you didn’t eat bread at all,” he adds. “Vastly different from normal bread.”

 

Setting it apart from many similar towns, there’s no meat department in the grocery store. But there are stacks of beans, a food that Buettner says is one of the keys to long life.

 

In Loma Linda healthful eating is part of the religion.

 

“The Adventists celebrate their Sabbath on Saturday instead of Sunday,” Buettner says. “They take their diet directly out of the Bible: Genesis chapter 1, verse 28 lays out the diet of the Garden of Eden.”

 

And like the men of Sardinia, they are always on the move.

 

Buettner believes that we can all benefit from what he’s learned from the Blue Zones, no matter how old we are.

 

“If you’re 99 years old and you’re sedentary and you start moving tomorrow, you will add years to your life expectancy,” Buettner tells NBC’s Cynthia McFadden. “It’s never too late.”

 

Buettner’s been trying to spread the Blue Zone message across the nation, encouraging communities to make small tweaks that might have big effects, like adding sidewalks, promoting bicycling, creating healthier restaurant menus. So far, six million people have gotten involved, says Beuttner.

 

Read more: Living to 100 in Loma Linda, where a healthy diet comes from the Bible

The US March employment report makes for dismal reading.  Job growth collapsed to 126k, the least monthly total since December 2013. Adding insult to injury, there was a 69k downward revision to this year's job growth. The average work week slipped 0.1%, which may not sound like much suggests a significant drag on output.  

 

One of the few bright spots in this otherwise poor report was the 0.3% rise in hourly earnings. Yet, the 2.1% year-over-year pace is still disappointing relative to past cycles.  The participation rate eased back to 62.7%.  The unemployment rate was flat at 5.5%, but the underemployment rate slipped to 10.9% from 11.0%.  

 

While the jobs report was disappointing, in some ways it confirms what we already know.  The US economy slowed markedly in Q1 15.  The slowdown does not appear to be as pronounced at Q1 14, when the economy contracted by 2.1% at an annualized pace.   In some ways, though investors are faced with a similar decision.  Is the weakness in Q1 GDP indicative of the trajectory of the US economy or is it a function of transitory factors?  

 

As we argued last year, so too now, that US economy is not slipping back into a recession.  The poor weather, poor strikes and payback from the more than 4% annual pace of consumption growth in Q4 14.  There has been a notable gap between the labor market and GDP.  In the bigger picture, we expect the gap to be reduced by increased growth rather than deterioration in the labor market. 

 

The pendulum of market expectations had already pushed the Fed's lift off into Q4.  It is possible that it is pushed into 2016.  However, we suspect that while Fed official s will take note of today's report, short-term market participants are likely to put more stock into the high frequency data than the central bank.  The speculative community remains very long US dollars, and position squaring will see the Q1 trend consolidate and correct here at the start of Q2.  

 

Read more: Poor US Jobs Report Sends Dollar Reeling

 

At the end of each quarter, the IMF reports on currency reserve holdings by central banks for the preceding quarter. What investors are most interested in is the currency allocation of those reserves.  

 

Not all central banks report the allocation of their reserves. China, the world's largest holder of reserves, is believed not to report the allocation of its reserves.  If it wants the yuan to be included in the SDR basket, it is probably a good idea to adopt the IMF's best practices. 

 

The currency allocation of 53.3% of $11.6 trillion of global reserves is known.  Of the remaining $5.515 trillion (46.7% of global reserves), more than $4 trillion is accounted for by China.   The allocation is scrutinized by analysts and economists trying to tease out details about the currency preferences of central banks.  Sometimes observers miss the forest for the trees or don't understand what they are seeing.  Others demonstrate the veracity of Nobel-prize winning economist Ronald Coarse observation that if tortured long enough statistics will confess to anything.  

 

Here are six points that have been largely overlooked when discussing the Q4 reserve figures. 

 

1.  The most important point that is under-appreciated is that the reserves are converted into dollars.  What is reported is the dollar value of reserves.  When the dollar rises, the dollar value of euro reserves falls, for example.  The reserves are invested in assets, mostly bonds, though an increasing number of central banks equities too.  The value of the assets change over time and need to be taken into account as well.  

 

2.   Central banks move at glacial speeds in changing reserves.  The increase in the dollar's share of reserves that was heralded by the headline writers was 0.50%.  The euro's share fell by 0.39%.  Sterling's share fell 0.05%  

 

3.   Overall reserves fell by $166 bln in Q4.  This follows a $223 bln decline in global reserves in Q3.   Part of can be accounted for by valuation, but seemingly unnoticed the dollar holdings themselves actually fell by $31 bln.  This is very small potatoes.  There are still 3.826 trillion dollars in official reserves whose allocations have been reported.  It is interesting to think about why dollar reserves may have fallen.  Contrary to the currency war meme, not all central banks want to have weaker currencies.  Several central banks are believed to have intervened Q4 14 to support their currency, and this often entails the sales of dollars.  

 

4.  The dollar value of euro reserves fell $46 bln to $1.351 trillion.  This is a 3.3% decline.  The IMF tells us the dollar rose from 0.7947 euros to 0.8237 (= euro falling from $1.2583 to $1.2140) over the course of Q4 14.  The currency valuation then depressed the dollar value of the euro holdings by 3.6%.    It could be that the IMF does not use the quarter-end rates to translate the euros into dollars.  It could be that the 0.3% (3.6-3.3) is a rounding error.  It could be that some reserve managers bought some euros (~4.2 bln euros).   It could be that the some eurozone denominated asset was marked up.  

Read more: Six Mostly Overlooked Points about the Currency Reserve Data

When we reviewed the HTC One M8 last year, our primary complaint was how little it was changed from the M7. HTC basically recycled the M7 design with the M8. Apple gets away with updating its designs every other year because it's a market leader. HTC is definitely not a market leader though, so we think it's fair to expect it to be nimbler and faster than its bigger rivals—that's really the only path to success when you aren't winning.

 

Now, HTC is back with a new flagship—the HTC One M9. While the M7 to M8 transition was underwhelming, with the M9, HTC has slowed down to nearly a standstill, as the design is nearly identical to the HTC M8. The Snapdragon 810 SoC—meant to give the M9 a speed boost over the M8—has been throttled so much that the M9 is at best equal to the M8, and in some cases slower. The other small improvements HTC tried to make—relocating the power button and an upgraded camera—didn't work out well, either.

 

The (dated) design

 

Have you seen an M8? If so, you're most of the way there. HTC has tweaked things a bit by giving the side of the device a ridge—imagine if the back of the exterior was sized about 2 percent bigger than the front and the edges weren't flush. It serves as a way to tell the M8 and M9 apart, but isn't really functional or good looking.

The back of the phone is still aluminum, but HTC has given it a finish that diminishes most of the premium feel you would normally get. It thankfully isn't as glossy as the M8, but we greatly preferred the finish of the M7. Aluminum is a great material; there is really no need to overcomplicate things. The odd stair step on the side of the M9 delineates the aluminum from the plastic front, which forms the speaker grills and the side bezel of the device.

 

Our biggest complaint with the M8 remains in the M9: the front of the phone still wastes a lot of space. Thanks to the top and bottom speakers and a bar dedicated solely to the HTC logo, this 5-inch phone is almost as tall as the 5.5-inch LG G3. And other vendors, namely Motorola, have proven that it's possible to fit decent-sounding front-facing speakers without taking up as much space as HTC's BoomSound speakers do.

 

One complaint about the M8 that HTC did try to address was the location of the power button. HTC put it on the top edge of the M8, and on such a tall phone that made it hard to press. To try to fix this, HTC put the power button on the side of the phone, right next to the volume up and down keys. The problem is that they are all the same shape and right next to each other.

 

The three similarly shaped buttons make it basically impossible to tell where your finger is by touch. If you put your finger on the side of the phone and feel an oval button, it could be any of three buttons. After a week of use, I still can't remember which button is which and have never gotten the power button on the first try. I've taken to just running my finger across all three buttons when I need to use the power button. Thankfully this still has tap-to-wake, which means the poorly designed buttons are only an issue for adjusting the volume. It's amazing that stuff like this makes it into production when, after spending five minutes with it, you instantly know it's a bad idea. The M8 used a single long volume rocker rather than separate buttons—keeping this and adding a smaller, separate power button would have been a wiser choice.

 

HTC Sense: The wrong kind of software differentiation

 

While we don't really like software differentiation from Android OEMs, we've come to the conclusion that there are good and bad kinds of differentiation. The good kind is something like Samsung's multi-window support, which is genuinely useful and is something that only an OEM can add at the OS level. There are also things like Motorola's always-on voice technology, which is software that works with specialized hardware.

 

Then there's the bad kind. One type is "change for change's sake,"—an OEM favorite—which offers the user a functionally identical interface that is "branded" and therefore inconsistent with other Android apps. This is getting especially bad in the Material Design era, where Google and third-party apps all have one design language, and OEM interfaces all stick out like a sore thumb.

 

Another bad software differentiation decision—and one of HTC's favorites—is to use your hardware as an excuse to do app development. On the M9, for instance, HTC will say "we have a really great gallery app." We don't know if the company has noticed, but there are thousands of gallery apps on the Play Store from companies whose sole job is make a great gallery app. If a user wants a good gallery app, then they should go to the Play Store and download one. This should not be an OEM responsibility. 

 

The goal of differentiation—which we think OEMs sometimes forget—is to sell hardware. Software differentiation only matters if it affects the core of the device, either via a complicated OS change (like multiwindow) or some combination of hardware and software. Even if HTC succeeded at making a great gallery app, it's not meaningful differentiation because it's just an app. Every other gallery app would immediately copy whatever the cool feature is, and anyone considering an HTC phone because of the awesome gallery app could just download basically the same thing from the Play Store. OEMs that do app development are wasting everyone's time and their own resources on something that will never be a selling point.

 

Read more: HTC One M9 review: HTC’s flagship feels like an afterthought