The Geek’s Reading List – Week of September 7, 2012
I offer a welcome back to my earlier readers and an introduction for my new ones. I am an independent analyst and consultant with 19 years of experience as a sell side technology analyst, and 13 years of prior experience as an electronics designer and software developer.
The purpose of the Geek’s Reading List is to draw attention to interesting articles I encounter from time to time. I hope that what I find interesting you will find interesting as well. These articles are not to be construed as investment advice, even though I may opine on the wisdom of the markets from time to time. That being said, it is absolutely important that investors understand the industry in which they are investing, along with the trends and developments within that industry. Therefore, I believe these comments may actually help investors with a longer time horizon.
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1. Intel cuts Q3 revenue outlook, cites weak demand
A $1 billion miss in the back to school quarter. Makes you wonder what the holiday season is going to look like. It is worth noting that the CPUs Intel makes are not the only things which go into PCs – DRAM, Flash, hard disks, and power components are also bound to be weak as well. Even the suggestion that this may be Windows 8 related is stupid: nobody defers a PC purchase for a new version of Windows anymore.
“Relative to the prior forecast, the company is seeing customers reducing inventory in the supply chain versus the normal growth in third-quarter inventory; softness in the enterprise PC market segment; and slowing emerging market demand. The data center business is meeting expectations.”
2. SIA: July semiconductor sales inch up, unevenly
The SIA is starting to sound like a management team: focus on sequential figures when the year-over-year numbers don’t look encouraging. If you look at the long term growth chart (1996 – 2012) you see that sales more or less doubled over 18 years. That’s around a 4% CAGR with a lot of that growth occurring prior to 2000. Not a good sign for an industry with massive capital spending needs and modest free cash flow.
“Global semiconductor sales totaled $24.34B in July, a scant 0.2% increase from the prior month and down -1.9% from a year ago, as macroeconomic challenges weigh down demand particularly in Europe and the Americas, according to the latest monthly data from the Semiconductor Industry Association (SIA).”
3. Ahead of the Bell: Audience shares plunge
I never heard of this company before but this announcement is an example of two of my rules of thumb for tech investment: never invest in derivative plays (own X because X sells to Y); and never invest in companies whose existence is dependent on a single customer.
“Audience sells processors and licenses intellectual property to Apple for use in the iPhone. Under its deal with Apple, Audience developed and licensed a new technology for use in the Apple devices, but Apple wasn’t required to use it. Audience said late Thursday that while it’s unlikely that Apple will use its technology in the new version of the iPhone expected to be released this fall, the iPhone 5, it still expects the technology to continue to be used in older versions of the phone.”
4. Intel Embraces Submerging Servers in Oil
What’s old is new again: I saw the Cray 3 which was immersed in a fluid cooling system: it was kind of spooky – the fluid was perfectly clear and moving at high speed so the cabling quivered as the system operated, like a throbbing brain. In any event, liquid cooling makes a lot of sense because liquids conduct heat much more efficiently than air. Of course, you have to find a compatible fluid so the electronics don’t corrode.
“Intel has just concluded a year-long test with immersion cooling equipment from Green Revolution Cooling, and affirmed that the technology is highly efficient and safe for servers. The testing, conducted at an Intel data center in New Mexico, may mark a turning point in market readiness for submerged servers, if recent experience with Intel’s embrace of emerging data center designs is any indication.”
5. Nokia Faked Its PureView Demo and Then Claimed They Never Said It Was Real
You really have to wonder what the marketing people were thinking on this one: we are living in 2012, not 1988, and people can figure this stuff out. The initial reaction to the demo was ‘awesome’ but that turned to outrage once the truth came out. Nokia has since apologized, which is what you do when you get caught, but the damage has been done.
“If the camera on the Lumia was that good, we wanted it. Badly. Immediately. But sadly, it was faked. Nokia isn’t showing off what the Lumia 920 can do—that video was shot with a big DSLR.”
6. ‘Super Wi-Fi’ poised for growth in US, elsewhere
We’ll see how far this goes: unlicensed (or even licensed) WiMax had great promise which never really materialized. The existing ‘licensed’ mode made sense during the era of Marconi style single carrier analog transmission is hopelessly obsolete. Unfortunately, there is a lot of money tied up in those spectrum licenses so I don’t expect it to change soon.
7. Kenya’s technology start-up scene is about to take off
What the Internet did to the Indian economy, it seems wireless technology may do to the economy of Africa. Communications can have a profound impact on GDP as goods can move more efficiently and pricing can reflect more information among the parties. We can only hope this is the start of a turnaround in Africa’s fortunes.
“In 2005, when Bitange Ndemo was appointed as permanent secretary to the ministry of information and communications technology (ICT), Kenya was a technological backwater. Access to the internet was available only through satellite connections and was wallet-sappingly expensive. In 2009 Mr Ndemo brought the first of four undersea internet cables to the Kenyan coast. Prices plummeted and bandwidth exploded. Just under 12m of the country’s roughly 40m people now use the internet, a number that has trebled since 2009.”
8. Amazon’s Bezos Launches New Kindles To Access Content Empire
Lots and lots of articles about Amazon’s product launches this week. The lower cost units are interesting, and hardware being hardware, likely reflect pricing trends in the tablet word in general rather than ‘design geniuses’ at Amazon. (Amazon almost certainly turned to ODMs for the products).
“A 7-inch version of the Kindle Fire HD, the successor to Amazon’s initial entry last year in the tablet Relevant Products/Services market, costs just $199 and will be available on Sept. 14. Its larger brother will cost $299 but consumers will have to wait until November. A deluxe Fire with 4G Relevant Products/Services, long-term evolution data Relevant Products/Services speed runs $499, the same as Apple’s 16-gigabyte iPad, but comes with 32 gigs of storage. The Kindle Fires are also equipped with front-facing cameras, like the iPad, for video Relevant Products/Services chatting.”
9. Disruption Starts With A Foot In The Door: Amazon’s New Data Plan Is Limited But Potentially Revolutionary
One interesting aspect of the Amazon launch is the cheap data plan. Admittedly 250 mb is not very much, but it depends what you want to use the product for (that an awful lot of text). Of course, regardless of who is doing the selling, the wireless license holders will ultimately dictate terms and conditions favorable to themselves.
“Amazon has included mobile data before in its Kindles, but those were strictly for books (which don’t take up that much data). As they go further into the fully functional tablet world, this starts to become more interesting. That’s because mobile data continues to be something of a racket, with just a few national providers: Verizon, AT&T, T-Mobile and Sprint (and there are limitations there).”
10. E-book anti-trust settlement is approved
I can’t really figure out who the good guys are here: Apple and the publishers for conspiring to raise prices (getting them a tap on the wrist) or Amazon for its policies. Frankly I think e-book prices are outrageous: usually slightly less than the price of a paperback despite the fact there is no printing, distribution, return, or merchandizing costs. I figure an e-book is properly priced at the author’s royalty plus small fees to pay for editing and distribution (a total of around $3). Until then, there are alternatives to purchasing.
“Before the release of the iPad, Amazon’s (AMZN, Fortune 500) Kindle was the preeminent e-book reader on the market. Amazon forced publishers to sell most books at $9.99. According to the Department of Justice, booksellers were unnerved by the discounted e-book price structure Amazon launched in 2007. The publishers went to Apple in late 2009 to find a way to force Amazon to raise its prices. The iPad proved to be the perfect tool to accomplish that.”
11. Updated services agreement allows Microsoft to integrate content across cloud properties
More fun and games in the whacky world of EULAs: I think this pretty much shows how secure cloud storage is – if Microsoft can scan your stuff to provide search results they are not just reading your mail but all your documents and spreadsheets as well. Not exactly what most businesses signed up for.
“This means, for example, that Microsoft can extract content from cloud-based services like Hotmail, SkyDrive, or Office.com, and use it to personalize a user’s Bing search results. The company alluded to this change in its email to users, explaining that such content usage would align “to the way we’re designing our cloud services to be highly integrated across many Microsoft products.”
12. LG’s 84-inch 4K ultra high definition TV goes on sale in the US next month for $19,999
Flat panel manufacturers are struggling after they invested billions for plants to support the HD transition. I wish I could say UHDTV is next – it is not because there is no content and there will likely never be much content. However, don’t be surprised to see these sets retailing for $4 or $5,000 within a couple years as manufacturers struggle for differentiation.
“LG said it would release its 84-inch 4K (3,840 x 2,160, or four times the resolution of your current HDTV) UHDTV outside Korea this month and the company confirmed shipments would be on the way during an event at CEDIA 2012 before also announcing an MSRP of $19,999..”
13. Why I’m Cutting the Cord, and How Cable Can Get Me Back
Cord cutting is a an irreversible trend, but only available for those fortunate enough to have access to real broadband. If consumers had a choice extending beyond their cable provider or telephone company for broadband services the ‘cable’ world would be in a lot more trouble than it is right now. The fundamental problem with cable (or satellite for that matter) is that consumers rarely watch more than a dozen channels but end up paying for hundreds.
“But as time passed, the bill bulged. In July 2011, it jumped to $108 a month. In August 2011, it leapt again to $126. Another jump to $135 followed in January 2012, and the next month, it hit $145. My last bill, for the month of July, was $153. That’s a $59 increase in my monthly cost over the span of two years.”
14. An integrated encyclopedia of DNA elements in the human genome
This is not an entirely surprising result as nature tends to conserve what it needs and gets rid of what it doesn’t. Junk DNA was essentially an admission of ignorance in how the genome actually functions. Still, this opens up significant new opportunities for medical research.
“The Encyclopedia of DNA Elements (ENCODE) project has systematically mapped regions of transcription, transcription factor association, chromatin structure and histone modification. These data enabled us to assign biochemical functions for 80% of the genome, in particular outside of the well-studied protein-coding regions.”
15. Flat lens offers a perfect image
Another example of how nano-technology may be disruptive. The production of high quality lenses is expensive and challenging. There is a reason you pay hundreds or thousands of dollars for a good quality camera or lens. If this proves to be scalable and stable companies like Leica and Zeiss could end up going the way of Kodak.
“In the future we can potentially replace all the bulk components in the majority of optical systems with just flat surfaces,” says lead author Francesco Aieta, a visiting graduate student from the Università Politecnica delle Marche in Italy. “It certainly captures the imagination.”
16. Tough gel stretches to 21 times its length, recoils, and heals itself
An interesting development in materials sciences, even though I don’t exactly understand what is going on. The video doesn’t work for me.
“Called a hydrogel, because its main ingredient is water, the new material is a hybrid of two weak gels that combine to create something much stronger. Not only can this new gel stretch to 21 times its original length, but it is also exceptionally tough, self-healing, and biocompatible—a valuable collection of attributes that opens up new opportunities in medicine and tissue engineering.”
17. Man Walks With Aid of Brain-Controlled Robotic Legs
This seems like an impressive development but they could have done a bit of work on the video – a bad camera angle and devoid of information content, it just shows a guy walking with stuff on his legs. Nonetheless I have great confidence the types of things will be commonplace within 20 years.
“A new brain-computer interface allows a person to walk using a pair of mechanical leg braces controlled by brain signals (above), as reported on arXiv. The device has only been tested on able-bodied people, and while it has limitations, it lays a foundation for helping people with paralysis walk again.”
18. Stem cells bring back feeling for paralysed patients
One of my lab demonstrators had a saying: “a third of the mice supported the hypothesis, a third did not, and the other one ran away.” That being said, this early trial is encouraging and I can believe any improvement is significant if you have profound nerve damage. The source of the stem cells is a bit discomforting, however.
“None of the three felt any sensation below their nipples before the treatment. Six months after therapy, two of them had sensations of touch and heat between their chest and belly button. The third patient has not seen any change.”
19. Have Three Little Photons Broken Theoretical Physics?
I took some comfort in the conclusion that the universe was essentially integer (if Planck Time and Planck Length are the smallest time and distance, and the universe has a starting time and location, then every dimension can be represented by a whole integer, albeit a very big one.) Now these photons show up and change everything.
“So we then conclude that these photons were not dispersed. So if they were not dispersed, then the universe left them alone. So if the universe was made of Planck-scale quantum foam, according to some theories, it would not have left these photons alone. So those types of Planck-scale quantum foams don’t exist.”
20. Paleocast Podcast
What can I say? A podcast about paleontology.