The Geek’s Reading List – Week of December 14th, 2012
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. APPLE MARGIN SQUEEZE: Global Telecoms Are Now Refusing To Pay Up For The iPhone
Most of Business Insider’s stories have the feel of the National Enquirer, but they do occasional say something of value. When you are the clear market leader, you have volume and high margins. When you become a distant second, you can either have margin, or sale volumes (consider Macs, for example). Regardless of the product, there comes a time when its feature list stops expanding. This can happen due to a number of factors, but in the case of a mobile phone, size limits utility. It is reasonable to assume that we are at the ‘plateau’ phase for smart phones, and that prices and margins are only going to go down from here, and not just for Apple.
“Since launching the iPhone in 2007, Apple has been able to maintain an average price point for the iPhone of over $600, thanks to the iPhone’s superiority to other smartphones, generous carrier subsidies in major markets, and consumers’ desire for the phone.”
2. $50 Android Smartphones Are Disrupting Africa Much Faster Than You Think, Says Wikipedia’s Jimmy Wales
There are three stories here: the first relates to the above article and shows what may be possible in terms of pricing for smartphones; the second is a rebut to people who whine about the cost of smartphones and the looming curtailment of ‘subsidies’ and the third is the ongoing transformation of the economic and political environment in Africa thanks to technology.
“What phone does Wikipedia founder Jimmy Wales have in his pocket? An unlocked Android-powered 3G smartphone, made by Chinese mobile maker Huawei – which was selling for $85 on the streets of Kenya last year and now goes for $50.”
3. T-Mobile isn’t paying for your phone anymore, and that’s a good thing
Phone subsidies were a clever marketing strategy when mobile phones were beyond the means of most consumers. Now they are a mechanism to get people to buy a phone and commit to services they cannot afford. Hopefully, carries will end subsidies and more consumers will realize that they come out ahead if they buy an unlocked phone, and there are plenty of choice in that realm.
“During T-Mobile’s annual investor conference in Germany, newly-installed CEO John Legere dropped two bombshells. The first was that T-Mobile USA would finally begin offering the Apple iPhone next year. The second was that T-Mobile plans to eliminate subsidies on new phones, meaning phone buyers would either have to pay the full price for a new phone up front – perhaps $300 to a very daunting $800+ – or pay off their handset in installments tacked on to their monthly bill.”
4. Apple Infringes Three Patents With the IPhone, Jury Says
An interesting headline, because if it were another company it would be “found guilty of stealing technology” or “Patent troll found infringing” or words to that effect. No doubt the company will claim this is a misapplication of US patent law. Which it may be.
“Apple Inc. (AAPL) lost an infringement case brought by patent-licensing firm MobileMedia Ideas LLC when a federal jury decided the maker of the iPhone misappropriated protected technology for the handheld devices.”
5. Apple Joins Google in $500 Million-Plus Bid for Kodak Patents
Such a partnership is not that unusual, actually. By outbidding smaller companies and over-paying for patents, large companies can keep them out of the reach of ‘patent trolls’ by licensing them to themselves, then either turning the patents over to a patent troll (see above item) or stifling competition by suing for patent infringement.
“Unlikely partnerships are typical in patent sales because they allow competitors to neutralize potential infringement litigation. A group including Apple, Microsoft Corp. (MSFT) and Research in Motion Ltd. bought Nortel Networks Corp.’s more than 6,000 patents for $4.5 billion out of bankruptcy last year. Google lost the auction for those patents after making an initial offer of $900 million.”
6. Android leapfrogs Apple
I am not sure of the ‘apps’ argument – many are free, most are cheap, and a clever marketer could contrive an exchange or rebate system to migrate customers.
“The surging popularity of Samsung smartphones has led to Australian sales of devices running on Google’s Android operating system overtaking Apple’s iOS for the first time. Figures from tech research firm Telsyte show that 44 per cent of 10 million smartphones being used in Australia are now running Android, compared with 43 per cent of iPhones running iOS.”
7. Setback for U.S. lawyers: Cell phones still aren’t causing cancer
Pity the poor tort lawyers! How will they recover? Cell phones cannot cause cancer and this explains why www.csicop.org/si/show/power_line_panic_and_mobile_mania/.
“A brand new study published in the prestigious Epidemiology journal shows that mobile phone usage still cannot be linked to gliomas, a broad range of cancerous tumors type that form in the brain or spinal cord. The study used glioma incidence statistics from four Nordic countries (Finland, Sweden, Norway and Denmark) over a 20-year period.”
8. Intel and ARM vendors start server war (of words)
There was a fair bit of mostly favorable coverage regarding Intel’s release of a SOC (system on a chip) for the server market. This provides a counter-point. I must admit I am beginning to wonder whether Intel’s dominant position in the space is going to persist. Not that there will be much money in it if ARM dominates, but a shift in share looks likely, and that can only hurt Intel.
“There is a new front in Intel’s war with everyone, customers not withstanding, and that is the so called microserver market. Intel had no answer for the ARM based devices from Marvell, Calxeda, and others until earlier this week when they admitted the existence of Centerton.”
9. GlobalFoundries urges EU to support chip industry
Subsidies just lead to a competition among governments to attract the least viable industries and, foundries, are neither huge employers nor founts of technology. The “government” of Abu Dhabi (aka the Al Nahyan family) is the largest shareholder of GlobalFoundries. If I had been suckered by AMD into buying their fabs, and AMD is circling the drain, I’d want governments to bail me out as well. Still, you have to wonder why governments anywhere would want to make good on their investment.
“The European Union should do more to support the semiconductor manufacturing or risk losing out on innovation, GlobalFoundries has said, although its status as an impartial observer is, perhaps, questionable.”
10. Time Warner Cable: Demand Not There for Google Fiber
I have been ruminating upon Google’s Kansas City experiment for some time. It seems to me that, as things stand, the fact that telephone companies and cable companies as dominant broadband suppliers is fundamentally unhealthy. These types of companies have a legacy as bloated and inefficient utilities and bandwidth is a fundamental threat to their existence. This is why they oppose “Net Neutrality” so vigorously and promote bandwidth caps, etc., in contrast with building infrastructure. “Broadband only” businesses would only be interested in delivering broadband, not the content. I suspect Google is hoping to foster such a model.
“If there is demand for [1 Gbps] service we will provide it,” Time Warner Cable chief operating officer Rob Marcus told attendees of a conference this week while discussing Google Fiber. Speaking at the Broadcast and Cable/Multichannel News OnScreen Summit yesterday, Marcus stated that while the company may eventually have to raise speeds to compete with Google Fiber, so far the company hasn’t had to.”
11. It’s Time to Fix the Pitifully Slow, Expensive Internet Access in the U.S.
Evidently some people disagree with Time Warner (that would probably be most of their customers). I think that Internet services (and affordable mobile) are as important to the citizens of today as electricity and telephone was in the 20th century. Back then, governments took steps to ensure electrification and a phone line for whoever wanted one. Now they are interested in filling short term budget shortfalls.
“Internet access in America remains relatively slow – particularly when it comes to upload speeds, the very feature necessary for cloud computing and creating user-generated content. Cable companies dominate wired internet access and face no real competition or pricing pressure; telcos like Verizon and AT&T have retreated to wireless, which will never be a full substitute for wired capacity; and we still have no plan for a nation-wide upgrade to fiber.”
12. Open municipal optical fiber networks, I like them
He makes a good point: how can Bredand2 manage when I can’t get broadband 50 km outside of Canada’s largest city?
“I opted for a 50/50 Mbit/s connection via Bredband2. Measuring it via Bredbandskollen gives 50/70 Mbit/s. For this I pay 350 SEK per month (€38/$53 at the moment). I’m more than satisfied! This is in a small town with a population of 2000 in Jämtland, Sweden. The population density is 2,6/km². If it can be economically viable to pull optical fiber here it should be a snap in most other places.”
13. FCC to make spectrum sharing reality, whether carriers want it or not
I believe the spectrum license model, which is an artefact of Marconi style radio, is obsolete and counter-productive. Modern and emerging technologies make spectrum scarcity less of an issue, however, spectrum ‘owners’ has no state in efficient use – they want to milk you for all you can. I’ll never see it, but I believe operation of the spectrum and delivery of services should be broken up by statute. The infrastructure and spectrum should be run as a non-profit (allowing for the necessary investment, and the actual use billed to consumers (which would include network operators). It’ll never change, of course.
“Two months ago, the President’s Council of Advisors on Science and Technology (PCAST) unveiled a bold plan to share 1,000MHz of federal spectrum with cellular providers. It wasn’t exactly what carriers were looking for. They’d prefer exclusive licenses to use spectrum whenever and wherever they need it. But the Federal Communications Commission has decided to adopt the plan, or at least its first steps. By the end of this year, the FCC announced this week, it will “initiate formal steps to implement the key recommendations of the PCAST report.” The first target is freeing up 100MHz of spectrum in the 3.5GHz band for small cell use.”
14. Researchers Detect Big Flaws in GPS
If confirmed, this is not a surprising result: GPS was developed long ago, and, while it was advanced for the time, security issues loom larger today and the technology available to subvert the system is far in advance to what GPS’s designers could have imagined.
“According to a researchers at Carnegie Mellon University and Coherent Navigation, a 45 second message broadcast could have a crippling effect on consumer and professional receivers. The findings, which included GPS receivers from brands such as Garmin, GlobalSat, Magellan, uBlox, Locosys and iFly, are especially worrying as critical services today rely on a functioning and reliable GPS network: “Until GPS is secured, life and safety-critical applications that depend upon it are likely vulnerable to attack,” the researchers concluded.”
15. Sharp’s 64-inch Ultra HD TV demands a lofty $31,000 price
UHDTV is awesome for things like theatres, and I don’t think Sharp or the other vendors expect to see much in the way of demand at these prices. Nonetheless, all TV vendors are desperate to rejuvenate TV sales. Personally, I think an update to TV user interface, along with a ‘self-teaching’ Wifi universal remote which would actually work with all your consumer electronics (and maybe also be an app on your smartphone) would draw more customers.
“Sharp has revealed pricing for the world’s first THX-Certified Ultra High-Definition — the new name for 4K and 8K — television, a 60-inch model named the ICC Purios. With a resolution of 3,840 × 2,160, it’ll be available in Japan from February at a cost of 2.6 million yen, or roughly $31,000 including taxes. Sharp’s TV will go head-to-head with an 84-inch UHDTV from Sony and a 55-inch model from Toshiba, which are priced at 1.68 million yen ($25,000 in the US) and 750,000 yen (roughly $9,000), respectively, highlighting the huge premium Sharp is asking for its next-gen TV.”
16. Vision-Restoring Implants that Fit Inside the Eye
Figuring out how to connect up a few pixels to the optic nerve is the hard part: figuring out how to extend that technology to thousands of pixels is an engineering challenge. This may not help all blind people, but it has the potential to do to blindness what cochlear implants have done to deafness.
“A coming generation of retinal implants that fit entirely inside the eye will use nanoscale electronic components to dramatically improve vision quality for the wearer, according to two research teams developing such devices.”
17. Solar Panels for Every Home
Absolutely – fragile, sail like structures fastened to the roof of your house makes perfect sense. After all, roofs are designed for a certain amount of wind and down force, so what could possibly go wrong if you increase that loading and supply lift, especially in 100 km+ winds? The article is co-authored by RFK Jr., who might have gotten over his responsibility in the death of unvaccinated children thanks to articles like this http://www.robertfkennedyjr.com/articles/2005_june_16.html.
“Having spent our careers in and around the power industry, we believe there is a better way to secure grid independence for our homes and businesses. (Disclosure: Mr. Crane’s company, based in Princeton, N.J., generates power from coal, natural gas, and nuclear, wind and solar energy.) Solar photovoltaic technology can significantly reduce our reliance on fossil fuels and our dependence on the grid. Electricity-producing photovoltaic panels installed on houses, on the roofs of warehouses and big box stores and over parking lots can be wired so that they deliver power when the grid fails.”
18. Tool use by an African grey parrot
My African Grey Parrot occasionally just wanders around thousand on a ‘promenade’, which is a problem because it is the only time he is silent. If I made him one of these, he’d probably spend the day chasing the cats.
“Proving that robots aren’t just for people any longer, African grey parrot, Pepper, has learned to drive a robot that was specially designed for him. Pepper, whose wing feathers are clipped to preventing him from flying around his humans’ house and destroying their things, now manipulates the joystick on his riding robot to guide it to where ever he wishes to go.”
19. Hipsters Who Hunt
This really says more about the media than ‘hipsters’. It was the media has created the cartoonish idea of a hunter or gun owner as a right wing lout with complete disregard for the environment. There is no connection between political affiliation and hunting. I am a hunter and most hunters I know are keen environmentalists, because you can hunt animals which aren’t there. Of course, what differentiates them from urban environmentalists is they actually know something about wildlife.
“Hunting is undeniably in vogue among the bearded, bicycle-riding, locavore set. The new trend might even be partly behind a recent 9 percent increase from 2006 to 2011 in the number of hunters in the United States after years of decline. Many of these new hunters are taking up the activity for ethical and environmental reasons.”
20. 2012 Mayan Astrology Predictions: Planetary Alignments To Trigger Earthquakes?
You know you have a credibility problem when a ‘Physic’ website reports your babbling with a question mark in the headline. Why anybody would assume a Wall Street trader would know anything besides trading (a rather limited skillset which exists only in the la-la land of the capital markets) is another matter. This is how gravitational force works: it is directly proportional to mass, but inversely proportional to the square of the distance. So, the planets might have a lot of mass, but there are very, very far away. Your chair has a greater gravitational influence on the Earth than the planets do.
“Highly respected 50-year veteran Wall Street trader for USB, Art Cashin has been sounding the alarms recently about possible increased earthquake activity which could be driven by odd planetary and solar angles which some see developing.”