The Geek’s Reading List – Week of May 30th 2014

The Geek’s Reading List – Week of May 30th 2014

Hello,

I have been part of the technology industry for a third of a century now. For 13 years I was an electronics designer and software developer: I designed early generation PCs, mobile phones (including cell phones) and a number of embedded systems which are still in use today. I then became a sell-side research analyst for the next 20 years, where I was ranked the #1 tech analyst in Canada for six consecutive years, named one of the best in the world, and won a number of awards for stock-picking and estimating.

I started writing the Geek’s Reading List about 10 years ago. In addition to the company specific research notes I was publishing almost every day, it was a weekly list of articles I found interesting – usually provocative, new, and counter-consensus. The sorts of things I wasn’t seeing being written anywhere else.

They were not intended, at the time, to be taken as investment advice, nor should they today. That being said, investors need to understand crucial trends and developments in the industries in which they invest. Therefore, I believe these comments may actually help investors with a longer time horizon. Not to mention they might come in handy for consumers, CEOs, IT managers … or just about anybody, come to think of it. Technology isn’t just a niche area of interest to geeks these days: it impacts almost every part of our economy. I guess, in a way, we are all geeks now. Or at least need to act like it some of the time!

Please feel free to pass this newsletter on. Of course, if you find any articles you think should be included please send them on to me. Or feel free to email me to discuss any of these topics in more depth: the sentence or two I write before each topic is usually only a fraction of my highly opinionated views on the subject!

This edition of the Geeks List, and all back issues, can be found at www.thegeeksreadinglist.com.

Brian Piccioni

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1) New Middleware Technology Quadruples SSD Speed

Solid State Drives (SSDs) are a huge improvement in all regards over Hard Disk Drives, however, there is room for improvement. Write times tend to be considerably slower than read times, though you always write more data than you read in any event. There is probably much room for further improvement, in particular in the computer interface. This announcement suggests a different algorithm might speed up existing technologies and the good news is it should be easy to implement. One thing to note is that the results are simulated and a typically much more modest (25-50%) improvement, which is still significant.

“A Japanese research team developed a technology to drastically improve the writing speed, power efficiency and cycling capability (product life) of a storage device based on NAND flash memory (SSD).”

http://techon.nikkeibp.co.jp/english/NEWS_EN/20140522/353388/

2) After Google bought Nest, it removed one of the company’s biggest competitors from search results

Rather hard to know or understand the facts in this case. It may be a coincidence that the delisting came shortly after the Nest purchase, however, I had never heard of Vivint prior to today while Nest was well known so it is hard to believe the company was “one of (Nest’s) biggest competitors” and home automation is different from overpriced web connected thermostats and unreliable fire alarms. That being said Google is running a business and there is nothing fair or not arbitrary about the advertising business. As the saying goes “freedom of the press is guaranteed only to those who own one” and Google owns the biggest online advertising business and they now own Nest, so don’t expect a level playing field.

“In the middle of January, Vivint, the Utah based home automation company that also produces smart thermostats, found itself with a surprising new rival. Google bought Nest and by virtue of acquisition Vivint was suddenly competing head to head with the Silicon Valley search giant. But Vivint — which was purchased by Blackstone in 2012 — certainly didn’t expect what happened next. Just two weeks later, Vivint was delisted from Google’s search results.”

http://pando.com/2014/05/29/after-google-bought-nest-it-removed-one-of-the-companys-biggest-competitors-from-search-results/

3) Fossil avatars are transforming palaeontology

Over the past few years I have been ruminating about the challenges of designing a robot which could remove the matrix (not the fossil stuff) around a fossil. Such a machine could work 24/7 and probably be much more efficient and faster than a human technician (there is considerable latitude when you are thinking about a problem in a field you fundamentally don’t understand. These visualization techniques, combined with 3D printing, may provide an even better solution.

“New techniques for visualizing fossils are transforming our understanding of evolutionary history according to a paper published by leading palaeontologists at the University of Bristol. Palaeontology has traditionally proceeded slowly, with individual scientists labouring for years or even decades over the interpretation of single fossils which they have gradually recovered from entombing rock, sand grain by sand grain, using all manner of dental drills and needles.”

http://phys.org/news/2014-05-fossil-avatars-palaeontology.html

4) Are Tesla’s Plans for a Giant Battery Factory Realistic?

Forbes is highly skeptical of the hype surrounding EVs and Tesla in particular, as am I. Like most “alternative energy” type solutions these are driven by subsidy and legislation rather than actually providing value for money. Exploiting and helping craft such policies appears to be a major talent of Elon Musk. Getting back to EVs, their major weakness has been, and remains, the battery packs which are both extremely expensive ($10K – $30K) and short lived. There is absolutely no reason to suspect they will get much cheaper and the lifespan is determined by the chemistry, which isn’t changing. Lots of hopes are pegged on Musk’s plans for a battery ‘megafactory’ despite a complete lack of evidence to support those hopes. The article contains comments from experts in the field citing what are, bluntly, well known facts in the battery business.

Tesla Motors Inc. plans to build one of the world’s largest factories of any kind in the U.S. But it wouldn’t build its electric cars there—it would make the batteries to power them. The plant, slated for completion by 2020 at a cost of as much as $5 billion, would be able to turn out more lithium-ion batteries than all the battery factories in the world today. Tesla plans to break ground in June, though the site is still uncertain, and expects to start producing batteries at the plant by 2017. It says the scale will help drive the cost of batteries down, in turn helping to make a mass-market, all-electric car possible.”

http://online.wsj.com/news/articles/SB10001424052702303647204579546060181430456

5) Understanding SaaS: Why the Pundits Have It Wrong

An unusually good article looking at the business dynamics of Saas (Software as a Service) and why this model merits different metrics when considering valuation. Of course, the problem is that valuation multiples tend to be derived from the most successful businesses, however only a small set of businesses (let alone SaaS businesses) are going to be successful. In other words, the business model may offer the potential for superior cash flows if successful, but investors have to be cognizant of the fact that many will not have a compelling product offering, let alone one which works with SaaS.

“Tune into any cable network stock market channel and the airwaves resonate with one consistent theme: SaaS companies are simply too expensive. In fact, we might even be in a bubble! The argument goes as follows — high revenue growth coupled with lack of profits means these businesses are fundamentally broken. Just as we saw in 1999-2000, investors’ willingness to pay for growth at any cost will end and many SaaS companies will be left behind.”

http://a16z.com/2014/05/13/understanding-saas-valuation-primer/

6) HIV can cut and paste in the human genome

Many diseases are a result of a malfunctioning gene – either inherited or as a result of a mutation after birth. The problem is that editing the gene or even supplementing its function (say with another copy) is easier to say than to do. You have to get inside a cell, then inside the nucleus, cut out the ‘bad’ copy (or the bad part of the gene) and replace with a good copy. These researchers claim to have solved the problem. Of course, this technique would have to be pretty reliable otherwise it could introduce new problems into cells and kill the patient. Still, it is very promising work.

“For the first time researchers have succeeded in altering HIV virus particles so that they can simultaneously, as it were, ‘cut and paste’ in our genome via biological processes. Developed at the Department of Biomedicine at Aarhus University, the technology makes it possible to repair genomes in a new way.”

http://news.au.dk/en/show/artikel/hiv-kan-klippe-klistre-i-arvemassen/

7) ProtonMail: ‘NSA-Proof’ End-to-End Encrypted Email Service

Subsequent to the lid being blown off NSA surveillance (which knowledgeable people assumed was going on in any event) there has emerged a number of ‘NSA proof’ applications and products. It is safe to assume that any ‘NSA proof’ hardware or commercial product is most likely either a ‘honeypot’ or that the system will be compromised through collaboration (NSA’s favorite technique). Open source solutions such as these have the potential for being actually secure since they are open to analysis, critique, and improvement.

“The Edward Snowden revelations triggered a large-scale movement worldwide towards deploying encryption across the Internet for secure services, which is something the government agencies like NSA and GCHQ have targeted repeatedly, as exemplified by abruptly shutting down Lavabit, a Texas-based Encrypted Email Service. In response, a group of young developers at the European Organization for Nuclear Research (CERN) has launched a new email service which offers end-to-end encryption and securing communications that could put an end to government snooping and will keep away our personal data from prying eyes.”

http://thehackernews.com/2014/05/protonmail-nsa-proof-end-to-end.html

8) Man to 3D Print His Own Home in His Own Home

There is considerable appeal to the prospect of the lone inventor working in his garage and changing the world. In the case of open-source derived solutions this is actually possible so the inventor should not be dismissed as a kook (though there are plenty of those out there). Robotically constructed houses are coming, probably sooner rather than later. I figure the foundation and exterior walls are the likely to be the first parts which will be built this way. One challenge will be the development of building codes: not that robots will be an issue but the materials and structural components will be novel and this will require considerable effort to get approvals.

“… Andrey Rudenko is in the process of testing his own 3D construction process from the confines of his Minnesotan home. Rudenko, a contractor with a background in architecture and engineering, is currently at the experimentation stage of his project. He’s spent the last year building a 3D concrete printer in his two-car garage, gradually scaling up his project to the point where he can print a two-story home.”

http://3dprintingindustry.com/2014/05/14/3d-printing-home-rudenko/

9) Samsung Is Building an Oculus Rift Competitor: Report

Well, Oculus Rift competitor is a bit of a misstatement since Oculus Rift is not on the market yet. Plus, VR goggles have been around for some time, so maybe its better to say Samsung is coming out with a VR headset it hopes will be commercially successful, unlike most other such product launches. Those folks at Samsung are pretty cocky to think they can take on a few kids who have no prior engineering or manufacturing expertise.

Given Samsung’s propensity to compete in virtually every conceivable product category, this isn’t too surprising: The company is working on its own version of the Oculus Rift and plans to unveil it this year. Samsung has even shipped prototypes of the device to some developers already, according to a report in Engadget. Rather than being a PC or game console peripheral, Samsung’s headset links to a Galaxy phone to create its virtual environment. It’s a demanding device, though: The consumer version will require the power of next-generation flagship processors, the report states.”

http://mashable.com/2014/05/23/samsung-is-building-an-oculus-rift-competitor-report/

10) Facebook Microphone Update To Store Data: Social Media Giant Confirms New Feature Will Aggregate Information

Just to be clear I do not, and never will, have anything to do with Facebook. Still this is damned creepy, and quite possibly a violation of the law in certain jurisdictions. Lets say you are dopey enough to install this app and agree – knowingly or otherwise – to Facebook eves dropping on you. I don’t get it, I don’t understand it, but that is your decision. Now, lets say you call me or you talk to me (nothing limits this disgusting ‘feature’ to when you are using your phone. Now, that means Facebook is now tapping my conversations without a warrant and without my permission which is illegal in a lot of places. I can easily imaging that future business meetings start with a demand people remove their phones from the room. Between Google Glass and Facebook is punching people in the face going to be the only way of saying ‘respect my privacy’?

“On the same day that Facebook touted sweeping new efforts to protect users’ privacy, the company confirmed that it plans to save data captured by smartphone microphones, potentially enabling the social media giant to listen in on private conversations.”

http://www.ibtimes.com/facebook-microphone-update-store-data-social-media-giant-confirms-new-feature-will-1588916

11) Kantar Survey: Android Up Again, iOS Down Again In U.S.

It should be obvious that as smartphone and tablet pricing declines, almost all the associated unit sales will be directed to Android (or potentially other open source mobile operating systems which may emerge). iOS has thus far only been available on premium priced products which are now increasingly behind the curve technologically. Apple could break with recent tradition and introduce products with specifications which support their premium brand position though, admittedly, you can only go so far in that regard as users have plenty of functionality as it is so this seems unlikely. Alternatively, the company might try and introduce price competitive models which would then jeopardize margins and their brand. Stay tuned.

“Android’s share of smartphones sold to U.S. end users rose 7.3 percentage points to 59.1 percent during the three months ending April compared with the year-ago period, a Kantar Worldpanel ComTech survey found. Apple’s iOS share fell 6.8 percentage points to 34.6 percent.”

http://www.twice.com/news/smartphones/kantar-survey-android-again-ios-down-again-us/45453#.U4YfDnDOhkk.twitter

12) The mechanics of the iCloud “hack” and how iOS devices are being held to ransom

Speaking of Apple, a few months ago I carried a story about a guy whose iCloud account was hacked (it was really easy to do) resulting in the destruction of most of his online life and much of his data. Seriously: don’t keep your backups all in one place. Now there is a new spin on the iCloud hack and it is ransomware. For reasons which are not clear to me this appears to have taken place only in Australia but you can be sure word has gotten out among hackers and it will spread.

“Oh boy. What we’re looking at is an iPhone that has been remotely locked by “Oleg Pliss”. What we’re looking at is a modern incarnation of ransomware executed via Apple’s iCloud and impacting devices using the “Find my iPhone” feature. Perplexingly, this is predominantly impacting Aussie iCloud users and to date, there’s no clear reason why, rather we have 23 pages of reported hacks and general speculation on the Apple Support Community website.”

http://www.troyhunt.com/2014/05/the-mechanics-of-icloud-hack-and-how.html

13) Google made a self-driving car, and it doesn’t have a steering wheel

I am a big believer in the self-driving care, which I figure will transform society. It makes some sens that a purpose built vehicle would be better than an adapted people driven car, however, not having ‘dual mode’ operation will put serious limitations on where such a vehicle could go. Nonetheless, one can imagine that a machine such as this would find use in densely populated urban areas. I am rather leery of the EV angle for the same reasons I am cautious about EVs in general: batteries are damned expensive and short lived. It is possible those disadvantages would be offset by other advantages of a self-driving car, however.

“Google today announced its own design for self-driving cars, which will drive people around without a steering wheel or pedals. It’s the latest project from Google X, the company’s skunkworks group headed by Google co-founder Sergey Brin.”

http://www.theverge.com/2014/5/27/5756436/this-is-googles-own-self-driving-car

14) How Statisticians Found Air France Flight 447 Two Years After It Crashed Into Atlantic

The futile search for the missing Malaysian flight is not exactly unprecedented (though the lack of a trace of wreckage, bodies, etc. is highly unusual). AF 447 disappeared almost five years ago and it took a couple years to recover that wreckage. This is the story of how it was discovered. Mind you – they at least had a general idea as to where the plane went down and the misdirection, lies, and false leads associated with the recent disaster where not a factor in AF 447.

“In the early morning hours of June 1, 2009, Air France Flight AF 447, with 228 passengers and crew aboard, disappeared during stormy weather over the Atlantic while on a flight from Rio de Janeiro to Paris.” So begin Lawrence Stone and colleagues from Metron Scientific Solutions in Reston, Virginia, in describing their role in the discovery of the wreckage almost two years after the loss of the aircraft.”

http://www.technologyreview.com/view/527506/how-statisticians-found-air-france-flight-447-two-years-after-it-crashed-into-atlantic/

15) Root backdoor found in surveillance gear used by law enforcement

Just to show it isn’t just NSA who spies on people, weakens security, implements backdoors, etc., however, they tend to be a lot more nuanced. One could attribute this ‘feature’ to flat out incompetence but its presence in a product used by law enforcement makes that unlikely, in my view.

“In a scathing advisory published Wednesday, the researchers recommended people stop using the Nice Recording eXpress voice-recording package. It is one of several software offerings provided by Ra’anana, Israel-based Nice Systems, a company that markets itself as providing “mission-critical lawful interception solutions to support the fight against organized crime, drug trafficking and terrorist activities.” The advisory warned that critical weaknesses in the software expose users to attacks that compromise investigations and the security of the agency networks.”

http://arstechnica.com/security/2014/05/root-backdoor-found-in-surveillance-gear-used-by-law-enforcement/

16) High smartphone patent royalties undermine industry profitability: report

As you might have expected all those crap patents do end up costing money and ultimately those costs are passed ot consumers. Some of the numbers seem a bit high inless the major patent trolls like Microsoft scale their blackmail down as the sales price of the product goes down.

“A study into royalty demands for smartphones has found the payments are currently so high that they undermine the profitability of the industry and stifle innovation. The paper [PDF] is written by two lawyers from US intellectual property firm WilmerHale in Washington along with one of Intel’s top legal officers, Ann Armstrong, in her personal capacity. It draws on publicly available information and captures royalty demands as well as actual payments.”

http://www.itnews.com.au/News/386933,high-smartphone-patent-royalties-undermine-industry-profitability-report.aspx

17) Kids with wheels: Should the unlicensed be allowed to ‘drive’ autonomous cars?

These are the results of an Internet service so they should be taken with a large block of salt. Most likely, the answers probably reflect as much about expectations regarding the capabilities of driverless cars rather than an informed consideration of the safety of such vehicles as they are likely to be within 10 years. Eventually it will be possible for young children, etc., to ride in them just as we permit them to ride elevators. That will probably be 20 years from now, however.

“Earlier this month, when we asked people about your general thoughts on autonomous cars, we found that one of the main advantages of autonomous cars is that those who are not licensed to drive will be able to get to places more conveniently. This led us to wonder more about who should be able to drive an autonomous car.”

http://robohub.org/kids-with-wheels-should-the-unlicensed-be-allowed-to-drive-autonomous-cars/

18) Scientists Report Finding Reliable Way to Teleport Data

Poor Einstein: they like to use his comment which was, in fact an incredibly prescient prediction about the implications of quantum theory. Despite the musing about secure communcations networks (you can always bribe somebody at the other end) these experiments are more likely to be of interest to quantum theorist than to have any practical application.

“Scientists in the Netherlands have moved a step closer to overriding one of Albert Einstein’s most famous objections to the implications of quantum mechanics, which he described as “spooky action at a distance.” In a paper published on Thursday in the journal Science, physicists at the Kavli Institute of Nanoscience at the Delft University of Technology reported that they were able to reliably teleport information between two quantum bits separated by three meters, or about 10 feet.”

http://www.nytimes.com/2014/05/30/science/scientists-report-finding-reliable-way-to-teleport-data.html?_r=0

19) The Willy Report: proof of massive fraudulent trading activity at Mt. Gox, and how it has affected the price of Bitcoin

Whats this? Fraud at a Bitcoin exchange? Whatever next? And market manipulation may have caused the value of Bitcoin to multiply 10x in a month? I’m shocked, shocked I tell you! Next they’ll claim a Swiss bank was used to launder the proceeds! Good thing this unregulated ‘market’ for intangibles is now clean and completely free of such shenanigans!

“Somewhere in December 2013, a number of traders including myself began noticing suspicious bot behavior on Mt. Gox. Basically, a random number between 10 and 20 bitcoin would be bought every 5-10 minutes, non-stop, for at least a month on end until the end of January. The bot was dubbed “Willy” at some point, which is the name I’ll continue to use here. Since Willy was buying in such a recognizable pattern, I figured it would be easy to find in the Mt. Gox trading logs that were leaked about two months ago (there’s a torrent of the data here).”

http://willyreport.wordpress.com/2014/05/25/the-willy-report-proof-of-massive-fraudulent-trading-activity-at-mt-gox-and-how-it-has-affected-the-price-of-bitcoin/

20) Microsoft demos breakthrough in real-time translated conversations

This is very impressive technology and the demo is very cool. Other articles suggest University of Toronto researchers were deeply involved in the development. I suspect comparisons to Start Trek’s “Universal Translator” (or Hitchhiker’s Guide to the Galaxy’s Babelfish) are more than a tad premature. Voice recognition itself is an evolving field and the nuance needed for translation is more than simply a another layer of challenge. Thanks to my friend Avner Mandelman for bringing this development to my attention.

“Skype Translator results from decades of work by the industry, years of work by our researchers, and now is being developed jointly by the Skype and Microsoft Translator teams. The demo showed near real-time audio translation from English to German and vice versa, combining Skype voice and IM technologies with Microsoft Translator, and neural network-based speech recognition. Skype Translator is a great example of why Microsoft invests in basic research. We’ve invested in speech recognition, automatic translation and machine learning technologies for more than a decade, and now they’re emerging as important components in this more personal computing era. You can learn more about the research behind this initiative here.”

http://blogs.technet.com/b/microsoft_blog/archive/2014/05/27/microsoft-demos-breakthrough-in-real-time-translated-conversations.aspx

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