The Geek’s Reading List – Week of October 3rd 2014
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.
LED lights have two major advantages – high efficiency and long life. Unfortunately, despite significant price drops they remain quite expensive, even though the long life and power savings offset the cost. One problem with LED efficiency is that, in traditional designs, only a portion of the light makes it out of the package, with the rest being absorbed. This research claims to have made a breakthrough with respect to that problem. What is particularly interesting is the comment these devices are cheap to manufacture. Of course other factors, such as life span and color, are very important as well.
“With LEDs being the preferred long-lasting, low-energy method for replacing less efficient forms of lighting, their uptake has dramatically increased over the past few years. However, despite their luminous outputs having increased steadily over that time, they still fall behind more conventional forms of lighting in terms of brightness. Researchers at Princeton University claim to have come up with a way to change all that by using nanotechnology to increase the output of organic LEDs by 57 percent”
2) Roadster batteries likely to perform better than Tesla predicted
This is a dated article which was brought to my attention through a web-argument. The headline sounds encouraging, especially if you don’t read the actual study, which appears to have no statistical merit – it uses self reported data from a non-random sampling of Tesla owners, for example, and it makes the rather odd assumption that you can extrapolate battery life. Of particular interest from the study itself: “A considerable number of owners reported that some or all of their battery pack had been replaced: 23 out of 122, or 18.9%.” (http://www.pluginamerica.org/surveys/batteries/tesla-roadster/PIA-Roadster-Battery-Study.pdf). My experience with car owners, in particular luxury car owners, is few them have a clue what has been done to their vehicles, especially if that service was done under warranty. In other words, you can be pretty confident that 18.9% may be the tip of the iceberg. Regardless, a 20% failure rate after one year would probably lead to widespread seppuku if Tesla were manufactured in Japan, regardless of the failure mode, because it implies a reliability nightmare over coming years. Since lithium ion batteries are extremely well characterized, there is simply no reason to believe reports such as these which fly in the face of what is known, especially if it is produced by an advocacy group.
“See, in 2006, when the Roadster was new, Tesla said the Roadster’s 53-kWh lithium-ion battery pack – good for 244 miles of range when new – would have 70 percent of its capacity after five years or 50,000 miles. With plenty of “old” Roadsters on the road, PIA studied four percent of the packs out there today and discovered (PDF) that the packs have an “average of 80- to 85-percent of capacity after 100,000 miles driven.” The numbers were self-reported to PIA’s website by Roadster owners in a project that started in January.”
3) Literary Lions Unite in Protest Over Amazon’s E-Book Tactics
The ongoing battle between massive book distributor Amazon and massive book publisher Hachette is interesting, albeit absurd. Neither company works for the public good, or represents anything else of merit. Amazon may or may not practice censorship as alleged, but surely Hachettte doesn’t publish everything submitted to it either. Frankly, I don’t give a damn about either company and I find it silly authors should be supporting one of a small number of powerful publishers. In an era when an e-book costs nearly as much as a hardcover, the only option for consumers seems to be piracy.
“Now, hundreds of other writers, including some of the world’s most distinguished, are joining the coalition. Few if any are published by Hachette. And they have goals far broader than freeing up the Hachette titles. They want the Justice Department to investigate Amazon for illegal monopoly tactics. They also want to highlight the issue being debated endlessly and furiously on writers’ blogs: What are the rights and responsibilities of a company that sells half the books in America and controls the dominant e-book platform?”
4) Surprise! Microsoft jumps to Windows 10
Is Microsoft going out with a whimper instead of a bang? After the unmitigated fiasco of Windows 8 the company eventually relented with a hybrid which covered up most of the abject stupidities of the user interface. Because I wiped my only Windows 8 computer and installed Linux, I have no idea whether Windows 8.1 would make said computer useable or not, however this Windows 7 machine is probably on its last legs and I dread buying another laptop to find out. I was hoping Windows 9 would be timely as well as useable, but the Fall 2015 release date strikes me as as a big problem. You can safely ignore whatever nifty and useable features promised for Windows 9 (even though it’ll be called 10): Microsoft rarely delivers a fraction of the advanced features it announces at such events.
“Microsoft just said no to 9. The follow-on to the current Windows 8 operating system will be known as Windows 10. Originally codenamed Windows Threshold, the new operating system essentially does away with the dependency on the tiled “Metro” user interface that Microsoft had attempted to implement across its entire device line, from desktop PCs to Surface tablets and Windows Phone devices. In its place is a combination of the so-called live tiles, present in areas like the new Start Menu, and a more classic Windows experience that aims to please both touch and keyboard-and-mouse users.”
5) ‘Anti-Facebook’ social network gets viral surge
There was a lot of media coverage about Ello over the past week. I have no interest whatsoever in social media, so I can’t comment as to whether this will make a dent in Facebook’s market share. The promise of no ads and not selling your data are all very well and good but I rather doubt the venture will be run as a social good. In other words, they’ll probably steal something from you, one way or another.
“Because of the limited supply and strong demand, the invitations have been selling on eBay at prices up to $500. Some reports said Ello is getting up to 35,000 requests per hour as a result of a viral surge in the past week. Ello appears to have caught on with its simple message which seems to take aim at frustrations of Facebook users.”
6) Doctors Find Barriers to Sharing Digital Medical Records
Microsoft built its huge Office business mostly on the backs of poor interoperability and shifting proprietary file standards so you can easily understand why the companies who make digital medical records software have their own proprietary format: it is designed that way. After all, Ontario has wasted $1 billion on doing the same and that is in an environment where they own the medical system so there is no profit motive involved. Unfortunately, most large IT projects, public or private, tend to devolve into a fiefdoms, tribal allegiances, etc.. But for that, this would not be a difficult problem to solve.
“As a practicing ear, nose and throat specialist in Ahoskie, N.C., Dr. Raghuvir B. Gelot says that little has frustrated him more than the digital record system he installed a few years ago. The problem: His system, made by one company, cannot share patient records with the local medical center, which uses a program made by another company.”
7) Practice Does Not Make Perfect
I read a couple of Gladwell’s books before realizing they were crap which is best ignored. He makes a good living off his formula: find a little known theory or phenomenon, seek out about 25 examples (one per chapter) which can be construed as supporting that theory or phenomenon and write a book around each one with little more than token consideration for alternative of informed viewpoints. Market the hell out of the book and become the ‘go to’ media expert on the subject. Rinse and repeat. The problem with the 10,000 hour theory, for example, it that a lot of people are idiots and/or lack any demonstrable talents or skill. You could give me 10,000 hours of art lessons and I can assure you you would not confuse my paintings with a master (meaning, with the right press, they’d be hanging in the national gallery as modern art).
“These findings filtered their way into pop culture. They were the inspiration for what Malcolm Gladwell termed the “10,000 Hour Rule” in his book Outliers, which in turn was the inspiration for the song “Ten Thousand Hours” by the hip-hop duo Macklemore and Ryan Lewis, the opening track on their Grammy-award winning album The Heist. However, recent research has demonstrated that deliberate practice, while undeniably important, is only one piece of the expertise puzzle—and not necessarily the biggest piece. In the first study to convincingly make this point, the cognitive psychologists Fernand Gobet and Guillermo Campitelli found that chess players differed greatly in the amount of deliberate practice they needed to reach a given skill level in chess.”
8) “The TV model is broken,” says ISP that stopped offering pay-TV
As the quality of TV programming continues to drop (Duck Dynasty, Ice Road Truckers, etc.) the prices paid by distributors – and therefore consumers – of this dreck continues to rise. I predicted in 1997 that the broadcast model will eventually shift over to distribution by Internet (i.e. YouTube, Netflix, etc.). 17 years later and it is starting to happen so I no longer expect it to happen quickly. Some part of this is, no doubt posturing, and it is more likely to end up with consolidation in the cable/ISP industry before you see much of a change. I remain very confident it will happen, however.
“Programming costs are so high today that even Comcast complains about the expense. What of small Internet service providers who lack the negotiating power of the nation’s largest TV and broadband company? Some of them are dropping channels or exiting the pay-TV business altogether, says a new article in The Wall Street Journal. “I think the TV model is broken,” BTC Broadband President Scott Floyd told the newspaper. BTC stopped offering TV late last year while continuing to sell Internet and phone service.”
9) Apple blacklists tech journo following explicit BENDY iPhone vid
Blacklisting for bad reviews is quite common and that alone is a good reason to ignore any non-negative review of any product. Positive reviews might be accurate but they are more likely bought and paid for by the company making the product, while negative reviews are far more likely to have been the result of objective analysis (or have been bought and paid for by the competition). Frankly I find forum discussions on a product to be far more useful: while they can be “astroturfed” real consumers usually outweigh those efforts. Regardless, I do find the efforts Apple suppressing coverage of an issue it says does not exist to be rather amusing.
“Apple has allegedly blacklisted a German tech journalist who filmed a video that proved the new iPhone 6 Plus could be bent. Axel Telzerow, editor of Computer Bild, was determined to see if the new mobe could be persuaded to take on a more curved shape, only to be “shocked” to see how easy it was to buckle the already quite curvaceous device. However, he was even more shocked to receive what he claimed was an ominous phone call from the Apple cops after posting a video of his bending activity. Telzerow claimed a fruity stormtrooper said he would never again receive Apple products for review purposes, or be allowed to come to any Apple events.”
10) These self-destructing SSDs will physically destroy the NAND flash on your command
A number of years ago I read about military grade hard drives with self-destruct systems which were used in surveillance airplanes and drones. The idea is probably a good one, however, no price is given and it is not even clear whether the product itself is actually available. Setting aside the likelihood it is astoundingly expensive, it would probably have a modest impact on security: in many situations data is accessed by lots of people and you get the odd halfwit (or crook) who does things like copy sensitive data from an encrypted source onto a tape, CD, or whatever, which is then lost or stolen. This happened to in the back office of a limited partnership I subscribed to a few years ago.
“It’s one thing to have your personal notebook filled with family photos, music and movies come up missing. It’s a different beast entirely when that missing notebook contains business information, trade secrets or the login credentials of your employer. In those instances, it’d be great to have a self-destructing hard drive akin to something out of a James Bond movie. As it turns out, that technology already exists and it comes from a company called SecureDrives.”
11) 4.4 billion people around the world still don’t have Internet. Here’s where they live
Not surprisingly, Internet access is mostly correlated with income, as are things like access to medical care, and so on. The suggestion that people who don’t have Internet access in rich countries because of choice is absurd: there are what are referred to as “poor people” who live in rich countries and most of them do not choose to be poor. Similarly, in backwards countries such as Canada, Internet access is simply not available in vast areas of the country including major areas of the GTA because broadband carriers would see a lower (though still very positive) return on investment and there are no government policies mandating or even encouraging access. Imagine the suggestion people without, or without access to, electricity “choose” that predicament.
“The sheer number of people unconnected in some countries is staggering. India is home to nearly a quarter of the world’s offline population; China houses more than 730 million; Indonesia 210 million; Bangladesh almost 150 million; and Brazil nearly 100 million. Even in the United States, 50 million people don’t use the Internet (though, as my colleague Caitlin Dewey points out, many of those who are offline in the United States are offline by choice).”
12) NetApp sticks biggest “patent troll” with $1.4M fee sanction
There are legitimate patent disputes and there are shakedowns, and this company seems to have followed the shakedown route, demanding license fees which, while not exactly token, presented the accused with the option of costly litigation or simply paying the protection money. In the earlier legal regime, as is customary in the US, “loser pays” was very rare so Summit could sue without worrying about having to pay the defendants costs even if the case was “wasteful and reckless”. The worm is beginning to turn on the patent troll business based on this and a number of other recent decisions.
“This summer, the Supreme Court made it easier for defendants to collect fees when they win patent cases. The decision is starting to have an effect—the nation’s largest patent troll just got slapped with an order to pay $1.4 million in attorneys’ fees to NetApp, which it sued in 2010. … The facts of this case demonstrate that Summit pursued an action against NetApp without any basis for infringement, delayed disclosing the existence of the Licensing Agreement for eighteen months, extracted settlements from co-defendants worth a fraction of what it would actually cost them to defend the lawsuit, and then voluntarily dismissed its claims with prejudice prior to the court issuing a ruling on the merits… The claims were frivolous—Microsoft’s initiator software [was] licensed, so no system employing it could infringe the asserted patents.”
13) WiLan says loses LTE patent case against Apple
As a general rule, you don’t want to go to court unless you have a reasonable prospect of victory. Having your head handed to you in a patent case shows potential licensees your bark is far worse than your bite and it should therefore result in far more modest settlements (or none in the case of invalidated patents). Combine that with the worsening outlook for trolls (see item 12, above), and you’d think investors would be avoiding the sector. They are not: WiLan has a $420 million market cap. Go figure.
“Canadian patent licensing company WiLan Inc (WIN.TO) on Wednesday said a U.S. judge had ruled in favor of Apple Inc (AAPL.O) in a litigation case against it. “WiLan has been advised that Judge Dana M. Sabraw has issued a ruling today that grants Apple’s motion for summary judgment,” the company said in a statement, referring to Apple’s move to have two patent infringement claims relating to LTE wireless telecom technologies ruled invalid and not infringed.”
14) Japan Starts World-First Stem Cell Trial, Plans More
This article sure sounds interesting, however, I don’t understand what the point of it is – in other words, do they hope to reverse macular degeneration or are they just looking into whether the injection of stem cells is safe? If they demonstrate safety but no therapeutic benefit, then will that safety data translate into, say, stem cell therapies for Parkinson’s? Because if you don’t know whether stem cells can be safely injected into the brain you may end up killing people who have a condition which, however debilitating, might not kill them for a long time.
“The first patient was treated this month in the world’s first clinical study of stem cells made from ordinary mature cells: induced pluripotent stem cells (iPSCs). The cells were complex retinal pigment epithelial (RPE) cells, but they began as a macular-degeneration patient’s simple skin cells. Those were turned into pluripotent stem cells using the Nobel Prize-winning genetic technique of Shinya Yamanaka. Yamanaka’s institute (Center for iPS Cell Research and Application, or CiRA) has assisted the trial’s sponsor, the Riken Institute.”
15) A New Approach to On-Chip Quantum Computing
We seem to be hearing more and more snippets regarding progress towards real quantum computers (in contrast with claimed quantum computers which get a lot of coverage for no actual results). Unfortunately, I don’t know enough (pretty much anything, actually) about the subject to understand what this does or how significant it is. As a general rule, however, these sorts of things take a while to escape the lap. In any event, while quantum computers are very good for solving certain problems, including important ones like protein folding, don’t expect to browse the web if and when they are developed.
“Now, an international team of researchers led by professor Roberto Morandotti of INRS-EMT in Canada, is introducing a new method to achieve a different type of photon pair source that fits into the tiny space of a computer chip. The team’s method, which generates “mixed up” photon pairs from devices that are less than one square millimeter in area, could form the core of the next-generation of quantum optical communication and computing technology.”
16) Nobody Can Win The Cloud Pricing Wars
Large companies like Google, Microsoft, etc., have staggering amounts of computing power and it is almost never all going to be used at the same time so they can essentially lease out their excess. Its a bit like having a 300 HP engine in a car (which rarely, if ever, needs that amount of power) and being able to lease out 0.000001 HP units of power to a few million companies who, themselves, are rarely using those 0.000001 HP units. So, its win/win, except for any “cloud computing” company without that sort of scale. The same reasoning applies to cloud storage, by the way.
“Earlier this week, Google lowered prices 10 percent across the board on their Google Compute Engine cloud platform . The cost is getting so low, it’s almost trivial for anyone to absorb the costs of running infrastructure in the cloud, but you have to wonder as the cloud pricing wars continue, how low can they go and if it’s a war anyone can win. The end game is obviously zero, but these companies have overhead and while the Big Three cloud computing companies –Google, Amazon and Microsoft –run their Infrastructure as a Service as a side business, chances are their stock holders don’t want to see them giving it away for nothing, a point we seem to be approaching quickly.”
17) 3D printed, perfectly transparent optics to replace injection molding
This item is essentially a press release for the launch of a service offering, and the service ain’t cheap, starting at 500 euros. Nonetheless, it does make one wonder whether the advent of 3D printing would finally disrupt the eyeglass industry. After all, eyeglass lenses and frames cost very little make and are sold for astoundingly high prices, largely due to a regularly environment which has been crafted to favor the industry at the expense of the consumer (note the 20+:1 price spread between unregulated reading glasses and “normal” glasses). There would probably be a regulatory arbitrage opportunity in a 3D printer which could produce eyeglass lenses are a reasonable cost.
“Injection moulding has been the main manufacturing method for optical components for a long time, but today the revolution Dutch 3D printing of optics firm LUXeXceL is launching the very first 3D printing service for functional optical components.”
18) Advertising firms struggle to kill malvertisements
I always run adblock plus on my computers so I don’t see advertisements of any kind, however, this is the first I’ve heard of “malvertisements”. Presumably, as ads increasingly use the security nightmare than is Adobe Flash, and other more dynamic elements, hackers have figured out how to insert malware in them. In order to frustrate detection, and thanks to the staggering number of adds, such malware is only inserted in a fraction of the ads which are served up. Needless to say, everybody involved denies responsibility and assures us their systems are “clean”, or at least they are clean until the next time. Like I said, I always use adblock plus (https://adblockplus.org/) and I always block even “unobtrusive” ads.
“In late September, advertisements appearing on a host of popular news and entertainment sites began serving up malicious code, infecting some visitors’ computers with a backdoor program designed to gather information on their systems and install additional malicious code. The attack affected visitors to The Jerusalem Post, The Times of Israel, The Hindustan Times, Internet music service Last.fm, and India-focused movie portal Bollywood Hungama, among other popular sites. At the center of the malware campaign: the compromise of San Francisco-based Internet advertising network Zedo, an advertising provider for the sites, whose network was then used to distribute malicious ads.”
19) Not there yet – BlackBerry’s promised comeback has not yet materialised
Investment commentators have a great deal of difficulty differentiating “not falling quite as fast as expected” from flying so this short piece is a bit of fresh air. It takes a long time for a large company to disappear – Nortel’s management destroyed that company as quickly as they did through sustained effort and skill. Setting aside sabotage, and there is still time for that at Blackberry, a platform with a small market share is expensive to maintain, both from the manufacturers and users perspective. Similarly, 3rd parties see little incentive to include such support in applications, interfaces, etc.. If, however, the market share is growing, various parties are willing to make an investment because they want to be in on the ground floor. This is not the case when you go from a large market share to a tiny one: the cost for all concern of supporting the platform becomes astronomically large, and nobody sees the point at making that investment. Eventually the remaining high margin businesses at Blackberry will collapse (they are, after all, a legacy of purchase decisions made long ago) and, for them the war will be over.
“BlackBerry, which once dominated the smartphone industry, now accounts for less than 1% of sales worldwide. As a result, the firm is haemorrhaging money. Analysts say that the only good thing that can be said about the firm’s $207m loss last quarter was that it was slightly less than expected. However, BlackBerry’s cheery boss, John Chen, portrayed the firm’s latest results as the first part of a comeback plan, which he hopes will see the company return to profit by 2016.”
20) Electric Vehicles Sell Power Back to the Grid
This rather appallingly stupid idea surfaces every now and then. Despite the author’s comment that “Auto makers, meanwhile, don’t know yet whether frequent charging will shorten a vehicle’s battery life” the reality is battery makers, and anybody who knows anything about batteries, knows, in fact, a lithium ion battery’s life is pretty much determined exactly by how much you charge it. There is no magic or ‘trick’: every charge applied to a battery consumes its life, So, it might be possible to convince owners of very expensive vehicles to use up their staggeringly expensive batteries providing leveling to the electric utility, and if you can, more power to you. However, if there was an economic argument in favor of using lithium ion batteries for grid leveling applications, you could bet the utilities themselves would be buying battery packs and doing it themselves.
“In the 1990s, Willett Kempton, a professor at the University of Delaware, proposed in a paper that electric vehicles could help pay for themselves by selling power back to the grid. When no one jumped on the idea, he decided to develop the technology himself. Now, the pilot project he spearheaded at the university in conjunction with power-plant operator NRG Energy Inc. brings in roughly $110 a month per electric vehicle. The operation uses software to link a minimum of nine electric vehicles, mostly Mini Coopers, together into a virtual power plant on wheels that can both draw energy from the grid and discharge energy when needed. “We’re not earning enough money to get rich,” says Dr. Kempton. But “it earns money, and it earns more money than it costs to do it.””