The Geek’s Reading List – Week of December 12th 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!
There were good mix of tech news items this week, again with no dominant theme. As has become customary, Tesla executives made some outlandish comments about revolutionizing the battery industry, much like hydrogen fuel cell promoters did a decade ago. History may not repeat itself, but it sure does rhyme.
This edition of the Geeks List, and all back issues, can be found at www.thegeeksreadinglist.com.
ps: I apologize for the uneven quality of this week’s GRL. I am in rural Michigan hunting and Internet access is spotty.
1) Tesla’s electric man
Hubris, surely thine name must be Tesla – and even the Economist’s IQ drops 50 points when the word energy enters a story. Here we have a guy with no mass production experience in his resume, who works at a company which does not manufacture batteries, nor does it manufacture large volumes of anything (and the thing it does mention has a poor record of reliability) explaining how mass production of batteries will work. Actual battery experts, some of whom work in the Consumer Electronics industry (which produces massive volumes) be to differ. As long as there is slack jawed, fawning praise for Tesla – as well as huge amounts of money from taxpayers and investors, the dream persists. Reality eventually wins regardless.
“The idea is that, benefiting from economies of scale, the gigafactory’s cells will be significantly cheaper than those from more established manufacturers. “Over the next ten years, it’s going to change to the point where we’re focused on production to meet the world’s energy-storage needs rather than waiting for a cost reduction from a radical change in battery technology,” says Mr Straubel. Not everyone agrees. A report by Lux Research, a firm of technology analysts, has predicted that the gigafactory will bring about only a modest cut in battery costs and suffer more than 50% overcapacity. “Most other companies do not believe that battery volume will grow as fast as it’s going to,” Mr Straubel counters. “They don’t understand the tight linkage between cost and volume. We’re at this crossing-point where a small reduction in cost is going to result in a ridiculously big increase in volume, because the auto industry is so big.””
2) BC Transit’s $90M hydrogen bus fleet to be sold off, converted to diesel
This was intended to be a “green energy” project for the Vancouver Olympics, and it truly was if the green in “green energy” meant money. I recall reading that the hydrogen was imported from Quebec where it was produced with “renewable energy”, however, I would wager the diesel burnt in transportation more than offset whatever purported environmental benefit which might have resulted. In other words, more likely, this program did more damage to the environment than just using diesel would have. The problem with fuel cells has always been, and will always be, hydrogen, not fuel cells.
“Hydrogen buses that were once lauded as the future of clean transportation in B.C. are being replaced by old-fashioned diesel power. The 20 vehicles were part of a high profile, $90-million plan to showcase hydrogen power during the 2010 Winter Olympics in Whistler. BC Transit is now taking bids on the buses and will either sell them off or have them converted to use diesel or other fuel. They have been in storage for several months and each has roughly 200,000 kilometres on the odometer.”
3) Turns Out the Dot-Com Bust’s Worst Flops Were Actually Fantastic Ideas
This is what happens with a tech journalist tries to wrap his mind around basic business. You see, a good business is one which makes money and those flops did not, and for the most part do not. Furthermore, with few exceptions, web based businesses have few barriers to entry meaning (and this is basic business here) in the unlikely event they did make money, new entrants would drive the profitability down to minimal levels. In other words, even the Uber business model can easily be replicated as can grocery delivery, online cat food, or whatever. Some such businesses can persist as a niche, and the Internet is a wonderful resource for small businesses. But, for the most part, those were still stupid ideas.
“If you had to pick one really annoying sock puppet to represent the imploded excesses of the dot-com boom, it would be the microphone-wielding mascot of online pet food retailer Pets.com. For a few months back in the late 1990s, he was everywhere—the Super Bowl, Live with Regis and Kathy Lee—and then he was gone, sucked into a black hole of dot-com debt. But the bust was so big and so widespread, there are so many deliciously ideal symbols for this dark time in the history of the internet, a period when irrational exuberance trumped sound business decisions. Fifteen years on, people—particularly people in Silicon Valley—still talk about these epic failures. In addition to Pets.com, there was WebVan, Kozmo.com, and Flooz.”
4) The Rise of AdBlock Reveals A Serious Problem in the Advertising Ecosystem
I don’t know enough about French law to hazard a guess as to whether they have a case or not, but this is silly to the point of absurdity. Sites are loaded up with annoying, distracting, bandwidth sucking advertisements and it is hard to make a case that users should be forced to look at them. If so, what about people who throw out the sports or travel section of the newspaper. Even if, somehow, this effort is successful an open source Adlock alternative would promptly emerge. One thing of note: you can disable “Acceptable Ads” in AdBlock. I do and I see no ads. And I don’t feel guilty about it. Sue me.
“On grounds that it represents a major economic threat to their business, two groups of French publishers are considering a lawsuit against AdBlockPlus creator Eyeo GmbH. (Les Echos, broke the news in this story, in French). Plaintiffs are said to be the GESTE and the French Internet Advertising Bureau. The first is known for its aggressive stance against Google via its contribution to the Open Internet Project. (To be clear, GESTE said they were at a “legal consulting stage”, no formal complaint has been filed yet.) By his actions, the second plaintiff, the French branch of the Internet Advertising Bureau is in fact acknowledging its failure to tame the excesses of the digital advertising market.”
5) Robots, Not Humans, Fake 23% of Web Video Ad Views, Study Finds
Its a little baffling they call this fraud. How is it fraud? Is there some sort of rule which says an ad has to be “enjoyed” by a human? What if a robot wants to buy a hamburger? As long as “pay per click” has been around, people in boiler rooms in places like India have been busy clicking away for profit. The bots are simply automating a “service” which has been around for some time. The only problem I see with this is that the bots are running on people’s computers without their permission. That being said I can see a business model where people are paid to host bots. Heck – isn’t technology wonderful?
“Computers being remotely operated by hackers account for almost one in four views of digital video ads worldwide, according to a study that estimates such fraud will cost advertisers $6.3 billion dollars next year. The fake views, which also account for 11 percent of other display ads, often take place in the middle of the night when the owners of the hijacked computers are asleep. The result is retailers, automakers and other companies paying for web advertisements that are never seen by humans, or are seen by fewer people than they are paying for, according to the report released today by the Association of National Advertisers, whose members include Wal-Mart Stores Inc. (WMT), Ford Motor Co. (F) and Wendy’s Co. (WEN).”
6) Samsung’s virtual-reality kit, Gear VR, finally launches
You may recall that Facebook purchased Oculus VR in May 2014, for the staggering sum of $2 billion. Of course, only a paltry few hundred million of that was money with the rest being Facbook stock. How, exactly, the management of Facebook were somehow convinced this was a good idea will probably make a good business case study one day, except it has been eclipsed by other, much more expensive but equally baffling moves. “Virtual Reality” headsets have been around for some time, however, the technological infrastructure did not really exist until now. This market will be dominated by large consumer electronics firms. No doubt Apple will soon “invent” the technology.
“Samsung is making a big jump into virtual reality, and it hopes early adopters will follow along. The company’s first virtual-reality headgear, the Gear VR Innovator Edition, was made available on Monday through AT&T’s and Samsung’s websites for $199, but only in the US. It launched with 17 apps, including a few from partner Oculus, which Samsung worked with on the product, and a few other games.”
7) Number of UK homes with TV falls for first time
I don’t know what is behind this, but it sounds potentially significant. UK has a yearly TV tax which is used to fund things like the BBC. According to http://www.tvlicensing.co.uk/check-if-you-need-one “You need to be covered by a valid TV Licence if you watch or record TV as it’s being broadcast. This includes the use of devices such as a computer, laptop, mobile phone or DVD/video recorder.” If people find they can use a computer monitor to watch stuff, and that stuff isn’t being broadcast, they a tax is a strong incentive to not have a TV. If BBC revenues begin to drop you can imagine the tax will be redfined to cast a wider net.
“The number of UK homes with a TV has fallen for the first time, as viewers turn to alternatives including tablets and smartphones to watch programmes. Ofcom said that after years of consecutive growth, the number of households with a television set fell from 26.33m at the end of 2012 to 26.02m at the end of last year. The media regulator said that nearly one million homes have a broadband connection, but no TV, indicating that other internet-connected devices are being used to view content. Ofcom said catch-up TV content in particular is growing in importance and being watched on smartphones, tablets, computers and games consoles. In its Infrastructure 2014 report, Ofcom cites BBC figures which show that in July 47% of requests for BBC iPlayer content came from tablets or mobiles, up from just 25% in October 2012.”
8) Big changes ahead for Windows: ‘We’ve got to monetize it differently,’ says Microsoft exec
It should seem obvious that if you have to give away an operating system to sell tablets which use it, that may be because not many people want that operating system. If not many people want the operating system, they aren’t likely to pay a subscription for it. Microsoft already effectively collects subscriptions from businesses on many of its products by complex licensing schemes so perhaps they are musing about extending that to consumers and small businesses. Frankly, it will be a cold day in hell before I pay a monthly Microsoft for an OS which happens to come installed on a computer I buy – especially when Playbooks and Linux are alternatives.
““The plan is to “monetize the lifetime of that customer through services and different add-ons that we’re (going) to be able to incorporate with that solution.” That sounds a lot like some form of subscription-based Windows. With Microsoft’s Windows 10 on the way next year, there have been various reports pointing to the possibility of a new pricing structure for Windows, where a basic level of the operating system would be free, and certain features would cost extra. Microsoft has already gone down this path with Office, making the productivity suite free on iPads, for example, and charging an annual subscription for advanced features. Turner didn’t go into specifics about the Windows plan, promising more details next year. But he made it clear during audience Q&A that the company doesn’t intend to lose money on Windows.”
9) HP Will Release a “Revolutionary” New Operating System in 2015
This story provides an update to an emerging technology which is being brought forward by HP, of all companies. Memristors are potentially revolutionary devices which can be used in a number of different ways including “non-volatile” memory. Unlike traditional Flash memory, memristors have supposed to have very fast read and write times so they combine the characteristics of high speed memory and mass storage. A computer designed around memristors will work much faster if it abandons the traditional memory performance hierarchy which has been around since the dawn of computer. This could be a very big deal.
“The company’s research division is working to create a computer HP calls The Machine. It is meant to be the first of a new dynasty of computers that are much more energy-efficient and powerful than current products. HP aims to achieve its goals primarily by using a new kind of computer memory instead of the two types that computers use today. The current approach originated in the 1940s, and the need to shuttle data back and forth between the two types of memory limits performance. “A model from the beginning of computing has been reflected in everything since, and it is holding us back,” says Kirk Bresniker, chief architect for The Machine. The project is run inside HP Labs and accounts for three-quarters of the 200-person research staff.”
10) Six-State Memristor Opens Door to Weird Computing
A bit of a follow on from the previous story but not as important. Memristors can act as analog (ie continuous) memory rather than a “1” or “0” as in traditional computer memory. Multi-state memory can increase density as you can store more bits in a memory cell, albeit at the cost of noise margin and, usually, speed. Don’t read too much into the idea of base 10 computers though: they might be more intuitive to people but they are a major pain in the butt to design since the circuitry gets extremely complex as you move up in radix.
“The newest fundamental electronic component, the memristor, still holds some surprises, it seems. Since researchers built the first memristor six years ago, this mysterious device has promised a host of applications—denser nonvolatile memories, new universal logic gates, and brainlike computers, among other things. Add to these another, according to Trinity College Dublin physicists: base-10 memory. Unlike transistor-based memories, which are designed to assume only binary states, the memristor can hold much more. The Trinity researchers constructed one that can remember six states, and there’s nothing to stop expanding that to 10 or more, they claim.”
11) Heathrow plane in near miss with drone
I wonder if people with model airplanes would be stupid enough to fly them in areas where $100 million aircraft full of people were also flying. Somehow I doubt it, but it seems to be the sort of thing enough “drone” (model airplanes that are easier to fly) owners do. I doubt an errant drone could bring down a commercial aircraft, but it probably could do millions in damage. Expect governments to impose fairly strict rules as to where and when drones can be used. I expect a legal requirement for a digital “stay away” system in any drone.
“An Airbus A320 pilot reported seeing a helicopter-style drone as the jet was 700 feet off the ground on its approach to the runway at 1416 GMT on 22 July. The CAA has not identified the airline or how close the drone came to the plane, which can carry 180 people. It gave the incident an “A” rating, meaning a “serious risk of collision”. This is the highest incident rating the CAA can give. Investigators were unable to identify the drone, which did not appear on air traffic control radar and disappeared after the encounter.”
12) New therapy holds promise for restoring vision
Gene therapies seem to have tremendous promise, in particular for congenital problems. The track record of the technique has been pretty uneven thus far, although that doesn’t eliminate the possibility of a breakthrough. More likely, slow progress will be made as this finding suggests. The problem I see is that the short effective period of the treatment may be useful for experimental purposes, however, it would probably make it impractical for human use.
“A new genetic therapy not only helped blind mice regain enough light sensitivity to distinguish flashing from non-flashing lights, but also restored light response to the retinas of dogs, setting the stage for future clinical trials of the therapy in humans. In normal mice with working photoreceptors (PR driven), stimulating the retina produces a variety of responses in retinal ganglion cells, the output of the eye. This can be seen in the colorful lower square, where measurements of the activity of different retinal ganglion cells are shown in response to the same stimulation. Photoswitches inserted into retinal ganglion cells (RGC) of blind mice produce much less variety of response (all evenly red means the cells fire at the same time), while blind mice with photoswitches inserted into bipolar cells (ON-BC driven) exhibit much more variety in their retinal response to light, closer to that of normal mice.”
13) It’s Time to Intelligently Discuss Artificial Intelligence
Musk (who is a businessman, not a scientist) and Hawking (who is an actual scientist and genius of the highest order, but not an expert in AI) have got a fair bit of press lately opining on the hazards of AI lately. Heck, even Margaret Atwood waded in lately (www.nytimes.com/2014/12/04/opinion/margaret-atwood-on-our-robotic-future.html). Unfortunately, knowng stuff doesn’t make you an expert, and it seems that people are concerned about what science fiction tells us about AI, not what AI experts actually know about AI. This is a counterpoint.
“Tesla CEO Elon Musk worries it is “potentially more dangerous than nukes.” Physicist Stephen Hawking warns, “AI could be a big danger in the not-too-distant future.” Fear mongering about AI has also hit the box office in recent films such as Her and Transcendence. So as an active researcher in the field for over 20 years, and now the CEO of the Allen Institute for Artificial Intelligence, why am I not afraid? The popular dystopian vision of AI is wrong for one simple reason: it equates intelligence with autonomy. That is, it assumes a smart computer will create its own goals, and have its own will, and will use its faster processing abilities and deep databases to beat humans at their own game. It assumes that with intelligence comes free will, but I believe those two things are entirely different.
14) iRobot Announces Create 2: An Updated, Hackable Roomba
Speaking of robots (which are also not what most people think they are), iRobot had the earliest mass volume domestic robot on the market. I didn’t know they also sold a “hackable” version, which they have now updated. Cool.
“Building and maintaining robots is one of the biggest obstacles in robotics research: when you’re spending all of your time just figuring out how to get a robot to work and then keeping it working, you end up spending none of your time teaching that robot to do anything useful. In 2007, iRobot came out with the Create, a vacuumless 400-series Roomba specifically designed to be used as a hackable mobile base. At a base price of US $129, it was rugged and reliable and relatively easy to program, and we still see iRobot Creates being used in robotics research.”
15) BitTorrent Inc Works on P2P Powered Browser
Traditional websites are hosted on servers, which may or may not be located at a specific location. If you take that/those servers offline, or block access ot them, the website goes offline, as numerous governments have shown. A BitTorrent based browser would keep websites in numerous chunks on numerous machines, and it would be very difficult practically to take those offline. In other words, this would be a nightmare for totalitarian governments and a very handy tool for the likes of terrorists and criminals.
““BitTorrent Inc. announced a new project today, a web browser with the ambition of making the Internet “people powered.” Project Maelstrom, as it’s called, is in the very early stages of development but BitTorrent Inc. is gearing up to send out invites for a closed Alpha test. The company hasn’t released a feature set as yet, but it’s clear that the browser will serve websites and other content through users. According to BitTorrent Inc. this can not only speed up websites but also boost people’s privacy. In addition, it should be capable of bypassing website blockades and other forms of censorship.””
16) Forgetting the Lesson of Cypherpunk History: Cryptography Is Underhanded
As the Snowden revelations clearly showed, all major tech firms are in cahoots with the security apparatus. This probably reassures some folks, but should scare the hell out of those who have read history. Some efforts have been made to develop open source alternatives, but it is impossible to know whether these are sincere, “honeypots”, or ultimately subject to compromise. Fundamentally, you can’t trust anyone, however, you might consider whether you want one of the large tech firms to profit from their continued misdeeds. Greenwald’s position is either one of ignorance or suggestive he has move to the dark side. Thanks to my friend Humphrey Brown for this item.
“There’s a general theme that recurs as the Snowden affair unfolds. Specifically, several high profile figures have openly extolled the virtues of commercial technology as a means of remediation, with the basic narrative that companies like Google and Apple, having conspicuously deployed encryption to protect user data, will encourage other vendors to do the same and gradually foster near universal internet privacy. Proponents of this narrative direct our attention to the recent outcry by officials like FBI director James Comey or GCHQ director Robert Hannigan. They presume that the uproar is evidence that encryption is a potent defense against government spying. But are high-level apparatchiks like Comey and Hannigan sincere in their protest or are they simply lending credibility to the high-tech industry’s marketing campaign to reassure users that their data is safe? After all, if the FBI or the GCHQ, Britain’s intelligence agency, makes a fuss then it must mean that Google’s encryption is solid, right?”
17) Excess Success for Psychology Articles in the Journal Science
The funding system for science is largely driven by the number of peer reviewed research articles which get published. There are inherent biases to what actually gets published (null results, results which should a particular experiment cannot be replicated, results which raise doubts regarding a favored hypothesis, etc., are much harder to get published than those which show a positive result, for example). Whether by accident or by design, researchers happily comply leading to the vast majority of “studies” (roughly 80%) being flat out wrong. Fortunately, some researchers have cottoned on and are now questioning the model. This is an example thereof.
“This article describes a systematic analysis of the relationship between empirical data and theoretical conclusions for a set of experimental psychology articles published in the journal Science between 2005–2012. When the success rate of a set of empirical studies is much higher than would be expected relative to the experiments’ reported effects and sample sizes, it suggests that null findings have been suppressed, that the experiments or analyses were inappropriate, or that the theory does not properly follow from the data. The analyses herein indicate such excess success for 83% (15 out of 18) of the articles in Science that report four or more studies and contain sufficient information for the analysis. This result suggests a systematic pattern of excess success among psychology articles in the journal Science.”
18) Quest for Quantum Computers Heats Up
Quantum computing is a potentially useful technology for certain scientific applications, as well as decrypting non-quantum codes. Since back doors, etc., seem to be an easier approach to spying, I assume the development of quantum decryption will not lead to much change. In any event applications like protein folding and the like may benefit, but you won’t see a desktop version for home use ever.
“The prospects for useful and profitable quantum computers are good enough to have drawn Google into the game, along with IBM and Microsoft, among others. Several academic groups are also pushing the technology in practical directions. At the Delft University of Technology in the Netherlands, for example, the government-backed QuTech Center is bringing researchers together with the Dutch high-tech industry. Delft physicist Ronald Hanson says that he will be able to make the building blocks of a universal quantum computer in just five years, and a fully functional—if bulky and inefficient—demonstration machine in a little more than a decade.”
19) How cheap does the Internet have to be to get everyone online?
Personally, I would not consider 70% of households “an overwhelming majority” – after all, would this be considered a big number if we were referring to electricity, refrigeration, or indoor plumbing? The fact that 2/3 of the 30% see no use in the Internet is not entirely surprising: who are you asking, the parents or the kids? With so much of modern life moving to the Internet, in particular access to government services, health and welfare programs, and so on, should there be any question that Internet access is an important aspect of modern life? In any event, yeah, lowering the cost should help. The most expensive plans should be a fraction of what they are and basic access should be near free.
“Although the vast majority of Americans have high-speed broadband of some kind these days, that optimistic figure comes with a few caveats: Most people can choose among only a couple of service providers. Many connections aren’t fast enough to handle next-gen services. And nearly one-third of U.S. households still have no broadband at all. So, how do we get this portion of the country connected to what’s become a crucial piece of the economy? The trick is to reduce the price of high-speed Internet, according to a recent federally funded study.”
20) A bright future for LEDs
We were well ahead of the curve with respect to the emergence of LED lighting as a replacement for incandescent or compact fluorescent. The quality and efficiency of LED lamps means they are a viable alternative even today. The interesting thing is, LEDs are so long lived the industry will rapidly reach saturation and there will be little in the way of a replacement market. This result is impressive: a 150 watt LED is the equivalent of about 1500 watts of traditional lighting. The quality of light should be much better, and it should be far more controllable. Not the sort of thing with much consumer application, but still very interesting.
“A single wafer-level LED chip that produces more than 150 Watts of light output has been made in work form China. This level of output from a single chip makes applications for LEDs in high power lighting from stadiums to runways feasible, and the researchers have long term plans for a new way to light buildings and towns. ”