The Geek’s Reading List – Week of January 16th 2015
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 has been a reasonable good week for tech news, however, no real theme emerged. A major auto show meant there were a fair number of cars related stories (EVs and self-driving in particular). The “anonymity” of Bitcoin has been unmasked as an illusion as the first Bitcoin related trial started. Finally – and most significantly – Deloitte launched its TMT Predictions roadshow. Check with Deloitte to see if and when they are presenting in your city. This edition of the Geeks List, and all back issues, can be found at www.thegeeksreadinglist.com.
1) GM to Introduce Electric Car With 200-Mile Range
The core problem with all Electric Vehicles is the fabulously expensive, short lived, battery pack. Battery technology has stagnated, meaning the price per kilowatt hour is not likely to drop significantly unless and until an unexpected, major technological advance occurs, no matter what any celebrity CEO has to say. In order to bring the price of an EV battery pack down, you need to either reduce the weight of the vehicle (resulting in more km/kw) or reduce the distance traveled. I suspect, in this case, the former is most likely what is planned. A $30,000 EV probably has a $10,000 battery pack, meaning it might make economic sense, depending on the price of gasoline, since you have to replace it every 8 years or so. It is worth noting that many mainstream auto vendors have released or will release EVs, likely eliminating the market for the sale of related tax credits – historically a major revenue source for Tesla.
“General Motors Co. is expected Monday at the North American International Auto Show to unveil an electric vehicle concept that gets 200 miles of electric range — a vehicle that could challenge upstart Tesla Motors Inc. — according to two sources familiar with the automaker’s plans. The concept car is named the Chevrolet Bolt and would get 200 miles or more of electric range and would be sold in all 50 states, according to a person briefed on the plans who asked not to be identified because the plans have not been made public. GM executives have talked about developing a 200-mile electric vehicle for nearly two years, but never confirmed plans to show it or what it would be named. The new Chevrolet Bolt is expected to retail for less than half the Tesla Model S — around $30,000 — and about what Tesla’s future, lower-priced car is set to cost.”
2) People ‘horrified’ by self-driving cars, says survey, as trials begin
Survey data can be interesting, but always has to be taken with a grain of salt. For example, if I ask one of my cats their opinion of quantum mechanics, I might garner a different responses than if I ask an actual physicist. Similarly, asking the man (or woman) on the street their opinion of a technology they know nothing about, “horrified” might be an appropriate response. I wonder what the answer would be if I surveyed airline passengers how they felt about the “self flying airplane” they were flying on.
“Many British people are “horrified” by the idea of self-driving cars, according to a new survey. Autonomous cars are set to begin trials later this month in four British cities, and they took centre stage at this week’s Consumer Electronics Show, but the British public are still unconvinced. Almost half of consumers wouldn’t want to be a passenger in such a vehicle, and 43 per cent wouldn’t trust it to drive safely, according to the research commissioned by uSwitch.com. And 16% of people are “horrified” by the idea of being driven in one.”
3) TMT Predictions 2015 The future in Technology, Media & Telecommunications
My friends Duncan Stewart and Paul Lee put together this extensively researched and thought provoking set of prediction every year and launch simultaneously in Toronto and London. The presentations are very good and well attended (you can download the presentation from the link, below). If you couldn’t get there this year, sign up for next year!
“ In-store mobile payments will (finally) gain momentum; For the first time, the smartphone upgrade market will exceed one billion; Print is not dead, at least for print books; The ‘generation that won’t spend’ is spending on TMT; Click and collect booms: a boon for the consumer, a challenge for retailers; The connectivity chasm deepens as gigabit Internet adoption rockets; The end of the consumerization of IT?; The Internet of things really is things, not people; 3D printing is a revolution: Just not the revolution you think; Short form video: a future, but not the future, of television.”
4) In the Silk Road trial, Bitcoin is a cop’s best friend
It’s been a while since we have heard of an entertaining Bitcoin scam, but, as we more or less predicted, the fraud itself is becoming unraveled. Bitcoin was favored by drug dealers and other miscreants because it was anonymous, or so the story went. The price really picked up when it came to the attention of “Internet Libertarians” who were attracted to the existence of a “currency” not controlled by a state. The whole thing was great fun, especially as said Libertarians were regularly robbed by said miscreants as we have frequently reported. The first major trial involving Bitcoin is under way and, it turns out, the joke is on the miscreants who have learned that, by golly, all Bitcoin transactions are completely traceable once certain conditions have been met. Of course, this is sad news if you are a drug dealer. Not that the fraud victims have any chance of getting their money back since there is no reason to believe Bitcoin theft is actually illegal.
“But now, as Ross Ulbricht defends himself against charges of running the Silk Road and profiting from drug transactions, Bitcoin may be the single biggest problem for his defense. The same features that made Silk Road possible have now turned against him, and casual observers are realizing that Bitcoin isn’t as anonymous as they thought. The public Bitcoin ledger details Ulbricht’s enormous financial holdings and a wealth of potentially incriminating transactions. Now that his wallet address has been discovered, the perfect anonymity tool has turned into the perfect source of evidence. Skeptics sometimes called the currency “prosecution futures,” and now it looks like some of those futures are coming due.”
5) Is this the end of Bitcoin? Behind its falling price and many flaws
Not surprisingly, the discovery that Bitcoin transactions are traceable (see item 4) has had a profound impact on the trading value of Bitcoin itself as drug dealers, etc., appear less attracted to it. As I understand it, this has derailed a number of Bitcoin related businesses, in particular miners and vendors of mining equipment, although hope if not lost since the infinitely gullible “Internet Libertarians” remain gullible buyers. If history is to be a guide, a valuation implosion of this scale tends to lead directly to the exposure of Ponzi schemes so stay tuned.
“The strategy of mining has become Bitcoin’s achilles’ heel. The design of Bitcoin dictates that the difficulty of mining will increase as more Bitcoins are produced and more miners get involved. This has led to mining being dominated by companies that can scale to the point where they can guarantee to earn a certain percentage of Bitcoins created each day. As Bitcoin’s value has dropped, the economics of the mining operation have changed, to the point that mining ceases to be economically viable. Cloud mining company CEX.io suspended their mining operations this week, declaring that it needed the price of Bitcoin to be at least $320 before it would be able to resume its operations. Unfortunately for them, the price has dropped even further since and the likelihood of it climbing back to $320 seems slim.”
6) FCC To Raise Minimum Broadband Definition To 25 Mbps, Further Highlighting Nation’s Pathetic Lack Of Broadband Competition
Until relatively recently (around the mid-1990s) the telecommunications infrastructure in North America was world leading, while that in Europe was a virtual laughing stock. The developing world was even worse. Twenty years of poor policy in North America and much better policy pretty much every where else has entirely inverted the situation of the mid-1990s, and, as a consequence, many developing countries have superior and more affordable telecommunications than does North America. At least US regulators (and the president, see item 7) are making noise about it, which is more than we can say for Canada.
“Over the last few months FCC boss Tom Wheeler has been making the rounds highlighting the fact that while U.S. broadband competition is fairly pathetic by any standard, it’s particularly pathetic when it comes to faster speeds. At speeds of 25 Mbps downstream, for example, nearly two-thirds of the country lack the choice of more than one broadband provider. That’s obviously (to most of us) thanks to a lack of competition, and as I’ve noted recently that’s only going to get worse as phone companies accelerate their abandonment of DSL networks they don’t want to upgrade, leaving cable companies with a stronger monopoly than ever before.”
7) Obama calls for end to 19 state laws that harm community broadband
For some reason President Obama has decided to make a stand on the subject of broadband, including proposals to regulate it as a utility, which I believe would be an excellent idea. I believe the legacy of poor regulation in the space must be a result of abject stupidity or corruption and I tend to believe the latter is more likely. Either way, it is improbable such efforts will be approved due to lobbying or flat out corruption. Unfortunately that means North American broadband infrastructure will continue to continue losing ground to the rest of the world.
“This is the second time in recent months in which Obama has taken stances on major issues at the FCC. In November, he called on the FCC to reclassify broadband as a common carrier service in order to impose net neutrality rules. After initial resistance, FCC Chairman Tom Wheeler now appears ready to do just that. Beyond those 19 state laws, there may be more restrictions on broadband that should be removed, the White House said. “The President is calling for the Federal Government to remove all unnecessary regulatory and policy barriers to broadband build-out and competition, and is establishing a new Broadband Opportunity Council of over a dozen government agencies with the singular goal of speeding up broadband deployment and promoting adoptions for our citizens,” the report said. “The Council will also solicit public comment on unnecessary regulatory barriers and opportunities to promote greater coordination with the aim of addressing those within its scope.””
8) Where Cellular Networks Don’t Exist, People Are Building Their Own
Of course, not all developing economies have a better telecommunications infrastructure, but, in my defense, Mexico is part of North America so my comments about the abysmal state of North American infrastructure (see items 6 and 7) still hold. This article is about or areas in Mexico which have decided to take things into their own hands and fund and deploy their own infrastructure. Something tells me it is illegal to do what they do (it certainly is in Canada and the US), however, the great thing about a failed state such as Mexico is that the law doesn’t work so they might as well go for it.
“The tower—which Hernández, Yaee’s blacksmith, welded together out of scrap metal just a few hours earlier—is the backbone of Yaee’s first cellular network. The 90,000 pesos come in the form of two antennas and an open-source base station from a Canadian company called NuRAN. Once Hernández and company get the tower installed and the network online, Yaee’s 500 citizens will, for the first time, be able to make cell phone calls from home, and for cheaper rates than almost anywhere else in Mexico.”
9) Shadow IT, Latency Reduction and More: The Next Decade in Storage
It is worth noting that cloud based storage may be wonderful and cutting edge but access times, etc., will always be abysmal due to the speed of the link and the network overhead. Furthermore, while my Solid State Drive may not be idea, it is not as prone to single point failure, DOS attacks, security agency perusal, and sloppy security as are all cloud services.
“For decades we had RAM, disk, and tape limiting our storage palette. But now: Get ready for Technicolor storage in 3D. The shadow IT industry – the secretive cloud-scale IaaS suppliers – is a key piece. But so are resistance RAM (RRAM), low-latency architectures, new applications, and the commoditization of most storage. Here’s an overview of some of the most critical changes affecting the next decade in storage.”
10) Storj, The New Decentralized Storage Solution
This is not exactly a new idea and I have seen a few business models based upon it. Besides, file torrents do more or less the same thing and a minor modification to Bittorrent Sync would amount to a similar model. From a business perspective, the main problem is that there are no barriers to entry so it is not the sort of idea worthy of funding. In fact, there are no barriers to entry to cloud storage in general meaning prices will be asymptotic to zero, or at least the cost of the electricity and bandwidth to provide them. Most such business idea assume individuals do not understand costs well enough to demand compensation, which is probably not a prudent long term strategy.
“Storj is a peer-to-peer cloud storage network implementing end-to-end encryption would allow users to transfer and share data without reliance on a third party data provider. The removal of central controls would eliminate most traditional data failures and outages, as well as significantly increasing security, privacy, and data control. A peer-to-peer network and basic encryption serve as a solution for most problems, but we must offer proper incentivisation for users to properly participate in this network.”
11) Stop threats to Canada’s online pirates, rights holders told
The start of 2015 brought a change in Canadian law which compelled Internet Service Providers (ISPs) to notify alleged pirates if requested to do so, even though most already did so voluntarily. This is considerate of them because it would lead pirates to anonymize their activities. Needless to say, the bloodsucking leaches of the legal profession saw an opportunity to use this new law to threaten Canadians with all kinds of horrors if they weren’t bought off (apparently, it ain’t extortion if you are a lawyer). Remarkably, for a government oblivious to the importance of telecommunications, the government has told them to back off on these illegal threats.
“Media companies must back off from threatening Canadians who illegally download movies, music and books with penalties that do not exist in Canadian law, the government said on Friday. “These notices are misleading and companies cannot use them to demand money from Canadians,” said Jake Enright, a spokesman for Industry Minister James Moore. Officials will be contacting Internet Service Providers (ISPs) and rights holders within days to put an end to the practice, he said.”
12) Andhra Pradesh government plans 15 Mbps broadband service at Rs 150 ($3)/month
I wish we had this sort of political leadership in Canada, at least with respect to broadband. Of course, Indian politicians are known for grand pronouncements with no follow through (sort of like Canada “taking on” the mobile carriers), however, at least the gentleman understands than broadband is important to the economy. Conversations I have had with politicians, bureaucrats, and other movers and shakers in Canada so a remarkable degree of obliviousness in this regard.
“Andhra Pradesh government, led by tech-savvy Chief Minister Chandrababu Naidu, plans to provide broadband connections with peak speed of 15 Mbps to twelve million households for as low as Rs 150/month in the first stage of its about Rs 5,000-crore optical fibre project. The state government has asked the Centre to provide its share of funds from ongoing National Optical Fibre Project that aims to connect 2.5 lakh gram panchayats across the nation by December 2016.”
13) David Cameron says new online data laws needed
It is true that there is no tragedy which cannot be exploited politically. After all, known terrorists attack a likely target in another country and the proper response can only be to use the jackboot upon law abiding citizens. Perhaps this halfwit expects terrorists to send text messages to each other regarding the timing and details of any such attack. Or at least to do so without availing themselves of techniques well known to spies and terrorists to avoid such oversight. It is a pity governments chose to do such things rather than acting against the actual perpetrators, agitators, and financial backers.
“David Cameron has promised a “comprehensive piece of legislation” to close the “safe spaces” used by suspected terrorists to communicate online with each other. If he wins the election, Mr Cameron said he would increase the authorities’ power to access both the details of communications and their content. Mr Cameron said the recent attacks in Paris showed the need for such a move. He was “comfortable” it was appropriate in a “modern liberal democracy”.”
14) Man Saves Wife’s Sight by 3D Printing Her Tumor
I doubt there is likely to be a large consumer market for 3D printers, however, they are very useful for commercial and medical applications. Most of the medical applications we have seen have been in the construction of replacement joints and the like. Some applications, such as this one, have allowed doctors to practice or plan complex surgeries. Thanks to my friend Humphrey Brown for this item.
“Balzer downloaded a free software program called InVesalius, developed by a research center in Brazil to convert MRI and CT scan data to 3D images. He used it to create a 3D volume rendering from Scott’s DICOM images, which allowed him to look at the tumor from any angle. Then he uploaded the files to Sketchfab and shared them with neurosurgeons around the country in the hope of finding one who was willing to try a new type of procedure. Perhaps unsurprisingly, he found the doctor he was looking for at UPMC, where Scott had her thyroid removed. A neurosurgeon there agreed to consider a minimally invasive operation in which he would access the tumor through Scott’s left eyelid and remove it using a micro drill. Balzer had adapted the volume renderings for 3D printing and produced a few full-size models of the front section of Scott’s skull on his MakerBot. To help the surgeon vet his micro drilling idea and plan the procedure, Balzer packed up one of the models and shipped it off to Pittsburgh.”
15) Create My Free App
I thought this was an interesting web site, but I admit I haven’t tried to use it myself as I have been very busy of late. Since many apps are essentially advanced web pages, and web page design software has been around for some time, the emergence of ‘drag and drop’ app development might have been predicted.
“How do I get started? Getting started on your free app is simple. First create a new account on our login page . From there, we will guide you through the design and publish steps. This simple, 5 minute process will give us all the information we need to design your custom app.”
16) Self-driving car technology moves to forefront at NAIAS
It makes sense that self-driving cars would be a hot topic at an industry show, but this is also a show notorious for “concept cars” which never see the light of day. I remain a big believer in the transformational impact of self-driving cars but reiterate that we are likely looking at a 20 year, rather than 5 year, time horizon for those to be on the market in any quantity. Besides, the optimal situation will be when cars, signage, and telecommunications infrastructure are all in place for true auto-pilot.
“Once relegated to convention center basements, test tracks and tech shows, self-driving cars and the technology behind them are center stage at the North American International Auto Show. Wholly autonomous vehicles for mainstream drivers may be years off, but parts of the self-driving experience are on display now at Detroit’s Cobo Center: three-dimensional cameras, lane-correction devices and other tools that increasingly remove the driver from the tasks of steering, braking and accelerating. There’s even a self-driving concept car with a sort of built-in lounge: The Mercedes-Benz F 015 concept has walnut flooring and seats that swivel to facilitate conversation.”
17) Marriott no longer wants to block guests’ WiFi devices
Call this another version of the Streisand Effect (trying to get something removed from the Internet vastly increases the audience for it). Marriott engaged in blatantly illegal “jamming” of WiFi bands and was fined. Rather than realizing the error of its ways, the chain doubled down on the stupid and petitioned for permission to illegally jam radio signals which served to widely promote its misdeeds and led to a backlash against the chain. I expected hackers to jam Marriott’s WiFi in revenge and they still might, just out of spite.
“Marriott’s (thankfully) raising the white flag and admitting defeat to Google, Microsoft and everyone else lobbying against its plans to block WiFi devices inside its hotels. The company has issued a statement that makes its new stance clear: guests can now use their own WiFi devices without having to worry that their hotspot connections will be blocked in the middle of something important. If you recall, Marriott recently paid a $600,000 fine due to a complaint that it’s been blocking guests’ MiFi and personal hotspots. The hotel chain claims it’s to protect guests from connecting to rogue hotspots set up by hackers and has even submitted a request to the FCC to let it continue doing so.”
18) 92 Percent of College Students Prefer Reading Print Books to E-Readers
This is a surprising result, especially considering the demographic. One major problem I see with e-books is that they are so damned expensive and come with limited rights. Why would I pay near the same for (sometimes more) for an e-book as a paper copy?
“Defenders of print books usually rely on anecdote or intuition—which can make it easy to dismiss them as Luddites or romantics. And the relative lack of data has sometimes forced them to resort to the hyperbolic—Andrew Piper proclaiming that e-reading isn’t reading at all—or the petty—Peter Conrad complaining that e-readers don’t align margins the way he likes. With her new book, Words Onscreen: The Fate of Reading in a Digital World, Naomi Baron, a professor of linguistics at American University, brings more data to the case for print. Baron and her colleagues surveyed over 300 university students in the U.S., Japan, Germany, and Slovakia, and found a near-universal preference for print, especially for serious reading. (She finds that the format doesn’t matter so much for “light reading.”) When students were given a choice of various media—including hard copy, cell phone, tablet, e-reader, and laptop—92 percent said they could concentrate best in hard copy.”
19) Gartner Says Worldwide PC Shipments Grew 1 Percent in Fourth Quarter of 2014
In general I believe industry research is not worth the electrons used to distribute it, however, because so many analysts and companies pay rap attention to the figures it can be worth looking at, especially if you don’t pay for it. To begin with, like most industry research these figures reflect unit sales rather than dollars which are the only metric that matters. I do not believe that it is correct to overplay the relationship between smartphone or tablet sales and PCs except for the fact that consumers have finite funds. My guess is pricing is probably slightly declining in the PC business so overall revenues are dropping 5% and the unit sale rise has to do with replacing old machines, a choice which had been postponed as much as possible due to the abomination known as Windows 8.
“Worldwide PC shipments totaled 83.7 million units in the fourth quarter of 2014, a 1 percent increase from the fourth quarter of 2013, according to preliminary results by Gartner, Inc. These results indicate a slow, but consistent improvement following more than two years of decline. “The PC market is quietly stabilizing after the installed base reduction driven by users diversifying their device portfolios. Installed base PC displacement by tablets peaked in 2013 and the first half of 2014. Now that tablets have mostly penetrated some key markets, consumer spending is slowly shifting back to PCs,” said Mikako Kitagawa, principal analyst at Gartner.”
20) Exclusive: Samsung talks to BlackBerry about $7.5 billion buyout – source
Most likely this rumor was started by a hedge fund manager keen to manipulate the stock (yes, some do). Equally, the rumor might have some foundation in truth – 20 years of equity research taught me that you should not assume a takeover won’t happen just because it makes no economic, strategic, or technological sense. Similarly, it is not entirely unusual for dim witted boards to massively overvalue a once great company. Frankly, I believe Blackberry will be bought, but only a complete idiot would pay more than a small fraction of its current stock price. So don’t rule it out.
“Samsung Electronics recently offered to buy BlackBerry Ltd for as much as $7.5 billion, seeking its valuable patents as it battles Apple in the corporate market, according to a person familiar with the matter and documents seen by Reuters. South Korea’s Samsung proposed an initial price range of $13.35 to $15.49 per share, representing a premium of 38 percent to 60 percent over BlackBerry’s current trading price, the source said on Wednesday.”