The Geek’s Reading List – Week of February 20th 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 12 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 was a very slow week for tech news – News was dominated by rumors – which developed into speculation and then into “fact” Apple was going to start manufacturing cars. Why the world’s largest company, which operates a business model involving subcontracting, would want to enter a low margin, capital intensive business is probably be not asked. This edition of the Geeks List, and all back issues, can be found at www.thegeeksreadinglist.com.
1) Apple said to be targeting car production as soon as 2020
As noted in our summary, tech news was dominated by rumors, which were breathlessly enhanced by speculation based on wild ass guessing, that Apple would be entering the car business. Frankly, I believe it would be a stupid move, but experience has show that you should never eliminate the possibility of an acquisition or business decision by a tech company simply because it makes no financial or strategic sense. This is particularly true of companies with large cash balances who generally prefer to blow the money rather than give it all to shareholders.
“Apple Inc., which has been working secretly on a car, is pushing its team to begin production of an electric vehicle as early as 2020, people with knowledge of the matter said. The time-frame – auto makers typically spend five to seven years developing a car – underscores the project’s aggressive goals and could set the stage for a battle for customers with Tesla Motors Inc. and General Motors Co., both of which are targeting a 2017 release of an electric vehicle that can go more than 200 miles on a single charge and cost less than $40,000.”
2) Why Tesla’s battery for your home should terrify utilities
Does nobody understand even basic electricity? Let’s see 10 kilowatt hour battery for two days, that’s 208.3 watts per hour, roughly the load of a desktop PC, or four lights, per hour. Mind you the average US household uses almost 30 kwhr per day so maybe this is for doghouses. And all that for the low, low price of only $3,000 (http://cleantechnica.com/2014/11/03/solarcity-tesla-storage-system-cost/). Grid scale batteries have some potential if, as, and when, durability and cost are dramatically improved and that sure isn’t going to come with Lithium Ion batteries.
“SolarCity is also running a pilot project with 500 homes in California, according to the company’s director of public affairs, Will Craven. The project uses Tesla’s 10-kilowatt-hour battery packs and can power homes for about two days in the event of an outage, Craven says.
3) 1.2B Smartphones Sold In 2014, Led By Larger Screens And Latin America
We continue to believe that the smartphone pricing will come under considerable pressure as the market is largely saturated and the devices themselves have reached “feature saturation” meaning there is only minor incremental benefit to a new device. This should have a profound impact on growth and large companies like Samsung and Apple will no be immune. As usual, we note that industry research should be approached with due caution.
“Apple is reaping the biggest rewards right now when it comes to selling its smartphones and other devices, but the overall picture for the smartphone market in the year ahead may be a little less rosy. According to the analysts at Germany-based GfK, in 2014 there were 1.2 billion smartphones sold, up 23% on the year before and crossing the billion-unit point for the first time. But they predict sales will slow down to 14% growth in 2015, working out to total sales of 1.368 billion devices. The reason? More countries are reaching their smartphone saturation point, and so the industry is looking ever more for growth in two places: emerging markets where smartphone adoption is still at an early stage; and among consumers flocking to buying newer models with larger screens.”
4) Russian researchers expose breakthrough U.S. spying program
One consequence of the Snowden/NSA revelations is that investigators are actually looking for malware in places in places they never would have considered otherwise. After all, previously, malware was assumed to be installed by criminals despite the best efforts of manufacturers whereas now it is clear that malware is often installed by governments with the cooperation of the large technology companies. The sad thing is that once identified, malware can frequently be used by people you did not expect to use it, including “real” criminals.
“The U.S. National Security Agency has figured out how to hide spying software deep within hard drives made by Western Digital, Seagate, Toshiba and other top manufacturers, giving the agency the means to eavesdrop on the majority of the world’s computers, according to cyber researchers and former operatives. That long-sought and closely guarded ability was part of a cluster of spying programs discovered by Kaspersky Lab, the Moscow-based security software maker that has exposed a series of Western cyberespionage operations.”
5) US and UK accused of hacking Sim card firm to steal codes
This is just more of the same sort of stuff we’ve been seeing for the past year or two. Western spy agencies seem hell bent on penetrating all widely used systems at the same time as their respective government lament more crudely executed hacking and cyber espionage by the Chinese. The companies involved usually act outraged when the news breaks, and pledge to make their systems more secure but that is all theater. The net result is increasingly that countries such as China and Russia are realizing that Western technology is untrustworthy and will work to displace Western suppliers to the extent they can. Furthermore, since most of the stuff in made in China, you can bet there is some reciprocation due.
“Each Sim card has an individual encryption key, installed by the chip manufacturer, that secures communications between the handset in which it inserted and mobile phone masts. This means that if anyone were to snoop on conversations or text messages, they would receive garbled, unintelligible data. That is, of course, unless those carrying out the surveillance get hold of the encryption key. With that information, they can even decrypt previously intercepted communications. However, this tactic only works for phone conversations and text messages. Communications through mobile applications such as Whatsapp, iMessage and many email services have separate encryption systems.”
6) Driverless car beats racing driver for first time
This is not an entirely meaningless exercise although it does not imply such a system would be immediately useful on the roads. There are two general problems with self driving cars, namely the driving and the navigating. Driving is largely technical and is dependent on navigating. Navigating isn’t just getting around it also means avoiding other cars, pedestrians, and so on. For the most part, navigating on a race track is pretty straightforward, especially if there are no other cars on the track. Nonetheless, driving at speed can be tricky and good navigation is not of much use if course corrections can’t be handled skillfully. Regardless, navigation is a more difficult problem by one or two orders of magnitude.
“To get the cars up to speed, the Stanford team have been studying drivers, even attaching electrodes to their heads to monitor brain activity in the hope of learning which neural circuits are working during difficult manouvres. And they have used the results to make a car that can drive even better than expert motorists. They predict that within the next 15 years, cars which can drive with the skill of Michael Schumacher could be driving children to school.”
7) The hype over driverless cars: is it overdone?
This article covers most of the points I think are relevant when I say that these are likely 20 years into the future, not 5 or 10 years. In particular I believe roads will have to be enhanced to include navigation aids, but I do not agree that an automotive auto-pilot will be “will be orders of magnitude harder than developing a pilotless airliner”. After all, airplanes have to keep flying, meaning they can’t just slow down to a crawl or dead stop in the event of a difficult problem or system failure. Also, I believe self driving would greatly reduce congestion through much more efficient use of infrastructure and smaller vehicles.
“As Nair’s remarks made clear, we’re still a long way from having robotic chauffeurs that can reliably drive cars through any traffic scenario without the aid and oversight of a capable human being. While it may be relatively straightforward to design a car that can drive itself down a limited-access highway in good weather, programming it to navigate chaotic city or suburban streets or to make its way through a snowstorm or a downpour poses much harder challenges. Many engineers and automation experts believe it will take decades of further development to build a completely autonomous car, and some warn that it may never happen, at least not without a massive and very expensive overhaul of our road system.”
8) Why Are Taxpayers Subsidizing Elon Musk’s $100,000 Tesla?
Musk has pretty much mastered the art of getting money from taxpayers through various businesses and politicians seem happy to oblige for some reason. The best example I can think of is Norway where EV subsidies are such that the cost to buy a new Tesla is in line with a Honda Accord, and there are numerous other benefits in terms of various privileges, etc.. Unfortunately, other car companies want to get on the gravy train if for no other reason than manufacturing their own Zero Emission Vehicle (ZEV) credits and they are all tooling up for – or already selling – EVs of their own. After all, building an EV is much easier than building a normal car. Why governments should be subsidizing the production of any type of vehicle is a matter for voters to decide.
“Elon Musk, all-purpose impresario of the future, is enthusiastic about electric cars. “Eventually,” he says in the forthcoming issue of Bloomberg Markets magazine, “all cars will go electric.” As the founder and head honcho of Tesla Motors, he would say that. But he has some evidence on his side. Electric cars are culturally modish. They’re by most accounts fun and safe to drive. And their sales have been holding up lately, even as the price of oil has sunk and Tesla’s stock has had a bumpy ride. One problem: The success of electric cars generally — and of Tesla in particular — is due in no small part to a government mandate. And that mandate is distorting the auto market without clear evidence that it’s going to achieve its stated purpose.”
9) Your old phone could be refurbished, end up as part of 120-million strong market by 2019
I’ve bought refurbished phones in the distant past before new unlocked phoned became readily available so I knew this market existed, however, I had no idea it was as big as it is. Presumably, many of the “recycled” phones are replaced because the consumer’s contract is up and they are “eligible for an upgrade” (in other words the carrier is happy to let them pay finance the phone in exchange for being indentured for another couple years. Frankly, I’m surprised the environmentalists haven’t cottoned on this yet. Ultimately, I believe what happens is that, for example 3G phones which might be obsolete as 4G is rolled out in one country, end up in areas where 3G is being rolled out.
“In fact, the latest finding from technology research house Gartner suggest that 60% of US and German consumers admit to replacing their smartphones because they are interested in additional functionality, or they “just want” a new device. As a consequence of this, the research house says, the worldwide market for refurbished phones that are sold to end users will grow to 120 million units by 2017, with an equivalent wholesale revenue of around US$14-billion. This is up from 56-million units in 2014, with an equivalent wholesale revenue of US$7-billion.”
10) FAA seeking drone rules favorable to commercial operators
For those who don’t know, drones are somewhat autonomous aircraft though mostly they are flown by remote control. Some have a degree of intelligence in that they can follow a flight path, return to home, or whatever. Drones can be as small as a sparrow or as large as a 747 but most drones with this context are relatively small hexacopters (helicopters with six blades). They are quite popular among researchers and hobbyists and you hear quite frequently of companies such as Amazon which want to do amazing and mre or less impractical things with them. Any object weighing more than a couple ounces falling from a great height has the potential to be dangerous so it was a matter of time before regulators caught up with the technology and began restricting their use. This is probably a good thing for the industry.
“The government is readying rules largely favorable to companies that want to use small drones for commercial purposes, according to a federal analysis, potentially leading to the widespread flights by unmanned aircraft performing aerial photography, crop monitoring, inspections of cell towers and bridges and other work. … The regulations would apply to drones weighing less than 55 pounds. They would improve safety by using small, lightweight unmanned aircraft instead of heavier, manned aircraft that “pose a higher level of risk,” the analysis said. It notes that between 2004 and 2012, there were 95 fatalities involving climbers working on cell and other towers.”
11) Grounded, Farmers Wait On Drone Rules
This is a bit of a follow on to item 10, above and provides further examples of the sorts of applications ‘pro-sumer’ drones might be applied to. One might imagine that regulations might be relaxed for farms provided the drone’s altitude is restricted to below aircraft flightpaths and the range limited to the farmer’s property.
“Farmers see drones as a way to get a birds-eye view of their fields to find problem patches with crops. That information can allow farmers to be more precise with fertilizers and pesticides and, ultimately, save them money. But getting them in the sky without running afoul of federal regulation is proving to be a challenge. Commercial use of drones is still widely banned in the U.S., though some companies have secured exemptions. Other farmers have gone rogue, flying drones over their property without all the proper permissions, daring federal regulators to put a stop to it. But the new federal rules, once approved, are expected to usher in a new era of farm machinery.”
12) Goodbye Google: A tale of digital independence
Apparently Google reported disappointing results recently and, as a consequence, there were lots of articles about how the company has lost its way, etc.. I have been concerned with Google’s assault on privacy ever since I learned of the company, though I admit that the Snowden revelations clearly show that substantially all large tech companies collude with the secrete police, which I believe represent more of a threat to privacy than Proctor and Gamble. Nevertheless I prefer their search engine though I tend to use Duckduckgo.com more and more and I have been ‘spreading out’ my systems much as this author describes. Has Google lost its way? Well it is a large megacorporation, not a charity, so as long as it makes money it is fulfilling its mission.
“I’m not saying Google is an evil, manipulative power that wants to control the universe, but I won’t outrule it either. The point is: while I don’t have anything to hold against them, I get this scary feeling in my intestines when I think of how much they know about me. That’s why I have decided for myself that 2015 is going to be the year I’m claiming my digital independence. And I start with moving away from as many Google products as I can.”
13) Lenovo caught installing adware on new computers
Sometimes you look at decisions companies make and you ask yourself what types of drugs the ‘deciders’ were on. Lenovo, which, despite being a Chinese company, is a mainstream supplier to corporate IT departments, figured that adding “adware” (which is better characterized in this context as malware) to their laptops would be a good idea. Not only that, by the adware installed a security certificate, giving it the same security level as the operating system. Not surprisingly, this itself was cracked, giving free access to the PCs (see http://www.theverge.com/2015/2/19/8069127/superfish-password-certificate-cracked-lenovo). Well done, Lenovo executives – now put away the crack pipe.
“… Other users are reporting that the adware actually installs its own self-signed certificate authority which effectively allows the software to snoop on secure connections, like banking websites as pictured in action below. This is a malicious technique commonly known as a man-in-the middle attack, where the certificate allows the software to decrypt secure requests, yet Lenovo appears to be shipping this software with some of its products out of the box. If this is true — we’ve only seen screenshots so far — Superfish could be far more dangerous than just inserting advertising.”
14) Military May Soon be Able to Copy & 3D Print Exact Replicas of Bones & Limbs For Injured Soldiers
The US military and its related programs provide massive subsides to the technology sector through various development programs. Some of those programs end up being very positive for the US economy, which goes to show that socialism works, some times. This is an intriguing idea: do whole body scans of people so you can 3D print replacement parts as necessary. Of course, an even better idea might be to not send people to places where they might end up losing those body parts that is just plain silly. The idea is workable in a civilian context where you might imagine that people might want to keep their blueprint on file, provided prices get low enough. As for the military, well, having a replacement femur when you are missing most of the rest of the leg is probably of small benefit.
“The idea is to image someone when they are in a healthy state so that the data is available if it’s needed at a later point,” explained Mah. “We have soldiers who get injured. They lose limbs and other tissues and it’s a challenge to reconstruct them in the field. but if they are imaged beforehand, you can send that over the internet and have a 3D printer in the field to produce the bone,”
15) Revolutionary new probe extends survival times for brain cancer patients
One of the challenges of brain surgery is that brain tissue is pretty homogenous to it can be hard to figure out what to cut and what to leave. This is a particular challenge with tumors because if you cut too much you kill or disable the patient and if you cut too little the tumor grows back. This probe allows surgeons to detect the diseased tissue and ensure they only cut out what they have to and cut out all of what they have to. Very impressive. Thanks to my friend Duncan Stewart for this item.
“Brain cancer patients may live longer thanks to a new cancer-detection method developed by researchers at the Montreal Neurological Institute and Hospital – The Neuro – at McGill University and the MUHC, and Polytechnique Montréal. The collaborative team has created a powerful new intraoperative probe for detecting cancer cells. The hand-held Raman spectroscopy probe enables surgeons, for the first time, to accurately detect virtually all invasive brain cancer cells in real time during surgery. The probe is superior to existing technology and could set a new standard for successful brain cancer surgery.”
16) Stopping HIV with an artificial protein
This is another impressive medical advance, although, since it has only been tested in a small number of monkeys it is still pretty much untested. The idea is to infect people with a genetically modified virus which produces a designed molecule which frustrated the infection mechanism of the HIV virus. Since the virus cannot replicate it would essentially cure the disease. If this works a similar approach could be developed for other serious conditions as well.
“In test-tube experiments, eCD4-Ig outperformed all known natural HIV antibodies at stopping the virus from infecting cells, Farzan’s team reports in this week’s issue of Nature. To test how it works in animals, they then put a gene for eCD4-Ig into a harmless virus and infected four monkeys; the virus forces the monkey’s cells to mass produce the construct. When they “challenged” these monkeys and four controls with successively higher doses of an AIDS virus for up to 34 weeks, none of the animals that received eCD4-Ig became infected, whereas all of the untreated ones did.”
17) High-tech contact lenses zoom with a wink of an eye
There were quite a few optics related stories this week. Although this is in the research stage of development, it has potential for those suffering from poor or deteriorating vision. The idea is to magnify (on demand) and allow the visually impaired to use their limited vision to see details as needed. Then they could remove the magnification and see a wider field of view as appropriate.
“The wearer winks with the right eye to activate the telescope, and with the left eye to deactivate it. “We think these lenses hold a lot of promise for low vision and age-related macular degeneration,” a vision disorder that affects older people, Tremblay said. “At this point this is still research, but we are hopeful it will eventually become a real option for people with AMD.” The device magnifies objects 2.8 times, meaning AMD patients can read more easily and better recognize faces and objects with its help.
This is another optics related article and kind of ties in to item 17. After all, a very thin lens is probably a better contact lens than a somewhat thicker one. Its a bit hard to understand but traditional lenses also work as prisms, meaning colours focus onto different planes. Better optical design makes an effort to correct this, however, that adds cost, weight, and complexity, especially if the lens has a large diameter and/or ‘zooms’. This technology uses very fine patterns on the glass surface to make a very flat, lightweight lens which does not have chromatic (colour) distortion. If this approach can be perfected and applied generally, it would have a disruptive effect on most systems which use lenses.
“Most lenses are, by definition, curved. After all, they are named for their resemblance to lentils, and a glass lens made flat is just a window with no special powers. But a new type of lens created at the Harvard School of Engineering and Applied Sciences (SEAS) turns conventional optics on its head. A major leap forward from a prototype device demonstrated in 2012, it is an ultra-thin, completely flat optical component made of a glass substrate and tiny, light-concentrating silicon antennas. Light shining on it bends instantaneously, rather than gradually, while passing through. The bending effects can be designed in advance, by an algorithm, and fine-tuned to fit almost any purpose.”
19) Optics: Supervision
And this make the third optics related story, although this is unlike the other two. I once followed a company called ART Advanced Research which tried to make a medical imaging system using short pulses of laser light. The results were impressive bu the company ran out of money before it was able to commercialize the product. This uses a similar but different approach: rather than using a ‘streak camera’ and complex math to reconstruct the path of the photon they use a type of adaptive optics which I do not understand. This probably has great potential, however, as ART discovered, lab results do not always translate promptly into a clinically useful imaging system.
“It seemed too good to be true, says Allard Mosk. It was 2007, and he was working with Ivo Vellekoop, a student in his group at the University of Twente in Enschede, the Netherlands, to shine a beam of visible light through a ‘solid wall’ — a glass slide covered with white paint — and then focus it on the other side. They did not have a particular application in mind. “I really just wanted to try this because it had never been done before,” Mosk says. And in truth, the two researchers did not expect to pick up much more than a faint blur. But as it turned out, their very first attempt1 produced a sharp pinprick of light a hundred times brighter than they had hoped for. “This just doesn’t happen on the first day of your experiment,” exclaims Mosk. “We thought we’d made a mistake and there must be a hole in our slide letting the light through!””
20) Raspberry Pi is UK’s best selling computer
The Raspberry Pi is essentially a mobile ARM computer based System on a Chip assembled only a PCB. It has become a ‘go to’ produce for ‘Makers’ of all sorts and has been applied to 3D printers, drones, and thousands of other projects. As a long time hardware guy myself I find its success heartwarming.
“The humble Raspberry Pi has become the biggest selling UK computer, the Raspberry Pi Foundation has announced. The stripped-back microcomputer designed for education has now sold five million units in the three years since its inception. In an era in which computers in the traditional sense of the word have seen declining sales in a market diluted by mobile devices, the success of the tiny Pi is remarkable.”