The Geek’s Reading List – Week of March 13th 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 another slow week for tech news – Most of the news was associated with the release of the Apple iWatch, which I figure was pretty meaningless from a technology perspective. Until somebody comes up with a reason to spend a few hundred dollars for a gizmo you wear on your wrist which tells you what’s up with the gizmo in your pocket, I don’t see the point. This edition of the Geeks List, and all back issues, can be found at www.thegeeksreadinglist.com.
1) Continued Electric Car Boom In Norway
It just goes to show what massive subsidies will do. Norway levies very large taxes to new car sales but not to EVs for some twisted reason – you might argue cars are “bad” for a variety of reasons, however, there is scant evidence EVs are good for the environment. Regardless, the net cost of a Tesla Model S in Norway is roughly the same as a Honda Accord, plus you get all kinds of other privileges like free parking. The thing with massive subsidies is that that they can only persist when a minority exploits them because governments need money, and the financial impact cannot typically be sustained once the political objectives are achieved, whatever those might be. Mind you, Norwegians are in for a collective shock once they realize they have subsidized the production of vehicles which will likely be scrapped within 8 years due to battery replacement costs.
“In Norway, there are 46,000 electric cars and plug-in hybrids on the roads, making it the country with the highest density of electric cars in Europe. Only last year, 18,650 all-electric cars and transport vehicles were registered, accounting for one third of newly registered electric cars in Europe. An additional 1,700 plug-in hybrids were registered. The most popular manufacturer was Nissan, followed by Volkswagen and Tesla. The reason behind the success of electric cars in Norway is the is generous financial subsidies for buyers, who avoid paying the VAT and carbon tax which are added on to the price of ordinary cars. Furthermore, electric car owners avoid paying motorway tolls and can park or charge their cars for free in many places.”
2) Insurers worry self-driving cars could put a dent in their business
There is a temptation to look upon robotic vehicles as an endpoint but the reality is somewhat more nuanced. Many manufacturers are offering active collision avoidance systems such as automatic braking which should begin to have a measurable impact on collision rates and severity as the portion of the fleet so equipped grows. Unlike seatbelts and good driving campaigns, these systems do not require the cooperation of the driver to be effective. We predict a dramatic drop in insurance claims, and therefore rates (assuming a competitive insurance market) within a few years as these systems become prevalent. Older cars without these systems will be more likely to be “at fault” in a collision and therefore their rates should rise in relative terms providing a positive feedback for more such systems.
“A world of robot cars may still be a long way off but that hasn’t stopped some big insurance companies from worrying about them. And not for the reasons you might think. That three insurance companies and an auto parts manufacturer mentioned driverless cars in their annual reports to the Securities and Exchange Commission (SEC) over the last week signifies a certain coming of age for autonomous vehicle technology. Under the “risk factors” headings of their filings, the three companies – Cincinnati Financial, Mercury General and the Travelers Companies – noted that vehicle autonomy could affect business, and not for the better. The companies sounded an ominous note – for themselves, at least – saying that driverless cars could change the way they do business.”
3) Why the Warm Ocean on This Moon of Saturn Could Be Perfect for Life
Life apparently started on Earth only a few hundred million years after the planet cooled enough to sustain it, meaning either a stupefyingly improbable roll of the dice happened at the start of the game, or, more likely, life is highly probable given suitable ingredients such as certain chemicals and an external energy source. This finding suggests the oceans of Enceladus include areas likely very similar to those found near geothermal vents on Earth, one place some scientists have suggested life may have begun. If there is life in the interior of this moon, it should be detectable in samples take on the surface, so an Enceladus rover might be a viable mission.
“Move over, Europa. It looks as though the most life-friendly habitat ever discovered outside of Earth is Enceladus—Saturn’s sixth-largest moon. Astrophysicists working with NASA’s Saturn sweeping Cassini spacecraft have just announced that Enceladus has a warm ocean at its southern pole with ongoing hydrothermal activity—the first ever discovered outside of Earth. This new research, published in the journal Nature, builds upon last year’s discovery of the moon’s 6-mile-deep ocean, which is also believed to contain many of the chemicals commonly associated with life.”
4) TiVo Study: Over 1.5 Million Cable Subscribers Plan To Cancel Cable And 38.1 million Cable Subscribers Are “Unsatisfied” With Their Service
This is one of a couple articles looking at the disruption going on in the broadcast industry as we had predicted in the late 1990s. Traditional broadcast television has a monopoly provider (the guy who ended up with a license) deciding what you were going to watch and when you were going to watch it. If they chose well they sold a lot of advertising so it becomes a “lowest common denominator” type offering – satisfactory to few but acceptable to many. More channels and cable are based on the same sort of model except there is greater choice (ignoring for a moment common ownership of many of the choices). Dissatisfaction with cable providers has been around since the dawn of the industry and is much due to lousy customer service and ever increasing pricing as a desire to switch. Streaming services actually provide a substitution and subscribers can choose what they watch and when they watch it. Ultimately this is a no win situation for cable companies as they only provide some of the broadband service despite typically having a monopoly on cable TV in their area.
“Digitalsmiths, a TiVo owned research firm, has released the results of their 2014 4Q survey. The survey concluded that approximately 1.5 million Pay-TV subscribers plan to cancel cable, and around an additional 2.4 million subscribers plan to downgrade their service. From the report “According to Q4 2014 survey respondents, 8.9% switched Pay-TV providers in the prior three months. Based on a year-over-year analysis this represents a 2.1% increase. Additionally, in the next six months 4.2% of respondents plan to “cut” service, 7.9% plan to “change” service, and 2.6% plan to “switch” to an online app or rental service. While some of these numbers seem minimal, they should still raise concern for Pay-TV Providers — since multiplied by millions of subscribers, the revenue threat alone is apparent.”
5) Americans are moving faster than ever away from traditional TV
As we note about, wishing to drop cable is not the same thing as dropping it because for the most part the only alternative has been broadcast (satellite has the same issue as actual cable). Given a choice, some people are, in fact, dropping cable in favor of streaming services as reflected in these data. The adoption of streaming is predicated on an available service and a suitable infrastructure, as well as knowledge and experience of the option. Although North America is falling behind relatively in Internet infrastructure for most of the population it is improving in absolute terms. The shift is small but significant and it should accelerate as more people see streaming as an option.
“Traditional television watching is declining faster than ever as streaming services become a mainstream feature in American homes, according to new research by Nielsen. Adults watched an average of four hours and 51 minutes of live TV each day in the fourth quarter of 2014, down 13 minutes from the same quarter of 2013, according to Nielsen’s fourth-quarter 2014 Total Audience Report. Viewing was down six minutes between the fourth quarter of 2013 and 2012. And between 2012 and 2011, viewing time actually increased for live TV. At the same time, more homes turned to online video, with 40 percent of U.S. homes subscribing to a streaming service such as Netflix, Amazon Instant Video or Hulu compared with 36 percent in the fourth quarter of 2013, according to Nielsen. Netflix is by far the most popular streaming service, in 36 percent of all U.S. homes, and Amazon Instant Video is in 13 percent of homes.”
6) Game of drones: As U.S. dithers, rivals get a head start
There is a libertarian streak in technology which tends to view regulation as the enemy. In many cases dialing back regulation makes sense as regulations are often solving yesterday’s problems and entrenching yesterday’s business models (see item 16, below). Nevertheless, some things call for regulation, and drones of all kinds (flying or land roving) can be dangerous to people and property. It is only a matter of time before one hits an airplane or drops from the sky and hurts somebody. This may be less of an issue for toy drones, but industrial units are bound to be bigger and heavier and therefore more dangerous.
“Sky-Futures, a British company that dominates the use of drones to collect and analyze inspection data for oil and gas companies, says its business soared 700 percent last year as the normally conservative energy industry embraced the new technology. Co-founder and operations director Chris Blackford said the company is coupling drones with software and a better understanding of what works in the field, giving Sky-Futures “a head-start over the U.S because we understand pretty intimately the problems facing the oil and gas market, and how we can solve them with technology.” Looser regulations outside the U.S. have created pockets of innovation attracting ideas, money and momentum, says Patrick Thevoz, co-founder and CEO of Swiss-based Flyability, which builds drones inside a spherical cage that allows them to bump through doors, tunnels and forests without losing balance.”
7) Dawn of a new era: the revolutionary ion engine that took spacecraft to Ceres
Star Trek fans may recall the use of “impulse power” when the Enterprise was moving “slowly” (below the speed of light). Impulse power was essentially charged particles accelerated by a fusion reactor and sent in the opposite direction of travel. This is what an ion-engine is, except of course they have not yet developed a fusion reactor. Nonetheless you can use solar power if you are close enough to the sun or a small fission reactor to product more or less the same effect. The interesting thing is that, although you use up the gas, you can get a lot of push for the amount on hand and since the thrust is dependent on how the fast the gas is accelerated, so you can have a relatively slow, steady acceleration which fairly quickly leads to extremely high speeds.
“But inside Dawn itself is another first – the spacecraft is the first exploratory space mission to use an electrically-powered ion engine rather than conventional rockets. The ion engine will propel the next generation of spacecraft. Electric power is used to create charged particles of the fuel, usually the gas xenon, and accelerate them to extremely high velocities. The exhaust velocity of conventional rockets is limited by the chemical energy stored in the fuel’s molecular bonds, which limits the thrust to about 5km/s. Ion engines are in principle limited only by the electrical power available on the spacecraft, but typically the exhaust speed of the charged particles range from 15km/s to 35km/s.”
8) Open Compute: Apple, Cisco Join While HP Expands
As the article suggests, the Open Compute project aims to provide a fully open enterprise grade networking switch, leading to a “white box” market such as exists for desktop computers. After all, like a PC, the architectural choices are more or less dictated by the major chips used in the system, and most of the software is already Linux based. The decision by Cisco and Juniper to join is a bit perplexing as proprietary vendors have the most to lose by the advancement of Open Compute. I rather doubt they sincerely hope the standard succeeds, so they are most likely there to observe and potentially co-opt development much as Microsoft has done open file standards which compete with, for example, Office.
“Apple, Cisco, and Juniper are an unlikely trio to join. For the last 18 months, the Open Compute Project has been talking about creating commodity switching from standard x86 hardware and disrupting the switch market, where Cisco and Juniper are high-end market leaders who are therefore among the most likely to get disrupted. A year ago Facebook produced its first prototype for a top-of-rack switch, a unit dubbed the Wedge. Monday it contributed the design of the Wedge to the project so that anyone may reproduce it.”
9) Genome Sequencing Price Dropping Faster Than Moore’s Law (my title)
Genome sequencing is a powerful tool for diagnosing various types of diseases ranging from inherited conditions to cancers which may respond better to specific treatments depending on their own genotype, so advancement of the technology is very significant. One has to be cautious when comparing improvements to Moore’s Law, especially over short periods of time since those can be due to specific innovations and not representative of some inherent process. After all, Moore’s Law has worked for over 50 years because transistors are better and cheaper as they get smaller – a relationship which is very unusual.
“To illustrate the nature of the reductions in DNA sequencing costs, each graph also shows hypothetical data reflecting Moore’s Law, which describes a long-term trend in the computer hardware industry that involves the doubling of ‘compute power’ every two years (See: Moore’s Law [wikipedia.org]). Technology improvements that ‘keep up’ with Moore’s Law are widely regarded to be doing exceedingly well, making it useful for comparison.”
10) The SSD Endurance Experiment: They’re all dead
We carried preliminary results of this test a while back – now all the devices being tested have died and the final results are in. Long story short, Solid State Drives (SSDs) tend to last much longer than their manufacturers expect them to so you should not be worried they are going to “wear out” on you. After all, Hard Disk Drives (HDDs) are far more fragile and power hungry and they don’t last forever either. I believe the best deal in a laptop is to buy a cheap laptop and replace the HDD with an SSD. It makes a dramatic improvement to performance and battery life, but, unfortunately it is not the sort of thing a casual user can do. Thanks to my friend Humphrey Brown for this item.
“Technically, I’m also a torturer—or at least an enhanced interrogator. Instead of offering a quick and painless death, I slowly squeezed out every last drop of life with a relentless stream of writes far more demanding than anything the SSDs would face in a typical PC. To make matters worse, I exploited their suffering by chronicling the entire process online. Today, that story draws to a close with the final chapter in the SSD Endurance Experiment. The last two survivors met their doom on the road to 2.5PB, joining four fallen comrades who expired earlier. It’s time to honor the dead and reflect on what we’ve learned from all the carnage.”
11) Cryptocurrency Miners Explained: Why You Really Don’t Want This Junk on Your PC
You might recall last week we carried a piece on how uTorrent was “slipping in” a cryptocurrency mining application with its latest software update. We consider this sort of installation malware, even if the user agrees to the installation, because few users understand the ramification of permitting the installation. Remarkably, the entire thing has blown up in uTorrent’s face and they have embarked on a damage control campaign. Users should be reminded there are plenty free uTorrent alternatives out their which don’t try to infect your computer. This article explains why you should never permit anything like Epic Scale to be installed on your computer. As far as I am concerned the appeal to benevolence is complete rubbish and should be ignored: once installed you have no control over what happens to the money.
“Bitcoin isn’t the only cryptocurrency. The Epic Scale junkware bundled with uTorrent’s installer doesn’t attempt to mine Bitcoin — it attempts to mine Litecoin, which was inspired by and is very similar to Bitcoin. Mining programs tap into your computer’s hardware resources and put them to work mining Bitcoin, Litecoin, or another type of cryptocurrency. And no, even if your hardware is used to generate money for them, you don’t get any of it. They get all the money from putting your hardware to work. Worse yet, your desktop computer or laptop at home just isn’t powerful enough to profitably mine Bitcoin, Litecoin, or other cryptocurrencies. Doing this profitably requires specialized mining rigs with specialized hardware and cheap electricity. So, even if you put your computer to work mining Bitcoin for your own profit, you’d actually lose money. You’d run up your power bill as your computer draws more power, and you’d make back less than it would cost you in power.”
12) Quebec company hit with $1.1-million penalty under CASL (Anti-Spam Law)
It sounds like a good start – short of flaying the CEO on live TV, a large fine should get their attention. Unfortunately, the devil is in the details: the fine is only a fine if the company agrees to pay it. Otherwise it is simply an invitation to explain themselves. Assuming this goes like any other corporate misdeed in Canada the net result will be, at worse, a tiny fine or, more likely, a sincere apology from the regulator for having raised the matter.
“Almost a year after coming into force, the CRTC has issued its first fine and notice of violation under Canada’s anti-spam rules to a Quebec company it says was in “flagrant” violation of the law. The Canadian Radio-television and Telecommunications Commission’s chief compliance and enforcement officer issued a notice to Compu-Finder March 5. At $1.1 million the fine is well under the $10-million maximum allowable under the law.”
13) How GitHub Conquered Google, Microsoft, and Everyone Else
Most PC users are aware there are a number of free or open programs available, including browsers such as Firefox. Most probably treat these with deep suspicion since free programs can include malware, adware, and other nasties. In fact, certain well known download sites, including those owned by major corporations, seem bent on providing distribution for toolbars, adware, virus scanners, etc.. In any event, open source projects pretty much require a version control function as well as allowing for the distribution of programs and source code. One of the major sites offering the later was SourceForge, but a relatively new entrant, GitHub, has emerged as the “go to” site for open source contributors as well as users of their software.
“So, like many other companies, Google created its own site where people could host open source projects. It was called Google Code. The company had built its online empire on top of Linux and other open source software, and in providing an alternative to SourceForce, it was trying to ensure open source would continue to evolve, trying to spread this religion across the net. But then GitHub came along and spread it faster. Today, Google announced that after ten years, it’s shutting down Google Code.”
14) Android phones will soon use a smaller, simpler USB connector
I tried to avoid mentioning the Apple product launches this week because, despite the hype, there was nothing of note there. I did see some coverage of the MacBook which referred to “Apple’s New USB” connector, which shows the power of marketing its not “Apple’s USB” connector, it is USB-C, which is the industry standard successor to micro-USB. It is reversible (there is no right or wrong way to install it) and you can move a lot of power across the cable. From what I read, the MacBook has exactly one such port, which is used for I/O and charging the laptop itself. This is outright stupid for two reasons: first, there are few peripherals which support USB C today so you’ll have to carry around adapters, and second, you can charge your computer or access a peripheral but not both, unless you have another adapter. So you can buy an expensive, thin laptop and carry two adapters in your pocket. I expect to see USB C quickly adopted on smartphones since they mostly use their USB ports for charging, and the high power capability should allow for fast charge.
“That tiny USB Type-C port you’ve seen on the latest MacBook and Chromebook Pixel? Don’t be surprised if you see it on your smartphone soon. In a video accompanying the new Chromebook, Google’s Adam Rodriguez says that his company is “very committed” to the new USB spec and that you’ll see it on both Android phones and more Chromebooks in the “near future.” It’s a vague promise, to be sure, but it’ll matter a lot in the long run. Type-C delivers brisk USB 3-level speeds (and eventually, 3.1) without requiring a gigantic connector, and the reversible design means you won’t have to inspect your phone to make sure you plug the cable in the right way.”
15) Surge in Smartphones Sets Off New Wave of Corporate Self-Reinvention
This is not a particularly good article but it does list a number of disruptive business models which have been enabled by the smartphone revolution. The particular mix of wireless, a graphical display, a camera, position information, and so on, has provided the inspiration for things such as Uber, though I don’t see how AirBnB figures into the mix. Of course, innovation and disruption is one thing, making money is another. For the most part, most such mobile related businesses have very modest barriers to entry, so it will be interesting to see which if any, ever make enough money to justify their valuations.
“Old-line companies might take solace in remembering that not every upstart of the web era — Pets.com is the classic cautionary tale — was able to supplant established business models. But the rapid rise of the smartphone and mobile apps has thrown the pace of change into warp speed. In recent years, the price of the devices has fallen sharply, enabling people in developed countries as well as emerging markets to buy a smartphone for as little as $25. That has put the mobile Internet in the hands of billions of people who, until recently, had no online access. Analysts say companies — whether traditional players or start-ups — that take advantage of the new mobile technologies could experience meteoric growth.”
16) Inside Big Taxi’s Dirty War With Uber
The taxi business is a big business, and a lot of wealthy and influential people own taxi licenses. Once you’ve got a taxi license you can rent it out to poorly paid drivers to make money for you – after all, most cab drivers don’t make enough money to be able to afford their own license. You can see the sort of horror a company like Uber can cause: imagine if cab drivers can work for themselves! A remarkably high proportion of the media coverage of Uber has been negative and this article suggests why this might be the case. Of course, whether Uber is doing good or bad doesn’t make it a good investment: it is just a car service and there are low barriers to entry. Nevertheless I would not place my money on cab companies coming out on top.
“David Sutton is looking for the worst possible news about Uber Technologies. An accident in San Francisco, an assault in Boston: Such bad tidings for Uber are ammunition for Sutton, a 48-year-old publicist. “Uber is a creep magnet,” Sutton says in a news release sent to U.S. local and national media outlets in February. Sutton is a hired gun in the dirty war that’s broken out between old-line taxi companies and Uber, the ride-share phenom. His client, a powerful trade association, represents 1,000 taxi and limousine firms worldwide. These firms want to kill the young juggernaut—or at least buy themselves enough time to develop rival car-hailing apps.”
17) 3-D printer for small molecules opens access to customized chemistry
Its not really a 3D printer but you’ve got to go with the buzzwords of the day. Long story short, this system allows the production certain types of chemical compounds at will. In contrast, as the article indicates these compounds would have been made after the chemist essentially figured out a custom production method for each one, which limited the number they could screen for certain applications. With this system they should be able to make prototype quantities for experimental use and then, if the molecule shows promise, figure out mass production later.
“Howard Hughes Medical Institute scientists have simplified the chemical synthesis of small molecules, eliminating a major bottleneck that limits the exploration of a class of compounds offering tremendous potential for medicine and technology. Scientists led by Martin Burke, an HHMI early career scientist at the University of Illinois at Urbana-Champaign, used a single automated process to synthesize 14 distinct classes of small molecules from a common set of building blocks. Burke’s team envisions expanding the approach to enable the production of thousands of potentially useful molecules with a single machine, which they describe as a “3D printer” for small molecules.”
18) DARPA looking for robots that can help us during disasters and calamities
Rescue robots make a lot of sense because they can be exposed to risks you would not expose a real worker to, and they can be built in forms very different from a human. For example, a snake like robot might be useful for exploring collapsed structures looking for trapped victims, or some other form might be good for putting out fires. It is early days but the DARPA program also funded early work into the self-driving car, and that has moved along at quite a pace.
“The DoD’s DARPA, short for Defense Advanced Research Projects Agency, announced the 25 robots from teams that will compete this Summer for the DARPA Robotics Challenge. According to Livescience, 14 teams from different countries are joining the remaining 11, and they are all advancing to the final round. The competition is scheduled in June, and it will be held in California. DARPA will award a total of $3.5 million cash prize, combined. Only three teams will win, the report added. These robots are human-controlled, meaning, they are still not capable of moving, or acting on their own. They are also not self-aware. So relax, DARPA is not developing an Ultron here.”
19) Apple Admits Siri Voice Data is Being shared with Third Parties
One thing you can pretty much guarantee is that there is data on your smartphone, it is being shared with somebody. In theory this doesn’t look so bad: the voice recordings are being checked against the transcription to improve the service, however, that doesn’t mean it is the only thing the data is being used for. As for anonymity, well, sure, maybe people can accept that as true but studies have shown that it does not take much to figure out who somebody is from a small amount of information.
“Apple admits that its Siri — an intelligent personal assistant for iPhone, iPad and iPod Touch devices — is collecting and also transmitting users voice data to 3rd party companies, which was disclosed in an unsurprising revelation two weeks back on Reddit. FallenMyst, a Reddit user claimed to had recently started a new job with a company called Walk N’ Talk Technologies, where job profile requires her to listen voice data collected from Apple, Microsoft users and check for incorrect interpretations.”
20) Your cat can finally post to its own Instagram account with the Catstacam
The prevalence of cat videos and photos on the Internet is well documented – so why not cut out the middleman and let puss post her own material? Actually this is a publicity campaign and not a real thing, at least not yet. I have to wonder what a “celebrity cat” is.
“Why should humans have all the social networking fun? What about cats? They have interesting, varied lives (when they’re not sleeping), and may have a deep desire to share it with others. Thankfully, the Catstacam is here to let felines indulge in some narcissism previously reserved for us humans. It’s a collar-worn camera with the ability to shoot six photos per minute, then upload the best ones to Instagram once it reconnects to Wi-Fi. Because cats find it difficult to use shutter buttons, the camera is activated by motion. It even comes in packaging that can be reused as a cat toy.”