The Geek’s Reading List – Week of May 8th 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 edition of the Geeks List, and all back issues, can be found at www.thegeeksreadinglist.com.
1) Why Tesla’s Powerwall Is Just Another Toy For Rich Green People
Almost all of the coverage of Tesla’s Powerwall was the sort of pig ignorant fawning blather we have come to expect whenever Tesla does, or rather claims to do, almost anything. After all, a simple Google search would have shown there is nothing novel about using Lithium Ion batteries for household storage. Even though the math showing it is a dumb idea is pretty straightforward, few bothered: who needs numbers when you have hype? This looks at the basic math, though it skips important considerations like the extreme fire danger associated with a large lithium ion battery. It does kind of anger me to see a reference to 1,000 watts of current. Don’t they have editors?
“All the breathless coverage of Elon Musk’s Powerwall battery brouhaha last night is missing the most important thing: a sober discussion of real-world costs. So let’s take a look at the costs and see if this world-shaking, game-changing innovation really makes any sense. Musk said Tesla’s 7 kwh capacity battery would cost $3,000, while the 10 kwh capacity one would be $3,500. (That doesn’t include the cost of a DC-AC inverter – about $4,000 $2,000– plus professional installation.) The implication is that a 10 kwh system could supply 1,000 watts of current to your home for 10 hours. That’s a good amount of energy. The average American home draws an average of 1,200 watts of power around-the-clock, according to the U.S. Department of Energy. For a sense of scale, a desktop computer draws about 100 watts, a big TV 200 watts. Refrigerators cycle on and off, but average about 100 watts.”
2) Tesla’s New Battery Doesn’t Work That Well With Solar
This is another article which looks beyond the hype associated with Tesla’s announcement. I thought there was no way these specifications could be true, but they are (see http://www.teslamotors.com/powerwall). The unit is rated “Power 2.0 kW continuous, 3.3 kW peak”. You won’t be able to run virtually anything with those specifications. Since your electrician would size for continuous load, that is really a single 15 amp circuit at 120 volts – in other words, don’t expect your tea kettle AND your refrigerator to work at the same time. If you have a forced air furnace the fan would not spin up with those specs. I have a portable generator the size of a carry-on bag that supplies 2 kW continuous. Tesla claims they have 38,000 preorders (at least $144 million) for the unit, but I expect most will be canceled once the afterglow wears off, especially since no down payment or commitment is required (see http://www.bloomberg.com/news/articles/2015-05-08/tesla-s-battery-grabbed-800-million-in-its-first-week). This simply proves my assertion that introducing the word “energy” into a conversation causes IQ to drop 50 points. At least.
“SolarCity is only offering the bigger Powerwall to customers buying new rooftop solar systems. Customers can prepay $5,000, everything included, to add a nine-year battery lease to their system or buy the Tesla battery outright outright for $7,140. The 10 kilowatt-hour backup battery is priced competitively, as far as batteries go, selling at half the price of some competing products. But if its sole purpose is to provide backup power to a home, the juice it offers is but a sip. The model puts out just 2 kilowatts of continuous power, which could be pretty much maxed out by a single vacuum cleaner, hair drier, microwave oven or a clothes iron. The battery isn’t powerful enough to operate a pair of space heaters; an entire home facing a winter power outage would need much more. In sunnier climes, meanwhile, it provides just enough energy to run one or two small window A/C units.”
3) Norway Puts The Brakes On Generous EV Incentives
It is mathematically inevitable that subsidies can only help an industry when that industry is very small. Take Electric Vehicles (EVs) for example: subsidies benefit an emerging minority such as EV vendors and owners at the sizable cost of of a majority of traditional vehicle vendors and owners. The larger the EV contingent, the smaller the non-EV contingent the more money needed and the less money there is to transfer. Note that the subsidies of the past few years have have only achieved 2% penetration, a figure which has enriched Tesla shareholders (and impoverished Norwegians to the tune of $400 – $500 million per year in subsidies) but would have no measurable environmental impact. I once read that Norway’s direct purchase subsidy on a Tesla was such that it cost almost the same as a Honda Accord in that country. The fact a government is rolling back incentives at such a low level indicates that the pain threshold for these nonsensical projects is quite low.
“The country had outdone itself by juicing the buying public with zero value added tax (VAT), toll-free driving, free public parking, and free access to the bus lanes … Those pesky EVs in the bus lanes however were already starting to receive pushback in 2013 from folks noting three out of four vehicles in the bus lanes during rush hour were electric. But a prime kicker spurring agreement between the right-wing government and center right allies has been reduction of tax revenues that are costing the government too much money according to the Telegraph. As we wrote last month, Minister of Finance Siv Jensen explained last year during her state budget presentation that the county’s current rush toward plug-in electrified vehicles has cost state coffers three to four billion krone ($384 – $512 million) in tax revenue per year.”
4) Dutch Homes Get Free Heating If They Agree To Host A Computer Server
There has been a number of schemes whereby companies were trying to set up distributed data centers in peoples’ homes. Most such plans assumed consumers were oblivious to the electrical casts of such a project (and, no doubt, many are). This project might make some sense: if the company pays for the electricity, the consumers get free electric heat which can be a benefit, at least some months of the year. Since a significant operating cost of a data center is air conditioning it can be win/win. Of course this might burden the local Internet infrastructure since servers tend to upload (send to the Internet) much more than they download, which is the exact opposite of traditional internet use.
“Leupe says 60% of the cost of conventional data farms comes from buying up and putting in the required building. Nerdalize, he says, can reduce costs for its clients by about 50% by hosting in people’s homes instead. Eneco, which has a minority stake in the startup, says households can save about $440 a year on their heating bills. Leupe insists there are no privacy or security concerns about storing data in people’s homes. One, the company knows if someone is tampering with its box. Two, the data is encrypted. And three, it’s distributed—anyone wanting to hack the network would have to know which households are carrying out work they’re interested in.”
5) Freightliner Inspiration Truck Receives Autonomous Vehicle Licensing from Nevada DMV
Trucks are extremely important to the economy and, at least where I live, a major factor in traffic congestion. Safety rules dictate drivers can only be at the wheel for so many hours, and the cargo can be both valuable and perishable. It would seem there would be advantages to automating some or all all truck functions and this may happen earlier than with cars. I have seen plans to operate “convoys” of trucks whereby, for example, the lead vehicle would include a human driver while following ones would essentially autonomously play follow the leader. Of course, a truck can cause a lot of damage so you can expect a lot of testing will be done before you even see trucks with drivers playing a passive role. See also http://www.freightlinerinspiration.com/
“At a ceremony today at Las Vegas Motor Speedway, Nevada Gov. Brian Sandoval officially granted the first license for an autonomous commercial truck to operate on an open public highway in the United States to Daimler Trucks North America (DTNA). At the event, hosted by DTNA President & CEO Martin Daum, Gov. Sandoval took part in the inaugural trip of the Freightliner Inspiration Truck in autonomous mode with Dr. Wolfgang Bernhard, Member of the Board of Management of Daimler AG Daimler Trucks & Buses, at the controls.”
6) Automation in Cars: A $100 Billion Market by 2030
I always take industry research with a large grain of salt, however, I agree with the general idea that this might be a very large market. There are just shy of 90 million cars and light trucks sold annually and it is reasonable a full automation system could cost as little as $1,000 per vehicle by 2030. Furthermore, it is also possible such systems may actually increase vehicle sales, at least until most of the global fleet has switched over.
The advantages of autonomous cars seem so obvious and revolutionary that we don’t need really need a report from a research company to tell us that there’s going to be a huge market in vehicle automation. Nevertheless, Lux Research has actually crunched the numbers and told us what kind of premiums we should expect to pay over the next few decades for autonomy. Lux Research is predicting that advanced driver-assist systems (ADAS) will be a $102 billion opportunity by 2030. This is a lot; right now, the market opportunity for driver assist systems is a mere $2.4 billion. Lux splits driver assist into “basic” and “advanced,” which seems to refer more to the perception of the technology involved than the technical difficulty or achievablility.”
7) Google reveals its self-driving car can keep an eye on cyclists – and even understand their hand signals
Unfortunately, I suspect very few cyclists use hand signals let alone know how to use them. Nevertheless, most drivers would (or should) act more cautiously when a cyclist comes into view and attempt to parse their actions, hand signals or not. This article looks at some of the technology Google has developed to do just that. It is easy to dismiss this sort of thing as computationally extravagant, as it likely is today, but with software the barely achievable tends to become the unimpressive within a decade.
“A Google patent has revealed that the firm’s self-driving cars will be able to detect and respond to a cyclists’ hand signals. The documents reveals that the car’s array of sensors will notice a cyclist among other objects and vehicles on the road. It can then watch their arms and hands for gestures indicating that they are about to turn or slow down, and change its own speed in response.”
8) ‘Centimetre accurate’ GPS system to be integrated into phones
I am not entirely sure the article actually says that this accurate GPS will be incorporated into phones, though is does seem the technology makes it possible to eventually create such a system using cheap antenna and a lot of signal processing. It is not obvious to me that precision GPS would be significantly more useful than existing technology in a phone or pocket device, however, such a system would greatly enhance autonomous vehicles and other robots.
“Knowing exactly where you are in the world, to the centimetre, is going to get a whole lot easier thanks to scientists who have created a new ultra-accurate GPS system. Researchers at University of Texas created the system, which will be able to provide centimetre-accurate GPS locations on mobile phones, tablets and other mass market devices. As well as being embedded in mobile phones, potential applications range from self-driving cars to virtual reality. The system, which allows cheap antennas to access location data, may also be used in delivery drones to help them drop-off parcels at an exact location.”
9) Neural network chip built using memristors
Memristors are a novel form of memory which was predicted in 1971 but only invented in 2008. The technology is the basis of Hewlett-Packard’s proposed “Machine” computer which is expected to do away with tiered memory (cache, DRAM, Disk Drive). As we noted a number of years ago, the characteristics of memristors also make them particularly suited to the fabrication of “real” artificial neural networks as this article explores the design of one such system. As a proof of concept, it isn’t much, but the article provide some indication of the incredible power of such a system once scaled up. The comments about the variability of memristors built on CMOS behaving erratically is interesting. The full article is accessible at http://www.nature.com/nature/journal/v521/n7550/full/nature14441.html
“Memristors have relatively simple behavior: they’re a type of circuitry where the present resistance to current is a product of the currents that have flowed through them in the past. The more current that goes through, the easier it will travel through in the future. Interest in memristors comes in part from the fact that the resistance persists even after current is turned off, making them a possible option for non-volatile memory. But the behavior of memristors is also fairly similar to that of a radically different type of circuitry: the synapses of neurons. Synapses are sites where nerve cells establish connections. The more signals that pass through these connections, the stronger the link between the two neurons becomes. This behavior has raised the prospect of using memristors to implement the equivalent of synapses on a neural chip, where more traditional circuitry would control the logic of the neurons, and the memristors would control the links among them.”
10) Optalysys prototype proves optical processing technology will revolutionise Big Data analysis and Computational Fluid Dynamics (CFD)
I admit to not keeping up with advances in optical processing. It can be hard to separate “proofs of concept” type lab bench experiments from actually commercially useful systems. Furthermore, most of my experience is in discrete sequential computation and the true power of optical processing is in truly concurrent processing. Therefore, I am not in a position to figure out whether Optalsys’ system is technically or commercially viable. Nonetheless, the applications cited are exactly the kind you would expect concurrent processing to excel at. See also https://youtu.be/T2yQ9xFshuc?list=PLQK8lSHQrWKqKCX3Gmg9vNVuSn93WNYPS.
“The prototype demonstrates optical derivative functions – mathematical building blocks commonly used in complex engineering model simulations such as weather prediction and aerodynamic modelling. It also performs correlation pattern matching used in Big Data analysis such as DNA analysis and financial modelling. The prototype achieves a processing speed equivalent to 320 gigaFLOPs and, because it uses light rather than electricity as the processing medium, it is incredibly energy efficient. Now the principles of the approach have been proven, Optalysys is ramping-up the processing capabilities of the technology. The first project to utilise Optalysys technology starts next month in collaboration with The Genome Analysis Centre (TGAC) to build a Genetic Search System called GENESYS. The system will perform large-scale DNA sequence searches with energy savings of over 95% per year. The project has been granted £0.5 million in funding from the government partner Innovate UK.”
11) Creating the Open Drone Ecosystem
This and the next article look at two approaches to the manufacture of drones: open and closed. There is not much difference between toy drones and professional ones except, perhaps, fail safes and certifications. One of my many rules of thumb is that “open” almost always wins, or at least that has been the rule for most of the part 20 years (Apple, arguably, being a notable exception). Most likely I figure a de facto standard based on Linux will emerge in this base.
“While there are many companies making drones from toy quadcopters to professional applications, most take a similar proprietary approach of building their technology privately in-house. An exception to this this rule is Berkeley, California based 3D Robotics. Co-founded by Chris Anderson, author of The Long Tail, Makers, Free, and ex-editor-in-chief of Wired magazine, the company is building products while working closely with a passionate Open Source community.”
12) Dubbed the ‘Model T’ and ‘Apple’ of drones, China’s DJI rakes in $75M funding
In contrast to the open approach, above, we have DJI’s efforts to establish itself as the de facto standard for drones. I figure there is near zero probability of this actually occurring as there is really nothing that complicated about making or controlling a drone, and, in particular, there is no “stickiness” associated with the operation of such a thing. You have to give them credit for trying, I guess. Most baffling of all is the silly valuation ascribed to the company – of course, that is par for the course nowadays. Provided valuations remain hyper-inflated the investors probably hope to IPO the company and sell their position at an even more ridiculous valuation.
“Shenzhen DJI Technology, the world’s biggest make of consumer and prosumer aerial drones, this week announced a US$75 million investment from Accel Partners, according to the Verge. Now valued at US$10 billion, it’s the undisputed champ both in sales revenue and in market cap. Accel’s injection values the company at US$8 billion, but the company is reportedly in ongoing negotiations that will raise its valuation even further. DJI expects to sell US$1 billion worth of drones this year, up from US$130 million in 2013. Previous investors include Sequoia Capital, but the company has taken in relatively little funding up to this point.”
13) Cable companies are scrambling as more viewers become cord-cutters
People terminate their cable subscriptions for a number of reasons, including economization. Nevertheless, cable providers continue to increase their rates while the content providers continue to debase the quality of the offering. Netflix and other streaming options provide a viable alternative, if you are fortunate enough to have reliable broadband service, however, streaming typically is not a solution for local news and sports. A relatively inexpensive antenna, broadband, and Netflix is increasingly an option. The logical response by cable companies and/or content providers would be to offer value for money, however, it seems more likely they will follow the newspaper industry down the rabbit hole while yelling “damn the torpedoes, full speed ahead!”
“The cable TV industry is setting its sights on consumers who are shunning their business. Viewers who get their favorite shows for free by using over-the-air antennas have made “OTA” the buzzy acronym at the Internet & Television Expo being held this week in Chicago, where cable companies are gathered to mull over their fast-changing future. There are now more than 12.3 million homes that depend solely on over-the-air broadcasting for their live TV viewing, a net gain of 1 million over the last year, according to audience measurement service Nielsen. That’s about 11% of all U.S. households with TV — hardly a mass migration to the old-school technology. But as the cable and satellite industries see a downward trend in the overall number of customers signing up for their video offerings while broadband Internet service continues to grow, it’s getting more attention.”
14) Light Gives Us Life But Actually Is a Terrible Business
We predicted the emergence of LED lights as replacements for incandescent and CFL bulbs a number of years ago. At the same time we opined that the extreme long life of LEDs would have significant negative consequences for the lighting industry which was based on the fact prior technologies are essentially consumables. For the record, we also predicted that LED lamps would alter how light fixtures, including car headlamps, were designed since there would be no need to provide for occasional replacement of the lamp. Perhaps McKinsey will get around to that eventually.
“The 10-year lifespan of an LED has killed the classic light-bulb business, where manufacturers could depend on consumers buying replacements every three years. The consultant McKinsey expects the global lighting market to grow by 5 percent this year and next, and then slow to 3 percent annually through 2020. Wolfgang Dehen, the CEO of Osram, the world’s second-biggest lighting company, resigned last year after admitting he had underestimated the pace at which sales of traditional lightbulbs would decline.”
15) Kitchen microwaves baffle Australian space scientists
This story is good for a chuckle, but it shows that, over the long term, science is self correcting. It is truly a pity it took 17 years for somebody (a grad student no less) to figure it out. A lot of very smart people have probably spent a lot of mental effort trying to solve this problem over the past 17 years: there were hundreds of articles (including scholarly articles) written about this phenomenon over the past 17 years. Never mind.
“After 17 years of fruitlessly searching the galaxy, Australian scientists have discovered the source of mysterious radio signals hitting a telescope. It turns out the source was their own kitchen microwaves. PhD student Emily Petroff made the discovery at the Parkes telescope, after noticing that the signals were only received during business hours. The rays, known as “perytons”, were emitted when impatient staff opened the microwave door prematurely. Although discovered in January the revelation has only come to light after Ms Petroff published her paper, “Identifying the source of perytons at the Parkes radio telescope.””
16) Deep-ocean microbe is closest living relative of complex cells
Just in case you’ve forgotten your high school biology, life can be separated into prokaryotes and eukaryotes where prokaryotes such as bacteria lack complex internal structures while eukaryotes have such structures, including, in particular, a nucleus containing the genetic material. The “jump” from prokaryote to eukaryote has been somewhat of a mystery since there does not seem to be a middle ground. Of course, there is no reason to believe such a critter would still exist: it could have gone extinct a billion years ago. Nevertheless, DNA “fishing expedition” (almost literally) has unveiled clues that a missing link may still exist since traces have been found in ocean sediments. Since DNA has a very short half life, there is an excellent chance they can actually find live cells once they figure out how to keep them alive for study.
“It’s one of the most significant, and most vexing, splits in life’s history. About 2 billion years ago, the prokaryotes, relatively simple single-celled organisms that include bacteria and archaea, gave rise to the more elaborate eukaryotes, the lineage that ultimately spawned multicellular life forms such as fungi, plants, and animals like us. Now, researchers combing through muck from the bottom of the North Atlantic Ocean have identified an archaeon that is the closest living relative of eukaryotes so far discovered. The microbe, informally dubbed Loki and described this week in Nature, has set off a buzz among evolutionary biologists.”
17) LinkedIn serves up resumes of 27,000 US intelligence personnel
This should be in the next James Bond film: the super villain unmasks 27,000 spies and their respective programs by … searching social media. The national security state has a few million intelligence personnel so this is just a drop in the bucket, but you might think that part of the massive surveillance apparatus would have noticed their own spies are publicly posting this sort of thing.
“The resumes of over 27,000 people working in the US intelligence community were revealed today in a searchable database created by mining LinkedIn. Transparency Toolkit said the database, called ICWatch, includes the public resumes of people working for intelligence contractors, the military and intelligence agencies. The group said the resumes frequently mention secret codewords and surveillance programs. “These resumes include many details about the names and functions of secret surveillance programs, including previously unknown secret codewords,” Transparency Toolkit said.”
18) Apple Has Plans for Your DNA
I’m sure they do. While genomics is a very powerful medical technology I don’t think people should be keen to turn their genome over to the likes of Apple and, from there, to whomever they want to sell it to (including, no doubt, security services). Your genome is a deeply personal piece of data and it can be used to discriminate against you or incriminate you. These sorts of medical advances are also subject to pseudo-scientific abuse, so don’t be surprised if companies start to discriminate against employees on the basis of their genetics. You might give Apple access to your genome today and in 5 years you might not be able to get auto, health, or life insurance. There needs to be laws about this sorts of thing.
“Apple is collaborating with U.S. researchers to help launch apps that would offer some iPhone owners the chance to get their DNA tested, many of them for the first time, according to people familiar with the plans. The apps are based on ResearchKit, a software platform Apple introduced in March that helps hospitals or scientists run medical studies on iPhones by collecting data from the devices’ sensors or through surveys.”
19) New Airbus A350 XWB Aircraft Contains Over 1,000 3D Printed Parts
This article is pretty light on details but it does provide some information with respect to increased use of 3D printed parts in industry. It is not clear whether this is a stopgap measure in order to get the thing into production on schedule, nor does it speak towards percentages (I suspect there are millions of parts on aircraft) or value add. Nevertheless, as a low volume, high value industry it does stand to reason the aircraft industry would adopt 3D production earlier than most.
“The A350 XWB utilizes state-of-the-art manufacturing techniques to reduce the overall weight and increase aerodynamics, ensuring safer, more fuel efficient travel. Available in three different sizes, the 800, 900 and 1,000 models, the A350 is the first Airbus manufactured aircraft with a fuselage and wingspan which are manufactured out of a light-weight carbon-fiber-reinforced polymer. Officially launching in December with the first plane being delivered to Qatar Airways, it was revealed this week that the company has also relied heavily on 3D printing for its production. Back in March, Airbus had announced that they would be using 3D printing within the new A350 XWB aircraft, however the scale of such use was not divulged. Today Stratasys has announced that over 1,000 parts within the aircraft are 3D printed, replacing out a3traditionally manufactured parts.”
20) This Library On A Chip Gives People Without Internet Access All The Information They Need
I don’t believe I had heard of this before, but it makes a tremendous amount of sense: basically “scrape” the Internet for various subject and store the actual information on hard drives for distribution to impoverished areas without Internet access. Of course, now that 32 gigabyte microSD cards are relatively cheap, you can put a huge amount of information on these devices for distribution to individuals with smartphones, tablets, or laptop computers. Since a book can take only a few megabytes you can fit thousands of books on an SD card, and since most important information regarding health, agriculture, education, etc., really doesn’t change much, this provides many of the benefits of the Internet to those who benefit the most. It is really a worthy project.
“There may come a day when the whole world logs on effortlessly to the Internet, but it ain’t happened yet. Today, there are about 7.1 billion people on Earth and only about 3.1 billion have private access to porn and cat videos. The rest have to use some form of public connection, or they do without. This digital divide creates a bifurcated world, where some people have the information and knowledge to get ahead, while others are left behind. But the solution isn’t necessarily to roll out more Internet. In fact, you can get a lot of information to people using more old-fashioned methods, like hard-drives and SD cards.”