The Geek’s Reading List – Week of September 25th 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) A diesel whodunit: How software let VW cheat on emissions
This was a huge news story for investors this week. Long story short it appears Volkswagen committed widespread fraud in order to pass emissions tests. They defrauded governments and consumers who thought they were buying a “green” alternative. It is amusing that slot machine software is carefully audited while the safety and emissions systems of automobiles are not. In any event, this will be fodder for cases studies in corporate governance for decades: at some point, somebody thought they could get away with this. What could go wrong?
“Volkswagen AG CEO Martin Winterkorn announced today he is stepping down as the result of his company’s cheating on emission tests, bypassing environmental standards and landing the company in regulatory hot water. According to the U.S. Environmental Protection Agency, Volkswagen was able to cheat emissions tests for half a million of its U.S.-sold cars. The software that enabled cars to thwart emissions tests is in as many as 11 million other vehicles, Volkswagen admitted Tuesday. Diesel cars from Volkswagen and Audi cheated on clean air rules by including software, likely a single line of code that made the vehicles’ emissions look cleaner than they actually were.”
2) Lockheed Martin Compact Fusion Reactor Update with Video of Technical Presentation made at Princeton
Some coverage of this more or less implied a working 100 MW fusion reactor was in the cards, which is a very different thing from working on a 100 MW reactor. The idea is that Lockheed Martin has come up with a new approach to fusion, however, even though the company has a great track record the reality is nothing has really been shown to work yet. Nevertheless, it seems likely a breakthrough will be made in nuclear fusion eventually and we can hope it will be sooner rather than later. Obviously, a working, small 100 MW fusion reactor would be a tremendous boon to humanity.
“In October 2014 Lockheed Martin announced that they will attempt to develop a compact fusion reactor that will fit “on the back of a truck” and produce 100 MW output – enough to power a town of 80,000 people. Lockheed is using magnetic mirror confinement that contains the plasma in which fusion occurs by reflecting particles from high-density magnetic fields to low-density ones. Lockheed is targeting a relatively small device that is approximately the size of a conventional jet engine. The prototype is approximately 1 meter by 2 meters in size.”
3) BBC planning Netflix-style service for US
This is a sample of a major trend sweeping the broadcast industry. Content providers now have a global market and can stream whatever content they want wherever they want it – except, of course, in places where existing license holders prevent that. In fact any content provider with the resources to produce content will eventually adopt this form of distribution. One thing with video streaming is that you can subvert things like ad-blocking, and it is hard to spoof advertisers with fake traffic (see item 4)
“A BBC spokeswoman said its programmes would still broadcast on US TV channels, and that the new service was not designed to compete with products such as Netflix, which stream content from a number of partners. “The subscription service will complement our existing footprint in the USA. Other video streaming services remain an important part of our business plan to ensure we bring the best of British to our audiences,” she said.”
4) How Much of Your Audience is Fake?
This is a well written article, except the dopey animations of fake mouse pointers. The article makes the case that a lot of web traffic (i.e. page hits) are generated by bots and that a lot of ad spending is based upon a fraudulent premise. I don’t find this surprising since the ad vendors have no real incentive to block this sort of behavior. In summary, unless you use ad-block, a web page is cluttered by advertising which is mostly clicked on by paid bots. At least the bots don’t use ad-block.
“Late that year he and a half-dozen or so colleagues gathered in a New York conference room for a presentation on the performance of the online ads. They were stunned. Digital’s return on investment was around 2 to 1, a $2 increase in revenue for every $1 of ad spending, compared with at least 6 to 1 for TV. The most startling finding: Only 20 percent of the campaign’s “ad impressions”—ads that appear on a computer or smartphone screen—were even seen by actual people. “The room basically stopped,” Amram recalls. The team was concerned about their jobs; someone asked, “Can they do that? Is it legal?” But mostly it was disbelief and outrage. “It was like we’d been throwing our money to the mob,” Amram says. “As an advertiser we were paying for eyeballs and thought that we were buying views. But in the digital world, you’re just paying for the ad to be served, and there’s no guarantee who will see it, or whether a human will see it at all.””
5) The sorry state of LTE in America: U.S. falls to #55 in global speed rankings
Any ranking of telecommunications infrastructure which places Canada ahead of Kazakhstan is immediately suspect. Indeed, as with most broadband studies this one is incomplete as it tracks the speed you get if you get LTE. Other important issues are whether you have access to wireless broadband at all or whether you can afford it (admittedly neither is probably the case for Kazakhstan.) Therefore, while the US or Canada may have “coast to coast” LTE coverage, there is a lot of land in between where even mobile is not available. The interactive report can be seen at https://opensignal.com/reports/2015/09/state-of-lte-q3-2015/.
“A new report from OpenSignal paints a bleak picture of the state of 4G LTE in the United States as it compares to the rest of the world. The firm’s data was taken from 325,221 LTE users around the world during the three-month period from June 2015 through August 2015. Where LTE download speeds are concerned, OpenSignal found that New Zealand had the fastest average speeds at 36Mbps. Singapore (33Mbps), Romania (30Mbps), South Korea (29Mbps) and Denmark (26Mbps) round out the top five. So where does the U.S. sit on this list? All the way down at No. 55, just behind India, Mexico and Kazakhstan. All four countries have average LTE download speeds in the neighborhood of 10Mbps.”
6) The US is overhauling dozens of policies to promote high-speed internet access
It is hard to believe the US and Canada once had world leading telecommunications infrastructure, but it is remarkable what a couple decades of mismanagement and corruption will do. Unlike Canada, the US is taking baby steps to move things ahead, all the while cautious not to annoy the regional monopolies which now control much of the communications infrastructure there.
“Twenty federal agencies are overhauling their policies to promote the deployment of broadband internet across the US. The changes range from allowing community recreation centers to tap into a $2.3 billion program to pay for high-speed internet, to collecting more data on who is and who isn’t able to access broadband, to making it easier for service providers to lay cables beneath federal lands. The actions come as a result of the Broadband Opportunity Council’s first report on expanding access to high-speed internet, which is being released today. The council was formed by President Obama earlier this year, with the goal of ensuring that the federal government is doing everything within its current powers to encourage the deployment of broadband. That means there are no new funding programs here, but existing sources of funding are being opened up and barriers to deployment are being brought down.”
7) The New Technique That Finds All Known Human Viruses in Your Blood
The headline probably overstates things and it is clear the technique is quite expensive. Nevertheless, knowing what ails the patient is an important part of medicine. There is a reasonable chance the technique can be cost reduced, which might make “virus scans” a normal component of a blood test. This might, in turn, lead to breakthroughs since most viral infections are only detected when someone is suspected of being sick due to a viral infection. There may plenty of illnesses which do not appear to be viral but actually are.
““When people analyze samples from people who are ill, they have some idea in mind. This is probably an enterovirus, or maybe it’s a herpesvirues. They then do a specific assay for that particular agent. They don’t usually have the capacity to look broadly.” The new system, known as VirCapSeq-VERT, barrels past this limitation. Lipkin, together with fellow Columbia professors Thomas Briese and Amit Kapoor, designed it to detect all known human viruses, quickly, efficiently, and sensitively. By searching for thousands, perhaps millions, of viruses at once, it should take a lot of the (educated) guesswork out of viral diagnosis.”
8) Microsoft strikes deal with China’s Baidu, gets a chance to upgrade more than half a billion PCs to Windows 10
One thing about Windows 10 is that it probably makes piracy of the OS a bit harder due to its continuous upgrade model. China is awash with pirated software so even a small change could have a material positive impact on Microsoft’s sales of Windows and related products. Of course, for security reasons, including NSA spying, Chinese government and enterprises are likely to adopt domestic versions of Linux as an alternative.
“Microsoft has made some progress already. We’re off to a great start in China,” Mehdi claimed, citing the earlier partnerships with Lenovo, Qihu 360 and Tencent. “Great” is in the eyes of the beholder, of course. According to Baidu, which tracks the operating systems that power the devices reaching its search engine, Windows 10 accounted for just 1.1% of all personal computer OSes last month. That was significantly less than the global average: U.S. analytics company Net Application estimated Windows 10’s user share as 5.2% for August. But it was larger than Baidu’s measurement of 0.8% for Windows 7 in January 2010, three-plus months after the operating system’s debut.”
9) The Plot Twist: E-Book Sales Slip, and Print Is Far From Dead
There are several challenges with e-books: the pricing (which tends to be absurd), and the user experience. Tablets and e-reader had promise, but reading a book on even a large smartphone is always a positive experience. The pricing is the reason I have never actually paid for an e-book: they often cost more than a paperback and come with all sorts of restrictions and limitations. The large publishers know that keeping people on paper is important to them so they probably want to do all they can to sabotage the new format. It seems to be working however e-books remain an excellent format for new authors.
“Digital books have been around for decades, ever since publishers began experimenting with CD-ROMs, but they did not catch on with consumers until 2008, shortly after Amazon released the Kindle. The Kindle, which was joined by other devices like Kobo’s e-reader, the Nook from Barnes & Noble and the iPad, drew millions of book buyers to e-readers, which offered seamless, instant purchases. Publishers saw huge spikes in digital sales during and after the holidays, after people received e-readers as gifts. But those double- and triple-digit growth rates plummeted as e-reading devices fell out of fashion with consumers, replaced by smartphones and tablets. Some 12 million e-readers were sold last year, a steep drop from the nearly 20 million sold in 2011, according to Forrester Research. The portion of people who read books primarily on e-readers fell to 32 percent in the first quarter of 2015, from 50 percent in 2012, a Nielsen survey showed. Higher e-book prices may also be driving readers back to paper. As publishers renegotiated new terms with Amazon in the past year and demanded the ability to set their own e-book prices, many have started charging more. With little difference in price between a $13 e-book and a paperback, some consumers may be opting for the print version.”
10) Breakthrough with New Technique for Graphene Production
It is hard to know which graphene announcements are real and which are vapourware. This sounds pretty exciting: a cost reduction of 99% and an improvement in quality is the sort of advance which might leave a mark. Graphene has many potential applications, however, the stuff has been staggeringly expensive to make even in small batches. Nevertheless, it is made from carbon, which is as cheap as you can get for a raw material so potential cost reductions such as these would make a big difference.
“The new technique, called nanoCVD, involves growing graphene in an industrial cold wall Chemical Vapor Deposition (CVD) system that was recently developed by the UK graphene company Moorfield. The method is based on a concept already used for other manufacturing processes in the semiconductor industry, and demonstrates, for the very first time, a way to mass produce graphene with present facilities. The researchers state that their method can grow graphene 100 times faster, reduce costs by 99 percent and enhance the electronic quality of the graphene. Professor Monica Craciun from Exeter said the new discovery could pave the way for “a graphene-driven industrial revolution.” “The extremely cost-efficient procedure that we have developed for preparing graphene is of vital importance for the quick industrial exploitation of graphene,” said former Exeter professor Thomas Bointon.”
11) Samsung’s 950 Pro M.2 SSD pairs NVMe with V-NAND for eye-popping performance
My first special report for BCA Research outlined my position the Solid State Drive will essentially eliminate the Hard Disk Drive industry. Announcements like this, and a similar announcement by Intel, show one reason why: besides being astoundingly fast, this SSD costs only about double a similar capacity traditional SSD, which is itself dramatically faster than any HDD. Unfortunately, the cost is still about 10x the cost per GB of a HDD however, I expect that gap to close markedly in 2016.
“Most SSDs still make use of the AHCI (Advanced Host Controller Interface) architecture, which was originally developed for spinning platter SATA hard drives back in 2004. While AHCI works fine for traditional hard drives, it was never designed for low latency NAND chips. As flash speeds have increased, AHCI has become a performance bottleneck. NVMe exploits both the PCIe bus and NAND flash memory to offer higher performance and lower latency. In the case of the 512GB Samsung 950 Pro, the combination of NVMe, speedy V-NAND chips, and a triple core, eight-channel UBX controller has resulted in some eye-popping performance. Sequential read speeds top out at 2500MB/s, while sequential writes hit 1500MB/s. By comparison, Samsung’s OEM-only SM951 AHCI drive—which is based on the same UBX controller, albeit paired with planar NAND—tops out at 2150MB/s sequential reads and 1500MB/s sequential writes.”
12) Supermassive black holes found spiraling in at seven percent light speed
The universe is stranger than we can imagine. Here are two impossibly massive objects spiraling into each other as relativistic speeds. Due to conservation of angular momentum, their speed (and presumably energy emissions) should increase as they get closer and closer. When they finally merge, it should be quite the spectacle.
“One likely black hole binary, PG 1302-102, was first observed last year by ground-based telescopes. A new study confirms this tentative identification. The estimated masses of the two black holes, along with the orbital period, allow us to estimate how close they are. In this case, the answer is “really close.” The inferred distance between them is somewhere between .007 and .017 parsecs, which is not much bigger than the diameter of the Solar System. That’s astoundingly close for two objects of this size—so close that there’s been debate in the scientific community as to how that’s possible (See sidebar). To maintain their orbit, the black holes have to be whipping around at relativistic speeds.”
13) Court adviser deals major blow to EU-U.S. data share deal
Although this only really got a high profile with the Snowden revelations of widespread spying by the NSA, at a minimum, this has been a problem since the post 9/11 “Patriot Act” obligated US firms to comply with warrantless searches of user data anywhere they hold that data. In countries with some degree of privacy regulations, this presents a problem since those same companies are required to comply with those privacy laws. I figure most of this is theater, even if well-meaning theatre. One way or the other hosted, unencrypted, data will be scanned by all and sundry spy agencies, be they American, Russian, or Chinese. That includes corporate data, of course.
“A deal easing the transfer of data between the United States and the EU is invalid, an adviser to the European Union’s top court said on Wednesday, dealing a blow to a system used by Facebook, Google and thousands of other companies. The Safe Harbour agreement did not do enough to protect EU citizen’s private information when it reached the United States and should have been suspended, Yves Bot, Advocate General at the European Court of Justice (ECJ), said. While Bot’s opinions are not binding, they tend to be followed by the court’s judges, who are considering a complaint about the system in the wake of revelations from ex-National Security Agency contractor Edward Snowden of mass U.S. government surveillance.”
14) Mobile money, trade credit, and economic development
This study suggests that the introduction of mobile payment systems into developing economies has a profound impact on GDP growth. The fact many such economies otherwise have limited banking infrastructure (or, more correctly, banking is unavailable to the poor) probably explains a lot of that impact.
“Using the firm-level survey mentioned above and our model, we gauge the economic significance of this effect. Comparing an economy with and without mobile money, we find a difference in macro output of 0.47%. Finally, to assess the economic importance of the mechanism we have proposed, we calculate its contribution to economic growth of Kenya since the introduction of M-PESA in 2007. Kenyan total factor productivity (TFP) and real per capita income grew 3.3% and 14%, respectively, between 2006 and 2013. The quantitative exercise result from the endogenous model implies that M-PESA generates 0.5% TFP growth for the Kenyan economy through the trade credit channel on an annualised basis. This implies that the mechanism we have proposed can explain 14% of TFP growth and 3.4% of per capita real income growth over the same period, suggesting quite a large economic impact of mobile money technology”
15) Two humans link their brains to play 20 Questions
This is an update on a technology which is moving towards direct brain to brain communication (like ESP except real). The experiment is somewhat contrived in that this is not the transmission of abstract thoughts so much as a sort of “yes/no” signal. One can’t help but wonder if it might be used to try communications with people with locked in syndrome or other serious medical issues.
“If you could eschew the telephone, and instead wear a cap that allowed you to share your thoughts with someone else, very far away, would you? It may be a moot point now, but there may come a time in the not-too-distant future when it isn’t, largely due to the work of Andrea Stocco and his team at the University of Washington’s Institute of Learning & Brain Sciences. In this latest round of Stocco’s research, two people were successfully able to transmit their thoughts to each other over the Internet, completing a game of questions-and-answers.”
16) Your city is stupid Smart cities are great in theory, tricky in practice
I’ve read better articles covering the issue of smart cities. It is a technology which has vast potential however the problem would be one of implementation. Governments are notoriously incompetent when it comes to deploying technology and the larger the project the more likely they are to go over budget by orders of magnitude. Part of this is no doubt due to the tendency to turn projects over to consultancies who then run amok, but either way it is a stretch to assume any significant smart city project will work out as planned.
“In San Diego, California, 70% of the time a traffic light goes out city officials only know because somebody phones in to report it. Believe or not, that statistic isn’t unusual for a city right now. And yet, in the city of Groningen, Netherlands, some traffic lights have sensors that can detect when it is raining or snowing, and will grant more frequent passage to cyclists when they do. Cities are a sieve for data but most of the information is flowing through the holes. Many bus systems will tell you when the next bus is coming, but how many tell you if there is a spare seat or space for your bike? “Smart city” is one of the latest big buzzwords, but it’s a phrase that can evoke such a jumble of ideas that it’s not easy to find one single definition. Perhaps the best interpretation is this: a smart city is one that has been consciously designed, with the aid of technology, to increase efficiency.”
17) Lab Grown Kidneys Have Been Successfully Transplanted Into Animals
As the article implies, these kidneys were implanted but they weren’t really properly functioning. They didn’t get rejected (which is good but not hard to do with lab animals), they did filter blood (which is a big deal) but urine removal, which is kind of important for a kidney, remains a problem. Still it is a move in the right direction.
“So far, rats and pigs have been tried. The first wave was with rats, but what is more interesting is the effect with a more complex animal like a pig. The success shown here bring the possibility of a human kidney transplant, using laboratory engineered kidneys, a step closer. The newly grown kidneys were created from stem cells, using rats as the incubators for the growing embryonic tissue. The kidneys are grown complete with a drainage tube and bladder for the collection of urine. The biggest problems the researchers faced were removing urine from the kidneys and avoiding them ballooning up under pressure.”
18) Switch the world’s street lighting to LED, urges new campaign
I am a big believer in LED lighting and predicted the rise of the technology years ago. LED street lighting makes economic sense because power consumption is a fraction of alternatives, and, more importantly, the fixtures last forever, which saves costly biannual bulb replacement. Nevertheless, this article is an excellent example of greenwashing: note how neither the article itself or the original “non-profit” report (http://www.theclimategroup.org/what-we-do/publications/the-big-switch-why-its-time-to-scale-up-led-street-lighting/) mentions the tiny detail the report (http://www.theclimategroup.org/_assets/files/LED-September.pdf) was sponsored by Philips, one of the largest manufacturers of LED lights.
“The campaign, called LED = Lower Emissions Delivered, follows up on the non-profit’s 2012 trials of LED street-lighting in 12 major cities including New York, London, and Kolkata, where it looked at how the latest LED products performed and are perceived by the public. The Climate Group said technological barriers to implementation of LEDs have now been overcome, while their consultation with cities has shown using LED technology for street lighting is now broadly accepted.”
19) Why Pharma Wants to Put Sensors in This Blockbuster Drug
I can sort of understand the need to track drug usage, in particular in patients who are unable to do so themselves. It is not clear to me that schizophrenics fit in that category: many complain the side effects of the drugs are worse than the illness itself. Mind you, I can the importance from the drug company’s perspective as they get a patent renewal, can charge more for the drug, and essentially police its use.
“This month, the Food and Drug Administration accepted an application to evaluate a new drug-sensor-app system that tracks when a pill’s been taken. The app comes connected to a Band Aid-like sensor, worn on the body, that knows when a tiny chip hidden inside a pill is swallowed—so if patients aren’t keeping up with their meds, the program can alert their doctors. The drug here is Abilify, a popular antipsychotic from the pharmaceutical giant Otsuka, and the sensor and the app come from Proteus Digital Health, a California-based health technology company. The FDA has already approved the drug and the sensor system separately—now, they’ll be evaluated together under a whole new category of “digital medicines.” If approved, the ingestible sensor can actually be used in the pill.”
20) The (Fake) Meat Revolution
I don’t know why tofu burgers get a bad rap: I actually like the things though I find them too expensive. In any event, this article is not about the monstrosity of stem cell based meat (essentially lab grown tumors) but meat substitutes. Like I said, I like tofu burgers but I am little confused as to why the Whole Foods crowd would be attracted to an industrial product like fake meat.
These meat alternatives could end up being cheaper than real meat. Buyers won’t just be vegans but also carnivores simply looking for healthy, sustainable, cheap food. So look out. If the alternatives to meat are tasty, healthier, cheaper, better for the environment and pose fewer ethical challenges, the result may be a revolution in the human diet. “The next couple of years will be exciting ones,” says Joseph D. Puglisi, a Stanford University professor of structural biology who is working on meat alternatives. “We can use a broad range of plant protein sources and create a palette of textures and tastes — for example, jerky, cured meats, sausage, pork.””