The Geek’s Reading List – Week of October 23rd 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) Next-gen cellular networks could use spectrum all the way up to 71GHz
It you would have mentioned 71 GHz radio 20 years ago people would have thought you were referring to science fiction. These sorts of frequencies have more in common with light that with traditional low frequency radio and that is what allows for the design of beam steering, etc.. One can’t help but wonder what happened to the “spectrum scarcity” behind fabulously expensive wireless license auctions.
“”It was once thought that frequencies above 28GHz could not support mobile services because their wavelengths were too short and the signal propagation losses were too high,” FCC Commissioner Mignon Clyburn said at today’s meetings. “But industry engineers have now turned these weaknesses into strengths by finding ways to use short wavelengths to build dynamic beam-forming antennas to support high-capacity networks that are small enough to fit into handsets. Many expect that these engineering advances will lead to 5G networks that will offer much higher data speeds and substantially lower latency than what commercial mobile services offer today.” There is “little doubt” that future 5G devices will also use spectrum below 1GHz, Clyburn said. Using both low- and high-frequency spectrum would help carriers achieve broad coverage and faster speeds.”
2) Driverless trucks move all iron ore at Rio Tinto’s Pilbara mines, in world first
This is an update on a story we’ve covered in the past. Mine equipment is an excellent candidate for driverless control, although in this case the application is very different from autonomous vehicles for consumers. In this case, the drivers are absent far away from the mine site. This is not only safer but cheaper as luring drivers to remote sites is costly. As we noted last week, a similar approach could be used in cargo ships.
“”To the naked eye it looks like conventional mining methods. I guess the key change for us is the work that employees and our team members are doing now,” he said. “What we have done is map out our entire mine and put that into a system and the system then works out how to manoeuvre the trucks through the mine.” The company is now operating 69 driverless trucks across its mines at Yandicoogina, Nammuldi and Hope Downs 4. The trucks can run 24 hours a day, 365 days a year, without a driver who needs bathroom or lunch breaks, which has industry insiders estimating each truck can save around 500 work hours a year. Mr Bennett said the technology takes away dangerous jobs while also slashing operating costs.”
3) U.S. to force drone owners to register devices soon, report says
This rumor caused pandemonium in the drone enthusiast community. Although you rarely hear of RC airplane enthusiasts flying their toys in restricted airspace and/or endangering lives the barriers to ownership and operation of drones are much lower and, as would be expected more idiots own them. The FAA’s responsibility is to the safety of the public, not half-wits who fly their toys where they shouldn’t. I suspect the registration mandate, if it comes, will apply only to drones above a certain size and range so actual toys would be unaffected.
“The general rules governing the use of commercial and non-commercial drones are still in flux, but one major rule is reportedly set to be enacted soon: legal registration. In much the same way as you might register an automobile, the U.S. Department of Transportation (DoT) is set to lay down rules that require all drone owners to register their devices with the government. The agency has not made an official announcement regarding such a program, but a report from NBC News on Friday claims that the rule is set to take effect in the near future. According to the report, drone owners would be required to register their devices with the DoT in a new program that would be launched by the Christmas holiday, right around the time a large number of drones will likely make their way into the skies as Christmas presents.”
4) Tesla shares dive after Consumer Reports yanks recommendation for Model S
Not slammed enough. Tesla’s are notorious for frequent and repeat repairs of expensive components like the drive system and batteries. This is not news: we have been commenting on this for years now. Unfortunately, the once credible Consumer Reports appears satisfied with writing aspirational reviews: it writes about what it believes should be true rather than what the facts say. Even so, any and all EVs suffer from an inherent flaw: the batteries are staggeringly expensive (that will not change) and short lived (that will also not chance). Anybody with the copious misfortune of owning an EV more than 8 years old will discover it will need a new battery pack worth much more than a typical car. But at least they don’t need oil changes.
“Consumer Reports withdrew its recommendation for the Tesla Model S — a car the magazine previously raved about — because of poor reliability for the sporty electric sedan. The turnabout comes after the influential consumer magazine handed the luxury car a “worse-than-average” rating in its annual report on the predicted reliability of new vehicles issued Tuesday. … Consumer Reports surveyed 1,400 Model S owners “who chronicled an array of detailed and complicated maladies” with the drivetrain, power equipment, charging equipment and giant iPad-like center console. They also complained about body and sunroof squeaks, rattles and leaks.”
5) When Tesla’s autopilot goes wrong: Owners post terrifying footage showing what happens when brand new autonomous driving software fails
I’ll give you one thing about Tesla: its quality is consistent, though not consistently good. In summary the company recently rolled out a series of features other car companies have offered for years. Aligned with its undeserved reputation for innovation and technological breakthrough it managed to convince a surprising number of commentators this was a sort of “self-driving car”. As it turns out, the software appears to be dangerously buggy and unless the driver is actively controlling the car at all times it has a propensity to veer into danger. Not-surprisingly, Tesla fans are blaming this on the driver (what do you expect from beta software) where no such shrift would be given if any other car manufacturer had endangered lives in this manner. It is a matter of time before this kills somebody.
“Less than a week into Tesla’s roll out of its autopilot software, footage has emerged showing the dangers of the system. The update lets the car use a range of sensors both inside and outside the vehicle to maintain its speed, keep a safe distance from the car in front and even change lanes automatically. But for drivers who keep their hands off the wheel, the car can sometimes veer out of its lane, according to two new videos. They raise questions over the ‘ambiguous’ legal rules surrounding self driving cars, as New York is the only state that requires a ‘driver’ must have a hand on the wheel at all times.”
6) Electric vehicles expected to be the norm by 2026
I’m sure if you would have asked me what I wanted when I was 14 I’d have said hoverboard so I’m not sure knowing the opinions of people who know nothing about cars, let alone EVs, and who can’t afford one, are. There is a lot of hype on the Internet concerning EVs, due largely to the efforts of Tesla to promote itself. Unfortunately, the adoption of EVs will be heavily dependent upon progress in battery technology and, Tesla hype to the side that is not progressing as quickly as people are led to believe. If people are really keen on saving the environment they might advocate for mass transit or even drive smaller cars. After all, the fuel efficiency of gasoline engines has improved immensely and consumers have mostly responded by buying more powerful vehicles.
“Respected futurologist Ian Pearson has forecast 2026 as the year in which the electric car will overtake its gasoline-powered counterparts in terms of sales. His prediction is based on new research, published this week by Go Ultra Low, a U.K. government-funded organization for promoting greener motoring. It finds that today’s 14-to-17-year-olds are already fantasizing about owning their first car, and that it is going to be of the electric, rather than the gas-powered variety. When asked, 81 per cent of British 14-year-olds said that their first car would be electric. What’s more, 88 per cent of all respondents said they believed more people should already be driving a hybrid or plug-in electric car in order to protect the environment.”
7) Coal Trumps Solar in India
A modern electric grid can tolerate some sporadic power sources like wind and solar, especially if the regulatory context pushes the cost of coping to the consumer. Otherwise it is an expensive and unreliable source of power. Unfortunately, it sounds like a good idea, and that is a bad combination. As this article shows the best wishes of Greenpeace are not as good as a connection to the grid. I can’t help but wonder how many Greenpeace activists had to study by the light of a single bulb. Thanks to my friend Evan Spiropoulos of Brickburn Asset Management for this item.
“Rupesh Kumar, an 11th-grader in Dharnai, grew up studying by the light of kerosene lanterns. He was hopeful when Greenpeace representatives came to his family’s two-room house, walking past two buffaloes tied at the front porch. They promised him a light bulb he could study by. He hopes to be the first in his family to go to college and get a job other than farming. Over three months, engineers set up 70 kilowatts of photovoltaic cells on the rooftop of public buildings scattered throughout the village. They installed 224 batteries to store the energy. … Kumar’s family received one compact fluorescent light bulb and a wall outlet to charge their mobile phone. The power would be free for six months and then cost 70 rupees per month. That comes to about $1, but a steep price tag in a place where poor people earn, on average, the equivalent of about 30 cents per day. Most of Kumar’s neighbors could not afford it.”
8) Getting LEAN with Digital Ad UX
This sounds like capitulation by the adverting industry but I rather doubt it. After all, a significant number of online ads are fraudulent, deceptive, or malware carriers and I doubt those advertisers will pay attention to the industry body. More likely this is a gambit to use voluntary compliance to a loose and unenforced code of ethics to get the vast majority of ads placed on Ad Block Plus’s white list. However, the technology is open source and there are alternatives such as uBlock, which has not yet been coopted by a business model.
“This was choice—powered by digital advertising—and premised on user experience. But we messed up. Through our pursuit of further automation and maximization of margins during the industrial age of media technology, we built advertising technology to optimize publishers’ yield of marketing budgets that had eroded after the last recession. Looking back now, our scraping of dimes may have cost us dollars in consumer loyalty. The fast, scalable systems of targeting users with ever-heftier advertisements have slowed down the public internet and drained more than a few batteries. We were so clever and so good at it that we over-engineered the capabilities of the plumbing laid down by, well, ourselves. This steamrolled the users, depleted their devices, and tried their patience.”
9) China to invest $78 bn to build 110 nuclear power plants by 2030, will overtake US
China gets a lot of coverage for its deployment of solar and wind power, but a healthy electric grid needs reliable power from nuclear, hydro, or fossil fuel sources. China has used a lot of coal in electric production which has led to a virtual environmental disaster in terms of poor air quality. If a country is concerned with greenhouse gas emissions, modern nuclear power makes a lot of sense as these are very safe and reliable. Unfortunately, political opposition to nuclear power prevents deployment in the developed world but China doesn’t worry about such things. See also http://www.technologyreview.com/news/542526/china-details-next-gen-nuclear-reactor-program/
“China plans to build 110 nuclear power plants by 2030 with an investment of over $78 billion overtaking the US which has 100 such plants amid criticism that Beijing is yet to implement enough measures to develop safety controls in existing projects. China will build six to eight nuclear power plants annually for the next five years and operate 110 plants by 2030 to meet the urgent need for clean energy, Beijing-based China Times quoted plan analysts as saying. China will invest 500 billion yuan ($78.8 billion) on domestically developed nuclear power plants, the report said. According to the China Times, the country plans to increase its electricity generation capacity to 58 gigawatts by 2020, three times the 2014 level.”
10) The subprime ‘unicorns’ that do not look a billion dollars
This provides some context for the current Internet bubble. “Unicorns” are start-up companies whose market values are in the billions based upon a recent round of financing. Of course, valuation based on the last round of financing is not exactly the same as valuation based on daily trades in the stock market and even that is often wrong for extended periods of time. Ultimately, few of these companies will ever earn a profit, let alone generate enough cash to justify their valuation, but at this stage of the market the issue is moot: the financiers are only interested in selling those companies to a hapless acquirer such as Facebook, Google, or Apple, or fobbing the shares off to investors to an IPO. What happens afterwards is of little concern.
“But there is also a false sense of security provided by the private markets at a time when interest rates are negligible and many investors, particularly those who are either new to technology or have short memories, are all too willing to back start-ups whose premises house several baristas and where a dozen blends of tea (not to mention the sea-salt flavoured chocolate bars and bio-dynamically raised Anjou pears) are de rigueur. It is easier to conceal weaknesses, present an aura of invincibility and confound investors as a private company that can escape by making few disclosures than as a publicly traded one. One glance at the list of so-called unicorns — those private technology companies valued at more than $1bn — illustrates this point. A handful of these businesses will become the great, enduring companies of tomorrow. But a good number seem the flimsiest of edifices. Forget the fact that some of these valuations are illusory because the most recent investors have structured their investments as debt in all but name, meaning that they will stand to profit even if the company is worth far less.”
11) How a criminal ring defeated the secure chip-and-PIN credit cards
It is truly amazing how creative some criminals are nowadays. These guys detected a basic flaw in the chip and pin system and developed a high tech solution which exploited it. I am pretty sure modern chip and pin transactions no longer work this way: the card doesn’t approve the transaction but answers a real time query with an encrypted response. Had that been in place in Belgium, this would not have worked.
“The researchers explain that a typical EMV transaction involves three steps: card authentication, cardholder verification, and then transaction authorization. During a transaction using one of the altered cards, the original chip was allowed to respond with the card authentication as normal. Then, during card holder authentication, the POS system would ask for a user’s PIN, the thief would respond with any PIN, and the FUN card would step in and send the POS the code indicating that it was ok to proceed with the transaction because the PIN checked out. During the final transaction authentication phase, the FUN card would relay the transaction data between the POS and the original chip, sending the issuing bank an authorization request cryptogram which the card issuer uses to tell the POS system whether to accept the transaction or not.”
12) A Few Thoughts on Cryptographic Engineering
I recall my cryptography prof, in 1987, explaining that if the NSA was pushing a standard it was because they already knew how to compromise it and they figured others didn’t. They would never push a strong standard they could not decrypt. I believe NSA backdoored ECC because that is what they do. The thing is a backdoor is only useful when you are the only one who knows about it. Even if the purported one isn’t the real one if people believe NSA has compromised an algorithm they move away from it. Most likely they already have mathematical (if not real) backdoors for the new stuff as well – after all there are no quantum computers let alone prospects for one. Either way, NSA whether because of ECC or their well-documented coopting RSA (http://www.reuters.com/article/2014/03/31/us-usa-security-nsa-rsa-idUSBREA2U0TY20140331) I doubt NSA’s guidance is viewed with the same respect it used to be. It would be like adopting Red Army or KGB cyphers. Thanks to Jim Laird of Laird Research for this item.
“At the time of Suite B’s adoption, ECC was relatively new to the non-classified world. Many industry and academic cryptographers didn’t feel it had been reasonably studied (Koblitz and Menezes’ anecdotes on this are priceless). ECC was noteworthy for using dramatically shorter keys than alternative public-key algorithms such as RSA and “classical” Diffie-Hellman, largely because new sub-exponential attacks that worked in those settings did not seem to have any analogue in the ECC world. The NSA pushed hard for adoption. Since they had the best mathematicians, and moreover, clearly had the most to lose if things went south, the standards bodies were persuaded to go along. The algorithms of Suite B were standardized and — aside from a few intellectual property concerns — have been gradually adopted even by the non-classified community. Then, in August of this year, NSA freaked out.”
13) The scientists encouraging online piracy with a secret codeword
We’ve written about the sorry state of academic publishing in the past. Industry consolidation means the cost of such publications has gone through the roof and many academics can’t get access to the article they need. Scientists are fighting back by moving to free online journals and by civil disobedience measures such as these. I disagree with the article on one point: in many countries there are specific exemptions to copyright for academic research. Thanks to my friend Humphrey Brown for this item.
“In many countries, it’s against the law to download copyrighted material without paying for it – whether it’s a music track, a movie, or an academic paper. Published research is protected by the same laws, and access is generally restricted to scientists – or institutions – who subscribe to journals. But some scientists argue that their need to access the latest knowledge justifies flouting the law, and they’re using a Twitter hashtag to help pirate scientific papers. Andrea Kuszewski, a cognitive scientist and science writer, invented the tag, which uses a code phrase: “I can haz PDF” – a play on words combining a popular geeky phrase used widely online in a meme involving cat pictures, and a common online file format. “Basically you tweet out a link to the paper that you need, with the hashtag and then your email address,” she told BBC Trending radio. “And someone will respond to your email and send it to you.””
14) Penguin Computing to Build 7-9 Petaflops of Open Compute Clusters for NNSA
Open source solutions are often mocked by investors despite the fact Android (an open source variant of Linux) is by far the most popular OS on the planet and much of the Internet runs off open source software. Open source hardware is relatively new and Open Compute is a Facebook sponsored initiative. The idea is to offer hardware designs which can be produced as commodities and used in data centers, etc.. This might lead to the development of a near zero margin business which would displace current server (and ultimately networking equipment) suppliers.
“Today the National Nuclear Security Administration (NNSA) announced a contract with Penguin Computing for a set of large-scale Open Compute HPC clusters. With 7-to-9 Petaflops of aggregate peak performance, the systems will be installed as part of NNSA’s tri-laboratory Commodity Technology Systems program. Scheduled for installation starting next year, the systems will bolster computing for national security at Los Alamos, Sandia and Lawrence Livermore national laboratories.”
15) How an industry of ‘Amazon entrepreneurs’ pulled off the Internet’s craftiest catfishing scheme
If there is a service or product on the Internet, you can rest assured somebody has figured a scam based on it. The idea with this one is to have somebody ghost write a “book” which is just a miscellaneous assortment of publicly available information. Then pay other people to create a large number of fraudulent favorable reviews for the “book” and use Amazon’s own policies to allow you remove any reviews which are not favorable. Victims see the book, read the reviews and pay money for a worthless piece of garbage. Usually the amount is small and hardly worth a complaint. Amazon itself profits from the scam so it is easy to see why they would do little to stop it. Long story short, short ignore favorable product reviews: chances are they are paid for. And that isn’t limited to e-books.
“The catfishing process varies according to the specific “entrepreneur” using it, but it typically follows the same general steps: After hiring a remote worker to write an e-book for the Kindle marketplace, Amazon’s e-book store, publishers put it up for sale under the name and bio of a fictional expert. Frequently, Kindle entrepreneurs will then buy or trade for good book reviews. At the end of this process, they hope to have a Kindle store bestseller: something with a catchy title about a hot topic, such as gambling addiction or weight loss. “Making money with Kindle is by far the easiest and fastest way to get started making money on the Internet today,” enthuses one video that promises to guide viewers to riches. “You don’t even need to write the books yourself!”
16) Brain Surgery Using Sound Waves
The technology uses focused sound wave to destroy brain tissue without having to cut into a person’s skull. Once doctors figure out what part of the brain is causing seizures, chronic pain or whatever they plan the surgery and burn the part away. It is sterile and apparently mostly painless. One problem is that you can’t be completely sure of what you are doing as you can with traditional surgery by stimulating the brain and asking the patient to describe what they feel. Perhaps in the future a method will be found to precisely stimulate the brain and we’ll have a complete package.
“A new ultrasound device, used in conjunction with magnetic resonance imaging (MRI), allows neurosurgeons to precisely burn out small pieces of malfunctioning brain tissue without cutting the skin or opening the skull. A preliminary study from Switzerland involving nine patients with chronic pain shows that the technology can be used safely in humans. The researchers now aim to test it in patients with other disorders, such as Parkinson’s disease.”
17) Automation expected to cut workforce needs by 25% at IT services firms
If this is how they feel it must be a depressing industry to work in. I wouldn’t take this survey too seriously as it assumes the respondents are in a position to actually judge the pace at which automation with eliminate jobs and they probably are not. Nevertheless, a lot of IT services functions probably lend themselves to automation or simplification of one sort or another. One can’t help but wonder if the lost jobs will be in the major economies or India, which has become a hot spot for IT services outsourcing.
“That automation will take jobs is a well-established labor market truism. For instance, in 1949 there were 182,500 people employed as telephone operators. That was the peak year for that profession. By last year, the number of operators employed by wired telecommunications carriers had declined to 2,170, according to federal labor data. A similar fate is about to befall people who do back-office IT services work. Thanks to automation improvements, dramatic cutbacks in IT services personnel are being forecast, according to a survey of representatives of about 170 global sourcing firms. This includes the IT services industry.”
18) HBO CEO Richard Plepler Criticizes Comcast, Other Pay-TV Firms for Snubbing Streaming Service
The comment appears to be that HBO expects Internet Service Providers to offer a bundle including HBO’s streaming service HBO Now, especially since so many ISP customers are not also cable TV customers. He makes a good point however ISPs are probably keen to maintain control over their bandwidth by subverting net neutrality and believe HBO should pay them for the privilege of delivering HBO content. Regardless, bundles such as these are probably in the future.
“The HBO CEO called out his Comcast counterpart and multiple other leading U.S. pay-TV distributors who don’t offer HBO Now with their broadband products as digital giants like Apple and Google have over the past nine months. “If you’re Brian (Roberts) and you have 6 million broadband subs, why would you not bundle HBO and share that revenue with us? Why would you give up that real estate and not be paid for it? I don’t understand it,” he lamented Tuesday evening in a keynote Q&A at the WSJD Live event in Laguna Beach, Calif. Plepler repeatedly criticized distributors who he complained were leaving money on the table by not using HBO Now to help drive value to their own broadband access. “Some of our partners are not as skilled at that, and I think that’s myopic on their part,” he said. HBO has managed to secure two deals with traditional distributors — Cablevision and Verizon — for HBO Now. However, Comcast, along with the potentially combining Charter and Time Warner Cable, do not offer the service. Neither do satcaster DirecTV or its own merger partner, AT&T.”
19) Hewlett-Packard throws in the towel on public cloud
This is another example of the hazards of using cloud services. Discontinuation of a cloud service can create disruption and costs for the subscribers. It isn’t as easy as changing over your provider in most cases, especially if there are customer records, databases, etc.. This is the sort of problem businesses can deal with, but the impact on consumers can be greater. As an example, most Internet of Things applications require access to a specific application on the cloud in order to work at all. If the cloud services provider decides to pull the plug or if the IoT provider figures it wants to get out of the smart lightbulb business, the consumer is left with a paperweight.
“Hewlett-Packard, which has spent the past year downplaying what had once been an aggressive push into the business of providing a “public cloud,” is exiting that business altogether. The company will “sunset” its product, HP Helion Public Cloud, on Jan. 31, 2016, according to a new blog post by Bill Hilf, senior vice president of HP Cloud. Public clouds are one form of “cloud computing,” in which tasks are performed over a network of distributed computing resources, rather than “locally” in the customer’s own data center. In a “public” cloud, those resources are shared by the public; in “private” clouds, the resources are used exclusively by one organization.”
20) Super-slick material makes steel better, stronger, cleaner
There are lots of interesting developments in materials science and nanotechnology. Here we have an example of a resilient superhydrophobic coating, meaning water won’t stick to it. Obvious applications of superhydrophobic coatings include heat exchangers (steam won’t condense on them) and aircraft surfaces for de-icing (though steel may be too heavy for that application). Unfortunately, the article does not tell us the cost of the coating, which is an important issue.
“While various grades of steel have been developed over the past 50 years, steel surfaces have remained largely unchanged—and unimproved. The steel of today is as prone as ever to the corrosive effects of water and salt and abrasive materials such as sand. Steel surgical tools can still carry microorganisms that cause deadly infections. Now, researchers at the Harvard John A. Paulson School of Engineering and Applied Sciences (SEAS) have demonstrated a way to make steel stronger, safer and more durable. Their new surface coating, made from rough nanoporous tungsten oxide, is the most durable anti-fouling and anti-corrosive material to date, capable of repelling any kind of liquid even after sustaining intense structural abuse.”