The Geek’s Reading List – Week of December 18th 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.
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1) Automation Is a Job Engine, New Research Says
This is not a surprising result. After all, automation is simply an extension of the industrial revolution where things like steam powered looms and other machinery replaced the work of craftsmen and led to dramatically increased output at lower costs. Every generation faces a new incarnation of automation and experiences the same fears the Luddites did. At the end of the day, living standards and quality fo life continue to increase despite hundreds of years of fear of job loss.
“The fear that technology is poised to kill jobs in unprecedented numbers is widely prevalent these days. Nothing is likely to ease that anxiety much, but a new research paper might prompt some second thoughts. Using government data, James Bessen, a researcher and lecturer at the Boston University School of Law, examined the impact of computer automation on 317 occupations from 1980 through 2013. His conclusion, in a sentence, was: “Employment grows significantly faster in occupations that use computers more.” Historically, it is well established that the advance of technology has generated more jobs than it has replaced, regardless of the angst of the moment. More than 80 years ago, the renowned English economist John Maynard Keynes warned of the “new disease” of “technological unemployment.””
2) Two-Thirds of Earliest Tesla Drivetrains To Need Replacement In 60,000 Miles, Owner Data Suggests
One only has to read the results of “long-term” (i.e. one year) tests of the Tesla S to realise these are incredibly unreliable vehicles requiring an unending of expensive (albeit under warranty) repairs. Those same tests carry fawning coverage of the vehicle’s acceleration without so much as wondering whether it is normal to have the drive system repeatedly replaced. What I have to wonder about is how the company is accruing for warranty claims: replacement of a drive train likely costs more than the gross margin on the vehicle and accruals are supposed to be based on the same sorts of calculations used in this article. One further note is that Tesla claims this issue has been fixed, even though failures of replacement drive drives have been reported.
“With almost 100,000 on the world’s roads, the Tesla Model S electric car is a remarkable achievement. It remains the longest-range electric car in volume production more than three years after it launched. But reliability issues with electric traction motors in early cars–those from the 2012 and 2013 model years–have dogged the earliest owners. Now, a new analysis of data provided to Plug-In America by 327 owners of early Tesla Model S cars suggests that as many as two-thirds of those early Model S drivetrains will need to be replaced within 60,000 miles.”
3) Experts doubt Google’s claim about its quantum computer’s speed
You couldn’t look at a technology website the past couple weeks without being bombarded by the “breakthrough” announced by Google regarding the performance of its D-Wave “quantum” computer (the quotes are necessary). The headlines invariably pointed to the “100 million times faster than a laptop” without answering the “if so then what” question. It is not entirely surprising a machine designed to do a particular manipulation (quantum annealing) is dramatically faster than a simulation. The same could be said about most simulations of stochastic systems. Unless and until a D-Wave computer can be shown to solve a commercially important problem significantly faster than a similarly priced supercomputer, it doesn’t matter worth a damn.
“Are powerful quantum computers finally here? Google is claiming that its D-Wave quantum computer can solve certain problems 100 million times faster than an ordinary computer, a result that it says could lead to huge improvements in artificial intelligence. But researchers contacted by New Scientist say these claims are overblown, and show little-to-no performance increase over a regular PC. Before you get too excited about a new era of computing, read on.”
4) World’s first in-human gene-editing treatment will tackle hemophilia
CRISPR is a major breakthrough in genetic engineering which got its start in 2007 (see item 5, below). The technique has vast potential in human medicine, drug manufacturing, agriculture, and other fields. Needless to say, there are concerns it could also be misused, concerns which should carry scant weight to the parent of a sick child. This experiment is purported to be the first effort to treat a human condition with CRISPR. It’ll be interesting to see what happens.
“Hemophilia B is a terrifying disease. The livers of those suffering from the genetic disorder fail to produce a key protein called Factor IX, which is responsible for clotting blood. Without this protein, they’re at constant risk of uncontrollable bleeding, including internally. However, a pair of researchers believe that their novel gene therapy could permanently cure the disease. To that end, the team of Michael Holmes and Thomas Wechsler from Richmond, California’s Sangamo biopharmaceuticals, have announced that the world’s first in-patient gene-editing therapy targeting these faulty genes will commence next week. The procedure leverages CRISPR-9 gene-editing techniques wherein scientists snip out a section of DNA and insert other strands in its place.”
5) Breakthrough of the Year: CRISPR makes the cut
Science Magazine finally nominated CRISPR its scientific breakthrough of the year – after all it is almost certainly a Nobel Prize winning advance. The article provides a bit of a history of CRISPR and touches upon some of the controversy.
“It was conceived after a yogurt company in 2007 identified an unexpected defense mechanism that its bacteria use to fight off viruses. A birth announcement came in 2012, followed by crucial first steps in 2013 and a massive growth spurt last year. Now, it has matured into a molecular marvel, and much of the world—not just biologists—is taking notice of the genome-editing method CRISPR, Science’s 2015 Breakthrough of the Year.”
6) Inside Netflix’s Plan to Boost Streaming Quality and Unclog the Internet
Netflix is a major source of Internet traffic (see item 7) and anything it can do to lower the bandwidth it needs in order to deliver an acceptable image will benefit its customers, Internet Service Providers, and Netflix itself since it will be able to supply more customers with the same amount of infrastructure. Unsurprisingly, they have discovered that different forms of content require different compression schemes for optimal results and they are essentially tailoring the compression system to the content. I find that Netflix quality is actually better than that I get over my satellite dish where supposed HD content contains all kinds of compression artefacts.
“Over the past few months, Netflix has dared some of its employees in its Los Gatos offices with a special kind of challenge: Two TVs mounted side-by-side were playing the same TV show episode. One was coming straight from Netflix’s existing service, the other was based on a new bandwidth-saving technology that the company has been working on for four years. Anyone capable of pointing out the difference could win a bottle of champagne. But in the end, even eagle-eyed employees had to give up, and the prize went unclaimed.”
7) Streaming Video Now Accounts for 70 Percent of Broadband Usage
This is not a surprising result and content providers should rejoice. Time was people who wanted to watch movies or TV shows had to pirate the content through downloads, typically torrenting. The rise of streaming video providers like Netflix and Amazon, along with Over The Top delivery by broadcasters means torrenting is largely being displaced by paid ac cess to content.
“If you’re reading this site (or if you work at a giant TV and broadband provider), the odds are you know that already. But it’s always useful to see it in a chart, so here you go. Here’s the latest breakdown from broadband services company Sandvine of “fixed access” — for the purposes of this piece, read it as “home broadband” — Internet usage during peak evening hours. That big red bar in the middle is the one to focus on. It shows you that “real-time entertainment” — streaming video and audio — account for 70 percent of the Web traffic coming to your house:”
8) The Lure Of Large Drives
I remain confident the HDD industry will undergo disruption over the next 18 to 24 months. I believe that once the price of 250GB SSDs get to around the $50, virtually all laptops (rather than just the most expensive ones) will ship with an SSD rather than a larger HDD. A counter argument is that, since Internet traffic continues to grow, and all that data needs to be stored, enterprise demand will make up the difference. I disagree: while traffic continues to grow, much of that growth is streaming and, for the most part, you don’t store streamed content on the receiving end. Furthermore, cloud technologies makes much more efficient use of storage, which will mitigate the impact on demand.
“The amount of digital data being created and stored is growing rapidly, by some estimates by over 40% annually. This rapid growth in stored digital content is leading to large data repositories. These repositories need a lot of storage in a limited space. They must also store this content cost effectively while still providing the performance that those who want to access this data need. While solid-state storage such as SSDs are increasingly being used for high performance applications, they are more expensive on a $/TB basis compared to hard disk drives and magnetic tape. Magnetic tape is used in libraries that require a robot to get tape cartridges and bring them to drives where they can be written or read. This takes time, so only infrequently used data is generally stored on tape.”
9) Consolidation’s Aftermath Why the latest round of acquisitions is causing angst in the semiconductor industry.
The article discusses the remarkable pace of consolidation in the semiconductor industry. Ultimately I figure there will be a relatively small number of large players as few start-ups are likely to survive long enough to grow to any size. Despite what the article suggests, this is a very bad thing for most of the suppliers to the industry as the larger players will have significant power and consolidation of engineering resources will reduce the opportunity for sales.
“Consolidation is not a new trend in the semiconductor industry, but the pace and size of the acquisitions in the past year are unparalleled. Spurred by cheap capital and the expected rise of interest rates at the end of this year, companies have gone on a buying spree. The argument is that acquisitions—and subsequent spin-offs or sales of non-strategic assets—allow companies to quickly strengthen their position in core markets and position themselves for new ones that have opened, or which are expected to open, as a result of increased connectedness with the Internet of Everything.”
10) Less than a perfect 10 Microsoft’s Windows 10 is failing to catch on
This article paints a picture in contrast to my view that Windows 10 will be a stunning success. I find the OS to be stable, fast, and easy to use. I don’t understand the comment that 9% penetration in 6 months is somehow comparable to 14% for Windows 8/8.1 after several years. Enterprise users always take their time before adopting a new OS, and consumers will eventually end up with Windows 10 as they buy new PCs.
“AFTER an initial flurry of people upgrading their personal computers to Windows 10, the latest and greatest version of Microsoft’s popular operating system, the migration seems to be running out of steam—despite a roll-out that was the most carefully managed in the company’s 40-year history. Launched in late July, after nine months of public testing, Windows 10 is available free (until next July) to anyone running Windows 7 or Windows 8.1 on their computers. Despite this unprecedented generosity from Microsoft, Windows 10 accounts for only 9% of computers used to surf the web, says Net Applications, an internet analytics firm based in Aliso Viejo, California. By contrast, six-year-old Windows 7 runs on over 56% of computers. Even the disastrous Windows 8/8.1 has a 14% share, while older versions still (mainly Windows XP) account for over 12%. For the record, Apple’s OS X claims 7% and open-source Linux 1.6% of total users.”
11) US to Open Large-Scale Metal 3D Printing Facility with Norsk Titanium
This is a great example of the sort of impact 3D can have on an industry. Rather than taking a very large piece of titanium and machining it down, the system uses a welding technique to build up a rough casting which is then finished by machining. This results in much less waste (even though titanium cutting can be recycled, it ain’t easy or cheap) and the process can probably be sped up a lot by using concurrent fabrication. Thanks to my friend Ted Conrod of Focus Asset Management for this item.
“There are a number of 3D printing facilities across the US, including Stratasys’ Direct Manufacturing and GE’s Alabama plant, dedicated to their 3D printed LEAP fuel nozzles. Apparently, however, Norway’s Norsk Titanium AS (NTi) doesn’t believe that any of these are quite industrial-grade. To push 3D printing into a mainstream manufacturing tech, the titanium 3D printing company plans to open a 200,000-square-foot plant that they deem the “world’s first industrial-scale 3D printing facility”.”
12) Revolutionary steel treatment paves the way for radically lighter, stronger, cheaper cars
I don’t know how real this is, however, there is a publicly available report purportedly produced by a legitimate lab (www.dtic.mil/get-tr-doc/pdf?AD=ADA588144) run by the US Military for use of the metal in armor. Unfortunately I don’t know enough about metallurgy to know what the report actually says. Nevertheless if you have an interest in novel materials it might be work looking in to.
“In Flash 1500 energy absorbing crush in this story’s lead image, the bends are twice the strength of the DP780 cans in cars today. Another major manufacturer “that makes 10 million vehicles per year,” according to Cola, tested Flash-processed steel on a structural/safety component of a car that is 3 mm thick and 3 lb (1.4 kg) in weight in its current form. Using the flash treatment, a part was created that weighs 2 lb (0.9 kg) at 2 mm thick, and passes all the same tests – and the OEM estimated it could be made at a cost savings.”
13) LTE-U, WiFi Backers Wrangle With FCC Over Sharing Spectrum
I tend to view spectrum shortage as somewhat manufactured – after all, Europe somehow manages to serve a similar population as the US in about 40% of the area. Nevertheless, spectrum is considered valuable and large economic interests are keen on exploiting whatever they can, even if that required stomping on other uses if they can get away with in. The problem with unlicensed applications is that the economic interests are diffuse and for the most part can’t afford the lobbyists to defend their turf. The involvement of Microsoft and Google might shift the tide.
“The other unlicensed shoe has dropped and stirred confusion as it makes its first bounce. At the end of October, a group of cable companies and big tech companies including Microsoft and Google had a meeting with Federal Communications Commission Chairman Tom Wheeler in which they complained about non-WiFi use of unlicensed spectrum. In their Ex Parte filing after the meeting, the attorneys representing those companies revealed the contents of their discussion. What the folks in Big Cable and Big Software are complaining about is that cell phone companies might start using the same unlicensed spectrum they currently use for WiFi for another technology, a form of LTE wireless technology that works on unlicensed frequencies.”
14) Philips Hue blocks 3rd party lights
Although I don’t really see the point of controlling lightbulbs over the Internet, Philips has set itself up as an early leader in IoT. They use a hub which actually connects to the network, to control a ZigBee mesh network of devices. Philips even worked to convince hobbyists to develop applications exploiting the hub. Last week they decided to essentially disable all non-Philips products from “their” network, resulting in outrange among that very community. Apparently the backlash had an effect http://www.cnet.com/au/news/philips-hue-reverses-course-will-continue-to-work-with-third-party-bulbs/
“Philips Hue was one of the first to get smart lights accepted by the mainstream. Their Zigbee-based hub is rock solid, never crashes, great API and worked with other Zigbee light bulbs too. They are a bit expensive but the platform was worth every penny, till now. Yesterday a thread on /r/homeautomation published that Philips Hue now blocks all but their own bulbs and those of “friends of Hue”. I have been able to confirm this in the Philips Hue FAQ (Update Dec 14: they have removed the entries – mirror here):”
15) New mass spectral imaging instrument maps cells’ composition in 3-D at more than 100 times higher resolution
This is another scientific breakthrough I don’t fully understand but which sound pretty impressive. It is kind of sad that they have to reference combating “bioterrorism” as a potential application but I guess that is what happens when a nation is run off fear.
“A one-of-a-kind mass spectral imaging instrument built at Colorado State University (CSU) lets scientists map cellular composition in three dimensions at a nanoscale image resolution of 75 nanometers wide and 20 nanometers deep — more than 100 times higher resolution than was earlier possible, according to the scientists. The instrument may be able to observe how well experimental drugs penetrate and are processed by cells as new medications are developed to combat disease, customize treatments for specific cell types in specific conditions, identify the sources of pathogens propagated for bioterrorism, or investigate new ways to overcome antibiotic resistance among patients with surgical implants, according to professor Dean Crick of the CSU Mycobacteria Research Laboratories.”
16) New microscope creates near-real-time videos of nanoscale processes
There must had been a microscopy conference or something because this is the second important sounding microscopy breakthrough I read about over the past couple weeks. Atomic force microscopes can produce incredibly high resolution images however they have tended to be quite slow. This approach speeds things up a lot, which allows the creation of animations of relatively fast moving reactions. I don’t think atomic force microscopes can be used on living tissue, however.
“State-of-the-art atomic force microscopes (AFMs) are designed to capture images of structures as small as a fraction of a nanometer — a million times smaller than the width of a human hair. In recent years, AFMs have produced desktop-worthy close-ups of atom-sized structures, from single strands of DNA to individual hydrogen bonds between molecules. But scanning these images is a meticulous, time-consuming process. AFMs therefore have been used mostly to image static samples, as they are too slow to capture active, changing environments. Now engineers at MIT have designed an atomic force microscope that scans images 2,000 times faster than existing commercial models. With this new high-speed instrument, the team produced images of chemical processes taking place at the nanoscale, at a rate that is close to real-time video.”
17) New software watches for license plates, turning you into Little Brother
It is sort of surprising this hasn’t been through of before: license plate reading is simply an application of Optical Character Recognition (OCR) applied to a moving target. I can’t really see a consumer application however it is easy to imagine this software might be adapted for use in parking lots or security checkpoints as the cost will be so low.
“For years now, specialized LPR cameras have been used mounted in fixed locations or on police cars. These devices scan passing license plates using optical character recognition technology, checking each plate against a “hot list” of stolen or wanted vehicles. The devices can read up to 60 plates per second and typically record the date, time, and GPS location of any plates—hot or not. With this new open-source software, anyone can freely and easily create their own hot list.”
18) Vehicle Safety Ratings Will Soon Include Marks for Crash Avoidance Tech
This is a fantastic initiative: rather than simply listing how survivable a collision would be with a vehicle there should be a rating for how well it can avoid collisions. I predict – and hope for – the introduction of basic crash avoidance standards for light vehicles in the near future. Just like crash safety test and other safety related standards, cars should be required to have things like autobrake, lane change warnings, etc.. This will rapidly increase adoption and drive prices down – though these systems are already becoming quite affordable.
“U.S. regulators want automakers to make crash-avoidance technologies and similar safety systems standard features in vehicles. That is why the National Highway Traffic Safety Administration (NHTSA) has announced plans to overhaul its vehicle safety ratings to acknowledge the presence or absence of such safety technologies. The proposal also includes language meant to reward automakers for including autonomous vehicle technology in the near future. Today’s vehicles do not require crash-avoidance technologies in order to win a coveted four- or five-star rating from NHTSA. But the 8 December announcement signaled the agency’s intent to raise the bar. Starting with the 2019 model year, cars earning the highest safety ratings will have to be equipped with advanced technologies that help protect drivers, passengers, and pedestrians.”
19) Drone owners must register with FAA, starting December 21
This is a direct result of idiots misusing drones and endangering property, people, privacy, and aviation in general. Drones over a certain size must be registered and display a registration number on their craft. This will make it easier to charge the idiots who do stupid things with the machines and will not present a significant burden to legitimate users with an IQ over 80.
“The Federal Aviation Administration said Monday that US residents must register hobbyist drones by February 19 at its drone registration website. Registration opens December 21 and is free through January 20, the agency said. After that, the FAA will charge $5 for registration. Accepting the guidance of an advisory panel, the FAA said registration is required for any hobbyist drone weighing between 0.55 pounds and 55 pounds. That weight limit includes even relatively small drones like the $549 Parrot Bebop 2, not just the serious $1,000 hobby-oriented models from companies like DJI.”
20) Tech and Banking Giants Ditch Bitcoin for Their Own Blockchain
Much of the excitement over bitcoin has been over potential use as a virtual currency, at least by neo-libertarians. This will never happen on a large scale because it makes money laundering and tax avoidance too easy. Nevertheless, the real value is the underlying technology (blockchain secure distributed ledger) though it apparently has some weaknesses. This article discusses the establishment of an open source project to develop, adapt, and enhance that technology. Open source is necessary for this sort of project in order to ensure bugs and weaknesses are quickly dealt with.
“Several major companies from across both the technology and financial industries—including IBM, Intel, and Cisco as well as the London Stock Exchange Group and big-name banks JP Morgan, Wells Fargo, and State Street—have joined forces to create an alternative to the blockchain, the global online ledger that underpins the bitcoin digital currency.
Overseen by the not-for-profit Linux Foundation, this open source project aims to build blockchain-like technology that can bring a new level of automation and transparency to a wide range of services in the business world, including stock exchanges and other financial markets.”