The Geek’s Reading List – Week of March 11th 2016
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) Snowden: FBI’s Claim That It Needs Apple to Unlock Phone is B.S.
Whether or not Snowden has direct knowledge of Apple’s security systems this is almost certainly true. Hacking an encrypted file is hard, but having access to a device secured by a 4 digit pin should not be that hard. iPhones and smartphones in general are not mysterious black boxes that nobody understands, they are well documented machines. If you have the machine in hand and the requisite knowledge you should be able to reverse engineer the software and rewrite it or otherwise spoof the software. Apple’s tactics are nothing more than theatre to give the illusion their phones are secure.
“NSA whistleblower Edward Snowden believes that Apple engineers are not the only ones who can unlock the San Bernadino killer’s iPhone. Snowden said yesterday that the FBI could have bypassed the phone’s auto-erase function without help, The Intercept reported. “The FBI is arguing in court that Apple has the ‘exclusive technical means'” of accessing the iPhone’s data, Snowden said via video link from Moscow at a conference organized by Common Cause. “Respectfully, that’s bullshit.” Snowden stopped short of explicitly supporting Apple, which is resisting a court order to unlock the phone for the FBI’s investigation. But he later Tweeted a link to an ACLU blog post that details how the FBI could crack the phone’s encryption.”
2) Good news — fintech could disrupt finance
Good news – unless you are in the banking business. While fintech has the potential to improve banking efficiency, this is a highly regulated industry and, in many ways, not a very competitive one. There is as much a chance that fintech will simply lead to more profit for the banks than lower costs for businesses and consumers.
“Why might one hope that new financial technology, or “Fintech” as it is known, will transform these businesses? The answer, especially for banking, is that they are currently not done very well. Banking seems inefficient, costly, riddled with conflicts of interest, prone to unethical behaviour, and, not least, able to generate huge crises. In a recent speech on the possibilities for a financial revolution, Andrew Haldane of the Bank of England notes that, astonishingly, the unit cost of US financial intermediation seems to be unchanged over a century (see chart). Moreover, income from finance simply rises and falls with the value of assets. That suggests a huge amount of rent-Why might one hope that new financial technology, or “Fintech” as it is known, will transform these businesses? The answer, especially for banking, is that they are currently not done very well. Banking seems inefficient, costly, riddled with conflicts of interest, prone to unethical behaviour, and, not least, able to generate huge crises. In a recent speech on the possibilities for a financial revolution, Andrew Haldane of the Bank of England notes that, astonishingly, the unit cost of US financial intermediation seems to be unchanged over a century (see chart).”
3) Why I think Tesla is building throwaway cars
I figure Teslas are disposable because of the inherently short life and high cost of the battery – an issue this blogger seems to disagree with in his other posts. (Frankly I’d like to see data which shows EV batteries are long lived in direct contradiction to all we know about batteries before I’ll believe it.) His position is that Tesla simply doesn’t provide the information to enable 3rd party repairs, that the costs of repairs are quite high, even when in warranty, and so on. In the incredibly unlikely event Tesla ever becomes a real car company (about as unlikely as them being cash flow positive) these would become important issues.
“It matters because Tesla would like people to believe they’re making very long lived cars that will last nearly forever. It’s apparently been stated in some conference or another that Tesla has a battery pack that has done the equivalent of 500k miles in a lab somewhere, and “low maintenance” is consistently listed by owners as a reason they purchased one. Right now, almost all the Model Ss driving around are under the factory warranty, and I’d wager a large number have the extended warranty (though see above for my opinion of it). In another 4 years, the first wave will be leaving the extended warranty coverage, and then people will have to pay the full costs to maintain the car. Which, unless something changes, involves going to a Tesla Service Center and paying whatever they want, since you can’t get parts other places, and even if you do get the parts, you can’t find out how to install them. And, at least some of them apparently involve firmware updates to make things work, which you can’t get the software to do. It’s pretty well locked down, and you simply don’t have any options. There are no independent shops you can use either.”
4) Why Solar Giant SunEdison Might Be Doomed
Hardly a day goes by where I don’t read about how solar power is “revolutionizing” the grid (meant in a positive way). In most cases these predictions are misdirection (referring to installations rather than power produced, ignoring subsidies, etc.). Frankly solar would be a lot more credible if not for its ability to destroy massive amounts of investor money despite equally massive subsidies. If SunEdison, SolarCity, and others were viable they’d be profitable – and they wouldn’t need all those subsidies.
“Shares of SunEdison were up more than 10 percent Tuesday after the cancellation of the solar giant’s disastrous acquisition of residential solar developer Vivint. The $2.2 billion deal fell apart after billionaire hedge fund manager David Tepper sued to block it—but the real cause was less Tepper’s objections and more SunEdison’s overall financial disarray. Despite the bump in stock price, the troubled company, based in Saint Peters, Missouri, is far from turning itself around. SunEdison, which has seen $10 billion in market value evaporate over the last year, has been justifiably called “the biggest corporate implosion in U.S. solar history,” as its strategy of acquiring seemingly every solar power company in sight hasn’t panned out. Under CEO Ahmad Chatila, the company has spent billions to acquire solar developers around the world, piling up nearly $12 billion in debt.”
5) Computer Science Expert: Artificial Intelligence Could Replace Half World’s Workforce In Next 30 Years
Unlike most commentators at least this guy has some direct knowledge of the field. It is hard to believe that we will have “machines will be able to outperform humans at almost any task” when all we have are machines capable of doing rote tasks better than the average worker (but usually not as good as the best). Spotting a bad bun flying down a conveyor belt is the sort of thing computers are good at, but they are not great at solving problems. Many factories are already highly automated and the workers remaining are either highly specialized or retained because of their flexibility. Since there are no intelligent machine (AI is not the same as human intelligence) speculation regarding the capabilities of an intelligent machine is just that: speculation.
“Artificial-intelligence (AI) machines could put one-half of the human workforce out of their jobs within three decades, a computer scientist told colleagues at an American Association for the Advancement of Science meeting in Washington. Echoing physicist Stephen Hawking’s and technology titan Bill Gates’ warnings last year, Moshe Vardi said AI could mean the end of the human race as we know it, the Guardian reported Saturday. “We are approaching a time when machines will be able to outperform humans at almost any task,” said Vardi, a professor of computational engineering and the director of the Ken Kennedy Institute for Information Technology at Rice University. “I believe that society needs to confront this question before it is upon us: If machines are capable of doing almost any work humans can do, what will humans do?””
6) How robots will kill the ‘gig economy’
Concern about robots taking our jobs has reached a fever pitch. It may be true that when autonomous vehicles become available (think 20 years rather than 5 years) logistics will be transformed and that will displace labor. It will take generations to change out the fleet and it will create a need for jobs in other areas. Automation has been going on for a couple hundred years and it has never led to the sort of mass unemployment its detractors have predicted for the past couple hundred years.
“The so-called gig economy will cease to exist in 20 years, according to a new report from venture-backed start-up Thumbtack, an online marketplace that helps skilled workers find customers. The study predicts that logistics companies — from start-ups like Uber to tech giants like Amazon — will soon replace drivers and delivery workers with autonomous vehicles and drones. Highly skilled workers, such as lawyers and accountants — no longer guaranteed jobs at big firms — will be the new gig economy workers, the study finds.”
7) Intel’s blisteringly fast Optane SSD tech will be compatible with MacBooks
While Apple often does adopt certain technologies early, most of its PCs are a generation or two behind the curve. Intel is in the business of making and selling chips and it wants to have as many Optane compatible products in the market as possible at launch. The assumption Apple might be an early adopter is a reasonable one however it makes no sense for Optane to be hidden behind an antediluvian SATA interface which is already much slower than traditional SSDs need.
“The first Optane products will likely be SSDs and reach enthusiasts’ PCs next year, then spread to other desktops and mobile products. Optane memory DIMMs, which can be plugged into existing memory slots, are also coming. Some Windows laptops also have NVMe storage, but most still rely on the older and slower SATA interface. Enthusiast desktop users like gamers are early adopters of new technology, and many will likely move over to Optane. Optane products will be initially based on Intel’s Skylake architecture. If Intel ships memory DIMMs, they will need to be compatible with the DDR3/4 DRAM bus that is in most PCs today.”
8) Insight: How a hacker’s typo helped stop a billion dollar bank heist
Oddly enough the headline misses the $81M the hackers made away with. I may be old school but $80M of fully laundered cash is a good pay day. It is remarkable that the system for verifying large bank transfers is so micky mouse that somebody can get away with this. Isn’t even $80M worth a phone call?
“A spelling mistake in an online bank transfer instruction helped prevent a nearly $1 billion heist last month involving the Bangladesh central bank and the New York Fed, banking officials said. Unknown hackers still managed to get away with about $80 million, one of the largest known bank thefts in history. The hackers breached Bangladesh Bank’s systems and stole its credentials for payment transfers, two senior officials at the bank said. They then bombarded the Federal Reserve Bank of New York with nearly three dozen requests to move money from the Bangladesh Bank’s account there to entities in the Philippines and Sri Lanka, the officials said.”
9) Bank of England looks into ‘centralised’ bitcoin alternative, RSCoin
A number of governments have looked into making their own digital currency. If it worked out this could lead to s sort of universal credit card/debit card/PayPal etc. Unlike Bitcoin, which bypasses regulatory oversight, a government sanctioned cyber currency would allow the same degree of confidence in terms of financial transfers while retaining anti-money laundering rules, preventing fraud, etc..
“A recent MIT Technology report claimed that the UK’s central bank had reached out to university researchers to help it create a cryptographically secure digital currency. The resulting system has now been revealed, and is named RSCoin. The RSCoin system, developed by Sarah Meiklejohn and George Danezis, employs cryptography to obviate counterfeiting and tampering. Unlike other mechanisms, the digital ledger used by the new cryptocurrency is handled exclusively by a central body. The report explained that RSCoin will only be made accessible to central bank users in possession of a specific encryption key.”
10) Quantum Computer Comes Closer to Cracking RSA Encryption
A lot of the discussion about quantum computing centers around things like artificial intelligence but the real application will be in “difficult” problems such as encryption, which is often based on factoring large numbers. Progress is being made, albeit slowly, as this work shows. The researchers have managed to develop a 5 bit quantum computer which can factor numbers up to 15. That may sound trivial but it seems that their approach is scalable.
“Much of the world’s digital data is currently protected by public key cryptography, an encryption method that relies on a code based partly in factoring large numbers. Computers have traditionally struggled to do the calculations based on factoring, so data transferred in this way remains secure. On Tuesday, two pioneers of this method, Whitfield Diffie and Martin E. Hellman, won the 2015 Turing Award, the highest honor in computer science. The thrust of their work underpins the most widely used encryption method in the world called the RSA algorithm.”
11) The Fire Monkey & the Telco Winter
Canada’s incompetent (and likely corrupt) regulators recently turned down the prospect of MVNOs for fear of the impact they would have of incumbent operators. After all, you can’t have the most expensive mobile rates in the world unless you look out for the interests of a bloated oligopoly. Meanwhile the Chinese government has taken steps to do the exact opposite and drive prices down. It’s almost like Chinese regulators are less incompetent or corrupt.
“Now the banquets and toasts are over, China’s Year of the Monkey is underway. Specifically, it’s the Year of the Fire Monkey which, according to tradition, is ambitious and adventurous. That might well describe the last 18 months in Chinese telecom — by local standards, at least, it’s been a lively ride. For one thing, consumers now have the choice of some 40 MVNO brands. With total subs topping 20 million, the MVNOs are starting to get some scale. In a parallel move in fixed-line broadband, the government has invited private firms to take part in trials. Consumers are getting a better deal, too, thanks to some determined jaw-boning from officials, forcing operators to cut data charges and boost access speeds.”
12) Amazon gadget hijacks owner’s heating after hearing radio report
This item struck a chord with me since we named our newest kitten “Google”. Unfortunately, when he is being called all manner of Android devices in our house now perk to attention for further voice commands. Other than that, when it works, voice command can be a safer alternative especially while driving.
“The latest group of gadget fans to discover the downside of talking to their hardware are owners of Amazon’s Echo, the all-singing, all-dancing home automation device produced by the Seattle-based retailer. Hiding inside Echo is Alexa, the (inevitably gendered) personal assistant: simply ask Alexa to perform a task, from playing your favourite song to dimming the lights in your smart home, and she will. But she’s not very picky about who’s giving the commands, as some listeners of American radio show Listen Up found to their cost. Rachel Martin, the host of the NPR-produced show, reported that a section covering the Echo managed to interact with the devices in the homes of several listeners.”
13) Cord-cutting more than doubled in 2015: Pay-TV lost 385K customers, Leichtman tally finds
Cord cutting is a trend among consumers to disconnect from cable services and rely on Netflix and other streaming alternatives. Cord cutting (disconnecting from cable) and cord-nevers (never having had cable) present a challenge for video distributors who have used their monopoly positions (typically supported by regulatory barriers) to force subscribers to pay for content they have no interest in watching. This is probably a secular trend as broadband speeds increase and more streaming services become available. It isn’t all bad news for the entertainment industry either as demand for quality content will probably rise.
“Despite a preliminary tally of publicly traded pay-TV companies that revealed only moderate video subscriber attrition last year, a more comprehensive count conducted by Leichtman Research found that the industry lost a significant number of customers, nearly 385,000. An accounting conducted by FierceCable on Feb. 22 featuring seven leading publicly traded operators found video sub losses at only around 44,000 for the year. … Leichtman’s study, which accounts for 95 percent of the market, also said that the combined privately held forces of Cox Communications, Bright House Networks and Suddenlink lost 153,400 video subscribers.”
14) Opera becomes first big browser maker with built-in ad-blocker
This announcement has probably caused shockwaves in the online ad industry. Opera has a 3.1% market share compared to Google Chrome’s 47.5% but the popularity of adblocking and the fact pages do seem to load a lot faster under Opera when adlocking is enabled may result in market share gains. If you want to download the browser and try it out you can get it at https://www.opera.com/developer?utm_medium=sm&utm_source=desktop_blog&utm_campaign=adblock_feature_release_news. Oddly enough, it seems you have to go to a few pages before the option of locking is enabled, and thereafter you can block or unlock on a URL by URL basis.
“Norwegian company Opera is introducing a new version of its desktop computer browser that promises to load web pages faster by incorporating ad-blocking, a move that makes reining in advertising a basic feature instead of an afterthought. Faster loading, increased privacy and security and a desire for fewer distractions are behind the growing demand for ad-blockers. However, their popularity is cutting into the growth of online marketing for site publishers and corporate brands, who rely on reaching web and mobile users to pay for their content rather than restricting access to paid subscribers. … Opera said it can cut page-loading times by as much as 90 percent by eliminating the complex dance that occurs behind the scenes in a user’s browser as various third-party ad networks deliver promotional messages to users.”
15) Miniature fuel cell to keep drones aloft for over an hour and phones charged for a week
Revolutionary fuel cells are nothing new (though their commercialization is quite rare). When I saw this headline I figured somebody had built a tiny PEM fuel cell which could run off hydrogen and generate a small amount of power. Silly me: this is a high temperature fuel cell, meaning it operates at a temperature in line with the melting point of many aluminum alloys, so it is not something you’d see in a smartphone unless you kept your smartphone in an asbestos pouch.
“Referred to as a third-generation fuel cell, the Postech team’s device boasts a simple structure and does not have any problems with corrosion of loss of the elctrolyte. It showed a peak power density of around 560 mW per cubic centimeter at 550° C (1,022° F) and maintained this power density during rapid thermal cycling. With this sort of power density and reliability, the team suggests the device may offer an alternative to lithium-ion batteries in a range of mobile electronics, such as smartphones and laptops. At just 78 mm2 per cell in size, the Postech device is also claimed to have fast on and off times similar to lithium-ion batteries and superior power densities that would allow smartphones that would only need to be charged once a week.”
16) OCP Summit: Google joins and shares 48V tech
The Open Compute Platform is an initiative started by Facebook to open source hardware and related software for the data center. Companies like Facebook have such massive operations that they can afford to design and build their own hardware. Open sourcing makes it more likely companies like Foxconn will produce the gear at their traditional negligible margins. That will open purchases to anybody, even companies which do not maintain large data centers. If momentum continues to build, this will be negative for the likes of Cisco and other vendors.
“Hölzle said Google’s 48V rack specifications had increased its energy efficiency by 30 precent, through eliminating the multiple transformers usually deployed in a data center. Google is submitting the specification to OCP, and is now working with Facebook on a standard that can be built by vendors, and which Google and Facebook could both adopt, he said. “We have several years of experience with this,” said Hölzle, as Google has deployed 48V technology across large data centers.”
17) Stem cells restore sight in rabbits and humans
Stem cell therapies, along with CRISPR, will likely lead to significant improvement in medical outcomes over the next decade or so. What is interesting about this article is that the therapy has been actually used on people (i.e. babies) to restore sight.
“The two teams each used adult stem cells to regenerate parts of the eye and restore sight to the blind. One team, from Cardiff University in the UK and Osaka University in Japan, grew a variety of cells, using one particular type to cure induced blindness in lab rabbits. The second team, from the University of California, San Diego School of Medicine and Shiley Eye Institute alongside colleagues in China, generated human lens cells, using them to restore sight to human infants with congenital cataracts. Both studies were published this week in the journal Nature.”
18) Bionic Fingertip Gives Amputee a Sense of Touch
One of the limitations of prosthesis is the lack of feedback which has the effect of significantly limiting the ability to control the limb or hand. A similar challenge exists in robots which use crude force sensors for limited feedback. This experiment has given an amputee a limited sense of touch by hooking a sensor directly into his nervous system. It may not be much but it is a big step forward.
“Dennis Aabo Sørensen became the first amputee able to recognize different textures using a bionic finger that was surgically connected to nerves in his upper arm. A machine controlled the movement of the fingertip over different pieces of plastic engraved with different patterns, smooth or rough. As the fingertip moved across the textured plastic, the sensors generated an electrical signal. This signal was translated into a series of electrical spikes, imitating the language of the nervous system, then delivered to the nerves. Sørensen could distinguish between rough and smooth textures 96 percent of the time.”
19) Bad news: Low-carbon air travel isn’t very likely
Electric airplanes were in the news recently and as I’ve pointed out, a Lear jet would require a battery the size and weight of a fully loaded 767, so don’t hold your breath. This article takes a walk down memory lane at other “carbon free” air travel options and what happened to them.
“Fortunately, there’s a groundbreaking techno-fix just around the corner, waiting to usher in the clean airplane of the future, right? Wrong. According to these researchers, that airplane is a false hope that we’ve been clinging to for more than 20 years, and here’s how they found out: First, the team compiled a list of 20 efficiency-boosting technologies hyped by the aviation industry between 1994 and 2013. These potential game-changers broke down into three broad categories: alternative fuels like hydrogen, algae, and this stuff that you’ve probably never heard of; new engines that could, for example, run on sunlight or electricity; and “airframe” improvements that would make planes lighter and more aerodynamic.”
20) HP Inc. CEO Dion Weisler: HP is betting big on 3D printing
It is hard to take HP’s plans seriously as they have a remarkable ability of snatching defeat from the jaws of victory. Nonetheless they do have impressive printing technology and they still plan to enter the 3D printing market sometime this year. It is unlikely they will “take on” injection molding with this new machine because, even though it may be 10x faster than other 3D printers, it would probably need to be 100x faster than that to replace molding. Nonetheless, a 10x faster machine, and one which can print colour and detail, could significantly broaden the market for 3D printing. A better video of their capabilities is here https://youtu.be/od863GF3WRk.
“Indeed, HP Inc.’s vision is to be a market leader in commercial manufacturing, solving the problems of quality and cost that have held the industry back to date. “Today, 3D printing is like a $5 billion or $6 billion market. It’s not going to change the trajectory of the business. But what will is when we can start tapping into the $12 trillion injection molding market. We get to democratize manufacturing with 3D printing,” he said. With its Multi Jet Fusion 3D printer, which is said to be ten times faster than any other 3D printer on the market, producing parts that are unbelievably dense with accuracy down to 21 microns (one tenth the size of a human hair), HP believes it can get the market to a “point of inflection”, where it will actually be more cost-efficient and effective to go to 3D printing rather than traditional injection molding.”