The Geek’s Reading List – Week of April 15th 2016

The Geek’s Reading List – Week of April 15th 2016

Hello,

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.

Brian Piccioni

 

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1)          Brain Implant Gives Paralyzed Man Functional Control of Arm

This is an impressive development and you should watch the video. The entire system is pretty clunky in its current incarnation but there is little doubt the technology will be significantly improved in form, cost, and function pretty quickly. This really gives hope to people with severe impairments.

“Six years ago, he was paralyzed in a diving accident. Today, he participates in clinical sessions during which he can grasp and swipe a credit card or play a guitar video game with his own fingers and hand. These complex functional movements are driven by his own thoughts and a prototype medical system that are detailed in a study published online today in the journal Nature. The device, called NeuroLife, was invented at Battelle, which teamed with physicians and neuroscientists from The Ohio State University Wexner Medical Center to develop the research approach and perform the clinical study. Ohio State doctors identified the study participant and implanted a tiny computer chip into his brain.”

http://neurosciencenews.com/paralysis-brain-implant-arm-control-4044/

2)          The Internet of Things has a dirty little secret

It is not really that much of a secret: a lot of the investor pitches on IoT related devices focus around “big data” or tabulating and selling what goes on inside your house. I really would like to know what people who buy Nest cameras are thinking by supplying Google with streaming video of the inside of their homes. The challenge with these “big data” ideas is that since IoT companies rarely offer a full product suite, consumers will have a hodgepodge of systems and the data will be incomplete – and that presupposes the company remains in business long enough to have a significant user base. Being spied on, questionable security (see item 3 and 4) and the possibility expensive gadgets will be made useless when the vendor discontinues support are all good reasons for consumers to avoid this technology for now.

“Now the same is happening with your every day gadgets, but in a slightly more sinister, under the surface way. Companies want to internet-connect your entire house in order to collect more data on you. The opportunities are delicious for bloated internet companies: now a software company could know how warm your home is, what times of day are noisy, whether you have a pet, when you turn on your lights or if you listen to music while having sex. Smart devices are sold as a way to improve your life — and in many ways, they do to an extent — but it also means those gadgets are incredible troves of data that could eventually turn into Software-as-a-Service money makers, just like Nespresso did to coffee.”

https://medium.com/internet-of-shit/the-internet-of-things-has-a-dirty-little-secret-28bce2d412b2#.fpf0p2gx7

3)          Could massive consumer fear kill IoT?

Security is one of two major issues with Internet of Things: few IoT companies are tech companies and fewer still have any expertise in security. Since many IoT products will be made in China, there can be no assurance they won’t come loaded with malware (see item 5). It is perfectly reasonable for consumers to “distrust” their connected devices and, frankly, I’m surprised the number isn’t higher. The other problem with IoT is that most devices stop functioning when the vendor discontinues active support as Google recently did with Revolv. This renders the respective gadgets worthless.

“A sizeable swath of the world’s wired population distrusts the Internet of Things (IoT) according to new study, raising concerns the technology’s consumer market growth could be seriously undermined. Computer Business Review reported on a recent global survey that found that 60% of consumers distrust connected devices, and an additional 11% find them of no benefit whatsoever. Additionally, 41% of global consumers said transparency is extremely important when considering IoT technology. The survey was done by Mobile Ecosystem Forum (MEF), a mobile ecosystem trade association, in association with antivirus software maker AVG.”

http://readwrite.com/2016/04/13/massive-consumer-panic-fear-kill-iot-pt4/

4)          Underwriters Labs refuses to share new IoT cybersecurity standard

The way you now a security standard is effective is to have it reviewed by as many experts as possible so UL’s decision to charge for the standard simply means the UL mark for IoT cybersecurity has exactly zero value. Regardless, software is frequently updated to fix bugs and therefore knowing a product has been blessed by UL or any other organization is pretty much meaningless. What is needed is a fully open IoT control protocol which can be inspected and improved by anybody. Unfortunately, IoT companies are all making a futile effort to establish their own proprietary system so it will take a while.

“UL, the 122-year-old safety standards organisation whose various marks (UL, ENEC, etc.) certify minimum safety standards in fields as diverse as electrical wiring, cleaning products, and even dietary supplements, is now tackling the cybersecurity of Internet of Things (IoT) devices with its new UL 2900 certification. But there’s a problem: UL’s refusal to freely share the text of the new standard with security researchers leaves some experts wondering if UL knows what they’re doing. When Ars requested a copy of the UL 2900 docs to take a closer look at the standard, UL (formerly known as Underwriters Laboratories) declined, indicating that if we wished to purchase a copy—retail price, around £600/$800 for the full set—we were welcome to do so. Independent security researchers are also, we must assume, welcome to become UL retail customers.”

http://arstechnica.com/security/2016/04/underwriters-labs-refuses-to-share-new-iot-cybersecurity-standard/

5)          Sophisticated Bribe Scheme Helped Crooks Whitelist Malware on Chinese Antivirus

That’s one way to do it, I guess. Rather than figuring out some complex security hole which might be patched, bribe developers to insert your malware into their applications (pretty much like Lenovo did for free). Then rely on the incompetence – itself possibly lubricated by cash – of an erstwhile reputable antivirus company to ignore the malware. This is most likely the tact used by security agencies so it gives you an idea how vulnerable systems might be. Regardless you have to credit the criminals for how they structured the crime to eventually steal AliPay credentials.

“Malware operators utilized this particular attack scenario in China, where they bribed the employees of an authorized gaming company in order to embed samples of their malware in the source code of one of their many mobile apps. The gaming company used its influence and past history to appeal to Qihoo 360, China’s biggest antivirus maker, to whitelist the apps, in order for Chinese users to be able to install them from third-party app stores without prompting them with malware warnings. According to security firm Check Point, Qihoo 360 appears to have trusted the mobile apps received from the gaming company and whitelisted them in its products without a thorough inspection.”

http://news.softpedia.com/news/sophisticated-bribe-scheme-helped-croocks-whitelist-malware-on-chinese-antivirus-502739.shtml

6)          Tesla faces tax credit puzzle

The EV industry lives and dies off subsidies despite questionable environmental benefits and I invite any EV vendor who disagrees is invited to reject subsidies. These subsidies largely benefit the wealthy as EV owners tend to have multiple vehicles and live in detached homes which can provide chargers. Tesla is particular is notorious for gaming the system, though, to be fair, without tax dollars the company would burn through money at an even greater rate. For example the “battery swap” sham was simply a mechanism to game California’s EV subsidy program. As this article shows the company has to carefully craft its shipment numbers to maximize the transfer of taxpayer money to it and its customers.

“Tesla said last week that 325,000 people had placed refundable $1,000 deposits on the Model 3, a sedan starting at $35,000 with a range of 215 miles and up, in its first week of orders. Because of a limit on the number of Tesla customers who can claim a $7,500 federal tax credit on electric-drive vehicles, it seemed some Model 3 buyers would come up empty-handed. Yet eagle-eyed customers and analysts noticed a loophole in the IRS rules for the credit: The $7,500 credit for electric-drive vehicles isn’t cut until the end of the quarter after the one in which a company hits its limit of 200,000 cars delivered in the United States.”

http://www.autonews.com/article/20160411/OEM11/304119915/tesla-faces-tax-credit-puzzle

7)          You can now customize your Tesla Model X online, smallest battery bumped to 75kWh

There is a completely unsubstantiated but widely held belief EV battery prices are dropping. You’d think that a measly additional 5 kWh (a 7%) increase in battery size would not result in a price increase if that was the case. The battery is the most expensive part of any EV and if you assume it is 40% of the parts cost, a 3% increase in price for a 7% increase in capacity is about right. At a minimum you can say battery prices do not appear to be dropping much. For the record, $3K for 5 kWh works out to a replacement cost of $45K for your short lived 75 kWh battery.

“Tesla has updated its website with the Model X Design Studio, the custom configurator where potential Model X buyers (and the merely curious) can check out all the different variations of the electric crossover. The base Model X now includes a 75kWh battery, up from 70kWh, which boosts the range from 220 to 237 miles. It also raises the price slightly, up to $83,000 from $80,000.”

http://www.theverge.com/2016/4/12/11414408/tesla-model-x-custom-design-studio

8)          Ottawa moving on high-speed charging stations for electric cars

Corporate welfare is the best kind of welfare – don’t just subsidize EVs for rich people, make sure they can drive their cars where ever they want. Even with the purported, albeit dubious, environmental benefits of EVs, what interest does any government have in promoting them? Shouldn’t it be the car companies which pay for charging stations and the electricity to power them? Perhaps governments might instead pay for mass transit infrastructure – a proven societal and environmental benefit, albeit one that only benefits the little people.

“The federal natural resources minister says there’s no time to lose in establishing a high-speed charging network for electric cars in Canada. That’s why Jim Carr is planning to ask the private sector for proposals this spring to develop a series of fast charging stations across the country. “This is not something that government can do alone, we have no intention of trying to do it alone,” said Carr in an interview with CBC News. “We think that this investment in electrical vehicles is a prudent way to proceed, but prudent doesn’t mean that you take your time. So we also understand that there’s urgency.””

http://www.cbc.ca/news/politics/electric-car-charging-infrastructure-1.3530793?cmp=rss

9)          Obama is urging the FCC to open up the cable box so you can watch TV how you really want

Set top box rentals are a massive source of income for cable companies: as noted in the article, consumers pay around $200/year to rent a box which probably cost less than $50 to make. It’s a bit like the “good old days” of the Bell monopoly when you were forced to pay rent equal to the cost of a new phone every year because nobody else was allowed to sell equipment which attached to “their” network. Not only are cable boxes a financial rip-off, they have extremely limited function meaning you need additional products to stream content, etc.. Opening the market would provide all kinds of opportunities for new businesses and help consumers to boot.

“President Obama is demanding better, cheaper versions of the cable boxes that millions of Americans use to browse their pay-TV channels, in hopes of enhancing competition. The Obama administration pressed for changes to the cable box in a letter to federal regulators Thursday night, according to multiple people familiar with the matter who spoke on condition of anonymity because the filing is not yet public. Obama’s move effectively throws the full weight of his office behind the Federal Communications Commission, which has taken the lead role in trying to crack open the market for TV set-top boxes. Millions of Americans pay, on average, more than $200 a year to rent their boxes from a cable or satellite provider.”

https://www.washingtonpost.com/news/the-switch/wp/2016/04/15/obama-is-urging-the-fcc-to-open-up-the-cable-box-so-you-can-watch-tv-how-you-really-want/

10)      Google Fiber wants to beam wireless Internet to your home

A major cost of deploying broadband is the “last mile” or the connection to customers. Based on the article it seems that Google is evaluating the same approach as Facebook, namely the use of 60 GHz spectrum for “last mile” connections. The advantage of 60 GHz is that there is ample spectrum up there but the drawback is that extreme high frequencies act pretty much the way light does requiring direct line of sight for the antenna pairs. This article has a bit more technical information http://arstechnica.com/information-technology/2016/04/facebook-plans-60ghz-gigabit-broadband-for-dense-urban-areas/

“In an interview with Re/code, Access CEO Craig Barratt, who oversees Fiber, said the company is working on connecting wireless towers to existing fiber lines, and that it is “experimenting with a number of different wireless technologies” to make that happen. It’s the first time Barratt or anyone at Alphabet has publicly talked about their interest in wireless. They’re not the only ones. Aereo founder Chet Kanojia says he wants to develop a similar system at his new company, Starry, and has promised to start testing it in Boston this summer. And yesterday Facebook announced an initiative to experiment with wireless Internet.”

http://recode.net/2016/04/14/access-google-fiber-ceo-interview/

11)      Cutting-edge theatre: world’s first virtual reality operation goes live

One of the valuable potential uses of virtual reality technology is in training. This article looks at the use of VR for surgical training. Unfortunately, besides the ability to look around the operating theater it is not clear from this particular application what the advantage of a VR style show would be over a simple high definition video feed. Thanks to Avner Mandelman of Acernis Capital Management for this item.

“On Thursday afternoon I witnessed the world’s first operation to be streamed live in 360-degree video, allowing medical students, trainee surgeons and curious members of the public like me to immerse themselves in the procedure in real time via the Medical Realities website. A one-minute delay was incorporated into the broadcast in case of any complications in the surgery.”

https://www.theguardian.com/technology/2016/apr/14/cutting-edge-theatre-worlds-first-virtual-reality-operation-goes-live

12)      Oculus Projects Two Month Delay for Some Early Rift Pre-orders

There is a tremendous amount of investor interest in VR technology. As somebody who suffers from “VR sickness” I admit to being a bit perplexed. Certainly I can see applications in gaming and training but a lot if going to depend on how good the software is. As 3D TV showed, the wow factor can dissipate pretty quickly. Oculus has been broadly hyped though I have noted increasing caution in online comments due to it being owned by Facebook. An rising chorus of people seem to believe, correctly in my opinion, that Facebook will simply use the device to gather more information on them.

“Unfortunately some more bad news for early adopters who pre-ordered the Rift and expected it to arrive on or around the March 28th launch date. The delay has now pushed expected shipping dates of some day-one pre-orders into late May and even June. Citing an “unexpected component shortage”, Oculus confirmed in the days following the March 28th launch of the Rift that there would be delays in shipping for some orders, and that customers could expect an update to their order status by April 12th. Today the company began updating the estimated ship dates of some orders, revealing the extent of the delay.”

http://www.roadtovr.com/oculus-rift-delay-shipping-pre-order-kickstarter/

13)      Driving to Safety – How Many Miles of Driving Would It Take to Demonstrate Autonomous Vehicle Reliability?

I have read articles which suggest self-driving cars will be on the road in about 5 years. Of course, a lot depends on what you mean by “self-driving car” and there is nothing to stop a car company from putting immature technology on the road in order to boost sales. Actual self-driving is at least 10 years, if not 20 years away and requires significant cost reduction of components such as LIDAR (which is keep to any safe self-driving car), improvements to software, and, as this item outlines a lot of testing to make sure the things are safe. Thanks to Ted Conrod of Focus Asset Management for this item.

“How safe are autonomous vehicles? The answer is crucial for developing sound policies to govern their deployment. One proposal to assess safety is to test-drive autonomous vehicles in real traffic, observe their performance, and make statistical comparisons to human driver performance. This approach is logical, but it is practical? In this report, we calculate the number of miles that would need to be driven to provide clear statistical evidence of autonomous vehicle safety. Given that current traffic fatalities and injuries are rare events compared with vehicle miles traveled, we show that fully autonomous vehicles would have to be driven hundreds of millions of miles and sometimes hundreds of billions of miles to demonstrate their safety in terms of fatalities and injuries.”

http://www.rand.org/pubs/research_reports/RR1478.html

14)      The CIA Is Investing in Firms That Mine Your Tweets and Instagram Photos

I can almost understand how a company would take money from the CIA. After all, jingoism is not unknown inside the tech industry. What I cannot understand is why any customer, especially “foreign” ones would want to do business with a company owned in part by the CIA, KGB, or Chinese Red Army.

“The latest round of In-Q-Tel investments comes as the CIA has revamped its outreach to Silicon Valley, establishing a new wing, the Directorate of Digital Innovation, which is tasked with developing and deploying cutting-edge solutions by directly engaging the private sector. The directorate is working closely with In-Q-Tel to integrate the latest technology into agency-wide intelligence capabilities.”

https://theintercept.com/2016/04/14/in-undisclosed-cia-investments-social-media-mining-looms-large/

15)      The Stupidity Of Installing Bloatware That No One Uses… And Everyone Hates

The interesting thing is that, at least with PCs is you can buy “signature edition” PCs direct from Microsoft which do not have bloatware and typically cost much less than PCs from Best Buy or other retail vendors. As a side note, Best Buy refuses to price match these PCs because the often much cheaper bloatware free PC has a slightly different product code from their own. Of course, I would not recommend you buy a PC from them, especially at a premium cost for a system loaded with bloatware.

“A new study from Strategy Analytics highlights what you almost certainly already know, that no one actually uses the crappy bloatware apps that Samsung puts on its phones. This shouldn’t be a surprise at all. But I actually wanted to highlight a different issue I’d noticed recently: which is that not only do people not use the bloatware apps, by making them both default and unintstallable, Samsung pretty guarantees that everyone hates those apps.”

https://www.techdirt.com/articles/20140423/15401627009/stupidity-installing-bloatware-that-no-one-uses-everyone-hates.shtml

16)      New debugging method found 23 undetected security flaws in 50 popular Web applications in less than an hour

Frankly I didn’t follow the technique but perhaps that is because I don’t know anything about Ruby on Rails. I can say that a lot of code I have seen recently, at least the stuff written in c, is a horrific mess with no comments, poor structure, and there is little good to say about it except, perhaps, that it seems to work most of the time. The problem may be that the mad rush to develop applications means a lot are developed absent any form of coding standards let alone competent programmers. It is scarcely surprising that code would be buggy.

“By exploiting some peculiarities of the popular web programming framework Ruby on Rails, MIT researchers have developed a system that can quickly comb through tens of thousands of lines of application code to find security flaws. In tests on 50 popular web applications written using Ruby on Rails, the system found 23 previously undiagnosed security flaws, and it took no more than 64 seconds to analyze any given program. The researchers will present their results at the International Conference on Software Engineering, in May. According to Daniel Jackson, professor in the Department of Electrical Engineering and Computer Science, the new system uses a technique called static analysis, which seeks to describe, in a very general way, how data flows through a program.”

http://techxplore.com/news/2016-04-debugging-method-undetected-flaws-popular.html

17)      Free Software Will Help Detect Faulty And Malicious USB-C Cables

The USB C standard allows for the transmission of high voltages through the cable, allowing fast charging, supplying power hungry devices, and so on. Strangely, the electronics can be damaged by a faulty or non-standard cable, which is suggestive the standard or the electronics themselves are badly conceived. This software might help but it seems like a sort of stop gap rather than a final fix.

“New authentication protocols will help protect consumers, and any work machines they might use, from malicious or faulty USB-C products. The USB 3.0 Promoter Group, which developed the technology back in 2008 and includes major companies such as HP, Intel and Microsoft, hopes the official USB Type-C Authentication specification will help end a number of recent incidents where sub-standard cables have either ripped off buyers or damaged devices. Software will be made available to download free of charge and can detect whether an approved cable or charger is being used, and will warn the user if this is not the case.This protection will even extend to checking whether the cable carries the correct encryption and security protocols in order to keep the user safe from advanced hacking tactics.”

http://www.techweekeurope.co.uk/workspace/components/usb-c-cables-authentication-software-189894

18)      Facebook, Google and Amazon to be forced to open up tax books by EU

Tax evasion (if you haven’t been charged and convicted it is called tax avoidance) is widespread with tech companies. Most of this activity is aided and abetted by major accounting firms, banks, and the laws of countries like Ireland. It is rather rich to suggest the EU is going to do anything about it since so much money is sheltered from taxation using EU law. Regardless when major EU banks like HSBC are found to have laundered money for drug dealers and terrorists (http://www.theguardian.com/commentisfree/2015/feb/15/hsbc-has-form-mexico-laundered-drug-money) they get off with a stern rebuke and a small fine so it is hard to imagine fine, upstanding tech companies are going to be reined in.

“The European Commission is bringing forward plans to make major multinationals such as Google, Amazon and Facebook disclose exactly where and how much tax they pay across the continent. The draft legislation being tabled on Tuesday was proposed before the latest Panama Papers scandal, but comes amid a growing clamour to force the biggest companies to pay their fair share. The plan was expected to include rules requiring businesses earning more than £600 million a year to open up their tax affairs to public scrutiny, revealing their profits and accounts in every country in which they operate within the EU.”

http://www.independent.co.uk/news/business/news/eu-announces-plan-to-make-facebook-google-and-amazon-pay-more-tax-a6979836.html

19)      UC Davis spent thousands to scrub pepper-spray references from Internet

In summary, security personnel employed by UC Davis brutally attacked a passive group of protestors. The response for the university was to use taxpayer dollars to try and scrub the attack from history. Evidently, the university is unaware of the “Streisand Effect” or the sad reality that the Internet never forgets. As a result, over the past few days news of this utterly stupid move was all over the media, undoing efforts to rewrite history. Perhaps now they’ll hire people to try scrub this boneheaded move, then that’ll be talked about, ad infinitum.

“UC Davis contracted with consultants for at least $175,000 to scrub the Internet of negative online postings following the November 2011 pepper-spraying of students and to improve the reputations of both the university and Chancellor Linda P.B. Katehi, newly released documents show. The payments were made as the university was trying to boost its image online and were among several contracts issued following the pepper-spray incident. Some payments were made in hopes of improving the results computer users obtained when searching for information about the university or Katehi, results that one consultant labeled “venomous rhetoric about UC Davis and the chancellor.”

http://www.sacbee.com/news/local/article71659992.html

20)      Useless robot waitstaff force the closure of two restaurants in China

For the record, a $7,000 robot should have been a red flag. You can’t really make anything even remotely capable of limited human function for that type of money and it isn’t really surprising they couldn’t serve soup. When such a limited function machine becomes available, expect it will be sold for at least 10x that price.

“We’ve built robots that can walk, talk, play incredibly deep board games, and even run hotels just like us, but there’s apparently one human skill the machines have yet to master — pouring drinks. Chinese chain Heweilai soon found out that robots can’t be trusted with simple restaurant tasks after it bought several $7,000 units to serve as waiting staff in three of its locations. Two of the restaurants were forced to close after the robots’ uselessness was discovered, with the third only remaining open after it consigned all but one of them to the scrapheap, replacing them with traditional meatbag waitstaff.”

http://www.theverge.com/2016/4/11/11405414/robot-waitstaff-china-restaurant-closed

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