The Geek’s Reading List – Week of June 17th 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.
1) New paper claims that the EM Drive doesn’t defy Newton’s 3rd law after all
The EM Drive is an electric propulsion unit which is most likely a sort of measurement error. Nevertheless, until it is fully figured out it is intriguing: the device appears to generate a small amount of “thrust” with only electricity and no moving parts. Even though the thrust is small it is continuous and could lead to very high speeds in a spacecraft because of that. This finding, if confirmed, may explain the phenomenon and perhaps even lead to more optimised versions. Of course until it is explained, skepticism is called for.
“Physicists have just published a new paper that suggests the controversial EM drive – or electromagnetic drive – could actually work, and doesn’t defy Newton’s third law after all. In case you’ve missed the hype, here’s a quick catch-up: a lot of space lovers are freaking out about the EM drive because of claims it could get humans to Mars in just 10 weeks, but just as many are sick of hearing about it, because, on paper at least, it doesn’t work within the laws of physics. Despite that not-insignificant setback, the EM drive shows no signs of quitting, and test after test – including trials by NASA scientists at the Eagleworks lab, and an independent researcher in Germany – has conceded that the propulsion system, somehow, does produce thrust.”
2) Shipping delays continue to dog Apple’s 4″ iPhone SE
It is hard what to make of this news. In general, you never want a tech product to be in short supply because the value of any gadget declines rapidly with time. It could be that, as management suggest, people are abandoning more featured, less expensive Android phone in favor of the iPhone SE, or that people who have never owned a smartphone make this their first purchase. Alternatively, the device could be cannibalizing sales of even more expensive iPhones. I guess we’ll find out when they report their quarterly results.
“As of this week’s annual Worldwide Developers Conference, U.S. Apple retail stores are still reporting two-plus-week wait times for new orders of the 4-inch iPhone SE. The handset launched in late March and supply has been constrained ever since. In April, rumblings from Apple’s supply chain claimed that Apple had increased orders for the iPhone SE, planning to build more than 5 million units in the quarter to keep up with demand. Those efforts, if accurate, don’t appear to have paid off yet, with demand continuing to outstrip supply into the summer.”
3) Verizon Offers LG K8 V Smartphone for $94 for a Limited Time
All US carriers ended the “contract and subsidy” business model early in 2016. This means that consumers pay full price for their phones, though the carriers do offer financing for those with good credit. It also opened the doors to real price competition in the US smartphone market as exemplified by this offer: even at $144 you are getting a pretty capable phone. I am convinced consumers who are faced for the first time with the sizeable cost of premium devices like iPhone will chose phones more in line with their budgets.
“The latest LG smartphone, the K8 V, is an Android handset that’s just been launched exclusively through Verizon Wireless, with a 5-inch LCD HD touch-screen display, an 8-megapixel rear-facing camera and a budget-friendly price tag of $144. Making it even more desirable for prospective buyers is that for a limited time, Verizon is shaving $50 off that price for online buyers, bringing it down to $94. The K8 V has some useful capabilities, too, including that it is a CDMA phone that can also be used internationally as a world phone on GSM and UMTS networks, according to Verizon.”
4) Tesla to clarify how customers may disclose problems
If the only thing I knew about Tesla was how they treated dissatisfied customers I would never do business with them. The model is apparent: when all else fails and the consumer refuses to comply publicly slander them and lie if you have to – in this case claiming the problem was due to the guy living on a dirt road (the first lie) as if, even if true, that somehow mattered (the second lie). As for “37 of 40 suspension complaints to NHTSA were fraudulent, i.e. false location or vehicle identification numbers were used”, well if you forced people to sign non-disclosure agreements and refuse to release the data I guess we should believe you: after all you wouldn’t lie would you? And fraudulent suspension complaints have to be a big problem for the NHTSA.
“Tesla said Thursday the car with over 70,000 miles had abnormal rust and that the Pennsylvania owner lived down such a long dirt road that it required two tow trucks to retrieve the car. The owner said the car had only been on a dirt road once or twice, and Musk later conceded to The Wall Street Journal that Tesla had erred in saying the owner lived on a dirt road. NHTSA Administrator Mark Rosekind said on Thursday that the agency was reviewing the nondisclosure agreements to see if they had impeded owners from making complaints.”
5) Volvo R&D Chief on Tesla’s Autopilot: “I’m Convinced It’s Trying to Kill Me”
I see all kinds of fawning praise for Tesla’s “autopilot” and yet when it fails the explanation is in the fine print. It is in the best interests of Tesla to promote its stock because without regular capital injections the company will quickly die, however that doesn’t mean they have things figured out. Volvo is a real car company and their insights as to the state of the art are relevant.
“Volvo has never shied from being first in safety. Company engineer Nils Bohlin introduced the three-point safety belt in 1959, an innovation estimated to have saved more than one million lives. The year 1972 brought the first rear-facing child seat. Side airbags and rollover protection, plus autonomous braking for cars, pedestrians, and now large animals—all Volvo firsts. So when the Swedish automaker has something to say about keeping people alive in cars, the world listens. And here’s what Dr. Peter Mertens, Volvo’s esteemed research and development chief, has to say about Tesla’s ballyhooed Autopilot system: “Every time I drive (Autopilot), I’m convinced it’s trying to kill me”
6) California lawmakers unplug the state’s electric car program
They’ll probably sort it out eventually but this sort of development shows what is really behind the “success” of electric vehicles: taxpayer money. If they wanted to do something about the environment they could, for example, subsidize cars with smaller engines. Instead they are paying people to buy cars which will be worthless when the batteries crap out in a few years. Thanks to Nick Tang for this item.
Note: LA Times has a wonky website. If you want to read the article and it only shows a subscription option, clear your browser cookies.
“Lua’s experience is exactly what Gov. Jerry Brown and lawmakers were aiming to achieve when they decided to spend money from the state’s greenhouse gas reduction fund on subsidizing the purchase of low- and zero-emission vehicles. But now they’re cutting off the cash, the result of a political impasse and questions over the future of the state’s climate change programs. Without the funds, California could have a harder time meeting its ambitious goals for getting cleaner vehicles on the roads and protecting public health in smog-ridden areas of the state.”
7) Volkswagen bets big on electric cars
Whether or not you are skeptical on the outlook for EVs as I am, the fact is that all they are is cars with a battery. The tricky bit isn’t the rest of the car – and actual car makers would have an advantage there – it is the battery. Since batteries are commodities and easily reverse engineered, no EV vendor would have an advantage over any other EV vendor. This is just another reason to question Tesla’s $32B market value.
“The strategy overhaul met a skeptical audience in Jack Nerad, executive market analyst at Kelley Blue Book, who questioned whether Volkswagen can achieve swift cultural changes and dramatic product transformation while cutting costs. What’s more, serious questions about the mass-market viability of electric vehicles remain. “Certainly electric vehicles are coming,” Nerad said. But “there’s no general consumer groundswell for electric vehicles.” Volkswagen may also find itself with split loyalties between its diesel cars, a favorite of European car buyers and some American consumers, and the need to develop electric vehicles. “Diesel is so deeply entrenched in Europe,” he said. “That’s the home field for Volkswagen. It’s hard to imagine they would step away from that.””
8) Intel lets slip roadmap for Optane SSDs with 1,000X performance
Optane, or 3D Crosspoint memory could be a revolution in semiconductor storage: it is much faster than flash used in Solid State Drives, and has much longer duty cycles. Unfortunately the missing parameter is cost: we have no idea how much more expensive than flash Optane will be and that makes a big difference for its adoption.
“Optane technology is primarily a mass storage-class memory that, while slower, is still cheaper to produce than DRAM and faster than NAND. Significantly, it’s non-volatile, so when the power goes off, the data remains intact, just as it does with NAND flash. … At its Intel Developers Forum in Shenzhen, China, the company said Optane has up to 10X the density of NAND flash and will enable SSDs to store more than a terabyte of data in an M.2 card that is only 1.5 millimeters thick.”
9) Report claims Intel CPUs contain enormous security flaw
Hmmm. A mysterious, undocumented, processor inside some Intel chips that nobody can figure out whether it is secure or not. It’s almost the sort of thing you’d expect a company to include if it were colluding with the national security establishment as we know all major US tech companies are doing.
“A new article on BoingBoing argues that Intel’s implementation of the IME and the microcontroller that runs it are fundamentally insecure, cannot be trusted, and could be used to perform potentially devastating exploits. Intel has publicly revealed very little about the precise function of its onboard microprocessor and the security system that guards it — and that, in turn, means that the company is essentially relying on security through obscurity to secure its own standard. Concerns about IME and AMT are nothing new; Joanna Rutkowska discussed vulnerabilities found in a much earlier version of the standard in 2009, and research into exactly how the Intel Management Engine secures data and maintains a trusted environment has been ongoing for years.”
10) Chattanooga Mayor Says City’s Gigabit Network (Which Comcast Tried To Kill) To Thank For City’s Revival
Of course, the guy is probably talking his own book but the comments regarding the regulatory context for telecommunications is telling. Unlike wireless, these are regulated at the state and local level, and politicians have no doubt pocketed large bribes (I prefer to believe they are corrupt rather than stupid) to ensure that any regulation around telecoms is to prevent meaningful competition. As per item 11 it is just another example of Soviet style economics selectively applied.
“But if you’ve been playing along at home, regional incumbents like AT&T and Comcast almost kept EPB’s network from ever being built. In 2008 Comcast unsuccessfully sued EPB to prevent the city’s plan from taking root. AT&T and Comcast are also behind a state law preventing EPB from expanding, one of nineteen such laws lobbied for by incumbent ISPs to maintain the apathetic broadband status quo. We’ve noted how state leaders (like Rep. Patsy Hazlewood, a former AT&T executive) have rushed to the defense of the state’s broadband duopoly and their protectionist law. The pretense usually involves these politicians insisting they’re just trying to protect taxpayers from themselves, ignoring the fact that letting AT&T and Comcast lawyers literally writing bad state telecom law has resulted in Tennessee being one of the least connected states in the nation.”
11) Cable Industry Proclaims More Competition ‘Hurts Consumers’ & ‘Damages Economic Efficiency’
You can readily imagine the horrors competition would inflict on any business: customers would have a choice and prices would come down. A Soviet-style economic system such as that enjoyed by the telecommunications sector in North America is one reason why rates are among the highest in the world while service quality is among the lowest. North American telecommunications companies are among the most profitable for some reason.
“In a filing by the American Cable Association (ACA, pdf), the organization’s lawyers try to claim that not only would an influx of competition somehow harm consumers, the group claims that adding competitors to what are frequently stagnant markets will somehow “damage economic efficiency”: “That overbuild condition is unlawful. It is not tailored to mitigate a merger-specific harm or confirm a merger-specific benefit. It will exacerbate the merger harms the Order identifies, damage economic efficiency, injure small providers, and harm consumers. The condition should be stricken.””
12) Why Microsoft’s Acquisition of LinkedIn Would Not be Another Nokia Story
Well, to be fair, Nokia was a dog’s breakfast before Microsoft bought them. Mind you the fact Microsoft paid billions for a dog’s breakfast company says a few things about the company’s competence when it comes to pricing acquisitions. That LinkedIn is not likely to be as bad of a disaster is cold comfort: it would take over 11 years to pay back the purchase price if LinkedIn can grow its non-GAAP (ie. imaginary) earnings by 25% per year from now on. Of course, few technologies last 11 years so the odds against that are pretty high. As for synergies, well, good luck with that.
“It has been less than a week and social media is abuzz with the news of LinkedIn’s acquisition by Microsoft. The deal that was finalized for a whopping 26.2 billion dollars is the largest software acquisition ever made. The move that is predicted by many as a catastrophic failure is in truth a well-planned move that would prove beneficial for Microsoft in the long run.”
13) IBM finally reveals why it bought The Weather Company
IBM has brilliant engineers and scientists but the company’s senior management make up the difference. If you develop a technology which can, for example, slightly improve local weather forecasts, the best way of making money from that is not to buy your customer but to find other customers. You see, the people who owned the Weather Company decided they would rather IBM give them money than sell them technology and they know the weather business considerably better than IBM. After all, IBM has missed every significant technology trend over the past 30 years so why would you expect them to behave any differently?
“On Wednesday, IBM revealed its first joint product with The Weather Company: a hyperlocal weather forecast—at a 0.2-mile to 1.2-mile resolution—to provide enterprise clients with short-term customized forecasts. It’s hoping to include this service, dubbed Deep Thunder, as part of a growing suite of products offered to enterprise clients through its Watson arm.”
14) Sony’s E3 press conference doubled down on PlayStation VR content
I remain skeptical about VR being as big as most predict. Much of the attention is on Facebook’s Oculus Rift device but others are coming on the market. The thing with Oculus Rift it is expensive and is that you need an upgraded PC to run it but game console vendors usually subsidize their hardware so that should give them a leg up in penetration. Sorry about the auto play video.
“You can pick up Sony’s electro-blue-lit PlayStation VR headset on October 13, the company revealed during its E3 presser, after prefacing the date drop with a trailer for the next Resident Evil. At $399, the new PlayStation 4-exclusive headset clocks in $200 cheaper than the next most expensive mainstream virtual reality headset (the Oculus Rift, at $599). Sony Interactive Entertainment chairman Shawn Layden says you can expect 50 games in all for PlayStation VR between launch and year’s end, including a mix of existing and completely new experiences.”
15) What is happening with Virtual Reality?
The lack of content for VR s one reason it hasn’t taken off yet. I find it hard to believe that VR movies will even be successful except briefly as a novelty. Like “3D” (i.e. stereoscopic) images, VR can only simulate a small part of the visual experience as important things like depth of field, etc., can’t be simulated without knowing what the viewer is looking at. The technology is bound to find some success in games, but even there the novelty might soon wear off.
“There is no denying it; virtual reality is the new upcoming area in technology. Do you remember that time when apple launched the iPod? Everyone stood back in awe to think that all your CD’s could fit into a tiny little box. Well Virtual reality is heading in that direction but VR has a problem at present. While there are plenty of products available for VR usage there has not been that wow moment yet. One of the difficulties at present is there is not enough content to use for VR devices. Google have gone down the VR route with their Google Cardboard. It is predominantly been promoted towards school children to explore parts of the world using VR. I tried this out recently and while it was cool to look out at the top of Matchu Pichu and I can see the benefit to schools, this has certain limitations and the novelty quickly wears off.”
16) Wal-Mart Experimenting With Robotic Shopping Cart for Stores
One Wal-Mart near me makes you deposit $1 to get a shopping cart, which is a reason I avoid that particular store. Shopping carts are cheap and often get damaged so I can only imagine what would happen to a robotic shopping cart after a few days with the average Wal-Mart shopper. Robots aren’t exactly cheap either. Mind you, every Wal-Mart store has a small fleet of scooters for use by the handicapped (though most of the time the handicap is obesity).
“Wal-Mart Stores Inc. is working with a robotics company to develop a shopping cart that helps customers find items on their lists and saves them from pushing a heavy cart through a sprawling store and parking lot, according to a person familiar with the matter. Such carts are an emerging opportunity for robotics companies as brick-and-mortar stores look for innovative ways to match the convenience of Amazon.com Inc. and other online retailers, said Wendy Roberts, founder and chief executive officer of Five Elements Robotics.”
17) Experimental Firefox feature lets you use multiple identities while surfing the web
This sounds like a potentially rather useful tool. The idea is to essentially present different sets of cookies, etc., depending on what you are doing. I suspect that it would be even more useful if you could assign the identity on the basis of the website so you could do your banking always with the banking identity presented.
“Mozilla’s Firefox browser is getting a new experimental feature today that aims to help you segregate your online identities and allow you to sign in into multiple mail or social media accounts side-by-side without having to use multiple browsers. This new “container tab” feature, which is now available in the unstable Nightly Firefox release channel, provides you with four default identities (personal, work, shopping and banking) with their own stores for cookies, IndexedDB data store, local storage and caches. In practice, this means you can surf Amazon without ads for products you may have looked at following you around the web when you switch over to your work persona.”
18) Telegram bug allows attackers to crash devices, jack up phone bills
Who knew Iran has computer security experts? This is a pretty clunky bug so it’s surprising the software engineers at Telegram let it through. Basically bad software allows arbitrarily long files to be sent to your device – at your cost. Doesn’t anybody do bounds checks in software anymore?
“To prevent malicious users from abusing the app, Telegram limits text messages to a specific range of characters. Each message must consist of at least one character, and it may not exceed 4,096 characters. But according to Iranian security researchers Sadegh Ahmadzadegan and Omid Ghaffarinia, those limitations can easily be circumvented. The two researchers note in a blog post that a programming error allows a sender to successfully transmit a message with arbitrary length to a receiver … That large file can, in turn, cause the phone to crash or stop working due to a lack of memory. It can also eat up a user’s monthly data allotment if they are connected to their mobile network and not Wi-Fi. In a proof-of-concept video, Ahmadzadegan and Ghaffarinia spent 256 MB of a 300 MB plan in just a few minutes by sending over-sized messages.”
19) 3D printed braces: the future of scoliosis treatment
There is little chance 3D printing will become the consumer market many had forecast. Nevertheless the fact is there are plenty of high value added applications for the technology. I favor medical because there are all sorts of things in the medical business which should be customized for the patient but they are not. This is a potentially attractive application and I suspect the scanning part could be reduced from 30 minutes to a few seconds with the right equipment.
“In making the 3D printed corsets, the first step is a CAD-CAM capture, wherein low cost infrared sensors can effectively 3D scan and capture the patient’s torso. The technology is also capable of simultaneously correcting the patient’s curvature in a digital model. According to the doctor, the modelling time lasts only about 30 minutes. The benefits of 3D printing the brace are also notable: the technology is cost and materially efficient, even once printed the braces can be recycled and modified, they are lightweight and custom fitted, and have a distinct improved aesthetic quality. Leoncini has been working with the DeltaWASP 40 70 3D printer for his braces.”
20) Walgreens ends relationship with Theranos, in-store centers closing immediately
Theranos is the “controversial” company which promised to do a whole bunch of blood tests from a small volume of blood. It was an early “unicorn” which raised a ton of money off investors who were unfazed that the CEO had dropped out of her second year of a chemical engineering degree and that you can’t really “hack” your way through biochemistry and medical engineering. Thanks to my friend Duncan Stewart for bringing this development to my attention.
““In light of the voiding of a number of test results, and as the Centers for Medicare and Medicaid Services has rejected Theranos’ plan of correction and considers sanctions, we have carefully considered our relationship with Theranos and believe it is in our customers’ best interests to terminate our partnership,” said Brad Fluegel, Walgreens senior vice president and chief health care commercial market development officer. The move is a big blow for Theranos, whose finger-prick blood-testing system vaulted it and founder and CEO Elizabeth Holmes into the national spotlight before crashing over the past eight months over questions about its technology.”