The Geek’s Reading List – Week of July 15th 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) The Fake Factory That Pumped Out Real Money
I love this article because it is about a scam (fraudulent biofuels) within a scam (biofuels). Why do I call biofuels a scam? Well, because, with the exception of the small amount which arises from waste like cooking grease, they use more fossil fuel equivalent to make than they produce. How do I know this? Well, when they start using unsubsidized biofuels to harvest the plants, etc., to make biofuels we can discuss it. Until then it is a scam to transfer taxpayer’s money to big agriculture. Thanks to Nick Tang for this article.
“In February 2009, shortly after Green Diesel produced its last fuel, Rivkin registered a user ID, PRIVKIN2, and an e-mail, email@example.com, with the EPA. Nine months later he reported that Green Diesel had produced 22.1 million gallons of biodiesel. The next year, the EPA began phasing in an electronic system for reporting RIN trades. From October 2010 through July 2011, Rivkin logged into the tracking platform at least 25 times and laid claim to more than 45 million RINs, the federal criminal complaint said. During the same period, he sold $48.5 million in sham RINs. Federal investigators think Rivkin stopped dealing RINs sometime in late 2011, though some of his falsified numbers were still being traded by others months later. In return for the hollow credits, ConocoPhillips paid Green Diesel $18 million, according to court documents. Shell got stung for $14.4 million, BP for $13.6 million, Marathon Oil for $12.4 million, Exxon $1.2 million. All these companies also were forced to buy new RINs to replace Rivkin’s phony ones.”
2) Samsung Develops Slot That Supports Both New UFS 1.0 and MicroSD Cards
Last week I had a piece on Samsung’s new UFS memory card technology which will replace SD and uSD cards with a much faster interface with comparable speeds to a Solid State Drive. These transitions create a “chicken and egg” dilemma – why adopt the new technology if the parts are scarce and expensive and why make the parts if there are few devices which support it. Samsung has a solution.
“So as we sort of expected, the new UFS 1.0 cards will not work with anything currently on the market. The microSD card slot in your device will not work with a UFS card. However, in really good news, Samsung has developed a socket that can support both the new UFS cards and microSD cards. In other words, your stack of microSD cards will not soon be obsolete – you’ll still be able to use them, even in devices that support UFS cards.”
3) Turn on 5G, turn off old landlines: FCC plans future of phone networks
To put things in perspective the unlicensed the spectrum alone being opened up is a multiple of all of the spectrum being used for terrestrial communications right now. The frequencies are problematic in that they require far more complex antenna technologies such as MIMO and beam forming unless there is a line of sight so I don’t expect products to be on the market overnight. Nonetheless, radio technology has a knack for exploiting the previously inaccessible so it will probably be a lot sooner than you think.
“”These new rules open up nearly 11GHz of high-frequency spectrum for flexible, mobile, and fixed use wireless broadband—3.85GHz of licensed spectrum and 7GHz of unlicensed spectrum,” the FCC’s announcement said. The frequencies are in the 28GHz, 37GHz, 39GHz, and 64-71GHz bands. As we’ve previously written, these frequencies are much higher than the ones used for 4G LTE and other existing networks. With the higher bands, the FCC can allocate spectrum in blocks of at least 200MHz, instead of the standard 5MHz or 10MHz, allowing networks to carry a lot more data.”
4) How the new 5G manifesto will affect your future phones, cars and internet
The article is a bit long and explains why most headlines stated operators wanted an end to “net neutrality”. That is technically true however it seems the issue is more subtle: can you combine all communications including emergency services and defer delivery in order to deliver entertainment. The solution can be to simply flag certain government sanctioned uses as high priority in times of need.
“Perhaps the biggest headline is that the EU wants 5G services to be up and running by 2020. But this is easier said than done. Before Apple and Samsung can start cranking out phones that support 5G, and before networks can start building new towers, the industry needs to get together to agree on a common set of standards to ensure that technology is interoperable and that the spectrum that is chosen for 5G is harmonised across Europe (so that 5G in one country doesn’t interfere with the TV signals in another, and so on.) According to the document, the signatories expect to see independent trials of various 5G technologies prior to 2018 – and then in 2018 the 3GPP, the organisation that agrees the standards internationally, will finalise the rules on what makes a phone officially “5G”.”
5) AT&T thinks drones can fix terrible reception at baseball games
Tethered drones to solve the problem of poor reception at baseball games. That is a solution, albeit a potentially dangerous and expensive one. Since base stations are cheap and WiFi even cheaper, why not just wire the station properly? Thanks to my friend Humphrey Brown for this item.
“So you’re at a Beyoncé concert, but can’t Snapchat a video. You want to text your friends your location at a baseball game, but your phone has no signal. Packed venues like these are notorious for poor cellphone reception. Well, AT&T says it has a solution: drones. AT&T Inc. T, says it is exploring providing LTE wireless coverage at crowded venues, like concerts and baseball games, by using a drone that is tethered to the ground but hovering in the air nearby. AT&T has dubbed the drones “Flying COWs” — the COW stands for “Cell on Wings.” The drones would boost LTE coverage to areas in need of it during occasional large events. They would be tethered to the ground to prevent them from going rogue and flying away.”
6) Microsoft prices Windows 10 Enterprise subscription at $84 per user per year
I suspect that Window’s 10 is part of a long term strategy to shift to offer “Software as a Service” to consumers and businesses. Of course many of Microsoft’s business customers already pay support fees and Office 360 already is a subscription service. “Operating Systems as a Service” is probably coming, with a basic version bought with the PC and recurring charges for premium features.
“Microsoft plans to make its recently renamed Windows 10 Enterprise product available as a subscription for $7 per user per month, or $84 per year. Microsoft took the wraps off the pricing of one of the two renamed versions of Windows 10 Enterprise at the company’s Worldwide Partner Conference in Toronto on July 12. Windows 10 Enterprise E3 is the name of the lower-end of two different versions of Windows 10 Enterprise. Windows 10 Enterprise E5 is the new name of the Windows 10 Enterprise version that also will include Windows Defender Advanced Threat Protection, a new Microsoft service for detecting and responding to attacks.”
7) Tesla no longer guarantees your electric car’s resale value
The article and much of the commentary hails this as a good sign. I strongly suspect the increasing contingent liability as well as the looming reality that 8 year old Teslas should have a $0 resale value is fast approaching has more to do with it. Any 8 year old EV is either due for a battery replacement (if used at all) or will need a battery replacement within a few years. Since the battery is a $30K replacement part, EVs needing a battery will be worthless.
“Tesla introduced its Resale Value Guarantee in 2013, when buying an upscale electric car was a riskier prospect. What if your Model S was worth less than a tried-and-true German sedan? However, the market has clearly grown up since then… and Tesla is changing accordingly. The automaker tells The Verge that it has discontinued the program for any new car bought after July 1st. The move will reduce interest rates “as low as possible” and sweeten leases and loans, a spokesperson says. You’re still protected if you bought a car under the guarantee, but any relative latecomers will just have to trust that the used EV market will work in their favor.”
8) Tesla Model X plows into Montana guard rail in third Autopilot crash
Tesla “autopilot” is remarkable piece of technology: when it works it is because of the advanced safety function, when it doesn’t the driver is an idiot for believing it would work. Imagine if anti-lock brakes worked most of the time: if they worked and saved your life they are a brilliant example of a modern safety feature but if they occasionally didn’t work then the accident was your fault for not providing enough braking distance and relying on the damned things to work in the first place.
“A Tesla owner is blaming an accident that took place recently in Whitehall, Montana, on the company’s semi-autonomous Autopilot technology. The news of the crash comes in the wake of two accidents — including a fatal one in Florida — in which Autopilot was allegedly involved. A message posted on the Tesla Motors Club forum by user Eresan explains that his friend was traveling in a Model X at about 60 mph in a 55-mph zone with Autopilot turned on when the crossover veered off the road and hit a wooden guardrail. The impact sheared off the passenger’s side front wheel, the fender, and the headlight, and it badly damaged the entire right side of the body. The two occupants walked away without major injuries.”
9) Tesla’s Autopilot: Too Much Autonomy Too Soon
Consumer Reports lost my respect when they provided the aspiration rating of “best car ever tested”, despite a poor build quality and such an astounding lack of reliability as many vehicles require major repairs within a year. They subsequently switched that to “not recommended” (http://www.roadandtrack.com/new-cars/car-technology/news/a27094/consumer-reports-tesla-model-s-not-recommended-on-reliability/). In any event, it seems to have dawned on the purportedly “pro-consumer” organization that potentially sacrificing human lives testing a novel feature might not be the best approach. Golly what a brave stance! Thanks to my friends Duncan Stewart and Humphrey Brown for this item.
“While the exact cause of the fatal accident is not yet known, the incident has caused safety advocates, including Consumer Reports, to question whether the name Autopilot, as well as the marketing hype of its roll-out, promoted a dangerously premature assumption that the Model S was capable of truly driving on its own. Tesla’s own press release for the system announced “Your Autopilot has arrived” and promised to relieve drivers “of the most tedious and potentially dangerous aspects of road travel.” But the release also states that the driver “is still responsible for, and ultimately in control of, the car.”
10) Senate committee calls out Elon Musk, wants answers on Tesla Autopilot
Senate committee testimony can be interesting or not depending on the biases at the table. A lot will depend on whether the committee members have been briefed on basic statistics (which would paint a rather different picture of safety) and whether they support the potential use of human sacrifice in a corporate R&D program. On the one hand there is a likely innate bias against a faux environmentally friendly vehicle, on the other hand there is a decidedly pro-business/anti-consumer slant to the US government and Tesla has a remarkable ability to shrug off negative news no matter how bad it is.
“The U.S. Senate Committee on Commerce, Science and Transportation has called out Tesla CEO Elon Musk to answer some questions about the company’s Autopilot technology, and what the Silicon Valley automaker is doing to educate drivers about it. Sen. John Thune, a chairman for the committee, issued the letter today seeking a response from Musk and Tesla no later than July 29th. The inquiry was prompted after a fatal Tesla crash in Florida, which we reported on earlier. During that crash, the driver had Autopilot engaged. In a second crash in Pennsylvania, which was not fatal, the Detroit Free Press reports that the driver thought he had Autopilot engaged. Musk issued a public statement today, however, that according to investigators’ findings, Autopilot was not on in Pennsylvania, and in fact could have prevented that crash.”
11) TV subscribers dwindling, but prices rise, CRTC data shows
This is pretty much par for the course in an economy consisting of a small number of powerful and lightly regulated oligopolies and a clueless government. The oligopoly structure and lack of regulation mean there is little to no competition and that gives a simple choice to consumers: drop the service or put up with a price increase. There is no natural competitive response such as improving service or reducing prices because there is no need for one. Fortunately for the cable companies they also have oligopoly control over Internet service (along with mobile service and much of the media) so they can jack prices on those to offset those as well.
“About 160,000 Canadians cancelled their TV subscription last year, but the industry managed to offset that loss by charging the remaining customers more. … While the number of TV subscribers declined, the hit to the companies’ bottom line wasn’t quite as dire, as revenues dipped by just 0.1 per cent to $8.9 billion. That’s because TV providers managed to squeeze more money out of their remaining customers by offering them expanded or better services. The average TV subscriber’s monthly bill ticked up from $65.25 in 2014 to $66.08 in 2015.”
12) Fox TV Launches Live Network Prime Time Streaming
As consumers slowly drop cable services content providers are in a bit of a pickle because many ex-cable subscribers still want to watch their programming, plus more and more people watch TV on a computer rather than a TV. “Over the top” has been around for some tie but is just coming into its own. This presents a major opportunity for Google to provide targeted ads since “over the top” streams are 1:1. Thanks again to Nick Tang for this item.
“Making a bold step into the streaming digital world, Fox will be the first network allowing viewers to live stream Fox prime-time programming across every TV market in the U.S. The new service, call Fox Now Live — a spin-off of its on-demand digital programming service Fox Now — starts today. It means pay TV subscribers nationwide can stream summer prime-time programs like “So You Think You Can Dance,” “MasterChef” and “Wayward Pines” at the same time these shows air in their local time zones.”
13) Tougher Turing Test Exposes Chatbots’ Stupidity
The original Turing Test was more of a thought experiment than anything else. It is a pretty meaningless exercise as are other parlor tricks to make people think somehow there are “intelligent” computers. It turns out that we don’t understand much about how the brain works yet along how intelligence emerges so coding it up is going to be a lot harder than you think.
“The Winograd Schema Challenge asks computers to make sense of sentences that are ambiguous but usually simple for humans to parse. Disambiguating Winograd Schema sentences requires some common-sense understanding. In the sentence “The city councilmen refused the demonstrators a permit because they feared violence,” it is logically unclear who the word “they” refers to, although humans understand because of the broader context. The programs entered into the challenge were a little better than random at choosing the correct meaning of sentences. The best two entrants were correct 48 percent of the time, compared to 45 percent if the answers are chosen at random.”
14) TOS agreements require giving up first born—and users gladly consent
Terms of Services are ubiquitous and probably unenforceable boilerplate which accompanies pretty much every tech product or service nowadays. I say probably unenforceable because in a lot of contexts somebody has to have read and understood a document before they can be said to have agreed to its terms. Since ToS are rarely read or understood, as this study shows, an enterprising lawyer could make the case they are void.
15) Ashley Madison admits using fembots to lure men into spending money
You might remember this as the company which has a purported match making site for infidelity and which was hacked. Besides opening up its users to blackmail, the hack exposed the apparent reality that there were very few actual female members and most of the expensive email correspondence was with non-existent people as this admission shows. I find it astounding that, despite the hack and the related revelations the company is still in business, especially since it turns out another component of their business model was to threaten exposing their own customers (http://money.cnn.com/2016/07/08/technology/ashley-madison-dispute-bill/) as a means to resolve disputes related to the practice.
“Last year, as part of an investigation into the data dump, I published a series of articles at Gizmodo exposing how the company used female chatbots called “hosts” or “engagers” to trick men into paying for Ashley Madison’s services. The scam was simple: when a man signed up for a free account, he almost immediately got a chat or private message from a “woman” whose profile showed a few sexy pictures. To reply to his new lady friend, the man had to pay for an account. In reality, that lady was a few lines of PHP code. In internal e-mails, company executives shared documents that showed more than three-quarters of all paying customers had been converted by a fembot, referred to as a “host.” There were more than 70 thousand of these fembot accounts, created in dozens of languages by data entry workers. The workers were told to populate these accounts with fake information and real photos posted by women who had shut down their accounts on Ashley Madison or other properties owned by Ashley Madison’s parent company, Avid Life Media.”
16) Bitcoin ‘miners’ face fight for survival as new supply halves
Bitcoin miners take electricity and use it to create numbers. Those numbers are then fobbed off to people as a sort of currency, and most of that currency ends up being stolen by what are essentially fraudulent banks. Although the value of the sham currency fluctuates a lot it stands to reason that it will approach the cost of the electricity used to create it. A stepwise decrease in “reward” cannot be matched by an equivalent drop in electricity price or offsetting improvement in computing efficiency. I therefore confidently predict an increasing amount of bitcoin mining will be by hacking other people’s computers meaning the sham currency will be produced illegally and deposited into fraudulent banks for easy theft. It has a certain Zen about it.
“The process has come to be known as “mining” because it is slow and intensive, reaping a gradual reward in the same way that minerals such as gold are mined from the ground. But on Saturday, the reward for miners will be slashed in half. Written into bitcoin’s code when it was invented in 2008 was a rule dictating that the prize would be halved every four years, in a step designed to keep a lid on bitcoin inflation. From around 1700 GMT on Saturday, instead of 25 bitcoins up for grabs globally every 10 minutes, worth around $16,000 at the current rate BTC=BTSP, there will be just 12.5.”
17) Industry estimates put downturn at between 5% and 8% for the June quarter
Apple PC sales are a minor component of the company’s revenues. Apple’s marketing allowed it to gain market share against other PC vendors despite offering a premium priced product with features a generation or so behind the curve. This was probably due to a spillover effect associated with the iPhone, another premium priced product which, although it once had class leading features, is now a generation or more behind. Apple is in for a world of hurt as the smartphone market matures and I suspect a similar fate awaits them in the PC business.
“IDC and Gartner both pegged Mac global shipments in the quarter that ended June 30 at lower numbers than during the same period in 2015, even as several Windows PC makers grew theirs. Historically, Apple has grown Mac sales while the broader personal computer market has experienced an unprecedented slump. IDC estimated Mac shipments for the June quarter at 4.4 million, an 8% reduction from 2015, dropping Apple from fourth to fifth place on the list of top OEMs (original equipment manufacturers). Meanwhile, Gartner put Mac shipments at 4.6 million, a decline of 5%, and like its rival, said Apple was No. 5, behind Taiwanese device maker Asus.”
18) PewDiePie and other YouTubers took money from Warner Bros. for positive game reviews
I’m shocked, shocked I tell you. I have no idea who PewDiePie is or what he does but the incestuous and financially lucrative relationship between companies which make stuff and media which talks about stuff is not exactly something new and it certainly isn’t limited to YouTube. When Apple product releases are featured on the national news either somebody is being paid off or there is some other consideration (such as ad spending) behind it.
“The Federal Trade Commission has reached a settlement with Warner Bros. over claims that the publisher failed to disclose that it had paid prominent YouTubers for positive coverage of one of its video games. The FTC charge stated that Warner Bros. deceived customers by paying thousands of dollars to social media “influencers,” including YouTube megastar PewDiePie, to cover Middle Earth: Shadow of Mordor without announcing that money had changed hands. Under the terms of the agreement, Warner Bros. is banned from failing to disclose similar deals in the future, and cannot pretend that sponsored videos and articles are actually the work of independent producers. “Consumers have the right to know if reviewers are providing their own opinions or paid sales pitches,” director of the FTC’s Bureau of Consumer Protection Jessica Rich said in a statement. “Companies like Warner Brothers need to be straight with consumers in their online ad campaigns.””
19) Can Fact-Checking Save Democracy—and Journalism as We Know It?
Fact checking? Fact checking? What is wrong with people? Reporters are mostly in the business of slightly modifying press releases or other stuff they are spoon fed, how can they be expected to fact check anything? The spin business would be devastated if reporters actually fact checked anything. Think of all the PR people who would be out of work, or the impact on Tesla if basic objective facts were ever checked. Tut tut. Fact checking indeed.
“In the decades after the 1980s, most news outlets around the world could not afford—or simply did not consider it necessary—to have fact-checking department, or even a single fact-checker playing the role of devil’s advocate in the newsroom. But the need for fact-checking hasn’t gone away. As new technologies have spawned new forms of media which lend themselves to the spread of various kinds of disinformation, this need has in fact grown. Much of the information that’s spread online, even by news outlets, is not checked, as outlets simply copy-paste—or in some instances, plagiarize—”click-worthy” content generated by others. Politicians, especially populists prone to manipulative tactics, have embraced this new media environment by making alliances with tabloid tycoons or by becoming media owners themselves.”
20) The Rise and Fall of Theranos: A Cartoon History
No pull quote here but the item is a fun read. Kudos to the Wall Street Journal journalist who bothered to fact check, but that is a really a very rare event. Watch the highly recommended movie “The Big Short” for a more typical example of what usually happens.