The Geek’s Reading List – Week of July 22nd 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) Solar power: Bill shock looms as lucrative tariffs roll back, advocates warn
There is no greater tragedy than the when a group loses its subsidies. It doesn’t take a PhD in economics to understand that solar subsidies are not consistent with widespread adoption of solar power. Think of it this way: if you subsidize solar power by $0.20/kWhr for a total of $0.28/kWhr, the more solar power you have the closer you get to having everybody effectively pay for $0.28/kWhr for electricity. This has a particular impact on the folks who don’t live in single dwellings and who can’t benefit from the subsidy but do pay for the more expensive electricity. Unsurprisingly these people tend to already be poor. The industry’s outrage also seems to be at odds with claims solar is getting cheaper and cheaper: if that is the case why are subsidies needed?
“Thousands of Australians will be hit by electricity bill shock of about $1,500 when generous solar feed-in tariffs are rolled back in coming months, consumer advocates have warned. The tariffs were introduced for a set period to kickstart Australia’s uptake of rooftop solar by offering money to solar users who fed energy back into the grid. More than 275,000 households will be affected when the tariffs are unwound from September to January in New South Wales, South Australia and Victoria.”
2) Google boasts quantum computing breakthrough with first display of real-world use
I’ve written a number of times in the past that a quantum computer hasn’t yet solved a commercially relevant problem more cost effectively than a classical computer of the same cost. That seems to have changed with this announcement as the researchers have managed to model quantum behavior with this technique and this might end up to be a big deal at understanding chemistry on a quantum level. Note that the research does not involve D-Wave, a company often cited a leader in the space.
“US and UK scientists have teamed up with Google to successfully demonstrate the first ever completely scalable quantum simulation of a chemical reaction, showcasing a real-world use for quantum computers which could revolutionise multiple areas of research into medicine and materials. Researchers from Google, Harvard University, Lawrence Berkeley National Labs, Tufts University, UC Santa Barbara and University College London have successfully managed to use a quantum computer to simulate a hydrogen molecule, which would be the first step towards simulating entire chemical systems.”
3) Scientists may be on the verge of smashing the Standard Model of particle physics
This could be a very big deal: as exciting as the confirmation of the Higgs Boson was it was something of a disappointment since it simply confirmed the Standard Model of physics. What scientists really hope for are unexpected results such as the one hinted at by this article. Unexpected results can lead to entirely an new understanding of physics and lead to practical advances.
“Data obtained from experiments conducted through last year indicates the possible existence of a new particle with roughly six times the mass of the Higgs boson. In tests this year — which began in May — the facility will try to determine whether or not the particle actually exists. While a number of theories have already emerged to explain the nature of this particle, its mere existence, if proven, could rewrite the existing standard theory of elementary particles.”
4) IDC: Smartwatch shipments fall for the first time; Apple only company in top 5 to decline
Go figure: the demand for heavy, bulky, wristwatch replacements that require daily charging is dropping. The only practical use of smartwatches I’ve seen is to show off the fact you have a smartwatch.
“The smartwatch market has hit its first bump, and it’s all Apple’s fault. Vendors shipped a total of 3.5 million smartwatches worldwide last quarter. This Q2 2016 figure is down 32 percent from the 5.1 million units shipped in Q2 2016, marking the first decline on record. It’s important to note that smartwatches are just a subcategory of the larger wearable market. As such, these figures don’t count basic bands sold by companies like Fitbit. Apple is thus the undisputed leader, even after the losses it saw in Q2 2016, and it could easily see a return to growth with the release of Watch OS 2.0. The latest quarterly figures come from IDC, which summarized its findings in the following chart:”
5) Apple proposes higher royalty rates for music streaming rivals
This is a brilliant strategic move by Apple. By proposing higher royalty rates, which it uniquely than afford, it can drive all its streaming music competitors out of business. “Artists” are hailing the move as they have lamented low streaming royalties (which are significantly higher than what they get for radio) for some time. Of course if Apple is successful all it will do is increase piracy and transfer even more control over culture to them.
“The new rates, if adopted, would drastically alter how songwriting rates are decided, how much artists receive, and how costly it is to operate in the streaming business. As it stands, companies like Spotify, Google, and Pandora pay out royalties according to complicated federal laws. These new rules would take effect in 2018 and remain active until 2022 as part of a Copyright Royalty Board proceeding that takes place every five years. The proposal, which may be amended in the future and will be reviewed by a panel of federal judges, does not cover rates for recordings. Those are calculated according to a different set of standards.”
6) Forget Comcast. Here’s The DIY Approach to Internet Access.
One of the truly strange things about Internet access is that it really doesn’t drop in price in North America, despite massive strides made in all domains of technology including telecommunications. This is primarily due to incompetent or corrupt regulation (I prefer to believe our politicians are corrupt rather than stupid). The Internet is an intrinsically decentralized and resilient system which requires neither massive capital investments nor deep knowledge to set up. Absent meddling and anti-competitive regulation it can be done on the cheap.
“So has one of the network’s most important structural elements: The Guifi Foundation isn’t the paid provider of most Internet service to end-user (home and business) customers. That role falls to more than 20 for-profit internet service providers that operate on the overall platform. The ISPs share infrastructure costs according to how much demand they put on the overall system. They pay fees to the foundation for its services — a key source of funding for the overall project. Then they offer various kinds of services to end users, such as installing connections — lately they’ve been install fiber-optic access in some communities — managing traffic flows, offering email, handling customer and technical support, and so on. The prices these ISPs charge are, to this American who’s accustomed to broadband-cartel greed, staggeringly inexpensive: 18 to 35 Euros (currently about $20–$37) a month for gigabit fiber, and much less for slower WiFi. Community ownership and ISP competition does wonders for affordability.”
7) One-Quarter of US Households Live Without Cable, Satellite TV Reception – New GfK Study
I predicted there would be a shift from broadcast (which includes cable) to Internet delivery in a brief article I wrote in 1996. The shift is taking a lot longer than I expected but it is happening. Interestingly it seems to be related to demographics, with younger consumers more likely to abandon cable entirely.
“New findings from GfK show that US TV households are embracing alternatives to cable and satellite reception. Levels of broadcast-only reception and Internet-only video subscriptions have both risen over the past year, with fully one-quarter (25%) of all US TV households now going without cable and satellite reception. The research, from GfK’s 2016 Ownership and Trend Report from The Home Technology Monitor™, shows that 17% of US TV households now rely on broadcast-only (a.k.a. “over-the-air” or OTA) reception, up from 15% in 2015. Another 6% say they only use Internet services such as Netflix, Amazon Prime, Hulu, or YouTube and do not have traditional broadcast or pay TV reception at all; this compares with 4% a year ago.”
8) US, NSF to put $400M into Advanced Wireless Research Initiative for 5G networks
5G wireless, along with opening of vast swaths of radio spectrum, could prove to be a very significant development in telecommunications technology. I am not sure I see the need for government to subsidize the development of that technology but I guess everybody wants to dip their beak in the taxpayers’ wallet.
“Today, the Obama administration announced the Advanced Wireless Research Initiative, a group backed by $400 million in investment that will work on research aimed to “maintain U.S. leadership and win the next generation of mobile technology” and specifically developing wireless networking tech that will offer speeds 100 times faster than the 4G and LTE networks that are being used today. Led by the National Science Foundation with participation from other organizations, tech companies like Samsung and carriers, the AWRI will receive $400 million from the government over the next seven years to develop and test new wireless networking technology in four “city-scale” testing platforms.”
9) Tesla Autopilot crash in Montana: Drivers reveals new details and claims a ‘cover up’ by Tesla
Frankly I don’t know who to trust here. On the one hand eye-witness testimony is rarely reliable and it is not like this driver doesn’t have a stake in the claim. On the other hand, Tesla does not have clean hands either, and, assuming they are telling the truth, you have no idea whether their system logs are reliable. Either way the company should not be using its customers to test safety systems.
“In the past few weeks, three accidents involving Tesla vehicles on Autopilot made the headlines. Tesla was quick to place the blame with the drivers for two of the accidents, one in Pennsylvania and one in Montana, both involving brand new Model X SUVs. In both cases, the automaker says that the vehicle logs show that drivers ignored several alerts to take control of the vehicles before the accidents. In both cases, the drivers were also cited by the police for careless driving – giving some weight to Tesla’s claims, but now the driver of the Model X in the Montana crash is coming back with a public letter to Tesla and Elon Musk claiming a “cover-up” of the problems with the Autopilot.”
10) What’s Next for Tesla, Amid Safety Probes and Weak Production?
It might be wishful thinking but even the fawning media coverage associated with Tesla seems to be waning. Not only have they lost the undying love of Consumer Reports but even journalists (generally not known for skeptical thinking) are beginning to wonder what is behind the curtain.
“A fatal crash, a federal safety probe, weak production and sales, and a major acquisition that has soured many long-time proponents. Just when things were starting to look bad for Tesla Motor Co., it now appears they could get worse. A third crash possibly linked to the maker’s semi-autonomous Autopilot system has occurred in Montana while, in Washington, D.C., the U.S. Securities and Exchange Commission is reportedly looking into Tesla’s decision to delay the announcement of the first, fatal Autopilot crash until after a $2 billion stock offering. Tesla investors, already riding a roller-coaster in recent months, began selling off shares, though many appear to be waiting to hear what Tesla CEO Elon Musk has in store after issuing a tweet last weekend that said the company is set to reveal its “Top Secret Tesla Masterplan, Part 2” some time this week.”
11) For Elon Musk, Tesla’s Impresario, the Latest Act Falls Flat
Magicians and stock promoters are masters of misdirection. Tesla has experienced a stream of bad news over the past couple months, most notably preannouncing not just a disastrous quarter but one which will mark their second consecutive sequential decline in sales. Last quarter the Model 3 was the rabbit pulled out the hat, this quarter it’s a bright, shiny, and frankly bizarre “master plan” which has no probability of ever being fulfilled. I can’t wait for next quarter: will he saw a company in half?
“The hints, the tweets, the will-he-or-won’t-he suspense. It was classic showman Elon Musk. Then his much-hyped 1,500-word manifesto dropped and — whiff. The maestro may have struck out. His groupies still idolize the billionaire-genius behind PayPal, SpaceX, Tesla Motors Co. and SolarCity Corp., the dreamer who wants to build hyperloops and colonize Mars. But recently, puffs of doubt have begun to surround the inspiration for Tony Stark in the “Iron Man” movies. After mesmerizing Wall Street for years, investors are starting to look for him to do something new: deliver financial results, or at least a road map for them.”
12) China To Ban Ad Blockers As Part Of New Regulations For Online Advertising
The article seems to make clear the ban on adblock may have much more to do with government surveillance than protecting advertisers. It stands to reason that if the Chinese are using advertising technology to monitor citizens other governments are as well and that is yet another reason to install adblock.
“Since it’s hard to see the Chinese government really caring too much about the problems that ad-blocking software causes for online publishers, there is presumably another motivation behind this particular move. One possibility is that the Chinese authorities use the tracking capabilities of online ads for surveillance purposes, and the increasing use of ad blockers in China is making that harder. That clearly runs against the current policy of keeping an eye on everything that online users do in China, which is perhaps why the authorities want ad blockers banned in the country, despite the inconvenience and risks for users of doing so.”
13) Mozilla to block Flash in Firefox browser
Flash, like a lot of Adobe software, is essentially a security vulnerability with some functionality thrown in to make it attractive. That’s why Flash and Adobe PDF reader require almost constant updates. Flash is obsolete but a lot of websites still use it rather than HTML 5. I long ago disabled Flash completely from Firefox, my main browser. On the rare occasions I encounter Flash content I want to watch I fire up Microsoft Edge then immediately shut it down.
“In August, it will block the Flash-powered parts of webpages that were “not essential to the user experience”. The browser developer said its action would mean webpages loaded more quickly and made crashes less likely. In 2017, it said it planned to introduce a system that would mean users must click to activate Flash no matter where it was used on a webpage. In a blogpost, Firefox developer Benjamin Smedberg said its first step would tackle the Flash-based parts of a webpage that users did not see. This includes files used to help with tracking and following which websites users visit, to aid advertising. Many of these hidden functions can now be done using HTML – the language of the web – said Mr Smedberg.”
14) Researchers create a tiny ‘Atomic’ hard drive that can store 500 terabits of data
This was all over tech websites this week but it is pretty much nonsense. As the article notes it only works at cryogenic temperatures and most likely ever will because atoms don’t stand still for very long, even at extreme low temperatures. It is pretty much a fact of life on the quantu scale and that is not going to changes.
“Imagine if individual atoms could store data. Dutch researchers are working on doing just that, and can fit 500 terabits of data in a single square inch. That’s right: 500 terabits, or 62.5 terabytes, in a drive the size of a postage stamp. This atomic hard drive is 500 times more dense than current solid-state drives, but don’t look for it on the market anytime soon. You can, however, read about it in a paper published in Nature Nonotechnology, if you’re up for some academic reading. For a less academic take, you can read Gizmodo’s interview with Sander Otte, one of the paper’s authors.”
15) Microsoft Responds To France’s Data Protection Law Order On Windows 10 Excessive Data Collection
The business model of the modern tech company is to take as much information about you and sell it to other people. That is pretty much Facebook, Google, and now Microsoft in a nutshell. Consumers don’t seem to mind and in most places neither do governments. In many ways I laud France for their efforts to dial it back to 11 but I doubt it will have any long term effect. Unless and until consumers care, businesses will just keep ramping up their invasion of privacy.
“The company is adamant about the fact that it’s built many protections into the OS to keep user data and information safe, saying that it’s always complied with the Safe Harbor framework, which has remained valid until last week, which is when the new Privacy Shield became adopted instead. Both Safe Harbor and Privacy Shield aim to protect user data as it gets sent back and forth between the US and the EU. Interestingly, Microsoft isn’t responding to every point of France’s letter quite yet; the company has said that it will release an updated privacy statement next month, which will implement the requirements to adhere to Privacy Shield rules.”
16) AI adoption coming quickly to the enterprise sector
Finally an article that looks at AI for what it is: an approach to dealing with data-heavy problems, not an attempt to create a “thinking” computer. As the article shows the problem solving approach has increasing utility is real work business applications. No killer robots are mentioned in the article.
“The leading factor driving this rise in artificial intelligence is the proliferation of data-driven projects. With the emergence of app-driven interaction and increased adoption of cloud-based SaaS solutions, consumers and enterprise customers alike are providing massive amounts of useful data to companies that they can use to improve and expand on their products and services. Artificial intelligence plays an important role in analyzing that data in order to find areas where company resources are best spent. One of the key reasons for so much investment in artificial intelligence is the lack of data science talent. Data scientists, humans that are able to comb through large amounts of data and analyze them to create actionable information, are in high demand right now. There simply aren’t enough trained data scientists to go around. With demand for this talent on the rise, companies are looking to AI to fill in the gaps.”
17) Offline: What is medicine’s 5 sigma?
The first step in fixing a problem is to admit you have a problem. The root of the problem is the “publish or perish” mentality which has dominated science for several decades and which leads to researchers cranking stuff out, and which provides a strong disincentive to attempt to verify the work of others because few journals will publish the research and you can end up isolated if you publish a negative finding. The journals themselves are largely to blame: besides their reticence to publish follow up findings, they seem to have convinced themselves “peer review” is a meaningful exercise in quality control. It is worth nothing that The Lancet, one of the most prestigious journals, published the “Vaccines cause autism” garbage which has led to so many deaths.
“The case against science is straightforward: much of the scientific literature, perhaps half, may simply be untrue. Afflicted by studies with small sample sizes, tiny effects, invalid exploratory analyses, and flagrant conflicts of interest, together with an obsession for pursuing fashionable trends of dubious importance, science has taken a turn towards darkness. As one participant put it, “poor methods get results”. The Academy of Medical Sciences, Medical Research Council, and Biotechnology and Biological Sciences Research Council have now put their reputational weight behind an investigation into these questionable research practices. The apparent endemicity of bad research behaviour is alarming. In their quest for telling a compelling story, scientists too often sculpt data to fit their preferred theory of the world. Or they retrofit hypotheses to fit their data. Journal editors deserve their fair share of criticism too.”
18) Corning’s new Gorilla Glass 5 survives drops “up to 80%” of the time
One of the most common failures for smartphones is a broken display. This is especially the case as many modern designs bring the display to right near the edge of the case. Corning’s Gorilla Glass is pretty amazing stuff and the promised drop resistance sounds promising. Unfortunately I suspect “edge on” drops are far more common than “face down” and are what leads to the damage. I wish vendors would simply install a thin bumper around the device to protect it.
“Gorilla Glass is great at resisting scratches, but it’s prone to shattering when dropped. With Gorilla Glass 5, Corning claims the glass is now able to survive more drops than ever. The official claim is that the new stuff survives “1.6-meter, shoulder-height drops onto hard, rough surfaces up to 80% of the time.””
19) Netflix will stream CBS’ new Star Trek series all around the world
Besides being a story about Star Trek this move is part of an effort to attract cord cutters and expand “over the top” delivery of content by broadcasters. The new Star Trek series will be available online only, probably to build paid viewers of CBS All Access. I can’t see subscribing to a service for a single program no matter how much I enjoy Star Trek. Alas, the Netflix deal excludes Canada, so the program will likely only be available through Bell or another of the oligopoly and therefore will be pirated. Thanks to Nick Tang for this item.
“Star Trek fans around the world clamoring for CBS’ new take on the universe have an unexpected party to thank for the show’s international availability: Netflix. The streaming giant announced today that it’s obtained the international rights to the new Star Trek in 188 countries (excluding the US and Canada), a deal that’ll see new episodes premiering on Netflix less than 24 hours after they make their domestic debut on CBS All Access, the network’s own paid streaming platform. Netflix has also secured the rights to all 727 episodes of Star Trek already made, including episodes from the original series, The Next Generation, Deep Space Nine, Voyager, and Enterprise. Those shows will be available for streaming around the world on Netflix by the end of 2016.”
20) This Open Source Tool Can Map Out Bitcoin Payments
One of the purported advantages of cryptocurrencies is the supposed anonymity of transactions. This work seems to imply that anonymity is not as strict as people think it is.
“Bitcoin is not anonymous. Anyone who has followed the dark web or the continuing regulation of the cryptocurrency should be familiar with that idea. If someone manages to link a real identity to a wallet—something that we’ve seen is possible—they can then follow other transactions around the public blockchain to see where else that person’s money has traveled. Now, researchers are releasing an open-source tool for grouping bitcoin transactions together in order to identify which belong the same entity, marketplace, or person. It doesn’t necessarily reveal the identity of the bitcoin user, but it can show details about someone’s bitcoin spending.”