The Geek’s Reading List – Week of July 29th 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) Transistors Will Stop Shrinking in 2021, Moore’s Law Roadmap Predicts
It looks like the gig is up, sort of, for Moore’s Law. There are lower bounds to transistor size but it seems the major limitation is capital, which makes sense for an industry which is no longer growing. Transistors will continue to get smaller, albeit much more slowly, and, as the article notes, the focus will be on 3 dimensional chips. Moving into 3 dimensions poses its own challenges however as outer layers will serve as insulation for inner layers which will present some power issues. From a financial perspective the challenge will be that the economics of the industry will change from 30% annual deflation to a much lower rate and that will impact all kinds of investment decisions.
“After more than 50 years of miniaturization, the transistor could stop shrinking in just five years. That is the prediction of the 2015 International Technology Roadmap for Semiconductors, which was officially released earlier this month. After 2021, the report forecasts, it will no longer be economically desirable for companies to continue to shrink the dimensions of transistors in microprocessors. Instead, chip manufacturers will turn to other means of boosting density, namely turning the transistor from a horizontal to a vertical geometry and building multiple layers of circuitry, one on top of another.”
2) 3D NAND Flash at 2 Cents per GB
The article itself is very interesting because it explains the state of the art with respect to 3D NAND. This company’s claim to fame is not a new memory type or cutting edge processing but simply a different approach to making a 3D flash device. Time will tell whether it can deliver but if the claims are even partly achievable the impact on the memory industry will be profound and hasten the demise of the Hard Disk Drive industry.
“The inventor of 3D monolithic chip technology back in 2010, BeSang Inc. (Beaverton, Ore.), claims to have since created a superior three-dimensional (3D) architecture for NAND flash. Frustrated with licensee Hynix’s slow implementation of its monolithic 3D technology, BeSang is opening the door to partnerships with other memory houses, as well as offering to contract-fab the chips for resale by others, at a price that reduces the cost-per-bit of 3D NAND from over 20¢ to about 2¢ per gigabyte.”
3) Google updates Nexus phones with spam call protection
Mobile phone spam is a rising problem and the solution is quite simple: as soon as someone answers the phone they can flag a number as from a smaller and once that happens enough the phones can identify it as such to the user. The root problem lies with the telephone service providers who profit from the spammers as well as from other telephone related fraud.
“The FCC gets more complaints over spam calls than anything else, and recently told telecom companies to block them for free. Until that happens, Google has made it easier for Nexus or AndroidOne device owners to see if a call is spam and block it, thanks to an update to its phone app. If you have caller ID enabled on those devices, spam or robo-calls will pop up with a red screen and warning that says “suspected spam caller.” After taking or rejecting the call, you can either block the number or report that it’s legit if Google flagged it in error.”
4) The Internet Of Things Is a Security And Privacy Dumpster Fire And The Check Is About To Come Due
This pretty much hits the nail on the head: IoT devices are slapped together by consumer electronics companies who typically lack expertise in computer security. Security is hard and the relevant talents are rare so the net result is no security. It isn’t like you should worry about somebody setting your thermostat for you but that your thermostat might be sending your banking information somewhere.
“And while mocking the internet of things has become a running joke, Schneier notes it quickly becomes less funny when you begin to realize that the interconnected nature of all of these devices means we’re introducing millions of new attack vectors daily in homes, businesses, utilities, and government agencies all over the world. Collectively these flaws will, no hyperbole intended, inevitably result in significant deaths …”
5) No treat for you: pets miss meals after auto-feeding app PetNet glitches
The other challenge with IoT is that the systems typically require access to the cloud in order to function. This company’s servers went down and that took their product off line. It appears there is a fall back timer so the critter don’t starve to death, but for a pet owner knowing whether the animals have been fed can be stressful and probably a major reason for buying the product.
“It is a cautionary tale for the rise of the so-called “internet of things”: some pets could be left hungry after a server outage appeared to be causing automated feeders made by a company called PetNet to malfunction. The lesson: always build a backup system. PetNet describes itself as “the world’s first intelligent pet feeder that will program itself around your life and the wellness of your pet. The $149 device links to a smartphone app so that, in theory, customers could rest assured that their pet was well fed while they weren’t home. But a server issue has taken down the system for a number of users, leaving many animals without their scheduled meals.”
6) Nintendo shares plummet after investors realize it doesn’t actually make Pokémon Go
Apparently, Pokemon Go is a popular game which has swept mobile users. The relationship between Nintendo (which owns the Pokemon franchise) and the game developer was well known public information. That didn’t stop Nintendo’s stock from dramatically increasing in value – at least until Nintendo reminded everybody it wasn’t that financially material for them. This kind of puts the whole “efficient markets hypothesis” to rest, doesn’t it?
“It appears that Nintendo’s huge stock bump, which took the company past Sony in market capitalization, was fueled by investors with the misguided belief that Pokémon is wholly a Nintendo creation and that the company would benefit accordingly. Nothing that Nintendo said in its announcement on Friday was new information — there isn’t a Nintendo logo to be found anywhere within Pokémon Go itself, and the status of the game’s ownership has been clear since it was announced last year.”
7) Bitcoin’s not money, judge rules as she tosses money-laundering charge
I have to admit I am not sure I follow the judge’s reasoning here: you can be charged with money laundering if you use diamonds or large cases of oatmeal as the exchange mechanism so the question of whether or not Bitcoin is money is rather moot. Oddly Bitcoin proponents are hailing this as a victory even though, if it turns out to be true, it equally makes theft of Bitcoin completely legal and makes any contract or agreement involving Bitcoin unenforceable.
“The sting was designed to catch Espinoza, then 30 of Miami, laundering money. Florida law prohibits using financial transactions to “promote” illicit activity, such as, in this case, credit-card fraud. Ultimately, Arias arrested Espinoza on three felony counts of money laundering, capping a three-month investigation in 2014 into South Florida’s exchange of computerized money. But a Florida circuit-court judge ruled Monday that bitcoin is not money at all. And if you don’t have money, you can’t exactly launder it.”
8) Can the internet reboot Africa?
It seems that a modern economy requires three things: rule of law, energy, and free flow of information. Unfortunately rule of law is not that strong in Africa and energy is often spotty in a lot of the continent. What is happening is the spread of Internet and mobile technologies and that may have a profound long term impact on the development of Africa.
“Such are the giddy promises of Africa’s “fourth industrial revolution” – a giant step forward into the digital world which the Guardian is reporting on for the next two weeks. Some are salivating that it will amount to the renaissance of a marginalised continent, while others soberly warn of the hype. By 2020 there will be more than 700m smartphone connections in Africa – more than twice the projected number in North America and not far from the total in Europe, according to GSMA, an association of mobile phone operators. In Nigeria alone 16 smartphones are sold every minute, while mobile data traffic across Africa is set to increase 15-fold by 2020.”
9) Mobileye Falls After Saying It Won’t Extend Work With Tesla
Mobileye is the company which supplies the technology behind Tesla’s “Autopilot”. If you read between the lines Mobileye is concerned there will be reputational damage done to it and the industry if it continues to collaborate with Tesla’s aggressive R&D programs.
“Mobileye supplies cameras and technology for Tesla’s Model S sedans, including machine learning capabilities for its Autopilot suite of features. That function was at the center of a debate over the safety of driver-assist capabilities this month after Tesla said U.S. regulators were investigating a fatal accident involving a Model S that was driving on Autopilot. Fully autonomous driving requires a “paradigm shift” in terms of complexity and the “need to ensure an extremely high level of safety,” Shashua told investors on the call. “There is much at stake here, to Mobileye’s reputation and to the industry at large,” he said. “We think that that’s not in the interest of Mobileye to continue with Tesla in that area.””
10) Elon Musk’s push for autopilot unnerves some Tesla employees
This story directly relates to the item above. Engineers are not soulless and they understand that sometimes their efforts can lead to injury or death. Consider the Challenger disaster, which largely occurred because NASA management ignored explicit warnings from technical staff of the risks of flying that day. The same could be said for deaths due to General Motors’ defective key switch. “The perfect” is exactly what you need, or as close to it, when human lives are involved.
“Even before Tesla reported the first known death of a driver using its autopilot feature, some employees worried the car company wasn’t taking every possible precaution. Those building autopilot were acutely aware that any shortcoming or unforeseen flaw could lead to injury or death — whether it be blind spots with the car’s sensors or drivers misusing the technology. But Tesla founder and CEO Elon Musk believes that autopilot has the potential to save lives by reducing human error — and has pushed hard to get the feature to market. The team’s motto is “not to let the perfect be the enemy of the better,” according to a source close to Tesla. For Musk specifically, the source says his driving force is “don’t let concerns slow progress.””
11) Infographic: Tesla’s gigafactory opens this week: What we know in 9 epic slides
Tesla made a big propaganda push over its battery factory this week, probably to distract attention from its quarterly results which are coming out next week. Most of the coverage I have seen appears to be written by people who have never been inside a modern factory. Long story short, there is a reason vertical integration is an obsolete business model. Thanks to my friend Fran Manns for this item.
“Tesla recently stated that its current battery cost is $190 per kWh for the Model S. The Gigafactory aims to reduce battery costs by 30%. Tesla expects this to happen through vertical integration, adding economies of scale, reducing waste, optimizing processes, and tidying up the supply chain.”
12) Tesla, IBM, Stanford, & PNNL Lead Obama’s Battery500 EV Battery Initiative
This is not another Tesla story but an exploration of the poor quality of information surrounding battery or any other “green” technology. If I want to know the price history of a 74LS00 quad NAND I can go through old catalogs and even call up distributors to get the current price. I can do pretty much the same thing for steel, Ikea furniture, or Beijing Duck. “Green” proponents of the battery industry (as distinct from folks in the battery industry who actually know things) rely on pricing models, anecdotes, and the tall tales of stock promoters to determine what prices are. Shouldn’t they just pick up the telephone and get some real data?
“Coming back to historical battery prices and how they’ve dropped in recent years, below a graph I love (from our “Electric Car Answers” page). It was originally published in 2015 as part of a study of battery price trends up through 2014 (the stidy was published in the journal Nature Climate Change), and revised it slightly in May 2016.”
13) Deutsche Telekom and BMW edge towards the truly connected car
Although the “connected car” could be a big deal for safety as cars could communicate things like rapid braking, loss of traction, etc., to other on the road, this article is not about that. For some reason DT and BMW have decided cars would make good femotcells. I am not sure why because they would still need some form of backhaul and so if a car can’t get reception why would it make a good femtocell? Thanks to Nick Tang for this item.
“So far, so good, and this probably qualifies as a “quite interesting” development, especially for passengers. But there’s a lot more going on behind the scenes. About 18 months ago, BMW was conducting trials with Nokia, Huawei and Vodafone that focused on integrating LTE base stations into their cars. The idea was that they would create a network of LTE small cells – not just for the benefit of the driver and passenger, but available for use by people and devices along the roadside. However, the caveat was that these car-mounted small cells would only operate when the vehicle was parked up and stationary.”
14) You can’t turn off Cortana in the Windows 10 Anniversary Update
This news swept the interwebs and created pandemonium. Even I got upset as I find things like Cortana an annoying distraction. Never let facts get in the way of a good story so see the next item.
“Microsoft made an interesting decision with Windows 10’s Anniversary Update, which is now in its final stages of development before it rolls out on August 2. Cortana, the personal digital assistant that replaced Windows 10’s search function and taps into Bing’s servers to answer your queries with contextual awareness, no longer has an off switch.”
15) Yes, you can turn Cortana off in the Windows 10 Anniversary Update
It turns out that you can, in fact turn off this annoying bit of Windows 10 after all.
“Now, in fairness, Microsoft did change some things around. The criticism that an “off switch” for Cortana is removed is technically correct and likely where much of the misinformation originates. But there is a reason for this too, which is a change in the structure of Cortana and it being a service on iOS and Android.”
16) How to Persuade Consumers to Disable Ad Blockers
I think the things outlined below would help convince some people to disable their ad blockers but I suspect ensuring ads do not contain malware (which is disturbingly common) or are fraudulent (like the majority of mobile ads) would be a more important step. Oddly enough those are not mentioned.
“The research report, titled “Ad Blocking: Who Blocks Ads, Why, and How to Win Them Back,” was conducted on the IAB’s behalf by C3Research. Based on its findings, the IAB said the most effective ways publishers can convince consumers to disable ad blockers include limiting access to content for ad-blocking visitors, avoiding ads with autoplay video or autoplay sound, ensuring ads don’t block access to content, and “guaranteeing” that ads don’t slow down their websites.”
17) Android to Send Location Data to First Responders
You would think that if a phone can tell you which street to walk down it would be pretty straightforward for emergency responders to find you. Apparently, not so much. The issue is most likely the state of the technology at the emergency call side of things as many of those systems haven’t been updated in decades. The comment “… (your) location is never seen or handled by Google” is pretty rich. Google knows everywhere you’ve been,, where you sleep, where you work, where you shop, etc..
“In fact, more than 99 percent of Android handsets—any device running Android 2.3 or later—already support this capability, using Wi-Fi and cellular tower triangulation to capture its precise location. Google is working with mobile network operators and emergency dispatch centers to add support on the receiving end. The UK and Estonia are the first two countries to get the emergency location notifications, with the feature going live there yesterday on some networks, including Vodafone and O2. Google has also partnered with the European Emergency Number Association, which coordinates emergency services across the continent.”
18) Stiglitz Calls Apple’s Profit Reporting in Ireland ‘a Fraud’
The Nobel Prize in economics is pretty much a made up thing, but, seriously, it doesn’t take a Nobel Prize in economics to call a scam a scam, especially when it involves transfer pricing. Transfer pricing fraud used to be taught in introductory accounting courses so it really isn’t that hard to spot. The problem is not the law but a complete lack of interest in enforcing it: that’s what you get when money is speech.
“Nobel economist Joseph Stiglitz said U.S. tax law that allows Apple Inc. to hold a large amount of cash abroad is “obviously deficient” and called the company’s attribution of significant earnings to a comparatively small overseas unit a “fraud.” “Our current tax system encourages companies to keep their money abroad, opens up a vast loophole through what is called the transfer-pricing system that allows them not only to keep their money abroad but, effectively, to escape taxation,” Stiglitz, who advises Hillary Clinton’s presidential campaign, said in a Bloomberg Television interview with Tom Keene.”
19) You Can Get a 3-D-Printed Cast for a Broken Bone
Medical applications are a high value opportunity for 3D printing. The manufacture of 3D printed casts should be easy enough to automate. I figure they put on a regular cast first then give you a 3D printed one later. The cost isn’t that bad considering how ridiculous cost for medical devices are in any case: I spent $180 to pay for an “air cast” when I had my leg fixed up and eyeglasses cost about 50x what it costs to manufacture them.
“But casts are finally getting a modern spin. 3-D-printed casts boast an open-lattice plastic design that’s customized to the individual patient. They’re waterproof, they’re more comfortable, and they may even help the bones heal faster. The casts are part of a larger movement toward personalized 3-D-printed medical devices. A number of startups around the world are working on this new technology. Earlier this year, engineering student Zaid Musa Badwan founded MediPrint in Mexico to manufacture the NovaCast he and colleagues designed, and a few weeks ago Xkelet, based in Girona, Spain, won a Red Dot Design Award (awarded in a prestigious international design competition) for its cast.”
20) Australia plans new co-ordinates to fix sat-nav gap
The story here is that Australia is a moving target so GPS – which provides absolute coordinates – is fairly quickly wrong. A meter or two matters for some applications like autonomous vehicles. If the GPS system weren’t antiquated technology it could probably beam out a “your continent has moved” correction factor along with location information and keep the data always up to date.
“”We have tractors in Australia starting to go around farms without a driver, and if the information about the farm doesn’t line up with the co-ordinates coming out of the navigation system there will be problems.” The Geocentric Datum of Australia, the country’s local co-ordinate system, was last updated in 1994. Since then, Australia has moved about 1.5 meters north. So on 1 January 2017, the country’s local co-ordinates will also be shifted further north – by 1.8m. The over-correction means Australia’s local co-ordinates and the Earth’s global co-ordinates will align in 2020.”