Value Unleashed

The Geek's Reading List is a weekly publication written by Valitas advisor, Brian Piccioni. Brian has been part of the technology industry for a third of a century now. He has been a sell-side research analyst for the past 20 years, where he was ranked the #1 tech analyst in Canada for six consecutive years, named one of the best tech analysts in the world, and won a number of awards for stock-picking and estimating. The Geek's Reading List looks at recent developments in the technology sector by discussing articles that Brian compiled over the week. In his own words, the discussions are usually provocative, new, and counter-consensus. The sorts of things not being written anywhere else.

Please note that this is an abbreviated Geek’s List. There will be no list next week.

The Geek's Reading List

1) Robot Designed for Operating Construction Equipment

No pull quote here because it is just a video. The engineers have developed a humanoid robot for the express purpose of controlling construction equipment. This approach doesn’t require modification of the construction equipment so the robot can be used in any machine when conditions make it too dangerous for a human operator. Their decision to go with a video game style control panel is a bit perplexing since heavy equipment operators are used to things being in a particular place and having a certain “feel”. I have become proficient in a number of such machines and even moving from one style of control to another can take some getting used to.

http://www3.nhk.or.jp/nhkworld/english/news/features/201511300812.html

2) MIT, Broad scientists overcome key CRISPR-Cas9 genome editing hurdle

We’ve carried a number of articles on CRISPR in the past. It appears to be a disruptive technology which allows for precise editing of the genome and will likely have a profound impact in medicine, genetically modified crops, and so on. This development apparently improves on the existing technique.

“Researchers at the Broad Institute of MIT and Harvard and the McGovern Institute for Brain Research at MIT have engineered changes to the revolutionary CRISPR-Cas9 genome editing system that significantly cut down on “off-target” editing errors. The refined technique addresses one of the major technical issues in the use of genome editing.”

http://news.mit.edu/2015/overcome-crispr-cas9-genome-editing-hurdle-1201

3) Nokia’s OZO VR camera will set you back £40k

I tend to associated Virtual Reality (VR) headsets with animation however it appears they have applications in video as well. This device, which looks a lot like a creature from a science fiction story, provides full field coverage so you can create VR video. Sounds like the sort of thing which could be used to great effect in advertising.

“Nokia’s virtual reality OZO camera will retail for a whopping $60,000 (about £40,000) when it becomes available early next year. Initially unveiled in July, OZO is a spherical camera featuring eight sensors and microphones designed to make 3D films and games that can be watched and played with virtual reality (VR) headsets.

http://www.theinquirer.net/inquirer/news/2437178/nokias-ozo-vr-camera-will-set-you-back-gbp40k

4) LG Display to Spend About $9 Billion on Factory for OLEDs

LG may be an Apple supplier, and rumors have Apple will launch an OLED phone within a couple years, but smartphone followers such as Samsung and many others (including LG itself) are already shipping products. Perhaps the factory is being built for Apple or the expected market for OLED in smartphones, notebook computers, and TVs.

“Apple Inc. supplier LG Display Co. will spend more than 10 trillion won ($8.7 billion) on building a new plant and expanding production of a newer type of display that can be used to cut power use, make thinner devices and show brighter colors. … The factory will produce organic light-emitting diode displays for larger TVs, smartwatches and automotive displays and is targeted to start in the first half of 2018, Seoul-based LG Display said Friday. The technology has been touted as a possible replacement for the liquid-crystal displays used in smartphones. Apple plans to adopt OLED for iPhones from 2018, the Nikkei newspaper reported Thursday without attribution.”

http://www.bloomberg.com/news/articles/2015-11-26/lg-display-to-spend-more-than-10-trillion-won-on-new-panel-plant

5) Apple To Abandon Headphone Jack? Leak Details Massive Change

If so, this is completely absurd, but not beyond the realm of reason: after all, Apple not only has a proprietary charging connector a few years ago it changed that proprietary connector for another, rendering all the various gadgets like clock radios etc., obsolete unless you bought a gizmo which converted the new proprietary connector to the old one. Apple’s major concern as always has been making profit of people who slavishly buy their products and a proprietary audio connector would make sure the poor audio quality could only be experienced over licensed products.

““Apple plans to remove the 3.5mm headphone port from the upcoming iPhone 7, helping to achieve a ‘more than 1mm’ reduction in thickness compared to the iPhone 6S.” This would create the thinnest iPhone ever made. It also states that Apple will bundle EarPods which use the Lightning connector with the next iPhone and that they will incorporate a small digital to analog converter into the connector. From that point onwards Apple would also require third-party wired headphone makers to bundle Lightning adaptors with its 3.5mm headphones or make them Lightning port only to gain Apple MFi certification.”

http://www.forbes.com/sites/gordonkelly/2015/11/28/apple-to-abandon-headphone-jack-in-iphone-7/

6) Musk’s Tesla faces German battle over battery-powered homes

This is a shocking development: it turns out putting a battery, a charger, and an inverter in a box is not actually that radical idea! Of course, people living “off grid” have known this for decades now, and anybody who knows how to use Google can even find lithium ion based “power wall” type solutions. Of course the fawning coverage over Tesla’s announcement carried no mention of this. It is amazing German companies claim they actually have a competitive offering – don’t they know about the reality distortion field surrounding Silicon Valley? What’s next? Will they’ll realize powering an automobile with commodity batteries isn’t worth a $31B market cap?

“”Tesla has made sure that they’re seen as a lifestyle gadget,” said Volker Wachenfeld, in charge of hybrid energy and storage solutions at SMA Solar. SMA Solar is one of a number of German companies with ambitions in the market, including Sonnenbatterie, SENEC.IES and Varta. Daimler Accumotive is also due to launch a product, while Solarwatt, owned by major BMW shareholder Stefan Quandt, says it is ready to join the fray. Sonnenbatterie, whose backers include Germany’s E-Capital and Czech firm Inven Capital, has already sold around 8,500 batteries in Europe, mostly in Germany, but its ambitions go further.”

http://www.reuters.com/article/2015/11/27/us-tesla-batteries-germany-insight-idUSKBN0TG1LX20151127?utm_source=twitter

7) A promising new prototype of battery

This has been touted as the miracle battery of the week but it might have potential – at least if the numerous details missing from the description of the technology turn out to be within the useable range. There is plenty of sodium around and it is pretty cheap. The problem would be the specific energy since sodium is a lot more dense than lithium. Nonetheless if they can manage to improve the chemistry these batteries might be disruptive for stationary storage applications due to the lower cost.

“After two years of research, a French team, mostly including researchers from the CNRS and CEA within the RS2E network on electrochemical energy storage have just designed an alternative technology to Li-ion for application in specific sectors. The researchers have developed the first battery using sodium ions in the usual “18650” format, an industry standard. The main advantage of the prototype is that it relies on sodium, an element far more abundant and less costly than lithium. The batteries have displayed performance levels comparable to their lithium counterparts, and this new technology is already attracting industrial interest. It could be used to store renewable energies in the future.”

http://phys.org/news/2015-11-prototype-battery.html

8) The rise and fall of the unicorns

Valuations of Dot Com 2.0 companies are not based on an hallucinatory expectation of future profitability as was the case with Dot Com 1.0, but upon one of two exit strategies: being bought by the likes of Google or Facebook – heck if they’ll buy Nest or Oculus they’ll buy anything – or that they’ll be sold to an unsuspecting public through an IPO. Most of the “Unicorns” have no sustainable competitive barriers to entry let alone a viable business plan (or, perhaps even any business plan). That some of the highest profile ones are having trouble raising private money suggests the IPO pipeline will soon fill up, even if that means a lower than expected valuation.

“Valuations for private technology firms are rising at a slower clip than they were six months ago. On November 24th Jet, an e-commerce competitor to Amazon, announced that it had raised $350m (valuing the firm at $1.5 billion), a big sum for a loss-making startup, but a lower one than it had first hoped for. Recently Airbnb, a fast-growing room-rental firm, raised $100m, but reportedly stayed at its recent valuation of $25 billion, instead of rising further. Fred Giuffrida of Horsley Bridge, a firm that invests in private-equity funds, reckons that the valuations in late-stage rounds of financing have declined by around 25% in the past six to eight months. These rounds are also taking slightly longer to complete.”

http://www.economist.com/news/business/21679202-some-private-technology-firms-are-having-trouble-justifying-their-lofty-valuations-rise-and

9) Xiaomi’s $45 Billion Valuation Seen `Unfeasible’ as Growth Cools

What makes this story interesting is not the valuation but the fact Xiaomi is slowing down. For those who don’t recall Xiaomi is a Chinese mobile phone manufacturer which has a modern approach to marketing. In the past its product releases have been met with the same sort of excitement Apple’s have been, at east in China, and the company had been expanding into India and other developing economies.

“Things were going so well for Xiaomi Corp. Customers were lining up, investors were swooning and the Beijing-based startup closed funding at a $45 billion valuation. That was last year. Now the high-flying smartphone maker is stumbling. Founder Lei Jun’s latest business, one of China’s most exciting startup stories of the past few years, is likely to miss its own goal of selling 80 million smartphones this year, according to two people with knowledge of its production plans. Suppliers also cut their internal targets for Xiaomi in anticipation of the shortfall, they said.”

http://www.bloomberg.com/news/articles/2015-11-25/xiaomi-s-45-billion-valuation-seen-unfeasible-as-growth-cools

10) Why everyone’s laughing at Yahoo’s review of Rihanna’s new album

Nobody should be laughing at Yahoo because this is just the way “journalism” is done. It is not coincidence that all media (even taxpayer funded broadcasters like CBC radio) had fawning coverage of the release of an album by somebody called “Adele”. I don’t know who this person is but I can tell that, like Rihanna (who is apparently another singer), whoever is doing the marketing serves up this sort of pre-written formulaic promotional material that “journalists” can customize and file as a story. It is hard to believe the media were once a source of actual information.

“Today, in a world first, Yahoo published its review of Rihanna’s 8th album Anti, but there was one big problem. It was written by someone who hadn’t heard it and actually has no idea what’s on it, although apparently the album “pushes the edge”. How do we know? Because it’s written in what the media industry calls a “shell” – the sort of thing politicians and marketers use with [INSERT NAME HERE] in it to personalise a generic message.”

https://archive.is/dZxLg

11) Ultrasound captures rat brain in microscopic 3D

This technique uses tiny bubbles as a sort of contrast enhancer and, presumably helps with resolution as well since they know the size of the bubbles. The great thing about ultrasound is that it doesn’t use ionizing radiation like X-rays and CAT scans and it doesn’t behave badly when around magnetic materials. So you might get some of the benefits CAT scan without the limitations of MRI.

“Scientists in France have developed an ultrasound technique that can rapidly build up a 3D view of a network of blood vessels, in microscopic detail. They used it to scan the blood vessels throughout the brain of a live rat. Within a few years, the researchers say their system could reach the clinic and help with cancer and stroke diagnosis. For the procedure, published in Nature, the rat was injected with millions of very tiny bubbles, which reflect sound waves much better than blood vessels.”

http://www.bbc.com/news/science-environment-34909663

12) Xbox Kinect technology helps create higher-quality X-rays

As near as I can tell, they use the Xbox technology to figure out to get the right X-ray picture, meaning that fewer images have to be taken, the ones which are taken are of better quality, and exposure to radiation is reduced. Thanks to my friend Humphrey Brown for this item.

“A team of researchers at Washington University School of Medicine, St Louis, has adapted a gaming system to help radiographers improve the quality of X-rays. The technology, originally developed for Microsoft Kinect, has been amended to provide a useful tool for measuring the thickness of body parts and monitor movement and positioning in the X-ray field of vision before imaging.”

https://thestack.com/world/2015/12/01/xbox-kinect-technology-helps-create-higher-quality-x-rays/

13) Toddler loses eyeball after errant drone slices it in half

This is a sad story which shows what fools can do with even toy drones. Not surprisingly, a machine with rapidly rotating blades can, quite literally, put somebody’s eye out. Drone enthusiasts were quick to criticise the story as not representing “real” drone operators, showing the No True Scotsman argument can apply to almost any situation. Thanks to my friend Duncan Stewart for this item.

“A British toddler recently had his right eye sliced in half by a neighbor’s drone, which resulted in the removal of his eyeball. He will eventually be fitted with a prosthetic. According to BBC Watchdog, Oscar Webb was just 16 months old at the time of the accident. He was out playing in front of his home in Stourport-on-Severn, Worcestershire when a neighbor’s drone hit him in the face. Pilot Simon Evans, a next-door neighbor of the Webb family, flew the drone in front of his house, where it clipped a tree and “spun out of control” for a moment before colliding with the young boy. (The BBC described Evans as an “experienced” drone operator.)”

http://arstechnica.com/tech-policy/2015/11/toddler-loses-eyeball-after-errant-drone-slices-it-in-half/

14) TrendForce Says SSD Adoption by Notebooks May Hit 30% Next Year as Contract Price of Mainstream SSDs Fell 10% for Four Straight Quarters

Long story short, there HDDs have a floor price of about $45 meaning, irrespective of capacity, they don’t get cheaper than that due to the mechanical components. Although mainstream laptops come with 500GB or 1TB HDDs, premium laptops come with a 256 or 512GB SSD showing that consumers value the performance of SSDs more than the capacity of HDDs. The pricing trend suggests 256GB SSDs will approach the floor price of HDDs, and a significant shift will occur at the expense of HDDs.

“DRAMeXchange Senior Manager Alan Chen said 256GB SSDs will be moving close to price parity with mainstream HDDs in 2016, so the adoption of SSDs in the business notebook segment will rise. DRAMeXchange anticipates the next year’s SSD adoption rate in the notebook market will rise above 30% for the first time.”

http://press.trendforce.com/node/view/2188.html

15) SEC Charges Bitcoin Mining Companies

I’m shocked! Somebody actually thought up a novel Bitcoin scam! Usually they just straight up steal them from exchanges they set up, but these guys had the initiative to (allegedly) set up a good old fashioned Ponzi scheme. Too bad for them that this sort of fraud is actually illegal whereby it is not clear than stealing Bitcoin is.

“The SEC alleges that Homero Joshua Garza perpetrated the fraud through his Connecticut-based companies GAW Miners and ZenMiner by purporting to offer shares of a digital Bitcoin mining operation. In reality, GAW Miners and ZenMiner did not own enough computing power for the mining it promised to conduct, so most investors paid for a share of computing power that never existed. Returns paid to some investors came from proceeds generated from sales to other investors.

http://www.sec.gov/news/pressrelease/2015-271.html

16) Germany Pays to Halt Danish Wind Power to Protect Own Output

One of the major subsidies paid to “alternative energy” is that they are guaranteed high prices (another subsidy) for as much electric power they produce whether it is needed or not. In contrast, power generators who produce most of the power have to throttle back production based on demand (go figure) and grid operators are faced with getting rid of excess power, which isn’t as easy as it sounds. Incredibly this situation has led to a push to deploy all kinds of power storage schemes which is mostly about stabilizing the grid which is destabilized due to other daffy policies.

“Germany’s wind farms are now producing so much electricity one of its grid managers is paying generators in neighboring Denmark to shut down to keep its network from overloading. German network operator TenneT TSO GmbH paid Danish power producers to withhold 37 gigawatt-hours of output in November, or about a day of production from the region’s biggest nuclear reactor, according to data from the Nord Pool Spot AS exchange in Oslo. The increase from 1.5 gigawatt-hours a year ago came as TenneT began from 2015 to boost payments to Danish producers via its neighboring grid to avoid cutting German output.”

http://www.bloomberg.com/news/articles/2015-12-01/german-wind-power-surplus-spurs-cash-for-neighbor-to-switch-off