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.

 

1. How Apple Alienated Mac Loyalists
2. Russian ‘methbot’ fraud steals $180 million in online ads
3. Uber sending self-driving cars to Arizona
4. Canada sets universal broadband goal of 50Mbps and unlimited data for all
5. Facebook at a Crossroads
6. Motion-Planning Chip Speeds Robots
7. FCC Republicans vow to gut net neutrality rules “as soon as possible”
8. Ham-fisted: Chap’s radio app killed remotely after posting bad review
9. Feds say Chicago e-recycler faked tear-downs, then sent CRTs to Hong Kong
10. The White House predicts nearly all truck, taxi, and delivery driver jobs will be automated

1) How Apple Alienated Mac Loyalists

The recent launches of the iPhone 7 and MacBooks demonstrate quite clearly the rot has set in at Apple. Neither product has any feature you might refer to as novel, despite the hype and super-premium price tag. In fact, it didn’t appear to occur to anybody at Apple that you might want to plug an iPhone 7 into a new MacBook without an expensive dongle adaptor. Quite a turnaround for a company which used to go by “it just works”. Eventually the chickens will come home to roost. Thanks to my colleague Paul Kantorovich for this article.

“In October, after more than 500 days without an update, Apple unveiled the new MacBook Pro with a slimmer design and louder speakers. The laptop garnered mostly favorable reviews from the technology press but grumbles from creative types, a key constituency, who said the device under-performed rival products. Interviews with people familiar with Apple’s inner workings reveal that the Mac is getting far less attention than it once did. They say the Mac team has lost clout with the famed industrial design group led by Jony Ive and the company’s software team. They also describe a lack of clear direction from senior management, departures of key people working on Mac hardware and technical challenges that have delayed the roll-out of new computers.”

https://www.bloomberg.com/news/articles/2016-12-20/how-apple-alienated-mac-loyalists

2) Russian ‘methbot’ fraud steals $180 million in online ads

This is a pretty sophisticated operation and I am not even sure if it is correct to call it “fraud”. After all where in the law does it say that annoying ads have to be watched by a human being? Thanks to my friend Humphrey Brown for this article.

“Methbot, so nicknamed because the fake browser refers to itself as the “methbrowser,” operates as a sham intermediary advertising ring: Companies would pay millions to run expensive video ads. Then they would deliver those ads to what appeared to be major websites. In reality, criminals had created more than 250,000 counterfeit web pages no real person was visiting. White Ops first spotted the criminal operation in October, and it is making up to $5 million per day — by generating up to 300 million fake “video impressions” daily. In the past, hackers have figured out how to deliver malvertising (viruses through ads) and how to fake clicks on ads. But this is another level.”

http://money.cnn.com/2016/12/20/technology/ad-fraud-online-methbot/

3) Uber sending self-driving cars to Arizona

The reason Uber is sending its self-driving cars to Arizona is because the US Department of Transportation (which has been very friendly to autonomous vehicle trials in the past) ordered them off the road due to numerous safety related incidents. I continue to believe Uber is interested in deflecting attention away from its inability to run a business (see http://www.cnbc.com/2016/12/19/despite-china-windfall-uber-on-pace-for-unprecedented-losses-report-says.html) so it can continue to raise money from gullible investors. That said I won’t be surprised if Arizona is the future home of the first person killed by an AV.

“Uber is moving its self-driving pilot project to Arizona, one day after the California Department of Motor Vehicles ordered the autonomous vehicles off the roads in San Francisco. “Our cars departed for Arizona this morning by truck,” an Uber spokeswoman said Thursday afternoon in a statement. “We’ll be expanding our self-driving pilot there in the next few weeks, and we’re excited to have the support of Governor Ducey.” After starting its San Francisco test on Dec. 14, the ride-hailing company angered the mayor and officials at the DMV by refusing to get a permit to operate its self-driving cars. Residents also flagged several incidents involving the self-driving vehicles, such as running red lights. And so, around noon on Thursday, a fleet of Uber self-driving cars passed through the South of Market area on the backs of several flatbed trucks. Commuters gawked at the fleet with their distinctive hoods, backing up traffic as the convoy slowly drove by.”

http://www.sfgate.com/business/article/Uber-sending-self-driving-cars-to-Arizona-10813886.php

4) Canada sets universal broadband goal of 50Mbps and unlimited data for all

Canada’s telecommunications infrastructure went from world leading to 3rd world comparable over the space of about 20 years, largely due to idiotic or corrupt (I prefer to believe my government is corrupt rather than stupid) policy decisions. There is little hope we can catch up to places like Romania as long as the various protections remain for the telecoms companies. This announcement had global coverage but it is not altogether that significant unless it is backed up by structural changes which aren’t go to happen as long as the telecoms companies continue to control the media as they do. Politicians need the media and the media are directly controlled by the telecommunications companies.

“Canada’s telecom regulator yesterday declared that broadband Internet must be considered “a basic telecommunications service for all Canadians” and created a fund to connect rural and remote communities. With this decision, high-speed broadband is now treated as an essential technology similar to voice service. All Canadians should be able to purchase home Internet with 50Mbps download speeds and 10Mbps uploads, and they should have the option of purchasing unlimited data, the Canadian Radio-Television and Telecommunications Commission (CRTC) announcement said. A new fund will make $750 million available over the next five years to support projects in areas where that level of broadband isn’t available.”

http://arstechnica.com/information-technology/2016/12/canada-sets-universal-broadband-goal-of-50mbps-and-unlimited-data-for-all/

5) Facebook at a Crossroads

I don’t really understand social media but a look at Facebook’s financial results shows that almost all its revenue comes from North American users and not from the new users which sign up in places like India. Growth is typically due to increased revenue from North American users, not new users or increased revenue from non-North American users. The North American Facebook user numbers are probably at saturation and the question becomes one of “what’s next” for Facebook.

“Altogether, Zuckerberg has yet to prove that he can build a new business or product to stand alongside his existing one: offering communications tools that target ads to their users. And recent months have shown that he can’t simply take that core business for granted while he boots up longer-term ideas. Facebook’s chief financial officer recently cautioned investors that revenue growth will slow in 2017 because the service can’t cram more ads in front of people without annoying them.”

https://www.technologyreview.com/s/603198/facebook-at-a-crossroads/

6) Motion-Planning Chip Speeds Robots

Certain types of problems require an enormous amount of computing power which take a long time to execute on a general purpose processor so researchers often turn to Graphic Processors (GPU) such as those made by AMD and Nvidia. Once the algorithms are really well understood it usually pays to make a special purpose processor whose innards are tweaked to the type of processing required. The first step in that process is typically a Field Programmable Gate Array (FPGA) which is a sort of reprogrammable logic device. The same thing will happen with “deep learning” – an emerging technology which has caused Nvidia’s stock to go parabolic. Thanks to my friend Duncan Stewart for this item.

“This motion-planning process is one of the most important skills a robot can have, and it’s also one of the most time consuming. Researchers at Duke University, in Durham, N.C., have found a way to speed up motion planning by three orders of magnitude while using one-twentieth the power. Their solution is a custom processor that can perform the most time-consuming part of the job—checking for all potential collisions across the robot’s entire range of motion—with unprecedented efficiency.”

http://spectrum.ieee.org/robotics/robotics-software/motionplanning-chip-speeds-robots

7) FCC Republicans vow to gut net neutrality rules “as soon as possible”

The incoming US administration is poised to do a whole lot of damage to the US technology sector if they proceed with a trade war as promised. The only losers (besides the tech companies) will be US consumers, but a plutocracy has little concern for them. They plan on doing damage domestically as well: the US telecommunications industry is even worse than Canada due to a similar legacy of bad policy. The most frightening prospect for consumers is the possibility “net neutrality” will be unwound. This would be a windfall for the large Internet Service Providers who would be able to increase profits while decreasing investment. It would cause a whole lot of hurt for the likes of Netflix and emerging content providers. Consumers in the US are typically served by a single ISP so there is no chance market forces will provide balance until 5G wireless is launched.

“More broadly, the Title II net neutrality order prohibits ISPs from blocking or throttling traffic or giving priority to Web services in exchange for payment. The order also set up a complaint process to prevent “unjust” or “unreasonable” pricing and practices. The threat of complaints to the FCC helped put an end to several disputes between ISPs and other network operators over network interconnection payments; this in turn improved Internet service quality for many subscribers. All of that is in jeopardy with the Pai/O’Rielly promise to undo the entire Title II net neutrality order. The process could take months, even if they get started right away, because of requirements to seek public comment. The Republican-controlled Congress could act more quickly, since Trump has opposed net neutrality rules and isn’t likely to veto a bill overturning the Title II order.”

http://arstechnica.com/tech-policy/2016/12/fcc-republicans-vow-to-gut-net-neutrality-rules-as-soon-as-possible/

8) Ham-fisted: Chap’s radio app killed remotely after posting bad review

I have no real idea what ham radio software does but this company’s actions are consistent with a trend to punish users who have the bad judgement to publish a negative online review for a product or service. Since most online reviews are fake, the only ones with any merit are the negative ones (though competitors can fake those as well). Regardless, punishing the reviewer is a pretty stupid move due to the Streisand Effect which amplifies bad coverage once people find out about it.

“HRD Software later said Giercyk’s license key had been blackballed, causing the software to close while starting up: the updated program would phone headquarters to check the key and discover the license had been revoked, forcing it to terminate. “I called the support line and asked them to explain what they were doing, and they informed me that I was blacklisted and the file they directed me to download blocked the software on my computer from running,” Giercyk, aka N2SUB, told fellow hams in a forum post. “Two days later, they contacted me and stated they would unlock my software if I removed the review I posted.””

http://www.theregister.co.uk/2016/12/19/ham_radio_app_bad_review/

9) Feds say Chicago e-recycler faked tear-downs, then sent CRTs to Hong Kong

E-waste was such a big deal the half-wits who run Ontario decided there needed to be a “technology tax” to offset it. The “fees” (i.e. a private tax paid into an industry slush fund) are fixed in price even though technology products drop in price and waste quite rapidly. As a result a substantial amount of the cost of certain items (over 20% in the case of a wireline telephone I bought) is technology tax. Oddly enough, the tax is highly selective and only applies to certain items despite a higher “e-waste” component in, say, appliances. Of course, like this guy in Chicago, oversight is pretty lax and you can be sure most electronic waste ends up in land fill. After all: what possible incentive does a consumer have to “e-cycle” a device after he’s paid a tax on it?

“Brundage promised his clients that their old computers, TV monitors, and various other devices would be broken down into their component parts and recycled in keeping with federal guidelines. Instead, feds allege that Brundage shipped some of those electronics for illegal disposal in landfills overseas. Those electronics included Cathode Ray Tubes (CRTs) from old computer and TV monitors, which contained “hazardous amounts of lead,” as well as batteries. The electronics that weren’t shipped to Asia were destroyed inappropriately on the premises of his businesses or stockpiled indefinitely in warehouses, which is forbidden by federal guidelines.”

http://arstechnica.com/tech-policy/2016/12/feds-say-chicago-e-recycler-faked-tear-downs-then-sent-crts-to-hong-kong/

10) The White House predicts nearly all truck, taxi, and delivery driver jobs will be automated

In other news, almost all horse coach drivers are now unemployed! Actually emergence of autonomous vehicles will likely have a negative impact on driver employment though I suspect delivery drivers will still be needed to place the parcel etc.. The real question is when: there is no reason to believe truly autonomous vehicles (i.e. no driver at all) will be on the road, let alone common, within 20 years. Even then it will take another decade or more before the fleet is switched out.

“In a report published Tuesday, the White House estimated that nearly 3.1 million drivers working today could have their jobs automated by autonomous vehicles. However, the report doesn’t offer a timeline for when this automation could occur, just that the jobs as they exist now are at risk. A bulk of the jobs come from heavy trucking, which the report estimates will see 80% to 100% of nearly 1.7 million drivers’ jobs automated. The White House predicts delivery drivers and self-employed drivers for on-demand services like Uber will face almost total automation as well.”

http://qz.com/868716/the-white-house-predicts-nearly-all-truck-taxi-and-delivery-driver-jobs-will-be-automated/