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.

The Geek's Reading List

1) You say advertising, I say block that malware

We covered counter measures to adblock recently. Besides the annoyance associated with online advertising much of it is fraudulent or malware because there is no quality control. One solution would be to vet advertisers or bond them but this would eat into profits. Either way I suggest adblocking is as important as anti-virus and other security measures.

“The real reason online advertising is doomed and adblockers thrive? Its malware epidemic is unacknowledged, and out of control. The Forbes 30 Under 30 list came out this week and it featured a prominent security researcher. Other researchers were pleased to see one of their own getting positive attention, and visited the site in droves to view the list. On arrival, like a growing number of websites, Forbes asked readers to turn off ad blockers in order to view the article. After doing so, visitors were immediately served with pop-under malware, primed to infect their computers, and likely silently steal passwords, personal data and banking information. Or, as is popular worldwide with these malware “exploit kits,” lock up their hard drives in exchange for Bitcoin ransom.”

http://www.engadget.com/2016/01/08/you-say-advertising-i-say-block-that-malware/

2) Nissan announce to launch more than 10 self-driving vehicles by 2020.

Nissan’s announcement is that they are introducing a number of enhance safety features which move in the direction of self-driving. This is good news and follows on from a similar announcement from Toyota. Hopefully these features will become standard and save many lives.

“Nissan’s first step toward full autonomy will hit the roads in 2016. It says the feature will be called “single-lane control.” This system will allow the car drive autonomously on highways, including in heavy, stop-and-go traffic. Two years later in 2018, Nissan’s “multiple-lane control” will be offered. That, as you might imagine, will expand the single lane system into multiple lanes. With that capability, it will be able to autonomously negotiate road hazards as well as change lanes during highway driving. Finally, in 2020, drivers will be offered “intersection autonomy.” This robust system will be capable of navigating city intersections and heavy urban traffic without driver intervention.”

http://www.trendingaround.com/2016/01/nissan-announce-to-launch-more-than-10.html

3) Your smart-home network will be a mess

If you visit the local big box hardware store you’ll find a wide assortment (I counted 5) of Internet of Things lightbulbs, none of which work with each other. They aren’t much more expensive than regular LED lightbulbs, but you should know that if you go with a particular vendor, and the vendor gets out of the IoT business, your lightbulbs won’t work anymore. My advice is to stay away from this sort of product until they adopt open standards.

“Light bulbs, refrigerators, sprinklers and door locks soon will be a lot smarter. Too bad they’ll have trouble talking to each other. Welcome to the chaotic underside of the smart-home vision, once all those humble devices start trying to communicate over a hodgepodge of wireless network standards. Some you’ve heard of, like the Wi-Fi that links your laptop to the Internet and the Bluetooth that connects your wireless headset to your phone. Other standards you probably don’t recognize include ZigBee, Z-Wave and Thread. And for the most part, they don’t get along.”

http://www.cnet.com/news/your-smart-home-network-will-be-a-mess-to-start-with/

4) H.265/HEVC vs H.264/AVC: 50% bit rate savings verified

Streaming of “over the top” video is a major driver of broadband traffic growth so a significant improvement of compression technology can have a big impact on accessibility, delivery cost, and even the pace of infrastructure investment. I am not sure the market will embrace 4KTV to the extent it did HDTV, however, these improvements might work across the board.

“The tests confirmed the significant compression efficiency improvements achieved in HEVC, verifying the results previously reported using objective quality metrics (PSNR based methods). In fact the compression gains of HEVC compared to AVC were noted to be significantly higher when the subjective metrics (Mean Opinion Scores – MOS) were considered compared to the same considering objective metrics (PSNR). The overall average bit rate saving achieved by HEVC compared to AVC for the same subjective quality was found to be 59% as supposed to the 44% gain shown with objective quality metrics. It was also noted that the bit rate savings for larger picture sizes were higher than smaller picture sizes, which is a very encouraging sign for future UHD deployments.”

http://www.bbc.co.uk/rd/blog/2016/01/h-dot-265-slash-hevc-vs-h-dot-264-slash-avc-50-percent-bit-rate-savings-verified

5) ATSC 3 Demo Offers Glimpse Into Future Of IP OTA TV

Everything is going Internet Protocol (IP) even, it seems, broadcast standards. Unfortunately, the document is a little thin with respect to details (for example, broadcasts is a one way pipe) but the transition makes senses as more and more content producers offer streaming services.

“This next generation standard is a platform that we can do so much with, and it is going to keep pace with what is out there,” said Anne Schelle, executive director of the Pearl TV consortium during a telephone interview from Las Vegas. There are several reasons the standard will position broadcasters to remain competitive far into the future, but one of the most important is that ATSC 3.0 is IP-based, and that is a critical part of what the private demos are trying to convey, said Mark Aitken, VP of advanced technology for Sinclair.”

http://www.tvnewscheck.com/playout/2016/01/atsc-3-demo-offers-glimpse-into-future-of-ip-ota-tv/

6) Why 2015 Was the Year That Changed TV Forever

2015 appears to be the year “cord cutting” (substituting cable services for streaming) gained a lot of profile. Many broadcasters also stream so what is changing is the delivery method, not whether people watch video content. Cord cutting is placing pressure on cable companies to “un bundle” services, which could completely disrupt the business of some cable content providers since most consumers only watch a small subset of the channels they are required to pay for. Unbundling would remove the enforced subsidy on certain channels, meaning they either raise rates, which may cost more subscribers, or lose their revenue base.

“Sometimes the arrival of new distribution technologies introduces only moderate change, like when the music industry shifted from records to cassettes. Other times, new distribution technologies require a radical reconfiguration of business models and completely change the user experience of a medium. This is what’s now happening for television. And just as streaming makes for a very different viewing experience, it is also changing the nature of the shows that are made. Streaming services produce content targeted to narrower niches and sensibilities. They’ve also allowed for much greater experimentation and diversity in the ways stories are told and structured.”

https://newrepublic.com/article/126732/2015-year-changed-tv-forever

7) French government considers law that would outlaw strong encryption

It is truly remarkable to see what a small group of people can do to a population of millions. All evidence suggest the Paris terror attacks were coordinated by known militants across unencrypted channels like text messages and yet France is keen to implement the sort of police state surveillance the Stasi could only dream of. It is a match made in heaven: politicians utterly ignorant of technology guided by police who would like to read all your mail. The only saving grace is that people will move to open standards which will be completely secure and impossible to police.

“The anti-encryption amendment is largely seen as a response to the two deadly Paris terrorist attacks in 2015, despite the fact that the attackers repeatedly used unencrypted communications in the leadup to the killings. Authorities still don’t fully know how the terrorists planned their operations, but the ISIS-inspired militants signaled the start to the Nov. 13 attacks through unencrypted text messages. They also traded unencrypted phone calls with senior operatives elsewhere in Europe. French authorities say that some blind spots remain due to encrypted messaging services like Telegram.”

http://www.dailydot.com/politics/encryption-backdoors-french-parliament-legislation-paris-attacks-crypto-wars/

8) New Discovery Around Juniper Backdoor Raises More Questions About the Company

This is an update on earlier coverage of backdoors which are being discovered in mainstream equipment. Unlike the one in Fortinet, this is almost certainly the work of NSA or some other state player based upon the level of sophistication. One has to wonder if Juniper advertisements will now carry the lede “now with a couple fewer backdoors …”

“(Since the revelations) … Juniper—whose customers include AT&T, Verizon, NATO and the US government—has refused to answer any questions about the backdoor, leaving everyone in the dark about a number of things. Most importantly, Juniper hasn’t explained why it included an encryption algorithm in its NetScreen software that made the unauthorized party’s backdoor possible. The algorithm in question is a pseudo-random number generator known as Dual_EC, which the security community had long warned was insecure and could be exploited for use as a backdoor. Whoever created the backdoor in Juniper’s software did exactly this, hijacking the insecure Dual_EC algorithm to make their secret portal work.

http://www.wired.com/2016/01/new-discovery-around-juniper-backdoor-raises-more-questions-about-the-company/

9) Google reports self-driving car mistakes: 272 failures and 13 near misses

Most of the coverage of self-driving cars glosses over the fact that the cars are mostly being tested in areas which, for example, lack snow. It would be interesting to know how often they are tested in fog, driving rain, and so on. The technology has come a long way but as these data show we are a long way away from either driverless cars or using the morning commute to catch up on your reading. The big advances are coming in advanced safety systems, which are a 5 year, rather than 20 year, technology.

“Google’s self-driving cars might not yet have caused a single accident on public roads, but it’s not for want of trying. Between September 2014 and November 2015, Google’s autonomous vehicles in California experienced 272 failures and would have crashed at least 13 times if their human test drivers had not intervened, according to a document filed by Google with the California Department of Motor Vehicles (DMV).”

http://www.theguardian.com/technology/2016/jan/12/google-self-driving-cars-mistakes-data-reports

10) How Will Talking Cars Change Our Roads?

V2V is one of the advanced safety technologies associated with self-driving cars but which can be used absent self-driving technologies. For example, if a driver slams on the brakes the system can signal other drivers (through say a steering wheel shake) than something is going on ahead. Similarly, if a car’s anti-lock brakes engage, other vehicles can be signaled the road ahead is slippery. Things like this, self-braking, and so on will be standard features soon and will save many lives.

“V2V technology is set to spread further and faster than self-driving cars. The Department of Transportation is expected to release a set of rules for V2V within a matter of weeks, and those could include mandating manufacturers to include it in new cars within as little as three years. As the technology spreads, equipped cars will become, in Barbaresso’s word, “probes” gathering and sharing data. For instance, if dozens of cars in one spot turn on their windshield wipers, that’s useful weather information for public agencies—and much more granular than standard satellite information.”

http://fortune.com/2016/01/08/connected-vehicles-impact-cities/

11) Driverless Ford tackles snow problem

I read the article and I’m not sure the author has actually driven in snow. The real problem with snow is not just knowing where the road is but loss of traction and poor visibility – a bad combination. Poor visibility reduces reaction times and bad traction makes collision avoidance that much more challenging. It is nice to see some progress is being made but I think a lot of the problem needs to be addressed.

“Driverless cars use Light Detection and Ranging (Lidar) sensors to build a detailed view of the world around them. Lidar works by rapidly firing laser light away from the car and measuring how much light is reflected back – a similar principle to radar, which uses radio waves instead. But these sensors do not work well in snowy conditions, and the car’s onboard cameras cannot see road markings obscured by snow. Ford said it had instead programmed the Lidar sensors to detect landmarks above the ground, such as buildings and road signs. The car could then compare this information to an existing high-resolution map of the road – generated by autonomous cars during more favourable weather- stored in its computer.”

http://www.bbc.com/news/technology-35280632

12) Independent internet radio stations stifled by fees

I don’t think Internet radio is as important as music streaming but if you are in the business it sure seems to be. Many of these stations focus on specific types of music which don’t get much air play and are essentially hobbies for the folks who run them. Shutting them down simply puts the music out of circulation and really does nothing for anybody. That’s what happens when your rules are designed for an ear when people listened to an actual radio – itself a dying medium.

“A new royalty rate fee went into effect January 1 based on a ruling by the Copyright Royalty Board. It impacts all U.S. internet radio stations that play music and snuffed one popular station. “Rates will be going up significantly,” says Rick O’Dell, founder/operator of Chicago’s smooth jazz station. “Sadly, it’s not an increase I can absorb.” O’Dell pulled the plug on smoothjazzchicago.net last week, ending a three-decade tradition that started on terrestrial radio and continued as a webcast for the past three years. The rate increase also seems to be choking the life out of Live365, a popular internet radio network that offers some 260 “human curated” indie stations — an international platform that showcases diverse formats, such as “Folk Alley,” “Surf Roots,” “DJ Out There,” “Psychedelic FM,” and “Alt Rock is Dead.””

http://www.sandiegoreader.com/news/2016/jan/10/blurt-independent-internet-radio-stations-stifled/#

13) Malware alone didn’t cause Ukraine power station outage

This is an update from a story are week or so ago about how “cyber terrorists” had shut down a power station in Ukraine. It turns out that’s not exactly what happened though their hacking apparently helped. I don’t like the term “cyber terrorist”: this might be vandalism on a grand scale but it is different from setting off a bomb in a bus.

“A new study of a cyberattack last month against Ukrainian power companies suggests malware didn’t directly cause the outages that affected at least 80,000 customers. Instead, the malware provided a foothold for key access to networks that allowed the hackers to then open circuit breakers that cut power, according to information published Saturday by the SANS Industrial Control Systems (ICS) team. Experts have warned for years that industrial control systems used by utilities are vulnerable to cyberattacks. The Dec. 23 attacks in Ukraine are the most prominent example yet of those fears coming to fruition.”

http://www.csoonline.com/article/3020737/security/malware-alone-didnt-cause-ukraine-power-station-outage.html

14) Robots Lay Three Times as Many Bricks as Construction Workers

This is an update to a story were had in the summer, except this actually shows the machine laying bricks. Brick laying is not as easy as it looks, especially since buildings are rarely square, level, and so on. One thing I find interesting is that the machine is laying bricks without ties, which doesn’t work in a lot of situations. Nevertheless, at this rate, brick laying machine might be commonplace in a decade or so.

“Construction workers on some sites are getting new, non-union help. SAM – short for semi-automated mason – is a robotic bricklayer being used to increase productivity as it works with human masons. In this human-robot team, the robot is responsible for the more rote tasks: picking up bricks, applying mortar, and placing them in their designated location. A human handles the more nuanced activities, like setting up the worksite, laying bricks in tricky areas, such as corners, and handling aesthetic details, like cleaning up excess mortar.”

http://www.technologyreview.com/news/540916/robots-lay-three-times-as-many-bricks-as-construction-workers/#comments

15) Nest thermostat bug leaves owners without heating

Nest is somewhat of an enigma to me: I understand why you’d want an online thermostat I just don’t understand why Google would have paid money for simplistic technology a two or three developers could have produced in a week using the contents of their spare parts drawer. Nor do I understand what a thermostat would need a software update: it’s a thermostat not an autopilot. Well I guess if you are going to issue a software update for a thermostat in the middle of winter you may as well let your customers test it for you. Thanks to my friend Humphrey Brown for this item.

“Google-owned smart homeware company Nest has asked users to reset their connected thermostats after a software bug forced controllers offline and left owners unable to heat their homes. The company has confirmed that a software update error had caused the thermostat’s batteries to drain, therefore making it unable to control the temperature. Users of the smart home device took to social media to express their anger at being left with cold houses. Some feared that the fault had put water pipes under pressure, risking burst plumbing.”

https://thestack.com/iot/2016/01/14/nest-thermostat-bug-leaves-owners-without-heating/

16) Internet Yields Uneven Dividends and May Widen Inequality, Report Says

I am surprised the UN doesn’t have people writing papers on how water is wet and other brilliant insights. Obviously a new technology will help people who have access to it more than people who don’t have access to it. This isn’t just the case in sub-Saharan Africa but the US and Canada, where Internet services are not available at reasonable prices to a large portion of the population. What is needed is a concerted effort to level access and not through corporate vampires like Facebook.

“Can the Internet save the world? In some places, it has helped curb corruption, encouraged more girls to go to school and enabled citizens to monitor election violence. But according to a report issued Wednesday by the World Bank, the vast changes wrought by technology have not expanded economic opportunities or improved access to basic public services in ways that many had expected. Rather, the report warned darkly, Internet innovations stand to widen inequalities and even hasten the hollowing out of middle-class employment.”

http://www.nytimes.com/2016/01/14/world/asia/internet-yields-uneven-dividends-and-may-widen-inequality-report-says.html

17) Et tu, Fortinet? Hard-coded password raises new backdoor eavesdropping fears

This is such a ham handed backdoor it is most likely the result of bad programming (such as the backdoor in Ruggedcom products) or an amateur hacker rather than NSA. A good backdoor is very hard to find even if you know what to look for. Apparently, Fortinet corrected the issue long ago, but that doesn’t speak to what damage might have been done in the past. Of course, as with Juniper, discovery and removal of one back door doesn’t mean there aren’t others.

“Less than a month after Juniper Network officials disclosed an unauthorized backdoor in the company’s NetScreen line of firewalls, researchers have uncovered highly suspicious code in older software from Juniper competitor Fortinet. The suspicious code contains a challenge-and-response authentication routine for logging into servers with the secure shell (SSH) protocol. Researchers were able to unearth a hard-coded password of “FGTAbc11*xy+Qqz27” (not including the quotation marks) after reviewing this exploit code posted online on Saturday. On Tuesday, a researcher posted this screenshot purporting to show someone using the exploit to gain remote access to a server running Fortinet’s FortiOS software.”

http://arstechnica.com/security/2016/01/et-tu-fortinet-hard-coded-password-raises-new-backdoor-eavesdropping-fears/

18) Bitcoin will crash and burn, developer declares – should you sell up now?

Bitcoin blockchain is an interesting technology, albeit with some correctable flaws. The idea Bitcoin could be an actual currency is laughable unless you know nothing about money laundering laws and so on. The market value of Bitcoin is subject to market manipulation which has probably fleeced more speculators than the countless frauds associated with Bitcoin exchanges. Setting all that aside it seems that even the developers community is undergoing something of a meltdown. Thanks to my friend Duncan Stewart for bringing this to my attention.

“Bitcoin is a failure, according to an expert and major supporter of the cryptocurrency. Mike Hearn, who has been cited as a Bitcoin expert and indeed was a developer for five years – he left a post as a senior software engineer at Google to work on the virtual currency – has turned his back on Bitcoin, declared it a failure, and sold all his coins. He detailed his reasons for doing so in a blog post spotted by Fortune, but the long and short of it is that it’s to do with infighting, politics and agendas – because of which he’s lost confidence in Bitcoin and believes its fundamentals are broken. He notes that nothing bad might happen in the near future, but in the longer-term picture, seemingly the only way is down.”

http://www.techradar.com/us/news/internet/bitcoin-will-crash-and-burn-developer-declares-should-you-sell-up-now–1313203

19) Scientists struggle to stay grounded after possible gravitational wave signal

If the rumour is true, and the data checks out, this would be an important discovery: not so much because it yet again confirms relativity but because it might lead to the development of more sensitive gravitational wave detectors and therefore new imaging systems. It would be particularly interesting if they find gravity waves but their measurement provided unexpected data.

“According to the rumours, scientists on the team are in the process of writing up a paper that describes a gravitational wave signal. If such a signal exists and is verified, it would confirm one of the most dramatic predictions of Albert Einstein’s century-old theory of general relativity. Krauss said he was 60% confident that the rumour was true, but said he would have to see the scientists’ data before drawing any conclusions about whether the signal was genuine or not.”

http://www.theguardian.com/science/2016/jan/12/gravitation-waves-signal-rumoured-science

20) SSD Pricing – Stop the Madness!

This post – which is not apparently meant to be sarcastic r humorous – appeared on the website of Trendfocus, an industry research firm which bills itself as “The Data Storage Industry’s Most Trusted Market Intelligence”. I am not so sure about the most trusted part, but I can say that if this is an example of their “market intelligence” it is pretty dubious. An SSD is a product where almost all of the value is in semiconductors and most people are aware of the fact that loosely speaking, price/performance in semiconductors doubles every 24 months (Moore’s Law). A 33% decline in a year works out a 56% decline in two years: very close to what you might expect given the nature of the product. Perhaps the author is new to the business.

“Now it is 2016 and three HDD vendors remain (barely) along with a lot of SSD companies, and we have seen pretty much the same behavior on SSD pricing throughout 2015 that will likely trigger additional consolidation in the SSD industry. Back to pricing – just over one year ago, average pricing for a 256 GB SSD was around $125. One year later, this same drive is about $85. That’s a 33% reduction in one year. How long can this type of behavior last? It is hard to imagine why any SSD company would want to follow such insane price trends down the road to un-profitability. As we all know from history (about 60 years worth in the HDD industry) that once you lower your price, there is no going back – unless, of course, there is a natural disaster in the world – which no one ever wants to see. But even then, price increases would be temporary for the most part.”

http://www.trendfocus.com/ssd-pricing-stop-the-madness/