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.

ps: Happy New Year!

1) AT&T to ditch most two-year phone contracts on January 8th
2) 3D-Printed Wonder Ceramics Are Flawless And Super-Strong
3) Remember the Air Umbrella? It isn’t going to happen
4) Car Makers Rev Up Automotive Grade Linux at CES
5) Linux Foundation Unites Industry Leaders to Advance Blockchain Technology
6) Is Blocking Readers Who Use Ad Blockers The Best Strategy?
7) G.M., Expecting Rapid Change, Invests $500 Million in Lyft
8) Google, HP, Oracle Join RISC-V
9) Google is tracking students as it sells more products to schools, privacy advocates warn
10) US Army scraps $42m Darpa robot for being too noisy
11) The Internet of Things Is Everywhere, But It Doesn’t Rule Yet
12) How the Internet of Things Limits Consumer Choice
13) New WiFi standard offers more range for less power
14) Breakthrough offers hope to those with Duchenne muscular dystrophy
15) High-fidelity CRISPR-Cas9 nucleases have no detectable off-target mutations
16) Why is Mark Zuckerberg angry at critics in India?
17) FCC: DOCSIS 3 Helps Drive Rapid Rise in Fixed Broadband Speeds
18) India Becomes Mobile-Phone Market With a Billion Subscribers
19) Physicists come up with a way to make cleaner fuel cells
20) Gamers Are Outraged at the Oculus Rift’s Price. They’re Buying It Anyway.

1) AT&T to ditch most two-year phone contracts on January 8th

AT&T is the last major US carrier to abandon mobile contracts and to cease “subsidies” (i.e. hidden financing) of smartphones. If you go to their website, or that of Verizon or T-Mobile, you now pay more or less market price for smartphones with a 24 month financing option. This means customers can immediately see, for example that an iPhone 6s Plus is exactly double the price of a near identical Nexus 5X or any of a myriad of other choices. Price visibility is a good thing for carriers but very bad if you are a high margin smartphone vendor accustomed to consumers not knowing how much they were paying for your product.

“AT&T’s long affair with the two-year contract continues to wind down, Engadget has learned. According to an internal document sent to employees this morning, new and existing customers will only be able to get new phones by paying the full price upfront or in installments over time. The move is set to take effect on January 8th, so you’d better act fast if you (for some reason) really want to lock yourself down for a few more years.”

http://www.engadget.com/2015/12/30/att-ditch-contracts-jan-8/

2) 3D-Printed Wonder Ceramics Are Flawless And Super-Strong

I remain skeptical that consumers will embrace 3D printing any time soon. Besides the fact that consumer grade machines are low resolution, the materials are limited. Besides: few people have the patience to build or fix things and 3D printers won’t change that. Industrial applications are different: materials are improving rapidly and there is a wide variety of applications whether a 3D printed part may be, in theory at least, better than one made using traditional techniques. Ceramics is a big market and this looks very promising.

“The team uses a $3,000 printer to print 100 micron thick layers of a plastic-like material out of a resin. That resin contains all the molecules you need to form a tough ceramic. The printing process is done by carefully etching layers of the resin with a UV light, which fuses small molecular clumps (called monomers) into long plastic-like chains (called polymers). Once the plastic-like pre-ceramic part is printed, it’s forged in an oven, where it’s slowly cooked to 1,000 degrees Celsius in the presence of argon gas. That heating basically tears away all the unnecessary chemical groups attached to the plastic-like material, leaving nothing behind but the strong ceramic framework underneath.”

http://www.popularmechanics.com/science/a18801/3d-printed-wonder-ceramics-wont-shatter/

3) Remember the Air Umbrella? It isn’t going to happen

One of my many rules of thumb is that any unregulated market devolves to fraud and that is obviously what has happened with crowdfunding. Although a high attrition rates is normal for engineering projects even when experienced people are involved, it is becoming increasingly obvious that many high profile crowdfunded projects are outright fraud. Since the crowdfunding sites get a percentage of the money raised their only concern is whether their reputation remains intact so the cash can keep flowing. My suggestion is to let other fools finance scams and buy products only once they are on the market.

“When a gadget called Air Umbrella hit Kickstarter in October last year, it left a lot of things unanswered. Would this really work? Would it spray passers-by with rainwater? Why was there no video of the actual gizmo in action? Toward the end of December, weeks after the China-based creators promised to ship the Air Umbrella to its campaign’s early backers, people began asking different questions – like, who are the creators? Why has the startup not logged in to Kickstarter for over a year? Was this whole thing a scam all along? Was this yet another Kickstarter disaster? The project raised US$102,240 from 842 backers, so a lot of people have money at stake.”

https://www.techinasia.com/air-umbrella-cancelled

4) Car Makers Rev Up Automotive Grade Linux at CES

Cars are getting smarter and will have to get even smarter to accommodate advanced safety systems and self-driving capabilities. Various companies, such as Blackberry QNX might dream they will become or remain, the car software of choice but that ain’t gonna happen: modern SOCs have plenty of computing cycle and often include IO sub-processors to deal with time critical stuff. Furthermore, auto-makers would be stupid to lock themselves into a particular vendor’s software or toolset. Long story short it’s all going to be Linux.

“The Linux Foundation Automotive Grade Linux (AGL) Collaborative Project is kicking off CES with two major announcements that show car makers are embracing open development and code. With four new major automotive OEMs stepping up to join the project (see announcement here), AGL is well-positioned to quickly become the de facto standard for automotive. Mazda, Mitsubishi Motors, Subaru as well as Ford, the first U.S. auto maker to join AGL, are committing to an open ecosystem and a common platform to accelerate rapid innovation. They see a clear benefit to working alongside other AGL members like auto suppliers, communications and semiconductor companies and collaborating directly with our global community of developers to advance the software for connected car applications. But even more important, it’s a clear indication that carmakers are embracing an open source development methodology that has been highly successful in other markets.”

https://www.linux.com/news/featured-blogs/211-dan-cauchy/876413-car-makers-rev-up-automotive-grade-linux-at-ces

5) Linux Foundation Unites Industry Leaders to Advance Blockchain Technology

Bitcoin introduced some interesting technologies such as distributed general ledger, though, judging from the numerous scams and frauds associated with the virtual currency it is far from perfect. There are companies touting proprietary knowhow of the open source technology, which is at least a little amusing. The formation of an open-source industry group ensures that if the technology has commercial application all the requisite knowhow will be readily available.

“The Linux Foundation, the nonprofit organization enabling mass innovation through open source, today announced a new collaborative effort to advance the popular blockchain technology. The project will develop an enterprise grade, open source distributed ledger framework and free developers to focus on building robust, industry-specific applications, platforms and hardware systems to support business transactions. Early commitments to this work come from Accenture, ANZ Bank, Cisco, CLS, Credits, Deutsche Börse, Digital Asset Holdings, DTCC, Fujitsu Limited, IC3, IBM, Intel, J.P. Morgan, London Stock Exchange Group, Mitsubishi UFJ Financial Group (MUFG), R3, State Street, SWIFT, VMware and Wells Fargo.”

http://www.linuxfoundation.org/news-media/announcements/2015/12/linux-foundation-unites-industry-leaders-advance-blockchain

6) Is Blocking Readers Who Use Ad Blockers The Best Strategy?

I was an early adopter of adblock technology and started noticing this trend a few months ago. Forbes.com blocks access if you are using an adblocker as is their right. Of course, switching off an adblocker means you get inundated with distracting, fraudulent, or even virulent (what are the odds an ad knows my PC is infected?) content. In most cases I just don’t bother with the site but in the rare case I am intrigued by the article I open Microsoft Edge, which doesn’t have adblock ability and look at the page with that. You see: a Microsoft browser is useful after all!

“There’s a growing trend in online publishing: Namely, media sites blocking users who choose to use ad-blocking software. In the past few days alone, a British publisher and the Forbes business news site have either implemented or are looking at implementing barriers that keep users with ad-blocking software from reading their content. It’s understandable that publishers might feel under pressure from ad blockers, but is blocking the blockers really the best strategy for dealing with this problem?”

http://fortune.com/2015/12/22/blocking-ad-blockers/

7) G.M., Expecting Rapid Change, Invests $500 Million in Lyft

This just goes to show that even non-technology companies can blow vast sums of shareholder money on stupid technology investments. To summarize, Lyft is a not very successful car service. The technology aspect is an app which can be readily replicated by a small team of people in a few months. Self-driving cars are good 20 years away and even then will almost certain require a human behind the wheel for a few years after that. Lyft and Uber will almost certainly be out of business shortly after investors realize a car service is a low margin business with no barriers to entry and stop giving them money to burn.

“Lyft announced on Monday that G.M. invested $500 million in the company, or half of its latest $1 billion venture financing round. The funding, which recently closed, values Lyft, which is based in San Francisco, at $4.5 billion. G.M.’s support includes more than financial backing. As part of the investment into Lyft, G.M. will work on developing a so-called autonomous on-demand network of self-driving cars, an area of research to which companies like Google, Tesla and Uber have all devoted enormous resources in recent years.”

http://www.nytimes.com/2016/01/05/technology/gm-invests-in-lyft.html

8) Google, HP, Oracle Join RISC-V

RISC-V is an open source CPU architecture which can be provided proprietary extensions. Various groups are working on VHDL (a high level language for hardware) implementations meaning the design can be implemented in FPGAs (programmable hardware) or produced as native silicon. In addition, all sorts of software support such as compilers, operating systems, etc., are available. Like any other open initiative is it probably too early to tell how successful it will be, however, margins for low costs Systems on a Chip (SOC) are pretty low, even if ARM royalties are already modest.

“RISC-V is on the march as an open source alternative to ARM and Mips. Fifteen sponsors, including a handful of high tech giants, are queuing up to be the first members of its new trade group which will host next week its third workshop for the processor core. RISC V is the latest evolution of the original RISC core developed more than 25 years ago by Berkeley’s David Patterson and Stanford’s John Hennessey. In August 2014, Patterson and colleagues launched an open source effort around the core as an enabler for a new class of processors and SoCs with small teams and volumes that can’t afford licensed cores or get the attention of their vendors.”

http://www.eetimes.com/document.asp?doc_id=1328561

9) Google is tracking students as it sells more products to schools, privacy advocates warn

Chromebooks are low cost notebooks based on an open source operating system and which use cloud services rather than local software for most large applications. Although the OS is open source, Google benefits because users are directed to their cloud offering, allowing Google to seed the market with future users. Frankly it is not at all surprising Google is making use of how student use their services and what they use them for: it’s their business model. If you dance with the devil you get burned.

“In public classrooms across the country, the corporate name that is fast becoming as common as pencils and erasers is Google. More than half of K-12 laptops or tablets purchased by U.S. schools in the third quarter were Chromebooks, cheap laptops that run Google software. Beyond its famed Web search, the company freely offers word processing and other software to schools. In total, Google programs are used by more than 50 million students and teachers around the world, the company says. But Google is also tracking what those students are doing on its services and using some of that information to sell targeted ads, according to a complaint filed with federal officials by a leading privacy advocacy group.”

https://www.washingtonpost.com/news/the-switch/wp/2015/12/28/google-is-tracking-students-as-it-sells-more-products-to-schools-privacy-advocates-warn/

10) US Army scraps $42m Darpa robot for being too noisy

DARPA has funded some remarkable technologies (the Internet being one) however the program is largely a massive subsidy program for US technology companies. It may be that this bizarre looking robot mule may find some use somewhere but the idea it might have a military application is laughable: in most modern wars soldiers spend most of their time behind fortifications or in armored vehicles, not wandering through the country side. Enemy fighters would quickly develop tactics to put the monstrosity out of action leaving the soldiers stranded. Perhaps a real mule would be a better choice.

“The United States Marine Corp has abandoned plans to use a robotic mule in combat situations, claiming that the amount of noise it makes risks giving away the position of troops to the enemy. The LS3, or Legged Squad Support System, had been the centre piece of a significant push by the US Army to integrate thousands of robots into its forces by 2030. Development of the LS3 first began in 2008 after the Defense Advanced Research Projects Agency (DARPA) offered a $32m (£21m) contract to Alphabet’s Boston Dynamics. A further $10m was awarded in 2013 for testing the quadruped robot, demonstrating that it could cope with carrying loads of up to 180kgs across rugged terrain.”

http://www.ibtimes.co.uk/us-army-scraps-42m-darpa-robot-being-too-noisy-1535185?

11) The Internet of Things Is Everywhere, But It Doesn’t Rule Yet

If you go to the lightbulb section at Home Depot you’ll find several vendors offering mutually incompatible “smart light” systems and there is an even broader selection at other places. Setting aside the questionable utility of smart light bulbs this means either you will need to standardize on a single lightbulb vendor for your house or you will need to master a variety of apps, etc. Either way you had better hope they maintain the product for the 20+ year life of the lightbulb. I would avoid any IoT devices until the industry moves to an open standard.

“Which brings us to the real dilemma the Internet of Things is facing as we come to the end of 2015: how the hell are all these things going to work together? Apple has Homekit; Google has Brillo and Nest; Microsoft has Windows; Samsung has SmartThings. There’s Wemo and Wink and Zigbee and Z-Wave and Thread and I’m not even making any of these up. You can control some things with your fitness tracker, some with a universal remote, and pretty much all of them with your phone. Some of the protocols overlap and support each other; others are more exclusive. But there’s no simple plug-and-play option, no way to walk out of Best Buy with something you know is going to work.”

http://www.wired.com/2015/12/this-year-was-almost-the-year-of-the-internet-of-things/

12) How the Internet of Things Limits Consumer Choice

This is another example of the issues with IOT and proprietary standards in general. The Digital Millennium Copyright Act (DCMA) was pushed by entrenched media and software companies and supported by politicians who collectively know less about technology than I know about dark matter. Although companies large and small can abuse the DMCA (having critical content removed from the web, for example) the inevitable response by consumers will be to boycott proprietary standards as they did with Keurig. I doubt consumers individually understand what the issues are but they’ll figure it out eventually.

“In theory, the Internet of Things—the connected network of tiny computers inside home appliances, household objects, even clothing—promises to make your life easier and your work more efficient. These computers will communicate with each other and the Internet in homes and public spaces, collecting data about their environment and making changes based on the information they receive. In theory, connected sensors will anticipate your needs, saving you time, money, and energy. Except when the companies that make these connected objects act in a way that runs counter to the consumer’s best interests—as the technology company Philips did recently with its smart ambient-lighting system, Hue, which consists of a central controller that can remotely communicate with light bulbs.”

http://www.theatlantic.com/technology/archive/2015/12/internet-of-things-philips-hue-lightbulbs/421884/

13) New WiFi standard offers more range for less power

This is another IOT related announcement. The new WiFi standard uses lower frequencies, which gives it longer reach for lower power. Power is important for IOT as some applications rely on battery power and a longer reach is always a good thing. 802.11ah will almost certainly have lower bit rates than 2.4GHz but that’s OK because IOT devices don’t need much bandwidth. One thing which is not clear is when compatible devices will be on the market. As a side note, 802.11ah may present a threat to ZigBee with is broadly used in a Hub/peer to peer network for IOT applications: there are Systems On a Chip (SOC) modules available which integrate a microprocessor and WiFi, all FCC approved, for around $1 but these do not have as good battery life so 802.11ah may improve that.

“The WiFi Alliance has finally approved the eagerly-anticipated 802.11ah WiFi standard and dubbed it “HaLow.” Approved devices will operate in the unlicensed 900MHz band, which has double the range of the current 2.4GHz standard, uses less power and provides better wall penetration. The standard is seen as a key for the internet of things and connected home devices, which haven’t exactly set the world on fire so far. The problem has been that gadgets like door sensors, connected bulbs and cameras need to have enough power to send data long distances to remote hubs or routers. However, the current WiFi standard doesn’t lend itself to long battery life and transmission distances.”

http://www.engadget.com/2016/01/04/new-wifi-standard-gives-more-range-with-less-power/

14) Breakthrough offers hope to those with Duchenne muscular dystrophy

CRISPR is probably the biggest advance in science and medicine in decades. It offers cheap and easy gene mutation and a recent development (see item 15) reduces off target changes to undetectable levels, vastly reducing the chances something will go wrong. It may be some time before CRISPR is applied to diseases which are not immediately fatal but there is a good chance it will lead to major advances in DMD, cystic fibrosis, and cancer treatment.

“Gene-editing injections could one day offer hope to those with the inherited disease Duchenne muscular dystrophy, research suggests. Researchers were able to halt the progression of DMD in adult mice using a recently developed technique that has been hailed as the scientific breakthrough of 2015. In a series of studies, three teams of US researchers showed how the gene-editing tool could be used to “correct” a mutation in the animals’ muscle DNA that prevented them producing the protein dystrophin, leading to partial recovery.”

http://www.theguardian.com/science/2015/dec/31/breakthrough-offers-hope-to-those-with-duchenne-muscular-dystrophy

15) High-fidelity CRISPR-Cas9 nucleases have no detectable off-target mutations

This is an improved version of the revolutionary CRISPR technique which might itself be a game changer. One of the risks of CRISPR is that you might introduce mutations – not a big deal if you are working on mice but possibly carcinogenic in humans. This new technique reduces that risk immensely, meaning therapeutic applications have probably been moved closer by years.

“A new engineered version of the gene-editing CRISPR-Cas9 nuclease appears to robustly abolish the unwanted, off-target DNA breaks that are a significant current limitation of the technology, reducing them to undetectable levels. In their report receiving advance online publication in Nature, Massachusetts General Hospital (MGH) researchers describe how altering the Cas9 enzyme to reduce non-specific interactions with the target DNA may greatly expand applications of the gene-editing technology.”

http://phys.org/news/2016-01-high-fidelity-crispr-cas9-nucleases-off-target-mutations.html

16) Why is Mark Zuckerberg angry at critics in India?

I can see why a billionaire is keen to promote his financial interests but I really have to question the judgement of somebody who wants to go toe to toe with a government. “Free Basics” is nothing but a scheme to inflate Facebook user numbers and even though most of the company’s revenue comes from North America you have to give shareholders something to dream about. Despite the ad campaigns, “Free Basics” is not a philanthropic endeavor. For what it is worth, Egypt recently followed suit.

“In an unusually pugnacious appeal in the mass-circulation Times of India, the Facebook founder forcefully defended introducing his Free Basics service, “a set of basic internet services for education, healthcare, jobs and communication that people can use without paying for data”. Facebook, Mr Zuckerberg says, has already launched the service in partnership with more than 35 mobile operators in more than 30 countries. He says more than 15 million people have already come online because of the service. “The data is clear,” he says. “Free Basics is a bridge to the full internet and digital equality.” So – in a tone which many say mocks critics – Mr Zuckerberg asks: “Who could possibly be against this?”

http://www.bbc.com/news/world-asia-india-35192184?OCID=twitterasia

17) FCC: DOCSIS 3 Helps Drive Rapid Rise in Fixed Broadband Speeds

As many consumers have discovered, advertised speeds are often well below realized speeds and both are moot if data caps are in place. Nevertheless, a plug and play upgrade works in the carrier’s favor at least because they can either charge more for the service or jam more customers on the same network. It is a pity North American broadband markets are so non-competitive as many developed and even developing markets have much better speeds at much lower prices and no data cap.

“The average maximum advertised speed across all participating ISPs was 72 Mbps as of September 2014, up a whopping 94% from 37.2 Mbps in September 2013. But while cable and fiber-based ISPs were usually meeting or beating that advertised price, DSL had not kept pace and some continued to advertise speeds that they did not deliver. The FCC said that was largely due to cable’s deployment of DOCSIS 3 — the maximum advertised speeds for cable ISP downloads increased from 12-20 Mbps in 2011 to 50-105 Mbps in September 2014.”

http://www.multichannel.com/news/fcc/fcc-docsis-3-helps-drive-rapid-rise-fixed-broadband-speeds/396188

18) India Becomes Mobile-Phone Market With a Billion Subscribers

India may not lead the world in terms of 4G infrastructure but they are a huge mobile market. Even voice or limited (i.e 2G) data can make a significant impact to standard of living and quality of life in the developing world as we have seen in Africa. Hopefully better information, access to financial services, and other benefits conferred by better communications will result in the sort of economic miracle experience by China through different means.

“Though phone bills in the country are among the cheapest in the world, India’s subscriber base has surged over the years to a size that’s more than triple the U.S. population, underscoring the country’s growing economic influence. Top Indian carrier Bharti Airtel Ltd. alone has more than 200 million subscribers. The huge user base is also the most spoiled for choice. As many as 12 operators fight for subscribers in the third-largest Asian economy, driving down tariffs and hurting profits. The imminent launch of Mukesh Ambani-controlled Reliance Industries Ltd.’s $15 billion fourth-generation services in early 2016 is set to intensify the competition further.”

http://www.bloomberg.com/news/articles/2015-12-30/india-becomes-second-phone-market-to-cross-1-billion-subscribers

19) Physicists come up with a way to make cleaner fuel cells

One of the most expensive items in a Proton Exchange Membrane (PEM) low temperature fuel cell is the Nafion membrane made by DuPont. Besides cost Nafion is from idea as it is prone to leaks and wear. This novel material which may be an alternative however as is usual with such announcements it is all the stuff they don’t tell you which can make the difference. Thanks to my friend Humphrey Brown for this item.

“An international group of scientists from Russia, France, and Germany have developed ion-exchange synthetic membranes based on amphiphilic compounds that are able to convert the energy of chemical reactions into electrical current. The new development described in the journal Physical Chemistry, Chemical Physics could potentially be used in fuel cells, and in separation and purification processes. The study was conducted by MIPT’s Laboratory of Functional Organic and Hybrid Materials, which was opened in 2014.”

http://www.eurekalert.org/pub_releases/2015-12/miop-pcu122915.php

20) Gamers Are Outraged at the Oculus Rift’s Price. They’re Buying It Anyway.

This is about the most balanced article I’ve seen over the announced pricing for Oculus Rift, the much hyped virtual reality headset. The criticism of the pricing (well above what people were told to expect) is the least of the problem as most everybody will need to spend far more for an upgraded desktop PC to run it (I don’t believe any notebooks will be able to). As the article notes, despite the price the associated hype means it will probably sell out. I happen to believe VR may be a fun peripheral for gamers, at least those not prone headaches and nausea associated with the technology but it is not clear to me there will be significant broader application. I also expect it’ll be a crowded market and prices will drop rapidly.

“In two years, we’ll all be wandering the streets with virtual-reality headsets pasted to our noggins. Either that, or every VR prototype will be buried under a concrete slab in a New Mexico desert. While there’s perhaps some middle ground between universal adoption and humiliating failure, that hasn’t been reflected in the rhetoric around the Oculus Rift. It is hard to think of another consumer tech product that has gone through so many cycles of hype and backlash before it has even been released to the public. (Oh, wait, no it isn’t: Google Glass. Hmm—hold that thought.) Now, the long-awaited consumer version of the Rift headset is finally available for preorder, and the price is higher than expected: $599.)”

http://www.slate.com/blogs/moneybox/2016/01/06/oculus_rift_s_price_sparks_backlash_but_gamers_are_buying_it_anyway.html