Value Unleashed

The Geek's Reading List

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) Why American Farmers Are Hacking Their Tractors With Ukrainian Firmware

2) IBM unveils Blockchain as a Service based on open source Hyperledger Fabric technology

3) Intel claims storage speed record with first large-capacity Optane SSD

1) Why American Farmers Are Hacking Their Tractors With Ukrainian Firmware

I have 3 tractors and, lucky for me, they run perfectly well without even a battery. Larger equipment tends to require a lot of computers for emissions controls as well as advanced functions such as auto-steer (which helps you line up your machinery for maximum efficiency) and other functions. Companies like Deere have found this is a great segue for keeping tinkerers and independent repair shops from touching any part of “their” tractors. Many farmers have a limited choice of equipment vendors and risk their crop if they can’t get a timely repair. Oddly enough Deere’s approach is legal.

“To avoid the draconian locks that John Deere puts on the tractors they buy, farmers throughout America’s heartland have started hacking their equipment with firmware that’s cracked in Eastern Europe and traded on invite-only, paid online forums. Tractor hacking is growing increasingly popular because John Deere and other manufacturers have made it impossible to perform “unauthorized” repair on farm equipment, which farmers see as an attack on their sovereignty and quite possibly an existential threat to their livelihood if their tractor breaks at an inopportune time. “When crunch time comes and we break down, chances are we don’t have time to wait for a dealership employee to show up and fix it,” Danny Kluthe, a hog farmer in Nebraska, told his state legislature earlier this month. “Most all the new equipment [requires] a download [to fix].”

https://motherboard.vice.com/en_us/article/why-american-farmers-are-hacking-their-tractors-with-ukrainian-firmware

2) IBM unveils Blockchain as a Service based on open source Hyperledger Fabric technology

Just to be clear this is generic blockchain technology, not Bitcoin, which is a particular implementation of blockchain. Given increased interest in the use of the technology by banks and other large institutions – which are IBM’s traditional customers – this makes a lot of sense. Of course there is nothing whatsoever to stop Amazon, Microsoft, and Google from offering exactly the same thing.

“IBM Blockchain is a public cloud service that customers can use to build secure blockchain networks. The company introduced the idea last year, but this is the first ready-for-primetime implementation built using that technology. The blockchain is a notion that came into the public consciousness around 2008 as a way to track bitcoin digital-currency transactions. At its core blockchain is a transparent and tamper-proof digital ledger. Just as it could track bitcoin’s activity in a secure and transparent fashion, it’s capable of tracking other types of data in private blockchain networks. This could allow any private company or government agency to set up a trusted network, which would allow the members to share information freely, knowing that only the members could see it, and the information couldn’t be altered once it’s been entered.”

https://techcrunch.com/2017/03/19/ibm-unveils-blockchain-as-a-service-based-on-open-source-hyperledger-fabric-technology/

3) Intel claims storage speed record with first large-capacity Optane SSD

Optane, also known as 3D Crosspoint memory is rapidly becoming a disappointment. The article sure sounds bullish but the speed advantages are in very specific use cases. It is also worth noting that the “older” Intel drive they are comparing it too has been on the market for 3 years and the past 3 years have seen a lot of improvement in the SSD arena. I remain hopeful Intel will eventually justify at least some of the hype around Optane but so far they really haven’t shown anything to justify it.

“The first large-capacity Optane SSD drive is the DC P4800X, which has 375GB of storage and started shipping on Sunday. The $1,520 SSD is targeted at servers. (Intel didn’t provide regional availability information.) … In a nutshell, Intel said that if you run sequential tasks, it would be better to use conventional SSDs. Optane lights up when running random reads and writes, which are common in servers and high-end PCs. Optane’s random writes reach up to 10 times faster compared to conventional SSDs, but only when utilization is being pushed to extremes, while reads are around three times faster. In a standard 4K data block, with 70 percent read and 30 percent write, the P4800X was five to eight times faster than the older P3700. The responsiveness of the drive increased with the data load.”

http://www.pcworld.com/article/3182547/storage/intel-claims-storage-speed-record-with-first-large-capacity-optane-ssd.html

4) What Happens If Uber Fails?

This is the sort of article you see when valuation bubbles are getting long it the tooth, except in this case the author seems to acknowledge it is a bubble. The trope is that, while one or two companies may have suffered down rounds the party will go on for all the companies that haven’t imploded yet. What tends to happen in real life is that investors shake off a few disappointments until some ill-defined critical mass happens and they have a collective “what was I thinking” moment which leads to a rush for the exits. Unfortunately, unless you have the good fortune of selling your stock to the unsuspecting public through an IPO, for most Unicorn investors there will be no exit.

“But how much is the tech industry’s fate actually wrapped up in Uber’s? If Uber implodes, will the bubble finally pop? It’s a question that’s full of assumptions: Uber’s fate is uncertain, and nobody really knows what kind of bubble we’re in right now. Yet it’s a question still worth teasing apart. Trillions of dollars, thousands of jobs, and the future of technology all hang in the balance. “These bubbles swing back and forth in fear and greed,” McGrath told me, “and when Uber stumbles, it triggers fear. Part of this bubble is created basically in a low-interest-rate environment. Money from all over the world is pouring into this sector because it has nowhere else to go.” This is a key point—perhaps the key point that will determine whether Uber lives or dies. Uber isn’t worth $70 billion because it is actually worth $70 billion. Its valuation is that high despite the fact that it’s not profitable, and despite the fact that it has little protection from competitors baked into what it is and does. Uber’s valuation, in other words, is a reflection of the global marketplace and not a reflection of Uber’s own durability as a company.”

https://www.theatlantic.com/technology/archive/2017/03/uber/520302/

5) T-Mobile busy testing 5G but not on the fixed wireless bandwagon: CTO

Of course he doesn’t believe in fixed wireless: he’s a mobile operator! It is true that range is bound to be pretty poor at 28 GHz but 5G technologies like MIMO and Beam Forming are not confined to particular spectrum. The real advantage is regulatory: there is loads of unlicensed spectrum which can be exploited by ISPs for the last 100 meters to the customer. Plus in the US wireless is federally regulated, and state and local laws shielding wireline ISPs from competition will not affect 5G ISPs.

“T-Mobile US CTO Neville Ray reiterated his disdain for the fixed wireless 5G model that Verizon has been pursuing—saying at this point in time, “I am not a huge believer” in that model—but that doesn’t mean T-Mobile is sitting idle when it comes to 5G. Speaking at the Citi European & Emerging Telecoms Conference in London on Tuesday, Ray said T-Mobile is testing 5G and he believes there’s a lot of potential for true innovation in the wireless industry, including with things related to virtual reality and eyewear, but mobility won’t come in earnest until the next decade. “We’ve done a huge volume of 5G testing, we have 5G radio, 28 GHz, all those pieces,” he said. “We’re trialing, testing, doing all the things,” he added, noting Verizon announced some larger scale trials this year.”

http://www.fiercewireless.com/tech/t-mobile-busy-testing-5g-but-not-fixed-wireless-bandwagon-cto

6) Average PC DRAM Contract Price Jumped Over 20% Sequentially in October with 4GB Modules Coming to US$17.5, Says TrendForce

With DRAM, Flash, and SSD prices trending up (as are, apparently, displays) PC prices and features are bound to be impacted. This is bound to be traumatic for consumers used to continuous improvements in price/performances. Don’t worry it will be a temporary affect: the memory vendors will add a lot of capacity and price will drop even faster than usual in a year or so.

“DRAMeXchange, a division of TrendForce, reports the average contract price of 4GB PC DRAM modules increased over 20% between September and October from US$14.5 to US$17.5 as DRAM suppliers completed their fourth-quarter contract negotiations with first-tier PC-OEMs. Spot prices of DDR3 and DDR4 4Gb chips also rose 17% to 24% respectively in October compared with the prior month to US$2.46 and US$2.48 on average. This strong showing indicates that the DRAM market outlook is rosy and further price increases are expected in the future. “From the supply side, PC DRAM currently accounts for less than 20% of the total output from the global DRAM industry because suppliers are focusing on the mobile and server DRAM markets,” said Avril Wu, research manager of DRAMeXchange. “From the demand side, branded device makers have fairly low DRAM inventories while facing higher-than-expected demand in the busy season. Hence, prices of PC DRAM have risen sharply in the recent period.””

http://press.trendforce.com/press/20161102-2677.html#EFRZdPoLvKZaUOO6.99

7) Apple says recent Wikileaks CIA docs detail old, fixed iPhone and Mac exploits

In case you missed it surprise, surprise, surprise Apple products are vulnerable to hacking. If you believe current products have all the backdoors patched I have some swampland in Florida to sell you.

“As any security expert will tell you, once you gain physical access to a device, nearly all bets are off. Remote intrusion is a much more real and dangerous threat to the security of either end users or company-wide systems. Basically if you have the device in hand and all the time in the world it’s just a matter of plugging away. That said, Apple’s devices have been engineered to be particularly resilient to even in-person attacks. Which is why the CIA docs garnered attention by the press and users today. To wrap — these appear to be older exploits but government agencies are always seeking new vectors and likely have new methods in place already that Apple is or will be patching out as soon as they are disclosed by researchers or disclosed by legal discovery.”

https://techcrunch.com/2017/03/23/apple-says-recent-wikileaks-cia-docs-detail-old-fixed-iphone-and-mac-exploits/

8) Theranos investors who pledge not to sue get Elizabeth Holmes’ shares for free

This is so funny it has to be true. The deal is apparently to the “investors” in the last round of financing who, presumably, were sold a pig in a poke. It turns out that, choosing my words carefully, there wasn’t much there there. Now, why somebody would want shares of Theranos for free is beyond me, especially since that is roughly what they are worth. The advantage to the people behind the company is pretty obvious: no lawsuit and therefore no legal discovery. It all just goes away.

“Theranos CEO and founder Elizabeth Holmes is planning to give up some of her personal shares to investors who pledge not to sue the disgraced blood-testing company, the Wall Street Journal reports. The deals would only involve investors from the last round of funding, which ended in 2015 and brought in more than $600 million. These investors include the family of US Education Secretary Betsy DeVos, the family behind Walmart stores, and John Elkann, who controls Fiat Chrysler Automobiles. Investors could get about two free shares of the company for every share they bought. The deals would also mean that Holmes could lose her majority stake in Theranos.”

https://arstechnica.com/science/2017/03/theranos-investors-who-pledge-not-to-sue-get-elizabeth-holmes-shares-for-free/

9) KABOOM! Incredible moment rockets fizz across a Ukrainian city after an arms warehouse packed with ammunition and weapons was ‘bombed by a drone’

I don’t know how reliable the Daily Mail is in general but BBC is reporting the same thing as suspicions (http://www.bbc.com/news/world-europe-39363416). It certainly makes sense: as I’ve written before consumer grade drones are perfectly capable of dropping bombs and have been used by ISIS for doing exactly that. Whether or not this particular attack was carried out by one it is a matter of time before the things are used for this purpose.

“Last night, Defence Minister Stepan Poltorak said authorities were considering a theory that the fire was caused by ‘explosive devices dropped from an unmanned aerial vehicle’.”

http://www.dailymail.co.uk/news/article-4346328/Clips-blast-Ukrainian-arms-depot-bombed-drone.html

10) Intel Forms New AI Group Reporting Directly To CEO Brian Krzanich

If I were NVIDIA I would have expected this day. NVIDIA’s stock has done really well over AI-related excitement even though their financials are mostly associated with gamers and PC applications. AI researchers used GPUs because they happen to be good at the sort of calculations used in AI even though they are very expensive and not particularly power efficient. It is a matter of time before Intel and others incorporate “AI Accelerators” into their processors which take you most of the way along the performance curve. After all, Intel sells more GPUs embedded in its processor than anybody else sells GPUs. This may not have a material financial impact on Intel but it will have a huge impact on AI related GPU sales.

“GPUs, with NVIDIA being the biggest recent beneficiary, have become the most recent standard for cutting edge deep neural network training, and inference today is spread across CPUs, GPUs, FPGAs, ASICs and even DSPs. AI is a quick moving target and I think it’s unwise to think the engines today will be static in the future. The engines that drive AI are a very competitive space and not only are we seeing startups engaging, but the largest semiconductor companies like Intel. Intel has been on an absolute tear in their goal to be the leader in AI. It acquired Altera for $16B and FPGAs are key to DNN inference.”

https://www.forbes.com/sites/patrickmoorhead/2017/03/23/intel-forms-new-ai-group-reporting-directly-to-ceo-brian-krzanich/#49dfa93b462b