Let’s Engage with Ms. Mohan- Smart Northeastern Reporter

BIG TECH FIRMS REPORT:

Earnings Season requires that entrepreneurs look into the “reported results” and think about what was NOT revealed.  Here’s a smart reporter at Fast Company finally looking at results of the biggest tech companies.

Read what she has to say….

An earnings bonanza was had this week, with heavy hitters like Apple, Tesla, Alphabet, Amazon, and Twitter reporting Q3 earnings. For some, it was a cakewalk: Alphabet revenue was up due to mobile search and video, and Tesla had its second profitable quarter in three years.

Picture Credit: Bell Helicopter

For others, namely Twitter, middling earnings were just the icing on the cake: Twitter also revealed that it is cutting 9% of its workforce—about 350 jobs—and soon after, came the news that Twitter is shuttering Vine. Chipotle, too, had less-than-stellar earnings: A 22% decrease in same-store sales proves that last year’s food safety scandal is still affecting Chipotle’s bottom line.

In other news, Microsoft and Apple both released new hardware in the way of the Surface Studio PC and new MacBook Pros; the FCC ruled that AT&T, Comcast, and other broadband providers can no longer collect user data without permission; Snapchat wants to raise $4 billion in its IPO next year; and Facebook is still trying to replicate Snapchat.

And Chipolte is turning around BTW – great product and dedication to service. Here’s their new delivery team presented above. Shhh!

Tweets by pavsmo

Atlantic Charges that Big Business is Killing Innovation

Picture Credit: The Atlantic, October 2016

It’s interesting to see The Atlantic criticize big business for failing to innovate. The article cites low new business formation and the lack of dynamism in the U.S. economy as key symptoms for our economic stagnation.

Botanists define a rheophyte as an aquatic plant that thrives in swift-moving water. Coming from the Greek word rhéos, meaning a flow or stream, the term describes plants with wide roots and flexible stalks, well adapted to strong currents rather than a pond’s or pasture’s stillness. For most of the 20th century, U.S. lawmakers worked to maintain just these sorts of conditions for the U.S. economy—a dynamic system, briskly flowing, that forced firms to adapt to the unpredictable currents of the free market or be washed away. In the past few decades, however, the economy has come to resemble something more like a stagnant pool. Entrepreneurship, as measured by the rate of new-business formation, has declined in each decade since the 1970s, and adults under 35 (a k a Millennials) are on track to be the least entrepreneurial generation on record. This decline in dynamism has coincided with the rise of extraordinarily large and profitable firms that look discomfortingly like the monopolies and oligopolies of the 19th century.

In fact, investment bankers have been busy inking deals to merge big firms together without any fear of regulatory intervention. And highly valued internet firms like Google and Amazon such up AI players and other social media firms with barely a stop at their stock share printing press. Derek Thomson argues that,”antitrust law shifted over the course of the 20th century from principally protecting competition to principally protecting consumers. Today many reformers are calling for the pendulum to swing back.”

Frankly, the disturbing stories of corruption and deceit at big banks makes one wonder why the Federal Reserve continues to pile on the national debt to nearly $20 Trillion. Look at the CEO of Deutsche Bank featured in a Zero Hedge article which has benefited from the largess of the European Central Bank.

Picture Credit: Deutsche Bank’s CEO John Cryan praying

Zero Hedge points out the extensive market manipulation behind the story, “Following the seemingly endless procession of short-squeeze-fueling trial balloons last week – from settlement rumors to German blue-chip bailouts to Qatari investors – Germany’s Bild newspaper confirms the rumors that sparked weakness on Friday: Deutsche bank CEO John Cryan has failed to reach an agreement with the US Justice Department. His arsenal of strawmen include: denials of bailouts, blaming speculators, rumors of informal capital raising talks with Wall Street firms, rumors of capital injections from Germany’s blue-chip corporations, rumors (denied) of Qatari sovereign wealth fund investments, and the sale of key assets and elimination of thousands of jobs.

The Atlantic laments there is an issue with Bigness overall.

The technology sector presents a thorny problem for antitrust reformers. Between too-big-to-fail banks and seemingly incompetent cable companies, there may be popular support for action against consolidated market power. But many of the companies in Warren’s crosshairs are beloved. The three most admired American companies are Apple, Alphabet, and Amazon, according to Fortune; Facebook is in the top 15 and rising fast. Our attention seems to be ever more focused on our phones, and Apple owns 40 percent of the U.S. smartphone market; between them, Google and Facebook collect more than half of all mobile-display advertising revenues. If mobile phones, software, and social networks eat the world, who decides how big the portions can be?

Smart Phones on Fire- Literally – But What Would Gilbert Newton Lewis have Done? Roll out the iPhone8?

Picture credit: Ariel Gonzalez / YouTube

Update: Oct. 9, 2016 – Amazing that a big tech company would risk the franchise over a likely fixable problem…

Samsung halts production of its Galaxy Note 7 as U.S. carriers stop selling faulty smartphones after multiple reports they catch fire

• Samsung Electronics has suspended production of its Galaxy Note 7 smartphones following reports of fires in the replacement devices
• AT&T and T-Mobile have said they will stop offering replacement Note 7s
• The carriers are concerned that the new versions are no safer than the originals
• Last month, a Chinese customer said his replacement phone burst into flames while charging
• An American user reported his replacement phone catching fire, even though it wasn’t plugged in
• Last week smoke started billowing from a replacement phone aboard a Southwest plane before it departed, prompting the flight’s cancellation

Read more: http://www.dailymail.co.uk/news/article-3830108/Samsung-halts-production-Galaxy-Note-7-U-S-carriers-stop-selling-refuse-exchange-faulty-smartphones.html#ixzz4MhUFjNlr

Update: Oct 7, 2016-    Replacement Galaxy Note 7 could face its own recall (CNET)  A second recall would be an unusual move but could happen if this week’s incident aboard a Southwest Airlines flight involved a “safe” Galaxy Note 7. (Citation: https://www.cnet.com/news/replacement-galaxy-note-7-could-face-its-own-recall/)

Breaking news that Apple iPhone 7s are catching on fire has triggered some pundits to scoff that the competition between the leading two cell phone manufacturers, Apple and Samsung, on feature set has gotten out of control with “inflammability” now a shared characteristic. Last year, a number of Samsung Galaxy 7 phones and tablets caught fire, prompting the U.S. Consumer Product Safety Commission to issue a broad recall and to put limits on recharging. Oddly, Samsung “offered to replace” the phones but not issue a recall of all 2.5M phones being shipped as they reportedly had a concern (according to TrendBlog) about the phone resale market value. While Samsung lost $20B in market value after the September 9, 2016 recall costong it over $1B, Apple has also suffered a material decline in market capitalization too. Apple-tracker, the Boy Genius Report, quipped:

The world’s leading smartphone makers just can’t stop copying each other. While the company has certainly improved its image over the past few years, Samsung is likely most famous for being an Apple copycat. After all, the company was sued repeatedly by Apple for stealing its technology and designs. And as we all learned, things got so crazy at one point that Samsung even created a 132-page internal document to help its engineers copy the iPhone pixel by pixel. Of course, Apple is hardly innocent in all this. The iPhone maker has aped plenty of features from Android in recent years, and it probably never would have made iPhones with large displays if Samsung hadn’t paved the way. But now, things have gone way too far…

Chemical engineers really need to help mobility device manufacturers improve their cell phone designs so that these cells maintain their high energy density but remain stable. And icConstrucx explains in detail  that the battery cycling  tradeoffs are inevitable: “Mixing cathode and anode material allows manufacturers to strengthen intrinsic qualities; however, enhancing one attribute may compromise another. Battery makers can, for example, optimize the specific energy (capacity) to achieve extended runtime, increase the specific power for improved current loading, extend service life for better longevity, and enhance safety to endure environmental stresses.”Without internal cooling systems due to their small form factor, the phones are at risk of chemical breakdown above 100 degrees Fahrenheit. Beyond environmental factors, there remains concerns about “battery management systems” which can fail, leading a fully charged battery to continue to heat until combustion. This “snowball effect” results from an overcharge state during which a chemical reaction causes the battery to fail. In addition to storing your phone in a cool place, battery life can be extended by disabling unused apps. shifting to low-power mode, and a number of other tricks highlighted by TrendBlog.net. They argued the Samsung BMS was materially different from the Apple BMS:

The primary issue is Samsung’s aggressive and quick charging forces for the Note 7’s huge capacity battery. The charging was relying upon a high voltage charging to deliver greater extended energy. A regular USB 2 charger (like the ones used in iPhone and iPad) run at 5 Volts and take up to 5-10 watts. On the contrary, the Galaxy Note 7 comes with a USB Type C adapter, which works at up to 12 volts and can take up to 25.2 watts.

But, waaay back in 1912 when Gilbert Newton Lewis effectively invented the lithium ion battery after he grasped chemical bonding a decade earlier such that two atoms can share the same ions with the lithium ion flowing to the negative electron when charging and vice versa. Since modern lithium ion batteries have multiple layers separated by an electrolyte layer which can become unstable, a heat spread can cause sparking and a catastrophic failure of the battery. The changes that allow heat to spread through a Li-ion cell were recently revealed by Donal Finegan and colleagues in Paul Shearing’s lab at University College London (UCL). Thermal runaway remains a concern to experts at the Battery University.

Picture Credit: CHF Collections: Gilbert Newton Lewis’s memorandum of 1902 showing his speculations about the role of electrons in atomic structure. From Valence and the Structure of Atoms and Molecules (1923), p. 29.

While the iPhone7 eliminated plug-in headphones in a shift to Bluetooth, the iPhone8 is going to be a wirelessly charged device. A patent recently released by the US Patent and Trademark Office, filed in late 2015, describes a unit that will wirelessly charge a mobile device through inductive power transmission (IPT) allowing the next iPhone to charge its battery unencumbered by cables. An IEEE xPlore paper in 2012 from managers of the Croatian Department of Communications had already suggested the industry shift to wireless charging. [The Fraunhofer Institute in Erlangen, Germany is aggressively applying IPT to electric vehicles.] As the CEO of MIT-inspired WiTricity, Eric Giler has a plan to beam electric power through the air (see his TED Talk here) to wirelessly power your laptop or recharge your car (Full bio).

Business Insider just reported that Apple is developing the iPhone8 hardware in its Herzliya, Israel facility, implementing a “radical redesign” and posssibly skipping the iPhone 7s to truncate the two year development cycle for a fall 2017 release. The office was set up after Apple acquired two startups: the flash memory designer Anobit in 2012 and the 3D sensor developer PrimeSense in 2013. Apple has since acquired the Israeli camera firm LinX. Some reports suggest that the iPhone8 will have an edge-to-edge display (according to MacRumours), suggesting that it removes the need for the top and bottom bezels where features like the fingerprint sensor and the front-facing camera are located.  After an unnamed Apple employee shared details about the iPhone 8 with a reporter, KGI Securities analyst Ming-Chi Kuo has shared a note with clients outlining his own expectations for the 2017 devices, which he believes will feature a glass casing and metal frame for the entry-level model and a stainless steel frame and 2D glass for the high-end model.

The Transformative Business Model

Picture Credit: Leandro Castelao

An interesting Harvard Business School article called “the Transformative Business Model” by Stelios Kavadias, Kostas Ladas, and Christoph Loch investigates 40 new business models with widely different outcomes. These business models relate to how companies organize to serve customers and deliver value, the complimentary firms that they select to partner with, and the means by which their supply chain operates. The professors summarize:

We usually associate an industry’s transformation with the adoption of a new technology. But although new technologies are often major factors, they have never transformed an industry on their own. What does achieve such a transformation is a business model that can link a new technology to an emerging market need.

So, part of the trick to to see the emerging market need before competitors do and to find the early adopters among the customer population that make demand go viral. As the business model evolves, the key is to select, allocate and organize the critical resources (i.e. MP3 combined with a pay-per-listen music service like iTunes driven by an easy-to-use online menu that is a front end to remote, large scale storage such as the Apple Cloud). The authors allude to Thomas Kuhn‘s concept of “paradigm shift” when they explain, “Most attempts to introduce a new model fail—but occasionally one succeeds in overturning the dominant model, usually by leveraging a new technology. If new entrants use the model to displace incumbents, or if competitors adopt it, then the industry has been transformed.” NPR did a nice profile on Kuhn’s 94th birthday last July 18th, defining a paradigm shift as “an important change that happens when the usual way of thinking about or doing something is replaced by a new and different way.”

Interestingly, even though a natural scientist, Kuhn was highlighting that paradigms determine large areas of experience at the same time and the “shift” involves an accelerating adoption of a new way of thinking or doing something. (Kuhn fascinates me and I wrote my senior thesis at Yale in the early 1980s about the shift from a bipolar world to a unipolar political economy in the wake of the collapse of the Soviet Union).

HBR always does the basic takeaway points well (analysts take note)- the professors define the “Transformative Business model” as linking technology and the market:

1. A more personalized product or service.

Many new models offer products or services that are better tailored than the dominant models to customers’ individual and immediate needs. Companies often leverage technology to achieve this at competitive prices.

2. A closed-loop process.

Many models replace a linear consumption process (in which products are made, used, and then disposed of) with a closed loop, in which used products are recycled. This shift reduces overall resource costs.

3. Asset sharing.

Some innovations succeed because they enable the sharing of costly assets—Airbnb allows home owners to share them with travelers, and Uber shares assets with car owners. Sometimes assets may be shared across a supply chain. The sharing typically happens by means of two-sided online marketplaces that unlock value for both sides: I get money from renting my spare room, and you get a cheaper and perhaps nicer place to stay. Sharing also reduces entry barriers to many industries, because an entrant need not own the assets in question; it can merely act as an intermediary.

4. Usage-based pricing.

Some models charge customers when they use the product or service, rather than requiring them to buy something outright. The customers benefit because they incur costs only as offerings generate value; the company benefits because the number of customers is likely to grow.

5. A more collaborative ecosystem.

Some innovations are successful because a new technology improves collaboration with supply chain partners and helps allocate business risks more appropriately, making cost reductions possible.

6. An agile and adaptive organization.

Innovators sometimes use technology to move away from traditional hierarchical models of decision making in order to make decisions that better reflect market needs and allow real-time adaptation to changes in those needs. The result is often greater value for the customer at less cost to the company.

Echo and the Voice Activated Device Space – AI Vectors

Picture Credit: Amazon

Update: The massive denial of service attacks last week were traced to a takeover of smart home devices by a Chinese firm according to Anthony Mongeluzo from Pro Computer Services as he detailed on Fox Business here. Internet traffic company Dyn told CNBC it faced continued DDoS (denial of service) attacks on 21 October, 2016 were “well planned and executed, coming from tens of millions of IP addresses at the same time.” What is more worrying is the CIA claim that more DDoS attacks are “planned” for election day, according to Carmen Medina (?), the former CIA Deputy Director of Intel who’s talking points were broadcast across the main stream media repetitively since the third debate ended last Wednesday.

Like the Red Sox’s Hanley Ramirez, Amazon is on a roll. It has the online e-commerce market in a vice hold and the fast shipping and benefits of its Prime service are compelling to repeat customers. Frankly, unlike Wal-Mart or KMart or Target (stupid bathroom absurdity), Amazon has choice, price advantage and convenience. IAI is a customer and repeat buyer for these reasons but we can, in fact, ask Jeff Bezos to avoid the mistake their Internet brethren have made in their social media and Virtual Reality (VR) ventures – that is, don’t censor or manipulate or indoctrinate or lie or invade the privacy of your customers.  In fact, the biggest threat to privacy lies in the Internet of Things (IoT) being hacked (which it has been and will) as something as basic as a Samsung TV communicates actively with up to 200 IoT devices in your home, oh, and records and videos activity inside your home ! That must be buried in the “usage agreement” written by a team of lawyers who declare you lose your privacy for “free services.” But IoT is forecast to be a $290B market by 2017, maybe larger.

So, let’s look carefully at the current Amazon hit – “the Echo” which is a voice-activated device (much like ones from Apple, Google [Home] and Microsoft [Cortona] offerings) that is “always on” and “logs every sentence spoken to it,” according to the London Telegraph. But wait, my British chums, it logs every sound it hears and is a continuous transmission device relying on serial inference and contextual awareness. In fact, “voice-activated smart home systems” are all the rage and are the enablers of the IoT takeover of homes from “dumb humans.” /S But, as Slate points out, just trust the – completely…

Five things you can do with the Echo

• Control your music by saying “Alexa, play some Adele” without having to pick up your phone or walk over to your laptop
• Ask for weather information by saying “Alexa, what’s the weather?”
• Get other handy information such as the time and traffic on your commute
• Alexa can also help out in the kitchen by answering questions such as “Alexa, set a timer for 25” minutes
• Third party compatibility with Alexa means that you’ll soon be able to order a pizza or book a taxi by calling out

The story of Echo actually starts with Amazon’s acquisitions of Alexa (website rankings & “actionable analytics” – 1999) and Evi (artificial intelligence – 2013) combined with the construction of a customer-centric shopping database and the development of a massive cloud computing capability. Even though the Amazon “Fire Phone” was a late-to-the-party fail, it did get Amazon thinking creatively about bunding devices with content using the lure of a “Prime” customer relationship which has translated into customer loyalty. Consumer Intelligence Research Partners reported that the Prime customer base grew 43% by H1 16 to 63M (over half of its customer base) with a annual spend differential of $1200 (Price) to $500 (non-Prime). Unlike dumb Siri which often routes drivers into traffic or gets them lost (try the smarter Google Waze), the Echo is quite efficient and represents a precursor of an animated robot assistant for the household or business applications. The Telegraph nails it as a platform for the introduction of artificial intelligence devices into every aspect of society.

Amazon’s software also seems more reliable. The company’s prowess in cloud computing – which has spawned the colossal Amazon Web Services unit – means that the Echo has access to the near-infinite computing resources of the company’s servers: it can hear a question, send it to be processed, receive an answer and relay it in milliseconds. And Amazon’s underrated artificial intelligence chops, honed using years of shopping data and developed at an R&D base in Cambridge, have allowed it to sneak under the radar.

Waay back in April 2014, WIRED called IoT “far bigger than anyone realizes.” To dig in deeper, the research shop of the article, Burrus Research, operates with  “a philosophy of helping clients understand and profit from the driving forces of technology-driven change, enabling them to gain new competitive advantage as they create new products, markets, services and careers.” Hardly a  Johnny-Come-Lately, futurist Dan Burrus has hung his shingle since 1983 and he does not see IoT as simply ‘increased machine-to-machine (M2M) communication.

When we talk about making machines “smart,” we’re not referring strictly to M2M. We’re talking about sensors. A sensor is not a machine. It doesn’t do anything in the same sense that a machine does. It measures, it evaluates; in short, it gathers data. The Internet of Things really comes together with the connection of sensors and machines. That is to say, the real value that the Internet of Things creates is at the intersection of gathering data and leveraging it. All the information gathered by all the sensors in the world isn’t worth very much if there isn’t an infrastructure in place to analyze it in real time. Cloud-based applications are the key to using leveraged data. The Internet of Things doesn’t function without cloud-based applications to interpret and transmit the data coming from all these sensors. The cloud is what enables the apps to go to work for you anytime, anywhere.

In closing, try to think of hapless astronaut Dave when his onboard mainframe HAL refuses his commands in the classic 1968 sci-fi movie “2001: A Space Odessey.”  Legendary film critic Robert Ebert explained,

What (Director Stanley Kubrick and author Arthur C. Clarke) had actually done was make a philosophical statement about man’s place in the universe, using images as those before him had used words, music or prayer. And he had made it in a way that invited us to contemplate it — not to experience it vicariously as entertainment, as we might in a good conventional science-fiction film, but to stand outside it as a philosopher might, and think about it. Life onboard the Discovery is presented as a long, eventless routine of exercise, maintenance checks and chess games with HAL. Only when the astronauts fear that HAL’s programming has failed does a level of suspense emerge; their challenge is somehow to get around HAL, which has been programmed to believe, “This mission is too important for me to allow you to jeopardize it.”

IAI leaves you with this classic scene: “Open the pod bay doors, HAL” –  [Link: https://www.youtube.com/watch?v=qDrDUmuUBTo%5D

 

In future posts, I’ll direct some attention to:

• Amazon’s Evi and its Lab 126 in Silicon Valley
• Google’s Deep Mind, Magic Leap and API.AI
  
• Apple’s VocalIQ
• Facebook’s Oculus Rift
• Fossil Group’s Misfit and Recon Instruments