The strategic implications of tiered network access

This week, the US Supreme Court struck down the FCC’s ruling on network neutrality, which defines telco companies as common carriers, who are therefore forced to treat all network traffic equally. In theory, this opens the door to things like tiered network access (where certain kinds of traffic get higher priority), or even attempting to bill large web media properties (i.e. YouTube and Netflix) for the traffic which they carry over their network.

Network problems - Flickr Creative Commons - Jeremiah Roth
Network problems – Flickr Creative Commons – Jeremiah Roth

I believe that the telcos are unlikely to move quickly on this, and will likely initially do some small (and very quiet) experimentation on a local basis.

The reasons are three-fold – firstly, the FCC may yet respond with an updated ruling that complies with the Supreme Court (this is apparently well within their power); secondly, large experiments run the risk of a massive consumer backlash; thirdly, the ultimate strategic outcome is actually quite hard to predict.

The third item on this list is most interesting from a business strategy perspective. Let’s try to game out some possible longer-term outcomes, shall we? Continue reading

Google buys Nest

Google just announced that it has bought Nest (producers of smart thermostats, and now smoke alarms too). Both sides (for now) are indicating that they’ll take privacy seriously.

Its clear that Google is chasing a strategy with the “internet of things”. Willing to bet they’ll make further purchases or create new products along these lines in the very near future – think connected burglar alarms (Rogers won’t be happy), smart door locks, or light bulbs that compete with GE’s connected product.

Its also clear that this is going to push other large tech competitors to do much of the same, for fear of falling behind. Expect much investment and many buyouts in this sector this year.

Rock, Paper, Scissors

I recently read an interesting book called Dogfight, about the war between Apple and Google over the cellphone market. If you haven’t read it, it covers some of the background behind the development of the iPhone and Android, and the strategies that both companies employed to fight each other.

The major IT companies have long been converging, in the sense that their offerings overlap more and more over time, and the strategic maneuvering of the past few years has gradually made way for something more like trench warfare – gradually improving their products in the hopes of outselling the rest, while relying on the entrenchment of their own platforms. Obtaining a new customer in this environment is zero-sum – the customer must be leveraged away somehow from a competing platform. This is one of the reasons why I wrote some while back that I was bearish on big tech companies in the immediate future. So far, the results of my predictions have been mixed, but I think we’ve already seen them start to play out. Continue reading

Direct magnetic drive

I’ve been thinking about alternative power-trains lately. I believe I’ve come up with something that is at least partially novel, and that might have applications for nanotechnology (I don’t think it scales up, unfortunately).

The basic idea is a modification of a standard electric motor (linear or rotary – I’ll show examples with use-cases below). The thought I had was whether it was possible to make the “fuel” for the motor directly power it, rather than using electromagnets powered by electricity. Continue reading

Partial automation of self-driving vehicles

Take a look at the scene below, and imagine it from the perspective of a self-driving car.

Street scene 1
Linked to original image on Flickr.

There’s a lot going on.

  • There’s the outlines of the road (i.e. potential paths, some of them legal routes for the vehicle to take);
  • there are traffic lights and other signs, all of which need to be identified (and then also checked for context – i.e. “does this sign apply to me?”);
  • there are other cars on the road and pedestrians (each of which may suddenly change direction);
  • as well as innumerable other non-traffic-related distractions (trees, shops);
  • and (perhaps most importantly) the desired destination of the passengers, which may also change rapidly (“hey, there’s a sale on in that store”, “you just missed a parking spot!” etc).

Continue reading

Inflection Points, Driverless Cars and “Soft” AI

Earlier this week, Nissan announced that it would have several models of driver-less cars on the market by 2020. Now GM and Honda have made several similar announcements. This could be an inflection point, where the driver-less car becomes somewhat inevitable (barring legislative ramifications, or a particularly gruesome accident). Continue reading

Microsoft after Ballmer

The New York Times, commenting on Microsoft CEO Steve Ballmer’s retirement, stated their belief that his replacement should be a catch-up artist, in order to allow Microsoft to somehow “get back in the game”.

I disagree. Playing catch-up is a fool’s game, a form of fighting the last battle. Continue reading

Indoor vertical food walls

I’ve been doing a lot of thinking about a few topics in the past few years – distributed systems, lowering humanity’s environmental footprint, and also food. None of what I’m about to write is particularly original, nor is it going to change the world – the potential product I’m describing is more oriented towards first-world apartment dwellers. I’m hoping that the idea will start other people thinking about the problem though.

The underlying issue is that our food supply is extremely fragile, and (while affordable in first-world terms) costly. There has been much research into reducing bottlenecks in the food supply chain, as well as well-known programs to encourage people to consume locally produced food.

One solution that has evolved is the idea of a food wall. They’re a form of vertical high density gardening. You can see examples here and here. Some examples are really impressive, and can generate vast amounts of food in a relatively small area. Most of the ones I’ve seen are intended for outdoor use though, and are still labor intensive. Continue reading

What is the Hyperloop?

As usual, Elon Musk is keeping everyone guessing. At some point in August, he has said that he is going to reveal exactly what he has in mind for this high speed transit system. There have been a number of guesses about the precise nature of the hyperloop, at least one of them supposedly coming close.

The basic idea has been around since the 60’s – build something like a train, but running inside of a tube, allowing for tight control over the environment that it moves in (and therefore permitting higher velocity). Some of the variations involve a vacuum tube, or pressure differentials to move the vehicles, or magnetic propulsion of different kinds. All of them were ultimately discarded as being unfeasible.

Instead of speculating about the technology (since so many others are doing so already), I just want to share a few thoughts that came to mind about how he might be planning on implementing the hyperloop from a business standpoint.

  • Railroad companies tend to trade at a relatively low P/E these days. A railroad already owns significant rights-of-way. In theory, buying such a company could be an excellent starting point. The new hyperloop tubes could be built on elevating columns, above the existing railway lines.
  • Safety is going to be a huge factor. How quickly can the vehicles inside the tube be decelerated in case of emergency? How will the system prevent vehicles from piling into each other at huge velocity, if something goes wrong? How will it deal with things like earthquakes?
  • My best guess is as follows: this system is wasted on human passengers. Personally, I’d rather take a plane if I’m in a hurry to get somewhere.
  • However: this would be an amazing way to deliver cargo quickly – think same-day delivery. Combined with other light-weight distribution systems (i.e. a network of small local delivery vehicles), a trans-continental hyperloop network would allow a small number of warehouses to provide same-day coverage for the whole of North America. Think of Amazon’s grocery experiment in San Francisco, scaled up big-time. Using a large volume of tiny vehicles, with automatic routing, the hyperloop would allow for exceptionally agile logistics, and would enable business models that are currently unfeasible.

I guess we’ll just have to stay tuned for now…

Yahoo! buys Tumblr

A few people have asked for my opinion about the Yahoo! purchase of Tumblr.

Short version: this is a “bet the farm” deal. Y! has (at last report) $1.2 billion in cash on hand, and this is an all-cash $1.1 billion deal. If anything goes wrong elsewhere, they’ll need to raise cash in a hurry, which would be costly. Continue reading