Uber, disruption and Clayton Christensen

This morning’s Observer column:

Over the decades, “disruptive innovation” evolved into Silicon Valley’s highest aspiration. (It also fitted nicely with the valley’s attachment to Joseph Schumpeter’s idea about capitalism renewing itself in waves of “creative destruction”.) And, as often happens with soi-disant Big Ideas, Christensen’s insight has been debased by overuse. This, of course, does not please the Master, who is offended by ignorant jerks miming profundity by plagiarising his ideas.

Which brings us to an interesting article by Christensen and two of his academic colleagues in the current issue of the Harvard Business Review. It’s entitled “What Is Disruptive Innovation?” and in it the authors explain, in the soothing tones used by great minds when dealing with those of inferior intelligence, the essence of Christensen’s original concept. The article is eminently readable and cogent, but contains nothing new, so one begins to wonder what could be the peg for going over this particular piece of ground. And why now?

And then comes the answer: Uber. Christensen & co are obviously irritated by the valley’s conviction that the car-hailing service is a paradigm of disruptive innovation and so they devote a chunk of their article to arguing that while Uber might be disruptive – in the sense of being intensely annoying to the incumbents of the traditional taxi-cab industry – it is not a disruptive innovation in the Christensen sense…

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Two cheers for the Librarian of Congress

Sometimes the Librarian of Congress does the right thing:

Every three years, the Librarian of Congress issues new rules on Digital Millennium Copyright Act exemptions. Acting Librarian David Mao, in an order (PDF) released Tuesday, authorized the public to tinker with software in vehicles for “good faith security research” and for “lawful modification.”

The decision comes in the wake of the Volkswagen scandal, in which the German automaker baked bogus code into its software that enabled the automaker’s diesel vehicles to reduce pollutants below acceptable levels during emissions tests.

“I am glad they granted these exemptions,” said Sherwin Siy, vice president for legal affairs for Public Knowledge in Washington, DC. “I am not glad it was necessary for them to do so in the first place.”

The auto industry, and even the Environmental Protection Agency, opposed the vehicle-tinkering rules that were proposed by the Electronic Frontier Foundation and others. About every 36 months, the Librarian of Congress and the Copyright Office entertain proposals for exemptions to the DMCA, which was passed in 1998. The DMCA prohibits circumventing encryption or access controls to copy or modify copyrighted works. The ultimate decision rests with the Librarian of Congress.

Just a pin-prick? Or a big deal?

This morning’s Observer column:

If you have ever been a hospital patient, then you will know the drill: before anything else happens, you have to have your “bloods done”. You roll up your sleeve, a phlebotomist searches your lower arm for a suitable vein, inserts a sterilised needle and extracts a blood sample that is then labelled and sent off to a lab for analysis.

Depending on your condition, this can happen a lot. If you are a cancer sufferer on chemotherapy, for example, you may come to think of your arms as pincushions and you sometimes have to watch in dismay as the phlebotomist hunts up and down for a suitable vein. Although the analysis of blood samples is now highly automated and efficient, at the sample-collection end it’s very time consuming and resource intensive.

The mind boggles at the amount the National Health Service must spend on it every year. And yet it is an absolutely central part of modern healthcare: blood tests are on the critical path of a very large number of diagnostic and treatment regimes.

Enter Theranos, a California startup that has (or claims to have) developed novel approaches to laboratory-based diagnostic blood tests using the science of microfluidics, which concerns the manipulation of tiny amounts of fluids (think ink-jet printers, for example)…

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The new Holy War — and its collateral damage

This morning’s Observer column:

The novelist Umberto Eco wrote a deliciously insightful essay in 1994, in which he argued that the Apple Mac was a Catholic machine, in contrast to the PC, which, he argued, was clearly a Protestant device. How so? Simply this: the Mac freed its users/believers from the need to make decisions. All they had to do to find salvation was to follow the Apple Way. When the Mac was launched, for example, a vigorous debate broke out among user-interface geeks about whether a computer mouse should have one or two buttons. Some were critical of the fact that the Macintosh mouse had only one button. But when queried about this, Steve Jobs – then, as later, the supreme pontiff of the Church of Apple – was adamant and unrepentant. Two buttons would undermine the rationale of the Mac user interface. He spoke – as his Vatican counterpart still does – ex cathedra, and that was that.

In contrast, Eco pointed out, the poor wretches who used a PC had, like the Calvinists of yore – to make their own salvation. For them, there was no One True Way. Instead they had to choose and install their own expansion cards and anti-virus software, wrestle with incompatible peripherals and so on. They were condemned to an endless round of decisions about matters that were incomprehensible to them but on which their computational happiness depended.

Spool forward 21 years to today and nothing much has changed, other than that the chasm between computational Catholics and Protestants now applies to handheld computers called smartphones, rather than to the desktop machines of yore…

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The hardware that breaks the commoditisation rule

Insightful column about the iPhone phenomenon by Farhad Manjoo: The nub of it is this:

In many fundamental ways, the iPhone breaks the rules of business, especially the rules of the tech business. Those rules have more or less always held that hardware devices keep getting cheaper and less profitable over time. That happens because hardware is easy to commoditize; what seems magical today is widely copied and becomes commonplace tomorrow. It happened in personal computers; it happened in servers; it happened in cameras, music players, and — despite Apple’s best efforts — it may be happening in tablets.

In fact, commoditization has wreaked havoc in the smartphone business — just not for Apple. In the last half-decade, sales of devices running Google’s Android operating system have far surpassed sales of Apple’s devices, and now account for the vast majority of smartphones in use.

For years, observers predicted that Android’s rising market share would in turn lead to lower profits for Apple (profits, not market share, being the point of business). If that had happened, it would have roughly approximated the way the Windows PC industry eclipsed Apple’s Mac business. “Hey, Apple, wake up — it’s happening again,” Henry Blodget, of Business Insider, warned in 2010. And again in 2011, 2012, 2013 and 2014.

None of those predictions came true. While the iPhone’s sales growth slowed in 2013 and 2014, it rebounded to near-record levels later last year, and its profits have remained lofty.

Instead of killing Apple, commoditization caused something stranger — it hobbled Apple’s main competitor in the smartphone business: Samsung, which until last year was gaining a creeping share of the profits in the smartphone business. At its peak in mid-2013, Samsung was making close to half of every dollar in the smartphone business, according to the research firm Canaccord. (Apple was making the other half.)

But the rise of low-end, pretty great Android phones made by Chinese upstarts like Xiaomi — and the surging popularity of Apple’s large-screen iPhones — put Samsung in a bind. In July, Samsung reported its seventh straight quarter of declining profits.

Yep. The reason why the Apple phone defies the commoditisation rule is that it’s not a standalone device, but part of a highly-functional (and useful) ecosystem. That’s why iPhone users who hanker after, say, Samsung’s or Sony’s latest phone think twice before making the switch: do they really want to leave the comfort and ease of the Apple ecosystem. And Apple has just made joining that ecosystem easier — by releasing an Android App that allegedly makes it simple for Android users to take their data etc. across to their brand new iPhones! Given the amount of money Apple makes from the iPhone, it does now look set to become the world’s first trillion-dollar company.

Potholes on the road to the self-driving future

This morning’s Observer column:

Somehow I think it’s going to take quite a while to get to self-driving nirvana. For one thing, autonomous vehicles require digital mapping that is an order of magnitude more detailed than anything in Google Streetview. Secondly, those maps need to be continually updated, because even an unexpected new mini-roundabout might confuse the vehicle and cause an accident.

But the biggest obstacle might come from what supposedly kept Harold Macmillan awake at nights – “events, dear boy, events”. Driving in Devon last weekend, I came on a number of temporary traffic lights at roadworks, and wondered how an autonomous vehicle would cope with them. After all, they would not appear on its digital map; and although it would be programmed to look for a red light in a standard position at a junction, it might not “see” a temporary one.

Devon is a ravishing county, but it has one quirk from the motorist’s point of view: it has lots of extremely narrow lanes, most of which have high hedges growing on either side. There are occasional passing places which allow two vehicles to edge past one another. This is fine until a procession of three or four vehicles meets another procession of several cars stuck behind a truck, at which point the only way to reach a solution involves a good deal of human-to-human negotiation. This is something that even the dumbest human is good at, but which will lie beyond the capability of even the smartest machine for some time to come…

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The ad-blocking paradox

This morning’s Observer column:

Mail Online is one of the world’s most popular news websites and it’s free: no paywall. But my browser has a plug-in program called Ghostery, which will scan any web page you visit and tell you how many “third-party trackers” it has found on it. These are small pieces of code that advertisers and ad-brokers place on pages or in cookies in order to monitor what you’re doing on the web and where you’ve been before hitting the current page.

When I looked at the Mail Online report, Ghostery found 31 such trackers. Some of them came from familiar names (Google, Amazon, Facebook, Pinterest, Doubleclick). But others were placed by outfits I have never heard of, for example, Bidswitch, Brightcove, Crimtan, Sonobi, Taboola. These are companies that act as high-speed intermediaries between your browser and firms wanting to place ads on the web page you’re viewing. And theirs is the industry that pays the bills (and sometimes makes a profit) for the publisher whose “free” content you are perusing.

But we humans are cussed creatures. It turns out that we loathe and detest online ads and will do almost anything to avoid them…

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