Monthly Archives: February 2016

The Wille E Coyote effect

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Benedict Evans is at the huge annual mobile phone gabfest in Barcelona. On his way he wrote a very thoughtful blog post about the world before smartphones, and why Nokia and Blackberry didn’t see their demises coming.

Michael Mace wrote a great piece just at the point of collapse for Blackberry, looking into the problem of lagging indicators. The headline metrics tend to be the last ones to start slowing down, and that tends to happen only when it’s too late. So it can look as though you’re doing fine and that the people who said three years ago that there was a major strategic problem were wrong. You might call this the ‘Wille E Coyote effect’ – you’ve run off the cliff, but you’re not falling, and everything seems fine. But by the time you start falling, it’s too late.

That is, using metrics that point up and to the right to refute a suggestion there is a major strategic problem can be very satisfying, but unless you’re very careful, you could be winning the wrong argument. Switching metaphors, Nokia and Blackberry were skating to where the puck was going to be, and felt nice and fast and in control, while Apple and Google were melting the ice rink and switching the game to water-skiing.

I love that last metaphor.

In a way, it was another example of Clayton Christensen’s ‘innovator’s dilemma’. It’s the companies that are doing just fine that may be most endangered.

It’s a great blog post, worth reading in full. Also reminds us that mobile telephony was much more primitive in the US than it was in Europe (because of the GSM standard over here), and that Steve Jobs and co really hated their ‘feature’ phones as primitive devices. Evans sees something similar happening now with cars. It’s no accident, he thinks, that tech companies (Apple, Google) are working on cars. Techies hate cars in their current crude manifestations, whereas the folks who work in the automobile industry love them. Just as Nokia engineers once loved their hardware.

Economic populism: or one reason why Trump and Sanders are thriving

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Nice New Yorker piece by James Surowiecki:

Both Trump and Sanders downplay the enormous economic benefits of globalization for American consumers of all incomes, and their proposed solutions are vague and could well be harmful if implemented. But their words resonate with many voters, because they articulate an important truth: free trade has created major winners and major losers in the U.S. economy, and the losers—mostly blue-collar workers—have received little or no help. Trade with China, in particular, has inflicted serious damage on American communities across the country, damage from which they have yet to recover. As the economists David Autor, David Dorn, and Gordon Hanson have documented1, what they call the “China shock”—beginning in 1991 and lasting into this century—demolished manufacturing in much of the U.S. Workers in the affected communities had a hard time finding and keeping new jobs, and unemployment stayed high and wages low for at least a decade afterward.

Trade isn’t the only reason that blue-collar workers’ standard of living has declined; automation and weaker unions have also played a part. By focussing on trade, though, both candidates are acknowledging something important: what has happened to U.S. labor was not a natural disaster but, in part, the product of government policies designed to accelerate globalization and expose American workers to foreign competition. That admission is more than working-class Americans have got from most Presidential candidates.

  1. The abstract for their NBER paper “The China Shock: Learning from Labor Market Adjustment to Large Changes in Trade” reads:
    “China’s emergence as a great economic power has induced an epochal shift in patterns of world trade. Simultaneously, it has challenged much of the received empirical wisdom about how labor markets adjust to trade shocks. Alongside the heralded consumer benefits of expanded trade are substantial adjustment costs and distributional consequences. These impacts are most visible in the local labor markets in which the industries exposed to foreign competition are concentrated. Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. Exposed workers experience greater job churning and reduced lifetime income. At the national level, employment has fallen in U.S. industries more exposed to import competition, as expected, but offsetting employment gains in other industries have yet to materialize. Better understanding when and where trade is costly, and how and why it may be beneficial, are key items on the research agenda for trade and labor economists.” ↩

What the FBI vs Apple contest is really about

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Wired nails it

But this isn’t about unlocking a phone; rather, it’s about ordering Apple to create a new software tool to eliminate specific security protections the company built into its phone software to protect customer data. Opponents of the court’s decision say this is no different than the controversial backdoor the FBI has been trying to force Apple and other companies to build into their software—except in this case, it’s an after-market backdoor to be used selectively on phones the government is investigating.

The stakes in the case are high because it draws a target on Apple and other companies embroiled in the ongoing encryption/backdoor debate that has been swirling in Silicon Valley and on Capitol Hill for the last two years. Briefly, the government wants a way to access data on gadgets, even when those devices use secure encryption to keep it private.

Yep. This is backdoor so by another route. It’s also forcing a company to do work for the government that, in this case, the government wants to do but claims it can’t. This will play big in China, Russia, Bahrain, Iran and other places too sinister to mention.

The FBI’s argument that the phone is vital for its investigation Seems weak. They already know everything they need to know, and the idea that the San Bernardino killers were serious ISIS stooges seems the prevalence of mass shootings in the US, and the say they conformed to type. What’s more likely is that the agency is playing politics. They’ve been arguing for yonks that they simply must have back doors. The San Bernardino killers presented them with a heaven-sent opportunity to leverage public outrage to force a tech company into conceding the backdoor principle.

Whither Twitter?

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My comment piece in today’s Observer.

If there’s one thing Wall Street and the tech industry fears, it is the idea that something potentially profitable might peak or reach some kind of equilibrium point. Endless exponential growth is what investors seek. Whereas you or I might think that a company with more than 300 million regular users that pulls in $710m in revenues is doing OK, Wall Street sees it as a potential zombie.

At the root of the dissonance is the fact that Twitter is a public company. At its flotation in November 2013 it was valued at $32bn, a figure largely based on hopes (or fantasies) that it would keep modifying its service to attract mainstream users, that its advertising business would continue to grow at a phenomenal rate and that it would eventually be bigger than Facebook.

It didn’t do all these things, for various reasons, the most important of which is that it wasn’t (and isn’t) a “social networking” service in the Facebook sense. At the heart of the distinction is the fact that, whereas it is easy to give an answer to the question “What is Facebook?”, the answers for Twitter depend on who you ask…

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What happens after Moore’s Law runs out of steam?

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This morning’s Observer column:

Fifty years ago, Gordon Moore, the co-founder of the chip manufacturer Intel described a regularity he had observed that would one day make him a household name. What he had noticed was that the number of transistors that could be fitted on a given area of silicon doubled roughly every two years. And since transistor density is correlated with computing power, that meant that computing power doubled every two years. Thus was born Moore’s law.

At the beginning, few outside of the computer industry appreciated the significance of this. Humanity, it turns out, is not good at understanding the power of doubling – until it’s too late. Remember the fable about the emperor and the man who invented chess…

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