Monthly Archives: January 2015

When Piracy is Easy, How Do You Compete?

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Popcorn Time is something that I’ve been hearing about for a while now but I’ve never really looked into. Effectively it’s a tool that gives you an easy to use User Interface to find Torrents for your favorite TV shows and movies. Torrents, by the way are a type of file and download methodology. Effectively you get tiny bits and pieces from a large number of different users across the internet. This makes it harder to track the individual files, prevents it from easily being removed from the web, and helps manage internet usage across the multiple users. In the days of Kazaa, you directly downloaded from a single peer, now you’re downloading from multiple users, so if one goes offline or reduces the bandwidth they are sending the file to you it has minimal impact.

Torrents are what’s called “piracy” and are on the pirate bay and any number of other sites that share those files. Since they do not have to follow strict contracting like Netflix, Comcast, Hulu, HBO, and other streaming services you have access to the movies you want whenever you want them. For instance, Netflix recently lost access to the Avengers, probably because of the cost of keeping in their library and Disney trying to create artificial scarcity of the legal product. You can find extremely high quality torrents out there to watch it if you can’t get it for free. In fact I’m sure it’s on Popcorn Time right now.

Because of these difference and the historic complexity and risks of downloading a torrent, Netflix had positioned itself as a way to prevent piracy. Now this might not be the case, as Netflix is beginning to see Popcorn Time as a legitimate threat to their business model. I’m not surprised that Netflix sees risk here and I think that this is a good thing for Netflix. It means they are expecting their business to be disrupted and that they can take proactive steps to address it.

What can they do to keep their business afloat and continue to fight piracy? Well, since they are essentially seen as a cash cow on two fronts – ISPs and Content producers (MPAA and TV companies), they need to clearly articulate the amount of piracy that was reduced once the content was put onto Netflix and then show the increase in piracy after the content was pulled from Netflix for contractual reason. If Netflix can’t afford to keep it on their network, then with an easy to use app like Popcorn Time, the content will be pirated, which means that any revenue artificial scarcity was hoping to drive or to be extracted from Netflix at an elevated price goes out the window and the content will still be consumed.

In some cases piracy will happen regardless, but if the trend continues were people are switching back and forth between cord cutting and going back to cable because of rising costs of apps, then apps like Popcorn Time will become more popular because they can completely replace Hulu, Amazon Prime Videos, HBO Go, Netflix, etc.. You could be a cord cutter with this and pay for one app to get your live sports and be good to go. Content producers will begin to lose out again, because they are trying to squeeze the companies that provide easy, relatively cheap access to their content. I’d rather not go back to that, but if my costs keep rising because the companies I choose to support can’t afford the content that I want, then I’d have no choice.

The Innovation machine – This is a “how to” guide for Innovation management

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As many of my blog readers know I’m an innovation reading junky. I’ve read many of the books on how to manage, from a individual’s perspective, creating an innovation or even at a high level how to run an innovation project. However, this if the first book that looks at things in a very systematic manner utilizing a lot of case studies. The Innovation Machine by Rolf-Christian Wentz is a fantastic introduction into a series of case studies of the most innovative companies in the world.

Books like the Innovator’s Dilemma are a lot more prescriptive in what a business should do or how a given business has been disrupted. Typically they focus on the smaller entrants that enter a market and beat the incumbents. The Innovation Machine on the other hand looks at the incumbents and analyzes what the organization did culturally to enable innovation. I believe books like Innovator’s Method and the Lean Startup address a different need: how to take an innovative idea to market. This book touches on those things, but looks at how the whole organization can enable those Lean startups within the organization and use it’s size to maximize the results.

The Innovation Machine also touches on the portfolio management aspect as well as some of the best ways to fund projects, staff projects (2 is best, a small room is next, anything else is doomed to fail), and finally how to integrate the project teams back into the larger business as a whole. No book that I’ve read has really discussed how to do this. All these topics are covered with clear case studies of some of the most innovative companies. He includes discussions of Google, Toyota, GE, P&G, SC Johnson, BMW, Microsoft, Whirlpool, and a litany of others. The stories are referenced as he details the concepts that were leveraged by the companies in his case study.

I believe that this book is a must read for a CEO or a leader that values innovation. Especially since he calls out the massive differences between managing Incremental Innovation and Disruptive Innovation – he gives very clear practical examples and methods for managing them separately. I believe these are powerful and will help me identify projects I work on more easily as disruptive or incremental.

AMD, What Are You Doing?

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The past few months haven’t been kind to AMD. First Lisa Su, the first female CEO, ousted Rory Read. Now three leaders have left including the General Manager John Byrnes, CMO Colette LaForce and Chief Strategist Rajan Naik. Furthermore, it’s pretty clear that the remaining two leaders long term leaders, Mark Papermaster CTO and Devindar Kumar were sort of bribed to stay with restricted stock. This is on top of delays in their desktop, graphics, and mobile chipset and layoffs.

I think it’s pretty clear that AMD no longer has a clear strategy. AMD, while I was working there, was starting to put out some cool stuff that could really define the future of computing. Their APUs were best in class and could have been deployed in a lot of really cool applications. However, those never appeared to have materialized and now Intel is starting to attack the SoC market. While Intel’s Iris graphic chipset is way behind AMD in pure power, I think it’s going to play a serious role in the up coming years especially since Intel is leveraging a similar enough design that they are able to use the Open Compute Language that AMD championed.

Another area of concern for AMD fans is that John Byrne, shortly before his departure, announced at CES that AMD was steering clear of the IoT phenomenon. Which I found surprising considering that their strategy, only a year and a half ago, was to conquer the embedded computing space. Since they restructured again, that’s about 4 times in the past 4 years, they have clearly decided to forego that space. The IoT chipsets are likely going to be a disruptive technology to computing. For instance, this computer you can dock and upgrade every year for about $200, while Intel released a full Windows computer on an HDMI stick for $150. In the past I wrote that I thought that the dockable phone that would turn into a full computer would be the long term future, but these are the incremental steps to get us there.

AMD clearly doesn’t see these spaces the future. They are currently looking at where the market is now and not truly planning for the future. I was excited whenever AMD announced the partnership with Gizmosphere hoping it could compete head to head with the Raspberry Pi, but AMD is clearly failing to embrace that movement, since those devices would be powering the IoT and the maker movement. On the otherhand Intel is rushing to embrace these groups and sees these people as the way into attacking Qualcomm, Samsung, ARM, and Apple’s designs.

Low power is going to be vital for the future expecting a smaller and smaller niche of applications. In these applications, excepting graphics chips, AMD is getting crushed. Even in the graphics space AMD is starting to flounder with poor quality, as @NipnopsTV reported with his year old or so 7970 card.

All of these should be a concern for AMD fans. The company is not investing in the disruptive technology hitting their industry, their market cap is only $2.06B and their shares are at $2.66. They may be positioning themselves to get bought or could be at risk for a hostile take over for their IP or pushed into bankruptcy since their IP might be worth more than the company operating as it is. Look at Nortel to as an example where it’s IP was sold for $4.5B while everything else was just ditched.

Could we eventually see a Samsung R290 and a Samsung Kaveri processor? They gobbled up a ton of AMD’s engineers in 2013 definitely could happen.

Researchers Have “Solved” Poker and What it Could Mean

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Today, Chezz pointed me to a really interesting article. Apparently have figured out how to pretty much guarantee a win in “Heads Up Limit Hold ‘Em” Poker. This is the poker equivalent to beating chess masters head to head, like what Deep Blue did in the 90’s and what Watson did more recently on Jeopardy! The difference between these instances though is all players in the game have the same basic information. In chess all the information to inform any move and future moves are available with a glance at the board. In Jeopardy! it’s a little different because it’s knowledge based, but to create the question to the answer, it’s what you know, but the answer is there for everyone at the same time.

In poker, it’s different because you, initially, know only 2 cards out of the 52 in the deck, as the play continues you know more. So you’re dealing with imperfect information about what action to take. This is important, because that’s what you need to do as a player is address that uncertainty. In this program the researchers developed a great learning tool that was able to determine the best course of play and with the experience the researchers gave the program they effectively created an unbeatable computer.

However, the game is limited to a 1 vs. 1 situation with a limit to how much the players are able to bet in any given situation. Those limits are based on multiples of the opening bid. These limits, I’m sure, will eventually be generalized to handle any number of players and then any number of betting options, such as no limit.

Once this happens, I think that these learning systems will have or could have a dramatic impact on a great deal of things. First, trading is essentially poker and the companies that will likely leverage this first will be the companies that deal in high frequency trading. This will make the computers act very differently than they are now and with these new learning algorithms built into them, it could dramatically reshape our stock markets (more than they have been to this point). Second, these systems would be used to “help” with negotiations in any number of situations. I’m thinking initially diplomatic situations where there are a great deal of stakes on the table, which most of them are known, but the information is incomplete. In these cases a computer can greatly augment the capabilities of the diplomat that wouldn’t have been possible in the past, which could either increase the likelihood of a war or reduce it depending on what the goals of the computer are. What does “winning” mean in those cases. So setting those clear boundaries will be important, but that’s why having a person there to augment the machine is crucial as they would provide that feedback over the course of the negotiations.

Finally, this one is by far the largest stretch, but it might be more possible to plan or react to a great deal of the actions of economic entities. This means that governments could leverage these applications to help determine the best determine where to invest as well as where to buy to help truly manage the economy. The central bank could change dramatically.

None of these situations are going to happen overnight. Most likely we’re 2-3 years from multiplayer with no limit hold ’em and 5 years for more monetizable uses for this application. Rest assured these algorithms will be used in a business at some point. Watson and Deep Blue have been repurposed to make IBM money. Expect something similar and I think that these are all very realistic applications that these researcher could pursue. What do you think?

Privacy and Public Places

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Privacy is a tricky thing, there’s privacy of your home, expectations of privacy around mail, privacy related to digital devices, privacy in your car, and privacy in even more public places – each one of them we have different understood or assumed levels of privacy. These maybe different from person to person, but generally we assume in certain places that we’re pretty safe from being eavesdropped on. Furthermore, even though we often talk or talk on our phones in public we expect them to be relatively safe from being overheard, because most people simply don’t care about what we’re saying.

In the public there are some clear rules about what is free for police to inspect and what is not public. For example a police officer can listen to your conversations if they have the right equipment. It is possible for the police to photograph you as well whenever you’re walking around in public. Another place that is mostly a public place is actually your car. If anything is clearly visible on the seats through the windows it’s considered public. However, if something would be in your trunk or glove box the police officer cannot search it unless you give them permission, they have probable cause, or they have some sort of a warrant.

Recently the police and FBI have been using something called a “sting ray” which is effectively a middle man attack between your cell phone and the cell phone provider. The FBI believe, according to recent filings, that a stingray is something that they should be able to use in public without requiring a warrant. They argue that since the person on the cell phone is speaking in public they should have no expectation of privacy.

I think that this raises a lot of concerns. First, even if the sting ray is deployed in a “public” place there are definitely places that you can expect privacy. For instance if you live above a series of bars the bulk of the people that would be hit by the sting ray would likely be in a public place. Even areas that are mostly park still have areas that are private or might even be residential. For this to be even close to realistic the FBI would have to 100% certain that ever person possibly impacted this is in a public place.

Personally, I don’t think that this argument will fly. I believe that this is very similar in terms of technology used and methodology as GPS trackers on cars or more similarly is the GPS information from cell phones. Even if you are using a third party application or technology you still have the expectation of privacy. I believe that this should hold in this instance as well. You’re expecting your communication to be secure between your phone and the cell phone provider without anyone listening in.

I seriously hope that the FBI loses this, because I find the fact that using a technology like this to intercept my cell phone calls from going to the cell provider to be terrifying and if a similar technology was used by any one other than the authorities, they would be on charges for computer fraud and likely put in jail for a very very long time.