The Creative Destruction of Nokia.

WSJ (June 15, 2012) on Nokia's remaining asset value:

BMO Capital Markets analyst Tim Long wrote that Nokia was grinding "its way toward irrelevancy" despite the new round of restructuring and management changes. As a result, he said BMO would take a new approach and value the company based on its cash and intellectual property. Mr. Long now values the company at less than $9 billion, which includes $6 billion of cash and $2.5 billion for its portfolio of patents and other intellectual property.

"We assume zero value for the device and Nokia Siemens Networks businesses," he wrote. "We see little hope for a turnaround from here even with a refined strategy."

Nokia's hardware and software combined seem to be worth nothing.  Only some electronic digits in the bank and some paper files on the shelves in the patent office can fetch some value on today's market.

tags: patents, notes, nokia, s-curve

$20M investment per job created?

There's an ongoing debate about the causes of the slowdown in productivity of American workers, beginning some time around mid 1970-s. The chart below shows trend vs actual productivity since the post-WW|| recession. (the chart below is from an MIT Tech Review article - click to read.)

The IT productivity paradox is often cited as one of the major reasons.

The productivity paradox (also the Solow computer paradox) is the peculiar observation made in business process analysis that, as more investment is made in information technology, worker productivity may go down instead of up. Before investment in IT became widespread, the expected return on investment in terms of productivity was 3-4%. This average rate developed from the mechanization/automation of the farm and factory sectors. With IT though, the normal return on investment was only 1% from the 1970s to the early 1990s.

Recently, economist Tyler Cowen wrote a book on this topic - The Great Stagnation, which I'm in the process of reading. In the meantime, it's important to note that heavy IT investment does not create a lot of jobs. Here's how Apple's new datacenter looks like from a job creation perspective:

(Nov 24, 2011. Washington Post) - Just off Startown Road, on the edge of town, Apple recently completed a massive $1billion data center to help power its cloud computing products.
Total new full-time jobs running the facility: 50.

A trillion-dollar question would be, What kind of innovation creates local jobs? For some reason, I have this vague association between our times and the times of the 18th century agricultural revolution in England. On one hand, the revolution produced a breakthrough in food production; on the other, it displaced hundreds of thousands of peasants [and their children] who had to move to the cities in search of work. Where would all the displaced factory workers go now? Social networking?

tags: innovation, destruction, niche construction, trend, economics, system

RIP: Blockbuster, Inc. (1985-2010)

CNET reports:

Blockbuster reportedly plans to file something called a "pre-planned bankruptcy" and will continue to pay the studios and other most other major creditors. This development shouldn't surprise anyone. For years, Blockbuster has closed stores, laid off thousands, and generally been tumbling towards extinction. Driving to a video store to rent a movie is rapidly becoming as unnecessary as hiring a travel agent, developing film, or listening to music on compact discs.

In a new content distribution environment, a recipe for success turned into a recipe for disaster. Now, even Google wants to be a video-on-demand provider. I wonder, how long this business model will last and what will come to replace it?


tags: entertainment, payload, distribution, control, information, business, model, destruction

Expanding contraction.

How real American towns become flexible like virtual Sim-cities:

The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.

Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area.

Flint, sixty miles north of Detroit, was the original home of General Motors. The car giant once employed 79,000 local people but that figure has shrunk to around 8,000.

Unemployment is now approaching 20 per cent and the total population has almost halved to 110,000.

The exodus – particularly of young people – coupled with the consequent collapse in property prices, has left street after street in sections of the city almost entirely abandoned.
 

The process of decay that took place in ancient Babylon, Egypt, and Rome, can now be executed on a time scale of decades rather than centuries.

Also related:
Esther Boserup. 1982. The Impact of Scarcity and Plenty on Development. Journal of Interdisciplinary History. Volume 14. Issue 2. (Autumn, 1983), 383-407.

David vs Goliath.

A wonderful piece by Malcolm Gladwell on rules to break the rules. One of them is not play by the rules set by your opponent:

...when the world has to play on Goliath’s terms, Goliath wins.

When underdogs choose not to play by Goliath’s rules, they win, Arreguín-Toft concluded, “even when everything we think we know about power says they shouldn’t.”

What goes unsaid, though, is that in order to accomplish a David-vs-Goliath type of victory, a would be David has to either be very lucky, or know Goliath's rules really well, and choose wisely which one to break . Why? Because even David can run out of time and resources while trying to break every rule in Goliath's book.


== an example of a destruction problem: attack interfaces and communications (distribution) rather than individual (strong) elements of the system.

A new drug-free therapy wipes away fearful memories in rats and humans. The simple treatment might eventually help patients with post-traumatic stress disorder, say researchers.

Unfortunately, this is not a therapy yet, and researchers don't claim to have the ability to wipe out one's memories. Rather, they think they've found a way to prevent certain memories from reconsolidating.

Despite proof of principle experiments in rats and humans, Monfils says researchers should proceed with caution in applying the new findings to treating PTSD or other anxiety disorders. Some people's reconsolidation windows may be longer than others, and people respond differently to stressful situations.
"I'm a simple rat researcher. I'm in no way going to suggest that I'm going to step in and tell clinicians how they should treat their patients," she says.
Journal reference: Science (DOI: 10.1126/science.1167975)

It would be a good after-air-travel pill: you take it, and forget about security lines at the airport, airline food, sitting for hours in an uncomfortable coach-class chair, waiting for lost baggage...