Cloud security: a new kind of an arms race in 2014

To me, the most interesting high-tech trend to watch in 2014 will be the competition between US government agencies, e.g. NSA, and US private high-tech companies, e.g. Google, Facebook, and others. Given the recent court decision, we can easily predict that the US government will continue intercepting, storing, and decrypting private and commercial electronic traffic. On the other hand, cloud companies like Google built their business on user trust and data security. They've already started the process of rethinking system security, including broad use of strong encryption algorithms.

An implicit assumption in the industry is that if the government can break into your data then any skilled hacker can do the same. In short, the deliberate weakening of security standards creates a direct threat to commercial cloud computing. As a result, we should see an arms race between the government and businesses in the area of digital security. Before, arms races were an exclusive domain of rival governments. Today, the global nature of the Internet brings a new category of players into the picture. We should expect exciting innovations ahead. Maybe even quantum computing will become a reality sooner, rather than later.

tags: innovation, internet, cloud, security, battle

Steve Jobs vs Elon Musk: an innovation perspective

Some raw notes for the BUS/SCI 117 course and book draft:

1. Many in the media and VC community say that Elon Musk is "Steve Jobs today."
-- 1.1. Based, e.g., on the marketing flair he presents his products.
2. How can we evaluate these statements?
3. Let's take an "innovation impact" point of view
4. Steve Jobs was instrumental in 3 technology/business revolutions
-- 4.1. PC (Apple)
-- 4.2. computer animation (Pixar)
-- 4.3. smartphone and connected media (Apple)
5. Elon Musk  was instrumental in 3 technology/business developments
-- 5.1. Person-to-person electronic payments (PayPal)
-- 5.2. Private space vehicle operations (Space X)
-- 5.3. Luxury electric car (Tesla Motors)
6. Steve Jobs' innovations initiated major changes in lives of billions of people (the "New World" test)
-- 6.1. Applications of Moore's, Nielsen's, Kryder's laws
-- 6.2. System-level impact: solving a Synthesis problem for new industries
----6.2.1. Exponential growth of devices, apps, services, communications
7. Elon Musk's innovations target(ed) lucrative niches
-- 7.1. long-distance money transactions between untrusted market participants
---- 7.1.1. One element of a much larger system (Deontic Payload)
-- 7.2. US government exit from space exploration
-- 7.3. Green-minded segment of the "conspicuous consumption" population
---- 7.3.1. Compare to Hummer, BMW, Nissan Leaf and Toyota Prius
8. Conclusion: Elon Musk's innovations are not even close to those of Steve Jobs' (yet)
-- 8.1. Has a chance if somebody develops an energy element (e.g. battery) with exponential growth of energy density or an extremely low resistance material (superconductor at high T)

tags: innovation, system, creativity, synthesis, deontic, payload, battle

Just for fun, a highly superficial visual comparison bw EM and SJ at businessinsider.com

Assumptions behind Open Innovation.

A 2010 paper "How Open is Innovation?" [doi:10.1016/j.respol.2010.01.013], by Linus Dahlandera of Stanford University and David M. Gannb of Imperial College London provides a good literature review for the concept of Open Innovation. It's a valuable contribution to our understanding of the process because many people use Open Innovation as a buzzword without really knowing what it describes. For me, it was interesting to see Open Innovation assumptions spelled out in some detail.

The concept [Open Innovation] has common currency for at least four reasons.

- First, it reflects social and economic changes in working patterns, where professionals seek portfolio careers rather than a job-for-life with a single employer. Firms therefore need to find new ways of accessing talent that might not wish to be employed exclusively and directly.
- Second, globalization has expanded the extent of the market that allows for an increased division of labour.
- Third, improved market institutions such as intellectual property rights (IPR), venture capital (VC), and technology standards allow for organization to trade ideas.
- Fourth, new technologies allow for new ways to collaborate and coordinate across geographical distances.

The third item on the list is particularly important (in the context of this blog) because it shows that Open Innovation assumes strong intellectual property rights. The disconnect with the reality is that many participants of the Open Innovation process assume that it implies availability of technology free of IP claims. As a result, they get unpleasantly surprised when the claims are asserted against technologies acquired through Open Innovation.
One of the reason behind the latest round of patent wars is this gap in understanding of what Open Innovation is vs what it is thought to be.

tags: innovation, patents, battle, mobile, technology, business, model

The latest numbers in the browser war of attrition.

Dec 16, 2011. CNet - ... numbers still show all versions of IE taking a total of 40.09 percent of the market, vs. 26.31 percent for all versions of Chrome. Firefox is at 25.07 percent, Apple's Safari is at 5.86 percent, and Opera gets 1.91 percent.

Today, browsers not only generate searches for Google and Microsoft, but, more importantly, track user online behavior.  We trust them with our passwords, messages, information habits, and much more. This intimate knowledge of users makes the internet giants fight the war of attrition over who is going to provide you with free software. It's scary even to think about how much the browser knows about you.

tags: security, privacy, battle

The dark side of innovation - 2.

Economist Joseph Stiglitz sees fundamental parallels between today's state of the economy and the Great Depression

(January, 2012. Vanity Fair) - Back then we were moving from agriculture to manufacturing. Today we are moving from manufacturing to a service economy. The decline in manufacturing jobs has been dramatic—from about a third of the workforce 60 years ago to less than a tenth of it today.

There are two reasons for the decline. One is greater productivity—the same dynamic that revolutionized agriculture and forced a majority of American farmers to look for work elsewhere. The other is globalization, which has sent millions of jobs overseas, to low-wage countries or those that have been investing more in infrastructure or technology.

His solution is massive public investment in education, technology, and infrastructure. I wish we had the money and the institutions to handle the task. As I wrote earlier, innovation by itself will not solve the problem.

tags: economics, trends, education, system, model, battle

Analog vs Digital: the sad story of Kodak.

An excellent article in MTR about the demise of Kodak, despite the company's pioneering efforts in digital photography.

In 1997, the stock market valued the company at over $30 billion. Today Kodak is worth only $265 million.

Kodak also invested extensively in research and development. In fact, the first electronic camera using a charge-coupled device was invented by a Kodak engineer named Steven Sasson in 1975, and Kodak in many ways led early development in digital photography. The company introduced the first megapixel sensor in 1986, and the QuickTake camera launched by Apple in 1994 had to a large extent been developed by Kodak. It looked like a pair of binoculars, stored 32 photos, and could be connected to a personal computer.

But the limited performance and the high price tag of such cameras (the QuickTake cost about $800 and a high-end digital news camera ran $15,000) meant that the market for digital photography was very small, almost insignificant for a multibillion-dollar company like Kodak.

It's easy to think that Kodak was disrupted by cheap digital cameras. This is less than a half-truth. If there were no web and Facebook (social networking), we would still be printing pictures using Kodak paper and Kodak chemical processes. And, because we'd be taking a lot more pictures, there would be more money for the company than ever before.

The real company that destroyed Kodak was Facebook, not Nikon, Canon, Olympus, and others.

tags: system, evolution, source, tool, battle, technology, magicians

ARM vs Intel

(November 11, 2011. Bloomberg):

Intel (INTC) focused its efforts on what’s called the “clock speed” of CPUs, rapidly increasing the performance of computer chips to handle desktop operating systems and processor-intensive applications better. Less thought was given to reducing the power consumption requirements of these chips.

...ARM chips have used a “bottom up” [low-power] approach. Early ARM chips weren’t capable of running complex software but could run for days between charges. Once the power requirements of the silicon were effectively managed, ARM chips began to ramp up performance, most recently with quad-core chips that can offer 16 hours of high-definition playback on a tablet.

The companies' IP models are also very different. Intel develops and makes its chips, maintaining a quasi monopoly in the high-performance PC and server markets. ARM designs chips and licenses its architecture to third party manufacturers.

ARM's IP model is better suited for early stages of the product innovation process, when companies adopt trial-and-error market strategies (Synthesis?).

An IP strategy map would probably be a good idea to reflect the contrast, but I don't quite know what its dimensions should be.

tags: technology, battle, information, s-curve, product, process, mobile

The beginnings of a new S-curve.

Some early indicators that mobile revolution is beginning to spread beyond consumer:

Enterprise mobile software company Enterproid, which lets Android device owners split their phone between business and personal profiles with its Divide software, announced Thursday it has raised $11 million in funding.

“Employees bringing their own devices to work is a growing phenomenon, and Enterproid has found a solution for the challenge it creates for businesses’ privacy and security...”

The functionality, including security features and virtual machine(VM) support, will eventually be built into the hardware. With Andy Grove and Bill Gates gone, it would be interesting to see whether Intel&Microsoft partnership that worked so well in the PC space is going to work again in the mobile enterprise segment. Businesses don't mind ugly devices for their employees as long as the hw/sw combo delivers functionality at a reasonable cost. ARM + Android vs Intel + Win8(x) - it could be a remarkable battle of technologies.

tags: mobile, business, technology, battle, synthesis, security

The dark side of innovation.

Amazon is making Kindle-compatible e-books available at libraries.

The introduction of the Kindle, the biggest-selling e-reader, opens up library e-books to a wider audience, heightening the fears of publishers that many customers will turn to libraries for reading material. If that happens, e-book buyers could become e-book borrowers, leading to a potentially damaging loss of revenue for an industry grappling with a profound shift in consumer reading habits.

Innovation is called "Creative Destruction" for a reason: it relentlessly destroys business models built on older technologies. If you see a major wave of innovation coming, this means a major destruction is underway somewhere else. People who happened to be on the wrong side of innovation are going to lose big in the process of restructuring. In his book The Great Stagnation, Tyler Cowen argues that America has been stagnating (since the early 1970s) because there was not enough innovation. I think it is a bit misleading.

@ $730K per patent, Google buys Motorola.

Whatever the business wisdom behind buying one of the worst mobile handset manufacturers in the world, Google's acquisition of Motorola is great for patents. Assuming, generously, the value of Motorola hardware division is $0, Google paid about $730K per patent in the deal. On the per patent basis, this is 50% more, than in the Nortel auction won by Apple, Microsoft, and others. Now Google will have a free hand at ripping off Apple design and business strategies, hiring Apple's designers, and so on. Add to it Google's cloud capabilities, with Youtube, Docs, gaming, etc., and you get a very strong challenger, both in the consumer and enterprise segments. It might be a bit too early to sell Apple stock short, but the competition in the mobile world has be come a lot less lopsided. Unless, of course, Google suffers from the Not Invented Here syndrome, and tries to create its own brand of smartphones.

From an innovation theory perspective, this event is also significant because it confirms that Open Innovation does not have a working IP model, except costly patent acquisitions. Free software and open technology is great, as long as it does not involve a major commercial success.

tags: innovation, patents, growth, software, business, model, mobile, control, battle, theory

The cloack and dagger war between Apple and Google continues. It appears that Google might be locked out of the emerging market for mobile advertisement on Apple devices:

Apple quietly changed the terms of service for the iPhone developer agreement Monday along with the release of developer version of iOS4 at Apple's Worldwide Developers Conference, according to MediaMemo and several other blogs. If preliminary interpretations of a key section are correct, Google's newly acquired AdMob subsidiary will be unable to share ad analytic information with its customers who have placed ads in applications on the iPhone, rendering those ads much less valuable.

Either this is a legal quirk, or, more likely, Apple intends to extract from Google a heavy price for playing on the wrong side of their prisoner's dilemma game. In the meantime, Google protests the agreement.

tags: battle, technology, apple, google, advertisement, business, law, information, tool, detection

Prisoner's Dilemma: PC vs mobile

Prisoner's Dilemma is a descriptive title for a strategy problem in game theory. It got its name from a hypothetical situation when two prisoners who stand accused of committing a major crime, e.g. an armed robbery, are interrogated separately by the police. The police have arrested them on a smaller charge and currently doesn't have any direct evidence that connects the prisoners to the armed robbery. If both prisoners stay silent they will receive a short sentence of several months in jail. If both of them confess they get 5 years in prison each. If one of them confesses, but the other stays silent, the first one goes free, while the second gets a 10 year sentence. It's a famous example - you can read an extensive description of how it works in Wikipedia and other sources.

Obviously, it would be better for the prisoners if both of them stayed silent and as the result got the lighter sentence. But game theory analysis shows that the most likely outcome of the game is when both of them confess and each gets 5 years in prison. The key to understanding this craziness is to appreciate the fact that the prisoners cannot communicate with each other and they don't trust each other. As a consequence, they choose to confess and get 5 years, rather than stay silent and have the other guy confess, which would cause him go free and you'd get 10 years in prison.

Now, let's turn to consider the world of mobile communications. It seems to me that Apple and Google are playing Prisoner's Dilemma in this space. Had they decided to cooperate in making iPhone a dominant destination device for media and cloud services, both companies would have benefited enormously: Apple on the hardware and media side; Google on the search and cloud computing side. But, Google seemes to choose the "confess" position. That is, rather than building apps and services exclusively for iPhone/iPad/iWhatever, they make an extensive effort to develop software and services for competing hardware. As a result, we can observe how Apple and Google are increasingly becoming marketplace adversaries. For example, recently Apple announced iAd, its own ad platform, which threatens Google's ad business on iPhone.

This situation stands in marked contrast with the 30-year old Intel-Microsoft relationship that made both companies dominant in their respective hardware and software PC business domains. Comparing the situations, I can't help but conclude that there's a lot more trust and communication between PC industry leaders than between Apple and Google.

tags: battle, technology, strategy, system, information, evolution, competition, mobile, cloud

GSM patents asserted by Nokia against Apple:

5,802,465 5,862,178 5,946,651 6,359,904 6,694,135 6,775,548 6,882,727 7,009,940 7,092,672 7,403,621

According to Nokia, the patents were recognized as essential to the GSM standard.

tags: patents, apple, mobile, control, battle

The day the second shoe dropped.

Several months ago I used example of Google' Outlook plug-in to explain how to solve a typical dilemma. Today, by buying DocVerse, a "startup that allows people to edit Microsoft Office files online", Google provided another example of the same problem-solution pattern. What's the difference between the two cases? Last time, Google's target was Outlook; this time, it's the rest of MS Office. Last time, Google engineers built the software themselves; this time, Google business people bought the company that makes the desired software.

In an interview, Jonathan Rochelle, group product manager for Google Apps, said Google acquired DocVerse to make it easier for people to transition from desktop software to online software. The latter is an area where Google is trying to get a leg up over Microsoft, with its Google Apps service, which includes online word-processing and spreadsheet software.

Google is now involved in two strategic battles:

1. against Apple, to dominate mobile software with the Android/Chrome combo;
2. against Microsoft, to dominate server software with Google Apps.

The only question is, Will Google's search cash cow produce enough money to sustain the troops?

tags: dilemma, google, problem, solution, battle, apple, microsoft, course, example, control point

Apple patents listed against HTC:

• Patent No. 7,362,331: “Time-Based, Non-Constant Translation Of User Interface Objects Between States”
• Patent No. 7,479,949: “Touch Screen Device, Method, And Graphical User Interface For Determining Commands By Applying Heuristics”
• Patent No. 7,657,849: “Unlocking A Device By Performing Gestures On An Unlock Image”
• Patent No. 7,469,381: “List Scrolling And Document Translation, Scaling, And Rotation On A Touch-Screen Display”
• Patent No. 5,920,726: “System And Method For Managing Power Conditions Within A Digital Camera Device.”
• Patent No. 7,633,076: “Automated Response To And Sensing Of User Activity In Portable Devices”
• Patent No. 5,848,105: “GMSK Signal Processors For Improved Communications Capacity And Quality”
• Patent No. 7,383,453: “Conserving Power By Reducing Voltage Supplied To An Instruction-Processing Portion Of A Processor”
• Patent No. 5,455,599: “Object-Oriented Graphic System”
• Patent No. 6,424,354: “Object-Oriented Event Notification System With Listener Registration Of Both Interests And Methods”

At first glance, they don't look that broad. The lawsuit is likely to cause a one- or two-year product deployment delay, not a knockout punch against Google and/or its hardware partners.

tags: patent, apple, google, mobile, law, battle

Use your head!

A wilder version of brainstorming:




tags: brainstorming, battle, video, youtube

Let the battle of formats begin.

Physical books are on the way to extinction. The technology that started with the invention of codex and, arguably, enabled the spread Christianity through the Roman Empire, is ceding its position to electronic packaging of text:

In another milestone for the e-reader, the company [Amazon] noted that on Christmas Day, for the first time ever, Amazon customers bought more Kindle books than physical books.

tags: payload, system, evolution, 10X, control, distribution, course, information, entertainment

Retail: The Battle of Technologies

NYT reports on a potential price war between Amazon and Wal-mart:

This fight, then, is all about the future. Rapid expansion by each company, as well as profound shifts in the high-tech landscape, now make direct confrontation inevitable. Though online shopping accounts for only around 4 percent of retail sales, that percentage is growing quickly. E-commerce did not suffer as deeply as regular retailing during the economic malaise, and it is recovering faster than in-store shopping. People are also shopping on smartphones and from their HDTVs.

By BRAD STONE and STEPHANIE ROSENBLOOM

Published: November 23, 2009

Amazon is going to win this war, unless Wal-mart takes dramatic steps to improve its e-tailing strategy. Since at least the last Christmas shopping season, Amazon's biggest advantage has been its ability to aggregate demand and effect real-time supply-demand pricing.

tags: distribution, control, commerce, greatest, 10X, battle

Developers make money on iPhone/iPod applications by luck. Apple makes money by design.

(CNET) More than 100,000 apps are now available for download from Apple's App Store, making it the largest such retailer in the world.

The App Store launched in July 2008 with just 500 applications. The store is now available in 77 countries, which has contributed to what Apple said Wednesday is well over 2 billion downloads.

It also appears that Apple's business model is running into scalability problems:

Most notably, Apple's app approval process has caused frustration with developers, who are sometimes left in the dark about the reason an app is rejected.

As we discussed during the last session of the Model-based Invention/Innovation class, this is a hole that Google can exploit with its Android platform/distribution system. The AppStore situation can be compared to what happened to Yahoo, when they ran into problems while trying to catalog the web. Eventually, search replaced guided portal-based navigation. Most likely, AppStore will be replaced by a free distributed marketplace for mobile software.

tags: mobile, problem, 10x, apple, google, control point, evolution, distribution,  battle

David Kessler, "an American pediatrician, lawyer, author, and administrator", gave a talk at Google about why Americans are fat and, increasingly, diabetic (youtube video link).

Key points:

- Food is powerful because it is rewarding;
- We feel very good when we anticipate palatable food;
- Repeat exposure to palatable foods changes the brain, conditioning it to respond to salient cues triggering wanting and desire;
- Evidence suggests in conditioned hypereaters stimulated brain areas don't readily shut off;
- Food with high Fat+Sugar+Salt content is very palatable;
- The food industry's business model is:
         a) make Fat+Sugar+Salt available anywhere any time;
         b) make food cues ubiquitous (e.g. via ads);
         c) make it socially acceptable to eat all the time (snacks, starbucks coffee on the run, in the car, meetings, etc.);
- Experiments with rats show synergistic [conditioning] effect of Sugar+Fat;
-To break the conditioning cycle we needs to take control over the content and the timing of our meals:

 

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Tomorrow I will add, either to this post or make it a separate post, a 10X diagram of the food industry's strategy.