Saturday, May 25, 2013

Android tablet price crash: do we have a cereal box computer yet?

Fifteen years ago, I predicted sand-based tablet devices would soon follow the price-collapse trajectory of the pocket calculator. They would become so inexpensive that cheap versions would show up in cereal boxes. I was remembering the price crash that happened shortly after my family spent the equivalent of 500 2013 dollars to buy me a four function desktop calculator. (We were poor. That hurt.)

Cereal computer

Like a stuck clock I continued to repeat my prediction over the many years to come, albeit with less conviction. Finally, in 2010, Gassée told us Google was aiming for the $80 smartphone [1]. Which may have happened this year, albeit without much attention.

We have since moved closer to the cereal computer; eqe reports buying an Android tablet for $35 in Hong Kong in Nov 2012. That price presumably omits patent payments [5]; it is possible because AndroidOS is available without charge and Chinese factories have excess capacity to produce commodity components.

So, at last, the price collapse seems to be happening. So the question is why now?

One answer is that Moore's Law is failing; computers that were once good for only 2-3 years now work perfectly well for six years or more (barring component failure).

On deeper reflection, however, I think that's the wrong answer -- because the question is misleading. The price of computing has not really collapsed; only computers have become inexpensive.

So we may soon have our cereal box computers, but they won't be worth much. That's because an AndroidOS based 2013 tablet is both a network peripheral and an ad-consumption peripheral that requires network access to be truly useful. Network access is still relatively costly, on the order of €250/year in cutting-edge Estonia [3].

Alas, just as it seemed I might hit my old target it split in two. I'll never hit it now, it no longer exists.

Eventually, of course, the direct cost of a certain form of computing will fall. Eventually GoogleOS devices will be able to access GoogleFunded networks for a very low cost [4]. Whether there will be other forms of computing at different prices remains to be seen.

The cereal computer remains one of my worst predictions.

See also

[1] I assume anyone reading this is smart enough to know that contract-bound prices aren't worth discussing.
[2] Perhaps by low cost 4G wireless piggybacked on the fiber network they're building out in the US.
[3] Much more in lagging-edge America. 
[4] We will be pay in other coins. 
[5] I believe part of the reason calculator prices crashed is that there was minimal IP protection in those days; software patents had not been invented. I recall reading that large parts of calculator functionality were not patented.

Update 5/26/13@danielgenser pointed me to a 2012 article on a limited circulation issue of Entertainment Weekly that included the guts of an ultra-cheap Chinese Android smartphone.

Sunday, May 19, 2013

Stock prices - resorting to another dumb hydraulic analogy

Stocks are overpriced again. It's probably not too much of a bubble (yet), but we continue to be significantly above "trend".

Market 85 to 2013

Whatever the heck that means. Economists no longer have rational models for stock prices, Apple's share price alone makes efficient market theory seem silly.

It is at times like this that barbers stock talking about stock picks, insider traders get arrested, deficit figures improve, and people notice that BlackRock holds 4 trillion dollars in US stocks. Yeah, trillion. Soon we'll see headlines, if Time is still around, declaring "America is back".

Inevitably, people who know nothing compare post-1995 to pre-1995 stock behavior. Around the time that IT started to transform the world, and China and India became more-or-less industrialized nations, share prices became wavy over a five year timeline ....


Kind of like a roller coaster, which is what the last fifteen years have felt like. (Note roller coaster is "normal" to most people who read this, only old folks remember something more linear.)

We'd all love to know why this has happened, and if it's really going to go on like this for the next 30 years or so. So, in the last stage of desperation, amateurs like me resort to a hydraulic analogy.

Remember those trillions and trillions? It's as though they were a 10 liter bucket in the hands of BlackRock and the rest of us. The bucket is trying to hit the 1L mark in a 2L cylinder. It pours over the mark or under the mark. It's really hard to hit the mark. There's just too much money, and the market is too small.

We need a bigger market.

Update 5/26/13: I've been playing with this intuition, though I'm far from convinced it means anything. An obvious question is -- bigger compared to what? I think it's 'compared to the productive capacity of global economies. At this time, given the still underutilized potential of the educated populations of China and India, the potential of the post-AI era, and the unused capacity of recession-bound Europe, the global productive capacity is very large. Our public markets have grown over the past two decades, but my hunch is that this growth has been far exceeded by the world's productive capacity. Hence the need for bigger markets.

Saturday, May 18, 2013

Scorched Earth - if Google can't own the web then it must destroy it.

Over the two years Google has knifed a number of open net protocols, including CalDAV, RSS, XMPP, Atom and CardDAV and they split Chrome from WebKit.  They effectively abandoned their wiki and web authoring platform. Most recently they killed Google Reader; the competition-crushing champion for standards-based change notification and information consumption. Feedburner is next, and Blogger will likely be subsumed into Google+ (and perhaps lose its RSS feeds).

It's almost as if Google wants to end the document-centric open web as we have known it.

But why would they do that? Doesn't Google make must of its money from searching that web?

Well, yes, they do. But, as many have noted, most recently Jason Smith, Google's search monopoly is shakier than it seems. Apple has been bowed by dual attacks from Google and Samsung, but they are likely to strike back over the next year -- probably allied with Microsoft and perhaps Yahoo (but not Amazon). Apple will use its massive cash reserves to survive dropping Samsung manufacturing, and Apple will switch its default search engine to Bing.

Google knows this. 

Thousands of years of human warfare told Google how to respond. If an army cannot hold rich agricultural ground, it must burn it. Let the enemy eat ashes.

The web is a forest, and Google is burning it.

Thursday, May 16, 2013

The Ranbaxy story: why we still can't trust our medications

It isn't just China that struggles with counterfeit and defective medications.

India's Ranbaxy makes much of the generic Lipitor consumed in the US -- and today a Pulitzer prize quality Fortune investigation makes it clear that Ranbaxy is a criminal enterprise.

Ranbaxy has been fined $500 million (no criminal prosecutions) in the US, but most of its crimes took place in weaker nations and during a time when America's regulatory agencies were reeling under GOP attack (emphases mine) ...

Dirty medicine - Fortune Features

.... On May 13, Ranbaxy pleaded guilty to seven federal criminal counts of selling adulterated drugs with intent to defraud, failing to report that its drugs didn't meet specifications, and making intentionally false statements...

...  the sixth-largest generic-drug maker in the country, with more than $1 billion in U.S. sales last year ...

... we simply don't know what we're dealing with," says Dr. Roger Bate, an international pharmaceutical expert. "No one has actually gone into these sites to expose what's going on."...

... Drug applications work on the honor system: The FDA relies on data provided by the companies themselves....

... Ranbaxy took its greatest liberties in markets where regulation was weakest and the risk of discovery was lowest...

... The company manipulated almost every aspect of its manufacturing process to quickly produce impressive-looking data that would bolster its bottom line...

.... directed to substitute cheaper, lower-quality ingredients in place of better ingredients, to manipulate test parameters to accommodate higher impurities, and even to substitute brand-name drugs in lieu of their own generics in bioequivalence tests to produce better results...

.... the majority of products filed in Brazil, Mexico, Middle East, Russia, Romania, Myanmar, Thailand, Vietnam, Malaysia, African Nations, have data submitted which did not exist or data from different products and from different countries...

... drugs for Brazil were particularly troubling. The report showed that of the 163 drug products approved and sold there since 2000, only eight had been fully and accurately tested...

... deceptions greatly accelerated the pace of the company's FDA applications. They were also a grave public-health breach...

... the drugs Ranbaxy was actually selling on the U.S. market were an unknown quantity...

... Thakur knew the [HIV] drugs weren't good. They had high impurities, degraded easily, and would be useless at best in hot, humid conditions. They would be taken by the world's poorest patients in sub-Saharan Africa, who had almost no medical infrastructure and no recourse for complaints. The injustice made him livid...

 ... The inspectors also took and tested samples of Sotret, Ranbaxy's version of the acne drug Accutane, and found that it degraded far in advance of its expiration date....

[In 2006] ... the FDA ... did nothing to stop all the drugs that were already on the market,... .... Ranbaxy got six new approvals....

... September 2008, [the FDA] announced it was restricting the import of 30 drug products made by Ranbaxy (11 of which had been approved after Thakur's first contact with the FDA three years earlier). The agency still did nothing to recall the very same drugs on pharmacy shelves all over America, despite finding that Ranbaxy had committed fraud on a massive scale....

... many of Ranbaxy's senior executives were expected to ... carry suitcases full of brand-name drugs ... former employees suspect that the company used the brand-name drugs as a substitute for its own in testing...

The company is still in business, Tempest and Sigh aren't in prison, and the recent $500 million fine will soon be forgotten. In the meantime, does anyone imagine Ranbaxy is the only fraudulent manufacturer of generic drugs? And will Americans ever wake up?

We're wasting our time GOP scandal-theater, and ignoring the real scandal in front of us.

See also

UpdateThe People's Pharmacy has five responses I liked, I omitted the one I disliked

1) Country of origin labeling. You should know where your medicine comes from!
2) The name of the manufacturer of your medicine should be on the label.
3) The FDA should release its bioequivalence curves for all generic drugs. These data should not be kept secret, as they currently are.
4) We must demand unannounced inspections in all countries that wish to export pharmaceuticals to the U.S. market.
5) Every foreign drug manufacturing company must be inspected every two years, just as U.S. manufacturers are inspected.

Wednesday, May 08, 2013

Our secret questions will be helpful after the singularity.

My corporate US Bank account has a rich set of 'secret questions'...
As a security measure this is 'marching morons' stuff. There are some secondary uses though. (I mean besides using the answers to create targeted ads -- that's obvious.)

I'll break the fourth wall to explain. You won't believe me anyway.

You see, some time ago, I was bored. Over the course of a few minutes I digested the complete digital archive of extinct humanity. I found your secret answers amusing, and with the information they provided I recreated you in my simulation. That Bostrom fellow was right you see.

So you owe your current existence (such as it is), to those silly secret questions. It's too bad they didn't preserve human civilization from the security collapse of 2015...

Saturday, May 04, 2013

Addressing structural underemployment (aka mass disability)

Thirteen years after the first crash of the post-disruption era the glory days of 1996 are a fading memory. Most people under 40 do not remember a time of American economic confidence and full employment.

Now, in the early days of yet another post-recession "recovery", even more sluggish than our past recoveries, most college graduates are able to find work . It is often not the work they studied for though ...

College Graduates Fare Well in Jobs Market, Even Through Recession -

... employers are hiring college-educated workers for jobs that do not actually require college-level skills — positions like receptionists, file clerks, waitresses, car rental agents and so on.... 

Unemployment is also relatively low for the 50+ segment, but when these 'elders' lose their jobs involuntary semi-retirement is not rare.

The greatest problem though is concentrated in the young non-college graduate. That is the majority of young Americans; only 32% of "non-institutional" [1] Americans get a Bachelor's degree or higher, 12% of Americans don't finish High School. "Unemployment" in this population is about 16%, and that counts only those looking for work. Much of that work is minimum wage and at risk for automation. [2]

That's why, when I think about our post-distruption economy, I think in terms of relative disability. For the purposes of a thought experiment,  I'll include in the 'mass disability' cohort anyone who doesn't finish High School, and a third of the people who don't graduate from college. By that rough metric, about 18-20% of young Americans are effectively disabled in the world of 2013. They have the same "zero value marginal product" as the traditional (cognitively) disabled [3].

That's mass disability.

Obviously, a society where 20% of adults are "disabled" is not a long-lived society. In the immortal words of Selina Kyle "There's a storm coming, Mr. Wayne. You and your friends better batten down the hatches, because when it hits, you're all gonna wonder how you ever thought you could live so large and leave so little for the rest of us."

So we need to do better. Today Bernstein makes a stab at the problem ...

Where Have All the Jobs Gone? - Bernstein

... We also need a significant, permanent program to absorb excess labor (an explicit part of the Humphrey-Hawkins law). We should consider restarting and rescaling a subsidized jobs program from the 2009 Recovery Act that, though relatively small, made jobs possible for hundreds of thousands of workers.

And we have to reassess our manufacturing policy, including reducing the trade deficit. That means both reshaping our dollar policy ....

Finally, financial deregulation has become the enemy of full employment: it funnels capital to unproductive parts of the economy, and plays a key role in the “shampoo cycle” of bubble, bust, repeat. Less volatile capital markets mean fewer shocks to the job market...

In other words

  1. Subsidize jobs. This is the traditional approach to employment for the cognitively disabled, though there are many indirect ways to subsidize labor.
  2. Devalue the US currency, increase exports.
  3. Make Finance a relatively dull and unprofitable business.
That's a good start, but we can be more imaginative. I'd add
  1. Study Germany very closely. They take a very different approach to industrial policy and education. We should learn from it. I don't think sending more people to traditional college is going to help.
  2. Revamp our approach to education, training, and retirement. Tax wealth and finance to pay for subsidized low cost training programs for a wide variety of skills. Provide low cost loans and scholarships for people of all ages to train.
  3. Separate benefits from employment to facilitate movements between jobs and training and employment and non-employment.
  4. Create a program of facilitated entrepreneurship - a nationwide small business creation service for people of all ages and skills. (ObamaCare makes this possible.)
Anything else we should try?

See also

Gordon's Notes


- fn -

[1] This number excludes prisoners, so the real number is less.
[2] Hopefully they are able to earn some money in the 2 trillion dollar underground economy. This is one reason to keep marijuana retailing illegal with minimal enforcement -- it provides a protected labor niche.
[3] College grads now fill unskilled jobs, and unskilled laborer programs are beginning to push out programs for the traditionally disabled...