Sunday, April 24, 2016

Intel, AMD, Google and the Changing Tech Landscape

  • Last week, comments from technology firms included: Intel CEO Brian  Krzanich - “Strength in our data centerInternet of Things and programmable solutions businesses partially offset weaker-than-expected PC revenues … We are evolving from a PC company to a company that powers the cloud and billions of smart connected and computing devices … today, we announced a series of actions that will build on the strength of those franchises and accelerate our strategic transformation. These changes will reduce our global employment by about 12,000 positions by mid-2017.”
  • Advanced Micro Devices CEO Lisa Su – “We believe [virtual reality]  will be a key long-term demand driver for AMD, across both our consumer and professional graphics offerings, especially as content creators require more powerful GPUs to create fully immersive VR experiences … we are making excellent progress on our strategy to reestablish our presence in the data center market.”   Note: AMD also announced a partnership with  Tianjin Haiguang Advanced Technology Investment Co., Ltd. , which  will pay $293 million for technology and design services  for the China market.
  • Google CEO Sundar Pichai - "We've always been doing cloud, it's just that we've been consuming it all internally at Google, But as we've grown … we've definitely crossed over to the other side to where we can thoughtfully serve external customers … We've been investing in machine learning and AI for years, but I think we're at an exceptionally interesting tipping point where these technologies are really taking off … That is very, very applicable to businesses as well."
MY TAKE
  • Regarding Intel -   As CEO Krzanich’s addressed the firm’s growth opportunities; the announced layoffs illustrate the challenge of realigning its resources with these business objectives.
  • Regarding Advanced Micro Devices -  As CEO Su affirms the view that semiconductor growth will be driven by data center/cloud growth, rather than PCs, its focus on graphic processors market could provide significant advantage in the emerging virtual/augmented reality market.  
  • Regarding Google – As CEO Pichai increases the firm's focus on cloud services and machine learning/AI capabilities, there is still a need to rationalize Google's varied development initiatives.

Sunday, April 17, 2016

Microsoft, the U.S. Government and Your Data

  • Last week, as leaders of the U.S Senate Select Committee on Intelligence released a draft of the Compliance with Court Orders Act of 2016.
  • Chairman Richard Burr said “I have long believed that data is too insecure, and feel strongly that consumers have a right to seek solutions that protect their information – which involves strong encryption … I do not believe, however, that those solutions should be above the law. I am hopeful that this draft will start a meaningful and inclusive debate on the role of encryption and its place within the rule of law.”
  • Vice Chairman Dianne Feinstein said “No entity or individual is above the law … The bill we have drafted would simply provide that, if a court of law issues an order to render technical assistance or provide decrypted data, the company or individual would be required to do so. Today, terrorists and criminals are increasingly using encryption to foil law enforcement efforts, even in the face of a court order. We need strong encryption to protect personal data, but we also need to know when terrorists are plotting to kill Americans.”
  • Separately, Microsoft filed a lawsuit against the U.S. Department of Justice that said “Over the past 18 months, federal courts have issued nearly 2,600 secrecy orders silencing Microsoft from speaking about warrants and other legal process seeking Microsoft customers’ data; of those, more than two-thirds contained no fixed end date … These twin developments — the increase in government demands for online data and the simultaneous increase in secrecy — have combined to undermine confidence in the privacy of the cloud and have impaired Microsoft’s right to be transparent with its customers, a right guaranteed by the First Amendment.”


MY TAKE
  • As Senators Burr and Feinstein seek to strengthen the government’s approach to data access and Microsoft seeks to clarify and perhaps restrain the government’s access to data, a broader set of data privacy issues continue to be debated.
  • Given the complexity of data privacy, poorly crafted legislation could lead to unexpected outcomes.
  • Bottom line: regardless of how public policy is crafted, encryption technology continues to evolve and law enforcement will need to adapt.

Sunday, April 10, 2016

Robots; by Land, Sea and Air

  • Last week, recommendations from the Federal Aviation Administration's (FAA) "small drone" working group included 1) drones weighing about half a pound or less should fly without restrictions and 2) drones weighing four to five pounds can fly over populated areas but must stay at least 20  feet above or 10 feet away from people.
  • U.S. Senator Dianne Feinstein’s commented about drone regulation saying “Reckless drone use varies significantly in different states and even within a state, which is why we need to maintain the ability for states to set their own standards of drone operation … one in five incidents of reckless drone use nationwide has occurred in California, and densely-populated areas with critical infrastructure like Los Angeles and San Francisco need flexibility to enact rules that address their unique challenges.”
  • Separately, the U.S. Navy christened the autonomous warship Sea Hunter, which was developed by the Pentagon's Defense Advanced Research Projects Agency (DARPA). The 132-foot diesel powered vessel, which is still being tested, is designed to operate without human remote control.
  • Deputy U.S. Defense Secretary Robert Work said, "This is an inflection point … this is the first time we've ever had a totally robotic, trans-oceanic-capable ship."
  • Also, as part of the “European Truck Platooning Challenge”, twelve semi-automated “smart” trucks from DAFDaimlerIvecoMAN, Scania and Volvo traveled to Rotterdam, Netherlands - some trucks traveled over 1,200 miles, crossing four country borders.
  • Dutch infrastructure and environment minister Melanie Schultz van Haegen said “Truck platooning will ensure cleaner and more efficient transport. Self-driving vehicles also contribute to road safety because most accidents are caused by human failure.”

MY TAKE
  • In the short term, the landscape for aerial and terrestrial automated vehicles will need to adapt to different regulations across, cities, states and countries – which may slow the pace of adoption.
  • In the longer term, the need for collision detection and avoidance will continue to challenge many robotic solutions.  Advances in sensor technologies will mitigate some of the risk, but adoption may be constrained to more structured use cases where the environmental variables are well understood.  

Sunday, April 3, 2016

The SEC on Start-Ups, Eye-Popping Valuations and Unicorns

Last week, comments from Securities and Exchange Chair Mary Jo White’s speech “Protecting Investors in an Innovative Financial Marketplace” included:
  • “It is undisputed that venture investing is not for the faint of heart … While the common refrain is that 9 out of 10 start-ups fail, an equally interesting statistic … is that 70 percent of failed start-ups die within 20 months after their last financing, having raised an average of $11 million. In other words, not only are these investments highly risky, they fail quickly too.”
  • “A current feature of the pre-IPO financing market  … that has gathered considerable attention recently [is] unicorns … I am speaking not of the creatures of fantasy, but of private start-up firms with valuations that exceed $1 billion. By one count, there are nearly 150 unicorns worldwide, many based here in Silicon Valley.  And, they do not appear to be an endangered species. One survey shows that there were 52 unicorn financings in the last three quarters of 2015 compared to 37 such financings over the 12 months that ended in March 2015.”
  • Beyond the hype and the headlines, our collective challenge is to look past the eye-popping valuations and carefully examine the implications of this trend for investors, including employees of these companies, who are typically paid, in part, in stock and options. These are areas of concern for the SEC and, I hope, an important focus for entrepreneurs, their advisers, as well as investors.”

MY TAKE
  • Regarding startup failure – By increasing their focus on customer acquisition, rather than fundraising, start-ups will likely increase their potential for success. 
  • Regarding Unicorns –  As some successful start-ups avoid the scrutiny of regulators such as the SEC by remaining private, the term Unicorn will  continue to be embraced by market participants.
  • Regarding eye-popping valuations –  Asset valuation is always challenging and often only validated in hindsight -  and the investment process remains a mix of skill, art and some luck.