Sunday, June 26, 2016

On the U.K. Exit- Selected Observations

Last Thursday, 52% of U.K. voters want to “Leave” European Union and 48% want to “Remain.”  The news triggered significant volatility across global markets.

The following are selected views on the impact of the vote:
  • British Prime Minister David Cameron - “The British people have made the very clear decision to take a different path and as such I think the country requires fresh leadership to take it in this direction ... I do not think it would be right for me to be the captain that steers our country to its next destination,"
  • German Chancellor Angela Merkel - "We take note of the British people's decision with regret. There is no doubt that this is a blow to Europe and to the European unification process … [the consequences] depend on whether we -- the other 27 member states of the EU -- prove to be willing and able to not draw quick and simple conclusions from the referendum in Great Britain, which would only further divide Europe,
  • Germany vice chancellor and economics minister Sigmar Gabriel - “Damn! A bad day for Europe”  
  • French Prime Minister Manuel Valls - "It's an explosive shock. At stake is the break up pure and simple of the union ... now is the time to invent another Europe." 
  • Former US Treasury Secretary Larry Summers - “As suggested by the fact that stock markets in Italy and Spain are down almost twice as much as in the U.K., the prospects for Europe may in some ways be worse than for the U.K. There is the real risk of “populist exit contagion” in a number of countries…. The effects on the rest of the world will depend heavily on psychology. I continue to be alarmed …  I fear this possibility will lead to a freezing up of spending decisions particularly on the part of internationally oriented businesses.” 
  • Advertising firm WPP CEO Martin Sorrell - "This decision will create tremendous uncertainty, which will slow economic activity and decision making," 
  • Airbus CEO Thomas Enders - "This is a lose-lose ‎result for both Britain and Europe … we will review our UK investment strategy, like everybody else will."
MY TAKE
  • Regardless of the rationale for the “Leave” vote (concerns about immigration, globalization, unemployment trends, etc.), increased uncertainty will likely dampen global commerce.
  • Scotland, and possibly Northern Ireland, may exit the United Kingdom, while maintaining EU membership, but other EU members may consider an exit.
  • It is unclear if the “Leave” political leadership is prepared to address the significant challenges ahead.
  • Bottom line: This is highly unpredictable and very unfortunate mess.

Sunday, June 19, 2016

The U.K.- Will it Stay or Will it Go?

Last week, as the June 23 vote by U.K. citizens to determine if they want to leave the European Union, a process referred to as Brexit, Prime Minister David Cameron said: “Here are five key reasons why I believe you need to vote to remain in a reformed European Union. 

  1. Jobs. British businesses rely on our deep links with Europe. Over 3 million jobs in the UK are linked to exports to other EU countries.
  2. On leaving. No alternative would give firms full access to the single market, without accepting immigration from the EU and paying into the EU budget. Every alternative would mean years of negotiations, uncertainty and risk for Britain.
  3. Travel. The EU delivers lower prices for Brits. The price of flights has come down by 40% and the cost of using your mobile phone in Europe by almost three-quarters.
  4. Trade. The EU is the UK’s main trading partner, worth more than £500billion a year – that’s half of our total trade in goods and services.
  5. National Security. The EU helps us to co-operate on crime and security. The European Arrest Warrant means over 7,000 suspects have been removed from the UK and we’ve been brought over 1,000 back to face justice here. 
  6. Jobs. British businesses rely on our deep links with Europe. Over 3 million jobs in the UK are linked to exports to other EU countries.” 
Note: while some surveys have suggested that a majority of UK citizens prefer to Leave the European Union, a NBC News/Survey Monkey U.K. poll last week reported that 48% of Britons want to "Leave" the EU, 48% want to "Remain" and 4% are undecided.

MY TAKE
  • While a “Leave the EU” view may be driven by concerns about immigration, globalization and unemployment trend, recent Google Trends data suggest that voters may be confused - with top U.K. Google searches including ‘why should we leave/stay in the EU?’, ‘what will happen if the UK stays or leaves?’ and ‘what is ‘Brexit’?’.
  • Leave vote will likely trigger short term market volatility across many international markets, while weakening the structure of the European Union.
  • Bottom line: Global investors, business leaders and policy makers are all focused on the outcome of the June 23 vote. 

Sunday, June 12, 2016

On the Centralization of the Decentralized Web

  • Last week, World Wide Web creator Tim Berners-Lee, while speaking at the Decentralized Web Summit in San Francisco, said “[the internet] controls what people see, creates mechanisms for how people interact … It’s been great, but spying, blocking sites, repurposing people’s content, taking you to the wrong websites — that completely undermines the spirit of helping people create.” And also “The web is already decentralized … The problem is the dominance of one search engine, one big social network, one Twitter for microblogging. We don’t have a technology problem, we have a social problem.”
  • Separately, computer scientist Jaron Lanier, while speaking at the WIPO Conference on the Global Digital Content Market (April 20 - 22, 2016,) said “Right now a handful of people – those inheriting traditional monopolies like oil and the increasingly powerful big computer networks – have a giant chunk of the world’s wealth and it's having a destabilizing impact. While an oil monopoly might control the oil, it won’t take over everything in your life, but information does, especially with greater automation … If we expect computers to pilot cars and operate factories, the employment that is left should be the creative stuff, the expression, the [intellectual property]. But if we undermine that, we are creating an employment crisis of mass proportions."

MY TAKE
  • Technically, the Internet and the World Wide Web are decentralized, but digital network effects have resulted in 1) winner-takes-all (or most) business models, 2) cultural silos and 3) diverse economic outcomes. 
  • At the same time, debates about the structure, bias and use of algorithms, artificial intelligence and automation are increasing.
  • The larger issue to address is how assets (both physical and digital) will be managed, traded, used and protected in an increasingly interconnected global community.

Sunday, June 5, 2016

Björk, Paul McCarthney, Virtual Reality and More

  • Last week, singer-songwriter Björk said: “I am delighted to announce the opening of Bjork digital exhibition at Carriageworks in Sydney.  It … is a further step into completing the full Vulnicura VR album which will come out soon. I feel the chronological narrative of the album is ideal for the private circus virtual reality is, a theatre able to capture the emotional landscape of it.”  HTC Senior Vice President Rikard Steiber (Virtual Reality) said “With Vive we are focused on bringing a fully immersive experience to our users, and this partnership with Björk felt like a really natural fit.”  Note: The VR exhibit will also support content on Samsung’s Gear VR headset.
  • Separately, singer-songwriter Paul McCartney released the first two episodes of PURE McCartney VR, a six-part series of virtual reality documentary where “fans will embark on a personal journey with Paul as he recounts memories and anecdotes related to various tracks, while sharing archived and never-before-seen footage.” Note: The content will be available in iOSAndroid, Gear VROculus Rift, HTC Vive and Desktop 360 formats.
  • Finally, Microsoft Executive Vice President Terry Myerson (Windows and Devices Group) announced at Computex in Taipei, China, “Today we focused on the next frontier – mixed reality. Providing devices with the ability to perceive the world, breaking down the barriers between virtual and physical reality is what we call mixed reality. Imagine wearing a VR device and seeing your physical hands as you manipulate an object, working on the scanned 3D image of a real object, or bringing in a holographic representation of another person into your virtual world so you can collaborate. In this world, devices can spatially map your environment wherever you are; manipulating digital content is as easy and natural as picking up a box or sitting at a table; and you can easily teleport into your next meeting or travel together as a team.
MY TAKE
  • Regarding Björk and Paul McCartney - Their efforts should help develop a better understanding of 1) user expectations for virtual reality and 2) the advantages and constraints of various delivery platforms.
  • Regarding Microsoft -  As the realms of augmented and virtual reality merge, users will increasingly confront the question of how much “virtual” they want to incorporate into their “reality”.