Dana Blankenhorn

Internet is the New Radio

Michael Wolff believes that “TV is the new TV.” Jeff Jarvis insists that a paper’s decision to go all-digital is not a death sentence.

Both, in the current economic environment, are fundamentally wrong.

You will find the answer when you turn on your TV. What you will find there is not action, and not news. You will find talking heads. Talking heads are cheap and draw audiences. This was true 50 years ago, when talk radio was first invented, and it is just as true today. TV is not the new TV, it’s the new radio.

A web site budget consists of three kinds of costs:

• Capital costs, the Web site and tools needed to create content on it
• Bandwidth costs, which have been falling over time
• Labor costs, which have been rising over time. These include the management costs needed to define and oversee the site’s mission.

A typewriter and word processing software are one kind of capital cost, but it takes a lot of labor to create things with them. A TV camera and studio set up are another kind of capital cost, but they take much less labor to create things with them.

Anyone with “the gift of the gab,” as Salman Rushdie wrote, can create an hour of TV or radio content in about an hour. But even the best writer (especially the best writer) may take many days to create an hour’s worth of reading material.

The End of the War

Every crisis in American history has gone through phases.

• There is excess, the period during which the crisis becomes evident and the failure of a current Thesis to deal with it becomes obvious.
• There is a Crisis election, in which a leader steps forward whose ideas can defuse the crisis.
• There is the struggle during which people die needlessly, a Trial by Fire in which the stakes are made clear.
• There is Validation, in which the new leader’s thesis is accepted.

History only rhymes. It does not repeat. So it’s not always obvious when a crisis is over, or when validation occurs. In America’s First Crisis, the one the winners called the Civil War, the Battle of Atlanta was followed quickly by the validation of the 1964 election, making the events of Appomattox inevitable.

Intel Commits to the World of Always On

I began writing about what is now called the Internet of Things, or IoT, over a decade ago, at Corante, a fine site with no business model. It was during that period in the early 2000s where I made zero dollars from writing, but it's a period I'm now quite proud of. 

I called this technology Always On, because it works in the background and doesn't have to be turned on-and-off like a PC.  I wrote about experiments using motes, sensors, and tiny processors affixed to products, or just strewn around the ground in order to study wildlife. Inventory solutions can find your keys with this technology, I wrote, and monitoring solutions can water your lawn.   Health solutions can prevent heart attacks.

Many of these stories focused on Intel, which has now decided that the Internet of Things represents the future. 

Over the last few months Intel began showing retail solutions that can measure customers for clothes at a glance and track clothes in stores. A computer-on-a-chip called Curie is being shown at fashion shows, used for health monitoring and CGI displays that take place around clothes. It’s the flash end of the market. 

But Intel estimates that IoT already represents 4% of the company’s turnover.  The big money is in industry, in turning an Inventory of Things into an Inventory of Systems that can control refineries, collecting big data used to improve production and prevent accidents. It you have ever wondered why there have been so few big planes going down over the U.S. lately, part of the answer lies in this technology, which constantly monitors a plane’s condition and alerts airlines to maintenance needs before conditions grow critical. IDC Research now sees this as a $1.7 trillion market within five years. 

Standards are going to be vital in the IoT, to enable interoperability, and Intel is busy creating and negotiating such standards with software companies as well as carriers. 

A lot of this market turns out to be in Asia, a market Intel failed to crack in its mobility quest. Asian companies can use IoT to help make factories run better, or to monitor both traffic and citizens.Security and privacy implications have many in the U.S. cool to this potential. 

None of this has yet to hit Intel’s stock, which is down almost 17% over the last year as PC sales have slowed and the company’s efforts in mobile have continued to flounder. But Intel still brings 25% of its roughly $15 billion in sales to the net income line each quarter, its cash flow averages over $15 billion per year, and the balance sheet shows over $100 billion in assets with long-term debt that could be instantly repaid, in a crunch, using cash and short-term instruments in hand. Intel, in short, can be here for the long haul.

It’s not often that an investor gets a chance to get in on the “ground floor” of something while at the same time buy a 3.6% yield that can be covered by net income three times. It’s not often you can buy something with a Price/Earnings multiple below that of the market, a safe investment with speculation of leadership in a market niche that is about to explode, as in trillion-dollar explode.

But that is what Intel is looking at, today.

Things with intelligence are becoming parts of intelligent systems, and Intel is ahead of the pack facing this opportunity. Come for the dividend, stay for the speculation.

Security Disasters Slowing Tech Acceptance

Apple has a problem. The government is demanding it crack its own encryption and deliver data from a phone encrypted by one of the San Bernardino terrorists. 

Hollywood Presbyterian also has a problem. Hackers pushed an encryption key on the hospital, through malware, and now won’t give the hospital access to its own patient files unless it pays them an enormous ransom. Vendors like MedAssets and RelayHealth McKesson have been unable to solve the problem. (On Wednesday the hospital paid the ransom.)

These are two sides of the same coin. Encryption is an arms race. Solve problems with a 40-digit key, using any technique, and those who want to keep secrets create a 256-digit key. Or a 1,024-digit key. Wash, rinse, repeat.

Ever since the Web was spun, activists have advertised this as a good thing. Encryption assures privacy. Encryption can assure security.

But it can’t, because this isn’t a one-way street. Bad guys can use the same encryption techniques used to guarantee security into a tool that destroys it. Government, in seeking greater security, thus demands encryption keys. But as Phil Zimmerman and PGP Software have demonstrated, you can also create encryption without readily-available keys. This has made Zimmerman a hero of privacy, a member of the Internet Hall of Fame, even a revered figure.

It has also enabled the Hollywood Presbyterian ransomware and given Apple an ethical dilemma which now has it appealing a valid court order and on the bad side of Donald Trump’s wrath. 

Once Apple delivers a solution to the FBI for cracking encryption under a court order, however, how do you secure it? A slippery slope has been demonstrated in government rights granted under the Patriot Act, not only through the mass collection of meta-data, but government using its power to go after drug dealers, even ordinary criminals. You want to be safe, right? Yes, but safe from whom?

Once a key is available to break the Apple encryption, it is only a matter of time before technology to overcome that key is produced, which leaves us right back at the Hollywood Presbyterian problem. The difference in these cases is that the government has no throat it can choke to demand the key – vendors are just as powerless as the hospital itself, and the law enforcement agencies working to help it.

Computers remain binary. No matter how complex we make them, so that analog signals can be analyzed by them in real-time, they are not analog machines, and the key decisions we must make around them remain binary ones.

So demand the Apple keys and become absolutely subject to government. Or fight the power and leave yourself subject to ransomware.

Were this an investment story, I would probably call this a great opportunity for Palo Alto Networks, Checkpoint or Intel , but computing history says that once encryption is broken new encryption will emerge, with a longer key, and we’ll be right back where we are now.

China Winning the Internet of Systems

Our capitalist system has a way of developing and defining standards that was effective in the 20^th century but may be ineffective early in the 21^st.

We wait for the market to create a need, and to create a leader. Then everyone else gangs up on the leader and creates what they call a standard.

Think of Betamax and VHS. Sony was the first mover, and the other manufacturers ganged up on it to take the consumer market. Or think of Apple and Microsoft in PC operating systems, where Microsoft, IBM, and their OEMs convinced most of the market to wait six full years for a working user interface Apple had introduced in 1984. The same thing is happening with Apple and Google in phones, although in this case Apple has managed to sponge off most of the profits and leave the OEMs toting Google’s laundry and holding the bag.

But there are areas of technology where that process doesn’t work, where only the government can create and enforce standards because the players are too selfish and diffuse to accomplish it themselves.

It’s why the Internet is the way it is. I was covering the story at the time it happened, so I know.

The Anger Season

I write from passion, often indistinguishable from anger,

People, in general, are far more likely to get active against injustice than active for justice. When things are good they are quiet, or they find something else to get angry about.

The 2000 election was decided, in large part, on “wedge issues” like guns and abortion, where minorities of the public could be made angry enough to vote. Those who had seen gains from the Clinton-era economy were less motivated. The result was close enough for a Republican court to steal, and we’ve been paying for that ever since.

Every major political change is motivated by anger, even if it is clothed in positive garments. Franklin Roosevelt’s theme song was Happy Days are Here Again, but the days were anything but happy, with unemployment at nearly 33% and hunger stalking the land. Barack Obama ran on change, on “Hope,” but what elected him was the fact that the economy was growing at a rate of -9% during that campaign.

So in every important election the battle is joined to tap into anger. The media is always surprised by this, and Democrats often suck at it, but anger is what drives turnout and turnout is what wins elections.

Every generational cycle has echoes of those that came before. We like to talk of Hillary Clinton as the “new Nixon,” we compare ISIS to Hitler, and we see VanillaISIS or police brutality in terms of the KKK. But I have long believed that the era ours is most like is that of the 1890s. It has the same sorts of problems. Rapid change, huge disparities of wealth and power, and a system that seems to be rigged in favor of the “big boys.”