Dana Blankenhorn

The Word for 2023 is Efficiency

If you can save costs, in business or consumer markets, you can make money.

This is technology’s big opportunity in 2023.

The cloud has already transformed how people interact. It’s now going to transform how machines interact.

Sensors and network software can be applied everywhere. Thanks to falling chip prices this can now be done cheaply. There is labor available to write the software, build the companies, and reap the rewards.

Consider the water system. Why aren’t sensors monitoring the condition of pipes, warning of potential failures, and identifying leaks the moment they occur? Why are water authorities still depending on people finding cracks in the street with water coming out of them on their own?

The Time Is Now

Here is what 45 years of studying business cycles has taught me.

Now is the time to work on your next great startup.

Right now. When the whole world is collapsing around us. When old business models are failing. When everyone is worried about their job, or about to lose it.

Look at the opportunities. I detailed them three years ago. The end of oil. The machine Internet. DNA as a programming language.

These boil down to renewable energy, control systems, and medicine.

Open Source Explains It All

Back in 2005 I was asked to take over a new “open source” beat for ZDNet.

It turns out to have been the most important story of my life. And yours.

Open source is software based on the radical idea that the more eyes you get on code, the better it will be. Without getting too deep into the weeds here, it works.

The benefits of open source, however, flow mainly to its users. In the old proprietary model, they flowed to developers. Microsoft and (especially) Oracle fought it so fiercely. They saw the “little guys” as ganging up to steal their competitive advantage. Microsoft finally surrendered, building a network of cloud data centers that has made it the second most-valuable company in the world. Oracle is worth barely one-tenth as much.

All of America’s biggest companies are now built on the open source idea. Apple built its cloud on open source. So did Google, and Amazon, and Facebook. Facebook extended this into hardware with its Open Compute Project. Netflix extended it into networking with Open Connect.

But open source relates to more than software, hardware, or technology.

Moore’s Law of Health

One topic in the coming re-write of my Moore’s Law book, now called Moore’s Law Explains it All, involves what I call Moore’s Law of Politics.

Moore’s Second Law, the rising capital cost of chip making, offsets Moore’s Law itself. Moore’s Law of Software, its value increasing with use, offsets Moore’s Law of Content, because most content doesn’t gain in value once you read, hear or see it.

At the same time Moore’s Law of Health, the fact that technology lets us live longer, creates a negative in Moore’s Law of Politics.

Political decision-making is stuck in the past.

I got a reminder of this during my recent trip to Heidelberg. I met a young Vietnamese mathematician. He was about the same age as my own son, 28.

I asked him about the Vietnam War. To him it’s an historical relic, like our Civil War. Even his father wasn’t impacted by it. It’s something from his grandfather’s time.

The 2020s: The Machine Internet

(This is Part II of a three-part series on technology in the 2020s, for publication while I’m at the Heidelberg Laureate Forum in Germany.)

The 2010s were the decade of clouds and devices.

But it was done through human intermediaries. People did the input and the output came from people.

Even if you’re talking to your computer, you’re still in there directing it. Our interfaces in 2019 are, in that way, not that different from what they were in 1979. Fingers are replacing mice, voices are replacing keystrokes, but you’re still making the decisions.

That’s what I think will change most in the 2020s.

It all seems frightfully late to me. I wrote about this stuff as The World of Always On as far back as 2002. Then again, I wrote A Guide to Field Computing in 1993, before the iPhone was a gleam in Steve Jobs’ eye.

The Machine Internet has been delayed by the human element. Right now, most “analysts” still assume this will keep it from happening. They’re pushed out the date for self-driving cars from 2019 to 2029. They think autonomous technology must be perfect to be useful.

It only needs to be better than you.

Monopoly, Market Advantage, and Mouthpieces

The long-running scam on which this blog was originally based was the AT&T monopoly.

Since the 1984 Bell break-up, AT&T has been recreating itself, like the brooms of the Sorcerer’s Apprentice sequence in Fantasia. What were originally 7 regional Bell companies merged into 2 regional Bells, then those two bought the long-distance operators with big market share in the Internet core. AT&T is descended from Southwestern Bell, one of the original 7, and changed names when it bought the long-distance operation.

AT&T has spent most of its corporate life grifting off government. It won huge subsidies to create “universal service” over a century ago, and it eventually won the end of price regulation on the service. It continued its grifting on the Internet. A “universal service fund,” derided as a “Gore Tax” by opponents, was a subsidy, crafted mainly for AT&T, aimed at delivering broadband service to rural areas and urban ghettoes.

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.

Who Will Make the Mozilla Phone?

That's the key question here  and the answer is, probably no one.

Android was a Linux, backed by Google. Their problems weren't with the operating system. In theory a mobile Internet client should be no different than a desktop Linux. But every aspect of the design for any “smart phone” – from how it takes calls, to the user interface, to the way apps interact – is covered by literally hundreds of patents.

• Some are held by giant companies which use them to pry open markets.

• Some are held by “development companies” like Interdigital, who research, invent and patent things for a living. (Interdigital invented one of the first digital encoding schemes, TDMA, back in the day.)

• Others are held by trolls like Lodsys, law firms that pick up minor claims at the patent office, expand them into grand conspiracies, then hold up every company in the mobile ecosystem for big gobs of cash.

You can't invent a way around these patents. If the present patent-and-copyright regime were in place at the dawn of the PC age, I'm sure we'd all still be driving IBMs with twin floppies.

Software patents are bad law for two main reasons.

1. They give lawyers an excuse to file their own private taxes on any innovator, slowing innovation, eventually slowing it to a crawl. Meanwhile nations without such court-created regimes, like China, are free to innovate all they want and run rings around us.

2. You can't invent your way around these patents, unlike drug patents, which specify compounds, or device patents, which are published so rivals can improve them. Patents granted on concepts don't have to show an actual invention. They don't have to publish the code. Which means you can't do the same thing, or something similar, in some other way. You can't patent a new mousetrap if someone has already patented the trapping of mice. You have an absolute monopoly on an entire industry that last for 20 years or more.

Google is Not at War

I have always been annoyed by the lazy "great game" tech analysis of reporters who would rather be covering politics than business.

An example is found in a recent TechCrunch piece on Google. Headlined "Google's Six-Front War," it focuses on the areas of business where Google is now concentrating its energy under co-founder (and now CEO) Larry Page.

VC Ben Horowitz started this nonsensical meme, calling Page a "war time CEO" in contrast to the "peace time" leadership of predecessor Eric Schmidt.

There are two things that are true here. First, Page is paring down the company's development focus. Second, he's focusing the company's energy on areas where it is in direct competition with other big companies. Microsoft in browsers, Apple in mobile, Facebook in social networking, etc.

This is natural. This is good. Page is wasting fewer development hours, he's aiming to monetize his infrastructure advantages in various ways, he's working to compete.

Free the WiFi

There are two reasons to share things via open source. So they won't become worthless, and so they can become more valuable.

The Sega game machine is an example of the former principle.  Had Sega been able to donate the code when they killed the product, it could have had an after-life. As it was, owners now have bricks.

WiFi is an example of the latter principle.  The Electronic Frontier Foundation now says it wants the WiFi protocol “opened,”  allowing free sharing of unused bandwidth.

Peter Eckersley calls fears of privacy and security that have made people lock their WiFi routers a “tragedy of the commons” and suggests the launch of an Open Wireless Movement to fight back.

I wrote something very similar two years ago, from Chengdu, where I was able to post stories only because of open wireless connections in a Chinese condo project. My hosts let us use a great apartment, but it had no computer, no Internet. Without the open connections of nearby units, which admittedly were on intermittently and didn't provide a ton of bandwidth, I would have been gone from the Web all that week. As it was, I delivered some of the most popular things I ever did write at ZDNet.