WCW III: World Chip War III

 Intel: The Missing Piece In The Epic New Global Microchip Battle

In the beginning, in the early 1970’s there were the original semiconductor companies like Intel, AMD, Motorola, and not far behind, the Japanese giants NEC, Fujitsu, and Mitsubishi. The first great Chip War was in memory chips, primarily as replacements for magnetic core memory and for the emerging new minicomputer industry. The Japanese fought World Chip War One as a nation, using the power and influence of its entire government to compete against the American companies. At the behest of the U.S. government itself, IBM bought a minority share in Intel to potentially defend Intel against any hostile bid from the Japanese.  Not long afterward, the Great Microprocessor War, World Chip War Two exploded, primarily between Intel and Motorola. Intel was the victor of World Chip War Two, primarily due to the extraordinary marketing genius of Intel Marketing VP Bill Davidow’s “Crush” campaign, not superior Intel technology. It was a huge lesson of the importance of marketing over having the “coolest technology.”  Now after something of a long hiatus, we have World Chip War Three, which is being fought over “CODECS,” and related chips which power our smartphones. Today’s news about Broadcom’s bid for Qualcomm omits the other crucial player in this new War of Titans, Intel, which has risen from earlier ignominious failures to become the third player in WCW III.

Broadcom’s Bid For Qualcomm Marks Upheaval in Chip Industry

The California-based chip maker offered made an unsolicited $105 billion takeover bid for Qualcomm

Broadcom proposed to acquire rival chip maker Qualcomm for $70 per share. PHOTO: MIKE BLAKE/REUTERS

By

Ted Greenwald

Broadcom Ltd. AVGO 1.42% made an unsolicited $105 billion takeover bid for QualcommInc., QCOM 1.15% the chip industry’s boldest bet yet that size will equal strength at a time of technological upheaval.

The approach, which would mark the biggest technology takeover ever, shows how tech companies are positioning themselves for a world where a range of chip-driven devices—from phones to cars to factory robots—are transmitting, receiving and processing evermore information. Broadcom Chief Executive Hock Tan already has used acquisitions to build the company into the fourth-biggest chip maker by market value, part of a wave of industry consolidation as profits on some chips, such as those used in personal computers, are squeezed by sluggish sales and rising costs.

A combination with Qualcomm would create a behemoth whose chips manage communications among consumer devices and appliances, phone service providers, and data centers that are becoming the workhorses in artificial intelligence.

The deal is far from certain. San Diego-based Qualcomm, which said it would consider the proposal, is expected ultimately to rebuff it on the grounds that the price isn’t high enough, especially given the significant risk that regulators would block it, according to some analysts. Under typical circumstances, unfriendly bids like this are difficult to pull off; given the sheer size and complexity of Qualcomm, this one could be especially challenging, analysts said Monday.

Broadcom’s preference is to strike a friendly deal, but if it fails to do so, it would consider nominating Qualcomm directors who may be more amenable to a transaction, a person familiar with the matter said. The nomination deadline is Dec. 8 and the annual meeting at which the director vote would take place is likely be around March.

Broadcom offered $70 a share for Qualcomm, representing a 28% premium from its closing price on Thursday—before news reports on the expected approach.

Qualcomm shares ended trading Monday up 1.2% to $62.52, while Broadcom shares were 1.4% higher at $277.52.

Mr. Tan said he has been talking with Qualcomm for over a year about a possible tie-up. “Our strategy has been consistent,” Mr. Tan said in an interview. “When a business is No. 1 in technology and No. 1 in market position, we acquire it and put it on our Broadcom platform and grow through that strategy. Qualcomm has a very large sustainable franchise that meets those criteria.”

Should the deal be completed, Broadcom would take on Qualcomm’s leadership in developing the next wave of cellular technology, known as 5G, which is expected to roll out over the coming two years. That could give Broadcom a new growth engine, as 5G is expected to dramatically accelerate the speed and responsiveness of cellular communications necessary for applications like self-driving cars.

Broadcom was formed when Avago Technologies Ltd. bought the former Broadcom in 2015 for $39 billion and kept the name, and Mr. Tan has continued growing by acquisition. The company sells a diverse line of equipment for networking and communications. Its products include chips for Wi-Fi and Bluetooth technology that connect devices that are closer together—technologies that some analysts say are likely to grow less quickly than 5G.

“People will continue to use short-proximity wireless like Wi-Fi and Bluetooth, but the growth and money is clearly in 5G,” said analyst Patrick Moorhead of Moor Insights & Strategy.

Overall, Broadcom and Qualcomm have largely complementary product lines. But the possible Broadcom takeover is likely to face intense regulatory scrutiny, given the companies’ combined scale and the fact that they are both leaders in Wi-Fi and Bluetooth technology. The companies share customers including Apple Inc., whose iPhones and iPads include components from both Qualcomm and Broadcom.

Qualcomm already has been under pressure from antitrust agencies in several jurisdictions, including the U.S. The company has paid hefty regulatory fines in China, South Korea and Taiwan.

Qualcomm was riding high as recently as a year ago after unveiling the chip industry’s largest-ever acquisition: a $39 billion proposed deal for NXP Semiconductors NV. The deal hasn’t closed yet, and Broadcom said Monday that its proposal would stand regardless of whether Qualcomm’s proposed acquisition of NXP is consummated under the current terms.

Since then, a string of hits by regulators, competitors, and customers including Apple has left the industry titan in a vulnerable position. Qualcomm’s profit in the fiscal year that ended Sept. 24 plummeted 57%, and its share price declined 18% in the 12 months through Thursday’s close compared with a 58% rise in the PHLX Semiconductor Sector Index. That was before news of Broadcom’s interest sent Qualcomm shares up nearly 13% on Friday.

Funding for the deal would come in the form of loans from a gaggle of banks, with additional cash from Silver Lake Management LLC. The private-equity firm, which already owns a stake in Broadcom, provided a commitment letter for $5 billion in convertible debt. Silver Lake said a substantial portion of that capital would come in the form of an equity investment from its Silver Lake Partners fund, with the remainder from other sources.

The equity contribution would be the single largest in the history of the firm, exceeding the roughly $1 billion it invested in the merger of Dell Inc. and EMC Corp.

Broadcom’s bid came days after the Singapore-based company announced plans to relocate its headquarters to the U.S., a move that could make it easier to pursue acquisitions of U.S. targets.

Broadcom’s earlier $5.5 billion offer to buy Brocade Communication Systems, based in San Jose, Calif., has been delayed due to a review by the Committee on Foreign Investment in the United States, which reviews international deals that raise concerns about national security.

Any deal to acquire Qualcomm would also receive close scrutiny, experts say. “Anything that has the word semiconductor in it gets rapt attention from CFIUS,” said James Lewis of the Center for Strategic and International Studies, a policy think tank. “The move to the U.S. is an effort to tamp down CFIUS concerns.”

Energy Aware Riding Wave of Innovation and Investment in Energy Efficiency

Energy Aware Neurio Sensor/Data Collection Technology

In October of 2013, I first met Energy Aware’s management team, led by UBC alumni founders Janice Cheam and VP of Software, Ali Kashani in their modest East Vancouver offices.  I had encountered Ali commenting on the Internet of Things (IoT) on LinkedIn, and I challenged his arguments, as the skeptic that I am. Ali very graciously invited me to meet with him to discuss it further. Home automation and its new iteration, IoT, has been around for at least twenty years and had been going absolutely nowhere. Added to that was what I termed “The Tower of Babble,” a term now also used by Qualcomm to describe the data communication hairball in the IoT space. Indeed, Energy Aware had struggled for quite awhile in this immature market.  What I learned in that first meeting with Ali and Janice turned this skeptic into a believer, and I have enjoyed the opportunity to work with Al and Janice since that time providing them with tidbits of advice here and there.  My gut told me that Energy Aware was on to something with significant potential, as IoT was finally achieving technological “convergence,” and the Big Dogs in Silicon Valley were now gearing up their own IoT efforts. There is a Tsunami coming, and Energy Aware is well-positioned to ride it.

Energy Aware’s Management Team: CEO Janice Cheam & VP Software Ali Kashani

Reblogged from the Seattle Times:

Energy efficiency becomes hot market for tech companies

Long overshadowed by wind turbines, solar panels and other fashionable machines of renewable power, energy efficiency is sparking innovation and interest from tech entrepreneurs, big-data enthusiasts and Wall Street speculators.

By Evan Halper

Originally published by Tribune Washington Bureau, July 6, 2014

WASHINGTON — As President Obama pushes ahead on a strategy to confront climate change that relies heavily on energy efficiency, some Americans may see flashbacks of Jimmy Carter trying to persuade them to wear an extra sweater and turn down the thermostat.

The technology world sees dollar signs.

Long overshadowed by wind turbines, solar panels and other fashionable machines of renewable power, energy efficiency has lately become a hot pursuit for tech entrepreneurs, big-data enthusiasts and Wall Street speculators.

They have leveraged multibillion-dollar programs in several states, led by California and Massachusetts, to cultivate a booming industry. This onetime realm of scolds, do-gooders and bureaucrats has become the stuff of TED talks, IPOs and spirited privacy debates.

“This is not about extra sweaters anymore,” said Jon Wellinghoff, a San Francisco lawyer who formerly chaired the Federal Energy Regulatory Commission.

Power companies are tapping databases to profile intensely the energy use of their customers, the way that firms like Target track customer product choices.

 

Google spent $3.2 billion this year to buy Nest Labs, a company that makes thermostats that resemble iPhones and are designed to intuit the needs of their owners. Energy regulators are providing seed capital to startups building such things as waterless laundry machines.

“There was this notion that energy efficiency would never be sexy, never be something people wanted,” said Ben Bixby, director of energy products at Nest, which has attracted employees from Apple, Google and Tesla Motors to its base in Palo Alto, Calif.

“Nest has built this object of desire,” he said.

On hot days, Nest’s technology enables Southern California Edison to precool the homes of customers before the evening rush, helping the utility avoid the need to fire up extra power plants and netting cash rebates for homeowners.

Spending on efficiency technologies and programs soared to $250 billion worldwide last year, according to the International Energy Agency. The agency projects that amount will more than double by 2035.

U.S. power companies have tripled their investment in efficiency programs — funded mainly through ratepayer fees — since 2006, with California spending the most per customer.

Now the Obama administration has made energy efficiency a cornerstone of its plan to slash greenhouse-gas emissions by 2020. The plan, released in May by the Environmental Protection Agency, pushes states to boost efficiency by business and residential power users 1.5 percent each year.

“We are very excited about the EPA proposal,” said Richard Caperton, director of national policy at OPower, a data-mining firm that nudges homeowners to make better energy choices by alerting them when their neighbors are being more efficient. “We think it opens up more opportunities.”

Not long ago, OPower was a small pilot project partnered with the power company in Sacramento, Calif. Now it does business with 90 utilities, including Seattle City Light, and has gone public.

All the mining of data involved in such high-tech efficiency efforts has some privacy advocates concerned.

In California, utilities are required to report when they share consumer data with someone other than the customer and vendors. Records show that last year immigration authorities, drug-enforcement agents and state tax officials issued more than 1,110 subpoenas for records that track energy use of customers in the San Diego area as frequently as every 15 minutes.

Emerging privacy issues will be a focus of a fall conference sponsored by the American Council for an Energy Efficient Economy.

“This is a big deal,” Associate Director Neal Elliott said. “But it is not a big deal unique to energy.”

Those behind the startups said data already collected by retailers and social-media firms create a much bigger potential intrusion. They express confidence that consumers are more likely to be charmed by their innovations than panicked.

So far, most of the efficiency focus has been devoted to what one innovator in the field, Swap Shah, chief executive of FirstFuel in Boston, calls “elephant hunting.”

Utilities seek out their biggest clients, a small group of corporations in energy-intensive industries, audit their operations exhaustively and work with them to cut use. Each audit requires a small army of staff, Shah said.

FirstFuel goes after millions of other commercial customers that don’t get the utilities’ attention. It mines the 36,000 data points of consumption a modern smart meter generates for a building each year and checks it against other data, such as weather histories and images of the building.

The result is a deep energy-use profile that reveals specific areas of waste, including lights left on all night, air conditioning running when workers are not in the building and poorly insulated windows.

The average customer can use the report to cut consumption more than 18 percent, FirstFuel estimates. No auditors need ever set foot on the property.

Entrepreneurs like Shah hope that their software will ultimately be used by big financiers contemplating whether to back retrofits on large commercial buildings. Investors have not always been eager to put money in such projects amid concern that the investments won’t pay for themselves.

A similar innovation includes one recently unveiled by computer engineers at Retroficiency in Boston. Its Building Genome Project gathered all the publicly available data on 30,000 buildings in New York City to show how huge amounts of energy could be saved with slight changes, said CEO Bennett Fisher.

“Millions and millions of dollars have been spent trying to figure out which buildings are inefficient,” Fisher said. “Doing it manually has created a bottleneck. We want to blow open that bottleneck.”

Vinod Khosla writes a scathing response to 60 Minutes’ ‘Cleantech Crash’ report

Vinod Khosla gives CBS News 60 Minutes another major black eye on their bias and lack of investigative depth, as with the lightweight report on the NSA.  Just consider for a moment the absurdity of 60 Minutes story in the light of recent major strategic initiatives by Cisco Systems, Intel, Qualcomm on clean tech and the “Internet of Things.  Add to that this week’s announcement of Google’s acquisition of Nest, a major energy efficiency company, for $3 Billion.  Khosla’s entire open letter to CBS is shown below.

Vinod Khosla writes a scathing response to 60 Minutes’

‘Cleantech Crash’ report

Venture capitalist Vinod Khosla has written a 2,000-word open letter to 60 Minutes and CBS in response to their recent “Cleantech Crash” report, which featured lengthy interviews with Khosla and a tour of one of Khosla’s portfolio companies. He asserts that there are numerous errors in the piece, that the journalists who made it were practicing “agenda-driven bastardization of news reporting,” and that the story “grossly misrepresented the state of the sustainable energy industry.”

You can read the entire letter here. He also says in the letter that Khosla Venture’s “cleantech portfolio is profitable.” Here’s my take on the 60 Minutes piece; here’sNRG CEO David Crane’s response; and here’s clean power entrepreneur and investor Jigar Shah’s take.

Open Letter to 60 Minutes and CBS

January 14th, 2014

To: 60 Minutes and CBS

Attn: Lesley Stahl, Jeff Fager, David Rhodes, Leslie Moonves

On January 5, 2014, CBS’ 60 Minutes aired a segment titled, “The Cleantech Crash” that grossly misrepresented the state of the sustainable energy industry.

At Khosla Ventures, we are focused on finding real solutions for energy independence, rather than just pontificating. The pontificators at 60 Minutes, with their agenda-driven bastardization of news reporting, failed to do the most elementary fact checking and source qualification, as was the case with your Benghazi reporting. No wonder one major media outlet wrote that you have been “widely criticized for leaving out crucial information about the state of the clean tech sector.” Is this the new CBS standard?

The errors in your story are numerous.

Fact: I have not invested over a billion dollars of my own money into cleantech. It is substantially less, and a simple query to us would have corrected this error. We manage a balanced portfolio, and it has not “crashed” nor is it “dead”. In fact, our returns are significantly above the venture capital average.

Fact: Contrary to your assertion, the U.S. Department of Energy (DOE) Loan Guarantee Program has created 55,000 new cleantech jobs. ^[1]

Fact: The DOE loan program, despite your implications, has a 97% success rate. ^[2] The former program head, Jonathan Silver, expects it to make money, not be a subsidy.

Fact: There is $51 billion remaining in DOE loan money.^[3] The amounts in the CBS report are far from “spent” or allocated. You seem to want to cite big numbers, whether they are true or not!

Fact: A substantial portion of DOE loans is allocated to nuclear energy^[4], not just cleantech segments like biofuels, solar or wind, a fact conveniently left out despite your being aware of it.

Fact: The U.S. spent $502 billion subsidizing fossil fuels in 2011. This is the result of directly lowered prices, tax breaks and failing to properly price carbon’s negative externalities.^[5] You ignored the fact that energy is far from being a level playing field. Many other subsidies are hard to account for like MLP partnerships, accelerated depreciation and below-market royalties that are never categorized as fossil fuel subsidies that disadvantage cleantech.

Fact: According to a senior U.S. Navy official, last year alone, $80 billion of taxpayer money was spent patrolling just the oil sea-lanes in the Arabian Gulf. There are many sea-lanes we patrol. Globally and over time, the U.S. has spent $7 trillion patrolling them.^[6] Such “protection spending” of U.S. taxpayer dollars for the oil industry is a much larger subsidy than any amount spent to support the cleantech industry, a fact CBS chose to overlook despite my statements on camera. This may be the largest U.S. subsidy in history, and it was purposely ignored because it is inconsistent with your agenda. Cleantech subsidies are a miniscule fraction of one-percent of these amounts.

The Department of Energy said it themselves, “Simply put, 60 Minutes is flat wrong on the facts. The clean energy economy in America is real, and we are increasingly competitive in this rapidly expanding global industry. This is a race we can, must and will win.”

There were many opportunities for you to showcase cleantech successes such as the dynamic glass company, View, with whom you met and visited as part of your research. You also had knowledge that View raised $60 million in private funding in early 2013, and weeks before your program aired, View secured an additional $100 million in private funding. These dollars will go toward ramping production efforts in its Mississippi-based manufacturing facility, which will in turn create scores of new American jobs. Sustainable energy is the way forward for this new era of American manufacturing.  Already, the Brookings Institute reports that the clean economy employs over 2.7 million workers despite your implications to the contrary!

You chose to ignore other success stories like energy storage company, Lightsail, which we also shared with you. In fact, you did not even want to visit the solar, engines or agriculture success stories, among others. You chose to ignore these FACTS, because it did not jive with the story you wanted to tell. Is your job reporting all the facts or merely pushing “angles”?

You fundamentally do not understand how innovation works with platitudes like, “for every 10 startups, nine go under”.  At Khosla Ventures, we invest in companies that have high failure probabilities, but the wins far outweigh the losses. I clearly explained that we expect 50-percent of our portfolio companies to make money and today, our overall cleantech portfolio is profitable; however, CBS chose to air sources who have never looked at the details of a quality venture portfolio. In fact, their so-called experts are only expert pontificators who have never produced any biofuels themselves.  One always can find a “source “ to throw mud at anything to get on-air; CBS appears to want the same standards for sourcing as the National Enquirer.

You falsely implied that our companies have received disproportionate taxpayer money, despite my repeatedly telling you otherwise. While these numbers are hard to accurately calculate, to the best of our knowledge, a substantial amount of funding (greater than 90%) for our cleantech portfolio has come from private sources. When our companies have received funding from the DOE, the dollar amounts represent a small fraction of the investment from private dollars. It is naive to believe that we can subsidize energy on a large scale; this kind of thinking would bankrupt any government, and yet CBS seems to imply that all our investments are based substantially on taxpayer money or are dependent on ongoing subsidies, a statement that is simply untrue.

In fact, the former head of the DOE loan program, Jonathan Silver, stated publicly that some of the projects cited as failures by CBS never even got loans in the first place. You also failed to note that while Range Fuels took federal loan money, we strongly opposed their decision to do so. Because these are independent companies, we seldom control these decisions. Repeatedly, your story reinforced the 60 Minutes thesis rather than objectively reporting the facts.

According to Silver, the DOE loan program was actually designed to make a profit in the long term even taking into account the failures, which represent a remarkably small portion of the portfolio (less than three percent). Any loan program, private or public, has both losses and gains. When the investment cycle is complete, Silver expects the government will actually make a profit on the portfolio. Interests are below market (just as in the oil leases that oil companies receive) but the terms are restrictive enough that our portfolio companies, Kior and Stion (our solar company) and others refused the loans even after they were awarded. CBS also failed to distinguish between federal loans that were designed to be profitable (the bulk of the money), research grants (billions spent on private universities and companies in and outside cleantech), work-for-hire (do we list Lockheed Martin, which receives billions of dollars annually in work-for-hire government revenue, as a subsidy?) and other programs.

You misleadingly hyped the “$150 billion” allocated to cleantech without noting that, while it has been allocated, much of it has not been spent. Further, to the best of my knowledge, much of such project spending goes to larger incumbents, not entrepreneurs.

Your naïve reporting also failed to account for the other setbacks we have gone through in the last five years, such as the economic crisis, which, while unrelated to cleantech, has substantially hurt the ability to fund cleantech research or projects. Many projects — be they chemical, oil sands or cleantech — have failed to meet their expectations because of the recent financial crisis.

At scale, new technologies must compete with conventional fossil fuels on both price and performance – in the U.S., as well as in India and China. Energy incumbents have incredible advantages embedded in our tax code, government regulation and public infrastructure; therefore, new competitive efforts must be nourished and encouraged to maintain a more competitive environment and a level playing field. Subsidies should be used to introduce new competition to markets against the embedded advantages granted to incumbents. We must reform America’s energy policy before companies become dependent on the existing subsidy regime. As context, Chinese solar, wind, LED and other companies get substantially larger government loans to compete against U.S. producers, even without technology differentiation. In fact, we risk losing technology to China because there is simply more government support there. U.S manufacturing suffers as a result. The 1950s and 60s saw the moon race. Today, we are in a new race for sustainable energy, but we risk losing because of irresponsible reporting like that of CBS!

Khosla Ventures does not believe in subsidy-dependent markets. Reaching unsubsidized market competitiveness five to seven years after a commercial start is an abiding principle for all of our investments. Subsidies are a crutch: they force innovation into a niche and create dependence on financial incentives that will eventually disappear. I have publicly stated that I am against corn ethanol and wind subsidies, among others, and in favor of reducing solar and biofuel subsidies over time. I also have written about the criteria for good subsidy programs elsewhere. We need to level the playing field in order to create new competition for fossil energy. Currently, there is an unfair advantage for fossil fuels with favorable tax legislation like Master Limited Partnerships, accelerated depreciation and below market royalties, and of course the aforementioned IMF-calculated subsidies as well as free transportation protection services provided by the federal government. It all adds up to massive numbers, much larger than for cleantech, and it has been going on for decades!

New industries are created by entrepreneurs who don’t necessarily have subject matter expertise when they get started, yet they are still responsible for most of the innovation we see in society. Did Google know much about media? Or Amazon about commerce? Tesla about cars? SpaceX about rockets?  EBay about classifieds? Juniper about telecommunications? What did I know about computing when I started Sun Microsystems? We should celebrate these entrepreneurs, not pillory them for fighting entrenched incumbent industries that have political influence and money. And yes, they often fail, but they also create more positive change than incumbents who, in general, are only responsible for incremental improvements. The oil industry has probably spent more money advertising their environmental efforts with the likes of CBS than on real research in green technologies.

Your so-called “experts” pontificate about the hard problem of energy; we heard similar things about the difficulty of telecommunications with trillions invested in infrastructure. Then, the Internet came along, despite the indifference of every major telecommunications carrier, and upended the industry. Looking back through history, we can easily find common shortsighted attitudes when evaluating new technologies. When Alexander Graham Bell invented the telephone, it was dismissed out-of-hand by the incumbent telegram service, Western Union. “The idea is idiotic on the face of it…. we do not see that this device will be ever capable of sending recognizable speech over a distance of several miles.”  Venture capitalist, Ben Horowitz, describes this naysaying attitude in an article titled, “Can-Do vs. Can’t-Do Culture”. As he so aptly points out about the naysayers, “They focused on what the technology could not do at the time rather than what it could do and might be able to do in the future.” This cynicism is exactly what CBS has proliferated in its unbalanced and unfair coverage of the cleantech industry. Today, the stakes are higher than ever as the world’s population increases and resources are limited. Our can-do attitude must overcome the naysayers.

To get to the energy-independent future we need, we must continue to try and sometimes fail, but the consequence for not trying is guaranteed failure. We will keep accepting intelligent and selective failure. Even oil prospecting has a greater than 55-percent failure rate, and yet we still do it. In the venture industry, we make risky bets all the time because that’s what it takes to innovate.

The future will run on energy. At Khosla Ventures, we are focused on making big bets to ensure a sustainable future even if some of them fail. It is unfortunate that stories like yours employ Benghazi-style reporting standards that overshadow the truth. I will continue to try and make the future happen and, when it does, hopefully someone else will do a better job reporting it.

As Robert F. Kennedy said, “Only those who dare to fail greatly can ever achieve greatly.”

— Vinod Khosla

Gigaom

Venture capitalist Vinod Khosla has written a 2,000-word open letter to 60 Minutes and CBS in response to their recent “Cleantech Crash” report, which featured lengthy interviews with Khosla and a tour of one of Khosla’s portfolio companies. He asserts that there are numerous errors in the piece, that the journalists who made it were practicing “agenda-driven bastardization of news reporting,” and that the story “grossly misrepresented the state of the sustainable energy industry.”

You can read the entire letter here. He also says in the letter that Khosla Venture’s “cleantech portfolio is profitable.” Here’s my take on the 60 Minutes piece; here’s NRG CEO David Crane’s response; and here’s clean power entrepreneur and investor Jigar Shah’s take.

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Industry Analysis: Two Year Semiconductor Industry Portfolio Returns Nearly 33%

Trends Driving the Semiconductor Market

Students of Industry Analysis may be interested in this. For my January 2012 Industry Analysis course focused on the semiconductor industry, I set up an imaginary portfolio, using only industry analysis macro information. My Wall Street Journal portfolio of 13 semiconductor companies, covered a wide range of application markets, and included Canadian semiconductor company PMC-Sierra. I would NOT recommend this as a serious portfolio strategy due to the highly cyclical and volatile nature of this industry. However, my overall gain over 2 years has been 32.87%. The top gainer, Micron Technologies (296.73%), lost its CEO in a plane crash after I invested but obviously recovered. The other two top gainers, ARM (112.70%), and Texas Instruments (56.71%) are both heavily involved in wireless communication chips.

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The internet of everything–annihilating time and space

An excellent discussion of the deeper social implications of the Internet of Everything. Perhaps difficult for some to grasp, but consistent with many other futurists’ views. The current world of MOOC‘s in online education, for example, may only be a brief waypoint on the journey to anytime, everywhere education.

Reblogged from Gigaom

by Liron Shapira, Quixey

SUMMARY:In the future everyone will be connected—everywhere, all the time—making space and time no longer an issue for physical devices, people and products.

Which modern technology “enables us to send communications…with the quickness of thought, and to annihilate time as well as space”? If you answered “the internet,” you’re right. If you answered “the telephone,” “the television” or any other speed-of-light telecommunication technology, you’re also right. That quote is from an 1860 book by George Bartlett Prescott, an American telegraph official.

In 1860, the fastest telecommunication link between California and New York was the Pony Express, which took at least 10 days to get a message to the other side of the continent. Then one day in 1861, the First Transcontinental Telegraph was completed and you could send the same message across the continent in 10 seconds. Two days later, the Pony Express officially ceased operations. Prescott was onto something.

The Ancient Greek word “tele” means “far away”. To telecommunicate is to communicate farther than you can shout. When you connect two points with a speed-of-light telecommunication channel, you annihilate the spacetime-distance between the points. You get a kind of wormhole.

The internet is a network of spacetime wormholes connecting every human being on the planet. If you want to chat with someone face to face, you just stare into your cell phone and they stare into theirs. You can’t tell if they’re a thousand miles away, or in the next room.

But when it comes to physical things, we’re still living under the tyranny of spacetime. Kevin Ashton, the inventor of the term “Internet of Things”, wrote in 1999: “We’re physical, and so is our environment … You can’t eat bits, burn them to stay warm or put them in your gas tank. Ideas and information are important, but things matter much more.” Just look around the room right now, at anything other than your cell phone. All the things you can see and touch depend on where you are in space, or on how much time you spend moving yourself to a new location.

That’s a problem, because at any given moment, most of the things you care about aren’t in your line of sight. Almost none of the food you’re going to eat that day is. Almost none of the appliances you’re going to use that night are. That’s the tyranny of spacetime, which the internet of things is now beginning to overthrow.

The internet of things has three major spacetime-annihilating functions:

• Transportationmaking far away things come to you
• Teleportation – instantly getting copies of far away things
• Telepresence – interacting with far away people and things

Transportation

In the past, far away things had no way to know what you wanted from them or when you wanted it. The right things wouldn’t know how to find you. So you’d have to travel to where the things were — to a restaurant, to your house, to various stores.

If you shop on Amazon instead of going to the store, you’re on the internet of things. Last year, Amazon acquired robotic warehouse technology company Kiva systems. When you one-click on that toothbrush, Amazon’s robots move it from deep inside the warehouse onto the floor where employees pack it and ship it to you.

The internet of things transports things to you pretty fast, but not at the speed of light. It uses the internet’s fast-moving bits the way skydivers use a little pilot chute to pull out a bigger, heavier parachute.

Teleportation

Actually, sometimes the internet of things does make faraway things come you at the speed of light. The trick, called “teleportation”, is to convert things to bits and then back to things again.

The first teleporters were invented before the internet, but the far away “facsimiles” they brought you were just pieces of paper. Modern teleporters are a lot more versatile.

The MakerBot Digitizer can scan 3D objects and store their structure as a file of bits. The MakerBot Replicator can read a file of bits and print a 3D object. Put the Digitizer and Replicator at opposite ends of an internet connection and you get a teleporter.

Thousands of objects can already be teleported at the speed of light – silverware, vases, lamp frames, and even some weird-looking, but functional shoes. Soon the internet will be able to teleport physical objects into your lap as easily as it teleports web pages into your screen, and you’ll be able to surf the internet of things.

Telepresence

Sometimes you want to interact with far away things without having them transport or teleport to you. Then what you want is telepresence.

For example, you often move far away from your locked bike. Normally that means you can’t unlock your bike to let a friend borrow it, and you also don’t know when thieves are cutting your lock. LOCK8 is a smart bike lock that lets you unlock it from far away, and notifies you when a potential thief is tampering with it. No matter how far away you are from your bike lock, LOCK8 gives you all the benefits of being near your bike lock.

What if you’re far away from your office, but still want to attend meetings as if you weren’t? Virtual presence systems like Anybots and Suitable Technologies’ Beam let you remote control a walking, talking, seeing, hearing robot. You can travel halfway around the world, and still have a physical presence at your office.

The future: The internet of everything

Did you know you have two wireless modems in your head? Your eyes constantly receive radio signals in the visible spectrum, and your sense of vision connects your brain to nearby physical things, like a de facto Local Area Network. But your sensory LAN connection only extends as far as your line of sight. It’s nothing compared to a Wi-Fi internet connection.

In the future of the internet of things, Wi-Fi is going to be everywhere, and the internet will connect you to every person and thing on the planet via transportation, teleportation and telepresence. A trillion wormholes will let you reach out from anywhere on earth and hug your loved ones, or try on a new pair of shoes, or unlock your bike.

In the future beyond the internet of things, all your senses will be wired directly into the internet’s wormholes, and you’ll be completely indifferent to the location of your physical body. When you look around you, you won’t be looking into a nearby region of space. You’ll be surfing an internet that annihilates all time and space – the internet of everything.

Liron Shapira is the co-founder and CTO of Quixey and is an advisor to the Machine Intelligence Research Institute (MIRI).  Follow him on Twitter @liron

Gigaom

Which modern technology “enables us to send communications…with the quickness of thought, and to annihilate time as well as space”? If you answered “the internet,” you’re right. If you answered “the telephone,” “the television” or any other speed-of-light telecommunication technology, you’re also right. That quote is from an 1860 book by George Bartlett Prescott, an American telegraph official.

In 1860, the fastest telecommunication link between California and New York was the Pony Express, which took at least 10 days to get a message to the other side of the continent. Then one day in 1861, the First Transcontinental Telegraph was completed and you could send the same message across the continent in 10 seconds. Two days later, the Pony Express officially ceased operations. Prescott was onto something.

The Ancient Greek word “tele” means “far away”. To telecommunicate is to communicate farther than you can shout. When you connect two points…

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Vancouver company Energy Aware making Big Waves in Internet of Things

I met today with Ali Kashani and Janice (pronounced “Janeece”) Cheam of Energy Aware in their offices in Chinatown, East Vancouver. Ali is a UBC Vancouver Engineering Ph.D, and Janice is a Sauder “BComm” graduate. Together, they are the brains behind Energy Aware’s novel approach to the “hairball”  of the Internet of Things.  I began our meeting as a skeptic, and came away impressed with their approach, their market savvy, their chemistry as a team, and the big name partners they have already attracted.  The problem that Energy Aware faces is one of scale and money. Major global players like Intel, Cisco Systems, Qualcomm and others have decided to focus here as well. That is both good and bad for Energy Aware.  The big dogs have the ability to crush better ideas with money, or to collaborate with Energy Aware, so its anyone’s guess what may happen here.  The market for the Internet of Things is hideously complex, confused and immature, a perfect opportunity for an innovative entrepreneurial team to win, with Vancouver as their setting.

Read more: The Internet of Things: the promise versus the Tower of Babbling Things

Read more: Zigbee wants to be the bluetooth of the Internet of Things: too bad everyone hates it

Read more: New global mega industry battle developing in the Internet of Everything

Vancouver company providing a novel approach to cracking the IoT “Tower of Babble”

Reblogged from The Vancouver Sun

November 14, 2013. 4:21 pm • Section: Digital Life

Ali Kashani, VP software, and Janice Cheam, founder of Energy Aware Technology, with pie chart showing household energy use.

Gillian Shaw

RECENT POSTS FROM THIS AUTHOR

• Vancouver company helps turn your home into a smart homePosted on Nov 14, 2013

What has its start as Janice Cheam’s student project at UBC’s Sauder School of Business has turned into an innovative new technology for transforming an ordinary home into a smart home of the future.

Dubbed the Neurio, the technology is contained in a WiFi sensor that connects to your home’s breaker panel, tracking energy use by appliances and other electrical devices and integrating with the cloud and apps enabling consumers to manage everything from turning down the thermostat when they leave the house to reminding them that they left the oven on.

Neurio  has just raised more than $267,000 in  a campaign on the online funding site Kickstarter,  more than double its $95,000 goal.

I paid $129 to the Kickstarter campaign to be among the first consumers to get the Neurio Home package that includes a sensor, access to an online site with apps for managing power use.

According to Cheam, who is president and CEO of Energy Aware, the company that created Neurio, using Neurio could save that $129 and more by encouraging more careful energy consumption.

“We’ve found and a lot of studies have shown this, when people start to get real time feedback on the way they use energy it really changes the way people behave and how they interact with their appliances,” said Cheam. “At a very basic level there is just this consciousness that my house is actually costing me money right now.

“If I’m going to leave this house it is still going to cost me money so maybe I should turn something off and save money while I do that. That positive feedback reinforces people’s desire to want to waste less energy.”

It worked for  Ali Kashani, vice-president, software for Energy Aware.

Using a prototype of the Neurio in his Vancouver apartment, he cut his annual power bill from $750 a year to $400, an accomplishment that also earned him a $75 rebate  from BC Hydro’s Power Smart program.

Among the power culprits in his home? A stereo amp that was set to demo mode from the store.

“When I started using the sensor I realized even when I hit the off button it was still consuming energy,” he said. “It was costing me about $10 a month and with a simple configuration change that problem was resolved.”

In the case of another family using the sensor, the software was able to determine that the household’s Saturday laundry was costing them much more than it should.

“One of the things we were able to detect really easily was that their dryer was really inefficient because you could tell how much energy it was consuming every time they ran a load,” said Cheam. “We could not only alert the customer to how much energy his laundry was using but we were also able to compare it to the community and show him how much more his dryer was costing in power.”

Neurio uses algorithms to track power usage and like the Nest Thermostat, learns over time.

New Global Mega Industry Battle Developing in the Internet of Everything

Another chapter in my Industry Analysis series

It has dawned on me recently that an entirely new Mega Multidimensional War of Titans is developing, entirely separate and distinct from the mobile smartphone Multidimensional Mega War of Titans.   In many ways this new industry war may be more strategic, larger and more valuable than the smart phone war.  The emerging new battleground is the Mega Global War of the Internet of Everything. The global players in this newly developing war are well known names in high technology: ARM, Broadcom, Cisco Systems, Intel, and Qualcomm, not to mention a new class of players like The Zigbee Alliance, Honeywell and a host of others.  A number of small Canadian companies are also in the thick of this.

Some history

The Internet of Everything has been around for over 20 years and gone absolutely nowhere for lack of “technology convergence” and effective industry “co-opetition.”  Definitional confusion has abounded, with terms like “home automation” and “machine to machine” (M2M) communication. The technology convergence issue is now resolved but not the need for “co-opetition.”    Despite this, it is estimated that there are already as many as two Billion  “Internet of Things” (IoT) devices already out there, though many of them do not yet work. Think of these as “sensors,” each with a microchip of some description, and some form of data communication, not all Internet compatible. The problem with what is out there is what I call “the Tower of Babbling Things.” There is no global industry consensus on how these sensors should communicate, so each competitor has gone forward to establish their own vertical proprietary markets.  Layer on  top of that multiple data communication protocols that do not talk to each other. The international standard bodies like IEEE and ISO have bravely declared their intent to establish coherence from chaos, but without the major players, their efforts are doomed. The result is a massive market hairball.  But the market value projections are so massive (see the Business Intelligence Infographic below) that the biggest global players appear finally to be moving.

The Mega Battlefield Begins to Take Shape.

While some major players have been engaged in the Internet of Everything space for some time, others are only beginning to mobilize their forces..  Intel has this week announced the formation of new Internet of Things division, following Intel’s recent announcement of of new family of “Quark”  Internet of Things microprocessors.

This is clearly a very important new technology development for all us, and is very much worth following. It will have an impact and major implications for all consumers and businesses.

Read more: The Internet of Things: the promise and the hairball

Read more: Zigbee wants to be the Bluetooth of the Internet of Things

Read more: Will the Internet of Things turn into a Tower of Babbling Things?

The Internet of Everything Outstrips the Smartphone Revolution

The Internet of Everything

Reblogged from SemiWiki.com

Can Intel Compete in the Internet of Things?

by Daniel Nenni

Published on 11-05-2013 03:00 PM

Kevin Ashton, a British technology pioneer, is credited for the term “The Internet of Things” to describe an ecosystem where the Internet is connected to the physical world via ubiquitous sensors. Simply stated: rather than humans creating content for the internet IoT devices create the content. To be clear, this does not include PCs, Smartphones, SmartTVs, or wearable electronics. Think everyday things like thermostats, appliances, parking meters, and medical devices enabling physical-to-digital communication via the internet.

Today there are an estimated 2B IoT devices in play and that number is expected to grow exponentially in the coming years, so yes, this is a big deal.The question I have is this: Does Intel have a chance here or will ARM and the fabless semiconductor ecosystem continue to dominate the IoT market?The annual ARM user gathering was last month and IoT was a major focus. You can read about the ARM and the Internet of Things keynote and visit the ARM TechCon website for more information. My agenda at the conference was gathering 14nm silicon data but I attended the IoT presentations as well and that lead me to where I am today, at the IEEE IoT workshop.“The great promise of the Internet of Things is about the transformation of the world based on the convergence of numerous disjointed systems into a fully connected environment where complex tasks are synchronized and performed by a unified platform,” said Oleg Logvinov, member of the IEEE-SA Standards Board, member of the IEEE-SA Corporate Advisory Group, and director of market development, Industrial and Power Conversion Division withSTMicroelectronics. “During the workshop in Silicon Valley, we will explore how various technologies can be applied across multiple verticals and how convergence is fueling IoT’s endless potential and opportunities.” I also attended the IDF 2013 Forum last September where Intel announced their IoT contender, Quark. For you Star Trek fans Quark was the beloved con man pictured above. For Intel, Quark is a synthesizable core based on the 486 instruction set to which they claim uses 1/10th the power of Atom and is 1/5 the size. This was just slides with little technical data but details are now starting to emerge. The first Quark will be manufactured on a 32nm SoC process. The main problem I see here is that Intel’s 32nm is HKMG which is not cost nor power optimized and will unfavorably compete with TSMC 28nm poly/SION but I digress…. Lets get back to business.

The IoT value proposition is similar to mobile with low power and cost being the primary drivers. Business models and ecosystem are also going to be determining factors. Do you even know what silicon is inside your mobile devices? I do, but most people don’t. Do you even care? I do, but again, you don’t. Is IoT going to be any different? Absolutely not so say good bye to the old school benchmarks and transistor one-upmanship.

Also read: Intel Quark: Synthesizable Core but you can’t have it

The first questions during the IDF Q&A were about Quark and the Intel business model. By definition a synthesizable core can be licensed and customized by the customer. ARM takes this to a deeper level by licensing the architecture and instruction set so customers have complete control over implementation. So the first question to Intel CEO Brian K. was: Will Intel license the Quark cores? The answer was, “No”. Can Quark be manufactured outside of Intel? No. Can customers synthesize Quark? No. Can Intel be successful in the IoT market with their current Quark business model? No (my incredibly biased opinion). Fortunately business models can change faster than technology so Intel still has a chance with IoT and Quark but they had better hurry.

Gaming Market Case Study: NVIDIA To Go Vertical

This is getting messy..  NVIDIA announced yesterday at CES in Las Vegas, that it will market its own game console, which will compete directly with Sony, Microsoft, Nintendo, and for all intents and purposes, Google and Apple TV.  Does this sound to you, as it does to me, like a disaster in the making. Analysts at the launch event in Las Vegas, were reportedly “stunned.”   Students of corporate and product strategy should watch this space, as may well be a classic shakeout, and because it is gaming, it may happen at an accelerated pace.