Category: innovation | 革新 | 독창성 | 改変

Innovation, alongside disruption are two of the most overused words in business at the moment. Like obscenity, many people have their own idea of what innovation is.

Judy Estrin wrote one of the best books about the subject and describes it in terms of hard and soft innovation.

  • Hard innovation is companies like Intel or Qualcomm at the cutting edge of computer science, materials science and physics
  • Soft innovation would be companies like Facebook or Yahoo!. Companies that might create new software but didn’t really add to the corpus of innovation

Silicon Valley has moved from hard to soft innovation as it moved away from actually making things. Santa Clara country no longer deserves its Silicon Valley appellation any more than it deserved the previous ‘garden of delights’ as the apricot orchards turned into factories, office campus buildings and suburbs. It’s probably no coincidence that that expertise has moved east to Taiwan due to globalisation.

It can also be more process orientated shaking up an industry. Years ago I worked at an agency at the time of writing is now called WE Worldwide. At the time the client base was predominantly in business technology, consumer technology and pharmaceutical clients.

The company was looking to build a dedicated presence in consumer marketing. One of the business executives brings along a new business opportunity. The company made fancy crisps (chips in the American parlance). They did so using a virtual model. Having private label manufacturers make to the snacks to their recipe and specification. This went down badly with one of the agency’s founders saying ‘I don’t see what’s innovative about that’. She’d worked exclusively in the IT space and thought any software widget was an innovation. She couldn’t appreciate how this start-ups approach challenged the likes of P&G or Kraft Foods.

  • Twitter troubles

    You can read elsewhere about Twitter troubles, I have linked to some of the best analyses I found out there at the bottom of this article.
    Twitter
    If you don’t have time to go through the the analyses around Twitter troubles, here’s the ‘CliffsNotes’ version:

    • Management turnover. Three different heads of engineering in 18 months, five different product leads in the past two years, three CFOs in 18 months and 2 COOs (mainly because the role was left vacant for over 12 months)
    • Growth in user numbers has been stagnant in the U.S.. The three published quarters of 2015 showed U.S. active users at 66 million. The last two quarters of 2014 were steady at 64 million
    • Growth in user numbers globally has been a modest 11 percent. Growth outside the U.S. was just 13% year on year in quarter three of 2015

    James Whatley and Marshall Manson called the user number plateau ‘Twitter Zero’.

    There have been product-related Twitter troubles:

    • The ‘Promoted Moments’ advertising option is confusing to look at
    • Will it, won’t move beyond 140 characters
    • Algorithmic filtering of the timeline
    • Utility of the news feed is becoming diminished for the digerati
    • Likely reduction in user engagement
    • Likely uptake in bot content publication
    • Inability to deal with community issues like #Gamergate
    • Twitter’s auto-playing videos are barely more than a rounding error in the battle between YouTube and Facebook for video supremacy

    What less people are talking about is what Twitter troubles means beyond Twitter.

    Advertising purchases are a near-zero sum game. Facebook and other high growth native advertising platforms gain from Twitter troubles. But for marketers this is not all good news. Facebook is poor at giving marketers actionable insights and intelligence. There is no Facebook firehouse of data. Facebook only provides aggregated data.

    The OTT (Over The Top) messaging platforms (WhatsApp, WeChat, LINE, KakaoTalk, Kik) are data black holes. Commercial dashboards on some accounts allow you to see how your account is doing. There is no insight of what is happening across accounts. There is no measure of influence beyond follower numbers and click-throughs.

    Twitter troubles with declining relevance, has a direct effect on social media monitoring and analytics platforms.

    Social media analysis of Twitter data is widespread. From consumer insights / passive market research to brand measurement and financial trading models.

    I had seen data which showed a direct correlation between brand related market research conducted by respected market research firms and social media analysis using Twitter data. The implication of this was that Twitter data could provide a more cost effective alternative.

    All of these research benefits are moot if Twitter is in decline or becoming irrelevant.

    Twitter data has its use beyond market research. It is the source of breaking news for the western media. Twitter’s firehouse also goes into making smarter phones. Apple’s Siri sources Twitter content to answer news-related requests.
    Siri using Twitter as news
    A poor performing Twitter has implications across the tech sector beyond online advertising. There are no obvious substitute solutions for its data waiting in the wings.

    Perhaps Twitter’s earning’s call on February 10 will give a hint of improvements at the company. But I wouldn’t bet on it. More related content here.

    More information

    Twitter Inc. quarterly results
    How Facebook Squashed Twitter – Stratechery by Ben Thompson
    Can Twitter turn stagnation into progress, or has it hit the wall? | Technology | The Guardian
    Twitter’s Fiscal 2015: Up, Flat, And Down | TechCrunch
    Twitter is teetering because it has turned into one big pyramid scheme | Andrew Smith
    Twitter Might Ditch The 140-Character Limit: What This Means For Marketers | SocialTimes
    Daily Report: The Tough Realities of a Twitter Turnaround – NYTimes.com
    Next Twitter boss faces complex challenges, says departing Dick Costolo | The Guardian
    Twitter data show that a few powerful users can control the conversation – Quartz
    Twitter’s Jakarta office is now open. Here are 6 reasons why Costolo is focusing on Indonesia | Techinasia
    Inside Twitter’s plan to fix itself
    How efficient is Twitter’s Business Model?
    Black Widow | Dustin Curtis – interesting analysis of Twitter and a warning about APIs

  • PrivaTegrity: the flawed model of distributed keys

    Dave Chaum’s PrivaTegrity – an idea to to try and balance between state actors demand for internet sovereignty and the defacto end of citizen privacy. Whilst also addressing the need to deal with emotive causes such as terrorism, paedophile rings and organised crime got a lot of attention from Wired magazine.

    Backdoors are considered problematic by privacy advocates and seem to be a panacea for governments who all want unrestricted access.
    Yesterday evening on a bus stop in Bow
    The principle behind PrivaTegrity is that there would be a backdoor, but the back door could only be opened with a nine-part key. The parts would be distributed internationally to try and reduce the ability of a single state actor to force access.

    However it has a number of flaws to it:

    • It assumes that bad people will use a  cryptographic system with a known backdoor. They won’t they will look elsewhere for the technology
    • It has a known backdoor, there is no guarantee that it can’t be opened in a way that the developers hadn’t thought of
    • Nine people will decide what’s evil
    • If you’re a state actor or a coalition of state actors, you know that you have nine targets to go after in order to obtain access by hook-or-by-crook. It was only Edward Snowden who showed us how extraordinarily powerful companies where bent to the will of the US government. The UK government is about to grant itself extra-territorial legal powers to compel access. There is no reason why a form of extra-ordinary rendition couldn’t be used to compel access, rather like Sauron in The Lord of the Rings bending the ring bearers to his will. Think of it as Operation Neptune Spear meets a Dungeons & Dragon quest held at a black site. Even if the US wouldn’t consider it a viable option, who is to say that other countries with capability wouldn’t do it. That group of countries with sufficient capability would likely include: UK, Kingdom of Saudi Arabia, United Arab Emirates, People’s Republic of China, Russian Federation, France, India, Pakistan, Turkey, Israel. All that these countries would need is intent

    More information
    The Father of Online Anonymity Has a Plan to End the Crypto War | WIRED
    Privategrity

    More privacy related content here.

  • The smartphone market and Huawei

    It is hard for anyone reading the media to believe that Huawei’s rise in the smartphone market was anything short of miraculous. In reality the roots of this rise go back at least six years. Back in 2010, Huawei was already shipping 3,000,000 smartphones. However since that time, the year-on-year percentage growth in consumer devices shipped by the company reduced from 82 per cent year-on-year growth to about 8 per cent growth in 2014.  This growth was initially driven by less sexy products like feature phones for China Mobile, DSL routers and 3G/LTE dongles.
    Huawei numbers
    In fact if we go back further to 2007, feature phones drove a 757 per cent growth in consumer devices shipped.

    2010 is quite crucial, Huawei Consumer Devices suffered a 32 drop in year-on-year growth in revenue / device going from $56 per device in 2009 to $38 in 2010. The margins per device then began to climb again during period from 2010 – 2014.

    January’s numbers discussed at CES don’t give us the total numbers of devices shipped by Huawei, but only smartphone numbers, so I haven’t calculated revenues for 2015, but they would represent a significant upswing from the 20+% growth enjoyed in previous years.

    Reading the Huawei coverage one would believe that the growth is being driven by developed markets and premium devices, but the truth according to the numbers found seem to be less clear. In between the years 2014 and 2015, the percentage revenue derived from Western Europe dropped from 11.3% to 10%, even as overall revenues grew. Much of this is driven by Southern European markets that had been hit hardest during the 2008 recession. It will be interesting to see how Huawei looks to crack Germany, the UK, France and the US.

    So what does this all mean?
    Huawei smartphones and watches are firstly just the most visible aspect of the company and not likely even the most profitable. Huawei equipment likely runs at least part of the internet network that brought you this page. They power mobile networks around the world (outside the US). They provide storage (very large boxes of hard disks) to banks and businesses around the world.

    Huawei Consumer Device numbers are reflective of wider technological change. In the space of the nine years that I looked, you could see the peak of the feature phone business, where Huawei was predominantly a domestic supplier. The rise of the mobile dongle to fill the gaps in free wi-fi networks and the rise of the smartphone/phablet which negated some of the mobile working laptops did around email, but also acted as tethered modems reducing the need of dongles.

    Huawei’s numbers are indicative of a successful fast follower strategy. Huawei learned the smartphone trade by first of all making badge engineered Android phones for T-Mobile. It then went out on its own. Each generation of phone improved in terms of industrial design and they built a direct to consumer channel over time.

    Xiaomi’s direct-to-consumer e-commerce strategy was transformative in the Chinese market and something that Huawei replicated with the Honor brand. Huawei hasn’t tried to build services in the same way that Xiaomi has and hasn’t ventured as deeply into the smart home.

    In terms of device numbers the company has successfully managed to displace both Samsung and Xiaomi in markets, but despite the ‘premium positioning’ it has taken a while to build the average revenue per device (ARPD). If the 20 billion dollar annual revenue announced at CES, only represents smartphone devices, then the ARPD (of $188) is still less than a third of what Apple enjoys with the iPhone.

    The smartphone market like dongles and DSL modems before it is moving rapidly towards maturity and lower growth. It will be interesting to see where Huawei’s business strategy goes next.

    How I got the data?
    The data quoted is based on numbers given out in Huawei’s annual reports from 2006 – 2014 and the Huawei Consumer Device press room where Consumer Device started to break out some of their own numbers. The types of numbers talked about vary from year to year. You can see a copy of my collated and calculated numbers here. When converting CNY to US dollars, I assumed an exchange rate of 1 yuan is 15 cents.

    More information
    Huawei annual report page
    Huawei Ships 108 Million Smartphones in 2015, Contributing to Annual Revenue Exceeding $20 Billion USD
    Total order value of Huawei Consumer in Western Europe exceeds 2 billion dollars
    Huawei Consumer Business Group Announces 1H 2015 Financial Performance
    Huawei Consumer Business Group Announces 2014 Financial Performance
    Huawei Consumer Business Group Announces Q3 2014 Financial Results
    Huawei Consumer Business Group Announces 1H 2014 Business Performance
    Huawei Consumer Business Group Ranked Third in Global Smartphone Shipments in 2013

  • The internet of heavier things

    I started to think about the internet of heavier things after I spent a bit of time with my Dad. We talked about work, engineering stuff in general and technology in general.
    IMGP0606.JPG
    My Dad has a pragmatic approach to technology, it’s ok so long as it fills three distinct criteria:

    • It’s useful
    • It’s efficient in what it does and how you use it
    • It doesn’t get in the way of product serviceability

    The last point is probably something that we tend to think about least, but my Dad considers it as he is a time served mechanical fitter.  Just prior to Christmas one of the gears went in my parents Singer sowing machine. The machine has been in the family for about 50 years. I managed to buy the relevant cog from a website for just under a tenner.

    Contrast this with most electronic goods where you tend not to be able to replace products at a component level. Even if you did, trying to find 50 year old standard catalogue processors, let alone a custom ASIC (application specific integrated circuit) would be a thankless task.

    We got to talking about a concept I read in EE Times earlier that month; the internet of heavier things (IoHT). IoHT basically means wiring  up or making smart fixed infrastructure and machinery. Venture capital firm KPCB think that the IoHT will generate $14.2 trillion of global output by 2030.

    The boosters for it like KCPB think that this opportunity revolves around a number of use cases:

    • Being able to flag up when preventative servicing is required. (For a lot of manufacturing machinery, companies like Foxboro Instruments – (Now Foxboro by Schneider Electric and Invensys Foxboro respectively) – had been doing this prior to the widespread implementation of TCP-IP network protocols). It is the bread and butter of SCADA systems. But it could be bridges and viaducts indicating that they need work done
    • MRI machines and other medical equipment that are financed on a per scan unit rather than as a capital cost. Basically extending the enterprise photocopier model into capital equipment expenditure
    • Machinery that is continuously re-designed based on user feedback

    Kicking it around with my Dad got some interesting answers:

    Flagging up items for servicing was seen to be a positive thing, however, how would this work with the reality of life in a manufacturing plant. Take a continuous process, say something like an oil refinery or food production line where the whole line needs to be shut down to enact changes, which is the reason why maintenance is scheduled in well in advance, on an annual or semi-annual basis. The process needs to take into account the whole supply chain beyond the factory and both shutdown and start-up are likely to be a complex undertaking. When I worked in the petrochemical industry before going to college; the planning process for a shutdown took six to nine months. Secondly, there was redundancy built into some of the plant so certain things that might need to be taken off line on a regular basis could be. A second consideration is that plants are often not off-the-peg but require a good deal of tailoring to the site. Plants generally aren’t new, there is a thriving market in pre-owned equipment. In the places I worked this included equipment such as such as pressure vessels, electric motors and valves – all of this would have implications for interoperability.

    Lastly, what would be the implications when when the ethereal nature of technology underpinning the internet of heavier things met infrastructure that has a realistic life of a hundred plus years in the case of bridges or buildings?

    Looking at the defence industry, we can see how maintenance costs and upgrading technology drives much of the spending on weapons systems – a bridge will generally last longer than a B52 bomber or a Hercules transport plane (both are 60 years old systems).

    Financing on a per-use unit cost. This was discussed less, the general consensus was that this could dampen innovation as the likes of GE Medical would become finance houses rather than health technology companies, in the similar direction to what happened with Xerox or an early 21st century Sony.

    Machinery that is continually redesigned on user feedback sparked a mix of concern and derision from my Dad. It seemed to be based on a premise that products aren’t evolved already – they are changed. The pace of change is a compromise between user feedback, component supply issues and backward serviceability. Moving to an ‘always beta’ model like consumer software development could have a negative impact on product quality, safety and product life due to issues with serviceability of equipment.

    More info
    Introducing the IoHT (Internet of Heavier Things) | EE Times
    The Industrial Awakening: The Internet of Heavier Things | KCPB
    What does technology adoption really mean?
    Old 2.0: interfaces and use cases
    Old 2.0: adventures in retail
    Old 2.0: On the virtual road
    On the road 2
    On the road
    Web 2.old

  • Trustworthy x86 laptops + more things

    Trustworthy x86 laptops? There is a way, says system-level security ace | The Register – ARM isn’t solution either. Trustworthy x86 laptops is a relative concept. With physical access to the hardware trustworthy could soon become untrustworthy

    Zuk sells in Vietnam | Shanghai Daily – part of the brand strategy might be masking the Chinese involvement given the fractious relationship with Vietnam

    Qualcomm bags license deals with China’s Tianyu and Haier – HKEJ Insight – interesting moves
    Ex-Yahoo COO Dan Rosensweig: go private – Business Insider – DanR is right

    AT&T to ditch most two-year phone contracts on January 8th – Engadget – I don’t see it affecting Apple that much but will it be an opportunity for Huawei to steal a march on Samsung and HTC in US?

    Hem.com Is On The Block, Swiss Furniture Maker Vitra Likely Buyer | TechCrunch – its in a tough space

    Is The Clock Ticking For The Traditional Watch? | Advertising Age – undecided looking at the opinions

    This is why you’re inadvertently watching more Facebook ads – Quartz – autoplay video units, I have to wonder about the real viewability stats

    Predictability is going through some unpredictable changes. – Slate – interesting essay on innovation

    Samsung says its new Tizen TVs will be harder to hack – wow security features on a smart TV, its a first

    LG’s smart home hub looks like an Amazon Echo with a screen | The Verge – interesting that they are blowing all of this stuff out before CES rather than using the show as a launchpad

    How a Nation of Tech Copycats Transformed Into a Hub for Innovation | WIRED – or why Silicon Valley needs to be very afraid

    How the Internet of Things Limits Consumer Choice – The Atlantic – good for business, bad for consumers

    Search Results – Springer – text books over 10 years old can be downloaded legally for free

    State-owned enterprises to be split into 2 classifications – commercial and strategic for government interests

    Why messaging apps saw the biggest mobile wins in 2015 – Luxury Daily – its all about WeChat in these examples

    5 Predictions for China’s Luxury Industry in 2016 | Jing Daily – Only a handful of luxury brands—including Chanel and Tag Heuer—opted to lower their China prices over the past year even as currency fluctuations widened the price difference. As long as it remains profitable to sell and a bargain to buy daigou items, the market will remain strong in the coming year.

    How Typecasting Millennials Is Hurting Ad Buyers | DigitalNext – Advertising Age – another play for programmable and deeper data sets

    Star Wars in augmented reality lets you fight the First Order in real life | Mashable – could bring back single player gaming as a thing

    Despite big hack, Ashley Madison is back – with four million new members | siliconbeat – what’s the definition of insanity, doing the same thing twice and expecting a different result?

    Behind Frank Quattrone’s Comeback in New Tech Era – WSJ – but dotcom taint still drags on him (paywall) – more on Frank Quattrone here