Checking Out KPCB Internet Trends 2015

I spent some time poring over Mary Meeker's recently released KPCB Internet Trends 2015 report.  The data reveals surprising growth potential in countries with low per capita GDP but strong smartphone penetration.  Smartphones are not yet a mature, low growth market like desktops but that threshold draws closer by the day.  Telecom and computer companies are thus wise to pursue the next big things in smartwatches and IoT.  There may be other big surprises ahead.  Here come my own guesses.

Drones probably belong in the IoT category.  Their affordability and loiter persistence enable operators to maintain daily coverage of some area with a very small fleet.  Farmers and miners may need no more than one drone for regular aerial surveys.  Anyone with persistent security needs for high-value properties will need no more than two or three for 24/7 coverage.  The strongest profits for drones won't be in manufacturing, because a drone's per-unit cost will drop rapidly with adoption just as the cost of PCs dropped in the 1980s.  The big bucks will be in cloud storage and data analytics for the millions of hours of video with embedded data that drones will generate.

The KPCB report is largely silent on wearables, another emerging IoT category that many people pretend to understand.  Measuring smartwatch usages in instances is only one way to capture their value.  Users will ultimately expect their smartwatches to do things their smartphone cannot do on its own.  A watch face's form factor limits its display capability to no more than six items:  a main icon (i.e., the equivalent of the time function), four very small icons (calendar date, etc.), and the background color representing something else.  I remain convinced that successful smartwatch apps will have little to do with games, email, messages, or notifications.  The winners will have a lot to do with biofeedback because the smartwatch, unlike the smartphone, is worn touching human skin all day.  Real-time health data is an untapped market.

Every analyst chasing perpetual growth from in-app shopping and advertising always forgets the economic cycle.  Even the most publicized analysts have trouble learning from experience.  Advertising is the first expense businesses typically cut in a recession because it loses its power to drive sales.  Campaigns pushing inventory clearances and discounts will continue to work well for high-margin businesses but will only compound the problems for low-margin businesses.  The good news for the ad sector is that the less effective channels like desktop ads will see cuts first.  If mobile ads are truly more effective at driving frictionless conversions, they will be cut last.  I am not aware of any ad channel that escapes cuts completely in a recession.

I will never forget the bullish talk that preceded the first dot-com bust in 2000.  Forrester Research led the lemming parade, investment bank equity analysts followed, and retail brokerages brought up the rear as they swept their sucker clients into Internet-themed mutual funds.  The impending bust in Web 2.0 companies will be just as much fun to watch from the sidelines.  Clearing out the debris will leave capacity for the next round of IoT plays to run.

The Haiku of Finance for 07/04/14

Spectrum and power
Optimize device design
Wearables adapt

Spectrum And Power Are The Long Tent Poles For Wearable Tech

The wearable tech sector is the hot thing attracting venture investment now that mobile computing has pushed the social media revolution to its apogee.  The FashTechSF event I blogged about is just the beginning.  Expect an onslaught of wearable startups clambering into overpriced San Francisco co-working spaces.  The ones that successfully deploy products must design for the two "long poles in the tent:"  spectrum management and power management.

Wearables must be confined to some predetermined part of the telecom spectrum.  Anyone who has ever worked in telecommunications knows that bandwidth is large but finite.  The FCC periodically auctions off parts of the electromagnetic spectrum that the government does not need to use.  Technologies that compress transmissions similarly make economical use of the airwaves.  The plethora of wearable gadgets that are about to hit Silicon Valley technology showcases need to design for spectrum allocations that are going to get very crowded.  Devices that do not adhere to wireless industry standards will face compatibility problems that frustrate consumers.  Your digitally enhanced shirts and socks won't perform if they can't communicate with your smartphone.  They'll be even less useful if other people's smart clothing jams your smartphone's signal on the street.  The IEEE Communications Society publishes its Transactions on Wireless Communications covering this very important topic.

Startups pushing wearables must optimize their devices power management in an era when Li-Ion batteries are built into small systems.  These batteries need to be rechargeable because the early adopters who will buy wearables first won't settle for the inconvenience of changing batteries.  The Wireless Power Consortium is driving the adoption of the Qi standard for recharging.  Wearable tech engineers need to know about Qi.  Note that IEEE is developing a standard for wireless charging with an initial focus on inductive coupling.

The Open Wearable Computing Group tracks emerging standards in this sector.  It is too early to tell which standards in spectrum and power will win broad adoption.  The wearable products that sell strongly and are compatible with leading smartphone OSs (iOS and Droid) will have the luxury of setting the early standard.  That's how VHS won the early VCR wars over Betamax.  Apple and Google need to hold wearable hackathons so they can attract solutions fitting their mobile platforms' existing spectrum and power configurations.  Winning in wearable innovation will be about more than pushing over-the-air software updates from the cloud to smartphones.  The winning products will be designed to fit hardware standards that won't pose transmission conflicts or power budget shortfalls.  

The Haiku of Finance for 07/03/14

Wear hot fashion tech
Digital seasonal style
Computing clothing

Alfidi Capital Sees FashTechSF's Wearable Technology In June 2014

I attended FashTechSF's Wearable Technology in Fashion exhibit last week in SoMa.  I don't normally cover the fashion sector of the economy but my attendance at the iFabbo Conference in 2013 broke new ground in this scene.  The most fashionable people in town just can't get enough of me.

Startups with wearable tech goods presented in the open space at Wearable World Labs in conjunction with their Wearable Wednesdays program.  The tech on display was pretty cunning.  I can see instant facial image manipulation finding a home on cosmetic counters and in reconstructive surgeons' clinics.  The athletic wearables will have to compete against the plethora of smart watches about to hit the market.  I suspect the non-watch wearables that win will look more like jewelry than tech gadgets, because people (especially women) want to show off their fashion sense with accessories.

My analysis must be so darn sharp that even the models promoting the startups find themselves drawn to me.  Here's proof that these models worship yours truly, Anthony Alfidi.

If you want more proof, here it comes.  These models are all over the tech scene but they always make time for a photo with the Greatest Man Who Ever Lived (ahem, that's me) whenever I show up to grace an event with my presence.

See, I told you so.  A lot of the booth babes at these types of tech events come from Models In Tech.  Startups angling for attention hire these gals to prowl trade shows and exhibit spaces on their behalf.  I wish I had thought of this totally awesome concept.  I'm kicking myself for not getting ahead of this wonderful trend.  I'll just have to play catch-up as much as possible.  Ladies, I have plenty of cards to hand out.  Contact me for the one and only Alfidi Capital experience, if you know what I mean.

I posed for a QuickeeCam shot with an appropriate beverage in hand.  These instant photo things sure are the new-fangled way to make ordinary people feel special.  I have enough ego for several hundred ordinary mortals and others are welcome to stroke it if they like.  I only take these photos so the attractive ladies on hand can swoon over my manly, handsome visage.  That's the magnanimous service I perform for humanity.  I can't help it if women are overwhelmed.

I listened attentively to the panel of tech people who shared their wearable insights.  I don't need to paraphrase their comments because I've got a bunch of original stuff to say.  Prepare yourselves for the wisdom of Alfidi Capital.  Wearables matter because they integrate directly into human lifestyles.  The smartphone is an interface that requires conscious use.  Wearables remove the cognition barrier, liberating us from thinking.  I can afford to be cynical because I haven't bought any wearable tech to enhance my lifestyle.  Wearable tech must be fun and easy to use.  Any tech innovation that crosses the chasm to mass adoption allows ordinary people to do what they've always done with less friction.  People are lazy and they don't like making more effort with something new.

I am absolutely certain that the SDLC and hardware cycles of wearable tech must synch with standard fashion cycles.  Retail fashion moves through four annual seasons, and each season's new styles typically have a two-year full cycle from initial design to final delivery.  Geography also impacts seasonality, because California coastal winters are not the same as Midwestern winters.  Wearable tech upstarts can probably learn from the automobile sector before they beta test new clothing items.  Wearable enterprises will have to push over-the-air software updates to their devices, just like autos.  One solution may be to keep the software in a cloud and push app updates to the smartphone or smartwatch that manages a user's wearables.

I was disappointed that one dude showed up whom I consider to be a complete phony.  I first met this guy at a Mobile Monday event in 2013 and he lied to my face about his background and a local private club.  He has since elbowed his way onto Silicon Valley's radar as a self-proclaimed "tech developer" but I just can't take his claimed expertise seriously.  Google can't run background checks on the Glassholes who sign up to show off.  The unfortunate task of calling out fakers thus falls to independent analysts like me.  I'll be watching you, dude.  Flying a quadcopter does not make one an expert on anything special.

I have not heard the last of the wearable tech sector and it has not heard the last of me.  The attractive women draw me to wearable events but I stay to see how investors can make money in the sector.  FashTechSF stays on my radar.

Health Risks of Cell Phones and Wearable Devices

The mobile tech revolution has moved so fast that health and safety risks are playing catch-up.  I attended a public forum earlier this month at the Commonwealth Club that opened my eyes to unassessed risks in mobile devices.  The bottom line is that cellular devices operate on low-power microwave frequencies.  Extended exposure to low-power microwaves may have human health consequences, which suggests the precautionary principle for technology use while research develops more definitive conclusions.

The scientists and medical experts on that panel presented evidence that a cell phone's intermittent pulse and wavelength variation are the source potential hazards.  These hazards may persist even when the device is at low power.  I took special note of one statistic presented on "digital dementia" diagnosed in South Korean children.  South Korea is the most saturated mobile market on the planet, according to every tech conference I've attended in 2013.  Putting a mobile device into the hands of everyone in emerging markets may magnify health risks.

The panelists weren't the only ones doing their homework.  WHO's IARC published a monograph this year (Volume 102) on the possibility of carcinogenic risk from cell phones' radiofrequency (RF) electromagnetic fields.  The UC Berkeley Center for Family and Community Health published a meta-analysis in 2009 on the risk of tumors from cell phone use.

Early regulation of cell phone risks has mostly fallen on deaf ears (pun intended).  San Francisco's "Cell Phone Right to Know" ordinance lost a court challenge in 2012.  The FCC does mandate specific absorption rate (SAR) guidelines for cell phones, but it still mentions the further precautions of holding the phone away from the human body and using accessories.  The federal government does not at this time speak with a unified voice on RF radiation, although FCC guidelines on wireless exposure purport to include guidance from the EPA, FDA, and OSHA.  Those other agencies have slightly different approaches.  The FDA has wireless standards for medical devices that IMHO can be adapted for cell phones and other devices used outside the human body.  OSHA defers to the FCC by restating the absence of a federal RF exposure standard but nonetheless provides a good summary of scientific literature on RF exposure.  The trouble with implementing more stringent guidelines at this stage is the lack of independent research on dose-response relationships.  Industry-funded research tends to minimize the hazards while independent research has begun to confirm hazards.  More funding for research means better knowledge of how to manage risk.

The implications of these risks for IoT devices and wearables are huge.  Google Glass, FitBit, and wireless chargers are designed to be next to the human body all day long!  Where's the Consumer Product Safety Commission in this controversy?  If the telecom industry and phone makers don't voluntarily dial down the radiation from their products, they won't like it when the CPSC hammers them later.  It's better for industry to get out in front of this now before they face multi-billion dollar class action lawsuits from cancer victims.  Who holds the patents for low-radiation phones and antennas?  Those innovations may prove to be very valuable if carriers and makers bring them to market.  The evolution of mobile phone standards offers industry a way to reduce RF exposure.  GSM is the most widely adopted standard for 1G and 2G networks but it may generate higher RF exposures than CDMA for 3G and later networks.  I think GSMA and CDG should have a chat about public-interest solutions before lawyers start trolling through cancer cases.

Civilization needs mobile tech, so to keep it we need to manage its risks.  The Environmental Health Trust has developed a knowledge base on the safe use of cell phones.  The International Institute for Building Biology and Ecology wants us to read the instructions and labels on our wireless devices.  The National Cancer Institute has a fact sheet on the cancer risk from cell phones.  The National Consumer Advocacy Commission maintains a cell phone safety website that mostly covers accident prevention, although it does admit the need for further research on RF health hazards.

The experts at the CW Club also advocated some simple rules for minimizing exposure that I'll repeat here.  Use earpieces and speakerphones whenever possible.  Don't use a cell phone in areas with weak signals because it must work harder to generate more power.  Use the phone's "airplane mode" to turn off microwave signaling.  Don't keep a cell phone directly on your body.  That last one matters very much for women, because there is evidence showing that women who keep cell phones in their bras experience increased risk of breast cancer.  I keep my own powered off when it's in my jacket pocket.

Technology marches on and so must human health.  I believe there is a role for institutional investors to play in this debate by pushing publicly traded tech companies to raise the bar on safety.  Cell phone RF risk is a perfect test case for applying corporate social responsibility policies.  Risk demands regulation, but regulation needs data.  If government agencies can't or won't fund research on RF health hazards, there's an entrepreneurial opportunity for tech companies that market safer devices.  This has been your public health message for the day from Alfidi Capital.  

Wearable Devices At Mobile Monday In San Francisco

I attended the Mobile Monday networking series for the first time last night. This one was "Challenges in Innovating Mobile Devices and Wearables" in San Francisco.  I'm not a tech developer but it behooves me to keep up on developments in this sector. My site and blogs need to be visible on mobile platforms if I'm ever going to capture the attention of tribal elders in emerging markets who play Angry Birds on their smartphones.

You never know who you're going to meet at these shindigs over pizza and booze. I got into a conversation with one dude sporting a Google Glass who claimed to be an IT developer.  I didn't question his insights until he started spouting off about Bilderbergers meeting at Bohemian Grove.  Whoa, back off, dude.  Those folks are my kind of crowd and I don't want them bad-mouthed by someone who has no understanding of the social hierarchy in advanced civilizations.  I searched the Internet afterwards for this guy's purported track record in tech.  It turns out he's nothing of the kind.  Success in entrepreneurship means separating the fakers from the makers.

I wanted to see real wearable hardware but the only examples present were some Google Glasses.  Anyone can sign up to be a Google Glass Explorer (i.e. a test marketer) but applications are currently closed.  I never thought wearing glasses would be so cool.  Mario Tapia kicked off the formal program with an introduction to Mobile Monday and its Momentum Mobile Accelerator.  They're always looking for hot startups, so get your application in ASAP if you're building a hot product.

Ubuntu was the featured presentation.  Their Linux-based real-time operating system (RTOS) is designed around user-selected content rather than a hierarchical menu.  It seems intuitive but I'm an old-fashioned menu kind of guy and old habits are hard to break.  I still don't have a smartphone so I can't do my own testing.  The good news is that Ubuntu is totally free, just like the financial research I publish.  I thought better of my plan to announce on Reddit that "today I learned (TIL)" about the XDA Developers community, because that would be too simplistic to say.

The expert panel didn't show off any gadgets but their shared experiences fired my imagination.  They mentioned that telecom operators often use their control of switching networks to dictate smartphone features.  Mobile developers should thus test market their beta devices with telecom carriers.  I can see the value of third-party data validating a new device that way if it attracts VC investment.  I recently advised an entrepreneur protege to get third-party data to show his environmental thingy invention worked.  He then broke off my relationship as his mentor because I told him something he didn't want to hear.  Oh, he also expected me to do all of his work for him at zero pay.  Forget that nonsense.

Okay, back to the panel on wearables and mobile tech.  You can't just make a wearable device in a vacuum, don'cha know.  They must be consonant with other devices in WiFi, IP, and other protocols.  They must solve problems, especially those faced by early adopters.  They generate contextual data, so they must "talk" in digits to other things.  Medical wearables will need FDA approval.  Some panelists actually thought fashion and social norms would be the biggest obstacles to user adoption of wearable mobile devices.  I totally agree.  Going on a date with someone wearing Google Glass would be awkward if you think they're recording your first kiss.  Wearables may be confined to a social context that inhibits their use with anyone other than the primary user.  People who feel perfectly comfortable sharing devices on social media may balk at sharing personal space with someone who looks like a cyborg.

I think a major conceit in the developer community is their belief that they can steer the device ecosystem of apps, network, and services in ways that influence OEMs to build devices.  That all depends on how successful the community is in getting developers to adopt standards based on the most portable programming languages.  HTML is a pretty successful language but I've noticed that the comments blocks on many blogs and media sites don't allow HTML tags.  Even a widely-adopted language like HTML is disallowed for some user-generated content.

The panel was seriously stumped on ways to monetize wearable tech.  They stumbled over nebulous concepts like P2P and energy until someone mentioned health care.  I can totally see preventive health monitors becoming mandatory for health insurance policyholders who enroll in plans under the Affordable Care Act's state-run exchanges.  Here's a brief sketch of how the flow of information would work:

Wearable health monitor
> Data on nutrition intake and fitness output
> Big Data collection through IRS to HHS
> Big Data analysis by health insurers
> HIPAA transfer to providers

The wearable can resemble a wristwatch, a device every human being has long been conditioned as an acceptable thing to wear next to one's skin.  That eliminates any contextual or social barrier.  The overall effect of wearables is much more significant than enabling more precise delivery of health care services.  The mandated wearing of these monitors for vulnerable populations like the elderly and new parents will eventually become a norm for the entire population.  Fear will drive adoption.  Vulnerable patients will fear adverse health outcomes that wearables could prevent.  The rest of the population will fear being shut out of health insurance altogether.  Wearables using an RTOS can be enabled with GPS, making instant geolocation of every citizen a real possibility.  The total surveillance society will be complete as soon as personal location data passes the HIPAA barrier to law enforcement and the intelligence community.  Your data could even go to environmental regulators who can decide whether you're using too many resources.

We don't even need to stop at wearable tech.  I've got the next logical step:  drinkable tech!  Yes, I'm serious.  Drink a milkshake blended with thousands of nanobots that will embed permanently in your body tissues, particularly your brain and nervous system.  Your body's natural electrical field will give them power.  Enough of them in your brain could enhance your intellect and make you telepathic with another similarly enhanced human.  Of course, connected to Big Data, they could also fill your head with the uncontrollable desire to perform as instructed.  The total surveillance society will become the total control society.

There's no looking back.  Put the protocols for wearable tech in the public domain now.  Arduino standards allow us to design our own device control systems.  Lets use Arduino to design wearables that allow for individual defense against unwanted external controls of cognition.