Crushed Between Clouds and Insects

An article in the New York Times today suggests that Intel, which got about 84 percent of its revenues in 2012 from PCs and the more muscular servers, has now joined the ranks of major computer companies upset by the maturing of the PC industry (“Intel Looks Past PCs for Foothold”). PC sales have been declining of late; the economy is sluggish, hence corporations and institutions, the major users of that tool, are not investing. But Cloud Computing is on the rise. Cloud computing? The phrase refers to the use distant servers, owned by others, to store an institution’s or enterprises total data “in a cloud.” Cloud servers are simpler and have fewer features than those used by corporations to perform broader computing services, along with file serving, in-house. Therefore they are less profitable. Intel, apparently, finds itself crushed between clouds above and insects (read smartphones and tablets and pads) below; these latter, according to the Times story, rarely incorporate Intel processors.

Why this need to “look past PCs”? The only explanation I can find is pressure on Intel’s stock. The company is magnificently profitable. In the 2007-2012 period, the company’s net income in the worst year, 2009, was 12.4 percent of its net revenues. In 2007 it was 18.2, inn 2012 it was 20.6 percent. This is a company with 53.3 billion in sales (2012) which has grown at a compounded annual rate of 6.8 percent a year 2007 through 2012. There is nothing wrong here except for the bloody market, and I mean the stock market. The market cannot stand a maturing industry. The lady may be but 43 years of age, but as soon as she has shown the first few grey hairs, she is immediately labeled a crone—and we must now “look past” the lady. Here is a chart of Intel’s revenues, net income, and an index of its stock, with 2007 set at 100:

What, if anything is wrong here? Revenue and net income show the consequences of the Great Recession—and the sluggish nature of the recovery. But the stock has responded much more dramatically. And, to be sure, the people who run Intel are not in the computer chip business. They are in the stock market business. Never mind the fundamental value of a corporation that absolutely dominates a market, computing, by owning most of the market share of its most fundamental component, the central processing unit. The same madness also governs the pea-sized brains of almost all those who run publicly traded companies—even one like Food, which can only really grow as population does. That industry has ruined a basic, necessary, and “always will be present” industry by trying to squeeze growth from it by making more and more high-margin prepared foods with too much fat, salt, or sugar—or artificially formulated foods with less of those three than natural foods ought to have.

Ears that hear, eyes that see. But we are lead by the deaf and the blind.

Aware 2, Meet Tomra T-820

A recent post reported on a camera, Aware 2, able to produce a photograph with 1 billion pixels of information—the chief purpose of which is to survey the world for purposes of defense or criminal investigations. On a short walk this morning, a discarded can on a lawn reminded me of returning cans at Kroger. It is done by feeding a machine. A belt takes the can, causes it to revolve very briefly before a camera. The imprinted image is interpreted; if the can is returnable in our location under Michigan laws—and presumably the band is also sold by Kroger—the can continues on and is swallowed; a display on the face of the machine credits me with 10 cents per can. If the can is persona non grata, why then the can comes back again and a message informs me of its rejection.

I got to thinking. Here is the same technology I saw in Aware 2: optical sensors interfaced with a computer. But who makes the object that—I discovered later—is called a Reverse Vending Machine; lets abbreviate that to RVM. The answer is (trumpets) Tomra.

Quite an impressive company. It is headquartered in Asker, Norway, began in 1971, and a year later it had already produced its first RVM. In 2011 the company had world-wide sales of 3,690 million Norway Krone ($619 million). Furthermore, it had expanded into all manner of recycling and sorting—always involving the same technology: optics and computing. Tomra’s machines can sort potatoes, lemons, meat, stone, and trash collected from a football stadium (it takes about 15 minutes to render the vast collection of a football game’s detritus into paper, plastic, metal, and other more or less homogeneous wastes). Tomra is big in the mining business sorting ores, in the food industry, and, of course, in can and bottle recycling.

I am impressed. I used to run the Recycling Division at the U.S. Environmental Protection Agency. In fact I was that division’s first director. Long ago and far away. Sorting was then strictly a matter of gravity and of magnets, the magnets able to retrieve the metals, ramps and shaking sorting rock and other debris by size and density. No sign yet of optics anywhere—except for human eyes staring at a moving belt where people sorted waste by hand. Now technology can do it faster and better. People, of course, are still needed—but in such sophisticated roles as designing machines, lenses, and in programming computers.

The most ambiguous feelings always arise when I come across something like this and my mind comes to a focus. Here is a high art made for a wasteful age—in which we use hair-thin aluminum to package sugary drinks that make us obese. They’re elegantly processed by wondrous machines produced by that can-do, enterprising Norwegian spirit…
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Image of the T-820 courtesy of Wikipedia Commons (link).

Getting Smart on Smartphones

The big news on the business page today, the New York Times, in my case, is Google’s acquisition of Motorola Mobile, the latter having a 5.9 percent share of the global smartphone market. The paper quotes Larry Page by way of showing the motivation for this acquisition. “Computing is moving onto mobile,” said Google’s chief executive. “Even if I have a computer next to me, I’ll still be on my mobile device.” Smart move that, Larry—especially having a computer next to you. In the experience of all those over 55, roughly, when you find something of interest on your mobile, you need a computer next to you properly to see what you are kind of squinting at on that tiny screen.

The huge, explosive hoopla surrounding this event has moved me to do a little quick-and-dirty analysis by way of putting smartphone on my own screen, as it were. Don’t own one. How big is this market, I wondered. The first place to look, of course, is on Market Size, a little sliver of the family business. There (link) I learned that global sales in the third quarter of 2010 came it at 80.5 million units. Multiply that by four to get a size for global annual sales: 322 million units a year—until the market is saturated, of course.

The next question I had was market size in dollars. That turned out to be a more difficult exercise. In this market number of units dominates reporting, be it of the category itself or the market shares of the participants. PCWorld (those people are always on top of things) came to my rescue in this article dated July 15, 2009. Slightly dated, but good enough for blogging work. The article has an excellent table showing both the up-front and the continuing costs of owning a smartphone. The answer is that owning a smartphone, all costs counted, will run the user about $1,900 a year. Wow! I thought. Aren’t those things, uh, something like $200 a piece?

The answer is yes, they are. If you simply average the prices of units provided by eight companies surveyed by PCWorld, the average is $198.62. To this add about a $36 activation fee. If you take this cost and spread it out over two years (the usual contract), that will run you $117.32 a year. But to this we must add monthly charges for services of $140.62 or $1687 a year. The two added together come to $1,804 a year. PCWorld’s estimate is rounded up a bit, reflecting the larger market shares of the more expensive units.

All right. If we take $1,900 a year times 322 million units a year, the global market size in dollars comes in at $612 billion—that’s a large market. If we stick to hardware sales alone ($199 per unit), we get a $64 billion market—still plenty big.

Next question? Well, what is the U.S. share of that? Using a Nielsen estimate here, namely that 60 million Americans own smartphones, we get a total market for smartphones (hardware and services) of $114 billion.

The final question I posed myself was this one: What percent of total U.S. consumption does that figure represent? It turns out to be 1.1 percent of total U.S. expenditures on durable and nondurable goods plus services. The picture of that slice is shown in the graphic above. It’s small—but visible. All that just to be connected to the mighty feed even on the move? Watching movies on a walk? Apparently so.

Footnote: Smartphone are more than cellphones and only represent 19 percent of all such devices. As Market Size defines it, quoting PC Magazine, a smartphone is “a cellular telephone with built-in applications and Internet access. Smartphones provide digital voice service as well as text messaging, e-mail, Web browsing, still and video cameras, MP3 player and video and TV viewing.”

Days When I Love to Hate Computers

Updating B’s machine to Internet Explorer 9. The stress of such ventures is awesome at my age. It takes part of a morning as the interminable downloads proceed and percentage changes, very slowly, mark progress on the screen. The ghouls of our age have names like Service Pack 2. Now I couldn’t install Explorer 9 because Service Pack 2 was missing. So I am now into the first hour of getting the pack. The tension mounts. As soon as Service Pack 2 is finally installed, I’ve no idea if Explorer 9 will be there or not. Probably not. Will I then have to begin that process all over again? Maybe so or maybe not.

Later...

Maybe so! Turns out they’d downloaded a bloody icon already, but when I clicked on it, they announced that now they are downloading the program. But—and there’s always a but—the downloading “requires updates,” and now I am into the first quarter hour (minimally) of the updates. After that, no doubt, they will want to “restart” again, and what with swifty Vista, the restart is another interminable process. Time to vacuum some rugs while the green bar advances in micro-milimeters-an-hour from left to right...

Later...

Yep. Restart it was, the full nine yards. But then, at last B’s computer’s now equipped with Internet Explorer 9, the cat’s meow. Let’s see it trot its new, glamorous stuff. And I asked Explorer 9 to dance. Then came the discovery that Explorer 9, the cat’s meow, operates slower than frozen molasses flow. I launched investigation to discover the reason why. Turns out that the thing comes with so many glorious so-called “add-ons” that every keystroke or mouse movement is monitored by an army of these, every add-on waiting for its chance to add itself on. After a frustrating twenty minutes, every add-on became a has-been-add-on. Explorer now not only looks like the last one, Version 7, but operates as fast as the ancient version of two years ago. So B’s machine is back to the future, as it were, but at least the version number has changed—and Google will now finally show her her Google Profile again, which Google refused to do this morning, which is what started all this in the first place.