The Low-Down: 2015-05-24

May 30, 2015

Why You Should Drink Cheap Wine

If you feel compelled to ask, you are probably drinking it for the wrong reason. JL

Brian Palmer reports in Slate:

Our appreciation of a wine depends on how much we think it costs. (But) higher prices do not reliably reflect quality.

It is not immediately apparent why consumers will want their jeans remembering what they did last night - or whether they will want to risk mistakenly tapping their pants and turning off the refrigerator, but perhaps life has gotten so boring that we need new challenges. JL

Alice Truong reports in Quartz:

Tapping or swiping a patch of yarn woven into fabric can control Philips Hue light bulbs or the music playing on a smartphone, and there’s potential for many other uses.

And in case you hadn't noticed ATM withdrawl fees are upsurging again. Well, financial reform sure was fun while it lasted. JL

Heather Long reports in CNN/Money:

If the fee collection pace keeps up, the big three banks are on track bring in $4.5 billion in overdraft charges by the end of this year. That works out to about $20 for every American adult.

A picture may or may not be worth a thousand words, but it's probably going to be worth the vast majority of time spent on the internet - and of the web's capacity.

People are watching more video than ever before and that form of usage will continue to grow. In part it's because consumers of information are lazy and in part because visual images are more easily translated than written words.

Everyone - hardware manufacturers, software creators, service providers, regulators of bandwidth and consumers - will have to adjust accordingly. JL

Brian Fung reports in the Washington Post:

Over half the world's population will be digitally connected. But individual users are expected to consume more video, and at a higher quality, which will put tremendous burdens on the world's Internet infrastructure."The cord-cutting household [consumes] more than twice as much data."

The Fed is boring and robots are cool. Was there anything else you wanted to know? JL

The Center for Economic Policy and Research comments:

If the Fed starts raising interest rates it can keep tens of millions from getting pay raises since a weak labor market will reduce their bargaining power. But hey, why bother listeners and readers with this stuff, let's have another piece on those nifty robots.

The most significant aspect of Apple's and Google's aggressive move into auto-telematics is that it ensures a speedier adoption of self-driving cars.

'Distracted driving' - drivers texting, phoning, posting photos on Instagram and otherwise doing almost anything electronically stimulated other than driving - is already one the primary causes of accidents. Enhanced mobile electronics such as those Apple and Google have in mind will only make that threat worse.

And, as surprising as it may have seemed a generation or two ago when the call of the road symbolized freedom, the betting is that consumers will choose access to the internet over access to the car keys. JL

Kirsten Korosec reports in Fortune:

Apple CarPlay will be in 861,000 new cars and Google’s Android Auto will be in 643,000 new cars this year. CarPlay and Android Auto allow drivers to bypass the dashboards found in most cars—a capability that will become increasingly important as car-sharing grows.

Dating Data: Analyzing the Conversational Cues to a Good First Date

Because we're not analyzing our personal lives enough as it is? JL

Rosie Cima reports in Price Economics:

A heterosexual couple on a good first date pay attention to each other, show each other they're listening, are kind and agreeable, and -- interestingly -- focus the conversation on the woman.

Reports that Rolls Royce is considering a FIFA signature edition have not been confirmed. JL

Aaron Kessler reports in the New York Times:

“They don’t look at us as transportation, they look at us as an extension of their lifestyle.”

Packaged goods providers - and food brands, in particular - are losing consumer support. This is due in part to technologically-driven diminution of corporate authority.

But it is also because brands, and the companies that fund them, have tried to stick with legacy formulas and processes that require less investment, less risk of new product failure - and thus higher margins. The problem is that technology has also given consumers a lot more information with which to make decisions. And corporate neglect of the maxim that a brand is a promise to the consumer has caused those consumers to look elsewhere.

Consumers once rationally assumed it was in brands' best economic and financial interest to serve them well. Since that can no longer be taken for granted, consumers have decided they have little to lose by trusting themselves. JL

EJ Schultz reports in Advertising Age:

Consumers are increasingly migrating to smaller, upstart brands that are often perceived as healthier and more authentic.Quite simply, big brands are losing one of their most valuable assets: consumer trust.

Maybe, with this announcement, impatient investors will begin to understand the strategic advantages of amassing a huge war chest rather than paying out bigger dividends.

Amazon is using its scale and cash reserves to crush competitors with ever more operationally challenging and expensive customer service offering. These services differentiate Amazon and make it that much more difficult for those within its ecosystem to consider alternatives - as well as making it harder for competitors to, well, compete. Financial benefits flow from operational domination. JL

James Vincent reports in CNN/Money:

Available for more than one million items in 14 metropolitan areas. Amazon Prime is estimated to have 30 million to 40 million customers in the US, with an additional 40 million to 50 million worldwide.

What happens when the greatest on-demand service is instant gratification itself? JL

Katie Benner comments in Bloomberg:

Fear of missing out is driving the on-demand investment boom, raising the possibility that the boom is well underway and the bust is not far off.

What happens when money is information and power is communication? We're in the midst of finding out.

The distribution of technological capability has provided smaller and less concentrated entities with the ability to influence their own destinies and those of far larger enterprises. Money and power, the two traditional goals of human endeavor, are no less important, but far harder to define.

We talk about data and disruption as if the outcomes they engender will only affect others; as if we think they can be managed. By us, of course (whoever 'us' may be). But we are in the process of discovering that surprises are as unevenly distributed as assets. JL

Greg Satell comments in Digital Tonto:

Digital technology is creating a titanic shift toward distributed models. Rather than assets managed by centralized institutions, we have ecosystems managed by platforms. Once money is pure information, it becomes programmable, which means it can become a product unto itself.

Netflix Now Accounts for 36.5% of North American Bandwidth Consumed During Prime Time

Mental health and population surveys should soon be pretty interesting. JL

Brian Fung reports in the Washington Post:

Both the season five premiere of "Game of Thrones" and the most recent "Call of Duty" downloadable content led to massive spikes in data consumption.

It will more directly compete with Apple Pay which, given Android's installed base, is a competitive advantage. But perhaps more to the point, it will actually have a chance of making money. JL

Megan Geuss reports in ars technica:

The company was actually losing money on each Google Wallet transaction

Whether these traits have been correlated with messy desks and/or drinking habits has yet to be established. JL

Joe Pinsker comments in The Atlantic:

There are two types of people in the world: those with hundreds of unread messages, and those who can’t relax until their inboxes are cleared out.

STEM (science, technology, engineering and math)? Hah! Robots can learn in a few minutes everything it takes the typical human years of undergrad, graduate school and and on-the-job training to master all that quantitative stuff.

Knowledge is necessary but insufficient. As the following article explains, survival in the technologically driven world requires the ability to sense context, interpret meaning - and effectively communicate the result. JL

Robert Shiller comments in the New York Times:

Successful occupations shared certain characteristics: People who practiced them needed complex communication skills and expert knowledge. Such skills included an ability to convey “not just information but a particular interpretation of information.”

He's already Apple's king of design and he's even been knighted by the Queen. So why did Jony Ive, Apple's chief design guru and Steve Jobs' spiritual if not literal successor just get a new title? Why would he care and what would it matter - to him or anyone else?

This is what happens when you are no longer a boutique but are, instead, a very, very, very large and important corporation. Shareholders, accountants, lawyers and regulators expect plans to be made. Their job is to prepare for the upside and manage any downside. Uncertainty is bad for business.

Having weathered the storm of Steve's passing and established that Tim Cook is an unquestioned success, Apple is preparing for whatever the future holds. No one expects - or wants - Ive to leave, but just in case, for whatever reason, worthy successors have been identified. Apple is in the process of reminding anyone who cares that the enterprise is greater than any one individual. JL

Belinda Lanks and Liz Stinson report in Wired:

Should Apple’s design guru ever leave the company, shareholders can take comfort in the fact that two Ive-sanctioned surrogates ready to step in.What they’re doing is laying the groundwork for a transition.

Corruption is terrible and all that. But when your corporate sponsors begin to say they are 'reassessing their relationship' with your organization, it's probably time to pay attention. And maybe even act. JL

Claire Phipps and Damien Gayle report in The Guardian:

Fifa sponsors, including Adidas, Visa, InBev (Budweiser), Hyundai, McDonalds and Coca-Cola, are calling for the body to reform its practices. Visa said "we have informed them that we will reassess our sponsorship”.

Insane? Irresponsible? Or maybe the key to the future of that enterprise and the entire internet.

Resentment of tech generally and the blatant exploitation of other's content or personal information is an econo-legal undercurrent that will not go away. This is not about privacy - we've kissed that good-bye - but about sharing the spoils.

Given Facebook's financial advantages, this could be a strategic blow to real or putative rivals as well as a means of further cementing its lead. There is a precedent. After all, paying for materials has worked in most societies for oh, about 7,000 years of human history...and counting. JL

Josh Constine reports in Tech Crunch:

Facebook could monetiz(e) publishers’ and artists’ content in a similar way to how it offers development, growth, and monetization tools for app makers. Allowing Facebook to host your videos, photos, or articles wouldn’t sound so scary if it was bridging you to payments from your fans.

The US Supreme Court Is Going to Rule on 'One Man, One Vote:' But the Decision Hinges on Nonexistant Data

Yup, that's a problem. Unless your purpose in filing the case is to enhance the power of rural voters who tend to vote differently than, say, tolerant urban hipsters. In which case, less is more. JL

Leah Libresco reports in the 538 blog:

“One person, one vote” is a deceptively simple promise, but a Texas woman wants to clarify which persons count. The plaintiffs are challenging the usual method (counting total number of people living in a district) and are asking that states use the total number of eligible voters instead. The trouble is, we don’t have statistics on the number of eligible voters.

Because bubbles are just buying low and selling high at scale. JL

Tracy Alloway comments in Bloomberg :

A weary client once defined a bubble to us: “something I get fired for not owning”.

Well, ok, then. We'll let you in on how to invest in the 'next generation mobility ecosystem' just as soon as someone figures out what it is. JL

Carmel DeAmicis reports in re/code:

Bill Ford may be the executive chairman of Ford Industries, but he’s admitted that individual vehicle ownership may not be the future. At TED, he said that his great-grandfather, Henry Ford, stood for the idea of mobility, not cars.

Male, white, single, under 34, no college degree.

"Top reasons independent contractors stopped working with a specific company? Insufficient pay, 42.9%. Could you see yourself working as an independent contractor for the rest of your career? No 32.3%. Yes, if the earnings increased a lot: 31.4%."

For many of those fitting this demographic profile, independent contracting is not a bad option - unless they can find something better. But to quote Janice Joplin, "Freedom's just another word for nothing left to lose." JL

Joe Pinsker reports in The Atlantic:

Investors want these startups to scale, and they’ll need on-demand workers to be onboard in order to do that. Fast-forward a decade into the future though, and it’s not clear that there will be enough willing on-demand workers if wages don’t increase.

The countries providing the largest subsidies for traditional carbon energy sources are China, the US, Russia, India, Japan and the EU (all member states combined). And this doesn't include tax breaks or other government support for energy industry companies themselves. Which makes the relative growth of alternative energy sources all the more surprising. JL

Benedict Clements and Vito Gaspar report in IMF Direct:

The figure exceeds government health spending across the world, estimated by the World Health Organization at 6 percent of global GDP. They correspond to one of the largest negative externalities ever estimated.

Yet another conundrum emerges in the monetization of social media. Social is getting more visual, which means more images rather than text. This drives greater attention - but it's also harder to track. Eventually, technology will solve this problem.

But the larger point is that our understanding of the interaction between media and technology is evolving - and that means the ability to capitalize on it will continue to evolve rather than offer the certainty that marketers and investors prefer. JL

Jack Neff reports in Advertising Age:

What goes on in visual social media largely eludes the tracking and analytics brands use to keep tabs on what people are saying -- or seeing about them. 85% of posts that contain a logo contain either no text or no text relevant to brand.

Sure, mobile is the dominant platform. Point conceded; the consumer has spoken, or rather, texted. Ease of use and convenience trump power, at least for now. But the question, as the following article explains, is what they are going to do with those devices - and of greater interest to everyone who is not a consumer: who profits?

Which brings us back - as usual - to data.

Oh, is that all? Well, yeah, everyone wishes it were that simple. But first of all what data are we talking about? There's content, which some people claim used to be king, but that was so long ago few can remember when that was or why anyone thought so. Sure it helps to have content people want, just like it helps to have hardware people want. But that simply gets you the attention that monetizes the real prize: it's the second kind of data that provides sustainable advantage. And that, of course, is not data about other stuff, it's data about the customer and what he or she want, need, hope for and, very much more to the point, will be willing to buy.

So the battle is going to be about generating the best data, how it gets shared. And then banked. JL

Richard Waters reports in the Financial Times:

“On one level, Apple and Google have won the smartphone wars. At the same time, what you’re going to do on these devices — and who’s going to control them and how they’re going to work are still completely unsettled."

Would You Rather Be a Real Millionaire or a Paper Billionaire?

C'mon, trick question. First of all, what's real? Almost all money is a string of electronic pulses these days. You used to need cash for taxis or street food, but now even they take credit cards.

And secondly, what the hell is a paper billionaire? In fact, what's paper? But more to the point, if you can borrow against it, that's about as real as you can get in this economy. Whether it's still real tomorrow is someone else's problem. JL

Dennis Keohane reports in Pando Daily:

It’s not difficult to see why many potential IPO companies don’t seem too eager to jump into life as a public company. They have it good (for now) with $1 billion valuations and the ability to raise money seemingly at will.

Taco Bell, home of the waffle sausage taco and the Doritos Locos Taco, is following Chipotle, Panera and even McDonalds by attempting to make its fast food menu healthier in order to meet the demands of its customers.

Some Taco Bell customers may be surprised to learn that it is possible to produce the chain's menu items with ingredients derived from actual food. JL

Craig Giammona reports in Bloomberg:

Taco Bell will remove artificial colors and flavors, high-fructose corn syrup and trans fats from 95 percent of its menu.The changes taking won’t affect beverages or co-branded products, such as the Doritos Loco Tacos.

If it's hard, make it easy. If it's easy make it easier. JL

Debbie Hauss reports in Retail Touchpoints:

The future of retail may lie in the power of digitally engaged, brand-loyal consumers who are looking for the ability to use one source for completing payments, accessing loyalty points and redeeming coupons and promotional offers.

Measures begin to degrade the moment they are announced because that is how long it takes those affected to begin gaming them. The checklist approach to managing operations, including supply chains, is popular thanks to its cost-effectiveness and the relative ease of reporting 'improved results.' But the data suggest that what it doesnt produce is better outcomes: that requires more effort, time and expense than many organizations wish to invest. JL

Christine Bader reports in The Atlantic:

Walking through factories with checklists has become the end rather than the means: As the saying goes, you don’t fatten the pig by weighing it. Companies aim to maximize the number of audits without assessing whether any of the underlying root causes have been addressed.

Guangzhou, once known as Canton, is China's third largest city. It is an hour from Hong Kong by train, separated from it only by the manufacturing center of Shenzhen and its satellite towns. A week before announcing the formation of its own taxi-hailing service, the city police raided Uber's Guangzhou office and shut it down. Uber's office in Chengdu has also been raided and closed, while Chinese internet behemoth Alibaba has launched its own rival to the service called Kuaidi - from a San Francisco base.

The challenges to Uber have unofficial and probably official approval from Beijing. Given Uber's history of ignoring government sanctions, this suggests that if it hopes to operate in China, it is going to have to concede far more in terms of financial payment and operational oversight to the appropriate authorities than it has been accustomed to doing so. Has Uber finally come up against an entity as ruthless and determined as itself? JL

Charles Clover reports in the Financial Times:

Guangzhou’s municipal government is planning to launch its own Uber-like online taxi hire service, only weeks after police closed the San Francisco-based transport app’s office in the southern Chinese city.

Because they can. And they can because technology has outstripped managements' ability to effectively coordinate the interface between technology and the people who use it. Meaning there is redundancy and waste in spending both on technology and on people.

Such interactions are becoming more efficient as we learn more about how to program, deploy, interpret and apply what we are gleaning from tech investments. But the data suggest this will likely mean in fewer employed people in the future unless the oft-promised but rarely seen 'new tasks' emerge. So will they then be 'wasting time' at home with government benefits, at work with private sector subsidization - or will we actually have to think about how to productively employ and incent the people who comprise the socio-economic systems this is ostensibly intended to manage and benefit? JL

Peter Fleming reports in the BBC:

At the very moment (work) is glorified as the highest civic virtue it is drying up at an unprecedented rate. We are moving into a post-work future. Half the global workforce is currently unemployed. A study of management consultants found that 35% 'faked' an 80-hour work week.

This Airplane Seat Can Tell If You're Nervous

Sharing your heart rate with the flight crew? Maybe when telepathic cocktail orders become commercially viable. JL

Suzy Strutner reports in Huffington Post:

The FlightBeat app is designed to monitor passenger heart rates using sensors built into their seats. Plane passengers would be able to opt out of sharing their heart rate with flight attendants.

C'mon, think big. Space is just real estate with lots of air around it. JL

Tim Fernholz reports in Quartz:

The 1967 Outer Space Treaty was designed to keep nuclear weapons out of orbit. When it comes to property, it simply says that nations cannot claim sovereign territory in space. But no country that could put people in space signed. Miners (are) eager to raise funds to raid space rocks packed with minerals valued in the trillions of dollars.

Technology will either deliver on its utopian promise - or produce a dystopian nightmare. But hey, at least there's a choice. JL

Gwen Moran reports in Fast Company:

Anyone who grew up with the notion that we’d all have jet packs and robot housekeepers by 2015 knows that predicting the future is a risky business. The jobs picture either delivers on technology’s promise or plunges us into a dystopian future.

Statistics and equations are always difficult, even more so with incomplete information. The important factor to remember in this instance is that to their families, friends and those who benefit from their sacrifice, they weren't just digits.

Wishing someone a happy Memorial Day seems like a contradiction in terms, so have a memorable Memorial Day, hopefully for purely positive reasons. JL

Carl Bialik reports in the 538 blog:

Seventy years after D-Day, no one really knows how many of the more than 150,000 Normandy invaders died that day. And no one will ever know for sure. Like any other statistic, you have to consider what you’re going to factor in. It’s a difficult equation to jumble.

There are now limits on the defensibility of software patents. This ruling recognizes the collaborative and iterative nature of innovation. It is also going to mean faster changes and that to be sustainable, such innovations are going to have to win in the marketplace rather than in the courtroom. JL

Brian Fung reports in the Washington Post:

The US Supreme Court's decision in Alice Corp vs CLS Bank "raised the bar for patentability and enforcement of software patents." Patent trolls accounted for 67 percent of all new patent lawsuits.

There was a time when tech dreamed of changing the world. Now it appears content to change your linen. Or walk your dog. Or buy your groceries. Or give you a l(y)ft.

The focus has gone from transforming the economy and society to solving quotidian 'problems' that earlier generations regarded as just life. And please spare us the argument that our existence is so much more complicated now and we're all so busy 'creating value' that we dont have time to do our own laundry. As if.

But this trend may provide a telling insight into the current economic state. The services that most tech companies are flogging these days are aimed at that narrow slice of demography which can afford to pay to make nuisances go away. The usual 1% rhetoric might be comforting but it is not useful here. The market is broader than that, but not broad in the historic sense.

Assuming that most people who work or invest in technology companies are rational examples of homo economicus, we must assume that they are in this primarily to make money (and yes, for the intellectual challenge, the thrill of being engaged in today's most admirable pursuit, the companionship of a like-minded cohort, etc). And so the popularity of this narrow-casting strategy means they no longer perceive the masses - those whose earnings have stagnated for a generation now - as a market capable of affording their innovations. Nor that that situation is likely to change anytime soon.

So they are selling to those, like themselves, who can afford to pay. But they may also, inadvertently, be holding a mirror up to the rest of the socio-economic system as the following article suggests. And given that most of the great recently accumulated fortunes in history - like Henry Ford, Ray Kroc of McDonalds, Sam Walton of Walmart et al - were made by selling to the many rather than the few, one can only speculate about what this increasing concentration of wealth and attention portends for the future. JL

Farhad Manjoo comments in the New York Times:

San Francisco’s tech industry “is focused on solving one problem: What is my mother no longer doing for me?”

Secret Files Reveal Police Kept Tabs on Star Trek and X-Files Fans, Fearing They Would Undermine Society

Hey, who says they aren't doing that right this minute? JL

Elizabeth Roberts reports in The Telegraph:

Scotland Yard kept a secret dossier on Star Trek, The X-Files, and other US sci fi shows amid fears that fans would go mad and kill themselves, turn against society or start a weird cult.

Uber is arguably the least ironic of new economy enterprises.It's battles with - and contempt for - state, local and national governments are one of its defining characteristics.

Which makes the irony of unemployment qualifications undermining its employment stance all the more amusing. JL

Josh Lowensohn reports in The Verge:

Florida's Department of Economic Opportunity (agreed) that Uber's job description and modus operandi for drivers shared more in common with Internal Revenue Service's definition of an employee than an independent contractor.

Combatting overfishing and fraudulent mislabeling while getting fishermen a better price for their catch. JL

Catherine Elton reports in Bloomberg:

DNA tests on 1,200 fish samples and found that one-third had been mislabeled.(With tracing) data are uploaded into the cloud, where they can be retrieved by a diner at a restaurant in Santiago by waving a smartphone over the menu.

We'll know they're really succeeding when they learn to cheat, obfuscate, procrastinate and blame others. JL

Kurzweil Artificial Intelligence reports:

We learn new skills over the course of our life from experience and from other humans. We can at best hope to offer pointers as they learn it on their own. Deep learning programs create “neural nets” in which layers of artificial neurons process overlapping raw sensory data.

They are age-old competitors, but in a globalized, technologically driven 21st century economy, capital and labor are co-dependent, co-evolutionary - and co-determinants of each other's failure - or success. JL

Klaus Schwab comments in Project Syndicate:

In a future of rapid technological change and widespread automation, the determining factor – or crippling limit – to innovation, competiveness, and growth is less likely to be the availability of capital than the existence of a skilled workforce.

The success of the smart watch comes down to the limited available 'real estate' on the wrist. And success in real estate is always about location. So, as the following article suggests, the screen hierarchy should tell us alot about who will win the economic battle. Hint proximity to user indicates greatest potential value to buyer - and thence, developer.JL

Horace Dediu comments in Asymco:

The jostling for position within the constrained real estate on the wrist will be analogous to the competition for positioning on the phone. The winners on the phone were different than the winners on the PC. The winners on the Watch will be different than the winners on the Phone.

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