Tuesday, September 29. 2009
Perhaps the most important question confronting the civilized world today is whether it is possible to stop belligerent, totalitarian regimes from acquiring weapons of mass destruction.
As technology advances it becomes more accessible and affordable. A few decades ago, only large corporations and government agencies had computers. Now just about everyone has them.
I don’t think it’s possible to stop Iran’s Islamic supremacist leaders from acquiring nuclear weapons. But it may be possible to delay them long enough to bring down the regime.
The urgent question is: what is Iran’s strategy? The regime has been leading chants of “Death to America!” and “Death to Israel!” at mass rallies for 30 years. Iran has displayed missiles carrying banners threatening Israel’s destruction at military parades. Mahmoud Ahmadinejad has conducted a long and public campaign of Holocaust denial coupled with predictions that Israel will soon disappear. And it is no coincidence that Iran tested a missile capable of reaching Israel on Yom Kippur.
I believe Iran’s current strategy is to provoke an Israeli attack. This would accomplish two things for Iran. It would give credence to the claim that Israel is the aggressor. And it would provide Iran the pretext for developing nuclear weapons and using them. In coordination with this strategy, Iran may only be developing the technology they need for nuclear weapons but not yet the actual weapons.
Some Israelis take comfort in the knowledge that most of the Arab world is equally afraid of a nuclear-armed Iran. I’m not sure about that. A few Arab states may privately welcome a preemptive Israeli strike, but publicly they will all use it against Israel.
So what is to be done? It’s very unlikely that sanctions will stop Iran from developing nuclear weapons. It’s even less likely that Iran’s leaders can be dissuaded through “engagement.”
That leaves three major options: (1) buy time by knocking out Iran’s nuclear and missile programs; (2) arm, train, and support pro-Western Iranians for the purpose of overthrowing the current Iranian regime; or (3) establish a credible deterrence.
The best option would be to assist Iranians in overthrowing the regime. There is clearly broad support within Iran for regime change. However, President Obama has apologized for the U.S.’s role in overthrowing a previous Iranian government, so it’s unlikely he would turn around and support overthrowing the current government. And it’s even less likely that President Obama would start a military conflict.
A preemptive military strike by Israel is problematic. There would have to be a good chance of setting back both Iran’s missile and nuclear programs for several years. And Israel would need, at a minimum, a public declaration by leading Western powers (the U.S., Germany, France, and the UK) that the threat posed by Iran is unacceptable, that further sanctions are unlikely to succeed, and that the situation calls for urgent action.
In dealing with these types of problems it’s important to consider all of the possibilities. In order to justify its invasion of Poland, Nazi Germany staged a fake attack by Poland on itself. What if Iran staged a fake attack by Israel on itself in order to justify launching a nuclear attack?
Israel’s current policy of “nuclear ambiguity” is apparently not working. Therefore, Israel needs to take further steps to establish a credible deterrence. One approach would be for Israel to take its nuclear capability public and indicate that if attacked with WMDs she will retaliate against all of her enemies (to remain nameless). Or it may only be necessary for Israel to convince her enemies that they cannot merely absorb a counterattack as they fantasize.
The counterargument is that mutually-assured destruction doesn’t intimidate Islamic supremacists because they are willing and perhaps even eager to die for their cause. Don’t believe it. Though they exhort others to carry out suicide attacks, the leaders want to stick around to enjoy their palaces and concubines.
Sunday, September 27. 2009
This post is the twelfth in a series based on my book, The History of Wireless: How Creative Minds Produced Technology for the Masses, published in 2008. Each week I’ll present the most interesting and surprising facts about the history and future of wireless from one of fourteen chapters.
The World Reaches 4 Billion Mobile Phone Subscribers
The digital mobile phone is one of the greatest success stories in the history of technology. According to the International Telecommunications Union (ITU), there are now more than 4 billion mobile phone subscribers. (China recently surpassed the 600 million subscriber mark.) Digital technology has driven down the cost of feature-rich handsets and driven up the capacity of mobile phone networks. It’s generally believed that, globally, more people access the Internet from mobile phones than from PCs.
The dominant standard, GSM, was developed by committee in Europe and proved a boon to companies such as Nokia and Ericsson. It’s often said that a good standard is a prerequisite to market growth. That may be true, but there was another key factor that contributed to GSM’s success. GSM licenses were awarded to multiple operators in each country, putting the final nail in the coffin of the state-owned telephone monopoly. GSM also inaugurated continent-wide roaming, and the switch to digital enabled higher network capacity and rapid handset cost reduction.
Ironically, the U.S. was slower to develop and implement a digital standard because it had a coast-to-coast analog standard with plenty of subscribers. There was reluctance to fix something that didn’t appear broken. However, that was an illusion: back then subscribers were so desperate for mobile phone service that they put up with noise, dropped calls, and high prices.
Then a fight broke out over digital standards. The U.S. ended up with two standards. One was based on a technology (time division multiple access, or TDMA) similar to, but not compatible with, GSM. The other was an unproven technology, using spread spectrum radio, developed by San Diego-based Qualcomm. It is called code division multiple access (CDMA). Critics said CDMA wouldn’t work, and some even accused Qualcomm of fraud.
Today, there are over 500 million CDMA users worldwide. That would normally be a very impressive number, but it’s small when compared to the number of GSM users. However, even Europe chose CDMA as its next generation (third generation, or 3G) standard. So unless operators leapfrog to 4G standards, CDMA should enjoy significant growth over the next several years.
During the mid-1980s there was a big push by landline telephone companies to digitize the so-called “last mile.” Integrated services digital network (ISDN) would have enabled a host of end-to-end digital services. It never took off in the landline phone business, but it is very much in evidence in the mobile phone business. Today, many features that are extras for landline users are standard features on mobile phones, such as caller ID, three-way conferencing, and call waiting. Plus, mobile phones can do text messaging, take and upload pictures, and run applications such as games and turn-by-turn driving directions.
Digital wireless has also enabled wireless LANs, wireless personal area networks (WPANs), and the Global Positioning System (GPS). Each of these technologies had to endure a long gestation; now they are near-ubiquitous.
The Internet gave us speed-of-light markets and citizen journalists. Digital wireless is enabling us to take the Internet with us everywhere and at all times.
Next time - Wireless: the Next Generation
Sunday, September 20. 2009
This post is the eleventh in a series based on my book, The History of Wireless: How Creative Minds Produced Technology for the Masses, published in 2008. Each week I’ll present the most interesting and surprising facts about the history and future of wireless from one of fourteen chapters.
Bell Invented the Landline Phone, Ring Invented the Mobile Phone. No Kidding.
Cellular telephone was first described in a Bell Laboratories’ internal memorandum written by Douglas H. Ring in 1947. The memo laid out the essential elements of cellular radio: divide a city into cells, use low-power transmitters, and handoff calls from one frequency to another as mobile users travel from cell to cell. In theory, the cells can be divided over and over to achieve ever-greater capacity.
Ring, who passed away in 2000, never received the honor he deserved. Most cellular telephone histories—Bell Labs is responsible here—refer to him only as “D.H. Ring” if they mention him at all.
The Federal Communications Commission (FCC) was for many years an obstacle to introducing the cellular telephone service. Regulation of the wireless spectrum has always been contentious, and though course corrections have been made over the years, the FCC has never been able to keep up with rapidly evolving technologies and markets. The FCC likes to pretend in hindsight that its leadership made cellular telephone successful. Nothing could be further from the truth.
The old FCC saw its main job as policing the radio spectrum. Consequently, the FCC was reluctant to introduce new services that would create more work for its staff. The FCC dragged its feet not only on cellular telephone, but services such as FM radio, television, and unlicensed radio.
The cellular telephone technical standard became a battle between AT&T and Motorola. The AT&T and Motorola cellular visions differed in several key respects. While AT&T focused exclusively on car phones, Motorola was convinced handheld subscriber devices were coming.
Motorola’s vision of handheld mobile phones, brought to life by Martin Cooper, heralded a future of personal communications. As Cooper later observed, cellular brought about a shift in which phones became associated with individuals rather than locations. Cooper placed the first official call from a portable cell phone in 1973, astonishing New Yorkers as he walked around the city talking on a phone. Today, people would be equally astonished to see someone using a mobile phone weighing almost two pounds.
The first commercial cellular telephone networks came online in Bahrain, Japan, and Mexico. But these were extremely limited systems. Then the U.S. truly fell behind. The first robust cellular telephone services were launched in Scandinavia in 1981.
What saved the U.S.’s lead in mobile telephone? The U.S.—thanks to its broad geography, extensive network of roads, and middle class prosperity—was the most mobile society on the planet. People in several professions could justify the high cost of the service just in terms of the time it saved them.
Scandinavia didn’t miss out completely, however. Nokia would go on to become the dominant supplier of mobile phones.
Nokia’s roots trace back more than a century. In 1865, mining engineer Fredrik Idestam started a paper mill based on a more cost-effective process. It was an immediate success. Idestam changed the company name to Nokia AB in 1871. “Nokia” was the local name for the marten, a northern weasel hunted for its sable-like fur. A cousin to the wolverine, it is also a carnivorous predator. Perhaps Idestam wanted people to think of Nokia as valuable to investors and customers and fearful to competitors. Or perhaps he just liked furry critters.
Nokia pioneered analog cellular phones in 1979 with Mobira Oy, a joint venture of Nokia and Finnish television manufacturer Salora. Nokia developed a digital telephone switch and the Mobira 450 Nordic Mobile Telephone (NMT) car phone in 1982. Two years later, it introduced the Mobira Talkman, a portable mobile phone for the NMT system. This was followed in 1987 by the 800-gram Mobira Cityman, the first handheld NMT phone.
Nokia succeeded, in part, because Finland had a more competitive telecommunications market than other European countries (where telephone service was often a government-run monopoly). The decision to aggressively pursue portable and handheld phones early—despite initial high costs and limited demand—positioned Nokia to benefit from the explosive subscriber growth ignited by digital cellular several years later.
Next time: Going Digital
The National Venture Capital Association (NVCA) recently published a new edition of their Economic Impact of Venture Capital Study. Given the timing, I thought the purpose was to undermine calls for regulating the VC industry.
An article by Vivek Wadhwa (What Have VCs Really Done for Innovation?) claims the NVCA exaggerates the role of VCs in creating and driving innovation--to the detriment of entrepreneurs who often risk everything they own. He claims the NVCA is looking for handouts:
What’s behind the NVCA’s voodoo economics? Even though they vehemently deny it, VCs are looking for bailout money and tax-breaks. After spending so much time, energy and breath in the past decade arguing that government subsidies distort markets, now the wealthy, bloated VC community wants its own handouts.
Wadhwa also links to a story at BusinessWeek (Venture Capitalists Head to Washington) in which he is quoted. The article claims the NVCA is trying to tap the Small Business Innovation Research program. I don't generally trust BusinessWeek, but I must assume the quote by NVCA president Mark Heesen is accurate:
"This is an Administration with individuals who understand and respect technology," says Mark Heesen, president of the National Venture Capital Assn. (NVCA), the industry's primary lobbying group. "And from Obama on down, there is a view that innovation is key to getting us out of this economic situation."
On the contrary, the Obama administration is pushing primitive technologies such as windmills and lifestyle/preventative medicine, while dreaming up new ways to punish advanced technologies such as medical devices (re: AdvaMed) and the Internet ("Net Neutrality").
Tuesday, September 15. 2009
Precursor LLC analyst Scott Cleland has released a white paper Googleopoly IV: Monopsony Control over Digital Info Competition. It's as alarming as it is fascinating.
The white paper concludes with these recommendations:
The DOJ/FTC should establish and publicize a hotline phone number and web address where those who believe they have been harmed by Google's monopoly/monopsony market power can confidentially report evidence.
From what I've seen, Cleland is generally skeptical of government initiatives to ensure telecomm competition and guide the industry in serving the common good. So it's a bit shocking to see him calling on government agencies to move aggressively against Google. I'd like to know more about why, in this case, he believes competition and copyright law offer insufficient protection. I'm concerned about Google's alleged abuses. However, based on history and experience, I'm also concerned that the DOJ/FTC could end up striking a deal with Google that would make some abuses permanent in exchange for support for specific government initiatives.
Monday, September 14. 2009
I wrote previously that contemplated health care reforms could discourage health care technology innovation. I didn't know how right I was.
The proposed health care reform legislation being considered by the Senate would impose a $40 billion tax on medical devices and diagnostics. According to AdvaMed (the Advanced Medical Technology Association), an industry group that otherwise supports health care reform, the tax will raise health care costs and amounts to a double tax hit on the industry.
From AdvaMed's September 8, 2009 press release:
“While AdvaMed supports broad-based health care reform and has been working to achieve that important goal, we cannot support a proposal that unfairly singles out the medical technology industry for a tax on innovation on top of the billions in cuts that the industry would already have to absorb within the health care reform proposal. We will continue to work with Congressional leaders and the White House to further real health reform and to eliminate this counterproductive proposal from any reform package considered by the Congress.”
UPDATE Sept. 15, 2009 12:00pm:
According to an article in the Wall Street Journal, earlier this year AdvaMed lobbied to have taxes imposed on hospital purchasing groups. Therefore, according to the article, they are only getting what they deserve.
On the contrary, what this proves is that when government meddles in markets such as health care, it's only natural that the participants respond by jockeying for position. To wit, "Give me the stimulus funds and make my adversaries and competitors pay." The top priority of most businesses is to play ball with whoever controls the White House and Congress.
Sunday, September 13. 2009
This post is the tenth in a series based on my book, The History of Wireless: How Creative Minds Produced Technology for the Masses, published in 2008. Each week I’ll present the most interesting and surprising facts about the history and future of wireless from one of fourteen chapters.
The Mobile Radio Pioneers
Now is a good time to remember that bad economies are merely crucibles for the next crop of brilliant entrepreneurs. The development of mobile radio started before the Great Depression and received its biggest boost after World War II, but its leaders were made during times of economic hardship and transition. The stars in this industrial drama are the people who built Motorola, LM Ericsson, and the transistor.
Paul Galvin was just trying to be a successful small business owner. His first efforts ended in failure. Just as the Galvin Manufacturing Corporation began to enjoy a boom in its consumer radio business, the stock market went bust. It was 1929.
Galvin entered the car radio business in the early days of the Great Depression. At the time, car radios were aftermarket products, and Galvin recognized that he could succeed by bringing down the cost. Galvin renamed the company Motorola and developed relationships with dealers and distributors around the country. By 1936, the economy was starting to recover and Galvin was thriving. But there were more challenges ahead.
During World War II, Motorola developed the SCR-300 backpack two-way FM radio in a deal with the U.S. Army. Now the company was positioned for growth. But it was Galvin’s son Robert who turned Motorola into a radio behemoth, growing sales 30 times the level he inherited in 1958. Key to that success was the creation of internal, competing R&D teams and a commitment to ongoing innovation.
A much older telephone company, LM Ericsson of Sweden, would become Motorola’s fiercest competitor in mobile radio. Lars Magnus Ericsson started a telephone repair business in 1876. He also produced what might be considered the first mobile telephone for consumers. Except that this “mobile” telephone used wires. Ericsson’s wife Hilda liked to go for long drives in the country. Ericsson gave her a telephone with wires attached to two long poles. When his wife needed to make a phone call, she could pull over to the side of the road and use the poles to connect her phone to overhead telephone wires.
Like Motorola, Ericsson succeeded by doing what was needed to survive. The two firms would eventually become bitter rivals in both the land mobile radio (e.g., police radio) and cellular telephone businesses. The tactics employed by their land mobile radio sales teams often resulted in lawsuits.
Keep in mind that Motorola began making mobile radios in the vacuum tube era. Even the SCR-300 backpack radio used tubes. Invented in late 1947 by a team at Bell Labs, the transistor would require a full decade to perfect and commercialize. Sure enough, it was just as transistors started to gain traction that Robert Noyce and Jack Kilby, working independently, developed the first integrated circuits.
To the pioneers, hardship and change are just opportunities.
Next time: Birth of the Cell Phone
Saturday, September 12. 2009
Kudos to George Gilder (The Israel Test) for cutting through the fog and showing everyone what the Israeli-Palestinian conflict is really all about.
It’s not about denying Palestinians their land, right to self-determination, or dignity. It’s about the Palestinians’ hatred of Jews and the Left’s hatred of free enterprise.
If you believe that European Jews swooped into Palestine and stole the Arabs’ land, you need to study Middle East history, because that’s simply not what happened. I suggest you start with Mark Twain’s travelogue, Innocents Abroad. Mark Twain did not have a dog in the Jews versus Arabs fight because he wrote his book in 1869—twenty-seven years before the founding of the modern Zionist movement. The book is about Twain’s journey to the Holy Land and his astonishment upon discovering that outside of Jerusalem it was all but uninhabited. Study further and you’ll learn that it was the Ottoman Empire that ruled Palestine up until World War I, and that the British gave the majority of Palestine (76%) to the Arabs in 1928. Considering that Israel has offered to relinquish the West Bank and Gaza since 1967, it’s clear that the Arabs could own 90% of Palestine today—were that what they were really after.
The Israel Test is also unique in that it celebrates Israeli high tech entrepreneurship. I couldn’t help but experience feelings of déjà vu as I read about some of the people and companies. Though I was first introduced to Israel’s fledgling high tech industry in the early 1980s, like Gilder I later met two of Israel’s best ambassadors of high tech, the late David Medved (Chairman of JOLT) and his son Jonathan (venture capitalist and CEO of Vringo). Israel is busy inventing products that save lives, make life easier, and make life more pleasant. What positive contributions are her enemies making?
That leads me to a new idea. Given that Israel is increasingly hospitable to high tech startups, and that the U.S. is increasingly inhospitable (with the exceptions of not-for-profit and “green” enterprises), perhaps this would be a good time for Israel to offer itself as a business haven for American high tech entrepreneurs. I don’t know what if any barriers there are to American entrepreneurs setting up shop in Israel, but I suspect the current Israeli administration would be open to lowering or removing them.
Yesterday I attended a fascinating lecture by James L. Cox, MD on prosthetic heart valve design at Barnes-Jewish Hospital in St. Louis. However, there was one thing about the lecture that struck me as odd—yet consonant with the times. Dr. Cox (who retired from clinical practice) expurgated the names of the private ventures with which he is involved from his slides. For example, in a photograph of the headquarters of one venture the firm’s name on the building was blacked out.
I found that silly. There is nothing wrong with profiting from products that prove useful to others. Plus, there are better ways to allay fears that a presentation is merely a disguised sales pitch. First, provide useful and accurate background information. Second, describe what you feel are your product’s strengths and what competitors and critics say are its weaknesses. Third, trust your audience’s natural skepticism and deal with it directly and honestly.
The main thrust of the presentation was that form should follow function. While some artificial heart valves mimic the appearance of natural heart valves, it’s more important that they mimic the performance of natural valves. Dr. Cox (also known for developing the Cox maze procedure for treating atrial fibrillation) explained that that requires looking not only at basic valve function but factors such as turbulence, stresses on adjoining tissue, and so forth. His company, ATS Medical, offers both mechanical and biological valves.
One of the most interesting ideas discussed was percutaneous valve replacement—deploying a replacement heart valve using catheters. The valve is contained in a stent which, once in position, is expanded to push the natural valve leaflets aside. This isn’t a totally new concept—nor is it in widespread use. The “form follows function” design approach can be beneficial here, as well.
Saturday, September 5. 2009
This post is the ninth in a series based on my book, The History of Wireless: How Creative Minds Produced Technology for the Masses, published in 2008. Each week I’ll present the most interesting and surprising facts about the history and future of wireless from one of fourteen chapters.
David Sarnoff: High Tech Business Guru or SOB?
David Sarnoff’s rags to riches story reads like something straight out of a Horatio Alger novel. Starting as an impoverished immigrant from a Russian shtetl, Sarnoff grew RCA and NBC into the first high tech media empire.
Sarnoff’s family immigrated to America in 1900 when he was just nine years old. He learned English, hawked Yiddish newspapers, and completed the eighth grade. Instead of going to a college preparatory school as he aspired, he was forced to go to work to help support his family. He set out to get a job with a major newspaper, but through a series of accidents ended up working for Marconi America.
Sarnoff soon demonstrated the moxie that would take him all the way to the top. Though hired as a mere office boy, he decided to meet the great Marconi and establish a rapport with him. Hearing that Marconi was en route to one of his New York offices after hours, Sarnoff rushed to get there first, and then introduced himself as the American branch’s newest employee. After a nice chat, Sarnoff offered to help Marconi in any way he could. It just so happened that Marconi was looking for someone discreet to deliver flowers and candies to his New York lady friends.
Sarnoff has been accused of claiming more credit than he deserved. He probably exaggerated his role (as a radio operator) in the Titanic disaster. He didn’t invent broadcasting, but starting with his “Radio Music Box” memo in 1915, he certainly did transform a simple idea into a thriving industry.
In a fit of protectionism, the U.S. government forced Marconi to sell his firm to a spinoff from General Electric called Radio Corporation of America (RCA). Sarnoff had earned his place as one of the firm’s top managers. However, he was surrounded by mid-level managers from GE, many who resented a Jew and outsider rising above them in the organization. When they began harassing Sarnoff, he responded with wisdom and maturity, and it proved a turning point in his career.
The mid-level managers began dumping small projects and crackpot inventors in Sarnoff’s lap, while invitations to social events never seemed to reach him. Instead of complaining, Sarnoff made the most of each project, and then invited RCA Chairman Owen D. Young to dinner at Delmonico’s restaurant in New York City (the highly recommended site of several historic business dinners). Over the course of the evening, Sarnoff told Young about his humble origin, his love for America, and the magnificent future he envisioned for RCA. Sandwiched between these inspiring topics, Sarnoff briefly mentioned the problems he was experiencing.
Young got the message and let it be known that when Sarnoff spoke, he spoke with the authority of RCA’s Chairman. Not long after, Sarnoff was promoted to General Manager.
Over the next few decades, Sarnoff proved himself a tough and savvy businessman. However, some critics feel that Sarnoff destroyed two of America’s greatest inventors, Edwin H. Armstrong and Philo T. Farnsworth. Sarnoff was determined that RCA would always be on the receiving side of patent royalties. He knew how to influence government policymakers. And he was a tough negotiator who knew how to bluff and when to just sit and wait.
Sure enough, Sarnoff used his lobbying skills to delay the successful launch of FM radio, and did everything he could to avoid paying Armstrong for the technology. And some suspect that Sarnoff took advantage of the naïve country boy, Philo T. Farnsworth, inventor of the “image dissector” television video camera.
Those accusations are not entirely fair. Sarnoff’s job was to promote the interests of RCA’s employees and investors. He got the better of Armstrong and Farnsworth, but not because he was trying to destroy them. The fact is that RCA made Armstrong wealthy years earlier, and eventually paid Farnsworth a small fortune.
Next time: The Mobile Radio Pioneers
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