A Silicon Valley Insider

Durban Very Small Steps for a Daunting Challenge

Sun, 11 Dec 2011 16:24:17 -0800

(E) There was a lot going on this week for the media. European countries (to the exception of the UK) agreed on monitoring their budget deficits at their (last?) debt summit to save the Euro. The race for the US President election is starting to be interesting. In Africa, Tunia has a new constitution, while Ivory Coast and The Republic of Congo are going through some challenging election processes. And, last but not least, in Silicon Valley, we are waiting for the IPO of Zynga anytime soon!

And by the way, there was also the United Nations Climate Change Conference in Durban in South Africa. The conference that the media did not much covered over the last two weeks. Out of a sample of a few major publications that I read every day: The New York Times, Le Monde, The Financial Times, The Economist, only the Economist did outline Durban as the first headline on its site over the week-end.

So what was accomplished at Durban?

A proposed agreement (to be further negotiated) that binds 40 wealthy countries (including the US, China and India - out of 190 countries that were present at Durban) to legally commit to reducing their carbon emissions by 2015, and makes that agreement operational in 2020. One difference between the Durban agreement and the Kyoto protocol is that Kyoto was only signed by the developed countries (to the exception of the US) while the Durban agreement has been signed both by developed and developing countries. However, there is no mention in the agreement of how much those carbon emissions will have to be reduced by. But the Durban agreement includes “an acknowledgement that there is a widening gap between the mitigation efforts currently promised, and those required to keep warming within the broadly recognized 2°C safety limit.”

The Durban agreement will replace the Kyoto Protocol that was enacted in 2007, and was due to expire next year. Governments that are part of the Kyoto Protocol agreed in Durban to a second commitment period to the protocol that will last five to eight years (though Russia, Japan and Canada have said that they will not be part of it). The Kyoto agreement requires countries to reduce their collective greenhouse gas emissions by 5.2% from the 1990 level initially over a five-year period from 2008 to 2012.

In addition, an agreement in Durban was also reached on a global “Green Climate Fund”, which will provide $100 billion that rich countries have promised to make available to poor ones by 2020, to help them cut their carbon emissions and to adapt to climate change. However, there is no mention in this second agreement of how those $100 billion will be financed.

So what should have been accomplished at Durban that was not accomplished at the previous climate change conferences namely Cancun in 2010 and Copenhagen in 2009?

I) The world needs to cut its carbon dioxide (CO2) emissions sooner rather than later and sharply rather than lower to avoid a potential increase in average temperatures from 1820 below 2 0C or 3.6 0F considered as the tipping point beyond which climate change become uncontrollable. That goal translates on a different scale, that the world’s governments must succeed to cut worldwide CO2 emissions in half, from the 1990 levels, by 2050 with specific targets mostly for 2011, 2012 and 2015 and not for 2020 or 2040 when it will likely be too late! 
II) Nations should be accountable to insure their emissions targets. This is to avoid the failure of the Kyoto protocol where most of the 38 industrial nations (the EC, Japan and Canada) which committed to reduce their emission targets of 5% in 2012 might not honored their commitments. Lack of reduction of emissions shall result in the payment of a nation carbon tax to a Global Climate Change Fund (GCCF).  
III) Deforestation, which is responsible for around 20% of the concentration of CO2 into the atmosphere, should be stopped in particular in Brazil and the Amazon, Indonesia, New Guinea and Congo. Appropriate programs and funding should be investigated and implemented to help those countries to fight deforestation by breaking up the demand for the lands and the wood and providing alternative economic developments that are not linked to deforestation. 
IV) Together the United-States and China emit 40% of the world’s greenhouses. China is now the first worldwide emitter with 6 billion of tons or 4.58 ton per habitant and the United-States the second emitter with 5.9 billion of tons or 19.78 ton per habitant. As the two economic leading powers of the world, both the United-States and China shall lead the world to a decarbonized economy. Both the United-States and China are the world’s heavy coal-using economies (others are India, Russia and Australia). 50% of the electric power is generated by coal in the US and although China is clearly leading in renewable energies, it is still building a coal power plant every ten days (coal is primary, by its molecule structure, carbon and so generates more CO2 than oil or gas do). 
V) In order to realistically achieve emission targets, nations shall investigate, co-operate and implement bottom-up policies and practical measures to insure decarbonized economies first by maximizing energy savings and second through the development and financing of large scale sustainable cleaner technologies for power generation, industry production, transportation (both for aircrafts and cars and trucks) and heating buildings. 
VI) The rich countries (the most CO2 emitting countries) should help the poor ones (the least CO2 emitting countries) in particular in the South Hemisphere, in Africa and in tropical regions that are the most vulnerable to desertification and water stress to quickly introduce new programs to adapt to climate change. Funding to that end shall come from the Global Climate Change Fund (GCCF). 
VII) The path to a decarbonized world can only be built with a global cooperation between countries. The world need to put the research and development efforts and the financing for carbon capture and sequestration (CCS), technologies that will provide environment sustainability, in parallel to operational policies and tactical measures for climate-change mitigation and adaptation.

So was Durban a sucess or a failure?

By all means when you considered what should have been accomplished, and what was accomplished, Durban is a failure as was the previous Cancun and Copenhagen conferences.

Even as previously noted, the participants to the Durban conference acknoledge their failures by including “an acknowledgement that there is a widening gap between the mitigation efforts currently promised, and those required to keep warming within the broadly recognised 2°C safety limit.”

At this point in time, only 34 countries that signed the Kyoto protocol are still commited to reduce their greenhouse gas emissions - those countries exclude the US and China. Besides that, there is no present goals to reduce further any time any greenhouse gas emissions. That is what the Durban agreement is supposed to define before 2015 with an implementation planned for 2020! When it will be obviously too late. That simply failure!

So what is next for you and me, your country and my country, and the world?

Continuing the path to an ever expanding carbonized economy is taking the risk that global society will not flourish anymore. We all know that. The world’s current ecological developments are unsustainable. If we continue living and working in the developed countries as usual, and if we start working and living in the developing countries as the developed countries do, we are taking a significant risk of future humanitarian, social and economical crises. Mankind present disruption of the Earth’s climate and depletion of the Earth’s resources are causing the rapid destruction of life-vital ecosystems. And those two trends can only become worse with a growing human population and the access to higher standards of living in the developing world. We can only use the Earth’s lands, water, biodiversity and energy in a sustainable way. Further disruption of the Earth’s climate and further depletion of the Earth’s resources will at least limit, if not endanger economic prosperity for ALL on the planet.

Every nation has not contributed in the same way to the present concentration of carbon dioxide into the atmosphere. But climate change is borderless. Every population, society and nation is affected in various and subtle ways. Change to the climate by one nation will affect itself as well as all other nations. Climate change is breaking century of diplomatic games. Cultural, economical and military competitiveness are no-sense in the context of climate change. Actions to block the consequences of climate changes must be shared globally with the same determinism and anxiety across world nations. Climate change is the business of every nation. And of EVERYONE! 
Reference:
United Nations Framework on Climate Change

Note: the picture above is from the Unitied Nations Conference at Durban.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Thinking Green This Holiday Season

Sat, 12 Nov 2011 08:11:44 -0800

(E) I received this week-end some simple and great tips from the San Mateo recycling center to think green this holiday season. Statistics show that during the holidays, household waste increases by 25%, or nearly 1 milion tons of additional garbage a week. Following are a few holiday waste reduction tips:

“Shoping in your hometown can help save gas, time and energy. If every family reduced gasoline consumption by 1 gallon, we could reduce greenhouse gas emissions by 1 milion tons!

Consolidates your purchases into one bag, or better yet, bring your own reusable tote bag when shoping!

Save a tree by purchasing a living tree. Living trees can be planted before the holiday and enjoyed throughout the year.

If the Internet is accessible, consider sending electronic holiday cards this year. If every family reduced their mailing list by just one card, we would save 50,000 cubic yards of paper!

Favor zero waste gift ideas such as gift certificates, concert tickets, home baked goodies or potted plants. And wrap your gifts with old wallpapper, fabric or canvas.”

Fore more holiday recycling ideas:

Recology San Mateo:
http://www.recologysanmateocounty.com/holiday_tips.php

Ca.gov Recycle:
http://www.calrecycle.ca.gov/publiced/holidays/

Note: the picture above is a winnery in Napa.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

No To a Collapsing Europe and the Return of the Great Recession Part II

Sun, 2 Oct 2011 13:48:50 -0700

(B) We did painfully learn in August of this year, during the US debt ceiling crisis, how it is difficult for one country to do the right “thing”. Now imagine, how difficult it is for 17 countries to do many right “things”, especially if first those right “things” to do are quite complex to achieve, and second if the 17 countries have not in place the appropriate structure to implement them!

So what Europe should do, why Europe is not doing it, what the rest of the world should do, and what are the risks both for the Europeans, and for all of us...following is a simple FAQ (Frequently Asked Questions):

What should Europe do?
• Stop European auteristy measures - The European Central Bank (ECB) should lower interest rates and favor credit easing
• Provide a large scale liquidity program to assist Italy and Spain that are solvent - The present European Financial Stability Facility (EFSF) of 440 Billion Euros being approved is not enough to respond to the needs of Italy and Spain that might require from 2 to $3 Trillion Euros
• Manage an orderly default of Greece through a retructuring of its debt
• Provide the equivalent of the 2008 US TARP program to recapitalize European banks to avoid a European credit crunch
• Germany should favor policies that are not by nature austere but stimulate internal consumption

Why is not Europe doing it?
• Europe has a monetary union through the Euro but no political, economic, social and fiscal union. In a nutshell, the German workers do not feel that they need to pay for the misfortunes of their Greek peers

What should the rest of the world do?
• The US, Japan, Canada, England and other Western Countries should have monetary and fiscal policies that simulate their economies and feed worldwide economic growth
• Fast developing economies such as China that rely heavily on exports should develop policies that simulate their internal demands

What are the risks?
• The risks are very high both because of the complexity of the macros, and the lack of time to soften a brutal delevering of debt burden European countries and banks
• A very weak Europe will weaken all other western countries, and all developing countries. The best scenario would be slower growth of worldwide economies, and the worst scenario would be another 2008 Great Recession.

For more food for thoughts, please read, listen, understand, question, agree and/or disagree with the following:

Professor Nouriel Roubini:
His latest thoughts:

• “How to Prevent a Depression”, Project Syndicate, September 19
• “Risk of a Depression is Huge”, Emerging Markets, September 26

PIMCO Mohamed El-Erian:
• “Europeans must not let their “Washington Intervention” go to waste”, Reuters, September 26

George Soros:
• “The Road from Depression”, Project Syndicate, September 29
• “Does the Euro has a Future”, The New York Review of Books, October 13

The Economist:
“Until politians actually do somethhing about the world economy...be afraid”, The Economist, October 1st

Note: the picture above is La Fountaine Saint-Michel in Paris.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Internet Performance Optimization The Mobile Web

Fri, 16 Sep 2011 13:58:55 -0700

(T) The new challenge to optimize the performance of the Internet is “ideally” to provide for mobile users a near zero latency experience to the Mobile Web. While for the last two decades, optimization was about a faster network and faster servers, optimization for this decade is about faster content from faster Web sites. In other words, optimizing the Mobile Web requires mostly optimizing the content both in the network and at the Web site. Most of the initial requirements to reengineering the fabric of the wireline Internet by increasing significantly its bandwidth and improving its data transmission have been accomplished, although new enhancements will certainly continue.

Now, the new challenges are first to optimize the content to provide a simliar experience as the one that users expect on wireline networks while the bandwidth of the wireless network is still being limited. Second as the number of users is increasing especially for the Mobile Web (but as well for the wireline Internet), Web sites must always be optimized to accomodate a larger number of users distributed geographically over the world. According to Yahoo, a 400 ms slower Web can translate from 5 to 9% drop in full-page traffic.

There are two complementary approaches to optimize the Mobile Web: network operators can optimize the mobile content in their networks, and content providers can optimize their Web content. And, in general the more the faster!

Optimizing the Web Traffic for the Mobile Web:
On wireless networks, video is the dominant driver of the Web traffic and can produce up to 40% of the traffic. Most of the video traffic, at any given time, is driven by a small number of videos that are downloaded by a very large number of users.

But even the bandwidth of 4G/LTE networks (5 to 12 Mb/s downlink – 2 to 5 Mb/s uplink) is not enough to accommodate the growth of the media traffic. If the traffic is not routed over WiFi networks (802.11n can provide up to 600 Mb/s), the media must be compressed in the network.

Network optimization of the mobile Web is performed by an inline HTTP proxy (identical to a firewall application proxy). The majority of the data compression is achieved through lossless and lossy optimization at the content layer while some level of data reduction can be achieved at the application layer (such as parallelization of content downloads), and at the transport layer (such as aggregation of TCP tunnels in particular if a client is used at the subscriber’s device).

Optimization generally compresses the HTML, JavaScript and CSS content, provides inlining of JavaScript and CSS content, and gzip many popular Web objects (such as HTML text, Microsoft Office, PDF, XML…). Part of Web optimization can also include lossy optimization of JPEG, GIF and PNG images. Lossy image optimization involves generally multiple quality levels for the user - the more the content is optimized, the lower is its resulting output quality. The average data reduction in HTTP web browsing for a smartphone can range from 20 to 50%.

The Web media (e.g. the video and audio) can be lossy optimized as images included in a Web page. Lossy media optimization involving generally the transcoding and lower frame rates of the media. The average data reduction in HTTP video bytes for a smartphone can be from 15 to 30% for lossless optimization, and from 0% to 35% for lossy optimization.

Optimizing Web Sites for the Mobile Web:
The Yahoo Developer Network and Web Performance Engineer Steve Souders have identified 35 best practices to optimize Web sites for faster speed-up. Those practices are divided into 7 categories: content, server, cookie, CSS, JavaScript, images and mobile. Technique 33 and 34 are specific to the Mobile Web. Technique 1 to 32 and 35 applies both to the wireline and wireless Web.

Following are the details of those 35 techniques:

1. Make Fewer HTTP Requests
2. Use a Content Delivery Network (CDN)
3. Add Expires or Cache-Control Header
4. Gzip Components
5. Put Stylesheets at Top
6. Put Scripts at Bottom
7. Avoid CSS Expressions
8. Make JavaScript and CSS External
9. Reduce DNS Lookups
10. Minify JavaScript and CSS
11. Avoid Redirects
12. Remove Duplicate Scripts
13. Configure ETags
14. Make Ajax Cacheable
15. Flush Buffer Early
16. Use GET for Ajax Requests
17. Postload Components
18. Preload Components
19. Reduce the Number of DOM Elements
20. Split Components Across Domains
21. Minimize Number of iframes
22. Avoid 404s
23. Reduce Cookie Size
24. Use Cookie-Free Domains for Components
25. Minimize DOM Access
26. Develop Smart Event Handlers
27. Choose <link> Over @import
28. Avoid Filters
29. Optimize Images
30. Optimize CSS Sprites
31. Do Not Scale Images in HTML
32. Make favicon.ico Small and Cacheable
33. Keep Components Under 25 KB
34. Pack Components Into a Multipart Document
1. Avoid Empty Image src

Good Readings:
RIM’s SlipStream Web Multimedia Optimization Technology
The Yahoo Developer Network
Steve Souders‘ Web Site and Blog

Note: the picture above are my personal BlackBerry and Playbook.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Internet Performance Optimization The Early Days of the Internet

Sat, 3 Sep 2011 15:29:29 -0700

(T) When Pathfinder was about to land on Mars in 1997, the challenge for NASA emerged paradoxically not in space but on earth on the Internet. The 20 NASA mirrored sites around the world had to serve a demand of 32.8 M hits when several computer-networking problems occurred. A router, at the NASA Ames site in Mountain View, CA which was not properly configured, caused the site network to be unusable. Several Web servers ran out of disk space and crashed. And the memory of the two major Web servers at NASA’s JPL, connected through two T3 lines, had to be quadrupled.

In 1995 after the Internet became a commercial entity, the response time of web pages for every Internet user was very noticeable. Internet networks were overloaded by the rapid growth of Web servers.

The first factor in latency was (and still is) in the way that HTTP works with TCP/IP. As an application protocol, HTTP makes a very inefficient use of TCP. HTTP requires many TCP connections to be created and destroyed per Web page transferred. HTTP ignores some of the fundamental concepts of TCP/IP design. However, it is the remarkable congestion control mechanisms of TCP/IP which saved the Internet from the famous prediction of Bob Metcalf, founder of 3Com, about the collapse of the Internet.

Web servers were (and still are) generally not the bottlenecks, except in very few cases, such as in the NASA example. Processing of HTTP required no more than 5% of the utilization of a server. A typical UNIX server could on average handle 3.5 millions hits/day. There were however some cases in which Web servers could become bottlenecks. A Web server could only handle a certain number of simultaneous connections, and a connection was not released until the HTTP request was serviced. If responding to the request took a large amount of time (such as in the case of retrieving large video files from the disks or if a lot of computation was needed for a search engine) then the Web server could starve for connections. And incoming users would see increased numbers of “server not responding responses” as connections could not be serviced.

The major and practically only source of Web latency was (and still is) in the network. Contributing first to the network latency is the bandwidth of WANs. A WAN could inject as much as 100-500 ms of latency even when the link is not fully utilized. Upgrading a WAN link from T1 to T3 would only improved latency by 20% for transferring a Web page from Boston to San Francisco despite a 30,000% increase in bandwidth!

Contributing second to network latency was routing. With the exponential increase of Web traffic, routing was degrading at an alarming rate. Internet routing was becoming very unstable with routes fluttering that is changing between sources and destinations. Some research on the Internet backbone showed that BGP updates, the Internet routing protocol, were dominated by pathological or redundant updates adding more traffic to the Internet. Routing instability led to general network instability.

Further research on Internet packets revealed that Murphy’s law was in full force. All assumptions about network behaviors were violated. Packets were frequently lost, corrupted, or arrived badly out of order.

The only solution to reduce latency in the Internet was believed to be through the deployment of reverse proxy caches that could disseminate the content of Web servers function of the demand of their contents.

But a few technology breakthoughs significantly contributed to improve the performance of the wireline Internet. Internet routers became much more efficient at processing packets. A new protocol was created MPLS (multi protocol label switching) to enable network operators to better deal with network congestion. And, large deployments of optical transport and optical switching equiment led the network operators to catch up with the demand of Internet content.livepage.apple.com

Unfortunately, network operators invested in so much network equipment, that their costs grew much faster than their revenues leading to the rise of the telecom bubble that burst in 2001.

Good Readings:
Van Jacobson, “How to kill the Internet”, SIGCOMM’95, Cambridge, MA, August 05
L. Zhang, S. Floyd, V. Jacobson, Adaptive Web Caching
C. Labovitz, G. Malan, F. Jahanian, “Internet routing instability”, SIGCOMM’97
Vern Paxson, “End-to-end routing behavior in the Internet”, SIGCOMM’96, Stanford, CA, August 06
Vern Paxson, “End-to-end Internet packet dynamics”, SIGCOMM’97
Requirements for Traffic Engineering over MPLS

Note: the picture above is a “Gelb Rot Blau” from Vassily Kandinsky.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Natural Quantum Computation

Sun, 7 Aug 2011 09:29:36 -0700

(T) D-Wave, a start-up based in British Columbia and a spin-off of the University of British Columbia, has been working for over 11 years on quantum computation. In 2007, D-Wave presented an early prototype of its quantum computing system at the Computer Museum in Mountain View, CA. And in May this year, D-Wave announced the first sale of its quantum computing system to Lockheed Martin based on a quantum annealing processor. At the same time, D-Wave scientists published the results of their research “quantum annealing with manufactured spins” in Nature Magazine.

As its name implies, a quantum computer attempts to process information leveraging the fundamental laws of quantum mechanics. In traditional computers, information can have two digital states 0 or 1. In quantum computers, information is modeled after atoms that can have more than one state simultaenously, a fundamental law in quantum mechanics called quantum superposition. As early as 1982, well-known physicist Richard Feynman pioneered the idea of simulating quantum mechanical objects. In 1985, Oxford University Physic Professor David Deutsch proposed a simple abstract machine, that he called the quantum Turing machine, that captures all the power of quantum computation based on quantum gates (qbits). And in 1994, Peter Schor from AT&T Bell Labs developed the first quantum algorithm to perform efficient factorisation of integers, a very useful computing application in particular in cryptography, and out of reach for traditional computing systems.

Building “universal” quantum computers is still a challenge (if you are optimistic) or a dream (if you are pessimistic) first because of the complexity of designing large number of interacting qubits, and second because of the interaction of those qubits with their surronding environment that can prevent them from efficient quantum computation, an effect called decoherence.

D-Wave natural quantum computer (NQC™) is built around superconducting processors designed to enable quantum annealing algorithms. Many computationally impossible problems can be reduced to finding the ground state of a system of interacting spins such as the Travelling Sales Man or the Spin Glass. Or quantum annealing enables the search for the ground state of a quantum system. To that end, D-Wave NQC implements a programmable quantum spin system, in which controled individual spins and their couplings perform quantum annealing, and then determines the state of each spin. D-Wave NQC implements an artificial Ising spin system involving an array of eight superconducting flux quantum bits (qbits) interconnected as a bipartite graph.

Simplified schematic of a superconducting flux qubit acting as a quantum mechanical spin in the D-Wave system - circulating current in the qubit loop rise to a flux inside, encoding two distinct spin states that can exist in superposition

D-Wave NQC demonstrates that a programmable artificial spin system can be manufactured as an integrated circuit implementing a quantum algorithm to solve hard combinatorial optimization problems found for instance in software engineering, financial risk analysis, or bioinformatics. D-Wave’s experiments provide a valuable framework for investigating the physics of interacting quantum spins, and a brilliant step toward the exciting quest for a universal quantum computer.

References:
D-Wave Systems
D-Wave Blog: “Hack the Multiverse”
Nature Magazine, “Quantum annealing with manufactured spins”, May 2011
D-Wave,“Implementation of a quantum annealing algorithm using a superconducting circuit”, March 2009

Note: the picture above is D-Wave 128 qubit superconducting adiabatic quantum optmization processor.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

The Real Value of Social Networks

Sun, 10 Jul 2011 15:27:35 -0700

(T) A few years ago, a friend of mine told me that he was using LinkedIn instead of scaning people business cards. Keeping business cards of people that we met in business meetings has always been a challenge. And, I know very few people who have ever taken the time to scan business cards that were given to them. LinkedIn for your professional network and Facebook for your social network both solve that problem: keeping the contact information of your network updated. That was probably the initial value of the first generation of social networks which is to keep, update and organize your contacts, and to faciliate your communication, through e-mails, chats and now video calls, with our network.

But the real value of social networks, and what is driving their growths is undoubtly in sharing. No one has probably better describes it than Kevin Kelly, co-founder of Wired Magazine:

“Everything that can be shared will be shared. We are just at the beginning of this movement. Sharing can enhance the value of whatever we share. We are now sharing things, we never thought we would, like information about our friends, locations, investments, health, memories, expectations, and activities. Privacy is a concern, but most people don’t mind sharing this information in the right context.”

Think about it - “sharing can enhance the value of whatever we share” - how many types of social networks we have already and could have, and how many usages from those networks we have already and could have based on the benefits of sharing - we are just at the beginning of that trend:

• Creating a Facebook page to start a revolution: “We are all Khaled Said”
• Buying clothes, according to your lifestyle or your community, through ModCloth instead of going to Macy’s
• Using Facebook and Twitter to find an organ transplant that is most likely to match the donor and save a life - The Dragonfly Effect from Professor Aaker
• Discovering, experiencing and sharing paintings that you love, and new ones that you will love with Artfinder
• Getting local restaurant recommendations from your friends through Foursquare when travelling to a new city or a new country
• Buying technology stocks with other technology investors through StockTwits
• Finding new products and stores that you might want to buy with Svpply
• Sharing your hobbies so that you know what’s going on through Facebook groups or Google + Circles
• Creating a personal brand or marketing a small business with Twitter
• Finding victims of natural disasters, eathquakes or tsunami - with Google’s Person Finder - or finding victimes of wars and genocides - such as the Remember Me Project from the US Holocaust Memorial Museum
• Sharing your private memories and good times with close friends and family using Path
• Using Facebook as the worldwide white pages phone book to reconnect with people from your past
• Using LinkedIn to post a resume and find a new job

The Web is clearly moving from web pages and e-mails to being rebuilt around people. As very well explained by Paul Adams, User Experience Manager at Facebook, we all live in networks of small connected groups, and we are influenced by the people around us, mostly the strong ties in our networks.

While the Facebook, LinkedIn and new Google + of the world are going to compete by providing new applications for their users leveraging their existing massive data or by being the social platform for third-party applications such as Facebook for Zynga social gaming, a large number of social start-ups such as Etsy, Tumblr, Path, Quora, Namesake, StockTwits, Artfinder, Svpply, Foursquare, ModCloth...are emerging.

And between one dominant social platform such as Facebook, and the new social start-ups, users will have to decide if they want to have only one social graph (which is probaly what both Facebook and Google want) or a “portable” social graph, such as a phone number, that they can carry and use over many social apps and services.

Note: the picture above is the wall from Repower America.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

The Urgent Need To Quickly Restructuring The Greek Debt

Sun, 3 Jul 2011 18:32:32 -0700

(B) The Greek debt crisis started over a year ago. And Europe does not seem close to a resolution. It is even worse: the opportunity for the European leaders to avoid a terrible disaster is quickly shrinking. The consequences for Europe, and the rest of the world of Greece defaulting on its debt will be distratous leading without a doubt to another financial crisis, and a global economic recession similar to the ones that we had in 2008. And, we are getting extremely close to that inacceptable point of no return.

Greece is insolvent. Its public debt is 160% of its GDP. However, European leaders, instead of considering it as a solvency crisis, have considered it as liquidity crisis, lending more with the help of the IMF to Greece, and asking for more austerity measures that the Greek do not seem to accept.

At this point in time, there are only two possible outcomes: Greece defaults on its debt - the most likely scenario as of today - or an orderly restructuring of its debt is being proposed, if European leaders act quickly, that could save Greece, the Eurozone and the world economies.

Professor Nouriel Roubini has clearly articulated how to propose an orderly restructuring of the Greek debt:

“If the PIIGS (Portugal Ireland Italy Greece and Spain) can’t inflate, grow, devalue, or save their way out of their problems, Plan A is either failing or is bound to fail. The only alternative is to shift quickly to Plan B – an orderly restructuring and reduction of the debts of these countries’ governments, households, and banks.
One can carry out an orderly rescheduling of the PIIGS’s public debts without actually reducing the principal amount owed. This means extending the maturity dates of debts and reducing the interest rate on the new debt to levels much lower than currently unsustainable market rates. This solution limits the risk of contagion and the potential losses that financial institutions would bear if the value of debt principal were reduced.
Policymakers should also consider innovations used to help debt-burdened developing countries in the 1980’s and 1990’s. For example, bondholders could be encouraged to exchange existing bonds for GDP-linked bonds, which offer payouts pegged to future economic growth. In effect, these instruments turn creditors into shareholders in a country’s economy, entitling them to a portion of its future profits while temporarily reducing its debt burden.
Reducing the face value of mortgages and providing the upside – in case home prices were to rise in the long run – to the creditor banks is another way to convert mortgage debt partly into shareholder equity. Bank bonds could also be reduced and converted into equity, which would both avert a government takeover of banks and prevent socialization of bank losses from causing a sovereign debt crisis...
The creditors and bondholders who lent the money in the first place must carry their share of the burden, for the sake of the PIIGS, the EU, and their own bottom lines.”

After the financial crisis of 2008, the West cannot afford further economic crisis. And it goes without saying it, that an orderly restructuring of the Greek debt requires a stronger Europe, that includes not only a monetary union but also both a fiscal and political union, and that every European country will have to share the burden of the Greek debt.

References:
Nouriel Roubini and Stephen Mill, “A Loan and a Prayer”, Project Syndicate
Joschka Fisher, “Does Europe have a Death Wish?”, Project Syndicate
The Economist, “If Greece goes...”
A Silicon Valley Insider, “The Public Debts of the Developed Nations Could Well Lead to the Next Financial Crisis”

Note: the picture above is “The Venus de Milo” from Le Louvre.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Risking its Position of Saver of Last Resort

Sat, 2 Jul 2011 12:53:34 -0700

(B) According to the Economist, the US only known instance of a technical default occured in 1979 when the US Treasury failed to redeem $122 million of Treasury bills on time. The reasons for that default were: high interest from small investors, a delay in raising the debt ceiling, and an equipment processing failure.

Today that default would cost $86 billion a year or 0.6% of the GDP! Interviewed on CNBC, Mr. Alan Greenspan summarized it very well: ”without raising the debt ceiling, the US will default on everything, and will lose its position of saver of last resort”.

While US politicians are taking an unaceptable amount of time to discuss the debt ceiling which should be raised since it is money that is (unfortunately) due already, the real challenge for the US is not its present debt ceiling, but how quickly to start reducing its astronomical $14.4 trillion debt (as of June 29, 2011) or approximately 98.6% of its GDP for 2010 (source: Wikipedia)!

According to Professors Reinhart and Rogoff, authors of “This Time is Different: Eight Centuries of Financial Folly”, “a 90% ratio of government debt to GDP is a tipping point in economic growth. Beyond that, developed economies have growth rates two percentage points lower, on average, than economies that have not yet crossed the line”.

The longer the US waits to take the path toward fiscal sustainability, the more dramatic and the more limited will be its options, ranging from fiscal austerity to structural reforms.

What is saving the US is that the dollar is still fortunately the world reserve currency, and the US has the largest and most liquid debt market. But over the last few years, foreign investors have less invested in the US (one of the reasons being obviously the decline of the dollar itself), and more in non dollar assets, and that trend is being expanded by the fact that even US private investors are investing more and more abroad.

As of January 2011, foreigners own 32% of the total US debt of $14.1 trillion, and if China, Japan, Saudi Arabia and other foreign investors lose their confidence in the US, not only will they reduce their willingness to invest further but they will ask for higher interest rates.

2010 US Category Spendings (from Wikipedia)

To reduce its debt, it is obvious that the US must quickly review and evolve its present entitlement programs, with Social Security and Medicare being first, and has to combine in some way raising taxes, and probably creating new ones, while lowering its spending, and in particular first, its defense budget. In 2000, the US government revenue was at 19% of its GDP, and spending at 18.5%. The result: a budget surplus. Today, revenue is at 14%, and spending at 23%. The result: a deep budget crisis! This trend needs obviously to be reversed.

Nobody wants to pay taxes. But as Alan Greenspan said rightly “taxes can be as low as possible but not with borrowed money.”

Finally, reducing a budget deficit is like reducing global warming. Actions cannot be scheduled to occur in 15, 10 or 5 years from now. Decisions and actions to reduce the budget deficit by cutting spendings and increasing taxes must occur now.

2010 US Receipts & Expenditures (from Wikipedia)

References:
Alain Greenspan Interviewed on CNBC: http://bit.ly/jh6ZNd
The Economist - America Debt Ceiling: http://econ.st/mp65Yv
A Silicon Valley Insider - The Public Debts of the Developed Nations Could Well Lead to the Next Financial Crisis: http://bit.ly/q20h3b

Note: the picture above is “Portrait de Dedie” from Amadeo Modigliani from the New York Museum of Modern Art.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
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What Kind of Cloud Do We Want?

Sat, 11 Jun 2011 15:21:54 -0700

(T) Thirty years ago, Ken Olsen, founder and CEO of Digital Equipment, never believed in the PC. His argument was that “why someone would use a PC when much more computing power is available to you, if you just connect a VT 100 terminal to a VAX”. What Mr. Oslen, although an outstanding engineer and entrepreneur, missed was that for users “personal” computing was more important than “powerful” computing. And over the years because of Moore’s law and better software engineering, Mac and PCs have become very persuasive in our daily personal and work life.

Eleven years ago, I was sharing a taxi going to a meeting in Chicago with a sale engineer, and that was the first time, as far as I remembered, of someone going to a meeting without his notebook but just with his BlackBerry. Over the last ten years, we have moved from “desktop” computing to “mobile” computing simply because “mobile” computing has just become more convenient than “powerful” computing.

I can only find two roots to cloud computing…

The first one is the concept of “thin client” that Sun Microsystems pioneered with the JavaStation. The major goal of the JavaStation was to lower the cost of operating clients in the enterprise by substituting PCs with JavaStations (whose OSs were a Java OS and had a Java browser). Google’s Chromebooks are following the same fundamental concepts of the JavaStation except that Chromebooks are designed to operate not with an enterprise server but with cloud services. And the simple reason for that is that over the last 15 years most of the user traffic has moved from local networks to the Internet.

The second root of cloud computing that I can point to is Hotmail. Hotmail was the first web-based e-mail service, and was very successful because it enabled users to check their personal e-mails at work, and at early Internet cafes. Over time, web-based services have exponentially expanded to consumers with iTunes, Facebook, YouTube, LinkedIn, GoogleMaps, Skype, Twitter and so on.

Today cloud computing services considered that the client is the browser. Furthermore, the browser can have the same fabric as its underlying operating system as in the case of Sun’s JavaStation, or becomes the operating system itself as in the case of Google’s Chrome.

Do we want all our applications to have the browser as the only client?

Probably not. This is the problem that many of us have run in many occasions. There are some applications that can be designed for the browser, or more exactly for some applications the browser can provide a sufficient user experience but there are many applications especially rich user interfaces or computing intensive I/O applications for which the browser does a poor job. A typical example is an enterprise network management application that might requires to display some complex system configuration or network topology maps.

Do we want all our applications to be cloud-based?

Probably not. Even if the application can be done within the browser, I feel sometime that I do not want the browser to do it for me. For instance bookmarking. I can use Delicious to have always my bookmarks available across my BlackBerry, Playbook and Mac. Unfortunately, Delicious breaks the organization of the bookmarks that I have with my browser. Therefore, I have to export my bookmarks and import them across my devices: smartphone, tablet and notebook through a USB – which is non sense! Ideally, we want the cloud to keep not only our data and back-ups updated but also the state of a work in progress that we might do over multiple mobile computing devices - and with those devices running native device applications that have some benefits over web-based applications. Those benefits can be features or better performance. Apple is starting to head into that path with iCloud. iTunes, by leveraging iCloud, keeps the songs that you purchased across Apple clients, and enables to download those songs across any Apple device.

Do we want all our data in the cloud?

Last May about 200,000 Citibank credit card customers in North America have had their names, account numbers and email addresses stolen by hackers. Earlier this June, Google announced that the personal Gmail accounts of several hundred people, including senior U.S. government officials, had been breached. Last April, the Sony's PlayStation Network was shut down after a massive security breach that affected more than 100 million online accounts! Also in April, hackers penetrated a network operated by data marketing firm Epsilon that handles email communications for JP Morgan, McKinsey, Best Buy, Target, Walgreens, Marriot. And, the list goes on...

Even RSA, a leading security firm, had a security breach earlier this year that disrupted the use of their security tokens to authenticate access to corporate networks for many of their customers.

Until Citibank, Google, Sony, RSA start encrypting their customer data in their clouds, the best way to guarantee that if data is stolen, it will not be accessed, do you want to have all your data in the cloud? Probably not.

And, if you have sensitive data in the cloud, make sure that you did encrypt them yourself before giving it to the cloud provider.

Note: the picture above is from Point Reyes south of San Francisco.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
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The Seven Forces That Are Expanding the Web

Sat, 30 Apr 2011 15:51:16 -0700

(T) At the Web 2.0 Expo 2011, last month in San Francisco, Kevin Kelly from Wired Magazine described extremely well six forces (I am adding a seventh one - connecting) that will contribute to expand the Web as we know it today:

1. Screening:
The screen is the destination for all data: screens are surrounding us in all sizes and shapes...

“Screens are proliferating into every part of our lives. A couple of decades ago, everyone thought that the web would be like TV, with 500 channels. But now the screens in our lives are taking the web everywhere, to the screen in Starbucks, smartphones, tablets, the living room, the workplace, etc. The question is, could one screen rule us all?”

1. Interacting:
User experience is moving on the Web from typing and reading, to full body interaction...

“Like actor Tom Cruise manipulating images with his hands on a holographic computer in Minority Report, we are now interacting with content all over the web. And when we interact, the web responds by adapting to our behavior. It’s possible for Web apps to measure our every move when we’re using them and then report detailed analytics to their developers. Those developers can then take that feedback and adapt their apps to better suit us. This feedback loop is making web apps better and better. It’s as if they’re reading our emotions and are becoming two-way windows.”

1. Sharing:
Anything that can be shared will be shared: friends, locations, investments, health, memories, expectations, hobbies...

“Everything that can be shared will be shared. We are just at the beginning of this movement.
Sharing can enhance the value of whatever we share. We are now sharing things, we never
thought we would, like information about our friends, locations, investments, health,
memories, expectations, and activities. Privacy is a concern, but most people don’t mind
sharing this information in the right context.”

1. Flowing:
Data is flowing to us in “always-on” real time streams from everything, and everywhere: RSS feeds, music, videos, games...

“The metaphor for the original personal computers was the desktop. In the Web, the metaphor changed to the page, as in Web page. Now, the right metaphor is flowing, or streaming, like streaming movies. We click on a movie site and expect the movie to start streaming to our screen in real time. Streams are everywhere now, on all of those screens in the screening trend. We can watch movies, listen to music, play games, and participate in conversations by tapping into these streams on the Web.”

1. Accessing:
Instead of owning content, files, software and computers, we will be accessing “everything” from the cloud...

“We used to own everything, like movie disks or computer game disks. Now, if we are surrounded by streams, we don’t care if we own them. We can rent them instead. On Netflix, you don’t need to purchase a movie. You can just pay to access it when you need it. With books, you won’t collect a library; you’ll download what you want five seconds before you read it on your Amazon Kindle eBook reader. Music will likely go the same way. If you can access your collection from anywhere by logging into the cloud, you won’t need to own it. All of the music on the planet can now fit on one 6-terabyte hard disk drive in a computer you can buy for $585. But there is no reason to carry it around.”

1. Generating:
In oder to increase its value, content will be generated by providing a unique experience that will be hard to copy...

“These days, anything digital that can be copied will be copied. So the goal is to make something that can’t be copied. If users generate their own content, personalize it, or customize it, then they’re creating something of value. Focusing on that is where you can be successful. Musicians have had the problem of digital piracy for years, and it has wiped out the old music industry.” But musicians should charge more for live concerts, an experience that can’t be duplicated so easy.”

1. Connecting:
Anything that can be connected will be connected: home appliances, medical devices, smart grid meters, car computers...

“One of the values of the Internet is in connecting many types of heterogenous networks. That value can now be brought to many devices, that are now dump but are being computerized and so more intelligent, adding both value to the Internet and getting value from the Internet. Everything in the home, in the car and in the office becomes a node on the Internet.”

The Web Business Model:
“Wherever the attention flows, the money will follow.” (hopefully!)

Reference:
The full video from Kevin Kelly’s keynote at the Web 2.0 2011 Expo in San Francisco:

Note: The picture above is from Kevin Kelly’s presentation.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
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The Creative Mind

Sun, 24 Apr 2011 13:08:08 -0700

(E) Creativity in arts, science and technology is about bringing change. Painters reveal new colors to our eyes, musicians new harmonies to our ears, scientists explain us why, and engineers design new tools. But it is only over time that we will be able to assess how creative or innovative a new art, theory or design will be, what will be its impact, and how valuable it will become to our culture.

The creative mind is unique by his ability to adapt to new situations and to leverage whatever is at hand to reach his goals.

He obviously shares a great amount of wonder and interests to develop what he should work on, and a great amount of openness and sensitivity to feel what could be changed.

In order to create, the creative mind develops a wild imagination with a sense of reality to come up with the next big thing. When working at his art, he generally combines playfulness (because of the enjoyment for his art) with discipline (because of his dedication to his art). And, he is at best performing in an harmonious and helpful surrounding and environment.

The creative mind is generally perceived by society as rebellious and independent. He often exposes himself to pain and suffering because of his deep sensitivity. How not to be devastated if no one cares about a new book or a new formula?

All major creative breakthroughs never come in one day, but after many years of perseverance. It is the enjoyment of producing his arts or discoveries that stimulates the passion and the dedications of the creative mind to pursue his own muse.

References:
Mihaly Csikszentmihalyi, Creativity, Happer Perennial
Michael Ray and Rochelle Myers, Creativity in Business, DoubleDay

Note: The picture above is an art student studying at New York MoMA.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
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The Creative Team

Fri, 22 Apr 2011 11:16:07 -0700

(E) What do engineers, product managers, entrepreneurs who started with a few ideas, a few tools, and a few dollars have in common in generating a tremendous amount of value for their companies. Simply said, all of them started by identifying exciting problems, and then relentlessly working to solve them by challenging common assumptions with, in most cases, very scare resources.

Innovation starts first with observation. Business and technology problems are abundant for those willing to investigate them. Defining the right problem to solve is often more difficult than solving it.

Second, innovation grows in places where people can share their thoughts. Creativity requires trading ideas. That is the reason why students at Universities or engineers in Silicon Valley can innovate: there are many venues around them to explore their ideas.

Third, innovators challenge existing assumptions. Innovators will foresee if common solutions can be improved, common solutions are not addressing the right problem, or if the problem is not properly defined.

Fourth, space and time are critical for teams to innovate. Surroundings need to accommodate team interactions. And, deadlines pressure the team to come up with a working plan.

Sixth, with well defined and tight rules, teams work harder to achieve their goals. Teams that have loose working rules, lose over time their senses of purpose. Innovative teams need to balance in their work enjoyment with discipline.

Seventh, innovative teams experiment a lot of options, willing to learn from their mistakes in the process, until they find the only path that will result in the best solution.

But in the end (eighth), the most innovative teams are the ones that always carry the attitude to endlessly overcome any barriers toward a successful outcome. That is very often how you can recognize if you have a creative team or not, and if you should invest or not in that team.

References:
Tina Seelig, Ingenius Levers for Unlocking Creativity, Stanford 2011 Entrepreneurship Week
Peter Drucker, Innovation and Entrepreneurship, Harper & Row Publishers

Note: The picture above are four musicians from the Chamber Music Festival Music@Menlo.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
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Fukushima Nuclear Plant BP Oil Spill How Many Disasters Before We Plug the World with Solar Energy

Sat, 9 Apr 2011 08:13:54 -0700

(B) Journalist Lisa Katayama, from TokyoMango, based in San Francisco is telling us how the people of Japan have learned to live with earthquakes, rebuilding their lives and their cities. But she believes that this time is different, and that Japan might change as a consequence of what happens on March 11, 2011 leading to over 20,000 people missing or dead, and over $200 billion in damages.

After the BP oil spill from last year, the Japan’s damaged Fukushima Daichi nuclear facility is another major event that should deeply challenge our present worldwide production of energy.

Fukushima will not be the last major nuclear power plant disaster:
The advantages of nuclear energy are obvious: plentiful, scalable and cost effective, and nuclear energy can directly produce the electricity that we desperately need. No questions about that! But nuclear energy has a long list of challenges that have never been overcome. No solution has been found yet to the disposals of nuclear waste from the nuclear reactors. And, there are the obvious risks of nuclear materials getting into a terrorist group or the risk of a nuclear plant being attacked by a terrorist group. And, we are discovering with the present disaster at the Japan’s Fukushima Daiichi power station that even in the most advanced countries in producing nuclear energy, nuclear plants can have reactor meltdowns.

Finally, can you believe that twenty five millions of New Yorkers are within fifty miles of the Indian Point nuclear plant in Buchanan, NY, and that the Diablo Canyon nuclear plant in California is built directly on a geological fault line, and located near a second fault? This is too wrong!

The BP Oil Spill will not be the last major offshore drilling disaster:
As the world's reserves of light oil are depleted, the oil industry is exploring and producing more oil from deep offshore wells, and unconventional reserves such as tar sands (or bitumen), and maybe in the future oil shales that are all likely to impact significantly more the environment.

The BP Oil Spill has been the largest environmental disaster for the United States with over 200 million gallons of oil into the Gulf of Mexico. The fabric of life itself has been destroyed for many generations in the Gulf.

But, it seems that we have not learnt any lesson from the BP Oil Spill. As reported by Rachel Maddow on MSNBC, deep water drilling permits are being issued with the same flawed blow-out preventers, and with the same emergency response plans that have been used by BP. Deep offshore drilling carries the same risks now that it did before the BP Oil Spill. This is unacceptable!

We do not have many options to produce clean and safe energy:
Natural gas is not a solution as it impacts the environment. Clean coal and carbon capture (CCS) could be a solution, as it does not impact the environment, if and when it works. Biofuels are taking lands from the earth ecosystems, and from food productions, and are therefore not solutions. And wind, hydroelectricity, geothermal and ocean waves cannot scale.

Solar energy is the only ecological, plentiful, scalable, safe, and cost effective energy that can directly produces the electricity that we need.

There is a vast amount of solar energy to harvest, and we need to start urgently heading down that path. We need both the private and the public sectors to massively invest, and we need quickly to embrace new policies and regulations to plug the world with solar energy.

We cannot take the risk to have another human and ecological disaster as the present Fukushima Daiichi nuclear plant or the BP Oil Spill. The planet resources and ecosystems are already too stressed out. We need to run the country and the world with clean and very safe energy.

References:
About the Fukushima nuclear plant:
Nassim Taleb: Time to understand a few facts about small probabilities (142)
About the BP Oil Spill:
Forensic examination of deepwater horizon blowout preventer
CNBC Rachel Maddow: Dubious assurances on deepwater drilling safety
About the Diabolo Canyon nuclear plant:
CNBC Rachel Maddow: Diablo Canyon nuke plant wants more.

Note 1 : The picture above is the PG&E Diabolo Canyon nuclear plant.
Note 2: The second picture is the blow-out preventers from the Deepwater Horizon drilling rig.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
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The Global Consumerization of Information Technology

Mon, 21 Feb 2011 14:16:17 -0800

(B) I kindly disagree with savvy investor Jim Cramer who likes to repeat, over and over, that
the Mobile Internet Tsunami is the biggest trend in Information Technology. I would rather consider that the Mobile Internet Tsunami is a big wave from a bigger Tsunami: the Global Consumerization of Information Technology. That trend has its roots in both Moore’s law and the openness of the Internet. From mainframes to minicomputers, from minicomputers to client/servers, from client/servers to the Internet, and finally from the Internet to our new age of mobility, technology has always offer more computing and communication power in a smaller form factor, and at a lower cost. And with the Internet, technology has moved from being critical to business productivity to being critical to how we all live. There probably has never been a better proof of the consumerization of Information Technology that the recent political events in beautiful North Africa, in particular in Egypt and in Tunisia, where a Facebook page such as “We are all Khaled Said”, can be instrumental to start a revolt, which can turn out to become a revolution, that spread across multiple countries.

The consumerization of information technology is already changing in many ways how technology companies must design and market new products, in particular:

User experience is the “only” feature of a technology product:
When consumers are using technology products in their daily lives, how well technology products provide them the experience that they are looking for is key to the product success.

Kids are the first adopters of new technologies:
The best focus group in technology are kids; and for two reasons. First, kids have no technology background so they are the fastest group to adopt new technology. Second, kids have little money, so they will always figure out to push the limit of any given technology.

New technologies are moving from the home to businesses:
New technologies are first embraced by consumers, and brought by consumers into their work. The technologies that we like outside work are the ones that we want to use in our work.

Everything starts from your BlackBerry:
With the latest generation of smartphones that we are carrying 24 x 7 with us, technology becomes entrenched to the most intimate moments of our personal lives.

Everything needs the cloud:
We get our music from iTunes, we connect with friends through Facebook, we find our directions through Google Maps... As consumers rely more on the Internet to live, cloud services are becoming the new architecture for any new Internet services.

Consumers need a store:
To sell consumer products from phones and pianos to clothes and fashion, you need a store where consumers can ask questions and get the devices, they love, repaired. Consumers do not want to torture themselves all day, all night to make technology works. They just want to go to the store, and get the help that they need.

Branding is key to marketing new technologies:
Technology companies have over time learned from the fashion, food, entertainment and car industries on how to create a brand. As many technologies are being used by consumers, brands becomes very critical to technology companies to focus on their target segments.

The most valued technology company is a consumer technology company:
In 2010, Apple passed Microsoft as the highest market capitalization technology company by Wall Street. As the consumerization of information technology grows, most of the growth of the NASDAQ will likely comes in the future from consumer-based technology companies. Facebook will certainly not be the last one.

Privacy is the major barrier to technology consumerization:
I strongly believe that consumer technology companies are not taking consumer privacy as seriously as they should be. Monetizing to the extreme what consumers search or like is a double-edged sword that could quickly lead a technology consumer company to market failure.

Information technology is now about connecting everyone and everything for everyday life and work. And, it is a real time global phenomenon. The consumerization of information technology is here to stay for a long time. No country can live any longer in silos. And no one can close the Internet.

Note: The picture above is an Egyptian mural painting that I own.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
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The Quest for Highly Efficient Solar Photovoltaics Cells

Sat, 29 Jan 2011 13:41:13 -0800

(T) Countries and regions with very high electricity costs and a lot of sun shine are the first adopters of solar energy. In California, the average cost over 30 years of electricity provided by a PV cell is $0.28/kW-hr while the average cost of electricity is $0.13/kW-hr and peak rates are $0.29/kW-hr (as always those do not include externalities dues to the impact on the environment of non-renewable energies).

So, we definitely need to lower the cost of solar energy and to that end, we need to improve existing technologies and looking forward to new disruptive technologies.

Conventional solar cells technology are based on a p-n junction that generates an electric field that will provide electricity when light is absorbed. P-N junctions have a maximum solar light conversion efficiency of 31% called the Shockley-Queisser limit assuming a junction band gap (or energy gap) of 1.5 eV for the silicon.

Today’s multicrystalline (c-Si) silicon solar cells is the most popular technology achieving efficiencies from 15 to 18% and a module cost of $3 per watt (in addition with the cost of the DC to AC inverter and the installation on an existing home, the total cost reaches $7.5 per watt in the US). Chinese solar cell manufacturers are selling crystalline silicon PV modules for $2 per watt!

SunPower designs and markets the most efficient crystalline modules reaching 21.5% efficiency. SunPower’s technology, invented by Dick Swanson and called backside contact cell, is based on p-n junctions made in high quality silicon that are located at the back of the solar module.

Competing with crystalline technologies are thin film solar cell technologies where only a thin film of semiconductor (silicon) is deposited by low cost methods on a glass substrate.
The cells can be directly integrated into the roofing material. The p-n junction is based on Cadmium Telluride (CdTe) and thin film solar cells can achieve efficiency of 11% at a cost of $1 per watt. First Solar is the market leader for thin film solar cells. And, thin film solar cells have reached a market share of 20% while crystalline silicon solar cells have now a market share of 80%.

There are many start-ups which are working on improving existing technologies such as Nanosolar, Solyndra, MiaSole, and may others. But while those start-ups are working on the next commercial products, there is a considerable amount of academic research on significant black swan technologies.

One of the first disruptive technologies is to increase the efficiency of a solar cell by stacking multi-junctions (at least three instead of two). High efficiency III–V compound semiconductors are good candidates for fabricating such multi-junction solar cells but the costs of manufacturing them is much more expensive obviously than two junction cells.

Another black swan is to design solar cells with very large numbers of single crystalline nano-wires, which are about 60 nanometers diameter and 20 micrometers in length, with unique electrical and optical properties. Nanowires have multiple ways to boost efficiency but the most critical one is that the path of the electrons through the wire is unaffected and thus suffers less energy loss which leads to a higher efficiency.

Another nano-technology, like nano-wires, is photonic crystals for which certain wavelengths can pass through the photonic band gap while light in other ranges is reflected. As such by "redirecting" unabsorbed photons back into the silicon, photonic crystals can improve efficiency.

Another disruptive technology is to generate electricity not only by light absorption but as well from the heat accumulated by rooftop solar panels. Stanford University pioneered that process called PETE and demonstrated that PETE could double the efficiency of existing solar cells.

The last black swan that could lead to even more efficiency is intermediate band solar cells that are single junction cells introducing multiple band gaps (see slide below) . Different options have been proposed to produce intermediate band solar cells in particular quantum dots, that are, simply said, extremely small semi-conductors more closely related to atoms than bulk material because of their discrete quantized energy levels. Unfortunately, no intermediate band materials has been realized as of today.

Resources:
GTM Solar News
Stanford Center for Advanced Molecular Photovoltaics
Silicon Valley Photovoltaics Society (SVPVS)

Note 1: The first three slides are from Professor Mike McGehee from the Materials Science and Engineering department at Stanford University.

Note 2: The last slide is from Doctor Wladek Walukiewicz from the Solar Energy Materials Research Group at the Lawrence Berkeley National Laboratory.

Note 3: The picture above is a SunPower installation of a large scale solar PV power plant for the US Air Force.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
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Entrepreneurship Europe versus Silicon Valley

Sun, 23 Jan 2011 15:15:26 -0800

(B) I had the opportunity to attend one of the sessions of the Stanford School of Engineering
speaker series on European Entrepreneurship and to listen to the flamboyant Loic Lemeur CEO of Seesmic and founder of LeWeb. In his talk Loic echoed the same points that Rodrigo Sepulveda did in a very good interview from TechCrunch about the French start-up market. And having some exposure both to Silicon Valley and to Europe myself, I can echo the same key points as well (but in a very different flavor):

Europe lacks a vibrant M&A and IPO markets:
To the exception of the UK, most of Europe is lacking a vibrant M&As and IPO markets. Successful US technology companies provides very profitable exits to their venture investors. This lead to a cycle where more money is invested and more start-ups are created. In Europe, public traded companies are not ready to value leading edge companies as much as in the US and to acquire them to grow their businesses.

The European market is still very much fragmented:
A large homogenous market has made the US such a driving force to create wealth and that what is making China also such a driving force to create wealth. There is room for any company for any industry in the US to grow, and to leverage later that growth in Europe and Asia. In Europe, start-ups have to overcome the differences in terms of markets, regulations, and labor for each country. Both US and Chinese companies can scale very rapidly giving them a sizable advantage over European companies.

The myth of the US hero entrepreneur:
In the US and particularly in Silicon Valley, the myth of the hero technology entrepreneur is attracting the best minds to the industry. While the old team of entrepreneurs Steve Jobs, Scott McNealy, Bill Gates and Larry Ellison is starting to retire, a new team Larry Page, Sergey Brin, Mark Zuckerberg and Mark Pincus is starting to shine. Europe does not appreciate its entrepreneurs as much as the US does.

Over time, multiple generations of entrepreneurs create multiple technology waves:
This is the reason why Silicon Valley is so ahead of Boston, New York, Raleigh, Seattle, Denver or Austin in the US as a technology economy and so ahead of Europe. Entrepreneurs are creating over their lifetimes multiple companies and investing in multiple companies.

Silicon Valley is a big campus from San Francisco to South San Jose:
This makes Silicon Valley the place to be for the Internet and the computing industry. Silicon Valley companies can find venture funding, hire employes, partner with other companies and acquire or be acquired.

But...while the Europeans are enjoying a shorter work week and the US has a deteriorating education system...
Incredibly talented, energetic and focused Amy Chua and other Tiger Moms are producing the prodigies of tomorrow in business, technology and the arts. But it seems that Tiger Moms can be found more in Asia than in both the US and Europe giving tomorrow edge to Asia over both the US and Europe.

C’est la vie!

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
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Der Schauspieldirektor What do We have Left from the Previous Decade To Address in the New Decade

Sat, 1 Jan 2011 06:16:47 -0800

(B) If the XX century was the one of globalization, the XXI century will have to be the one of sustainability. The first decade of this new century has been the theater of a worldwide renew of terrorism activity, growing economies in the developing world, and a severe global financial crisis. We are starting 2011, with a long list of things to do, many left over from the previous decade.

We Still Need To Put in Place a Sustainable Worldwide Economic Development:
Let’s not carry our journey toward an unsustainable economic development for 2011 and beyond as we did over the last decade. The world needs to put the research and development efforts and the financing that will provide environment sustainability, in parallel to policies and measures for climate-change mitigation and adaptation. We need to accomplish many many things, and at least:
• Stopping the destruction of the Earth ecosystems
• Transitioning to sustainable electricity that do not use any fossil fuel
• Efficient buildings that make a better use of energy (for home, businesses and governments)
• Sustainable transport that do not use any fossil fuel
The path to a decarbonized world can only be built with global cooperation between all countries. We have a shared planet.

Soon 7 Billion on the Planet Putting More Pressures on Water and Food:
Producing more clean water and food for a growing world wide population is still going to be a major challenge for many countries of the developing world as well as many parts of the developed world. We will reach 7 billion between 2010 and 2012 and 9.2 billion in 2050 according to the projections of the United Nations. Growth in the world human population is coming mainly from Asia (in particular China and India), and Africa with the remaining from South America. But with higher standards of living and better education, fertility rates in the developed world have been rapidly dropping. If instead of being 7 billion of human beings on our planet, we would be only 3.5 billion, just half of it, the fundamental questions of “why, what and how” to pursue sustainable economic development would not be a priority.

The New Comers to the Developing World: Africa, Vietnam, Turkey, Indonesia...
Vietnam, taking the lead over China for outsourcing, Malaysia and even Thailand, despite its political turmoil over the last two years, are enjoying strong economic growths in Asia. But probably, the biggest economic development to come in Asia might be Indonesia that benefits from a growing and large middle class, and a relative political stability. In the Middle East, Turkey is emerging as the most vibrant economy. And Latin America with stronger democracies, and under the leadership of Brazil and Chili will still keep its pace of expansion (to the exception of Mexico that has not solved its drug war). But the hope is that in this decade, Africa could emerge from its poverty. Africa’s emerging economies are South Africa, Egypt, Algeria, Botswana, Libya, Mauritus, Morocco and Tunisia. Together those countries match the average GDP per person of the BRICs. Those new BRICs countries are the ones with political stability, controlled inflation, diversified economy and a young population.

Failure from the US and China To Establish Coordinated Economic Policies:
Following the 2008 financial crisis, the overspending (or deficit) countries such as the US and most of Western Europe (the UK, France, Spain, Greece, Portugal, Ireland, Iceland) as well as Dubai, and Australia have started a massif effort to deleverage, by reducing both their private and public spending, and importing less. Unfortunately, while the deficit countries are spending less, the underspending (or surplus) countries countries such as China, Germany, Japan and some Asian developing economies have not been spending more on both private and public consumption, and saving less. As a result, we have a global excess of productive capacity due to a shortage of aggregate global demand. The failure in particular from the US and the Chinese governments to establish global policies to correct those trade imbalances is reducing the prospect of global economic growth for everyone on the planet.

Solving the Currency Crisis, the US Dollar, the Chinese Renminbi and the Euro:
While the overspending countries have a depreciation of their currencies (in particular the US dollar and the Euro) in order to reduce their trade deficits, the underspending countries have resisted the appreciation of their currencies (in particular the Renminbi) because they are either unable or unwilling to reduce their savings, and sustain growth through higher spending on their domestic consumption. As a result, the only way the deficit countries can achieve real depreciation is via deflation while the surplus countries have growing risks of inflation.

In Europe, while maintaining the eurozone with a weaker euro strengthens the German economy, the PIIGS (Portugal, Ireland, Italy, Greece, and Spain) countries with their large external deficits are still very much in need of strong financial supports in order to be maintained within the Euro as they implement painful fiscal and structural reforms. More than ever, Europe needs to leverage the benefits of the Eurozone and a single currency.

Economic Growth is Much Needed in the US and in the Europe to Reduce Unemployments and Deficits:
While the developing world is expanding in the planet and so reducing global poverty, the US economy needs growth after a recovery simulated by the government stimulus anquantitative easing from the Federal Reserve. But so far, US corporations, which are operating very profitably, are not investing in the US but growing their workforces mostly outside the US. The US is still facing many internal challenges: housing crisis, degradation of its education, health care costs, and an aging infrastructure. Europe needs badly policies that restore competitiveness and growth. Many European countries need the courage to free their labor markets, liberalize some of their national services, and correct abuse or misuse of some of their social programs. Without growth, it will be difficult both for the US and Europe to lower their unemployment rates and stabilize their public and private debts as a share of theirs GDPs.

Successes in addressing all those challenges for 2011 and beyond will require global cooperation, global innovations, global policies and global regulations.

Globalization has both benefits and requirements.

References:
“How to avoid a double-dip global recession” Nouriel Roubini
“A survival strategy for the Eurozone” Nouriel Roubini
“The US-China dialogue of the deaf” George Soros
“Where are the jobs? For many companies, overseas” Pallavi Gogoi
The World in 2011, The Economist
“The Road to an Unsustainable Economic Development for 2010 and Beyond” A Silicon Valley Insider
“Our Journey to a Sustainable Economic Development for 2010 and Beyond” A Silicon Valley Insider
“The Public Debts of the Developed Nations Could Well Lead to the Next Financial Crisis”, A Silicon Valley Insider.

Note: The picture above is one among many theaters. Der Schauspieldirektor is a divertissimento from Mozart.

Copyright © 2005-2011 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

If Jim Cramer and John Doerr are not Investing in Clean Tech Who Will?

Sun, 26 Dec 2010 06:33:32 -0800

(B) During the last week of November, the exuberant Jim Cramer from CNBC held a Green Investment Week. But paradoxically, investing for profits in Green does not assume investing in the emerging providers of the Green economy for Jim. “I hope it’s the soul-crushing revelation that saving the environment and making money in stocks to augment your paycheck are incompatible goals in this particular market”. To make the point even more clearer: “I want you to forget the wind-power clean energy” Cramer suggested to his viewers. “That is a money loser. So is solar”.

So what did Jim Cramer recommend? First, to sell all pure clean tech players such as First Solar (FSLR) or EnerNOC (ENOC), and investing in companies such as Baldor Electric (BEZ), maker of energy-efficient industrial motors, CSX (CSX), a railroad company, Ameresco (AMRC), a provider of building energy efficient systems, and Clean Harbors (CLH), the largest operator of hazardous waste disposal.

Last month while announcing the hiring of Mary Meeker as a the new high profile Kleiner Perkins Caufield & Byers (KPCB) partner, John Doerr sent some mixed messages about his future investments in clean tech: “We still believe there are enormous opportunities in green technologies” he said, “there will be bigger than billion-dollar IPOs in the next 12-to-18 months. But what’s going on in the Internet is tremendously exciting too. We can walk and chew gum at the same time.”

KPCB’s clean tech portfolio includes a range of large bets like Tesla’s competitor Fisker Automotive, regenerative fuel cell maker Bloom Energy, low-cost solar film maker Miasole, and smart-grid technology company Silver Spring Networks.

So if Jim Cramer does not want to invest in public clean energy providers and John Doerr is preferring investing his money in the iFund (iPhone apps) and the sFund (social networking start-ups) instead of private clean energy providers, WHO WILL? Let face it, if we do not change something and very quickly, simply said NO ONE!

So what do we do? There is only one solution: new policies that provide the adequate regulations, funding and taxes to support the clean tech industry, and make it more profitable than the fossil fuel industry.

And let be smart, there are solutions to make the clean tech industry economically attractive , and forcing the energy migration from fossil fuel energy to cleaner ones.

Following is a simple proposal from economist Jeffrey Sachs (published recently in project syndicate).

“We need to induce power suppliers to adopt low-carbon energy sources. Suppose coal produces electricity at a cost of $0.06 per kilowatt-hour, while solar power costs $0.16/kilowatt-hour. The tax on coal-based electricity would have to be $0.10/kilowatt-hour. In that case, consumers would pay $0.16/kilowatt-hour for either coal or solar. The utilities would then shift to low-carbon solar power.

Politicians are loath to impose such a tax, fearing a political backlash. A feed-in tariff subsidizes the low-carbon energy source rather than taxing the high-carbon energy source. In our example, the government would pay a subsidy of $0.10/kilowatt-hour to the solar-power plant to make up the difference between the consumer price of $0.06 and the production cost of $0.16. The consumer price remains unchanged, but the government must somehow pay for the subsidy.

Here is another way. Suppose that we levy a small tax on existing coal power plants in order to pay for the solar subsidy, and then gradually raise consumers’ electricity bills as more and more solar plants are phased in. The price charged to consumers would rise gradually from $0.06/kilowatt-hour to the full cost of $0.16/kilowatt-hour, but over a phase-in period of, say, 40 years (the lifespan of the newest of today’s coal plants).

Assume that as of 2010, the entire electricity system is coal-based, and that the electricity price paid by the consumers is $0.06/kilowatt-hour. By 2014, suppose that 10% of the 40-year transition to solar power has been achieved. The consumer price is raised 10% of the way from $0.06 to $0.16, thus reaching $0.07/kilowatt-hour.

The coal tax for 2014 is then set at $0.01/kilowatt-hour, which is just enough to pay the needed solar subsidy of $0.09/kilowatt-hour. Solar producers fully cover their costs of $0.16/kilowatt-hour, since they sell power to the consumers at $0.07/kilowatt-hour and receive a subsidy of $0.09/kilowatt-hour. A small coal tax can support a large solar subsidy.

Suppose, further, that by 2030 the transition to a low-carbon economy is halfway completed. The consumer price for electricity is now set at $0.11, exactly halfway between $0.06 and $0.16. The coal tax is now raised to $0.05/kilowatt-hour, just enough to cover the solar subsidy of $0.05/kilowatt-hour. Once again, the solar producers cover their costs exactly, since the subsidy of $0.05/kilowatt-hour closes the gap between the consumer price ($0.11/kilowatt-hour) and the producer cost ($0.16/kilowatt-hour).

Let us presume, finally, that by 2050, all electricity production has made the transition to low-carbon energy sources. The consumer price finally reaches $0.16/kilowatt-hour, enough to cover the full cost of solar power without a further subsidy.

This approach allows higher consumer electricity prices to be phased in gradually, yet establishes strong, immediate incentives for adopting solar power. Moreover, the government budget is balanced every year, since the coal tax pays for the solar subsidy.
The actual transformation in the coming years will have one major advantage compared to this illustration. Today’s solar power plants might cost an extra $0.10/kilowatt-hour compared to coal, but such plants will be much less costly in the future because of improved technology. Thus, the magnitude of subsidies needed in a decade or two will be lower than they are today.

Energy debates in the US, Australia, and other countries have centered so far on introducing a cumbersome cap-and-trade permit system. Every major user of fossil fuel would need to buy permits to emit CO2, and those permits would trade in a special marketplace. The market price of the permits would be equivalent to paying a tax on CO2 emissions.

Unfortunately, cap-and-trade systems are difficult to manage and don’t give clear signals about the future price of permits. Europe has adopted such a system, but other parts of the world have repeatedly rejected it. In fact, Europe’s biggest successes in promoting low-carbon energy have come from its feed-in tariffs, and carbon taxes in some countries, rather than its cap-and-trade system.

The time has come for the US, China, India, and other major economies to declare how they will foster their own transition to a low-carbon economy. A small and gradually rising carbon tax that funds a feed-in tariff system could win political support in the US. It could also help to foster consensus among the major coal-based economies, including China and India.

There really are effective long-term solutions to manmade climate change that are politically acceptable and feasible to implement. It is time to embrace them.”

And, it is time to make the clean tech industry so attractive that both Jim Cramer and John Doerr are dying to invest in it.

Note: The picture above is Green Still Life from Pablo Picasso.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

The Race to Faster Data Rates WiFi Moving Soon Beyond 1 Gbps

Sun, 12 Dec 2010 16:42:48 -0800

(T) I am a strong believer that WiFi will be the most ever deployed networking technology with Ethernet. There are two reasons for that. First, is that businesses have been replacing Ethernet with WiFi networks. No other technologies has ever been a threat to wired Ethernet. Second, is that cellular networks are presently not able to provide the bandwidth required to support the emerging very rich media applications of the new Mobile Internet. In the lab, 4G LTE can provide up to 100 Mb uplink and 50 Mb downlink but present commercial deployments of LTE are just offering 10% of those numbers. We prefer using WiFi instead of cellular. We are only using cellular for the Mobile Internet when WiFi is unavailable. The only occasion where we are not using WiFi even when it is available is when we have to pay for it (consumers do not like to pay for something that they are used to have for free).

WiFi is every where, even in the planes and particularly in our homes. Beyond eliminating wires at home for the TV, the printers and the other devices, WiFi is generating new types of applications by enabling our home devices to be connected. I can record my sister composing on a piano, improve the recording on my Mac with GarageBand, and finally have it played on my stereo systems.

Not only WiFi is everywhere at work, at home, at the coffee shop, at the library, at the airport but WiFi is scaling.

The present IEEE 802.11n has brought some significant improvements to previous 802.11 a/b/g in particular by supporting OFDM (the most efficient encoding technique to multiplex the signals), MIMO (multiple inputs and multiple outputs that enables both the transmitter and the receiver of the wireless signal to have two or more antennas), efficient MAC aggregation of smaller frames into larger ones, more efficient MAC acknowledgment, and some power savings. 802.11n, operating from 2.4 Ghz to 5 Ghz, can scale from 54Mb/s to 150 Mb/s, can combine two 20 Mhz adjacent channels therefore leading to a maximum data rate of 600 Mb/s when MIMO with two inputs/outputs is employed.

While 802.11n has been very successfully adopted, IEEE is presently defining 802.11 ac that should operated in the 5 Ghz band and be compatible with 802.11 a/b/g/n. 802.11 ac will likely use wider channels, perhaps 160 Mhz, be MU-MIMO, multiple users MIMO, and likely to reach 1 Gbps.

At the same type a number of vendors formed the Wireless Gigabit Alliance and are proposing a new specification called WiGig, and a candidate to the new IEEE 802.11ad to scale up to 7 Gpbs!

Definitely, WiFi has everything that it needs to keep going.

Note: The picture above is the Mac store on Fifth Avenue in New York.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Cloud Computing Let not be Confused by the Vendors or What Wall Street Understands

Sun, 14 Nov 2010 16:58:51 -0800

(B) Now that every IT vendor is surfing the wave of cloud computing, and that Wall Street analysts have broadly embraced the concept, it is some time difficult not to be confused. It seems that every IT vendor listed on the Nasdaq is probably a cloud computing vendor.
So let’s not be confused by what is cloud computing, who is using it and who is not using it and, who is a provider and who is not a provider of cloud computing!

First, is cloud computing purely hype or reality?
Cloud computing is a reality. Businesses are buying CPU at $0.10 per hour and storage at $0.10 per Gb per month from Amazon Web Services, developing their office documents through Google Docs, getting their ERP system from NetSuite, managing their customer leads with Salesforce.com, and supporting their customers through RightNow.

At the same time, we (you and I) get our music from iTunes, we connect with friends through Facebook, we publish our professional bios on LinkedIn, we find our directions through Google Maps, we share our pictures on Flick , we share our videos on YouTube, we check our e-mails on Yahoo! Mail, we phone with Skype, we IM with Yahoo! Messager, we send updates through Twitter, we search for knowledge on Wikipedia, we buy and sell stuff on Craigslist, we...

Cloud computing is today the most efficient way to deliver, update and tailor any software application as a utility service. The life cycle of software technology is very short. Products are outdated as soon as they are launched. Cloud applications provide to the user the latest applications always-on without any switching costs. And, those products can target “The Long Tail” or many diversified and particular user market segments.

Additionally, the economics strongly play in favor of cloud computing, and the business model for cloud applications is straightforward: subscription-based or usage-based (pay as you grow). For the user, it provides a lower service cost since the investments in the infrastructure are shared among the various users and applications, and no start-up costs are required. For the provider, the start-up costs into the infrastructure are huge but profits and return on investments come when the service scale and is massively used.

So let’s not be confused: even if some IT vendors are inflating the expectations in particular for businesses, cloud computing is definitely a reality in particularly for consumers.

Second, is there any new significant technology behind cloud computing?
The fair answer lies somewhere between not much and not yet. Cloud computing generally refers to Web-based applications provided from shared software and hardware resources in a datacenter located somewhere in the Internet. None of those applications need to be physically located where the user is.

Cloud computing needs to provide low application latency, scale to million of users, be always available and ideally enable secure transactions and protect user privacy. One of the first characteristics of cloud computing is the clear separation between the user interface from the service backend, that enables users to access cloud-based applications anywhere from any device. A second key characteristics of cloud computing is elasticity. Cloud Computing must provide a Web service to a few or hundreds of millions of consumers or 100 servers for one hour or 100 hours of one server to a business.

Cloud computing is definitely an evolutionary step. Started in 1995, businesses redesigned their applications using Web-technologies and launching internally Intranet-based applications. In the late 1990s, a number of service providers started first to host Internet applications, and second to offer themselves applications becoming ASP (Application Service Providers). Cloud computing is just the evolution of those previous trends accelerated by user mobility which requires applications to be accessed from many types of devices (making the browser the only available user interface), and both inside and outside the enterprise network boundaries (making the Internet the only place where resources can be).

So let’s not be confused: cloud computing is a natural evolution of Web-based applications that leverages existing technologies but requires new technologies in particular for its elasticity.

Third, what is the difference between private and public clouds?
Could applications can be rented from a public cloud or owned by an organization, and in that case are part of a private cloud.

Public cloud computing does not require any investments from the organization for the datacenter resources, and the operations of the datacenter. The scope of the applications that can be provided from the public cloud is obviously limited but capacity is on-demand. A public cloud can be seen as a Virtual Private Network (VPN).

Private cloud computing requires investing and operating the datacenter. It provides for the organization greater control over the application security, compliance and QoS. It enables an easier integration between different types of applications, and an easier support for existing applications.

Vendors have started to consider three layers of cloud computing: Software as a Service (SaaS such as Salesforces.com product offering), Platform as a Service (PaaS such as Amazon Web Services product offering), and Infrastructure as a Service (IaaS such as Rackspace product offering).

So let’s not be confused here, private cloud computing is just the next generation of enterprise datacenters, most of the action is going to occur in public clouds for consumers and businesses. Private clouds will just adopt new technologies pioneered by public clouds.

Fourth, who is a buyer of cloud computing and who is not?
All consumers are users of cloud-based applications and in most cases, we do not pay for them since funding is usually provided by advertising.

Small and medium-sized businesses are the mostly likely buyer of cloud applications services. With cloud computing, there is no need for an IT department. Just buy what you need from salesforce.com or NetSuite.

Large enterprises who have already large IT department and legacy applications will be migrating over time their existing datacenters to private cloud technologies.

So let’s not be confused here, the first and foremost buyers of cloud computing applications and infrastructure are businesses that are outsourcing their IT department.

Last, who is a provider of cloud computing and who is not?
That is where a lot of the confusion is. Since, there are not many exciting waves in the computing industry, besides the Mobile Internet, every IT vendor is putting “cloud” in their marketing materials.

The true providers of cloud computing are definitely the salesforce.com (SaaS providers), the Amazon (PaaS providers), and the RackSpace (IaaS providers).

Now is a VMWare, an F5, a Riverbed, an EMC, a Cisco, an IBM a provider of cloud computing technology? Definitely, virtualization, load-balancers, traffic optimization, storage, ethernet switches and servers are products that are commonly used in datacenters but have also many use cases outside the datacenter. It goes without saying that a lot of today datacenter products cannot be simply re marketed for cloud computing applications. They need to be redesigned for public cloud applications in particular scale, metering, management , security etc...

So let’s not be confused here, some datacenter technologies and products are new because they are satisfying new requirements to operate cloud applications; some datacenter technologies and products need to be re-engineered to meet the specific requirements for the cloud infrastructure while some other datacenter technologies and products do not need to be re-engineered.

Note: The picture above is a sunset from a Pacific Island.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Why So Much Buzz About HTML 5

Sun, 7 Nov 2010 16:34:13 -0800

(T) In my own experience, I have not seen very often some great technology being defined through a standard organization. Standards are usually a battle where players push technologies that protect their legacy products and support their product road maps. Having said that, standards are essential to promote product interoperability.

The major stated goal of the present specifications of HTML5 from the World Wide Web Consortium (W3C) according to its editors is to expand the Web’s openness and platform independence by integrating new capabilities that today required proprietary (but often popular) tools such as Adobe’s Flash, Sun’s JavaFx, or Microsoft’ SilverLight to build rich Internet applications.

There are probably two reasons why there have been so much buzz about HTML 5. The first reason is probably because major vendors such as Google, Mozilla, Apple, Facebook, and YouTube have embraced and evangelized HTML 5 applications long before its final specification which might still take years! The second reason is because Apple for its iPhone and iPAD considered that because of HTML 5, it does not need to support anymore the Adobe Flash client, creating tensions, between the two companies, widely commented in the press.

Following is an overview of some key aspects of the HTML 5 specifications including graphics and image, video, Web worker, local storage, offline Web applications and geolocations.

Graphics and Image Tag:
Scalable Vector graphics (SVG) and Canvas APIs both introduce the capability to manipulate graphics within a Web page. By doing so they are replacing previous functions offered by tools such as Adobe’s Flash, Microsoft’s Silverlight and W3C’s Vector Markup Language (VML) that complement HTML in various ways to create graphics within Web pages.

SVG is vector-based; it uses high-level geometrical primitives (which defines structure, position and appearance) to create the images in XML. SVG uses a retained-mode that links all geometric objects in a tree structure; as a consequence event handling is easy.

Canvas is pixel-based; it uses low-level scripts to add graphics to a Web page. Canvas uses an immediate mode where the rendering engine immediately executes the graphic commands; as a consequence event handling is difficult.

While there are use cases where both SVG and Canvas can be used, in general SVG is best suited for easy-to-use interfaces of interactive graphics of medium animations while Canvas is best suited for high graphics animations such as fast games where large number of elements are being rendered (without mouse interactions only keyboards).

Following is the HTML for the SVG API to create a rectangle:
<svg width=”200” height=”200”>
<rect x=”0” y=”0” width=”100” height=”100” fill=”blue” stroke=”red” stroke-width=”5px” rx=”8” ry=”8” id=”myRect” class=”chart”/>
</svg>

Following is the HTML for the Canvas API to create two rectangles:
<canvas id="myCanvas" width="150" height="150">
</canvas>

var canvas = document.getElementById(‘mycanvas’);
var ctx = canvas.getContext (‘2d’);

ctx.fillStyle = “rgb (200,0,0)”;
ctx.fillRect (10, 10, 55, 50);

ctx.fillStyle = “rgb (0,0,200,0.5)”;
ctx.fillRect (30, 30, 55, 50)

Video Tag:
HTML 5 provides a new tag for video that enables to add to the HTML code an .Ogg, .MP4 or .WebM video. The media player is embedded into the browser which plays natively the media without any specific plug-in. With HTML 5, video rendering is treated as an image rendering. Following is a very simple example of the HTML 5 video tag:

<video width="320" height="240" controls>
<source src="pr6.mp4" type='video/mp4; codecs="avc1.42E01E, mp4a.40.2"'>
<source src="pr6.webm" type='video/webm; codecs="vp8, vorbis"'>
<source src="pr6.ogv" type='video/ogg; codecs="theora, vorbis"'>
</video>

As a consequence, HTML 5 makes the Adobe Flash Plug-In irrelevant; that is the reason why Apple did not announce the support of Adobe Flash on its iPAD.

The HTML 5 specification does not specify which video formats the browser should support, but .Ogg and .MP4 are the two common ones. Apple Safari supports .MP4 only, Firefox .Ogg and .WebM, and Google Chrome .MP4, .Ogg and .WebM. So in order to have a video watchable across many HTML 5 platforms, a developer might need to encode it in many formats.

Web Worker:
Web Workers provides a standard way for browsers to run JavaScript in the background. With Web workers, the developer can spawn multiple “threads” that all run at the same time. These background threads can perform intensive calculations, initiate network requests, or access the HTML 5 local storage while the main Web page responds to the user scrolling, clicking, or typing.

Local Storage:
HTML 5 storage provides a way for Web sites to store information on your computer and to retrieve it later. The concept is similar to cookies, but it is designed for larger quantities of information. Cookies are limited in size, and your browser sends them back to the Web server every time it requests a new page. HTML 5 storage stays on the user computing devices, and web sites can access it with JavaScript after the page is loaded. Within your browser, any Web site can read and modify its own values but sites cannot access values stored by other sites.

Offline Web Applications:
Offline Web applications start as online Web applications. The first time you visit an offline-enabled Web site, the Web server tells your browser which files it needs in order to work offline. These files can be anything - HTML, JavaScript, images, even videos. Once your browser downloads all the necessary files, you can revisit the Web site even if you are not connected to the internet. Your browser will notice that you are offline and use the files it has already downloaded. When you get back online, any changes you have made can be uploaded to the remote Web server.

Geolocation:
The geolocation API lets the browser shares the user location with a trusted Web site. The location information can be given by many means including a dedicated GPS, the IP address, the cell tower ID or the WiFI network connection. The latitude and the longitude are available to JavaScript applications on the page, which in turn can send it back to the remote Web server for location aware applications. It goes without saying that the geolocation API will likely be used extensively for social network and advertising applications.

The simplest use of the geolocation API looks like:
navigator.geolocation.getCurrentPosition (
function(position) {
var lat = position.coords.latitude;
var lon = position.coordrs.longitude;
showlocation (lat, lon);
}livepage.apple.com
).

To further study HTML 5:
Introduction to HTML5, Brad Neuberg
HTML 5: Up and Running, Mark Pilgrim, O’Reilly
W3C specification

Note: The picture above is The Orator from Pablo Picasso.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

A Silicon Valley Insider Selected Among the Best International Technology Blogs by Computer Weekly

Mon, 25 Oct 2010 09:58:03 -0700

(E) ComputerWeekly.com has selected this year, A Silicon Valley Insider, among the best
international technology blogs. This year's shortlisted blogs by ComputerWeekly.com, in association with IBM, includes:

• Silicon Valley insider
• TechCrunch
• Engadget
• Gizmodo
• Mashable
• Slashgear
• Boy Genius Report
• Apple Insider
• Bruce Schneier
• Wired Gadget Lab
• Pocket-Lint

ComputerWeekly readers are invited to vote now. Blog winners will be known on November 18.

Note: The picture above is from ComputerWeekly.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

The Mobile Apps Market Growing Fast very Fast

Sun, 24 Oct 2010 21:00:24 -0700

(B) The Mac would not have been successful without VisiCalc, the iPod without iTunes and the iPhone without its Apps and the App Store. Applications are what give life to a computer. While the first iPhone came with 11 Apps, Apple has now on its App Store over 250,000 Apps for nearly every application - work, home, traveling, shopping, studying, entertaining...

CNBC did a very interesting documentary, Planet of the Apps, about Apple Mobile Apps. Following is a summary of the key market metrics that I found interesting in that documentary:

• The Mobile Apps market was estimated to be $4 B in 2008 and will grow to $20 B in 2014!
• The Apple App Store is selling over $200 M of Apps every month
• Apple is receiving over 1,000 Apps applications a day
• Although many Apps are for free - pricing is ranging from 99c to $4.99 with the most expensive iRA Pro Apps selling for $900 (for monitoring homes and businesses)
• The most successful Apps can generate over $500,000 in sales per month
• Apple is taking 30% of an Apps revenues leaving 70% for the Apps developer
• Development costs for an Apps can range from a few thousand dollars to half a million dollars
• Heavy Apps users can spend up $7 a month buying Apps for their iPhones or $60 to 65 a year.

It goes without saying that the Mobile Apps market is growing fast, very fast. It might be overwhelming for the users to find now the Apps suited to their needs, among so many choices. And in a crowded market, Apps Developers will have to much more market and promote their Apps to establish their presences.

Additionally, the Apps market is being expanded first by competition, and second by new devices.

Most Apple competitors have moved into the Apps market as well: BlackBerry App World, Android Market and even network operators have launched their own App Stores: Verizon Media Store, Orange UK and Orange France Application Shop...

And, the initial Mobile Apps market is being expanded by new devices: Apple iPAD supports over 200,000 iPhone and iPod touch Apps - Google TV will include next year Apps from the Android Market - and Apple (again) will provide Apps both for laptop and desktop computers with its coming operating system Lion.

Finally, we should expect in the soon future, new products attempting to integrate Mobile Apps and emerging Cloud Computing architectures for both consumer and enterprise Web-based applications.

Note: The picture above is from Apple App Store.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

The New World for Video From New Video Formats and New Streaming Protocols to HTML 5 and Google TV

Sat, 16 Oct 2010 12:02:01 -0700

(T) Video is everywhere. All over the Web with YouTube. On our iPhone and Android. And, now broadcast video and the Web are merging. On mobile networks, video is the dominant driver of the Internet traffic and can produce up to 40% of the traffic. Most of the video traffic, at any given time, is driven by a small number of videos that are downloaded by a very large number of users. One video user consumes as much bandwidth as fifteen Web users. Most videos are watched for a few seconds and most users do not finish watching the videos they downloaded.
There have been many new media technologies over the last year to feed the growth of the media content - following is a quick review of them:

New Video Formats:
Video formats (or containers or wrappers) define the file structures and properties to store the media. Ogg, a new open source royalty-free media container, maintained by the Xiph.Org foundation is being supported in open source browsers such as Firefox, that have a built-in Ogg player. Ogg integrates Theora as the video codec and Vorbis as the audio codec that are both being recommended into the HTML 5 draft specification.

In parallel to Ogg, Google has launched earlier this year, WebM, an open source royalty-free media container, based on the Mastroska media container that integrates Google On2 VP8 video codec and the Vorbis audio codec from Xiph.Org.

New Video Streaming Protocols:
Streaming media enables to deliver to the user device the media as a steady continuous stream, allowing playback of the media to proceed while the subsequent data of the media is being received. With live media streaming, the media is captured, compressed and transmitted on the fly; versus video-on-demand (VOD) media streaming that previously records and compresses the media. The two incumbent streaming protocols have been RTSP and Adobe RTMP.

RTSP (Real Time Streaming Protocol) originally developed by Netscape and RealNetwork, and defined in the IETF RFC 2326, controls the media sessions between the client and the streaming media server like a VCR with play and pause commands. In most cases, RTSP leverages RTP (Real Time Transport Protocol), defined in the IETF RFC 3550, for the transport of the media itself.
RTMP (Real Time Messaging Protocol) from Adobe works with Adobe Flash Media Server and Adobe Flash Player Client, and is widely used in video Web applications. RTMP maintains a single constant TCP connection, and allows for multiple, bidirectional, communication channels to be active simultaneously between the Flash Clients and the Flash Media Server.

One of the major issues of RTSP and RTMP is that both protocols can be blocked by firewalls, although RTMP, to avoid that, can be tunneled into HTTP.

YouTube has pioneered the use of HTTP progressive download in which the video is transported over HTTP and the client can start playing the video before its final download. In order to integrate streaming into HTTP, both Apple and Adobe have recently launched two very similar and competing protocols: Apple HTTP Live Streaming (proposed as an RFC) and Adobe HTTP Dynamic Streaming. Both protocols basically enable the Web server to provide multiple versions of the same media file to the client at different bit-rates. Each version of the file is split into segments of equal duration. The client checks the network bandwidth and chooses accordingly the version of the media file to stream from an index file provided by the server. Apple HTTP Live Streaming supports video encoded in H.264 and audio in HE-ACC and .mp3 formats.

Videos and HTML 5:
HTML 5 provides a new tag for video that enables to add to the HTML code an .Ogg, .MP4 or .WebM video. The media player is embedded into the browser which plays natively the media without any specific plug-in. With HTML 5, video rendering is treated as an image rendering. Following is a very simple example of the HTML 5 video tag:

<video width="320" height="240" controls>
<source src="pr6.mp4" type='video/mp4; codecs="avc1.42E01E, mp4a.40.2"'>
<source src="pr6.webm" type='video/webm; codecs="vp8, vorbis"'>
<source src="pr6.ogv" type='video/ogg; codecs="theora, vorbis"'>
</video>

As a consequence, HTML 5 makes the Adobe Flash Plug-In irrelevant; that is the reason given by Apple to not support it on the iPAD.

The HTML 5 specification does not specify which video formats the browser should support, but .Ogg and .MP4 are the two common ones. Apple Safari supports .MP4 only, Firefox .Ogg and .WebM, and Google Chrome .MP4, .Ogg and .WebM. So in order to have a video watchable across many HTML 5 platforms, a developer might need to encode it in many formats.

Apple TV and Google TV:
Last month, Apple released a new version of Apple TV, a small network appliance, that can stream the media content from iTunes, Netflix, YouTube, Flick and MobileMe on an HD TV screen for $99.

Google TV , a very innovative product, is both a software platform that can be built into an HD TV from Sony and an appliance from Logitech. Google TV is based on Google Android O/S and Google Chrome browser along with Adobe Flash Player. Google TV enables complete Web access on the TV set, enables watching TV broadcasting programs and Web browsing at the same time, comes with Mobile Apps, can use an Android phone as the remote and facilitates play lists and recording among many other features. Google TV will also include an open-source API that will enable developers to create widgets. Prices of Sony and Logitech Google TV are ranging in the few hundred dollars and much more expensive than the Apple TV but I would expect them to decrease quickly as Google improves and expands the Google TV in the soon future.

Note: The picture above is Google TV.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
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The Key to Success is Insanely Great Products

Thu, 14 Oct 2010 10:10:28 -0700

(B) In the 90s, many analysts and business scholars suggested, at that time, that Apple should sell its hardware business to an Asian PC manufacturer and focus only on developing and OEMing its software to other PC manufacturers, as Microsoft has been doing since its inception. It goes without saying that if Apple would have not kept its full hardware and software value chain, it will not be the most valued technology company today with Apple shares above $300 this week for the first time.

A few months ago, I bought a new MacBook Pro. After creating my logging and password, it recognized that I have in my home network an Apple Time Capsule on which I had back-ups of all my applications, virtual machines and data from my previous MacBook Pro. My new MacBook Pro asked me if I wanted to upload my back-ups from my Time Capsule - I did agree with that nice suggestion - and the next day in the morning (it took all night for the transfer because of the large size of my back-up), I had all my applications, virtual machines and data on my new MacBook Pro. I did not have to install any software application manually and I was ready to go to work! Do you know of any other story where migrating from one computer system to another one is easier?

Steve Jobs has said many times, over many interviews, that he learned earlier in his career that the key to success is to create INSANELY GREAT PRODUCTS! Do not worry about anything else - worry about creating insanely great products! And, that what Steve has being doing over and over since he returned back to Apple in 1996, in particular since 2004 with young kids starting to embrace the iPod and buying Macs only.

Steve’s vision is straightforward: solving the personal computing needs of every one with Plug & Play products. All Apple products come with elegant and distinctive design and the complete components that you need to work and to play. On any Mac, you can instantly browse the Internet, blog, create your web site, organize your photos and make a movie without having to purchase any additional software. No learning curve - just go for it!

Steve’ strategy is as simple as his vision: Apple value chain needs to be built to develop, to integrate and to distribute the different pieces of a product: the hardware, storage, O/S, applications, services, distribution. Many analysts and business scholars have said in the past that Microsoft was successful because it was focusing only on software, Intel was successful because it was focusing only on chips and Dell was successful because it was only manufacturing and marketing PCs - based on Microsoft and Intel’s technologies, and therefore Apple business model will never succeed if it develops, manufactures, markets and distributes a full computer product line. Guess what! Steve showed that all those analysts and business scholars were wrong.

In the end, what only matters is to be obsessed in developing insanely great products and get the right people, technology and organization to do so. No technology CEO has better managed than Steve Jobs the art to create and launch insanely great products. Although, Steve had a few product failures such as the Lisa in the early days of Apple or at NeXt with the NeXt workstation, failures that probably are the reasons for his today’s successes. But since 2004, one success leads to another one: from the Mac to the iPod, from the iPod to the iPhone and from the iPhone to the iPad (not to mention iTunes and the Apps Store)! Apple brand is so successful that Apple does not need to spend any marketing dollars to have thousands of people all over the world waiting to get its products from its stores (although it still excels at advertising its products).

And, product innovation is not only in the hardware - Time Capsule, in the application software - iLife, in the service - iTunes, in the mobile apps - the App Store - it is as well in the distribution channel with the Apple Store. Forget about Dell strategy to sell computer only on the Internet. The Apple Store is America and the world best run IT department. The Apple Store is the new generation of User Groups. No need to torture yourself all day, all night to make your computer system works. Just go to the Apple Store and get the help that you need. Again everything must be easy with Apple’s vision of personal computing: especially getting help. No wonder why the Apple Store is selling more per square feet than Macy’s.

As Steve will tell you - simply said - the key to business success is insanely great products! Profits will come with great products and so will shareholder value.

That all!

Note: The picture above is the Apple Store au Louvre in Paris.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Wireless for Dummies 4G LTE EPC and IMS

Sat, 9 Oct 2010 14:02:22 -0700

(T) Each generation of cellular wireless networks has been characterized by new frequency bands e.g. radio waves, higher data rates and new (but not-compatible!) transmission technology. The first generation of wireless telephony or AMPS enabled the first wireless phone calls over an analog transmission.

The second generation or 2G (GSM, CDMAOne) introduced digital transmission, more efficient use of the wireless spectrum (so better coverage), international roaming and the first data services: SMS text messages. The 2.5G (GPRS, EDGE, CDMA 2000, 1xRTT) improves the data rates over 2G without any changes to the radio access network. The third generation or 3G (UMTS, HSPA, CDMA2000, EV-DO) standardized by the 3rd Generation Partnership Project (3GPP) increased again the data rates and introduced a packetized network to enable the wireless Internet with a new range of possibilities for Internet access, instant messaging and mobile TV.

LTE or Long Term Evolution, a 3.5 G technology, and LTE Advanced, a 4 G technology, goes beyond providing the wireless Internet to enable mobile broadband. The world’s first publicly available LTE-service was pioneered by Telia Sonera in Stockholm and Oslo in December 2009. And this year many worldwide carriers have announced their plans to migrate their networks to LTE such as Verizon Wireless this week at the CTIA show in San Francisco.

But note that emerging LTE networks are not backward compatible with 3G networks. So, your 3G iPhone or Android will not work on the soon to be deployed LTE and 4G networks!

LTE provides only IP services and does not support the concept to establish a “voice circuit”. It reduces the time to connect and get onto the network, reduces network latency for the subscriber to 5 ms, increases the network bandwidth from 1.25 Mhz to 20 Mhz and the throughput to 100 Mpbs downlink and 50 Mbps uplink.

One of the building blocks of wireless technology is to multiplex the wireless signal e.g. to use the same frequency band between multiple subscribers. All new wireless networks including LTE, WiMax, a broadband wireless access technology defined by IEEE 802.16 and the new WiFi standard IEEE 802.11n are based on OFDMA to multiplex the signals.

And, all new wireless networks LTE, WiMax and 802.11n enable both the transmitter and the receiver of the wireless signal to have two or more antennas, a technique called multiple input, multiple output or MIMO, that increases the transmission bandwidth.

Simply put, the architecture of the next generation of telecom networks will include: the LTE radio network or E-UTRAN for evolved Terrestrial Radio Access Network, the Evolving Packet Core (EPC), an all IP network, that will not only support LTE but as well all 3G and 2G wireless access networks and the IP Multimedia Services (IMS) network for VoIP and other media services.

The LTE radio network is simply architected on a mesh of peer eNodeB. The EPC network is built on four key network elements:
• The MME (Mobility Management Entity) provides all the mobility services for the network while the HSS (Home Subscriber Services) stores all the subscriber data;
• The S-GW (Serving Gateway) is a data gateway for the IP traffic while the P-GW (Packet Gateway) routes the IP traffic.
The protocol to transport the Internet traffic from the eNodeB to the P-GW is an evolved GPRS Tunneling Protocol (GTP) that has been used in 3G networks.

One of the key networks connected to the EPC network is the IMS network. The goal of the IMS network is to provides IP services, in particular VoIP, conferencing, messaging and presence. The protocol, to control and manage the IMS services, is SIP (Session Initiation Protocol).

The IMS network is basically designed around a few key network elements:
• The CSCF (Call Set-up Control Function) that provides the call set-up and control functions;
• The HSS (Home Subscriber Services) that stores all subscriber data;
• The AS (Application Server) for all the IP services.

The VoIP traffic is converted to pure telephony for the PSTN (Public Switch Telephone Network) through the MGW (Media Gateway) and the MGCF (Media Gateway Control Function).

One important network element shared between the LTE network and the IMS network is the PCRF (Policy and Control Reference Function) server that provides all policies for the subscriber.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

A New Disruptive Technology Signals Market Value Destruction and Creation

Sat, 2 Oct 2010 18:00:37 -0700

(B) Someone asked me a few days ago the following question: who is the most threatening competitor to Microsoft? Without thinking, I answered Google! Wrong answer, I was told, it is not Google - it is VMware! Actually, I was not completely wrong but my interviewer was not completely right either. The complete answer is that Microsoft has not one but four types of competitors: VMware, Google, Apple and OpenSouce Inc. or in other terms there are four types of disruptive technologies to Microsoft’s business model namely: virtualization, cloud computing, mobility and open source software.

Microsoft business model has always been to OEM its Window Operating System to PC manufacturers and to sell in addition to large enterprises and consumers its suite of Office and Exchange application products. Virtualization first disrupts Microsoft licensing model. I have the same Windows machine on two Macs using the same Parallels virtual machine. Second, with cloud computing, I can develop my documents and presentations leveraging Google Docs over the Internet without installing Google Docs on my Mac. Third, the more we do on our iPhone and Android, the less we do on our desktops. And last, the more Linux and other open source software are matching the capabilities of commercial consumer and enterprise-grade software, the more options are available to software users.

Long answer to an initial simple question. The most threatening competitors to an established player are the ones that are going to challenge its business model with new disruptive technologies. In that process, significant market value is destroyed for the incumbents but new market value is created by the challengers.

In the 80s, IBM, DEC and Unisys lost billions of market value, while Microsoft, Intel and Oracle created billions of new market value in the 90s - now Microsoft and Oracle have lost billions of market value that has been created in the 00s by Google, VMware, Apple and OpenSouce Inc.

A new disruptive technology has never come from thorough planning and careful design but is always the fruit of Positive Gray Swans. Great technologies always came from nowhere.

If Tim Berners-Lee did not have the idea in 1994 to create the Web to share his ideas at the CERN, and Marc Andreessen and a few students from the University of Illinois at Urbana-Champaign did not create Mosaic the first browser, there will be probably no Internet today.

And a new technology always leads to another one. The MAC and the PC led to the LANs, LANs to client-server architectures, client-servers to the Internet, the Internet to mobility and mobility to cloud computing.

In that process, existing market value is destroyed for the present market players and new market value is created by the emerging market players.

Note 1: I borrowed the concept of value migration between players of the same industry from Adrian Slywotzky’s book “Value Migration”.

Note 2: I borrowed the concept of disruptive technology from Clayton Christensen’s book “the Innovator’s Dilemma”.

Note 3: The picture above is an “ecluse” from Brittany to regulate the flow of water.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Symantec Stuxnet Deep Diving

Thu, 30 Sep 2010 22:00:18 -0700

(T) “I thinks that computer viruses should count as life. I think that it says something about human nature. The only form of life, we have created so far is purely destructive. We’ve created life in our own image” did say Stephen Hawking.

The widely commented, in the press and in blogs, Stuxnet Windows worm or Win.Stuxnet introduces the third generation of computer attacks - the one that every information security engineer has been talking about for so long. The first generation of security attacks in the 1990s, the time of Melissa, Code Red and Slammer, was driven by kids trying to make the headlines. The second generation of attacks that started to appear in early 2000s were driven by organized groups trying to make a profit with a specific target e.g. I give you access to your computer if you send me a check. The present generation of worms such as Stuxnet is to attack computer systems key to an industrial process or a country infrastructure. Unfortunately nothing to be proud of! I let you read the New York Times or the Economist or your favorite paper or blog which has analyzed in depth the geopolitical landscape of cyberwar introduced by Stuxnet and the “why” about Stuxnet and the “who” behind Stuxnet.

But as an engineer, I could not resist the reading of the findings from the three scientists namely Nicolas Falliere, Liam Murchu and Eric Chien from Symantec that have provided in-depth technical analysis of Stuxnet over the last two months. Following is a summary of their final findings in nearly plain computer english. All background information is referenced below.

Stuxnet Target System - Siemens WinCC Systems:
Stuxnet targets Siemens’ SIMATIC WinCC SCADA system. SCADA stands for Supervisory Control and Data Acquisition and generally refers to a computer system that monitors and controls an industrial process such as a manufacturing plant, an infrastructure such as a water or power generation or distribution system or a facility such as a building or an airport.
Siemens WinCC system is a TCP/IP-based client-server system that involves operator and server stations. The operator station is a standard PC running Windows Vista/XP or Windows Server 2003. The server station runs Windows 2003 Server SP2 or Windows Server R2 SP2.

The operator from his PC generates the code called a Programmable Logic Controller (PLC) that will provide the monitoring and control of the industrial process. A simple example of a PLC could be controlling the flow of cooling water in a production process. To that end, the design of a PLC includes a number of integrated system software components: APIs, graphic and visualization tools, notification/event systems, process data reporting and archiving etc...

Stuxnet Anatomy and Infection:
Stuxnet goal is to reprogram Siemens SCADA systems by modifying the code from the PLCs and to hide those changes from the operator of the equipment. In order to achieve this goal, Stuxnet leverages and compounds the effects of many subtle components to increase its chance of success.

According to Symantec, this includes in a nutshell:
“zero-day exploits, a Windows rootkit, the first ever PLC rootkit, antivirus evasion techniques, complex process injection and hooking code, network infection routines, peer-to-peer updates, and a command and control interface.”

or in more technical details:
• “Self-replicates through removable drives exploiting a vulnerability allowing auto-execution (Microsoft Windows Shortcut ‘LNK/PIF’ Files Automatic File Execution Vulnerability (BID 41732).
• Spreads in a LAN through a vulnerability in the Windows Print Spooler (Microsoft Windows Print Spooler Service Remote Code Execution Vulnerability (BID 43073)).
• Spreads through SMB by exploiting the Microsoft Windows Server Service RPC Handling Remote Code Execution Vulnerability (BID 31874).
• Copies and executes itself on remote computers through network shares.
• Copies and executes itself on remote computers running a WinCC database server.
• Copies itself into Siemens SIMATIC Step 7 projects in such a way that it automatically executes when the Step 7 project is loaded.
• Updates itself through a peer-to-peer mechanism within a LAN.
• Exploits a total of four unpatched Microsoft vulnerabilities, two of which are previously mentioned vulnerabilities for self-replication and the other two are escalation of privilege vulnerabilities that have yet to be disclosed.
• Contacts a command and control server that allows the hacker to download and execute code, including up-dated versions.
• Contains a Windows rootkit that hides its binaries.
• Attempts to bypass security products.
• Fingerprints a specific industrial control system and modifies code on the Siemens PLCs to potentially sabotage the system.
• Hides modified code on PLCs, essentially a rootkit for PLCs.”

Stuxnet History and Geographic Distribution:
Stuxnet was first discovered in June 2010 by VirusBlokAda, a security firm based in Belarus.

According to Symantec:
“As of September 29, 2010, the data has shown that there are approximately 100,000 infected hosts. We (Symantec) have observed over 40,000 unique external IP addresses, from over 155 countries. Looking at the percentage of infected hosts, by country, shows that approximately 60% of infected hosts are in Iran. The concentration of infections in Iran likely indicates that this was the initial target for infections and was where infections were initially seeded. While Stuxnet is a targeted threat, its use of a variety of propagation techniques has meant that Stuxnet has spread beyond the initial target. These additional infections are likely to be “collateral damage”—unintentional side-effects of the promiscuous initial propagation methodology utilized by Stuxent.”

Stuxnet Removal:
Siemens has released a detection and removal tool for Stuxnet but the worm's ability to reprogram external PLCs may complicate the removal procedure. Symantec's has warned that fixing Windows systems may not completely solve the infection; a thorough audit of PLCs might be wise to perform.

References:
“Stuxnet Introduces the First Known Rootkit for Industrial Control Systems”, Symantec Nicolas Falliere
“Stuxnet Using Three Additional Zero-Day Vulnerabilities”, Symantec, Liam Murchu
“Exploring Stuxnet’s PLC Infection Process”, Symantec, Nicolas Falliere
“Stuxnet P2P component”, Symantec, Liam Murchu
“W.32Stuxnet Dossier”, Symantec, Eric Chien (The essential reading to really understand Stuxnet!).

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Investing in Clean Energy Leaders

Sun, 29 Aug 2010 14:41:02 -0700

(B) The best companies to invest in Clean Energy are in the US and in China. But because of regulations and incentives, Germany has presently the largest installations of solar panels in the world. China is making clean energy a highest priority than the US and is rapidly establishing itself as the leader in producing both solar and wind energy. Of the 10 largest solar-panel manufacturers, half are based in China. And, Chinese solar panels accounted for about half of the worldwide total shipments in 2009. Most Chinese solar companies are traded in the NYSE.

So if you are interested to invest in clean energy, following are a few leaders to watch: First Solar, Yingli Green Energy, Trina Solar, Cree, American Superconductor and EnerNoc.

First Solar, Inc (FSLR) manufactures and sells since 1999 photovoltaic (PV) solar modules using a thin film semiconductor process based on Cadmium Telluride (CdTe) to convert sunlight into electricity. It is the largest manufacturer of thin-film cells in the world and the world's first largest manufacturer of photovoltaic (PV) cells. First Solar expects to bring its total production capacity to more than 1.4 GW by the end of 2010 and plans building a solar power plan in China in 2011.
• Q2 2010 Revenues: $588 M
• Q2 2010 Profits: $159 M
• Market Cap: 11.03 B
• P/E: 17.72

Yingli Green Energy (YGE), headquarters in Baoding, China and founded in 1998, produces and commercializes worldwide photovoltaic (PV) solar modules based, on a different technology than First Solar, which is monocrystalline solar cells. Yingli is the largest Chinese solar manufacturer with a production capacity of 600 MW in 2009. It was the first chinese company to sponsor the 2010 World Cup in South Africa. Yingli completed its IPO on the NYSE in 2007.
• Q2 2010 Revenues: $398 M
• Q2 2010 Profits: $133 M
• Market Cap: $1.68 B
• P/E: 28

Trina Solar (TSL), headquarters in Changzhou, China and founded in 1997, manufactures and sells worldwide photovoltaic (PV) solar modules based both on monocrystalline and multicrystalline solar cells with power outputs ranging from 165W to 230W. Trinar Solar completed its IPO on the NYSE in 2006.
• Q2 2010 Revenues: $370 M
• Q2 2010 Profits: $83.6 M
• Market Cap: 1.78 B
• P/E: 12

Cree (Cree), founded in 1987, develops and manufactures light emitting diode (LED), component and chip products for lighting. Its LED products are used in various applications, including video screens, gaming displays, function indicator lights, and automotive backlighting.
• Q2 2010 Revenues: $265 M
• Q2 2010 Profits: $53 M
• Market Cap: 5.78 B
• P/E: 36

American Superconductor (AMSC), founded in 1987, produces and commercializes worldwide electrical power systems for the design of wind turbines and superconducting wires that extends the reach of the emerging power grid infrastructure.
• Q2 2010 Revenues: $97 M
• Q2 2010 Profits: $9 M
• Market Cap: 1.27 B
• P/E: 54

EnerNoc (ENOC), founded in 2001, provides energy management solutions, mostly in North America, focusing on demand response applications, for optimizing energy supply and demand, in particular for smart grid power operators.
• Q2 2010 Revenues: $66 M
• Q2 2010 Profits: $1 M
• Market Cap: $851 M
• P/E: N/A

Other clean energy companies to watch includes in the US:
• SunPower, SPWR (Solar manufacturer)
• Itron, ITRI (Meters for the smart grid)
• Comverge, COMV (Demand Response systems for the smart grid)

and in China:
• JA Solar Holdings, JASO (Solar manufacturer)
• Suntech Power, STP (Solar manufacturer)
• Solarfun Power, SOLF (Solar manufacturer)

Note: The picture above is “Women, Birds, and a Star” from Joan Miro.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Mathematics is Still Essential for Science and Technology to Progress

Sun, 22 Aug 2010 18:00:44 -0700

(E) We only hear about great mathematicians when they receive their Fields Metals or they solve a challenging problem. This week the four Field Metals winners, the equivalent of the Noble Prize in Mathematics, were announced on August 19 at the International Congress of Mathematicians in Hyderabad in India and included: Cédric Villani of the Henri Poincaré Institute in Paris, Stanislav Smirnov of the University of Geneva, Ngô Bao Châu of the University of Paris XI, and Elon Lindenstrauss of the Hebrew University of Jerusalem.

Professor Ngô proved in number theory the Fundamental Lemma, a building block of the Langlands Program that was initiated in 1967 by Professor Robert Langlands from Princeton University to unify certain aspects of algebra (Galois Representations) and analytics (Automorphic Forms). The Langlands Program led two other mathematicians to win as well the Fields Medals: Laurent Lafforgue and Vladimir Drinfel’d.
While most mathematicians have focused their researches in Theoretical Physics such as String Theory, Professor Villani has focused on applying probability theory to study the entropy in Fluid Dynamics and demonstrated not only that entropy increases, like when a gas escapes from a container, but it does it at different speeds, sometimes quickly or sometimes slowly. Professor Villani also worked on optimal transportation that defines how to ship, at the most effective cost, goods from a variety of producers to a variety of consumers.
Professor Smirnov has been rewarded for his research in finite lattice model. A simple analogy to a two dimension lattice is a chess board that stretches to the infinite and might have its lattices changed, as the lattices grows and change their shapes. Professor Smirnov’s research can be applied to both pure mathematics (complex dynamics) and applied mathematics (statistical physics).
Professor Lindenstrauss worked primarily in Ergodic Theory, a field of mathematics that analyses the behavior of a dynamical system when it is allowed to run over a long time. Ergodic Theory has applications as well both in pure mathematics (number theory, differential geometry...) and applied mathematics (statistical physics).

While this year Field Medals achievements will probably only be remembered by the mathematicians, that was not the case in 2006 when Grigori Perelman both refused his Fields Metals and his one million prize from the Clay Mathematics Institute to have proofed the Poincaré Conjecture, the first of the seven problems proposed by the Clay Institute to be solved. The Poincaré Conjecture basically states that “the sphere is the only three-dimensional closed space lacking holes” or better stated in 1904 by Henri Poincare himself and in his own words “la sphere est le seul espace compact simplement connexe de dimension trois”. While the Poincaré conjecture is easy to consider in two dimensional spaces, it is much harder to conceive for higher dimensions: Stephen Smale solved it for five dimensions and Michael Freedman for six dimensions. And, both of them were rewarded by the Field Medals. Dr. Perelman’s proof, very simply said, leverages the Ricci Flow from Richard Hamilton to re-shape, cut and modify a surface that has three dimensions to conclude that it is a sphere.

By solving hard problems Mathematicians are developing critical theories leading to new scientific work and technologies from fast algorithms for searching DNA sequences in biology, to models to analyze the behaviors of the returns of an asset in finance.

Mathematics is still essential for the progress of many sciences and technologies.

For instance, pioneered by Benoit Mandelbrot in the 1980s, Fractal Geometry establishes the repetition of geometric patterns at different scales in nature. Fractal Geometry has been applied to many sciences and technologies in particular biology, meteorology, seismology, finance, and computer networking! The fundamental assumption of Fractal Geometry is that fractals kept the same shape or properties over different scales. Its mathematics can be leveraged to study any type of patterns in space or time that remain the same even as the scale of the observation changes.

Over the last few years, mathematics has been key to better understand our Universe. Finally, theoretical physicists have reconciled the antagonisms between quantum mechanics and Einstein’s relativity by proposing initially the String Theory which has become now the M-Theory. Furthermore, some physicists have leveraged String Theory to propose that the origin of the Big Bang came from the collision of two branes (a concept issued from String Theory).

And, probably no other mathematicians has pushed recently the frontiers of mathematics than cosmologist expert in Parallel Universes, Professor Max Tegmark from MIT. Professor Tegmark argued that “our physical reality is a mathematical structure and that our universe is not just described by mathematics - it is mathematics”. According to Professor Tegmark’s Mathematical Universe Hypothesis (MUH), “we don’t invent mathematical structures - we discover them, and invent only the notation for describing them”.

Whatever is the problem being solved or the application of the theory, mathematics is still essential for the progress of many sciences and technologies and not only physics but also engineering, computer science, biology, finance and economy, why you can agree or disagree with Professor Tegmark if the Universe is Maths or not someone has still to establish the equations to explain “why does water boil when it is warming up?”.

References:
Terence Tao’s Blog article on Lindenstrauss, Ngo, Smirnov, Villani
The Millennium Prize Problems stated by the Clay Mathematics Institute
The Math Book, From Pythagoras to the 57th Dimension, 250 Milestones in the History of Mathematics, Clifford A. Pickover, Sterling Publisher

Note: The picture above is a sculpture from Giulio Monteverde, “Columbus as a Boy”.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

What Will it Take to Run the Country and the World with Clean Energy

Sun, 6 Jun 2010 16:00:58 -0700

(E) We are now witnessing the huge risks and the enormous impacts on the Earth ecosystems of deep offshore drilling with the present BP oil spill. As openly stated by the White House Energy and Climate Change Adviser, Carol Browner, on May 30, “it is probably the biggest environmental disaster, we’ve ever faced in this country”. Since the spill began on April 20, between 23 million to 49 million gallon of oil have already leaked into the Gulf of Mexico, already doubling the output of the Exxon Valdez in 1989. With so much oil, it is obvious that the fabric of life itself in the Gulf of Mexico has been destructed for many generations!

Just in the next decade, we have to double the present production of worldwide energy. As the developing nations leading by China are transitioning to stronger economic growths and higher living standards, the pressure on energy supply, that has already significantly increased, will increase much more in the soon future. Now add to that, the growth in worldwide populations from around 7 billion this year to 9.2 billion in 2050, according to the United-Nations, and imagine how much more energy the world will need!

The lighter grades of crude oil result in the best yields to produce fuel oil and gasoline but as the world's reserves of light oil are depleted, the oil industry is exploring and producing more oil from deep offshore wells and unconventional reserves such as tar sands (or bitumen) and maybe in the future oil shales.

The Deepwater Horizon well that has led to the present BP oil spill in the Gulf of Mexico is around 5,000 feet below the ocean surface and its oil reservoir 2 miles below the ocean floor. Offshore wells can now be drilled from 6,000 to 8,000 feet below the ocean surface and 20,000 – 30,000 feet below the ocean floor. The deepest offshore oil is 36,000 feet deep.

The onshore production of heavier crude oil such as tar sands requires more complex and expensive oil refineries resulting in larger carbon footprints for the environment. Bitumen are so thick and heavy that they must be heated and diluted before they can flow. In that process, a lot of water is used and heated with natural gas. In addition, the water generated is quite toxic because of the heavy metals such as sulfur contained in the oil.

Another type of unconventional oil reserves is oil shale, an organic-rich sedimentary rock. Extracting oil from the shales is a very difficult and environmentally unfriendly process known as "retorting". Because of the high costs of retorting, no one has yet been producing commercial quantities of oil shales.

I do not believe that natural gas (which produces less carbon dioxide (CO2) than oil) and clean coal (whose carbon has been captured during production) are solutions to our world energy problems. Natural gas obviously impacts the environment. And, producing clean coal is an expensive process still in an exploration phase. In addition, both of them still make us dependent of fossil fuels.

We need to explore and produce new sources of energy that will preserve the Earth ecosystems, are sustainable in the long-run, cost effective like oil and scalable, and plentiful like coal. We have only two options in front of us: solar and nuclear energy. Both of them are ecological, plentiful, scalable and cost effective, and can directly produce electricity.

Nuclear energy has two major disadvantages that makes it a second choice after solar energy: disposal of nuclear waste (although solutions are emerging, read MIT experts tackle nuclear power waste problem) and the risks of non-peaceful nuclear proliferation.

Therefore the Sun is the energy of our future. Solar energy is our largest, safest and longest-lasting energy source. Photovoltaic (PV) cells are already in use on the roofs of houses and buildings but emerging miniature PV cells will soon be found in power-generating windows, electric car sun roofs, and soon your iPhone (Apple has already filled a patent on it).

There is a vast amount of solar energy to harvest, and we need to start urgently heading down that path. To that end, we need both the private and the public sectors to massively invest and we need quickly to embrace new policies, regulations and carbon taxes from governments to switch the world from the exploration, production and use of oil, natural gas and coal to the research, production and use of solar energy and other forms of clean energy.

Because of the demand for oil exceeding the supply, oil prices are likely to skyrocket again in the future. As oil prices increase, oil companies will become even more profitable and therefore will have the cash to invest in bringing economically the production of oil sands and may be oil shales.

So we need to make very expensive and unprofitable to explore, produce and use oil and other fossil fuels and make it very cheap and profitable to research, produce and use solar energy and other renewable energies. We need to quickly transfer the investments, the labor and the energy companies from the oil industry to the emerging solar industry.

We cannot take the risk to have another large scale ecological disaster as the present BP oil spill. The planet resources and ecosystems are already too stressed out. We need to run the country and the world with clean energy.

And, we are running out of time!

References:
Wikipedia, Deepwater Horizon Oil Spill
BP, Gulf of Mexico Response
Time Magazine, Catastrophe in the Gulf: How Bad Could It Get?
NPR, Browner: Government Monitors BP’s Every Move
A Silicon Valley Insider, We Will be Running Out of Oil Soon
A Silicon Valley Insider, The Sun Our Future Energy Source

Note: The picture above (copyright of BP p.l.c.) is Rachel Newman from the International Bird Rescue Research Center examining a pelican from the Gulf of Mexico to determine if it is healthy enough to be released.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

What Will it Take for Europe to Wake Up One Day

Sat, 8 May 2010 06:30:35 -0700

(B) Europeans enjoy some of the best social programs in the world, from the highest number of paid vacation days, the shortest number of hours worked per week, early retirements, education and unemployment benefits paid by their governments. Europe is financing its social programs with large taxes, on households and businesses, and running large public deficits. And, the costs of those social programs are increasing faster than wealth is created. Instead of permanently crafting new regulations and new taxes to support their social programs, Europeans should focus their energy investing and growing their economies in order to create wealth.

Europeans public companies are much less profitable than their American counterparts therefore expanding less and hiring less. Raising capital for a start-up in Europe takes three to five times the time it takes in the US for three to five times less capital. And, Europe is not investing in tomorrow technologies. Even if at the Copenhagen conference, Europe was the most willing to reduce its carbon dioxide (CO2) emissions, according to a new United Nations Environmental Program (UNEP) research, Europe only spent from its 2009 economic recovery program the equivalent of 0.2% of its GDP in green investments, while the US spent 0.7% and China more than 3%. Even in Africa, Europe is losing its economic relationships with rich commodity nations such as Niger and Congo that are now looking to China for their financing.

European economies have two major structural challenges. The first one is that long-term growth in living standards can only be achieved by fundamentally raising productivity. Or in Europe since the 90s, wage growth is in excess of productivity growth. The second major structural challenge is that public funding for social programs has increased to support an aging population. This is not however a problem specific to Europe but also largely spread in the US and in Japan.

The 2008 financial crisis has worsened the fiscal positions of most European nations by first requiring them to support their financial systems, second by spending to stimulate their economies and last by lowering their taxes due to the economic recession. And, nations that had already accumulated significant public debts before the financial crisis are now at risk (like the US).

In addition, the tight monetary policies from the European Central Banks (in comparison to the low interest rates from the US Federal Reserve), and before this year, the appreciation of the Euro (due to Middle East and emerging market investors diversifying from the US Dollar to the Euro) that made it more difficult for European companies to compete in international markets, and you have finally the complete list of the ingredients to explain this week and this year Greek and other coming European economic disasters.

European countries, part of the Euro zone, cannot restructure their debts by issuing new debts in their own currencies. So their unsustainable public debts leads to credit crises and defaults on their sovereign debts which are government bonds issued in a foreign currency. That is what happened to Greece but could happen to Portugal, Spain, Ireland and the UK which are facing more and more the pressure of their sovereign debt investors.

The greatest achievement of the European Community is to have created a single market absorbing Mediterranean nations and emerging Eastern Europe democracies. But the European community has wasted too much energy creating useless bureaucracy in Brussels and endlessly negotiating European treaties while gradually losing its economic competitiveness.

This week’s collapses of the London’s FTDE, Paris’ CAC 40, Frankfurt’s DAX and New York’s Dow Jones (and in particular the Dow Jones’ intraday on Thursday losing 1,000 points due to high frequency trading and even worse - human trading mistakes; very current during panic crises) are by all means very reminiscent of the 2008 stock market crashes.

The 2008 credit crisis started with the collapse of the subprime mortgage market, that was initially thought to be contained, and spread suddenly like a virus to the US financial system and later to the world financial system. Similarly, the collapse of the Greek economy could very well spread across Europe: Portugal, Spain, Ireland, the UK, Italy and France, all those countries have large public deficits as a percentage of their GDPs and sovereign debts (to the exception of Italy which, like Japan, has its government debt financed mostly by the savings of the Italians themselves).

And to make things worse for the equity markets, investors are started to worry that Europe could certainly slow down the US and the global economic recovery.

While I am hoping that Europe will stop its political divisions and delays in decision making and moves quickly toward fiscal responsibility, the US should learn from the present European crisis. First, because the US is running like Greece a 10% fiscal deficit in 2010. Second, look at the damage caused by the Greek $400 billion public deficit, and imagine what could be the damage caused by the US $14 trillion public deficit! What is presently saving the US, is that the dollar is still fortunately the world reserve currency and the US has the largest and most liquid debt market. But if China, Japan, Saudi Arabia and other foreign investors lose their confidences in the US, they will likely reduce their willingness to sustain further the US public debt. The longer the US waits to take the path toward fiscal sustainability, the more dramatic and the more limited will be its options.

In the meantime, I am still hoping that Europe one day will wake up and start to be more concerned about increasing its productivity and competitiveness than increasing its wages and social programs. Maybe when that will happen, it will be nice again to re-discover the richness of the Greek Mythology in the streets of Athene or admiring the masterpieces from Monet or Gaugin at the Musee d’Orsay in Paris without having to worry about an unexpected strike affecting your visit.

Annex 1:
Following are the fiscal situations and prospects as a percentage of their GDPs for some European nations according to a research “The Future of Public Debt: Prospects and Implications” from the Bank for International Settlements (BIC):

Annex 2:
Following are the sovereign CDS spreads and several fiscal indicators for some European nations according to a research “The Future of Public Debt: Prospects and Implications” from the Bank for International Settlements (BIC):

References:
• Nouriel Roubini interviewed on Friday, May 9th on CNBC: Crisis Economics
• Stephen Cecchetti, M S Mohanty and Fabrizio Zampolli, The Future of Public Debt: Prospects and Implications, Bank for International Settlements (BIC)
• A Silicon Valley Insider, The Public Debts of the Developed Nations Could Well Lead to the Next Financial Crisis, March 28, 2010
• A Silicon Valley Insider, Too Big to Fail, June 28, 2009
• A Silicon Valley Insider, The 45 Trillion Dollars Credit Default Swaps, April 5, 2008

Note: The picture above is the famous Paris’ bookstore Shakespeare and Company in Latin Quarter.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Getting the Salt Out of Seawater at the Same Price as Fresh Water from the Ground

Sun, 2 May 2010 22:00:42 -0700

(T) One of the most critical resources for life is water. Without drinking water, there is no survival. Without water for crops, there is no food. Without water for the industry, there are no new products. In many parts of the world, we have exceeded sustainable limits on the withdrawals of water from groundwater aquifers. We have disrupted water flows with the damming of rivers. Global warming is only going to accelerate the scarcity of water, in particular in Africa and South Asia. Less than 1% of the Earth’s water is accessible freshwater; the rest for around 97% is sea water and 2% are the ice caps and glaciers. And, the amount of fresh water has stayed at the same level while the human population will reach 6.9 billion in 2010 and 9.2 billion in 2050 (according to the projections of the United Nations).

This year a strong El Nino has brought some welcome relief to California water crisis. Most of the water supplies in California come from the Sierra Nevada reservoirs and is carried over 2,000 miles of canals, pipelines and aqueducts, that are vulnerable to an earthquake, to the driest and most populated Southern California. 70% of the water in California comes from the north, while 80% of the demand is in the midsection and south parts of the state.

Like many other parts in the world, the solution to the water crisis in Sunny California will have to get the salt out seawater. According to the International Desalination Association, there are now around 14,000 desalination plants in operation around the world. In California alone, some 20 seawater desalination plants have been proposed, including a $300 million facility near San Diego. However only 0.3% of clean water is presently obtained from water desalination because plants are expansive to build and expansive to operate due to the energy required to desalinate water.

The first generation of desalination plants, deployed in particular in the Middle East, heats seawater until it turns to steam, leaving its salt behind, then condensing it.

The second and present generation of desalination plants filter water from seawater by using a process called Seawater Reverse Osmosis (SWRO). SWRO forced seawater through a semi-permeable membrane, producing pure water on one side and concentrated brine on the other. By pumping seawater to pressures over more than a thousand pounds per square inch, SWRO takes less energy than boiling seawater. But SWRO is still very expensive because of the required energy to achieve the high pressures that must be attained for it to work effectively.

Recent technological advances from Energy Recovery Inc (ERI), a public-traded company based in San Leandro, California, has pioneered the development of energy recovery devices, that improve the energy efficiency and reduce the cost of SWRO. Early energy recovery devices were only 50% to 75% efficient but newer ones such the PX product line from ERI can recover up to 98% of the energy from the high-pressure membrane reject stream.

According to ERI, “the core of PX technology is an isobaric energy recovery device, made of uniquely engineered ceramics which captures the hydraulic energy from the high pressure reject stream of seawater reverse osmosis (SWRO) processes. It transfers this energy to low pressure feed water with an efficiency of nearly 98%. Pressurized seawater from the PX device is sent to the membrane feed, merging with the pressurized water from a high pressure pump. This significantly reduces the amount of water pressurized by the high pressure pump. Because the PX device itself consumes no electrical power, overall energy consumption of an SWRO process is drastically reduced”.

In addition, a number of new disruptive technologies could further cut the required energy to desalinate water. The first one, close to commercialization, is forward osmosis, that pushes water to the membrane by “natural osmosis” into a solution that contains salt that can be easily evaporated. Natural osmosis occurs when the water molecules pass through the cell membrane from an area of low solute concentration (outside the cell) to one of high solute concentration (inside the cell).

Other research methods attempt to redesign the permeable membrane such as carbon nanotubes that separate positively charged salt molecules from uncharged water molecules and biomimetrics that leverage the same proteins that usher water molecules through the membranes of living cells.

With the scarcity of fresh water being more and more a challenge to overcome for many populations and many countries, we need to research more and invest more on how to get the salt out of seawater at the same price as groundwater.

References:
Energy Recovery Technology
National Geographic, Water our Thirsty World, Special Issue

Note 1: After I learned about Energy Recovery from listening to one of its board members, I bought some company shares. ERI is traded on the NASDAQ, symbol ERII.

Note 2: The picture above is the Afareaitu waterfall on the island of Moorea in Tahiti.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Carlos Ghosn on Zero Emission Cars

Sat, 10 Apr 2010 11:28:56 -0700

(B) Carlos Ghosn, Chairman and CEO of Renault and Nissan, came to Silicon Valley earlier this year at the Churchill Club to share his views on the future of electric cars. I was really impressed by the vision, the intelligence, the passion, and the energy of Mr. Ghosn. Following are my notes, and below the complete video of his talk on YouTube.

Why Renault Nissan is launching some new electric cars?
Across his interview, Mr. Ghosn gives three major motivations for Renault Nissan to produce electric cars. First, car manufacturers, as any other industry, cannot ignore anymore the effects of climate change. He noted that he should leave to his children the task of marketing Renault Nissan’s electric cars (because his kids are the ones to worry about the life of the Polar Bears not him). Second, car manufacturers must offer vehicles that are not dependent anymore on oil. Electric cars can be powered by multiple sources of energy: nuclear, solar or hydroelectricity. And last (although not said but inferred from the interview), Mr. Ghosn is very competitive; and since the electric car is the product of the future, Mr. Ghosn wants Renault Nissan to lead the industry with that new generation of products.

According to Mr. Ghosn, the first dream of the middle classes in China, Russia and India is to have a car. Nobody can stop that dream. Car manufacturers must target those huge markets not only with the right models and at the right prices but in a way that is ecologically friendly. Car manufacturers can only sell to those emerging markets with zero emission cars leveraging today electric technology and tomorrow fuel cell technology.

The battery is the only challenge in designing electric cars!
The future of the electric cars is, first and foremost, in producing the batteries. The largest opportunity in green cars for the venture capital industry is in investing in start-ups designing and producing more efficient batteries. Today, it takes 8 hours to recharge from a house an electric car. An alternative to that is a “fast charger” that recharges a car battery in 30 minutes, and in a few years in 15 minutes or less. Batteries are going to evolve in their sizes, the number of their cells, their geometries, and the chemicals they used. Not only battery technology is going to evolve to reach a lower cost but also to provide to the electric vehicles different ranges. 80% of the people on the planet today drives less than 100 kilometers a day and, in Japan or in the UK, 80% of the population drives less than 50 kilometers a day.

Costs will not slow down the penetration of electric cars!
Costs can be lowered with the right design and manufacturing. As an example, the cost of a fast charger last year was $30,000. This year, it will cost $8,000. Renault Nissan wants to reach a final cost for a fast charger between $1,500 and $2,000.
Mr Ghosn is investing in manufacturing capacity now and believes that governments should create incentives to encourage car manufacturers to build the right scale to produce electric cars today. Renault Nissan will produce 500,000 electric cars this year (200,000 in the US, 200,000 in Europe and 100,000 in Japan).

What are the future disruptions to the car industry?
The first emerging disruption to the car industry is obviously the introduction of hybrid, electric and fuel cell cars. But be aware of who is talking about, who is investing, who is building manufacturing capacity, what be the car performances, and would that be a show-car or a mass-market car?

The second disruption will attend to make cars very affordable. The middle-classes of China, India and Brazil want a car for their families and their friends with all the functionality of existing cars at a very affordable price. Developing full functional low priced cars is technically challenging. It requires a new mind set for the development engineers. The car industry started with American and European competitors. Japanese and later Korean manufacturers entered the market with aggressively low priced models and poor quality, but over time improved the quality of their products and started to market high-end models. The same shall be expected from today Indian and Chinese car manufacturers: first very cheap cars with poor quality but over time better quality and higher end models. If the present US and European car manufacturers cannot compete with low entry priced cars from India and China manufacturers, they are opening the door to future competitions. The way to compete in this changing game is to send western development engineers in China, India and to re-invent the design of cars from cheap parts even from waste.

How the car industry will evolve in the next five to ten years?
Nobody would have ever predicted that the US government would be the major shareholder of General Motors. The wildest scenarios can happen; the car industry is very unpredictable.
The growth of the car industry will come from China, India, Brazil, South America and one day Africa.

First, industry consolidation will persist through different “shapes and forms”. Second, the center of the industry is moving from West to East and from North to South. Car manufacturers will have to adapt their value chains accordingly. Third, the car engines of the future will be hybrid, electric and fuel cell. Cars will not moved in the same way as they do today. Forth, car manufacturers will have to change what they do and what they outsource. They might integrate some of their suppliers or to create new suppliers. Last, the development of zero emission cars will be a partnership between the public and private sectors from financing, research, building incentives for capacity, to regulations. Zero emission cars should be a common goal between the public and the private sectors and both sectors need to work together to achieve that goal.

A short technology primer about lower and zero emission cars
An hybrid electric vehicle such as the Toyota Prius combines a conventional gasoline engine with an electric motor. You fill the hybrid vehicle up with regular gasoline. And, the hybrid augments the normal car engine with a battery-powered motor by connecting a small generator and a rechargeable battery to the braking system of the car. The energy, which is normally discarded as friction heat when braking, is collected by the battery for later reuse in normal driving mode.

A plug-in electric vehicle such as the Nissan Leaf or the Tesla Roadster is powered by a battery alone and must be plugged to be recharged into a conventional 120 volts home outlet or 220 volts outlet that electric clothes dryers use. As an example, the Nissan LEAF has a range of 100 miles per charge under average everyday driving conditions; its battery charges in 4-8 hours on a 220 volts home charging unit. At a faster charger station available in service stations or malls, it will charge to 80% in about 26 minutes.

An hydrogen fuel cell electric vehicle such as the Honda Clarity is powered by electricity generated onboard the vehicle. A fuel cell stack converts the hydrogen and oxygen into water, and in the process, produces electricity. The car must be refueled with gaseous hydrogen.

A selection of a few electric and fuel cell cars
Nissan’s Leaf Car
Nissan Leaf Electric Car from Nissan (available on April 20th 2010)
Electric Nissan Leaf priced at $33,000 from CNET Green Tech.
Nissan will sell electric car for just over $25K from Yahoo News.

General Motors’ Chevy Volt
The 2011 Volt from Chevrolet (available on December 2010)
First Chevy Volt cars will not be E85 ready from CNET Green Tech.

Telsa Motors
Telsa Motors Roadster Sport (available today)
Telsa Motros CEO: Model S is cheaper than it looks from CNET Green Tech.
Tesla extends Raodster’s lifespan with new lotus deal from GreenBeat.

Honda FCX CLARITY
FCX Clarity Zero-Emission Hydrogen Powered
Honda produces first commercial hydrogen cars from CNET Green Tech.

Electric car start-ups
30 electric cars companies ready to take over the road from GreenBeat.

Stanford electric vehicle showcase
The showcase featured alternative vehicles from Daimler, Honda, Pi Mobility, Tesla, Toyota, VW and AC Propulsion: Stanford University YouTube Channel.

Note: The picture above is the Electric Nissan Leaf.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

The Public Debts of the Developed Nations Could Well Lead to the Next Financial Crisis

Sun, 28 Mar 2010 20:00:12 -0700

(B) For the present academic year, some of the staff and faculty of the University of California at Berkeley, one of the most prestigious universities of the US, are in furlough to save $184 million to the State of California. A major opposition to the present health care bill, that aims to expand health care coverage to more than 90% of the US population, was its initial cost (although in its last form, estimated to cost $940 billion over 10 years, it shall reduce the US deficit to $138 billion). During Hurricane Katrina, 1,836 people lost their lives and the reconstruction costs of New Orleans, which is still unfinished, have run into the billions while it would have only cost $200 million to repair the levees. When a state or a nation (even the first economic power) runs a large budget deficit, it cannot even meet the most essential needs of its population such as education, health care and safety. And, if a nation cannot address its most essential needs, it cannot prepare itself for a sustainable future!

A Brief History of Government Debts
One of the characteristics of emerging markets is the recurrence, sometime even chronic, of their insolvencies such as debt crises in Latin America that spanned during the nineteen and twenty centuries. All European countries and the US at different stages of their economic developments from the Renaissance to World War II have gone through some recurrent external debt defaults just as many emerging markets do today. As a nation gradually transitions to a “matured” development stage, it usually builds a better ability to control its debt. But let’s not fool ourselves, even in developed nations, highly leveraged economies with continual roll-over of new debts could very well lead to a new financial crisis. The collapse of the US Financial System in 2008 has reminded us that excessive debt accumulation can pose greater systemic risks than its seems during the booming years. And, excessive debt accumulation holds wether by governments, banks, corporations, or households is a serious risk to future economic prosperity. Debt lowers economic growth and lower economic growth makes the payment of the contracted debt much more challenging.

Nations facing excessive debts have two options:
- to default, as it is a common case for emerging markets which requires the help of the International Monetary Funds (IMF) and or other nations to bail them out. Argentina holds the record for the largest default with $95 billion in 2001;
- to issue more debt to payback the present debt which is the case when a country has its debt in its own currency and can print new monies. But this leads to higher or even hyper inflation, higher interest rates and government bonds with no values and negative returns for their investors.

The Present Debts of the Developed Nations
The current US Federal Government debt is estimated to be $14 trillion or close to 90% of its GDP! Around 53% of that debt is owned by Federal Government Accounts, 22% by domestic investors and, 25% by foreign investors. According to the US Treasury, the top five foreign owners of the US debt rank as follows:
First: China 24% or $895 billion
Second: Japan 21% or $766 billion
Third: Oil exporting countries (Saudi Arabia and other OPEC nations) 5.6% or $207 billion
Fourth: UK 4.8% or $178 billion
Fifth: Brazil 4.6% or $169 billion

The 2010 US federal budget deficit is estimated to reach $1.1 trillion or 10% of the US GDP on a budget of $3.5 trillion.
According to Professors Reinhart and Rogoff, authors of “This Time is Different: Eight Centuries of Financial Folly”, “a 90% ratio of government debt to GDP is a tipping point in economic growth. Beyond that, developed economies have growth rates two percentage points lower, on average, than economies that have not yet crossed the line”. Or out of the G7, to the exception of Germany and Canada, all other countries have crossed or close to cross that line with the following ranking according to the IMF:

First: Japan 225% (2010 government debt to GDP)
Second: Italy 112%
Third: US 90%
Fourth: France 77%
Fifth: UK 69%

In more details, following are the current and projected fiscal deficits according to the IMF:

Nations with lower debts in the developing world are those with economy-driven commodity such as Saudi Arabia or Chili or strong trading or manufacturing exporting economies such as Hong-Kong or China.

Present Challenges for the Developed Nations to Reimburse their Debts
The 2008 financial crisis has worsened the fiscal positions of most developed nations by first requiring them to support their financial systems, second by spending to stimulate their economies and last by lowering their taxes due to the economic recession. Nations that had already accumulated significant debts before the financial crisis are more at risk in particular the US, the UK, Japan and some European countries.

What makes the problem worse for the US and other developed countries is first that the present recovery might not be strong enough to pay back enough of that debt quickly and second that spending is likely to increase to support an aging population.

As we all know, there are more people leaving the workforce than people entering it and people are living longer. This is not however a problem specific to the US but also largely spread in Japan and in Europe.

In the US, costs related to the three major entitlement programs, Social Security, Medicare and Medicaid are growing faster than the economy can fund them. According to the Congressional Budget Office (CBO) and the Treasury Department, those programs have a net present value of $40 trillion over the next 75 years!

The Pressure of the Sovereign Debts on Interest Rates
The US owns 45% of the total worldwide sovereign debt (sovereign debts are government bonds issued in a foreign currency). As a nation’s debt deteriorates, foreign investors sell their bonds, putting upward pressure on interest rates and causing the nation to devaluate its currency, which if the bonds are denominated in foreign currencies, makes it impossible for the country to pay back its debt.

That is what happened to Greece which has to be bail out with the help of other European countries and the IMF. But the UK, Spain, Portugal and Ireland, as did Greece, are facing more and more the pressure of their sovereign debt investors which as a consequence increases significantly the volatility of their credit default swaps (CDS) to protect against default of that debt (over the last few months, Greece CDS look like those of an emerging market - very expensive to buy!).

The pressure from investors on the US and Japan sovereign debt is less than for other developed nations but still very much a risk.

For the US, the dollar is still fortunately the world reserve currency and the US has the largest and most liquid debt market. But if China, Japan, Saudi Arabia and other foreign investors lose their confidence in the US, not only will they reduce their willingness to invest further but they will ask higher interest rates.

For Japan, its debt is fortunately largely financed internally from its population savings but unfortunately its population is shrinking!

The Urgent Need for the Developed Nations to Move Toward Fiscal Sustainability
In over a decade, the US has moved from a budget surplus of $559 billion under President Clinton to a budget deficit of $14 trillion under President Obama.
Between President Clinton and President Obama, the US has known two economy recessions, the first one due to the technology bubble and the second one due to the credit bubble. And the US has to finance increased Social Security and Medicare costs and a meaningless and frenetic war, like any other war!
Over the next few years, the US and the other developed nations (Japan, UK, France, Italy, Spain, Portugal, Ireland) need urgently to find the courage and the discipline to reduce and balance their debts. Let’s not believe, that among the developed nations, the bankruptcy of Iceland in 2008 and of Greece this year will be the last ones. The longer the developed nations are waiting to take the path toward fiscal sustainability, the more dramatic and the more limited will be their option ranging from fiscal austerity to structural reforms.

The US, for instance, must review and evolve its present entitlement programs, with Social Security and Medicare being first, and will have to combine in some way raising taxes (and may be creating new ones) while lowering its spending, in particular, its defense budget.

While the US and the other developed nations are drafting new legislations to avoid another systemic risk from a highly-leveraged banking sector may be they should be considering creating a new independent financial institution that will oversight the US and the other developed nations to avoid another type of systemic risk, this time due to their own public debts.

References:
• US Treasury: Major Foreign Holders of Treasury Securities
• US CIA: 2009 Country Public Debt as a Percentage of GDP
• Carmen Reinhart & Kenneth Rogoff, This Time is Different: Eight Centuries of Financial Folly, Princeton
• IMF, The State of Public Finance, March 6, 2009
• Nouriel Roubini, States of Risk, Project Syndicate, March 15, 2010
• Nouriel Roubini, The Risky Rich, Project Syndicate, January 18 , 2010
• Nouriel Roubini and Arpitha Bykere, The Coming Sovereign Debt Crisis, Forbes Magazine, January 14, 2010
• Bill Gross, PIMCO, Investment Outlook, March 2010
• Bill Gross, PIMCO, Investment Outlook, April 2010
• Stephen Cecchetti, M S Mohanty and Fabrizio Zampolli, The Future of Public Debt: Prospects and Implications, Bank for International Settlements (BIC)
• Wikipedia, United States Federal Budget (the two charts of this article are from this Wikipedia article)
• A Silicon Valley Insider, Too Big to Fail, June 28, 2009

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Our Journey to a Sustainable Economic Development for 2010 and Beyond

Sun, 14 Mar 2010 20:12:37 -0700

(B) If every citizen, of every country on our planet, consumes like an American citizen today, the world would need 5.4 Earths to sustain us! It takes today about 17 months for the Earth to regenerate what the world uses over 12 months! We are exploiting the Earth’s resources at a rate 44% faster than what the Earth can reabsorb and reproduce. Together the 6.8 billion people on the planet, that we are, require the resources it would take to one and a half Earths to sustainably reproduce, according to the Global Footprint Network! WE need to face this unconceivable economical imbalance between the Earth limited resource supply and the ever increasing resource demand from our worldwide economies.

The Roman Empire, the Mayas, the Easter Islanders were some of the most advanced civilizations from the past. All of them still surprise us by their accomplishments in politics, laws, sciences, arts, architectures and religions! And, it is critical today to understand why did they rise and fall. The growth of the Roman Empire is particularly impressive in its geographic expansion, spread over three continents. While the fall of the Easter Island is particularly obvious with its famous Moai in an island completely deforested.

In his book “Collapse”, Professor Jared Diamond has articulated seven driving forces hat have historically contributed to the collapse of past civilizations. Namely, they are:
1. Habitat destruction and deforestation
2. Land erosion and fertility
3. Lack of water
4. Overhunting
5. Overfishing
6. Introduction of foreign species to the natural habitat
7. Increased per-capita impact of people.

Those seven factors are very much into the fabric of our present global civilization. We have two clear choices in front of us: either we continue our road to an unsustainable economic development or we start our journey to a sustainable economic development. Are we condemned like Sisyphus? Or can the world save itself from ourselves? Of course, the world can save itself from the climate change, the destruction of the earth ecosystems and resources, its rising world population and its ever growing demands of goods and services. But we need to act soon and together. We are running out of time. And failure is not an option.

The Urgency to Develop and Spread Sustainable Technologies Like Viruses
The I PAT formula has captured, in a simple way, the impact of the human activity on the environment:
I = P x A x T,
where

the human Impact (I) on the environment equals the product of the population (P), the affluence (A: consumption per capita) and, the technology (T: environmental impact per unit of consumption).

As the world becomes richer, with the developing world joining the developed world to enjoy higher incomes and living standards and, as the world’s population continues to grow rapidly (even if the proportional rate of population growth has declined), the product P x A will continue to grow. As proposed by Professor Jeffrey Sachs in his book “Common Wealth”, our only chance is to re-invent T in the equation to S = 1/T where S stands for emerging sustainable technology. Simply put, the growth of P x A must be compensated by the growth of S. Economic prosperity can ONLY be expanded if it is based on sustainable technologies. And, if we want to exclude an income reduction for both for the developed and developing worlds, we urgently need to develop and adopt sustainable technologies.

We all know that scientific discoveries and technical breakthroughs are the results of positive Gray Swans. So it goes without saying that the governments, the private sectors and the academic institutions must come together to create the ecosystems to fund, nurture, develop and grow research and development in sustainable technologies that can spread themselves like computer viruses to the complete value chain of the economy: products and services, households and businesses, governments and non-profitable organizations.

There are so many sustainable technologies that are waiting to be developed: water desalinization, higher organic agricultural outputs with less lands available, environmental friendly fish farming, solar, wind and nuclear energy, electric transportation, complete new environmental airplane engines, capture and storage of carbon dioxide...

At a minimum, we want to foster technologies, products and services that can reduce, reuse and recycle. But ideally as suggested by William McDonough and Michael Braungart in their books “Cradle to Grave”, we want to spark technologies, products and services that can restore, re-generate and rebuild the Earth’ ecosystems and resources. Easy said very difficult to accomplish. Yes, the challenges are not missing in front of us!

Not only do we need to create a new world of sustainable innovation that will seed new venture capital, new start-ups, new industries but we need to do it on a global basis and in such a way that it becomes ubiquitous.

Toward Global Governance: Global Policies, Global Innovations, Global Regulations and Global Cooperation
The 2009 United Nations Climate Change Conference in Copenhagen did not result in any major new global policies for the world. The conference was supposed to debate over greenhouse gas emissions, development plans and funds for the adaptation and the transfer of clean technologies from the wealthier nations to the poorest ones, that are the most exposed to climate change. Every nation came to Copenhagen with its own self and competing interests. The small pacific island nations, which will disappear under sea level rise and many European countries favored the reductions in greenhouse gas emission. But too many developing countries, which are dependent on fossil fuels for their new economic growths and the oil producing nations, which reduction in geenhouse gas emissions is a threat to their economies opposed those reductions.

Developing countries have absolutely their rights to growth their economies but should limit planning traditional fossil fuels technologies to do so. And, developed nations, which contributed the most, since the industrial revolution, to climate change first should lead aggressively the efforts to limit greenhouse gas emissions and should move their economies toward green technologies. Second, developed nations have the obligation to help financially and technically the poorest countries that will be the most affected by climate change.

While climate change is certainly a major factor to an unsustainable economic development, unsustainable economic development is fundamentally about “demand” versus “supply” of the world resources for the world population. Unsustainable development is borderless. Every population, society and nation is affected in various and subtle ways. Lack of the Earth resources by one nation will affect itself as well as all other nations. Sustainable development is breaking century of diplomatic games. Cultural, economical and military self interests and competitiveness are no-sense in the context of worldwide economic sustainability. Actions to block the consequences of unsustainable developments must be shared globally with the same determinism and anxiety across world nations. Sustainable development is the business of every nation. And of EVERYONE!

The first goal of every government shall be first to be committed and dedicated to sustainable economic development since there is no other alternative for any population.

The second goal of every government shall be to create a favorable environment between public and private research and development to plan, finance and engineer the switch over to green technologies. The Internet was created by the US Government and was developed beyond imagination by the private sector. Entrepreneurs and venture investing will not suffice. Worldwide governments must find a way to foster sustainable technology developments.

The third goal of every governments shall be to create incentives and regulations for households and firms to adopt sustainable technologies and resources instead of unsustainable ones. The world was very successful in controlling the depletion of the ozone layer due to the use of chlorofluorocarbon (such as Dupont’s Freon for refrigerants). Let’s not expect that Wall Street, businesses, households and all of us will do their best to move to a sustainable development without incentives and regulations. Change is not easy.

The forth goal of every government shall be cooperation between nations. We have to move away from self and competing interests where each country will do the least and expect the other countries to do more. In particular, we cannot have the benefits of sustainable technology in high-income markets and not in low-income markets. We must redefine competitive profits in such a way that profits enable firms to develop more sustainable products but without establishing borders that limit the adoption of their sustainable products. A good illustration of that goal would be to duplicate the tier-pricing approach that was taken for drug patents to fight HIV/AIDS where drug companies agreed to sell products at a reduced profit in low-income markets while making patent-protected profits in high-income markets.

“Less is More” - Reinventing our Consumer Behaviors and our Economic Models
Every Westerner on the planet cannot continue consuming as he or she does today. And, the developing world should not aim to take the eccentric consuming behaviors of today’s developed world. How often do we need to change our smart phones? How many cars do we need to drive? How many houses do we need to live happily? Why are we wasting water when we are running out of it? Why can’t we stop eating large ocean fishes in order to give them some time to reproduce themselves? Why are we expanding our homes, factories, towns but not giving at the same time more space to the animal habitat even when we know that more than half of today mammals population is declining and a third is facing extinction (according to the International Union for Conservation of Nature).

Our foolish global consuming society needs to make finally the difference between “what we need” and “what we want”? We need to learn to limit our consumption of good and services that are not based on sustainable natural resources. And, we need to learn to live from the consumption of good and services that are based on sustainable natural resources.

If as consumers, we start to behave with sustainability in mind so will our suppliers of goods and services. Wall Street business model is based on ever expanding economies where companies increase their profits by selling more to their customers, expanding their product lines, growing internationally and entering new markets. We have to realize that prosperity is limited by the Earth ecosystems and resources. We need to build new economic models based on “The Natural Capital”. Wall Street needs to start rethinking about rewarding the long term value of companies conserving, protecting, re-generating, and re-building the Earth ecosystems and resources. Degradation, erosion and destruction of “The Natural Capital” need to be taken into account in our economic forecasts and their externalities need to be taken into account in the pricing of products and services when using, abusing or misusing the Earth ecosystems and resources.

Containing The Growth of the Human Population
How many human beings can we be on the planet is a very controversial subject that was started forty years ago by Professor Paul and Anne Ehrilch in their book “The Population Bomb”? Of course, forecasting the right number is very challenging.

If instead of being 6.9 billion of human beings on our planet, we would be only 3.45 billion, just half of it, the fundamental questions of “why, what and how” to pursue sustainable economic development would not be a priority for our present human civilization. As noted by Professor Paul and Anne Ehrilch in their second book “The Dominant Animal”, on top of other effects, human population size is the “elephant in the living room”. Shifting population sizes for any species on Earth has important consequences for the future of those populations. If we were half of our total population, we will have more water, more food, more space for other animal species, more resources, in a nutshell we will have more of everything that we need and less emission of greenhouse gas and so no climate change. The Earth will be a paradise!

We will reach 6.9 billion in 2010 and 9.2 billion in 2050 according to the projections of the United Nations. Due to the present size of the younger population that will have new children soon, we will be adding, for sure, a billion people and will be reaching 8 billion. Growth in the world human population is coming mainly from Asia (in particular China and India) and Africa with the remaining from South America.

The two major drivers of human population growth are fertility rates and progress in health care. We all know that with higher standards of living and better education, fertility rates are rapidly dropping. And better health care changes the profile (shaped by size per age and per sex) of a population. In African countries, most of the size of the population is at a young age, sometime up to 50% under the age of 15, and declining steadily as the age of the population augments while, in developing countries, the profile of the population size is most evenly distributed across ages.

The present worldwide fertility rate, or number of children per woman, is 2.56 and expected to decrease to 2.02 in 2050. The fertility rate of most wealthy nations is around or below two which is considered as the replacement rate. Simply put, each woman, over her life time, would have two children, a son and a daughter, to insure the continuation of the population (more precisely the replacement rate is 2.1 with 105 boys for 100 girls). In sub-Saharan and several Middle Eastern countries, the fertility rate is between 5 and 8.

We must adjust, balance and control our population growth to our resources. Reverend Thomas Malthus already established that evidence in the eighteen century. This is a difficult decision and not only an economic one but of course a cultural and religious one as well.

So by helping the poorest countries in particular in Africa, with adequate population policies and family planning, to reduce their fertility rates and, mortality rates in particular for the youngest, we can start and must start containing the rise of the human population. Unfortunately, containing the growth of the population in poor countries has a lower effect on the demand for worldwide resources than in wealthier countries (but containing the growth of the population in poor countries is imperative for those countries to achieve faster prosperity).

A Sustainable Worldwide Economic Development Must Eradicate Global Poverty
Compare the impact of the recent 7.0 Port-au-Prince earthquake and the recent 8.8 earthquake in Santiago. Poor countries cannot endure extreme suffering from natural disasters while richer countries can, if not overcome, at least survive and surely recover from them. The death toll of the Haiti earthquake is in the 250,000 range while the death toll of the earthquake in Chili, one of the most developed economies in South America, is less than a thousand.

Poor countries collapse through natural disasters and implode into the violence of national crisis. They propagate environmental disasters, diseases, insecurity and human migrations. The present burning crisis of Haiti, Afghanistan and Darfur demonstrates why and how extreme poverty pushes desperation, depletes natural resources and leads to political instability.

According to the Inter-American Development bank, the reconstruction of Haiti could cost nearly $14 billion. The war in Afghanistan has cost to the US, only, around $300 billion dollars (add to that figure the contribution of other nations)! A US soldier costs one million dollar a year while $75 can purchase the required equipment to chlorinate enough water to provide to 1,330 people, 20 gallons of clean water per day for 7 days (according to Doctors without Borders)! The cost of helping a poor country to deal with a natural disaster or an internal crisis is by no means comparable to the cost of investing into that country to eliminate poverty.

And, a future worldwide economic development cannot be sustainable if it does not include economic development for all of us and therefore if it does not contribute eradicating global poverty.

“After the final no there comes a yes
And on that yes the future world depends.”

So wrote the poet Wallace Stevens and “so goes our generation’s challenge to turn the world from its unsustainable course” wrote Professor Jeffrey Sachs in the Power of One, the last chapter of his book “Common Wealth”.

Some French scientists have coined the term “Les strategies sans Regrets” to point out that the right actions for sustainable development are those of the present generation that will not be regretted by future generations. We have to choose if we want our children and our future generations to live in a sustainable or an unsustainable world. We have the option to act responsibly to maintain the Earth as a living planet and to respect the Earth ecosystems, animal and plant kingdoms that have the least reproductive and adaptive capacity but are so essential to the Earth and to human life.

So, let’s not carry our journey toward an unsustainable economic development for 2010 and beyond. As said by the US States Secretary of Energy, Steven Chu for the environment and before him by President John Kennedy in another context for the Cold War: “Our problems are man-made; therefore, they can be solved by man”.

References:
I have used many over the last few months to start thinking about the content of this article but following are the ones that have inspired me the most:
• Jeffrey Sachs, Common Wealth, Penguin Books
• Jared Diamond, Collapse, Penguin Books
• Paul and Anne Ehrlich, the Dominant Animal, Island Press
• Stephen Schneider, Science as a Contact Sport, National Geographic
• William McDonough and Michael Braungart, Cradle to Cradle, North Point Press
• Joanna Yarrow, Ecological, Duncan Baird Publishers
• National Geographic, State of the Earth 2010, Collector’s Edition
• Le Monde Bilan Planete 2009, Les temps forts et les acteurs de l’annee
• Les economistes peuvent-ils sauver la planete? La decouverte, Novembre 2009

Note: The picture above is the sculpture “The Thinker” from Auguste Rodin.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Apollo Sun Silicon Graphics and NeXt the Ascent the Metamorphose and the Fall

Mon, 8 Feb 2010 21:30:10 -0800

(T) I will always remember the Monday morning in 1989 when I was “Up in the Air” traveling from Paris to London with my general manager and learning from the Financial Times the acquisition of Apollo Computer by HP for $476 million. At that time, the computing industry was still very young and M&As were not common practice. Not to mention the high price paid by HP for this acquisition that surprised both of us. Apollo was the first workstation vendor two years before SUN Microsystems.

During my studies in computer science, our school lab was equipped with Apollo workstations and we were the first class to learn C and UNIX. Before us, other computer science grads learned Fortran and Multics (although we learned in my class C, Pascal, Lisp and Prolog, at that time the only programing language used in the industry was Fortran).

After my computer science degree, when I interviewed for a position at Apollo Computer, I was asked what was the major difference between Apollo and Sun. I tried to answer the question by pointing out differences into their implementations of the Unix operating system but I lost myself in my response. My interviewer with this question was only trying to point out the culture difference between Apollo which was an East Coast-based company and Sun which was a Silicon Valley-based company.

Apollo was founded in Boston in 1980 by William Poduska an ex-Prime employee (Prime Computer was a mini-computer manufacturer; other mini-computers manufacturers from the 1980s included Digital Equipment, Data General and Wang).

The first Sun (Stanford University Network) workstation was the product of Andy Bechtolsheim in 1982 when he was a PhD graduate at Stanford University. Andy needed a more powerful computer than those available in the marketplace for his PhD and designed his first workstation from spare parts, using the Motorola 68000 for the CPU and Unix for the operating system. With two other Stanford graduates, Vinod Kholsa and Scott McNealy and Bill Joy a graduate from UC Berkeley and a major contributor to Unix BSD (Unix implementation from UC Berkeley), Sun was launched. One of the best way to start a company is to develop a tool that can become a product for which a large potential market is indeed in need. That was exactly why Sun was started. And, the workstation market grew fast and became quickly one of the fastest growing markets in the computing industry.

In the meantime at Stanford (again!), Jim Clark a Computer Science professor designed the very first VLSI chips that accelerated geometric computations required to display three dimensional images. Jim foresaw a market segment in need of a new kind of workstation that could be used for high-end visualization applications. And, Silicon Graphics was born as a new competitor to both Apollo and Sun.

After leaving Apple in 1985, Steve Jobs with a few Apple employees created: NeXt with some initial seed money from Ross Perot. Initially, Steve wanted NeXt to develop a new generation of powerful computers for the academic market. But NeXt changed its course and became the last entrant to the workstation market competing with Apollo, Sun and Silicon Graphics.

The NeXt workstation was without doubt the most elegant workstation ever designed. It used the Mach kernel developed at Carnegie Mellon for its operating system: the NeXtSTEP. The NeXt workstation was used by Tim Berners-Lee at the CERN and became the first Internet server. While Steve secured a $100 million investment from Canon to manufacture NeXt workstations in Fremont, CA, NeXt never reached any significant market share compared to Sun and Silicon Graphics. Finally, Steve withdraw NeXt in 1993 from manufacturing hardware and re-engineered the company around NeXtSTEP and its object oriented user interface which later became OPENSTEP and got adapted by many leading software development organizations. And 1996, Apple acquired NeXt in order to use OPENSTEP as its next generation of operating system. After the acquisition by Apple, Steve first became the Apple interim CEO and later in 2000 the Apple CEO while still being the CEO of Pixar. It goes without saying that Steve learned from his youngest mistakes both at Apple and NeXt to transform Apple which was close to going out of business in 1998 to the most innovative high-tech company of this century and probably for the hight-tech industry.

Jim Clark at Silicon Graphics did a fantastic job to execute on the vision that he imagined while being a professor at Stanford University. Silicon Graphics’ IRIS workstations captured the high-end graphics and visualization market. The initial machines were based on the Motorola 68000 processor like Sun’s. In 1992, Silicon Graphics bought MIPS to redesigned its workstations around MIPS’ RISC architecture. The quality of the Silicon Graphics 3G graphics became a brand for the production of hollywood movies’ visual effects, in particular Steven Spielberg’s Jurassic Park was designed on IRIS workstations. But Jim Clark, very savvy at capturing new market trends, foresaw very quickly that PCs were not far distant to compete effectively with Silicon Graphics workstations at a much lower price point. In 1993 in disagreement with the other board members about the direction of the company, he left Silicon Graphics to start with Marc Andressen Netscape. After the departure of Jim Clark, Silicon Graphics moved aggressively into the high-end supercomputer market to compensate the lack of sales in its workstation business by first leveraging its internal high-end computing technoloy and further by purchasing in 1996 supercomputer vendor Cray Research for $740 million. But over time, the supercomputer market became under attack from high-end commercial servers from Sun and IBM which later became under attack themselves from clusters of off-the-shelves Linux-PCs based systems. Silicon Graphics finally abounded its MIPS RISC processors to adopt Intel’s RISC processors. It re-branded itself to SGI. But over time, SGI’s high-end servers sales decreased to a point where the company in 2008 filled for bankruptcy and sold its assets to Rackable Systems for $25 million. SGI’s last headquarters on Amphitheatre Parkway in Mountain View, CA became Google’s Googleplex.

For the first two years, Sun’s CEO was Vinod Koshla but Vinod left Sun to join top venture capital firm Kleiner Perkins Caufield and Byers and asked the energetic and charismatic Scott McNealy to become the CEO. In 1988, Sun hits a $1 billion dollar revenue. For its first decade, Sun was predominantly a vendor of workstations for engineers and scientists competing with Apollo and Silicon Graphics on lower margins. Sun branded itself as a leader of open standards and computer connectivity with the message “the Network is the Computer”. Sun invented a new network file system: NFS and integrated very quickly TCP/IP, the Internet protocol, into its UNIX kernel. In its second decade of operations, Sun moved aggressively into servers and storage leveraging the move to client/server architectures. Scott McNealy’s strategy was pretty simple: “not being a car dealer but thriving as a car manufacturer” in other words for Scott owning core computing technology was an absolute priority for the company; as such the company abandoned Unix BSD to create its own operating system: Solaris and developed its own line of RISC processors: the Sparc.

During its second decade of operations, Sun grew very quickly by moving from the technical computing market to the commercial computing market and having its line of server becoming well-adopted by database and enterprise applications vendors such as Oracle, Ingres, Informix, Baan, SAP and many others. Sun execution became flawless. It launched Java in 1995, a new network programing language created by James Gosling that was quickly massively adopted by all software engineers and developers around the world and became an ubiquitous tool to develop emerging Internet and intranet applications. Sun was very successfully ridding the Internet wave. its servers was used widely worldwide for Web applications. Scott’s marketing messages were simple as was his strategy: “Sparc is good, Solaris is good, Java is good and Microsoft is bad”. Scott never considered seriously IBM, DEC, HP as competitors. For him, the only competition to Sun was Microsoft. And, Sun’s mission was to relieve the computing world from Microsoft’s oppression.

But after the Internet bubble, major companies started slowly to replace Sun’s Internet servers with clusters of Linux PCs. Sun was much too slow to react against the adoption of Linux and lost gradually its profitable competitive edge. Sun’s technology investments were unprofitable: Sparc was losing against Intel’s processors, Solaris was losing against Linux and Scott was never able to make a business from Java. In addition, IBM and HP became stronger competitors taking market shares from Sun. Add to that, a lot of acquisitions that hurt Sun (Cobalt Networks for $2 billion, StorageTek for 4.1 billion and MySQL for $1 billion) and a complete demotivated workforce which has been laid off quarter after quarter as “RIF” (reduction in force) and Sun entered and stagnated in its third decade of operations from one of the most flawless high-tech companies to execute that it was during its second decade to become one of the high-tech companies to fail to execute properly. And, I still do not understand why Scott could not turn around the company or found someone who could turn around the company.

Finally, in April 2009, Oracle announced the agreement to purchase Sun for $7.4 billion. Sun became completed absorbed by Oracle on January 27, 2009. And with that ending, all workstation vendors have disappeared from the market place.

So what are the conclusions of the ascent, metamorphose and fall of Apollo, Sun, Silicon Graphics and NeXt. Let me suggest three conclusions.

The first one is that, if technology is complex, business strategy is simple. There only a few reasons why a high-tech company succeeds or fails. And, it is always a simple combination of a few unique facts that are centered around technology, product, market and management execution.

The second one is the incredible technology contributions of those companies in:
• software: Unix, C programming, the Unix Shell, the text editor VI, Java, distributed operating systems...
• networking: NFS, TCP/IP, Ethernet, mail...
• and in hardware: RISC processors, graphics processors, multiprocessors, parallel computing, computer clusters...

And, my last one is the impact of the high-profile founders and CEOs of those companies. With Scott McNealy and Jim Clark so prominent figures of the high-industry, with Bill Gates having retired from Microsoft, and Steve Jobs being unfortunately sick and less involved in the operations of Apple, the high-tech industry is definitely losing those who started the computing industry.

Note 1: I have been both an employee and a client of Sun Microsystems.

Note 2: The picture above is from Sun; from left to right, Sun’s founding team: Vinod Khosla, William Joy, Andreas Bechtolsheim and Scott McNealy with the Sun-1 workstation in 1982.

Note 3: The first picture in the article is the NeXt workstation from Tim Berners-Lee and the second one is his description of his invention of the Web on the NeXt User Interface. Those pictures are from Wikipedia.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Haiti Afghanistan and Darfur Why We Must Eradicate Global Poverty

Sun, 31 Jan 2010 18:00:41 -0800

(E) Watching the painful images of human losses from the January 12, 2010 earthquake in Haiti, I cannot stop imagining how San Francisco will look like after the next big “ONE” such as a new 1906 earthquake. What would happen to the San Francis Hotel, the luxurious stores on Union Square, the financial district around Market Street, the Embarcadero, the Golden Gate, the Bay Bridge? Will San Francisco look like Port-au-Prince? Geophysicists are telling us that earthquakes do not kill people; but buildings do. Poorly constructed buildings in Port-au-Prince were waiting to kill their inhabitants. Buildings in San Francisco are supposed to have been designed with the safest building codes standards. However, I have personally always doubt of the capacity of earthquake-proven architectures to hold a strong earthquake (and I sure hope to be wrong!). But even if most buildings in San Francisco would collapse under a 7.0 earthquake, the major difference between the Port-au-Prince earthquake and the next expected big one in San Francisco is simply that poor countries cannot endure extreme suffering from natural disasters while rich countries can, if not overcome, at least survive and surely recover from them. The confirmed death toll of Hurricane Katrina is at 1,836, while there is not a sure estimate yet of the death toll of the earthquake in Haiti, present estimates are now in the 300,000 range (may be more than the Indian Ocean Tsunami of 2004 where 230,000 people died). The uniqueness of the tragedy in Haiti is the outcome of an extreme natural disaster occurring in an extreme poor country.

In his book “Collapse”, Jared Diamond compared the destiny of Haiti with the one’s of the Dominican Republic. Both states share the same island. But one country is the poorest out of Africa while the other has achieved some economic prosperity. Haiti has all the characteristics of an extreme poor country: highly crowded, deficient in natural resources, corrupted state, no school, no road and so a life for its inhabitants without water and food.

It is by all means not an accident, that after having been invaded by Russia, Afghanistan became the harbor for international terrorism. Isolated by its mountains, Afghanistan shared the same profile of a desperate country with Haiti: poverty, overpopulation and environmental degradation. As noted by Jared Diamond about Haiti: “if one instead looks to the outside world to help through government aid, NGO initiatives, or private efforts, Haiti even lacks the capacity to utilize outside assistance effectively”. And, the same parallel applies to Afghanistan: poverty in Afghanistan has been one of the major challenges for the US and NATO to bring stability to the country.

Finally the tragedy in Darfur illustrates again the strong relationship between poverty and unacceptable governance. Poverty grows with poor governance. And, poor governance maintains and exacerbates the tragedy of a population in basic needs of water and food. The heart of the crisis in Darfur is the lack of economic development. In her book “The Challenge for Africa”, Wangari Maathai explains the crisis of national identity in Africa where some ethnies share the power and the resources while others are desperately hungry. “while some of the political and social problems in Sudan, Chad, and Africa in general are the legacies of colonialism - arbitrary borders or the favoring of one micro-nation, which then has access to more resources at the expense of other communities - after more than forty years of independence, none of these excuses justify poor governance or leaders committing crimes against their own people. It is inexcusable for African leadership to fail to protect its own citizens and then complain or respond defensively when citizen seek help or redress elsewhere”.

The histories and crisis of Haiti, Afghanistan and Darfur demonstrates why and how extreme poverty pushes desperation, depletes natural resources, leads to political instability. Poor countries collapse through natural disasters and implode into the violence of national crisis. They propagate environmental disasters, diseases, insecurity and human migrations.

In addition, a lot of poor countries in Africa had their natural resources exploited by external richer powers from Europe during the colonization era or now by some developing countries from Asia hungry for trades and new natural resources with no respect for the countries, its people and its environment.

The United-Nations Millennium Development Goals (MDGs) developed by the United-Nations General Assembly in 2000 structures global development policies, plans, and aids. The MDGs has eight goals to be met in 2015:

1. Eradicate extreme poverty and hunger
2. Achieve universal primary education
3. Promote gender equality and empower women
4. Reduce child mortality
5. Improve maternal health
6. Combat HIV/AIDS, malaria, and other diseases
7. Ensure environmental sustainability
8. Develop a global partnership for development

Those eight goals are fantastic! Unfortunately, the UN MDGs are failing to make significant progress in some areas. And, the UN even acknowledges that fact itself: “With only five years left until the 2015 deadline to achieve the Millennium Development Goals, UN Secretary-General Ban Ki-moon has called on world leaders to attend a summit next September to boost progress towards the MDGs”.

The burdens to escape poverty are totally surmountable. Jeffrey Sachs, author of “The End of Poverty”, articulates the four fundamental types of investments to end poverty in a given state:

“The first is a boost to productivity of the core livelihood, agriculture. This is the hallowed Green Revolution that initially lifts smallholder farmers out of subsistence. The second is health, including control of the main killers - infection, nutritional deficiencies, and unsafe childbirth - through the provision of preventative and curative health services. The third is education which ensures that households develop the requisite skills to navigate the local global economy. The fourth is infrastructure, essential for productivity in every sphere, including power, roads, safe water for drinking and sanitation, phone services and Internet connectivity, and port services”.

After only two weeks, the aid to the Haiti earthquake provided by worldwide nations in particular the US and Europe is already more than a billion dollars. The war in Afghanistan has cost to the US only around $300 billion dollars (add to that figure the contribution of other nations)! A US soldier in Iraq costs one million dollar a year while $75 can purchase the required equipment to chlorinate enough water to provide to 1,330 people, 20 gallons of clean water per day for 7 days (according to Doctors without Borders)! The cost of helping a poor country to deal with a natural disaster or a war is by no means comparable to the cost of investing into that country to eliminate poverty.

According to Jeffrey Sachs:

“The end of extreme poverty would require less than 1% of the annual income of the rich world to finance the crucial investments needed in the poorest countries to extricate them from the poverty trap (and even that modest transfer to the poor would be temporary, perhaps lasting only until 2025)”.

Poor nations such as Haiti, Afghanistan and Sudan and many others are going to some extreme hardships. Poverty is so deeply rooted into the bodies of those nations, that disempowerment paralyzes those nations. International aid is the fuel to start the engine of economic growth and higher living standards for those countries. Good governance will maintain it. And, education will expand it.

Global poverty is killing part of the world. And, the world cannot afford global poverty. So, why don’t we eradicate poverty? The problem is not a financing one: investments are modest nor a lack of solutions: solutions exist to eradicate global poverty, the problem is the inability of the world to achieve global goals, develop global cooperations and implement global solutions. And, we need to change that!

Eradicating poverty cannot be solved by governments, or by the private business sector, or by non-profitable organizations alone. Multiple stakeholders have contributed to global poverty and they all must be part of the solution. The poorest countries do not participate in our global marketplace and do not access our borderless Internet culture. We need first to provide them food and water, environmental protection, disease surveillance and second help them to build their public, educational and infrastructure systems. Only when that is in place can they start building goods and services for their local economies and participate trading with the rest of the world.

There is no reason why prosperity cannot be for all. In the end, we are only one species sharing the same planet.

References:
• How You Can Help End Poverty?
• Jeffrey D. Sachs. The End of Poverty, Penguin Press
• Wangari Maathai, The Challenge for Africa, Winner of the Nobel Peace Prize, Pantheon
• Jared Diamond, Collapse, How Societies Choose to Fail or Succeed, Penguin Press

Note: The picture above is a young girl from a Pacific island.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
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The Road to an Unsustainable Economic Development for 2010 and Beyond

Sat, 2 Jan 2010 09:30:52 -0800

(B) Rising world population, ever growing demands of goods and services, destruction of the earth ecosystems and resources and climate change are the four major challenges for our global human society for 2010 and beyond. Out of the four challenges, the Conference of Copenhagen which was supposed to address the challenges of climate change failed in December 2009. The sooner we face the reality of every one of those four challenges, the sooner we take the path to commit to their solutions. And, the sooner the human civilization can continue to flourish but definitely not in the same way.

Since the industrial revolution in the beginning of the XIX century, our pursuit of economic growth, consumption and wealth have led us to take advantage of the Earth resources and ecosystems as if they were inexhaustible. We have depleted the Earth resources for water, food, land, wood, energy and raw materials as we did not realize that we had only ONE PLANET. And, the scale of the human activity is so overwhelming and so ubiquitous that it does not give any home for any other species on our Blue Planet. We have been harvesting the Earth resources and ecosystems at a much faster rate than they can regenerate and killing the other species at a much faster rate than they can reproduce. We have simply reached a point where the Earth cannot give us any more what we need for our on-going well-being.

A Very Crowded Planet - Just One Planet as the Home for 6.9 billion People!
Our Universe is 13.7 billion years old. Our earth is 4.5 billion years old. The first living cells on earth appeared 4 billion years ago and mankind only 1 million years ago. From the Roman Empire to the Renaissance, the human population was stable and around a few hundred million people. It reached its first billion in 1800, 4 billion in 1950 and will reach 6.9 billion in 2010 and 9.2 billion in 2050 according to the projections of the United Nations (UN). Growth in the world human population is coming mainly from Asia (in particular China and India) and Africa with the remaining from South America.

The two major drivers of human population growth are fertility rates and progress in health care. We all know that with higher standards of living and better education, fertility rates are rapidly dropping. And better health care changes the profile (shaped by size per age and per sex) of a population. In African countries, most of the size of the population is at a young age, sometime up to 50% under the age of 15, and declining steadily as the age of the population augments while, in developing countries, the profile of the population size is most evenly distributed across ages.

While urban areas account for only 3 to 4% of the world’s land areas, since 2007 there are the home for half of the world population. Furthermore, the UN projects that all the 1.7 billion population increase between now and 2030 will come not only from the developing world but in the urban areas of the developing world! People from the rich countries are moving to big cities to look for new jobs while people from the poor countries are moving to big cities to escape hunger. More than twenty mega cities in the world have more than 10 million inhabitants and with that will encounter many common challenges such as concentration of pollution, infectious disease transmissions and greater vulnerability to flooding and earthquakes.

Climate change will force population migrations from desertification (in particular in Sub-Saharan Africa and in the Gobi desert in China), rising sea levels (in particular South Pacific Islands, Bangladesh and many large coastal cities) and from melting permafrost (in particular in Alaska). It is expected that 50 million people might be displaced by environmental disasters in 2010 and 150 million people in 2050 according to the UN.

Globalization of Prosperity in a World of Connected Consumers:
The world has become a global marketplace fueled by border less trade, production, consumption and financing of goods and services. Because of globalization, China, India and Brazil have started their economic growths based on the competitiveness of their exports. Those exports have brought to those countries, the know-how, the technology, the infrastructure and the financing to develop internally domestic consumer markets. As a consequence, an economic circle has been created in the developing world where international trades and exports spark internal economic growth and where internal economic growth drives in return new types of international trades and exports.

The gross household consumption was $8.7 billion and the per capita household consumption was $29,000 in 2005 in the US while it was $1.7 billion and $1,000 (at purchasing power parity) in China and $1 billion and $17,000 in France according to the World Bank. As China, India and Brazil achieve market-based economic growth based on globalization, those countries raise their living standards and narrow their per capita income gaps with the United-States, Japan and Europe.

On-going information and communication, affordable and convenient air travel and people migrations from East to West and from South to North have crafted the foundations for the global market place. The hundreds of millions from China, India and Brazil that are joining and re-creating the world wide middle class are eager to live and to consume in the same way as the US, Japan and Europe do; buying cars, gourmet food, fashionable clothes, cell phones and so on. The world has become a marketplace of connected consumers where consumer behaviors and brands are border less. Apple, Zara, Nintendo, Facebook, Hermes, Honda and many others have target markets that cross across geographies and cultures.

As the world population is rising, the income per household is rising in the developing countries, and the developing world is consuming more in addition to the developed world. There is more economic growth in the years to come for the entire world.

The Destruction of the Earth Ecosystems and Species:
With human impact on nearly every ecosystem on the planet, hundreds if not thousands of animal species most of them still unknown are disappearing. We all known the reasons: destruction of the animal habitats, deforestation, over hunting, over fishing and climate change. According to some research from the Zoological Society of London, one in four mammals is in danger of extension. Ubiquitous animal habitat destruction is a major crisis in particular in Southeast Asia, Central Africa and Central and South America. Tropical regions were biodiversity is the richest are the poorest regions where protection of the environment is the most missing. The species that are the most threatened are in a nutshell:

• Fish: According to the UN, 46% of the 28,000 known fish species are threatened dues to over fishing, industrial and agricultural pollution, changes in the chemical composition of the water (in particular lower rate of oxygen in the water due to global warming). Unfortunately, wild fish cannot be substitute to farming fish since fish farming is extremely polluting. According to Doctor Arnaud Filleul, a French zoologist, ideally we should urgently stop eating many endangered wild fishes to give them a chance to reproduce themselves.
• Corals: Coral reefs are suffering from rising sea surface temperatures and acidification of the oceans without mentioning the effects of tourism, harvesting and pollution on them.
• Amphibians: For many reasons, habitat destruction, pesticides and herbicides, introduction of new diseases, exposure to ultraviolet radiations are impacting large scale amphibian populations in particular many species of fogs and toads.
• Pollinators: The flowers, the fruits the vegetables of my garden, all of them are dependent of the honeybees and other pollinators. Less honeybees result in less food. The reasons are complex and involve habitat destruction, attacks from parasites, infections from pesticides.
• All large mammals including whales, polar bears, elephants, gorillas and many others: In general, the large mammals that are easily hunted and need large habitats, habitats that are destroyed or fragmented are under continuous threats from mankind.

It goes without saying that climate change is challenging more the survival of the animal species. Some species must change their migration paths, some must go higher in the mountains to find lower temperatures and some simply cannot escape because they are not mobile or have lost completely their habitacles such as the polar bears.

The Depletion of Precious Resources:
Our economies have never valued “The Natural Capital”. We have widely tapped into the Natural Capital without understanding its Value. Any valuable item is precious. And so are the limited resources from Earth. We have consumed, as if the resources of the Earth were infinite. As a consequence, we are likely going to miss in the future water, food, wood, raw materials and fossil fuels.

• Water: One of the most critical resources for life is water. Without drinking water, there is no survival. Without water for crops, there is no food. Without water for the industry, there are not new products. In many parts of the world, we have exceeded sustainable limits on the withdrawals of water from groundwater aquifers. We have disrupted water flows with the damming of rivers. Global warming is only going to accelerate the scarcity of water in particular in poor countries and in Asia. Less than 1% of the Earth’s water is accessible freshwater - the rest for around 97% is sea water and 2% are the ice caps and glaciers. And, the amount of fresh water has not changed.

• Food: According to the Economist of November 21st 2009, demand for agricultural goods will rise by 70% by 2050. A quarter of the earth’s fertile soils have already been degraded by intense fertilization. Agricultural production will have to grow without farmers clearing large amounts of new lands and with more limited water supply. Global warming is only going to accelerate the stress of agricultural production with more desertification and water rarefaction. A billion people do not have today proper alimentation. To feed 9.2 billion people on the planet with the agricultural capacity already fully utilized today, agro ecology will have to innovate with new agricultural techniques at the same time as sustainable land management and water conservation.

• Forests: Deforestation has been driven to produce paper and various other items and for heating homes. The largest forests on Earth in Brazil and the Amazon, Indonesia, New Guinea and Congo have been under severe destruction. From 2000 to 2005, the Amazon forest has lost 3.47 million hectares and the Indonesia forest has lost 1.45 hectares! And with deforestation, the concentration of CO2 increases, some rich ecosystems existing only in large tropical forests are lost, and animal species losing their homes dye.

• Raw Materials: The present growth of the new developing countries has set off a new boom for the extraction of raw materials in particular minerals, metals and ores. Commodity prices went through a bubble before the 2008 financial crisis but the bubble is unlikely over yet. Those prices are leading to new large scale search for new mines both for common ores such as copper, iron, tin, and for rare metals such as platinum and tungsten. Some of those materials will be disappearing in the future such as zinc which is widely used and for which a substitute will have to be found.

• Fossil Fuels: The depletion of fossil fuels is probably the one that is most talked by the politicians, the economists and the media. It is very difficult to predict when we will run out oil - may be in the next 20 years - may be in the next 40 years. But we will run out of oil. Like most commodities, because of the demand for oil exceeding the supply, oil prices are likely to skyrocket in the future. Gas reserves will last longer than oil’s may be 80 to 100 years while the reserves for coal are still enormous and could last for over 200 years.

The Impact of Climate Change:
Since the start of the industrial revolution in the 1820s, human combustion of fossil fuels and destruction of forests have increased the concentration of carbon dioxide (CO2) into the atmosphere by 35% from 280 parts per million (ppm) to 380 ppm today. There have been now a greater concentration of greenhouse gases into the atmosphere than there have been for up to 800,000 years. The rate of this change does not give anytime to any species on Earth to change the path of its Darwinian evolution to adapt. We have altered the biosphere in a few decades in ways that would have naturally taken 1,000 years or more. Since 1850, the Earth have already experienced an average near-surface temperature increase of 0.8 0C (or 1.4 0F). A doubling of CO2 will increase the average temperature from 2 to 4.5 0C (or from 3.6 to 8.1 0F). 2 0C or 3.6 0F is considered in the scientific community as the tipping point beyond which climate change becomes uncontrollable.

The consequences of climate change have been described in details in many publications and briefly include:
• Rising ocean levels due to the thermal expansion of seawater and the melting of the ice of the North and South Poles;
• Large scale extension of the most vulnerable species in particular those with constrained habitat ranges or limited mobility to adapt to new lands;
• New types of diseases and increase of disease transmission due to increase in temperatures and decline in rainfalls;
• Decrease in agricultural productivity due to altered seasons, rainfall patterns and biodiversity;
• Decrease of water availability due to increase evaporation, changes in rainfall patterns and river flows;
• Increase destruction from natural hazards in particular flooding and droughts;
• Acidification of the oceans and waters due to rising CO2 that will change the ocean chemistry and alter marine biodiversity.

My hope is that we can start 2010 and this second decade of our XXI century having learned from our mistakes from the first decade of our XXI century.

Europe was the political and economical leader from the Renaissance to the XIX century, and attempted to expand its dominance to Africa, North and South America. The XX century was the American century with two World Wars, a Great Depression, European colonization ending and the United-States economic expansion since World War II.

The XXI century started with a new type of war (that is not a Napoleonic state war), the collapse of the worldwide financial system and the rise of Asia’s economic power. China and Asia will produce in this XXI century more than half of the world income, will be the center of gravity of the global population and as a consequence will have the largest impact on further climate change.

Please let’s not carry our journey toward an unsustainable economic development for 2010 and beyond.

References:
I have used many over the last few months to start thinking about the content of this article but following are the ones that have inspired me the most:
• Jeffrey Sachs, Common Wealth, Penguin Books
• Jared Diamond, Collapse, Penguin Books
• Paul and Anne Ehrlich, the Dominant Animal, Island Press
• Joanna Yarrow, Ecological, Duncan Baird Publishers
• National Geographic, State of the Earth 2010, Collector’s Edition
• Le Monde Bilan Planete 2009, Les temps forts et les acteurs de l’annee

Note 1: My background is in technology and in business so I have obviously no expertise in particular in agriculture, fisheries, animal species etc... - so for those subjects, please read and learn from the experts.

Note 2: The twenty largest mega cities are from West to East: New York, Los Angeles, Mexico City, Rio de Janeiro, San Paulo, Buenos Aires, Istanbul, Cairo, Moscow, Karachi, Mumbai, Delhi, Kolkatta, Dhaka, Beijing, Shanghai, Seoul, Manila, Osaka and Tokyo.

Note 3: The picture above is one of my paintings.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Copenhagen Must Put the Planet on a Path to a Decarbonized Economy

Sat, 28 Nov 2009 10:31:37 -0800

(E) Continuing the path to an ever expanding carbonized economy is taking the risk that global society will not flourish anymore. We all know that. The world’s current ecological developments are unsustainable. If we continue living and working in the developed countries as usual, and if we start working and living in the developing countries as the developed countries do, we are taking a significant risk of future humanitarian, social and economical crises. Mankind present disruption of the Earth’s climate and depletion of the Earth’s resources are causing the rapid destruction of life-vital ecosystems. And those two trends can only become worse with a growing human population and the access to higher standards of living in the developing world. We can only use the Earth’s lands, water, biodiversity and energy in a sustainable way. Further disruption of the Earth’s climate and further depletion of the Earth’s resources will at least limit, if not endanger economic prosperity for ALL on the planet.

Every nation has not contributed in the same way to the present concentration of carbon dioxide into the atmosphere. But climate change is borderless. Every population, society and nation is affected in various and subtle ways. Change to the climate by one nation will affect itself as well as all other nations. Climate change is breaking century of diplomatic games. Cultural, economical and military competitiveness are no-sense in the context of climate change. Actions to block the consequences of climate changes must be shared globally with the same determinism and anxiety across world nations. Climate change is the business of every nation. And of EVERYONE!

If you are seating comfortably in front of your computer in your house in Silicon Valley, the chance are pretty high that you belong to the 95% of the world population that has not been affected yet severely by climate change. But if you have lived in New Orleans during Katerina and intend to stay there for the next hurricane, if you are a fisherman in Patagonia who cannot find any fish in the warmer Antarctic waters, or if you are a family struggling to find everyday food in Sudan, incoming changes to the climate have already changed your life for ever. But let be realistic, the decisions of the world leaders in Copenhagen will soon impact 100% of the world population. So let’s hope that they will make the right decisions:

I) The world needs to cut its carbon dioxide (CO2) emissions sooner rather than later and sharply rather than lower to avoid a potential increase in average temperatures from 1820 below 2 0C or 3.6 0F considered as the tipping point beyond which climate change become uncontrollable. That goal translates on a different scale, that the world’s governments must succeed to cut worldwide CO2 emissions in half, from the 1990 levels, by 2050 with specific targets mostly for 2010, 2015 and 2020 and not for 2030 and 2040 when it will likely be too late!

I) Nations should be accountable to insure their emissions targets. This is to avoid the failure of the Kyoto protocol where most of the 38 industrial nations (the EC, Japan and Canada) which committed to reduce their emission targets of 5% in 2012 might not honored their commitments. Lack of reduction of emissions shall result in the payment of a nation carbon tax to a Global Climate Change Fund (GCCF). Examples of carbon taxes (32 Euros per ton of CO2) have already been successfully implemented in Sweden, Denmark, UK and lately France on a national level.

I) Deforestation, which is responsible for around 20% of the concentration of CO2 into the atmosphere, should be stopped in particular in Brazil and the Amazon, Indonesia, New Guinea and Congo. Appropriate programs and funding should be investigated and implemented to help those countries to fight deforestation by breaking up the demand for the lands and the wood and providing alternative economic developments that are not linked to deforestation.

I) Together the United-States and China emit 40% of the world’s greenhouses. China is now the first worldwide emitter with 6 billion of tons or 4.58 ton per habitant and the United-States the second emitter with 5.9 billion of tons or 19.78 ton per habitant. As the two economic leading powers of the world, both the United-States and China shall lead the world to a decarbonized economy. Both the United-States and China are the world’s heavy coal-using economies (others are India, Russia and Australia). 50% of the electric power is generated by coal in the US and although China is clearly leading in renewable energies, it is still building a coal power plant every ten days (coal is primary, by its molecule structure, carbon and so generates more CO2 than oil or gas do).

I) In order to realistically achieve emission targets, nations shall investigate, co-operate and implement bottom-up policies and practical measures to insure decarbonized economies first by maximizing energy savings and second through the development and financing of large scale sustainable cleaner technologies for power generation, industry production, transportation (both for aircrafts and cars and trucks) and heating buildings.

I) The rich countries (the most CO2 emitting countries) should help the poor ones (the least CO2 emitting countries) in particular in the South Hemisphere, in Africa and in tropical regions that are the most vulnerable to desertification and water stress to quickly introduce new programs to adapt to climate change. Funding to that end shall come from the Global Climate Change Fund (GCCF).

I) The path to a decarbonized world can only be built with a global cooperation between countries. The world need to put the research and development efforts and the financing for carbon capture and sequestration (CCS), technologies that will provide environment sustainability, in parallel to operational policies and tactical measures for climate-change mitigation and adaptation.

“After the final no there comes a yes
And on that yes the future world depends.”

So wrote the poet Wallace Stevens and “so goes our generation’s challenge to turn the world from its unsustainable course” wrote Jeffrey Sachs in the Power of One, the last chapter of his book Common Wealth.

References:
• The United Nations Framework Convention on Climate Change
• Jeffrey Sachs, Director Earth Institute Columbia University, “It's too late to seal a global climate deal. But we need action, not Kyoto II”, The Guardian, September 29th, 2009
• Ban Ki-moon, Secretary General of the United Nations, “We Can Do It”, The New York Times, October 25th, 2009.

Copyright © 2005-2010 by A Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Pre Copenhagen Climate Change for Dummies

Sat, 28 Nov 2009 10:30:59 -0800

(E) Since the start of the industrial revolution in the 1820s, human combustion of fossil fuels and destruction of forests have increased the concentration of carbon dioxide (CO2) into the atmosphere by 35% from 280 parts per million (ppm) to 380 ppm today. CO2 is an occurring gas emitted naturally by volcanoes in the Earth’s atmosphere. If you remember your high-school chemistry class, fossil fuels are mostly composed of carbon (C) and hydrogen (H) in varying (and some time complex) proportions. When burned, the carbon of the fossil fuel (C) combines with the air oxygen (O2) to produce the carbon dioxide (CO2) and its hydrogen (H) with the air oxygen (O2) to produce water (H2O). Similarly when burned, trees and plants convert their carbon (absorbed from photosynthesis) with the air oxygen into CO2. And so by replacing forest lands by farm lands, deforestation has the same CO2 effects as burning gasoline when driving. Fossil fuels presently contribute to 80% while deforestation contribute to 20% of the total CO2 emissions.

The Greenhouse Effect:
The greenhouse effect of carbon dioxide, methane (CH4), nitrous oxide (N2O), water vapor, and a few other gases (fluorinated gases HFCs and PFCs) is to keep the heat energy from the Earth. Greenhouse gases are transparent to the sun ultraviolet radiations (that are short wavelengths) that warm the Earth. But as the surface of the Earth reflects those radiations back to space into infrared radiations (long wavelengths), a process called albedo, the energy of those infrared radiations are absorbed by the greenhouse gases keeping the heat in the atmosphere. While water vapor can disappear in days from the atmosphere, the lifetime of CO2 in the atmosphere can range from 50 to 200 years!

Before the first industrial revolution, half of the greenhouse gases produced by the Earth ecosystems were reabsorbed by the natural “sinks” of the oceans, the trees and the plants. Life on earth could not have existed without natural greenhouse gases that kept the Earth warm enough. But human activity released around 36 billion of tons of greenhouse gases in 2007, half went into the atmosphere and half was absorbed by the sinks. There have been now a greater concentration of greenhouse gases into the atmosphere than there have been for up to 800,000 years. The rate of this change does not give anytime to any species on Earth to change the path of its Darwinian evolution to adapt. We have altered the biosphere in a few decades in ways that would have naturally taken 1,000 years or more.

The Climate Sensitivity:
Assuming that the current annual growth rate of carbon concentration stay at 2 ppm, by 2100, the concentration of CO2 will double to 560 ppm. But if you take into account the rapid economic growth of China, India and other developing countries, the present concentration of CO2 will not doubled in 2100 but in 2050 - and this could even come earlier if some positive feedbacks kick in (such as CO2 naturally sequestered by the oceans and the lands that could be released by warmer temperatures)! Since 1850, the Earth have already experienced an average near-surface temperature increase of 0.8 0C (or 1.4 0F). A doubling of CO2 will increase the average temperature from 2 to 4.5 0C (or from 3.6 to 8.1 0F). 2 0C or 3.6 0F is considered in the scientific community as the tipping point beyond which climate change becomes uncontrollable.

The Consequences of Climate Change:
The consequences of climate change have been described in details in many publications and briefly include:

• Rising ocean levels due to the thermal expansion of seawater and the melting of the ice of the North and South Poles;
• Large scale extension of the most vulnerable species in particular those with constrained habitat ranges or limited mobility to adapt to new lands;
• New types of diseases and increase of disease transmission due to increase in temperatures and decline in rainfalls;
• Decrease in agricultural productivity due to altered seasons, rainfall patterns and biodiversity;
• Decrease of water availability due to increase evaporation, changes in rainfall patterns and river flows;
• Increase destruction from natural hazards in particular flooding and droughts;
• Acidification of the oceans and waters due to rising CO2 that will change the ocean chemistry and alter marine biodiversity.

Can we Change the Course of Climate Change?
According to Jeffrey Sachs in 2007 fossil fuels contributed to 81% of the CO2 emissions and deforestation to 19%. More precisely, production of electricity generated 32%, industry 22%, transportation 18%, residential and commercial 9%.

So if we just start producing electricity with solar, nuclear and wind energy instead of coal and natural gas and if we stop deforestation, we could reduce the emissions by 51%. If half of our transport systems in particular our cars would be electric, we could reduce the emissions by 60%. And through the use of renewable energy and more efficient energy savings, we certainly could take care of the remaining 40%. The numbers do not lie: there is significant room, if not eliminating completely, at least significantly reducing CO2 emissions.

We need to modify our behaviors, stop changing the climate, and transitioning quickly to a global society where environmental sustainability is the first priority for everyone.

References
• Intergovernmental Panel on Climate Change, Fourth Assessment Report, 2007
• Nicholas Stern, the Economics of Climate Change, Cambridge University Press
• Jeffrey Sachs, Common Wealth, The Penguin Press.

Note: The picture above is one of my paintings.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

The Road Map to the Smart Power Grid from EPRI

Sun, 8 Nov 2009 14:17:33 -0800

(T) Is the Smart Power Grid “reality” or “hype”? There are definitely a number of inflated expectations about what is presently the Smart Grid, why do we need it or how to design and implement it. Depending of who you listen to or what you read - the Electrical Power Research Institute (EPRI), the Department of Energy (DoE), the utilities, the start-ups and the large industry equipment providers from Silver Spring Networks to GE - everyone has its own story; and that is more obvious when you read the media. Hype is good since it can accelerate the penetration of new technologies but hype can sometimes disrupt the birth of a new technology. Technology needs to be nurtured and to grow before to make any difference.

Having said that, there are fundamental reasons why the power industry needs to quickly upgrade its grid to a smarter one. The major motivation for the Smart Grid is that the end nodes of the delivery system that includes power transmission and distribution are changing.

The power plants that will generate the energy of tomorrow have to evolve. Renewable energy, in particular Solar and Wind, are creating a major challenge for the utilities. They are introducing stochastic ( e.g. uncertain) power generation. Although forecasting the sunshine in San Francisco is not too difficult; forecasting it in Boston is much more challenging. However, try to forecast the energy production in both cities from a wind park a day ahead or even five hours in advance! Solar and wind power generation makes every day different for the utilities. And as a consequence, utilities need to adopt new storage systems from new generation of large scale batteries capable of storing from 10 Mega Watts to 1 Giga Watts to smaller ones capable of storing from 100 kilo Watts to 10 Mega Watts. And, they will have to build new generation of large scale storage power plants.

The other major evolution to the end node of the present grid is the Home Area Networks (HAN) for residential consumers or Building Area Networks (BAN) for business consumers. Both residential and business customers will likely have in the soon future their own energy generation system from solar powers and wind turbines. In that case, the grid does not become the first source of power for the home or the building but an addition to it or a back-up. Second, the needs to provide power for Plug-in Hybrid Electric Vehicle (PHEV) is disrupting the demand for electricity both on a time scale - everyone will likely recharge his or her PHEV after work in the evening - and on a geographic scale - purchasers of PHEV tend to live near each other (Berkeley, California, for example, represents 18% of all customers in PG&E's territory while Fresno, California, is only 2%).

Besides accommodating the generation, distribution and storage of Solar and Wind Energy and the penetration of PHEV, utilities need to upgrade the power grid to sustain efficiency and resiliency.

An efficient grid is required to improve the “Demand Response” that is the temporary and voluntary adjustment of power demand by the residential or business end-users in response to price changes or emergency needs. To that end, the industry is adopting smart network interfaces and smart meters.

A resilient grid is required to decrease the magnitude and the duration of blackouts such as the one in 2003 in the US North East that can cost billions of dollar to the economy. To that end, the industry is adopting a new generation of monitoring and control systems that will provide higher visibility and better control of the grid behavior, and a new generation of protection and restoration network systems.

According to EPRI, the vision of the Smart Grid is to engage customers, enhance efficiency, ensure reliability and enabling renewable energy and electric transportation. The power network will integrate a communication fabric that reaches every device and highly instrumented with advanced sensors and computing systems. Logically, the Smart Grids can be viewed as seven “domains”: the power generation, the transmission system, the distribution system, the customer, the markets, the network operations and the service providers. The National Institute of Standards and Technology (NIST) is presently in charge of coordinating the development of a framework to achieve the interoperability of Smart Grid devices and systems.

According to the Cleantech Group, over one billion dollars have already been invested in Smart Grid start-ups since the early 2000s. In order to increase our supply of energy and to generate it from renewable energy and to accommodate the new requirements to sustain the environment, total worldwide investments in the Smart Grid will likely grow from today’s billion dollars to the hundred of billions of dollars in the next twenty years.

So let’s hope that the present hype in the Smart Grid will help to modernize the electric power system by focusing on the benefits of the renewable energy, the requirements to facilitate electric transportation while considering an holistic approach to the network by removing the present deficiencies and implementing innovative and cost effective solutions.

Note 1: This article partially used background information from the talk, I attended, “The Smart Power Grid” by Stephen Lee from EPRI at the IEEE Power Electronics Society Santa Clara Valley Chapter on October 21, 2009.

Note 2: The picture above is my house interface to the present grid of PG&E with my new smart meter (although I have only presently a smart meter for electricity not for gas yet).

Note 3: The picture on the side is from EPRI: the house of the future.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

The Sun Our Future Energy Source

Sun, 18 Oct 2009 20:00:11 -0700

(T) We have many non fossil alternative energy available to use today. If you consider all of them, the list is pretty long and include at least solar, wind, nuclear, hydroelectricity, biofuels, biomass, geothermal and ocean waves energy! There are many factors that are likely to make one of those renewable energy more appropriate to satisfy our energy requirements than another one. Namely, the energy of the future must be plentiful and scalable to meet our growing worldwide energy consumption. And, it needs to produce abundant electricity in a cost effective matter. Ideally, you might want to add that its source, generation and distribution shall be equally spread worldwide to mitigate any geopolitical risk regarding its supply and pricing.

Biofuels and biomass are not the best solutions:
Biofuels are mostly produced from crops such as sugar cane in Brazil or corn in the US Midwest. There are two major challenges with biofuels. The first one is that they require too much soil and water that must be preserved more than ever to feed a crowded planet. The second one is that they keep us dependent on liquid fuel for transportation. Or transportation is roughly a third of our energy consumption and we need ideally to move as quickly as possible to electrical-based transportation. In addition corn-based biofuels require fossil fuel from the corn fertilizer, to the processing of the corn and the transport of ethanol that makes the net carbon reduction of corn-based ethanol nonexistent.

Biomass generates electricity from plants through a process called photosynthesis that converts the solar radiations into the stored biomass energy. But photosynthesis is not efficient. Plants can only capture 1% of the solar energy while solar photovoltaic (or PV) cells can capture up to 15% of the solar energy hitting a given surface (more on that soon).

Wind, hydroelectricity, geothermal and ocean waves are local solutions:
Wind, hydroelectricity, geothermal and ocean waves energy might be competitive in certain regions. But each of them depends of favorable local conditions and has limitations to be produced in large quantities. They will likely contribute to produce the energy of our future but in a marginal way and cannot be considered as a global replacement to oil and natural gas. Wind power has been growing recently worldwide annually by 45% a year and represented 1.5% of the worldwide electricity production in 2008. And, in most cases, wind is cost competitive.

Nuclear energy is a second choice after solar energy:
The only two sources of energy that can be the large-scale non-fossil fuel alternatives are nuclear and solar energy. Simply put, both of them are plentiful, scalable and cost effective and can directly produce electricity. However, nuclear energy has many disadvantages that makes it a second choice after solar energy.

The fears of nuclear proliferation has always be a major security constraint to the development of nuclear energy. No solution has been found yet to the disposals of nuclear waste from the nuclear reactors. And, that is both an environmental and political challenge that is still waiting for a solution.

Solar is The energy of the future:
Solar energy has now the potential to be our largest, safest and longest-lasting energy source. Yes, the Sun is the energy of our future! Emerging solar technologies exist already that will make large-scale production of solar energy to be a viable and cost-effective alternative energy source on a worldwide scale. There is a vast amount of solar energy to harvest, and we need to start urgently heading down that route.

We can capture 1000% more energy from the sun than we are consuming! The total solar energy absorbed by the Earth in a few hours is more than a year of the total worldwide consumption of energy. The amount of solar energy reaching the surface of the planet is so vast that in one year, it is about twice as much as the energy that will even be obtained from all of the Earth’s non-renewable energy sources including oil, natural gas, coal, and mined uranium combined.

Sunlight can be converted into electricity using photovoltaics (PV) cells that are being presently improved from many start-ups to deliver the ultimate solar electricity cell and panel. PV cells have mainly been used to power small and medium-sized applications, from the small calculator powered by a single solar cell to off-grid homes powered by a photovoltaic array.

Multi-megawatt PV plants that converts the sun’s rays directly into electricity using semi-conductor technologies such as the 20 Mega Watts site in the Spanish province of Alicante are characteristic of the trend toward larger photovoltaic power stations both in Europe and the United States. The Alicante solar power plant has now 14 hours of solar storage that enables the generation of solar power over a non-stop 24 hours period.

Today electricity prices, for instance in California from PG&E, are increasing on an annual basis on an average by 6% due to the increase in gas pricing. Solar energy prices are currently decreasing by 20% a year. So, we should expect soon - may be as soon as in the next 2 to 3 years that solar energy will be as cost effective as gas to generate electricity.

Yes, definitely the Sun is the energy of our future!

Note 1: This article is based from the talk “State of energy address? Are we are on the right track?” from Professor Gerritsen from Stanford University on July 23rd at the Cantor Museum of Art at Stanford University and from the talk “Physics for future presidents” from Professor Muller from UC Berkeley at Kepler’s bookstore in Menlo Park last summer.

Note 2: The picture above is a sunset from Brittany, France.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

We Will be Running Out of Oil Soon

Sat, 10 Oct 2009 18:00:48 -0700

(B) We will run out of oil in a few decades. The total world oil production probably peaked in 2008 and will be dropping in the decades ahead. With a growing world population and a much more industrialized world, worldwide demand for oil will outpace worldwide production of oil by a significant margin. As a result, expect oil prices to skyrocket again and oil dependent economies to be challenged. 
The top three oil producing countries are Saudi Arabia, Russia and the United-States. Yes, the US is still the number three producer of oil while Russia production is expanding and, Russia is likely to be soon the first oil producer in the world. About 80% of the world’s readily accessible oil reserves are located in the Middle East with 62.5% coming from Saudi Arabia, UAE, Iraq, Qatar and Kuwait.

We are consuming currently worldwide around 84 million barrels of oil per day. The US is consuming around 25% of the world oil produced or roughly 21 millions barrels of oil per day; this is the equivalent of 100 olympic sized swimming pools! The US produces roughly 7 barrels of oil per day and imports 14 millions barrels of oil per day.

Oil is supplied to the US for 40 % from OPEC countries and for 60% from non-OPEC countries. The top five suppliers of oil to the US are Canada 20%, Mexico 11%, Saudi Arabia 10%, Nigeria 10% and Venezuela 9%.

The US oil production peaks in the mid 1970s and since then has dropped. 25% of the US production comes from 4,000 offshore platforms mostly in the Golf of Mexico; Texas supplies 10% of the US oil, California 10% (California has been suppling oil for over 100 years) and Alaska 10% (the largest oil field in the US is in Prudhoe Bay on the North Slope of Alaska).

Crude oil and natural gas consist of a complex mixture of hydrocarbons molecules and organic compounds. It was formed from the fossilized remains of dead plants and animals exposed to heat and pressure in the Earth’s crust over hundreds of millions of years.

An oil well produces predominantly crude oil with some natural gas dissolved in it. Primary oil recovery techniques provide 20 to 30% of the oil in the reservoir. Oil is simply driven out of the reservoir by the difference of pressures between the atmosphere low pressure and the reservoir high pressure. Secondary oil recovery techniques can provide 60 to 70% of the oil in the reservoir:
• by increasing the pressure on the reservoir - some fluid such as water are pumped into the reservoir;
• or by expanding the reservoir - carbon dioxide (a technique called as well carbon sequestration) is injected into the reservoir (oil and carbon dioxide mixes together and expands the reservoir as a result).

Most of the oil in Saudi Arabia is very light and therefore of excellent quality, and available at low production costs through primary oil recovery.

Offshore wells, obviously the most expensive wells, can now be drilled from 6,000 to 8,000 feet below the ocean surface and 20,000 – 30,000 feet below the ocean floor. The deepest offshore oil is 36,000 feet deep.

The lighter grades of crude oil result in the best yields to produce fuel oil and gasoline but as the world's reserves of light oil are depleted, the oil industry is increasing its production of unconventional oil such as heavy oil that requires more complex and expensive oil refineries. Because heavier crude oils have too much carbon and not enough hydrogen, those processes generally involve removing carbon from or adding hydrogen to the molecules.

Extra heavy oil is found in a semi-solid form mixed with sand and water and referred to as sand oil or crude bitumen. In Canada, bitumen or tar sands are so thick and heavy that they must be heated and diluted before they can flow. In that process, a lot of water is used and heated with natural gas resulting in a large carbon footprint production. In addition, the water generated is quite toxic because of the heavy metals such as sulfur contained in the oil. Venezuela also has large amounts of oil sands but is missing the gas to produce the oil. Together, Canada and Venezuela contain an estimated 3.6 trillion barrels of bitumen!

Another type of unconventional oil reserves is oil shale, an organic-rich sedimentary rock, that can be found in particular in the US Rocky Mountains. Extracting oil from the shales is a very difficult and environmentally unfriendly process known as "retorting". Simply put, retorting required mining the shale, hauling it to a processing facility that crushes the rock into small chunks, then extracting its kerogen, then upgrading the kerogen through a process of hydrogenation (which requires lots of water) and finally refining it into fuel oil and gasoline! Because of the high costs of retorting, no one has yet been producing commercial quantities of oil shales.

We have already pumped around a trillion barrels of oil from the ground. Known reserves of oil are typically estimated at 1.2 trillion barrels of oil. If you add to it the reserves of oil sands, those reserves increase to 3.74 trillion barrels and if you add to it in addition the reserves of oil shales, those reserves can reach in total more than 5 trillion barrels!

Because of the demand for oil exceeding the supply, oil prices are likely to skyrocket in the future. And because of their volatility, speculation might even push oil prices higher as they did last year. As oil prices increase, oil companies will become even more profitable and therefore will have the cash to invest in bringing economically the production of oil sands and may be oil shales.

The production, refining, distribution and retailing of petroleum products is the world largest industry in terms of revenues. High oil prices will definitely keep the oil industry alive and the oil industry will likely bring to the market more and more oil that is much more expensive to produce and much more environmentally unfriendly to produce.

It is very difficult to predict when we will run out oil - may be in the next 20 years - may be in the next 40 years. But we will run out of oil. Gas reserves will last longer may be 80 to 100 years while the reserves for coal are still enormous and could last for over 200 years. As an alternative to the future lack of oil and to be more environmentally friendly, the coal industry is working to produce “clean coal” an expensive approach to capture and store the carbon generated by the production of coal.

However, at the same time, higher oil prices must accelerate the opportunity to create and to develop a new industry that can deliver new sources of energy that are more cost effective than oil, that are plentiful for a more crowded planet, that will preserve the remaining critical Earth ecosystems and, that are sustainable in the long-term for the environment.

Let’s not wait to take advantage of that huge opportunity in front of us.

Note 1: This article is based from the talk “State of energy address? Are we are on the right track?” from Professor Gerritsen from Stanford University on July 23rd at the Cantor Museum of Art at Stanford University and from the talk “Physics for future presidents” from Professor Muller from UC Berkeley at Kepler’s bookstore in Menlo Park last summer.

Note 2: The Hubbert peak theory assumes that the rate of the petroleum production tends to follow a bell-shaped curve. The mid 1970s were the Hubbert peak for the oil production in the US and 2008 was probably the Hubbert peak for the worldwide oil production.

Note 3: The picture above is an oil sand field from Alberta, Canada.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

How Much Energy Do we Need?

Wed, 7 Oct 2009 18:29:22 -0700

(B) Our body needs to get from our meals 2,000 calories per day or the equivalent of a 100 watts light bulb. In our day-to-day life, every one of us needs 100 of those 100 watts light bulbs to meet our total energy needs for driving, in our homes, at work, and for producing the goods that we consume. In the US, the present total energy consumption per year is 1020 joules (or 100 exajoules) and in the world 4.5 1020 joules (or 450 exajoules) with 80 to 90% of that energy derived from the combustion of fossils fuels.

Many parts of the world have still limited access to energy. As the developing nations such as China, India and soon South America are transitioning to stronger economic growths and higher living standards, the pressure on energy supply has already significantly increased and will increase much more in the soon future.

Now add to that equation - the worldwide population growth: according to the United-Nations, the world population is expected to grow by 40% from now to 2050 or from 6.6 billion in 2007 to 9.2 billion in 2050.

The bottom line - if you consider both the economic growth of the developing countries and the growth in worldwide population, we have to double the present production of worldwide energy in the next decade in order to satisfy a future worldwide consumption of 10 1020 joules (or one zettajoule) per year. So now imagine how much energy the world will need in 2050 when the standards of living of the developing world will have matched those of the present developed world and our already very crowded planet will count 9.2 billion human beings!

Worldwide economies have two essential challenges in order to maintain our “energy-hungry” way of living:
1. How do we first double the worldwide supply of energy in the next decade?
2. How can we meet this significant increase of demand in energy without damaging further the Earth’s climate and ecosystems.

While the US has only 5% of the total worldwide population, it consumes 20% of the worldwide energy production. The US is definitely wasteful, consuming much more energy per capita than the rest of the world and could significantly benefit from “Save Baby Save” policies instead of “Drill Baby Drill” ones.

In the US, 95% of the fossil fuels are employed to generate energy, the remaining 5% are used to manufacture diverse materials such as plastics, fertilizers and various chemicals.

Following is the break-down of the US fossil fuel consumption:
• 40% is used to generate electric power
• 32% is used by the industry
• 28% (mostly gasoline and jet fuel) is used for transportation
• 20% (mostly natural gas and coal) is used for heating

And, the break-down of the sources of energy for the US are:
• 29% from imported oil
• 11% from domestic oil
• 24% from coal
• 19% from natural gas
• 8% from nuclear
• and 8% from other sources (solar, hydro, wind, biomass, geothermal)

Three are three fundamental attributes of any energy source that are fundamental to consider in order to develop a sustainable energy policy:
1. Potential damage of the energy source to the Earth’s environment (both from its production and its consumption)
2. Efficiency of the energy source to produce “easy-to-use” energy
3. Cost of producing that energy.

Let’s examine how those three attributes differ among a few well-known alternatives:

For the same weight, gasoline delivers approximately:
• 2 times the energy of coal
• 2 times the energy of chocolate chip cookies
• and 1.5 times the energy of ethanol

And, in energy per pound,
• Natural gas (CH4) is 1.3 times better than gasoline
• Uranium is 2 million times better than gasoline

Note how much energy food provides to the human body (that is the reason why it is so hard to lose weight without physical exercise and why we are desperate of eating chocolate when we fall in love!).

The cost of energy per kilowatt-hours is for (excluding production investment costs):
• Coal: 0.4-0.8 cents ($40-80 per ton)
• Natural gas: 3.4 cents ($10 per million cubic feet)
• Gasoline: 11 cents ($3.70 per gallon)
• Car battery: 21 cents (but $50 cost to replace).

In the US, coal is 21 times cheaper than gasoline. The cheap cost of producing coal and the abundance of coal are the obvious reasons why China and India are relying so much on it as their primary energy source today. China, India, the US and Russia have huge coal reserves that could last for the next two centuries while the world might be running out of oil in the next few decades. Unfortunately, coal is primary by its nature carbon and so it generates more carbon dioxide (CO2) damaging the environment than oil or gas do.

We need to deliver to the world new sources of energy that are cost effective (like oil), scalable and plentiful (like coal) to accommodate the growth in worldwide population and the economic development of China and India while at the same time, those sources of energy must be sustainable for the environment and preserving the remaining critical Earth ecosystems (not like oil and coal).

In the next few articles, soon to come on that blog, we will attempt to investigate the present sources of energy and which new sources of energy should we invest in for our future?

Note 1: This article is based from the talk “State of energy address? Are we are on the right track?” from Professor Gerritsen from Stanford University on July 23rd at the Cantor Museum of Art at Stanford University and from the talk “Physics for future presidents” from Professor Muller from UC Berkeley at Kepler’s bookstore in Menlo Park last summer.

Note 2: The picture above is a Citroen 2CV.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Good Green Tech Readings

Sat, 12 Sep 2009 16:00:58 -0700

(T) While I wrote on that blog that I would like to see more from both Stanford and UC Berkeley as the engines of knowledge in Green-Tech for Silicon Valley, I have enjoyed over the last year listening, reading and learning from Professor Gerritsen from Stanford University and Professor Muller from UC Berkeley.

I had the chance to listen to Professor Gerritsen’s talk “State of energy address? Are we are on the right track?” on July 23rd at the Cantor Museum of Art at Stanford and Professor Muller’s talk “Physics for future presidents” at Kepler’s bookstore in Menlo Park last summer.

My next three blog articles are based on both of those talks.

Professor Gerritsen is a faculty member in the Department of Energy Resources Engineering at Stanford University, a researcher developing new tools to enhance production of existing oil and gas reservoirs in an environmentally friendly way and a teacher in energy resources, fluid dynamics and computational mathematics. In addition, Professor Gerristen is leading Smart Energy a non-profitable organization dedicated to discuss new energy technologies and policies.

Professor Muller is a physic professor at UC Berkeley, a researcher at the Lawrence Berkeley National Laboratory and the author of “Physics for Future Presidents”.

Besides reading Professor Gerritsen and Muller, I have read, re-read and re-re-read “Common Wealth Economics for a Crowded Planet” from Professor Sachs director of the Earth Institute at Columbia University and an advisor to the United Nations.

While Gerristen’s expertise is mostly in Oil and Solar energy, Muller is a physicist that can explain us the fundamentals of energy and global warming, Sachs articulates the economic challenges for the 21 century: economic growth with environment sustainability without any poverty traps!

And last if you have only the time to read, one Green-Tech blog, of course besides A Silicon Valley Insider, I recommend reading Green Tech from CNET.

Note: The picture above is a hummingbird enjoying one of my flowers in my garden. As noted by Professor Muller the hummingbird “uses enormous energy to flap its wings just to sip a tiny amount of nectar”.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

The Challenges Ahead for Microsoft to Sustain its Growth

Sun, 16 Aug 2009 18:53:43 -0700

(T) I do not share the views of many analysts in Wall Street that, even after a terrible Q4 earnings report, are still optimistic about the future of Microsoft. Their optimism about Microsoft are mostly based on the early successes of Microsoft new search engine Bing and the high expectations of its next operating system Window 7. However, I would argue with them that the numbers in the recent Microsoft earnings are starting to “finally” prove that Microsoft is not well positioned for the future and that its $58 Billion revenues might continue to decline even after the economy expands again. Of course, Microsoft is so much entrenched into the IT infrastructure that customers are still very much dependent on Microsoft’s products but...

Microsoft’s Q3 earning report this year was the first one where sales year-over-year were down. Not only in this Microsoft’s Q4 earning report, revenues expectations were missed by $1.27 billion or 17% and every sales of every business units were done, but more importantly this last quarter was the first one where sales of the Windows operating system were declining. And, this year was the first time for Microsoft to lay off some of its staff.

Microsoft extremely powerful business model has been based on expanding its product lines around its PC operating system monopoly and competing on any new market with emerging competitors through extreme low price entry. When competitors were pushed out of business and at that time generally Microsoft products have gained feature parity with leading competitive products, Microsoft raised its pricing. That strategy made Microsoft winning against any competitor such as Borland, Novell, Netscape and many others in the PC business.

But, now that computing is moving to mobile devices and cloud computing where applications are provided and priced on demand and are not dependent of PCs, that strategy will not work anymore.

Microsoft Last Competitive Advantages - Office and Exchange:
At the server, Linux has weakened all Unix flavors even Solaris leading Sun to be acquired lately by Oracle. The reason why Linux has never taken off at the desktop is because users have to use Microsoft Office and in particular Microsoft Outlook. All corporations have built significant infrastructure of Exchange servers in order to support Outlook e-mails and paid for that to Microsoft significant licensing fees. Although Google Apps and Open Office are still far away from taking significant market shares to Microsoft Office - and Google Gmail and Yahoo Mails are still far away from taking significant market shares from Microsoft Outlook and replacing Exchange - at the end of the day - IT is a cost center for businesses and in order for businesses to lower their costs, they will have to move to Web-based applications and Web-based e-mails. Microsoft has offered since November 2008 hosted versions of Exchange, SharePoint, Office Communications and Office Live Meeting and an online version of Office 2010 is expected. But the economics are playing against Microsoft. And when offered as a hosted service, Microsoft’s competitive advantages are lowered since it is easier for customers to switch from Microsoft to another vendor.

Windows Operating System Sales are Declining:
The only reason why on my Mac, I do have a Parallels virtual machine with Windows XP is to be able to run Microsoft Outlook. When Apple’s new MAC OS Snow Leopard will support Exchange or if I can use Office Mac 2010 with Outlook as announced this week by Microsoft, I will not have the need of using anymore a Windows machine. Or simply put if for business communications, I do not need anymore Microsoft Outlook, I do not have the need as well of using a Windows machine.

And the more businesses will move to Web-based office applications suite and e-mails, the more sales of the Windows operating system will be declining. Users will be free to move from Windows to Linux, MAC OS, Google’s Chrome or Android or other operating systems that could finally hit the market. According to Forrester Research, 86% of corporations are still using Windows XP. Only 12% of businesses have migrated to Vista. So yes definitely, Microsoft can only do better with Windows 7.

Microsoft is not Leading in Mobile and Cloud Computing:
As written many times in this Blog, the new world of computing is Mobility. The Mobile Internet is mostly driven by the new generation of mobile devices, faster wireless networks and all the Web services, that we are using everyday without paying attention, enabled by cloud computing.

The iPhone, the BlackBerry and the Android are the new generation of notebooks, where the phone is one of many features. Mobile devices are today more powerful than desktop PCs were 8 or 10 years ago. And, Microsoft with Windows Mobile is not in any meaningful way a threatening competitor to the iPhone.

The emerging applications for mobile devices are Web Services for consumers or Software as a Service (SaaS) for enterprises that will have to be provided from the “cloud” as a utility service. Microsoft is certainly trying to adapt its existing product lines to mobility such as Office Mobile and cloud computing such as the expected online Office 2010. But as always Microsoft is not leading but reacting. And, it has not created new products for mobile and cloud computing that can be new source of revenues.

Microsoft Online Advertising with Yahoo:
Although Microsoft has tried many times to come up with a successful online advertising strategy, it has failed so far to take significant market share from Google. It is still unclear if its latest partnership with Yahoo and its new search engine Bing will finally be an inflection point for its online advertising revenues.

The Trend to Open Source is not a Good Fit for Microsoft Business Model:
There are obviously pro and cons to Open Source. The pro - open source is free - the con - it needs to be maintained. Sometimes, open source works well such as it has been the case with Linux sometimes it does not work when support and release maintenance are lacking. However, it not possible now for any software company even Microsoft not to build an ecosystem for its product portfolio with the open source community.

Microsoft has been one of the most successful American businesses and continually confronting many technology and competitive challenges such as Unix vendors, client-server architectures, more security in software products and of course the Internet.

When Bill Gates decided to offer for free Internet Explorer bundled to Windows 95, he pushed Netscape, which had over 50% of its revenues from Navigator, out of business.

But if Steve Ballmer decides to offer for free the online version of Office 2010 to take the lead over Google Apps, he will not drive Google, which has significant cash inflows from its online advertising product lines, out of business.

If Microsoft is not reinventing itself and playing to a changing game with the same business strategy it will be challenging for Microsoft to keep its growth rate.

And, may be no High-Tech company even the most resilient one such as Microsoft cannot be built to last for ever?

Note: The picture above is the 1978 Microsoft team based in Albuquerque with Bill Gates front row on the left and Paul Allen front row on the right.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Starent Aruba and Riverbed: the New Competitors to Cisco Systems

Sat, 8 Aug 2009 18:52:33 -0700

(T) The Mobile Internet is mostly driven by the new generation of mobile devices, faster wireless networks and all the new Web services that we are using everyday. There are two types of wireless networks that enable the Mobile Internet: the present 3G cellular networks (migrating soon to 4G technology) and the Wireless LANs or commonly known as WiFi networks (and specified by the IEEE as the IEEE 802.11a/b/g/n standard).

Cisco Systems is unequivocally the leader in wireline IP networking with its revenues mostly in Ethernet switching and IP routing. But while Cisco is the leader in Wireless LAN switching, it has always left the cellular wireless infrastructure market to other vendors such as Nokia, Ericsson and Motorola that have built over time the CDMA and GSM networks that we are using everyday with our cell phones. And, that strategy seems to have been working quite well to Cisco which has always focused on the network infrastructure supporting the Internet Protocol (IP).

Like Microsoft, Cisco has been a fearsome competitor. But what it is worth noticing is that two out of the three networking start-ups namely Starent Networks, Aurba Networks and Riverbed Technologies that had IPOs in 2006 and 2007 before the 2008 financial crisis are leading in their respective markets ahead of Cisco. And, investors in those three companies have been quite rewarded by their financial performances. Jim Cramer in his Mad Money show has recommended many times those three stocks. So the question is now for those investors if any of those three companies could be the next Juniper Network.

Cisco’s Strategy is to Expand Beyond Networking:
Cisco’s strategy is better illustrated as the opposite of Oracle’s strategy. Oracle’s Larry Ellison CEO has bought all major enterprise software companies (PeopleSoft, Siebel, Hyperion, BEA....) to the exception of Microsoft and even bought very recently a hardware company: Sun Microsystems mostly for its software: Java and Solaris!

Cisco’s John Chambers CEO strategy is diametrally opposed to Larry Ellison’s one. Cisco is focusing expanding beyond its core networking market and growing its revenues in particular into:
• Software with Cisco’s Application Networking (or previously known as Service Oriented Architecture (SOA))
• Web services through its WebEx acquisition
• Or more recently into the blade server market with its new Unified Computing product line and so competing with Dell, HP and IBM in the datacenter.

For the last few years, Cisco has bought more non-networking start-ups than networking ones and hired more executives outside the networking industry than inside the networking industry.

However, Cisco leadership and revenues in those new markets are still not noticeable and it is still not obvious if Cisco will succeed expanding beyond networking. As well explained by James Collins in his book “Built to Last”, it always a difficult challenge for a $36 Billion company to “preserve its core” markets while at the same time “simulating progress” towards new markets. Cisco Q4 earning reports was good in particular on the profit side due to some significant reductions in operating costs that Cisco seem always able to master.

But, while Cisco is focusing on expanding beyond networking, this might leave a window of opportunity for the new network equipment providers such as Starent, Aruba and Riverbed.

No Competitor Except Juniper Has Taken any Meaningful Market Share from Cisco:
In 1998, Juniper was the first routing vendor to deliver to worldwide service providers such as AT&T, BT, or NTT a high-end router with an OC-192 or 10 Gigabit/second interface for core Internet routing. Service Providers are always looking to have two suppliers. The ability of Juniper to build complex routing products that work, led Juniper to take some market share from Cisco core service provider routing business. Later Juniper acquired NetScreen in 2003, a security firewall vendor, to expand its business in the enterprise networking marketing. But Juniper has never been able to take significant market share to Cisco in the enterprise networking market.

Among the 20 Ethernet switching start-ups of the 1995-1998 time frame, only Extreme Networks and Foundry Networks survived. But Extreme and Foundry switching revenues combined have never exceeded $1 billion - while Cisco switching revenue is beyond $15 billion (Foundry Networks was acquired by Brocade Communications for $2.6 billion in 2008).

The Starent - the leader in SGSN and GGSN Equipment for North America Wireless Data Networks:
Starent Networks mainly supplies two types of network equipment: the SGSN and the GGSN that are required to build the General Packet Radio Services (GPRS) network that can support mobile device to access the Internet. Basically, the SGSN is responsible for the delivery of data packets from and to the mobile stations within its geographical service area while the GGSN converts the GPRS packets coming from the SGSN into the Internet Protocol (IP). So whenever you are using your iPhone or BlackBerry to check your e-mail, the chances are pretty high that you are connected to a SGSN and GGSN from Starent.

The target market for Starent is roughly $1.7 billion growing at 14%. Besides Cisco, Starent’s competitors include Ericsson, Nokia Siemens, Alcatel Lucent and Huawei. Starent is the market leader in North America while in foreign markets, legacy telecommunication equipment vendors lead depending of their geographical strengths.

Starent Q2 earning report on July 23rd was $78.3 million in revenues, 28% up from a year ago, and $15.2 million in profits or 20 cents per share - while analysts were expected 17 cents per share. Starent market capitalization is $1.62 billion.

Aruba - the Challenger to Cisco for Wireless LAN Switching:
Aruba Networks supplies all the equipment required to build Wireless LANs which include mainly the controller to tunnel the wireless data traffic to the LAN and the access points that connect the wireless devices such as notebooks WiFi-enabled to the controllers. And, Aruba has attempted to innovate on the technology side in securing the Wireless LAN. So whenever you are working in a Starbucks with your notebook, the chance are pretty high that you are connected to an Aurba switch.

The worldwide Ethernet switching market is roughly around $17 billion with Cisco owning most of that market. Over the years, most of the switches will be migrated to the exception of those in the datacenter to support wireless LANs. Aruba is the only challenger to Cisco for Wireless LAN switching.

Aruba Q4 earning report will be on August 27th. Its Q3 earning report was $45.8 million in revenues, 7.5% up from a year ago, beating analyst expectations for $42.8 million and a loss of $5.8 million or 8 cents per share. The better than expected Q3 revenues has boosted the stock in the last few months. Aruba market capitalization is $750 million.

Riverbed - the leader in WAN Traffic Optimization for Enterprise Networks:
Riverbed Technology provides networking equipment to optimize the traffic between remote business locations across any Wide Area Network (WAN) network. Basically, Riverbed technology improves the performance of transporting data and caching applications data in order to lower the bandwidth requirements. As a result, it decreases the number of remote servers and applications in enterprise networks. Using Riverbed equipment, IT departments can rely more on consolidating their IT resources because of less needs on distributing resources.

The target market for Riverbed is roughly $1.1 billion growing between 5 and 10%. Besides Cisco, Riverbed competitors include Blue Coat (which merged with Paketeer). In terms of leadership, it is a close race between Riverbed and Cisco with each of the company holding between 25% and 28% of the market shares. But according to Gartner, Riverbed is ahead of Cisco in terms of execution and vision.

Riverbed Q2 earning report on July 24th was $91 million in revenues, up 12% up from a year ago but below the $93.6 million expected by the analysts and a loss of $290,000 or less than a penny per share. Riverbed market capitalization is $1.4 billion. Its stock was severely punished after its Q2 revenue miss.

What to Expect from Starent, Aruba and Riverbed in the Future:
If Starent, Aruba and Riverbed continue to innovate and execute well, their stocks will likely be outperforming since all of them are in growing markets. However if they let Cisco innovating faster than them or do execute poorly, their stocks will likely be punished by investors. Those three companies face different challenges. In the wireless markets, it is much easier for Starent to take the lead over Cisco but Starent will have to grow internationally. While in the enterprise networking, it much more harder both for Riverbed and Aruba to compete with Cisco, in particular for Aruba which is competing to Cisco in its core product portfolio. Riverbed needs to leverage the application vendors and take market share from Blue Coat to grow - while Aruba has a lot of room to take a more significant market share from Cisco.

Note 1: The picture above is the Cisco CRS (Core Routing System) product.

Note 2: For full disclosure, I own both Aruba and Riverbed stocks.

Note 3: Content for this article is based from public available information.

Copyright © 2005-2010 by Serge-Paul Carrasco. All rights reserved.
Contact Us: info at asiliconvalleyinsider dot com

Can Mobility Drive the NASDAQ to a New Bull Market?

Sat, 1 Aug 2009 08:00:50 -0700

(B) This week on CBNC, our hyper-energetic investor guru Jim Cramer made on his show Mad Money a wild prediction: the 12 day winning days that the Nasdaq had until it came to an end late last week is the prelude to its next bull market. Yes, its next bull market! Jim argues that it was the longest since 1993, and that it is a very bullish sign for tech stocks. The last times that the NASDAQ had a similar run were in 1992 when the PC revolution exploded and in 1996 when the Internet revolution exploded. And, both in 1992 and in 1996 the NASDAQ started some long term bull market cycles. Since the explosion of the Internet bubble in 2001 where the NASDAQ reached 5,000, the NASDAQ has roughly moved ONLY between 2,750 and 1,250.

This time, Jim believes that this new NASDAQ bull market will be driven by the Mobile Internet. It goes without saying that Jim has the instincts of a top money manager and the true courage to defend his convictions even his most daring ones.

I let you decide if you agree or disagree with Jim’s prediction of the NASDAQ starting its next bull market. But what I would certainly agree with Jim is that the growth in the NASDAQ will unequivocally come from the Mobile Internet. And, following is why - based on some of my thoughts that I have already mostly expressed in some previous articles.

The history of the computing industry can be summarized in five architecture phases: the Mainframe, the Mini-Computer, the PC and Client/Server, the Internet and today the Mobile Internet. During each phase, the computing industry delivered more with less. Today, the new client is any mobile device. The new computing architecture is Cloud Computing. And, the new applications are the iPhone Apps and any Web-based service.

The Mobile Internet is mostly driven by the new generation of mobile devices, faster wireless networks and all the Web services, that we are using everyday without paying attention, enabled by cloud computing.

The iPhone or the new generation of handsets with laptop capabilities:
The iPhone, the BlackBerry and the Android are the new generation of notebooks, where the phone is one of many features. Mobile devices are today more powerful than desktop PCs were 8 or 10 years ago. Their successes rely on a combination of new operating sytems, processors, memory and displays. And, when you get mobile computing power, new applications are spreading at the speed of light. Many kids all over the world are developing iPhone applications every day. And, the 17 millions of iPhones users have thousands of applications to choose from.

Faster 4G and WiFi Wireless Networks:
The existing 3G cellular networks will move soon into 4G technology based on LTE (Long Term Evolution). LTE is an all-IP (Internet Protocol) technology based on orthogonal frequency division multiplexing (ODFM) - or in plain english - meaning it can deliver more bits per Hertz. Similarly, Wi-Fi networks are moving to 802.11n that has the potential to displace wired networks to enable a completely all-wireless workplace. 802.11n embedded now in a number of switches can support data rates of 300 Mbps (Mega bit per seconds) while common Ethernet connections are 100 Mbps.

Web Services and Cloud Computing:
We get our music from iTunes, we connect with friends through Facebook, we find our directions through Google Maps, we share our videos on YouTube, we...

Welcome to the world of Cloud Computing where information and applications are on-demand! Web Services for consumers or Software as a Service (SaaS) for enterprises will have to be provided from the “cloud” as a utility service. It is the most efficient way to deliver, update and tailor any product and service offering. The cloud resources are distributed data centers that can be accessed through any wireless networks and the Internet.

But the Mobile Internet will not create as many start-ups as in the 80s and in the 90s:
While I cannot agree more with Jim that the Mobile Internet will certainly drive the growth of the NASDAQ, I do not believe that the Mobile Internet will lead to the infrastructure build-ups that we had in particular in Silicon Valley during the 80s and the 90s.

The Mobile Internet is an incremental evolution to the present computing infrastructure but it will not require a complete new computing and networking infrastructure such as the ones built in the 80s and the 90s where silicon, storage, networking and software start-ups could in a few years reach several hundreds million in revenues.

As a consequence, I am not expecting that the Mobile Internet will significantly be the next growth opportunity for Silicon Valley.

The Mobile Internet will have a bigger impact in Africa than in Silicon Valley:
But following is my final note on the Mobile Internet: do you know what is the most lucrative business right now in the streets of Douala in Cameroon or in Abidjan in Ivory Coast? Repairing cell phones. Yes, in the streets of the most populated cities in Africa - repairing cell phones is the best business for young entrepreneurs. For many kids in poor countries, the cell phone is the only access to the Internet and to Facebook.

The Mobile Internet will have a much bigger impact into developing countries than in Silicon Valley.

But again I would agree with Jim Cramer, the Mobile Internet is the only next big thing for the NASDAQ right now.

Note: The picture above is one of my favorite cafes in Wall Street.

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