Start Up: Trump’s cybersecurity firing, Twitter’s ongoing failure, the Titanic smartwatch?, and more

The service bit might be OK, the sales part less so this year. Photo by Jeremy Brooks on Flickr.

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A selection of 9 links for you. Available at all good stores! I’m @charlesarthur on Twitter. Observations and links welcome.

Secrecy surrounds White House cybersecurity staff shakeup • ZDNet

Zack Whittaker:


The chief information security officer for the White House’s Executive Office of the President has been removed from his position, sources have confirmed.

Cory Louie was appointed to the position by former President Obama in 2015, charged with keeping safe the staff closest to the president — including the president himself — from cyber-threats posed by hackers and nation-state attackers.

But circumstances surrounding his departure, weeks after President Donald Trump took office, remain unclear.

It’s thought he was either fired or asked to resign last Thursday evening, and he was escorted out from his office in the Eisenhower Executive Office Building across the street from the West Wing.

His LinkedIn profile remains unchanged at the time of writing.

Since then, there has been a near-absolute wall of silence from the White House — from both the staff, which up until last week worked for Louie, and spokespeople for the Trump administration.


I feel much safer now, don’t you?
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Twitter: not even Donald Trump can help it make a profit • The Guardian

I wrote:


Twitter doesn’t seem to have a knack for making money from what it does, even though millions wait breathlessly to see what will pop up on it next. Its earnings before interest, tax, depreciation and amortisation figures show a profit – $215m, up from $191m a year before – but that excludes stock compensation, restructuring and various other expenses.

The reality is that Twitter has too many employees for what it does (and their stock options drag down profits by $158m a quarter). And what it does to make money – ie show ads to people – isn’t done well enough. However, its returning chief executive and co-founder Jack Dorsey seems reluctant to make the deep cuts needed to focus on profit.

Compare it with Facebook, founded just two years earlier, in 2004. Mark Zuckerberg’s company had fourth-quarter revenues of $8.81bn, 13 times greater than Twitter, and profits of $3.56bn. Twitter, on the other hand, has never made a profit.

Dorsey managed to throw in some buzzwords on the analysts call – machine learning, artificial intelligence – but the company is a wounded bird and arguably has been ever since it decided its model should be about showing people adverts. That’s a fight that it was always going to lose to Google and Facebook, which started earlier and do it better. News publishers aren’t the only ones losing to those two giants.


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Automated adverts place big brands on extremist and porn websites, Times investigation reveals • Press Gazette

Dominic Ponsford:


The Times found that an authorised Nissan dealer’s adverts appeared on the official Youtube page of the far right English Defence League, Argos appeared on sexually explicit Youtube videos and advert for Marie Curie appeard over a video fora  racist song posted by Combat 18.

The Times also warned that advertising agencies are exploiting the complexity of online advertising to exploit clients and make huge profits

The findings mirror those of The Guardian which found last year that when it bought its own online advertising space via the programmatic method as much as 70% of the total spend went to agencies in between the publisher and the ad buyer.

Associate professor of media design at the New School David Carroll told The Times: “Oneof the problems with programmatic advertising is that ads don’t know where they appear. That makes it extremely easy and lucractive for extremely partisan and fringe medio to succeed widely.”


Question is, will those big brands pause or even withdraw their advertising from adtech networks, or do they feel satisfied with what they’re getting? That decision will make a huge difference.
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PC industry expected to stabilize and see less than 5% shipment drop in 2017 • Digitimes

Monica Chen and Joseph Tsai:


With AMD ready to release Ryzen CPUs and Vega GPUs, sources from the upstream supply chain expect the PC industry to stabilize and see a less than 5% on-year shipment drop in 2017, while PC and related component sales in the first quarter are also expected to perform better than the same period a year ago, according to Taiwan-based supply chain makers.

Worldwide PC shipments reached around 260m units in 2016, down 6% from 2015 and the volume has been dropping for five consecutive years. Among PC vendors, Dell and Hewlett-Packard (HP) were able to maintain their shipment performances thanks to strong orders from the enterprise sector and their leaderships in Europe and the US.


Only a 5% fall! Break out the champagne!
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In which, alas, I must rattle a tin cup • Armed and Dangerous

Eric Raymond – you know, of The Cathedral and The Bazaar – is married, but his lawyer wife was laid off by her law firm. (He blames the Affordable Care Act, but it’s unclear quite how that is its fault):


So now it’s been five months since either of us has been drawing anything like a salary. We’re burning savings, and Cathy – who grew up poor and thus finds a state of no income viscerally terrifying in a way I do not – has started to look like a shell-shock victim. This is damaging my morale.

The only bright spot is my Patreon feed. Right now it’s pulling $1,392 a month, which is actually rather a lot for Patreon but nowhere near enough to cover our living expenses. That would take about $3,000 a month; the big items are mortgage and medical insurance driven stratospherically up in cost by the same disastrous government bungling that cost my wife her job. Then, of course, there’s income tax; with that I figure we’d need $5K a month to be sure of keeping our heads above water.

Thus, even with the Patreon, we’re fast approaching the point where if someone were to offer me a day job, I’d have to take it. And that would be unfortunate for the long term; the infrastructure work I’m doing and expect to do in the future is tremendously important. Somebody’s going to need to design and field NTPv5 to fully cover the IPv6 transition, and it looks increasingly like that somebody needs to be me.


Reality bites. The comments make for your entertaining morning’s reading.
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We’re witnessing the slow-motion collapse of the smartwatch • Business Insider

Steve Kovach:


This is a make-or-break moment for Google’s smartwatch experiment, and I’m not confident it’s going to work.

Google is making a weak case for Android Wear. It’s not building its own products, and instead relying on fashion brands like Michael Kors and Fossil to carry the torch. This is despite Google’s increased investment in excellent hardware, like the new Pixel phone and Google Home connected speaker that are designed to push the Android ecosystem forward.

A member of the Android Wear team told me last week that the reason why Google isn’t making its own smartwatch is because Google sees smartwatches as more of an open ecosystem driven by personal style, so it wants to let in as many partners as possible.

That’s one way to look at it.

The other way to look at it is Google sees the same writing on the wall many of its other partners have, and time is running out to prove Wear is a viable platform. Instead of investing the resources in building its own smartwatch, it put more of the burden on its partner LG instead. (Google did say Android Wear momentum is growing, with holiday activations up 70% from the year before, but declined to provide hard numbers. Take that stat with a healthy dose of skepticism.)


I agree with everything Shead says on Android Wear. The problem isn’t the software per se, but the business model: unlike Android on phones, there’s no way for OEMs to make any money beyond the hardware, which gets commoditised to hell and – even worse – sells in low volumes. Result: low return on investment. Secondary result: companies such as Motorola get out.

However Shead is down on the entire category, including Fitbit (isn’t quite a smartwatch) and the Apple Watch. The latter is specifically different from Android Wear, though: it’s designed as an extension of the existing iOS ecosystem, and the tight integration means that it’s not just a dumb lump. (Kovach was taken to task by a number of analysts on Twitter over this point. His defence was that he didn’t mean all smartwatches – just those that weren’t Apple Watches, though that logically calls the article’s headline into question.)

Also worth reading: Jan Dawson on the same topic from the same day. Some wonderful wearable forecasts from 2014 about 2016. Soooo far off. Bonus: Ron Amadeo pointing out that the new Android Wear devices are using two-year-old CPUs.
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Spotify needs to face the music • Bloomberg Gadfly

Leila Abboud:


Spotify raised $1bn in convertible debt a year ago from private equity funds TPG Growth and Dragoneer Investment Group LLC, among others. It came with strict terms linked to the IPO timing, setting a stopwatch on a listing and offering the funds a sweet deal.

In the first year the debt carried a 5% interest rate, so Spotify has a $50m interest bill coming. The coupon then increases 1 percentage point every six months until IPO, up to a 10% limit. So Spotify would owe another $65m if it waited another 12 months. This isn’t chump change. To put it in context, Spotify’s R&D budget was €143m ($153m) in 2015.

Plus the longer Spotify waits to IPO, the more shares it must accord to TPG and Dragoneer at listing. The creditors would’ve been able to convert their debt into equity at a 20% discount to the IPO price had Spotify listed in year one. That discount will now increase by 2.5 percentage points every six months.Of course, if Spotify’s enterprise value outpaces what it’s paying out in interest and extra equity, then a delay could be manageable. But it would have a cost.


I made precisely the same point about Spotify when it raised the $1bn in March 2016:


I think it’s safe to say that with this debt deal, Spotify can never make an operating profit if the debt payment is included.

In other words, this is a financing deal aimed at getting Spotify over the IPO finish line as soon as possible so that it can get a giant cash injection, and its future losses become public shareholders’ problem, not those of the venture capitalists or music labels that have funded it so far.


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Wikipedia bans Daily Mail as ‘unreliable’ source • The Guardian

Jasper Jackson:


The Wikimedia Foundation, which runs Wikipedia but does not control its editing processes, said in a statement that volunteer editors on English Wikipedia had discussed the reliability of the Mail since at least early 2015.

It said: “Based on the requests for comments section [on the reliable sources noticeboard], volunteer editors on English Wikipedia have come to a consensus that the Daily Mail is ‘generally unreliable and its use as a reference is to be generally prohibited, especially when other more reliable sources exist’.

“This means that the Daily Mail will generally not be referenced as a ‘reliable source’ on English Wikipedia, and volunteer editors are encouraged to change existing citations to the Daily Mail to another source deemed reliable by the community. This is consistent with how Wikipedia editors evaluate and use media outlets in general – with common sense and caution.”

The proposal was made by an editor known as Hillbillyholiday early in January, and fellow editors had weighed in with arguments for and against the ban over the past month. Those who opposed the move said the Daily Mail was sometimes reliable, that historically its record may have been better, and that there were other publications that were also unreliable.


Speaking as a journalist… when it comes to factual stories which have checkable facts, the Mail is often unbeatable. It drives its journalists to find things out and to get them absolutely correct. Whether you agree with the facts that it tries to get (the house price of the person who killed three people, say), or the way that it spins them, is a different question.

There’s also a distinction to be made between the website, which churns stories at a colossal rate and doesn’t always check facts first, and the newspaper, which (in my experience, going up against its writers) does. The problem is that you can’t see which derives from which when all you do is go for the online one.
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Dyson’s perfectionists invent a future beyond vacuum cleaners • FT

Michael Pooler and Peggy Hollinger:


[James Dyson] is relying on the company’s culture of innovation to take its reputation beyond domestic products and into the wider world of cutting-edge technology, including areas such as battery storage, robotics, artificial intelligence and, possibly, even automobiles.

“In 15 years’ time what you will see from Dyson will be something very unusual . . . and across quite a broad range of technologies,” says Sir James, speaking to the Financial Times from the Malmesbury campus that is home to 3,000 employees.

“We are a technology company and we’re passionate about developing technologies that are going to be very important in the future.”

Even so, there are questions over whether the company, sometimes described as “the UK’s Apple”, risks overreaching itself as it moves from the home into frontier technologies. Privately held, it remains under the control of its founder, whose influence risks being diluted as the company’s 8,000-strong workforce expands by more than one-third over the next five years.

Max Conze, chief executive, may run the business but Sir James decides which research projects get the green light for commercialisation, which are extended and which are shut down.

“In some companies you get design by committee,” says one former Dyson researcher who spoke on condition of anonymity. “Dyson is very much the opposite — you just have to convince one person . . . He makes all the calls.”

Steve Carden, technology and innovation expert at PA Consulting, believes that Dyson can achieve its goals but that its culture might have to change.


If its culture does change.. well, it’s hard to predict. Dyson is an odd company which proceeds, like Apple, at its own particular pace, making its own innovations, pricing at a premium. And James Dyson rules it.
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Errata, corrigenda and ai no corrida: none notified

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