Eq: Tech
In today’s Tech Watch post, we will look at the growing battle in the wireless charging space, which is proving a hot segment. Wireless chargers are just as they sound, wireless mats on which you can place phones or other devices and have them charged. However, in a Betamax vs. VHS-like battle, multiple different technologies are emerging in the space, with powerful players on both sides. The Wireless Power Consortium, which includes LG, Philips, Samsung, and Sony is developing one type of technology, while the Power Matters Alliance, which includes Powermat—the most dominant company in the space—is developing a different form of the charging station. From the outside, the technologies are indistinguishable, but each requires separate hardware, so for now they are mutually exclusive. Powermat just won a lucrative contract from Starbucks, who plans to install Powermat’s stations in all of its stores by the end of 2015. The transmitter which is required to enable current phones to charge will likely start to be integrated into new phone models over the next year.
FINSUM: Evidently, the demand for wireless charging mats is massive—from individual consumers all the way to carmakers (like Cadillac, who is introducing it already), hotels, and airports. An interesting niche space for investment.
In an interesting development, major auto insurers, like Insurethebox, are announcing that the development of driverless cars may ultimately lead to the demise of their industry, as the cars are expected to drastically reduce the rate of accidents. The industry current underwrites more that $25 bn of premiums every year, but this figure could dwindle mightily as safety improvements and legislation may reduce the need for insurance. As Google, Volvo, GM, and a slew of other carmakers experiment with driverless cars, many are wondering how responsibility for crashes and repairs will be handled legally. In fact, that aspect is seen to be the driverless car’s single biggest impediment to full release—who is responsible when an accident happens? Currently, the US, UK, and several European countries have granted licenses to test driverless cars on public roads, and Google hopes to release its model to the public in the next few years.
FINSUM: The development of driverless cars does raise a major liability question, but if safety improvements are as drastic as touted, they would accordingly lower the overall need for insurance. Insurers may have to develop new revenue models to sustain business.
Infuriated over US accusations that China uses special military hackers to spy on the US and eager to boost its own state-controlled technology sector, China is targeting some of the US’ largest tech companies with tougher rules. Microsoft appears a particular target, and Chinese investigators are visiting the offices of major companies as they investigate concerns over US spying within China. Beijing appears to be trying to limit the scope of US tech company operations within China as a way to mitigate spying, which it believes is done through the companies, but it is also an attempt to stymie the corporations’ growth so young state-owned tech companies can get a better foothold in their domestic market. China is now routinely moving all of its government-related operations off of major US technology platforms, and the government has officially forbade state agencies from using Microsoft’s new Windows 8 operating system. All the issues have soured US tech companies’ formerly ebullient views on the Chinese market.
FINSUM: This seems to be somewhat of a “mini-sanction” that China is enacting against the US. It also seems to be retaliation for the US boosting tariffs on Chinese solar products to lofty levels. The Washington-Beijing tussle continues on all fronts.
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A new study by the US’ National Bureau of Economic Research has done an in-depth analysis of how technology is replacing jobs in the US. The newly published report shows that during the recession, a new wave of technology was ushered in by businesses which replaced mid-level jobs all across the country. Process-oriented jobs which had routine functions were particularly hard hit, but traditional bastions of the middle class, likes sales jobs, bookkeeping, and manufacturing, have been devastated by technology. The results shows that the young and the less educated have been hit the hardest, and interestingly, women have actually thrived during the period, whereas men have suffered disproportionately. The report says that in good times, management is unlikely to replace workers with technology, but once harder times hit, they do so much more readily, which explains why the job replacement occurred during the recession. Even industries like wealth management have seen job losses and increasing levels of automation.
FINSUM:This is a great article for understanding which industries and jobs have and will suffer most from the onset of technology. One thing is clear—this trend is not likely to abate any time soon.
Receiving enormous press coverage is the IPO of Alibaba, China’s largest ecommerce business. The forthcoming offering of the Chinese giant, set to begin after Labor Day in September, is valued at up to $250 bn, but few know that the deal might be a major cash out for China’s crony capitalist system. Few are aware that many of Alibaba’s shareholders are the sons and grandsons of the communist government’s top leaders--former Prime Minister Wen Jiabao’s son started and runs a private equity firm that is heavily invested in Alibaba. The company has thus far not made public its full list of shareholders, so future buyers in the IPO are still in the dark as to who currently owns the company and how much sway they may have internally. The opaque ownership of the company, especially considering its heavy government connections, means that there is the threat that the soon to be public business might be run more like a Chinese state-owned enterprise than a Fortune 500 public company.
FINSUM: In addition to the governance risk associated with the Alibaba IPO, there is also the reputational risk involved. With such an opaque list of government-connected shareholders coming at a time of high Chinese aggression throughout Asia, the risks of a controversy are considerable.
Aggressive regulator Benjamin Lawsky yesterday made New York the first US state to propose thorough Bitcoin regulations as he took the step of bringing Bitcoin under his purview. The new proposal outlines rules for “consumer protection, the prevention of money laundering and cybersecurity”. The rules are viewed as not being overly onerous, as New York seems keen to attract Bitcoin-related business, from which it will likely earn significant tax revenue as the industry goes. The new rules would apply to financial service entities, but not to retailers who simply accept Bitcoin payments. Lawsky said his division tried to build some flexibility into the regulations so they could adapt with changing technologies. Regulators globally have been vexed as to how to regulate Bitcoin, with each country as yet having its own specific rules which take quite different views of the currency.
FINSUM: This was an important step for New York in trying to make the city the home of future Bitcoin business, which could potentially become quite lucrative. The move was clearly intended to inspire investor confidence.