Back to bust? High technology on course for harder times - FT.com

Summary:
The IT industry may be about to face its toughest period since the dotcom bust due to the slowdown in the economy. Corporate demand, the IT industry's main source of prosperity, will fall significantly. Instability in the financial markets, declining new hires and weakening corporate profits will result in a lowering of capital expenditure and a premium being placed on operational efficiency. This is likely to play out over the next 9 months, with tech stock, already down 19% over the last 12 months, to fall further. Other recent trends that will compound the impact of the economic slowdown are the increase in choice leading to price deflation; the rise of software as a service and virtualisation. Consumer spending and spending on advertising, an important source of revenues for many Web 2.0 startups are also in decline. The downturn, however, may be less painful than the dotcom crash. There is less overcapacity in the industry, and increasing demand from the emerging world for IT services is compensating for the slowdown in the US and UK. (Published: 14/08/08)

Notes:

• information technology industry may be about to face its toughest period since the dotcom bust
• forgotten side of the technology world: industry's main source of prosperity is the corporate customer
  
• the engine that powers Silicon Valley and the rest of the technology industry
• "flashy gadgets such as Apple's iPhone and online consumer services such as Facebook may have captured the popular imagination and created new technology fortunes, but they are not the industry's main source of prosperity"
• companies account for 60-65 per cent of the end-market for technology
• consumer technology represents only about 20-25 per cent
• governments make up the rest
• with a pronounced economic slowdown in the US and the UK, this engine has started to sputter:
1. weakening corporate profits
2. decline in new hires
   
3. instability in the financial markets
   
• these have historically all been warning signs of lower capital spending ahead
• based on the usual lag, the turmoil in credit markets of the past year virtually guarantees that corporate spending on technology will fall over the next nine months or so
• technology demand, which has been growing recently at an annualised rate of 5-6 per cent, could decline by 10 per cent
• tech stock investors
  
• investors in tech stocks are invariably drawn by the promise of superior growth
• made the sector a stock market stand-out for much of last year, as a slowing US economy made growth stocks rarer
• industry's seemingly endless hype cycle feeds this optimism
• there's always a new computing architecture about to go mainstream, a new must-have gadget, and a Next Big Thing
• optimism is often justified given the big markets that new technologies can create
  
• but: investors frequently pay dearly for that potential
• "If it doesn't work, you get your neck broke"
  
• tech stocks have fallen 19 per cent over the 12 months to the end of July
• nearly double the rate of the overall market
• operational execution at a premium
  
• "I expect the slowdown to profoundly impact Silicon Valley internet, networking and technology companies over the next 12 to 18 months"
• "Technology start-ups should already be tightening their cost controls and turning their attention to the nuts and bolts of operational efficiency."
  
• "There are still numerous long-term growth opportunities across Silicon Valley, but operational execution is at a premium and much more of a differentiator than it has been in many years."
  
• Jim Breyer, partner in VC firm Accel Partners
• recent trends in the technology industry compounding the impact of the worsening economic environment
• availability of choice -> price deflation
  
• thanks to the rise of the internet and other standards-based technologies
• made it easier for buyers to shop around
  
• many corporate buyers have come to count on these to help them continually reduce the overall size of their tech budgets
• When the 1990s tech boom reached its peak, corporate buyers were often tied to proprietary systems from single suppliers
• that is no longer the case
• result: a severe price deflation has taken hold in some corners of corporate technology
• rise of "software as a service" and virtualisation
• two of the most powerful recent technology trends that exemplify this change
  
• software as a service (SAS)
• involves shifting corporate computing tasks to online services
• e.g. using a company such as Google to provide an e-mail service
• "I don't have to buy servers, I don't have to buy storage, I don't have to do back-ups"
• many of these service companies have priced their services at rock-bottom rates
• relying on attracting large volumes of customers to spread their large fixed costs
• "We're talking about products that are one tenth the cost of things that were hawked in the last recession"
• virtualisation
• makes it possible to run several computing workloads on a single server,
• greatly reducing the number of machines that companies need to buy and maintain
• trends like these have created new markets and supported the rise of new companies
• but 1: they have also exposed those whose technologies or business models are not suited to the changing times
• e.g. Sun Microsystems
• soared in the dotcom boom as its proprietary servers became the mainstay of Web 1.0
• but has struggled to adapt to the latest generation of low-cost, standards-based machines and open-source software
• but 2: even tech companies that have been better positioned to ride this wave are starting to feel the pinch.
• due to weaker corporate demand
• companies taking a more "pragmatic" approach to their tech budget
• putting off buying new services
• not just weaker corporate demand
• consumer spending on tech, though far less significant overall and traditionally less prone to big dips, could also be hit in a wider downturn
• another big source of growth, the rapid rise in online advertising, has slowed notably this year in the face of a wider softening in consumer advertising
• after growing nearly 26 per cent in 2007, online advertising in the US, is predicted to grow by only 17.5 per cent this year and 14.5 per cent in 2009, before growth eventually pushes back above 20 per cent in 2011
• search still dominates
• people are cutting back on typical display ads
  
• this slowdown in advertising could not have come at a worse time
• many of the consumer web companies created since the dotcom crash have been avidly building an audience in the expectation that they will cash in through advertising

• downturn will not be anywhere near as painful as the one that hit the industry at the start of this decade
• late-1990s tech binge was more than a bubble in stock market valuations:
  
• it also reflected a massive bubble in tech spending
• internet euphoria
• fear that many older IT systems would not be able to handle the date shift at the turn of the millennium
  
• combined to produce a boom in corporate spending
• we don't have the overcapacity in IT systems we had going into the last downturn
• capital spending in the US has been low by historical standards for the past four years
• will cushion the blow from any fall now
• demand from emerging world growing
  
• after many years of investment, these markets are finally on the brink of becoming significant money-earners for some of the industry's biggest players.
• at its current growth rates, these "growth markets" may account for nearly 30 per cent of its revenues in five years' time
• Silicon Valley is once again turning into a place of "haves" and "have-nots"
• those start-ups that raised a comfortable cushion of cash from investors to see them through this more uncertain period and those that risk being left high and dry if business turns down
  

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Oil refining byproduct becomes a hydrogen goldmine - R&D Magazine

Summary:
A commercial-scale process to extract and reuse pure hydrogen from the hydrogen sulfide that naturally contaminates unrefined oil, including oil sands, has been developed by a collaboration between the U.S. Dept. of Energy's Argonne National Laboratory and Kingston Process Metallurgy Inc. (KPM) of Kingston, Ontario. It is less energy- and capital-intensive that existing processes, such as the Claus process. The reactions between the hydrogen sulfide and copper and the copper sulfide and air release energy that helps to heat the system. It produces sulfuric acid as a byproduct and is resistant to contaminants such as ammonia and various hydrocarbons, converting them to their elemental state instead. Thus far this process has only been demonstrated in the lab. A pilot scale reactor will be developed next. (Published: 03/09/08)

Notes:

• hydrogen sulfide present in crude oil and raw natural gas
• conventionally removed using Claus process, invented more than 100 years ago
• energy- and capital-intensive
• limited in terms of the other types of impurities it can handle
• costly energy-intensive modules that scrub other contaminants, such as ammonia, methane and carbon dioxide from raw oil and natural gas must be separately attached to Claus processing facilities
• loses the hydrogen in the process
• gets converted into water
• Argonne and KPM method
• centered around a molten copper reactor
• innovative process technology that is more energy-efficient than existing methods
• in the reactor, hydrogen sulfide gas is first separated from the crude oil stock, using technology already in place
• this gas is then bubbled though molten copper
• releases pure hydrogen
• the hydrogen is then captured for use as a valued product
• as the sulfur reacts with the copper, the copper is gradually turned into copper sulfide
• in addition the process creates concentrated sulfuric acid
• used widely in the chemical industry and which has become a valued agricultural commodity
• the concentrated sulfuric acid is created when copper sulfide is reacted with air to recover the pure copper
• releases a concentrated stream of sulfur dioxide which is then reacted with water
• the copper is then reused in the process with negligible losses
• the reactions between the hydrogen sulfide and copper and the copper sulfide and air release energy that helps to heat the system
• enables the products to be efficiently harvested
• system operates at a temperature of about 1,200 degrees Celsius
• contaminants such as ammonia and various hydrocarbons are reformed to their elemental constituents
• demonstrated in lab
• next step is to develop a pilot scale reactor
• Companies will be able to retrofit their facilities with the process technology or construct new plants that incorporate it

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Quote of the Day

“God created the bulk but the Devil created the surface.” - Wolfgang Pauli

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How to fix a broken venture capital model - EETimes

Summary:
Interview with Matthew Nordan about why the current VC model is broken, especially in the case of materials, energy and environment sector investing. The linear path from angel to VC to IPO no longer works due to greater costs, longer gestation times, greater technological uncertainty and ill-defined problems. This is a time of great experimentation and visible discomfort. New type of VC machine needed. Smartest venture firms cultivate relationships with the buyers of technologies. Nordan also has four rules for venture companies: Make non-obvious matches of technologies and solutions; be suspicious of exponential growth; maximize options to avoid surprises from left field; and avoid focusing on an ideal technology to such an extent that you fail to see a "good enough" technology in its wake. (Published: 22/07/08)

Notes:

• Matthew Nordan, Lux Research, President
• ideas on how to make startup financing work again
  
• old machine
• linear path
• angel funding -> VC financing -> (some cases growth equity/PE) -> public markets
• works really well for IT
• don't need tremendous amount of money; pretty capital efficient investments
  
• also for life sciences
• because there's a rule book that you can follow by using the FDA and EMEA approval cycles as a way of determining how far the company is
• none of those rules exist in the materials, energy and environment world
• and you need more money over longer periods of time (gestation times in excess of a decade)
  
• frequently break 10 year close-ended fund cycles that VCs as a rule have
• with greater levels of technology risks further down the cycle, down into the land where you have 10s of millions of dollars of investment being made by PE and growth equity funds
• machine doesn't work; need a new machine
• new machine
• some innovations promising; but you don't know what works till folks have seen a 25% IRR on doing it in a new way
• interesting: fund that raises small amounts of money to be able to go out and seed companies to get them to a stage that they are ready for a venture fund
• cut of that first part of the technology development cycle and get it to fit into a 10-year close-ended structure
• interesting: project financiers beginning to construct joint venture vehicles where there may be a carve-out slice of equity for the venture financiers that may get them some returns (some meat to take home to the cave for the LPs) before the company is able to achieve the liquidity of it
  
• particularly for water and waste technologies
• venture funds have responded by specializing
• Rockport and Kleiner Perkins Caufield & Byers
  
• invest in early-stage technology
• Riverstone and FourWinds
  
• invest in deployment of semi-mature technologies
• only a few funds like Vantage Point try to span the gamut of development and deployment
• new model of "clear-cutting" VCs
• exemplified by Khosla Ventures
• represent funders of last resort
• ultimately this a time of great experimentation and visible discomfort
• will be 5 to 10 years before we know which of any of those ingredients are going to work out
• bringing in the growth equity partner between VC and IPO
• growth equity is coming back
• VCs are not prepared to extend funding into the hundreds of millions of dollars
• smartest venture firms cultivate relationships with the buyers of technologies
• smart venture firms talk to the customers of potential startups to say what problems do you need solved five years down the line?
• ranging from OEMs in the semiconductor field to utility companies in the energy field
• then build a startup based on the wish-lists of those customers
• business plans get ripped apart five times over before the company ultimately decides what it is that it's supposed to be doing
• difference from an energy environment perspective is that the problems are generally less well defined; lack of definition
  
• as opposed to software: explicit problem that they're trying to solve upfront
• e.g. Green Fuel Technologies Corp., algae company
  
• intended to use algae to process wastes from natural gas plants and ferment biomass fuels
• turns out that you can get a lot more revenue from the same unit of algae, not by fermenting it to make biofuels, but by selling it as fish feed, or as an additive
  
• the desiccated algae itself are more valuable than the biofuels that you can make from them
• at least in the current state; may change over time

• four rules for venture companies
1. make non-obvious matches of technologies and solutions;
   
2. be suspicious of exponential growth;
   
3. maximize options to avoid surprises from left field and to be aware of unexpected breakthroughs;
   
• e.g. emerging "solar antenna" that can tune in to 800-900 nm waves, thus obsoleting several small-scale solar technologies
• also involves carefully quantifying all externalities
• e.g. the water-use requirements for ethanol and biodiesel make so-called clean energies look dirty when total inputs are taken into account.
4. avoid focusing on an ideal technology to such an extent that you fail to see a "good enough" technology in its wake

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Utilities say grid can handle rechargeable cars - MSN Money

Summary:
Energy industry officials believe they will be able to cope with the increased electric demand when rechargeable cars become a reality. Industry has already dealt with increased electric demand from millions of plasma TVs (cars consume 4x more electricity). Changeover from ICE to electric is likely to be gradual (still lot of issues with batteries to be solved). Will thus be able to handle it in same way as they handled plasma TVs. Most electric cars will likely be charged during off-peak electric use times, utilities should have no problem generating enough electricity. Potentials problems: rise in oil price causes transition to be very rapid; stress on distribution system in certain areas; electric vehicles getting larger and requiring far more electricity for recharging; and demands from people that their vehicles be recharged quickly, drawing more electricity during peak times. (Published: 23/07/08)

Notes:

• cars vs. plasma TVS
  
• rechargeable cars consume about four times the electricity as plasma TVs
• but: industry already has dealt with increased electric demand from the millions of plasma TVs sold in recent years
• experience will help them deal with the vehicle fleet changeover
• Mark Duvall, program manager for electric transportation, power delivery and distribution for the Electric Power Research Institute
• Plug-In 2008 conference
• "So as long as the changeover from internal combustion engines to electric vehicles is somewhat gradual, they should be able to handle it in the same way"
• "We've already added to the grid the equivalent of several years' production of plug-in hybrids."
• "The utilities, they stuck with it. They said, 'All right, that's what's happening. This is where the loads are going, and we're going to do this.'"
• Automakers are planning to bring rechargeable vehicles to the market as early as 2010
• but will take much longer for them to arrive in mass numbers, due in part to a current lack of large-battery manufacturing capacity
• auto and battery companies still are working on the lithium-ion battery technology needed for the cars, and on how to link the battery packs to the vehicles
• Efrain Ornelas, environmental technical supervisor with Pacific Gas and Electric Co. in San Francisco
• "We see the vehicle penetration levels coming at a rate that's manageable. It's not like tomorrow the flood gates are going to open and 100,000 vehicles are going to come into San Francisco or something like that."
• PG&E will be able to track their charging patterns and plan accordingly for the future
• current demand
• utility officials say they already are coping with increased demand
• especially during peak-use periods in the afternoon and early evening
• rest of the day, most utilities have excess generating capacity that could be used to recharge cars
• most electric cars will likely be charged during off-peak electric use times, utilities should have no problem generating enough electricity
• the preparation doesn't mean electric vehicles will be accommodated without problems and good planning
• since people with the means to buy electric cars likely will live in the same areas, utilities worry about stress on their distribution systems
• if high gasoline prices could push sales of rechargeable electric vehicles well into the millions by 2020, that could stress the system
• other possible problems include
  
• electric vehicles getting larger and requiring far more electricity for recharging
• demands from people that their vehicles be recharged quickly, drawing more electricity during peak times
• choice for consumers
• consumers will face a lot of choices about when and where they charge up their cars and how much they want to pay for the electricity
• utilities likely will raise rates to charge cars during peak use times, generally from around noon to 8 p.m., and lower them for charging during low-use hours
• e.g. PG&E charges 30 cents per kilowatt hour to charge an electric vehicle during peak hours, he said, but charges only 5 cents from midnight to 7 p.m
• talk of the cars storing electricity and sending it back to the power companies during peak times
• officials say that's a long way off

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Buffett on the Stock Market (1999) - Fortune Magazine

Summary:
Buffet looking back in 1999 at the preceding 34 years and looking at the prospects for the stockmarket over the next 17 years. Preceding 34 years consisted of two contrasting 17 year periods. In first period, DJIA hardly moved; in second period, up nearly 10x. Main difference: interest rates and corporate profits. Interest rates down significantly in after 1982, and healthy corporate profits for period. Superimposed was market psychology. Many investors think next 17y will be more of the same. Buffett says this is unlikely: would require lowering of interest rates, and corporate profits after tax as a percentage of GDP to remain in excess of 6%. Profits cannot grow faster than GDP. Returns over next 17y more likely to be around 6%/year (4% reall return). Buffett on the chances of succesfully riding a wave of innovation: just look what happened to the automobile and aviation industries. Much easier to pick losers than to pick winners. However, key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. (Published: 22/11/1999)

Notes:

• explanation of why investors in 1999 are expecting too much
• investing = laying out money now to get more money back in the future in real terms, i.e. after taking inflation into account
• 1965 - 1999: 34 years, 2 periods of 17 years very different
• 1965 - 1981
• DJIA: hardly changed
  
• 31/12/1964: 874.12
• 31/12/1981: 875.00
• GDP: up 370% (almost 5x)
  
• Fortune 500 sales: up >6x
• rates on long-term bonds: tremendous increase
  
• 1964: 4%
• 1981: 15%
• corporate profits after tax as percentage of GDP
• mostly between 4 - 6.5% (normalcy range)
  
• down to 3.5% by 1981
  
• 1982 - 1999
• DJIA:
• 1981: 875.00
• 1999: 9,818.00
  
• GDP: up <3x
• rates on long-term bonds: going down
• 5% in 1998
  
• corporate profits after tax as percentage of GDP
• close to 6% by late 1998
  
• reasons for difference
• INTEREST RATE
  
• act on financial valuations the way gravy acts on matter
• the higher the rate, the greater the downward pull
• if government rate rises, prices of all other investments must adjust downward, to a level that brings their expected rates of return into line
• conversely, if government interest rates fall, the move pushes the prices of all other investments upwards
• basic proposition: what an investor should pay today for a dollar to be received tomorrow can only be determined by first looking at the risk-free rate
• every time the risk-free rate moves by one basis point - by 0.01% - the value of every investment in the country changes
• easy to see this in case of bonds
• value of which is normally affect exclusively by interest rates
• in case of equities, real estate, farms, etc. other variables also at work
• usually obscuring effect of interest rate changes
• yet effect always there, like the invisible pull of gravity
• huge increase in long-term government bond rates between 65 and 81
• gravitational pull of interest rate more than tripled
  
• huge depressing effect on the value of all investments, including equities
• major explanation of why tremendous growth in economy was accompanied by stock market going nowhere
• 1981-1983: interest rate situation reversed itself (Paul Volcker)
• effect on bonds
• e.g. put $1m into 14% 30-year US bond issued Nov 16 1981
• reinvest coupons, buying more of same bond
  
• end of 1998:
  
• bond selling at 5%
• made ~$8m, annual return >13%
• better than stocks in most 17 year periods
• effect on equities
  
• also pushed up by falling interest rate (in addition to other factors)
  
• e.g. put $1m in the Dow on Nov 16 1981
• reinvest all dividends
• end of 1998:
• made ~$20m, annual return of ~19%
  
• beats anything you can find in history
• AFTER-TAX CORPORATE PROFITS
• as percentage of GDP: portion of GDP that ended up with the shareholders of American business
• from 1951 to ~1980: within 4-6.5% range
• 1981 - 1982: down to 3.5%
• i.e. profits were sub-par and interest rates sky-high
• 1998: up to ~6%
• i.e. profits in upper part of normalcy range and interest rates low
• PSYCHOLOGY
• "Once a bull market gets underway, and once you reach the point where everybody has made money no matter what system he/she followed, a crowd is attracted into the game that is responding not to interest rates and profits by simply to the fact that it seems a mistake to be out of stocks. In effect, these people superimpose an I-can't-miss-the-party factor on top of the fundamental factors that drive the market. Like Pavlov's dog, these investors learn that when the bell rings - in this case the one that opens the New York Stock Exchange at 9:30am - they get fed. Through this daily reinforcement, they become convinced that there is a God and that He wants them to get rich."
• prospect for the next 17 years
• investors today have rosy expectations
• staring fixedly back at the road they just traveled
• expect 12 - 20% returns on 5 - 20 year investments
• Buffett: won't come close even to 12%
  
• 3 things need to happen for next 17 years to be as good as 17 years just passed
  
1. INTEREST RATES MUST FALL FURTHER
   
• if interest rates fell from 6% (now) to 3%, would come close to doubling the value of common stocks
  
• if you think interest rates are going to fall to e.g. 1%, you should buy bond options
  
2. CORPORATE PROFITABILITY IN RELATION TO GDP MUST RISE
   
• growth of a component factor cannot forever outpace that of the aggregate
• wildly optimistic to believe that corporate profits as a % of GDP can, for any sustained period, hold much above 6%
• e.g. competition will keep the percentage down
• also public policy element: if corporate investors, in aggregate, are going to eat an ever-growing portion of the economic pie, some other group will have to settle for a smaller portion
  
• would raise political problems
• reasonable assumption for GDP growth: 5% per year
• 3% real growth ("pretty darn good"), 2% inflation
• unless serious help from interest rates, aggregate value of equities can't grow much more than that
• GDP growth is limiting factor in returns you're going to get
• cannot expect to forever realize a 12% annual increase in valuation of American business if its profitability is growing only at 5%
• inescapable fact is that the value of an asset, whatever its character, cannot over the long term grow faster than its earnings do
• note: future returns are always affected by current valuations
• and: investors as a whole cannot get anything out of their business except what the businesses earn
• minus "frictional costs", i.e. transaction, advice, fees
  
• e.g. Fortune 500
• 1998 profits: $334b
• 1999 market value: ~$10tr
• i.e. investors were saying in 1999 that they would pay $10tr for $334b in profits
• frictional costs ~$100b/year
  
• i.e. less than $250b return on $10tr
• is "slim pickings"
• Buffett's most probable return over next 17y?
• assuming constant interest rates, 2% inflation and frictional costs: 6%
• minus inflation: 4%
• could just as easily be less than that as more
  
3. SUCCESSFULLY RIDING THE WAVE OF INNOVATION
   
• e.g. IT revolution
• Buffett cautions by using automobile and aviation industries as example
• both transformed the country much earlier in the century
• automobile
• early days of cars: at one time at least 2,000 car makes
• industry was having incredible impact on people's lives
• in hindsight, revolutionized society
• with such knowledge investor would have said: "Here is the road to riches."
• 1990s: only 3 US car companies left, in dire shape
• aviation
• industry with plainly brilliant future, would have caused investors to salivate
• 1919-1939: 300 aircraft manufacturers
  
• today: only handful
• 129 airlines filed for bankruptcy in last 20y
• 1992: since dawn of aviation, money made by all of country's airline companies: zero
• note: much easier in such transforming events to figure out the losers and short them
  
• e.g. possible to grasp importance of car when it came along but how to pick winners?
• better to turn things upside down: short losers, e.g. horses

• "key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage"
• "products and services that have wide, sustainable moats around them are the ones that deliver rewards to investors"
  

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Word of the Day: the Uncanny Valley

Summary:
In video gaming and robotics, the paradoxical point at which a simulation of life becomes so good it's bad. A term coined by the Japanese roboticist Masahiro Mori.

Notes:

• Mori observed that the more humanlike his robots became, the more people were attracted to them, but only up to a point:
  
• if an android become too realistic and lifelike, suddenly people were repelled and disgusted.
• The problem is in the nature of how we identify with robots
  
• When an android, such as R2-D2 or C-3PO, barely looks human, we cut it a lot of slack.
  
• It seems cute.
  
• We don't care that it's only 50 percent humanlike.
  
• But when a robot becomes 99 percent lifelike—so close that it's almost real—we focus on the missing 1 percent.
  
• We notice the slightly slack skin, the absence of a truly human glitter in the eyes.
  
• The once-cute robot now looks like an animated corpse.
  
• Our warm feelings, which had been rising the more vivid the robot became, abruptly plunge downward.
  
• Mori called this plunge "the Uncanny Valley."
• As video games have developed increasingly realistic graphics, they have begun to suffer more and more from this same conundrum.
  
• Games have unexpectedly fallen into the Uncanny Valley.

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High oil prices spur demand for low energy electronics - Reuters

Summary:
With oil at around $145 a barrel and electricity costs jumping, consumers are becoming preoccupied with keeping down their power bills. Electronics makers that develop energy efficient product lines and market them effectively to customers may get an edge in a gloomy global economy. Going green is not only eco-friendly but crucial for business, going beyond just products, extending throughout the development and manufacturing process, according to LG Electronics. These energy-efficient products, however, carry a hefty price premium to reflect the cost of developing new technologies, which in turn hampers faster adoption. A survey has found that found that green consumers are more brand-loyal than average consumers. A green-technology product that establishes new benchmarks and appeals to concerned consumers will have an iconic market presence if done right, according to Forrester Research. (Published: 05/07/08)

Notes:

• With oil at around $145 a barrel and electricity costs jumping, consumers are becoming preoccupied with keeping down their power bills.
• Electronics makers that develop energy efficient product lines and market them effectively to customers may get an edge in a gloomy global economy
• Kim Jik-soo, a spokesman at LG Electronics Inc.
• "Going green is not only eco-friendly but crucial for business. This goes beyond just products, extending throughout the development and manufacturing process."
• electronics firms are furiously developing energy efficient products and heavily promoting lines already on the market that use less electricity than competitors' brands
• from washing machines that use steam instead of hot water, to fridges that use low energy compressors, to low power computer screens
• washing machines
  
• using steam instead of hot water, cuts water and power use by more than 70 percent compared with some top-load models
• LG Electronics Inc and Whirlpool Corp
• refrigerators
• consume 30 percent of overall power in a typical home
• traditional compressors are giving way to linear compressors that use up to 40 percent less power and make less noise
• computing industry
• replacing screens lit by conventional cold cathode fluorescent lamps (CCFLs) with light emitting diode (LED) displays
• "LED saves up to 40 percent of the power used in traditional backlights. Next year they will be commonly found in notebook screens, and will be increasingly used in TV panels from 2010."
• Market researcher DisplaySearch expects LED-backlit displays to account for 50 percent of notebook panels in 2010, up from 12 percent this year.
  
• By 2015, all laptop displays will use LEDs, generating sales of $6 billion.
• building and street lighting
• Samsung Electro-Mechanics Co recently replaced lighting in the South Korean parliament building with new LED products and reported LED consumed just one sixth the power of incandescent bulbs.
• these energy-efficient products carry a hefty price premium to reflect the cost of developing new technologies
• in turn hampers faster adoption
• e.g. Whirlpool's washing machines with steam feature are sold at $1,300-$1,500, compared with a traditional machine priced at $700.
• makers argue that the lifetime savings from green products could amount to the price of the appliance itself
• Sometimes a little incentive helps.
• Japanese electronics retailer Bic Camera Inc is running a campaign in which buyers of eco-friendly products get extra credit points that can be used for future purchases
• U.S. survey by Forrester Research, 2007
  
• found that green consumers, who agree to pay extra for electronics that use less energy or come from an environmentally friendly maker, are more brand-loyal than average consumers.
• Christopher Mines, Forrester analyst:
• "More than 25 million U.S. adults fall into this segment, enough for even the largest consumer electronics marketers to target,"
• "Green-targeted PCs and other electronics will evolve as part of the consumer electronics industry's move to go beyond 'beige box' design," he said. "Apple certainly leads the way here."
• "A green-technology product that establishes new benchmarks and appeals to concerned consumers will have an iconic market presence if done right."

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Electro-Shock Therapy - The Atlantic

Summary:
Jonathan Rauch about the development of GM's Chevy Volt pluggable hybrid. (Published: 04/07/08)

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Electrostatic readout of DNA microarrays with charged microspheres - Nature Biotechnology

Summary:
Paper describing a method for label-free electrostatic readout of DNA or RNA hybridization on microarrays which is based on the electrostatic properties of microarrays. Changes in surface charge density as a result of specific hybridization can be detected and are measured from the position and motion of charged microspheres randomly dispersed over the surface (in 100uM NaCl). Interactions between the microspheres and substrate can be imaged by a variety of optical methods that provide a rapid indicator of DNA hybridization. The naked eye is sufficient to read out the hybridization, which may facilitate broad application of multiplexed assays. Practical diagnostics require rapid and simple quantitative readouts that do not use dedicated instrumentation or intensive image processing. (Published: 29/06/08)

Notes:

• microarray assays
  
• typically rely on fluorescence detection, which requires time-consuming chemical labeling, reverse transcription, high-power excitation sources and sophisticated instrumentation for scanning
• consequently, microarray assays tend to be performed by dedicated centers rather than by individual laboratories, and not by clinics in developing countries
• alternative label-free DNA detection techniques
• e.g. surface plasmon resonance, electrochemical sensing, fluorescent polymers,
  atomic force microscopy, microcantilevers and electronic depletion of a field effect transistor
• none of these have gained widespread use because each requires
  
• either complex device fabrication
  
• or sophisticated instrumentation for readout
• additionally, none are compatible with conventional DNA microarrays where up to 10^6 sequences can be interrogated in a single experiment
  
• electrostatic-based DNA or RNA detection method
• Complementary oligonucleotide binding strongly affects the electrostatic charge of the surface due to the negatively charged DNA phosphate backbone
• hybridization is measured electrostatically using charged microspheres that are highly responsive to changes in charge density on the microarrayed surface
• Interactions between the microspheres and substrate can be imaged by a variety of optical methods that provide a rapid indicator of DNA hybridization
• role of each silica microsphere is analogous to that of an electrostatic force microscope (EFM) tip where the vertical deflection of the tip is used to report local electrostatic surface properties
• EFM, however, is a serial technique that is practically limited to a field of view of 100 um2
• particle-based technique described here is capable of parallel sampling of a microarray surface over centimeter-length scales
• glass support is positively biased using an aminosilane modification
• balances the negative charge contributed by both the glass surface and the printed single strand (ss)DNA molecules
• necessary because the charged microparticles are responsive to a limited range of surface charge densities
• typical experiment
• a prepared substrate is mounted in a well chamber and hybridized
• unlabeled and negatively charged 5.6 mm–diameter silica microparticles are then added and allowed to sediment above (or otherwise interact with) the array over a period of 20 min.
  
• Microspheres uniformly distribute across the entire surface and adsorb to the positively charged background.
  
• However, over sufficiently negatively charged areas, they adopt an equilibrium height that is dictated by a balance between gravitational and local electrostatic forces.
  
• To determine the precise heights and positions of the population of levitated microspheres, we then acquired a collection of dualwavelength reflection interference contrast microscopy (RICM) images covering the entire array area
• Image acquisition was automated using a motorized translation stage, and a softwaredriven autofocus routine.
  
• At each stage position, 20 images were acquired (0.4 fps) yielding 20,000 images/mm2.
  
• On average, there were 20 microspheres per field of view (30 x 30 um) resulting in 400,000 microparticle observations/mm2.
  
• The interference images corresponding to individual microspheres were used to determine their position with 1-nm vertical resolution and 16-nm lateral resolution.
  
• Although this is an optical technique, the resolution is not diffraction limited
• it is determined by the particle position resolution and the density of particle observations.
• A quantitative spatial map of the surface charge density is generated by compiling the set of three-dimensional (3D) particle position measurements.
• practical diagnostics require rapid and simple quantitative readouts that do not use dedicated instrumentation or intensive image processing
• To develop such a readout strategy we take advantage of the fact that silica microspheres respond to the surface charge in an easily observable manner.
  
• If the surface is negatively charged, microparticles remain laterally mobile
  
• can be easily visualized by monitoring the intensity variance in a time series of brightfield images.
  
• Alternatively, positively charged areas can be identified by the presence of electrostatically adhered microspheres.
  
• This can be rapidly imaged using darkfield or brightfield microscopy.
  
• Therefore, adhesion of charged particles provides a simple test to map the sign of the surface charge.
• Direct comparison between fluorescence and electrostatic detection on the same substrates, under identical conditions reveals comparable figures of merit, indicating that sensitivity is primarily limited by hybridization, not the readout
• This particle-based electrostatic detection method offers multiple advantages over existing microarray detection methods.
  
• First, expression profiling and SNP detection using primary mRNA can now be performed without reverse transcription and fluorescent tagging.
  
• Second, electrostatic detection is compatible with conventional microarrays as well as unconventional arrays fabricated on injection-molded plastic or embedded within microfluidic architectures
• Third, imaging by pixel-by-pixel statistical averaging of colloidal particle positions is not diffraction limited, which suggests a strategy to take advantage of DNA nanoarrays that can hold 10^4 more features per unit area than conventional microarrays.
• Finally, microarrays consisting of proteins, small molecules, polymers and heterogeneous catalysts are rapidly coming online and might benefit from the electrostatic readout platform we describe herein.

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Experimental quantum chip produces unknown molecule - R&D Magazine

Summary:
Researchers at Purdue, Delft and Melbourne have created a new, hybrid molecule in which its quantum state can be intentionally manipulated, a required step in the building of quantum computers. The device consists of a single donor atom (arsenic) in a gated nanostructure. By controlling the voltage, the researchers found that they could make an electron go to either end of the molecule or exist in an intermediate, quantum, state. Measurements on the device could only be interpreted by considering the dopant to be made of two parts. One end comprised the arsenic atom embedded in the silicon, while the 'artificial' end of the molecule forms near the silicon surface of the transistor. A single electron was spread across both ends. (Published: 27/06/08)

Notes:

• Gerhard Klimeck, prof. electrical and computer engineering at Purdue Univ.
• "Up to now large-scale quantum computing has been a dream. This development may not bring us a quantum computer 10 years faster, but our dreams about these machines are now more realistic."
• Quantum computers
• would harness the strange behaviors found in quantum physics to create computers that would carry information using quantum bits, or qubits.
  
• would be able to process exponentially more information
• If a traditional computer were given the task of looking up a person's phone number in a telephone book, it would look at each name in order until it found the right number.
  
• A quantum computer could look at all of the names in the telephone book simultaneously.
• could take advantage of the bizarre behaviors of quantum mechanics in ways that are hard to fathom
• e.g. two quantum computers could, in concept, communicate instantaneously across any distance imaginable, even across solar systems
• challenge until now had been to create a computer semiconductor in which the quantum state could be controlled, creating a qubit.
• Klimeck: "If you want to build a quantum computer you have to be able to control the occupancy of the quantum states. We can control the location of the electron in this artificial atom and, therefore, control the quantum state with an externally applied electrical field."
• single donor atom in a gated nanostructure
• observed evidence for a new hybrid molecule in the solid-state
• Hollenberg: "Measurements only made sense if the molecule was considered to be made of two parts. One end comprised the arsenic atom embedded in the silicon, while the 'artificial' end of the molecule forms near the silicon surface of the transistor. A single electron was spread across both ends."
• "What is strange about the 'surface' end of the molecule is that it occurs as an artifact when we apply electrical current across the transistor and hence can be considered 'manmade.' We have no equivalent form existing naturally in the world around us."
• By controlling the voltage, the researchers found that they could make an electron go to either end of the molecule or exist in an intermediate, quantum, state.
• Sven Rogge, Delft Univ. of Technology:
• "Our experiment made us realize that industrial electronic devices have now reached the level where we can study and manipulate the state of a single atom. This is the ultimate limit, you can not get smaller than that."

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Carbon nanotubes interfere with protozoan function - R&D Magazine

Summary:
Study by a Canadian group found that carbon nanotubes may be toxic to microorganisms. When cultures of a certain key protozoan, a single-cell organism, were exposed to the nanotubes their ability to ingest and digest bacteria was hindered. Protozoa exhibited clumping. If such exposure ever occurred in the wild, there is a possibility that the nanotubes move up the food chain, with impossible to forsee ecological effects. Study illustrates need for research into the health and environmental impact of nanoparticles. (Published: 19/06/08)

Notes:

• Nature Nanotechnology link
  

• Univ. of Waterloo group exposed Tetrahymena thermophila to single-walled carbon nanotubes
• exposed to different concentrations of nanotubes in solution and monitored them for three days using video microscopy
• found that the protozoa unnaturally clumped together initially and then ingested SWNTs and bacteria alike
• additionally, the protozoa's ability to ingest and digest their prey bacteria species was compromised
• control cultures remained healthy while the nanotube-exposed cultures exhibited various negative responses depending on the concentration
• ranging from diminished mobility to death, with the most prevalent effect being cell clumping
• one potential positive effect of Tetrahymena thermophila nanotube uptake
• the protozoa released extra “exudates,” fluids rich in proteins and cellular debris
• help solidify impurities in the wastewater
• could make the protozoa more efficient water-cleaners.

• implication: if such exposure ever occurred in the wild, the nanotubes could move up the food chain
• additionally, because the protozoa's ability to ingest and digest their prey bacteria species was compromised, certain bacteria populations could balloon
• could have untold ecological effects
• pressing need for research into the health and environmental impact of nanoparticles
• Part of the reason for the lack of studies on carbon nanotubes effects on microorganisms is that scientists generally believe that the nanotubes are insoluble in water.
  
• However, at least one recent study challenges this belief.
  
• “We hope that our work will stimulate a line of research towards better understanding of the effects of nanomaterials on diverse organisms, especially on single-cell organisms that are ecological important,” says Tang.

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EU Backs US$1.5 Billion Research Program to Develop Hydrogen Cars - FuelCell Today

Summary:
European Union approved a 940 million-euro ($1.5 billion) research initiative to spur the development of hydrogen-powered cars, seeking to reduce air pollution and reliance on imported oil. The program aims to accelerate the commercialization of hydrogen and fuel-cell technologies, allowing "commercial takeoff" between 2010 and 2020. FuelCell Today Newsletter: "More than ever, funding for fuel cells is being made available by governments worldwide. The opportunity to bridge the gap between research into and commercialisation of fuel cell technology has perhaps never been greater." (Published: 02/06/08)


Notes:

• Joint Technology Initiative (JTI)
  
• 940 million-euro ($1.5 billion) research initiative to spur the development of hydrogen-powered cars
• 50 percent financed by companies including Royal Dutch Shell Plc and Bayerische Motoren Werke AG and 50 percent funded by the EU over six years
• aims to accelerate the commercialization of hydrogen and fuel-cell technologies, allowing "commercial takeoff" between 2010 and 2020
• Existing market barriers include
  
• the cost and durability of fuel cells,
  
• the sustainable production of hydrogen
  
• the safe distribution and storage of hydrogen.
  
• The JTI aims to reduce time to market for hydrogen and fuel cells technologies by between 2 and 5 years
• quicker impact on improving energy efficiency, security of supply, pollution, and on improving potential for reducing greenhouse gases
• EU is creating public-private partnerships in research and development to help raise R&D spending to 3 percent of gross domestic product from 1.8 percent and bridge the gap with the U.S. and Japan
• In the UK, the Technology Strategy Board has allocated an indicative amount of £4 million to fund highly innovative collaborative research proposals on components and materials for low impact buildings, something that fuel cells could be a good fit for
• FuelCell Today Newsletter: "More than ever, funding for fuel cells is being made available by governments worldwide. The opportunity to bridge the gap between research into and commercialisation of fuel cell technology has perhaps never been greater."
• See also: JTI website
  

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OLEDs could soon wave lifetime woes goodbye - R&D Magazine

Summary:
Sealing of OLEDs using ion-assisted deposited passivation layer (SiON) as opposed to glue has been found to greatly increase the longevity of the displays. SiON has a lower water permeability than conventional glues, the main cause of reduced life-times of OLEDs. Note: these OLEDs are compared against unencapsulated OLEDs, not commercial benchmarks, and the results are far less impressive when this is borne in mind. Overhyped IMAO. (published: 23/04/2008)

Notes:

• OLEDs promising for next generation of displays and solid state lighting
  
• use less power
  
• can be more efficiently manufactured
• better color
• capability of larger displays
• lacking is an inexpensive encapsulation method to mass produce organic electronics that doesn't let moisture in
• currently displays sealed in inert atmosphere or in vacuum
• glass lid glued on top of display substrate
• moisture absorbing powder inside
• expensive and labor-intensive to assemble
• Georgia Tech Research Institute (GTRI)
• Wusheng Tong, senior research scientist
  
• Hisham Menkara, senior research scientist
• Brent Wagner, principle research scientist
  
• thin film barrier, pinhole free SiON (silicon oxynitride)
  
• ion assisted deposition
• relatively inexpensive
• performed at room temperature, thus keep organics material intact
• 50-200nm
• thinner increases risk of pinholes
• no sign of degradation after 7 months using SiON barrier
• as opposed to 2 weeks unencapsulated, same conditions
• note: this is to be expected without encapsulation
  
• accelerated degradation tests at 50°C and 50% relative humidity
• little degradation after 2 weeks
• note: 2 weeks at 50°C and 50% RH not very impressive
  
• unencapsulated OLEDs degraded immediately
• note: again, this is to be expected without encapsulation
• Note: these devices should be compared against an industry standard (e.g. a Kodak OLED) rather unencapsulated displays
  

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Nano switch hints at future chips - BBC NEWS

Summary:

Molecule sized transistors made using graphene. Graphene geat conductor, works at room temperature. Challenge is to make large wafers. Other applications: displays and solar panels. (17/04/2008)

Notes:

• graphene
• single layer of graphite, thickness of one atom
• stable and robust
• transparent
• Dr Kostya Novoselov and Professor Andre Geim from The School of Physics and Astronomy at The University of Manchester
• first to separate sheet of graphene from graphite, 2004
• leading research into potential applications of graphene in electronics
• Manchester team shown that graphene can be carved into electronic circuits with individual transistors
• transistors not much larger than one molecule
• graphene can conduct electricity better than silicon
• great conductor
• graphene transistors will work at room temperature
• current silicon roadmap expected to end in 2020
• race to find alternative materials
• biggest challenge: producing graphene sheets big enough to be used as wafers for chip production
• biggest wafer produced so far: 100um
• yield of working devices: ~50%
• same process used as in making silicon transistors
• use in display technology?
• because it is transparent
• transparent conductor
• using small interconnecting graphene sheets together
• other applications: solar panels, transparent window coatings, sensing technologies

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Carbon Dioxide Removed From Smockstacks Could Be Useful In DVD And CD-ROM Manufacture - ScienceDaily

Summary:
Carbon dioxide removed from smokestack emissions in order to slow global warming in the future could become a valuable raw material for the production of DVDs, beverage bottles and other products made from polycarbonate plastics. Two presentations at the ACS 2008 meeting were dedicated to the topic. Polycarbonates have great potential for use in removing carbon dioxide from the environment. Estimates are that it's a matter of a few years before CO₂-derived polymers are available to the public. (Published: 09/04/08)

Notes:

• ACS meeting, April 8, 2008
• two presentations on trapping CO₂ into carbonates and urethanes to avoid release of many million tons into the environment
  
• Thomas Mueller, RWTH Aachen:
  
• "Carbon dioxide is so readily available, especially from the smokestack of industries that burn coal and other fossil fuels. And it's a very cheap starting material. If we can replace more expensive starting materials with CO₂, then you'll have an economic driving force."
• "Millions of tons of polycarbonates already are sold each year with the volume rising. Perhaps no other consumer product has such a great potential for use in removing carbon dioxide from the environment."
• are the mainstay for producing eyeglass lenses, automotive headlamp lenses, DVDs and CDs, beverage bottles, and a spectrum of other consumer products
• "Using CO₂ to create polycarbonates might not solve the total carbon dioxide problem, but it could be a significant contribution."
• "I would say it's a matter of a few years before CO₂-derived polymers are available to the public."
• Toshiyasu Sakakura, Institute of Advanced Industrial Science and Technology in Tsukuba, Japan

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Quote of the Day

"The world of technology thrives best when individuals are left alone to be different, creative, and disobedient." - Don Valentine, Sequoia

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