Trends I'm Watching

The hidden export from China: deflation

Trend: China will continue to export cheaper goods and drive up commodity prices.

Jim Jubak at MSN Money argues that China will produce and export more goods and consume more commodities in the near future, perhaps resulting in deflation. Excerpts below.

Source: MSN Money - The new risk from China: deflation - Jubak's Journal

Deflation effectively took Japan out of the global economy for more than a decade, slowing global growth and increasing global economic volatility. Serious deflation in China has the potential to be a lot more dangerous. At its least damaging, it would flood the world's markets with even cheaper Chinese goods. At the worst it could stall the Chinese economy, a major driver of global growth, and even send the country into one of its traditional periods of instability.

How did China get into this mess?

Start with an economy built around export growth and feed it with lots and lots of cheap money. And then ignore any signals that the rudimentary, somewhat free market might be sending you about overinvestment or overcapacity.

The result has been massive overcapacity in fixed assets.

Of course, this excess capacity hasn't ended plans to add even more capacity in these sectors.

Companies can raise money to build clearly unnecessary and unprofitable factories because all too many Chinese banks continue to make loans on the basis of political connections rather than market forecasts. Put a local entrepreneur and his local political patrons from the district government in the same room with a banker, and a loan pops out.

Google vs. Yahoo: Why Google is Winning

Trend: Google's ad platform is outdistancing the competition.

Ed Kohler at the Technology Evangelist blog lists the six reasons that Google is winning. Note: Google Adwords and Yahoo Search Marketing are the two ad platforms that generate the bulk of each company's profits.

Source: Technology Evangelist: Six Reasons Why Google is Kicking Yahoo's Butt

.... key differences in their Pay Per Click platforms:

1. Search Term Wildcarding: AdWords offers more - and easier to use - options for controlling when your search terms will be displayed.
2. Reporting: ...Google's actually works. The reporting is faster, easier to navigate, easier to export, and easier to save/schedule.
3. Site Targeted Advertising: Google has found a way to get more money out of [advertisers] through the same platform. And it works.
4. Ad Scoring Systems: Google switched to a quality scoring system that changes the minimum bids based on a term's, "click through rate (CTR), relevance of your ad text, historical keyword performance, the quality of your ad's landing page, and other relevancy factors."
5. More advertisers = More Relevant Ads
6. Make Publishers Money: Google receives more clicks and makes more money.

NASA: 2005 Was Warmest Year In A Century

Trend: The Northern Hemisphere is getting warmer.

The Environmental Protection Online web site reports the latest global temperature results from NASA — excerpts below.

Link: Environmental Protection

Climatologists at NASA's Goddard Institute for Space Studies (GISS) in New York City noted that the highest global annual average surface temperature in more than a century was recorded in their analysis for the 2005 calendar year. Some other research groups that study climate change rank 2005 as the second warmest year, based on comparisons through November. The primary difference among the analyses, according to the NASA scientists, is the inclusion of the Arctic in the NASA analysis. Although there are few weather stations in the Arctic, the available data indicate that 2005 was unusually warm in the Arctic, according to a Jan. 24 statement. In order to figure out whether the Earth is cooling or warming, the scientists use temperature data from weather stations on land, satellite measurements of sea surface temperature since 1982, and data from ships for earlier years.

Previously, the warmest year of the century was 1998, when a strong El Nino, a warm water event in the eastern Pacific Ocean, added warmth to global temperatures. However, what's significant, regardless of whether 2005 is first or second warmest, is that global warmth has returned to about the level of 1998 without the help of an El Nino.

The result indicates that a strong underlying warming trend is continuing. Global warming since the middle 1970s is now about 0.6 degrees Celsius (C) or about 1 degree Fahrenheit (F). Total warming in the past century is about 0.8° C or about 1.4° F.

Who Really Controls Energy Production?

Trend: Continuous disruption of energy production is difficult to prevent and effectively creates fear and uncertainty among the consumers of energy.

John Robb at the Global Guerrillas blog writes about how sustainable systems disruption targeting energy production is being used by small groups of global guerrillas to undermine the supremacy of powerful nations in a global economy.

Source: Global Guerrillas

The control over the price of oil is in now in the hands of global guerrillas -- the open source, system disrupting, transnational crime fueled, sons of global fragmentation....These actors can now, at will, curtail the supply of oil through low tech attacks on facilities in Iraq, Nigeria, central Asia, and India. The amount of oil effectively under their control exceeds five million barrels a day, more than Saudi Arabia's two million barrels a day of swing production.

Means and Motives

It's important to note that this capacity to disrupt production is substantially different than any terrorist threat we have faced in the past. With terrorism, the potential of damage has always been from single large attack on a major facility or node (extremely difficult to accomplish and relatively easy to recover from). Today's threat is based on sustainable disruption -- ongoing, easy, low-tech attacks that are nearly impossible to defend against (everything from pipeline destruction to employee kidnapping). The goals of these attackers can be divided into three complimentary categories:

• Delegitimization of the target state. Attacks meant to "hollow out" the state, through an inability to deliver critical services or a denial of income/investment, to create zones of local control.
• Coercion of the core Western states. Either to damage the US or a target state through economic means.
• Criminal profit. By increasing the prices of oil and its refined products, the profits generated by criminal enterprise (bunkering of oil, smuggling, etc.) are radically improved.

The Coming Coal Boom

Trend: Alternatives to unstable supplies of imported oil and expensive natural gas are key to electricity generation in the US.

Jim Jubak at MSN Money says coal is cheap and the supply is stable, which makes it very desirable for electricity generation. Excerpts below.

Link: MSN Money - 6 ways to invest in the coming coal boom - Jubak's Journal.

I have seen the fuel of the future.

It's not natural gas. That was the fuel of the future in 2000.

It's not uranium. That might be the fuel of the future in 2015, if the new generation of nuclear plants turns out to be as good -- once someone builds one and operates it for a while -- as their proponents hope.

It's not solar or wind or fuel cells, either. But they could give nuclear a run for its money by 2015 -- if government subsidies produce enough of a market to drive costs down further.

Nope. The fuel of the future is coal. For the next five years anyway.

Saving energy in office buildings

Trend: Office buildings are a prime target for improving efficiency and reducing energy use.

Roland Piquepaille describes a study of saving energy during peak demand in the Emerging Technology Trends blog of ZDNet.com.

Link: ? Saving energy in office buildings | Emerging Technology Trends | ZDNet.com.

Precooling a structure in the morning before temperature rises has been done before. It later saves energy during times of peak demand and you might even have done it intuitively at home. But now, engineers from Purdue University have developed a 'control' algorithm which promises to reduce energy consumption — and electricity bills — by as much as 30 percent for small office buildings which represent the majority of commercial structures. So far, this method has only been tested in California, but the researchers say that their control software could be used anywhere after minor adaptations.

Here is a short introduction by Emil Venere, from Purdue University, about this method.

The method has been shown to reduce the cooling-related demand for electricity in small office buildings by 30 percent during hours of peak power consumption in California's sweltering summer climate. Small office buildings represent the majority of commercial structures, so reducing the electricity demand for air conditioning in those buildings could help California prevent power-capacity problems like those that plagued the state in 2000 and 2001, said James Braun, a Purdue University professor of mechanical engineering.

So how does this system work?

The method works by running air conditioning at cooler-than-normal settings in the morning and then raising the thermostat to warmer-than-normal settings in the afternoon, when energy consumption escalates during hot summer months. Because the building's mass has been cooled down, it does not require as much energy for air conditioning during the hottest time of day, when electricity is most expensive and in highest demand.

15 New Tech Concepts For 2006

Predictions: Popular Mechanics' 15 Tech Concepts You'll Need To Know In 2006

In the January, 2006 issue of Popular Mechanics, Alex Hutchinson describes 15 Tech Concepts You'll Need To Know In 2006.

Source: PM: 15 New Tech Concepts For 2006

1. Body Area Network (BAN)
2. Metadata
3. SPIT (SPam over Internet Telephony)
4. Electronic Medical Records (EMR)
5. Perpendicular Storage
6. Nanoparticle Batteries
7. SPIT (SPam over Internet Telephony)
8. Micro Fuel Cells
9. Electronic Medical Records (EMR)
10. Coal Gasification
11. Perpendicular Storage
12. Presolar Interstellar Grains
13. Crime-Lab-on-a-Chip
14. Fiber-to-the-Home
15. Blind-Spot Detection

via Emergic via Slashdot

The Future of Movie Theaters

Trend: The movie theater business needs a new business model to be viable as the digital home becomes reality.

Mark Cuban describes how Landmark Theaters caters to its target audience, and why most movie theaters don't satisfy any target audience.

Source: What Business are theaters in ? - Blog Maverick - www.blogmaverick.com _.

At Landmark Theaters we know who our demographic is. Its not kids 18-24 who are deciding whether to hang out at the mall or go to the movies.  Its not people who are concerned with seeing the latest blockbuster. The 12mm and growing number of people who attend movies at a Landmark Theater are typically 25 plus years old, who love independent films from independent minds.

We try to be the Voice of Independent Film for the people who make movies, and the people who love to see those movies.  That is our mindset. That is what our demographic wants.

Our job at Landmark is to go out and find those movies and to make the experience of watching those movies as unique and enjoyable as possible. It can be the decor of the theater. It might be offering adult beverages before, during and after the film. It may be offering the a DVD selection of  the movies director so you dont have to scour the aisles of a huge retailer looking for a title they may not have. It may be offering the soundtrack of the movie, or the book the movie was based on. And starting with Bubble, it will include selling the DVD of the movie you just saw. Also starting with Bubble will be the rollout of Digital Cinema. Every single play of Bubble in our theaters will be digitally projected.  We are using a mix of Sony 4k and TI based 2k projectors. We want our customers to have the best possible viewing experience with every single showing of this and future movies. No scratches, no pops, no fades, no problems with the presentation whether you see it the first day of release or the last showing 6 months later.

We have to create an environment that makes going to a movie at a Landmark Theater - fun,  entertaining, relaxing, a good value and for a film fan, the best answer to the question, what do you want to do tonight.

I can and will offer my observations of the problems first run multiplexes have.

Chasing Google

Trend: Google's technology continues to provide a competitive advantage in search engine results pages ads.

Jim Jubak describes Yahoo's search advertising problem in MSN Money.

Source: MSN Money - Buyout boom's next phase: greedfest - Jubak's Journal

...shares of Yahoo (YHOO, news, msgs) fell 12% on Jan. 18 after the company came up a penny short when it announced fourth quarter 2005 earnings. No, that wasn't Wall Street's all-too-frequent overreaction to an inconsequential shortfall.

What drove the stock down wasn't the earnings miss but the company's admission that it had fallen way behind in its efforts to roll out new technology to compete with Google (GOOG, news, msgs). Yahoo's problem is that its search engine is less efficient at matching users' searches to the ads it displays. The result is that the ads Yahoo props on the web page that shows the search results get less click-through than the ads on a Google page. Yahoo's click through may be only half that of Google's, estimates Citigroup.

Since advertisers on the Internet pay per click, you can see Yahoo's problem. New search technology is supposed to make the ads Yahoo surfaces more relevant -- but in its earnings announcement Yahoo said it would introduce its new technology "deliberately" over the coming year. Wall Street decided that "deliberately" means late and that’s what crushed the stock.

TI's Green Dream in Texas

Trend: In a high-energy cost era, green factories can cost less to build and maintain than traditional factories.

In a column titled A Green Dream in Texas, Thomas L. Friedman describes how Texas Instruments built a factory to be very efficient by applying green principles (excerpts below).

Link: The NY Times

The most impressive project I’ve seen is by Texas Instruments, which is building a “green” chip factory here in Richardson, near Dallas. T.I. is keeping 1,000 high-tech jobs in Texas by building its newest facility – to make wafers used in semiconductors – in a cost-saving, hyper-efficient green manner.

T.I. always wanted to keep its newest wafer factory near Dallas so it would be near its design center and ideas could flow back and forth. But China, Taiwan and Singapore were all tempting alternatives, offering low wages, subsidies and tax breaks. So the T.I. leadership laid down a challenge: T.I. could locate its new wafer factory in Richardson, if the T.I. design team and community leaders could find a way to build it for $180 million less than its last Dallas factory, erected in the late 1990’s. That would make its cost-per-wafer competitive with any overseas plant’s.

Although the T.I. engineers initially thought it impossible, they pulled it off. Previous chip factories had three floors because of the complicated cooling and manufacturing process involved in making wafers. The T.I. design team came up with a way to build the Richardson factory with just two floors – a huge savings in mass and energy. T.I. also contacted Amory Lovins, the green designer who heads the Rocky Mountain Institute, and asked him to help it design other parts of the plant in a way that would lower its resource consumption, which, over the life of a plant, can exceed construction outlays.

Together, T.I. engineers and Mr. Lovins’s team designed big water pipes with fewer elbows, which reduced friction loss and let them use smaller pumps that save energy. Various passive solar innovations were built in, including roofs that use a white reflective coating to reduce heat. These, together with innovations in how air is circulated, cooled and recovered naturally, reduced total heat so much that T.I. was able to get rid of one huge industrial air-conditioner. Almost all of the waste from the building construction is being recycled. The urinals are all waterless.