Category Archives: technology

Smartphone Design is Broken

The iPhone 7 was released this week so it is a good time to talk about smartphones and the Broken Window Fallacy. We have talked about this concept in the past but we’ll modify the idea a bit and apply to the current state of smartphone design.

The Broken Window Fallacy was first explored by the French economist Bastiat. The original thought experiment involved a group of people deciding that the economy benefited when a pane of glass was smashed because it gave work to the glazier.  It has been mentioned on this site before talking about flooding. In reality it is good for the glazier but not for the economy as a whole because using resources to fix the window would have been used in a more efficient manner. With the broken window you end up in the same state after the fixes as when you began but the tradesperson has made money. If you spend the money instead on curtains for the window then you end up with the window still existing, a tradesperson has still made money and you have the curtains.

So how does this apply to smartphones?  Quite simply, smartphones are not designed correctly.  That is,  they are designed with form over function in mind.  You have an expensive electronic device that you use for all manner of information retrieval and communication throughout the day but if you drop it from more than 2 feet off the ground, it is severely damaged.  What was the first thing that popped into your head when you read the previous sentence?  It likely involved something about a case.  Not mine, I have a case or not if you put it in a case. The first time a consumer decided it was okay for a company to sell a expensive piece of gear that looked pretty on the internet and in ads but that needed to instantly be put in a big rubber case the moment you started using it we got a modern variation of the Broken Window Fallacy which we will call Design Flaw Industries.

Design Flaw Industries (DFI) are exactly what they sound like.  The two examples we will use here are phone cases and phone screen repair services/shops.

Phone cases account for about 29% of all mobile phone accessory sales.  It is estimated that the global accessory market will be about $50 billion this year.  Screen protectors make up another 7%.

Squaretrade, a seller of smartphone insurance (which we can surely count as another DFI) says that since 2007 US consumers have spent $23.5 billion on phone screen repairs.  On top of that, 15% of the iPhone users they surveyed currently had an un-repaired broken screen. You can see phone screen repair shops/kiosks in every major city.  These are not repairs on things that wear out like you may experience on a TV, these shops almost always have a big sign that says something about being able to fix your broken screen.

So here we have a global industry based almost entirely on the fact that smartphones are designed poorly.  Apple, at least, has moved to a metal back rather than glass but many companies still use glass.  Even if it is the Gorilla glass kind(one of the all time great marketing jobs, it’s unbreakable). Samsung even made their phone MORE fragile with the wrap around screen on their Edge models. There are rugged phones of course but this should not be a niche category.

Keep in mind that we are not talking about accessories.  Charge cables, headphones, etc., all make sense. What we are talking about here is something that could easily be improved at the design level.  How about a phone that is made with a carbon fiber frame with a slight edge so even if you dropped in flat on its face it didn’t shatter the screen?  Many would think carbon fiber looks cool but some people want to see the rose gold backing on their phone for the 8 minutes between when it comes out of the box and when it is put into a case that helps define them as a person.

So the designers are to blame but so are the consumers because they keep buying phones designed to look good and be fragile.  They choose to put their money into an industry that really should not need to exist. This is not a perfect match to the Broken Window Fallacy but because of the billions of dollars spent on smartphone screen breaks and screen break prevention could be used on almost anything else that would be of greater benefit, Design Flaw Industries can at least be considered an economic cousin.

Facebook Buys Oculus Rift for 2 Billion

Recently Facebook purchased the virtual reality (VR) company Oculus. Oculus is one of the big success stories of Kickstarter. They managed to raise a couple of million dollars in order to get their VR headset off the ground with over 9,000 people contributing to their campaign.  If you donated around $300 then you received the first version of their development kit; basically an advanced, working prototype. The reviews for the first version of the prototype were extremely positive with many reviewers implying that this might be the dawn of a new medium (No one counts the VR setups from the 90s).  The purchase of the company by Facebook came as a shock to most people and an overwhelming majority of the immediate online feedback was negative.  So today we will look at two things.  One, as a Kickstarter backer what rights do you have regarding the resulting product?  Two, is the purchase of Oculus by Facebook a good thing?

What rights do you have as a Kickstarter backer to control the direction of the company after the campaign is complete?  None.  What are the responsibilities of the people running the campaign to their backers? Only what was promised as an incentive.  If you pledged $300 to get a development kit and you got that development kit, your deal is done.  If you pledged $25 you got a t-shirt, your deal is also done.  Kickstarter is not a source of venture capital (VC).  Backers are not buying shares in a company.  It is more like an elaborately disguised pre-order combined with donations. It is actually a pretty sweet deal for the people running the campaigns.  With traditional VC Oculus would have to sell a percentage of the company to get the start-up cash. So while many people feel betrayed because the little VR company that everyone supported got purchased by the big bad Facebook, there is nothing supporters can do about it.  People asking for their money back are wasting their time.

This event will likely change the way people select the campaigns they support in the future.  It will also change the way people market their campaigns.  The outcome will either be that campaigns start to give out small amounts of shares as incentives or people will start including things like “We guarantee we will remain an independent company for X years” in their summaries. Although, when Mark Zuckerberg walks through the door with a couple of billion dollars it has to be hard to stick to your convictions.

Is this purchase a good thing? Facebook is not interested in the hardware that Oculus makes.  It is interested in VR as a medium.  Facebook values user data above all else.  They want to build a huge customer base so they can segment the market and sell targeted ads based on user behavior. This is why they paid $2 billion for a company that has what they think is a very promising new technology with tens of thousands of users but $19 billion for WhatsApp, a simple messaging program with 450 million users.

Both Oculus and Facebook have said that the VR company will continue to operate independently in the near future and if that is true then this purchase is a good thing.  The main fear I had personally was a VR world covered in ads that also tracks everything you do online.  However, with the backing of Facebook Oculus should be able to ramp up and expand this technology much faster and that is good for everyone.  Games are the first place that this tech will be used and playing games in a full VR environment is going to be great. Beyond that we can expect VR hangouts (Hey! Come to my virtual apartment and look at my virtual pictures on the virtual wall above my virtual couch), tours of famous places, training  and educational material (Hey! You are the size of a blood cell, let’s take a trip through the circulatory system), and many other uses. All of this is good.

Not by any stretch of the imagination do I think that Facebook is going to let everyone use their technology without gathering their data and serving them ads but if this gigantic influx of capital into Oculus pushes the technology as a whole forward and causes other big companies to follow up with their own alternatives, then I am all for it.

Canadian Wireless Code of Conduct: Consumers Finally Win the Right to Pay Higher Prices

In January we looked at the proposed changes to the rules that govern wireless service providers in Canada.  Those changes have now been implemented and Canadian wireless providers are no longer allowed to offer 3 year contracts, 2 years is the maximum. In a surprise to no one with any understanding of how a business works, all the major providers have announced that their rate plans are increasing in price and that phones will now have lower subsidies and will therefore be more expensive. Thank you CRTC. Thank you for making cell phone service in Canada more expensive.  Two possibilities exist. Either the people at the CRTC are completely incompetent or they are malicious. Let’s explore the first possibility as I would like to think that the government is not just straight up trying to cause harm to consumers.

As mentioned in a number of posts, I have no love for my service provider.  Interacting with them is one of the most frustrating things I can do on a regular basis because it seems like they are actually trying to anger customers with every policy implementation. Any time they make a change to my account it is done incorrectly and a second phone call is required to fix it. However, I have been with them for over 10 years because I know that it is absolutely not any better at the other providers.  I know this because I worked for one of their competitors, in the call centre, taking calls about people’s bills.

With the 3 year contracts a customer had some power to negotiate a deal every three years.  So that tiny window every three years is the one time that Rogers, Bell, whoever you are using, cares to listen to you.  That power is now diminished.  Now you can sign up for a maximum of two years which means less guaranteed income for them and less power for you when you are negotiating a deal.

Back to how the CRTC thinks the world works. Cell phone companies are now going to lock people into 2 year contracts.  Each of these new contracts is 1 less year of guaranteed income. When the Rogers’ accountant is balancing the books he now has one less year put into the net present value of a new contract.  Less NPV, less posted profits.

Take a customer that stays with the company for 10 years. Here is an extremely high quality infographic to show the hardware upgrade cycle.

upgrade_cycle

The phones represents when the company will offer a hardware subsidy to the customer.  I will allow you to draw your own conclusions on how this might affect a company’s profits.

With less guaranteed revenue and more frequent payouts of hardware subsidies the cell phone companies raised their prices. If you hear someone say they are surprised by this then that someone either lives in a fantasy land of benevolent corporations or they run Canada’s federal telecommunications regulator.

 

CRTC’s Canadian Cellphone Company Code of Conduct

Here in Canada you can pretty much guarantee that you will never hear this statement:

“I love my cell phone provider.  They give me fair rates and great service.  My favourite thing about them is that if I do ever have a problem, I call in and they solve it for me the first time, every time. Also, my bill is always exactly what I expected it to be and prices are fair, especially compared to the U.S.”

Well this week CRTC announced something they referred to as a draft code of conduct for wireless providers in Canada.  I would like the final document to be named the CRTC’s Canadian Cellphone Company Code of Conduct, or CCCCCC.  You can see it here.

Sighs of relief went up around the country as people felt there was finally something being done about the evil cell phone companies that had been screwing us all over since the dawn of time. Today we will look at the suggestions that have been outlined in the draft and how they might affect you as an individual.

Let me start by stating that I am no fan of cell phone companies. People that know me have heard me rant about them in the past. However, I think this draft code of conduct is not the correct solution to the problems we face as consumers. Also, I should mention that I used to work in the call centre for one of the major cell phone providers in Canada and so I have a pretty good understanding of what people are upset about when they talk about their cell phones. Let us begin.

We will use the nice summarized list of the new suggestions from the CBC.

  • Monitoring usage: Customers must be given tools to monitor their usage compared to the limits of their plan in order to be aware of extra fees they might incur if they go above the limits.

A great recommendation.  Rogers thought it was so good they travelled back in time and implemented this years ago.  You can see usage details on their website or directly on a smart phone app that is free to download and comes installed on most phones by default.  Bell had an even older service so that even before smartphones you could send in a text and it would autoreply with your usage and overage fees.

  • Bill caps: Customers must be allowed to restrict features that could incur additional fees and have the ability to cap their monthly bill at a certain amount. Once the user hits the cap, the service provider would suspend services that could result in extra fees.

This is a spending cap on Bell and CLM(Credit Limit Monitoring) on Rogers.  These are usually implemented automatically on people with weaker credit scores but you can put them on your account voluntarily as well.

  • Personalized summary of terms, conditions: Customers must receive a personalized summary of key terms and conditions in their contract, such as how much they would pay in cancellation charges at different times during their contract and what tools are available to help them monitor their usage of different services.

Yes, a normal cell phone contact could take minutes and minutes to read through and you want your phone now! Now, now. Make them give us bullet point contracts! Also, they already tell you in your quick start guide how to monitor your usage. In case you were wondering, that is the booklet you normally throw in the recycling bin after you take your phone out of the box.

  • Unlocking wireless devices: Wireless providers are required to give customers the option to unlock locked wireless devices. The fee that can be charged for this option and the time frame in which devices could be unlocked would vary depending on whether or not the cost of the device is subsidized by the provider.

I agree with this.  Locking phones is dumb.

  • No fine print: Policies governing the terms or use of service “must be written in clear, easy to understand language” and in an appropriate font size.

Confusing contracts are already against the Consumer Protection Act of 2002.    Here is a link to the summary of your rights.  So I guess now they can be fined $250,000 as a corporation AND it will be against the CCCCCC. Also, I am not sure we need to take the term “fine print” so literally as to regulate the font size.

  • Advertised prices: Advertised prices for a contract must include the total monthly amount the customer must pay on a recurring basis and indicate whether the figure includes sales tax and government-mandated fees.

Yeah we already have this protection as well.

  • Cancellation of service before contract is up: Early-termination fees can only include the subsidies the provider has absorbed to lower the price of mobile devices and discounts the customer received for signing a fixed-term contract.

I am fine with this but most people will still think these fees are too high.

 

The number one thing missing from this list is a statement about the length of contracts.  This is a huge complaint from customers in Canada.  Most countries have two year contracts, in Canada the contracts are normally three years.  Everyone is demanding that the contracts be limited, by law( or CCCCCC rules in this case), to two years.  Make three year contracts illegal! The angry internet people type (sometimes in all caps).  Of course, right now you could get a two year contract if you like, or no contract at all.  You could just go buy a phone and start a plan with a provider.  But wait! Phones are expensive, who wants to pay so much for a phone when they are practically giving them away with a contract?  In reality people want the fanciest phone at the lowest possible price and so they sign up for three years.  There is no reason to legally limit the contracts to two years.  You don’t want a three year contract?  Don’t sign one.  Pay more for your phone. Then other people do that. Then the companies start giving better deals to people on two year plans because everyone wants one.  This is a new system where people demand something and then others sup…  provide it. I have just invented it.

We should be talking about the real problem with our cell phone market here in Canada; the limitations on foreign investment on the wireless industry and the spectrum auctions.

Not too long ago it was illegal for a wireless provider to be owned by a foreign entity.  That is, only Canadians could own Canadian wireless providers. Now we changed the rules so that if you own less than 10% of the market then you are allowed to accept foreign investment. Great. As far as I could tell there is nothing written about what happens when you accept that money and then grow up to 10% of market or beyond. At 9.99% of the market you can have European or US companies investing.  10.01%? I guess you give all the money back or sell your extra share to domestic owners. It really is not clear what happens.

Spectrum Auctions.  It may not seem like it but there is only so much air to go around when it comes to cell phone signals. This year sometime there is going to be an auction to see who can take up what parts of the air that has recently become available. You may have heard about how over-the-air TV(antenna, bunny ears, etc) switched from analog to digital in the not so distant past.  Well, that freed up some spectrum space that is really nice for wireless companies. It turns out that the signals that travel in this spectrum space are great for high speed data and for going through walls.  So you can get faster speeds and your signal will work in more places like parking garages and elevators. Good news right?

The auction process the CRTC came up with is that each major service area will have its spectrum divided up into four blocks.  Yes four.  You would not want three because that would benefit only Bell, Telus and Rogers.  Remember, this is an auction so the highest bidders get the spectrum space. They have basically left one block open for another company to buy in each service area. See, competition. Rejoice. Although not too much competition because if those smaller firms that are supposed to come 4th in these auctions got an influx of money and were able to buy too much of the spectrum then they would go over 10% market share and then they would not be allowed to use the money that allowed them to grow over 10%…  I wish I was making this up.

There is only one solution to this.  DE-regulation. Rather than trying to get better customer service and lower prices through adding more laws which cost the government money to enforce, we need to remove restrictions on who can buy our spectrums.  The idea here is that if the big companies in the U.S. had access to our market some of their deals might start showing up here.  Or, they would start moving up here and all of a sudden it becomes cost effective for Canadian companies to decrease their pricing. I am not normally so Fraser Institute on topics but in this case it makes so much sense to just de-regulate the market and watch the benefits roll in.

Although, we should make sure the de-regulation is printed in a nice easy to read font.

 

Wi-Fi Shutdown – Electromagnetic Hypersentitivity in Ontario Schools

Electromagnetic Hypersensitivity (EHS) is known by various names but I will use EHS. I first heard about this a long time ago as I was working as tech support for a large computer manufacturer.  The customer had made his way through the first few levels of support when he finally reached me.  He calmly explained that no one had been able to help him to this point.  His issue was that he needed to know the frequency of the electromagnetic radiation that was being emitted from our monitor.  I asked him why he wanted to know this information and he calmly and very matter-of-factly explained that he had a condition called electromagnetic hyper sensitivity. I had never heard of this so I asked him to describe it to me.  He said that when he sits in front of one of our monitors and turns it on that it feels like his skin is burning.  I did not believe him at all so I asked a few follow up questions.  It seemed that it was not just our monitor, but all electronics, that gave him this reaction.  He said that if he walked into a Future Shop that it would cause a burning sensation all over his body.  He then began to explain to me the various ways he went about avoiding this problem, including special headphones he would wear.  Yes headphones.  It became clear that the customer had other issues that did not involve electromagnetic radiation. Since that time the references to this phenomenon have exploded on the internet and around the world.

Why am I writing about this?  Back in 2010 I posted this. It was about a school banning wireless internet.  And now we have this.  The Ontario English Catholic Teachers Association(OECTA) is recommending all schools disable their Wi-Fi networks. This is a position paper released by the OECTA. In it, they recommend school turn off wireless networks and use traditional wired networks instead. It is only 8 pages long, including appendix, so feel free to read it. At this point in writing this post I was just going to mention how ridiculous this all was but instead I decided dig a bit deeper because this is getting out of hand.

There are a number of very broad claims made by the paper and each seems to be well cited. If you want to read up to page 5 you will see this:

“Approximately 3 percent of the population (over 1 million Canadians) has been diagnosed with environmental sensitivities (ES) which include multiple chemical sensitivities (MCS) and electromagnetic sensitivity.”

And this is the article by Park and Knudsen they cite for it. We run into a problem here because the quoted text does not appear in that article. Go ahead and check that if you like. On top of that the article is titled “Medically unexplained physical symptoms.” That really should give some indication how compelling an argument can be made by citing it. Directly after that they have:

“Some studies show that adults who are electrically sensitive react to this frequency (2.4 GHz) at levels 0.3 percent of SC6 Guidelines.”

The study they cited can be found here on page 273. This is the main argument behind the article and when searching for this article I noticed that every website that cited it appeared to be dedicated to letting everyone know how horrible 2.4 gigahertz radiation is  (That is the frequency that Wi-FI and many cordless phones work on). Written by Madga Havas, PhD from the University of Trent and published in the European Journal of Oncology it appears to offer evidence of EHS.  Unfortunately there exists a very compelling rebuttal which you can read here.  In short, it mentions that the European Journal of Oncology may not be the most reputable journal around and that the methods used in the study were imperfect and likely lead to a false conclusion. That one you should read because it does a really good job of picking apart the original study.

The OECTA does actually forget to mention one of the most popular articles on this topic.

http://www.psychosomaticmedicine.org/content/67/2/224.abstract

This is a meta analysis of all studies about EHS.  A meta analysis looks at all studies on a topic to see if any conclusions can be drawn from them.  Using 31 studies they conclude that the effect has never been proven to exist.

If there are health issues that arise from extended Wi-Fi exposure then I am all for shutting it down until we come up with an alternative. I live in a appartment where at any point I can see 15-20 wireless networks.  If there were any credible evidence to support the claim I would not have a basis for this post and would likely be guranteed to get whatever Wi-Fi is supposed to cause.  At this point turning off the networks is silly and there is no reason to do so. With the publication of this paper I suspect we will start to see more schools turning off their networks and that is sad.  This is a teachers association – you know, the people that teach the children – and they could not take the 10 minutes required to verify their information before they posted this embarrassing position paper. I really question how well these same people can set educational standards.

 

Bank of Canada – New Polymer Bank Notes!

The Bank of Canada has just announced that we will be getting new polymer (think plastic) based bank notes.  The new notes will be harder to counterfeit and will last longer.  So far we only have a new $100 bill but all other denomications should be in place by 2013.  Like many currencies around the world, our current bills are made of a cotton based material .   Although many last longer, these have an average life expectancy of about one year.  The BoC claims that these new notes will have a life expectancy two and a half times as long.  Not too shabby.  The new bills also include a bunch of new security features that will make them much harder to counterfeit.  You may have seen the security features on the CBC website but that list is actually incomplete.  Here is the video directly from the Bank of Canada that lets you know all the things you should look for on these new notes.  Very cool. 

In 2001 Canada was one of the worst countries in the world for counterfeit bills.  It was then that the BoC decided to start replacing our notes with something more difficult to copy.  The effects were not seen until the level of counterfeiting peaked in 2004 and then began to decline.  It is still a problem however. In 2010 about 2.6 million dollars worth of counterfeit notes were passed to banks.  This means, of course, there is more in circulation.  To see the entire breakdown take a look at the RCMP numbers here.

Near the bottom of that page you will see the methods that criminals are using to counterfeit the notes.  An inkjet printer is the most common technique. If you watched that video you know that an inkjet printer will not reproduced the new notes convincingly.  So the new notes will be completely rolled out by 2013 and that leaves a lot of time for people to get fooled by the current batch.  For current notes, you can find out how to spot them here. Remember that if you try to hand in a counterfeit note to any bank they will give you nothing for it so make sure you check notes when you get them. And if you happen  catch someone trying to give you a fake based on the information you saw here, simply take half of its value and mail it to me.  

This just in…kids don’t like school.

http://www.cbc.ca/health/story/2010/08/16/wifi-students.html

So this story on CBC today discusses a group of about a dozen parents in Barrie that want Wi-Fi turned off in their children’s schools.  They claim that the Wi-Fi is making their kids sick. You can read the article for the symptoms they are claiming only occur at school and then go away at night and on the weekends. I am pretty sure most people reading the story probably thought the same thing.  Kids that feel drowsy and sick at school then totally fine on the weekends?  Strange!  It must be the Wi-fi.  Now, I will agree that there is very litte evidence for or against the argument that Wi-fi causes sickness in kids. The problem of course is that Wi-fi is everywhere you go now. It will be in your house from your neighbour’s router, it is in malls, libraries, everywhere!  Oh don’t forget that the cordless phone in your home runs at 2.4 Ghz which is the same as many Wi-Fi routers.  Until I see more evidence I call BS.  Also, I believe I can spot the twelve kids least likely to grow up learning about technology at home.

On a side note I think that CBC.ca should have to show a change log on their stories.  They post at story in the morning and then edit it throughout the day. Sometimes they end up taking out quotations or changing the information contained in the article. I noticed changes to this story from the time I read it this morning and when I read it again this evening.  Then I noticed it had been edited at 6:12pm.  Not sure I like that.  They should maybe get the story straight first and then post it.  It might be hard to post a whole new story each time they acquire new information but they should still post a list of changes/edits.

Cloud 8.

Cloud computing. This is something that people have been talking about for some time now. It’s the idea that files and applications need not be stored on your home computer exclusively.  When I save my document at home I can go to work and access that same document because I stored it on “the cloud”.  Some people love the idea because of the portability while others claim that we are giving our security over to some remote server. That debate is not what we are talking about today.  Today I am talking about the fall of Facebook.  Yes I have discussed Facebook in the past but I have never really described the end of Facebook.  Here it is.

Facebook provides something that people love, convenience. They can talk to all their friends, share all their pictures and trade messages in one easy place.  The interface is easy to understand and there is no complex setup.  This is obviously something that no one else has provided on such a large scale before.  Most people believe that no one can truly take over that market now because the user base has become too large. I don’t share this belief. 

There is a company that can easily trump any other in user base, and we all know who it is — Microsoft.  My prediction is that the next operating system from Microsoft will integrate the idea of a cloud completely into the main interface.  You might be able to store things locally but at the click of a button everything will be shared. Anyone else that runs the same operating system will instantly be able to see as much or as little detail about you as you like. 

Let’s all remember that Windows runs on about 90% of all computers.

When the next OS comes out and all the features that Facebook offers are built right into the interface people will recoil at first.  The beauty of it is that at first it will offer to integrate all your Facebook contacts, slowly pulling you in. Then, it will read your wall and post it to your desktop. Then, it will allow you to post on other people’s walls from your desktop. All this will be possible without having to go to the actual “internet” or Facebook homepage.  The most important thing of all is that all the information normally mined by Facebook,   what you like and dislike, your friends and interests will now be available to Microsoft as well.  Ignoring the revenue they could steal from ads, they will slowly crush the need for Facebook at all. As people move to the new OS, all services that were previously provided by Facebook will be available right on your OS desktop. People don’t care who provides the service as long as it is easy. Microsoft could actually offer a free OS that is supported by advertising.  The only options for Facebook will be to sue or try an OS of their own. In a Facebook v. Microsoft battle my money is on Microsoft.