Economics of Technology – Page 13

Firms Compete in Product Market and Cooperate in Parts Market

(p. B1) When the iPhone X goes on sale next month, Apple Inc.’s rival, Samsung Electronics Co., has good reason to hope it is a roaring success.
The South Korean company’s giant components division stands to make $110 from for each top-of-the-line, $1,000 iPhone X that Apple sells.
The fact reflects a love-hate dynamic between the phone makers that is one of the more unusual relationships in business. While each company vies to get consumers to buy its gadgets, Samsung’s parts operation stands to make billions of dollars supplying screens and memory chips for the new iPhone–parts that Apple relies on for its most important product.

For the full story, see:
Timothy W. Martin and Tripp Mickle. “Samsung To Benefit If iPhone X Is a Success.” The Wall Street Journal (Tues., Oct. 3, 2017): B1 & B5.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the story has the date Oct. 2, 2017, and has the title “Why Apple Rival Samsung Also Wins If iPhone X Is a Hit.”)

FCC Spectrum Regulations Drive Innovators to Bankruptcy

(p. A17) In 2004 the FCC moved to relax L-Band rules, permitting deployment of a terrestrial mobile network. Satellite calls would continue, but few were being made, and sharing frequencies with cellular devices made eminent sense. By 2010, L-Band licensee LightSquared was ready to build a state-of-the-art 4G network, and the FCC announced that the 40 MHz bandwidth would become available. LightSquared quickly spent about $4 billion of its planned $14 billion infrastructure rollout. Americans would soon enjoy a fifth nationwide wireless choice.
But in 2012 the FCC yanked LightSquared’s licenses. Various interests, from commercial airlines to the Pentagon, complained that freeing up the L Band could cause interference with Global Positioning System devices, since they are tuned to adjacent frequencies. Yet cheap remedies–such as a gradual roll-out of new services while existing networks improved reception with better radio chips–were available. In reality, the costliest spectrum conflicts emanate from overprotecting old services at the expense of the new. With its licenses snatched away, LightSquared instantly plunged into bankruptcy.
. . .
. . . regulatory impediments continue to block progress. Years after the L-Band spectrum was slated for productive use in 4G, it lies fallow–now delaying upgrades to 5G.

For the full commentary, see:
Thomas W. Hazlett. “How Politics Stalls Wireless Innovation; The FCC unveiled its National Broadband Plan in 2010–but couldn’t stick to it.” The Wall Street Journal (Mon., Oct. 2, 2017): A17.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Oct. 1, 2017.)

The commentary, quoted above, is related to the author’s book:
Hazlett, Thomas W. The Political Spectrum: The Tumultuous Liberation of Wireless Technology, from Herbert Hoover to the Smartphone. New Haven, CT: Yale University Press, 2017.

Musk Fires Under-Performing Workers to Speed Output of Mass-Market Electric Sedans

(p. B4) DETROIT — The electric-car maker Tesla fired hundreds of workers this week after a series of performance reviews conducted during the biggest expansion in the company’s history.
Tesla said Friday [Oct. 13, 2017] that the dismissals were not out of the ordinary, even though they came as the automaker tries to increase the production of its first mass-market vehicle, the Model 3 sedan.
The company has been criticized for the slow pace of its early production of the new model, which has generated hundreds of thousands of deposits from prospective buyers.
Tesla built about 25,000 vehicles in the three months that ended Sept. 30, but only 260 of those were Model 3s — considerably fewer than the 1,500 it had projected. The automaker has attributed the low production rate of the new car to unexpected bottlenecks in its manufacturing system.

For the full story, see:
BILL VLASIC. “Tesla Fires Hundreds of Workers.” The New York Times (Sat., OCT. 14, 2017): B4.
(Note: bracketed date added.)
(Note: the online version of the story has the date OCT. 13, 2017, and has the title “Tesla Fires Hundreds as It Tries to Speed Production of an Electric Sedan.”)

The Ship that Held the Antikythera Mechanism Was Greek, Not Roman

(p. A12) A bronze statue’s orphaned arm. A corroded disc adorned with a bull. Preserved wooden planks. These are among the latest treasures that date back to the dawn of the Roman Empire, discovered amid the ruins of the Antikythera shipwreck, a sunken bounty off the coast of a tiny island in Greece.
. . .
For decades people referred to it as a Roman shipwreck, like in Jacques Cousteau’s documentary “Diving for Roman Plunder,” but the team’s findings since 2012 — such as a chemical analysis of lead on the ship’s equipment that trace it back to northern Greece and the personal possessions they found with Greek names etched on them — are changing that narrative, Dr. Foley said. “It’s starting to look an awful lot like a Greek-built, Greek-crewed ship, not a Roman-Italian vessel.”

For the full story, see:
NICHOLAS ST. FLEUR. “A Bronze Arm Points to More Treasure Below.” The New York Times (Sat., OCT. 7, 2017): A12.
(Note: ellipsis added.)
(Note: the online version of the story has the date OCT. 5, 2017, and has the title “Bronze Arm Found in Famous Shipwreck Points to More Treasure Below.”)

On Private Property, Innovator “Can Try New Ideas Without as Much Red Tape”

(p. B1) SAN JOSE, Calif. — Molly Jackson, an 82-year-old retired nurse, was sitting in the back seat of a self-driving taxi when the vehicle jerked to a halt at a crossing as its computer vision spotted an approaching golf cart.
When the vehicle, a modified Ford Fusion developed by a start-up named Voyage, started to inch forward, it abruptly stopped again as the golfers pressed ahead and cut in front of the car.
Ms. Jackson seemed unfazed by the bumpy ride. As a longtime resident of the Villages Golf and Country Club, a retirement community in San Jose, Calif., she knew all about aggressive golf cart drivers.
“I like that; we made a good stop there,” Ms. Jackson said. “I stop for them. They say we don’t have to, but I do.”
. . .
The speed limit, just 25 miles an hour, helps reduce the risk if something goes wrong. And because it is private property, the company does not have to share ride information with regulators and it can try new ideas without as much red tape.
(p. B6) Cars that can drive themselves could be a great benefit to older people. Residents at the Villages say that once people stop driving, they often pull back from activities and interacting with friends.

For the full story, see:
DAISUKE WAKABAYASHI. “Where Cars Brake for Golf Carts.” The New York Times (Thurs., OCT. 5, 2017): B1 & B6.
(Note: ellipses added.)
(Note: the online version of the story has the date OCT. 4, 2017, and has the title “Where Driverless Cars Brake for Golf Carts.”)

Gig Workers Have More Control Over Retirement Savings

(p. 2D) “There’s this myth that the Gig Economy equals Uber driver,” said Diane Mulcahy, who recently wrote a book on the subject. “If you are not a full-time employee in a full-time job, you are part of the Gig Economy.”
While gig workers have been around as long as there have been handymen, tutors, writers and musicians, what’s new about the Gig Economy is how quickly it has infiltrated white-collar professions and industries such as health care, finance, the law and technology, Mulcahy said. She is a private equity adviser for the Kauffman Foundation, which studies and supports entrepreneurship. As proof, she said, look at the growth of national online placement services like Toptal for tech and finance workers and Axiom for lawyers.
. . .
Managing volatile income can come down to ongoing business development and networking. Gig workers must make sure to keep business flowing through the development pipeline and writing contracts in a way that ensures ongoing cash flow, Mulcahy said.
Saving for retirement is one of the few areas where the independent contractor has an advantage because through IRAs and 401(k)s for the self-employed, they can save more quickly and at higher levels than their full-time brethren, she said.
This all comes as the economy has fundamentally changed.
“This is the future of work,” Mulcahy said. “The full-time employee is getting to be the worker of last resort.”

For the full story, see:
Miami Herald. “As full-time jobs slip away, Gig Economy movement leverages skills and passions into multiple jobs.” The Wall Street Journal (Sat., Sept. 6, 2017): 1D-2D.
(Note: ellipsis added.)
(Note: the online version of the story has the title, “As full-time jobs slip away, Gig Economy movement leverages skills and passions into multiple jobs.”)

The Mulcahy book, mentioned above, is:
Mulcahy, Diane. The Gig Economy: The Complete Guide to Getting Better Work, Taking More Time Off, and Financing the Life You Want. New York: AMACOM, 2016.

Has Jeff Bezos Given Up on Well-Paying Jobs for Average Citizens?

I have not read Scott Galloway’s new book, but suspect that there will be much in it to disagree with. But he makes a thought-provoking, and plausible, point, in the passage below, quoted from a Galloway op-ed piece.

(p. C3) I recently spoke at a conference the day after Jeff Bezos. During his talk, he made the case for a universal guaranteed income for all Americans. It is tempting to admire his progressive values and concern for the public welfare, but there is a dark implication here too. It appears that the most insightful mind in the business world has given up on the notion that our economy, or his firm, can support that pillar of American identity: a well-paying job.

For the full commentary, see:
Scott Galloway. “Amazon Takes Over the World.” The Wall Street Journal (Sat., Sept. 23, 2017): C3.
(Note: the online version of the commentary has the date Sept. 22, 2017.)

The commentary, quoted above, is related to the author’s book:
Galloway, Scott. The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google. New York: Portfolio, 2017.

Baseball Immigrants Learn English by Watching “Friends”

(p. D1) When he returns home from the stadium, Philadelphia Phillies shortstop Freddy Galvis often gets into bed and watches reruns of “Friends.”
. . .
For at least one generation of Americans, “Friends” endures as a cultural touchstone, a glowing chunk of 1990s amber. But its runaway popularity stretched far beyond the United States, and for some Latino baseball players it is something more: a language guide, a Rosetta Stone disguised as six 20-somethings commingling in a Manhattan apartment.
And also just a funny show.
“Now that it’s on Netflix, I always put it on and watch it,” said Mets infielder Wilmer Flores, 26, who is from Venezuela. “When I get up in the morning, I turn on the TV, and whatever episode is there I’ll watch and keep watching. I stop it when I come to the stadium. When I come home from the stadium, I pick up where I left off.”
What has the sitcom done for his English proficiency?
“It’s near perfect,” said Flores’s teammate, Jerry Blevins, who is from Tennessee. “When he doesn’t know something, it’s surprising.”
. . .
(p. D2) For Galvis, the English-language broadcast with Spanish subtitles on Venezuelan television, was an excellent learning tool. “You can compare what’s going on that way,” he said. “If they say ‘happy,’ you see he’s happy and the subtitle says ‘feliz’, then you can learn. You might not learn 100 percent, but you’ll learn to associate.”
. . .
Like Flores, Galvis is evangelical about “Friends.” He tells young Spanish-speaking players that he is living proof that consuming popular culture in English can help. And although he is now a capable English speaker, he still watches “Friends” with subtitles in Spanish so that his wife can learn English.
Marta Kauffman, one of the creators of the show, said she was delighted to hear about its unlikely and unintended impact on certain players. She compared the phenomenon to how Viagra was originally designed to treat heart problems but later was embraced for a very different purpose.

For the full story, see:
JAMES WAGNER. “For Some Major Leaguers, It’s Always Great to See ‘Friends’.” The New York Times (Mon., SEPT. 18, 2017): D1-D2.
(Note: ellipses added.)
(Note: the online version of the story has the title “‘Friends,’ the Sitcom That’s Still a Hit in Major League Baseball.”)

For Innovators to Seek the Way to San Jose, City’s Bureaucrats Should “Get Out of the Way”

The passages quoted below are authored by the Democratic mayor of the city of San Jose, California.

(p. A17) Recently, states and cities have been luring companies with subsidies. . . . The commonwealth of Massachusetts and city of Boston brought General Electric headquarters to Beantown with a $145 million incentive deal.
. . .
But my city won’t be offering incentives to Amazon. Why? Because they are a bad deal for taxpayers. With many subsidies, the jobs a company brings to an area don’t generate revenues commensurate with public expenditures. The GE deal will cost taxpayers more than $181,000 for every job created in Boston. Most experts insist that other factors–particularly the presence of a skilled workforce–play a far larger role in determining boardrooms’ corporate location decisions. Moreover, some 95% of Silicon Valley’s job growth comes from new small-business formation and when those homegrown companies develop into larger firms.
. . .
A healthy economic ecosystem that supports innovation and growth is what makes a community attractive to a company like Amazon.
. . .
As elected officials, we would do well to resist ribbon-cutting and take the longer view. To attract innovative employers, let’s all stay in our lanes, create safe and attractive cities for talented people to live in, and clear bureaucratic red tape. In other words: Get out of the way.

For the full commentary, see:

Sam Liccardo. “Why I’m Not Bidding for Amazon’s HQ; San Jose won’t offer subsidies for favored corporations, which are a bad deal for city taxpayers.” The Wall Street Journal (Thurs., Oct. 5, 2017): A17.
(Note: ellipses added.)
(Note: the online version of the commentary has the date Oct. 4, 2017.)

Silicon Valley Firm Defies Disruption

(p. A1) LOS GATOS, Calif.–Companies that resist change don’t tend to last long in the caldron of innovation called Silicon Valley.
Then there’s the Z.A. Macabee Gopher Trap Co.
Founded in 1900 by local barber and inventor Zephyr Albert Macabee to manufacture his patented metal gopher traps, the company is a stickler for tradition.
The traps’ design has remained exactly the same, including their forest green color–despite complaints that the hue makes them hard to spot. Some customers gripe of hitting them with mowers, and have repainted them bright red or other colors. Still, the company doesn’t waver.
Macabee operates out of the same small Victorian house where “Zeph” Macabee started it all on a quiet residential street. Even the packaging—Spartan white boxes of 24–remain unchanged since the postearthquake edition of 1906.
“We have a strong product identity,” says Ronald Fink, the company’s cheerful septuagenarian general manager, who grew up on a nearby apricot farm.
But existential questions loom. The company’s patent expired in 1917. The threat of cheap Asian knockoffs led the company in (p. A10) 2008 to shift all production to China and lay off the eight Cambodian refugees who built traps in the basement on decades-old machines.
Another new competitor has popped up: a pest exterminator named Steve Albano, founder of Trapline Products in Redwood City, who used and studied Macabee traps and came up with what he considers a better design. “I think they just work better,” says Mr. Albano.
. . .
As the owners sort out their differences, copycat traps are flooding the market. Most retail for about a third less than the roughly $9 a Macabee commands, including several that even mimic the forest color.
“But people still buy us, because they know they’re getting quality,” says Mr. Fink.

For the full story, see:
Timothy Aeppel. “Old Time Rodent-Trap Company Doesn’t Gopher Change; At one firm in Silicon Valley, disruption is a dirty word; existential fears after 100 years.” The New York Times (Fri., June 19, 2015): A1 & A10.
(Note: ellipsis added.)
(Note: the online version of the story has the title “Macabee, an Old Time Maker of Rodent Traps, Doesn’t Gopher Change; At one firm in Silicon Valley, disruption is a dirty word; existential fears after 100 years.”)