Last week we had the pleasure of hosting the 13th annual Predictions Dinner in New York, at the Lotte New York Palace hotel. In addition to an inspired conversation with Deloitte's Bill Ribaudo, and my first interview by my daughter, Scout.ai CEO Berit Anderson, on The Pattern Future, I shared my predictions for 2018.
As usual, I started with a brief review of the coming global economic landscape, followed by my accuracy grading of last year's predictions. These and my Top Ten Predictions for 2018 are below.
The Economic Landscape
Themes for the year:
1. Nationalism and Aggression, in a Bare-Knuckles Fight for Power and Money
2. Unintended Consequences of the Net and Its Alternative Uses
3. The Myth of Free Trade Finally Collapses on a Playing Field Dominated by China
The World
Investors and Dictators Up, Employees and Citizens Down
China's New Plan: The "Third Wave"
First Wave: Global IP Theft
Second Wave: Using Stolen IP to Build Champions via Protectionism and Fraud
Third Wave: The "Going Out" Tsunami; Stolen Goods at Half-Price
[Note: Our next SNS Global Report will focus on this Third Wave, specifically on China's push into chips.]
Countries
The US. Shiny on the outside, rotting on the inside. Investors happy, citizens miserable.
China. Get ready for the military, as Xi moves from consolidating power to distracting citizens from his failing economic plans.
UK. Scary and down, followed by scary and up.
Germany. Support for the AfD party keeps growing. Merkel makes it back into the PM seat.
EU: Confused and stumbling.
Middle East. A pawn in the new CRINK [China, Russia, Iran, North Korea] alliance. Further torn by Saudi / Iran conflict and Netanyahu's grab for Jerusalem.
Turkey. Sayonara, NATO; hello, Putin - as exemplified by the recent purchase of military jets from Russia.
Russia. Continues consolidating power, destabilizing democracies everywhere, rebuilding the Soviet empire. Putin makes new aggressive moves in Ukraine, perhaps also Moldova, and anywhere else within reach.
South Korea. In very serious economic straits, with Samsung in turmoil internally and challenged by China's Huawei externally, and with North Korea out of control.
Japan. The only way to go is up; a good year. But - hooking up with China? Disastrous. Don't do it, Abe.
Italy. Scary.
Greece. Now a Chinese vassal voting against its EU partners.
Graded Past Predictions
2006 - 2016 Average = 95.0%
2017 Year Score = 97.0 %
Total Average since 2005, including 2017 Predictions: = 95.2 %
The Math:
(95.0 x 11 +97) / 12 = 95.2 %
[Note: See full set of 2017 graded predictions in "Takeout Window," below.]
Top Ten Predictions for 2018
The International Car Connection Competition (5G vs. V2V) turns out to be based upon the wrong question: Both win in a hybrid of function and timing. V2V is first out, and used for time- and function-critical communications (crash avoidance, object navigation); 5G picks up the rest, providing entertainment, wide area navigation, road assistance, traffic data, and other services in which latency or failure are tolerable.
AI Splits. Artificial Intelligence breaks into two separate fields: incremental AI and discovery AI. Currently recognized as a necessary tool that generally delivers important - but incremental - improvements, we will see the first major shoots of Beyond AI, as "discovery AI" emerges to deliver true pattern discoveries.
Security: The Impossible Dream. The tech industry rolls out a stunning number of "smart" but completely insecure IoT devices, intended to moderate the compute load at the center but destroying any sense of net security, while even the best centralized clouds get hacked. Everyone who cares about security turns to encryption, increased authentication, and nightly prayer.
Cryptocurrencies Go Nuts. Bitcoin theft becomes common. Serious blockchains become commercial and common. China attempts blockchain hacking, through spoofing, corruption, and / or unauthorized control. Prices display dizzying volatility. Libertarians get the Wild West they have dreamed of, and probably deserve.
Drones of all kinds dominate military planning. Imagine one F-35 or aircraft carrier vs. 1,000 armed, intelligent, autonomous, swarming drones. Or 1,000 vs. 1,000. Or one submarine vs. 500 underwater torpedo drones. Warfare will never be the same.
Content and Data become increasingly weaponized. Infowar actions expand, public cynicism and mistrust grow, as the net moves from a once-happy neighborhood into the dark side of town. Corrupted training files (the Achilles' heels of AI), invasive personal profiling disguised as advertising, and surging online crime increasingly turn the net into a threat.
China's high-end strategies put non-Chinese global tech firms at serious risk, as they get played off of one another and have little recourse or help from their own governments. Qualcomm, Apple, and Ericsson continue to suffer at their hands. Huawei gains the negative brand perception of being ChinaZilla, a relentless, state-supported global bully in almost every electronic appliance market; no one likes them, and no companies can compete with China's resources.
Commercial Space has arrived. Elon Musk achieves his dream of transforming commercial space launches from exotic, often-dangerous events to having the drama and timing of Paris-Berlin train travel. From this year forward, space will be dominated by commercial enterprise.
Biology and Medicine become inextricably intertwined with computing. Medicine requires increased computing at all levels, and computer design continues to evolve using biomimicry. Which is which? Evolved biology equates with natural intelligence.
Patient, Heal Thyself. The concept that the most effective treatments are those that help the body to heal itself becomes mainstream. With proven success in augmented immunity cancer treatments, many other approaches using the body's own systems to re-establish, or retain, good health states will emerge in both research and general practice.
I look forward to talking with our friends at TAG Bellingham about these predictions in a few weeks, and with all of our members over the next year.
In the meantime, SNS staff (and hopefully all of you) will be taking a well-deserved two-week vacation, as we do every year, starting this coming week. We will be back to you again at the start of 2018, coping with (and, hopefully, benefiting from the knowledge of) these and other predictions and events.
Your comments are always welcome.
Sincerely,
Mark R. Anderson
Quotes of the Week
"You don't understand how the Internet works." - Steve Wozniak, Apple Co-Founder, to the FCC, prior to its intended vote to end net neutrality; in an open letter posted on Tumblr
Twenty top tech CEOs, including SNS member Vint Cerf, were signatories of the letter of protest to the FCC and Congress on this issue.
What could possibly go wrong with appointing an ex-telecoms lobbyist to run the nation's most important policy group on telecommunications?
Idiots.
"[The FCC's] rushed and technically incorrect proposed Order to abolish net neutrality protections without any replacement is an imminent threat to the internet we worked so hard to create." - Ibid.
"Today, the fingerprints of Russian disinformation campaigns have been left on both sides of the Atlantic. Whether it is Brexit or the American election, Russian propaganda still infects US social media networks. And we see the same sort of divisive propaganda that we saw during the Cold War." - Mark Jacobson, professor at Georgetown University and former Pentagon advisor, in a Congressional hearing in November; quoted in the Wall Street Journal
"We are losing the battle. Many have decided to not necessarily accept the American federal government's decision to leave the Paris agreement. -- What we are starting today is the time of action, because the urgency has become permanent and the challenge of our generation is to act." - French President Emmanuel Macron, at the second annual meeting of the Paris climate accord; quoted in the WSJ
Only the US, among all of the world's countries, has stepped out.
More idiots.
"The price being paid for reducing the China debt could prove more costly than the debt burden Sri Lanka seeks to reduce." - N. Sathiya Moorthy, Senior Fellow at the Observer Research Foundation; quoted in the WSJ.
First China lent Sri Lanka money to build the port; now Sri Lanka has to lease it back for 99 years to China, to pay off a small part of that debt. Got it? Want to see it again?
"India has been overwhelmed by China's offensive in its strategic backyard. Countries in the region are beginning to realize the long-term costs of Beijing's massive investment promises." - Constantino Xavier, Fellow at Carnegie India in New Delhi; quoted in the WSJ.
They call it One Belt, One Road; at SNS, we call it One Rope, One Noose.
Takeout Window
2017 Graded Predictions
And here are last year's calls:
Top Ten Predictions for 2017
1. Apple is done. Apple's failure to innovate and create new product lines has reached a critical failure point. Connected Car cancellations and the outflow of key players, NEST loss and founder departures, and nothing evident except tediously similar products and continued kowtowing to China: the result, for Apple, is that hope really is a strategy.
10 pts, with the failure to innovate even a new phone, collapse of watch market, increased pricing vs increased innovation, continuing slide in china market share.
2. Long live HP, HP is dead. Contrary to current stock moves, HP is Up, HPE down.
10 pts. Out with Meg, in with HP Inc.
3. Qualcomm and NVIDIA drive the chip world. The first has more promising company markets, and the second, more promising technology.
10 pts. Could not be more true, although QC now facing major threats via China.
4. Servers continue to outpace PCs in real innovation, with the next generation likely powered by Xeon Phi.
10 pts. Yes on innovation, with the most exciting chips showing up in servers vs. PCs, but the Phi looks to be getting replaced by related threads of Xeons.
5. CarryAlongs outpace PCs, as consumers continue to outpace producers. This category now dominates the personal compute space, including Phablets, pads, SurfacePro, Intel twins, Small MacBook Air-like laptops. All are in virtually identical sectors.
10 pts. True, from the Kindle avalanche to all other entrants in this form factor.
6. Microsoft gets its Mojo back. The Windows guys become the Xbox guys, making AR (HoloLens), Surface Hubs, Surface Pros, other computers, and beating Apple for Coolness in the recent NYC / Valley showdown. Which stock would you rather own today?
8 pts. Started out the first half of the year this way, but ending it with a more of a thud.
7. The car replaces the PC and smartphone as the exciting new test and launch platform for apps and innovations. New efforts will include: Personalization, wireless locking and synching, home / car connections, car / car connections, car / net connections, smarter nav, shared memory and databases, new entertainment features.
10 pts. Absolutely true, as hardly a week goes by without new international announcements in autonomous- and connected-car innovations, with the new rollout dates now just around the corner.
8. The Smartphone As Zombie. Steve is dead, copycats eat margins, China and SK subsidize their phones, real innovation takes a vacation. Google is the only source of innovation now. For everyone else, phones show the same level of real innovation as Asian copycat patents.
10 pts. The Google Pixel 2, despite OLED screen issues, is the phone of the year, and nothing else has shown up of any interest at all. Those buying the Apple X are almost doing it under protest. Sad
9. The Shadow Knows: The Facebook Shadow Grows. Fake news, Trump election, aiding China censors, trying to name his baby after Xi Jinping, other craven behaviors relating to sucking up to bad guys and invading privacy, all leave a bad taste in the mouths of anyone paying attention. Where to go next? What part of your life do you really want to share with Zuck?
10 pts. Zuck himself has reversed his story on FB's fake news and Russian influence. What a jerk.
10. AI Hits a Speed Bump: In the middle of all this expansion and excitement, it turns out that Deep Learning and Deep Neural Networks, and Machine Learning, have been benefiting primarily from the single and simple discovery that more iterations help.
9 pts. All this is true, in terms of incremental-only new rollouts, but AI has made up for lack of quality with increased quantity, as every doorbell and IoT entry looks poised to carry some amount of "AI."
Total: 97 points
Upgrades
Blue Origin Makes 7th Flight
From: Blue Origin [email protected]
Mark,
New Shepard flew again for the seventh time today from Blue Origin's West Texas Launch Site. Known as Mission 7 (M7), the mission featured the next-generation booster and the first flight of Crew Capsule 2.0. Watch the mission highlights here.
- Gradatim Ferociter!
Crew Capsule 2.0 features large windows, measuring 2.4 feet wide, 3.6 feet tall.
Ethermail
Re: "SNS: Amazin'"
Mark,
I posted this on FB with a link to this week's SNS about Amazin':
Mark Anderson featured a deep look at Amazon in this week's SNS. This isn't like analyses covered anywhere else. And makes it even more interesting to note this post today by Mark Edward Minie:https://www.businessinsider.com/vertical-farming-company-ple --------- Anyone interested in the trajectory might find some juice in the search thread "amazon vertical farming," I've just noticed. Those paying attention might've seen it coming.
The link to the post is here:
From the Comments, by Mark Edward Minie:
What does Mark [Anderson] think about negative emissions technologies? Like my Amazon funded Bionic Leaf project? I firmly believe we will need to develop a wide array of bionic technologies to regulate Earth's biosphere to keep it human habitable...is Mark and SNS interested? I think they will "suddenly" become the next big thing...
and:
We are looking to hold a meeting on the topic in Port Townsend in January 2018...ultimately I'd like to start an "Electric Leaf" company...the fantasy is to do it out by The Old Alcohol Plant...
We are doing the meeting with the help of the CoLab in Port Townsend...
Mark Edward Minie
[Affiliate Assistant Professor
Bioengineering Department
University of Washington
Quilcene, WA]
Sally Anderson
[Editor-in-Chief
Strategic News Service
Seattle, WA]
Mark,
Yes, we are extremely interested in any technology that can take CO2 out of the atmosphere at scale.
Thank you; we'll check it out and perhaps have a chance to see you there.
Mark Anderson
Subject: E2MS
Mark and Lee,
My apologies for being a bit detached. Finally got near my computer after couple days detached, feels more like a week. 'Whim-ed off' to Vernazza (Cinque Terra) and then ended up staying there for the past couple days. I am really delighted for your interest in WorldWind and how it can support E2MS.
On another note. . .
Mark, I am greatly disappointed that you will be just over the hill in Half Moon Bay for a couple days just when I am not there. I would have loved to visit you or have you visit my office. It's a nice corner one over-looking a federal airfield that is now a playboy runway. Anyway, one of the nicest offices at the Center (thanks to my now retired former boss, a 50-year NASA guy and former Peace Corps).
If you are going to be near Moffett Field, and would like to drop in, I can arrange a visitor badge and someone to meet you at my office who is on our small team, but not me [sigh]. My return flight from Rome arrives Wednesday eve. So I can be in the office Thursday. And I'll sure need a sanity check after a couple weeks 'off the grid.'
We dearly need to see ourselves, as E2MS will show, as we ride this snowball into the Inferno. Even with 'use the force Luke' there is as yet no maneuver to pull out of this nose-dive, even with Patty Wagstaff at the controls.
Just too many clowns too full of themselves hanging on the wheel (or stick as the case may be).
As for getting E2MS to rock the joint with a "Hello World!", sure glad for whatever moments we can wise-up and delay this 'over-heating' thing.
Thinking of ^energy^, from what angle do you want to work? Generating it or spending it, i.e., power sources or consumption? And since we have the Earth to observe, we can consider the various storage volumes, fossilized (petro) and vegetative (cellulose), then there is anthropogenic (methane from rice production and cows). And who is accounting for the huge sea lane CO2, nobody. It would be great to go after it all, but I know you like to focus and build.
I guess it would be nice to 'monitor' it at the source, where it [is] being 'generated' (converted) from petroleum, coal and gas, including HUGE venting associated with offshore production. I was a commercial diver for three years, doing maintenance on blow-out-preventers (underwater plumber) on the sea floor (in the mid 70's). And at night we would just go under the flare and scoop up scampi and everything else attracted by the light.
Patrick Hogan
[Project Director
NASA World Wind
NASA Ames Research Center
https://worldwind.arc.nasa.gov/
Moffett Field, CA]
Subject: Re: CNBC - Trump claims $250 billion China trade 'miracle' - whether those deals live up to the lofty price tag is under question
Mark and Scott (Foster),
Trump praises Xi as "a very special man".
Another favorite quote (and likely accurate): "Interesting to see how many of those are past agreements/purchase orders repackaged. Beijing is a master of selling the same agreement 10 times," former Mexican ambassador to China Jorge Guajardo posted on Twitter.
Trump claims $250 billion China trade 'miracle' whether those deals live up to the lofty price tag is under question
President Donald Trump can return to the U.S. claiming to have snagged over $250 billion in deals from his maiden trip to Beijing.
Read more: <https://www.cnbc.com/2017/11/09/trumps-250-billion-china-miracle-adds-gloss-to-off-kilter-trade.html>
John Petote
[Founder, Santa Barbara Angel Alliance
and SNS Ambassador for Angel Investing
Santa Barbara, CA]
P.S.
Re: "'We can no longer tolerate these chronic trade abuses': Trump lashes out at China and others" CNBC
Music to my ears -- and a long time in coming. Now let's see what actual retaliations are taken when inevitable further violations occur. Hopefully not just more blah, blah, blah. -
President Donald Trump addressed the Asia-Pacific Economic Cooperation summit in Vietnam on Friday against a backdrop of regional trade tensions.
Read more: <https://www.cnbc.com/2017/11/10/donald-trump-speaks-to-asia-pacific-economic-cooperation-in-vietnam.html>
-JP
John,
This is probably the best speech on China I have heard Trump give to date; clearly, it was written by someone else on his team, but it sure is refreshing. If only he would act, and not just talk.
Mark Anderson
Mark and John,
I like what he said about our trade deficit with China not being China's fault, that his foolish predecessors are to blame, and that China has done good things for its people by cheating its trade partners. But he's probably not smart enough to turn the tables.
Scott Foster
[Author, Stealth Japan
Private Equity Analyst
and SNS Ambassador for Asia Research
Tokyo]
[Followed shortly by:]
Subject: CNBC - US government warns businesses about cyber bug in Intel chips
Mark,
US government warns businesses about cyber bug in Intel chips
The U.S. government urged businesses to act on an Intel alert about security flaws in widely used computer chips.
Read more: <https://www.cnbc.com/2017/11/22/us-government-warns-businesses-about-cyber-bug-in-intel-chips.html>
John Petote
Mark,
China's debt crackdown hits cash loan firms:
John
Subject: Re: Now this is an interesting update about China consumer debt +
Mark and John,
This is interesting. Micro-financing not as a route out of poverty for rural women as in Bangladesh, but as a way to indulge spendthrift tendencies and goose consumer spending in China. Beware. Consumer loans have on occasion threatened the health of the South Korean economy as a combination of eager lenders, reckless borrowers and high interest rates caused a dangerous pile-up of debt.
Academic study from 2007: Between 1999 and 2005, the share of household loans in total bank loans outstanding grew from 30 per cent to over 50 per cent, as bank lending to consumers grew twice as fast as total bank lending...
News from 2011: If thrift is an Asian virtue, then it is one that South Koreans are notably lacking: each adult has almost five credit cards on average and the household debt burden exceeds that of the United States before the subprime crisis. (Reuters)
News from 2013: South Koreans are spending more than they earn. After decades of strong economic growth, a nation of careful savers has given birth to a credit culture that has been labelled a "ticking time bomb". (BBC)
It hasn't blown up yet, but ...
The country's household debt stands at more than 160 per cent of household incomes, having risen steadily for more than three decades, and is seen as one of the economy's weakest points. (FT)
We might think we have a credit card problem. Korea and now China have a bigger problem.
Scott Foster
John and Scott,
While we assume that most events inside China occur with the permission, if not direct strategic guidance, of the Standing Committee, when we saw the country shift the debt burden onto individuals, from the real-estate bubbles to off-balance sheet wealth management vehicles, it was clear that, at the least, Xi and Co. were well aware of it. In all likelihood, they were pushing it, as a way of clearing debt from the obvious places, even as they added much, much more to the national total.
All of this recent buildup helped underline, for us, the crash that started in January 2015, and the extent to which Xi will go to mask it, internally and externally.
What would happen to the Communist Party if it became public knowledge that the real GDP is in the -2% range? Nothing good.
Mark Anderson
Subject: Watch "3D-Printed 'Schwarzite': Building Material of the Future?" Video at Tech Briefs TV
Mark,
Interesting 3d printing articles. It is fun to watch this industry.
Scott Biddle
[Past Aerospace CEO
Friday Harbor, WA]
Subject: Blockchain and the have-nots
Mark,
One of the most important aspects of blockchain is, like cell phones, it's a technological innovation that could bring people in the developing world along, rather than leaving them behind.
Charles A. Richardson
[Friday Harbor, WA]
Subject: well that's interesting...
Mark,
Ken Fricklas
[Managing Partner, The CORE
Boulder, CO]
Where's Mark?
* On January 12, Mark will be speaking at Predictions NW, at the annual Technology Alliance Group meeting in Bellingham, WA.
In between times, he'll be in the Wasatch Mountains, at 7,200 feet, looking out and wondering how, for the first time in his adult life, there is no snow in the Utah mountains in December - while our friends dodge statewide urban wildfires in California and it snows in Atlanta. Let's get rid of the Trump crowd now.
