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How the tech boom is bad for innovation


Jon Stokes has a fascinating column making a credible case that the VC and tech bubble is hampering development of the cloud. I recently had a sit-down chat with Ping Li, a venture capitalist at Accel Partners who does investments across the layers of the cloud stack… he explained that the talent shortage is stifling fundamental innovation in the cloud space. To do really fundamental engineering innovation of the kind that was done, say, in the early days of Google and VMware, you need to hire and retain teams of talented engineers. But in today’s go-go funding environment, top engineers are being enticed with truckloads of money to break off and form two- and three-person startups. This phenomenon, explains Li, is why “many of the really big innovations happen in less frothy times.” He did go on to clarify that “some great companies do get created in these times (like Amazon in the last bubble). It’s just harder given talent shortage.” I asked Jon if this meant that real innovation in the cloud requires pretty big teams, and can’t be done by smaller startups. And the answer there is absolutely yes — if you’re looking for something huge like Amazon’s AWS, which required the full focus of Amazon’s large technical staff over a multi-year timeframe. Scalable websites can, thanks to Amazon’s cloud, now be launched with a handful of employees. But to develop the cloud itself takes serious resources — to the point at which it’s now conventional wisdom that you need to be Amazon, Apple, Google, or Microsoft to even play in that game. And even they’re starving for talent. There’s the email I got a few months ago from a friend of mine and product manager at Apple, who was wondering if I knew any cloud computing hackers that they could hire. When we get to the point where Apple product managers on the client side are reaching out to their personal networks in search of cloud coding talent for the world’s largest tech company, you know it’s bad out there. Jon frames the problem as one of supply and demand: The current crisis in the cloud is the product of too many dollars and transistors chasing too few coders and sysadmins. It will take a while for the latter to catch up with the former… unless, of course, another major downturn strikes. It seems ironic that less money could equal more innovation, but it wouldn’t be the first time that a wave of downsizing and tight money boosted productivity. I asked him whether looser skilled-immigration policies might help, and he said probably not: I think that the root problem isn’t one of geography–it’s that this stuff is happening so fast (i.e. Moore’s Law and my cheap transistors argument) that the hardware build-out is outstripping programmer education. And by “programmer education” I mean not only the number of programmers being trained in aggregate across the world, but also programming as a discipline’s ability to empower ordinary mortal to develop and deploy software on these massively parallel systems. The cloud has to be “de-ninjafied”, so to speak. Getting max productivity out of the cloud has to be brought within the grasp of non-ninjas, the way that, say, VisualBasic from MSFT brought building a relatively complex custom relational database application within the grasp of the average local technical college graduate. This rings true to me. The cloud is not located in any particular country, and if there were great engineers who could be hired to work on it from Beijing or Bangalore, I’m sure that Apple and Amazon are more than capable of doing that. What needs to be done here is basically cloud-development grunt work: taking a young and complex technology, and building the tools which can bring it to the masses. There’s not a lot of glory in that — while companies which live in the cloud, like Airbnb, can find themselves worth billions, the engineers who work on the cloud are more like the utility workers of the internet. And it’s easy to see why they might be finding more attractive opportunities, right now, elsewhere. Here’s how Jon puts it: In order to move the cloud itself forward in a major way by solving large batches of related fundamental technical problems you need longer timeframes. You can fiddle around in the guts of the cloud, smoothing out this and optimizing that, and adding features and bells and whistles. But to do the big projects, you need time. Now, there are shorter-term innovations that can and will get done in the cloud, so VCs have plenty to fund. But to shift the tectonic plates, you need time and resources. This isn’t like sustainable energy — it’s not something that the government can or should be stepping in to fund. More money pouring into the tech space would only exacerbate the current problems. There’s a case to be made that AWS is the result of what happened when Amazon, after the dot-com bust, found itself with an unusual degree of access to the time and talent of a large number of engineers. The cloud is young; it could do with a lot more development along those lines. But as Jon says, we’re unlikely to see such fundamental evolution in cloud architecture for a while. Because for the time being, smaller, lighter, and riskier projects look much more attractive.

UPDATE 4-New iPhone goes on sale, fans say tribute to Jobs


* Reviewers rave about Siri, but otherwise no revolution* Users report glitches with iOS 5 operating system, iCloudBy Michael Perry and Isabel ReynoldsSYDNEY/TOKYO, Oct 14 (Reuters) - Apple Inc’s latest iPhone went on sale in stores across the globe on Friday, with fans snapping up the final gadget unveiled during Steve Jobs’ lifetime, many buying the phone as a tribute to the former Apple boss.Hundreds queued around city blocks in Sydney and Tokyo to be the first to get their hands on the iPhone 4S, which looks similar to the previous iPhone 4 but has a better camera, faster processor and well-received voice activated software.”I am a fan, a big fan. I want something to remember Steve Jobs by,” said Haruko Shiraishi, waiting patiently with her Yorkshire terrier Miu Miu at the very end of an eight block queue in Tokyo’s smart Ginza shopping district.Australian Tom Mosca, the first to buy the new phone in Sydney, said the first thing he would do was ask his new white iPhone: “Where’s Steve?” Many Apple fans believe the phone was called iPhone 4S meaning “for Steve”.Apple CEO Tim Cook and his executive team hope the first device launched without the firm’s former visionary leader at the helm will safeguard their global market share against a growing challenge from the likes of Samsung .The South Korean firm, Apple’s arch-rival with smartphones powered by Google’s Android software, expects to overtake it as the world’s biggest smartphone vendor in terms of units sold in the third quarter.The iPhone 4S — introduced to the world just a day before Jobs died — was dubbed a disappointment because it fell short of being a revolution in design, but glowing reviews centred around its “Siri” voice-activated software have since helped it set a record pace in initial, online sales orders.Apple’s Asian fans showed no disappointment with their new phones, ahead of sales in Germany, France, Britain and North America. In Tokyo, 24-year-old Ryosuke Ishinabe said: “I just wanted the newest iPhone. I want to try out iCloud.”But despite all the enthusiasm at Apple stores, the launch was marred somewhat by widespread complaints on the Internet about problems downloading iOS 5 — the latest version of Apple’s mobile software.There were also problems with iCloud, Apple’s online communications, media storage and backup service formally launched on Wednesday, with users reporting glitches such as losing their email access.The iCloud issue coincides with problems for rival Research in Motion , which is grappling with an international outage of its Blackberry email and messaging services.JOBS SHADOW OVER iPHONE LAUNCHThe vast majority of iPhone 4S buyers at the Sydney store appeared to be existing Apple customers, many having bought the original iPhone and upgrades each time. Only one out of 10 people surveyed by Reuters in Sydney was a new Apple customer.”I have been waiting for the iPhone 5 for a long time. But since Jobs died, I wanted to make sure I had a new iPhone with some advantages over the old,” said iPhone devotee Mark Du, concerned over future Apple gadgets without Jobs at the helm.Apple fans in Sydney and Tokyo made sure Jobs was part of the iPhone 4S launch, with flower, candle and photo shrines to the late Apple boss erected outside the stores.Demonstrating the enthusiasm for the new phone, Japanese mobile carrier Softbank Corp had to temporarily stop contract applications after its computer system was overwhelmed with more subscription requests than it had expected.Apple said it did not release sales figures on launch day, so gauging the initial sales may be difficult. Apple said it had taken more than 1 million online orders in the first 24 hours after its release, exceeding the 600,000 for the iPhone 4, though that model was sold in fewer countries initially.Some analysts expect fourth-quarter iPhone shipments of as much as 30 million or more, almost double from a year ago.Apple’s fifth-generation iPhone uses chips from Qualcomm Inc , Toshiba and a host of smaller semiconductor companies, according to repair firm iFixit, which cracked the device open on Thursday.APPLE SOFTWARE CRITICISMApple’s iOS 5 software became available this week and is intended to upgrade older phones and enable new features such as a messages and better Twitter integration.Twitter users raged over “Error 3200”, dredging up comparisons to the obscure numbered error messages supposedly prevalent in Windows software and complained of inordinately slow download times.”This would be a great time for like, Samsung or something, to take out a sponsored ad,” user Ryan James Kirk tweeted.The iPhone — seen as the market’s gold standard — is Apple’s highest-margin product and accounts for 40 percent of its annual revenue. It is the world’s biggest selling smartphone, with a slim market-share lead over Samsung.Analysts point to several factors in Apple’s favor: a $199 price that matches up well with rival devices such as Amazon.com Inc’s “Fire” tablet; availability promised on more than 100 carriers by the end of 2011, far more than its predecessors; and glowing reviews.In a sign of how tough the competition is, two doors along from the Sydney Apple store, Samsung has been selling its new Galaxy SII for only A$2 to its first 10 customers each day, prompting Samsung fans to also camp out on the footpath.

UPDATE 1-Budget cuts take US military ‘to the edge’- Panetta


By David AlexanderWASHINGTON, Oct 13 (Reuters) - Defense Secretary Leon Panetta chided congressional dysfunction and warned that cutting $450 billion in defense spending would take the Pentagon “to the edge” at a hearing on Thursday punctuated by anti-war protests.Panetta, in his first appearance as Pentagon chief before the Republican-led House Armed Services Committee, said any defense cuts over the $450 billion currently approved for the next decade “will truly devastate our national security.”“I don’t say that as scare tactics. I don’t say that as a threat. It’s a reality,” Panetta told the lawmakers, saying his remarks were based on going through the weapons systems, personnel and benefits that may have to be cut to achieve the $450 billion in spending reductions already approved.Asked whether President Barack Obama agreed with his assessment that there should be no further cuts to defense spending, Panetta said the U.S. president did.The defense secretary’s remarks, which were interrupted by protesters shouting “war machine” and “you are murdering people,” come as the Pentagon is working to implement a reduction in national security spending agreed upon between Congress and President Barack Obama in August.The deal requires $350 billion or $450 billion in cuts over 10 years depending on whether it is compared to the Congressional Budget Office’s projections of defense spending or the Pentagon’s projections.Pentagon officials have said the cuts will be difficult but manageable. However, they have expressed concern about a provision that calls for automatic cuts of another $600 billion if a special congressional “super committee” fails to reach a deal to further reduce federal spending.Some analysts note that Defense Department’s budget has nearly doubled over the past decade and say it should be able to manage $1 trillion in spending reductions over a decade without much difficulty.DYSFUNCTIONAL CONGRESSPanetta, himself a former congressman, expressed concern about whether the super committee would be able to reach a compromise agreement that would avoid further defense cuts. Republicans and Democrats in Congress have been sharply divided over where to cut and whether to raise additional revenue.”One of the great national security threats is the dysfunctionality of the Congress and its inability to confront the issues that we face now,” he told lawmakers. “And I think your concern is that this committee that’s been established might fail to provide the leadership that it’s been given … And that concerns me as well.”A group of Republican members of the House Armed Services Committee, led by chairman Buck McKeon, later released a letter they sent to the super committee warning that further defense cuts “will compound deep reductions already imposed and critically compromise national security.”The Pentagon-friendly group of lawmakers quizzed Panetta and Army General Martin Dempsey, the new chairman of the Joint Chiefs of Staff who testified alongside him, about several weapons systems, including the F-35 Joint Strike Fighter, the Defense Department’s costliest procurement project.Dempsey expressed support for development of Lockheed Martin’s radar-evading, next-generation jet but said he was concerned about the ability to pursue three different variants in the current fiscal environment.The Marine Corps’ short-takeoff, vertical landing version of the plane, which could be used off the flight decks on assault ships, was put on probation by former Defense Secretary Robert Gates last year because of production delays and cost overruns. It is currently undergoing testing at sea.”That’s something we’ll have to keep an eye on,” Dempsey said. “Three variants create some fiscal challenges for us.”Panetta told lawmakers the cuts were forcing the Pentagon to make strategic choices about where to engage globally in the future and where it should take risks and cut back.While stressing no final decision had been made, he said if the United States decided to maintain its force structure in Asia and the Middle East to guard against Chinese military expansion and threats to Mideast stability, it would likely have to pare back elsewhere in the world.”Just by virtue of the numbers that we’re dealing with, we will probably have to reduce our presence elsewhere, presence perhaps in Latin America, presence in Africa,” Panetta said, noting that would be difficult because of concerns about Islamic extremism in parts of Africa.

UPDATE 2-FDA reviewers unconvinced on Teva Parkinson’s drug


By Alina SelyukhOct 13 (Reuters) - Teva Pharmaceutical Industries Ltd’s clinical trials of its Parkinson’s drug Azilect left U.S. drug reviewers unconvinced that the treatment slows the disease’s progression.In documents released on Thursday, the Food and Drug Administration researchers raised concerns about the design, analysis and results of the studies.”There is no demonstrated benefit of rasagiline (Azilect’s generic name) for slowing the rate of progression of Parkinson’s Disease,” one reviewer wrote.However, the researchers added that “it has not been clear what sort of data would definitively establish” whether a drug modifies the disease.There is no existing cure or treatment that slows or entirely stops the progression of Parkinson’s.Azilect, which Teva markets alongside Danish partner Lundbeck in a number of countries, is approved to treat symptoms of the neurological disorder, such as trembling limbs, stiffness, slow movement and impaired balance.Israel-based Teva wants to expand the drug’s indication to show that Azilect slows the clinical progression of Parkinson’s.The FDA review was complicated by the fact that it is hard to draw a line between treating the symptoms of Parkinson’s and treating the disease.Much is unknown about Parkinson’s, including the causes of the neurogenetic disorder. Anywhere from 500,000 to 1.5 million Americans are estimated have the disease, and nearly 60,000 are diagnosed each year, according to Parkinson’s Action Network.Azilect received FDA approval in 2006 for use as a single drug therapy in early Parkinson’s and, in more advanced patients, in addition to levodopa, a standard treatment for the disease that can mask symptoms but does not stop the disease’s progression.Teva’s drug works by blocking the breakdown of dopamine, a chemical that sends information to the parts of the brain that control muscle movement and coordination.Teva was not immediately available for comment. Its shares were little changed in morning Nasdaq trading.FDA advisers will vote on Oct. 17 on whether Teva has provided the drug regulator with enough evidence of Azilect slowing down Parkinson’s.

UPDATE 2-FDA reviewers unconvinced on Teva Parkinson’s drug


By Alina SelyukhOct 13 (Reuters) - Teva Pharmaceutical Industries Ltd’s clinical trials of its Parkinson’s drug Azilect left U.S. drug reviewers unconvinced that the treatment slows the disease’s progression.In documents released on Thursday, the Food and Drug Administration researchers raised concerns about the design, analysis and results of the studies.”There is no demonstrated benefit of rasagiline (Azilect’s generic name) for slowing the rate of progression of Parkinson’s Disease,” one reviewer wrote.However, the researchers added that “it has not been clear what sort of data would definitively establish” whether a drug modifies the disease.There is no existing cure or treatment that slows or entirely stops the progression of Parkinson’s.Azilect, which Teva markets alongside Danish partner Lundbeck in a number of countries, is approved to treat symptoms of the neurological disorder, such as trembling limbs, stiffness, slow movement and impaired balance.Israel-based Teva wants to expand the drug’s indication to show that Azilect slows the clinical progression of Parkinson’s.The FDA review was complicated by the fact that it is hard to draw a line between treating the symptoms of Parkinson’s and treating the disease.Much is unknown about Parkinson’s, including the causes of the neurogenetic disorder. Anywhere from 500,000 to 1.5 million Americans are estimated have the disease, and nearly 60,000 are diagnosed each year, according to Parkinson’s Action Network.Azilect received FDA approval in 2006 for use as a single drug therapy in early Parkinson’s and, in more advanced patients, in addition to levodopa, a standard treatment for the disease that can mask symptoms but does not stop the disease’s progression.Teva’s drug works by blocking the breakdown of dopamine, a chemical that sends information to the parts of the brain that control muscle movement and coordination.Teva was not immediately available for comment. Its shares were little changed in morning Nasdaq trading.FDA advisers will vote on Oct. 17 on whether Teva has provided the drug regulator with enough evidence of Azilect slowing down Parkinson’s.

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