Daily Archives: August 25, 2020

Why 5G is the first stage of a tech war between the U.S. and China

By Prabir Purkayastha – The U.S. tech war on China continues, banning Chinese equipment from its network, and asking its Five Eyes partners and NATO allies to follow suit. It is a market and a technology denial regime that seeks to win back manufacturing that the U.S. and European countries have lost to China.

International trade assumed that goods and equipment could be sourced from any part of the world. The first breach in this scheme was the earlier round of U.S. sanctions on Huawei last year, that any company that used 25 percent or more of U.S. content had to play by the U.S. sanction rules. This meant U.S. software, or chips based on U.S. designs, could not be exported to Huawei. The latest round of U.S. sanctions in May this year stretched the reach of U.S. sanctions to cover any goods produced with U.S. equipment, extending its sovereignty well beyond its borders.

In the last three decades of trade globalization, the U.S. has increasingly outsourced manufacturing to other countries, but still retained control over the global economy through its control over global finance—banks, payment systems, insurance, investment funds. With the fresh slew of sanctions, another layer of U.S. control over the global economy has been revealed: its control over technology, both in terms of intellectual property and critical manufacturing equipment in chip making.

The new trade sanction that the U.S. has imposed is in violation of the World Trade Organization’s rules. It invokes national security, the nuclear option in the WTO, on matters that are clearly trade-related. Why the U.S. has gutted the WTO, refusing to agree to any new nominations to the dispute settlement tribunal, has now become clear. China cannot bring the illegal U.S. sanctions to the WTO for a dispute settlement, as the dispute settlement body itself has been made virtually defunct by the United States.

The battle over 5G and Huawei has become the ground on which the U.S.-China tech war is being fought. The 5G market (including installation and network equipment) is expected to reach $48 billion by 2027, but more importantly, it is expected to drive trillions of dollars of economic output over the installed 5G networks. Any company or country that controls the 5G technology will then have an advantage over others in this economic and technological space. more>

Updates from McKinsey

The present-focused, future-ready R&D organization
There’s no one right way to organize R&D. But a set of core design principles can provide the flexibility R&D organizations need to outpace competitors.
By Anne Hidma, Sebastian Küchler, and Vendla Sandström – Across engineered industries, the explosion in software has increased product complexity by an order of magnitude. Along with rapidly evolving technologies, fast-changing consumer preferences, accelerated product cycles, and the practical realities of globalized operations and markets, R&D departments are under unprecedented strain. As product variation grows and product portfolios expand, updating existing products compounds the already heavy load R&D organizations bear.

Yet amid these 21st-century challenges, R&D units are still following 20th-century models of organization—models not designed for today’s need for speed and the expanding web of interdependencies among all of the moving parts. The traditional component-based approach to R&D is no longer sensible in an era when digital and electronic systems are so thoroughly integrated with hardware. Still many companies struggle to shift toward an approach that focuses more on the function the customer wants, rather than the components that make the desired function work.

There is no one right way to organize R&D. But there are certain fundamentals that can help R&D organizations, regardless of industry, act more responsively and meet the burgeoning challenges they face today. From our work with clients and our extensive research, we’ve distilled a set of core design principles for R&D organizations and identified the important ones. By following these principles, companies can help their R&D organization serve as engines of innovation for outpacing competitors. And they can foster the agility organizations need in supporting collaboration among remote, distributed teams—as has become more important than ever in response to unpredictable external events.

Determining the right structure for the R&D organization has never been easy. The division of responsibility is a balancing act between the project-management organization and the R&D line organization, with inevitable trade–offs. Today’s R&D teams don’t have the luxury of following a sequential, piece-by-piece approach in which finished, designed components are handed off to testing at the end. Moreover, the teams need to be insulated from the external and internal the disruptions that the broader organization experiences, which today come with greater frequency.

As they’ve grown organically, many R&D organizations continue to operate with the same structures and processes they’ve used for years. Despite (or perhaps because of) the increasing inadequacy of those structures and processes, organizations don’t follow them consistently. Pet projects are often hard to kill, even long after their diminished promise becomes apparent. And because research effectiveness is hard to measure—and companies often don’t understand R&D costs or ways of working—the black-box image persists without challenge. more>


Updates from ITU

Smartphone on wheels: What Android’s dominance could mean for carmakers
By Roger Lanctot – Casual observers of the automobile industry are quick to compare connected cars to “smartphones on wheels.” It’s a simple way of looking at things that makes some sense now that half of all cars produced in the world are made with a built-in cellular modem…or two. It belies the complexity of connecting cars, but maybe it’s an accurate way to look at things now that Google’s Android operating system is on its way to dominating in-dash infotainment systems.

Strategy Analytics estimates Android’s share of the global smartphone market at 86%. Android is a long way from that kind of dominance in the world of the connected car, but the die is cast. Android is steadily muscling aside Blackberry’s QNX operating system, legacy Microsoft offerings, various Linux distributions, and a handful of other bespoke systems.

Cars are different. Winning the infotainment system OS race is not a zero sum game. Unlike smartphones, cars have multiple operating systems, multiple networks, and multiple microprocessors. Still, Android’s arrival and impending hegemony in the automotive industry has massive implications.

Car makers are attracted to Android because it promises lower development costs. There are many more app developers working in Android, thanks in large part to that smartphone market dominance, which means they are both readily available and less expensive to hire.

Just like those smartphones, though, cars will require frequent software updates – and that’s a trick that is relatively foreign to the average auto maker. Only Tesla Motors has managed to make automotive software updates look easy – and Tesla isn’t even using Android…yet.

Android arrives at a point in time when creating and managing millions of lines of code is beginning to dominate the design process at most auto makers. The emerging and growing mountain of software code is driving massive hiring and pushing auto makers to seek out sources of savings.

In shifting to Android the industry is looking for development savings of 30%-40%, but there’s a catch. Not only will all that “relatively” inexpensive code require updates – it is also likely to demand greater processing power, memory, and storage capacity – in anticipation of dozens of software updates likely to occur over the estimated decade-long life of any given vehicle.

That’s a pretty big fly in the ointment. Under-resourced infotainment systems are a sore point that continues to plague the automotive industry. Cars are being sold and driven today that lack sufficient processing or memory resources to support their Android and, yes, non-Android systems.

In essence, the onset of Android is opening the automotive industry to a veritable ocean of clever code and related applications. It is also contributing to the auto industry’s pivot toward the rapid adoption of over-the-air (OTA) software update technology. That, in turn, is broadening the deployment of cloud-based services and applications including everything from hybrid navigation to digital assistants and edge computing.

It’s also introducing a wider range of failure points, cyber security vulnerabilities, and plain old software bugs. But a properly configured system, equipped with OTA update capability, can enable a car maker to maintain or extend the value of a vehicle or even avoid expensive in-person recalls.

Software-related recalls are a growing challenge for auto makers. more>


Updates from Chicago Booth

How effective were stimulus checks in the US?
By Áine Doris – As the United States was hit with COVID-19, Congress passed the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act in an attempt to soften the blow from widespread lockdowns and business closures that led to soaring joblessness.

The CARES Act—which included one-time cash payments of $1,200 or more to households starting in April—bolstered incomes and spurred spending as promised, although the effect was uneven, suggests research by Northwestern’s Scott R. Baker, Columbia’s R. A. Farrokhnia, University of Southern Denmark’s Steffen Meyer, Columbia’s Michaela Pagel, and Chicago Booth’s Constantine Yannelis. The researchers conducted an almost real-time review of how a significant slice of the population used the direct payments.

The stimulus prompted an immediate, general uptick in household spending, the researchers find, but households with cash on hand tended to save their stimulus checks, while those without cash on hand spent almost half their checks within 10 days.

The researchers tapped newly accessible data from SaverLife, a nonprofit organization that helps families develop long-term saving habits. The SaverLife data provided detailed, high-frequency information including day-to-day inflows, outflows, and balances of anonymized individual bank accounts. This enabled the researchers to analyze the impact of the CARES payments on households, taking into account changes in overall income level, cash flow, and existing liquidity.

Using data on more than 6,000 US households for April, the researchers calculated households’ marginal propensity to consume―the proportion of every dollar received that they spent from the moment they received the CARES payments.

“We wanted to understand the multiplier effect of CARES payments―how when the government gives you a dollar, you spend it and effectively give someone else a dollar, who then goes on to spend it, giving someone else a dollar, and so on,” Yannelis says. “This is how fiscal stimulus works, so you have to look at people’s marginal propensity to consume to assess the multiplier effect.”

The researchers find a sharp and immediate response as payments started hitting bank accounts. Within the first 10 days, households spent an average of 29 cents from every dollar received. The bulk of this spending was on food, rent, and bills, most likely in response to the shelter-in-place directives and supply-chain restrictions. The spending couldn’t significantly benefit the restaurant, services, and hospitality industries because they were largely shut down to slow the spread of the pandemic. more>