339: Netflix's Ad-Tier, Can China 'Take' TSMC?, Apple's Post-China Plan, Microsoft + Facebook, Transmission, Cloud Energy Arbitrage, Nvidia 4090, and Rick Rubin

"fills up a chalkboard with complex math Good Will Hunting style"

Oct 14, 2022

The visions we offer our children shape the future. It matters what those visions are. Often they become self-fulfilling prophecies. Dreams are maps. —Carl Sagan

🛀💪🤕 My shoulder injury that lasted a year was a good practical demonstration of how sarcopenia works and how dangerous it can be (“muscle loss that occurs with aging and/or immobility”).

As people age, they don’t become more frail and prone to injury in a straight line, it’s often very non-linear.

You may be doing very well for a long time, and then you get sick or injured and lose a bunch of muscle mass in a very short period of time. Over time, it gets harder and harder to bounce back (and that’s when you are diligent about it — many just never try to regain the lost muscle).

The weaker you are, the more prone you become to falls and injuries, and the next time you can’t be active for a while, you lose even more muscle… Vicious cycle.

You don’t need ‘just enough’ muscle to do what you need to do in everyday life, you need *extra* as a ‘buffer’ so that you can handle bumps in the road and come out the other side with still enough for functional health and to avoid the frailty downward spiral.

Thinking about this, I’m even more motivated to exercise even more and encourage my parents to stay active. And like investing, there’s a huge benefit to starting thinking about this young rather than when you’re nearing retirement age…

🛀 🏹 Sometimes, I think about how in prehistoric times, when some tribes somewhere became the first one in the area to master something like bows and arrows, or metal blades, or something of the sort.

For them it must’ve been kind of like having nuclear weapons in the 1940s.

🎮 🧠💭👾 I recently did a quick thread about the evolution of video game graphics using Lara Croft over the years as an example.

Irish Born Investor (gee, I wonder where that guy’s from? 🤔) wrote:

I played resident evil 1 a while ago on PS4. The “remaster”. I looked and said that’s identical to the original I played as a kid, turns out you can revert to the PS1 graphics..when I reverted I was so shocked that what I remember vs the reality was incredible. Essentially blobs

This is so true! In my experience, our brains heavily ‘remaster’ video game graphics in our memories.

It’s almost like what we’re really left with is the feeling that the game gave us at the time, and then our brain just fills in the rest, being heavily influenced by what we’re used to today.

Even if you remember that a game had crappy graphics, they’re almost always way worse than you remembered when you actually go back and look at the original.

Sometimes to relax I play some modern versions of Doom — I even upload some of my games to Youtube — but when I go back to the 320x200 original that I played as a kid, I can’t believe how blurry everything that isn’t right next you is!

We now have app icons that are higher-resolution than the whole screen was for the original 1993 game!

💚 🥃 🐌 A big THANK YOU to the three new paid supporters who joined in the past 2 days. I truly appreciate the support B., P. and J.! (👋)

The best way to support this steamboat is by upgrading to paid, but the second best way is to spread the word to people you think may be interested, and to hit “like” on editions that you enjoy. It helps!

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🏦 💰 Liberty Capital 💳 💴

📺 Netflix unveils details of ad-supporter tier 🍿

So it’ll be $7/month, or $1 less than Disney+ and Hulu with commercials.

Quality will be limited to 720p and the ad load will be 4-5 minutes per hour (if I remember correctly, old-school broadcast TV had around 20 minutes of ads last I checked — don’t know if it’s better or worse these days).

All this is rolling out in the U.S. on November 3rd.

Netflix priced the service so that any customer who switches to the ad-supported service from the ad-free basic plan will have a “neutral to positive” effect on the company’s revenue, according to Peters.

If we compare this to the bottom-of-the-barrel (🛢) 720p basic plan-without-ads at $10/month, it means (*fills up a chalkboard with complex math Good Will Hunting style*) that they’re expecting to make at least $3 in ad revenue per sub.

I’ll be curious to see how popular the new tier is and whether they have to further tweak the segmentation. I had a friend who didn’t notice the quality difference between VHS (📼) and DVD (📀) back in the day, so there are people out there who are not very discerning at all about image quality and 720p will be plenty good for them…

🇨🇳🌊🇹🇼 🥚🍳 Can China ‘take’ TSMC by force? 🤔

Chen Ming-tong, director-general of Taiwan’s National Security Bureau, told lawmakers on Wednesday that it would be useless to take over facilities from Taiwan Semiconductor Manufacturing Co. if Beijing took control of the island. TSMC is highly integrated with the global supply chain, including suppliers such as ASML Holding NV of the Netherlands, so the US and other countries would be able to choke off its production without getting rid of its plants, he said.
“If you understand the ecosystem of TSMC, the comments out there are unrealistic,” Chen said. “TSMC needs to integrate global elements before producing high-end chips. Without components or equipment like ASML’s lithography equipment, without any key components, there is no way TSMC can continue its production.”
“Even if China got a hold of the golden hen, it won’t be able to lay golden eggs,” he added.

And that’s just one aspect. You also can’t operate TSMC without the very specific and esoteric expertise and experience embedded in the brains of thousands of engineers, and the plants themselves and their nearby ecosystem of suppliers would likely be damaged in a shooting war…

Source.

⚡️ Legalize electricity transmission! ⚡️

How’s that for a clickbaity headline?

But still, the reality is pretty screwed up:

In fact, over the past decade the U.S. has built more than 10,000 miles of natural gas pipelines per year compared to just 1,800 miles of new electric transmission lines per year. Although many factors contribute to lengthy permitting timelines, the difference is partly because the Federal Energy Regulatory Commission (FERC) can approve interstate fossil fuel pipelines, but currently lacks the same authority for interstate transmission lines, which instead require state-by-state permitting approvals.

As difficult as getting pipelines built is — and those who want to build them certainly don’t seem to think it’s easy! — electricity is the real final boss of red tape & permitting hell.

This has a big impact on renewable energy projects. While I don’t believe that solar & wind are the panacea that many do, I do want to see a lot more built where they make sense (Mastercard ad voiceover: For everything else, there’s nuclear), and that can’t happen without a way to move that power to where it is needed.

h/t Richard Morrison & Alec Stapp

📋🍎 Apple’s plan to extricate itself (partly) from China 🇨🇳

Ming-Chi Kuo is generally pretty plugged-in when it comes to Apple’s supply chain, so his claims about Apple’s plans to diversify its manufacturing/assembly base outside of China could be decently accurate (but who outside of Apple really knows?):

1. According to Apple's plan, the Indian company Tata Group may cooperate with Pegatron or Wistron in the future to develop the iPhone assembly business. More than 80% of the iPhones made in India (by Foxconn) are currently to meet domestic demand.

The potential cooperation of Tata Group and Pegatron or Wistron can accelerate the increase in the proportion of non-China iPhone production.

2. The main non-China production site for MacBook in the future may be Thailand. All MacBooks are currently assembled from production sites located in China.

3. In the medium term (within 3-5 years), at least the US market (~25-30%+ of global shipments) can be supplied by assembly sites located in non-China to reduce potential impacts from political risks (e.g., US-China tariffs).

4. In the long run:
(1) The non-Chinese markets will be supplied by assembly sites located in non-China, while the Chinese market will be supplied by assembly sites located in China.
(2) Assemblers can conduct NPI (new product introduction) in China and non-China.

🇪🇺☁️ Cloud vs On-Prem Energy Arbitrage, European Edition

Commenting on Europe’s energy crisis, Microsoft cloud head honcho Scott Guthrie had this to say:

“I’ve not seen the current situation cause people to pause cloud,” said Guthrie [...]
“Are we seeing people accelerate to the cloud because of the energy crisis? I think the answer is definitely yes,” Guthrie said. “Similar to Covid, I think what we saw with Covid at the beginning, in particular.”
Guthrie said he hasn’t heard companies saying they would slow their use of cloud computing because of the higher energy costs.
“If you think about the current situation in Europe right now, where the energy prices are going up dramatically, if you can reduce your workloads on prem, and you can move it to our cloud quickly, you can reduce the power draw you need, and that translates into real economic savings,” he said. [...]
A metric of efficiency called power-usage effectiveness, or PUE — the energy required for a facility divided by the energy used for computing — is very high at Sanofi, while it’s much lower for Azure, Chenaur said. Microsoft’s global PUE number works out to 1.18. (Source)

There are probably tiers of potential energy arb, depending on what workloads we’re talking about.

If it’s sensitive stuff that is regulated and needs to stay in the jurisdiction, you may still be able to save if Azure can run things significantly more efficiently than you could on-prem, thanks to higher utilization and better architecture, more modern hardware, whatever.

But for certain workloads that aren't private data and aren't latency-bound, in theory you could upload that stuff to some data-center faraway where energy is cheap and have it processed there. In normal times, energy costs aren’t that big a factory, but in Europe right now, they may make a material difference.

Microsoft partners with Facebook Meta for VR versions of its apps 🥽

Microsoft and Meta looked like they were on a collision course last year, poised to compete heavily for the future of work in the metaverse. But today, both companies announced they are partnering to collaborate on how people will work and even game in virtual reality. That starts with Microsoft bringing its biggest services — Teams, Office, Windows, and even Xbox Cloud Gaming — to Meta’s Quest VR headsets. [...]
This virtual office of the future won’t just be about meetings. Microsoft is bringing Windows 365 to Quest, the company’s platform for streaming full versions of Windows to devices.

I think this is very smart.

Under Nadella, Microsoft knows itself. It knows that it’s a horizontal player, and so the choices in front of it are looked at through this lens, unlike during the Ballmer era.

What would they gain by not porting their software to Meta’s VR/AR platform? I guess they’d slow Meta down, thus helping their own Hololens and other AR/VR stuff be in a better competitive position. But that would also force Meta to push even harder to develop its own office/meeting software. The chances of it taking off and succeeding enough to threaten Microsoft Teams/Office are pretty slim, but hey, these things are so important that anything that affects the moat matters.

On the other hand, by pushing its stuff through one more distribution channel, Microsoft makes its very profitable platform even more valuable and removes possible reasons for users to jump ship to something else, and it’s Meta that is doing the hard work of building the platform.

So if Meta’s AR/VR hardware reaches escape velocity in a few years and sells really well, not being on it could hurt Microsoft, but being on it doesn’t help Meta so much that Microsoft’s own AR/VR effort would be left behind. And after all, Microsoft always has the optionality of pulling out of the deal if that ever becomes more advantageous.

In short: I think this is win-win for both companies, but Microsoft is the bigger winner here, because it’s taking a much smaller risk for what could be a pretty big reward if it works (Microsoft’s software is very profitable — it remains to be seen how profitable Meta’s VR/AR stuff will be, if it ever gets there).

For more on what Meta announced at its recent Connect 2022 event, check out this summary by my friend MBI (💎🐕).

👔 Microsoft kills ‘Office’ brand, goes with ‘Microsoft 365’ 🖇

Speaking of the Redmond guys & gals:

Microsoft is making a major change to its Microsoft Office branding. After more than 30 years, Microsoft Office is being renamed “Microsoft 365” to mark the software giant’s collection of growing productivity apps. While Office apps like Excel, Outlook, Word, and PowerPoint aren’t going away, Microsoft will now mostly refer to these apps as part of Microsoft 365 instead of Microsoft Office.

It reminds me a bit of years ago when Acura killed the ‘Integra’ name and replaced it with RSX. My understanding is that at the time, they felt the sub-brand had too much mindspace and they’d rather have that transferred over to the main brand, to strengthen it so it can be more of a halo (😇) for other product lines too.

So maybe MS wants the focus back on ‘Microsoft’ rather than ‘Office’, though it could also be that they want to create a wider bundle with things that wouldn’t necessarily feel like they fit into the Office brand..? 🤔

🧪🔬 Liberty Labs 🧬 🔭

🧠 🧫🕹 ‘Lab-grown brain cells play video game Pong’

They call it DishBrain!

Through electrophysiological stimulation and recording, cultures are embedded in a simulated game-world, mimicking the arcade game “Pong.” Applying implications from the theory of active inference via the free energy principle, we find apparent learning within five minutes of real-time gameplay not observed in control conditions. Further experiments demonstrate the importance of closed-loop structured feedback in eliciting learning over time. Cultures display the ability to self-organize activity in a goal-directed manner in response to sparse sensory information about the consequences of their actions, which we term synthetic biological intelligence

Original paper in Neuron.

🔥 Nvidia RTX 4090 Review 🔥

I mean, it’s a review, so I won’t spend too much time on it — if you’re curious about the details, you can read it.

But I thought this part was kinda funny:

The RTX 4090 is the biggest holy-cow jump in GPU performance compared to its contemporaries in recent history. It arguably exceeds even the Nvidia 1000-series Titan X in that regard. Think of any current PC gaming workload that includes "future-proofed" overkill settings, then imagine the RTX 4090 faking like Grave Digger and crushing those tests like abandoned cars at a monster truck rally. [...]
The RTX 4090 is so powerful that I've reached a point where some tests' maxed-out settings at 4K resolutions have become CPU-limited, and that makes our usual slew of multi-GPU comparisons a bit moot.
Nvidia suggests that all 4090 owners should upgrade CPUs and get system RAM up to a DDR5 rating, and my own tests bear that out.