Video iPod

The Future of Technical Innovation

Rumors have been circulating around for a good while now about a secret Video iPod future tech innovations that Apple has in the works. Most of the news coming out on the subject has been pure speculation by anonymous sources who claim to offer some juicy details. But the factis that most of us know next to nothing about Apple's next-generation iPod.

But that hasn't kept the rumor mill from churning and constant talk about such a device on various Websites re-emphasizes the point that people want an Apple branded Portable Media Player. (a handheld device that stores and plays back digital music, video, and photos) in the iPod format.




Steven Jobs discussed video on handheld devices (such as a Video iPod). He admits that you can download videos from iTunes as well as Video Podcasts, but he is uncertain if people will buy a dedicated video playback device. "So far they haven't. No one has been successful with that yet." - Jobs still insists that the convergence between TV and Computers is not going to happen.

Yeah, right...
Word on the street (Wall Street, that is) has it that Apple has approached Warner, EMI, Universal and Sony BMG to license music videos to sell via the iTunes Music Store for $1.99 each very soon whatever that means. They’re also apparently in talks with media companies about licensing TV shows to offer via the iTMS, though the complexity of securing rights there may take longer than for music videos or even feature films. The WSJ article also indicates that Apple has told some music industry execs that it has plans to announce a video iPod soon, as well. Keep in mind that this all seems a bit fishy given Apple’s customary tight lippedness on product announcements, but we’re sure there’s a blogger they can crack down on somewhere.

The Singularity is Near

A Look At Our Future by John Mauldin

"It will therefore be crucial that you see the world anew. That means looking from the outside in to reanalyze much that you have probably taken for granted. This will enable you to come to an understanding. If you fail to transcend conventional thinking at a time when conventional thinking is losing touch with reality, then you will be more likely to fall prey to an epidemic of disorientation that lies ahead. Disorientation breeds mistakes that could threaten your business, your investments and your way of life." --James Dale Davidson and Lord William Rees-Mogg, The Sovereign Individual, in 1997

When the Human Genome Project was started in 1990, skeptics pointed out that it would take thousands of years for the project to be completed at the speed at which gene scanning took place at the time. Ten years later, only a small percent of the total genome had been mapped. Yet a few years later it was finished. What would have taken hundred of years using late 80's technology ended up taking less than 13 years.

But it was even faster than that. One private company started with new technology and finished the entire genome in about two years! Today it would take even less time. The cost of scanning a base pair has dropped from $10 to only a few pennies. Within a decade or less, you will soon be able to get your personal genome scanned for less than $1000 done in a very short amount of time!

Qualify now.

One Grain at a Time We are all familiar with the story of the King who wanted to reward one of his servants. The servant merely requested a grain of rice put on the first square of a chess board and for the King to double the number of grains each square for all 64 squares. Of course, eventually that is more grains of rice than atoms in the universe.

For the first half of the experiment, things were going along nicely. Only towards the end did things get out of control. The growth in the number of rice grains accelerated. In fact, the accelerating growth continued to accelerate. And that is the model for the future. The pace of change will accelerate.

Most of us think in linear terms when we think of change. By that I mean we draw a straight line projecting what the future will be. We take the pace of change we see around us and project that onto our model. But in terms that we can measure, whether it is in transistors on a chip, speed through a wire, or any of a score of things, the pace of growth in change is not linear. It is accelerating. The graph is not a straight line, but one which curves upward more rapidly over time. Think NASDAQ in the late 90's or the graphs you have seen for the growth of debt in the US.

It was easy for critics to suggest the Human Genome Project was a government boondoggle. They could simply look at the technology around them, the growth rate of the speed of new invention and extrapolate to a thousand years. They were incredibly wrong. It took the government project less than 13 years. It took Celera Genomics about 2 years. They finished at the same time.

Ray Kurzweil is perhaps the primary spokesman of our generation documenting the change in the pace of technology. Some of that change he has personally been responsible for. He is the inventor of speech recognition, scanners, music synthesizers and many other technical marvels. He is a certifiable genius in multiple fields. You can learn more about him by going to his web site at:

http://www.kurzweilai.net.

Kurzweil has given us what is known as Kurzweil's Law, or the Law of Accelerating Returns. In an evolutionary process, positive feedback increases order exponentially. A correlate is that the "returns" of an evolutionary process (such as the speed, cost-effectiveness, or overall "power" of a process) increase exponentially over time -- both for biology and technology. The evolutionary process of technology seeks to improve capabilities in an exponential fashion. Innovators seek to improve things by multiples. Innovation is multiplicative, not additive. Technology, like any evolutionary process, builds on itself. This aspect will continue to accelerate when the technology itself takes full control of its own progression.

Ray is the author of The Age of Intelligent Machines and the later Age of Spiritual Machines. The titles speak for themselves.

Now before we start, let me warn you that Kurzweil's projections and book are way out there. I am talking about machines and humans merging, nanotechnology on a scale that rivals anything in Star Wars and human beings living very, very long lives (in 40 years or so). It is fun speculation over a glass of wine.

The point of the next few weeks for me, and it should be for you, as I will repeatedly emphasize, is not whether he is right or wrong about his time frames or even the specifics of his projections. It is about the direction our technology is headed and the pace of the changes and the types of changes we are likely to see in our lives in the next two decades

Kurzweil has now written what may be his opus, "The Singularity is Near." If you are at all interested in what the future might hold, and are not afraid to get out of your box, you should get this book and read it.

http://www.amazon.com/exec/obidos/ASIN/0670033847/investorsinsi-20.

Warning: it is not light reading, and I am not referring to the fact the book weighs a few pounds. There are over 150 pages of footnotes and index. The book itself is 500 pages of the fascinating story of our future technological potentials, plus intriguing stories of what is happening today. (For instance, scientists at that hotbed of scientific research, the University of Oklahoma, have demonstrated a "molecular photography" technique for storing 1,024 bits of information in a single liquid-crystal molecule comprising nineteen hydrogen atoms. Talk about the potential for small storage devices!)

What is The Singularity?

Kurzweil suggests it is a future period in which technological progress becomes so rapid that it radically transforms humankind. The difference between human and our machines becomes less and less as we adapt to an increasingly technological civilization. Increasingly, out nanotech starts to inhabit our bodies.

"To picture the singularity, imagine computers trillions of times smarter than Newton, Einstein and Edison inventing new technologies while continually enhancing their own abilities. Kurzweil argues that the Singularity will occur around 2045." (James Miller - cf. below.)

Why would we do this? Because, Kurzweil suggests, it improves our lives, one small bit by bit at a time. A drug here, gene therapy there, enhanced ability to access information directly, it slowly and then rapidly invades our lives and bodies. While you might resist, your kids won't and your grandkids 20 years from now will see it as their birthright.

Further, each and every step makes economic and business sense. Who doesn't want to live longer and healthier? Have faster communications? Easier lives and more fun? It is the same path we have been on for centuries. It is one where entrepreneurs use technology to try and improve our lives, and at the same time improve their bottom lines.

What kind of pace of change are we talking about? Kurzweil has a team of ten who track the progress of technology and predict where it will be in ten or twenty or one hundred years. It helps that he has been right more often than not. This was written in 2001:

"The first technological steps--sharp edges, fire, the wheel--took tens of thousands of years. For people living in this era, there was little noticeable technological change in even a thousand years. By 1000 A.D., progress was much faster and a paradigm shift required only a century or two. In the nineteenth century, we saw more technological change than in the nine centuries preceding it. Then in the first twenty years of the twentieth century, we saw more advancement than in all of the nineteenth century. Now, paradigm shifts occur in only a few years time. The World Wide Web did not exist in anything like its current form just a few years ago; it didn't exist at all a decade ago.

"The paradigm shift rate (i.e., the overall rate of technical progress) is currently doubling (approximately) every decade; that is, paradigm shift times are halving every decade (and the rate of acceleration is itself growing exponentially). So, the technological progress in the twenty-first century will be equivalent to what would require (in the linear view) on the order of two hundred centuries. In contrast, the twentieth century saw only about twenty-five years of progress (again at today's rate of progress) since we have been speeding up to current rates. So the twenty-first century will see almost a thousand times greater technological change than its predecessor."

Although the vast majority of the thousand times greater technological change Ray is talking about happens in the last part of this century, some of it happens in the next twenty years. How much change are we talking about? Well, from when he first penned those words, the pace of change has picked up. At current levels, that means the twentieth century was equivalent to about twenty years of progress at today's rate of change. That pace will continue to increase the amount of innovation we pack into just a few years. From his book Fantastic Voyage (also highly recommended book on health and living longer):

"...And we'll make another twenty years of progress at today's rate [of growth], equivalent to that of the entire twentieth century, in the next fourteen years. And then we'll do it again in just seven years."

That means in the next twenty-one years we will see double the technological change that we saw in the entire twentieth century. At that pace, we will see almost four times the rate of change within twenty-five years.

James Miller at Tech Central Station reviewed the book. Writing in his blog, he notes:

"But the Singularity doesn't appear near. This is because most of us are used to linear thinking and haven't yet grasped the implications of the exponential growth of information technologies. For example, assume that the power of computers doubles every generation. Further assume that so far 100 generations have passed and our computers have but one-billionth of the power needed to achieve the Singularity. How many more doubling generations would be needed for humanity to reach this singularity? Well, linear thinking would say that since it took 100 generations to get one-billionth of the way there it will take a total of 100 billion generations to make it all the way. But if computer power doubles every generation, then it would take only 30 more generations for computer power to increase a billion fold.

"The human brain is a much faster information processor than even the best of today's computers. But the regular doubling of computing power means computers will quickly reach human equivalence. Kurzweil estimates this will happen by the early 2030s."

(http://www.techcentralstation.com/081505C.html)

The Accelerating Pace of Change

I keep emphasizing this accelerating pace of change. It is critical for you to grasp it. It matters not one whit whether Kurzweil is right about something called the Singularity, or whether machines will in some far-off future merge with humans. First, it is way off in the future, far too far for most of us to concern ourselves with. Second, it is pretty far out. Who knows, and I am certainly not saying it will (or won't) happen. There is a lot of future in our lives before we get there.

The point is that over the next 20 years things are going to change faster than you now think they will. Much faster. The financial plans you are making, the business plans you project, may all have to be thought through one more time.

There are going to be opportunities which we can only now begin to faintly see. As time goes on, advances in health care, which we will visit next week, may make it possible for you to live a lot longer than you now plan. There is reason, as I will show, to think a lot of my boomer generation will make it to 100. Put that into Social Security and Medicare cost plans, not to mention your retirement plans.

A lot of what we think is science fiction is going to happen in the next 20 years. If we stretch it to 30 years it will look like magic.

(For those who want to do a little advance homework, we will be looking at another very important book by Jeff Hawkins called "On Intelligence". You can buy them both at once at Amazon and get free shipping. (www.amazon.com) Hawkins has a quite different view of how things progress, but no less profound in terms of the prospects for change.

Over the next few weeks, in addition to my usual economic comments, we will explore some of what Kurzweil, Hawkins and others see in our future. I will try and comment on what that might mean in practical terms for us. Stick with me. This is going to be a fun trip.

On a personal note, I know that many of you will not like the thought about so much changing. I should point out that a lot will not change as well. There are certain values which are indeed ageless. In an age of increasing change, those things like our core beliefs, family and friends will be all the more important as anchors in the wind of change. Hold on to them and build them now. They are going to be important. In fact, one of the points I will make is that personal relationships in a virtual world are going to be critical.

It is time to hit the send button. Let's remember those in the way of Rita and pray things go better than it looks right now. (For the many who have asked, my part of Texas (Dallas-Fort Worth) is 250 miles from the coast. All we will get is some much-needed rain, although maybe more than we want in a short period. It is the people on the coast who have problems.

Your really positive about the future analyst,

John Mauldin

JohnMauldin@InvestorsInsight.com