Google to start making processors?

Google's recent purchase of Agnilux, a company started by former PaSemi (and then Apple) folks, seems at first to be to improve the power/performance for the data centers. This would be the natural direction, since Agnilux was purported to be working with Cisco on more efficient chips. However, I think it's more likely that Google wants to seriously think about making chips that go into end consumer products such as mobiles, tablets and TV set-top and/or the TV's themselves.

Google has been a big proponent of improving the power efficiency of data centers. However, designing a chip that delivers the kind of performace for such heavy compute tasks is not easy. ARM architecture also doesn't seem to lend itself directly to use in server chips. On  that other hand, ARM is an ideal candidate for low-power consumer product chips as established by Apple designing its own processors based on such technology. Why would Google want to develop its own chips instead of buying them off-shelf from vendors. I think it's primarily motivated by the desire to own the entire ecosystem from design of the hardware and the software and eventually, design (or atleast create reference designs) for products they wish to see in the market. If Google controls the product, they control the display where they can show the advertising that will make them good money. This ties in well with their desire to encourage consumer access to high-speed broadband at home and wireless on the go.

I will post more info on this as and when I learn more. I'll leave you with a recent news I hear about Google reportedly preparing to intro TV software next month

Deflation

Considering we are still in the throes of a recessionary environment, it isn't surprising that consumer prices are falling, or atleast, hardly rising. Outright deflation as seen in Japan is a scary phenomenon as it can exacerbate a recessionary downward spiral in prices. As an aside, you would think that given the steep drop in house prices, this is a no brainer. However, the calculation of CPI (consumer price index) uses owner's equivalent rent (essentially rent) which has fallen much slower than housing.

Ben Bernanke (the Fed chief, aka Helicopter Ben as you will figure out in a little bit) had make a comment many years earlier saying that the Fed always had a ready tool to fight deflation - dropping dollars out of a helicopter! While that is a picture worth remembering, the fed doesn't really own choppers. What they have done so far is to drop the overnight lending rate precipitously (some may say this is exactly what got us into this mess) and gone into the market and bought shitloads of RMBS (residential mortgage backed securities) and treasuries. The prior move (rates) is part of monetary policy but the latter (buying risky securities) is getting into the realm of fiscal policy, and is almost the equivalent of pumping $$'s into the system (for every dollar worth that the fed buys, there is an extra dollar in the capital markets that can be used elsewhere). This is in addition to all the stimulus provided by the government. All of this would make us believe that the total amount of dollars in the system would increase leading to inflation!

Undermining the effect of all of these moves is the massive deleveraging by the consumer and the tremendous decrease in the rate of bank lending. Although the fed can decrease effective interest rates, there needs to be end demand from consumers and businesses to increase their indebtedness as opposed to paying off or walking away from their present commitments. Additionally, there is massive overcapacity of production making it difficult for companies to raise prices. So all in all, there's a big tug-of-war going on with respect to prices.

I'll leave you with a graph showing the month-to-month change in the CPI. After plunging in '08, prices seem to have stabilized but there is still the fear that they will drop into negative territory in the coming months. Interestingly, the prior month (Jan '10) was the first in a quarter century when core CPI (excluding food and energy prices) dropped!!

The Baltic Dry Index

From Wikipedia,

The Baltic Dry Index (BDI) is a number issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the Index tracks worldwide international shipping prices of various dry bulk cargoes.

The reason I like this index is that it represents the true price of hiring a shipping vessel. While it is true that it is skewed towards commodity prices (and as such highly influenced by Chinese demand), I think it foretells things to come. China is the leading manufacturer in the world today and its imports should show the upcoming demand from the rest of the world! China has been stockpiling crude oil, copper, and many other materials. Once that demand slumps, shipping costs will plummet. Here is a graph for the latest value of this index. I'm already concerned since this value has fallen below the trendline, but I'd get even more concerned if it broke down below ~2240.

Here's a chart of a longer timeframe view of this index. Notice the massive volatility during the financial crisis and a bottoming prior to the bottoming of the market. Today's prices are still a fraction of what it cost then!

KO = Knock-out!

From Coke's quarterly results

In emerging markets, Coke’s unit volume growth was even sharper, led by China, where the metric was up 29 per cent, and India, which saw a 20 per cent increase in unit volume.

Emerging markets => emerging waistlines?

Chemical Exposure Linked to Attention Deficit Disorder in Children: Scientific American

An important article. Key points...

"The connection was only detected for the types of phthalates used in perfumes, shampoos, nail polishes, lotions, deodorants, hair sprays and other personal care products."

"But there are no U.S. restrictions on phthalates in cosmetics and other personal care items."

"Engel said people should “press legislators” to restrict phthalates in adult, as well as children's, personal care products"

Here's the link to the article

iPad disappointments

Gauging from the rampant speculation, there would most likely be a number of people who think today's announcement didn't live up to the hype. A game changer does not come along very often so I didn't expect way too much, but came away with a few disappointments

• No ability to make calls from the 3G device i.e. it will not be attached to a phone number. You can still make calls over wi-fi but what's new about that?
• User interface seems almost like the ipod touch, so what's new about that?
• No camera (or is there one?). Very sad if there isn't one as this would have been ideal for video chats
• Can't multi task? I think it should be able to especially since it's competition is not phones but netbooks. I need to follow up on this

iPad surprises

Almost none. But I'll list a couple anyways

• A big one for me was that the processor is built in-house. I was sure there was an effort to build an ARM based processor, but I believed that the first edition tablet would have a custom designed one built by Samsung or Qualcomm.
• The price point of $499 is nice. However, I'm not sure of the punch this device has, especially with the "creation" of a new category of devices. Also, paying 100 bucks extra for another 16GB is steep! I wonder what external storage interfaces it has
• 3G not built-in by default. This is something new from Apple, which generally doesn't create too many flavors of the devices it manufactures. I think this is simply a pricing decision for those who like the tablet form factor but don't need the mobility factor
• Unlocked 3G. So it looks like AT&T decided not to subsidize the tablet like they do with the iPhone. Maybe the balked at the subsidy Apple was asking for. Or maybe they figured people who really wanted it would get one anyways. I wonder if there is any way to share a data plan between an iphone and the ipad or you have to pay separately for both