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Technology journalist Bill Bennett discusses Russia’s move to crack down on virtual private networks. Also, two conflicting takes on the power of online advertising; and the day the music died: the Pandora music service closes in New Zealand and Australia.

New technology – Bill Bennett

From my speaker notes:

Virtual Private Networks

Virtual Private Networks allow people to surf the next anonymously. They also help keep data safe from online criminals.

A VPN is a safe tunnel, usually from your computer, phone or tablet to an end-point elsewhere on the internet. They are a form of encryption.

You can use a VPN to make it look as if you are connecting from elsewhere in the world. So, if you want to see content that can only be accessed from, say, the UK, choose an endpoint in the UK.

Earlier this week Russia followed China cracking down on VPNs.

Putin pushed a law banning VPNs through the Duma. China has been cracking down on VPNs since January. I had personal experience of issues with a VPN when I was in China last year.

Apple pulls VPNs from Chinese app store

Also this week, Apple pulled VPNs from its App Store in China.

Critics say Apple should have stood up to China and refused, even though that would mean losing sales maybe even pulling out of the Chinese market. On the other hand, it is complying with the law. Chinese law says VPNs need to be licensed.

The consequences of pulling out of China are huge. It is Apple’s second largest market. What’s more, China is where most of the company’s products and the components in its products are made. Bloomberg’s Gadfly has an interesting take on this.

Meanwhile… perhaps New Zealanders ought to be more familiar with VPNs

Symantec, which sells a Norton-branded VPN service, says New Zealanders take risks with public wi-fi – something that a VPN can protect against. About two thirds of NZers think they are safe with public wi-fi and the same number take no precautions when using it. Hardly any NZers know whether they are transmitting data safely or not. I wrote about this earlier today.

Online advertising failures and successes

Two conflicting takes on the power of online advertising:

Procter and Gamble cut US$100 million from its online advertising spend in the last quarter and noticed no discernible impact on its business. This is taken as evidence online advertising doesn’t work. Part of this is a lot of ads turn up at dubious sites and are only seen by fake traffic or bots.

Sounds like a lot of money, but P&G spent a total of US$2.5 billion on ads in the quarter.

Also says niche advertising on Facebook didn’t work either.

Motorola is a much smaller company, but it reports the money it spent on Facebook ads did nothing to help its campaign to relaunch its phone brands. It too spent on highly targeted Facebook campaigns that didn’t work.

…And yet: The New Scientist reports that ad campaigns that used artificial intelligence to target voters on Facebook were enough to swing both the US Presidential election and the Brexit referendum.

So why does one type of advertising work and the other fail?

My take is that you don’t need to shift wavering individual voters by much to swing their vote. That’s part of it. The other part is that you don’t need to influence that many voters in a tight ballot. Clinton actually won the US popular vote by around two percent, but a tight focus on key states meant moving only a tiny fraction of voters was enough to win it for Trump.

One set of researchers also pointed out that it can be more important to persuade some people to vote or not vote, than to change their choice.

The day the music died…

Pandora music service closes in New Zealand and Australia. Meanwhile Apple has dropped almost all its non-iOS iPod models. The two stories are closely related. First, the streaming music market is consolidating. That was always going to happen. Global scale is important here. It also seems users don’t like the advertising supported model much.

Meanwhile Apple’s iPhone, which, arguably is a brand extension of the iPod has eclipsed its granddad and rendering it almost obsolete. Cue squeals from people, like me, who still love their old-school iPads.

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Unisys Security Index 2017New Zealanders have a healthy scepticism when it comes to the Internet-of-Things collecting and sharing their data. More than anything, we want control.

For years we’ve been told the IoT is just a remote-monitored heartbeat away. The technology promises to change our lives as much as mobile phones.

Heaters can start to warm homes when we’re 30 minutes away. Our fridges can order fresh milk before the last drop is drunk. Farmers can already micromanage water and fertilizer to the nearest square metre in each paddock.

That’s the IoT dream. It’s already happening.

There’s also an IoT nightmare. It’s where embedded devices watch our every step and report back to uncaring, anonymous companies. They can use data gathered from our own things coupled with their own sensor information to break down any resistance we might have to spending money with them.

Watching over us

Being part of someone else’s business model is one thing. Not everyone or everything that wants to monitor us is as benign. And if the good guys can watch over us, so can the villains.

As part of a global research project, Unisys, a large technology company, questioned 1012 New Zealanders about their reaction to the Internet-of-Things.

Unisys found there’s a nuanced response. No surprises there. The TLDR version is that we’re comfortable with some aspects of IoT, uncomfortable with others. It all adds up to a complex relationship with the technology.

Control freaks?

Yet it all boils down to who is in the driving seat. New Zealanders want to the power to direct what happens with their data.

Take the idea of putting buttons on smartwatches that can alert the police to the user’s position when pushed. We’ll put aside for one moment that not even one-in-ten New Zealanders currently uses a smartwatch. That’s not the point.

Unisys found 84 percent on New Zealanders like the idea of an emergency button. That’s a overwhelming support. Yet only 31 percent like the idea of the police being able to monitor their fitness tracker to figure out where they are at any given moment. That’s a big thumbs down.

You don’t have to look at that hard to realise the first gives you the option of calling for help. The second means you’ll get help, or maybe interference, whether you want it or not.

Personal data

Trust and control are central to personal data. Most people in New Zealand trust the police, but that doesn’t go as far as letting them watch over you all the time. Being able to call for help retains control, being monitored, puts someone or something else in control.

Unisys found there is also high support, 74 percent, for medical hardware such as pacemakers or blood sugar sensors able to alert doctors if something happens. We tend to trust our doctors.

Almost two-thirds of New Zealanders are happy to have sensors on their luggage so their phones know where it is at an airport. Which you could interpret as meaning we are less trusting of baggage handlers or worry about the lack of control. If the IoT hands some back, we like that.

This is the first in a series of sponsored posts about the 2017 Unisys Security Index New Zealand.

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wellington cloud
wellington cloud

Four years ago Microsoft lost its mojo. The software giant had failed to compete in web search.

People questioned whether Microsoft was on an IBM-style path to irrelevance. When the phone business flopped, it looked like Microsoft’s time in the sun was over.

Today it is back. The 2017 Microsoft is a different beast, the main reason for its revival is a successful transition to selling cloud computing services. Microsoft’s birth isn’t yet on the same scale as Apple which came back with the iPhone, but that can still happen.

This week Microsoft reported quarterly profits that are more than twice the level of a year earlier.

It’s not all good news. Some of the jump was down to the company realising a tax benefit after writing off its failed mobile phone business.

Fast growing cloud transition

Yet that’s the past The important part of the quarterly announcement is that Microsoft’s cloud business is growing at a clip. That was enough to send the share price up three percent.

This wasn’t the first quarter where Microsoft’s cloud business was the star of the show. It’s been climbing for years now. In the latest quarter Intelligent Cloud revenue was up 11 percent to US$7.4 billion. Revenue for the company’s Azure cloud services was up almost 100 percent.

While Azure still trails behind Amazon Web Services, there is clear blue sky between Microsoft and the next set of cloud service providers. Being second in the most important market of the day is a huge win for Microsoft.

Azure profits

At the same time, cloud economics means it is close to a winner takes all game. Amazon and Azure share almost all the cloud profits.

The other cloudy good news from Microsoft is that revenue from the cloud version of Office 365 went past traditional software sales for the first time. There are now 90 million Office 365 users on iOS and Android. That is a big thumbs up for CEO Satya Nadella’s decision to support non-Microsoft operating systems.

Although Microsoft is doing a better job of transforming than rivals like IBM, Oracle or Google, it isn’t in the clear yet. Sales of Surface devices fell two percent during the quarter. Meanwhile enterprise service revenues fell. Yet it appears to be keeping pace with AWS, that’s something no-one else can manage.

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Gartner says New Zealand technology spending will be $11.8 billion in 2017. That’s up 2.7 percent from 2016. It’s also a lot higher than last year’s forward looking forecast from Gartner. The total spend is forecast to pass $12 billion in 2018.

Communications services is the top technology category in New Zealand. Customers will spend a total of NZ$4.4 billion this year.The category includes consumer fixed and mobile voice and data services, enterprise fixed and mobile voice and data services. It may be the biggest sector, but shows next to no growth.

Gartner expects software to be the star performer over the next year, with IT services also showing respectable growth. Sales of devices and data centre systems will be flat.

Australians spend more however you cut it

New Zealand’s numbers compare with a total IT spend of A$83 billion in Australia, almost eight times the amount spent here. Australia’s communications services sector is around six times the size of New Zealand’s at A$26.8 billion.

Gartner expects both New Zealand and Australia to increase spending in the next year by more than the worldwide 2.4 percent forecast.

IT Spending Forecast Q2 2017

In part the difference between Australia and New Zealand can be put down to population size. Yet there’s more to the numbers than how many people live in each country. New Zealand’s spend amounts to around NZ$2,500 per person, while Australia’s is almost A$3,500.

One possible explaination for some of the difference is that some Australian IT companies wrap New Zealand revenue into local income. And there’s a tendency on the other side of the Tasman to gold-plate projects. Yet you can’t escape from thinking Australians appear more willing to invest in technology.

New Zealand: IT Spending Forecast (Millions of NZ$)

Segment 2016 2017 2018
Devices     1,659     1,734     1,724
Data Centre Systems         344         342         347
Software     1,363     1,499     1,647
IT Services     3,764     3,840     3,920
Communications Services     4,355     4,383     4,437
 
Grand Total   11,484   11,798   12,074

 

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Frances Coppola writes about financial bubbles. She says the market for crypto-currencies shares characteristics with earlier bubbles like Dutch tulips and dotcom stocks. Which means a crash is underway. That’s not just Bitcoin, but all of the crypto-currencies.

The remarkable aspect of this is that everyone couldn’t see it coming. As Coppola points out some investors still don’t accept the likelihood of a crash.

It will be interesting to see what remains after things settle down. The idea of a blockchain isn’t going away, but the, at times irrational, enthusiasm  for crypto-currency could be coming to an end.