Tidbits in the News: Eric’s Take on AI, Essential Sale, Apple Knew It All

Trump’s been making headlines, as always, cancelling the scheduled talks between North Korea and the US, and then alter reinstating them after what seems like a giant power game played by the US president.

Moreover, with growing domestic and international pressures concerning his standing in the world, it looks increasingly like the president is only going to play harder with North Korea to milk every last drop out of these talks.

But that’s a story for the bigger fish in the ocean. I’m here to talk about the news no one else is talking about.

Eric’s Take on AI

Eric Schmidt has a lot of cache to his name in the world of business and tech. He was, after all, the CEO of Google during its rapid rise to prominence earlier this decade. In a recent interview, Eric Schmidt has come out against Elon Musk and the late Stephen Hawking on AI, claiming that the benefits of the technology far outweighs any detriments it poses to human society at large.

He argued that as populations age, there will be vacant job openings that will dictate the demand for AI and robots in the workplace. In short, AI is the solution to the oversupply of jobs, and the lack of human labor to fill those  positions.

On whether AI should be regulated, he gave the following analogy:

The example I would offer is, would you not invent the telephone because of the possible misuse of the telephone by evil people? No, you would build the telephone and you would try to find a way to police the misuse of the telephone.

Couple of things to unpack here, so let’s get started.

First, there’s no doubt that AI and automation of work will relieve the pressures of an aging society, particularly in delivering economic growth. Japan is  a great example of this. Japan has been facing the aging population issue for decades now, and it’s also a front runner in the real of robotics and AI. This isn’t a coincidence. Japanese business leaders have long seen automation as the solution to a myriad of issues, from high labor costs to a shrinking labor force — two very real problems in the country, even today.

This is why you see so many vending machines, selling everything under the sun. It was one of the first instances of automation, in an effort to automate the convenience store experience. Now there’s restaurants that take orders on vending machines to help automate the experience. And it’s a growing trend, not just in Japan, but in its neighbors South Korea and China.

Automation in general, be it AI based software automation, or robotics based hardware automation, is inevitable.

But whether it’s required is a different question.

There’s ample room here to claim that economic growth in an era of a declining population is contradictory, perhaps even downright naive. Moreover, to think that demand in this new era will stay stable, or perhaps even increase may be even dangerous. It may be the case that the overall need for labor may decrease, which may mean robots effectively taking jobs away from humans.

Second, there’s the analogy Eric gives regarding regulation of AI. He sees the blame of anything going wrong to be with the end user,  rather than the developer, which is fair. For the most part, technologies have no real fault of their own, as its application is where the problems begin. This is true with the telephone, where people can use it to phish others, to the internet, which can be used to facilitate a market place for illegal goods. In both instances, the fault is with the end user, not with the developers.

But what happens when the technology can draw conclusions for itself? What happens then?

Because AI is a fundamentally different from the other technologies so far. A telephone cannot decide for itself whether to call someone and request certain information. The internet cannot facilitate market places on its own. A car does not decide which route to take on its way to a destination. AI can.

AI can take make decisions for itself. It can decide, based on its processes, who to call. It can facilitate a market place. It can decide what route to take. It can decide which investments to make. It can make decisions.

IT may be the case that we need to regulate AI very differently from other technologies we’ve had so far. We may need to put regulatory controls on developers as well as the users, if we want AI to be held accountable for its actions. Because if it can make decisions without human oversight, it needs to be treated like a decision maker rather than a tool.

Essential Sale

It’s been about a year since Essential Products Inc raised capital at nearly a 1B USD valuation. This time, they’re gracing headlines in quite a different manner — they’re looking to sell out. This comes with further news of the company halting development on all products in its current development pipeline. It comes after nearly a year of lackluster sales for its rather lackluster device.

There’s definitely value in this company, especially in its employee talent pool. The cache of the Andy Rubin brand, coupled with the business network and stability that came with it, allowed the company to gather quite a team. If anyone ends up buying up the firm, this will be the primary asset, along with the company’s IP portfolio.

What I want to focus on, instead, is the reason for the sale.

Because from the onset, the company’s vision wasn’t just a smartphone. It was an ecosystem. You can see this in the name of the corporation, Essential Products Inc. They were going to transform your life by providing a seamless experience rivaling that of Google and Apple. They were ambitious, and the Essential Ph-1 was the keystone to their vision.

But the  vision never played out. In fact, it fell apart as soon as the Ph-1 landed. The lackluster camera, the lack of a headphone jack, even the price — the product was riddled with problems that resulted from an unpaid attention to consumer needs. The press took note of this, and so, too, did the consumers. In a last ditch effort for the firm, the price was cut by 200 USD, but even that was too little, too late.

I know, because I was looking to buy one for myself.

I wanted the brand to succeed. I wanted to like the phone. I wanted to believe. But the first product inspired nothing more than doubt in my mind, and, by the  looks of it, I wasn’t alone. It definitely is not an easy fight to compete against juggernauts like Google, Apple and Samsung as a startup, but one need only look at One Plus to find a great example of how to take advantage of a market looking for alternatives.

It may be that Essential was leaning on the Andy Rubin brand a bit too much. IT may be that there are certain benefits of the product that the market just isn’t ready to appreciate yet. But it’s the responsibility of a company to deliver what the consumer wants, not what it wants. If only the company heeded public sentiment a little bit closer. Perhaps, then, we’d be wading through the hype for Essential Ph-2.

Apple Knew It All

It turns out that Apple really does know everything. In recent documents that were revealed as part of a class action lawsuit against the company, Apple’s own internal tests concluded that the iPhone 6 was over 3 times more likely to bend compared to the iPhone 5s, while the 6 Plus was more than 7 times more  likely.

These aren’t benign results, either. In fact, bendgate was the single largest smartphone related scandal until the Note 7 disaster. It became a viral meme, even, with people sarcastically claiming it as a “feature” for the new device.

What’s interesting here is that Apple later went on to reformulate the alloy composition for its devices the following cycle, after claiming it only affected a handful of devices.

And, despite all this, along with batterygate, sentiment on the company remains strong.

Two things here, yet again. First, the power of Apple’s brand, and second, the ethics of corporate strategies. Let’s get started.

Apple brand is the most powerful bar none. No other company in the world can claim such a strong, unified, diverse group of fans that Apple has. Moreover, this group of fans is the very basis upon which the company has built its empire, and it’s the very foundation upon which its future profits stand. But what’s the secret to Apple’s brand strategy? How did it manage something that’s unprecedented in the history of humanity?

That’s the thing, no one can say for certain. I reckon it’s got much to do with apathy, and how people don’t care as much for things that doesn’t affect them personally. Moreover, Apple’s update cycle has made it much easier to  make a decision to upgrade every 2 years, making it even less likely that issues persist for years on end.

What’s more is that it controls the experience — from hardware to software. That means that there are tighter tolerances when it comes to UX. But, again, this is all speculation.

What we do know is that this brand has saved Apple time and again from PR disasters. It’s been able to brush off criticism on lack of features, underpowered hardware, and even large scale scandals like this without so much as a shrug. That speaks volumes about the importance  of a brand in 21st century business.

But is this entire practice ethical? This is entirely different from the question of legality. That’s something that remains to be seen, as it’s an ongoing court case at the moment. But, regardless of the outcome, the ethics of this constant practice  of denying allegations of faulty product design, is rather shady.

We expect people to be honest. It’s the basis upon which the free market operates. The whole system depends on information symmetry. This practice Apple has made a habit of creates information asymmetry like none other, based upon which consumers make purchasing decisions. That’s not ethical, that’s shady business tactics.

But unfortunately, Apple isn’t the only corporation involved in this practice. Samsung has a well known history of denying allegations of product defects, while automobile makers from all over the world are notorious for selling faulty products. Even Google and Facebook have denied allegations of breach of privacy. Heck, it’s more difficult to find a company that follows every ethical business practice to the word.

It’s a matter of economics. If the cost of a probable litigation and reparation outweigh the economic benefits, companies would do their best to remain on the right side of public sentiment. But, our current system is conducive for this malicious behavior because the benefits far outweigh the costs. The most  famous example of this is, perhaps, the Ford Pinto, which is an interesting story worth an article on its own.

I’m not arguing for more government intervention in the free market. But I am arguing that if consumers don’t react as they should to such discoveries, then government shouldn’t hesitate to balance the scales. Otherwise, consumers will end up losing every time.


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