Archive for Comment

Certified Halo – Raising Awareness of the Seed Enterprise Investment Scheme

18/06/2012 / / No comments

This morning sees the launch of a campaign by a group called Certified Halo.

Certified Halo are a group of London based startup entrepreneurs in tech who are on a campaign to raise awareness of startups and the opportunities to invest in them.  I met with the founder of Certified Halo Rayhan Rafiq Omar and his colleagues a few weeks ago when they contacted me about the campaign. I listened to their objectives which are borne out frustrations that many startup entrepreneurs face and with which I empathise.  I thought I would share some of those (and mine) here.  Today and tomorrow Rayhan and his colleagues, who are all founders of new enterprises in digital media and tech, are flyering the City and Canary Wharf as the launch of the campaign to raise awareness of startups and the opportunities for individuals to invest in new and early stage enterprises, which have been given a boost by the Seed Enterprise Investment Scheme (SEIS).  One problem they cite is that many people aren’t even aware of the SEIS, which is something we have found since we launched the first SEIS fund in the market – our ASCEND SEIS Fund.  Raising awareness of the SEIS is one of the objectives of the campaign and we have got behind Certified Halo to help raise that awareness.

Awareness of new enterprises and how to access them

This is a big issue.  A lot of people are aware of Silicon Roundabout but very few people have any idea how to access investment opportunities emanating from the creative entrepreneurs setting up new enterprises there. So far there are a few VC firms that have backed companies in the sector but these are not open to most private investors and in the main, VC funds invest at a later stage than seed stage (which for us doesn’t necessarily mean as early as a person and an idea, but can be a business that is up to two years old, with a product or service built and ready to take to the market or may already be in the market and now looking to scale).

Awareness of the SEIS

Another problem.  The Government introduced the SEIS scheme in December 2011 to take effect from 6 April 2012 (subject to the formality of Royal Assent which is expected in July 2012) and still very few people know anything about it.  The idea behind the SEIS is sound – it is to encourage investment in new enterprises which otherwise fall into the equity gap and should lead to employment, earnings on which tax is paid, exports and growth for UK plc.  But it won’t lead to anything if no one knows anything about it.  Even many IFAs I have been speaking to know very little about it or had not understood it, and had already formed the view that it is not something they will be considering for their clients.  In part that’s also a result of a wider cultural issue which is another problem for start ups in the UK.

Culture and education

As Certified Halo note in their flyer, the US has a culture that allows companies like Google, Apple, Cisco and others to start up, innovate and deliver outsize returns to investors.  There are two reasons why: 1. It is as normal to invest in start ups as it is to invest in exchange traded stocks and funds; and 2. Investor love business and innovation and want to be part of the story and share in the rewards.  It’s different here.

I agree with that.  There is a real cultural issue in the UK where entrepreneurship is little understood and rarely supported.  Not everyone can be a entrepreneur, nor should they be, but  if more people understood entrepreneurship then this would lead in my view to two things.  Firstly more people would be more entrepreneurial, which is not the same as being an entrepreneur, but has ramifications for entrepreneurs (I’ll explain why below) and secondly there would be more investment available from private individuals for entrepreneurs as a culture of allocating a small portion of one’s portfolio into new enterprises, perhaps through SEIS/EIS/VCT funds, as an asset class would develop.

More entrepreneurial people in industry is a good thing for entrepreneurs.  Take for example an entrepreneur who has a new product to bring to the market and who wishes to obtain retail distribution via a major high street retailer.  He has to persuade the buyer at that retailer to take the product, which being new, carries a risk.  It doesn’t matter how good that product is, how much better or cheaper than existing products it might be, if the buyer is not entrepreneurial he or she simply won’t take that risk.

This is something that needs to be examined in education.  Education in the UK is focussed on preparing people for employment.  It does this by preparing people to become equipped with qualifications which serve as signals which they take into the employment market in order to attract employers’ attention for interview and employment.  If the focus of education policy were to equip people with the skills to make a living as opposed to obtaining a job, if enterprise and entrepreneurship were taught in schools, we would have better equipped entrepreneurs and a better understanding and appreciation of it amongst the employed (and many private investors).  That would be good for everybody.

Complexity of the Seed Enterprise Investment Scheme

The SEIS rules are complex.  Unfortunately they need to be, because tax incentives have a habit of being abused.  See my post here about Project Finance v Company Investment in the Creative Industries.  The rules are new and we will be reviewing how they work in practice and offering our ideas to Government to simplify it without making it more vulnerable to widespread abuse, so the costs of compliance borne by companies and new enterprises reduce.  At Ascension we can manage these costs as we have been studying the legislation ever since it was published and we have many years’ expertise in tax and experience in EIS and VCT compliance – but to an entrepreneur on his or her own, the costs of compliance can be a very significant portion of the available finance.

Good luck Rayhan and Certified Halo!

The Certified Halo website is here: www.certifiedhalo.com.

Category: Ascension News, Comment, Creative Business, Investment, Tax Incentives / Tags: , , , ,

Finance in the Creative Sector

21/03/2012 / / No comments

Excellent article in this week’s The Economist (and not just because they very kindly make reference to our ASCEND SEIS Fund)….

http://www.economist.com/node/21550277

The Economist makes excellent points we have been banging the drum about for a while and we think the time is ripe now for investment in the creative industries, particularly with the support of the Government through the introduction of the Seed Enterprise Investment Scheme which, despite its low limits of £150,000 per company, should be enormously valuable to companies in the creative sector.  £150,000 wouldn’t go a long way in many other sectors, but the impact of digital technology has dramatically reduced the investment requirements for creative enterprises right across the supply chain from creation, production, distribution and marketing.  Valuable intellectual property rights can be created nowadays with very little investment in expensive capital equipment and using the Internet and harnessing social and mobile platforms to reach audiences and consumers in a targeted, trackable and cost effective way.

That’s one of the reasons why, as The Economist also notes, start ups in the creative sector fare better than other young businesses in other sectors.

 

Category: Comment, Creative Business, Investment, IPR, Tax Incentives / Tags: , , , , ,

Enterprise Investment Scheme – Unapproved versus Approved

22/02/2012 / / No comments

It’s that time of year again when investors are considering tax efficient investment strategies. Gaining popularity this year is the Enterprise Investment Scheme because of the increase in the income tax relief from 20% to 30%, making it compare very favourably against VCTs which don’t offer the same CGT reliefs and require a longer hold period before gains become capital gains free.

A comparison between EIS and VCT is the subject of another post but here we compare Unapproved and Approved EIS funds.

Firstly, Approved in this context means HMRC Approved. It does not mean that the fund is approved by anyone giving an opinion about the quality of the investments, investment team, investment strategy or anything in fact. It doesn’t even mean that the investments made by the fund are pre-approved as actually qualifying under the EIS. The only difference between an Approved and an Unapproved fund is that the Approved fund prospectus has been reviewed by HMRC and, provided the fund invests at least 90% of its assets in EIS qualifying investments within the 12 months following closing the fund, then investors in the fund will be treated as having made the EIS investments as at the date the fund closes and not, as is the case with an Unapproved fund, when the fund actually invests in the EIS investments. Apart from another minor difference – there being no £500 minimum investment in Approved EIS fund – that’s it.

If there was ever a case of the tax tail wagging the investment dog choosing one fund over another because it is Approved is it. In fact there are many good reasons to favour Unapproved over Approved. Leading publication Investors Chronicle summarises the point pretty well:

“From an investment perspective, an unapproved fund is potentially in a better position as it has longer to choose its investments and build a more diversified portfolio. This can mean approved funds spread their risk over fewer investments due to the time restriction.”

“An unapproved fund gets its income tax relief on the date of each investment, provided it qualifies. Ultimately, when choosing an EIS, you have to balance certainty of tax relief with the potential for better returns.”

http://www.investorschronicle.co.uk/2011/09/15/your-money/strategies-for-investing-in-eis-OfuoaIHVyvJ301AfQ7eMhL/article.html

Another reason to favour Unapproved over Approved is the flexibility over the use of the available income tax relief. Here’s an example:

An investor in an Approved EIS fund rushes to get their investment in before the 5 April 2012 deadline and makes a £100,000 investment. As it is an Approved fund he/she can claim 30% income tax relief against their 2011/12 income or, if they elect to treat some or all of the investment as having been made in the year ended 5 April 2011, only 20% income tax relief in that prior tax year. The investor won’t be able to claim any income tax relief in the tax year ended 5 April 2013 without making a new investment in an EIS in that tax year (or if the fund manager blows the Approved fund status).

If the investment is made in an Unapproved fund, either before or after the 5 April 2012 deadline (but obviously before the fund closes which it must do before the manager can invest from it) the position is different. Income tax relief is available following each investment by the manager so assuming the manager takes up to 2 years to invest the fund and manages the timing of investment so the fund is deployed equally over the 2 years, then the income tax relief is available across 3 tax years, all of which are at 30% (assuming no changes in the legislation applying to the year ended 5 April 2014).

Here’s an example with a £100,000 investment in an Unapproved fund which commences investment after 6 April 2012. If the fund is deployed equally over the two years ended 5 April 2013 and 2014 then the investor has the following options:

  1. Treat £50,000 as having been invested in the year ended 5 April 2012 giving income tax relief at 30%; and
  2. Treat £50,000 as having been made in the year ended 5 April 2013 giving income tax relief at 30%

Or

  1. Treat £50,000 as having been invested in the year ended 5 April 2012 giving income tax relief at 30%; and
  2. Treat £50,000 as having been made in the year ended 5 April 2014 giving income tax relief at 30%

Or

  1. Treat £50,000 as having been invested in the year ended 5 April 2013 giving income tax relief at 30%; and
  2. Treat £50,000 as having been made in the year ended 5 April 2014 giving income tax relief at 30%

Or

  1. Treat £100,000 as having been invested in the year ended 5 April 2013 giving income tax relief at 30%

Finally, as noted above an Approved fund must invest 90% of the total subscriptions in EIS qualifying companies within 12 months. Private company investments take a lot of due diligence and time with management prior to investment to get right so unless at fund closing there’s already a good pipeline of investments in place and on which the fund manager has been carrying out the necessary due diligence, that’s not a lot of time to source, win and diligence opportunities that merit investment, IMHO. YMMV.

This blog post is for information only and does not constitute investment or tax advice.

Category: Comment, Investment, Tax Incentives / Tags: , , , , , , ,

Seed Enterprise Investment Scheme SEIS the day!

18/02/2012 / / No comments

I saw that title on a blog post (click here) by Mike Hyland of Grant Thornton about the Seed Enterprise Investment Scheme and I liked it so I hope he won’t mind me borrowing it.

A good point Mke makes is that given the way the loss reliefs work and the interaction with the 50% income tax relief and the additional CGT exemption worth 28% in the first year of Seed Enterprise Investment Scheme is that an investment in SEIS can actually give you 103% tax relief if your entire investment fails.

Here’s how:

  • £100,000 invested in Seed Enterprise Investment Scheme after 6 April 2012 gets 50% income tax relief (incidentally the investment may be treated as having been made in the year ended 5 April 2012 and hence the relief obtained earlier)
  • If the taxpayer also has a capital gain which is realised in 2012/13 which is claimed as having been reinvested in SEIS then the 28% capital gain will be wholly exempted
  • In the event the investment fails the net investment after income tax relief i.e. £50,000 is also available to offset against taxable income, so for a 50% tax payer that’s worth another £25,000 (or 25% of the original investment)

Add it all up and you get to 103%.  That’s some underpinning in the downside case and to my mind makes Seed Enterprise Investment Scheme a no brainer in 2012/13.  Of course this is based on the draft Finance Bill and it remains to be whether it makes it into the final legislation.  As long as it doesn’t give rise to abuse (and with 60 pages of legislation, most of which is anti-avoidance, hopefully HMRC already have it covered) that is a great one year offer by the Government to stimulate investment in new enterprises and provide a much needed boost to the economy.

The Government is effectively saying to investors: For the first year of SEIS, rather than pay income tax and capital gains tax, use your money to invest in SEIS and put the money to work stimulating new employment and creating something of value.  If the investment succeeds and you realise your investment after three years you keep all the gains and don’t pay any tax on it.  On the other hand, since new ventures are risky, if the investment fails, you can get a further income tax relief that effectively means you didn’t lose anything at all.

In any event waiting to do SEIS in the new tax year makes much more sense than rushing to invest in and EIS or VCT before the tax year end since you can carry back the income tax relief on SEIS to 2011/12. It certainly doesn’t make sense for most people in the 50% tax bracket to do a regular EIS this year and certainly not an Approved Fund since you are limited to income tax relief at 30% in 2011/12 or, if you make the carry back claim, only 20% in 2010/11.

More on this point later.

 

Category: Comment, Investment, Tax Incentives / Tags: , , ,

Arise Sir Design Guru

03/01/2012 / / No comments

We are delighted to learn about the recognition of Sir Jonathan Ive’s contribution to the worlds of consumer technology and product design through his knighthood in the New Year honours which we also write about in our newsletter Altitude.

Sir Jony’s contribution to Apple is an example highlighting four observations:

  1. Excellence in creativity can build assets generating enormous earnings and value;
  2. Excellence in creativity alone is not enough, but its partnership with excellence in business is both powerful and necessary;
  3. Britain’s top creative talent often ends up leaking out of this country overseas with the effect that the value created accrues to overseas companies and their investors; and
  4. Understanding the landscape in the creative industries requires an understanding of the roadmaps in technology and digital media.

These observations are why Ascension came into being and why in 2012 we’re launching Ascension Seed Capital for Creative Enterprise and Digital (ASCEND®) – the UK’s first Seed Enterprise Investment Scheme Fund.

The value of excellence in Creativity

It’s not difficult to see how much value creation Sir Jony has contributed to in the last 14 years at Apple. From 1997 following Sir Jony’s inspired efforts, Apple launched the iMac, MacBook and MacBook Pro, iPod, iPod Touch, iPhone and iPad all with the same attention to detail in hardware and software design that has made the products coveted the world over.

In that time Apple has gone from needing a $150 million bailout from arch rival Microsoft to survive to becoming the world’s second largest company by market capitalization today worth c. $380 billion. After adjusting for stock splits and dividends, the value of Apple shares has gone up over 100 times so the value created has been some $376 billion (or at today’s exchange rates, more than £235 billion).

The question then is how much of that value has accrued to Sir Jony himself and how much to Britain in the hands of British investors? It has been reported that Sir Jony is due to receive £15m in Apple shares in 2012 following the company’s most successful year ever – so we estimate over the 14 years Sir Jony’s compensation has been a fraction of the value created, perhaps 0.05%.

And of the 71% of Apple currently held by institutional and mutual fund owners less than 5% is held by UK funds. We expect a detailed analysis of UK ownership over the 14 years would reveal that the vast majority of the value created in Apple has been captured by US investors.

The value of excellence in Business

Clearly Apple’s success is not just about Sir Jony’s great designs but the recognition of and harnessing of his genius by the late Steve Jobs on his return to the company he founded in 1997. Thereafter Steve Job’s marketing genius, his vision and leadership of the company, his strategic decisions to lead Apple from simply making computers into a consumer technology business marrying hardware and software to build platforms for media consumption has made Apple the great company it is. Apple’s ruthlessness in operations, quality control and driving down supplier costs have built its enduring competitive advantage. This excellence in business has translated into billions of dollars of value. An article by Ndubuisi Ekekwe in the December 2011 Harvard Business Review makes the same point in the technology sector, where Microsoft and Intel both owe their success to a combination of excellence in technological invention and innovation and what he calls “latent factors” – business features outside the scope of the core tech team. But like everything in the creative industries, such as movies where success starts with a great script, creativity is where it all begins.

Britain’s excellence in Creativity

Britain has long punched above its weight in creativity and is seen as a leader around the world. In film, television, music, interactive entertainment, fashion and product design, British creative talents coming out of British schools, colleges and universities have gone on to command top positions in US and European fashion houses, entertainment companies and consumer technology firms.

Of the few British based global successes such as Paul Smith and Vivienne Westwood in fashion, James Dyson in industrial design, Simon Fuller’s 19 and XIX in entertainment, and Michael Acton-Smith’s MindyCandy in social and digital media demonstrate the vast potential in value creation on a global scale accessible by British creative talent.

Sir Jony is sometimes referred to as one of Britain’s greatest “exports” but as I said above, the export of Sir Jony’s talents has done little to the balance of trade for UK plc and the UK economy.

The internet and in particular the mobile internet, app and social media platforms and e-commerce, and their rapid adoption by consumers and resulting changing patterns of behaviour in consumption now provide increasing opportunities for British creative talent to reach global audiences. Building global businesses in the UK generates real export earnings, employment and economic growth.

Why does it matter?

At a time of difficulty in the UK economy the creative industries represent the shining beacon towards the way out for the UK. The creative industries contribute £59.1bn to the UK economy or 6.1% of GDP. That’s the same size as the financial services sector in the UK.

In fact, over the last two decades the creative industries have outgrown the rest of the economy and the trend is forecast to continue (Source: PWC Global Entertainment and Media Outlook, June 2011). At a time when figures from the Centre of Economic and Business Research’s annual world economic league table show Britain as now the seventh richest country in the world having been overtaken by Brazil and predicted to fall back even further to eighth by 2020 (Source: CEBR. 26 December 2011), now it is more important than ever for greater recognition of British excellence in creativity and encouragement for investment in the value creation opportunities in the creative industries.

What is being done about it?

Greater recognition of the value of design given by the knighthood of Sir Jony is a start but in many ways highlights the failings of Britain’s ability to retain top talent. Part of the problem is a serious market failure to provide creative talent with both the skills of entrepreneurship and requisite investment behind their talent. More creative entrepreneurs retaining more of the value generated by their creativity for themselves and their home-grown companies that provide the infrastructure and business skills outside the scope of the core creative can only be good for UK plc. Doug Richard’s social enterprise, School for Startups, has a School for Creative Startups Programme, designed to equip creative talent with at least the realisation that, with help, they can build businesses of value. Past governments have tried to promote investment in segments of the UK creative industries such as film with targeted tax breaks that led to abuse. At last, in response to the difficult economic times, the UK Government is introducing a measure from April 2012 which, although not aimed at the creative industries specifically should, if successful, go some way to addressing market failure, in the form of the new Seed Enterprise Investment Scheme. It’s a scheme almost tailor made for the creative industries, where relatively small amounts of investment in enterprises combining excellence in creativity with excellence in business can deliver spectacular bang for the investment buck.

Category: Comment, Creative Business, Investment, IPR / Tags: , , , , , , , , , , , , , , ,

Seeding Growth

14/12/2011 / / No comments

I’ve been going through the draft legislation published yesterday on the Seed Enterprise Investment Scheme (SEIS) coming in from April 2012.

This is a really exciting initiative for the creative industries. In fact, I can’t think of a sector better suited to SEIS than the creative industries.

Investments in companies under the SEIS are limited to a maximum of £150,000. That’s not a lot for a new venture in clean energy or life sciences or pretty much anything in fact, other than the creative industries, where you can get a lot of bang for your investment buck.

I’ll be writing more about this shortly but in the meantime I’m thrilled about the Chancellor’s Christmas present…for now. Let’s hope this actually makes it onto the statute books in a way that makes it useable and it’s not just for show (you know who I mean).

Category: Comment, Investment / Tags: , ,

Steve Jobs

06/10/2011 / / No comments

Sorry to hear about the passing of Steve Jobs today.

Our office is a stone’s throw from Apple’s largest UK store in Covent Garden and I’ve been in the store several times in the last few months, marvelling at the sheer brilliance of Apple’s complete nailing of how to do retail. Of course it helps if in your wonderfully designed stores, where you display product everywhere available to play with as much as you like and where the knowledgable staff don’t try to sell you products but rather gently persuade you to join the family of worshippers, that your products are wonderful as well.

Today I went by the store feeling the sadness that many of us are. A sadness from the loss of an incredibly talented person who achieved so much, who changed not one but several industries, and all that in a short lifetime, and from wondering what else he could have gone on to do.

There were many people there leaving flowers and tributes and a Japanese news crew filming the proceedings. I stood for a while and felt the palpable sadness in the air. It was all a bit like when Princess Diana died. There can have been very few business people in history whose passing has moved people like this.

It made me think of one of the quotes of Albert Einstein: “Try not to be a man of success but rather try to be a man of value”.  I think Steve Jobs must have known that one too.

Category: Comment, Creative Business / Tags: , ,

Microsoft: Cleaning Windows?

28/06/2011 / / No comments

Outdated, dull and difficult to use – all words that have been used to describe Microsoft products, but even if they were true once, are they anymore?  In this post we look at the latest developments from the world’s largest software company and consider what they mean for consumers and enterprises.

Windows (Gr)8 

The first main innovation of note is in the Windows 8 operating system.  It is essentially a combination of two user interfaces: that of Windows 7 (which is similar to previous versions of Windows) and that of Windows Phone 7 (which although fundamentally different is a touch UI much more akin to the Apple mobile operating system, iOS).  Windows 8 will allow users to combine these two interfaces, simultaneously on the same screen.  Microsoft refer to it is a “reimaging of Windows” and state that “a Windows 8-based PC is really a new kind of device, one that scales from touch-only small screens through to large screens, with or without a keyboard and mouse.”

This is important because one of the major criticisms levelled at Apple is that whilst its operating system looks good and is easy to use, and is particularly strong in the creative industries, it’s not great for doing serious office productivity work (indeed the reverse is levelled at Microsoft).  The long-term trend is towards device convergence and it will therefore be increasingly important for an operating system to be able to move seamlessly between these two modes.  It also signifies that Microsoft is anticipating, and positioning itself for, the post-PC world.  Microsoft expects to see the iPad’s dominance seriously challenged once Windows 8 launches at the end of 2012, and competing tablet manufacturers adopt it as standard.

Windows 8 will also feature the Windows app store, in a direct attempt to compete with Apple and Google.  Microsoft thus hopes to attract developers who are currently building smart phone apps to create high quality apps for Windows, because ultimately it is the apps that drive consumer adoption and revenues to the platform owner.

However, Microsoft cannot feasibly expect to position itself as the tablet operating system of choice without cracking smart phones first.  As it stands, sales of Windows Phone 7 mobile handsets are underwhelming – 1.6 million in Q1 2011 compared to 16.9 million Apple iPhones in the same period in a market (source: Gartner 2011).  In order to rectify this, Microsoft has announced a partnership with Nokia, where the handset manufacturer will be a key decision maker in the future development of Windows Phone 7.

Head in the Clouds? 

One common misconception about Microsoft is that they have been slow to offer any cloud-based services.  In fact, Microsoft Hotmail provides the most web-based email accounts in the world and has done for a very long time since being acquired in 1998.  However, it is true that Microsoft hasn’t ventured beyond email whilst competitors such as Google have made great strides in terms of cloud-based document sharing.

To combat this they are launching Microsoft Office 365 this month, which brings cloud services to the enterprise market, and includes the Microsoft Office suite of desktop applications in a software-as-a-service bundle.  Microsoft’s cloud will offer all the functionality that users are familiar with, as well as allowing document collaboration, and will also include Microsoft’s recent acquisition, Skype.

It is different from other cloud based services in that Microsoft also offers options whereby it provides its market leading office productivity software as a bundle or users who already have licensed software can pay less for the cloud only, but in either case applications can be used without an internet connection (which is in marked contrast to Google’s enterprise cloud, Google Apps).   Microsoft Office 365 marks an evolution in the company’s business model, where users pay for service provision and management, as well as for the software licence.  Subscriptions are monthly and dependent on the amount of storage and the type of Microsoft apps required.  Its real strength is its familiarity – Microsoft is the de facto standard for business documents; companies will be reluctant to use cloud-based services that don’t allow for the sharing and/or editing of Microsoft Office documents and Microsoft Office 365 ought to be amongst the amongst the best services to do so.  Certainly this feature gives it a potential edge over Google Apps.

What does this all mean?

Microsoft is finally catching up with its competitors who have out-innovated it and its sheer size and dominance meets that it will be able to push adoption of innovations in mobile and in cloud based services to a mass market. Savvy media companies will already be meeting with Microsoft to work out how they can position themselves to make the most of Windows 8.  However, Microsoft’s latest offerings appear more reactive than proactive and we can only wonder how long a strategy of being third mover in the fast moving technology market can be sustainable.

Category: Comment, Technology / Tags: , , , , , , ,

Battle of the Clouds

25/05/2011 / / No comments

The forecast for the next couple of years certainly looks stormy in the consumer tech world.  Three of the world’s largest technology companies, Google, Apple and Amazon, have recently confirmed launch details of their consumer cloud computing services, where the battle lines have been drawn not on storage capacity or file types, but on the very essence of data storage itself.  Just as VHS overcame Betamax, each company wants its version of the cloud to be the de facto standard for cloud computing.

Here we highlight the differences between the two main types of consumer cloud on offer, what they reveal about how the companies supporting them see the future of the internet and what we see as the implications for media companies.

The cloud as the sole storage provider

This approach to cloud computing, championed by Google, is one where all your files and data would not be stored on your laptop or tablet but held remotely on your provider’s servers and accessed through your web browser.  Should you ever lose your laptop, all your information would be backed up and accessible immediately from any device.  In fact, very little would be stored on your actual device at all, though a constant internet connection would be required for access.  This eliminates the need for vast amounts of storage space on your device, and paves the way for a much more streamlined (and cheaper) breed of laptops.  Indeed, Google has partnered with Samsung and Acer to launch Chrome Books – a line of low spec (16GB storage) and therefore relatively inexpensive notebooks created specifically to provide access to web-based apps and Google’s cloud.

The cloud as a backup storage provider

This approach views cloud computing as a backup for all the data, apps and software stored on your

devices, and is the type of cloud Apple is pushing in its iCloud.  The files themselves will still be stored and run from your laptop or tablet, meaning that they can be used without an internet connection.  This provides users with the assurance that their data will be stored independently in two places at the same time, eliminating any risks to access should the provider’s servers go down.  However, this requires a larger storage capacity on your devices, which of course comes with a larger price tag.

What do these differences mean?

It‘s perhaps unsurprising that Google, a company born online, would see cloud computing as solely server and browser based, and that Apple, a device manufacturer, would see cloud computing as a backup system for your devices.  But more fundamentally, they signal how each company sees the future of the internet.

Google is betting that the world will have cheap, fast and widely available internet access in the near future – that we will always be connected wherever we go.  However, given the difficulties in providing consistent, high quality internet access even within the UK, a system that requires a continuous internet connection may prove to be troublesome in the short-term.

Apple, on the other hand, views the cloud as a repository for all your data and a method of synchronising and accessing files (particularly media) across different devices.  Apple sees physical devices at the heart of your internet experience.

What next?

Finally, the cloud may represent the start of the post-PC world.  Only five years ago, Apple made half of its profits from laptops, desktops and the software for them.  Today, computers represent only a quarter of its profits, whilst mobile phones and tablets account for the lion’s share.  Allowing seamless access to all of your files from any device will certainly help continue this trend.

What impact will it have on media?

There is a great deal of hope that cloud based services will make piracy a thing of the past by allowing only legitimately purchased media to be shared, decreasing the appeal of pirated copies.  But even if cloud providers decide not to go down this route, cloud computing may still offer record companies, for example, a chance to make revenues from pirated copies of their content.  Apple’s iCloud will come with a new service able to scan devices for content and match them to a record company’s existing repertoire licensed to Apple thus enabling rights holders to charge cloud providers a fee for each of the songs they are allowing users to store and access.

Another consequence of cloud computing is that consumers may choose not to own media at all.  Indeed, the transient nature of streamed and mobile access lends itself more to a rental model rather than an ownership one, which favours companies like Spotify over iTunes.  Coupled with this is the risk that media companies will have to rely on a limited range of technology companies to distribute their content.  There are few tech companies that have ingratiated themselves to rights holders and content producers so the world’s move to cloud computing is not without its potential drawbacks.

Category: Comment, Technology / Tags: , , , ,

Intel and Chips

05/05/2011 / / No comments

Intel announced a major breakthrough this week in chip design with a new range of “3D” chips.  The news has taken the tech world by storm, but what’s the fuss all about?

After all, most reports highlight that the new chips mean that Moore’s Law, i.e. that the number of transistors on a semiconductor chip (the wafer thin silicon chip at the heart of microprocessors), will double every two years as predicted by Intel’s founder Gordon Moore 45 years ago, will now continue.  Hardly news is it?

3D Chips – What are they?

3D chips are so-called because they employ a three-dimensional structure to pack more processing channels into each transistor, the microscopic unit that amplifies electronic signals and is a building block of all electronic devices.

Traditionally, transistor channels have been situated flat on a surface.  Intel engineers took these channels, which serve as the neurons for a computer’s brain, and realigned them to fit into smaller spaces.  Intel called the design “a fundamental departure” from the two-dimensional transistor structure that has powered electronics within computers, cars, household appliances and other devices for decades.  Intel said the 3D transistors are so small that more than 100 million could fit on the head of a pin.  The original transistor, built by Bell Labs in 1947, was large enough to be pieced together by hand.

It won’t be ready for mass production until later this year or early next year but being able to use the 3D method to mass-produce chips could give Intel a three-year lead over competitors.

How do they work?

Transistors are like switches, either on or off, and smaller transistors allow for running circuits at lower voltage without sacrificing speed.  Yet the smaller the transistor, the less it acts like a perfect switch – it’s never entirely off and instead leaks current.

Intel’s 3D transistor greatly mitigates this effect by applying electrical control to three sides of the transistor “pipe” instead of just one.

What impact will it have on devices?

If you believe, as we do, that the future of computing is in cloud-based services and small and/or ultra-thin, lightweight, and low-power devices – then the news is interesting.

Tomorrow’s smartphones will have the multi-GB memory and Quad Core speed of today’s computers in a thinner, lighter form factor and use less power.  Intel have lagged in the smartphone and tablet market to ARM, whose low-power designs have been most widely adopted, most significantly by Apple in its iPhones and iPad devices as well as Nintendo, Nokia, Samsung, Sony Ericsson and others.

Now we will see Intel enter this market, pushing the capabilities of devices further and ahead of their competitors, who are not expected to bring 3D chips to market for several years.  The new technology will first appear in laptops, desktops, and servers that use Intel’s chips and are expected to hit the market in early 2012.  But in 2013 you can expect to see Intel’s low-power Atom CPU lineup and system-on-chips designed for smartphones and tablets to appear.

Why does it matter? 

Intel claims its new transistors which are based on a 22 nm manufacturing process can switch 37 percent faster than those made with its existing 32 nm process in chips that operate at low voltage, or 18% faster in chips that operate at high voltage.  Transistors switching at the same speed as those in the company’s 32nm chips can operate at significantly lower voltage, cutting power consumption in half.  This change in how chips are produced is expected to raise production costs by a modest 2 or 3%.

That’s the big deal with 3D transistors – it’s that lower power consumption.  That’s a very significant breakthrough in a mobile computing world.

What impact will it have on media?

It means that pretty soon everything you can do now on your personal computer or set-top box you will be able to do on your smartphone or tablet.  Today’s devices have compromises and limits which but for the new technology would have persisted until such a breakthrough came.

Imagine your phone in your pocket is also a set-top box which you can plug into a screen anywhere to view live 3D video.  Imagine that the same device can connect over a LTE connection to a cloud service for instant multichannel  streaming from your personal media library which is then streamed to  different receivers in your home for multi-room AV.  Imagine also that when playtime is over you connect a wireless keyboard and mouse to work on a multi-media presentation on your office server over wireless VPN.

Imagine now that the device that does all this is smaller and lighter than today’s smartphones.  You won’t need to imagine for much longer.  It’s coming.

Category: Comment, IPR, Technology / Tags: , , , , , ,
 
Ascension Media Group website