Rethink Technology business briefs for March 1, 2017
Co.Design has some very interesting graphic visualizations of patent filings by Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) (NASDAQ:GOOGL). The visualizations (like the one shown above) were generated by Periscopic and are called "Innovation Signatures."
In the visualizations, each blob is a patent inventor, and the size of the blob is proportional to the number of patents the inventor has. Since many patents have multiple inventors, lines indicate common patents between co-inventors.
The visualizations for the respective companies suggest a deep-seated cultural difference, but what that might be is open to interpretation. Co.Design thinks the visualizations indicate more centralized control on the part of Apple management over the R&D process.
They give as an example the fact that Steve Jobs was granted 347 patents over a period of a decade compared to Sergey Brin and Larry Page who have a combined total of 27 over the same period.
While patents and by inference innovation appear to be more concentrated in the hands of the few at Apple, patents are more broadly dispersed at Google. This suggests that Google's organizational structure at least for R&D is flatter and less centralized than Apple's.
Co.Design points out that many of the prominent names in the Apple close-up above are subordinates of Jony Ive, such as Eugene Whang, Christopher Stringer, Bart Andre and Richard Howarth. Clearly, a very small group is generating a relatively large number of patents and this group is centered around the hardware design of Apple's products.
I find it curious because Apple is generally regarded as having a relatively flat managerial structure. Yet when it comes to R&D, innovation seems to be focused in a small group. This seems to be more a function of Apple's design focus than organizational structure.
Likewise, the large number of patents for Steve Jobs shows how important he was as Apple's de facto Product Architect. Jony Ive's prominence on the innovation map suggests that he has certainly tried to step into that role.
The innovation maps of both companies are surrounded by thin shells of patents disconnected from the central mass. This shell reflects patents owned by companies that were acquired by Apple or Google.
Overall, Apple has been more efficient in its innovation, generating 10,975 patents with a team of 5,232 inventors compared to Google's 12,386 patents generated by a team of 8,888. I believe that also reflects the impact of Steve Jobs. I have observed that the genius of Steve Jobs was in recognizing the marketable product latent in a given research project. Or, conversely, recognizing when research wouldn't lead to a product.
Jobs gave Apple the ability to get by on R&D budgets that were relatively small compared to Apple's industry peers. Following the departure of Jobs, Apple had to expand its R&D spending to compensate, and it has. Apple's R&D spending for fiscal 2016 was up 25% compared to 2015. This has given rise to concern that Apple might not be spending its R&D money efficiently, and probably Apple isn't as efficient as it was under Jobs.
Short of finding another Steve Jobs, Apple really had no choice but to take a "shotgun approach" to R&D. What's disturbing about the chart is the concentration in the design area given the fact that the design language of Apple's products hasn't changed much in recent years, and product designs have become very evolutionary. The design concentration of the innovation map suggests that Apple may not be efficient in its approach to visual design.
The innovation map also suggests that while Ive has stepped into the role of Product Architect, he has only emphasized the visual design aspects, according to his predilections and abilities. In that regard, I continue to think that Apple is still missing a true Product Architect in the Jobs' vein. The Product Architect that Apple needs is a technologist, but also a generalist, someone who cares about the underlying technologies as much as physical design, someone who cares as much about software as hardware as much about functionality as appearance.
GDC Culture Clash
Another sort of culture clash was on display at the Game Developers Conference. This was a clash between personalities and corporate culture, between Red and Green, between AMD (NASDAQ:AMD) and Nvidia (NASDAQ:NVDA).
Raja Koduri, head of AMD's Radeon Technology group presented at GDC. I find Koduri very likeable as a fellow engineer. He clearly enjoys explaining the technology behind AMD's forthcoming high performance graphics architecture, code named Vega. He was in his element speaking to other software engineers.
In contrast, CEO Jen-Hsun Huang's presentation later that evening was all about achieving certain business objectives. One objective was to highlight areas where the current generation Pascal graphics cards may have some advantage compared even to AMD next generation Vega (more about that below), but most importantly his objective was to launch the GTX 1080 Ti. The 1080 Ti is Nvidia's answer to Vega in the near term.
Insofar as the 1080 Ti, it was a very straightforward pitch. The 1080 Ti would offer a 35% performance boost compared to the initial GTX 1080. Huang also claimed it would be faster than the Titan X, although he didn't say by how much. Huang pointed to hardware improvements as part of the reason for the performance gain.
For some time, I've been saying that Nvidia would have to respond to the Vega threat, and now we know what the near term response is at least. The 1080 Ti will be available to purchase next week, well before Vega is expected to launch in Q2.
Unfortunately, Koduri really didn't offer anything by way of Vega performance, let alone a specific launch date. Demonstrations have suggested that Vega would outperform GTX 1080, so the performance claim for the 1080 Ti was clearly aimed at heading off the Vega threat.
Huang conceded that not all the speed gains for the Ti were hardware related, and that some of it was due to driver improvements. But AMD will also be able to take advantage of driver improvements before it launches Vega. We won't really know how Vega and the Ti compare until products are shipped to third parties for testing, so I'll withhold judgment.
Perhaps recognizing that the Ti will have to compete on price, Huang made sure that everyone knew that the Ti would cost $699. He also announced a price reduction for the 1080 to $499. Given that Vega uses High Bandwidth Memory, which is a very expensive process that Nvidia only uses for its GP100 server accelerators, I suspect that AMD will have a tough time beating Nvidia's prices, and if it does, profitability may suffer.
Returning to the possible performance advantage of the 1080 Ti, Nvidia highlighted its work in advanced physics modeling through a demonstration of real time fluid dynamics simulations. One demonstration was sloshing water in a tub. Gamers will recognize this as a very difficult simulation to do well. In general, games don't do particularly well simulating water.
What Huang showed was truly impressive, especially since it wasn't just a video playback but a real-time demo. It's the best simulation of water I've seen. A similar demonstration of flame and smoke from a fire was also the best I've seen. It was especially impressive to see realistic shock waves form in the flame as a result of projectiles passing through it, as seen in this still from the demo:
Although AMD and Nvidia seem to be comparable in terms of visual detail and rendering quality, it seemed to me as I watched the demos for the respective companies that Nvidia had the edge in physics modeling and simulation.
The key takeaway from Nvidia's GDC presentation was that unlike Intel (NASDAQ:INTC), which seems ludicrously blasé about the Ryzen threat, Huang wanted to demonstrate that Nvidia was ready to fight for market share.
The 1080 Ti may only be a stop gap. Last year, at Nvidia's GPU Technology Conference, Huang unveiled Pascal. At GTC this year, in May, Nvidia could unveil the next generation Volta GPUs.
Disclosure: I am/we are long AAPL, NVDA.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.