There’s a big lie about disruption going around. And folks aren’t spreading it intentionally.
Many smart investors I talk to genuinely believe it to be the truth.
If you accept this widespread lie, you’ll likely make poor decisions when investing in disruptive companies.
Here, I’ll explain the real truth and why it matters to disruption investors.
Your Smartphone Is More Powerful than an Early ‘90s Supercomputer
Your smartphone can do the job of a whole collection of gadgets.
It’s a phone, camera, camcorder, Walkman, watch, wallet, radio, global map, TV, VCR, and computer all in one.
And keep in mind, all a supercomputer does is crunch numbers. We have “Moore’s law” to thank for this.
Named after Intel founder Gordon Moore, it observes that computing power doubles roughly every two years.
This has led to exponential growth in computing power.
As you may know, exponential growth “snowballs” over time. It builds momentum and eventually leads to vertical gains, as you can see here:
For the past few decades, computing power has more or less followed this path.
This Is the Driving Force Behind Moore’s Law
Moore’s Law says the number of transistors that can fit on a computer chip doubles about every two years.
Transistors allow computers to compute. The more transistors you cram onto a chip, the more computing power it has.
Again, for the past 50 years, this has more or less held true. Back in 1965, only 64 transistors fit on the world’s most complex computer chip.
More than 10 billion transistors can fit on today’s chips.
Moore’s law is responsible for many of the giant stock market gains in the past few decades.
Leaps in computing power enabled big disruptors like Apple, Microsoft, and Amazon to achieve huge gains like 50,800%, 159,900%, and 111,560%.
And along the way, the companies that make the computer chips have gotten rich, too.
Taiwan Semiconductor, Micron Technology, and Intel achieved gains of 1,014%, 3,256%, and 35,050%.
Conventional wisdom is that Moore’s law will continue to snowball. As progress gets faster and faster, you can understand why many folks think we’re headed for a tech utopia.
It’s a great story. But it’s not quite true.
Moore’s Law Will Break Down
Moore’s law isn’t really a law. Gravity is a law. Moore’s law is an observation and a forecast.
As I mentioned, since 1965, it has held true. But here’s the key…
Within the next few years, Moore’s law will break down.
You see, although today’s transistors are microscopic, they still take up physical space. There’s a limit to how small you can make anything that occupies physical space.
We are now approaching that limit with transistors. So the progress predicted by Moore’s law must slow.
In fact, Moore’s law is already slowing down. Many technologists predict it will totally break down between 2022–2025.
Does that mean progress will stop?
Not a chance.
New technologies will pick up where Moore’s law leaves off. There are three exciting computing technologies in development you should know about.
3D Computing Hits the Market Later This Year
What does a city do when it runs short on land? It builds skyscrapers.
By building “up,” you can create real estate with the footprint of a one-story building, but one that holds 100X more people.
Something similar is just getting underway in computing.
You see, the “guts” of computers have always been two dimensional. Flat computer chips sit on a flat motherboard. Nothing moves in 3D. There’s no “up” or “down” inside a computer chip.
That’s now changing. In December, Intel (INTC) introduced its new 3D chip technology. It plans to begin selling it later this year.
Tech reporters are touting it as “how Intel will beat Moore’s law.”
Chips stacked in 3D are far superior to ones placed side by side. Not only can you fit multiples of transistors in the same footprint. You can better integrate all the chip’s functions.
This shortens the distance information needs to travel. And it creates many more pathways for information to flow.
The result will be much more speed and power packed into a small space. Eventually, 3D chips could be 1,000 times faster than existing ones.
DNA Computing Is a Bit Further off, but Its Potential Is Mind-Boggling
DNA carries the instructions that enable life.
As incredible as it sounds, DNA can be used for computing. In 1994, a computer scientist at the University of Southern California used DNA to solve a well-known mathematical problem.
One pound of DNA has the capacity to store more information than all the computers ever built.
A thumbnail-size DNA computer could theoretically be more powerful than today’s supercomputers.
I won’t get deep into the science here. DNA computing is still very early stage. But several companies, including Microsoft (MSFT), are working to push the technology forward.
Quantum Computing Could Be the Ultimate Disruption
The science behind quantum computing will bend your mind. To understand its potential, all you really need to know is this.
The basic unit of conventional computation is the bit. The more bits a computer has, the more calculations it can perform at once, and the more powerful it is.
With quantum computing, the basic unit of computation is called a quantum bit—or qubit.
Bits behave linearly. To get a 20-bit computer, you might add 2+2+2+2+2+2+2+2+2+2.
Qubits are different. Every qubit doubles computing power.
So, a 10-qubit computer could do 2x2x2x2x2x2x2x2x2x2 calculations at once, or 1,024.
A 100-qubit quantum computer could perform over 1,000 billion billion billion simultaneous calculations. Those numbers are too big for humans to comprehend.
In theory, a small quantum computer could exceed the power of a regular computer the size of the Milky Way galaxy.
With enough computing firepower, a quantum computer could solve any problem.
If we ever achieve far-out goals like controlling the weather, colonizing Mars, or reversing human aging, quantum computing will likely be the driving force.
There Are No Pure-Play Quantum Computing Stocks
They’re all private or have been scooped up by larger companies.
Many of the big tech players are developing quantum computing technology. Microsoft, IBM, Google (GOOG), and Intel are a few.
Google looks to be in the lead.
In March 2018, it unveiled its Bristlecone quantum processor, which the company thinks could achieve “quantum supremacy.”
Quantum supremacy is the “tipping point” for quantum computing. It’s the point when a quantum computer can beat a regular one in a useful task.
So far, scientists haven’t been able to crack this. But once quantum supremacy is reached, progress should take off very quickly.
This is yet another great reason to consider investing in Google.
Xbox App May Come to Smart TVs in the Next 12 Months: Phil Spencer
Xbox app may come to smart TVs in 2021, head of Xbox Phil Spencer shared during an interview with The Verge. Microsoft is working on bringing its game streaming service — xCloud — to mobile phones and it seems like the company already has plans on implementing something similar with smart TVs. While Spencer did not share exact details about the app, Xbox chief last month hinted that the company could be working on TV streaming sticks for its xCloud gaming services.
Phil Spencer spoke with The Verge about the new Xbox consoles and the future of gaming, and shared that an Xbox app or something on those lines will make its way to smart TVs in the next 12 months. “I think you’re going to see that in the next 12 months. I don’t think anything is going to stop us from doing that,” the report quoted Spencer as saying.
Looking back at CRT TVs that project an image on the back of a piece of glass, Spencer mentioned that TVs nowadays are like game consoles stuffed behind a screen with “an app platform and a Bluetooth stack and a streaming capability”.
According to Spencer, watching Netflix, Hulu, Disney+, and other streaming services is one of the primary things that users do on their consoles. Talking about changes in technology, the head of Xbox said, “I think you’re absolutely right, there will be winners and losers and things that evolve and get combined together. What I’m saying is the amount of compute capability in my home has increased with the number of streaming signals that have come in, not decreased. I think gaming will be one of those things as well”.
Back in October, Microsoft hinted at TV streaming sticks for its xCloud gaming services. At the time, Spencer stated that there may be low-price hardware in the Xbox ecosystem, referring to devices that can just plug into a TV and run games via xCloud.
Microsoft is working on bringing a stable version of its xCloud game streaming service to mobile devices. As of now, it is available in beta on Android with Xbox Game Pass Ultimate and brings over 100 games to a mobile device.
Facebook and Instagram are getting Vanish Mode in chats
Ten days ago WhatsApp got Disappearing Messages and now the other two apps with messaging abilities in the Facebook family are adopting it. Both Messenger and Instagram will get Vanish Mode which will delete messages upon closing the conversation window.
Vanish Mode is activated with a swipe from the bottom of the chat. Once a message is sent, it will stay on the screen until it is turned off or the app is switched. Of course, you can always screenshot the message before it disappears.
The new feature will work both in group chats and personal conversations. While they are instantly disappearing, Facebook revealed conversations can be reported, meaning they will remain in the system for up to 14 days, so they are not instantly deleted.
Such features aren’t entirely new in the Facebook universe – there still is “Secret Conversation” for Messenger but it is rather tedious to set up and use and nobody has the time for that. Instagram also has something of a disappearing feature – currently, photos can be sent and set up to disappear once seen but nothing on messages unless you Unsend them.
Kuo: New iPhone SE unlikely to be announced in the first half of 2021
Reliable Apple analyst Ming-Chi Kuo is out with a new investor note today in which he says that Apple is unlikely to release a new version of the iPhone SE until the second half of 2021 at the earliest. This comes as the iPhone SE introduced in April continues to sell well and as Apple focuses on the iPhone 12 lineup.
Today’s investor note from Kuo focuses primarily on the prospects of Apple supplier Genius Electronic Optical. The company is said to be relying on a new iPhone SE during the first half of 2021 to boost its growth, but Kuo says we shouldn’t expect such an announcement.
This would seemingly mean that, if an updated version of the iPhone SE is coming at all in 2021, we shouldn’t expect to see it until the second half of the year. Kuo has previously reported that a 5.5-inch version of the new iPhone SE would come in the second half of 2021 at the earliest as well.
Kuo also says in today’s research that the iPhone 13 is on track to be released during the second half of next year. This comes after a previous report from Kuo suggested that Apple has several improvements in store for the iPhone 13 camera.
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