Daily Tech Snippet: Tuesday February 10

• Blast-from-the-past: A famous old post on Amazon's move to a Service Oriented Architecture: One day Jeff Bezos issued a mandate. He’s doing that all the time, of course, and people scramble like ants being pounded with a rubber mallet whenever it happens. But on one occasion — back around 2002 I think, plus or minus a year — he issued a mandate that was so out there, so huge and eye-bulgingly ponderous, that it made all of his other mandates look like unsolicited peer bonuses. His Big Mandate went something along these lines: 1) All teams will henceforth expose their data and functionality through service interfaces. 2) Teams must communicate with each other through these interfaces. 3) There will be no other form of interprocess communication allowed: no direct linking, no direct reads of another team’s data store, no shared-memory model, no back-doors whatsoever. The only communication allowed is via service interface calls over the network. 4) It doesn’t matter what technology they use. HTTP, Corba, Pubsub, custom protocols — doesn’t matter. Bezos doesn’t care. 5) All service interfaces, without exception, must be designed from the ground up to be externalizable. That is to say, the team must plan and design to be able to expose the interface to developers in the outside world. No exceptions. 6) Anyone who doesn’t do this will be fired. 7) Thank you; have a nice day! Ha, ha! You 150-odd ex-Amazon folks here will of course realize immediately that #7 was a little joke I threw in, because Bezos most definitely does not give a shit about your day. Over the next couple of years, Amazon transformed internally into a service-oriented architecture. They learned a tremendous amount while effecting this transformation. There was lots of existing documentation and lore about SOAs, but at Amazon’s vast scale it was about as useful as telling Indiana Jones to look both ways before crossing the street. Amazon’s dev staff made a lot of discoveries along the way. A teeny tiny sampling of these discoveries included: – pager escalation gets way harder, because a ticket might bounce through 20 service calls before the real owner is identified. If each bounce goes through a team with a 15-minute response time, it can be hours before the right team finally finds out, unless you build a lot of scaffolding and metrics and reporting. – every single one of your peer teams suddenly becomes a potential DOS attacker. Nobody can make any real forward progress until very serious quotas and throttling are put in place in every single service. – monitoring and QA are the same thing. You’d never think so until you try doing a big SOA. But when your service says “oh yes, I’m fine”, it may well be the case that the only thing still functioning in the server is the little component that knows how to say “I’m fine, roger roger, over and out” in a cheery droid voice. In order to tell whether the service is actually responding, you have to make individual calls. The problem continues recursively until your monitoring is doing comprehensive semantics checking of your entire range of services and data, at which point it’s indistinguishable from automated QA. So they’re a continuum. – if you have hundreds of services, and your code MUST communicate with other groups’ code via these services, then you won’t be able to find any of them without a service-discovery mechanism. And you can’t have that without a service registration mechanism, which itself is another service. So Amazon has a universal service registry where you can find out reflectively (programmatically) about every service, what its APIs are, and also whether it is currently up, and where. – debugging problems with someone else’s code gets a LOT harder, and is basically impossible unless there is a universal standard way to run every service in a debuggable sandbox. That’s just a very small sample. There are dozens, maybe hundreds of individual learnings like these that Amazon had to discover organically. There were a lot of wacky ones around externalizing services, but not as many as you might think. Organizing into services taught teams not to trust each other in most of the same ways they’re not supposed to trust external developers.

• Winner-takes-all: Apple Grabs 93% of the Handset Industry’s Profit; Apple + Samsung > 100% of Industry Profits Report Says: Apple’s record-breaking holiday quarter, which brought in $18 billion in earnings, allowed the company to capture 93 percent of the profit in the handset industry, according to a new report from Canaccord Genuity, an investment firm. Samsung took the rest, but its share is shrinking, the report said. Canaccord Genuity’s report on industry profits a year ago estimated that Apple took 87.4 percent of phone earnings in the fourth quarter of 2013, while Samsung took in 32.2 percent of industry profits. (The numbers add up to more than 100 percent because Apple and Samsung combined made more money than other competitors lost.) The report acknowledges that it may be overstating Apple’s profit because it does not include estimates for some Chinese vendors like Xiaomi, which is one of the biggest smartphone makers in China, the largest smartphone market in the world. The report notes that no estimate could be drawn because Xiaomi, a private company, does not disclose its profit numbers. However, Xiaomi’s profit model does not primarily rely on smartphone sales. The company sells its phones for nearly the same amount it costs to buy and assemble the materials. To make money, Xiaomi focuses on selling apps, games, and special Android operating system themes and Internet services. The upshot of the report is that Samsung is losing ground in its fight with Apple for smartphone dominance. Samsung still sells more cellphones than any other company. But its profit is eroding because Apple is eating into its sales of high-end smartphones, a trend that is likely to continue after the enormous success of the iPhone 6 and iPhone 6 Plus. Both iPhones, which include bigger screens, gave Apple a huge boost in China, an important market for Samsung.

• The package delivery start-up space is getting increasingly crowded in the US: Sidecar, a Ride-Hailing Start-Up, Pushes Into Package Delivery Start-ups like Uber and Lyft are making it acceptable to carpool with total strangers. In the future, you may start carpooling with their lunch. That is exactly what Sidecar, a ride-hailing start-up in competition with the likes of Uber and Lyft, aims to make happen. The company announced on Monday it plans to use its fleet of cars to introduce a package delivery service, delivering items like food and groceries for partner companies. That service will be powered by Sidecar drivers who are also picking up and dropping off passengers, a move the company says cuts pricing and delivery times dramatically. The new service, which is now available in all of the American cities in which Sidecar operates, is essentially an open call to restaurants, grocers and stores which do not otherwise offer a delivery service. Sidecar, which is based in San Francisco, will face numerous competitors. GrubHub, the big online food-ordering service, recently acquired DiningIn and Restaurants on the Run, two companies that will allow GrubHub to start offering delivery for the restaurants it serves. Postmates, another start-up, owns a fleet of messengers who order and pick up food from thousands of restaurants. Sidecar will rub up against Uber, too, in its ultimate ambitions of becoming a way to delivery anything — from groceries to gourmet food — anytime, anywhere to anyone. And to some degree, Sidecar’s move into deliver will also pit it against a couple of the tech titans, Amazon and Google, which have both dabbled in same-day delivery projects.

• Patent story #1 of the day: Qualcomm Inc. was fined $975 million by Chinese antitrust regulators, who set new terms for smartphone makers to license the chipmaker’s technology, ending an inquiry that threatened the U.S. company’s growth in the biggest mobile market. China’s National Development and Reform Commission issued a decision that Qualcomm violated its anti-monopoly law, the San Diego-based company said Monday in a statement. Qualcomm won’t challenge the decision, which includes a fine of 6.088 billion yuan ($975 million) and imposes conditions on royalties charged on phones sold in China. The accord puts to rest an investigation that lasted more than a year and hurt Qualcomm’s ability to collect licensing revenue in China, where some handset makers have delayed royalty payments or paid less than they owe. Qualcomm, whose chips run most of the world’s phones that can access the Internet, gets the majority of its profit from patent-licensing fees related to its ownership of technology fundamental to cellular-phone systems. “It’s a net positive when it’s all shook out,” said Mike Walkley, an analyst at Canaccord Genuity, who recommends buying Qualcomm stock. “It makes more sense if China wants to protect the Chinese consumer.” Qualcomm shares rose 3.1 percent in extended trading following the announcement. They gained 1.2 percent to $67.11 at the close in New York. The stock was little changed last year as the company grappled with the impact of the investigation on its business. As a concession to Chinese authorities, Qualcomm will offer licenses to 3G and 4G essential patents and will no longer require the bundling of those rights with other patents in its portfolio, the company said. For handsets sold in China, Qualcomm will charge a licensing rate that’s similar to the royalty rates it charges elsewhere in the world, countering concerns that it would be forced to offer a discount to settle the investigation. While the percentage being charged is similar, the value of the handsets -- used as the basis for the calculation -- will be assessed at 65 percent of the device’s total price for phones sold in China, Qualcomm said. “We end up better-positioned as a company in China as a result,” Chief Executive Officer Steve Mollenkopf said in a telephone interview. “It removes the uncertainty.” The company had $31.6 billion of cash and marketable securities at the end of its most recent quarter. While chip sales provided 74 percent of revenue in that period, licensing fees contributed 58 percent of pretax profit. The company has collected more than $30 billion in royalties in the past five years. The chipmaker said it now projects revenue for the year that ends in September will be $26.3 billion to $28 billion, compared with a Jan. 28 forecast that revenue would be as low as $26 billion. Annual profit excluding certain costs will be $4.85 to $5.05 a share, Qualcomm said, up from an earlier estimate of $4.75 to $5.05

• Patent story #2 of the day: Microsoft and Samsung have settled a contract dispute over patent royalties, though terms of the settlement are confidential, Microsoft said in a statement on Monday. Microsoft sued Samsung last year in a federal court in New York, accusing Samsung of breaching a collaboration agreement by initially refusing to make royalty payments after the U.S. company announced its intention to acquire Nokia's handset business in September 2013. The lawsuit claimed Samsung still owed $6.9 million in interest on more than $1 billion in patent royalties it delayed paying. Samsung has countered that the Nokia acquisition violated its 2011 collaboration deal with Microsoft. In 2011 a technology analyst at Citigroup estimated that Microsoft was getting $5 per Android handset sold by phone maker HTC under a patent agreement, and that Microsoft was looking for up to $12.50 per phone from other handset makers it had yet to come to an agreement with. Microsoft has never confirmed those figures, but neither has it said publicly that the estimates were out of line. To apply the $5 price to Samsung, the Korean company could be paying Microsoft about $1.6 billion per year, based on Samsung's sales of 318 million smartphones in 2014, according to IDC shipment numbers. Samsung said it had agreed in 2011 to pay Microsoft royalties in exchange for a patent license covering phones that ran Google Inc's Android operating system. Samsung also agreed to develop Windows phones and share confidential business information with Microsoft, according to court filings. Once Microsoft acquired Nokia, it became a direct hardware competitor with Samsung, the filings said, and Samsung refused to share some sensitive information because of antitrust concerns.

• Patent story #3 of the day: IBM filed a lawsuit against Priceline on Monday, accusing it of infringing four IBM patents in running its travel and dining websites. International Business Machines Corp asked the U.S. District Court for the District of Delaware to bar Priceline from using the patents, to award IBM royalties and to order Priceline to pay IBM's costs and attorney's fees. IBM also said that the infringement was willful, and asked for all damages to be trebled. IBM said it had approached Priceline about the alleged infringement. "Despite IBM’s repeated demands, Priceline refuses to negotiate a license. This lawsuit seeks to stop Priceline from continuing to use IBM’s intellectual property without authorization," IBM said in its complaint. Two of the IBM patents are from the late 1990s, one which tracks prior conversations with a user and another which speeds Internet transmissions. The third patent is from 2006 and is a method of showing Internet advertising; a fourth from 2009 improves on a single sign-on. Priceline also used the patented technology on its websites kayak.com and opentable.com, IBM alleged.