Microsoft Goes Biotech On Big Data

Microsoft (MSFT) reported a strong quarter on July 19, besting expectations on the back of strong growth in their cloud services business where they compete with Amazon (NASDAQ:AMZN) and IBM (NYSE:IBM).

So it got me thinking to revisit my thesis from June that MSFT was one of four stocks, including AMZN and IBM, to own for the long-term as a serious innovator in big data and artificial intelligence.

What my digging found stunned me.

Apparently in April, Microsoft made a little purchase from a biotechnology company called Twist Biosciences. Twist doesn’t make or test drugs. They like to play around with DNA.

And the purchase might have been small in dollars for MSFT, but it was big in “what my brain can comprehend” terms. From the Twist press release dated April 27, 2016…

“Twist Bioscience, a company accelerating science and innovation through rapid, high-quality DNA synthesis, today announced Microsoft Corp (NASDAQ:MSFT). has agreed to purchase ten million long oligonucleotides from Twist Bioscience to encode digital data.”

DNA… for Digital Data Storage?

Then, on July 7, MSFT gave up the goods about their research with the University of Washington. From the Microsoft blog, by Mike Brunker…

Researchers at Microsoft and the University of Washington have reached an early but important milestone in DNA storage by storing a record 200 megabytes of data on the molecular strands.

The impressive part is not just how much data they were able to encode onto synthetic DNA and then decode. It’s also the space they were able to store it in.

Once encoded, the data occupied a spot in a test tube “much smaller than the tip of a pencil,” said Douglas Carmean, the partner architect at Microsoft overseeing the project.

In the video that accompanies this article I describe the amount of data being generated by information-intensive companies like hospitals, industrial giants like General Electric (NYSE:GE), and video-centric businesses like Alphabet’s (NASDAQ:GOOGL) YouTube.

The IoT Deluge Overpowers the Cloud

And then there is the building tsunami of data being collected from the IoT (Internet of Things).

Last year, when Cisco (CSCO) projected that 50 billion devices would be connected to the Internet by 2020 and would generate nearly 50 trillion gigabytes of data annually, they probably were underestimating the fecund potential of mobile video platforms and services like Facebook Live (NASDAQ:FB) or Snapchat.

So where does DNA come in to this equation to be the problem solver?

“DNA is an amazing information storage molecule that encodes data about how a living system works. We’re repurposing that capacity to store digital data — pictures, videos, documents,” said Luis Henrique Ceze, a UW associate professor of computer science and engineering and the university’s principal researcher on the project.

Ceze, who is conducting research in the team’s Molecular Information Systems Lab (MISL) housed in a basement on the UW campus says, “This is one important example of the potential of borrowing from nature to build better computer systems.”

DNA very simply has some ideal attributes for data storage and manipulation such as being dense, robust, and yet flexible. So it can not only stand the test of time, but also weather extremes and magnetism. Unlike silicon-based storage, it’s also immune to power outages or surges.

“Today, the vast majority of digital data is stored on media that has a finite shelf life and periodically needs to be re-encoded. DNA is a promising storage media, as it has a known shelf life of several thousand years, offers a permanent storage format and can be read for continuously decreasing costs,” commented Emily M. Leproust, Ph.D., CEO of Twist Bioscience.

Years Away from Shoeboxes and Sugar Cubes

Extrapolating the storage of 200 megabytes in a space like the tip of a pencil leads these researchers to estimate that a few data centers could fit in a few sugar cubes. Or the entire Internet in a shoebox.

Alas, the technology is not fully developed yet and would be cost-prohibitive vs. existing data storage conventions. So it’s certainly not commercially-viable right now. Again, from Mike Brunker’s article…

Ceze said the biotechnology industry made big advances in both “synthesizing” (encoding) and “sequencing” (decoding) data in recent years. Even so, he said, the team still has a long way to go to make it viable as an archival technology.

But this research, led by Karin Strauss at Microsoft, is advancing computer science and technologies at a faster pace because of this cross-disciplinary approach where scientists and engineers know they can learn so much from the wisdom of life found in the genetic code.

Gilder on Life-Based AI

On the surface, this project appears to be simply “borrowing from nature” to build a bigger “digital attic” as Brunker calls it.

But I’m thinking that the insights gained from experimenting with the “amazing information storage molecule” will teach us much more about life than computers. Then again, I’m partial to brains and evolution more than bits and bytes, so don’t take my word for it.

As beautiful coincidence would have it, the day after finding this Microsoft-UW-Twist story while searching for news after MSFT earnings, this morning I picked up my latest copy of the excellent Modern Trader magazine run by my friend Dan Collins in Chicago.

The August edition has a terrific interview with the technology and economics visionary George Gilder, whose Microcosm still has an important place in my list of formative books. Gilder is much more outspoken than I remember, especially on politics and central banking. Definitely make time to read the interview online at ModernTrader.com.

One thing he said grabbed my attention right away, but might not have if I hadn’t read about the MSFT research last night…

“Silicon will ultimately prove to be a dead end for artificial intelligence. Real AI will be accomplished through carbon technology like the human mind.”

So, you’re safe. Until the computer scientists can copy your brain, you’ll still be needed and employable. But keep learning anyway, because these guys are busy working on stuff.

Be sure to watch my video to get the whole story… and keep me employed.

Kevin Cook is a Senior Stock Strategist for Zacks Investment Research where he runs the Tactical Trader portfolio.