Micron, qualcomm, verizon. Tesla ceo elon musk cuts a rug after delivering the first customer cars from the shanghai factory. Shares touch a record high. This week brought increased tensions between the u. S. And iran. A military strike in baghdad and in baghdad took out one of irans top generals. They responded by launching missiles at u. S. Interests in iraq, roiling the markets and creating new fears of cyber warfare. Cybersecurity firms like cloudflare were up this week as a result. I was joined by the director of strategic threat at an ai security firm. There is a significant distinction between irans battlefield capabilities and where they are on the cyber front. They are never going to go toe to toe with the United States in this realm in a conventional battle. In the cyber realm, they have a greater chance of pushing back more dramatically and having a greater impact in the United States, so even though they have not gone that route in terms of immediate reprisal, it is not out of the question that we will see Something Else. Taylor marcus, your take on that . I think you make great points. They are moving into the cyberspace. This is the time for them to do it even more than they have. They have historically and beyond. Certainly, i was not expecting to see the immediate retribution, but the cyberattacks and vulnerabilities are significant and we think about those. It expands to not only the government, but the Threat Landscape associated with the private industry and commercial companies. Taylor i wonder why a physical attack first and then a cyber attack . Why is Cyber Attacks seen as a secondary choice . I would say secondary or augmenting. I feel to get adequate revenge, it needed to be something in the physical space they could point to on par with what occurred. However, disabling Critical Infrastructure as their first move would have been very escalatory. Cyber allows them to do it behind the scenes and include something they could attribute. Four allow it to be conducted. Taylor in the introduction, we were talking about fireeye and crowd strike as a few of the companies that could benefit from this. In your reporting, is it too early to tell . It is hard to say because you have crowd strike and fire eye as the two prominent, strictly cyber firms listed, but there are dozens of large and Small Companies that play in the space. Microsoft offers Cyber Security solutions and Onsite Services when there is a hack. Cisco does as well. There are local providers providing state governments and counties with cybersecurity protection, so i think you can distinctly state that it will reap some of the benefits, but what share is hard to tell right now. Taylor we have been talking about this for a few days. Does that mean we are any more prepared . I dont think the answer is yes. I think you are more on guard. As you talk about the Cyber Security companies and what they are looking at, i think one area we are seeing a growth is the application of Artificial Intelligence to move faster into that security space more quickly. We have a scarcity on cybersecurity skill sets. There are a number of individuals trying to figure out the right formula for bringing in new technologies while getting a more robust Security Team in place. Taylor some of your smart analysis has pointed to an increase in National Infrastructure and cyberattacks. Walk me through both of those. Theres a lot of vulnerability in the u. S. If they were going to strike in the u. S. , it might be against Critical Infrastructure. I think today we move past that level of escalation, but it remains a vulnerability and something we have to be very mindful of. I know the u. S. Government is focused on it. You have these systems now being more linked into the i. T. And that makes that vulnerability increase. On the cyberphysical front, you are talking about moving away from going after data, grabbing data and causing machines to destroy themselves through a cyberattack. That is significant if we move further into that space, and it becomes mainstream as a viable escalation point. Taylor i feel like i come to you every day and ask how good are the iranian coders and how good are we at defending ourselves . Do we know how far they are getting ahead of us . It is hard to say on a daytoday basis how they are progressing, since stuxnet hit 10 years ago we have seen capabilities mature aggressively. In 2012, they showed an attack on saudi aramco, and no one thought they would use that again and four years later they were able to attack a broader swath of saudi assets. We have seen smaller attacks that are more incrementally sophisticated in their technology and the way they are using it to indicates their using it to indicate their program is getting stronger. The trouble is understanding what they are capable of only occurs when they successfully infiltrate an adversary. I guess we will really know what they are capable of when we see what theyre capable of. Taylor that was marcus of dark trace and bloombergs correspondent. Coming up, ces off in las vegas and we talked to the biggest leaders in tech and media. Next, we hear from the ceo of micron. Chipmakers have enjoyed a recent rally. If you like bloomberg news, check us out on the radio, bloomberg app, bloomberg. Com and in the u. S. On sirius xm. This is bloomberg. Taylor chip stocks have enjoyed a rally and growing optimism for the sector as 2020 takes hold. The optimism was apparent in ces. I caught up with microns ceo on tuesday. Sanjay with respect to the chips, we have said that 2020 should be a good year for the industry. First quarter, typically slower but in our industry, because of the capex reductions, the supply growth has been slower. Applications such as 5g, ai, all of these are driving data, to store that data and process that data. Micron is expanding its portfolio solutions. Applications are growing. Micron expanding. We are wellpositioned for 2020. We are excitedly looking forward to 2020. 2019, micron produced excellent results. There was excess supply in the industry. Forward. Oking strong execution on the part of micron with respect to Product Portfolio and technology. Taylor analysts on the street, namely some from cowan, upgrading the stock, saying that new smartphone launches should tighten the supply up. Does that affect your thinking as you look to supply in 2020 . Sanjay the supply growth is less than demand growth and demand continues to exceed given the markets such as cloud, smartphones. Increasingly, autonomous features as well. All of these are driving growth in demand. Just look at 5g smartphones. They are driving higher average capacity. Phones announced with dram content as high as 12 gigabytes. Even 300 phones have six gigabytes in them. In 2020, a couple hundred million of 5g smartphones are expected to be sold. 5g is going to be a strong driver of dram content growth as well as flash content growth. Explosion of data and ai driven features as well as immersive experiences. They drive greater demand for data which bodes well for microns business. We have exciting products that in 2019 we have announced, very good for the smartphone applications. It is not just about smartphones. When you look at clouds, servers they are requiring ai driven applications that are requiring more and more memory storage. Taylor that was microns ceo. As for qualcomm, it unveiled the first chips and software for fully Autonomous Vehicles at ces on monday. The president spoke with bloomberg about what he calls the natural extension into this space. We are very excited to expand our automated offering. We believe that cars are going to have to process so much data and it requires so much processing. It is going to require a completely different equation about power. Coming from the cell phone industry, we have the ability to do chips. They are efficient from a power standpoint. You cannot run a data center out of the trunk of your car, and that is the opportunity for qualcomm. We unveiled our solutions from level one to level four , autonomy. But the commercial opportunity will be to add autonomy to every car as a convenient feature with a driver behind the wheel like cruise control. That is the real opportunity qualcomm has to scale this, and we are pleased to announce the expansion of our relationship with General Motors to include autonomy as well. Happy about that. A significant milestone for the qualcomm automotive business. When we talk about the prospects and competition in this space, a couple months ago in november, intel talked about the acquisition and how it was scaling up at a pace that it said is faster than competitors. Is this going to be about what you do at qualcomm internally, or you look at m a and buying smaller players . Cristiano that is a great question. We have been building in our automotive business organically. We got to connectivity to become number one in telematics. Also connecting the cars to the other cars. Then we went to the digital cockpit transformation and became number one with 19 oems engaged. Autonomy is a natural extension of our computing capabilities becoming more powerful for Battery Powered devices, that is what you see in phones. We got into vcs for the car as well. We could see further acquisitions down the road but probably smaller. We feel good about what we have done to build our platform with organic efforts. There are going to be flashy things thrown out at ces that will make you believe this is available tomorrow. With Autonomous Vehicles, we are not there yet. When is qualcomm betting we will get Autonomous Vehicles . 2030 . Cristiano that is where the difference is. While we have a platform we can do full autonomy, we are focused on level two and three which allow you to scale and make this a commercial good proposition for us and our makers. In the platform we unveiled, we expect to see cars on the road by 2023 with what we call level two plus or level three, which will have full autonomous capabilities with the driver behind the wheel like a feature. That is what we think the scale will be and we think will become a commercial reality. Taylor that was qualcomm president cristiano amon. Food Delivery Business getting crowded and grubhub may look to consolidate. And elon musk has reason to celebrate as teslas production and delivery efforts get moving. This is bloomberg. Taylor its no news that microsoft competes with amazon in the Cloud Business, but a new target seems to be retail customers. I caught up with a retail analyst. We are talking about this because microsofts ceo is keynoting a big retail show. Retail is one of their most important sectors. Generally speaking, Web Services Amazon dominate the market but want tothe retailers work with amazon, which is one of their biggest competitors. You do not want to line amazons pockets with cloud revenue. Microsoft is working with customers like kroger and walgreens and now ikeas own store of the future concept. Ways to help these companies ecommerce sites better, monetize, sell more advertising. Things that will help these retailers do a better job of competing with amazons consumer business. These relationships help microsofts Cloud Business compete with amazons Cloud Business. Taylor where do you see them being able to explain their to expand their cloud offerings to go toe to toe with amazon . I would say to take a step back. Amazon is going to get a lot larger over time. We have seen consistently microsoft narrow the gap in terms of size visa vis aws. We expect that will continue. They are doing a better job getting more enterprise business. They recently won a 10 billion project with the dod. 10 year. They have the retail aspect. I would say it was last year in 2019 when we first began to hear about microsoft pitching to customers that they are the more logical cloud provider as it relates to those Retail Companies where they are not in the crosshairs so to speak as that might be the case with aws. Those would be areas where we are seeing microsoft gain momentum. Taylor that was a bloomberg correspondent and a mizuho analyst. The Food Delivery Service is and is a crowded one and there were reports grubhub may be looking for a sale or acquisition. Analysts say the company is more likely to be an m a target. For more, i spoke to john white and a jefferies analyst. We have seen the consolidation space with doordash buying caviar. I think it could go either way. Clearly, there has been a lot of pressure on the revenue. There has been a lot of focus on the market. Our shortterm thesis is that grubhub has been dislocated. They had great margins, but longterm, the economics can be restored. I think the ceo of grubhub has said that consumers should not get used to the prices they are seeing right now because they are not sustainable. In any market, you see too many vendors chase the market. There is way too much competition. That will consolidate. Potentially, economics will restore. There is a standalone case for grub where they can do very well among three big players, which they think they would be the third biggest. There is another case where you could see, would amazon want to acquire this . Could uber or doordash look at a way to consolidate some of the assets together . Could another large food or Beverage Company look at this . I think there are a lot of options where shareholders could win at this level. We dont have a buy on the stock but we do believe you could see a higher price. Taylor you mentioned uber eats. Let me pose this question to you. You have been covering uber and uber eats. Do you see potential for uber eats to come in and take up grub . Tom i think i do. Echoing the comments of my colleague, this is a space that is ripe for consolidation. We have a lot of businesses that have similar if not identical business models. They are burning cash, chasing growth. On paper, consolidation seems to make a lot of sense. For uber, makes a ton of sense to explore this. I think there are reasonable questions as to whether or not they could get a deal done. I think uber has a target on their back. That is an open question. With these sorts of deals when antitrust folks look at it, it depends on how they define the market. Are they going to define it narrowly as Online Food Delivery or just sort of restaurant volume overall . There are some questions there. To his point, one thing that could also go against the deal it could likely result in prices for consumers going up. That is not something regulators like to see when they are going to approve a largescale merger. It is inevitable eventually but a deal would probably accelerate that timeline. Taylor that was tom white of da davidson and a jefferies analyst. Alphabet was upgraded. Analyst Michael Levine wrote that after a Critical Foundation year, the narrative continues to improve in 2020 and beyond. For more discussion, i spoke to him monday. One of the things that was most compelling to us was both the change of regime with sundar stepping in, as ceo and chairman. But something i think investors may have missed, his compensation agreement was filed with the fcc on december 20, and what struck us was that he basically is compensated on the percentage differential that google stock does relative to the s p 100. He has basically got a 45 million on plan for Stock Performance in 2021. A second 45 million for 2022. It is pretty refreshing and encouraging to see alignment between management and Stock Performance. From a company that is historically taken a very different approach to working with the street. Taylor that was Michael Levine of pivotal research. Coming up, apple reaches a new milestone in china. We will have the details next. We are livestreaming on twitter. Check us out and follow our global breaking news network on twitter. This is bloomberg. Taylor welcome back to the best of bloomberg technology. I am taylor riggs. Apple enjoyed a fresh price target boost this week. From 2. 85 to 3. 50 share. Looking at the past year, shares continued to retire and this week hit a record. Analyst kyle mcnealy says that foot traffic at u. S. Apple stores showed apple was set for a strong finish to 2019. Sales in china were also up as Government Data indicates it grew 18 . Alistair barr filled me in thursday. In china, that number is a surprise. The broad push in china to focus on huawei and have consumers by huawei funds instead of iphones. Huawei phones instead of iphones. That was the concern for a lot of last year. Some of the trade tension has come down. I think more to the point is a device like the iphone 11 is a little bit cheaper. The battery life is very long. The photos you can take are a lot better than the previous version. When you put all those things together and combine it with a large backlog of older iphones like the iphone 6 and iphone 6s, which were huge hits, those devices, there comes a point where millions of people are going to upgrade. Are they going to upgrade to Something Else . Theyre probably going to upgraded to a new iphone. Taylor one of the other things that surprised us was the fact that the iphone 5g phones are not out yet. What is driving the big push we saw in december. Partly, it is this upgrade wave. Even if they did not produce the iphone 11 and had the same phones from last year, if you have an iphone six s, which is four years old, you have to upgrade at some point. Jumping to an Android Phone nowadays is becoming a bigger step for people because a lot of your digital life is run through these devices. There are other ways that apple hooks people into the ecosystem. Taylor i want to touch on a company you mentioned earlier, huawei. I am surprised we have not seen more nationalism in china about huawei and pushing away apple. That is very true. Part of it is this ecosystem issue. If you already have a huawei phone, you are used to the android operating system. You will probably stick to that. The challenge is a lot lower than two years ago, investors were expecting the company to keep growing. After the shock last year, that reset the bar. Now, if apple gets 5 growth a year, investors will be over the moon because there are other things that are coming after the growth. Taylor that was bloombergs alistair barr. Elon musk was in china and had something to celebrate. He was at a tesla plant tuesday, handing over the first chinesemade model three sedan. But it is a different model ev that has musk excited. Probably even more people prefer an suv than a sedan. Ultimately, model y will have more demand than probably all the other cars that tesla provides. Then tesla combined. Taylor i spoke with hall, who covers tesla. It is the only plant without agv. It sets it apart from other models. Its a whollyowned tesla facility. They get a lot of funding from banks and the speed of construction really astounded people. A year ago it was like a muddy field, and now they are having a big party. A lot of Chinese Government officials were there. Musk was dancing. Taylor take a look at a chart im showing inside my terminal. China is the largest market for evs. They have some of the most demand. This really has been the bull in the bear season on the stock. Can they actually capture that Chinese Market . Is this the first step in what could really set tesla apart . In the middle of this trade war, having local production helps lower the cost. Right now, tesla is assembling the cars in china. As more of the supply chain is localized, full on production will happen and then they can lower the cost to the consumer more. Costs are still high compared to locally made cars, but they will be able to lower the price. That will give them more cost parity. Taylor the soundbite we heard in the beginning, he was talking y demand will top all the other models combined. When do we expect the model why y crossover . He has said that before on the earnings call. What was news to me is that they will begin model y production in shanghai as well. It sounds like they will launch on two continents in parallel. The y is the lower cost suv. I think they have learned a lot of lessons. The y will probably be big. Most people in the world want suvs as opposed to sedans. Taylor the Biggest Issue was the production. How did they avoid that in china . It appeared to be a seamless rollout. Its hard to say. We have not heard much from the company about what they did, but i think tesla has sort of reinvented the wheel many times. Theyve learned painfully often the challenges of manufacturing and then they kind of power their way through them. Whatever they learned from getting the model three up and running in fremont, they took that to china and improved on it further. Taylor i am asking a bit of a far out question here. We were speaking with the micron ceo at the top of the hour. They went into china and then accuse the chinese of stealing their technology. Is there a similar risk for china . There is always a risk. I would be surprised if tesla went in not being aware of those risks. I think with the ip they have, it is pretty solid. They have also opensourced a lot of their patent and it would be hard for someone to just copy them outright. Taylor coming up, we head back to ces in las vegas. Highlights from our conversation with meg whitman and Jeffrey Katzenberg on their new venture in the crowded streaming space. And later, we spoke to the biggest moguls of this week at ces. We will get insights from the media link founder and ceo on the latest trends in streaming ads, and brands. This is bloomberg. Taylor back to ces in las vegas , where we got an ear full from content creators and brand advisors. First up, meg whitman and Jeffrey Katzenberg. We talked with the pair on how mobile content can shape the future. What we talked about was a new technology platform, which was part of our differentiated versus other services that will allow mobile viewing to be extraordinary and allow creators to tell stories and a whole new way. Just a couple of other things. We think people will be on during the day and on the go , where they have a chance to watch a very fantastic hollywood Quality Content in short bites, and we introduced a Technology Today that is fullscreen video that allows you to see content in ways never before. Taylor you just closed a second round of funding, 400 million that will carry you through the spring launch in april and beyond. I want to get more of the details here. 175 new original shows, 86 episodes of quick bite content, this is a crowded field. Who exactly are you targeting with this content, and how do you convince them to pay another 4. 99 on top of netflix, hbo go and disney plus . Our content is quite unique, very differentiated from anything anybody is making today. As meg said, we are relying on this Incredible Technology that is quite revolutionary in terms of the quality of what we can deliver, and yes, there is a tremendous volume of content. Yes, there is a tremendous volume of content because people want quality but they also want quantity. We will publish three hours of original content every single day. That is 35 more than a broadcast network. Were not competing for the television set. All the things going on today are all focused on what people are doing in front of the tv. Less than 10 of viewing on netflix, hbo, disney, any of them are actually on a telephone. We are only on a telephone, so we are highly differentiated and our use case is quite different. Taylor that was meg whitman and Jeffrey Katzenberg. Verizon made the rounds, discussing its partnership with disney plus. We caught up with the ceo wednesday. Think about our business, if you think about the 900 million users globally, we are also at the top of the fund for disney plus. There is a lot they are doing to attract new customers. Part of our media platform is a streaming service and we leverage that to stream content. As they grow, we grow. Who else could you partnership with . The reality is theres only a limited number of set use cases. You want to be careful with consumers and work with great, iconic brands, disney is a great brand like verizon. That Partnership Works well, so i think we will go use case by use case. I do not want to name names, but there will be limited partners who benefit. Apple music did that. Disney is the next big thing that is happening. How do you read disney success . What do you see them achieving in the next 12 months, the next three years . I think at the top level, getting more customers signed up. Retention of customers really coming in. And are you keeping them for longerterm . You are focused on 5g. The company, more broadly, is focused on 5g. What opportunity does 5g bring Verizon Media . One of the biggest use cases when we think about 5g is the media use case. That is the most tangible for consumers and advertisers. You have seen ar in the 4g world. In the 5g world, it will become mainstream. We launched our News Platform in collaboration with the ap. They are building a platform where news is experiential. The reason you cant do it at scale is because you dont have the speed you need to do that. 5g at scale helps us to do that, so i think on the content experience side, you go to a much bigger scale. Sports is another use case. We have them working with the nba and nfl to get the fan base to the next level. I want to talk about sports. Yahoo sports is popular. You also have sports book. Talk to me about those two businesses and what the future opportunities are because that is an exciting area. Commerce is where sports fits in in terms of completing the lifecycle, the transaction cycle. Think about the Sports Betting world, the hardest part is to get the consumers. Its the top of the funnel. What yahoo has today, our ecosystem and within the u. S. , sports is a leading player. You think about fantasy sports. We already have a tiedin consumer base, so for us it was a natural extension to close the loop for Sports Betting. We are clearly want to do it. We chose the best partner, mgm, and that lunch in new jersey is our first legalized adding betting state. What comes next . There are at least five states, there are many states that are legalized, but the platforms are not set yet, so i hope we have five plus more states. Taylor that was the Verizon Media ceo. Without a doubt, many media and mobile vendors say 2020 is the year of 5g. Among those is the media link founder who joined meet wednesday. As we said last year, i think it will come to fruition sooner than we think. The combination of 5g and just about everything that it impacts will have major consequence, and usually that will be positive, from everything i know. The one area i was interested in 5g having an impact in was content consumption, and i was listening to the news the other day from here at ces talking about the other story that continues to be important, autonomous driving, and we believe autonomous driving and 5g will be part of continuing to fill the content. If you think about people commuting, and they will not be literally behind the wheel but have that amount of time to get from home to work, there will be more time for content consumption. 5g and autonomous driving are one of the interesting combinations you will see happen in the short run. Taylor it is interesting to talk about that content and the consumption. We have a lot of new entrants into the streaming wars and continue to see so in 2020. What have those conversations been like as you see more competition in the streaming space . From our perspective, we look at it through two lenses. Number one, if you are marketing the services, if you are disney, hbo, quibi, amazon, etc. , you have to think of being a performance marketer rather than a brand marketer because you are in the business of acquiring subscribers, and hoping they do not turn. From a marketing perspective, it is a different marketing muscle. From a consumer perspective, it is going to be some binary choices. We talked about the skinny bundle from the cable context, and i think we are seeing a rebundling that will occur because consumers to seem to be because consumers seem to be around the range of four to five subscriptions that consumers will subscribe to. That will create binary choices. Taylor that was the founder, chairman, and ceo of media link. 2019 was the year of tax ceo departures, what will 2020 hold . We talked diversity in the Silicon Valley boardroom next. This is bloomberg. [speaking foreign language] taylor if 2019 was the year of tech and ceo shakeups, what will 2020 hold . Some of those who left the helm included alphabet, ebay, and then adam neumann who abandoned ship when weworks ipo collapsed. The ceo a board span joined the monday of board span joined me monday. There were a Record Number of ceo turnovers in 2019. It comes from a few things. We are looking at 2020 as the year of accountability and certainly thats what we saw for ceos in 2019. Bottom line, what are ceos expected to deliver . One of them is they need to make investors money, and they cannot screw up while they are doing that. If you look at that turnover, it often came because ceos were not making money that investors were expecting, or they were making awful mistakes. Taylor in all of your years of looking at this, did 2019 feel cyclical, or was there a structural shift were people are saying we will hold you accountable . Abby i think it is more of the latter, and that ship has sailed. Accountability comes from a few different areas, the Business Roundtable came out with a big statement in the middle of the year. We are seeing it in how investors are behaving, and what we would call activists versus pacifists who have blended together, and more demands from investors as well. Taylor when we look to 2020 and accountability, one of the main things you are keeping an eye on for this year . Abby for 2020 the watchword for boards will be accountability. We are seeing hints of that already. For example, what is going on with boeings board. And then, the massive reworking of the bed, bath, and beyond earlier this year. Investors and regulators and employees, nobody is off the hook anymore. Taylor when you look at after a ceo steps down and there is a big shakeup, what do you see with the incoming executives . Is there enough of a Diverse Group . Abby the thing to remember about ceo turnover is that there are two ways to address that. Its in the grand category of things called succession planning. If the board has had the opportunity to be thoughtful and plan this out, even though it is a multiyear process, they will get a smooth transition in the face of tragedy. Oracle is a great case study. With the untimely loss of mark hurd, they were as stable as could be, prepped and ready to go. Even in the case of alphabet, you mentioned earlier you had a guest talking about alphabet, i do not think that was a big surprise, sundar was in the wings, waiting to step in the role of ceo. Adam neumann, your other example, took everybody by surprise, his whole board and adam himself. Taylor i want to take a look at a chart we are showing inside the terminal. I cannot put it out on social because we do not have the terminal number, but we have created a customized index, a watchlist showing women on the board. The most is oracle at four. You go down the list, it seems good, not great. Have we done enough . Abby there is clearly more work to do, and these are larger companies. On a Smaller Company side, you have some surprises. Im surprised hp did not show up because i like to show them as a good example. But certainly, elf beauty just across the bay in oakland, stitch fix, surveymonkey, they have good examples of diversity on the boards. Taylor you talked about and mentioned those are californiabased companies. My smart producer pointed out in california there is a new law if you are publicly traded, one female on the board. If we needed a law, it means we were not doing enough. What did you make of that . Abby this is the California Law you are referring to, i am a capitalist at heart, so in the Perfect World we would have gotten diverse boards through the right reasons, but we did not. Thats where the law had to come in. Sure enough, it had the desired effect. There are 40 companies that have yet to comply, and we will see what happens, it is up to the regulators. But no question, we cut the number of boards who have no women in california by two thirds. It was close to 120 when this law was put into effect, it has definitely made progress. Taylor that was board span ceo abby adlerman. That does it for this edition of best of bloomberg technology. Tune in each day 5 p. M. New york, 2 00 p. M. San francisco. We are livestreaming on twitter. Check us out and follow our global breaking news network. This is bloomberg. Carol welcome to bloomberg businessweek. Im carol massar. Jason im jason kelley. Carol Carlos Ghosns escape to beirut. The fugitive comes out swinging against japan and nissan. Jason plus, australia in flames and how the fight has put a global focus on climate change. Carol the u. S. Catholic churchs strategy to reduce payouts to Abuse Victims by