Iphones over the Opening Weekend but the shine is starting to come off a bit due to some technical problems, which have caused headache after headache. Apple had to pull its update after some customers couldnt make calls. A new report says apps are crashing. 67 more often than the previous version. And healtkit had to be dropped from the rollout due to a bug adding to the users complaining that the new iphone bends when tilted in your pocket. This showing an iphone 6 plus getting, well, bent. But apple is fighting back say the phones go through rigorous testing and meet very high standards. So how serious are the problems for apple . I spoke with our editor at large cory johnson and the senior and the Senior Research analyst, and the man behind that video who also just tested an iphone 6. I started by asking him what exactly happened when he tested the 6 compared to the 6 plus. The 6 did much better as i expected it would, the fact that it has a smaller form factor. I put as much pressure as i could in the same location and attempted to bend it in the same fashion. And i mean, it kind of had a tiny little bend but nothing significant and completely useable. So at this point, im willing to say based on that little piece of evidence that the 6 is going to be probably a little bit more durable than the 6 plus. You also compared it to a few other phones. I did. How do they stack up . Even with the standard iphone i could feel that there was a tiny bit of liability pliability, like it sort of seemed like it would probably give way sooner than some of the other devices that i tested. The most impressive is this one here, which is the new moto x, and i especially wasnt able to get any kind of creaking or cracking, twisting, bending, nothing out of it. I can actually replicate that right here. This phone is just solid and i actually didnt know that when i first received it because these tests werent really even a thing at that point. But the moto x as well as the other very popular phone did really well in a similar test. All right. How big a problem . Lets start with the bending because there are a few problems happening right now how big a problem is the bending . I think its topical today but ultimately it will blow over. And if people just use the fobe reasonably, i dont think its going to cause any significant change in the overall demand. But lets assume that it is a big problem just for the sake of argument. We estimated that about 30 of the iphone use are going to be the 6 plus. So i think when you put it in the context of the mix between the two, it really isnt much of a problem. And the Software Problem is something that gets fixed over time. That is easy to fix. Gene, let me explain why youre wrong. But heres why i think this matters. The essential brand argument of apple is you dont have to be an expert, you dont have to know how to ctrlaltdelete. These are simple devices, crill. You dont have to worry about the updates, downloads. This is apple. And i wonder if a series of problems in both hardware and Software Start to erode the brand value itself. I think that if they dont get the Software Issues fixed, in the past they do have new software hiccups. For example, when the last iphone came out there was the touch id, which had some problems. So i think the concept of them trying to get some bugs isnt anything unique. And theres been issues that have drained power faster. So if i they dont get this tightened up that could potentially be a bigger problem but i think there is a window that people will give them the benefit of the doubt. Is it bigger or smaller because so many people are eligible for upgrades and phone shopping literally right now . I think it gets definitely magnified and theres just no place for apple to hide when youre selling 10 Million Units over a short period. This stuff is going to come out. But its just part of developing hardware and software you go through these factors. But if they can get the patches fixed in a month, people arent going to be talking about this. Lewis, what do you recommend to users right now . Millions of people have watched your video. People care about this. The real time analytics that im looking at show 16 million views in the last 24 hours. So they havent updated the public figure yet. Youve had more views than there have been iphones sold . Thats hilarious. Its still accumulating close to 1 million views every hour. From youtubes realtime analytics where im getting that data. So this is something that people are interested in, whether theyre iphone owners or not, this is an incredibly highprofile company and an incredibly highprofile product, and people want to know about these devices intimately. I suppose thats what videos like this provide. Is this going to be a real issue that everybody has that your neighbor has and family members have . It doesntt, but mean that it isnt useful information. People always want to buy things that are overengineered, that are tougher and stronger than they need to be. So when i tried the same test my impression of the moto x changed immediately when i saw it didnt do anything similar to what the 6 plus did. So part of the pride of ownership comes through recognizing how robust the device that you have purchased is and the fact that the other models from other brands fared so much better is meaningful to me. Earlier, john chen, the ceo challenged everyone to try to bend the new blackberry pass port and cory johnson grabbed my passport on the set and tried to do it himself. Luckily he was not successful. I dont know if that means the phone is stronger or he is weaker than you. I think he needs to hit the gym. I completely agree. The passports are thicker, fatter. The tough every thing is that emily didnt care if i grabbed the passport. I cared. I almost had a heart attack. I thought you were more defensive of your iphone. I think thats the way people have this attraction to the phone, they have this real intimate relationship with the iphone. The iphone is my primary device. I use the blackberry for more business things. But really, gene, added altogether, what do you recommend for users . I think you have to make your decision. At the end of the day i think youre going to probably feel like the bigger phone, even with the issues, the 6 plus is probably a great phone. Coming up, more on blackberrys new phone, the passport. I speak with Ceo John Chen about whether the square screened model aimed toward business customers can turn blackberry around. Welcome back to the best of bloomberg west. I am emily chang. As we mentioned, blackberry has just unveiled its newest smartphone, the passport, which claimed, doesen not bend like the apple iphone. How many of these squarescreen phones can blackberry sell . Can it really help turn around the struggling company . I spoke with john chen and started by asking him why he opted for the square design. Because we talked to the customers and they look at how they use the device and for productivity and looking at the new style apps, looking at the vertical apps and health care apps, we figure that the wider and more onetoone aspect ratio is what everybody will need for achieving more. So thats how we came up with it. Whats your goal for this phone . How many do you think youll sell . I am not disclosing it right now, but we expect it to be successful. But the market will tell me that. We have various different ideas that we could kind of use as a motherdaughter type approach. So well, were going to have to gauge the market response. So far seems to be pretty good. Lets talk about the market. You and i have talked about market share. Idc is saying global shipments are lower than 1 and by 2018 market share will be 0. 3 . Where do you think it will be . My job so to make sure that doesnt happen, right . So i think we have a good plan, we have a good set of portfolios. Despite everything weve gone through, this is the third phone that we released this year, and there is also one coming out in a couple of months called a classic and so we started out with the z3 in may and now it is in about 13 countries and seems to be received quite well. Then we Just Announced the porsche designed phone on september 17, and now were doing it obviously here in toronto myself and my colleagues in dubai and london releasing that phone. So things are i think we can pick up the pace and we should be gaining market share as we move forward. Your job, john, is to also make sure the phone doesnt bend. You took a little jab at apple saying you challenge us to bend the passport. What do you think of these reports that the iphone can bend . Ive seen it happen in a video. I have no idea. I just read before i came here this morning, and i thought it was a little amusing. You know me, i cracked that as in good humor and not to mean to be mean to anybody but on the other hand our passport is extremely wellbuilt. And i would its somewhat of a challenge, but you have to do it the same way, put it in your pocket and then see whether it bends or not. I doubt it would happen. Seriously, does this pass the bend test . Did you guys actually test this for bending . We do a lot of mechanical testing. I dont know whether we particularly do the bending itself. But we actually here showcase the kind of five layer of the phone including the antenna layer, which is a complete steel frame around the inside the phone. So bending that needs a little effort. What do you think of the new iphones and the apple watch . What do i think . I really dont know enough. Ive been so busy i dont know enough how to comment on that. Obviously they have their audience, and im hoping to go after my audience, which is about the people who strongly need productivity and this phone should appeal to them. One thing you do know is that the president is also addicted to his blackberry. Did you send him a passport to test out . I dont think we gave it to the white house yet. I dont know. I could be wrong. But i would love to have president obama use it. A lot of the heads of state use the blackberry with extra security and this will continue on. How about this blackberry shares are up almost 70 since you took over. So investors are counting on you. They seem to believe in you. You said that blackberry will be profitable by 2016. Whats the time line now . Any likelihood you can do it sooner . I told people were very profitable in fiscal year 2016. So sometime in 2015 calendar, and im Still Standing by it, depending on the wrist activity y of alleceptivit these phones and the classics coming out in about two months, our Software Releases next month, im expecting to see some growth next year. So with that, if i could get some growth on the top line, i would be able to make it profitable sooner. My interview with blackberry Ceo John Chen. How will apple pay to work with major Credit Companies . Welcome back to the best of bloomberg west. Im emily chang. One feature the millions of new iphone owners will use next month is apple pay will allow users to wave their iphones or watches in front of a reader to make a purchase. Mastercard and are official partners. This is just starting to penetrate the united states. So what does visa think about all these technologies . Cory and i spoke with visas chief enterprise risk officer ellen richey. I started by asking her just how apple pay exactly works. The way it works is you provision your card on to an apple phone very simply by taking a photo of it. In the background, Visa Technology working with your bank that issues the card will verify that it is really you. Once youve done that, very simple step, all happens in the background. When you come into the store, you can simply wave the phone after pressing your fingerprint to the reader on the phone and it will make the payment for you. From a risk perspective, obviously weve seen major credit card breaches at target and home depot. Had apple pay been more mainstreamed would that have happened . We say insecurity can never solve the problem because we have very enterprising criminals attacking our system every day. But apple pays and similar technologies will be a big part of the solution along with those new chip cards that you mentioned. Specifically about these technologies, does visa have more cards using this technology than say using different wallet formats . Well, right now most of our payments in the u. S. , as im sure you know, are taking place on plastic cards. So the mobile technologies are relatively new. We think they will be taking off. But right now the overwhelming majority is on your plastic cards, which are going to be swapped out for those new chip cards over the next two or three years. How fast will you actually be swapping them out at visa . Great question. Thats just what i was about to tell you. Visa itself doesnt put the cards out. Its our issuing bank partners, so whatever bank issues your card. They have told us that by the end of 2015 we should have 575 million chip cards in the u. S. Market, huge numbers. Ellen, specifically, do you think that the apple proposition is different because theyve got biometric id on the device so therefore they will have a lot less risk . I think the proposition is really a strong one from a security position point of view, but it isnt really about the finger print so much as the technology that operates in the background. And that includes Chip Technology which generates a onetime code, cant be replicated by a criminal. So it really makes the data useless to criminals and will be a big part of devaluing the data and making the system a lot safer in the future. Exactly the same thing as those chip cards do. I dont understand the fundamental difference here. Right now today when you use your plastic card the store reader will read the card and it will have a series of numbers that could be used to make a fake card. Thats why theyre stealing the data from places like target and home depot. But once you have a onetime code it wont matter whether that data is ever stolen because you cant use it without a new onetime code generated by that little chip either in the card or the phone. So in other words what youre saying is the retailer never has that cache of credit card numbers, so hackers can break into target and home depot all they want. Theres nothing in there. Essentially correct. Thats why we say these can take technologies can take the Retail Industry out of harms way from criminals trying to steal data. The technology thats integrated, thats different from chip and pin technology. How do you see these working together . Is this adding layers of security to the actual transaction . Yes. Its adding layers of security to all the transactions. So its important to know that in security the criminals will always go to the weakest link. So you have to secure the physical point of sale where youre going to use your card in the terminal physically and also the digital point of sale, whether mobile or electronic. The technology will be operated on much the same principle but its implemented differently depending whether youre there with your card or transacting remotely. You mentioned that visa is going to have 575 million chip and pin cards out there by the end of next year. Will retailers have the hardware to accept these cards . The retailers are coming along perhaps a little more slowly. They have to take the trouble to swap out their terminals. Theyve done a lot of that work already. So many of them right now are upgrading their backend systems to read the information. We expect there will be significant numbers, but some of the industry gurus are projecting up to 30 of all payments will be chip on chip. Chip card meets chip terminal by the end of 2015. So thats quite a lot. So to explain why the processing business is so hot right now. If i were apple i would is be saying to you visa i dont care. The thumb print is reducing your risk and therefore we should get a piece of the transaction. Explain to me why the thumb print biometric is not reducing risk. Well, let me start with the tokenization piece. Its what makes that data useless by creating a single digital account number similar to the one time code on the chip card. So that is what is really reducing the risk. The thumb print is a great thing. Dont get me wrong. But it is what we call static data. It doesnt change from use to use. So in theory our ingenius criminal minds could be able to that phoneprint data as we will. It is good but its the combination of things that make it work and especially eliminating the static data. As i understand it apple is taking a portion of bank fees but the apple transactions, its not taking anything from the credit card companies. Does your take away change . Is apple taking any part of your cut . Apples arrangements are primarily directly with those Financial Institutions and the economics for visa doesnt change. Risk officer for visa. Pulls out due to differses over Climate Change and other Tech Companies are following suit. Weve got the latest on the growing controversy coming up next. You are watching the best of bloomberg west, where we focus on innovation and technology. Im emily chang. Googles executive chairman eric schmidt has admitted that it was sort of a mistake to give film support to alec which opposes u. S. Action on Climate Change. We spoke with forecast the Facts Campaign director brant olson. That organization has led a campaign against alec over Climate Change. I started by asking olson if he is satisfied with googles move. Its certainly a step in the right direction. I think schmidt said this was the wrong thing. Alec was not aligned with the companys values nor that of their users, so were very encouraged. It makes sense to me that the Koch Brothers support alec. It makes sense to me that exxon mobile supports alec. It doesnt make sense to me that google is getting involved in funding a group thats opposing understanding about Climate Change. Why is google involved with alec . Thats a great question for google. What do you think . Youve been insisting that they end that relationship. Alec is very active in state houses around the country. To the extent you are a country that wants to have interest in state houses, alec is an organization you would probably think about. The problem of course from our perspective is while google and alec may align on tax policy or immigration policy not immigration policy. Trade or other types of things theyre fundamentally at odds. The good news from google is they placed Climate Change high enough on their list of priorities that they disaffiliated from this group. I have a statement. How do you respond that . Its more lies, frankly. The American Legislative Exchange counsel has not been shy about their position on Climate Change. Look back at a draft legislation proposed in 2009. It suggested that teaching Climate Change as a theory in schools around the country. That is not about free market. Thats about misinformation. Climate change is a fact, real, happening now, and google recognizes that. Does this go beyond alec . Are there other things that google is doing to support Climate Change deniers . So goodle as well as a number of other companies, are very heavily invested in their political contributions in washington, d. C. So google for example contributed almost 700,000 to Climate Change deniers in the white house excuse me, in congress, since 2008. So theres additional steps that need to be taken. Schmidt was very clear that the company has a view. It should make sure that its political contributions align with that view. Google gave us a statement. Were also learning now that facebook and yelp have pulled out of alec as well. Up next, the private space race taking off with spacex winning a big nasa contract and blue origin signing a new rocket partnership. Which tech titan may come out on top . Welcome back to the best of bloomberg west. I am emily chang. Well, spacex may have thrown the latest mission to the space station. It may soon be challenged by another tech titan. Blue origin backed by amazons jeff bezos said it is products too send space. We spoke with the former International Space station starting by asking him who will win the race to space . I think its a really good set of circumstances right now. What we need more than anything else are better engines. We are so limited by our engines technology, trying to safely get to space and then try to get even further out into the universe. Weve been making small modifications to existing engines. Thats what the funding from nasa is helping to pay for that is better engines. So im really excited about that some of the best are putting their efforts into trying to solve that problem. But there are also huge competitors. Can you explain who is doing what and who might be doing what better . Sure. The engine that jeff bezos and his blue origins group are working on in partnership with the united launch alliance, theyre look at cutting their reliance on a russian engine that weve been partnering and subcontracting and using for several years. Looking to have an American Made next generation rocket engine and jeff has brilliant people working for them, so theyre really working on that piece. Spacex under elon musk not only built a new rocket ship, but they are building new space ships as well. That is sort of like the one you just mentioned. Theyre kind of a complete services company. But what he is looking at is how to make a launch rocket reusable, after its spin off to come around and land again. If he can do that he will cut the cost by a factor of 10, maybe 100. So theyre heading down slightly different paths, but theyre taking us where we want to go. Those are two great competitors. Competition is great. With boeing and Lockheed Martin working together, talking to me about what that means in terms of opening up the sort of idea sharing between all of these, now four of these companies, really. Well, the real difference is in the past nasa has sort of told the Rocket Companies what to build and then they built it for them. In this case what were doing is saying this is the product that we want. You can build it any way you want. Sort of the difference between having your own fleet of cars and renting your car. So that allows a lot of freedom of design. And weve got a couple different camps competing, which i think is a good idea and i think the way nasa has done it is smart and good for the nation. Hopefully coming out of both will not end up with just one winner but will come up with two different ways to get to the space station. Since the shuttle we only have one way to get people to and from the space station. Which is never a good thing. In your experience having worked with spacex and the dragon capsule in space, are there any concerns about working with a third party, anything related to safety perhaps thats different than just nasa . When i sat on top of the rocket ship you are counting on tens of thousands of people that you have never met and little companies that help build all the parts. Companies that you never had a chance to visit. Thats why you need a really good strict set of rules. You need oversight, you need to have a very strict set of requirements and then you need to make sure that the vehicle you are riding is tested properly. So theres always that concern. Test pilots arent passengers and astronauts arent passengers. Former International Space station commander chris hatfield. Boeing could be bringing new drones to the high seas. Why one of the worlds biggest defense contractors is teaming up with an ocean robot maker next. Welcome back to the best of bloomberg west. I am emily chang. Its not just the skies. The ocean could also be another frontier for drones. Boeing Just Announced that its teaming up with liquid robotic which is makes underwater drones which collect information about ocean conditions. The companies will Work Together to develop new products focused on Antisubmarine Warfare and marine surveillance. We spoke with liquid robotics ceo gary guisen. Gary gysin. I started by asking him how does the Partnership Work . Weve been working in the defense face for quite a while. Wave powered and solar powered platform, you can put any sensor on it. We can detect surface ships, submarines. So the partnership with boeing is just a natural extension of the number one defense contractor on a global basis. So partnering with the top player in the Defense Industry is just a huge companymaking event. Are you sharing technology . Absolutely. What kind . We make the drone that runs on the surface. Boeing also makes undersea drones, aerial companies, a Company Called insitu and they make aircraft of course. That have been modified to work in a military context to hunt for submarines, to do surveillance and that sort of thing. Obviously deep connections. Is that the principle driver for you . Its two things. Thats a big thing. Because were Startup Company theyve got reach that we would never have. But the vision they have is to connect all of these assets in an unmanned way from sea floor to space. So they play in satellites, they have aircraft, aerial drones, underwater drones, nothing on the surface. That is where liquid robotics comes into play. At the moment, what kind of drones are more advanced . Air drones or underwater drones . You will have to say aerial. Theyve, the connotation is sometimes is negative because theyre dropping bombs. But drones are here and pervasive and all over the place. You have the google car, consumers flying quad copters. We make an ocean drone, it listens well for things we arent armed or weaponized. We are gathering information we can supply to other people. What kind of marine surveillance are you talking about . Surface vessel detection. Thats a big one. Theres a lot of illegal fishing, human trafficking, drug running. So we can detect what kind of ship it is. What is it . We can also detect things you things underwater. Submarines is a big thing and with russia rearming their fleet, chinese submarines, iranian submarines its a hot topic to figure out where all the submarines are. How big a focus is this right now . Its a huge focus. There was something which was on the c floor which was acoustic sensing and its pretty much inoperable. Why . After the cold war there wasnt need to keep investing. But now submarine warfare is a big deal. How do other Countries Technology stack up to ours or yours . Does it just do russia and china have the same thing . Were way ahead. For ant submarine warfare spend, its a 19 billion spend. Just to put it in perspective. So the dominant share building that technology to track them were far and away ahead of the market. What has the interest, how has that impacted your business . The fascination of drones have grown. It helps. Drones are here unmanned things are being created for a reason. In our case the ocean is a dangerous place. The waves are huge. Its expensive to put a ship out in mid ocean. We can patrol and do things in a very Cost Effective way. Thats similar to delivery. So youre going to see drones. Theyre here. Theyre being developed in all different markets and i think thats going to be a big part of our lives. Cory johnson and liquid robotics ceo gary gysin there. Now to drones in the air. Google wants to test them in new mexico. These would reportedly deliver Internet Service to remote areas. I spoke about the potential and venture. Its really fascinating. Youve seen google earlier talk about this project which is the idea of using balloons to create a mesh fabric and this is sort of the natural next step. The problem is with drones in particular hot air balloons have this wonderful property that they just stay up. Drones dont. We havent done very well so far in terms of creating long lasting drones. Im a little hard pressed to see how you create even a quasi permanent presence using quad copters yet. Its a long term project. But project loom we havent heard much about how that balloon project is actually going . A little bit. We know that initially the idea was they were going to try to use it as a fabric for wifi specifically and discovered that wasnt working particularly well. Weve since gone on to using the lte, which is the Data Technology that most of us are using on our iphones and androids. That seems to be working a little better. Beyond that theres not too much weve heard. The testing obviously is continuing but theres nothing anywhere near rollout. Facebook is also trying to provide internet everywhere. Who wins, google or facebook or someone else . Im not sure what were winning exactly here other than were causing facebook and google to spend an inordinate amount of money. But my guess is google is probably in a better position to do this. I think the bigger question Going Forward is what is all of this in service of . Is it in service to bringing connectivity or Something Else thats going on here thats maybe more interesting, data collection. And again i think google is in a better position to benefit. Bloomberg contributing editor paul kedrosky. Coming up, every growing tech Company Makes mistakes along the way. So how should they address the issue to avoid disaster . The yahoo chairman is next. Welcome back to the best of bloomberg west. I am emily chang. When pay pal cofounder spoke about twitter saying there is probably a lot of potsmoking going on, dick costolo said the decision to use humor seems to have had the right effect but not all tech executives get it right and sometimes the wrong response can lead to a nightmare. How should executives address vulnerability . I talked to about it with the former ceo of live ops. I asked him if he thought the response was the right response. It appears to be since it was i laughed. It was funny and mediated the situation so then it didnt get run out of control. At the same time he was talking about mismanagement of twitter. In retrospect, has sort of backpedaled saying management has gotten better but thats got to rattle a ceo. You know, whats going on in at twitter in dick costolos mind . I dont know whats going on at twitter and im probably the wrong person. I tend to try to not comment on something unless i have inside information on it. In general when someone criticizes your leadership whether its your leadership. Well, someone is always criticizing you. Youve got to find out just one voice in the wilderness or its a trend. If its a trend, you need to actually be able to address it and respond to it and listen to it. Sometimes you need to listen to it and modify behavior, sometimes you need to listen to it and explain bare and i need to know. And sometimes you need to ignore it. One situation, the ceo of snapchat. Some emails were published that were very derogatory towards women. He apologized saying im obviously horrified. Oh, my goodness, i think he did a beautiful job of owning up to some bad behavior that was public and that there is no excuse for. Compartmentalizing it and making sure it was tied to a time in his life that he didnt have quite the maturity he has now and trying to separate that from where he is now and how he behaves now is really good. Is an apology enough . I think it is not always enough. You also have to have good behavior. So ray rice has apologized. Not enough. I dont know if he could ever apologize enough. As a human being. Oh, my goodness, the whole thing. Its not just the n. F. L. Theres no way women should ever get abused at any time and that happens over and over again. That is something we have to fix that in society. So maybe the only good thing is way more attention to this so with try to eradicate it. What you make of Roger Goodells response . Has he been apologetic enough . I dont even know if the apologies are enough. We need to see change in the n. F. L. And have the behavior get fixed. And the fact that theres controversy over whether he saw tapes or not or the n. F. L. Knew, i think theres a taint over everything how truthful is everybody in this whole thing. And how well managed is it going to be to just have it glossed over instead of fixed. I think any time you try to gloss over something and hope it goes away, most people see through that very easily. So you think the best strategy is to comment . Because in some cases companies will choose to not comment at all. I think it depends like many things it depends on what the situation is. Sometimes you cant comment. So you may be in a quiet period and somebody says something about your financials and youre not able to say anything. And the noise builds and you feel very helpless but youre not allowed to do something. So theres all kinds of times that not commenting is appropriate. I think its judgment you have to use on what is the situation . Is it better to tell the truth . Which i think is always better. How much explaining do i need to do . How vulnerable should i be . I think people give a lot of credit to people like evan who showed that he was pretty wasnt evolved very well as a young man in college and he owned up to that and said he apologized and deeply regretted it, and hopefully they give him a hall pass to give him a chance to prove that he is a much better man today. Yahoo chairman maynard webb. That doesnt for this edition of the best of lumber west. You can catch us monday through friday 1 00 p. M. And 6 00 p. M. Eastern time. 10 00 and 3 00 pacific. Well see you next week. Ranked as one of the Fastestgrowing Companies in north america, web. Coms mission is to help businesses succeed online. We provide the Marketing Solutions you need. From websites, search, and social media. We take care of it for you. You can focus on what is important. Your business