2006. This indicates the possible exit of greece from the eurozone. Before an exit is conceivable that someone would leave you cannot cheap somebody in. If the greek population decides to leave, then you can leave. You cannot hold anyone back. And that means the contagion effect would be a lot less because this is a great event. A great event. A greek event. Internet Money Transfer company zoom says they were the victim of international fraud. The company says the fraud was not about customer money or comedy systems, but employee in person nation and fraudulent requests. And the spacex gearing up for a major launch tomorrow. They plan to launch the falcon rocket to the International Space station. On his return to earth, spacex will attempt to land the rocket on a platform floating in the middle of the atlantic ocean. They have landed rockets on platforms twice before. The holidays are done. That means it is time for the Consumer Electronics show in las vegas. It opened it to the media today the public tomorrow. 600,000 people in the crowds there. This year, the internet of things was the major showcase. Smart cars, wearable gadgets and tvs. The big names will be there including samsung, sony, automakers. And some big names will not be there. Indeed, apple. Neither will microsoft. Joining me, the president of check analysis Tech Analysis Research as well as our regular contributor joining us from swanky san diego. Paul, good to see you. Bob focusing here on the internet of things there is something we have hearing about for a year. It could have talked about any number what is new this year in the internet of things . I think what is new this year is we are seeing a variety of devices we have never seen in the past. I got press releases about smart toothbrushes. And bracelets. We are seeing a range of stuff we have never seen before. [indiscernible] bloomberg. Com the issue is we have a bunch of individual products and what people want, i think, is this idea of a connect did home. But the reality is it is more of a disconnected home. I wrote a guest column in usa today on friday. You have this that has its own set of absent this has it set of apps and there is no way of pulling these together. That is the challenge i see. Paul, there are so many Consumer Electronics shows. I know. And as an investor there were important points i was able to pull out of this. It was not just me not knowing what was going on, but the circles on the calendar. When you go to the Consumer Electronics show, how do you separate the signals from noise . By not going, actually is the best way to separate. The risk of going, it is so overwhelming. To separate this incredibly splashy i dont know connected dishwasher to a genuine signal and say, you know what . Does not only has legs for the company, but it will cause problems for companies a, b, and c as well. So, it is really important at shows like ces to stand back and say, this has importance to an individual company, but as far as affecting the stock and that good stuff, it will also cause damage to other people. I kind of look at both of those. It is not enough to have the novelty. It has to be novelty with consequences for somebody else. Right now we are showing one of my favorite ridiculous connected devices which is the connected refrigerator. I see this year after year after year. Someone comes out with a refrigerator with a screen that is connected that no one ever figures out how to use. But because of low power bluetooth and devices like some of the nest devices, the drop cam and so far acting as hubs and their ability to be controlled by android or the iphone is this your different for connected devices in the internet of things . Paul, to you . I am hugely optimistic about what is happening. You have to think about the feverish pace of products and the perspective of wearables right now. I was looking the sort of idea of the bluetooth wearable thermometer. Helicopter pilots and people who want to max out can monitor their kidss temperature during the night. But the notion this is possible and you can manager with respect to power consumption is really important. Wearables will quickly become the fabric of everything around you and that is when the stuff really becomes interesting. Not that you have a great big gadget hanging off your wrist. Today we saw a ring wearable which looked like something that might eventually turn into ironman or something area iron man or something. The idea is important. It probably augurs well for apple and the new watch product. I think if you buy shares of tesla you may turn into iron man. What makes it different this year . What makes it believable this year . What has been so unbelievable in years past. The topic of wearables is a good one. We see a bunch of lowcost pretty high quality sensors bringing in a huge amount of information. One of the interesting things i think we will see happen this year from this is this idea about big data about you. You can have big data about yourself because of all of the sensor data between your health and fitness wearables, the thermometer, all of these wearables, the environmental information. You combine that with all the tracking online. All of a sudden you have this big potential. Scary on one hand. In opportunity on another. Then there is the sensors in the quality of the sensors out there. Paul, you mentioned the damage done. When i went to this as a money manager i will give you an example. The firm i went to work for was a short on shares of what i think is a great company. They had a product that i thought might be undermined by a product coming out of asia. And sure enough, there were dozens of competitors with similar technologies. Is that something useful to look for, where other Companies Might feel pain . You know, i really agree. From the standpoint of an investor, that is really where to look. Who knows what will help in terms of which products will succeed . Garmins is everyones great white whale or favorite whipping boy, take your pick. Specifically, garment announced three new wearable products various watch products that are really interesting, but in some ways they are of what happened in the early days of the pc industry. They are stand alone. They are proprietary devices. Theyre really fascinating devices. But then you look at android and ios with respect to using mobile platforms that are emerging. The days of proprietary wearables will pass pretty quickly. So maybe this will finally be the year that garmin gets harpooned. Having that against them, im not going to take that bet. Let me ask you have you picked the losers when you go cbs new products when you go see these new products . The losers are the ones who will try to do things that are too outlandish right now. Right now, i think you will see some crazy promises, crazy things out there and to me, those are big red flags. People who think theyre going to change the world are medically. I think we will have to see incremental changes for these things to work. And do not forget when we talk about wearables. We have the apple watch hanging up in the distance. Apple brings credibility to a lot of markets. When apple enters the market with their watch that will give credibility to the category and in general get more people looking at it, considering it. The idea generation, it will be an interesting show this year. Are you going . I am going. Bob odonnell, Paul Kedrosky always appreciate your time. Where ariel left off dishs new streaming service. We are online on apple tv and amazon fire tv. This is bloomberg west. Cory johnson. Dish Network Plans to unveil the First Streaming Service from a cable or satellite company. Hbo is also announcing off during an overthetop Service Later this year. Joining me, paul sweeney in new york. It would appear that the dam has finally broken. The major programmer is saying, screw the cable companies. We are going directly to consumers and giving them what we want. Yet, and they have thrown down the gauntlet here. This is a key issue for the whole media ecosystem. The big thing about these distributing cable companies, satellite companies, Media Companies like disney. They have all lived and died the last 30, 40 years with the concept of the bundle where consumers can pay 80 dollars when hundred dollars a month for a whole suite of channels, and now the question is that bundle at risk . Is there a market of consumers who want to pay a much lower price point for fewer channels . Dish is putting out a channel lineup that interestingly does include espn and we will see the market a man. Lets talk about that. Espn and hbo are the two Single Properties that people pay up for and get stuck with a package or whatever. Particularly with espn i watched a lot of espn this weekend. There was some spectacular football and also the stuart scott coverage. My heart goes out to his family. It just really spoke to how powerful that franchise is for disney, but how espn really drives the cable business. If you talk to the disney folks, when they think about espn, they think about it as a brand, not necessarily a cable channel. Multiple channels of espn. Online digital properties. They treat espn as they would their other brands, whether it is a disney character. Espn is one of the key drivers probably for any package that is going to be brought over the internet. It is going to have to some have to have some major sports component. We do know that consumers continue to watch sports. Those ratings continue to be outstanding. The College Football semifinals games the two highestrated cable shows ever. Really be brisk here, if you were a big media company, how much programming do a put out direct over the internet ala hbo, versus how much do i try to keep in the bundle . It is pretty clear that is where the customers want to be. But the rapid move toward mobile, people watching tablets, both screens, it is clear that people want to have access to content wherever they are. They absolutely have to be there. Again, the fine line that these Media Companies walked and that includes the cable distributors how they protect to their existing ecosystem where they are getting 80 to 100 a month, while at the same time realizing a big chunk of their Subscriber Base is getting content outside of the package online, whether it is net licks or hbo netflix or hbo Something Like that. They have to make sure that they do not suffer the same fate as the Music Industry 15 years ago. The Media Companies have to maintain pricing control of their content, to make sure that they get paid every step of the way, whether it is inside or outside of the bundle. We have seen a lot of baby steps. Dish, late last year, it hbo going direct to the consumer. That is one of the things we have highlighted for 2015. How well will be big Media Companies manage that transition from the mandated cable bundle to a direct consumer approach . Bloomberg Television Director of market research, paul sweeney, think you very much. Bloomberg west will be right back. On cory johnson and this is bloomberg west. We are constantly hearing about big new things and technology and here is one. It is always a way by about 20 years. Wearable technology. A company in rochester, new york has been trying to mine this for years, but has just gotten a big boost from intel. Scott travers joins me via skype. Still with me, Paul Kedrosky. Your company has been going after this for a long time, and all of a sudden, oculus happens and they invest in your company. Why . I cant speak to all of intels reasons for investing in vuzix. One of the really grails of these spaces wearable display systems. There are some and he things you can do that you just cannot do with any other form of wearable technology. At the problem is most people do not want to look like a nerd when they are wearing their systems. Oculus is a prime example. Oculus google glass also has challenges. You look so out of sort of odd. Ultimately these things will look just like a pair of glasses. Maybe that is one of the reasons they wanted to invest in vuzix, thats because where we are going. By the end of this year, we will have a device that looks like conventional sunglasses. From the financials, it looks like you are spinning plates really just staying in existence long enough to get to that spot. Talk about the decision to sell your Tactical Defense unit which seems to be a Firm Business for you. I wonder if that is a lesson for something that looks at work that is too far away are taking too long . Actually our defense business is a 13 million on an annual basis, 50 60 up and down between consumer and defense. The technology that we used was good for the defense space, but it was not the technology that was needed in the consumer space and then the industrial space. This is a business that up until just recently was very difficult to find. Typically Companies Like oculus have changed that paradigm. C the market itself is changing in a big way. So yeah the market itself is changing in a big way. So, yeah we sold the Defense Division because we knew this change is coming. Tell us something that people could not do before that they will be able to do that we can see from your financial . Vuzix is making the smart glasses, and you can maybe see a pair of them here. In the industry, they do a great job. There is a list of companies now that are trying to employ this Technology FieldService Applications stuff like that. You could see that not everybody would wear this walking down the street. That said, the dollars from intel are being used to help move this technology to the market. All right, vuzix ceo paul travers. We will be right back. Time now for Bloomberg Television on the markets. Im olivia sterns. Traders have gone back to work with the full first week of trading after the holidays. We saw Energy Stocks took the biggest tip. Oil fell below 50 a barrel for the first time in five and a half years. Also on concerns of greece leaving the euro. Bloomberg west we are watchingbloomberg west, and i am cory johnson. Delivering apple watch early this year, and it may set the tone for the Consumer Electronics show that starts today. Of course, the new wearable device will be pricing the highend version at we do not know, but can apple pull off another home run with this watch as it did with the iphone and the ipad . Joining us is an analyst. Good to see you. This apple watch. Obviously, it is going to lead a lot of the discussion that is happening in las vegas this week. What about the size of this market . We are thinking about a smartwatch market, not the broader watch market, so that will be initially a smaller market, and what we have been doing is we have been serving a lot of people, about 10,000 people in the u. S. , and some of them knew before earlier in the year and did not know what the watch looked like, and the ones later on did know, but the interest level is low surprisingly low. About 10 of iphone buyers say they are going to buy the watch. It is clearly the big topic, but it is going to take maybe some more powerful apps to drive the value for consumers to understand why they need the watch versus just use their phone. Greg specifically, and you do as much work as anyone i know, and i feel like trying to figure out what trend to tie it to me sit bit, and some people wear their heart rate monitors, and do you take that and multiply it . What sort of logic do you attach to that growth rate . We think the general wearable market is a good starting point and there is about 5 million of those per year, so it is a good starting point. I think it shows that this is not the phone market. This is not a one billion units per year market, so the value and really the power of the apple watch is it is going to go beyond fitness. It is going to be a platform. To answer your question, we start with the base level of how many sit bits are out there, and then the expanded size. We think a good way to think about this is a subsection of what the current iphone uses are, so the big picture is this. About this as it is somewhere between 10 Million Units and 20 Million Units in the first year, and that is going to compare with about 200 million iphones, and down the road, this could be a 50 million unit type of business, but it is not going to be a 300 million unit type of business. Ever . I think it would be tough. You do not want to say never but probably down the road, that is a possibility, but not in the near term. I guess my question is, what is the thing that is going to make this incrementally where you say, oh, my god, this is taking off . I mean, what is the one thing that can change that . If you look at the basic level, the watch part, and obviously people use their phone as their watch, but the pocket watch was basically eliminated when the wristwatch came out, so there is a lot of utility having some things readily accessible on your wrist, so i think to answer your question, to some the value will be for things that are easily accessed whether it be apple pay or opening locks, and they used the starwood example, where you go up to your room and wave your watch, and your car, assuming the battery holds up, and you can access your home, so i think some of the value is going to be some of those everyday things that are kind of annoying that you take out of your pocket. To take keys or your phone out of your pocket, and putting that on your wrist i think is going to be some of the initial big value. Longterm, health and wellness is going to be something bigger and we need developers to build those applications. So we talk about the price point for the entrylevel model, and i wonder about the next few weeks and months the addition and the cost of the addition. How much will the apple edition cost . We think it can be well above 1000. If i could guess, it is going to be about 1100 dollars or 1200 so it will be a big ticket item. I think the average price is going to be somewhere around 500. Higher than the 350 entrylevel. I wonder if apple is looking at this as a very different way to market products, laces like burberry and other places, and if they are thinking about retail at multiple price points and limited runs. Very different from the steve jobs approach of one great device for everyone. You definitely want to make it so it is personalized. Out of that is the detachable bands so you can dramatically change the look of the watch by changing out the bands, and as you say, they have gone with personalization with this more so than with any other product, so i would agree with that. They still want the basic platform and the real substance of the technology to be mainstream or to be consistent across the board, but i think the ability to personalize it is one of the key differences between the watch and other apple products. The buying of that personalization. This is going to be a great story. Senior analyst, thank you very much. Well, from start up to apple, a rival that has become one of the largest smartphone makers of 2014, and now we know just how large print details, next. I am cory johnson, and this is bloomberg west. Xiamoi, the chinese smartphone maker, said sales doubled, selling more phones in 2014 than the previous year, and most of the sales have come within china, but the question is, can this continue outside of china where they face problems about copyright and other issues, and i am joined by guest from new york. I think a lot of people including recent investors are penciling out the growth in china as if it will go ross the world with similar ease. Will it . I think in the emerging market, it is a distinct possibility, and because the price point of these phones is a lot lower than the other smart phones, so i think the emerging markets, russia india, you could see similar growth rates. Why . What is it about those markets . Anyone loves a bargain. Yes, but a much Higher Quality point. You are getting an apple experience for like one fourth the price, and that is hard to beat. I actually had this discussion with a friend of mine a few weeks ago when they were selling some xaiaomi equipment, and i think all of it was sold within six seconds or seven seconds, though if you were to look at that level of excitement, one of the other things that xiaomi does, they limit the supply of the phone or the ipad or tablet and that really makes it a big deal, as well. I wonder if they have copyright problems that will make it much more difficult to come to the market like the u. S. , if the applelike experience might be owned by apple, and they will get their pants sued off of them if they come to the u. S. Yes, that will be a problem anywhere in the western world. A maybe they will be limited to those places where the copyright protection does not extend . I would not say does not extend, but they are not as strict as they are in the u. S. And europe, but the smartphone markets, the emerging markets, if you really want to think about it, i would say how many people in the u. S. , you know need to buy another smartphone if they already do not have one . So among the investors in the most recent round was the very optimistic yuri milner the russian investor in a lot of Big Technology the buddies, with facebook, and also there in size in groupon, and listen to what he had to sing in terms of talking about that investment and how he chose it. He said, i was attracted by the size ahead of them. I do not think there is a company that has reached this as fast as them. In terms of its speed of growth. But, i would add that it is probably unprofitable. The company has made a point of saying, we are going to offer a top experience because our profits are so small. Does that put the company in a little more risky than otherwise . One thing technology companys have been embarking on in the last few years is to make sure they have the biggest share possible. We do not know what they have in stock, but it is possible for them to offer some Digital Services internet gaming, digital video, once they have a platform base. So in other words established the phone as a delivery device, not a profit center, so you can profit on the goods and services that come across the phone. I would say so. So should we therefore be looking for more from them that is content related . Yes. We have heard rumblings that they have tied up with bidu. They have another tv provider in china that they have a deal with. It is possible that they might look into gaming. There is all sorts of stuff they can be delivered from this particular platform once you have a sizable user base. And the carriers might also have coming to say about that as well. Thank you, as always. And speaking of television, the world of sports remembering espn announcer stuart scott who has died of cancer at the age of 49, a fixture on espn since the 1990s, also with monday night football, and he was known for his catchphrases like booyow, and a moment of silence was held before the playoff game, and president obama released a statement, with stars like Magic Johnson and lebron james all posting tribute to that legend who is gone far too soon. Bloomberg west will be right back. This is bloomberg west and i am cory johnson. Google wants to push further into your living room. This works with one of the chrome casts and supposedly the press of a button. Google is working with samsung lg, and others for speakers for the service that will be available in the spring. Well, a surprising twist in the Music Industry. Sales of downloaded songs plummeted, but vinyl is making a comeback. Vinyl records posted 9. 2 Million Dollars in sales, a 52 increase from the previous year. Uses of streaming Services Also grew, a 50 4 increase from 106 billion in 2013 but paid downloads of songs declining by 12 . And then helping us from skype is a representative of a research firm. So streaming is growing almost as fast or just a little bit faster than vinyl. So is this back to the future or what is going on here . It is not quite back to the future. Vinyl sales has seen some great growth, and vinyl is still a real niche market and it is just capturing some of the spending of the hipsters, about half of the people under the age of age of 25 who buys singles do not even have a turntable. This is just their way of expressing them being a fan of a particular artist but the big story is the declining downloads, because we are in a transition process. What is happening now is all most exactly what happened a decade ago and the itunes music store was kicking into gear, and people stopped buying cds and they stop buying cds and are starting to buy downloads. Now, music subscriptions. Lets talk about this. Probably the most important and powerful this is in all the world of music was apple music and itunes, and steve jobs famously said that people want to own their music. He built the business on that. Is he wrong . No, he is not wrong, it is just what ownership means. It is changing a lot. Owning does not mean having copies residing on your shelf or even a digital file sitting on your hard drive. Ownership is being reinvented. Ownership can mean having permit access to your playlists. Ownership can mean being always able to get to the music you love at the swipe of a finger so steve jobs was absolutely making the Reference Point at a time when ownership really did mean holding something, so strictly speaking, yes, he is wrong, but by the language of today and the language of todays digital situation, he got it right. The access to something on a permanent basis is actually fleeting. Are there records or recordings i should say, that i love on spotify that have disappeared from spotify. I presume they have lost the rights of those. Do the right of certain tracks become a more valuable item or the permanence of those rights and the losers who lose those rights, to hurt the Service Overall . Yes, you have hit upon something. This is the teething pains of streaming. Downloads, bands like ac dc, led zeppelin, the beatles. Ac dc. Where is ac dc on spotify . Exactly. Ac dc only got onto itunes a few years ago. Ac dc is pretty conservative when it comes to digital. The sort of artist made their money when life was really simple. You sold little, shiny discs, and people came to your concert, and that was it. Nowadays, it is far more complex. You look at the way a taylor swift makes their money, the way these guys have made their careers, they have to be thinking about 6, 7 eight main sources of income simultaneously, so without trying to be critical of those old guys, change is difficult, and technology can look really unnerving, particularly when youre jumping into the unknown, which is what is happening with streaming. I think ultimately, give it a few years. More and more of these artists will learn that streaming is where the future is. Whether it is the future they want or not is another matter. They cannot be resisting too long. Otherwise, people go for illegal alternatives. I think it is teething problems. Yes, i just wonder if we will see some of those. With the digital media, it might be ac dc, and then led zeppelin and Frank Sinatra were the big holdouts, and by holding out, they got some pretty sweet deals, or at least their camps did. We will continue to watch this and what the move to digital means. Thank you very much. Well, on bloomberg west, we focus on one number that means a lot. The bwest byte. 74. Which is the number ranking of the end of power on amazon. Com and that is the book that Mark Zuckerberg picked as his first book to read of the year. He is going to read something new every couple of weeks, and he has already had sort of the oprah effect on this book. You cannot buy it anymore. Is there going to be a book club with Mark Zuckerberg . It is about how power has shifted from military and government to individuals, which is, of course, part of Mark Zuckerbergs series of connecting the world and giving people more power, but we had the first interview with the author of the book who said it was completely surprised. He did not know this is going to happen, and he was overjoyed. And consuming these books at what pace . One every two weeks. That is a lot. What are you reading right now . Right now i am reading the Marissa Mayer book. Interesting. I have read a couple of books on instagram, of all things, and they have had some great feedback, so maybe i will get back to that. There is no better way to get short form ideas about longform media. And he posted about writing his shareholder letter on his phone. He writes to staff on his phone using facebook messenger, and hopefully now he is using some other apps. And from bloomberg news, thank you very much. You can find the latest headlines anytime on your phone. Mark zuckerberg is getting them on his phone or online. There will be more bloomberg west tomorrow