Transcripts For BLOOMBERG Bloomberg West 20150210

Calculus . And the possibility of lethal defensive weapons is one of those options being examined. But i have not made a decision about that yet. Cory the latest all round of diplomacy is scheduled for wednesday. Qualcomm settled a huge battle over enforcing its licenses in china. Qualcomm has been fined nearly a billion dollars for antitrust violations. But in paying that fine, it gets a firm new licensing base. Licensing rate. The ability to connect royalties on china is based on qualcomm designs. Qualcomm boosted its revenue and profit forecasts. Microsoft is planning its biggest bond sale ever. They are going to issue 10. 8 billion in debt, in six parts. Microsoft is one of only a handful of companies with a aaa rating. Amc says breaking bad spinoff Better Call Saul had the biggest series premier cable has ever seen, helped by a leadin of the walking dead. The zombie series attracted 15. 6 million viewers. Now to the lead. Spacex has postponed the launch of its falcon nine rocket for the second time. This comes after the weekend launch was scrubbed with 2. 5 minutes to go. Elon musk tweeted, air force tracking radar went down. Launch postponed to same time tomorrow. Once a rocket gets off the ground, spacex has a goal to get a deep space climate observatory into orbit, and to land the first stage rocket booster on a barge floating in the ocean, something it failed to do last month. Joining us now from new york there across the, live from cape canaveral, is dana hull of bloomberg news. What is the scene on the ground . Dano to be clear, i am in cocoa beach. There is not much of a scene at the launch facility itself. Cory lovely cocoa beach, i have logged some time there myself. It is a big deal, the space race. How do we put what is happening today into perspective . Eric today was the second postponement of the spacex launch, but it is difficult to count how many times the payroll has been carrying has been postponed. Al gores in florida for this launch. 17 years ago this month, he came up with the nugget of an idea that became the core of the satellite. Cory lets talk about the zombie satellite. A fantastic piece on the Bloomberg Business website about this satellite project. It goes all the way to a latenight inspiration. Tell me about this. Eric al gore, when he became as president in january 1993, hung a picture of the whole earth in his office, removing a 19th century predecessor he would not name. Five or six years later, he was getting a little tired of that one, so he called nasa and asked for another picture of the whole earth. The problem was, there was not one. What he realized was that they could send sort of a protogopro, a late 1990s version, fling at a million miles into space, have it turn around and stream back continuous pictures of the earth. Scientists were sort of upset about the involvement of a political figure in Satellite Development process. They told me that after he invented the internet, he needed to put something on it. Cory it is the nanny cam of the earth, right . Eric for the whole earth. Cory but there was a scientific process, to try to find Something Else they could do. Eric that is absolutely true. As soon as he came up with the idea, he knew that is not a reason to send a satellite into space. He conducted a series of meetings with nasa, what became a proposal. Nasa selected a three instrument project that, over the course of 18 months, became this discover satellite. It was not called that. It was initially called triana, a gorgeous name, after the sailor on columbuss ship the pinto who first saw the new world. What ensued was a political fight in washington. You remember al gore was running for president at this time. The Congressional Democrats i apologize republicans wanted no part of what they started ridiculing as goresat. This story is so long and so epic. Cory that is why i tweeted out the link to your story, which is long, and epic, and awesome. In addition to that satellite, we have this amazing story of spacex. Where in the timeline of what spacex is trying to achieve does this launch fit . What are they trying to get done here that they have not done before . Dana spacex has the ultimate goal of creating reusable rockets that would allow for interplanetary travel and human settlement on mars. Part of their effort is to prove rocket reusability. The news in florida is, this is not just a launch into deep space orbit. It is the ability of spacex to land the falcon nine rocket booster successfully on their custombuilt ocean platform that is floating hundreds of miles away in the atlantic ocean. Cory last time, elon musk tweeted, before we had the epic video, which is my favorite vine of all time, he tweeted, the drone spaceport ship god forbid we call it a barge. But landed hard. Another wonderful euphemism. It did not land hard. It crashed. Good on him for trying. Is this the kind of Epic Financial change that would make this business go from a money loser to a moneymaker . Dana spacex is a closelyheld company. I would not assume that they are losing money. They have quite a lot of contracts with nasa and private clients as well. I would not assume anything about spacex finances until we have more information. But reusability is huge. That has been the holy grail for decades. No one else has ever really tried it in this way. If they can successfully land the rocket on the platform, they are going to try again tomorrow night, it would be a huge technological advance for them. It would still take several other tests before they could attempt a landing on land. But i think that with every test, even if some are a failure, spacex is gaining more data, learning from their mistakes, and pressing on. For the launch tomorrow, they will have a lot more hydraulics than they did the first time around. Cory thank you very much for this interesting story. We will be watching the skies tonight and tomorrow. You are watching tv. Or is tv watching you . New privacy concerns over Samsung Smart tvs, and exactly what they are picking up inside your house that you might not realize they are watching. We tell you the details, next on bloomberg west. Cory here is a check of your world news headlines. Drug cartels, arms dealers, tax evaders they all had bank , accounts with hsbcs private bank. A new report from the consortium of investigative journalists is based on documents leaked by a computer technician eight years ago. Hsbc says it has cleaned up its act since then. Netflix is now available in cuba as it seeks markets for international expansion. Starting today, cubans with Internet Access will be able to subscribe to netflix. Internet access may be about to improving cuba as the country moves toward normalized relationships with the united states. Microsoft plans to sell smartphones and tablets in africa, working with Technology Partners from china for that launch. Smartphones will cost 75 100. Microsoft looks to capitalize on growing demand for smartphones in africa. Is your smart tv watching you . Samsung is warning its customers about conversations nearly tech near the tech savvy television set. The statement from samsung says, please be aware that if you have spoken personal or sensitive information, it will be captured and transmitted to a third party through the use of Voice Recognition. That is right. Your tv is listening. How big a deal is this . The Consumer Protection Council Advisor Julia Horowitz is in d. C. Also joining us, paul kedrosky. I will start with you, julia. What do you make of this smart tv listening to me . Julia if you are watching tv, tv should not be watching your back. Cory i dont know, its nice for everyone to chip in a little bit. Is this a serious concern . Julia samsung should not be collecting personal data from people watching television, for at least two reasons. The first is that it is unnecessary. There could easily be privacyenhancing technologies built in that would eliminate or minimize the need to collect personal data from consumers. The second is that consumers like the companies, do not know what is going to happen to the data after it is collected. Cory what do you do in front of your tv you do not want people to see . Paul i like to stand there and recite my Social Security number as often as possible. Is that wrong . Cory apparently so. A smart tv, big data, Artificial Intelligence have we reached the point where we have to start being concerned about our devices watching us, or the businesses that might create . Paul we should always be concerned. I think that the question here is, you kind of have to break it down. Is the objection not just samsung. Is the objection that connected devices use Voice Recognition . I do not think that is the objection, because we all seem to be in favor of the idea that our devices can listen to us and do things based on words we speak. Is the objection that the words we speak are sometimes relate sometimes relayed outside of the device . I would hope that is not the objection, because that is the essence of cloud services. When you process voice, it often does happen through a third party. It seems like it was nuanz this time, which happens to have great Voice Recognition technology. That is no different than what happens with google, or with apple, with siri. Is the objection how good of a job they are doing anonymizing the data . That is a perfectly legitimate concern. I think privacy advocates samsung has done a poor job of this have modeled the have modeled the argument. What are we objecting to . It is not clear to me. The objection is not that somehow devices in our homes can act on voice commands. If that is the objection, people should go back to living in a cave. Cory there was some time between voice command tvs and caves. Julia, is the ultimate issue that companies have to think about the anonymization of this data . Or will they at some point not be able to collect this . Julia i would like to correct something paul said. The issue is not anonymity. It is not the use of new technologies. I think the real issue is over collection. And not careful planning. So, companies that do not know what use they are going to put to data they collect should not be over collecting in this way. Cory paul, i think it is interesting go ahead. Lots of companies that never thought there would be in an arena when they have to think about anonymizing data. Collection of cloud data of random things their customers are doing, saying, whatever. They now have to think about issues of privacy. All kinds of companies have to worry about privacy that never thought they would. Paul and apple had these issues around siris voice data. When does it become fully is fully disconnected . Is there a randomized i. D. Connected to users . It is a broad term, and i do not know what it means. The notion of overcorrection. You listen because you are not exactly sure where in your user statement the actual command resigns. People do not speak in these kinds of barked out turn on watch bloomberg. People do not want to talk like that. Devices have to listen to a whole set of expressions. If that constitutes the boundary when that becomes overharvesting, when you introduce natural language interfaces, we are kind of screwed. You will not be able to say anything that is not more complex than turn on, turn off which is a sort of nonsensical position to take. Cory i think this is going to be interesting. I think about tvs and hotel tvs in hotel rooms. There is an interesting story. It affects a lot of companies and a lot of important people. Thank you very much. Well, alibaba investing 590 million to become a major player in the cell phone market. That just happened. But can alibaba succeed where amazon is already failing . Maybe failing, or at least stumbling. We talk about that next. Cory alibaba is about to become a major player in chinas competitive smartphone market, investing 590 million in any in a chinese smartphone manufacturer. The investment would give alibaba a key weapon in its battle to acquire some control of the half a billion smartphone users in china. Alibaba will get a platform for its mobile operating system. Joining me now is the Research Director at counterpoint technology. He joins me via skype from mumbai. This is really interesting. It is a huge chunk of money for maizu, a company i have never heard of. Neil this is almost 45 of maizus revenue in 2014. This particular deal is signifying a race toward becoming a complete ecosystem player. Everyone in china is racing to become a complete ecosystem player. Right now, there is smart phone companies. They have grown on a smart phone experience. Then there are Software Service Companies Like alibaba, baidu. But there is no apple in china. Alibaba wants to become the apple of china. They want hardware as well as software. They want to have a platform, as you said, to sell all the software and services, using the hardware platform. As you have seen, the money resides in being a complete ecosystem. Cory of course, there is an apple in china, at least in the fourth quarter. It is out with an apple phone, with software from the apple app store. Is that the ultimate goal, that alibaba will have all that and more, because they will have the commerce that happens as well . Neil yes. It is an interesting business model. It is a competitor for amazon as well as apple. It has a horizontal play with ecommerce. It has a huge user base to sell it software and services content. And other partner hardware and extra stuff. At the same time, it wants to be a player like apple, because that is where most of the profits are. Cory right. Does it matter which company may company they invest in . Maizu was 13th in Chinese Market share last year. Does it matter that they invest in maizu and not xiaomi, the number two . Or does it not matter, because the phones are not that different . Neil it was a good move. Maizu is one of the best design houses in china. If you see their smartphone design language, the narrow portfolio, and the focus on the devices they have, it is a very good move. The only thing is, maizu lacked marketing muscle, or the go to Market Strategy xiaomi had for the last few years. Cory when i look at this, i wonder if the thing that makes it matter is not the marketing dollars, but the name brand alibaba has in china. I do not have a sense of alibaba tells me they have a great name brand in china, but do they . Can this propel sales, just by having an alibaba phone, but it will suddenly be successful . Neil it will not be an alibaba phone. It will definitely use the maizu brand name, which is more of a younger type brand, and second to xiaomi in terms of the overall marketing to consumers. Cory thank you very much. We appreciate it. We will have more bloomberg west right after this. A look at the grammys and the important social media story. Cory you are watching the winners and from last nights grammy awards. British singer sam smith won song of the year, record of the year, but beck got a surprise win for album of the year. Spotify tried to cash in on those winners. How can they do that . I am joined by the founder of plus capital, and of pentagon cds and tapes. The Music Industry has changed so much in the last two or three years, i wonder what the grammys are for. What do they mean for business whether of an artist, a label, or spotify . Adam it is a great question. If you look over the last decades, the grammys has always been the best marketing event that the record label business has ever had. After the grammys, there is usually a bump of a 2x to an 8x on weekly sales of a single or an album. You will see that in the spotify charts this week, but i do not know what that will do for the music business. Cory spotify just let us know what happened with beck. That record, recording, album i am still stuck with 20thcentury nouns. Adam me too. Cory it shot up 524 overnight after winning record of the year. Kanye west probably lot by probably helping a lot by dissing that win. Why dont we break it down . For an artist whose music was the least listened to he was the surprise winner, sort of except that he was nominated. For someone who had the least listened to record spotify predicted beyonce would win, because she had the most downloads. That is not how the grammys work. Adam not at all. I think back was fifth out of five on the spotify charts. This is an industry event. There is a very small number of people who curate the people who are nominated in the first place, and the voters themselves are with the academy of arts and sciences. It comes back to the demographics and taste of the members, not what is being streamed. The only thing streaming has an effect on is just like any other promotional mtv, vivo. It is how many times a member of the academy might be listening to it, not necessarily the general public. I would say it is the music is the music business. People in the music business are thinking, what is going to sell more records . If it is a popular title and they think they can sell more albums, cds, digital downloads streams cory i will go with recordings. An interesting thing is, the Digital Services have made it much harder to find what music to listen to. They have also made it a lot faster to get the music itself. If you get a spotify subscription, you got it. If you do not know who beck is you turn on shazam, you identify the artist, and you are listening to this new music. I am wondering about the importance of Something Like the grammys in terms of music discovery. It seems harder because people are not listening to the radio. Those tentpole events become much more important. Adam i agree. The duets, some of the incredible combinations the great thing about the grammys is, it is not about speeches, it is about performances. I think you will see people viewing it as a discovery event, with artist combinations you would not have heard about. Cory i wonder if there are more events that have to happen there, and if there might not be things that help people find similar music that they like. Adam shazam, spotify so many interesting playlist companies coming out right now that are helping with discovery. I will say there is this Inflection Point between discovery, exposure, and cannibalism. You are seeing that with taylor swift right now, where you are in the rarefied air of being really important. Being discovered is great through these services, but when you start to consume only through these services, the artists are going to find themselves hurting their own album business. Cory i wonder about the impact of social media, where artists with big followings end up getting more airtime, more fancy clothes from swanky designers, and all that, because social media is leading to their popularity on a lot of platforms other than just recorded music. Adam look at megan trainor. She is incredible on social media. I think it is becoming this direct to consumer opportunity for artists. I have had two major artist, two of the top artist, come to me in the past year, just to try to figure out, what do i do now that i have this direct to consumer following . How do i make money off of it . You see beyonce putting out midnight records. You see a lot of money being made, between touring and building a brand. It is not necessarily happening through the sale of music. Social media is playing an incredible part of it. It is going to reshape the way artists make money in the future. Cory interesting stuff. Great show last night, the grammys. How much do you hate your email . One of the earliest applications on the web is certainly due for an overhaul, but is there any hope . Why does email stink . That stories next. Cory how many emails are in your inbox that you are never going to look at . One venture capitalist is trying to reimagine email. He searched for five years to find Something Better. There has to be Something Better as a tool. He could not find it, so he left to focus on his own solution. A Company Called handle, aimed at increasing productivity. This email inbox thing is an awful problem. I wonder if we go from a world where the phone stopped working, so people stopped answering the phone. Then they stopped answering their answering machine. Then they moved on and cut email. Every innovation gets left in the trash pile of things they endure. Things being ignored. What do we do about that now . Shawn it is a good observation if we are starting with email but ultimately it is about your attention. If we consider attention the most important resource you have, the inbox is consuming 13 hours a week and growing. So that is where we are starting. Cory the average person gets 147 messages a day, and leaves 48 of them unopened. Already, the average person, nearly half the email is so worthless to them, they do not bother opening them. Shawn it is kind of like the old yogi berra quote, i do not go there anymore because it is too crowded. Nobody goes there anymore. Cory it was a copacabana after a fight with mickey mantle. Nobody goes anymore. It was too crowded. Shawn people keep sending your message. Ultimately, they want your attention. Facebook sends over 10 billion emails a day to get to the website. People are leaving the inbox but they are coming back to that. The solution is actually to put you back in charge. We take your inbox, but we make it part of your day, not your whole day. You actually work out of this part of your inbox called the handle timeline, which is like a to do list. Cory you are using computers to go through your inbox it is machine learning. See what you have done with email in the past, and automate that. Shawn it is part machine, but it is mostly you. People like to see the messages. You get dopamine when you check. That is why people like to look. Some check their inbox a hundred times a day. Work in peace without being distracted. We have full context awareness. You think of a future place or project. Once you do the processing, you are working on what matters to you. Cory you look at this problem for a long time, grappled with this problem a long time. Productivity has been on the table for years. Are there solutions that seem like the right solution that are not . People first work on the project and think, priority. I am going to have three priorities. Shawn we studied over 1600 people, and there is thousands of solutions. You are trying to manage your attention for when you put a sticky note on your phone, or when you send yourself an email, or you put a to do in your calendar. You are trying to say, this is what i want to do. All of those fail because it is not this integrated system. Cory an integrated to do, calendar, and email. Shawn those are the three. Cory outlook does that. Shawn it does not. Any time you move an email from one place to another, it copies it. It is in two places. When you send from a to do to an email, it is on your to do list. Cory how much of a problem are proprietary email Systems Companies have that do not allow you to use another tool . Shawn the world is changing. Anything you can get on your iphone, we can get access to as well. We can talk to your gmail server. A lot of companies are moving to google apps. Any email service in the cloud, we can get access to. Cory an intriguing problem, when we are all suffering from. Great stuff. The ceo of handle. Time to check the world news headlines. Greece will seek and seek 11. 3 billion in shortterm financing. The new government trying to stave off a funding crunch buying time to convince creditors to ease austerity demands, according to greek officials. They will propose this at a meeting with the eurozone finance ministers on wednesday. Egypt has suspended National Soccer League Matches indefinitely after at least 19 people died in a stampede at a Cairo Stadium over the weekend. The violence began after about 10,000 fans of the local cairo team tried to enter the stadium without tickets. Police reportedly fired tear gas at the crowd in response. Riots at another game three years ago left 70 people dead. And opec is cutting its forecast of Oil Supply Growth from countries outside opec by the most in at least six years. The organization predicts that nonopec nations will pump about 400,000 less barrels a day than previously estimated, because of the recent slump in Oil Prices Putting Pressure on u. S. Drillers to idle rigs. Shell and many others have curbed spending plans. Up next, a selfdescribed adventure enthusiasts responsible for this viral video a volcano diver yes, he dives into a volcano he talks about how he uses technology to capture some amazing video in one of the hottest, most dangerous places on earth. Cory you might think he has one of the coolest or craziest jobs in the earth. His experience is startups that connect people with onceinalifetime adventures, and it led to this viral video called volcano diver. 3. 7 million views on youtube. He is now out with a new volcano video. This time, he was sponsored by a handful of technology companies. What inspired the latest stunt . Check this out. Sam i always look for experiences most people do not know exist, and i wanted to make this happen. Cory but the lava, the poisonous gas, it is an amazing thing. Sam it is certainly unlike anything i have ever done. Extremely hot environment, about a thousand degrees fahrenheit when you are approaching the shore of the lava. Cory it is interesting to me that in a world of go pro, where adventures become real to people the Business Opportunities from a media standpoint and beyond. Sam i think there are so many opportunities to capture incredible content with cameras like that. That was part of my intent with this more recent expedition, going down with a film crew and capturing it in a way that has never been seen before. Cory what was involved . Sam a drone Company Called dgi, dji, and the other was a a wearable that measures your emotional response. Cory what is the emotional response one gets while lowered into a volcano . Sam peaks of excitement and troughs of nervousness and stress. We were able to overlay that on the go pro footage and retrace exactly what i was feeling, and come back with a story to tell that is more than just imagery. Cory so you used the data to add to the narrative, and narrated on top of that. Sam i am passionate about experiences and equally passionate about technology. I think there is a cool opportunity to merge those worlds, so that is what we did. Cory passionate about experiences . Sam unearthing adventures that are lesser known, and reporting back to the world on things people do not know exist, or do not know a lot about. Cory do you feel like the recording of it takes away from the personal experience . Or do you push yourself for letting someone see it . Sam Technology Allows me to capture the experience without detracting from it personally, which is part of the reason i thought it would be interesting to record this. I do not have to talk into a microphone. I am descending, and my body is doing what it is doing. We can visualize that with a chart and a biometric thumbprint. Cory what is the revenue model . Outside of the thrill. Sam i am not monetizing this yet. My goal, moving forward, is to create a series of adventures and embark with technology, and sponsor the experiences from Companies Looking for branding opportunities, and tell a story on digital outlets and on television. Cory go pro thinks they are going to build a media business, that they are going to get somebody to give them the media. They have a channel on virgin america. There is a big thing on youtube. What do you think about the potential to on that kind of media . Sam a brilliant model. They have a distributed team of filmmakers from around the world that are probably stoked to submit their films. In my case, i am interested in owning that content and working with lots of different partners, not necessarily handing it over for free. Including go pro, i think there are a lot of natural synergies. Cory the bwest byte, we focus on one number that tells us a lot. Joining us from san diego, joel rosenblatt. What have you got . Joel the number is 9600 square feet. Cory that would be a big house. Joel bigger than my home. Cory bigger than my home. My home is big. Joel it is what a developer said he might build on the property behind Mark Zuckerbergs property. Cory with a wonderful view of Mark Zuckerbergs bedroom. Joel he did not tell Mark Zuckerberg he would be looking into his bedroom, but emails indicate that is what is going to happen. Cory a guy buys a house behind Mark Zuckerberg, and send him an and sends him an email that says, as a favor to you, neighbor, at twice what i paid i will let you buy some of that property so that i cannot see into your backyard when i build my new mansion . Joel a piece of the property to afford him the privacy he thinks he deserves. The two negotiated. In the end, Mark Zuckerberg bought the entire property. Cory but he did not do what he said he was going to do . Joel he claimed the critical piece of the deal was an unwritten spoken agreement to introduce this developer to some of Mark Zuckerbergs contact, Business Contact friends. It is not clear who those people would be. That is the part he did not do. That is the core of the dispute. Cory what is your take . Paul it is easy to feel a lot of schadenfreude, and say privacy, not making connections these are things mark maybe would feel good about having happen. I find this predatory stuff depressing. What people do not realize is how widespread it is. The instant in the Tech Industry people fall out of your trees, trying to end up with a claim against you. It is really awful, and it is getting worse because of how much visibility these people have. You may not be sympathetic to mark in general, but this story is the tip of an iceberg that is really awful right now. Cory it does sound like you have a litigious guy who is just trying to get in his wallet, but could be more than that . Paul i do not think so. A loose promise was likely made. And as a result, this guy felt like he has an edge and is prepared to exploit it to the max. Cory thank you as always. Appreciate seeing you on the show. More bloomberg west tomorrow right here. The following is a paid advertisement from star vista entertainment and time life