bronx in about three minutes, but by that time, the fire had spread throughout. they were able to rescue a dozen people. several more were critically injured and are said to be fighting for their lives. police promising a bigger security detail than ever before in times square for the upcoming new year's eve celebration. it cap's a year that saw a number of deadly attacks including a vehicle assault at the same spot where revelers will bring in 2018. an army of snipers and back in spending officers will be deployed along with metal the textures and bombs trained to find explosives. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. "bloomberg technology" is up next. ♪ cory: i'm cory johnson in for emily chang, and this is "bloomberg technology." after massive gains, can big tech continue its run? and president trump resizes -- and president trump once again criticizes amazon on twitter. should the tech giant be worried. and more from our best conversations of the year with candid discussions with c palmer and meg whitman. the sector outperforming the broader market, breaking records, up nearly 30% for the year -- i did not see the final numbers, but pretty damn close to that. it was a really amazing year. just across the markets, i think. you have been investing in tech for as long as i have known you. just what a run. , david: it was a good run, but it was a nasty close today. but in the scheme of things, i , think what really distinguished tech was that growth was scarce and secular growth stories, as characterized by the fang names -- cory: you mean topline growth in technology? david: i mean topline and earnings growth and the stalwart and the largest cap name in the s&p was apple. cory: it also seems there were not -- at least i did not notice -- there were years when software and service was the thing. there were years when hardware or even consumer facing stuff was the thing. this year seemed to have been driven by m&a. david: subsectors in semi. artificial intelligence -- names nvidia were very strong. you had broadcom. adding very strong broad performances as well. as you noted, you had m&a activity, broadcom going after qualcomm. that really popped that stock at the end of the year. cory: where do you see growth coming from on the topline? salesforce a lot of people were short, just continue to blow through estimates, the stock continued to rise. i did not see the big candidates. where do you see the best opportunities for growth going forward? david: first, you have to look global. tech is a global growth the phenomenon. -- is a global growth phenomenon. some of the most successful large caps have much higher growth rates internationally than they do in the u.s. i think you have a global digitization towards tech. tech as an infrastructure, the secular shift to cloud, the use of mobile, if you will -- your smartphone is the storefront for online shopping. and then, the internet as the infrastructure of choice for all both enterprise and consumer , activity. cory: give me some names you like that you have done some work on, or names you do not know anything about. do you remember when we ran into each other in the hallway? i was doing a story from when i worked with another network, and you were there meeting with management trying to learn a little bit more about the company to make the investment. you have been doing this so many years, i wonder what research you have dug up. david: thanks. i will probably run into you at one of those hallways at ces. cory: explain how you work that conference. david: it's a madhouse, but what is really important is the opportunity to engage with management, to see the actual products in practice. i think one of the most compelling secular growth trends continued movement into the cloud. the cloud is a place called the data center and the re-hosting of data enterprise applications into that environment is a compelling spend. capex spend.lling cory: what kinds of companies? david: in the bay area, names like equinex, hosting many of the same names we talked about but also the conversion of enterprise compute. within that data center ai chips, server chips, com boxes. with blinking lights. a lot of software hosted and distributed globally and in the network. cory: interesting data center play. do you like the structure for that business? david: the reit has some unique attributes, and that is the requirement that some 80% gets -- that some 80% of the earnings gets distributed out as earnings. those are real cash earnings. the challenge in a raising rates environment is that they tend to be very rate-sensitive. if we see a reflate coming off the tax bill that was approved in december, those could be challenged in terms of valuation. cory: we see higher rates and suddenly data center stocks throwing off what is essentially a dividend. 80% of the profits coming out. training along with other reit's like real estate -- trading along with other reit's like real estate reit's. david: exactly. that actually works to the advantage of some of the fast software names because those tend to be a distant payback opportunity set. cory: i don't understand. what do you mean? david: a lot of tech companies run two sets of numbers. all generally accepted both gap earnings and pro forma numbers. within the press release are, if you will, that channel of both gap earnings and pro forma numbers. in a raising rates environment, investors want more near-term cash flow as opposed to distant cash flow. again, if we get this reflate from the stimulus package out of the tax package, i would contend that companies planning to land and expand and maybe give profits five years out could be challenged names. cory: so revenue recognition makes it harder in a rising rate environment for companies not doing a lot with profits as opposed to companies like sap and oracle that the david: you are going to shift some of that to the near-term period, but again, the real swing factor on many of these companies is -- can you get leverage out of your business model on the sales and marketing side and, quite frankly, in the case of salesforce, as the market and company pointed out in recent meeting news, how do you prove the monetization of your existing workforce? cory: a lot of private companies on the side -- does it matter if we see those companies come out? david: i think it is terribly important we get a new next generation of public companies. just as a historical factoid, if you took the nasdaq peak -- and we were there, march of 2000 -- the top 15 companies, and you ask where are those companies are now, there is only one name in that list that has a higher valuation today than it did in march 2000. cory: that would be? google? it was not even on the list, was it? david: that is the point. on the list today are the facebooks and googles, which were not even around at that point. the importance is that new company formation and coming public into the capital markets. cory: i really appreciated. -- i really appreciate it. we have been doing this every year on new year's eve for many years. maybe we will go back to the tuxes next year. we are watching netflix, scrapping cash bonuses for top executives. a new tax benefit eliminate deductions for performance-based bonuses for managers who make $1 million or more, so it is no longer a write-off. coming up, one of the biggest battles in 2018 could be the president versus amazon. we discuss why president trump is taking aim at the tech giant. and "bloomberg technology" live on twitter right now and every weekday at 5:00 on the east coast, 2:00 on the west. this is bloomberg. ♪ cory: president trump has once again criticized amazon. on friday, the president tweeted -- officethe u.s. post which is losing -- should be charging much more. i did not do a donald trump imitation. that was a missed opportunity. we are joined by alex wayne in washington and you are welcome to do in imitation of the president. since you are imitating business analysts -- tell me about the business of the post office. can the post office just decide to pick one customer and charge more money? >> yeah, no, of course. the problem with the post office has nothing to do with amazon. it is a government agency forced to act like a for-profit business, and it does not do that very well, of course. its rates are decided by an independent board. they are generally too low for most of what it does. it is required by law to deliver to every address in the united states. the post office would like to see is genuine reform of how they operate so they can set rates more competitively and maybe not delivered to some places that are really expensive to get to. cory: we talked this morning, and i pointed out that amazon -- they do not tell us how their business works, but they do tell us about their shipping costs, which are massive, far exceeding their shipping revenues. the losses they have an shipping were as high as $7.2 billion last year. they are expected to be 30% higher this year. alex: sure. the reason they get such a good price from the post office -- it has been reported about two bucks per package -- is because they are such a high-volume shipper. they are almost certainly the post office's highest volume client. although the details of that relationship are secret. cory: there is a lot of competition out there. the post office competing with fedex, ups, dhl, and many others outside of the country, but again, those companies do not have the requirement to show up at everyone's house every single weekday and on saturday. alex: right, and potentially amazon could be a competitor to the post office itself. amazon is working on several different methods of delivering packages itself, including the last mile but the post office handles right now. i don't think the post office has a lot of room to raise prices, and regardless, donald trump certainly cannot order them to. cory: when i was at time we had a lot of magazines delivered to a lot of post offices, and they did their own delivery, bypassing the post office, and they made sure there were stories in the local press the post office could see that they were building this capability. there was no intention to actually roll this business out. we just wanted the post office to see this when we entered into negotiation about the cost of delivering "sports illustrated." people, fortune, and the like. alex: would not surprise me if amazon is playing the same game. cory: exactly. what do you think amazon is trying to do in terms of competition and putting drones on "60 minutes"? alex: i would be surprised if amazon can beat two bucks a package, even with a drone. it is not my job to analyze their business, but putting people out on the streets, in trucks is expensive. , the post office has been doing it a long time and is pretty good at it. it seems like a reasonable cost for amazon to have the post office do that for them. cory: he is not a business political analyst, but he plays one on tv. alex wayne. thank you for joining us. coming up, apple apologizes for slowing down older iphones. meanwhile, we take a look at the top stocks of 2017. this is bloomberg. ♪ cory: i know you are wondering what the top performing ipo was over the last year. it was roku. roku had a big run. three months into the deal, they set a pace more than doubling since hitting in september. on the other end of the spectrum, blue apron has seen shares fall by more than 50% since its debut in june. kind of sick to the stomach on -- kind of sickens the stomach on that one. apple issued a formal apology for creating a software upgrade that hurt the performance of iphone 6's and 6 s's. while the news is drawing ire -- the company is on track to close out a banner year. our bloomberg technology reporter who covers all things apple for us is here to talk about it. >> if you have a slightly older battery, last year, apple noticed or some customers started complaining that their phones were crashing, and apple looked at it and realized it was because some of the faster processes being performed by the new operating system were placing greater demand on the power they pulled out of the older batteries, and they were crashing. cory: high-performance apps were crashing because they were written with the expectation of a more powerful processor. alex: exactly. and it is built on a better processing system. frankly, this is why they are issuing the new fix, which is that a new battery can cope with this performance. i think lots of the things you can do with, say, multiple lenses on the camera, image stabilization and things like that. cory: i love criticizing apple. it is fairly amazing, i wish -- they would be criticized more, but i think it is amazing, the backwards compatibility they tried to build into this as they are really racing ahead. this phone is really very different than the one before it and the one after it will have even more capabilities and better power consumption characteristics, much more powerful chip. it is a very big technological challenge. alex: i think it is actually interesting to look at it slightly upside down. it is a tacit admission that the hardware in terms of the process and actualrocessor computing power within the phone can still run the new software, so in some ways, it is not this kind of thing they're trying to go for, and that might create a problem for apple because one of the reasons the stock is so high this year is because investors are looking forward to this super cycle. 1/3 of phone owners decide to replace the battery so their phone can still perform well with the new operating system, that begs the question -- will they not go for the new iphone x or iphone 8? cory: we have seen the time in which people replace devices stretching out over time, not just in phones but computers as well. >> iphone 6 was the sweet spot. being targetedre by the new phones, iphone x. cory: there was a belief in their being a big cycle with the iphone x. >> you are in the target area. cory it's not too late for you : to shop for my birthday. you don't have to wait. you can go out right now. i will do the rest of the segment by myself if you run to the apple store -- you are not going to do that. fine. alex: two years was the classic upgrade cycle. now it is extended to three years. the iphone 6 came out in 2014, so it is very much in that sweet spot. cory: also interesting what a big product refresh they had with the phone, the watch, and airplay. alex: we did see growth across all their product sectors. we will probably see more refreshes -- we did not see new ipads this year -- we did see the ipad pro, which is the crazy expensive ipad coming out. cory: a guy sitting across from me on the plane the other day had one. alex: his elbow extending out into your area as well. you should get the business class seats. cory: there's still the expectation of 10% year-over-year revenue growth for apple in q4, which concludes this week. alex: it is interesting the kind of relativism we have when we talk about apple. apple is still growing ahead of pace, but that pace is slightly slower than it was to do for -- then it was two or three years ago. people are looking for a repeat of what they saw and 2015, or 2014. it is still growing, just perhaps not as fast as a few years ago. cory: great time. great time with you this year on tv, radio, walking around this newsroom and this great city. really appreciate it. you have done such a good job for us. alex: thank you very much. cheers. cory: coming up, believing in bitcoin. the winklevi talk about it coming up. you can check us out on the bloomberg app, sirius xm, and download our podcast, coast to coast. this is bloomberg. ♪ >> you are watching "bloomberg technology." let's check first word news. new york city's fire commissioner says the fire in the bronx last night was started by a three-year-old boy and a mother who fled the apartment, leaving the door open. he provided more details today. >> last night's tragic fire, other than 9/11 was the worst loss of life in almost 20 years -- 28 years for our city. that fire occurred in 1990. we are in the midst of the worst month of the loss of life in our city from fire in the past 10 years. >> 12 people including four children died when the fire raced through their building. meanwhile in another deadly fire, this one at an upscale restaurant in mumbai, india. 14 killed and dozens injured. an artificial bamboo ceiling burned quickly and collapsed as people tried to escape. turkey has finalized its purchase of an antimissile system from russia. the deal closed despite concerns voiced by some of turkey's nato allies. turkey is now the first member of the military alliance to own russia's most advanced air defense system as turkey strengthens ties with russia and relations with other western nations deteriorates. the prime minister of russia blames anti-russian hysteria. for meddling -- for alleged meddling in the u.s. election. the kremlin hopes the relationship improves, but concludes it takes two to tango. for the second time since september 11, a defense secretary does not visit troops in a war zone. general mattis broke a long-standing tradition of thanking combat veterans. the only time a holiday visit was skipped since americans began fighting in afghanistan in 2002. by then secretary donald rumsfeld. and bundle up, record cold grips , much of the northwest. temperatures are below zero from new england to the northern plains. dozens of cities are setting daily cold records because of the arctic blast. the deep freeze is expected to hang around through next week. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ cory: this is the "bloomberg technology." i am cory johnson. bitcoin trading after a selloff yesterday, nevermind. bitcoin bouncing off lower levels, well above $14,000 at the close. this is after south korea curbed speculation and suggested retail customers might not he able to trade it everywhere they want. the digital currency has dropped from a record high at $19,511. the cme group introduced its futures contract. among the largest holders, cameron and tyler winklevoss founded a crypto currency exchange called gemini. they explain why they made such an early big bet on this asset in 2013. >> we think bitcoin is like gold 2.0. whatever your reasons for investing in gold, whether it is scarcity, durability, fungibility, bitcoin matches or beats gold across the board in all those categories. it is not scarce. it is fixed. you can send it around like an email. it is a lot harder to do that with bars of gold. the market cap is $300 billion for bitcoin, for gold $6 trillion. we think bitcoin disrupts gold. we have said that since the market cap was $1 billion for bitcoin. we are 300 times more correct today. there is a chance it will be 20 more times from here on out. cory: is there any reason people -- is there any reason to believe that people are selling gold and buying bitcoin? >> anyone who likes the characteristics of gold will be attracted to bitcoin. >> there was a note talking about that. from his research, he has not seen that yet because etf's have not seen outflows from gold. >> you said you could be 20 times more correct than now? we could see another 20 or 30 fold increase in the price of bitcoin. how do you get there? even positive -- even people positive on bitcoin said we could see a sharp correction, then go back up, that it could be a rocky road to get there. >> part of that is creating access to it. we've built gemini.com, a licensed exchange custodian two years ago. we are onshore, headquartered in new york, so it is easier for hedge funds to get involved. we have some of the world's most sophisticated traders and prop market makers on gemini. phase two of that is creating a which we havect done with a bitcoin futures contract that is cash settles which allows institutions trading in chicago to get exposure to bitcoin with cash and settle out with cash. they don't have to touch or feel bitcoin and they get the exposure to it. the next phase of that would be something like an etf product. >> which you guys introduced. you had a filing, and the sec pushed back. are you planning to refile? what is the next step? >> we are in process. we don't have to refile because we are on appeal. the approval ruling is appealed right now and we are just waiting to be heard by the commissioners. >> what is the next step with the cme? cboe is up and running. the price will not be taken from gemini, but a combination of different exchanges. >> that's right. our contract settles through the gemini option. we really love our product because we think it is simple and easy to understand and the arbitrage between the futures price and the underlying spot. we welcome them to the party. settles on aeirs -- but it is a different flavor them up but we welcome more products and more price discovery in this market. >> when the contracts were being launched, daily auction volumes can be light on gemini and it can be difficult for the exchange. what are you doing to address that? >> it is tried and true and used around the world to price equities, so the mechanism is straightforward and simple and will grow as this contract grows, so we are not concerned. we run auctions every day, even holidays and weekends. those might be thinly traded, but weekdays are when you want to focus on the contracts. >> it is the largest global liquidity event in the entire bitcoin market. that is the key. if you look at 4:00 and the constituents of another blended index, a $2 million print is quite large. it is very elevated a lot of liquidity. a lot of these auctions are self-fulfilling. you have a contract pricing to it, so it builds the relevancy of it. it is unfair to take a snapshot in time before there is something tied to that price. >> you guys are just one exchange. many times you see pretty prices on-- diverging these different exchanges, which can make it difficult to trade bitcoin and transact in bitcoin. what do you think causes more price stability? does bitcoin need to be transactional at some point more than it is right now? >> it depends on which exchanges. not all exchanges are created equal. we are a new york trust company. we are the most regulated bitcoin exchange in the world. when you look at the prices across u.s. exchanges, they are regulated, it is a small deviation and they track each other. if you're talking about unregulated, offshore exchanges in different jurisdictions that are highly risky and of course there will be risk premiums. sometimes people can't get their fiat currency in and out. >> we are talking about coin paints also. base also. coinbase's price has been different at times from other exchanges. >> it is all about getting sophisticated players into the ecosystem. the futures product we have been building and is live right now, the first ever futures product with the cboe, will create the ability to short bitcoin, so there will be a two-sided market that will reduce volatility, increase price discovery and increase liquidity. cory: we shall see. tyler and cameron winklevoss, founders of gemini. coming up, steve ballmer talks tax reform and the move to make data more simple. -- more accessible. this is bloomberg. ♪ cory: a twitter shareholder and former ceo of microsoft, steve ballmer says tech companies cannot do more to police fake news. he provided an update on usa facts. take a listen. >> we launched our platform with data from the government about the government. no fake news, no alternate fax. cts. we keep the information current. the real thing we are doing now is help citizens run through the topics of the day. we have a walk-through of the budget, gdp, tax revenue, deficit, and how that compares to the cbo. we make no predictions. we make sure people can look at these government proposals in the context of the past, then be able to say does this make sense to me or not. we have a video that will explain to citizens this is a set of data and how to think about something like the budget proposal. emily: i know you know these facts better than anyone. do you have any advice? >> these things are holistic issues. we look at tax reform, budgets and, and health care. when you look at the economies -- when you look at the economics of these three things, they are related. what does it mean to have a budget without tax reform? you have to have a tax plan to have a budget. it would be like an expense plan without a revenue plan. it does not make sense. one of the biggest pieces is health care. so understanding how they mesh together would be a key piece of advice. emily: you mention that this is an age of misinformation and fake news. what is the responsibility of platforms? >> this notion of people being fed what ever will make them feel good, people want to feed whatever the instincts are. the goal has to be this is how it looks. you can see it anywhere -- anyway you want to but some place you have to be able to take a look at stuff objectively. i'm not sure you can say that is facebook's job. they are not in the news business. they pass along other people's news. same thing with google. that is part of the issue. things can look authentic. we did a poll and when surveyed, people said -- i find my information most often on social media and trust that the least. you think platform should be policing this more? >> they can't. over time there needs to be something that is the equivalent of an authenticated user on twitter that says you are who you say you are. it would be nice to have authenticated sources, so people cannot just hear what a crowd is saying, but hear from authentic sources. emily: what if that information is coming from our own president? is that a problem if he is spreading disinformation? >> we elected the president. our country as a whole. he is our president, and i know people have problems with that, supportive of that, but he is speaking authentically for himself. in a sense that is a set of -- when a policy leader speaks, you can say it is true, not, but it is what he is thinking. every voter benefits from the ability to hear directly. just as we hear directly from other people. i get a chance to speak directly on the internet. lebron james gets direct -- gets a chance to speak directly on the internet. not everybody wants to your what people say to one another. they don't always agree. we have seen that with lebron james and the president. emily: some are saying the president is taking it to another level, perhaps even inciting nuclear war on twitter. should he be kicked off twitter? should he be allowed to make these statements on twitter? >> everybody has a right to speak for themselves. that includes the president of the united states. everyone has the right to speak for themselves. that is in the fundamental nature of this country, and an important one. i think citizens have an elect the people who they think will best represent their interests. that gets a chance to be battle tested every two years, every four years. i love our system because people have to constantly prove themselves. if people are doing things that are not valued, that will come across. the way our system works, it does not take 100% to win. it takes 51% of the electoral college to win. that is not really what it is, but it logically takes 51% to win. cory: that was steve ballmer talking to emily chang. as a reminder bloomberg lp has a , partnership with twitter. check it out. coming up, meg whitman as she prepares to leave the company after seven years at the helm. this is bloomberg. ♪ cory: meg whitman stepped down in february. -- meg whitman, preparing to step down in february. we discussed her decision to leave and why now is the right time for her and hp. >> i led a transformation that may be one of the biggest transformations in global business history from a single enormous company that was really facing a lot of challenges to four nimble, agile companies. hpe is well positioned for the future. this has been in the works for some time, and just decided it is right for the next generation of leaders to take hewlett-packard forward. you and i have talked before and i am a big believer in the right person in the right job at the right time. i think antonio will be a fantastic ceo. emily: why is antonio the guy for the job, someone who has been there for decades? >> i have said from the beginning of my tenure that the next ceo needed to come from the inside. when you come from the outside, which i did, the time it takes to understand the people, products, culture, market -- it takes a long time. antonio and i have crafted the strategy for hewlett packard together. he will execute that strategy as a standalone company. he is a deep technologist. be ahe next ceo needs to deeper technologist then i i had am. to learn enterprise technology. 22 years, he is an enterprise technology executive, and i think he will take as company to a place i never dreamed i could. emily: some argue hpe needs a landscape shift. and that appointing an insider is not the right way. how do you respond to that? >> think about the transformation as hp as a whole, but also hpe. we shrunk down to a $24 billion company, then made 6-7 acquisitions, the largest being aruba, a fantastic acquisition that has opened a growth frontier for the company in the intelligence edge. gardner published a study that said the edge will eat the cloud because so much data is being generated at the edge that it will require storage at the edge to get those insights. i think the company is in very good shape. we are less dependent on the commodity server business than we were six years ago. we have value products and growth products. we are the leader in high-performance compute. we created a whole new category called composer will infrastructure -- compose a ball infrastructure with our product synergy. we created pricing so you can keep workflows as you pay and consume storage. we are in a good place with a coherent strategy match to the needs of the market now. emily: how do you turn around enterprise spending? when more and more companies are outsourcing to cloud service providers? >> that takes a certain percentage of our market, a largely the commodity server oriented business, but many workflows are staying on trend. a recent trend is a multi-cloud strategy. some workflows and a public cloud, some in a managed service provider, some will remain on premises, and we have seen companies move back on premises because it has gotten expensive in the cloud. we have to be able to enable a hybrid solution for customers and find the right mix and where their workflows should live. we acquired a company called cloud technology partners that helps companies figure out where those workflows should go. we need to enable the future and of course, the edge is as much pressure as the data center is under, the edges not and growing like weeds. emily: when you say data will eat the cloud, what did you mean by that? >> the edge is going to eat the cloud. what is happening is there is an explosion of data at the edge. the edge is anything not your data center. think about -- sensors in jet engines, hospital beds, irrigation equipment. there is tremendous data being generated at the edge on every factory floor. that data is being generated and the companies want real-time insights from that data and the ability to make real changes to what they are doing on the factory floor, oil rig, hospital bed right then and there, and the consumer insights and the industrial insights are happening at the edge as opposed to the data center, and it is dragging along compute and storage, and the growth is tremendous. my prediction is that in another decade the amount of compute and storage at the edge will outstrip the data center. cory: that was meg whitman talking to emily chang. that does it for the last "bloomberg technology" of 2017. we are live streaming on twitter. that is it for this year. have a happy new year everyone. "bloomberg technology" will be back on tuesday. this is bloomberg. ♪ ♪ >> the following is paid advertisement for omax3, brought to you by prevention pharmaceuticals. announcer: today on medical discoveries, we're exposing america's fish oil scam. doctors everywhere are recommending americans take fish oils daily because over 8000 clinical trials support what have been called miraculous health benefits. so, why aren't you seeing the benefits from your store-bought fish oil? coming up, you'll discover the truth about potency, purity, and a missing link ratio between e.p.a. and d.h.a. that researchers affiliated with yale university have discovered, which is t