behind schedule. -- with gains across all industries. all sectorsound were rising. in china, the gains were virtually across the board. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. now let's get you a quick check of the markets. afternoon trading getting underway in hong kong and china. we are seeing as selloff in china despite the stabilization that we are seeing of economic data there. this is bloomberg. ♪ caroline: i am caroline hyde, this is "bloomberg technology." holiday cheer echoes for allison. shoppers got mobile. sony apologizes after it twitter account is compromised. why we are becoming numb to cyber attacks. steve ballmer unplugged, america's richest ceo sounds off on everything from the rise of donald trump to how his relationship with bill gates apart. now to our lead. toshiba came roaring back this holiday season. consumer confidence can a better-than-expected, giving it its biggest game -- gain. were -- amazon reported its best holiday season yet, having shipped one billion items. rose --after it's at app rose to number one. retail, and our editor at large, cory johnson. i have a new woman in my life, alexa. cory: really. amazon is very fast and loose with the numbers they published. 25%ctation was for year-over-year sales growth. yearsold nine times more more alexa devices than last year but we don't know what they sold last year. it is estimated that they sold about $1 billion of alexa products for perhaps very little profit. it could be a much larger number now. be a significant number, maybe not on an amazon scale. but still, selling a lot of these things is good, not just for amazon that it creates a flywheel effect for people who use alexa. more people have alexa or echo, the more they use amazon. if using get people to put this in their house, they are more customers. -- more frequent customers. us a sense of the mobile element you are covering. there seems to be a real buoyancy and how much we are getting geeky about the way we shop. the big brick-and-mortar retail shoes to talk about their apps, but now it is really the battle of the apps. they know customers will only use a couple of them on their phones. amazon is really dominating. only a few other retailers can make a dent there. using it in real-time, ordering things in bed at night. i think more and more the debate is not about who has the best website that who has the best at profile --and mobile website. caroline: are they managing to lock-in some of the payments? shannon: i think they're doing better than they were a few years ago. but the way amazon continues to dominate the space and is drawing more consumers into their ecosystem with prime, with alexa and echo, the harder it gets for rick and mortar retailers. mortar retailers. as soon as they get a great website, amazon has a great app. amazon has one hour shipping. now they have something like alexa to compete with. they are trying in making some progress, but i don't know if anyone is slowing amazon to -- down. through category by category of the top-selling products and they were wonderfully random and weird. i went through about 30 of those items and i noticed these were very cheap items. for $7.99, bathtub baby toys for $6.95. driving so much volume and having a tiny margin, they are taking money away from other retailers and that changes the nature of retail. caroline: i think that is fascinating. especially out, today, when consumer confidence is better. consumers seem to be pretty 35itive when they are over millennials and not sounding confident. amazon is now getting into a peril. apparel.-- into year for apparel, i don't know it is going to be catastrophic, but it is important. millennials are not wanting to spend on a peril -- apparel. they would rather be spending their money on tech. retailers were forced to offer bigger discounts than ever this year. presenceess for your -- pareresents. maybe we will see in incremental in effect, but not really a boost to retailers. voters0% of millennial voted against donald trump. 63% of them voted against him and he winds, they are not feeling good about anything right now. have had an may effect on consumer confidence for millennials. caroline: thank you for joining us. cory, sticking with us. another high-profile hacking over the christmas holiday. sony music apologized to britney spears after it's twitter account was hacked and falsely reported the pop stars death. major cyberfter a attack two years ago rippled -- crippled the company's film division. one of the biggest stories this year was the yahoo! hack. to derail theugh acquisition of the company? there seems to be, despite thousands of hacks, we are getting a bit numb to it. the most important hack for corporate america was the sony hack couple of years ago. we were talking about it every, single day. what is going on in the sony hack was peculiar because it was a nationstate sponsored hack. it was sponsored against company for political reasons, i did not like a movie coming out about north korea. even though we knew the bad guys were behind it, it still have the desired effect of removing those executives. specifically, companies like yahoo! whose bread and butter is technology, they failed at this. -- you sayt does not the sony one in particular was important, but isn't that we keep hearing about hack after cyber attack, it does not really affect the investor base. cory: if the value of yahoo! corporate is let's say 20% of , the business of yahoo! itself is a small portion of the value of yahoo!. if that business contracted by 20% -- i'm sorry, 25%, that would account for a 5% drop in shares. it is ridiculous to think this -- cost 5%a 5% drop damage. there is maybe some reaction in the market and i think verizon recognize that. the value of the business is not damaged by 25% because of the hack. remains aand it popular website. still slipping. the point is, is it less attractive, maybe when you are eating fewer eyeballs. -- getting fewer eyeballs. cory: it is not getting better. on some level it is getting worse because of the hack, because of the study drip drab news about hacking. it makes it harder to charge more, to put more advertising out there. it is on some level lessened. whether it is 25% of the business, i am not convinced. johnson, cory fantastic to have you in over this festive. . cory: so festive. caroline: coming up, will they stay or go? u.k. startups mold their strategies post brexit. this is bloomberg. ♪ caroline: the u.s. has accused three chinese hackers of making more than or million dollars of illegal profits after hacking servers. it is alleged they bought shares in companies before deals were announced. involvethe transactions intel. from hacking to events like brexit and the election of donald trump, they have shaken the tech world. saw itselfdustry appended in 2016. some in the industry for see a potential brain drain in the u.s. and eu k. andwill be the winner loser's? me is president of a venture capital form. thank you for joining us today. first of all, it is known that globalization, that maybe technology has not helped equally across the board. with this remain a key topic of discussion? raj: i think it absolutely will. globalization and technology and innovation have had huge benefits over the years but that benefit has not been equal. if you look at how dollars have been invested in the u.s., you start to see that just a handful of places have gotten most of the investment. here in california, there are the likes of washington. --tain states really without really without, where many states did not. aj: it a concentration in a handful of states. invested lastlion batch of what was invested last year, $47 billion of it went to only four states. you start to see that these dollars have led to a real divide. if you look at states like florida, less than half $1 billion was invested, or ohio where only $250 million invested. there is a stark contrast against four states. caroline: fascinating numbers. who plays up to this? do we see the government trying to bring more ecosystems across different states? is it your role as a venture capitalist to look harder in the states that perhaps are not now?ng the book right raj: i think the incoming administration have made it a priority that they want technology and innovation to impact more people. i think we all bear a responsibility. i think it is in two places. one is in hiring, we talk a lot about diversity in hiring but that really needs to extend beyond a few pockets in the u.s. and the companies we invest in, the companies we back, for these companies to become large companies, they have to serve a wider consumer base. i think that is what you see with the companies who have had breakout success like uber. they launched uber x and had a price point available to more consumers, they really took off. global company a and populism and wealth inequality is a global problem. we are seeing some companies looking to harness more growth potential and we see some companies perhaps not wanting to go to certain countries anymore. i come from berlin, where we are starting to see that city looking to build up as we see startups looking in a less friendly way at the u.k. globalch has become so that if your policies are not means is and what that a? for many governments, but i think it has to do with diversity in hiring and immigration, intellectual property protection, i think those kind of issues that are important to tech, if you are not sitting a government policy that supports the tech community, entrepreneurs have a ton of options these days. if you are in london and you are a fin tech company, you're probably thinking about places like berlin and dublin and amsterdam. caroline: how many copies have acted on that? when i was in berlin just post-brexit, we saw policymakers going to london and advertising saying, come build your start up here in germany. many -- have many companies acted on that? raj: i think it was a little premature from the berlin government. there are a lot of companies, they have caused their growth -- paused their growth in the u.k. and they're waiting to see what happens when brexit is actually triggered. the financial passport allows them to operate throughout the eu. i think there is a lot of focus on what is going to happen with the finance a passport. is it does not continue to exist for u.k. fin tech companies, i think we will see a real exit and more funding going to companies outside the u.k. already this year, it is the first year where german fin tech companies outranked u.k. fin tech companies. caroline: twice 17 would be an unset -- 2017 will be a fascinating year. thank you for joining us. coming up, we are focusing on the top news of 2016. top, virtual reality. this is bloomberg. caroline: tech forecasters have long believed that video gaming would be the gateway for virtual reality to go mainstream. vr6 was seen as the year the market might turn a corner. the long awaited hardware from several companies hit the shelves. did it live up to the hype? 2016 may he remembered as a turning point for virtual reality technology. a surprise tor billion dollars acquisition by facebook, oculus delivered its long-awaited high-end headset. the hype around this product was intense, with some calling it the best new device density iphone -- since the iphone. strongestone of the launch lineups of any new platform ever. >> critics quickly cited as an issue that it required a powerful pc to run, vaulting the price into the thousand dollar range. the $800 five was debuted. was debuted. was in partnership with valve, who owns steam. people who use steam already have the high-end pc, they are hard-core gamers. >> it was predicted in april that vr could generate $2.3 billion in 316. rounding out the 2016 launches was playstation's vr. it is much cheaper than the others, and instead of a pc, it can run on the ps4. one thing all three products have in common, they are all waiting for market demand to catch up. >> we have yet to develop the vocabulary to describe it. we're trying to learn to design .n that the -- that environment it creates a whole new experience and i think designers of this trying to put their head around the special features. >> without a breakout hit, heavyweights are in wait and see mode. >> all of the projections have continued to come down. i think in the end, and we have learned this through our own business. in the end, it is about providing consumers a compelling experience that brings a particular form of technology to life. i don't think we have seen that yet for vr. >> while 2016 might not of been the year vr takes off, there is hope for next year. hit $4.6dicted it will billion in 2017. caroline: coming up, we are bringing you the best of the studio 1.0. ceo describesrmer what drove a wedge between him and bill gates. and on wednesday, william lee will join the surveillance team to give his outlook on 2017. that interview starts at 6:30 a.m. eastern. this is bloomberg. ♪ >> it is 1:30 p.m. in hong kong. prime minister singh to abe has become the first japanese leader in decades to visit pearl harbor. he did not apologize for the attack that through america in world war ii. this matched president obama's visit to hiroshima earlier in the year when he likewise did not apologize for using the atomic bomb on the city. the yuan will not object to china sending ships to taiwan. -- sailedill sail 90 19 not a goal miles south of the island in what it says was a routine exercise. delta airlines and boeing have canceled long-standing contracts for 787 liners. andorder was placed in 2005 was inherited by delta when you bought northwest. the specific details of the termination have not been released and single aisle orders will continue. when it comes to making money, thane has done it better -- his net worth has risen by 52% in 2016. has risen to $14.3 billion. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. let's get you a check on how the markets have been trading. here is so be. asian shares falling. oil prices trading near a six-month high. there's been an upward climb. -- upward climb in australia helping that. on ing at what is going big day forit is a the index there. sharp is headed in the other direction. of take a look at what is going on elsewhere. helsing reversing. is a second a weaker against the dollar. gains.sie making breaking through with the resistance double on november 28. that is your look at the markets. ♪ >> he got his start at microsoft as employee number 30, personally hired by bill gates. and over three decades, he went from top lieutenant to microsoft ceo and is perhaps best known for bringing life to software conferences that will never be seen again. in 2014, steve ballmer left ,icrosoft after a 14 year reign taking his enthusiasm from the boardroom to the basketball court with his deal to buy the l.a. clippers. joining me, steve ballmer, former ceo of microsoft and owner of the l.a. clippers. thank you so much for joining us. you that iumor about could not possibly believe to be true, which was that you were shy growing up. steve: it is a true rumor. emily: it is true. tell me about this. a little kid,was if somebody's dad was at home come if i did not know the people, literally i would sit out in the car sometimes because i was so shy and nervous. when i got to college, a friend of mine describes it this way, hi, my name is steve in my hand is sweaty because i am so nervous to meet you. i guess you can say it has changed. emily: quite considerably. you brought life to software conferences that will never be seen again. where did that guy come from? steve: that is good question. i would say there was a breakthrough for me when i was football manager at harvard. it is intimidating to get in front of hundred football players. hey, listen up a minute here it you have to speak before an unruly group. in detroit,ere born your dad worked at fort, you excelled at math and science. at harvard, some other kid named bill gates lived down the hall. you are better at math than him. steve: that is an extreme way to say it. prize, titian was the big math competition, and i did beat him. emily: what was your relationship like in school? steve: we got to know each other, we took a math class together. we brainstormed about microsoft. about a year after the company moved to seattle, he called up and i was at stanford business school, hey, we could use a guy like you, blah blah. emily: you joined microsoft in 1980, you were the 30th employee. was there a time when you were thinking, is this for me? were arguing,d i i wanted to add a bunch of people, he did not want to add them, he said we were going to -- i was going to bankrupt the place. i wondered why i dropped out of school. out and his dad took me that is where i make up in my headset bill invented the computer on every desk and in every home. i bought into it and to state a total of almost 34 years. emily: you were his top lieutenant and you became ceo in 2000. you tripled microsoft's revenue. what was it like? steve: people like to focus on bill as ceo or me as ceo, but he was like a baby. we were nurturing it. he was the senior partner and i was the junior partner. say, mom gets to decide more than dad. i take great satisfaction in the things we accomplished throughout the time, not just when i was ceo. we had a miserable year when i became ceo. building not know how to work for anyone and i did not know how to manage him. some and myened up life changed a lot in 2008 when bill actually left the company. emily: how so? steve: he told me, i'm happy to help you that i don't want you to need me. i have another life. in a sense i finally felt like, ok, we're not partners anymore, i have to take accountability. i think it probably did some of my best work at the company after he left here it emily: like what? bing. push us into get us into the cloud. we pushed into the hardware surface -- business with surface. now my successor is taking things to infinity and beyond, if you will. emily: what is your relationship with bill like today? steve: we have drifted apart. he has his life and i have mine. microsoft is what bound us. we started off as friend but we aroundmashed -- enmeshed microsoft. we have drifted a bit. emily: what really happened? steve: i think at the end of the day, there are two things. a little bit of difference in opinion on the strategic direction of the company, vucevic is a challenge. number two, -- which i think is a challenge. a brotherlywe had relationship, both the good and bad, and i think that was more difficult at the end with the strategic direction change. is not going anywhere so the rest of the board felt pressured despite the fact that profits were going up. we had a combustible situation. emily: does it ever bought the you that you don't get credit for that? steve: sure, and no. at the end of the day i have the comfort of knowing what i did and feeling good about myself and everything else is not really matter. emily: where did you want to take the company, where did he want to take the company? steve: there was a fundamental difference in what it meant to be in the hardware business. aroundcame to a climax what to do about the phone business. stage sasha was on recently and said that mobile phones were one of the biggest mistakes in microsoft history. steve: i would've moved into hardware faster and recognized chips,as a separation of systems and software that was not going to reproduce itself in d.e mobile worl i wish i'd thought about subsidizing phones through the operators. people thought iphones were never going to sell. it was business model innovation i apple to get it built into the monthly cell phone bill. we should of been in the hardware business sooner. we were still suffering what i would call some of the effects of our vista release of windows, which sucked up a huge amount of resource or a much longer period of time than it should have because we stumbled. when you have a lot of your best engineers being nonproductive for a while, it takes its toll. emily: how do you think sasha's doing? steve: i think he's doing a fantastic job. he has really pushed on the cloud and is pushing on artificial intelligence. revenues and profits have been pretty flat, but that is important to maintain as he read years -- regears the place. he has my unconditional support. ♪ as thehow does life owner of basketball team compared to microsoft? emily: you bought the clippers for $2 billion. how is life as the owner of a basketball team compared to microsoft? comparing them might not be the most interesting are valuable thing to do. i love the game and love seeing us go out there and win but there are aspects of the job, as well. how do i properly interact with our coach? with our staff, with our players? what is my role? we a big decisions in front of us. an arena, where do we go in terms of changing how sports is consumed? virtual reality and live , hey,tics in addition to it is the season and let's go when some ballgames. emily: how can you beat the warriors this year? steve: i watched the spurs beat them by 25 points in their opening game. you can be anybody on any given night. cavs: that said, the and worries are favored. does the league have a problem?veness think there is competition. in any given year, there are players that are difference makers. emily: how is the search for the new arena going? steve: we are searching. first question is, what is out there for available land, what would it look like to build the building. we have some good confidence we will find land, we can build the building of a good price. i am very interested in the building of an arena, but before it is all said and done, i'm sure we'll talk to the staples guys. never enter into renegotiation with the landlord before you have an option. emily: let's talk about the class you are teaching because you are drilling down on government. early when i retired in 2014, my wife -- she is been working for 10 plus years on issues of child welfare, and what does it take to help support children who grow up in tougher circumstances. i retired and she says, ok, you are my partner. i said, come on. the government takes care of that we just have to pay taxes correctly. she said, no, we can do better. i put 10 years in. we locked in on two things. one, a focus on kids who are born in communities where their probability of living the american dream, having that sense of upside is limited. my wife challenged me. i said, i have to figure out what government does. how much money does it take in, what does it put out, how is it working? eventually we have the idea that we needed to create something kind of like a 10k, we are hoping to publish early 2017. emily: what are the most troubling things your found so far about the numbers? government is making good progress in improvements in many ways. i was surprised by how good i felt. not perfect, but much better about government and taxes. i came away with two big things, number one, what i call the savings programs. not the transfers and entitlements. savings programs. medicare and social security. we have to have enough expense to match. second thing, we have to get the debt under control. but the third thing, which really jibes with what my wife said, there are communities of people -- let's say you are born in the bottom 20%, if life was perfect, there would be a 20% chance you stay in the bottom 20%. the truth is that there are communities where that number is over 50% and that is not ok. every kid should at least have the opportunity. what does it take for government and for us as people with philanthropic and civil resources, how do we partner with government? it has been interesting, but when you look a government a lot of things are going well and some things not. ♪ emily: when you joined microsoft, you did not get a single share. is that true? ♪ emily: you mentioned you can never make the math work on salesforce. what you mean by back -- by that? steve: it is too expensive. it is a fine company, i don't know if it is a great company. relative to earnings potential, it is dramatically overpriced. that is my opinion. emily: do you think they're headed for disaster? steve: they are not headed for disaster. in my worldview at some point in time, the market will ask companies to make profits commiserate with their market cap. when will be market demand that they be a great company? can't say. emily: is amazon getting a pass from wall street? steve: they are because people pulling in the future of earnings. -- people believe in the future of earnings. say they are divorced. emily: we can talk about twitter, you are still an investor. at the time you announced the stake, it was 4%. do you still own as many shares? steve: it is fair to say i remain a large investor. emily: what you think about what they're going through? anve: i think they are your report visible asset. -- an asset that you cannot reproduce. do you see twitter having a future as an independent company? they would be great as an independent company and i'm sure there are acquisitions that would also make sense. emily: what about going private? steve: going private is a distraction. think the company would be better served to put energy into innovation than all the work it would take to go private. emily: what about jack dorsey having his two jobs? steve: i think it is easy to question. people like me would like more out of twitter. wonderinge me are about what he does with his time. i would like to see them work on the things they need to do from a product and cost structure standpoint and be open, always open, to opportunities to be independent but also to make a sale if that is appropriate. emily: when you joined microsoft, you did not get a single share. is that true? steve: that is complicated. i had a market share. i did not have a stock option. i had eight and three quarters percentage of the company. you still own a lot of the company today, something like 4%. steve: i still own what i owned, that is not something i disclose. you have to consider the possibilities. emily: bill gates and paul allen have sold a lot of their shares but you have held on. why? steve: i believe in myself. i ran a company i believe in and it is worth a lot. the full recognition in the marketplace of the value of the profit stream we created was not necessarily recognized during my tenure but it is now being recognized. i would say number one, i make a great investment by holding and number two, i have a lot of loyalty. if i start selling, what does that mean? it means i don't believe in the future of the company. i try to basically believe the people who are on board's and work for companies, at least in leadership positions, they should have to hold their stock. emily: comparisons have been made between you and tim cook. tim obviously took over from an iconic ceo. what you make of those comparisons? steve: if you write it down on a byce of paper, ceo replaced not founder, business oriented ceo, the comparison is perfect. when you say that most of the revenue was generated under my watch and tim's watch, yes. those things are true. during the tenure, the new product was not built. in my case, we got going in the building we got assets. apple is more secretive. i cannot tell you what he is or is not building. the jury is out. thing people worst ever say to me is i am compared to a guy who did a great job at apple, so be it. emily: what do you want to write in chapter two of steve ballmer? steve: i want to have fun and make a civic contribution. i think some of the things we can do with the clippers can be very important cynically inside the loss angeles area. i see myself as an energetic but thoughtful guy, a guy who is come from being shy and nerdy to not. the grounding parts throughout that is the ability to think through heart problems and hopefully make a difference. ceoy: steve ballmer, former of microsoft, owner of the l.a. clippers, it has been great to have you. manus: problems mount for toshiba over concerns of a right down at the nuclear unit. the group says the it will probably be in the billions. another bright spot, japan has a an industrial output rises the most in five months. an outflow fears, chinese authorities could be braced for renewed pressure on the currency as the convergent quota increases flight concerns for the pboc. ♪

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