Earlier about his plans. To do first thing i want and focus on is a ruthlessly thating any obstacle allows to innovate. Any individual in the organization can innovate. And then focus on innovation, on things my croissant can uniquely do. Microsoft can uniquely do. Lea thompson is taken over as chairman. Bill gates will John Thompson will take over as the chairman. Bill gates will stay on. I am glad sake a glad up. A has decided to step ill have a third of my Time Available to meet with product groups and it will be fun to do find this next round of products working together. I am joined by jon erlichman, who helped break this news from l. A. Tell us in the final hour how this decision officially came together. Important inoad is the context of this whole story. This was a Company Looking at other internal candidates. It were looking at ceos from other shops be in at the end of whoday they picked somebody knows bill gates, knows Steve Ballmer, has been there for over two decades. He says he is going to be ruthless about allowing this company take on the next chapter of what microsoft will be. Thisill gates role come a is still a tough one to figure out exactly what ultimately he will be doing. Presumably have a chance to be a bit more handson on a variety of things that Satya Nadella is pushing forward with. They have a good enough relationship that that is not seen as a conflict or challenge on either side. Ella thatds like the sounds like the della sounds has asked bill gates surely he wants the support of the board and to say things to the board that will support him in his job there. It was always going to be tough for an outsider to come into this company. It is famously insular in every possible way. I think the more genetic thing not due a longtime microsoft employee for 20 years who has been working up the ranks that is not a surprise. I think the more surprising thing is that John Thompson, a guy from Silicon ValleySilicon Valley has had a longtime hatred if not outright what is going on in redmond with microsoft. To have someone from Silicon Valley in John Thompson become the chairman of this company, to lead this search the rewards and inside person with the job that gives them a chairman job, i think that will be one of the more important things. Not only John Thompson was from semantics for a while but also the ibm guy. But also an old ibm guy. This is a guy who spent a lot of time on Partner Relationships working with customers. The thing Steve Ballmer was supposedly good at at microsoft. A Silicon Valley chairman. That will be very significant to the future of microsoft. And Satya Nadella will be briefing consumers and customers at noon pacific time. I also want to bring in our Bloomberg Contributor editor, Paul Kedrosky who is with us from san diego. You called this take a month and a half ago. Is the president of the Office Division at microsoft. He joined in 1992 and left only to head up healthcare. Gov at the department of health and human services. Kurt, i want to start with you. Who was Satya Nadella to you and within the company . I spent a lot of time working with him over the years. Obviously my division, being very closely related to his own, spent a lot of time working through what are our relative plans. I think he is a good choice. Hes that rare combination of very strong technologist as well as somebody who has a strong vision, focus, and business focus. I wouldnt think of him as someone who just focuses on the technology. It is about how we bring the technology to market and how we actually transform the business as a result. Azure, driving the strategy for ford. Andas a great track record has done a lot for the company. How did he get the job . , im not sure i am the person to ask. I think he is a natural person for the role. I read what you read in the press. It was a discussion of whether you want somebody internally or looking at strong candidates externally. Great internal candidates and knows the business super well. He is on board with that. He has a very strong relationship with the other leaders in the organization. Is not shy about challenging the status quo. Paul, let me ask you, you and i were guessing it was in the della for a while there. Gave an it that you insider the inside track . Was things, one ballmer was on the board. This was like having evan jack on your board. You are either going to make structural changes in the board you might as well have an internal candidate over an extra candidate. I think he was one of the strongest candidates. Is usually important if you look at its contribution it is huge. It was a natural fit once you made that change. Them a curt, let me ask you, having worked with him for two decades hurt, let me ask you, having worked with him for two decades was there any indication early on that this could ultimately be his destiny . I dont know if there was any indication. I thought he was always a strong leader in the organization for the reasons i said. I also think he is a very good team builder and a person who can bring consensus where there is conflict. If you look at what microsoft is looking for, i would say the situation over the last few years stands out as the guy who has the right talents for the job. Are all these famous stories about microsoft fighting against microsoft. You certainly let it in a strong way. There have been some big choices of using outside software on the microsoft cloud. How has he been able to navigate those things . Can you give me an example . It ishink the piece of the strength he has and the Technology Vision to begin with. I guess there is an example i bring up about the discussions what role azure should play internally in our properties. There was a real discussion with Satya Nadella about what is the real evolution after it comes on line. That brought us closer together. Here is a guy who can really work with us, find out what the right answer is, and make that happen. I think that is a strong example. As far is giving your conversation as your conversation with your sources, what is it they say that makes Satya Nadella successful . Any executive should have strong vision and intellectual curiosity. What is it that makes him special . A couple of things, besides the idea of him being able to stand next to an area of growth and an area where microsoft can say we are making some inroads. The second thing being his connection to the world of startups, the world of Silicon Valley, the world of where technology is going. It goes together with his willingness and i go back to ruthless hef made, the idea of being able to cut down some walls and shift around the politics of microsoft to get things done. I wouldnt say that is a 1, 2, 3, nation that helped him get the job. Three combination that helped him get the job. We will continue this conversation after the break and the role bill gates will play in the new microsoft. M a look him back to bloomberg west, we are discussing the big news of the day, microsoft officially naming its new ceo, Satya Nadella, to replace steve balmer. Take a listen to what John Thompson, the new chairman, had to say. After reviewing all the candidates, sought to was our first and unanimous choice Satya Nadella was our first and unanimous choice. He has the attributes we are looking for. Steve ballmer also had something to say. Take a listen. I am so excited today to be part of announcing Satya Nadella as our new ceo. He is a microsoft veteran 422 years. In erie and 22 years we have had a chance to work together. At future is going to be bright with innovation, with growth , with impact on the market and on the world. Company. Is we will miss his enthusiasm. We are here with special guests, Paul Kedrosky from san diego, microsofts for Office Division president. And jon and cory johnson are here as well. There is no indication Steve Ballmer is stepping off the board. He is still a director. Gates is taking a greater role in product and product development. Hows this going to affect Satya Nadellas ability to do with he needs to do . I think it will be a positive. I think he has a lot of different voices which are complementary and challenge one another. Steve is such a strong business person and having more of bills time to be able to engage on the technology side, it is going to be a strong cast of characters to drive the strategy. I think satya will be the person that will balance off the different priorities and really find what he thinks of as that north star. He has a strong relationship with both of those leaders and he will be able to do that balancing act in a strong way. Does billrt of power gates have over employees . Is he almost godlike . Say dont know if i would godlike. He is certainly revered within microsoft. There are few visionaries on the planet that have made such a contribution both to the space and tech nonprofits as well. People look to him for that shining a light, that direction we need to go in. They look for that spark of genius that you see that he is driving into our products. To they look for him look him for confidence in leadership. Let me ask you about what microsoft needs in the Product Portfolio standpipe standpoint. Where do you see a need for Something Better . Them a limited say i think theres just no way this relationship with gates and ballmer works as described. I have to assume this is mostly happy talk and i dont see how any strong ceo is going to be able to talk with a former founder designing products in the back loud and saying, what do you think about this . Leaving that aside, i think number one is to consolidate power. The priority needs to be around in a prizes and cloud services. They probably need to make some acquisitions in the area. There are lots of people sitting out there that microsoft can easily acquire. Offould get a lot of it their back. Goingan say that we are to do this, and that is what i think they need to do out of the remainsicrosoft office one of the most important divisions at microsoft. That is a division you ramp it what you think of some of these ideas that might resolve should get rid of xbox, get rid of income a get rid of smart phones and tablets and focus on the enterprise. What do you think Satya Nadella should do when it comes to Consumer Enterprise . , i think we have a strong set of businesses across the board. On how it to comment would work with bill and Satya Nadella. Nobody gets to a position like president of the Office Vision or cloud and enterprise without being able to tell bill, thank you very much for the input, i have heard it, and yet we are going to go in a slightly different direction. It is a mistake to think about this as bill being the sole leader on the technology agenda. It is about providing satya input, providing a broad set of leaders input into the process. We do understand how to take that input along with other input. Why have them, then . Why have the strong founder there and all the pretense of all of this . He has been out of the Technology Industry by his own admission, doing more for the planet for years. Why try to reinsert him in a time when the company is going through the succession . It confuses me. I think there is a great opportunity for him to contribute. If bill is really going to spend a third of his time weighing in on the Technology Issues that faced the company, i think that is an incredible asset. I think his track record alone says that has a Great Potential for the company. I think you can lay an awful lot of the blame for microsofts relative states compared to his competitiveness to the position. Ates left it is difficult to make a strong argument that someone who has been out of the business in every meaningful way for some time and arguably left the company in a position where it had to struggle to figure out its identity is now the right person to play Technology Visionary alongside a new ceo. I think that creates incredible problems. Im going to ask you really quick, do you hear anything about additional shakeups as well now that one person has been chosen . Are you hearing about any additional shakeups . There is a lot of talk about whether people will choose to leave. It has of everything you guys just said, lets see what happens over the next eight months, not just with people inside deciding whether this is the place for them to be anymore even with Steve Ballmer and what his role will be. Come time for the annual meeting when they decide on board seats, we may have more to discuss at that point. Jon erlichman, our senior west coast correspondent, paul cory johnson Paul Kedrosky, cory johnson. Youll talk about what it could involve next. Samsung may be rolling out its next Flagship Smartphone this month. The company sent invitations to an event called Samsung Unpacked in barcelona. Hinting at the successor to the galaxy s four. What could the next galaxy look like . Paul kedrosky is with us from san diego. What else can samsung do with the galaxy . Do they have left do . The could carpet bombed the landscape from sizes, color, form factors. This will be a step back in some ways, which will be welcome. They are going to go back to a little more google integration. Probably more integration of google now. A little less samsung customization and a bit more of the vanilla android experience. I think it would make a credible nexus competitor. Signed ag and google big patent licensing deal. Google sold off the motorola handsets unit to lenovo. Of how much danger given that context, how much danger is there of samsung stepping back from android and relying on their own operating system . That they dont have google as the head competitor, the big risk is they dont feel any pressure to produce a more vanilla android experience and do these truly esoteric and bizarre customizations that have alienated a lot of customers. I think what you will see instead is a lot more partnering and more of a pure android experience. The latest conversation is they recognize the problem is not hardware, it is software. See that i would be very disappointed in the launch. Into beatingerg editor, Paul Kedrosky from san diego. We will be covering that samsung even from barcelona. We will be back with more after this quick break. Youre watching bloomberg west. I am emily chang with your top headlines. Bloomberg and cisco has entered into a longterm patent licensing deal, covering a broad range of products and technologies. The two tech giants say it will cut down on future patent lawsuits. Both belong to a patent at the c group, the coalition of at of patent fairness. A doubledigit and rise for profits for these Third Straight quarter. Panasonic has been shifting away from tv production and pivoting toward a whole range of products including auto parts, solar panels, and home appliances. Netflix has announced a 400 million bond sale to raise money for Capital Expenditures and expansion. Plans substantial expansion in europe this year as well as the creation of more original shows. It comes after moodys raise the Credit Rating of the anticipation of or the subscribers. Of further subscribers. President obama talked about connect ed, an initiative to connect 99 of students to highspeed internet within five years. The fcc is announcing a down payment of 2 billion to connect more than and 20 Million Students to highspeed broadband over the next two years. Microsoft, apple, at t, and alleged 750 Million Dollars collectively to help connect schools. With more. N is back this is a big deal. This isnt about just getting dialup or anything else at school. Another double in the grant size, in the 2 billion. We are joined from our d. C. Bureau to talk about this. Some level this is a decision to not put cellular phones in the hands of poor people but to expand highspeed internet into schools. Is that the tradeoff here . , i dont think that is the tradeoff. An effort to recommit and reboot the eu rate program. Make sure it focuses on bringing highspeed broadband to our schools, not just connecting them to our internet. Of eatingis end something that is not just for the kids but in the eating for this run the Community Just by the virtue of highspeed and wifi . , that is a great point. When we bring really highspeed broadband to schools at every community we make it incrementally less expensive to deploy to the businesses and homes that are nearby. Infrastructure investment in the country, as well. Residents clinton first initiated this notion of getting schools connected. President clinton first initiated this notion of getting schools connected. I think highspeed is a game changer. It changes the way we create content, the way we distribute content, the way we consume content. I think it is not just changing our commercial lives, it is going to change education two. Why wasnt the money put to use in prior years . Memo would have had a complicated and bureaucratic system when it comes to the rates. Taking a hard look at that system and finding ways we can be more efficient and direct more dollars toward Broadband Services and not oldfashioned Services Like voicemail and paging. Was that the decision before . There was a lot of money to be spent, being spent in stupid ways, so why spend it at all . I think the program has been chugging along. 1996 was a long time ago. It is time for a top to bottom revamp. It is time to focus it all on broadband on broadband and connectivity. Principally it is being funded by a Long Distance and an International Voice calls. Prices are declining. Not fundamentally changing the input, which is the money. When these to be done to address that . Done toneeds to be address that . In the nearterm we are making a concerted effort to be more efficient with the dollars we do have and i think that is a really good thing. We have seen a lot of initiative, not just in Silicon Valleys, but companies are stepping up to provide a lot of fun. But what about educational outcome . I have never seen a single study. Hat proves it to them you cant bring the technology and the broadband. You need to find ways to invest in teacher training. Were going to have to look at new ways we can do that in washington and work with some of those companies who announced commitments to make sure they can help as well. Anything any additional spending that will do that, teach the teachers how to teach . There have been some commitments made today and conversations about how to secondary educational education act and take a hard look at what we can do for teacher training for the digital age. In 2002 and 2004 there were a lot of discoveries of fraud and abuse in this program. This goes back quite a way. There were some serious issues, there were people put in jail. There were allegations of 100 of hundreds of millions of dollars wasted in abuse and fraud. What do you do to try to keep that from happening . Fraud, and is waste, abuse, we are going to find it and make sure anyone who participates in it is penalized and cannot be a part of the Program Going forward. It is essential we make sure this program is well run because it has the power to do so much good for our schools and communities adjacent to those schools. Them a thank you very much. Much. Thank you very does the tech and history need more diversity . Youll talk about the skills and opportunity gap in Silicon Valley. The skillstalk about and opportunity gap in Silicon Valley. Them who is taking the ap Computer Science exam . Not a lot of girls, not a lot of blacks, and not a lot of latinos. In three states no students took no female students took the exam. In eight states no latino students took the exam. To discuss this is the cofounder and executive director of code 2040. Nicholas sanchez is also with us. All of this is coming out of a study out of georgia tech university. Only 2200 high schools offer this test. Who is to blame here . You framed the question how early this cap starts and the answer is very early. Allnd graders from backgrounds were asked to draw a picture of a scientist and the vast majority drew a white man. We are talking about perceptions of what is possible in your life. There is a huge shortage of teachers who are trying to teach Computer Science adequately. Were losing way before these kids hit high school. I always assumed the numbers were getting better. In wyoming it is far worse. Why is no one taken this exam . This is something we are seeing across the board. The numbers are getting worse. That there isnt imagery of diversity in this field. Whether it is Young Students looking to experiment with what they want to do or College Students thinking about what field they want to enter, there are not people succeeding in the field. That is not to say there arent successful black, latinos, women in the field, but they are not a visible role model. Should consider that should Computer Science be a requirement . Calculusds who took ap and the numbers are like 18 for Computer Science. I wouldalculus and never have even thought about Computer Sciences. We believe that it is. Change trying to train a 21st century workforce, we have to make science as ubiquitous as math. If you want to end up in colleges we have to be close to calculus. How much of kids know about Computer Sciences . Should they knowhow to build a website . They know how to build a website . It is important to realize it is not too late for students to start looking at Computer Science when they are in college or even after they have graduated. Have a program that works with College Students around the country. Some of our students have been programming since they were children. Others are excelling. A heres my question, i have number of nieces and nephews i buy Christmas Gifts for. There are some games out there they went to this debate with the spare they went into this debate with their parents. If they havent expressed interest in it should they learn these kinds of things . Most kids express an interest even on the consumer side. Its not like going to pe. This is a huge past time for kids of all backgrounds. Somebody is on the other side of that, determining what youre consuming, be it a videogame or movie. Children,t allowed especially children of color, to see themselves as the creator of tech. They love mine craft but they never think of taking a Computer Science course. Them what you guys think is a bigger problem, the opportunity gap that people do not have these opportunities growing up or the skills gap where we do not have enough skilled people to fill skilled jobs . What we are looking at is a changing demography in this country. There is going to be a new workforce. It is impossible to tease them apart. We have to think about solutions holistically. This conversation is certainly not over and im happy you guys were a part of it. This one caught our eye today, googles homepage is famous for its doodles and now google is sponsoring a doodle contest, asking them to draw a doodle about making the world a better place. They will get a 30,000 college and a google tech grant for the school. Entries are due by march 20. Facebook turns 10 years old today. We look back at the first decade of the social network and consider the next. John mulligan testified on capitol hill to defend eta preaches like the one that has happened washington correspondent megan hughes has been covering the story. What have we actually learned today that is new about the target breach . Walked us through the timeline here and what happened in december. He said the department of justice notified the company. The investigators then found of salesn point registers that were capturing card data on that magnetic strip on customers cards. They are saying these chip target says they are accelerating their timeline for these chip enabled cards. They have been in need have been used for years in other countries. There are a number of participants in the payment card world. The Chip Technology would have rendered the account numbers that were taken far less useful. It is technologies like that that we think are important and we are committed to working forward and accelerating our efforts in that particular area. We also heard from the Neiman Marcus cio today. One difference between the companies is pin numbers. Numbers ins pin addition to this card enabled technology as an additional eight additional layer of technology. Niemann is waiting until that becomes an industry standard. It makes sense and it will take a long time. We will see how the Credit Card Companies feel about that. Today is facebooks 10th birthday. The company Mark Zuckerberg started in his University Dorm room has grown to include more than 6000 employees worldwide. It averages 750 million users every single day. Heres a look at some of the most memorable moments over the last decade. The facebook was started in 2004 as a harvardonly social network. By years and it had one million active users nationwide. Of itseoric success founders to drop out of harvard and head west to Silicon Valley. There it became just facebook. 2005, facebook and 800orted over 800 over 800 college networks. It also managed the newsfeed. Games like scapula swear a big hit in 2007. Iphone debuted and users the facebook iphone app was introduced. In Mark Zuckerberg challenged himself to wear a tie for a full year. Farmville overtook the site. 2010. Ok supersized in in 2011, facebook introduced timeline, and the company was valued at 50 billion. For the 12 solutes are shipped top one billion. Andbook acquired instagram the company went public at 38 per share. By the end of 2013, facebook petabytes of 300 data. Stores 10 million photos, or one gilly or one million gigabytes. Asebook continues to grow the market cap grows. Zuckerbergs next challenge is making its the next 10 years. We focus on one number, tell me it is not 10. It is not 10. It is 31 point five percent. Facebook says it has 945 million monthly active users of mobile in the last quarter. It is amazing that they have those numbers. Bytes about facebook. The Pew Research Center did another study talking about how only 10 of people actually change or update their statuses every day. The one thing that this is people off the most is over sharers. Over sharers the tend to dominate facebook. I wonder what that means for facebook in the next 10 years. There are people who like to talk a lot about what they are doing. I am relying on you to talk a lot so i can get my interesting information. I dont think it is a big deal. Everybody is on facebook. Everyone can use it in a different way. I might not want to use it. I remember when facebook was so depressing with the passing of my friends. We talkedilar about the election when it felt like a small village and in some cases a village you did not want to be a part of because political opinions are being expressed. It is interesting to watch facebook deal with these changes and the way people use it in changing times and try to make their business relevant. It is interesting thinking about the next 10 years. Anything willnk be bigger than facebook. There are now so many options out there. Do you think that is potentially Fair Assessment . They are going to do what they can. They have a long road ahead. There are so many other options including snap chat, twitter, facebook. Thank you for watching this edition of the show. Happy birthday facebook. From bloomberg World Headquarters in new york, i am mark crumpton. This is bottom line. Today, microsoft named its new ceo and bill gates stepped aside as chairman. Then, the u. S. Senate prepares to vote on the much delayed farmville. And facebook turns 10 years old. To our viewers here in the United States and to those of you joining us from around the world, welcome. We have full coverage of the