Conference. Later this year, weve got the best Product Pipeline that i have seen at apple in my 25 years at apple. It is the best Product Pipeline you have seen in 25 years . Thats right. Will you tell us about them . I get to see it tomorrow. I have been hanging out with this guy for two months. Im not kidding. That is a really strong statement you made a few minutes ago. I think you set for the rest of this year, you have the best Product Pipeline you have seen in 25 years. In 25 years, you did the imac, the ipod, the iphone, the ipad, the macbook air, those are all widely recognized as pretty good products, right . I agree with you. I believe the products we have coming are great. The appearance came just hours after apple struck a deal to buy beats electronics for 3 billion. Apple will gain access to the popular beats headphones and other hardware as well as the new beats streaming music service. Ceo tim cook posted this photo of him sharing a laugh with eddie cue and jimmy iovine and dr. Dre. I spoke with cory johnson via skype. I started by asking brad what he thought of comments. Could the products coming up really be better than the iphone, the ipad and the ipod . We will believe it when we see it. Could you see the eyes rolling when you saw the tape rolling . It comes from a position not of strength but of weakness. Music is core to the apple franchise. Really, over the past couple of years, the hot services in music are pandora, spotify and youtube. Apple has squandered that franchise. By buying beats, they get the credibility of its founders and they get the hardware and the beats music subscription service. Look, music is what brought apple back. The ipod is what brought apple back. The ipod on windows is when the growth accelerated on apple. This really does show apple trying to fix a problem they have got with their old business, not developing new business. The comments about the Product Pipeline. What could they invent anywhere near an ipod or the imac, which was the first steve jobs product . The iphone, what could possibly be close to that . It is hard to imagine anything. We said a lot of people are talking about services and Cloud Services and the way they screwed that up. Clearly, theyre looking in a Rearview Mirror and not looking ahead. There are a lot of people criticizing this beats deal. They dont think it is very innovative. It is also expensive. Beats has an android app and a Windows Mobile app. Apple has this very limiting orthodoxy of developing just for ios. Having beats allowing to exist as a separate brand allows them to relax some of that and build an independent service that is basically following consumers and how they are using the devices. Do you agree . I think it is easy to be skeptical. Theres no question that apple is doing this deal because it is a reaction to downloads going down in reaction to online streaming. The price tags for this deal came down to 2. 6 billion of cash. When you look at it and you look at the business in isolation, that alone is a good business. It is easy to reject it, but it is a good strong business. Lets also not forget that with beats, theyre getting an established brand that absolutely has a cool factor these days with the kids. I dont think we should minimize that. One more thing that is really important in this world of ondemand streaming, theres been an artist backlash to overall economics of the streaming services. With the beats deal, with jimmy and dr. Dre coming through, that is a big win signifying to the Artist Community that they matter. You can make a lot of friends with 3 billion. I agree with all of that, sort of. 1. 2 billion in revenue is probably what is the margin of profit on these headphones . These margins are pretty good. Beats is also getting into the automobile market. When you look at the deal, it is extending apples brand into areas where it wants to be, including wearables. Im not necessarily justifying the price, but i think it is easier there are some reluctant behind it that is easy to overlook. There is item after item of why it does make sense for apple. What about the cultural differences . You can see the difference between eddies personality and jimmys personality. He is very much larger than life and very outspoken. Not your typical buttonedup apple executive. Apple needed an ambassador for the creative community. Content is what is selling hardware. The apple tv, the ipod touch. You need the content and the apps. Apple has a limited orthodoxy. It has a downloadcentric model. Consumers want to get content in different ways. Jimmy and dr. Dre bring that to apple. They have a ton of credibility with Media Companies and artists. Do you think there will be a culture clash . Theyre culturally less dissimilar than you might think. Lets not forget the fact that steve jobs was considered by many to be an artist. You have content and then you have the marriage of artistry and technology. I think this is a really exciting deal to signify this convergence of Technology Meeting great content. Content drives great technology. I want to make this other point. The biggest deal before this was when they bought next for 400 million. That was not only the biggest deal, but apple was proud of that. They would never do a deal that was bigger than the next deal. M a folks would say that. Apple is willing to take bets to complement its products and services in areas where it is weak. It is an important step for the company. They generated cash from the time that the news leaked. This is so massive that it is a bump on the log for them. Samsung unveiled its grand plan to become a leader in the Health Tracking industry, from wearables to a new health database. We got all the details with the president of Samsung Electronics next. Welcome back to the best of bloomberg west. Im emily chang. Samsung wants to be a leader when it comes to tracking your health with wearable devices. The company showed off a prototype of a new wearable device called the simband. It also announced it is starting a Software Platform for developers where all the Health Care Information can be uploaded. I started out by asking why he thinks samsungs wearable tech announcements are so revolutionary. Is really two things. We announced a platform, it wearable platform that can be able to monitor our vital signs, as well as the cloud Data Platform where it can be able to deposit all kinds of information about your vital signs, but not only from our device, on many other devices. When you put together, you can make much more sense around that information. And that is what we were announcing. Is is based on android or something new . We support multiple os. It is linux based. Our goal is to let the developers decide which os they want to use. We will provide options based on our platform. Ive won wristbands for a few days. Im not compelled to use them everyday. What is a massmarket use case . Why should every consumer in the world be wearing Something Like this . Is a really great question. I have been communicating with all kinds of wearable devices. Most of them do not last more than two weeks. Some of them are heavy, some are not very comfortable, some of them are not accurate. Some of them have limited functionality. What were hoping to do Going Forward through our Development Platform is the whole world of entrepreneurs join us to make a platform we can monitor our vital signs. Know much more about our body. It is what we call voice of body. We think were going to make a huge trend of progress about understanding our body. In other words, why should you learn about your vital signs when you see a doctor . Could you know more about your body signs continuously, not in an invasive way. Trends on signs of our heart rate or Blood Pressure or whatever is important to you. Do see beyond a path to getting fda approval . Is at a gold . I think our goal is creating a develelopment platform and thn whoever wants to make in products from this Development Platform should depend on their objective and go through the appropriate regulatory process. What is the cool sensor youre working on. Is what we showed today. It can be able to monitor multiple things. It can give you heart beat, of course. It can also give you monitoring of your ekg. It can give you potentially looking at your body mass, as well as your indicator of stress in terms of some kind of humidity on your body. This is another product. It gives me some idea of my heart rate. This morning i was at 52. It also tells me how much i walked today. I walked 4000 and 85 steps. It also tells me how much i ran so that i can see the information about what kind of exercise i have done. 41 minutes, that type of thing. One of the cool features is sleep. It monitors your sleep, how long you slept, but also how deep you slept by measuring your motion. You have for smart watches on the site at present. Would you learn from consumers that you have integrated into what comes next . Wanted to have a majority of the smart watch market, the reviews of the watches have been mixed. Is clearly what we call the early stage. If you recall any new technology in early stage, theres a lot of learning going on. Our products will continue to evolve over time as we are adding better sensors. Most importantly, better sensors and algorithms. Theyre expected to announce something fitness tracking related. Is the coincidence that you held this event today just ahead of that . You know, i think everybody has their own schedule. This is our schedule. We are very excited that we can talk about this Critical Service of wellness and health. You once quoted andy grove only the paranoid survive. Are you paranoid about apple . Do you worry about this market . I cannot comment on competitors, but we are paranoid about anybody and everybody out there. Parts of being where we are is trying to work on a very critical mission, and trying to bring the best product we can. When you create great products, hopefully that will take care of this type of issue. Your head of strategy and innovation center, which sounds like an awfully big job. What is next . What is the next big thing for samsung . I think what we announced today, our engagement in addressing the need to address the ever increasing health costs, i think the u. S. Alone is over 3 trillion per year. Given our economy of 50 trillion, it is almost 20 . Reducing the cost of health. The more proactive about it so that some of these technologies can be used to really improve our wellness. In the process, we should be able to reduce cost of health care, which would be a good thing. It is very important to work on. Google is going high speed on a self driving car project. We will tell you about the new prototype google is building next. Welcome back to the best of bloomberg west. From search giant to carmaker, google is hitting the gas on one of its moon shots the self driving car. It has no gas pedal, no breaks. It runs completely on software. Google cofounder sergey brin spoke about the prototypes. The reason im super excited about the prototypes and the self driving car project in general is the ability to change the world and the Community Around you. Google will Start Testing the prototypes later this summer with human drivers. If all goes well, a Pilot Program can be launched in california in the next couple of years. Cory johnson and i spoke with john leonard, a professor at mits department of mechanical engineering. This is the first time google has launched cars from scratch. I asked john if he sees google as the next u. S. Auto manufacturer. It is really a transformative potential decision that google is taking on, because you can really distinguish dougals googles approach as more revolutionary versus evolutionary with the auto manufacturers approach. I think we are still a long way off from mass scale production, but the value of the software that google will create, if it can really enable these were but cars to navigate through the world safely, that really can be transformative. The car itself looks sort of cute. They wanted to look friendly. It looks like the vw bug. It does have an innocuous looking about it, something that will stand out. I know you drove a driverless car. I drove in a driverless car, i didnt drive it. I find it really disturbing. I imagine a lot of other drivers do, too. This will stand out, where people will see this thing coming from a distance. It is an intriguing notion to get this out there. Its original goal was to make all the information in the world available. Lets take a listen to a bit more about what sergey brin had to say about why he is so optimistic about this and why it is such a big idea. Take a listen. Some of the business questions like how the service will be operated or will we operate ourselves or our nurse are things that we will sort out when it is closer to being more widely employed. These initial test vehicles will probably just be operated by us because it is specialized. Longerterm, it is not clear. We are almost certain to partner with a lot of companies, possibly uber. The legal issues are going to be massive when it comes to this in terms of proving safety. They will have a lot to go through with washington before the get anywhere. John, i want to talk to you about the navigational and mapping issues. Youre done a ton of research on the specific problems that can arise. What challenges is google going to face . Googles approach uses very precise writer mapping. Largescale capture of information about the physical world that google is leading. It gives them down to centimeter level positioning with which gives them the ability to develop these vehicles. There are still some great challenges. Google are driven by data. This deployment of 100 test vehicles will give them data about how the systems will be used and how they can perform. I will help them create the software value. I call it mixed emotions. Im excited about the technology and the chance to save lives, but there are great challenges. I worry about things like left turns across busy roads, driving on roads that might have snow, interpreting the gestures of crossing guards and traffic cops. It is pretty clear with the releases that had the last few weeks that google really are not letting off the brakes as you have said. Theyre really making this sustained longterm investment. We might he a long way away, but i do see it as a potentially transformative technology. John, let me ask you, there are a lot of these types of innovations in cars right now that recognize when a car is drifting out of a lane, that can tell when youre backing up into a parking space or even control your car for that parallel parking adventure, but the persistent nature of this that lets a car drive all the time, what is the biggest difference between the occasional nature of self navigation and the persistent nature that they are proposing . There are major differences. The government has defined some levels of autonomy. Theres autonomy when the human is ready to take control in the event of something going wrong. Level four is total autonomy. Google has said with its announcement that theyre going to level four. Most of the other companies are going after more level three. You have this challenge of if something goes wrong, how do you alert the driver and handed back to them . There are liability implications in terms of the software or the driver. Google are bypassing that handoff issue completely and just going for a much more ambitious goal. By going to a lower speed, they can do this safer am a smaller scale deployment. I think we still might be possibly even decades away from full taxi driver capability, say in manhattan, but this is an interesting path to getting the data in a safer, smaller scale way to understand how the future might unfold. Without the ability to give the human control, this car only has two buttons, stop and go. What is the stop button what if the stop button doesnt work . What do you do . I think the paradigm is that the stop button will always work. The software will have so much redundancy and the sensor coverage for example, one small detail of the google lexis prototype is that if im not mistaken, theres a blind spot very close to the car which makes it hard to do precision maneuvering say in a Shopping Mall parking lot. The smaller vehicle seems to be 360 degree coverage all the way around the vehicle up close. That was m. I. T. Mechanical engineering Professor John leonard and cory johnson. How exactly did the yahoo Alibaba Partnership come together . We will get the information when we come back on the best of bloomberg west. Welcome back to the best of bloomberg west. I am emily chang. He is a tech executive who played a key role in forming yahoo S Partnership with alibaba. He is the ceo of textbook rental. With alibaba filing for a u. S. Ipo, i asked him if he sees any risk to investing. All of their success has been in china. The question is how big can the Chinese Market be . Will they have competitors there . We know people are trying to compete with them. They will get local competition. To this point, they have not had that. When they try to be in the u. S. , what is their Growth Potential in the United States . Will they be able to buy companies . There are a whole bunch of unanswered questions. The management is extraordinary and they have tremendous momentum. They have accelerated their growth during these are longterm questions. Yahoo will sell half of its stake in ali baba. What should it use the money for . That is up to marissa. If i were a betting man i would say she would return some of the to the shareholders as she did before. The question is what areas does she want to grow in . It is difficult to buy a company of certain sizes and scales. Public companies, there are a lot of Public Companies that might be interesting for her. She will be judicious about it. I dont think it is the goal