tv Bloomberg West Bloomberg September 7, 2016 6:00pm-7:01pm EDT
states lies within the margin of error. a survey shows that rhode island , traditionally a strong democratic state features a close race. races in newcates jersey and new hampshire are close. clinton is ahead in etiquette, vermont, massachusetts and maine. a north dakota judge issued an stein, accused of spray painting construction equipment during a protest against the dakota access pipeline. theetary of state kerry and russian foreign minister will meet in geneva on thursday to does this a possible syria deal. russia is a key ally of the sure all assad while u.s. supports rebels fighting to overthrow the syrian president. the international olympic he is promising all cooperation with brazilian authorities a ticket scout ring invest nation that targeted one of its top executives.
missed thesident opening of the paralympics in rio where police plan to interview him. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i mark crumpton. this is bloomberg. "bloomberg west" is next. emily: i'm emily chang and this is "bloomberg west ." apple unveils the iphone seven and a revamp watch. will it reignite sales growth? the latest shoe to drop in m&a focus on aarpens its data center business. hp enterprise slimming down, announcing a $9 billion deal to
spin out software assets. shares are down on the latest earnings report. first, to our lead -- a suite of upgrades for apple plus flagship product -- the iphone seven has landed. it is water resistant, dust resistant with better battery life and cameras. wearers of the watch will be able to swim and play pokemon go from their list. and apple ditched the headphone jack come a showing off new headphones called air pods. apple stocks got a slight boost off the announcement will stop joining me is one of our bloomberg reporters who broke several of the product ahead of the event and cory johnson, who joins us from san francisco. what has been the reaction from folks who attended the event out there? i have seen more reactions online then talk to people here.
this is a carefully liked it crowd of journalists and members ,f the technology world principally apple employees. so their views are not typical of your typical consumer. they are much more likely to be excited about some developments the average person might not make a big change in their life -- a technologist might see how difficult that is. so we will see how the consumer reaction is. the event was geared toward getting the crowd to be excited. out want the press to walk waving apple pom-poms and i have no doubt that the fan boys will aid them as we try to fight them. you were live blogging the entire thing. you broke a lot of the news we saw happening today with a eighth to the phone and a date to the watch. walk us through the most significant of a juicy -- significant up dates you see.
mark: i that the iphone seven plus was a big data in terms of the camera system. it's interesting they are shifting one of the key features in its software up date later this year. i found that quite odd but this is the one where they map out where people are in the picture and blur the background. advancement in terms of the processor is significant as they way with the future of their processor lineup will be. i felt the air pods were interesting and the price when came in a little lower than people were expecting at $160. i think made sense for them to launch altogether. the dual camera processor, you can only get that if you buy the digger iphone. what do you think of that move? there's a technology reason behind this. maybe they want to push people
to trade to that larger phone. what do you think? inasmuch as people are paying great attention to the quality of the lenses they use when they buy a phone, i think of side the world of the technology press, people are going to say their picture is a little bit better than my own. i don't think the average user looks for that stop that said, some of the hyperbole apple offered, when tim cook described as the gold standard for smartphones, i think that's right. it is necessary for apple to have the phone that can do the best if only so they can say their products are the best and command the operating margins that give them a vast majority of the industry's profits. is all about the apple image in a burnish that by having the top of line product for the industry. emily: let's talk about the air pods committees new the wireless headphones.
are we seeing an important new product category? mark: i think apple is looking for new ways to generate profits and i think these will help them with that for their products business are two booming categories of these footprint. sales flow so showing that they can produce new products beyond their current lineup is significant from an investor perspective stop letting it's interesting to see apple actually increased the price of both the new apple watch series two and the iphone seven plus by $20 each over their predecessors, so that was interesting. apple did announce other headphone makers are working on making wireless headphones of their own. thatare going to have pods plug into the lightning port sold with the phone but are headphones around
apple music? no is the short answer. i don't think apple music is going to be a necessary component of that them. i think the ease-of-use is there in the way job own and makers of headphones don't have. theseo much easier with apple devices and i think that's important to stop ease of use is the calling card of apple whether you go back to the early days of the apple ii or the macintosh. but it has gone by the wayside for a lot of apple products stop if they can make the processes your, they will sell more. and thewith this device announcement of this q1 shift that is supposed to make it easier, i think we are seeing the first big integration of the
beats hardware stuff and the apple hardware business. emily: you can start pre-ordering all of these products on september 9 stop our apple reporter, i do want to break this down in more detail and take a deeper look at the new iphone specifically because apple has been under pressure to breathe new life into its like ship product. will the latest of dates be enough to reverse two consecutive quarters of sales declines? our two longtime apple watchers. enough to reignite sales? guest: there are a couple of interesting things. there's a lot of discussion around the lifestyle extension and replacement for phones. i think it's moving from 26 months to 28 months.
so there are a large portion of the install base on this accent six plus and if they hold true to the upgrade cycle, they are in line for a refresh somewhere in the next two or months stop that will be a big part because it's a big of great. if you look from x 27, it might not the viewed as big, but it is a big one. and the other one, they are bringing the installment plan to china and i think that god overlooked. motivatorignificant for a lot of customers in these markets who have seen year-over-year increases and think it might be time to join the program because they are doing a lot year-over-year for emily: so they are expanding their up rate to china because it has only been available to the u.s. thus far. we see china actually offer iphone that the discount so that
they are cheaper in china than the u.s. for the first time ever stop do you see these new iphones mark there's a lot of technology packed in there. do you see them reversing the i thinkclined? guest: the year we are comparing it to come we had growth of 30% to 40% and that's tremendous in this saturated market. if you look at the long-term trend, it has been a steady upward climb and once we get past the hump of the iphone 6, we will see a return to a modest 10% type growth. i don't inc. it has that much to do with product. we have a billion customers nearly. are are satisfied, they upgrading the product and buying more and more accessories, so the revenue interest going to grow. the camera is better than
ever and we see more and more people carrying an iphone and not hearing regular cameras in our. but they only have the dual processing camera on the bigger. what do you think of that? guest: there are others selling dual lens phones and they're not shipping them in huge volume. there's a lot of innovation that goes into it, so i think it would have been hard even if apple wanted to bring it to the iphone seven, it may not have been possible. they: how many people have bigger screen versus the smaller screen? guest: the bulk of the bases on a six or six as. some moving toward the larger screen and i think there's part of the market trying to figure out which size they want. the bigger phones are not the .argest portion of that mix
the question is will the camera be what moves ebola? will they be satisfied with the screen that they have and the internal component of rate to the cpu and other components? guest: the reason people by the bigger phone is not because it has more processing power. the people who don't buy the bigger phone, it's because of the bigger screen. it's a limitation and an enabler. some people have that need and some people don't. we saw ae way -- surprise when they went to a smaller screen in the roddick sold better than apple expected. it was backordered for a long time. the bulk is in the middle right now. how big a feed is the water resistant and dust resistant part? guest: they are not the first to
do this. it is a challenge to manufacture something of the precision they do and bring it into be waterproof. it is not just water resistant, it is actually waterproof. it has become a hygiene factor. it is something that becomes something every has to have. i think waterproofing is one of these things like having a high resolution does. emily: battery life is still an issue. guest: that's a huge deal and not get a lot of airplay. the battery life keeps getting better even though performance is increasing. not get a lot of airplay. they talk about between two and four hours of use out of device that personally, i don't feel the pain of battery because i'm somehow always in the green. emily: i feel the pain every day for guest: if you look at studies around features a drive
purchase, camera and big screen rates low. there estimates might be conservative. i think they might get that are gains and of consumers catch on, it's a huge pain point. that is one thing that might make a big difference. guest: the big phone does have amazing battery life compared to the others emily:. it does. my husband has that one. we're going to dive into the apple watch coming up after this quick break and stop plus hp enterprise confirms a nearly $9 billion software spinoff, so what is it investors don't like? we will discuss later this hour. and nintendo getting a huge used on the news that super mario run is coming to the app store. this is bloomberg. ♪
emily: as we just mentioned, apple released a new watch called series two. mark gorman got a first look at the new watch at the event in san francisco earlier today. we are here in san francisco looking at the new iphone and apple watches. you can see the new apple watch -- series two. new running and walking unction now at the end things from the new gps. pacing option. it looks very cool. a new collaboration with new models from nike.
operations in addition to the phone. emily: here to break down the highlights are my guess that's i want to talk specifically about the watch waterproof, gps tracking, new software and what do you think about the new watch? guest: let me begin with something different -- they gave us a hint of how well the product is doing. they say it rose in rank and became the second best-selling watch in the world and they put it between the rolex and fossil. if you look at the numbers come you can see the range, so we did that and it turns out to be between 3.8 billion and four $.5 billion in the first thing. focus on that for a minute
because i made an for the first 12 months of its lifecycle. that's within the ballpark, assuming the higher end. but let me that in perspective. it's more money than tesla makes in this product is considered a flop and worth, generally speaking. emily: that's a great point. why don't they just tell us what the number is? always saidhave they don't want to give the competition the sales figures. so they will say a great category. out.n figure it i'm sure you can do enough backwards math to figure it out. quite understand the logic. product andeeper
i've been bullish on it all along. look at the performance improvement we are in one year. it's a dual core gps waterproof at nine's next? we are years into the iphone and it took a couple of years to get traction. it was not a billion units right away. so this is fascinating. emily: will this become more guest:niche product mark i think it would be a leap to say everybody owns one i think we are seeing a growing category around not just fitness but the fashion element. they did not position themselves against fitbit or garment. to us totrying to get think of it as a watch product. guest: i'm going to call it and
say we are all going to have smart watches. feelinging the same that this is the kind of product, we want to have computers on our wrist. it's a universal need and it going to be there. emily: i do want to talk about gaming because mario is finally coming to the iphone. pokemon go is coming to the watch. there was a big emphasis around gaming with the iphone and the watch. what do you make of it? guest: starting with the watch, there hasn't been a lot of rake out games stop i'm going to use it like crazy to catch pokemon on my wrist. is opening up those visual opportunities for developers. the performance of grade will see more opportunities for your wrist.
now the floodgate can open and we will see. example.a good hopefully between pokemon go and mario, they are learning to invest in the mobile area in a way that brings people to places with accessible devices we have in our pocket every day. of a newes this open category of customer apple did not have before? guest: i think the nike thing is even bigger. it never happened in the steve jobs era. it's a big change. emily: we will see if it ends up taking share from fitbit. always great to have you guys here on the show on the most important day of the year.
emily: one stock we are watching -- twitter. shares rose more than 35% in wednesday trading after one analyst wrote that disney makes the most sense strategically as a potential buyer of twitter. he says disney needs to build a larger homes presence on noble devices. the also noted the body language of the twitter cofounder in our interview might signal there's a bidder for the company. it was in that interview that he said twitter has to consider the right options for the company. another story we are watching -- snapchat daily stories coming to
an end. with daily video shot by everyday people in new york and l.a.. about 15 people pulled together local stories and will lose their jobs. curatingwill focus on he is for specific events like the super bowl. still to come, is it worth the trade? it depends how attached you are to your headphones. we will catch you up on everything you need to know about the iphone seven, next. this is bloomberg.
by nbc news. national security issues will dominate the event which will be held before an audience of veterans and active duty troops aboard the uss intrepid. the decommissioned warship is a floating museum in new york city. president obama spoke briefly to the philippine president on the sidelines of a gala dinner. the white house said the discussion was not some active. a formal meeting between both leaders was scrapped after the president used profane language speaking to reporters about president obama. a russian fighter jet came within 10 feet of a u.s. navy surveillance aircraft conducting routineobservation -- operations in the black sea. earlier this year, russian jets buzzed over a ship in the baltic will stop britain's home office is construction will begin on a wall around a refugee camp in
france. it being set up to keep refugees from sneaking across the english channel. leastmp is home to at 7000 refugees. i'm mark crumpton. this is bloomberg. it's just after 6:30 here in new york. my colleague paul allen has looked at the market in sit. paul: we will start off as always in new zealand were trading has been underway for 30 minutes and the index off about a fifth of 1%. we expect to see a little strength in nikkei futures and little we this here on the afx. japan is set to release a revised bp in just a couple of hours time. we expect to see a upward revision there will stop china will release its trade balance for august. those numbers will be flattened
by the chinese currency. we expect a trade balance out of australia today is well expected to show the deficit narrowing to $2.7 billion want this has announced a and on a travelers who want to charge their samsung galaxy note seven in flight. it is no longer allowed due to the well publicized battery overheating issues. and we will have the incoming reserve bank of australia governor speaking here. you can watch that on live go on your bloomberg will stop i'm paul allen were bloomberg tv in -- the, australia for bloomberg tv in sit, australia. emily: i'm emily chang and this west."omberg
apple rolling out the other eight to its iphone line today including a faster processor and a dust resistant body in a bid to reignite global iphone sales growth. drag ons been a performance as local rivals introduce cheaper hands that's with color functionality. the company is making a huge base,r the consumer extending the subscription plan to asia. economy. alex webb was at the event today and joins us now in the studio. -- this upgrade program is only in the u.s. than will only be available in china and the u.k. for we know the iphone has been struggling in china up what do you make of this? guest: iphone sales fell off the cliff in china this year. manages tooes, if it
achieve any great rate of pickup is that it can help stabilize their revenue. you might pay a base level of $32 a month depending on what model you have and that allows you to up rate your iphone every single year quite a smart way of retaining customers. emily: how big of an impact can this have on revenue from greater china? guest: i think this could stabilize china. history says there's a lot of top tier customers in china that are willing to pay for the product. fore is a barbell strategy they want to meet the needs of that most manning customer and targeteds a squarely at that most demanding customer and they want to have a full set of products for all different kinds of products but still skewed toward the midrange and high-end it could help revenue because in the next two quarters, apple will skew a
little more high-end and you could start to see stabilization. we were saying earlier that the big screen is not relating chinese customers. what is? symbol.he status in china, it has been for a long time. looking at this new dual lens system, if you are not the one is willing to get a larger handset and the discomfort that might come with it, this might incentivize you to go for that higher end model. as some sort of incentive emily: ibc has numbers out that their numbers are likely to slip to 15% this year for obviously, apple is making
big moves into india. do you see india picking up the slack? will india be as big a buyer of iphones as china has been? guest: in india, it's a much more competitive or get. to make aly for them big, wide push into india and get major traction. it is a lower-priced product that we have seen that will be the lead product for apple in that can beer time, a better segment, but we stand by our numbers in that it is a very price sensitive base. have an talking about apple squeezing hard suppliers and apple saying we're going to less.e parts and pay you how does that trickle down into what we see on the other end? it is their challenge to come up with innovations every
year and keep it aimed price point. that is not an easy thing to achieve and we will do that trickling down in the stock and the earnings of the suppliers in the coming months. a lot of people in these wide chain, it is a punchy and aggressive place to stop a lot of these guys come out of the investment banking world. it is something which hopefully means makes no difference to us. we have to talk about the samsung recall -- they got a had start getting their phone out for this iphone was unveiled. recalling millions of the galaxy note tablets up how do you see that playing into the dynamics of who buys what this holiday quarter? guest: this is tough news for samsung. we are talking about recall that could cost up to $7 billion and
it's difficult to rework these products. a lot of them will just have to be re-manufacturers -- remanufactured stop this opens up what tim cook has talked about as switchers, people apple can woo over to the left arm. if you are looking for a large phone, you some doubt if you are a samsung customer and apple gave you a nice reason to take a look at their product line today samsung has to move quickly and they also have to be price aggressive or service aggressive in order to make sure they retain that profitable customer who is interested in the large foreign factor product. and there are still questions about the root of this exploding battery issues & music. thing with the galaxy note tablets will stop we will be closely following that. think you so much.
morewant to talk about one story and that is hp -- shares of hp enterprise not doing much off the back of the companies third quarter earnings report stop staying true to the pledge to shrink the company, hpe is spinning off software access in a deal with u.k. firm micro focus. you just spoke with meg whitman after earnings came out. tell us what her messages this quarter and what is hpe after this? onst: hpe is focused infrastructure for the enterprise and if you take a look at what they have done over the last year or more, they've really gotten out of his this is that were not necessarily strategic. we look at the domestic sure merger. and look at the most of the people hpe had laid
off were associated with that services this is now you look at andisitions like aruba there, you are going after growing parts of the enterprise infrastructure. so what hpe will be going for it and company around 28 lee dollars focused on driving either private cloud or serving need of the public cloud or serving the need of hundred rises across their campus come across their branch office, and across their data center. that means hpe is about one word -- scale. they need to ramp up scale dramatically to be the most cost-effective enterprise supplier choice. and she has trimmed the company down to be that going forward. that acquisition closing today, biggest tech deal in history for the you have michael
dell saying bigger is better and on the other hand coming up meg whitman say leaner is bettman -- leaner is better. how will history look upon these decisions? guest: don't forget it was a decade ago that carly fiorina was talking about better together. this strategy has clearly changed at hewlett packard enterprise and now they are about focus and agility. when you compare that with michael dell's strategy which is about going to a company like emc and probably reducing costs to figure eight, a significant unlockof i.t., hp can i.t. around it and focus their strategy in a software area that was complicating a lot of their sales motion. how will history treat each of these? they will treat them differently but they are value add moves for both companies will stop michael
needs to pay down his debt and he's doing a good job. hp needs to drive cash flow to drive scale. i think what you are going to see is a three-way battle that's really focused on lenovo, hewlett-packard enterprise and dell with the enterprise infrastructure business going forward. we will be looking back in history books to see if you are right stop coming up, details of the $4 billion plan to take mcafee security out from under intel's roof once again. this is bloomberg. ♪
then the cyber security giant became intel security when intel bought it for nearly $8 billion. now intel is spinning out the cyber security firm once again. intel and tpg will invest in the spinoff transaction valued at $4.2 billion. cory johnson is standing by live with more details. give us some context. why is until spinning this out at half the price? one can quibble about what the dollar amount was, but they acquired a lot of cash. still, it's more than $2 billion than the value of the business andt now this is profitable have taken so much cash out of the process. if you look at the way they break it down, that mcafee
agment, let's call it about $2.1 billion annual bit. they are selling half of their stake for about $2.1 billion it's about equal the value of symantec. a decent transaction or intel. ins actually going to result intel getting $3 billion cash back on their balance sheet and maintaining 50% ownership of this company. much orl is going to be focused on selling semi conductors than with the mcafee at that is part of the rest of intel. emily: how do you see this unit into the rest of the cyber security industry? many folks say it is headed for a major correction. we might see a lot of smaller players get snap that were
simply not surviving. when i talk to people in cyber security, and i do in all kinds of levels, what i hear over and over again is there are great solutions to problems that need solving. arethe umbrella solutions companies that can handle things a lot of, >> ways. we know there's a lot of's ending in the industry, but who the vendors are going to succeed , -- this is not a 50/50 deal with intel. it's a 51% epg deal. tpg is going to run the show. has a lot of financial wherewithal to add on to it the security unit is to make it a more fully flexible thing. intel will be on the sidelines owning 49% and anchor tenant as
a customer of this new and steve. there position to add what they need to, intel now really focused on selling chips, internet of things, selling chips for mobile stuff than he sees. understanding security is important, but it is not their main business. emily: cory johnson live in san francisco. i do want to turn to our conversation with john mcafee, the original cofounder of mcafee. once a penny stock -- the plan to transform the dumping into a cyber security form -- siebel -- cyber security firm rebranded with the cyber pioneer as ceo. he joined pimm fox to discuss this new venture.
john: when i became the ceo, we throughout all the sting projects and became a pure cyber security firm and i think we have some of the rest, certainly the most up to date, avant-garde cyber security firm on the planet. >> google became a verb that needsto search and mcafee a word like that associated with online security. what is the technology that is going to set this new venture you joined a part western mark john: i invented the current technology. it started with antivirus technology and wrenched out into a whole system of programs involved in finding malware. but by the time you find out where, it's too late. the office of personnel management was hacked in 2013.
21 million records were taken. they did not find out until 25th. all of our products today are reactive. i'm developing an entire line of proactive alex. all of my friends are hackers. i started writing hackers but as i got older, i got some grudging respect and they asked me to keynote desk on two years ago, the worldwide hacking tension and i was -- i actually hired a bunch of hackers to help. ones doing the hacking. if you are going to build the best bank vault, you have to hire the best bank called cracker because otherwise, you are going to miss some ink. the proactive products are catching hackers in the first few seconds they start sniffing your systems. it takes hackers months to get what they want and for the first
few days, they are probing around. since i know how hackers work and since i hired know how hackers work, within 10 seconds of a hackers sniffing your system, we have identified him. we have found out where he lives and went to easing and send in message to the i.t. manager saying you have a hacker in russia, do something. we aret do anything, but the alarm company. antivirus pioneer john mcafee on his new position leading nte capital. tomorrow, don't miss our continued coverage of apple with gene munster. he's on it: 40 5 a.m. new york time. -- he's on aterg 6:45 a.m. new york time. ♪
wrap up the acquisition of emc to create a $74 billion business serves 98% of fortune 500 companies. the new company has 140,000 boys were now. michael dell did not deny there could see job cuts ahead, sing the tire was more about revenue rose. apple announced it new and improved iphone seven and seven west today. mark berryman attended the event and got his hands on one in the demo room. take a look. mark: it is september, so we are here to look at new iphones. iphone today released the iphone seven and seven less. the new home button here, that can give you feedback when you push it.
it is not a physical click. detail of the pictures and the new dual camera -- when you open up the camera app, it has a new zoom feature so you can soon. apple announced a wireless andion of its headphones we're going to take a look at that now. casecome in a charger stuff you can charge it with the lightning tracker that will last about 24 hours. the air pods will come out at the end of october and sell separately or 100 $89, according to apple. apple is not the only company unveiling new hardware today for sony announced two new
announcer: from our studios in new york city, this is "charlie rose." we begin this evening with politics. the presidential campaign enters its final stretch with just 62 days until the election. a new cnn poll has trump leading ornton among likely voters i-5-43, that is a national poll. clinton holds a comfortable lead in swing staples such as pennsylvania and florida. they will face off on september 20 6, 3 weeks. joiningeet --