tv Bloomberg Technology Bloomberg August 1, 2017 11:00pm-12:00am EDT
alisa: i'm alisa parenti in washington. you are watching "bloomberg technology." president trump is standing by his eldest son on the accuracy of his statement regarding a meeting with a russian lawyer. that is after reports that trump himself dictated the july 8 statement, which says they discussed the adoption of russian children. emails showed it was a means to deliver damaging material about hillary clinton. secretary of state rex tillerson says the u.s. is applying peaceful pressure on north korea. pyongyang raised concerns after two recent icbm launches. he also says the american people want better relations with russia. he will meet this weekend with russian foreign minister sergei
lavrov in manila. the coalition of 16 state attorneys general filed a lawsuit charging the epa with illegally delaying designating areas impacted by unhealthy levels of ozone. the coalition says the epa administrator, scott pruitt's, one-year delay violates the requirements of the clean air act. president trump has not signed a sanctions bill targeting russia set last week. that package of financial sanctions passed congress with overwhelming support. the coalition says moscow has ordered a reduction in the number of u.s. diplomats to russia. i'm alisa parenti in bloomberg. "bloomberg technology," continues. ♪ emily: i'm emily chang and this is "bloomberg technology."
coming up, apple cash stash continues to grow after a strong third quarter that beat revenue. that is before the launch of its anticipated iphone. i talked to tim cook about the quarter and his thoughts, coming up. plus, sprint continues its quest for the right partner, and wall street may be buying in. the struggling telecom posted its first profit in three years, despite a second straight quarter of subscriber losses. facebook's hardware ambitions. a device to bring their 2 billion friends even closer together using ai and a standalone speaker to challenge amazon and google are in the pipeline. we will discuss the major products from its building 8 lab. first, apple surpassing 1.2 billion iphones ever sold. shares are popping in after hours trading. the company reporting third-quarter revenue of just under $45.5 billion. that is up 7% from that quarter
last year. apple also issued revenue guidance for the fourth quarter that beat analyst estimates and almost two thirds of the revenue is coming from international sales. i just got off the phone with ceo tim cook. he told me "we are happy to give guidance of $49 billion to $52 billion. we really like what we see for the beginning of the back-to-school season." guidance is important because it signals strong sales of new iphones later released this year, and while apple doesn't talk about future products, it signals that more people are waiting in the hopes of a new iphone. he said it feels like the rumors are much louder and much more frequent than in the past, so we do believe it has created a pause slightly larger than previously. joining me here in the studio is our principal analyst. julie apple shares are up. , why? >> there's a lot to look forward
to here. on one hand, the smart phone market will grow about 50% over the next five years. there's a lot of upside. but there's a lot more to come. there's a lot more to come with the smartphone living in a bigger ecosystem. a lot of upside to come with things like virtual assistants and voice assistants. like is all the services, apple pay or the content they sell. emily: he told me in the last 12 months, services have become the size of a fortune 100 company. it's a milestone that they projected, but not this soon. >> they have to be happy about that. it will be an important revenue stream for apple, just like competitors look forward as the other hardware markets turned -- start to mature. emily: what is your take on the broader ecosystem? we focus so much on the iphone.
we are expecting a new one in the fall. but everything else is also moving the boat. >> i agree that it was impressive that in the first quarter when you saw iphone unit sales in particular be basically flat, that services like apple music subscriptions rose very strongly. the big question for me is can those -- that services revenue continue to grow quickly even if iphone sales don't? how independent is services revenue from the iphone? emily: on that note, everybody was focused on the revenue guidance, because it may give some indication of when the new iphone will start being accounted for in their revenue. what do you make of it? on the one hand, services could make up for a greater portion of the revenue. on the other hand, the iphone could come sooner than we think. >> i think the services will move the needle in the near-term. primarily, apple is still a hardware company.
17% of their revenue still comes from the smartphone. that will be their biggest category in the foreseeable future. emily: let's talk about china. we saw a 10% decline year-over-year, but the decline is slowing. last quarter, it was a 14% decline.that will be their biggt category in the foreseeable future. when i spoke to tim cook, he says the results are encouraging, we thought we would improve some, but we improved a bit more. they had a june quarter record for mac sales. ipad results were strong. the iphone on a year-over-year basis in mainland china was essentially flat, similar to the projection of the market, so we feel really good. what do you make of this? >> no matter what tim cook says, the most important question for apple right now is how will the sellversions of the iphone in china? i don't see a lot of encouraging signs. this was the sixth quarter in a row that apple had declining
revenue in china. the technology market in china has changed markedly since late 2014 when apple got a big lift from iphone 6 sales in china. i don't know what the iphone demand is in china for the next version of the iphone. to me, that is the biggest question hanging over the company. emily: we do look at the rankings all the time. there are local brands that are now surpassing apple in china. >> i think one of the things to look at is apple still gets 85% to 90% of the profits in iphone hardware sales. apple is not trying to run the race to the bottom. they won't be ever the number one smartphone maker in the world, ever. the question is, how well are they doing with china's middle class or affluent, and those who can afford to buy more than one device? the second thing is how well do they do with services? how well do they do with the chinese language and providing services that the chinese population wants? emily: something else that is
interesting is that with the new iphone whether it is the iphone , 8 or iphone x, we could see a four digit price increase. the one we are expecting with an oled screen. even as the competition in china is rising, prices rising. are consumers-- going to want to pay for it? >> i don't think anyone knows what demand is going to be for an iphone that is $1000 or $1400. we are talking about a brave new world of iphone pricing. interestingly, some of the analysts in china follow the market and say that prices are an interesting signal. if it is expensive, it is considered a luxury good, and people might want it more. but i don't think anybody really knows what demand is going to be like for a and up iphone. $1000 emily: i want to mention that we saw iphone sales increase.
the state of the ipad is in question. tim cook had enthusiasm for air pods, which is lower revenue product, but they are increasing their production capacity. they are optimistic. >> there has been a six to eight week wait to get air pods since they were launched. they should increase capacity. it's a good product. the ipad market, that's a little harder. everyone is trying to find -- from the business side, will it compete with the surface or microsoft tablets? it doesn't have the functionality. it will be a bit of wait and see, to see if it is worth it in the long term. emily: we are going to listen into the earnings call and bring you any headlines as we have them. even if air pods are doing well, the ipad is doing better. is the iphone all that matters?
>> apple is the iphone company for the foreseeable future, yes. emily: thank you for stopping by. julie will be coming back later this hour. >> can i come back for facebook? emily: yes. speaking with earnings, sony's turnaround seems to be on the right track. they recovered a quarterly profits that topped analyst estimates. they have a healthy music business and brisk sales on its playstation 4 consoles. offer reading -- operating profit beat average projections. coming up, shares of sprint soaring after the ceo says a deal decision is "in the near future." we will explore. "bloomberg technology," is live streaming on twitter 5:00 p.m. in new york, 2:00 in san p.m. francisco. this is bloomberg. ♪
emily: paytm, india's largest digital payment startup is said to be taking aim at whatsapp. according to the wall street journal, paytm is preparing to introduce messaging into the app. they are looking to expand the user base of 220 million. earlier this year, they raised $1.4 billion from softbank, the largest funding round for a single investor for the tech sector in that country. softbank is the parent company of sprint, which reported earnings earlier today. they overcame their second straight quarter of subscriber losses and posted the first profit in three years. shares soared as much as 12% today. the ceo says a decision on the possible merger is "close at hand," during the earnings call. joining us now to break it all
down, peter ahlstrom. what does he mean? reporter: in terms of financial report, there were positive signs. there was profit finally after three quarters -- three years of losses. that was a step in the right direction. but, the company did lose subscribers. this is at the same time that all three competitors added subscribers. in terms of the business, sprint is continuing to struggle. investors took positive notion from this idea that sprint would be able to reach some sort of agreement with one of the merger partners it has been talking to. the question is who, and how the deal would get done. it has been in discussions with charter, as we reported. emily: what are prospects for an actual deal? >> it depends on how the deal is structured. it seems like a long shot. t-mobile seems like more of a reasonable deal. they can combine the wireless
entities. a bigger challenge would actually be combining with charter. they already have a market cap of more than $100 billion. sprint is discussing a complex merger where it would raise a bunch of money, create a new entity, put sprint and charter into the new entity. they have been very aggressive. emily: let's talk about whether softbank and raise money to do this. >> he has already started lining up financing for this, and has at least $65 billion in at least $65 billion in commitments so far. japan's banks has been compliant in terms of lending money in his deal hunting sprees. it is possible he could come up with the capital, even though it would load a lot of debt onto his balance sheet. emily: let's say a deal happens. how does that change the entire ecosystem? what are the new dynamics? >> the idea in theory is that
you would combine some of the cable infrastructure you've got with charter, some of the wireless infrastructure with sprint, and be able to deliver a whole range of services. not just traditional cable or wireless, but internet on top of that. they would go above and beyond what we have today. the question is whether you can execute that. sprint went through a disastrous merger with nextel in the past. mergers are hard to pull off, especially with different businesses. emily: let's talk about leadership. especially if a deal with t-mobile comes about. we've seen the ceo of t-mobile and the ceo of sprint sparring very publicly. who's going to run the company? >> only one person gets to run in the end. at this point, t-mobile looks like the stronger company. negotiations would be over who is doing the business, going forward. both ceos would have a case to make for themselves. at this t-mobile is stronger, so point, you would anticipate the
loser would run the business. but it is not clear. emily: peter elstrom, in town from tokyo. thank you for that update. we are listening into the apple call. shares hitting fresh highs after hours are up more than 6%. $159 a share. ceo tim cook just spoke about the strength of the iphone. take a listen. tim cook: i found results were -- iphone results were impressive, with especially strong demand at the high end of our lineup. iphone 7 was our most popular iphone, and sales of iphone 7 plus were up dramatically compared to 6s plus in the june quarter of last year. the combined iphone 7 and seven plus family was up strong double digits, year after year. one decade after the initial iphone launch, we have now surpassed 1.2 billion cumulative iphones sold. ♪ emily: the u.k. is making
another move to prepare for brexit. the treasury is proposing a new national investment fund to close a $5.3 billion funding gap between american and british tech startups. the fund would provide money and ther incentives to country's most promising startups. almost 40% of all the funding for u.k. based firms comes from the e.u. back to european investment funds. it has been some time, but uber and didi are once again going head-to-head this time in , northern europe. the partnership is didi's first in europe. taxify a boost. caroline, how exactly will this work? caroline: it will work by pushing into 18 countries that taxify is already in.
we don't even know the reports, some of eight figures around the market. they will help with technological developments at taxify, which is only a four-year-old startup, which already claims to have 2.5 million users across 18 countries. these largely are emerging markets at the moment. we are talking about africa like nigeria and south africa. also present in eastern europe like romania and hungary. there are big ambitions to come here in london and the u.k., and push into paris. this is about scaling. once again, taking the battle to uber, which is in large part the number one player in a lot of those countries. emily: we have been covering the scandals at uber ad nauseam. sexual harassment issues, culture clashes. has this impacted the brand of uber in europe at all? caroline: i think it has in london. it has been well noted.
i think the problem is there is a competitor people have been able to switch to. lyft doesn't really exist outside the u.s. it is not in london. it wasn't an obvious rival to go to that was of a similar price point. instead, there are various apps you can use taxis on. maybe people will turn to a different organization with ease. the also have a lot of regulatory issues when it comes to the u.k. london black cabs have been pushing back. you have the same in france. notably in germany, uber has struggled to make inroads. they had only aligned themselves with licensed taxi firms. they have not been able to dig deep into the usual means of anyone being able to drive a car and take people around. the regulatory question is big. emily: we have seen uber pull out of russia essentially, all out of china essentially. are they threatened in the european market as well?
caroline: that's going to be a really interesting question. they partnered up, but taking a minority stake in the combined venture exactly in the same way they did with didi over in china. it will be interesting whether they have to scale back in european countries. just thinking back earlier this year, they had to pull out of denmark because they said the regulation that was about to come in didn't make it sensible to remain in the country. they are really being attacked at all fronts. didi is taking them on not only in africa and europe, but also asia. we saw grad in southeast asia, lyft in the u.s., these are the competitors didi has got into bed with. it seems like uber is being kicked out. emily: is didi going to have any local teams in europe? caroline: that is something we have to get the bottom of. as yet, that has not been
reported. they seem to be getting into bed with taxify, which has a team in estonia and across 18 different countries. we have to see whether they set up shop in the united kingdom. but when they push into london later this week -- year, i'm sure taxify will indeed come. maybe that is where some of the financial help from didi will help your they will be able to put people on the scene and managed to hire teams. interesting to see how didi comes into play. emily: when do we expect to see the results of these new efforts to push into europe? caroline: i think certainly this year. in the next few weeks, i understand that taxify will be making a trip to the united kingdom. they could be already laying the groundwork. we could see the moves into this -- these new countries coming fast.
certainly this side of 2017 seems to be where the view is to expand, but at the moment it seems to be doubling down where they are present within the 18 countries. they've got a big area where they want to expand into. if you are looking into being number one into europe and africa, at the moment they are number two to uber, they want to become number one. that's a lot of ground they have to put into work. 18 countries doesn't quite suffice. i'm sure that amount of money, although we don't know how much, will be put into work asap. emily: caroline hyde, thank you for that report. we will see later. uber is getting more competition in bangkok. japan's line is expanding the taxi service to the city. the company will start offering it by the end of the year. it will team up with a bangkok taxi cooperative network, and initially operate about 20 dozen -- 20,000 cars. tesla's director of battery
technology has left the company. according to his linkedin, he joined tesla in 2006, making him one of the longest-serving executives. tesla is said to be overvalued according to david einhorn. einhorn is betting against tesla stock, and says he's worried about the company's cash burn. a check on apple shares. they are soaring in late u.s. trading as the company projects revenue in the current quarter that tops analyst estimates, signaling strong sales of new iphones, scheduled to be released later this year. sales will be $49 billion to $52 billion in the three months through september. analysts had projected $49.1 billion. we will get you the details from ceo tim cook. they are talking about apple pay and augmented reality. we will bring all that to you. if you like bloomberg news, check us out on the radio. listen on the bloomberg radio app, bloomberg.com, and sirius radio xm. this is bloomberg. ♪ ♪
kong, and 1:29 p.m. in sydney. honda shares surged the most in seven months after first-quarter earnings beat estimates. net income jumped 18% to $1.8 billion. the full-year operating profit forecast was raised to $6.6 billion. on the star record sales in china, jumping 19% in the first half. however, those in north america declined. beene u.s. auto market has declining on a year on year basis. our overall sales were down 3% to just over 4.4 million units.
the passenger segment is struggling and growing inventory and incentives. honda's shear has expanded, despite having to adjust output in our u.s. factories. jumping in sydney, raising $2.5 billion to buy rio tinto's assets. yancoal will contribute. there will be two chinese investment groups contributing a further $1 billion. yancoal is returning from a self-imposed -- a bloomberg survey found the median forecast for inflation peaking at 0.28% for the fourth quarter. there were stark contrast from the view of the boj which maintains inflation will hit its
2% target. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> i am sophie kamaruddin with a check on the markets. asian stocks holding your decade highs with tech stocks powered by apple's rosy outlook. -- a drop we see in commodities players tracking the falling metals and oil. crude is snapping a six-day advantage. leading the drop in sydney. the aussie dollar holding losses below .80. performers the worst after the unemployment miss this morning. the dollar regains momentum. we see the korean won lead lower. venezuelan bond yields spiking
as bets on a default are rising. the main theme driving market action, lg gaining almost 10%. amongin hong kong and chinese and taiwanese suppliers. ♪ emily: this is "bloomberg technology." i'm emily chang. our top story this hour, apple's third-quarter earnings results. -- reports. investors are pleased with the updated fourth-quarter guidance. on the analysts call ceo tim , cook spoke about the promise of their latest efforts in augmented reality. take a listen. tim cook: we believe ar has broad mainstream applicability across education, entertainment, interactive gaming, enterprise, and categories we probably have broad mainstream applicability not even thought of. with hundreds of millions of people actively using iphones and ipads today, ios will become the world's biggest augmented
reality platform as soon as ios 11 ships. emily: we are learning more about apple's international revenue. revenue for china is down 10% year-over-year, but the decline is slowing. peter elstrom joins us from tokyo. still with us to discuss apple, julie osk, principal analyst at forrester. i asked tim cook if he sensed a turnaround. he said the results were encouraging, improved better than even they thought they might. what is your take? reporter: it would be better if sales were actually increasing. china is such an important market for apple in the last years. the last four quarters have been difficult for apple. competition is rising from many competitors. xiaomi has been particularly strong. last week, while they had a meeting with analysts and investors, and they talked about what they are preparing. they talked about the next iphone.
they head of the consumer business seemed to know a bit about it and said they had something ready that might be better, better wireless charging, a better camera. he said that price would be about half of what apple is planning on charging. it will be tough. emily: competitors are aggressive. i asked tim cook when i got to sit down with him, and spoke about china over the long-term. take a listen. tim cook: we make all of our decisions for the long-term. we are not investing for next quarter or next year. we are thinking about many, many years out. as i stand back and look at china, i see megatrends there that make china an incredible market. emily: what is your take on the prospects for apple in china? >> i would have to agree with what peter said as well. it's a big market. i agree they are investing for
the long-term. i think it's tough to compare them, because they are targeting a higher end of the market, and more and more it will be about the package of services, the quality of the voice services. there are a lot of unknowns. emily: what about india? i did ask tim cook when india will start picking up for china. he said they are investing heavily there and he is optimistic about that market. when will we see a more measurable contribution? >> apple is a tiny player in india right now. the products are just too expensive right now. they could get around some of the tariffs if they get around the assembly in the country. still, they need to come in with low end phones in india. emily: let's talk about the ipad. sales had been struggling, but this quarter we saw an increase. take a listen to what cook had to say moments ago on the call. tim cook: the ipad product lineup is stronger than ever. the new ipad we launched in
march offers great value for performance, and the new 10.5 inch ipad pro launched in june features the world's most advanced display with promotion technology, and is more powerful than most pc desktops. emily: there has been a lot of concerns about the ipads, especially with cannibalization. phones are bigger, do they still need the ipad? how much does the ipad matter? julie: that's the right question to ask. how much does it matter? smartphones are still the biggest category, and the overall global market for smartphones will still grow by 50% in terms of people in smartphones, so you are asking the right question. how much does it really matter? emily: what do you think about his comments about augmented reality? as a measure of future growth? julie: i think that's one of the big categories. if i'm apple, i'm always talking about my strength.
things like augmented reality where they have made those investments, there are exciting applications that include social media, gaming, business applications as well. i think there's also a lot of excitement around the voice assistants. apple does not yet have that in the market. emily: the home pod coming later this year, we will discuss that. julie is sticking with me. thank you to peter elstrom. facebook is said to be developing a video chat device for the home. it would mark their first major hardware product for its building lab. 8it could be announced as soon as next spring. joining me is sarah frier, who helped break the story. what do we know? reporter: this is going to be basically video chat. facetime on steroids. it will be a big screen, kind of the size of a laptop on a stick
in your living room. it will have a really high end camera that will allow you to talk with people. it is a more immersive experience. one of zuckerberg's goal is to bring people closer together. this hardware lab, they want to come up with technology that would prevent us from having to be tethered to our phones. that we can be in a physical environment and enjoying our lives, but still feel like other people can share moments with us. that is the high level. emily: a longtime former google executive has high hopes. do people want a device like this? julie: i think facebook has to make a play in the hardware space. if you look at where future growth will come, we have 33% of users using a voice or some kind of assistant in the home.
voice services and services like facebook are crucial to the future of digital experience. facebook has to make a play. emily: what else do we know about what they are working on, and how it would position facebook vis-a-vis google, which has google home, and amazon with the echo, and apple with the home pod? reporter: this voice touchscreen device could get a lot more fancy. you could add a 360 degree camera. the cameras they are working on has a sensor technology that can lock in on things that move. if your grandmother is calling you to talk to your kid, he can hold up a painting and the camera will follow it. the other thing facebook is working on is something similar to the google home and alexa devices you are talking about. just a more simple speaker that can use facebook power and ai system they are working on.
that is the lower end device. we have heard from our sources that type of thing could be killed, considering the competition in the market. emily: we have the big tech giants doing the same thing, just slightly different, who is in the best position to succeed? julie: it is still really anyone's game. building a piece of hardware isn't hard to do, but assembling the services and doing voice while language generation and understanding is very hard to do. google knows a lot about our day-to-day lives. apple has a great connected ecosystem of products already in the home. amazon knows about shopping habits. facebook knows a lot about my social media habits. emily: but they don't make hardware. julie: it is very hard to do. the secret here is the setup and ease-of-use, and how well it is done. it is hard to do. only 8% of consumers in the u.s.
have one of these devices, and will probably be one of these in everyone's home in the next five to 10 years. emily: thank you for stopping by. sarah frier, great reporting by the tech team. staying with facebook, the company is acquiring ai startup, seen as a way to boost its virtual assistant in the messenger app. they are expected to move into the messenger team at facebook. amazon is known as a major disruptor from consumer electronics to streaming services. by the next big push may put the likes of paypal and visa on notice. later, bitcoin has split. what it means for investors in the digital currency. this is bloomberg. ♪ emily: now to a stock we are
watching. canadian e-commerce platform shopify beat analyst revenue estimates for 9th street quarter. the company booked over $150 million in sales, beating the estimate of $144 million. their growth comes is spending continues to shift from physical stores to online retailers. amazon has been on the disruption path for quite some time now, as we were just discussing. from the shift into consumer electronics, pitting it against apple and google, to the multibillion-dollar acquisition of whole foods. what is next? according to a bernstein senior research analyst, it could be payments. as the e-commerce giant further promotes amazon pay, the service for making payments online and on mobile. joining us from new york is lisa ellis. tell us about amazon's efforts in payments and what it means.
>> absolutely. the real risk here to the incumbent payments players like visa and paypal and mastercard is that amazon decides to build its own paypal, similar to how paypal is built off of the ebay platform, and alipay was built off of the alibaba platform. those entities have over $70 billion in market cap right now, and are formidable players on the payment stage. that is the real risk. the reality is, amazon has more of the capabilities to do that, and it is further down the path to doing that then you might think. on the capabilities side, the trick to building a payments network is you have to overcome the chicken and egg problem. you need users and merchants. amazon has over 300 million
consumers and 200 million merchants on the platform already. plus, they have the technology capabilities of amazon web services second help them in building their capabilities. plus, they are over 10% of global e-commerce sales. they are further down the path on doing this. they have also been actively promoting the amazon pay button off of the amazon platform. we ran a consumer survey, and it is one of the top buttons consumers highlighted. emily: what's interesting about payments is that these companies and services are not necessarily apples to apples. you have apple pay, they have been talking about that. there is also paypal. what does this mean for competitors to amazon pay? >> for the direct competitors to amazon pay, like a paypal, that is particularly concerning.
paypal's core customer set is a small and medium merchant trying to do sales online. amazon is directly targeting that same small and medium merchant that may be selling goods to the amazon platform. emily: compared to alibaba and alipay? >> we are familiar with paypal building here in the u.s. alipay built up as part of the alibaba online platform, similar to amazon in china. recently it has spun out and is under and financial and starting to expand pretty aggressively internationally as well. they have recently acquired moneygram here in the u.s. and are trying to expand internationally. emily: amazon is entering into so many new businesses. there are groceries now. are there any antitrust or regulatory issues on the horizon?
>> the regulatory issue they may run into. one of the areas we are watching closely is that they recently launched amazon reload, encouraging consumers to actually store money in a balance in their amazon account. when other players have done that, that can sometimes run afoul of the cfpb or banking regulations entities who are concerned it looks and feels too much like a deposit account or checking account. afoul of the cfpb or banking emily: lisa ellis, senior research analyst, thank you for that report. coming up, more of "bloomberg technology." we will be talking about bitcoin. caroline hyde will be back with us from london. ♪ emily: apple ceo tim cook
tim cook: we created 2 million jobs in the u.s., and we are proud of that. we do believe we have a responsibility in the u.s. to increase economic activity, including increasing jobs. apple could have only been created here. emily: apple ceo tim cook there. we are listening to the final minutes of the investor call. we will bring you headlines as we have them. moving onto bitcoin. history has been made in the cryptocurrencies space. the number one digital currency bitcoin has split in two. this comes after a long debate about how to scale bitcoin. and increase block size, those of the files in which transactions are reported. the new strand is called bitcoin cash. joining me for the latest is caroline hyde from london. you have been following this bitcoin progression closely. tell us what is behind the
split. caroline: the split is almost philosophical in nature. it is what they want to see bitcoin become. part of the ecosystem is wanting to see bitcoin remain a store of value as it has been, an alternative to gold, a safe digital asset class. but there is a growing wish for the scale of business to keep up. transactions have become sluggish and costly. how do you scale? they managed to compromise with a so-called software update, where they managed to get most of the ecosystem to increase the block sizes, where you record the transactions on the block chain. and it doubled from one megabyte to two megabytes. it wasn't enough for a small group of investors and developers. they wanted more scalability and wanted to go from one megabytes to eight megabytes.
it happened today with bitcoin cash. almost like a stock split in the same way they have the same history, now we have two different currencies going a different direction. instead of fostered on different business models, they are supported by different digital technologies underlying them. the protocol, the block chain, is different. emily: what does this exactly mean for bitcoin traders? caroline: a lot of volatility. a lot of question marks, a lot of handwringing, and a decision whether to back bitcoin cash or not. not everyone will back the new digital currency. if you own bitcoin right now, you are allowed to get bitcoin cash automatically. but that's only if you had your bitcoin stored in the supportive wallet, in the supported areas and companies that allow you to have bitcoin and get bitcoin cash as well. the likes of, for example, fred wilson, who is a backer of the biggest exchange out there.
he says he doesn't want bitcoin cash, because i don't believe in the underlying technology for now. if you are a bitcoin holder, you have seen a lot of turbulence, a lot of people withdrawing bitcoins out of the exchanges because they were not going to be will to get a hold of bitcoin cash, and trying to put into an exchange. for the time being, there are a lot of people trying to work out where the prices go. i can tell you that about three hours ago the first bitcoin cash was mined. at a moment, it is trading at just a 10th of the price of bitcoin original. emily: fred wilson also said he's bullish about other cryptocurrencies, specifically ethereum. what is next for bitcoin? will we see more offshoots? caroline: it's interesting you raised that, because last year
we saw the same thing happened with ethereum. that's why you have ethereum and ethereum classic. classic never really took off. will that be the demise of bitcoin cash as well? many are saying we could see a new precedent being set. the worry is could we see more and more splits? many felt this was the joy of bitcoin, that it was immutable. now that has been undone. that is the key question. can this keep happening? the key is that the strongest will survive. emily: caroline hyde in london, thank you for that bitcoin report. we have been listening to the apple earnings call. someone just asked a question about cars. tim cook saying apple is making a big investment in autonomous systems. he adds that autonomous systems mean more than just cars. he's expanding on something i asked about in june. a little more of a hint of what it looks like under the hood of
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