tv Bloomberg Technology Bloomberg October 25, 2017 11:00pm-12:00am EDT
you are watching >> bloomberg technology. let's start with a check on your first word news. president trump says under jeff flake likely to the right thing by not seeking reelection in arizona where the president says he didn't have a chance. president trump: he was against me from before he ever knew me, he wrote a book about me before i ever met him, before i ever heard his name. his poll numbers and arizona are so low that he could not win. i don't blame him for leaving, i think he did the right thing for himself. alisa: trump is describing him as sad and a disgrace. reports that hillary clinton and thatnc paid for research
produced a dossier about allegations about his ties to russia. all incoming flights into the u.s. will face new screen procedures including interviews for visitors and american citizens. five global carrier said today they will start conducting interviews tomorrow. american airlines will invite naacp representatives for a meeting to discuss concerns over potential discrimination against black passengers. this comes after the organization issued a travel advisory against the carrier citing disturbing incidents reported by african-american passengers. global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. on the alisa parenti. this is bloomberg. bloomberg technology is next.
emily: coming up, apple's most advanced handset hits stores next week. what the success of the iphone x could rise in fall on its ambitious key feature. will the new facial recognition technology set the gold standard for the industry? we'll explore. plus, amazon gets a spare key. a new delivery feature that lets in -- couriers in, even when there is nobody home. a new price system in the pipeline to better navigate the highs and lows of the u.s. box office. how regal entertainment plans to rip the script on how viewers pay. first, to our lead. interest continues to grow over the iphone x as the countdown to its november 3 release begins. this is one of the most ambitious devices apple has ever brought to market. the technology posed several challenges, however, from facial recognition to 3-d features. we have been covering what's
been going on behind closed doors and whether the tech giant will be ready to get the phone in the hands of consumers next week. you have a new story out right now where the main headline seems to be that apple, at least from where it started with facial recognition technology, decided to downgrade that technology in order to produce it at a mass scale. please clarify what i said. >> the technology was previously only in the microsoft connect, the size of a large hardback book. they reduced it down to a few centimeters across and a few millimeters deep. the round of error, the margin of error in that is tiny. in order to make it possible for their suppliers and component makers and assemblers, who build them into a package and are then shipped to the foxconns of the world, they had to reduce the specifications in order to ship it in the quantities needed. emily: what does this actually mean? is the technology going to be
any different than advertised? >> from a consumer perspective, i don't think anybody will be able to tell the difference. the difference they were talking about, one in 50,000 people could spoof your fingerprint. face id, one in a million. idea whether they cut some of these specs off before the one million figure, but the likelihood is it will be infinitely better than touch id. emily: bloomberg's claim that it reduced the accuracy spec or face id is false and we expect face id to be the new gold standard for facial authentication. the quality and accuracy have not changed. it continues to be one in probability of a random person one million unlocking your iphone with face id. >> speaks to what i said before. that perhaps suggests that happened before they released that number. we stand by our reporting. have good confidence in the people we spoke to. >> i think this is about the tolerance of where apple
potentially started versus what they will live up to when they shift. the fact is, if they live up to that one in a million, then they have not reduced it, and the consumer will never know. if there is a reliability problem, if people experience situations in low light, in ways that do not necessarily recognize it, that would be an issue. we don't believe that will be the case. apple is standing by this technology. we have said we think they will be somewhere between three mayan r million.d fou we have no reason to believe it will not be a successful launch. us through how apple's facial technology is expected to work. >> there are three components that matter. the illuminator, which is like a torch which sees a face. it passes on the action to what they call the dot projector, which is computationally intense.
this flashes 30,000 dots at your face. the infrared camera then detects that, puts that through the algorithms and recognizes this is the person that i should allow or not allow to unlock the phone. emily: how difficult would you say is it to manufacture this kind of technology at scale? crawford: it is very difficult. these are precision products. we have heard a lot of rumor and yield has been a problem. manufacturing yields of 60%, 50%. those are unacceptable when you think about a high-volume manufacture product. those yields have to come up to the 90, even 70% overtime. i think they will get better. this is a very expensive product. this product has a premium price point. there is going to be followed all out. emily: are there other components causing issues? alex: it seems they have broken the back of that. the flood projector as well,
this inferred laser, they had some issues with that. the yield on the dot projector was about 20% at one stage, 40% for the illuminator. it is still a long way from the 90%. crawford: i would just say, we believe apple will ship optimistically 37 million. we are now feeling that is at the high-end. not only based on the components we are talking about today but also based on oled availability. samsung has the absolute lion 's share of the screens locked up. they take a significant amount themselves. we are not going to say it is not going to be a constraint going forward and certainly into next year. emily: that is shipping, what about demand? are you expecting demand to be higher than ever despite this $1000 price tag? crawford: our expectation is there will be unsatisfied demand.
this is going to be a very hot product. people are lining up for it, trying to get it, they will not be able to meet initial demand in queue for, we believe. q4, we believe. alex: also wanting to take away, this is one detail of the story which apple has not been happy with. we go into great depth with the supply chain. the takeaway is they have broken the back of a lot of the problems they have had with a 3-d sensors. please read our story. emily: preorders start on friday. you can go to the store and buy it the following friday, if you stand in line, presumably. how do you expect the demand and supply curve to unfold? crawford: i think they are going to be fairly supply constrained. our expectation is a run for -- around 4 million launch. they probably ship optimistically 37 million, probably more realistically 30 million range for q4. and then our expectation is, as
you get out into next year, we are looking at 50% of phones high-end. 240 million units next year. not all iphone x. half of those will be the larger size, which the x will be included. emily: iphone 8? crawford: our expectation is pretty strong. for this quarter, about 15 million. alex: one interesting idea, it will be important to have the iphone x in stores. there are probably a lot of iphone 8 buyers waiting to hold the two side-by-side and say, do i want to pay more to buy this? emily: alex webb, thank you. crawford, always great to have you here on the show. thank you both. twitter, facebook, google, maybe appearing on capitol hill earlier than planned. the three have been invited to a senate hearing tuesday. the senate committee on crime and terrorism wants to discuss
russian election interference and the use of the company's platforms by extremist groups. top lawyers will be appearing on the hill the day after to publicly testify about russian meddling in the 2016 u.s. elections. coming up, tom leighton, to to discuss his company's big earnings beat. bloomberg tech is live in streaming on twitter. this is bloomberg.
emily: the stock we are watching, advanced micro devices, plunged more than 13% in the session. its worst performance in five months. shares are under pressure after the company reported fourth-quarter revenue may drop 15% from the previous quarter. meantime, the company reported a profit and sales beat in the current quarter. turning to a bright spotlight in today's mixed bag of earnings, akamai technologies, a provider of content delivery and cloud security posted revenue earnings that topped estimates thanks to strong video traffic from large customers. tom layton, the ceo of akamai technologies, expanded on the company's performance earlier. >> yeah, i think so. people are watching a lot more video online, at higher quality levels. as much as that's happening, it is really the tip of the iceberg. we gave an example on the call. we had 60 terabits per second last quarter. what is that? that is 12 million people watching at reasonable quality
levels. you can imagine a future world with 100 million, a billion people watching, maybe even high-quality. so a lot of runway left there, i think. >> i was looking at analyst notes. they boosted the price tag of $270, an analyst at quarterly execution was dollar. what is it about the current industry environment that is coming together right now for you? >> in addition to media and video, there is a lot of interest in cybersecurity. you look at the headlines every week of the latest disaster. that is where we had really compelling solutions. that business for us now is half a billion dollars in revenue and growing in the high 20's. we just unveiled our latest technology to use machine learning to differentiate between bots and humans. humans, when they hold a mobile phone and are tapping, have a much different dynamic than a
bot would coming into your account to steal your identity or hack into an account to steal your money. on the enterprise side, the old notion that you have a perimeter corporate firewall like the moat around the castle does not hold any more. scarlet: what does it look like now? >> we are in a world now where you cannot trust anybody, even your employees, because they are getting infected. they take their devices, they go to websites, click on the wrong link, get infections, and then come inside, import it. once behind a firewall where you're in the corporate perimeter, it runs wild and you get these big data breaches. >> you mentioned extension of products. what other new products are you looking at and will those be the growth drivers next year as well? >> i think so. managing the bots, they're all different kinds, a lot of them bad but not all, a very fast-growing product area for
us. stopping the account takeovers is important. stopping enterprise employees from getting infected, even if they do click on that bad link. we have new products in market there that i think will sustain a lot of growth for our cloud security business. on the media side, not only is there more traffic because more people are watching but we just unveiled our new technology where over-the-top is ahead of satellite. typically, if you watched online, you would be 10 to 90 seconds behind satellite. the touchdown had taken place, a minute later you are seeing it. now we beat the satellite, which is very cool. scarlet: that is a good the development from where you stand, certainly. i was noticing that you were one of the 18 ceos invited to the white house this year. him you had also served on george w. bush's information technology advisory committee as well. what do you see in terms of a continuation in commitment to
modernizing and securitizing government in i.t. infrastructure? has that been consistent, is there followthrough? tom: the major tech companies want to help the government modernize i.t. and better protect themselves, so we do a lot of work in washington to help the government. irrespective of administration, that's really important to do. abigail: sticking with the topic, executives from facebook, google, and twitter will be testifying on capitol hill next week on russian intervention. what do you want to hear come out of that? tom: a serious concern, these are very unusual times. we want to be sure the internet is used for good and not to do bad things. privacy is another major issue right now. how do you balance law enforcement's need with the need for the citizen to have privacy? tech is right in the middle of it. it is hard for the laws to keep
up. tech is moving so fast. scarlet: you think we should consider these companies a public utility as sometimes suggested? tom: it's very different from a normal public utility, these are obviously very large, powerful companies providing a lot of great services. it is just now we are the middle of some of these issues around potentially things that do with the election being influenced by social media or manipulated news . it is really amazing what happened over the last decade. layton, -- that was tom leighton, ceo of akamai technologies. coming up, will a new pricing strategy incentivize moviegoers? we will dig into regal cinema's latest test. and our interactive tv function, check it out, right on the bloomberg. if you miss an interview, you can go back to it, you can send
subscribers in the third quarter now is twice as many as sprint. it added less than 300,000. t-mobile is a champion of charitable commerce, giving away perks like rides, dunkin' donuts products, and netflix services to all subscribers. regal entertainment group is testing demand-based pricing for tickets, potentially leading for higher prices for top hits and low prices for flops. this would be a major shift for an industry that typically uses a one-size-fits-all approach. the company is working with an app maker which has lobbied the aters to try dynamic pricing. explain why they are doing this. anousha: what is said frequently about the theater industry is innovation has not come to it. this is really probably one of the more conservative i would say chains taking the bull by the horns and addressing an
issue that the industry is facing now, which is a very low turnout at the box office, struggling in terms of revenue this year. especially over the summer it was very disappointing. that is reflected in their share. amc and regal, the two leaders, seeing their share prices fall considerably this year. emily: so when this actually mean if you go to a movie that is popular or good, the price would be higher, and a movie not doing so will would be lower? anousha: we don't know what the parameters are. when i reached out to regal for more details, they are quite reticent to give too much detail about how exactly they will do this. what's clear, they want to make more money in quiet time, and busy times, and to use something like apps and tickets to make group bookings, make it more opportunistic when you go to the
movies, and to work together to try and find some kind of trend in pricing that will help that, being flexible in pricing. the interesting thing is studios really do not want, by and large, to have a price put on the movie that indicates maybe it is not very good. it is sort of like a fine line they will have to tread around. they can maybe charge more in what they expect to be busy. but not necessarily charge less for films that people don't like. it is going to be a tricky one. emily: how do we expect studios to react to this? anousha: when i spoke to executives in private -- these are very tense conversations. the movie industry is at a critical juncture. cinema and exhibitors are under
pressure, as our movie studios, to address the rising trend of netflix, amazon, streaming in general, people not going to movies. they are very sensitive conversations. what i've been hearing is that studios generally don't want that kind of dynamic pricing or commoditization of movies. at the same time, theaters have to find some way of addressing the lack of attendance. something probably in the middle will happen. also analyst pointed out this year, amc suggested something similar in terms of dynamic pricing. in other industries, it's commonplace. music, sports. emily: you also have a startup like movie pass that has this controversial once a month $10 fee to see a movie every day if you like. do we know how that experiment is working? anousha: we know it's very popular. they just upgraded the expectations for their subscriber count, increased the public filings around how many
subscribers they have, now 600,000. whether that ends up being a business that works, we will see, but definitely there is demand for it. that is a major threat. the other major threat we are reporting on his premium video-on-demand. movie studios saying, people want movies at home sooner, so they are trying to pressure studios to release their new movies, reduced exclusivity period that is typically given to theaters eminem show them at home sooner so they can make more money. there's a lot of different pressures and delicate negotiations going on, and testing what's possible. emily: a new shock, reporting in hollywood, thank you for joining us. coming up, a prominent venture capital firm in silicon valley is investigating whether it's founding partners is guilty of misconduct. we will have that story next.
fastest rate in seven years. gdp rose 1.4% through september. the hollywood studio founded by harvey weinstein could be in trouble. : he said last week it had a preliminary agreement to invest, but sources say the deal has been terminated. the weinstein company has been colony said last week it had a preliminary investment to invest, but sources say the deal has been terminated. sophie: a good start to the earnings season helping stocks. the nikkei gaining, resuming gains after the rally started
wednesday. a firmer yen, leading against the greenback which is falling along with treasury yields. have little enthusiasm for korean stocks despite the gdp. check out chinese large caps. gaining, breaking 4000 points for the first time since the 15. in best-performing segment that benchmark, rising to a record level. helped by the jump of a liquor maker. for the biggest gain since august, 2015, after more than doubling net income in the third quarter. goldman raised their price target by 9.2%. there are zero cells on the stock. let's check what is moving on the hang seng.
plans to invest $1 billion in the macau operation. that is a snapshot of what we are looking at in hong kong. this is bloomberg. emily: one of silicon valley's top investors is being investigated for potential miss conduct. they say they are investigating steve jervidson who sits on the board of tesla and space x. this comes after being called women approaching by founding partners should be careful. predatory behavior is rampant. security within the firm creating files on women to potential violations of revenge porn laws. to grotesque laws.
i will not set foot inside silicon valley for investment. we will say that there are not many details. what do we know? >> we know what the firm has confirmed to other outlets. sometime over the summer, they hired a law firm to look into allegations of potential misconduct against one of the founding partners. we really don't know much more than that. we don't know how long it has been going on or the degree it was involved with firm stuff or between him and potential entrepreneurs and that kind of thing. emily: keri made the statement on facebook and said, the situation is personally atypical. i have not been in any other situations remotely like that. i was not seeking investment or trying to further my career. we understand that she and jurvetson were involved in some sort of personal relationship. she said after she wrote the post, she was contacted by the
attorneys working on the investigation. steve jmore about urvetson. we know he is on the board of tesla and spacex. we know he is charismatic. >> he is a well-known investor and he has a particular interest in space and fringe technology. he has a close business relationship with elon musk. he is also a personal friend. he is a person who is in the orbit of some of the top entrepreneurs, top ceos, top investors in silicon valley. a big name. emily: he invested in hotmail in the early days. i believe jurvetson is the firm that threw tesla a lifeline in the early days. this is just a theory. the latest in a series of scandals across silicon valley involving tech companies, chris sacca, dave mccourt, travis kalanick who resigned amid these
issues of sexual harassment. talk to us about the climate. >> i think the climate is a time unlike another time we see. there are allegations about this stuff coming out. a lot about recent behavior but sometimes older. there is a women women feel more -- since women feel more -- there is a sense women feel more emboldened to speak up. they say, i experienced this behavior and it was wrong. the way to stop it from happening in the future is to name names. come on the record. say these kinds of things. the example that you brought up with this woman who said she had this gray area personal , experience with steve jurvetson, underlines how fluid the lines are between investors in silicon valley. you are not working together until there is an investment, but there is a lot of networking. it is sort of business but sometimes it is personal.
there are these hierarchies. managers should not date people who are their direct reports, but it is less clear in this world between investors and onto entrepreneurs. emily: to reiterate, the statement the spokeswoman for , dfj said the firm hired a law firm after hearing indirect accusations about jurvetson. the process is ongoing. the firm has not received a formal report of claims against jurvetson or other investors. a lot of questions. not a lot of answers. we will continue to report this story. thank you so much. uber is being sued by three engineers accusing the right de hailing giant of discriminating against women and people of color. three female plaintiffs say that uber pays women and people of color less than their peers and does not promote them as frequently as males, whites, and asians. they say the company is in
here is what he told us on the latest episode of this show. >> you are running the microsoft is this solutions division, but then they say we want you to run the search business called bing. did you say, you cannot compete against google? or, i would be happy to do that? >> i had just been promoted to lead our business solutions team. i was loving that job. it is something i had aspired to do. steve comes around and says, i have an idea. i think you should run this group that has high attrition. we have a tough task. i don't know if it is a good career move, but i need help. think wisely and choose. [laughter] and i was like, wow. this is an interesting choice.
i remember distinctly going that night to the building in which ing team and our search team was housed. it was 9:00 or so. the parking lot was full. people were in. i said, what is the deal? these people are working and inspired. i said, i have to join this team. the fight that they showed caused me to not take the easy path. did they say, if you don't do this well, you might not get another job? one thing that is amazing about bill and steve is their candor. they are honest about most things in life.
if you do a good job, maybe you'll have another job. >> then they ask you to run another business, your cloud computing business. how did it happen that amazon computeras not a company, more or less, became a giant in cloud, and microsoft, right nearby, wasn't? happens when a company becomes successful, there is this beautiful virtuous cycle that gets created between your concept of product, your capability, and your culture. you really have all of these three things fall into gear. they are working super well. then what happens is the concept of that made you successful runs out of gas. it is not going anymore. you now need new capabilities. in order to have that new capability, you need a culture that allows you to grow.
our silver business was growing strong double digits. it was high-margin. you look around on the other side of the lake. here is a very low margin business called the cloud. people would look at that and say, what would we do that when we have such an amazing, fast-growing, high-margin business. that, i think is the challenge. to see these secular trends long before they become conventional wisdom. change your business model, change your technology and change the product. in tech, it is unforgiving. quite frankly, i think now that tech is part of every business, i think all of us have to deal with it. the issue ofcussed pay equity for women and what steps he is taking to address the challenge at microsoft. >> almost everything you have done since you have been ceo has worked perfectly.
the stock is up, the market value is up, everybody likes it. the only thing i could find that anybody criticized you for was, you gave a statement about women's pay at one point. you correctly changed your position the next day. can you explain what happened? >> absolutely. i was asked about pay equity. i just gave such a nonsensical answer which maria, the interviewer, was kind enough to correct me while i was on stage. i was answering a question using my own personal experience without understanding the broader context, the depth of the question, which is, what is a person like me, the ceo of a company, doing to make sure that one, women can fully participate in our companies and in our
is equal payere for equal work, and more importantly, equal opportunity for equal work. that was the real question. it is not about what works for you and what career advice do you have? it was a great learning moment. it is something that i have obviously taken back. in fact, when i speak to women who are close to me, senior, successful women that are key to even theirnd hurt their ownrd even personal experiences, that is when it struck me how the job of the ceo is to make sure that everyone, whether it is gender diversity or ethnic diversity, can first come into the company, do their best work, so we can serve our customers. that is a realization which i thought i had. quite frankly. i glad that i messed up so am publicly because i think i internalized the lessons from
it? >> did you hear from your wife at that point? >> absolutely. at that point my mom was alive. i heard from my mom and my wife. my wife had to give up her career because of our son. even in the case of my mom, i realize it more than i even did growing up. the trade-off that my mom had to make where the system that she was working in did not support her reentry into the workforce after she had myself and my sister. >> you have about 125,000 employees. what percentage are male? what percentage are female? how many senior women do you have? technology is not a field where a lot of women have risen to the top. >> one of the things we have made good progress on is women's representation. we have a long way to go. you have to remember in tech, we have a particularly difficult
of technology disparity in terms of gender diversity, but let's start with the progress. in the last year, we made, we have gone from around, we have improved to 27.7% of women coming into the organization. which is about two points more than historically speaking. in the technology side, where we have improved by 4 points. i would say that is movement in the right direction, but not enough. one of the other things are board also did was to change the compensation system for me and say, lookreports to numeric progress, aside from the , works we may do, programs we may have. let's tie compensation to real numerical progress. we are doing everything, but it is going to take continuous the vigilance, continuous push.
emily: as we have been reporting, more than 200 cities are bidding to secure the location of amazon's second headquarters. the chairman and ceo spoke to bloomberg at the future investment initiative in riyadh and says he is betting on one city in particular. >> they create so much demand. cities are excited to have them. >> they are not building their own building? >> they don't want it on their balance sheet, but they are
doing their own distribution center. i think boston has a good shot. the zeitgeist. the other places they might go are the southeast, atlanta, raleigh durham. atlanta is affordable. it's a transportation hub. emily: in other amazon news, the retail giant would like to make missed deliveries a thing of the past. and new service will let amazon deliver packages into your home and it will let selected services like house cleaners and dog walkers in while you are away. the service works with an electronic lock and security camera which will film the person entering your home. joining me to discuss is mark gurman. how does this fit into the hardware strategy? >> it is interesting. it seems like every other week we are talking about a new echo, a new fire tv, new tablet. now it is security cameras.
it is a hot space right now. nest came out with theirs. everyone is coming out with a security system for the home. this is amazon's approach. they are tying it to how they make money, packages. people buy stuff online. this is just another tool amazon is selling to help get their stuff. emily: this would literally be the delivery person entering your home? what about security concerns? >> it is interesting. we have not heard back from them if amazon has an insurance program, liability, terms of service. are you waiving your right to sue amazon or file a complaint if something goes wrong? i'm sure that the people are vetted. they hope there will not be a circumstance like this but the reality is that letting a person into your home is not an easy thing. emily: how do they convince people this is worth it? there are two things. in terms of buying the hardware, it is a no-brainer purchase. if you look at the specs, the video quality, the app integration, it is $120.
which is a really good price, that is about half the price of some of the other cameras. in that sense, it is a cool product. in terms of the amazon key, it is a tougher sell. emily: how does this fit in? does it fit in with the echo and other home-based devices? >> all the devices are designed to sell you more stuff. whether that is buying stuff with your voice. this is another conduit of that system. they are also going to be selling subscription service. that is another way to make money. emily: how does this fit into the broader delivery efforts? in general, amazon is trying to take on more of the delivery logistics problem. taking it away from ups and fedex. >> there is another element. amazon is getting more competition. there was a time when you could not think of anyone other than
amazon. now there is walmart. walmart is competitor and they have announced a similar service. amazon is fighting back with a more integrated approach. with smart locks and their cloud camera tech. emily: what will you be watching as you head into the holidays? >> it will be interesting to see how the different companies create their platforms as a way to lock people into their ecosystem. it is going to be interesting to see if some people buy apple devices, google, next, amazon. the competition is going to heat up and you are going to see everybody trying to get a piece of every device. emily: what is the hottest speaker on the market? >> stay tuned to gadgets with gurman, my blog. we will be comparing everything down the road. i have been listening to the sonos 1 at home. that is the one, it is a sonos speaker with alexa. it sounds really good. emily: thank you for stopping by. that does it for this edition of
"bloomberg technology." tech earnings will be in full swing thursday. twitter, amazon, microsoft, intel. just a few of the companies reporting. we will have full coverage in and out. a reminder, we are live streaming on twitter. check us out on bloomberg tech tv. that is all for now. this is bloomberg. ♪ who knew that phones would start doing everything?
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