tv Bloomberg West Bloomberg December 5, 2013 12:00am-1:01am EST
>> welcome to the late edition of "bloomberg west." recover that media companies that are reshaping our world. i am emily chang. our focus is on innovation, technology, and the future of business. there was a self driving car and then a plan to use whether weather balloons for wi-fi. it looks like amazon might use
robots and the former head of android is part of it. in china the government has cleared the way for the largest cell carrier to offer four g services, and that could mean hundreds of millions of new customers. how do you put together the management team? we asked the guy who has done it. maynard webb is here for "office hours." first, to the lead. google is known for its far- reaching projects like google glass and the self driving car. now the latest moonshot involves robots. the company has required seven robotic companies in japan. ceo larry page writes, i am excited about andy rubin's next project. android started as a crazy idea. it ended up putting a in hundreds of thousands of pockets. it is still early.
can't wait to see the progress. what might google be doing with these robots, and how might it compare with the delivery drone amazon is testing? first, what could google possibly be working on? >> i wouldn't say first. this is characteristic of how google operates. this has always been characteristic of how google operates. this is very similar. his passion is robotics, and they allowed him to pursue this. we don't know where it is going to lead. maybe building motorola phones easier. >> so automating assembly lines. >> he has the company re-think robotics. a lot of people think about how to use this technology in manufacturing to help streamline
and make processes more efficient. >> the timing is interesting. are they trying to one up amazon and their drones today? >> definitely not. i think larry page announced he was doing something back in march. >> there were some questions. >> we all wondered. kudos for breaking that stories. google to forces acknowledge that he acquired these companies. >> google has been interested in package delivery. a have then experimenting there, which is amazon's turf. >> could google roboticize the delivery process? you are already more than halfway there. >> talk to me about andy rubin. >> he was the most important executive in many ways.
he joined in 2005. he turned it into a strong foray to compete with the iphone. steve jobs was so angry because he thought google had copied apple. he tells me he flies a drone over his house as a security precaution. >> interesting. wow. wow. that is quite unique. you have gotten a look at google glass, but this is separate. this is not happening within google. >> they are very similar. it was described as the home for projects that no one in their right mind would start at google. it is so different from their original business model.
and he wanted to do this on his own. clearly there is a very similar egos, very expensive. you want to get him outside of the primary business. >> as i understand, andy rubin's new department is going to try to put out products sooner rather than later. >> i would say we know very little about the timeline. we don't know what form this is going to take. will he be selling or providing technology like motorola? it is too early to tell. >> a lot of these don't make money. google glass is barely on the market. how does this add to the business? there has been a lot of talk about whether they are distracted by these objects when their main business is advertising. >> i would say financial return is not a short-term
consideration. all of the companies are competing to be the biggest on the block. it helps with recruiting and image. the whether balloons have huge financial issues, but that is not what they are focusing on now. >> will the iphone become the new smart phone of choice in china? find out how the administrative change will affect the carrier next on "bloomberg west." ♪
4g service as opposed to its own 3g network, which is not compatible. cory johnson has more in today's drill down. it sounds like a big deal. >> it is interesting with the change affecting as many as 750 million people, it's not that big of a deal. the bigger thing might be the ramifications. i think ramifications go favre aon this company. -- go far beyond the company. the minister of technology, the minister of technology, which i love saying -- >> all of the chinese departments. >> they choose td-lte standard, which is the chinese standard. this will be the biggest in the world. >> why don't they just call it 4g?
>> it's different. it's the way it works. it's the way it broadcasts a signal, the duration, how high it can go as well as the kind of chips. >> it's basically the same. >> it will have a lot of the same characteristics. for this market you had the other carriers choose. they have a much smaller percentage of the market. they originally chose homegrown technologies because it has been good for the units. it's good for the cell phone makers. apple didn't want to be involved. this was never licensed by the chinese government.
making great the standard that licensed by the chinese government. >> apple could be a huge winner here. the question is how much could they win? >> it's unclear how much they could win and how many customers will migrate to that phone. there are other important players. a lot of other companies could do this. it is not a game or a space. a lot of companies could benefit. they will benefit from this greatly. spreadterestingly, i put on there. >> sprint. yes, i did see that. >> softbank just acquired sprint and clearwire. clearwire is based on this td- lte standard.
this means a phone on china mobile would work in japan and across the u.s. it can be developed in a cheaper fashion. they could use one phone and one service in china and japan. it will be interesting to watch. >> thank you. even before this rollout, apple and china mobile were already talking about a distribution deal and reaching an agreement in some amber. earlier i spoke to one of the leading authorities from apple and asked how close apple is to getting this he'll nailed down. -- since a temper. earlier i spoke to one of the leading authorities on our own. i asked a gene munster how close apple really is to getting this deal nailed down. >> from a technology standpoint they have passed a big hurdle.
we think something is going to happen in the march quarter. we thought it was going to happen in the fall. it is close is the important take away. >> what is holding it up? >> part of it is the technical things cory was talking about. another is the coverage, this new standard cory was talking about. it is hard for china mobile to do a deal with apple if they sell these phones and they don't work. they are trying to build a coverage map you see carriers in the u.s. talking about. they need to build that for china, so it's a combination that what we don't think is holding it up is an interestk from china mobile to do this. we don't think it's related to price. we think there are technology hurdles that are slowly being overcome that are going to make this a reality. >> what's interesting is chinese
users are going to have to get new phones, right? >> they will probably still have a dual standard, just like when lt came out you could still use 3g. a lot of those antennas are still up and active and you will be able to use those. if you had a 4g phone, that would not work. existing people would still be able to use it, but if you want a better performance, that is being opened up. iphone users walk that better performance. >> they have almost 800 million subscribers, but some have migrated to china telecom, were they already offered the iphone. are higher and users going to users going to come back to china mobile? how many customers are going to buy iphones? >> it's a huge number.
we focused on the number of three g. it is a smaller part of their overall number. from apple's is that is the low lying fruit they can go after. they can get 10% of that in a year. in the u.s. they have about 65%, so it is a much lower share because of economic differences. even though china mobile has lost a test they haven't had the iphone, there is still a huge pie there, one hundred 70 million compared to verizon and at&t, so a big opportunity, as you have outlined. >> how big an opportunity is it for apple? is this going to give them a huge advantage, or is it still going to be an uphill battle, given low-cost competitors? >> yesáqpvq!i=9
looked at the phones selling on china mobile. 80 different smartphone models. a lot of different options. the average price was about 250 dollars. the average price of an iphone 5c is about 750 as a starting price. we are talking about a 3x close to 4x multiple. the opportunity gets watered down. that is why we expect a 10% market share versus the u.s. i think if you want to boil it down to one take away, if they get a 10% share of the 3g market, that would add up to 5% of estimates in 2014.
5% is enough for investors to care. that was a senior research and analysis, gene munster. we will be broadcasting live headquarters all week long. we will have exclusive interviews. we will also look at the business of ebay and show you how it survived and thrived since the dot com bubble. still ahead, the senate takes up a classic gun ban. 3-d printed guns are coming under fire, but is fear warranted? that is next. ♪
worth more than gold, but are we in a bitcoin bubble? chairman alan greenspan chairman alan greenspan says this. >> you have to stretch your imagination to infer what the intrinsic value of bitcoin is. i haven't been able to do it. you ask me is this a bubble. yes, it is a bubble. >> last month bernanke told congress virtual currencies like bitcoin may have long-term promise. the republican-led house passed a bill renewing the ban on plastic guns just days before it expires. any lewd metal detectors at check points. the senate still has to take up etalt can pass -- elude m
detectors at check points. the senate still has to take up the measure. the debate has put 3-d printers at the center of the controversy. >> there has been a lot of talk about how it is easy to make a plastic gun through a 3-d printer. there are questions, like how expensive is it. it is always good to see you. what do you make of this story? >> this is the most dangerous thing. 3-d printing is this marvelous technology that can do all kinds of things. it is a thing we need to understand. unfortunately, it is becoming associated with in the public libertarians want to make guns that can avoid metal detectors as was demonstrated and as congress and senate are now debating and trying to react to it. >> libertarians? is it rand paul we are afraid of?
>> that is probably the wrong word. it as thereushing is a small anti-government group. i don't want to lump all ibertarians in. there is a small, very radical group who believe this is a good thing, that you should have the freedom and ability to make a gun that is double. -- not detectable. it is a small group, but it is a technologically able group. one person put it out there, and thousands of people downloaded his design. possibility that this could be done. there are two issues. one is how congress will deal with it. the house has renewed legislation. the senate is considering stronger legislation, which is if you make a plastic gun, you need metal in it that cannot be removed. it is very different from saying -- the senate is debating whether there is a stronger bill. there is another issue, the threat to the industry.
>> i believe this is kind of ridiculous. the ability to make a 3-d gun requires a 3-d printer. they are so insanely expensive. yes, there are some cheap printers that printing seizing that crumble in your hands. there are 10,000 dollar printers that meant using colors, but they are hard to set up. if you are going to spend a quarter of a million dollars on the printer, why wouldn't you go by half dozen or 100 guns? >> i don't think there is a fear there will be a flood of 3-d guns on the market next year. the prices of 3-d printing will grammatically -- dramatically. over time, they will be able to do more of them. there has been a prototype. the possibility is you can have many more of them in the not-
too-distant future. >> i feel like the level of 3-d printing companies has gotten so ridiculous. it is like fruit loops are more exciting when they are hyper loops. is more exciting when it is 3-d printing. they are kind of crazy. stratus is at 4 billion. at 6 million. the company i look at, they have a $44 million market cap. they have three full-time employees and a market cap. it seems like there is so much excitement that is not there. >> what is interesting about this business is it has been lumped in with other technology companies. they are building software, which is so much easier to scale. 3-d printing is going to move
>> this is "bloomberg west," where our focus is on technology and the future of business. i'm emily chang with your bloomberg top headlines. production on "fast and furious halt.has been put on they will consider this time to consider all options moving forward with the franchise. fast and furious is universal's top franchise. netflix is the second season of of cards will be released on valentine's day. all of the extras will be available. it is the first ever streaming
major runtimee a emmy award. disappearing app snapchat has approach emily white to be the ceo. they recently spurned a $3 billion takeover offer from facebook. it is time for our office hours segment. it is time for our office hours segment. we have maynard webb. he formerly served as coo of ebay. he currently sits on the board of salesforce.com. he also founded a startup called everwise which is focused on mentorship. the creative landscape is so competitive, you said you have to think differently. >> you have to think about it as you are very lucky to have a few key slot open. i think about having tickets to the super bowl and which of my
friends are going to be lucky enough to come with me. i have always found i am going to have somebody have the job of their life. i find people who want to be part of that. >> one point is you should be looking for great passion as opposed to a great resume. why? >> i think there are a lot of people with a great resume who are not always great for a startup. >> have there been times you turn someone down because you didn't feel like they had the passion? >> absolutely. it's not just passion. its competency and capability. just because you're in a great company doesn't mean you necessarily are the person doing the building or driving the bus. you must have just -- you might have just been on a bus.
some person who is in a good company may not be the same person you need to build the first iteration of a product. >> what is an example of a company that does recording really well? -- a recruiting really well? well is an marketing amazingly good recruiter. he never stops. >> in what way? >> he is always looking one or two people deep for every connection he has. >> he is also a pretty good salesman. i have seen him. he is compelling. >> he is compelling. >> it's hard to say no. i would think it is hard to say no to a guy like mark. >> i would say that is true. >> what if you are not as good of a salesman as he is? >> it's not all about selling. it's painting a picture of why this is the best way for you. if you are trying to woo someone and selling too hard, you shouldn't waste time and energy on that. you need to paint a picture of
why it is special, and they wil' get excited or not. i never get worried there are not more people who lean in. i think about it differently than when we started. i think there are very few change the world, cool jobs out there. >> you also say to recruit constantly. what if you don't have the luxury of a budget? what i say recruit constantly, i don't mean hire constantly. i mean to always know who the next person is. so you know where to go as opposed to waiting for months to start your recruiting cycle and finding somebody. it is all about people and done.g thing i would say at ebay, meg was fabulous. she would bring people in.
she would give them special projects. >> how do those people feel? they don't necessarily know what they will be doing down the line. we were growing so fast. we have a track record of putting those people in bigger jobs. one came to run small things and was running the u.s. business. in six months we knew he was going to do something big. we just didn't know what. you have people buy into the journey. >> what do you do when your budget is tight and you want someone who might cost more than you can afford? can you entice those people? >> i always want people with more stock than compensation. i try to pay them enough that they are not homeless, but i would rather have them enjoy more upside. i would rather treat people well and make sure they are going to make a ton of money if we do well.
>> he also said not to underestimate what you have to offer as the employer. >> a lot of people get nervous. how do i recruit out of google? you have something google does not have. you have the chance to build something from the beginning. it's magical. a lot of people love to do that. that is what i mean by thinking differently. you have to realize you have an enormous gift to give people. >> i have heard executives say everyone is replaceable. if you lose a good person, how big a deal is it? do you think about it that way? >> i think about the best people i want to keep forever as long as they are willing to keep with me. >> are they replaceable? if you lose them? >> at the end of the day if they get hit by a bus or they die, you have to keep going on. you hate not having them, but a mission of the company and the
passion and dream has to keep going. >> everybody has that investment they pass on like facebook and they wish they had invested. do you have a person you wish you had hired that you passed on? i know you probably can't name names. >> absolutely. there were people i didn't pass on that i wish i had. i have made hiring mistakes as well. >> any names? >> no. [laughter] >> how do you apply the company and the companies where you sit on their board? >> when we have to higher a -- hire a director, we say, let's go find the best in the world. we don't settle. >> it takes a lot of time. >> it takes a lot of time, but it's also an honor to be on boards and also hard work, but
council. the ceo went to the head of one of the most valuable internet companies, and now he is the richest man in china. his net worth has increased to over $12.2 billion, and that puts him at the top spot. we discussed how he spends his money. first, let's learn more about who he is. he may be china's richest man, but his road to success started in one of the most unlikely of places. >> he was born in a city in china. his parents were factory
workers. he had four sisters. he was the only boy out of five kids but was interested in computers. >> he headed to the united states in 1991, earning a masters degree. >> i think robin had at least two things going for him. he understood very early the importance of search. he is educated in the u.s. >> after a decade in the u.s., li returned to china. together they created what has been known as the google of china. >> we can combine that with internet growth overall. >> his friends and family says his devotion to baidu the finds him. he has been noted for falling asleep in his car after work. he has also picked up some influential friends along the way like bill gates, alibaba, and a few enemies, too.
>> they are competitors. in 2004, larry page and sergei brin went to visit. baidu with careful not to reveal too much. >> regardless of how he is seen, li is worth $12 billion. he came above eric schmidt on the billionaire list more than two decades after he invented his own brand of search. when i sat down with him i asked how he spent his aliens. take a look at what he said about the difference of philanthropy in the united states versus china. >> it's not as mature.
i have seen them start to think about that. we increasingly spend more time to do philanthropy work. we held a banquet where we used 56 million rmb. we provide certain inventories, so it is relatively easy to risk money in china. >> are there any causes you are particularly passionate about or you give your own money to? >> my passion is related to internet.
i give money to my hometown. right now those popular public places, coffee shop, people all have free access to wi-fi in china. >> that was robin li. chairman. a quick reminder of a "bloomberg special. we will be broadcasting live from ebay headquarters all day. we have exclusive interviews with top executives, including the ceo and others. we will show you how ebay has
this is "bloomberg west." i am emily chang. carl icahn says he will pursue a nonbinding vote to force apple to boost it buyback land. -- plan. he says the proposal will be smaller than the buyback he had been pushing for. he disclosed he has about half of one percent of the company. apple has authorized a buyback of $60 billion. our next guest is one of the most widely covered analyst who is not on wall street. he is best known for his
analysis of apple's this news -- business strategy. he joins us from new york. another thing you're known for is figuring out what the expenditures are. it is difficult. it is sort of a black box. you use iphone and ipad sales to figure it out. why is that number important? >> ever since apple was involved, it has had a huge increase. that includes a lot of servers. they are increasingly challenging google's scope. a lot of that is manufacturing equipment. ever since the iphone we have seen a tremendous rise in
spending. now the question is can we compare it to another company in the same space doing a similar type of spending and see if there is a predictor for future production sales. >> what is apple's spending, and how does it compare to samsung for example? >> i can show you the history. some song is currently apple's samsung is currently apple's strongest competitor. if we go back to when the iphone was introduced, apple was only spending about 100 million a quarter. as you can see, although there
has been a huge acceleration in samsung spending, apple has gone up as well. in september 2012 they very nearly matched samsung. there is certainly a correlation between both companies and what they are actually shipping into the markets. apple spending has come down. the company predicts in the next year they are going to increase that spending from 8 billion in the last fiscal year to over 10 billion next year. >> it looks like samsung has gone up.
how does this compare to other companies? >> that's exactly the way you want to do this. apple has gone from one cluster to another. you can see they're spending has been above google and microsoft. google and microsoft were not in the device business until recently. we do see a rise in microsoft and google. they are starting to pop more into manufacturing. >> what about advertising spending? samsung has been getting a lot of attention for its ads.
the next big thing is already here. how does it compare? >> we can look at the history. in 2009, samsung was a large spender. they have that business. they were certainly one of the larger pc makers. they are a little less than samsung. if we go forward, there was rising spending amongst all the players. the largest growth was from samsung, which accelerated to where they are spending more than coca-cola on ads. this is a phenomenon that is visible worldwide.
>> horace, really interesting stuff. thanks for slicing the numbers of slightly different way today. it is now time for the bwest byte where we focus on one us a whole tells lot. what have we got? the number of mobile phones for u.s. citizens there are more phones than u.s. citizens in this country. >> obviously a lot more growth potential. this china mobile thing, i just wonder how many china mobile users are going to buy that. >> certainly more. >> a lot have already migrated to china telecom. >> there is certainly a lot