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tv   Bloomberg West  Bloomberg  December 11, 2013 12:00am-12:31am EST

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>> live from pier 3 in san francisco, welcome to the late edition of "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i am emily chang. our focus is on technology and the future of business. let's get straight to the rundown. move over google glass. getting into wearable tech, making all kinds of wearable gadgets. and amazon drones may still be years away, but sparking a revolution?
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and twitter is trying to get in on snapchat's turf. sending messages on the mobile app. well, congress has been racing to come up with a budget deal by their deadline this friday. we have some breaking news that tonight they have apparently reached a deal, and we are expected to hear any moment. yang, what are we expecting to hear? >> a few details about what this framework might look like. leading up to today, we have heard a lot about a trillion dollar spending almost for the next two years, but we are
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getting more details about how they plan to make up or those sequester cuts that they will be curbing. according to the deal, according to my colleague, heidi, they would ease sequester cuts in the first year by $40 billion and even by $20 billion in the second year, and that is a $60 billion total, the cost of which would be made up with the auctioning of government airwaves and increased premium for government worker pension funds, and there would be no changes to entitlement programs, as we expected, so right now, that is what the deal is shaping to look like. the two chairmen of the house and senate budget committees, they should be coming out any moment. it should thaw some of the tension we have been seeing these last few years in the budget fights.
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it is certainly low-hanging fruit. they have not talked about some of the issues, but we will see that the government should be running past january 15. emily? >> is this expected, or is this surprising? >> it is not surprising, so leading up to today, we did hear a lot about this potential framework, about them setting spending limits to the billions, so we have heard a lot of details leading to today, so it is certainly no surprise in that sense. no surprise, again, that they are not touching any of the big issues of tax increases or entitlement reforms, but it is good to see they are making a good-faith effort to come together, even though we have the two sides, republicans and democrats have come together to
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reach a broader outline for a deal, it is still going to take some convincing. some are not happy about having to pay higher premiums for their pensions, so it is something that both sides are still going to have to do a lot of convincing, that we are not done and are not closed yet. >> thank you. we will continue to follow this story from washington. i want to get to some breaking news, and this from foxconn, developing wearable technology, according to two people familiar with this. foxconn will provide office space and services to at least 20 companies. they are trying to diversify their revenue stream as some things threaten to do rail their traditional business. for more, i want to go to
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someone who helped to break this story. first of all, tell us what you know about the actual fund. >> good morning from taipei. well, the key is really for foxconn to look into the future. they do make the apple devices. apple is their largest investor. apple has only been a client for about one decade. they are investing in this incubator. that is going to be one of the major points, that it is going to be an incubator, so they want to bring in new ideas and grow those ideas, and they want to bring it to taiwan, and they want to be able to offer the technologies. there is a lot of technologies involved in things such as wearable devices. we know they are involved in the google glass project.
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we want to make sure they have the technologies available to offer them to companies like google or apple or microsoft, and those companies that will be developing in the future, so that will be key, offering extra things to their clients going forward in the future to keep up the profit margins, because in pure manufacturing, the margins are not that high. >> some sort of wearable device, what does this mean for apple? is this a conflict of interest?
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>> yes, at first, people would think so, and the chairman of foxconn in june this year at the annual shareholders meeting showed off. it was a smartwatch that he had, and he was very proud of it because it could measure somebody's heartbeat and transfer it, and iphone, of course, and so he was proud to show off this technology, but it is not exactly a conflict. until now, foxconn has not gone out to compete with any of their clients. they have been very clear about that. they are not going out and doing branded work. what they are trying to do is anticipate what their clients need, so when a company like apple or google or microsoft comes to them and says, we want to develop this, they do have their offices in cupertino, but apple does develop a lot of their own technologies, but they work very closely with their manufacturing partners, such as foxconn, to figure out how to bring it to market and mass market, and that is one of the key things, mass production, so it foxconn is trying to anticipate the needs, and they can actually fulfill them. >> what do you think foxconn will be looking at other than
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wearable technology? >> well, one of the things that we can assume, and we certainly have not seen necessarily any evidence, is things that go further, such as medical devices, and that is similar to wearables and connected devices, but the thing with medical devices, we have aging populations in the u.s. and japan and even in china. things that can measure vital signs is certainly an area that foxconn would be interested in. in southern taiwan, to build software, to build the connectivity, they are looking on that. there is not a lot of growth or new ideas left, is certainly the belief in taiwan. they will be looking at areas that will do new, innovative software that can connect into that. >> our bloomberg news reporter
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in taipei who broke this story, tim culpan, thanks so much. satya nadella is a name being floated at microsoft, the cloud services chief. we caught up with him at the internet conference in paris and pressed him on whether he would want the job. take a listen. >> steve ballmer is the ceo, and i am actively engaged in running our enterprise engineering. >> but do you want the chief executive role? >> i have said everything i am going to say about that topic.
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>> our editor at large, cory johnson, with us now. we have been talking about the microsoft ceo search for a long time now, and they want to name a successor before the end of the year, and that is almost here. we have heard they have reached a stalemate, they are close -- where are we? >> sources have said they have not made a decision quite yet, there are some other possibilities out there, but satya nadella is the leading internal candidate, from what we understand. this is a guy who has been at microsoft for many years and was
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principal to the cloud and the division that the cloud is underneath, and he is highly respected in that part of the company. the technology world is moving into the direction that he runs. take a listen to what he had to say about the cloud. >> if you look at what happened even in the last quarter in terms of our cloud, it grew over 100%. we have over 50% of the fortune 500 using windows. office 365 is already on a run of 1.5 billion. that is the kind of growth we are seeing as this $2 trillion is shifting. >> there are executives at microsoft that i assume would like to be promoted as well. greg external candidates are probably in the mix, but if you look at what satya nadella has done, sales are rising significantly, and we also see profitability in that sector.
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he is not only doing $20 billion in revenue each year in that sector, but he is showing operating income that continues to grow, over a billion dollars in profit, and that is the kind of leadership that is impressive and kind of rare in microsoft. >> if they do not get this job, executives that have been there a long time, will they leave? >> that is an interesting question. there was a reorganization of the structures in microsoft, and some people did leave, including the man who ran the xbox division, who left for zynga, but one of the advantages of having only one name out there as an internal candidate, it keeps other people from getting their hopes up too much, but like i said, there are other possibilities. i want to say for the record that i am personally very happy and bloomberg and have no immediate plans to leave. although bloomberg's plans may be different.
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>> that is good to hear. i am glad you will be with us. ups will deliver millions of packages this holiday, and they are betting on an algorithm to get the job done. ♪
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>> welcome back to "bloomberg west," and a senate budget chairman is speaking now. let's take a listen. >> before the next one got started, that uncertainty was devastating to our fragile economic recovery. it cost us billions of dollars in lost growth and jobs and the continued across-the-board cuts
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from sequestration are forcing our families and communities to pay the price, so i am very proud to stand here today with chairman ryan to announce we have broken through the partisanship and the gridlock and reached a bipartisan budget compromise that will prevent a government shutdown in january. our deal puts jobs and economic growth first by rolling back sequestration's harmful cuts to education and infrastructure investments and defense jobs for the next two years. i know there were some people who thought these cuts should continue, but i am glad we increased these key domestic investments and that we averted the next round of military cuts to programs, bases, and defense jobs in the country. it continues the president we set in the fiscal cliff deal that sequestration should not be replaced with spending cuts alone. this bipartisan deal will help millions of americans.
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from the workers at our military bases and construction projects who were furloughed or laid off to the kids who lost their slots in head start programs to the seniors wondering if they were going to have meals on wheels and to the families who were praying for halted medical research programs to get back to work on a cure and so much more. because of this deal, the budget process can stop lurching from crisis to crisis. >> the senate chairman speaking about the just reached budget deal on the sequester cuts that we have been talking about now for many months now. well, all day today, bloomberg television is taking you inside ups, the world's biggest shipping company. they have a system that crunches data to save a fraction of a mile on a driver's daily routes, but all of those fractions add up to big savings. we have an inside look with how
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it works. >> this is orion, the algorithm that makes ups tick. >> orion is changing the world of package delivery. >> the truth is, today we are a technology company that has trucks. >> orion is a program 10 years in the making. the objective, to find the fastest, most fuel efficient way to get packages to you. >> there are more ways to service those customers. orion is looking at trillions of things in seconds. it is going to say, here is the best way to deliver. >> each truck has over 200 sensors that monitor everything they drivers do, from starting
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the vehicle to unloading boxes. they prioritize distance, time, traffic, and cost. >> our goal here was not that we would dramatically grow efficiency by doubling and tripling, it was trying to take a look at some small gains, but on our scale, small turns out to be rather significant. >> its culture of efficiency is a story passed, starting with the company's first delivery car, a model t ford in 1913. 11 years later, they built the first conveyor system for handling packages. >> good morning, everyone. good morning, everyone. >> this year, it is orion. >> how is this a game changer?
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>> we will have a portion of our fleet, and he will already save us millions in fuel. it will adjust on the fly, so if the lead time changes, we run orion, and this is your new plan. >> we do not think ups when we think technology. >> google maps are not accurate enough for a ups driver. >> you are better than google maps? >> absolutely. we have a world-class group that many people do not know about that create magic year. >> carol massar, bloomberg. >> well, twitter updates the way users can share and view photos, so is the company trying to give services like snapchat and instagram a run for their money? you can also watch on bloomberg.com. ♪
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snap chat >> this is "bloomberg west." i am emily chang. these days, launching a video to show how things work, including the recent one for the coin app have gone viral up to 7 million views. jon erlichman went to venice, california, to talk to the filmmaker behind those videos, calling him the spike jones of tech. take a look. >> are you running a startup? do you want to have a video that will get everybody's attention? this is the man to call. about five years ago, adam made a video, so he started doing them for all sorts of tech companies. >> square. i did the job own. my videos are nothing without a successful product. technologies that are going to be interesting and grow.
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>> compared to a tv commercial, how much does one of these cost? >> $50,000 to 100,000 dollars. >> and like most companies, his company also accepts traditional forms of payment. >> stock options, which can be interesting, because they are going to be growing. >> interested and lucrative. >> lucrative, too. that means interesting. >> jon erlichman, bloomberg. >> that is it for bloomberg west.
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>> bankrupt company, bankrupt city -- how do you be a luxury brand? >> for 30 years, we lost our way. sales had declined. >> how do you get away with not listening to customers? how do i know you are listening now? >> the biggest thing is still pushing through that perception that it is the old man car. >> we produce the world's best cars again. we can do this. >> it is cadillac. >> it has an incredibly

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