tv Bloomberg West Bloomberg January 31, 2014 1:00pm-2:01pm EST
>> live from pier three in san francisco, welcome to the early edition of "bloomberg west." i'm emily chang. our focus is on innovation, technology, and the future of business. the microsoft board is planning to name a new ceo after a long search to replace steve ballmer. she is the head of the cloud and enterprise group, so what will microsoft look like and what is the future of the company, especially if bill gates stepped
down as chairman? in jon erlichman and corey. y. cloudhas run these businesses which are the future of computing and microsoft has had success growing these businesses when they have not had success over the last 15 years with the great exception of xbox. the other thing that you get , this is anadella guy who is a microsoft guy, has been for more than 20 years, 22 years, in fact. and he is a technologist in the
same way that bill gates is. he is likely to think about product first, how to sell it second. he does have some of those same top 50 fortune ceo relationships. so he does satisfy the multiple roles the company has. >> he has been there since 1992. jon, talk about what is going on with the board. john thompson has been leading the search. how did he become a potential replacement of bill gates as potential chairman? this is a company that has explored the idea of having internal and external candidates as the next chief executive. early on in the process there was a feeling from some of those big names outside of the company, what am i in the position to do, if bill is chairman? not to suggest that it is not
something that could be worked out, but this is the reality as a new ceo. do you have the ability to do what you want? now that we have seen satya , itlla as the ceo picked becomes more of a story about the relationship between him and bill gates, potentially. there is a lot of things that you have to do at the chair level that may not be as important to someone like bill gates, as it could be ably managed by someone like john thompson. is well-liked by gates. they could spend more time together shaping that role outside of the board room. that is what we have to keep in mind in terms of bill's potential role in this unfolding story. information asny to whether bill gates will stay on as a director, will ballmer be in there if thompson becomes chairman? have weighedeople
on whether there is value to having both of them on the board. the reality is, you have a new ceo from inside the company and the potential to team him up with an executive chairman who is well respected and liked, knows the dealers on the wall street side. whether that means someone stays on the board or leaves, it is tough to say. a lot of it is pr positioning, coupled with the best course to take with your new chief executive. >> how do the board dynamics impact satya nadella's ability to do his job? he needs to do what he needs to do with ballmer and gates in the board room. >> when they had that reorganization earlier this year, satya nadella ended up running arguably the most important division in the
company. i think we could say that before they picked him, he had board support. he was chosen to lead one of the most important visions. but to pick him as ceo, he also has board support. he probably also buys into the strategic decisions about the direction the company is going and should be arranged. when he chooses to offer of different suggestions, he can point to his track record and look at what he did in the server and tools business. when you look at their revenue and the way that the business consistently grew under satya ,adella and added to revenues when you look at those revenues, he can safely say, look at what i did the last time you let me run something. he set a track record unlike anyone else at microsoft. >> thank you so much. cory will be sticking with us. we have a special roundtable assembled here.
om, you like this pick. why? >> microsoft future is in the cloud. that is the only thing they have to do right and they will be a great company. a lot of people like for them to do tablets and phones, but the core of this company is enterprise. the core of this company is big business and making their applications run. have all the they right strategy right now, because of satya, which they can implement, and make microsoft a powerhouse in cloud. from that standpoint, some of transitionands this
in technology, he is the one that understands the big transition, so he will be the perfect guy to turbocharge the growth of this company. he is a low-key guy, very modest, likes to make sure there is consensus, but he is very strong-willed. will notlk to him, he let you in on any of his secrets or how he is thinking. i have got to get to know him over a period of time. my hat duration of him has grown over the years. he has actually done what he said up to do every time. is person he reminds me of the guy who runs android and chrome at google. is one of those people that does not make too many waves and knows how to bring people together. microsoft needs someone that stable to go through the transition he needs to go through over the next five-10
years. he has the capability to bring everyone together, including the people in control in the past, people that he wanted to bring in in the future. are with us from redmond, washington. you overlapped with satya for a few decades. what is he like to work with? >> satya knows microsoft, and easy person to work with. one of my cofounders here worked for him for a long time. i worked in a different area but we worked together in the commerce server days, working with independent software vendors. he istell you that focused on innovation and reigniting the passion for technology with customers. potentialere are opportunities everywhere for saidsoft, although as cory
before, microsoft is still mixing the same callous. they have a lot of potential to go into different spaces like wearable devices. who is have someone is knowledgeable, they can attack those things much faster. >> you are one of the guys that said it will end up being nadella in the end, but is he the right guy? we heard yesterday, this is a safe bet. is a safe bet a good bet? >> it is a low margin debt. low chance of failing, perhaps a low chance of being an outlier as well. microsoft is a very insular culture. people have worked there for decades. it is a place where people stay and stake out their careers and lives for incremental changes.
it will be interesting to see if satya nadella can bring those major changes to adopt to this new world of computing. at 46 years old, his relative youth will allow him to see he will see perhaps microsoft in a different way even though he has been there for so long. will bere of computing very different than the last 20 years. s place in the world is not so secure going forward. one would imagine that the focus will be on enterprise. >> i want to talk more about what changes you all think should be made. malik, cory, om johnson. more after the break. ♪
i'm emily chang. , cory back with om malik johnson, and our third guess from washington. you mentioned perhaps microsoft needs to make major changes. do you think they need to make changes, and what should they be? >> the changes they need to make are not as radical as most electric think. this is a company which has a huge installed base of applications, developers who have been developing on microsoft platforms. just to get them on the cloud platform is a massive opportunity. from that standpoint, not much of a change, just a transition. from the change they need to go through, it is mentally, more intellectual. the desktop is not the center of the universe.
they do not need to be making all of their investments -- intellectual investments in the operating system but more in a wherecentric world devices connecting to the cloud are as important. can a guy that has been there for two decades make those changes? >> my last conversation with him , we went for a walk. we were discussing our interviews before hand. we ended up talking about things which had nothing to do with what you and i think about computing tasks of today. we were talking about genomics, bio informatics, drug discoveries, the role that cloud can play in oil exploration, so on and so forth. this is a guy who understand where the company needs to go. i think you need a stabilizing force to take the company into the transition.
you do not need a polarizing figure. i think steve ballmer became a polarizing figure for wall street and employees and the world at large. he was guiding the company on the right track but he was steve, that was his challenge. cory, do you agree, these are the changes that needs to be made and that satya nadella is the one that can make them happen? think he could. one thing in particular about a company like microsoft, where internal politics have ruled, he knows the people there, he knows who the brilliant people are. he probably knows people hidden at the company who he can bring out to do better work. that is what you get from an insider from a company like this. om is right, cloud and mobile is the future. surface has been a flop.
eight is aindows terrific operating system, i think, widely reviewed as such, but it has not taken off. they still have a lot of work to do to make the partnerships that are required to make those efforts work. clearly, he is coming from a place where he has seen what works firsthand, and not just in the right area in the cloud, but also how to build something. and people make a career at microsoft, they can make a career over a small and trivial thing that requires a lot of effort but not a lot of innovation. making a better save button could be a moment in someone's career, but it cannot teach you how to build a multibillion- dollar business. >> tell me about the culture inside microsoft, david. do the employees within the company feel the need for change, are they willing to change? >> very much so. everyone i talk to here feels
the need for change. i joined microsoft as an intern in 1987 when microsoft had market share in all areas. has notetitive spirit been lost. i think people also need an inspired leader that can reject that passion to improve people's lives. at the end of the day, there are only two companies that can change people's lives. they need a new vision, they need a new leader. if a leader is able to inject that type of spirit, they have a deep bench and people will start moving again. two amazing things, unlikely things, but they need to be asked, instead of being stuck in
a cast, being stuck in the internal politics, or other things that really do not matter in the marketplace. the vision and spirit of the company and the values of the company need to be around innovation as om said. as well as passion for technology and customers. there are too many things that microsoft has let go of and they are costing the company a lot of money to catch up. smartphones, tablets. these devices, like wearables, should not be the way. , om malik, cory johnson, thank you for weighing in. we will continue to follow the story and wait for a formal announcement. he is one of the most widely followed analyst not on wall street. co joins us of sym
welcome back to "bloomberg west ." i'm emily chang. we are ending a big week earnings. lots to talk about. is the founder of asymco. best known for his work on apple. people say that you are one of the most accurate analyst not on wall street. with all of the news we have heard this week, what is the most important thing that happened this week? >> the big news has to be apple's earnings. what we saw with the slowing of the iphone to seven percent in
the quarter, a lunch quarter, is indicated of the slowing of the top 10 in the business. this was slightly overshadowed by the success of samsung, showing in unit growth. that followed the news from google which showed slowing in their margins, decreasing their indicates mobile is affecting them negatively as well. that is where all of their users are coming from and they are not asgood at clicking on ads the desktop calculation is. so there is an interesting point of inflection where we are seeing mobile growth slowing, and as a result, affecting google also. >> what does google selling their handset business to lenovo mean to others in the industry, does it change the balance of
power? there are many dimensions to that story. we have heard a lot about intellectual property, the acquisition as an ip deal, so potentially the android ecosystem would be defended by google fromtents by motorola. in fact, it would be a shame to spend that much money. staff,motorola's entire along with these patents. what would they be used for? it turns out, i think, google wanted to convert these resources into its in-house hardware team. it did not work out, they probably made a mistake, and are probably substituting the nest group for what was thought of as the mobile -- motorola group, what they would be doing. what do you think of the
mesko graham becoming their hardware brand? they are sothink well oriented as a company. they never bundled the motorola and google brands. brand that the nexus they created as a premier android brand. the nexus brand never made it onto the motorola handsets, and yet it made it onto their competitors. from was a nexus brand samsung and htc, so it is an interesting company in that sense but they do not treat assets in the optimal way. they do not think about whether this is the brand that we need. i think motorola will be a great brand for leno by, and somehow was not useful for google. ofhorace dediu, cofounder
>> welcome back to the early edition of "bloomberg west." i'm emily chang. president obama has been meeting at the white house today with ceos from two dozen companies including ebay and boeing, talking about how to get some of the long-term unemployed back into the workforce. more than 300 companies signed a pledge not to discriminate against those out of work or long periods. a government report will say the transcanada keystone excel pipeline will not quickly boost oilsands output and will not have a great impact on climate, according to u.s. house members
briefed on the study. the government will also be seeking public comment on the project. for the second time this week a cruise ship has returned to port early due to sick passengers, this time a princess cruise ship returned to houston after 176 people got sick. virus is the suspected outbreak. public debate over income inequality has been raging in san francisco and beyond. one person with a plan is tom draper. he is proposing to split california into six states. joining me is tom draper. cory johnson is also with us from new york. you are coming to us from stamford. what is the progress you have made on this plan, what kind of support have you gotten? >> we have submitted to the
attorney general's office and they are deliberating now. we should here in about two weeks what the title and summary will be for the initiative. it is interesting, we have support from all over california. i think californians believe california is ungovernable in its current state. the idea of having six new california's is spark their imagination. you said you think every state will become wealthy as a result of this and the system as it stands now has a horrible problem between the haves and have-nots. you also said if the government provided services to constituents, like google did to its employees, you would not have to split california into pieces. what did he mean by that? government --
currently in california -- 40 years ago, the government was spending 25% of our money on infrastructure. today they are spending three percent of the money on infrastructure. i think that discrepancy makes it so that we are not getting very good government services. i think we need better government services, and i think ,y creating six new californias we are going to the end of with six new states where we are closer to our constituents, wherein each of those states has .ts own personality and values it just feels right. it also feels like californians need this. , what do you make of this plan, giving you have been living in california for so long? >> if nothing else, it casts a
light on how different parts of california are. there are a lot of things in california that work well as a system, not least the water supply, at least when we had rain in california. >> i would disagree with that, and so would everyone in the central valley. been fighting sacramento on water forever. it is a big issue. we have no infrastructure spending on water. there is enormous infrastructure spending on water. there was a bond two elections ago about development on the sacramento river to divert more water to the valley. >> but they are not spending it in the right way. we could have huge rains and that water just disappears. that each individual
state will come up with new methods for storing, distributing, and using their water -- >> some parts of the state will not have water to distribute. >> different parts will have different interests and how the water is moved around. they have infrastructure, but it is so antiquated and they are not even using time division in their infrastructure. there are certain times were certain areas need the water, certain times when they do not, but it is just a spatially divided water system. there are so many new things that could be done with better infrastructure. >> let's talk about silicon valley in particular. itthere any concern that became a separate state, that that would exacerbate income inequality? all six of these
new states would become wealthier and better run. people would get what they really want. in the silicon valley, we want things like -- we want a government that knows how to respond to things like bitcoin napster, new technologies coming along. we need a government that is responsive to that kind of thing. in the central valley, it is all about water. they are the people that feed the world. california, they are all concerned about immigration. i know the people way up north, in what would be considered jefferson, they have been trying to break away from the state for years. taxes thathese fire are specifically targeting them .nd they get no benefits
all the various regions will be better off with better, closer, , that are governments amenable to the value systems and the thinking of those populations. >> do you think the ceo of a reporter-- he told that he believes google buses should be taken off the streets of san francisco. do you believe that? buseselieve the muni should be upgraded. government services need to be improved. i appreciate that google wants to take good care of their employees. that is a great thing. our government should equally think about their constituents and figure out how to take care of their constituents. currently we are not being served in california.
so what do you think the aside from, tim, splitting california into six pieces, based on the tools that we have now, what is the solution to fix some of the dissent we have seen, and the outrage over this discussion of the 99% versus the 1%. by creating six new california's, all of those can createernments new ways of thinking, new ways of governing. they can manage those issues in with a closer group of constituents, people who are closer to their government. so each individual government will deal with that in whatever way is the right way for their constituents. i think that you will just see
people being happier. nobody is happy with california. we are 46th in education and we pay the most. what doesrfect world, a silicon valley state look like, is it filled with facebook employees, google buses, drones, is there room for teachers and immigrants and artists? hope so. silicon valley was made by teachers and immigrants and artists. our teaching when system, our education system was the best in the world. now we are 46th. that does not bode well for our
future unless we do something about it. immigrants, my gosh, we love them here in silicon valley. they make up the backbone of silicon valley. i see the state just responding better to its constituents. the biggest year i have is the status quo. we leave it alone and california keeps getting worse and we get worse and worse services for more cost. , thanks forr sharing your thoughts. cory, thank you as well. there has been a lot of talk about the super bowl but the nfl is already looking forward to next year and an $800 million opportunity thursday night. we will look at the opportunities for midweek games. ♪
the big game is this sunday but the nfl is already looking ahead to next year, negotiating the broadcast rights for a thursday night games -- eight thursday night games. it could bring the league $800 million in revenue. who wants the tv rights? >> everybody is hungry for these tv rights. obviously, the super bowl is a great tag for this because everyone is watching, but everyone is watching the regular season, too. think about what this has done for the fox network, espn, transferred to monday night football. coo here onormer monday night. but go to that. >> i think it will be a regular broadcaster but i would like to see the eggs broken and go to someone completely new technologically speaking. players the traditional
are the hungriest, but there are the worlds of youtube and interest from silicon valley folks as well. >> who can pay the most, who will pay the most? >> i was looking at google's e, moreile -- cash pil than $50 billion. not to suggest they are in the mix, we have not heard a lot about that, but there are no tentpole events available for streaming players. that is why we could look more to what youtube might do next. the traditional tv players are obviously hungry, too. >> thank you. we will be right back. ♪
>> welcome back to "bloomberg west." i'm emily chang. that clip that you saw was a short film created by a san francisco startup. they have developed software that captures a person's facial movement to animate 3-d characters live. in the is with me now studio to talk about how the technology works. how is this different from traditional animation? towe were the first ones incorporate machine learning into animation. consuming is a time- act. toinvolves a lot of people create every frame of animation. from editingove into experiencing. so we tried to use machine
learning to animate, like we are doing now. you created a 3-d character of me by taking a few pictures. if i raise my eyebrows, smile, you can see it happening. the webcam is taking video from your face and is able to extract your emotions and then transferring them in real time to the camera, like i am doing. >> so how do you actually do this? technology andl machine learning to run this in real time on a game engine. from a project we did on unity. time theansfer in real emotions on the character. >> mostly game developers are using this technology now? is our target, but
also people doing independent films. >> is this technology being used widely yet? >> this is on the bleeding edge. it is coming to the market now. we only launched the first version a few months ago, so it will take a while before we can penetrate the pipeline of production. it is so much faster, basically read time -- real-time. conversationsd with film studios, you mentioned independent filmmakers. understand why they would not want to use this. what are the drawbacks? next you are making the pixar film, you have the luxury of having hundreds of animators working with you. but if you have an amazing idea and you are an independent filmmaker, you do not have those means, so we are enabling them. even game developers who want to bring more emotion into their games and characters, we enable
them to compete with the giants. >> what does this mean for the gaming industry? there has been so much time i'll -- tumult. how will this impact game developers? >> i think we will see some greater animations in games, we will see things coming from parts of the world we have never heard about. these people will have the skills and technology to compete and bring their own fresh and crazy ideas to the market. it will be more and more things taking an impact in the game market and animation market. >> fascinating. i love my avatar. it has been fun. ceo of mixamo, thank you for being here. ♪
>> welcome back to "bloomberg west." i'm emily chang. coming up on the late show, forget football. half the fun of watching is catching the over-the-top commercials. we will look at the top ads already posted online with a youtube trend analyst. that is a budweiser commercial there. is 56 minutes past the hour which means bloomberg is on the markets. mark crumpton is in new york. onlet's get you caught up today's trading action on wall street on this last day of january 2014.
stocks falling, pushing the s&p 500 to its third weekly loss, a slump in emerging market currencies into new to weigh on the street. the dow industrials down half a percent, 15773. broader market s&p 500 down a quarter percent. the nasdaq is down fractionally. 4167. been a rough month for the markets. broader market snp on track for its worst on three decline since may 2012. you know how the saying goes, as goes january, so goes the year. so will that adage holds true this year? manager from stifel nicholas is with us now from his office in new jersey. chad, is that adage going to hold true this time around? >> i do not agree with that adage. i believe we will be going through a re-adjustment period.
year was riding the wave of liquidity courtesy of the federal reserve. i do believe this year in 2014, adjustment, to 15% one that has been long-awaited. the economy in the u.s. is improving, gdp growth to be around three percent. we are looking at a five percent to 10% upside. >> was this the plan before this recent bout of volatility? have been lowering our exposure to the emerging market since 2013. we decided last week to eliminate it entirely. usbelieve very externalities, courtesy of the fed withdrawing their qe could accelerate pressure on emerging markets in the coming months. so the answer to that is yes, we wanted to pull back our risk.
we did allocate towards the united states. fed,t's talk about the central bank, stimulus, the final days of ben bernanke. have pumped a lot of liquidity into markets. from your perspective, what has been the effect of that? been asset inflation on all different classes. has it transitioned into economic growth? somewhat. has it held the credit markets together? yes. so it has provided a level of support for the credit and equity markets, but keep in mind, for 2014, we will be dealing with the transition from two more forward-looking guidance. morganlander, joining us
from new jersey, good to have you on. thanks for your time. we are on the market again in 30 minutes. "money ," weoney moves welcome to focus on alternative assets. we show you what investors and entrepreneurs are doing, as well as hedge funds, private equity, real estate, and more. today private equities dry powder reaching an all-time high. how firms are gearing up to invest and where the money is likely to go. former and it felt quarterback -- nfl quarterback will be with us to talk about the super bowl and other topics, charity included. assets categories. super bowl championship rings th