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tv   Bloomberg West  Bloomberg  August 27, 2015 11:30pm-12:01am EDT

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emily: apple since invites -- sends invites to its next big event, while a former ceo unleashes competition, the new -- competition to the new iphone. ♪ emily: i am emily chang. this is "bloomberg west." coming up, president obama is about to speak in new orleans on the 10-year anniversary of hurricane katrina. we will look at how companies like airbnb are helping to revitalize the new orleans economy, and how local leaders are shaping sharing economy regulations. plus, amazon may be re-thinking its mobile phone strategy and
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tesla scores better than big with consumer reports. all of that ahead. first, to our lead. apple, of course. new products coming on september 9. the company sent out invitations to a san francisco event where it is expected to unveil a new iphone and apple tv box. what else should we watch for? former apple ceo john scully joins us now. crawford del prete is with us from boston. and we've got lulu chen visiting us from hong kong, along with adam, who covers apple for bloomberg news. i want to start with the invitation, because it says something curious. "hey, siri, give me a hint." so, we tried that. hey, siri, give me a hint. siri: you have to wait until september 9. i bet you were one of those kids who snuck downstairs to open your presents early, weren't you? emily: of course i was. it's very clever. adam, what are we expecting? adam: some of the things on tap are going to be an update to the
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iphone. this will be the speed bump model, where it has an improved camera, a beefed-up processor, as well as a new feature that has been on the apple watch called the force touch. when you push down on the screen, you will be able to activate new features. emily: and the new set-top box. adam: the new set-top box. it has not been updated for several years. that was a device that was actually introduced on the same day as the iphone, back in 2007, but obviously has not been as much of a focus for the company, but now it's a competitive market -- amazon, google, and roku are playing in that space as well. emily: crawford, what are you looking forward to? crawford: to the point that was just made, i would expect new iphones, but on the tv box, i think the "hey, siri, give us a hint" is a hint to a more interactive way to work with television, potentially. this idea of having apps on a tv
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box, being able to speak to your television as opposed to using the remote control, could be a way to integrate siri into the television. emily: john scully, you are unveiling a new phone, the obi world phone, which looks like an iphone. it is built on android and designed by robert brenner, who worked at apple. and you are releasing this in october, which is prime iphone time. what is your intention? do you think you can take the iphone and these cheaper android competitors on? john: we have no interest in taking on apple. iphone is a spectacular product. it dominates the high-end , premium and of the market. what we are doing is creating the only other design-led consumer electronic company in the smartphone industry from the united states. we are here in silicon valley,
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and we brought together several of the old apple team that i worked with. and we are creating a design center which is at the budget end of the industry, nothing to do with where apple is, but it takes the apple platform and toys with the interface, but we are doing a lot with the user experience and basically getting what people would expect for maybe $700 from the premium phones and getting it to a $199 price point, and we have an even lower price point at $129. these are all for the developing markets, which are diverting from low bandwidth to 4g lte. emily: lulu, obviously china is huge market for apple. it is also a huge market for xiaomi and samsung. should apple be worried about the state of iphone sales in china and the incoming competitors?
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lulu: they have always faced a lot of competition in china. they have always faced competition from xiaomi and lenovo, but an issue that all of these companies are facing right now is the slowing economy in china. if you look at what competitors are doing, they are asking themselves the question if they should expand into the smaller tier cities and try to explore that market, or should they go overseas? that is exactly what xiaomi is doing, choosing india as the next market, because maybe they realized the larger markets are not the place to base their growth. emily: there were interesting numbers today on the apple watch, more impressive than i think a lot of people expected. apple shipped 3.6 million apple in thes -- apple watches last quarter. break it down for us and what it
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means, the trends you see. crawford: what we saw is this category expanded over 120%, so this is the classic situation where apple is a category buster. apple is basically coming in and redefining the category. we believe the wearable category between now and 2020 has the opportunity to be a bigger game changer than the tablet was. we expect this is the beginning of that trend. there will be fits and starts, but we also believe that between now and 2020, 500,000 apps will be developed for wearable devices. our expectation is that it's a very different world if you are a wearable competitor today than it was one year ago. your market is twice as large, but you have a whole new competitor, and a competitor that has developers on its side. that is huge. for companies like garmin, that is a real warning sign. you could see a lot of these single application wearables
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really sediment into devices like the apple watch, as well as like a re-thought android device , which we will likely see in the next few months. emily: john, looking at the big picture, we are hearing the apple watch is maybe doing better than some expected. there have been no concerns about iphone sales slowing down. what do you see you when you look at the big picture for apple and the challenges that lie ahead? john: i think apple is in very good shape in china. the reality is the china market is going -- is growing at 1.2% year-over-year. very slow, but apple is growing very fast. they made a public statement a few days ago, which means there are a lot of people that are not growing at all. it is changing the behavior that people ascribed to the iphone, and they are willing to wait. in the past, people would buy a new phone every six months, nine months, year. now they are willing to wait
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maybe 18 months to get an iphone. that's having an impact on the market. less phones are being sold. that's a problem for other companies like samsung in china, and it's why you see people like xiaomi moving into other markets. in the case of the obi phone, we are not even going into china. we are focused on the middle east and africa and west asia and southeast asia and we will be in about 70 countries over the next two years, but we're not even looking at the u.s. or western europe or china at this point. they are replacement markets. emily: john scully, crawford del chen, youm, and lulu will be sticking with me. adam, we will watch your reports for more hands. hints. speaking of apple, ceo tim cook's goal for apple pay is to reach 1.5 million u.s. locations
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by the end of the year. today apple pay teamed up with payanywhere to reach that goal. here is the ceo. what differentiates us is our future set. we are the only company in the united states that allows buyers to pay with apple pay. so as a business owner, if you want to accept apple pay on your iphone or ipad, your only choice today is payanywhere. emily: the card reader will be available exclusively in apple stores starting next week. now to a story we are watching -- amazon's fire phone never caught on with consumers. now the e-commerce giant is dismissing dozens of engineers who worked on the device , according to "the wall street journal." the exact number of cuts is unknown. amazon is not commenting on this report. coming up, it is the 10-year anniversary of hurricane katrina. the sharing economy has been critical in helping to revitalize new orleans. i will be joined by the leader of a group of airbnb hosts working to develop sharing economy regulations for the city.
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♪ emily: in about 20 minutes,
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president obama will speak in new orleans, commemorating the 10-year anniversary of hurricane katrina. bloomberg television will carry that speech live. since the hurricane, a growing number of new orleans residents have been using airbnb as a way to earn money while they rebuild their city. and dozens of airbnb hosts in the city are working to crack sharing economy regulations. polly is a member of the alliance of homeowner prosperity. she joins me from new orleans. first, as i understand it,
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short-term airbnb rentals in new orleans are still illegal. yet a lot of people are doing it anyway. what is the state of airbnb in new orleans right now? paulie: i'm sorry, i didn't exactly hear you. would you mind repeating the question? emily: as i understand it, short-term airbnb rentals are illegal in new orleans. yet a lot of residents are using it anyway. what is the state of airbnb you see in new orleans right -- airbnb use in new orleans right now? polly: legalization is coming. i am happy to say that we are working with the city council to get legalization in place by the end of the year. emily: but how many people are using it? how much demand is there for airbnb? polly: i hear all kinds of numbers.
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anywhere between 1800 and 2000, probably, but that is not people who are doing it full-time. it could be someone just doing it for mardi gras, jazz fest, or someone doing it all year round. emily: so how would you describe the impact hurricane katrina had on the rise of the sharing economy and the need for regulations to govern these kinds of services? polly: i think it is safe to say that since hurricane katrina, all eyes have been on new orleans. you can't pick up a publication today without seeing what a great destination it is for tourists to visit. and the sharing economy has made it possible for new orleans residents to participate in the recovery since hurricane katrina. the residents are why the recovery -- emily: have you gotten any help from airbnb specifically? polly: we have not. we would love that, but no, we have not. emily: what is left? in terms of legalization, what more steps need to be taken? polly: we need to agree on an ordinance. it's a discussion happening
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worldwide right now, from cities -- paris, new york, san francisco, where you are, emily -- it is a big part of the conversation. we have to figure out what will work for new orleans as far as how to approach it and make it regulated and legal. emily: all right, interesting. polly, president of the alliance for neighborhood prosperity. thanks so much for joining us today. speaking of airbnb, the home sharing startup has joined a growing list of tech companies expanding into china. just a week ago, airbnb announced a partnership with two chinese venture capital firms to hire a china ceo. today we learned uber's china arm has closed its $1 million -- $1 billion fund-raising round early. how successful will uber and airbnb be in china? what challenges will they face, expanding into these local chinese markets? lulu chen still with us, who lives in china and can give us the exact picture of what these services look like.
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let's start with airbnb. what do you think of the strategy they have mapped out to expand in china? are they setting themselves up for success? lulu: the first thing they say is right now they want to look for a ceo in china to manage the business. if you look at companies that have managed to do this successfully, like linkedin, they were looking for people who have a wide range of experience operating on the ground in china, but also having the communication ability to communicate with managers in the u.s. so they have enough support and backing of the headquarters, and also, an understanding of how the regulatory environment works. that is really important when you are trying to compete with local competitors on the ground who know how to navigate the environment and know the customers and local regulations. emily: how would you compare the way airbnb is doing it to the way uber is doing it? lulu: uber found themselves a partner, baidu.
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emily: the number of china and runs 90% of this market. lulu: exactly, 90% of taxi market shares, 78% of private licensed cars, and they also launched a product which is a car sharing service in china already attracting 3 million people within the first few months. emily: what is it like to use uber in china, and across the different cities? it's a very localized business. lulu: it is quite localized. you would be surprised at the amount of people using uber in china. also, the purposes of it. if you tried using the equivalent of uber x in china, you get people picking you up. these could be government officials driving to work. they want to save some gas oil and that is why they are using the service. also, headhunters use it to find recruitment for silicon valley in china and some people are even using it as a dating app. the local adaptation of these
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apps is amazing if you look at it. emily: so, tencent blocked uber chat.h from we -- from wechat. wechat is huge in china. tencent locked uber from wechat. what is the chance of uber china's success? lulu: they blocked uber from a public account service -- that is the equivalent of an account companies set up, so fans can follow their information, news releases. in terms of messaging, they can still do that. but wechat is very popular in china. traffic volume is through the roof. being blocked on tencent is something of a setback for them. they are trying to compensate for having this cooperation with baidu. in terms of competition, it is a competition for capital and talent in china. also upping its game and hunting in silicon valley all the time. emily: what about the market? i mean -- can uber be the uber
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of china, or just the lyft of china? lulu: it depends how fast they expand. dd is already in 300 cities right now. uber wants to be in at least 60 cities. you can have the comparison there. if they have the local expertise and navigate the regulations on the ground, they might have a chance. emily: interesting stuff. lulu chen in town from hong kong. thanks so much for joining us here today. great to have you. well, washington, d.c. is looking to silicon valley for help. defense secretary ashton carter will be meeting with tech executives tomorrow right here in the bay area. this is part of an attempt to bridge the divide between the pentagon and the tech community, weary of excessive privacy violations. carter will meet with executives from linkedin to initiate an official defense department page on the professional networking site. others are looking for help to combat cyber threats. both the fbi and the nsa are matching secretary carter's
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outreach efforts. i will have an exclusive interview with the defense secretary tomorrow at 1:45 p.m. eastern. i will also be sitting down with mark andreessen of andreessen horowitz. be sure to check out those interviews. up next, aol's president talks to us for the first time since that $4.4 billion acquisition by verizon. he will tell us how it's added ad businessts stands up to google and facebook ♪ emily: all right, it is time
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now for a breaking bloomberg west byte. mark zuckerberg just posting on facebook that facebook has reached 1 billion people who use the social network in a single
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day. it happened on monday. zuckerberg saying one in seven people on earth used facebook on monday. that is a big milestone for facebook. for the first time, one billion people using facebook in a single day. he also said, thank you for being part of our community, for everything you've done to help us reach this milestone. i'm looking forward to seeing what we can accomplish together. well, gone are the days of "you've got mail." long gone. aol is now competing with google and facebook as an advertising tech heavyweight. it is a big reason verizon bought the company for $4.4 billion earlier this year. joining us to talk about how they are fitting in with the new parent company, aol president bob lord. bob, thank you so much for joining us. we really have not gotten a lot of information about how this deal has worked out. i'm curious -- how exactly does aol fit into verizon right now , and how are things working out so far? bob: thank you for having us on. there is some great activity
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happening about how aol is actually fitting within verizon. verizon was one of our largest customers, and they understood value we created from creating customer segments and doing at -- ad technology. so they decided to combine our assets and create a wholly-owned division under the verizon entity. we operate with the same strategy and guidelines we had within aol, but there are assets verizon has given us to build the new next-generation media company. the strategy we had at aol it is -- the strategy at aol is only reinforced by the acquisition. emily: how are you incorporating verizon's user data and how is verizon changing now that you are here? bob: the most important asset we brought to the party was our automated media buying stack. we are allowed to use part of the verizon data as long as the consumer has opted into
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permission for us to use this data. what we can do with that data, it is very interesting. we can serve a great, great consumer experience in ways that they have never been able to do before. because we are able to use that data and understand behavior, the context that somebody is in, and what they are consuming, we can actually serve them more content that provides us with more information about them. from that context, what we can do then is go to brand advertisers to give them the opportunity to bring great brand experiences to that consumer like they have never had before. for example, if someone is in seattle watching the seattle seahawks game, their context will be very different than someone in miami watching a miami dolphins game. emily: so, you are the guy who led aol's programmatic ad efforts. that is transforming digital ads, but what will it take for it to come to television and for tv networks to embrace this? bob: we are living in a very interesting time right now.
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the great thing about aol is that we are helping to change the inertia. there is an inertia model, where the economics are a self -fulfilling prophecy. what we are doing is not only looking at the digital space, but we are taking the technology and applying it to linear tv on the supply side. we have actually gone outside the u.s. because there is great supply to test the model and make it work. what we will be able to do in the future is use great data and great technology and apply it to linear tv feeds so we can actually serve relevant advertising to people when they are watching linear tv and also on the ott platforms and mobile platforms. emily: interesting. though you are taking on google and facebook, which just hit one billion daily users. there is stiff competition out there, but we will have to leave it there. aol president bob lord. thanks so much for joining us, and thank you for watching this edition of "bloomberg west." tomorrow do not miss my exclusive conversation with u.s. defense secretary ashton carter
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and anderson horowitz's mark andreessen. ♪
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>> the following is a paid program. >> the following is a paid advertisement for timelife's video collection. ♪ announcer: it was the summer of 1969. america had just put the first man on the moon. hair was big and skirts were short. cbs had just pulled the plug on the smothers brothers show by replacing it with "hee haw." hee haw, hee haw.

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