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tv   Bloomberg Technology  Bloomberg  February 7, 2019 11:00pm-12:00am EST

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>> i'm emily chang in san francisco and this is bloomberg technology. 2018 marked twitter's first full year of profitability but the company reported daily active users for the first time and the number is smaller. you week that we will hear from the cfo. plus, we check with a tech ipo pipeline. post mates has filed to go public and they could see a hot
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--. expand itsooked to base, but the last quarter showed a pickup in sales. we hear from gopro's ceo. to our top story, bloomberg gave a lackluster forecast and reported tepid user growth. the company did you start reporting daily active users for the first time at 126 million. smaller than some might have thought but has grown 9% year-over-year. they will no longer report monthly active users after the first quarter. shares plunged after the report. i caught up with twitter's cfo and asked what he had to say. >> we had a record quarter to finish a record year. the highest revenue twitter has ever had. the most profits and the highest level of profitability we have
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ever had. we feel great about our momentum going from 2018 into 2019. we are really excited to reaffirm our same priorities were executing as last year as we going to 2019 and we will work hard to deliver great outcomes one day at a time. emily: you made a big change reporting daily active users and you are stopping reporting active monthly users. why do this now? why not a few quarters ago? ned: sure, this has been a long journey for twitter. we started getting monthly active users at the time of the ipo, but there has been a gradual shift in the company where our priority is really to drive value for people every day. the best way to measure that is by monetizable dau. that is what we are looking at internally to measure success for some time. we have given year-over-year growth rates for it since 2016, but we want everyone aligned on the same metric we go with internally so there is transparency and alignment, so we are all looking at the same
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measure when it comes to measuring our success. emily: snap reported 186 million dau's, facebook, 1.5 million. so why should advertisers choose twitter which appears to be the smallest? ned: advertisers come to twitter because we have the most valuable audience when they are most receptive. today's information doesn't change anything, they know what they are getting with a specific objective in mind, whether they are launching a new movie or new phone, if they are advertising during the super bowl to amplify their message. we had 30 of 38 super bowl advertisers on twitter on the day of the super bowl, amplifying their message because that is where they know their customers are carried this doesn't change anything from an advertising perspective. we share a number that is different from others. all are monetizing will for people who come -- monetizable. that might be different from how
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some others look at it. they could be sharing a family of apps or users on a different part of the service that might not see ads. emily: but you don't know for sure. how do you know what they are sharing? ned: i know what we share, and what we share is the number we are trying to drive. they are all people on twitter, on the app, that is the number we are trying to drive. emily: have you seen any increase in advertising or influx of advertisers as a result of the scandals and controversies at facebook? ned: we think about things we can control. if we look at the past couple of years and the recovery we happen -- we have been driving, it is because of things we are doing better. the service is much better than it used to be for people on it, easier to find the things you are looking for, where there are events and topics, infrastructure that allow you to follow things that might have been harder to find before. for advertisers, we are much more clear. they should come to twitter to launch a new project or service. or when they want to connect with what is happening. i think that clarity has helped
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us internally. it has helped externally a lot as well. emily: monthly users are declining. this is the number you will stop reporting, but do you think is changes you are making to the platform will increase overall monthly users or are you focused on increasing the engagement of daily users? ned: we think the changes we are making to the service ought to grow daily users over time. that is the way we are measuring success. we are not trying to get to people to come to twitter monthly. twitter is a place where newsbreaks. it is a place for conversations around sports and politics and entertainment, and things people care about. if you are coming monthly, we are not doing a good job helping you find value on twitter. when we are making changes, we are thinking how we can get people get value every day. emily: spending is rising 20%. is this a one off or is the cost structure changing? ned: we grew 17% last year, but if you look at the fourth quarter, which represents the hiring we did for the year, where headcount grew 16% over
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the course of the year, expenses or 21% in the quarter. that and addize merit increases and other things, new hires as well, we will continue to higher at the same priorities -- we will continue to hire at the same priorities, we will get to the 20% growth, which is what we talked about. this isn't a change. it is a continuation with the same priorities, thinking about health, conversations as a way to drive audience on twitter. emily: do you see the 20% number staying the same over several years, or is that an annual thing? thing for an annual 2019. we will talk about next year more when we get there. as we make investments in 2019, we are not thinking about this year. we are thinking about hiring people who could have an impact on twitter over a long period of time. emily: what other product changes are you making that you think will expand the overall audience?
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ned: i'll give you a couple of examples. one is for the fourth quarter and there are a couple in front of us. the fourth quarter, we made it easy to switch back and forth between the reverse chronological timeline so you are seeing the latest tweets and one where we use an algorithm to service the most relevant tweets first. that is about transparency. it is about helping you figure out or decide what you want to the in the moment. we are proud of the change we executed fast. emily: and the super bowl. ned: i love to hear that. it was a great use case where you want to hear what people are saying in that moment when a field goal is made or missed and a critical call is made. that had a positive impact we were pleased about not just externally but internally because we could move and try things, and that has great outcomes as a result. when we look ahead, there are a couple of things we think about. conversations, we want to make it easier for people to tweet
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and be a part of a conversation, then events and topics. you follow people, but you care about a topic or event. that is what brings you to twitter. nedly: twitter cfo to segal there. i want to stick with twitter and bring in salina way who covers twitter for us. there is something he said which is we are not trying to get people to come back monthly which was intriguing since you know, as a quarter ago that was the number. >> ever since twitter has been a public company, investors have been clamoring for a daily active user numbers. in 2017, the fcc asked twitter why they don't disclose the actual number. twitter said they didn't want to invite unfair competition and growth rate is more important than the number. but here we are they and they are disclosing the physical number. now undoubtedly, daily active users is a more important metric for advertisers. if somebody is only coming once a month, it is not a valid user -- viable user from an
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advertiser's value proposition. daily active users is what they have been using internally to growth metric to drive for several years, but it is convenient they decide to phase out monthly active users right as it is decreasing and daily active users are increasing. emily: let's talk about the daily active user number. it is smaller than people thought it might be, much smaller than the snap. how does that compare with what estimates were? selina: when we talked to analysts, they were expecting less than 50%, but it is 39%. that is less than people imagined and it was 115. so the positive is it is growing at almost double digits rate while snapchat has been basically flat or declining. that being said, snapchat is much larger. it is 186 million daily active users, and facebook is more than one billion. twitter says they are only
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calculating monetizeable people that actually look at ads, so it is not an exact comparison. it is not exactly an apple apple comparison. emily: twitter is an influential platform. the president is tweeting every day. you don't see the same with snap. how do advertisers see snap versus twitter. selina: they are very different platforms. twitter is what is happening now, to drive engagement towards an app whereas snapchat was about the person to person and friend to friend engagement and the demographics are different. snapchat tends to skew younger. twitter is an incredibly influential platform. there are news outlets every day and on television networks like our own, message to message where tweets are being shared but they are not counting that into the mdau numbers. the overall influence is larger than what the number shows. emily: bloomberg tech's selina wang, breaking it down for us, thank you so much. ok, coming up.
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self-driving car startup aurora just got a boost of confidence from amazon. how the company is using this to -- latest funding to support a range of carmakers. that is next. if you like bloomberg news, listen on the bloomberg app, and in the u.s. on sirius xm. this is bloomberg. ♪
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emily: amazon is hitting the gas on self driving cars. the e-commerce giant announced an investment in the autonomous technology startup aurora innovation as part of their $530 million funding round, founded
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-- funding round. founded a few years ago, aurora works with automakers to develop sensors needed to deploy autonomous cars. the funding round valued at $2.5 billion. joining us to discuss, the cofounder who ran google self-driving car unit for a time. thank you for being on the show. amazon, that was a surprise. that piqued our interest. why is amazon getting into self driving cars? >> you have to ask them that, but from our perspective, it is amazing to have a great partner like this. this is a company that is a technology giant and a massive logistics company or we are excited and see if we can make them a customer. emily: how did the conversation play out then, from what you can tell us from your side? how do you see this being integrated into amazon someday perhaps? integrated? chris: i can't speak to amazon
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but adam wainwright we are -- but aurora we are building a driver. that can move people and ultimately will move goods as well. we look at amazon and see this incredible logistics company and look at an opportunity to help them with that overtime. emily: so potentially self driving amazon cars bringing goods to our doors? goods, that isng right. emily: talk about aurora. it is in volkswagen and hyundai and a sort of stack. what does the technology to? chris: we are building a driver and the idea is you should be able to sit back, read a book, get from a to b. we have been going 2.5 years now. we are 200 people now, it is exciting to see the progress on the software. emily: for the technology on the roads today, is that driving these cars for them? chris: we are still developing it, so we don't have a product yet we ship to customers but we have vehicles on the roads in california, pennsylvania as well.
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emily: when you say driver, it is a fundamentally different approach from, say, google has taken or tesla has taken, right? chris: it is similar to google's approach. they are building a driver, integrating that, buying vehicles from people and doing what they are going to do with it. our model was do the thing we can be the best in the world at, and we think it is building the driving capability. then we work with companies like volkswagen and hyundai and other companies in the transportation sector. what we are really excited about is that we are an independent player. people that are working with us have confidence we will be supporting them and their interests. emily: what do you make of the sort of broader industry, tesla? -- what is happening at google, tesla, and you see the traditional automakers trying to get into self driving cars. in some ways it is moving slowly than what some might expect. i went in a self driving car in
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2011, haven't had the chance to do that again. chris: technology has this opportunity to save lives and make the roads more efficient and less expensive and more accessible to get around. like anything that will be transformational, it takes a while. it is a new technology and it is bridging two industries, technology and in automotive. any time you have that complexity, it takes a lot of figuring out. emily: who do you think the winners and losers will be? it is not a zero-sum game. chris: obviously, we think aurora will be one of the winners. we look and we see the incredible green field. in is the next step democratizing transportation. emily: what are the challenges to work through? there are some moral and ethical issues you have to work through when you are building self driving cars. which way does it go if it sees
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a person on the road this way or a person on the road that way? is really heart of it anticipating what others are going to be driving on the road. our heart is seeing other people, whether it is a cyclist, pedestrian, or car. what are they about to do next? will they step on the road, will that vehicle make a lane change? if you can do that well, you become what we talk about as a human, a defensive driver. then you avoid these catch 22 situations. emily: how can a car know what another car will do if there are not necessarily signals? maybe they didn't use a blinker, they made a last-minute decision. chris: that is part of the challenge. there are subtle cues. as a car driving, even if it doesn't turn on the turn signal, if it starts to drift, it might be about to make a lane change. as you are approaching an intersection, it might be that some car wants to move over, that is part of the magic of this technology is getting to the point where we pick up subtle cues in the software and
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react safely. emily: what are your carmaker partners saying to you? partners and potential partners? chris: they recognize that this is an important technology. they see this as part of their future. for many of them, they will be moving from carmakers to people with drivers that will be able to provide mobility. the key ingredient is having a driver in their system. that is what aurora brings. emily: have you plan to spend $25 million? chris: tha we love that, it is n incredible vote of confidence. the folks we have around the table with sequoia and amazon and t. rowe price is great. we will spend it on hiring great people. it is a big problem, we need lots of people. that will be a big part of it. emily: all right, chris armstrong, ceo and cofounder of aurora. thank you. congratulations. chris: thanks so much. emily: competition in food delivery is getting more cutthroat as postmates looks to go public.
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what does it mean for grubhub and more? that is next. all us on twitter. check us out @technology. check us out on tictoc on twitter. this is bloomberg. ♪
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emily: another tech unicorn is heading to the public market, food delivery service postmates has filed for an ipo thursday following a slew of other companies like uber and lyft looking to list this year. olivia is here with more. post mates, the latest one to pull the trigger. >> we reported today they have filed. we understand they are seeking a valuation of $1.85 billion or higher.
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they are hoping for much higher. a really interesting company. people don't understand that postmates is the pioneer of the on-demand food delivery. grubhub existed before, but they were a website that sort of used restaurants that had their own delivery people and postmates brought in this gig economy model that is popular with uber withyft and matched that companies that couldn't afford their own delivery people. you have these follow on competitors that have come out that come out of the woodwork like door dash and uber eats that are still while but not as -- is wildly popular but not as profitable. emily: one of the things you mentioned as a customer occasionally, i find their fees are higher and they are less transparent about where the money is going. maybe -- olivia: you are not the first person to mentioned this to me
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and i have not done a study on it, either. i don't know where their fees fall compared to the other ispanies, but postmates popular. it is the leader in l.a. and tends to have i think a slightly wealthier clientele. it is popular with celebrities and a lot of their brands are exclusive, high-end, organic brands that they build these exclusive relationships, so it is very possible their fees are higher than competitors. door -- is built more on doing deliveries for the cheesecake factory. uber eats is with mcdonald's. each one of these have their own niche, their own service. postmates has clearly gone after a slightly riskier crowd. emily: what advantage does an is give postmates as uber doing it and it is a huge part of their business. olivia: employees and investors, people that want to make money,
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so it does that. postmates just raised a whole bunch of money. it raised $100 million recently and before that, $300 million, so it is not like it doesn't have cash. it certainly does, but the timing is good. the ipo market is hot, keeping me busy in my new role. i think they sort of saw this was a great window. they are one to watch. you never know, there may be another larger company would want to acquire them. that could happen. emily: uber has been straight up, they are experimenting with groceries. is postmates looking to expand beyond food delivery? delivered meals, things like that? olivia: post mates is already doing grocery delivery, and they have a deal with walmart where they will deliver groceries. a lot of people don't realize this, but there is a delivery
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partner for apple and tech brands. they will quietly deliver -- if you need a laptop last-minute, yours crashes, they will be on the backend of that in the white glove delivery option they provide. so you know, i think they are experimenting with lots of things but certainly restaurant delivery is there sweet spot and the majority of their market. emily: all right, olivia come our deals reporter bringing is another scoop, thank you so much. coming up, imac could be bracing for a down fourth quarter but one place embracing its giant screens is china. we will discuss. and seattle and san francisco two tech hubs that brought us jobs, but they are cities facing huge housing shortages. we will speak to the former governor of washington about how big tech is trying to remedy the problem critics say it created. this is bloomberg. ♪
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emily: this is "bloomberg technology global link" where we join "daybreak australia" to bring you the latest in global tech news. haidiily chang with stroud-watts. let's take a look at the top global tech stories of the day. heidi: it looks like despite twitter's daily users rising to -- nine poin -- 9% to 126 million in the fourth quarter, the social media company also reported a decline in monthly active users. the number was down 9 million from the same period last year. twitter also revealed it will no longer report monthly active users going forward.
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amazon has cut a deal to return thousands of suspended products sold to its indian site. to do so, it has to sell much of its stake in the company. the products would be listed on the first of the month following a new e-commerce law. together, the companies account for more than 70% of india's entire online market. that retail market. bt --an telephone company bce has set a possible ban on huawei equipment will not delay it -- has said a possible ban on huawei equipment will let delay its rollout. canadian prime minister justin ondeau is weighing a ban huawei's 5g network. >> later this month, imax will release its fourth-quarter numbers. with its global box office slipping 15%, one place it held strong was greater china where receipts jumped by 10%. the company is hoping 2019 will be a box office breakthrough with plenty of blockbusters from
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the likes of marvel studios and the latest "star wars" installment. earlier, we caught up with imax's ceo to get his thoughts on the year ahead in the u.s. and china. >> we always say we are not a quarter horse. we are in it for the long run and or the year. as a matter of fact, we disclose our box office or the fourth quarter, and it was quite strong. of course, you are right, it did not live up to the year before because there was no "star wars," but "aquaman" was a huge blowout success. many of the films did very well in china, so most analysts would say our fourth quarter did better from a box office point of view than they expected. this year is a little bit of an embarrassment of riches because in the first quarter, you have a lot of terrific films. is coming out and later, "captain marvel." 's
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"lion king" and the next star wars is coming this year. some years, it happens. i don't think this will be one of those years. >> to your point, china has been doing well, we have seen the pace of growth in chinese box office sales slowing down. how do you plan to deal with that? greatyou know, it is a time to ask that question because it is chinese new year the last few days and chinese new year accounts for a fairly significant portion of the year's box office. the first three days of chinese new year, we are up 20% over where we were last year and last year and last year, we were up 75% over the year before. i think the market itself is kind of flat over chinese new year, but again, for premium entertainment, a special experience, a way to see the movies, we are doing extremely well in china. >> you have deep business ties. -- ties there.
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i am curious about your sense on the ground of the chinese business community's view of harder ships with american companies right now. rich: i was in china about six weeks ago. i think the business people i met are anxious to reach some sort of compromise with the united states. as a matter of fact, they had an interesting comment almost across the board. they were speaking different languages, not only chinese and english, but they wanted to talk business language, which the u.s. was, and the government was more caught up in government policy language, so in the business community, i think there is a lot of support. a lot of the sectors in china, as you guys have been talking about, have been suffering. some of the things like auto and steel and bigger areas, but consumer discretionary -- the business we are in.
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that has held up pretty well. i think it may be part of the export economy suffering more than the internal consumption part of the economy. >> netflix has started to make some noise in the movie business. of course, we have seen "bird box's" success. is there any chance you could be partnering with them in the future for event films? rich: i think one of the great things about imax is we eventicize films. as good a film has "roma" was, it suffered through the fact that it wasn't a big event with the press and the red carpet. with the academy awards, we will see how that affects people's perception of the movies. we have talked to netflix many times about doing things with them because we are a great platform to do that, but for now, wants day and day with streaming and we are committed to working with our partners
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worldwide in preserving the windows as they exist today. places like amazon are respecting the windows. places like apple have not announced their position. i would love to work with netflix, but i think they need to show some flexibility on the windows. >> that was an interview with the imax ceo rich gelfond. really interesting to hear from the imax ceo talking about the chinese markets and how consumption remains quite strong. really worth pointing out that in the chinese new year, the first day of the chinese new year already, china broke their single day box office record, raking in more than $213 million in a single day. emily: the chinese market certainly a big ticket for hollywood. i don't to date myself, but i think it has been a couple of decades since i have been to an imax movie, but "the lion king" might be enough to get me to go back. >> i mean these days, i watch movies through streaming. right?
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you can get it in your house, basically. he also talked about netflix and wanting to do some sort of partnership with them, but worth noting it is the same issue in asia, as well. you see imax having great business in india and japan, but the challenges posed by streaming are still there. emily: i'm with you. i don't leave my couch, and that's how i like it. thank you so much for that interview. we will have much more ahead, so stick with us. this is bloomberg. ♪
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emily: antitrust authorities in germany have ordered facebook to change the way it combines user data. the three having your investigation looked into how facebook -- consumer data and whether it used its power to make users give up information.
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facebook says it will appeal. last month, microsoft announced a $500 million initiative to tackle seattle's growing housing crisis. since 2011, home prices in the area have grown faster than the median household income, and this is not just a problem in seattle. another high-tech hub is facing a similar issue. just a week after microsoft announced this, mark zuckerberg and his wife said facebook was backing a $500 million effort for housing in the san francisco bay area. joining us, the former governor of the state of washington christine gregoire. she is now the ceo of challenge seattle, an alliance of executives from the region's prominent businesses and philanthropies, including microsoft and amazon, that address the area's housing troubles. governor, thank you so much for joining us. how did you get microsoft to focus this much money on housing? , all ofe: you know, we the ceos had a meeting and
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talked about the amazing success we have had economically but some of the challenges that have come about as a result of that and really talked about housing affordability at the top. they began the process of asking how they could help, and really, they stepped up and said they would invest big-time, ally givehilanthropic money to homelessness -- $25 million. $200 million for low income, and for the first time ever, 220 $5 -- $225 million for middle income housing because with the growth and high cost of housing, we have seen the affordability of middle income housing just diminished dramatically so we are pushing all of our middle income families out of the region. emily: i recently sat down with priscilla chan to talk about the chan-zuckerberg's big backing of the housing initiatives in san francisco. facebook is part of that, genentech is part of that. i asked why more companies seem
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to be wising up to their role in this issue. take a listen to what she had to say. priscilla: this is a problem that exists that impacts the greater community. they want to be able to be part of the building the seattle or the bay area into a place that people from all different backgrounds can come and be successful. it is also understanding that looking at opportunities like the partnership where they can be part of being a durable solution. emily: one of the things she also mentioned was that this is a talent issue. it is difficult to companies like facebook to recruit in the area because it is so expensive, even for people making very competitive tech salaries. why do you think companies like microsoft or amazon are on board? what is in it for them? isistine: well, i think what in it or them is not only their ability to recruit and retain, but importantly and the number one subject these ceo's have discussed is if you cannot have
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the people that help you when you are sick, teach your children, respond to fires, respond to natural and unnatural disasters -- by that, i mean law enforcement officers, firefighters, teachers, nurses -- you don't have the fabric of a community, and if you don't have that kind of economic diversity and people can live where they work, you lose the vibrancy, the health of your community at large, which is very important to them. let me give you an example. of the 100 responders from one of our local utilities, three ,- that does first response three live within close proximity to where they actually work. the rest are over 90 minutes away. everybody is impacted when that happens. it is economic impact, social impact, quality of life impact. it's health. it's safety. it is impacting every way. emily: now, jeff bezos and
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amazon are part of your coalition and many in seattle would say amazon is a big heart of the problem if not the problem. how do you balance that? christine: we have enjoyed the amazing positive success of economic development in our region. now we know along with that comes some significant challenges. so what we are in the process of doing -- yes, microsoft stepped off first big time and a amazing credit to them, but now we are going to ask the community at large to support. we have asked our mayors to step up and they have volunteered to see what they can do to break down their barriers and provide incentive for middle income housing that do not exist today. we have asked our community to support mayors so they can get the job done. so we call it an all hands on deck effort. at some point, we're going to ask anybody and everybody in the community, not just large business but all business to -- not just a business, but the community at large to invest in
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the future of our community if we want to maintain the quality of life that brought us here. or why we have stayed here. emily: do you expect amazon to play a financial part in fixing the housing issue in seattle similar to the commitment we have seen from microsoft? christine: we are having a meeting of all of our ceos tonight to have that discussion about how we go about getting more people to invest along the lines of microsoft, how we get individual philanthropic people to invest in our community, how we get the average citizen maybe to buy a community bond that will support middle income housing. it is not just microsoft and amazon. they are stepping up. they are going to be supportive. they are part of the solution, but it's everybody being part of the solution. because we all want the quality of life that brought us here or kept us here. emily: what have these sorts of prodevelopment policies been difficult to accomplish in the past? i assume there are a number of
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political and practical challenges you will be up against. christine: no question about it. we actually took a look around the world in sydney, australia and london, england. they said they raise capital from the private sector, but they did not succeed in addressing middle income housing, and the main reason they did not was they could not make down some of the policy barriers or provide economic incentives to developers and builders to get the job done. so that is why we have art nerd -- partnered with the public sector. we think we cannot succeed private alone or public alone, but together with community support, there is nothing we can't do. emily: all right, christine gregoire. thank you so much for joining us. we will be watching to see what you accomplish. christine: thank you. emily: still ahead, gopro is zooming into a new opportunity. we will hear from the ceo on why the company is moving most of its u.s.-bound camera production out of china by this summer. that's next.
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this is bloomberg. ♪
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emily: apple releases software updates for iphones and other devices to fix a bug that allows users of facetime to listen in on people before they accept or reject the call. forbug was a black eye apple, which has made security of itsling points products. meantime, gopro reported a profit wednesday and beats wall street sales expectations after the company cut costs, and its action camera sold briskly during the holiday shopping season.
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in december, group -- gopro said most of u.s.-bound camera production was moved out of china for the summer. nick woodman said china is getting more expensive than the threat of tariffs was a catalyst to move production. nick: we are showing a lot of growth internationally, which is terrific. we were up significantly in a mia and aipac in the fourth -- in amea and aipac in the fourth quarter. excited we showed results because we returned to product strategy and pricing strategy we know well, so it's great to have that predictability back in the business. we finished the fourth quarter up 20% in terms of units sell -- unit sale year-over-year, so that is terrific momentum. >> the new positioning is you are not trying to be relevant to everyone but serve that core customer. how do you continue to monetize that same of people? nick: well, we have not reached everybody in the world that could benefit from a gopro. the strategy you are referring to is customer segmentation and
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better understanding who in the world has a problem that gopro can solve for them. it's funny you call it a new strategy because it is actually our original go-to market strategy. it is how we build the brand and how we built in the business, serving specific customers that would benefit from gopro. after going public, we adjusted our strategy a bit and tried to be more relevant to everybody, and it turns out that it is better business for us to better understand the various customer segments specifically and address their needs with specific product and marketing that resonates with them. >> so in december, gopro said it would be moving u.s.-bound production out of china to avoid potential tariffs. why did you choose mexico as the new location? nick: for several reasons. there are some cost benefits to moving some of our production to mexico. there's supply chain benefits, and it just makes a lot of sense
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for many reasons. while the threat of tariffs -- we have not been included on the list, but while the threat of tariffs served as a catalyst to get us thinking about moving production out of china, once we did our homework, it just made a lot of sense on many levels. it is just smart business. tariffs or no tariffs, we are moving our u.s.-bound production to guadalajara. >> walk me through how the cost savings work. without the tariffs, why is it cheaper to be in mexico versus china? nick: because china is getting more expensive to do business in. >> is this something you would have considered without the threat of tariffs? nick: i think we would have eventually gotten there, but not as quickly as we have. >> what other countries were under consideration? nick: malaysia was a consideration, but at the end of the day, mexico has got terrific infrastructure. for our businesses in the americas, it makes a lot of sense, so we decided to move to mexico. >> camera sales in the asia-pacific region have been growing quite significantly, but can you talk about the china
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demand as a result of the macroeconomic headwinds? nick: china was more challenging last year, but we still managed to grow 2%, which is great. it is a big opportunity for us in china. china is an expensive place to do business, and it is great to see gopro thriving there. it shows that our go to market strategy and global demand for gopro extends into the chinese market, so there's obviously a lot of opportunity for us there. >> is that a market you will continue to invest and double down in from a marketing perspective? nick: yes, we have sales and marketing offices in china. operations, as well. it is an important hub for us. >> several of gopro's efforts to diversify beyond action cameras have struggled, including the drone business, but the software business seems to be taking off with the cloud less -- cloud plus subscription, so what is the roadmap for growing that software revenue? nick: gopro serves as a solution for people who want to capture and share experiences.
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that starts with the camera, but we also need to solve for helping people offload their footage, archive it, access it, get more out of it. gopro plus offers unlimited cloud storage, photo and video content to our customers. it also offers you break it, we replace it damage guarantees. gopro's are used during activities that would otherwise damage other consumer electronics. we want to guarantee our products for our customers and we will be rolling out other features and benefits that excite our customers. for $4.99 a month, plus offers a lot of value and we are seeing strong interest and intend to build on that this year. >> this is an exciting area for investors. you get higher margins on the software side versus the future, -- hardware side of the business, so looking out into the future three to five years, what portion of revenue could software subscription services become? nick: it could have a meaningful
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impact on our gross margins, that's for sure. we're starting to see that. which is terrific. we talked about that on the call yesterday. we have work to do to drive awareness of plus. as we shared previously, awareness of our cloud subscription offering is roughly 20%, 25% amongst our community, so there's a lot of opportunity, a lot of work to do. we have also been doing research to understand what our customers want to see from the plus subscription. we rolled out unlimited cloud storage and increased discounts at and have seen a nice uptick in subscriptions for this year, so more planned for this year. emily: gopro's ceo nick woodman there. that does it for this edition of "bloomberg technology." on friday's show, we will speak to the person with the power to possibly kill amazon's hq2 plans in new york city.
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a new york senator will be joining the show. much more on twitter. i am emily chang. this is bloomberg. ♪
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