tv Bloomberg Technology Bloomberg June 17, 2019 5:00pm-6:00pm EDT
drive global trade. problem.ids, a the vast majority of children are not watching. the smartphone market taking a huge hit in the trade war. apple's iphone could be seen weaker than expected demand, especially in china, and huawei gave a doomsday estimate for smartphone sales. the company is ready for a drop of up to 60% in international smartphone shipments. founder expects to/revenues by $30 billion -- to slash revenues by $30 billion over the next few years. international shipments that go outside of china account for about half of huawei smartphone sales, and that is a chunk.
>> he talked about the revenue hit. they don't want to resort to mass layoffs, they don't want to sell off parts of the business, and they don't want to reduce research and development spending it people close to the -- spending. people close to the situation tell me they have been looking for that drop-off in smartphone sales. this is something we've been talking about, talking to partners, customers across europe, saying there's a drop-off because people don't know what will happen in this company and what does it mean to me if i can't access android services and products on my smartphone? it is a big deal in europe, which was a big growth driver for them outside of asia. emily: huawei sales account for about a third of the smartphone
market. could they make up the shortfall in china? mark: it is possible. if we believe people in china will stop buying smartphones and products from american companies, those sales will have to go somewhere. it is possible huawei could pick up a little bit in china but i don't think the differences will be too drastic. have ameantime, you number of analysts coming out with grimmer outlooks on iphone sales, not just because of china but seemingly globally. what are they saying? mark: there's a lot of speculation, not only because of trade war with china, about iphone sales, analysts and investors not being us optimistic. apple used to come out with a big iphone redesign every two years.
but we have seen in the last few years, the changes year-over-year have not been that dramatic. what we will see for the new iphone coming out is a design the same as this year and the one before that> .e are -- before that> the same asng about 2017 and 2018. . software updates are making -- are available to more and more older devices. the combination is not lethal to apple but it does pose a long-term challenge. emily: obviously there is the greater economic uncertainty that is affecting the entire smartphone market in general. tom: the trade war is taking a toll, and you are seeing in different ways. chipmakers, their products. there's concern about the 5g
rollout. we are on the cusp of this massive technological upgrade where we will have this ubiquitous internet service, the internet of things. huawei is a big provider of that equipment. to the extent that you will see people cutting back on purchases gear, that slows the rollout of 5g and of services, hardware, other things that will be accompanying that rollout. mark, asterestingly, you reported, apple wasn't planning to reveal a 5g iphone this year. huawei is the leader in 5g. couldn't that have given huawei market?in the mark: that's a good point. apple is one of the biggest phone makers in the world so
apple not coming out with a 5g device is going to mean that some components makers, partners, aren't going to rollout new things to be competitive with 5g until apple is there. i think this whole 5g push will 2020.,ven bigger deal in 2021. way was planning to -- huawei was planning to unveil a foldable phone this month. they have delayed that seemingly delayedsamsung has their foldable rollout due to issues with the screen. mark: huawei was planning to launch a foldable phone soon but they saw how samsung essentially embarrassed itself by launching a phone worth $2000 that by
removing the screen protector can damage the phone. huawei is taking a different approach, waiting the extra few months to see if they can mitigate any problems, probably using the next few months to put it through further testing, and then they will not launch the device until it is ready. right, lots to continue to follow. andmberg tech's mark gurman tom giles, thank you. a new china region chief. stanley chen, former general manager of google in taiwan will take over running operations in china. google takes in about 15% of its revenue from the asia-pacific region even though it pulled it's search engine from mainland china and 2010.
there, a factory there, lots of brilliant engineers in china. it is a good market for us. we've been focused on encouraging the governments on both sides to engage in constructive dialogue. we do not believe tariffs is an effective way to drive global trade. that is where we think we can have some influence. we obviously don't have control. what we try to do with our customers and partners is try to mitigate any consequences of tariffs that could be in place that impact the free flow of goods around the world. our customers need product and some of our global customers have big assembly operations in china. we need to work constructively with them to mitigate these. -- these implications.
>> your peers like google, starting to shift production out of china, apple with some kind of plan b in place, intel isn't considering in the back of your mind a backup plan should something happen to shift some of the production out of china? bob: in light of tariffs, we need to think through with our customers and our own operations how we mitigate the effect that tariffs or anything else could have on our businesses. higher tariffs ultimately end up in higher prices for consumers around the world. we work to mitigate those. >> you are not there on thinking of shifting anything out, or you are not worried about a backup plan. you are focused on mediating? no, i think there are multiple things going on.
we are working with the governments to encourage them to get to a resolution. secondly, we've been working since the tariffs started last year both with our manufacturing operations as well as the assembly operations of our customers. we've been working to mitigate the impact for more effective ways of the movement of goods around the world so our products will be more expensive -- will not be more expensive at the point-of-sale> . mitigate?es it mean, bob: products assembled in china and shipped to the u.s.. mitigate means, how do we move goods? sometimes our customers move their operations. less product coming from china to the u.s. that will be subject
to tariffs. mitigate means at we work with the global supply chain to reduce the impact of higher costs arriving at consumer shelves? >> so that does involve some moving around? bob: absolutely. >> moving on to economist cars. today, i think you took your third ride in the autonomous car and tried a new system that will be part of a ride-hailing service. what are your thoughts? bob: i went on the streets of jerusalem, traffic going both ways, the on and off ramps, people walking across the street, and doors opening. to watch how far mobile eye technology has come. the gentleman behind the wheel that took me on the drive, not once did he have to put his hands on the wheel.
the most impressive thing is to see how far they have come in each one of the successive drives i have gone on. believe announced i last year that they plan to rollout a ride-hailing service. what is going on with that and when can i hail down a cab? bob: last year, we announced with volkswagen and champion motors that volkswagen would build a car, mobileye would build the technology inside the car, and champion motors would help assist with the technology inside the car to bring the services here to israel in the 2021 timeframe. we are extremely excited about what that means about bringing safe security to address two fundamental problems on the
highway in jerusalem, traffic and safety. we think we are going to the able to deploy mobility service over time here and then expand to the rest of the world. emily: for more, i want to bring in bloomberg's ian king. first, what he said about china. how big a hit will this trade war be for intel in particular? ian: intel is one of the companies absolutely in the crosshairs here. china is the largest market for computers, semiconductors. what he was talking about with mitigation is basically stopping that china to u.s. import, or minimizing that as much as he can. intel has plants in this country, assembly and china, devices it is going to in china.
it is really difficult so that is why he kept saying, we are looking into it. nobody knows the answer. emily: are they able to re-divert, redirect? goes on inof what china can't easily be relocated and why should it be if a large part of your market is in china as well? emily: robo cars, how important could this be to intel's business? ian: mobileye has been a bright spot for them. it is something they have spent a lot of money on. a lot of cars on the road with mobileye technology. at this point, it is still a relatively small business, still only a few hundred million dollars per quarter. emily: if these cars take 10 years to get to market, then what? concernt is the overall
not just for intel. is this market going to develop as fast as they want it to? emily: how are their efforts in self driving cars compared to other chipmakers? ian: they are on the road. a lot of other companies right now are talking about test programs. intel got in early, the drivers assistance level. they are generating data, generating experience. in that sense, they are ahead. king, bloomberg's ian thank you for that extra context. coming up, amazon is sharpening its approach into the $130 billion videogame industry. and bloomberg tech is livestreaming on twitter. you can check us out @ technology. this is bloomberg. ♪
emily: apple ceo tim cook gave the commencement speech at stanford over the weekend. while he discussed the virtues of higher education and stanford in the tech community, he also doubled down on his critique of some of the biggest issues facing big tech right now. tim: every data breach, every privacy violation, every blind eye turned to hate speech, fake news poisoning our national conversation, miracles in exchange for a single drop of your blood. too many seem to think that good intentions excuse away harmful outcomes. whether you like it or not, what you build and what you create define who you are.
emily: meantime, at a time when most tech giants are jumping in to the videogame industry, amazon is fine-tuning its approach. according to the wall street journal, amazon laid off several dozen employees to its division that develops video games. it is struggling to develop a blockbuster game of its own. many people may have not quite realized that amazon is working on its own blockbuster video games. what happened here? matt: they have been developing a couple of games internally for several years. a lot of those are sticking out into beta but none of those have been full-time releases. i think they see value longer-term in cloud-based game streaming but they also understand, to be successful, they need exclusive content, so they are trying to build out
their own content so that when cloud streaming is real, they will be able to compete in that market. emily: how significant are the layoffs? matt: probably insignificant. in the videogame industry, for every game that gets released, there are probably a graveyard of dozens that never get seen. this is just the nature of the creative industry. you have a lot of projects and you have to cull them early in development if they are not going to be successful commercially. emily: we know that amazon bought twitch. how has that been going and how does that fit into what amazon is trying to do? matt: they haven't architected what they are trying to do. it is still the biggest livestreaming form for gaming. will basicallyey make it a way where you can buy games while watching somebody play and then jump right into
them. google is trying to do exactly that with stadia and youtube gaming. amazon is in a good position because they have the eyeballs on twitch. over the next few years, amazon and google will try to take a slice away from microsoft, sony who control the console industry. emily: even if they haven't exploited it, how much of a relative position is amazon and compared to google working on a streaming service, apple, sony? the competition landscape is going to change dramatically in the next couple of years, isn't it? matt: content is king. i think the game makers realize they will not make the mistake that the video creators did. they's a scale economy, can games that are so much
larger. $100 millione budgets these days. the scale to create great games and have the content and developing teams, microsoft and sony working together will probably when the cloud. -- probably win the cloud. emily: do we have any idea what kind of games amazon is working on? are these like first-person shooters or the farmville or angry birds? matt: they are more first-person shooters. one is like a civil war era came. warave stash er -- civil era game. the games that allow you to live inside that environment are the ones that have the staying power. they want to engage with the social element they have with twitch, for sure. emily: things for weighing in.
emily: this is bloomberg technology, i'm emily chang in san francisco. is bitcoin getting a facebook bump? the crip toe currency crossed the $9,000 mark, coming as the world awaits the launch of facebobbing's own digital currency this week. ripple has just announced a partnership with the global payments provider moneygram. it will let ripple serve as a cross border payment and foreign exchange settlement option for moneygram. to tell us more, ripple's c.e.o. is with us, joining us from ripple h.q. in san francisco. god to have you back with us. moneygram owns about 5% of the
global remitance market. how will this deal work? brad: emily, it's great to be back, thank you. the deal is a big step i think for ripple but even a bigger step for the overall industry. as you know well, there's been a lot of excitement about around what blockchain and crip toe can mean for the -- and crypto can mean for the industry. we haven't seen much beyond experimentation yet. we are the market leader because we have mature aid agressively and are solving real problems for real customers. moneygram is just the manifestation of that as the second largest global remitance company we're able to have a big impact with one customer and one partner in this emily: as i understand it, western union tested ripple but it ended up being more expensive than its current network. is moneygram saving bun my using rip snl brad: what western union said, they've been around for decades they said in our beta
time, the time the product hadn't launched they said we matched the efficient soif what they were already optimized my view is they'd spent decades getting to an efficiency we matched with a beta product, i was pleased that western union could come out and say we are already as good as their decades they had invested in building out that capability. with moneygram we know out of the gates we can make their system much more efficient. and the key reason is today both western union and money gram, they prefund accounts around the world so they can make payments. so moneygram and western union have negative working capita what our products allow the companies to do is not prefund and just shoot payments in realtime. that's a massive savings in terms of efficiency, not just in terms of what is the cost and f.x. but the capital cost. it's a dormant asset when you prefund those, sitting there waiting for people to make payments. that's the transformational thing that xrp is an extremely
efficient digital asset allows for the asset. emily: how much equity did ripple get in this deal? brad: we committed to invest up to $50 million. we'll end up owning between 6% and 10% of the company. they decide how much of that $50 million they want to call down. at close they've called down $30 million at a price of $4.10 per share. so we're excited to be shareholders because we think that actually it's been an undervalued asset. as you may know, a company tried to buy moneygram a year ago, blocked by cfius. but we think it's an undervalued asset in the overall landscape. we couldn't be more excited to have a shared vision of how this can work. emily: a potential blocked by the u.s. government. do you have plans tie to the tie o gain share in other existing
money transfer services? brad: what's next for us is to continue to build out and expand the number of corridors where we are today. we work with over 200 banks and financial institutions today. if this new product, we're enabling liquidity into the mexican peso and the philippine pay tso. we've only been live for six -- peso. we've only been live for six or seven months. we want to expand the number of corridors we support globally. emily: facebook, we believe, announcing crypto plans tomorrow, there's broad speculation it within some sort of crypto currency that can be used internally within facebook walls to make payments on fatesbook and within facebook's other services like instagram. what's your take? brad: i think it's incredibly positive signal to the overall
blockchain and crypto market to have a player like facebook leaning in. there's been a lot of skepticism in the origins of crypto coming from an anti-government, anti-bank point of view, to see major industry players lean in and participate in the market is a positive for the overall market. it will be interesting to see what part of the market they focus on. david marcus has been an incredible leader. we'll see them do something very consumer-y oriented, part of the payment system. but i think it's, i'll be watching alongside everyone else to see what they decide to pursue. i think what i've heard is the technology isn't quite ready to go live. sometime in 2020 they'll be out there actually deploy thafplgt for me what moneygram and the stuff we're doing today is the key difference. what can we do today with these technologies to solve problems. it's been hard for the people following this industry to separate what is noise and what is actual real and pragmatic today. emily: that said, do you have any concern that what facebook
will unveil will make ripple less relevant? brad: i don't think so. face intook consumer oriented company. what ripple is doing is enterprise infrastructure, intersecting various payment networks around the world. we're working with some of the biggest banks around the world, small payment providers, providing that interoperability, as opposed to solving within a network kind of problem. it's verying very different than what they -- what i expect they'll be doing. mip we'll be covering this -- emily: we'll be covering this week and i know you'll be watching. thank you so much, brad, for stopping by. bhoing's c.e.o. said he expects the 7 7 max jets to return to the skies by the end of the ear, possibly with a new name. they talked about plans to fix the jet, working with leg reg lators to get them recertified
for air and when they'll actually fly again. >> first thing is we are very, very focused on safety. that's our paramount focus here. that's the tone for the entire show. we are making good, solid progress on bringing the max back up, working through the certification simulation flight this is week, we hope to schedule the flight test, certification flight shortly and get the airplanes back up in the air. all of this is being done through the lens of safety. we'll take whatever time is necessary to make sure the airplane is safe. >> 2019? 2020? >> it's something we expect to happen before the end of the year. we're making good, steady process -- progress but i don't want to give you -- we'll take the time necessary. >> could be 2020? >> we expect it to happen this year. >> this is a more for rogue examine -- thor rogue -- thorough examination of the aircraft? >> we're working with regulators
around the world, f.a.a., chinese authority, brazil, canada. about two week ago, the f.a.a. hosted a multiregulator meeting in dallas. it's important we do this in a thorough -- >> you keep emphasizing the thorough. are the regulators going further in than you would have expected initial fi hi? >> i think we're going even deeper than normal. i think that's good. we encourage that we're looking at every dimension of the max, the software update we're making. but nottle on the airplane itself, also the training and education materials theernled end-to-end design certification process. t's a holistic effort. i see grow grohing convergence between the regulate yoss, a lot of questions we're answering. detailed work on certification. we're encouraged by the collaboration between the regulators and we're seeing growing convergence between. >> do you think the aircraft
will fly first in the u.s. or in europe or the same time? >> i think there's an opportunity to do it together. i know the f.a.a. and yasa are having meaningful discussions. we're going to support whatever the regulators want to do. >> you think they're getting closer together, not further apart? is is there a gap between where the f.a.a. is and others? >> there's some work to do but the trend is they're converging. that alignment adds strength. >> what about the chinese regulators? >> they're part of the discussions as well. if i look across at regulators around the world, i see convergence across the entire group. i'm encouraged by this that progress. our focus remains on safety. emily: coming up, youtube spevent the last year growing resources, improving child safety. but is youtube kids any more kid friendly? we'll discuss next. ♪
emily: elon musk took to twitter to say he was deleting twitter he said just deleted my twitter account, less than two months after ending his legal bat with federal regulators over his unpredictable use of social media. he change hid twitter handle dotcom. for father's day. but as of now, his account appears to still be there and back to his original handle. youtube kids was meant to be a safe place. not many kids using it are
sticking around. according to several youtube staffers, most children using the kids app shift to the main sight long before they hit 13 where they risk being exposed to inappropriate content. joining us is doug clinton and bloomberg's lucas shaw in l.a. how many kids are actually using youtube kids? lucas: youtube says more than 20 million. that's not an exact number you have to figure if it was more than 30 million or more than 25 million they'd say that. there are two billion people who use ewetube every month. then if you look at some of the most popular channels that program for kids there are those with larger audiences or larger subscriber bases than the entire audience for youtube kids. >> so what are the trends in viewership? are the kids using it sticking around? are they going to watch netflicks? what are they doing? lucas: it's popularring more popular among the 2-7
demographic. that's when parents can exercise a great deal of control over what their kids are watching. so you don't have that 8 or 9-year-old who wants to be like her older sister, her older brother and wants to, the person who would watch "the real world" when they were 10 years old and probably shouldn't have. most kids who do watch it watch it when they're really little, when parents are exercising control. once they get to a certain age thashe graduate to regular youtube or they'll watch netflicks or something else. there's no shortage of places for kids to find program right now, youtube is the number one destination. >> how big a problem is this for youtube given that youtube kids is a small piece of the pie? doug: it's a meaningful part ofnary business in the hundreds of billions of dollars. i think one of the challenges that youtube kids in particular has is as you sign up to use that particular product, you
actually can only bucket your content into two buckets. either you say your kid sunday 8 or your kid sunday 12. and i think when you talk about having kids use the product after age 7, the types of content that kids want to watch when they get older and older involves much -- evolves much more quickly than the buckets youtube kids offers on their plalt form today. emily: what is youtube trying to do about this? lucas. ewetub's approach to kids -- youtube's approach to kids is similar to their approach in other areas, they roll out changes to small airs to minimize the problem or disaster but won't eliminate. they remove channels that are malicious in some way or take down video s that inappropriate but create -- or create better tools for parents to monitor and restrict but the big change youtube won't make that a lot of
parents and activists and some business partners would like to see them make is take the kids app and only hand pick the videos in it. don't allow anything to come into that fitter that might be inappropriate. or just to kind of create more warnings an more tools for parents to make sure they feel safe when kids are on it. emily: as a parentmark videos on youtube kids aren't entertaining. might be a figure rein jumping around against an animated backdrop. ut it's really not much. whose responsibility is this really? parent's responsibility to monitor or youtube's response to believe the cure ate bet her doug: we think it's both. youtube should do a better job. the algorithm in terms of what they play next is one of the biggest problems once you get three or four or five videos in,
you can run into questionable content that your kids are eeing. parents are given tools. youtube kids isn't the most entertain bug freedom and safety are always a tradeoff. if you want the ultimate safety for your children, force them to watch youtube videos only through youtube kids even if they're not the most entertaining videos. emily: meantime, doug, as lucas and our colleague mark bergen have reported, some google staffers and youtube staffers won't let their children watch it. doug: we've seen this with facebook too facebookers not allowing their kids to sign up for facebook until they're much old . it's intick -- indicative that some people even within the organization see a problem. culturally when you think about youtube, facebook, social media in general, all these plat forms were start as ways to allow pem to express themselves freely.
youtube, one thin -- one thing it's done is created an open platform for millions of creators to express themselves. it is a difficult tradeoff, i think, to eliminate some of the freedom that these platforms for founded on. emily: doug clinton of loup ventures and bloomberg's own lucas shaw, i know this is something bloomberg will continue to follow. slack is going public. next. this is bloomberg. ♪.
company slack is taking a different route, opting for a direct listing. allowing its investors and even employees to sell their existing shares immediately. much the same way spotify did last year. slack's going public at a time when u.s. stocks got an upbeat start to the year but faced extreme volatility in the midst of a trade war with china and antitrust scrutiny looming over big tech. tens of billions have been raised in public offerings though while some i.p.o.'s have soared, others have floundered. c.e.o. stewart butter feel and his team have transformed the way companies manage endless emails and messages but the key will be to convince potential investors that the company is worth its targeted valuation of around $16 billion to $17 billion. despite slack's revenue growing to $600 million this year, its revenue growth is slowing. and its losses are expecting to near $190 million. another unprofitable tech union
torn -- unicorn. what could make this a success for slack? >> no news is good news. if it's quiet, stays stable, some trading and nothing crazy happens, it'll be seen as a big win. >> we'll find out this week if investor are as collaborative as slack hopes. >> to further discuss, we've got ellen hewitt, who you just saw there. and michael meyer. you said slack needs to do more chance, what do they need to do? >> they have to prove they're a collaboration platform, that's the holy grail of enterprise software, to build something people want to build on top of. if they can prove that you should and prove it's easy and people build things on top of them then it's hard to get that out of your company. that leads to ongoing revenue that starts to drive further
growth. emily: ellen what is investor interest like right now? we're three, four days out, what are we seeing? ellen: it's different than a regular i.p.o., you don't have the same structure of banks raising interest from groups ahead of time. but we have been tracking slack share sales on the private market. as early as february we saw prices at more than double the last private funding round. it seems like based on disclosures since then in filing that interest has stayed there that's partly how we were corroborating this idea of where the company hopes to be valued at when it goes public on thursday. emily: how close is slack to being more than an app or being stiff competition for whatever alternatives are out there in your opinion? michael: yeah, that's the interesting thing, what is that competition. there are many, many apps out there, most of them are free. they have to prove they can be more than that. many developers and companies
know that. ask any developer in your company, they've probably heard of slack. but ask the person that tracks e.r.p. approvals and they probably haven't. they really need to get out of that technology space they're in and grow to the rest of the company and prove their value to everyone else in the company. the same value that most technologists, especially developers have seen already. emily: right. ellen, you see this in companies, groups, particular teams going rogue, using slack, they love it, everybody else at the company has no idea anybody is using it. ellen: one of the things stewart butterfield, the c.e.o., said in an earnings call, one of the biggest challenges and tuns they have is explaining to salespeople who have never used slack what it is. there's not an easy answer. he tried to say it gets close to replacing internal email, which is a good way of saying it, but it's smrn that. until you try it, you don't know it and that's great because once
you try it, people love it. until you do it's hard to grasp. that could be a challenge for their growth going forward. emily: michael, as someone outside of our silicon valley bubble, what's the view on slack beyond? is it a cool thing, people don't use it don't understand or don't know about it? or is it become manager mainstream? michael: it's starting to become more mainstream simply because the people that are using it realize you can do more than just chat. when i'm in a company and i want to do things that are fairly monotonous, we all know computers are supposed to do that for us, but until now you've had to be able to program the computer to do it. with a platform like slack, all of a sudden i can think of anonymous things, put a natural language interface on top of it, i can almost start to talk to the applications that i once had to deal with in ways that i didn't really enjoy. that's what's going to start to
bring it to the mainstream, to the masses, more than it already is. emily: what's going to happen thursday? will we see this the typical gathering of c.e.o., early employees standing there ringing the bell? ellen: that's the expectation but if it's like spotify, instead of trading starting immediately, there could be a couple of hours when we're waiting for the first trade to take place. because direct listing, you are not starting with a direct price. they're doing a complications to decide where should the first trade begin. emily: all right, we're going to be covering it, ellen will be covering it, what is happening thursday on the floor of the new york stock exchange. bloomberg beta, the venture capital arm of bloomberg l. spmplet an investor in slack. we're live streaming on twitter, check us out there.
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