The paytv business. Googles annual Developer Convention starts tomorrow and wearable devices will be front and center. The countdown is on for the new iphone which will be bigger and badder than before . Hardingppliers in china production on these new iphones next month. Displayl has a 4. 7 inch and one of the phones will also have a 5. 5 inch screen, bigger than the samsung galaxy. Me whoaros is joining broke the story as well as brian blair from new york. Have been talking about this and expecting this for quite a long time. Is the timeframe important . It is not important, its pretty known and this is the time they typically start production. They have been preparing for the last four months but now is when they start production. If youre going to make 50 million per units, you have to have a couple of months of lead team leadtimes of this is the right time to start. I know your sources are not named but in terms of your story , does this suggest a release in october or earlier . September timeframe. It is the typical release schedule for apple. Whats new is that this is not just a speed bump, its not just fingerprint reader, its a new screen size and the larger screen size is one of the key things that people want. We have seen success with that. Do you expect them to do a four inch screen as well . I dont expect so. We have not been able to confirm that but many suspect they will. We believe they will keep they will have those 4. 7 screen and do a 5. 5 inch screen and they are going to keep the 5s on the production line and keep the five in the production but we dont believe they will continue to make the 4s anymore. Thats the four inch screen, gone . The four inch screen is what you see right now on the 5 and 5s which will remain but the 4s has a 3. 5 screen and that will go away. What does this mean for the cost of the phone . A lot of the components tend to drop out the glass and the battery maybe dont drop as much. Absolutely especially the screen which will be mark spencer. A lot of the key components for apple will still be the same. Those will have declined in price from the last year. I typically think about Semiconductor Price erosion at 15 20 per year which can change the volume. The cost of the glass is more expensive particularly on the 5. 5 inch. Will apple charge more for that . Pricing for ahis number of years now. Im wondering if a raise that price of the entrylevel 5. 5 inch product. There is a great possibility of that because of the higher price point. What do we know about the market for these phones . Where are people in terms of contracts particularly in the u. S. And the upgrade cycle . There is clearly a lot of demand for the larger phones. I think this is a big enough change in the product line that a lot of people will move up. 40 of android phones are this 4. 7 inch screen size or larger. Numbers are five inch and higher that is expected to grow 30 per year were as there will be a slight decline in smartphone growth for smaller screens. This is critical because samsung has been the number one Global Player in mobile smart phone volume were a number of years now. Part of the reason is because samsung decided to take a direction doing the larger screens which seems silly. It turns out this is what consumers have wanted for the last several years. You mentioned 40 in china, everywhere i go in the world, i see people using the larger screens. Apple has been behind in this regard but this is a critical piece of their strategy and i think it will be important to their volumes in the back half of the year. Many people dont want the smaller screen sizes oh apple will see a big surge in demand internationally because of these new screen sizes. I think they will topple samsung and some of these markets as a result. Why does it take apple so long . Its an absolute marvel in every way. So is the galaxy. Why does it take apple so much longer than samsung to come up with a new design and make the changes the market is already responding to . Cowsthink apple has sacred from the steve jobs era. He was always vociferous about the fact that the smaller screen size was the right size and the portability was more important than the ability to have a big screen. Its like the music subscription thing. It took them a long time to get the notion that people wanted to own their music. To some degree, its a cultural thing. Agree, we saw the same thing with the ipad. They said for a while that we dont believe in a seven inch screen and they thought it was to take to compete with the smart phone and too small to compete with a 10 inch tablet but then we saw it in the market. I agree with you. I am hoping we will see some samsung ads making fun of them showing the size of the hand matching the size of the phone. Is there a crow to be near . I think there is. Apple is being reactive in this regard. Appleeople have expected to address this segment of the market for a while. Which is large, 5. 7 inches, they sell 10 Million Units in the first 60 days and apple has ignored that. There is a little crow to be eaten. Move doesnt have to first but they have to move eventually. Thank you both so much for being with us. Apple is expected to release more stuff. They have a dispute with the Justice Department and amazon is facing antitrust complaints from german booksellers. We will see what publishing means and the future of books next on on Bloomberg Television, streaming on your phone, your tablet, and bloomberg. Com and now available on apple tv and amazon fire. Bloomberg west, i am cory johnson and this is bloomberg west. Apple settled up book distributing lawsuit last week and now is turning its focus to its appeal of a july, 2013 ruling in its big dispute with the Justice Department. Ebookto do with a fixed prices. Apple appealed the ruling in february calling the governments arguments absurd and fundamentally flawed and now apple is expected to release and a brief on the case today. Amazon is also facing a big push back from antitrust regulators around the world. What does this mean for Digital Publishing . Its good to see you. Tommy about smash word. Book publishing platform with 100,000 authors. The books andload we distribute them to leading ebook retailers. Amazon . Very few to amazon. They love to boast about the books that are published outside traditional publishing but they ave a huge dispute with cahette. What is the effect of this dispute with chachette have on the rest of the industry . It has had a big effect on the biggest will come down the line once the dispute is settled if its settled. These two companies are fighting for the future of publishing. There is a lot at stake here. Amazon is looking to squeeze cachette and get payments for coop dollars and cachette is trying to hold the line of preserve their margins. Specifically, its interesting that there are you just think amazon takes a cut but they sell little pieces such as what i heard in the last couple of days is that they are trying to exact fees for placement in the store, coop fees, fees for preor button so you can put your book on preorders. Socachette would have to pay more for that. Thats right. At the same time, amazon is trying to get a bigger cut of ebook sales. Weve got this model for ebooks selling at retail called agency were publishers typically keep the retailer takes 30 and publisher keeps 70 and the polish on the publisher sets the price and amazon does not like the agency model. If they dismantle the model, they succeed in being able to take a larger margin from publishers that puts the future of large Book Publishers in jeopardy. Why cachette . T was fascinating to read about the way publishers met in secret and restaurants in new york city and come up with a plan to conspire against amazon. Ishachette very different in this regard . We should state that the socalled conspiracy is only alleged. The publishers were forced to settle at gunpoint. If they did not settle, they faced damages, they faced annihilation of their business. They could not afford the risk of going to trial so they settled. Apple could afford it. Yes, apple could afford it and apple believes, as i believe, that they did not conspire. Apple came to market with a superior Business Model that appeal to publishers and allowed publishers to set the price of their own books and gave publishers control over their destiny. Amazon did not like that. The Justice Department took that as a conspiracy and came down on all of them. Is fighting it and they will appeal it and hopefully take it all the way to the Supreme Court and i hope it prevails. This really was the publishers struggling to respond to amazon and their strongarm tactics. You can see amazon trying to do the same kind of things like in the supermarket model. For payments of where you would appear on the shelf. Definitely, amazons model is all about taking margin and putting the pressure on the suppliers to cut costs. That works in many businesses but it does not work as well in publishing. Ironically since thats where they started. Publishers created amazon and publishers created the amazon problem. Amazon is now commoditizing book of pushing and saying that all books aree interchangeable objects and it does not matter what the consumer buys. Pressure onting the the publishers to give them terms they want. Faces a bigrs now decision will they give in the amazon terms or are they willing to pull the Nuclear Option and pulled her books from the stores . Think the publishers need to quickly diversify their retail distribution so there not so dependent on amazon. Amazon has shown not just they are predatory but a lot of publishers are starting to see amazon as arrested dog, someone they cannot do business with. Rabid dog. They feel amazon will destroy the business. Trying to alienate all the Book Publishers in the supply chain. Very interesting, thank you for being here. At t and directv executives are in the hot seat defending their proposed merger to congress and we will show you how they say the deal will benefit consumers. You can also watch us on Bloomberg Television, streaming on your phone, your tablet, and bloomberg. Com and now available on apple tv and amazon fire. Bloombergback to west. Google is testing the domain registration business doing an invite only test on its site. Is tankingeb. Com today. Will offer domain registrations for 12 annually with free privacy. Most companies charge extra for web privacy. Ceos of at t and directv are testifying in backtoback hearings before Congress Today about their 48 billion proposed merger and megan hughes is on washington. What are these guys saying there . From thee are hearing executives is that this will be a good thing for consumers. At t Ceo Randall Stephenson says this will allow them to offer bundled services if thats what Consumers Want and that they will be able to compete with the big cable providers. Here are a couple of stats content costs would be lowered by 20 for subscribers. He said it would mean 1. 6 billion dollars in cost synergies over the first three years. Broadband extension would be extended to 15 million areas especially in world areas. Directvs Michael White says this to me, the exciting thing about this is not just the commitment we make today but the fact of at t having a profitable video business will support them to continue to invest in increasing speeds and broadband which we know thats where the future is going. Expansion has been a top priority for many lawmakers. We heard that being brought up over and over again today so that is a sweetener. Another sweetener and proposed merger is at t promising they will abide by 2010 Net Neutrality proposals from the administration. They dont have to but they say that is something they will do it this deal goes through. What do the opponents of this deal say . We are also hearing from consumer groups, representatives from smaller cable providers who are against this deal testifying in the earlier hearing today. Consumer groups are arguing the opposite. They say this will put upward pressure on pricing. They are focused on pay tv. There is some overlap because at t does provide Video Services in 21 states. Directv provides Video Services across the country. There is some overlap and they say it will mean higher prices specifically to pay tv. Piece by fredreat hickey last month and he talked about all the places we see inflation that are not measured by the commerce department. Cited cable tve and how much those fees have risen. Is that something that has resonated with lawmakers . We are not hearing a lot of specific opposition from lawmakers or specific concerns when it comes to this deal. We hear some very broad statements of concern about the general landscape of these megamergers specific to telecommunications. It does not really have to do with paytv or content providers as much. We hear more questions about rural broadband, access for rural areas, unions and what this means for workers, those sorts of things. Does not seem there is a lot of direct opposition to this deal as much as there is general concern about this year of megamergers we are in. It sounds like they are having this hearing in 1982. Its worth mentioning we have another hearing coming up on the senate side at 2 30 p. M. Eastern and we will year from senator al franken who is a big proponent for the comcast time warner deal. We may hear more from him this afternoon. We can only hope. Thank you very much. Google io kicks off tomorrow but what will be unveiled at their annual Developers Conference in San Francisco . That is next on bloomberg west. It is 26 minutes after the hour which means Bloomberg Television is on the markets. We are at huge session lows area of the s p 500 is turning lower by 1 10 of one percent and the nasdaq is impoverished is in positive territory. The data has been better. New on sales is up the most in 22 years. The stock market is not listening so we have a lot of headroom at the moment. A couple of stops to stocks to look at the Pharmaceutical Company ce rtex is up. Bloombergwatching west. Google is kicking off its annual twoday developers concert, google io tomorrow. Designers and developers and marketers will be involved with the apple operating system the google operating system. Ofre is a possibility products being announced. What do you expect . I think the key thing for google is you want to hone the developers efforts and focus on certain areas. Will it be chrome or android or mobile or wearables . These are the areas where google has had stakes in Hardware Software combinations. The key thing for me is the three messages i want to take away. There is 10 or more. What are the three areas i want to take away . Wearables is an area of interest. I want to see some new developments there. I would like to personally see something in the automobile area and i want to see advancements in all of their current product platforms. I think how why do you want to see that . Why do you want to see them active and wearables . Its an area that has attracted a lot of buzz and you want to also see something that competes with apple from a competitive standpoint. I want to see what they can do in this industry if they put their minds to it. I know what are the highlights of google i o is that i get quality time with you tomorrow. What do you see . The one story that will probably happen is wearables because we are awaiting the launch of the apple smart watch and the fact that google is ready to go. That got there androidwear software and smart watch partners ranging from lg to motorola to samsung so they have an opportunity to get in front of those developers and say get to work. They will need those developers on their team to really make a difference or make google part of this Big Conversation of where smart watches are going. They can spend time talking about the power of android in butr areas and they will they have already defined a smart phone market. In the first quarter, android was used in some way, shape, or form on more than 80 of the phones that were shipped. I have to think of the next categories and i think thats what people are focused on. We saw samsung announce a fitness band demo a couple of days before the last apple announcement. Do you think we will see a lot of partner products or partner potential products . That is a great question. How they approach and position the product will be key. It could be an android wearable made by samsung or a Samsung Wearable that has android on it. Theres a subtle difference in the two and how they market it will be a big piece of how the roddick is positioned. How the product is positioned. There is a significant amount of integration going on between the various operating systems that apple has. There is subtle integration facets. The ecosystem is coming together. Wearablesd and the are positioned on the competitive side will be important. In terms of tomorrows big show, do you expect a lot of buzz from developers . Everyone has been so google glass. That was the real excitement factor couple of years ago when sergei brin was making a big splash. He parachuted into the event last time, two years ago. He didnt but he got us excited about watching somebody do that. Thats good delegating. Function. Tive there you go. Google glass is really controlled by google right now. Youve got android which is this world that is shared. If they are pushing ahead with software for smart watches under the android label, how does google glass connector that . You will see a lot of people wearing google glass and they will have those questions. I dont think google is ready yet to talk specifically about how those two different wearable categories could come together. I think people are excited to talk about that. Jon will be in San Francisco tomorrow for google i o. Sprint has raised the stakes in his battle with t mobile. They say new customers can now drop their Service Within 30 days with no penalties. Its in response to a new team mobile promotion that gives you a seven day trial period. We have alex sherman here to talk about it. To t mobile shaking things up. Mergerlong rumored theoretically between sprint and tmobile and you look at what is going on here, t mobile starts the ball moving with this seven you to try, allowing out the t mobile phone and the t mobile service or seven days and deciding whether you want to buy it. Sprint comes forward and extends that to 30 days. You wonder if regulators are looking at a deal down the road and they are seeing the number three and four company competing like this and pushing the ball forward toward consumer friendly plans. Why would they accept the merger . Right now it seems like the two companies independently are doing a good job of moving forward in a way that at t and verizon are not. You put those companies together theoretically, you can make an art that those companies will not have the same competitive back and forth and maybe things will start to stagnate from a consumer Friendly Point of use of that is a hurdle these companies will have to address it they come together. Going from the one night stand to the seven night stand or 30 night stand, thats a great. And or smit. Endorsement. Hearings are going on right now about the direct tv at t deal. You wonder if these deals will get approved. That sprint t mobile is the biggest longshot of the three but there is a strong case to be made that if youre going to strengthen at t by adding directv to it this is the case that sprint and tmobile will put forward if they go ahead with the merger which could come in august they will say we are little companies compared to this giant at t that making it even bigger by adding a 50 billion company onto it. If youre going to let that deal go, you should let our small deal go. If we cannot compete now, we certainly arent going to be able to compete if you allow at t to buy directv. Regulators will have to have multiple things going on in their heads when they decided they should let all three of these deals go or block all three of them or let to go and block one of them. It will be a cop looking at picture for them later this year and early next year. I was in seattle last week and i spent quality time with john legere into the wee hours of the morning. This a lot of people at party at the macklemore concert and they had worked with him for many years going back to global crossing. One of the takeaways is that this is a plan on how to really shake up the Telecom Industry and draw customers to t mobile, the fastestgrowing mobile carrier out there. I wonder if they have a planned response as well. You would have to imagine they do. This speculating backandforth might make things more difficult but you would have to imagine that if the merger will go forward and by all accounts it is, that they have a plan and maybe they will say that if you put us together, we will have a 69 stand. They have some sort of thinking here. There is no question that Deutsche Telekom is pulling the strings and were that john legere will be the ceo of this new company so theres no doubt that he is involved in the discussions. Hes involved in the strategy and you can make a case that john legeres entire persona has them a plan the last couple of years. A used to be a buttoned up guy and used to wear a suit and be a normal executive. Bs and drops fbom swears all the times of this could be part of his plan. They probably want to make this the un carrier on steroids. Love is in the air with alex sherman thank you. Following the bread crumbs left by private faces a daunting task but it might help investors tracked Young Companies in real time and we will tell you about a company doing that next on bloomberg west. Welcome back. File of Public Companies stock chart for private companies are an enigma to use in Artificial Intelligence to create a database on or hundred thousand companies, data fox unravels the mysteries of private companies. John ott joins me right now. You showed me the company a few weeks ago. Outs really hard to find details about most businesses out there. We cover the startups and finding out who they are and who they compete with is difficult. There is not a lot of information out there. Int which is out there is disparate sources. How can you possibly get a sense of how this works . You work at Goldman Sachs a long time ago. What was your job there . To invest in private companies out of the european office. What was the process to find those companies and find out what was what . My managing director could walk up to me and say weird egging into this sector or this ,ompany such as data centers tell me about the biggest 20 data centers and western europe or the United States and which ones should we contemplate an investment with. About findingst all the dry cleaners in San Francisco . Usually high growth tech enable businesses. Some information is collected and databases would pay for access to. Like Dun Bradstreet . Thats a good example. There are great public filings that are very difficult to mine information out of. There is a lot of great information in press relations press releases and news articles which is unstructured content. You cook this up out of Stanford Business school . I teamed up with a friend of mine at stanford. They focused on getting information out and my other cofounder and myself worked in finance a we knew what we wanted out of a product or it i want people to see this. I think the idea is interesting. This merger 90 million goes into this company, where do you find this in your database . It was a company that no one had ever heard of unless you were a customer. We pull up this information that we are wholly cap from hundreds of different sources and pieces of content. You did not have someone say do a report on this . Didnt touch this so grab information from this content like press releases and their own website. Are able toay we find out who they are and who their competitors are. Instead instead of having an analyst to this annually, we already added here because we know though words they are using to describe itself online and we look of the other 10 businesses that describe themselves in a similar way. I showed you this conspiracy theorist and you found a similar graphic approach. Of sector this list comparisons, companies related so by visualizing this, instead of having a dry list of companies related to the business, we can see who the big they have a big relationship with ibm. Yes. It tells you how many connections happen . Its weighted how similar ly they are described and how they describe themselves. You can actually open some of these notes. Rather than having just a discrete sense of what the landscape looks like, you can now start to see that this is a virus per section and this one does solutions. You start to get a sense of where this company resides in its own universe. They might be worthy of an investment. Who are the future partners or threats or who might acquire this company . Your business is quite young. The ideas can be so original. What is your Business Model . How can you get revenue or profit . How dataoes against businesses have been built up especially when it comes to private Company Information because it has been such a manual process. Dun bradstreet has dozens of people sitting in the far is doing this stuff manually. We are doing it automatically. We have a team of seven people and have profiles like this, 400,000 companies, that allows us to sell subscriptions a much lower price point than where Dun Bradstreet comes in. Who would be a likely customer . Initially, we thought it would be Investment Investors and bankers. Found that a lot of large fortune 500 and other Big Companies try to keep tabs on the landscape. Businessesand able that might be challenging them are major groups that are interested. I would would imagine lead generation is huge. Thats the work i used to do at Goldman Sachs. Everyone is looking for the next big thing, a company that might be disrupted i or they should tag along with. Interesting stuff, data fox. Whos going to win the world cup . Im from the netherlands. They are doing all right so far. Thank you very much. The Supreme Court decision as early as this week to change the way we watch tv. We will claim that next on lumbered west. Be sure to turn tune into bloomberg tv tomorrow a special coverage all day on the clinton global meeting in denver. We will have bill clinton at 11 30 a. M. Eastern on ways to improve the nations economy. America all day tomorrow on bloomberg tv. Welcome back to bloomberg west. Byte is one number that tells us a whole lot and Jon Erlichman as that number. I have 2 billion as in 2 billion. By 2020, its that will be generating upwards of 2 billion from annual retransmission fees. To give you context aware that number is now, a wall street brokerage estimates this year that number will be in the 600 million range. Those numbers are climbing because the pay tv providers like comcast and directv are paying more and more to cbs to carry the network. The reason we want to focus on this number is because we are waiting for a decision at the Supreme Court level in the battle between the upstart aereo which does not pay the broadcasters as it broadcasts their signal versus the broadcasters like abc and nbc and cbs. Is victorious, we have no idea what that will happen and you have to wonder what that means for the billions of dollars of retransmission fees going to broadcasters. From one of a story our colleagues about the nfl and that they could be hurt a ruling for aereo. I get it because of cbss paying directv are getting paid by directv, they may not see those revenues. Thats an excellent point. Technically, this more than just a broadcasters against aereo. Sports guys are concerned about this. Is victorious, what does that mean for the broadcasters . Ceo says we will move from being a broadcast network to being a cable channel. The power ofave espn where a lot of the world cup action is taking place. Asuppose you could be moving lot of the sports content that is currently on the broadcast networks to the cable channels. Thats one of the many moving parts we will have to keep an eye on as this unfolds. The broadcasters have certainly cried wolf enough time so you wonder what theyre math is like and how much pain they will feel. Absolutely, i think aereo does not have a plan b and broadcasters dont have a plan b because they all have different interests. Cant wait to see you tomorrow so thank you very much. You can get the latest headlines all the time on your phone and tablet and bloomberg. Com and on bloomberg radio. We will see you on bloomberg west tomorrow. From bloomberg World Headquarters in new york, i am mark crumpton. This is bottom line. President Russian Vladimir Putin revokes the mandate to use force in ukraine. Then, bloombergs exclusive interview with alan mulally afford. Lebron james test the free agent market. To our viewers and the United States and those of you joining from around the world, welcome. Full coverage of the