Transcripts For BLOOMBERG Best Of Bloomberg Technology 20170903

First to our lead, the worlds most valuable startup may be going public sooner than we think. The incoming uber ceo met with his new employees wednesday and thinks the company should go public within the next few months. He also outlined some of his Top Priorities at the job, including coming up with a new set of Core Principles and bringing in a new chairman to help implement the agenda. Ubers comm team treated out some of his remarks, saying the company has to change. What got us here is not going to take us to the next level. In addition to taking the ceo chair, he will likely get a seat on the board, opposite chairman Travis Kalanick. Meanwhile, Travis Kalanick has already expressed interest in returning to a more active role in the company which could create a potentially awkward dynamic that khosrowshahi will have to manage. In the meantime, it was all smiles at the new Board Meeting as Arianna Huffington shared this. We spoke with our bloomberg tech reporter, Eric Newcomer, and our global head of technology to find out what else happened at that meeting. There were sort of some jokes celebrating travis role at the company. Saying what got them to this point is not what will get them ahead. Obviously, this conversation about the ipo. 18 to 36 months seems very far to me. It is a distant thing with lots of hurdles in the interim. But this is a guy, khosrowshahi, who has run a Public Company for a long time, so he understands the importance of going public at some point. Emily what do you make of the show of camaraderie . The all smiles, the hugs . I think it is more than just what was said but also how it was said. This is a showing of unity. Ryan graves, one of the cofounders, was there. Travis was there, shedding tears introducing dara. Other Board Members were there. Perhaps not everyone on that very contentious board, but it was definitely a message sent to employees, drivers, and the media and their customers that they are trying to send, that these dark days are over. They want to hit the reset button and get out of these headlines a little bit while repairing damage to the brand. Emily travis says he wants a more active role. Travis is obviously very emotional about how this has unfolded. Do you think that person could be travis . For now, i would say no. The board approved an independent chairperson, which would be someone outside the company. They would have to reverse themselves there. Emily what role could travis take on . I think advisor could be the role for now. It is not clear if you will get more than that. Remember, this is all tied up in litigation. The other news today, is that, the lawsuit in march, it is moving to arbitration. It is somewhat of a victory for travis. He wanted this to be resolved, but his status on the board and the two board seats he controls is very much still in question. Pending the outcome of that, i think we will see what type of influence he will retain on the board and operationally. Emily lets talk about that lawsuit moving into private arbitration. He was asking for it to be dismissed, which it was not. Shervin pishevar, another early uber investor, released a letter today. It was in delaware to speak with the court. Bear with me i just want to read a little bit of it. He is coming in on the side of travis saying, we are swimming in the crucible of one of the grandest business and moral battles of our generation, and we writes with the souls indelible, eternal and permanent ink of righteousness. We write with the souls of thousands of lives saved, the lives of millions of jobs created liberating multitudes of drivers from the shackles of servitude to iniquitous taxi cartels of corrupt cabals that choked cities with their pollution of air and morals. I am glad i got all of that out. What is going on here . Eric i think, shervin he is a big friend of travis, and he has a lot of passion. He wants to show support. He is communicating in his own way that travis has done good by creating uber, which he sees as a public utility which broke up the taxicab coalitions. So i think he is trying to frame it in perhaps an overdramatic way. The problem is not only that the writing is overinflated, but it comes at a terrible time. This was a day about unity, and he is drawing more attention to the divisions that still are there. It feels a little tone deaf. Emily what is the strategy . Is there a strategy here . Brad i think hes trying to muster public support for what he sees as still a divided board, but it does not really make the argument all that persuasively. What do you make of that 18 month to 36 month time frame for an ipo . 18 months is a bit sooner than we would have thought, right . Eric it is near enough to say that it is possible, but who knows . It is so far away that it is hard for people to get their heads around and take too seriously. So, i think it is kind of a nothing statement which sounds sort of serious. Brad this is a company that is still going very quickly but is losing per quarter. Of strategiclot decisions about where he wants to grow and where he wants to pull back with businesses like uber rush. He needs to give himself time. I think right now, this is just the proverbial heisman stiff arm to give himself sometime while he figures out what is going on. Emily bloombergs Eric Newcomer and brad stone. A little later in this show, we will hear from the man who replaced Dara Khosrowshahi at expedia. Next, we bring you our exclusive conversation with dell chair and ceo, michael dell. His thoughts on the future of the cloud, next. This is bloomberg. Emily google agree to comply with europes demands for the way it operates its shopping search service. The tech giant faced a deadline on tuesday to disclose how they plan to stop discriminating against rival shopping services. Google said it is sharing the plan with regulators but declined to comment further. If google did not submit a plan to the e. U. By the deadline, it would have faced record fines on top of its 2. 7 billion penalty. Oracle is hiring another 5000 employees for its Cloud Software business. The move is the latest in a backandforth between oracle and its main rival, salesforce. Last week, the salesforce ceo bragged he was on track to hit record revenue for this year, a goal oracle was trying to hit first. Las vegas played host to vm world. One of the tech industrys top Cloud Infrastructure and digital workspace events. I caught up with Dell Technologies chair and Ceo Michael Dell for an exclusive interview. I started by asking what he was most excited about. Take a listen. Michael what we are seeing is the emergence of this sort of multicloud world. Customers are figuring out that cloud is not really a place but a way of doing i. T. They are modernizing, automating their existing infrastructure, and they are also leveraging the public cloud and other services and software. Vmware is incredibly well positioned, with their innovation they are creating to enable the new connected future, and do it in a secure manner. Emily when you say multicloud, you think public and private. You think hybrid cloud is the way the future . Michael i think customers are adopting i. T. In a hybrid fashion. All the customers we talked to are already using many different modes of i. T. And when you imagine forward to the future of an enormous number of connected devices as the cost of sensors comes down, you are actually going to have a distributed computing world that is far more vast than what we have today. Emily talk to me about some of the partnerships. Vmware partnered with amazon a year ago. They made it official. Vmware also partnering with google. What is the impetus to partner with what could be considered your enemies . Michael the partnership to us was about bringing together the number one private cloud with the number one public cloud. That gives customers great flexibility to leverage their Vmware Software and capability on a public cloud environment. That is great. With google, we are bringing together pivotal and very developerfriendly capabilities that pivotal has brought to half of the fortune 500 with kubernetes, a cloud operating system, put in the open source community. And bringing that to the 500,000 plus customers that vmware has in a secure manner. That is creating a developerfriendly infrastructure that allows companies to develop these next generation apps, put them in containers, and deploy them on premise or in the public cloud. This is exactly what customers are asking us to do. Emily do you have any concern that these public cloud owners could steal your private Cloud Business . Michael what i see is that when new things happen in the industry, if they are good for customers, if you stand in the way of those, you do those at your own peril. Just like when vmware just came out when it was a tiny company, when it was just starting, dell was the first server vendor to embrace vmware. Yes, we sold fewer servers at the beginning, because you could virtualize the server. But we ended up selling a whole lot more servers than we ever imagined, and now we ended up number one in the world in servers. We have been growing in double digits and since doing very well. When customers want different modes of i. T. , when they want the public cloud in addition to the private, it is important for us to listen and bring those capabilities to our customers. Emily so when it comes to the amazon deal or the google deal, how can dell, in particular, more broadly, use that deal . Michael vmware and pivel are both parts of Dell Technologies. Certainly combining all of our sales force across the company, all of our channels, we will be bringing those capabilities to all of our customers. One of the things that we have seen in the combination is this idea that customers actually do not want to have more partners. They want fewer partners. And by bringing number one in everything all in one place to our customers, we have seen really a fabulous response. Revenue synergies is greater than we thought, faster than we thought. It is because we brought this broad set of capabilities. As i said, dell emc, vmware, go together like Peanut Butter and chocolate. Emily our exclusive interview with dell Ceo Michael Dell. On monday, amazon spent its first day as the owner of whole foods cutting prices by as much as 43 . Markdown items were seen with orange signs, reading whole foods and amazon with the old and new prices listed. In a sign of how the retailer is changing, the amazon echo was also on sale for a company that is traditionally known for kale. We spoke about this with Olivia Zaleski and james cakmak. Olivia lots of price cuts, we can see them on bananas, we saw them on lean beef, Peanut Butter was a big one. Emily avocados, that is all i want to know. Olivia you care about the avocados . They were down a dollar. My favorite, rotisserie chicken, was down five dollars. Which is a huge price cut. Emily was it crowded . Olivia it was. It was really crowded. I spoke to people who held off on their shop because they wanted to go to the monday i wanted to go monday to get to big savings. Emily interesting, james, that you would see amazon echos in the store. Do you think people will be buying these at whole foods while they are Grocery Shopping . James buying the echos . Emily yeah. James possibly. I do think the echo was actually the First Successful entry into the living room. We are seeing it trying to be copied by google and apple, not as successful as the echo. But when you think about the whole whole foods transaction for amazon, this is just another point to underscore the deflationary impact you are seeing from amazon across all of retail. As you increase the pledge point with the customer, especially as it relates to grocery, i think the opportunity is not just limited to the grocery here, but Bigger Picture into restaurants and prepared foods, and all the way down the supply chain, i think you will feel the effects. A big win for amazon to get this deal to be approved by the sec. Emily within the grocery business, how do you see grocery competitors responding . Whether it is cosco or walmart or kroger . James i dont think you can. The problem is the Business Models are so different. What amazon has the opportunity to do is operate at a target 0 margin. They are able to do that because all the fact that their business is subsidized through the cash flow proceeds from awf. There is no grocery that has that luxury, and no retailer that has that luxury. That is why you continue to see a deflationary impact from amazon. I think as you look longterm, this grocery is a massive step toward capturing an even greater part of the broader economy. Emily coming up, another bloomberg scoop on the next iphone. We will tell you what new tricks ceo tim cook might have up his sleeve when he gets up on stage later this month. This is bloomberg. Emily one of the Worlds Largest drone manufacturers is making a security push. Dji will pay around 30,000 to anyone who finds flaws in the software. The dji Threat Identification Reward Program comes after the u. S. Army ordered personnel to stop using drones made by dji due to security holes. Dji says the program was used to protect users private information. Apple has set september 12 for its most significant new Product Announcement in years. Last week, bloomberg was a first to report on several new features, including a facial Recognition Software to unlock your phone. They are also planning to eliminate the concept of a home button. That is according to people familiar with the gadget. The move would mark the biggest interface change in the iphones 10 year history. Our bloomberg tech reporter mark gurman brought us his scoop. Mark i think iphone users will be very excited about this new phone. Obviously, they have been working on this phone for a long time. Trying out a bunch of new features to make a big splash for the products 10th anniversary. The biggest change, they are getting rid of the home button. It will not be a virtual home button. It will be a new system based around gestures and thumb control. Emily the home button is actually staying on the seven plus, or the seven s plus. They are not going away completely. Mark there will be three new phones. Two of them will have the current design of the 7s. The big changes are happening on the higher premium phone. Emily what else did you see . There are design changes, the screen is taller. Mark what some people dont get is the new iphone will be significantly taller. It is able to fit more content. You will see more text message conversations, more of maps, webpages, other applications from the app store. A big change to the screen. Emily talk to us about what is going on with toshiba and the the chip unit and apples interest in that . Mark apple is always looking for new ways to get components for the lowest cost and the highest quality. They have done so many deals. It is called nand chips. Is an absolutely critical component to the iphone, just as the screen or the cellular reception modem is critical. They want to be able to get as many of those, and obviously, toshiba does great work on chips. Emily what does this mean for apple in terms of performance and supply chain issues . Mark probably little in terms of performance, because man chips are pretty much on par with Storage Capacity and speed. Having more suppliers gives them more leverage. Emily do we know anything more about when we will see this new phone in person . Mark yes. Midseptember is when we understand this new phone will be announced. Emily our bloomberg tech reporter mark gurman there. Apples success this year helped push ceo tim cooks compensation to new heights. Less week, cook was awarded shares of apple stock valued at 90 million. Cooks total surged to 150 million last year, compared to 72. 9 million in 2015. We spoke with anders who wrote this for bloomberg news. He spoke with Caroline Hyde. When he came to the ceo role, apple said, ok, we will give you a massive stock of stock that he will get two increments for 10 years. It was worth about 370 million at the time. A couple years later, it was restructured and split up over the years. Cook, in a typical year, he can collect about 280,000 shares as long as he remains on the job and another up to 280,000 shares if apples share price beats at least two thirds of the companies in the s p 500. They did so in the past three years, so he corrected all those collected all those shares. Caroline i am looking at the pay go function in the bloomberg. You can see how he is really high flying. He is number two at the moment in terms of where he stood previously. Talk to us about how tim cook stacks up versus the rest of the tech ecosystem with the new conversation . In the bigger scheme, it is almost absurd that even tim cooks figure, which is really, really high, does not hit the ceiling when it comes to pay in the tech sector. We have seen mark lore at walmart, who is north of two 200 million in 2016. Prior to that, we have sundar pichai, who also every other year, he gets a big stock grant from google. So even though apples cook gets quite a bit of money, he does not tend to be up at the very top. Caroline nothing like m a. Talk to us about whether or not this will be sustained . Will we always see tim cooks compensation tied to the share Price Performance . Should it be tied to another critical measurement . Revenue, for example . That is a frequent debate among pay consultants and people in the boardroom and the executive suite. Is it share price really the best measure of corporate performance . Because some people say perhaps you should focus on other internal financial matters, such as revenue or product development, which will, in turn, drive share prices. Share price being the ultimate goal, but perhaps not the journey to get there. The way apples award for cook is set up, it is tied to share price. The board can change that. But it has been successful both for shareholders and for cook himself. So i would not say that i see any change is coming in the near term, but who knows. Caroline and how does it fit with those who work at apple, with the general public . Im speaking from london, where there is so much handwringing and government pressure and public outcry when you see ceos being paid significantly more than the average person on the street. How is it being absorbed in america, where it is a little more land of those that can make it . Anders making a lot of money is not seen as a bad thing in the United States of america. We know that. Cook actually did get a bit of pushback for his compensation when he first signed on and got this large 370 million award. It was actually at cooks request that part of these shares were tied to the companys share Price Performance. And if the shares dont beat at thirds of the companies in the s p 500 than he gets fewer shares. Emily that was bloombergs anders melin. Coming up, bitcoin prices have been hovering at record levels once again. We take a deep dive at what is driving the crypto craze next. A reminder that all episodes of Bloomberg Technology are Live Streaming on twitter weekdays at 5 00 p. M. Eastern. This is bloomberg. So new touch screens. And biometrics. In 574 branches. All done by. Yesterday. Banks arent just undergoing a face lift. Theyre undergoing a transformation. A data fueled, security driven shift in applications and customer experience. Which is why comcast business delivers Consistent Network Performance and speed across all your locations. Hello, mr. Deets. Every Branch Running like headquarters. Thats how you outmaneuver. Emily welcome back to the best of Bloomberg Technology. Im emily chang. Cryptocurrencies like bitcoin and ethereum have been surging this year, causing interest in Digital Assets to spike. This week, we took an indepth look at the rise of virtual currencies. We began by looking at what has made the market so volatile. Caroline hyde reports. Caroline cryptocurrencies are in the midst of a record heading run. Bitcoin, as close to a household name as you can get in cryptocurrencies, have shot up over 350 so far this year. In fact, it jumped from just over 1000 at the start of the year to over 4500 recently. Ethereum, number two in the digital money market, is on the move as well. Camilla we see Companies Across all industries looking to see how they can use this technology. Caroline it is not all smooth sailing. Just look at a recent 30 day snapshot in bitcoins price, and you can see a roller coaster. Last year, bitcoin plummeted 13 after hackers stole 65 million. This year, ethereum also fell on hard times. Camilla we have to remember that this technology is still pretty new. That causes there to be glitches along the way. Caroline even with volatility inherent in these new currencies, there are still plenty of promising opportunities. There is a growing mainstream acceptance. Big investors like mark cuban are already throwing their weight behind cryptocurrencies and the Block Chain Technology that underlies them. We are even seeing more Financial Institutions, such as fidelity, and Retail Investors embracing virtual currencies. If the sec approves the first bitcoin electronically traded fund, it will make it easier for the everyday investor to jump in. Bitcoin has also soared past the price of gold for the first time this year. But given we are not four years removed the bitcoin crash of 2013, there might be one sure bet you want to make when looking at cryptocurrencies. And that is to buckle up. Emily Caroline Hyde joins us live from london, as well as Roger Mcnamee, cofounder of Elevation Partners, a private equity firm that invests in private intellectual property. Great to have you on the show. Highs, lows . Bitcoin are we in a bubble . Roger i would think we probably are. I think it is important to distinguish between cryptocurrencies and the Block Chain Technology that comes underneath them. To me, the thing about cryptocurrencies is they really are not currencies. They are really commodities, like soybeans. They are things that people trade to create a return. Emily what does that mean about the value . Roger it means it will always be volatile. It is volatile by design. Currencies, by definition, need to have stability. If you look at this and think about it, it is more like trading gold futures or oil futures. Those are going to be inherently volatile. Yes, there is something very valuable underneath them, but you would not use gold futures to pay your mortgage or your childs college tuition. Emily so you think if you own bitcoin now, does it have longterm value . Roger it is too early to know. Structurally, these things do not seem like they can make the transition to become real currencies, but i am not sure that matters to investors. I think they are in it for the volatility and the return. And that may work out, as it has for a lot of people. But i do think we are not done with the sharp drops, and i think there are enormous structural issues. There are thefts of the cryptos here, there, and everywhere. That, i think, is going to continue. The whole concept of the role of miners and the fact that these are adopted primarily by black and gray markets, suggests it confirms my basic notion. Which is that these are far from mainstream currency options. Emily you mentioned people getting robbed, the number of complaints about calling base, the biggest cryptocurrency exchange, has gone from 600 to 300, and we are seeing so much more mainstream acceptance. Give us some examples of how we are seeing Mainstream Investors embrace this. Caroline i think that is what is so fascinating. It is indeed the likes of fidelity, one of the biggest Money Managers, they are mining bitcoin themselves. They themselves are looking to be getting into this as an asset class. We are seeing banks between the cryptocurrencies and Block Chain Technology that is shared recordkeeping underlying it. The actual technology, six banks today joining a project which is called the utility settlement coin. They are building their own coin. It will be available by the end of next year. Why . To make Financial Transactions that much easier. Clearing settling. This is why they want to introduce this technology. Not, perhaps, as a store of value, as we are seeing bitcoin become. That is what is so interesting. We saw the split in bitcoin. Into bitcoin and bitcoin cash. Really at the heart of this is what is bitcoin . A socalled haven, when you see a flight to value. When you see concerns about north korea, for example, gold shoots up. As does bitcoin. Or does it become a payment mechanism . Do we need to start to see improvements in the size of the transactions . This is how much bitcoin is beating gold. What is interesting is talking about the flood of investors into this market, you are in for a roller coaster ride whether you hold the actual cryptocurrency or you gain exposure. Check out my bloomberg at the moment. Going into g btv 3994. What do you get . A crypto roller coaster. You see in the white line, Bitcoin Investment trust. This is where Money Managers have been pouring their money, who do not want to buy bitcoin but they want exposure. On the bottom half, we see the 90 day volatility of that Investment Trust is more than three times the volatility of bitcoin. Whether you want to be overall, it seems you are in for a rough ride, whether you have a cryptocurrency or Investment Trust. Emily if you look at the run up in bitcoin, it is dwarfing the runup before the tech bubble, the housing bubble, roger, is that a concern . Roger only if you are long on bitcoin. If you have already taken your profits, youre sitting there, not a problem at all. When you talk about 170 billion interest in this category, that is why, you see banks and others coming in. Why are we having this segment right now . There is a lot of interest in it. The trick is, at least for viewers watching this, is to separate the commodity of bitcoins from the notion of a cryptocurrency. A currency needs to have stable value. I dont think you will get there from this. Then, the third piece, this is the one i am excited about, is the underlying Block Chain Technology. There are a lot of reasons why people would like to be able to do highvolume financial and information transactions at a low cost with privacy and security. Block Chain Technology offers that promise. I think everyone is excited by that. What i would love to see is of these banks or Financial Institutions actually try to create a currency. Try to create a stable store value that would rival a national currency. That is the Promised Land that so many people are hoping for. Emily when it comes to block chain, there is talk that it could revolutionize not Just Financial Services but real estate, giant technology companies. Roger and sale of information. Emily where do you think the block chain could be the most revolutionary . Or is that an exaggeration . Roger too early to tell. To me, what is exciting about it is it is like the internet before it. It is a distributed system where scalability is not a problem. With the scale of markets you have today, if you take that off the table as an issue, you can apply it to almost anything. Now, what remains to be seen is which markets will find this most appealing. And in its current state, the answer is only experiments. Consumers are not yet interacting with this regularly. But a lot of money has been raised. We are going to run that experiment and see. I look at this and go, to me, that part is really, really exciting. It makes it worth going through what i think is going to be further issues around the socalled currency part of this discussion. Emily that was Elevation Partners cofounder Roger Mcnamee and bloombergs Caroline Hyde. Coming up, Mark Okerstrom talks about his plans for the company, including a possible partnership with uber. emily as we discussed earlier, this week saws uber ceo Dara Khosrowshahi move from being expedia ceo. The Online Travel company did not waste time. They promoted the chief Financial Officer to the top job. We spoke with him a day after accepting the move. Mark these things, you talk about them for years. Somewhat like a sports analogy, you prepare the team for a big game. Suddenly, you get a call on sunday night, and the game is tomorrow. It unfolded like that. We were already for this eventuality when it did unfold. I do not think it unfolded exactly how everyone had planned. But we are all happy expedia. We are all excited. We are happy. Im happy for the people at uber. I think he will do fantastic. Emily when it comes to you and your job, barry diller said no one else was considered. I know you and dara have worked together. What is your vision . Some things you might do differently . Mark as i said, i have been very involved in the Strategic Direction of the company for a long time. Dara and i have been lockstep in all the major decisions, as well as with barry diller. I dont have a long list of things im dying to change. We have a number of priorities across the company. Certainly becoming more international is one of the key priorities. I will be very focused on making sure we continue to expand globally. The transition that homeaway is a big priority. If i do my job well, it might go faster. Emily lets talk about that. You know how some deep ties to ubers new ceo. What are some ways you could Work Together . Like, perhaps, free uber rides for expedia customers . Mark we have talked a long time about possible ways we could integrate with uber, integrating with stuff like the homeaway app. Im hopeful that in the future now that we have a direct connection, the talks might be easier. Emily dara is walking into an incredibly challenging situation. An ousted founder who still wants a role in the company. Lawsuits. Difficult board dynamic. We have heard a lot about he can deal with difficult personalities. Tell us more about why you think he has what it takes to take on some of these personnel challenges . Mark i think above all, dara has one of the highest levels of Emotional Intelligence i have ever seen. He knows people. He is humble. He listens. And i think, above all, dara makes people around him better. People want to be around him. People want to think like he does. He is a great role model, and he is a man of high integrity. He values diversity, gender balance, he really stands for a lot of the great things that, from what we read, may be lacking at uber. So i have 100 confidence that uber will be a much Better Company under daras leadership. Emily information retracted a report that you were going to uber with dara. But there is a point that dara has a lot of executive positions to fill. Are you concerned that a number of expedia employees will follow him there . Mark i think we feel very good about our executive team. We have, i think, one of the most talented executive teams out there. We have been together for a very long time. They are really excited about the prospects around expedia inc. They are highly engaged. They are highly committed data we have been working together on a strategy that we are not yet done, so there is lots of work yet to do ahead of us. I think we feel pretty good about our team. Emily that was expedias new ceo, Mark Okerstrom. Coming up, vmwares roster of Cloud Computing partnership grows. And if you like bloomberg news, check us out on the radio. You can listen on the Bloomberg Radio app, bloomberg. Com, and in the u. S. On sirius xm. This is bloomberg. Emily south Koreas Samsung is investing 7 billion in flash memory chips. The threeyear investment will go towards its xian plant. The chips business has allowed it to become more profitable than apple in its second quarter. This comes after a seoul Court Sentenced jaeyong lee to prison in a bribery scandal. Several new partnerships with the likes of google and amazon. I sat down with vmware to talk about Cloud Computing partnerships. Pat we have those conversations. We do not want surprises. Because we are trying to be thoughtful about our relationships with them. Ibm, we are also partnering with pivotal in that community. We go through all of those discussions, because it is important to us. Think about these partnerships like friendships. You know, i may do some things that you did not necessarily want me to do, but let me explain to you i dont want to surprise you. And maybe there are even opportunities for us to Work Together in different ways. That is how we approach working with our ecosystem partners. We say it is all friends. Emily are you concerned that this partnership with amazon, for example, could lead to them stealing your business . Pat absolutely not. If you think about it, several have asked that question. Customers, if they wanted to just move to the Amazon Service, they would have. It is not like the Amazon Service appeared yesterday. It is been around for a decade plus now. What customers have found is that to replatform my application, it is hard and doesnt give me a lot of value. Yesterday, i had the app, tomorrow, i have the app running on amazon cloud. I had to put a lot of work to get it there. That is the problem we are solving. We have customers saying you can now take advantage of cloud scale, cloud geography, cloud economics without replatforming the application. In many cases, these applications that we are now bringing to the cloud, they might have been curated for 20 or 30 years as they built those. Complex networks, security management, we now give them the easy button. Amazon is excited, because they have heard that from their customers, too. Emily it has been a year since the big merger closed. The biggest tech deal in history. What is it like for you under the dell umbrella . Pat when we announced the merger, michael and i got on stage. I said three words describe independent, ecosystem, acceleration. Independent. We are an independent company. We are governed by the board. Dell and silver lake happen to be our largest shareholder Emily Michael doesnt bug you too much . Pat of course he bugs me. He is the chairman of the board. But i managed are the board, and it is really the multiplicity of the board. He was committed to our independent ecosystem. And he is going to accelerate his business with us. A billion dollars of synergy. The independence is working great. The board is happy. Obviously, when companies are doing well, the board is happy. That is wonderful. Ecosystem. Think about the partnerships we have announced. Ibm, amazon, the hp announcement this week. All of those are not necessarily in the traditional view of dells best interest. But in my view, it is good for vmware and dell technology. The ecosystem is being supported. Finally, we raised our guidance for the acceleration. Last quarter we did that. Overall, we are seeing them sell more of our products and build more new products together. Overall, we are exceeding the expectations that we had a year ago when we announced the deal. Emily how is the networking business doing . Is it still growing as rapidly . Are you seeing meaningful competition from cisco . Pat networking is going great for us. The vision i laid out is bold in the sense that it is not just the data center anymore but between data centers, between clouds, we are stretching it to be an i. O. C. , into the core service, provider network, todays announcement into nextgeneration container. We are viewing it as a common fabric that connects these things together. Turning data centers into centers of data that have a connection across everywhere they go. Going very well. The relationship with cisco, they continue to view this that networking layer, we are in this hardware business, and what were finding is customers are running a lot of our Overlay Network on their hardware. That is great. Maybe half of our customers run in that way. But our vision is much bigger and broader than any traditional view of networking. That is why it is a thrilling period for what we are doing. Emily just a last question about security. I know you unveiled a new security product. How concerned are you at the level of threats that were seeing from cyberspace . Will the industry ever be able really get ahead . Pat yeah. And as i declared in my keynote on monday, i think we, the tech industry, have failed our customers in security. We have almost 2000 Different Companies in security. Mindboggling innovations going on, but there are so many products that are, as we are calling it, chasing bad. We need to think holistically in a different way to solve the security dilemma. We call it enforcing good. We announced new products. App defense is one of those. We said there are three things we need to do to fundamentally change the game in security. One is it is not about infrastructure. Infrastructure must, essentially, eliminate many of those products and make it secure infrastructure. Literally, products and companies go away. They disappear into the infrastructure. You cannot turn it off. It is always secure. Second, we must integrate into the core security ecosystem and automate, integrate, validate, so customers are not trying to put all these pieces together. We have done it for them. Third, enable consistent cyber hygiene. We have been involved with the u. S. Government. We had representatives and senators talking about cyber hygiene. They are introducing legislation. We laid out five cyber hygiene principles. That if you do these things, you will not be sony targets. The service area of those will be radically reduced, if not eliminated. Sort of like a great sports team. You practice the basics. The people who are practicing the basics and implementing these things consistently and well, we think we would eliminate a large portion, maybe 80 to 90 , of all cyber losses. We believe this is the right way to think about security in the future. We at vmware are stepping forward in a much bolder way in this regard, partnering with dell in our ecosystem. It is time to change the game in cybersecurity. Emily that was vmwares ceo pat gelsinger. That does it for this edition of best of Bloomberg Technology. We will bring you all the latest in tech throughout the week. Tune in each day at 5 00 p. M. In 2 00 p. M. In san francisco. All episodes of Bloomberg Technology are Live Streaming on twitter. Check us out on weekdays. That is all for now. This is bloomberg. Carol welcome to bloomberg businessweek. Oliver we are coming to you from inside the magazines headquarters in new york. Carol Hurricane Harvey in texas. 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