Joint News Conference at the white house where they stressed the importance of the special between the two countries. May is the first foreign leader initially with trump since the inauguration. He confirmed he accepted an invitation from queen elizabeth. May and mexicos nieto have put some of their differences over the border wall line them. Ne on a today on a arranged phone call. They held discussions on the trade deficit, Drug Trafficking to work together. Global news 24 hours day powered y more than 2,600 journalists and analysts in more than 120 countries. This is bloomberg. Bloomberg technology. Techs cloud addiction could drive a trill dollars into the sector over the next five years and well break down vmwares big quarter with the c. E. O. And as the International Space station floats toward retirement the startup of a private space station. Amazing. But first, the man for fort grow structure expected to dramatically. Big tech ll the companies, earnings, growth. More than a trillion dollars in or pending will be directly indirectly shifted towards the cloud over the next five years the company that went at least a rillion of that, microsoft, represented right here. Glad to have you here. Thanks. Well have a conversation. I really think this is truth, really re in this dramatic time in technology, where all the Big Companies articularly the hardware slingers are losing their business of selling stuff to companies because all of these ompanies are looking to the cloud but your company has made this dramatic turn where you had in e 15 of revenues all this cloud business. Look, were really excited about the results we just posted. What were more excited about is the momentum were seeing with the microsoft cloud. Track for our 20 illion commercial runway by fy 20018 and posted 14 billion in the last announcement and were aerospace to agriculture Big Companies are etting their business on the microsoft cloud. 95 growth, faster than growing, a services smaller business but probably number two by most estimates. Customers is it getting . In the last six months alone weve announced major agreements g. E. , boeing, bmw, renault sap mars, planet mars . No, the candy company. Be ychi, that would really cool. Enterprises around the world are betting their business on cloud. Rosoft what we see fueling this is digital. As companies try to reinvent themselves with cloud they are choosing microsoft for that. I suspect you have a way in using ft everyone is microsoft in some way whether its their debtsk top software, something. How many of these are core microsoft customers that are moving business to the cloud used to using e microsoft for a lot of other things not just desktop applications . Were seeing growth from all sorts of customers. Traditional en microsoft customers that have come to trust our credibility over the last several decades as well as new customers that are areas like the internet of things and the of Artificial Intelligence to reinvent their businesses. Land o lakes, most known for butter and dairy but they have a 13 billion agricultural business fueled by the microsoft cloud. In terms of profitability, trillion dollar number that gardner has, i think its wrong for a lot of reasons but one i dont think those dollars will shift. I think fractions of those dars will go to the cloud an most of will disappear. Do you guys have the same notion as microsoft that the it spend not be all moved to the cloud but companies will be able to spend less because they go to cloud . Its a pretty interesting thing to think about. We used to think about our total opportunity as the number of p. C. S and data servers object planet but now actually do look at our opportunity relative to the total Addressable Market for it span. You think about whats happening in Digital TransformationBig Companies their eing are betting entire digital Aviation Business on the cloud and moved to using a. I. Technology so they can better address irlines around the world more nimbly and at a better scale. This doesnt just translate to it cost translation. New Business Growth thats coming from it that weve never been able to address. A land o lakes or a bit fortune 500 company where to nking about go. Im talking to west, now im ibm andto microsoft and others. Why should i go to microsoft . Well, its really simple. Day it becausehe of our scale, the trust and security weve built into the enterprise d our credibility and experience with working customers in this space. We frankly know what it takes to able to partner with industries and the world. Take for example the connected space which we think there is a lot of opportunity in. Ere not taking the tact of building cars but rather we have major contracts with bmw, volvo, toyota, just about every auto manufacturer on the planet where connectedwering their car strategy. Its that ecosystem, enterprise skabl and credibility that makes microsoft a differentiated choice in the space. Youre faced with a dilemma to allow open systems customers to move on unless they find a cheaper price, but the to have would like that ability, or closed systems that might work before because databases that are databases. Microsoft amazon is certainly going towards that specific api approach. Your take . We think open is the right way to got. Frankly, thats a big part of ur business today, more than 2 3 of the work loads we run today are open source work loads. They are nonmicrosoft work loads but when it comes to the enterprise, again, big usinesses, when they are betting the farm, when they are thinking about how they the trustthey want to that microsoft can provide. Will your business be bigger five years from now . Thats our intent. Good to know. That. Uck with the battle of redmon versus seattle is on. Very much, appreciate it. From microsoft. You. Hank coming up, discussing vm wares latest earnings and behind their double digit growth. Bloomberg technology now live twitter right now bloombergtechtv. This is bloomberg. Vm wares shares up more than 3 . Analysts wrong . With revenueo that from the virtual cloud fort company. Ructure 8. 8 . 2. 03 billion from a year before. Networking , software and demand for the core behind all wing but of this, the c. E. O. , help us to break it down. Always good to see you even virtually. When we look at this quarter of longer trend, if we look back over the last vm endar year and where is ware and where is it transitioning to do more . Thank you. Always great to be here with you and have a chance to chat. This was a great quarter. Performance across ll of our gos, across the new product lines. Exceeded our expectations. It was a perfect quarter in so dimensions. Weve really been building the year hroughout with multiple quarters and we feel like our strategy has just esonated very well with customers and they are getting increasingly confident with how enable this mobile cloud experience for them in a multicloud world and be part of their Digital Future. Been a good time for the company. How is it change something we just talked about how their embracing the cloud and how Many Companies are shifting work loads towards the loud but they arent doing it at home so they are not rushing out to buy vm ware for their servers. Wondered how your business is changing on the face . We think about that most are building new work loads. Less of shifting work loads cloud. A lot of on premise environment. 2030 until s are its 5050 cloud on premise. He strategy is to be uniquely positioned across the two. Nable customers to increase flexibility and a hybrid environment that combines those two together without needing to hange their application while they harness this incredible power that the public cloud is offering. Partnerships with ibm and amazon have really resonated in marketplace. The growth of our Cloud Network has been extremely well received in the marketplace. And the core, premise products have done very well also. Seeing it on both sides of our business. What is the amazon to nership, describe that me . What we announced back in ware and s that vm amazon were coming together, the lead in the public combined with private cloud were coming together to have this vm ware of the full software on the global skabl available with the amazon footprint and that brings the of those two worlds together and it had an incredible residence. Weve been overwhelmingly positive had positive customers and ur increased their strategic confidence Going Forward in strategy so its brought the two and were quite excited about that. Its not available yet. Nextll be in the middle of year but weve already started to see customers increase their vm ware c commitment to as a result of that announcement a couple of months ago. Things that, there is speculation, in the way its going to grow Going Forwards, is hat you will have different kinds of customers going to different vendors and, certainly will be exceptions, but that big s p 500 companies that used to doing a lot of business with microsoft will go the two guys with the dogened a computer and a power point presentation going web services, and for the heavy compute stuff you will see them looking to google and ibm. I wonder how you see that playing out from your standpoint . There will behink a multicloud future. Its not just different kinds of customers but different kinds of work loads as well. You just had microsoft on. 365, ill get that for microsoft cloud. My new app development, i want amazon, maybe google and some of their Big Data Services will be the best place. Many cases, rectory, cost driven, latency, my iot factory, will be on premise. Ts a multicloud future and vm ware strategy is to give the software, management, networking and tools, that our customers take advantage of all of them and they have the ability to say well have the best of cloud. Just like vm ware gave customers andibility of their servers franchise in the past well give them flexibility and control of Cloud Services in the future and that strategy is resonating very well with customers. So ill bet you had an eyebrow raise when you saw the for app ng paid dynamics, even on projected Revenue Growth, which was with you probably 10 imes next years revenues and wonder what you make of that kind of valuation in a Company Space . R i was a bit startled by the acquisition. Sysco, thats ee an important partner for us. Complementary to us, at the app layer versus us with the infrastructure layer. I think overall, its everybody ising, this tech opportunity moving beyond traditional it, breaking at, tech is out of tech. In the Digital Future every of ness and every aspect every business becomes a technology opportunity. So we believe were coming into accelerated growth for tech overall and were quite opportunity that and vm ware is uniquely positioned to benefit from it. I would imagine youve got to think some of these Unicorn Companies are overvalued and we so blow up in r the next year . Well, you know, i think we ent through a major adjustment in valuations early last year, valuations, there havent been that many ipos, there has steady stream of that but not crazy amounts of it Going Forward. Been a t think its particularly overheated market. His was, as i say, surprising, at the valuation that was paid for it. Vm ware has a tremendously record, weve used them strategically. Weve been a disciplined buyer nd i think whats differentiated us in the ema market is that, of the acquired ompanies, weve had extraordinary success rate of the companies weve brought in and well continue to use them an important part of our strategy. The prices are getting higher. Gelsinger, glad to have you on. Thanks. Appreciate it. Were stock that watching right now, company sinking as much as 10 on friday, the second worst performing tech s p 500. A weak outlook to its latest earnings reports. Selloff has been going on since billion of the month, dollars in market cap. U. S. Deal to ond buy a Money Transfer service but why payment . Going to uncover some secret paying points in the payment business. This is bloomberg. This week, two Companies Make big bets in the payment industry. Buying u. S. Money transfer b ande money gram and air b looking to amp up its expertise, looking at tilt. Well talk more about this, the and in new pple york, tim. Do you see a connection between these two companies coming, or companies ese four coming together . I think there is no question there is a question, and part of is represented by the complexity of our payments infrastructure. Just these two companies but everybody. They are talking about spending million to 20 million to solve their payments problem, a re they have, you know, traveler, a guest, paying in australian dollars being hosted host in the uk, in british ounds, enabling that payment, collecting the payment, dispersing the payment, thats complicated ry thing to do because our global and structure is so slow can have an error rate of 10 . Is this the same thing ripple is trying to do . Sure. Why cant value move as innovation moves today. Cant stream video but i get to london in the next three or four days . I toastest way for you and to get 10,000 from there is to fly there. I wonder when we see the notion, that they are looking to a beachhead into the u. S. For payments . Exactly. Suchinted out, payments is a paying point for global commerce, and especially in ecommerce. Hen you think about it ecommerce is all about not using cash, so the paying points logistics, actually fully moving a product from a to b. User interface and apple, trying to decide that you want payments. E it and for jack and financial, buying gram, it helps to solve that given that jack mar did you want to do more in the u. S. He said, a million small to Medium Enterprises in the u. S. Goods to china. But they dont really have a that. Ts platform to do pay is very big in china but it doesnt exist in the u. S. , so by hes actually helping aid this flow of goods from the. S. To china and so thats really one of the reasons why he would want to do this purchase. Im surprised that we havent google, facebook and amazon look at the Banking Sector or at payments in some big serious way. Im surprised, but i read a that ugted people are very willing to look at those companies if they were to a service and yet they havent. Why do you think . Study was just done that said one out of three consumers changingwould consider their Financial Institution to and i think actually, what really that were seeing, i agree with what tim said but the cquisition, almost a billion dollars to expand into this e, i think is coming coming to fruition, the it rwoman talked about almost two years ago, she said the banks biggest competitor the new ager banks, of Digital Companies where the trust and brand relationship and touch points are high. Should be more worried about facebook, apple and ansome. The were seeing with financials acquisition is maybe the first shot across the bow. Anks have an opportunity to upgrade their infrastructure and provide better services, better capabilities such that they can a level Playing Field. Is it a zero sum game where the transactions and fees might same, just move to new technologies, or do you think overall just as we were businessg in the cloud earlier in the show, the value the value of what you but the money being spent is a lot less . I think there is no doubt that the cost and friction this will come down dramatically over the next 10 years. We can have debates about who and what technologies will win but at the end of the day the banks will continue to be at the center of this. I think some, for example, the bit Coin Community have argued down own with the banks, with the government, down General Services j. P. Morgan . N and the banks arent going away, the governments arent going currency isnt going away so ripple takes the point, how do we enable banks to on that level Playing Field by selling them the same kind of technologies that bit is built upon such that they can have realtime and anliation realtime, aerate, we talk about reliable, vm ware reliability at a very high level. Our Global Financial has maybe one nine of reliability, error rate of 5 to 10 . Here, 90 of bit coin trades are happening in china. Are they thinking about that in the way money is being transferred out of china and wants to get a piece of that . Basically, they already have so much in the area of financial services. He very fact that put it into another company, they have money market product, all sorts of other things like insurance loans, and doing some kind of block chain technology, i dont think they bit coin o much into itself, but as a technology itself would make sense for them to look into. Solve any necessarily problem because they have already got an infrastructure in you point out so much of the transaction, volume, does go through china or from hinese, in and out of the country and internally, so learly the Chinese Community and the chinese users are willing to adapt, that are purely mobile. Bank for o physical them to deal with and they dont mind. You very much. Appreciate it. With the up, whats up romance between President Trump is that why tesla shares are rising . Next. This is bloomberg. Courtney i am courtney collins, and you are watching bloomberg technology. Donald trump and theresa may have kicked off a new era in u. S. U. K. Relations. They held a joint News Conference at the white house today and stressed the importance of good relations between the two countries. Mr. Trump governments must be responsive to every day working people, must represent their own citizens. Madame prime minister, we look forward to working closely with you as we strengthen our mutual ties in commerce, business, and foreign a