Transcripts For BLOOMBERG Bloomberg Technology 20170321 : vi

Been. Ban. A federal judge will consider the request at a hearing in honolulu. Global news 24 hours a day, powered by more than 2600 journalists around the world. Im mark crumpton. Bloomberg technology, is next. Cory im cory johnson. This is bloomberg technology. Coming up, we go live to las vegas, nevada for the ibm internet conference. We talk about everything from the cloud to ibms partnership with wanda. Marc benioff says the window for acquisition is posing. Firstll ubers board Travis Kalanick to resign . First, lets turn to the market selloff for u. S. Equities. It biggest slide since october. Lets bring in stocks reporter abigail doolittle. A big fella today. Cap down a big selloff today. Tech down 1. 5 . Reporter indeed. It was a pretty bad selloff for major averages today. A dayw down the most from standpoint, the worst selloff since the beginning of september. Some are saying this is a reversal of the reflation trade. Now is the worst sector for the major averages, including the nasdaq. Tech was down about 1. 5 on the day, but relative to financials, not down as much. What really stands out about the nasdaq having a hit today is when we take a look at the today chart of the nasdaq, yesterday the tech heavy index put in an alltime intraday high. A bit of a reversal. All of the big names yesterday led the declines today including outdoor apple, out for that, microsoft. Paul sweeney earlier told me he believes this probably has to do with profit taking, considering a lot of the stocks have been so strong this year. A various day on stocks today. When the trump rally , itted after the election was led by banks, but tech is leading. Reporter this year, tech is the best sector. We go to the bloomberg. We can see on the top that tech is up 10. 4 . Behind it, health care up about 8 . It has a pretty sizable lead sector, beingbest led this year in terms of percentage performers by activision, skywards, symantec, and xerox. Activision is pushing into digital. Skywards is the apple supplier. Symantec in the security space doing well, and xerox having the best year since 2013. We have to bring it back to apple. This is the Biggest Holding in both the s p 500 and the nasdaq. Caroline and i have been looking at the technicals on apple for quite some time. We take a look at another it is not pulling up. Actually, im not able to pull up that chart, but act apple can be a little variation b earish. Signs pointing to the fact that apple could in fact trade down 120e nearterm perhaps to pershare. That could point to a bit more of a pullback ahead. Cory interesting to watch skyworks perform spectacularly. Always, welittle, as appreciate it. Ibm has a big cloud conference in las vegas. The company is focusing on the cloud because a lot of other businesses are not going well. Much of theired business as the cloud last year. Caroline hyde has been on the ground. How is it . Caroline i am in the city of sin, and it has become the city of tech. 20,000 developers and engineers gathered to hear the leaders of at t, salesforce, and ibm about the push to cloud, ai, and where blockchain might be going. Caught up with none other than the ceo, president , and share of ibm Ginni Rometty, and we talked about the crowd. The idea of crowd is a platform for the new era of business. What distinguishes this is three things. One is that it is enterprise strong. That meet the minimum for the enterprises we deal with. You have to prepare them for the future. There are two more things that are distinctive. Line it is a data first architecture, and the third it is cognitive at its core. When i say it is enterprise next, one is its global but the other part is you have to be able to put captive innovation in all the time. Today we also announced blockchain in production on the ibm cloud. After transactions, 10,000 a second. That is really important and blockchain work. We also announced quantum. The First Quantum computer available on the cloud. It operates at 1000 times colder than outer space. This on your premises, but the point is enterprise strong, you have to have security better than anyone else. When it comes to being data first, it is very different than some of the consumer clouds out there. When we say data first, you have to protect clients insights, not distribute them. When you look at consumer guides, they take data, and it is really how they monetized it by distributing it. Some call it commoditized or democratizing. We think the value for the client is in their insight. We can give them data control and tell them for sure that data is not intermingled with someone else, not isolated the insight from it, we are not monetizing. We can show you how to protect it. That is data first. The third part that distinguishes us is cognitive at the core. That is watson. What is different about watson then ai, ai is a small piece of it. World,the data in the 80 of it is not searchable. People think everything is on the internet. 20 of the worlds data is on the internet, 80 is not. That is where the greatest value is. That is what watson has been trained to deal with. Caroline the crowd at the 17 percent of revenue. Where do you want it to be . Im here today because we see lots of clients moving businesses onto the ibm cloud. We do 97 of the largest banks in the world. We run a 30 of their lines 80 of the airlines. 90 of thetelcos, credit Card Transactions come through us. The ibm cloud is about helping them bring that into a future world. Caroline will that build your revenue . Ginni rometty it does. If you look at the Global Technology services is this, many think it is Running Services for other people and has gone down, but it hasnt. We have built the backlog. Part of that is the work they do cloud. I think it is a fallacy with existing customers when they will build new things on the crowd, but they have reasons its aother info reality. What we had to do is build hybrid cloud environments as well as be the best public cloud. Caroline will the revenue you are garnering from the cloud drive Revenue Growth in the next couple years for ibm . Ginni rometty it will. 70 of all of ibms revenue is 13. 7 billion, and it is 35 . As you take a look at the crowd, the analytic revenue including watson, mobility and security, those are strategic imperatives. That is part of ibm. Ibm. 33 billion, 41 of that is complemented by the work we do in our core franchises, which may not always be growing, but they are really important. Together we are growing in the places we are investing, and those other areas we are moving with the market. Caroline china is fascinating. You just came back yesterday. Talk to me about the partnership. Will you always have to be a part of someone in china . How important will china be for ibm . Ginni rometty we will be a partner on the cloud, but we china. Large business in it is all of ibms business there. We were one of the first. Weve been there over 35 years. Very wellestablished brand and very wellrespected brand. We are the partner to the banks there. They are the most sophisticated Financial Transactions in the world. In the cloud, what we will do is partner. Wanda is one of the most successful private companies in china. Great attitude about agility and skill. A huge, they have business that will also be on the crowd. It will be both a customer of the cloud and partner. It is a great quitting because they are a big egos is ecosystem. I look forward to that being a successful partnership. It is our First Partnership there. Have a view onu how dominate you want china to be in revenue stream . Ginni rometty it is an important and good part of revenue. Is to models. Ing very large state enterprises, or large enterprises, and really just building power. 12,000 startups today in china. 12,000 a day. You need to look at the two markets differently and start them both. Do. Is what the cloud will we were strong in the Enterprise Market and now this allows them to serve them and the origin for narrow and the entrepreneurial market. Caroline ibm ceo Ginni Rometty there. Next, the internet of things with ibm general manager harriet green, then we talk about blockchain. The, none other than salesforce chair and ceo marc benioff, talking all things ai and jobs. Caroline cory i cant wait for that. All episodes of bloomberg technology, are streaming on twitter. 5 00 on the east coast, 2 00 on the west. This is bloomberg. Caroline cory now back to the ibm conference in las vegas. Caroline hyde is there now. Caroline thank you. We are joined by harriet green, who is leading the internet at things of things at ibm. Wonderful to have you here. Lovely to see you again. Lets start off with the internet of things. Take the whole platform environment that has developed and learned about what the internet of things is, then we have a whole range of applications, how to get started in the internet of things. Then the Digital Transformation that goes around it. 10 days ago, we had the genius of things event and our munich internet of things headquarters. From 4000 clients different businesses. We had 22 companies sharing outcome. How bmw, how visa, all using cognitive in the internet of things, as well as a series of Companies Working with those around location. Colocation. Companies like bnp paribas working to innovate and create using cognitive. Laboratories in these ecosystems. Caroline what does bnp paribas make . We are looking into it. We are looking at the problems that data can help solve, and together we create services and intentionith their vertical knowledge and our own cognitive knowledge to come up with a solution. Caroline if it driving revenue for ibm . Yes, the internet of things most definitely. Has thousand we had 6000 through the application or Digital Transformation. It is a real inflection point. Caroline what edge is the i ai giving ibm . I think it is enormous. One of the key elements is this mass of data, structured and unstructured, coming from every possible sensor, device. You saw our announcement with at t and the onset of 5g. Watson is able to not only process all of that data, structured and unstructured, but very quickly in natural language share correlations and patterns that you would just not be able to see. Case letter is an example. They are the biggest world. Turer in the their factories are going to be smarter and more efficient, but they are also creating a cognitive self determining ball bearing that knows when it needs maintaining, that knows when it needs replenishing, and knows when it is off. Watson really is the differentiator. Watson, how could you really analyze and create meaningful products and space . S in this caroline do you think watson is the edge visavis googles cloud, microsofts cloud . I think the fact that we have that ise capabilities actually with clients discussing outcomes yesterday, the largest french Transportation System was talking about the money. Of ways they save cognitive is huge. The second two areas that are big in the internet of things, which are very differentiating for ibm the first is the whole security. Years or more, ibm has been protecting the data of our client. It is their dan data. Even if we create products together, it is their data. The data and Security Issues where we have baked into our product, all that ibms history imbues in are the single most important elements. The cognitive edge, security, and data. Caroline harriet green, it is great to be in las vegas with you. To have you here. I know you are usually based in germany and the u. K. We wish you well. Harriet green, heading up the drive in terms of internet of things and watson for ibm. Cory interesting stuff. Thank you. Scandals. A string of board member Arianna Huffington says details must change at the top. All that next. This is bloomberg. Cory it has been a terrible, horrible, no good very bad few weeks for uber. Company, trying to get an update in efforts to fix the internal culture that has been blamed for a succession of scandals. There was the exit is from former president geoff and three other highlevel employees heading for the hills along with it, confidential proprietary information. And yes, the Sexual Harassment scandal. This is weird. Reporter yes. The advertised it as we are not going to make any news. They said they would have a diversity report out by the end of the month. Eric holders report on Sexual Harassment and cultural problems with the out by the end of april. They made commitments to working on the organization. The head of hr sent a had a cult of the individual and needed to change that. Cory he had of hr referred to the own organization as a cult . Reporter the idea was we had good values, which is pull yourself by your own bootstraps, solve the problem. That sort of becomes excessive and creates a culture where one superstar is more important than the morale of the rest of the team. Cory this is unusual for a company to do this. Companies have problems. They might be extreme and also unusual, but the airing of the dirty laundry and working it out publicly doesnt seem like the uber that we know. Reporter it is a company that consumers have a very close relationship with, so i think theres a big obligation to own up here customers. B company. Ome bto this is a ride people are taking to every taking every day, and they need to explain. Drivers were a big theme of the call saying they would try to improve their lives. Cory when youve got an assetless business, where you dont own stuff, youre demanding the attention of customers and providers of the service. These guys leave in cars every day. Reporter what people forget is wanted to fix the of session with brands. Thats why jeff jones was a marketer. It was supposed to be all about brand, and obviously it has been destroyed. The first three months of the year. Rachel holds, one of the top executives cory we have a quote from the call. This is jeff jones saying that its referring to something that went down. Reporter it was a pretty biting comment. Clearly he disagreed with Travis Kalanick on a lot of issues. I sourced a couple of them. One was how drivers were treated, the tipping issue. He supported tipping drivers. Another was safety on the platform. He had concerns about the Leasing Program that encouraged less safe drivers to join uber. There were a number of clear debates within the company on which they seem to be taking different sides. Cory this company is so fascinating. Im so glad our colleague work wrote a book about it. Thank you so much. Thel to come, marc benioff, ceo of salesforce says the window for deals is closing. An extended conversation, next. Mark im mark crumpton. You are watching bloomberg technology. A critical built to replace the Affordable Health care law, President Trump arrived on capitol hill looking to sway gop congressmen either fence. Or on the the president emerged from the meeting confident House Republicans will get the job done. President trump we had a great meeting and i think we will get a real winner vote. It was a great meeting. Terrific people. They want a tremendous health care plan. Thats what we have. I think we will get the votes. Mark the french paper reports prosecutors want to why the investigation into president of candidate francois fillon. Hes under investigation for allegedly paying family using public funds. Martin mcguinness, the former ira commander who helped negotiate peace in northern ireland, and later became deputy leader of the powersharing government, has died. He was 66. He was also chief negotiator for arm. Ras political the u. S. General Assembly Held a moment of silence and diplomats gave speeches today, paying to the late Russian Ambassador to the u n the bodys longest serving security manager Security Council member. He had a heart attack in his new york office. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Im mark crumpton. This is bloomberg. It is just after 5 30 p. M. Here in new york. My colleague paul allen has a look at the markets. Good morning. The markets probably not going to do so great after we saw the long winning streak on the s p come to an end in the u. S. New zealand is the only market open right now. It is currently on the 1 . 4 10 of 1 . The largest milk producer reporting a net increase of 2 . Some encouraging prices from the milk powder shares as well. Elsewhere around the region, nikkei futures looking pretty weak. Percent. Also expecting bank of japan minutes from january today, and japan february trade balance. A return to surplus is forecast. Asa futures is pointing down as well. We are also going to be enjoying the first day of the visit of the chinese premier to australia. Im paul allen in sydney. More from bloomberg technology, next. Cory this is bloomberg technology, im cory johnson. We continue coverage of ibms cloud focused event. They gathered in vegas. We heard from the ceo Ginni Rometty earlier this hour. Caroline hyde is on the floor with more. Caroline i am, indeed. I spoke to a man passionate about the changes in the workplace with ai, but also concerned about the changes in workplace with ai. We are talking about salesforce ceo marc benioff. What we have been able to do is find a way to work with both companies together a great example. If you probably know, crazy hailstorms we had last week we managed five of the Top Insurance Companies in salesforce. Those Companies Want to know when the hailstorm is about to happen. They want to notify those customers to put their cars in the garage. It will save them a lot of money. The combination of ibm and salesforce lets us do that, because watson will tell us what the weather is. We are able to notify customers to get the car into the garage. The rest is magic. Caroline you have a company that has built your own product via internal rnd. Was it low hanging fruit that they had already there . We had some incredible Ai Technology ourselves, but it is highly integrated into our corporate form core platform. It has been available now to all of our 150,000 salesforce customers all over the world. The opportunity with watson is to bring a generalpurpose ai platform that is programmatic so customers can extend solutions with what watson can do. Caroline you mentioned insurance. Where else is the low hanging fruit . Where are the demands coming from for the ai product . It is really almost in every industry, and they can be much smarter. Are u find employees able to extend capabilities. We are seeing salespeople being much more productive than ever before they. Are able to know exactly who to call on, when to them, how to call on them in a prioritized way. That is all done by einstein. The power of ai. Caroline you have done global outreach. You have had Significant Growth asia. Ope and where geographically is eating up the desire to get into Artificial Intelligence . You really see that across the whole world. Tois really starting percolate into that software across the world. In fact, we are seeing ai inside all of these different jobs and work streams. The advances in ai have far exceeded our industrys expectations over the last years, and now vendors like salesforce and ibm can extend and complement our solutions with this amazing technology. Not just Machine Intelligence are learning, but deep learning as well. You probably saw two weeks ago announced cocacola they will be building coolers with cameras in the, and cameras can do realtime Inventory Management so that you know coolers. Ppening in the as people take the coke out of the cooler, trucks are rolled to the stores knowing they need to replenish the supply is. Caroline it sounds phenomenal. For your it mean bottom line and topline . You said 10. 2 billion for Revenue Growth. Whether it is einstein or whats, what does ai built into that . Salesforce is already the top five ai companies in the world. We just delivered a phenomenal quarter. Hitsaw our deferred revenue 14. 5 billion, up 28 for the quarter. That exceeded expectations. A lot of that is driven by ai. Its also driven by a lot of other major trends we assigned ourselves to very early, including the cloud, social networking, and mobility. Our customers are really moving trends. We need to outline salesforce with those trends to get growth. That is how we created extraordinary growth. Caroline crm is where it remains . Crm is the fastestgrowing of all the enterprise segments. It will be the number one industry by 2020. We are uniquely focused on sales, service, marketing, community, analytics, apps and commerce. Caroline you mentioned how ai will be affecting jobs. Does the world realize how much this is going to make people lose jobs . That is the 64,000 question. Thats why i went to washington dc on friday. Im really focused on that issue. The workforce will dramatically change over the next one to two decades. It will be driven by Artificial Intelligence. Thats why we need to start retraining in new types of Job Development before the technology had baskets. Technology hits. I called for a moonshot of apprenticeships based on what we learned in other countries, like germany or switzerland. We can bring that to the u. S. And improve the quality of the workforce. I hope the government listens. Caroline do you think a support system a support system it do you think everyone can be retrained . Absolutely. There are so many vehicles to train people. Especially in the u. S. , we have phenomenal opportunities. Community colleges, k12 systems, and a lot of Workforce Development programs already. There are so many people ready for these jobs. I look at the thing we are doing with veterans. We bring them into the company and retrain them. Salesforce will create 2 million jobs and add 2020. Illion to the gdp by we are really focused on creating these new jobs and getting people ready for salesforce jobs. I think creating a platform for the is so important. I think apprenticeships are the key, and automation and oneonone. Caroline youre looking at hiring and growing a lot. You have been an acquisitive company. Does that remain the case of the evaluations at the moment to remain acquisitive . Last year i think i was super clear i thought there was a window that was really open for mna at that activity. We bought the Number One Company and commerce, and deliver Commerce Solutions to a lot of Amazing Companies around the world. To 2 will do one billion billion. And we got some amazing private companies as well, like this incredible productivity tool. A lot has happened this year, which are the markets are rewarding. The m a windows have narrowed. I dont see us doing a lot of that this year. Caroline maybe marc benioff is not going to be quite so much on acquisitions in 2017, but he is able to have a flutter, particularly when it comes to blackjack. He was up to the wee hours playing with teammates. We stick to the financial theme next. We talk about the effects of blockchain with Arvind Krishna. That is coming up next. Cory i think the benioff news about not doing acquisitions is a huge deal. The company has been centered on acquisitions a lot for the last couple years. Great stuff, thank you. This edition of out of this world. Aesident trump has signed 19. 5 billion authorization bill for nasa. It passed congress and the house unanimously. The agency the objective of the human exploration of mars. It maintains the governments support for the International Space nation, the all right in vehicle, and commercial space programs. Researchup with ibms director of Arvind Krishna about blockchain. This is bloomberg. Cory heres a story we are watching. As if the pc industry doesnt have enough problems, the Trump Administration has imposed a new rule banning pcs on life from the u. K. Flights from the u. K. To the middle east. Officials say theres no specific threat, but the new rule is what they call evaluating intelligence. The uks following the suit with a similar restriction. Back to the ibm cloud conference in las vegas with caroline hyde. Caroline i have a great conversation up next. Im talking blockchain. What is it and what does it mean for your business . We discussed that with the senior vp of ibm business, Arvind Krishna. A great new product you have unveiled. Ibm blockchain. What actually does it do . The blockchain is one of the most fundamental technologies since the early internet. It will change transactions. What the internet did for information blockchain will do for transactions. How is it going to do that . It is the first time we can have proper transactions with multiple parties. Immediately i think the key part of this would be the banks. . But is it across industry . Many. Cross shipping containers, in terms of transportation, health care, it can go to food, Like Companies like walmart doing food safety. Of course, financials. Capital market, settlements, equity changes. Changeve blockchain will the physical world, not just the world of money. Caroline is this already being sold to clients . How much do you think this will drive revenue for ibm . Is there a competitor . It will drive revenue. If i give you the number of clients we are working with, over 400. We have hundreds inside ibm working on it. That gives you a sense of the excitement of the opportunity as well as the investment behind it. Caroline investment is strong in ibm research, do you feel theres enough going in . Absolutely. Not just on blockchain, but across the board. Ibm is a fountain of innovation for the company. We have ai, the watson platform, blockchain, the latest announcement of quantum computing. Healthe tell me, the care companies, transportation, the banks who is knocking on your door is a developers . Is it developers or ctos . , withis open Source Developers and ctos. It is ground up. But it is often the ceo who gets into the conversation. The ceo drives it which awareness toter the benefits of their business. They look at it and think how many benefits can i have . When you think of how big the number is in the supply chain and the reward back into the real world, this is going to transform the way these things work. Caroline i feel in 2017 every other week we are talking about the record high or sudden plummet in bitcoin, not to mention the crypto currencys how much is the volatility in currencies sometimes getting blurred into concerns about blockchain . Thats a great question. These are separate universes. Theres a world of cyber currency. Thats one side. They had value, but thats not what we talk about. There is enterprise blockchain meant for business. On a do not depend nonentity. Ity. Nonentity anonymo how quickly do you think youll have people copying what you are doing . This is your first interest entrance into supplying with luck chain . Blockchain . We will always get competition. We stay ahead by innovating, getting more clients, and building blockchain networks. Caroline thats why you need people like Arvind Krishna, explaining it and breaking it down when it comes to blockchain and what it means for your business. Cory thank you. Up ahead, Apple Unveils the cheapest ipad to date. Companys revamp of one of its most popular products. This is bloomberg. Caroline twitter cory twitter said it has accounts, in,000 an effort to extract violent extremism. More than half have been shut down in the last two quarters. Twitter says it started taking legal requests to remove content posted by birth by journalists. Posted by verified journalists. Apple has a special edition red iphone 7. This will join the fight against aids. Ipod. Lso revamped the the lowest price moves ahead of plans for a new iphone later this year. Lets stick with the ipad first. Really interesting business in apple. It grew spectacularly, then fell amazingly in terms of sales growth. Reporter it is the business which was supposed to be the replacement for the iphone. Unfortunately, people hang on to the iphones for quite a long time. They have a good life expectancy. I dont know how many ipads you have gone through, but i have had about two. If you compare that to iphones, its not very many. Cory we discussed this on our radio show that my ipad i remember having an argument with my boss. I should have said i would have it longer than i had the job, it was three bosses ago. Reporter the thing thats interesting about it is the margin on the ipad are worse than a laptop. One might imagine apple would prefer to be selling laptops. But of course, you have apps in the ipad. Cory thats interesting. Advertisingen services. Reporter exactly. It is the way to drive more revenue, cutting the price on the ipad is a way of getting the tool into customers hands and hoping they will spend more money. Cory which one do you have . Reporter i think i have the ipad pro, the smaller one. Cory not the many mini. New . E device itself reporter the old device on new pricing. Different memory options as well. Cory how dramatic is the price drop . Reporter they are 229 now. Insubstantial amount of money considering you can get a laptop for over 100. Big one, theery proone, but the one that it is the size you pay for. Reporter its a way for branching out with products. If you think about apple in the 90s, they were considered a creative industry. Gradually they moved into the broader market. Now theres a certain recalibration. They are introducing these pro models. The lowest model starts around 600. That is an even more substantial chunk of cash. Cory how does this work in terms of the Developer Community . The killer app on the phone was not phone calls, it was lots of other stuff. Isorter one of the problems the way the app store used to be set up, in such a way you would pay for an app once, maybe user couple times, and never use it again. What they are trying to do is Incentivize Developers to develop apps that are prescription based, and more compelling. It serves to make ios devices more sticky, i. E. You keep using them, because the apps are really compelling. Cory also the replacement cycle we have seen that a little bit with phones, and certainly with pcs. People are not updating with the latest new operating system for the nonapple business. The the ipad and the phone, times got fleshed out longer and longer. Is that because people have all three . Reporter there are a number of factors. On the one hand people think theres not much more innovation you can do. The curve is flattening a little bit. On the other hand theres a sense perhaps everyone who has a smartphone needs a smartphone. The opportunity to attract new customers is limited. I think those elements are replacing slightly. Sensing samsung recall help them regain shares. Cory also, now the Trump Administration banning the use to the middle east on flights. That does it for this edition of bloomberg technology. Wednesday, we hear from the ceo of adobe after their big quarter. This is bloomberg. From our studios in new york city, this is charlie rose. We begin this evening with this fact. I missed you. So it is very good to be back. We have been together for more than 25 years. From the unfolding discovery of the brains mysteries to the mind of russian president vladimir putin. And in between, we have seen five president s. Bush, clinton, bush, obama, and trump we have made. Met oscar winners and nobel laureates, and that heroes who simply did their duty. Im people