You are watching the pulse. We are live from our bloomberg headquarters here in london. Coming up, bring it on boston. Britains pusht to become the new hub of medical innovation. Falling prices for galaxy. Evices Jonathan Ferro joins us to talk about what is ailing the worlds biggest smart phone manufacturer. It comes in at a . 4 trillion of profit. It is a slowdown. It is down from a year earlier. That is the point. A lot of people are talking about two words market saturation. That is interesting. It takes as to what the rest of the year will look like. People are looking at what and lenovo will do next. Can the chip away at the bottom end of the market as well . Price point is a big deal. We can add the nokia deal into this as well. They werent making any money in it anymore. Talking about margins. Nokia got bigger margins from the old handsets than the likes of samsung do today. That is quite telling. Going forward as a price point gets lower, the margins of these companies is going to get smaller and smaller. We, the show, have a lot of gas, talk about innovation and disruption. To be quite honest, it is giving me a headache. Fingerprint sensors, waterproof phones. The word disruption came on at one minute past nine. Yesterday was 10 minutes past nine. The big thing for mobile phones is the size of the screens. At it is wearable. It basically enables the company to take on the big ones. Samsung is spending so much money on marketing. The most disruptive thing that is going on in the Smartphone Market is not innovation, as google coming in making cheap handsets at people want to buy. It is not the hybrid technology youre talking about. 25 of samsungs workforce is in research and Development Third weather coming up with . Samsung galaxy gear . Let me be honest with you. What if apple launched galaxy gear. Two cooks heads would be on the line. Everyone would be coming on the show talking about apple getting rid of tim cook. What apple does is comes out with the finished product. Gets a comes out earlier product out there. The big deal this year is not hybrid technology, is the fact that the iphone may be 5. 5 inches big. He majority you like a kid looking for the next big shiny thing. The point is this is a mature market. The market is going to shrink and way on these companies. Is to bring your costs down to protect this margins. Those companies have really got to look to do that now. To the carry on spending or do they protect margins . That is going to be a big story. With samsung you could probably do both. You could attack lower price points. They make their own screens and chipsets. They have an advantage of the chinese. And they have a great brand name. Follow the margin you can thought the radar screen completely if you go after margins. They can carry on spending are they need to protect the margins. Are going to dive you dont innovate. I dont disagree. All i am saying is that is the price point comes lower, that is more pressure on those companies. Up microsoft. This is a great case in point. The fact that were talking about this and them turning off xp is fascinating. This is where microsoft made so much money. I love the fact that heres the inertia in the technology or. Get this. In china, 50 of pcs still run xp. 1 00 p. M. Standard time today microsoft is going to turn off support for this. A 50 of pcs in china still run on it. 500 million pcs around the world still run on xp which is a 12yearold operating system. I find that mind blowing. Heres a security. It is going to be absolutely huge for china. What i think is fascinating is that 90 of pcs operate on windows operating system. Hackers use holes in xp because the system has been evolutionary , to find holes and later operating systems. It is like having unvaccinated children in the school system. There is a weak point in the system, and that is what hackers are using. Jonathan ferro, thank you so much. Our European Business correspondent Caroline Hyde is live from Imperial College. She joins us there. Talk to us a little bit about how important the Life Sciences are to the british economy. 50 billion pounds important, guy. The lifeow crucial sciences element is to the uks economy. That is about double the amount of money that adds to one of our key grosses every year. Unique researchers like this are driving Forward Development and breast cancer. It is unique accent like these amazing laboratories that they these laboratories. It is that serve research that they want to focus, shine a light on. Just to try to bring investors attention. At the hubs we are the having cambridge and oxford and make london another linchpin, as they say, the Golden Triangle. Caroline, why would london proved to be a good addition to the expertise im ready handed back to because we have lost all connection. That is a shame. We are going to ask about the Golden Triangle. We will get back to caroline throughout the day. Medcity. Orting from i want to talk about what is going on in that ukraine. Armed men are storming buildings in three cities in Eastern Ukraine. Some would say it is the same as what preceded russias annexation of crimea. Ryan, this comes as a bit of a surprise. The three cities are donetsk, kharkiv. Armed men are seizing government buildings there and then declaring that there from independent states in that they will hold referendums in may where they will ask the local electorate if they want to join russia. What we saw inke crimea. This is a very significant chunk of ukraine, about 10 Million People live in those three cities and surrounding areas. It is, in many ways, the industrial heartland of ukraine. This is a very big deal for the Central Government in kiev. Perhaps even more of an issue than crimea was. Look, accusations are flying from east to west and west to east. Talk us to the reactions to the events. Reared quite a bit from russia. Russia is saying that these protesters, as theyre putting it, should have the right to choose their political destiny, perhaps supporting these groups or armed men as some are describing them, warning the ukrainians to suspend any military preparations that may be underway to take the buildings back. We have also heard the russians say that there are 150 military specialists from the United States in ukraine. Ukrainian stressed that as you create special forces, the russians are talking about security contractors. The Foreign Ministry say they work for a private Security Firm called greystone, another very interesting allegation. I spoke with the Russian Foreign minister a short while ago. He said that is just russian propaganda. There are no u. S. Military specialists on the ground in ukraine. He said all of this is simply an , to create and pretext to send Russian Troops into these of ukraine. They wont let that happen. In fact, he says their party taken one of the three underment buildings back control. Thereve agreed with the socalled protesters in the donetsk Regional Legislature that they will lay down their arms. Clearly, this is something we will have to continue to watch. Be doing ay, he will force. Ryan chilcote. Here is what us you are watching today. Investigators have narrowed the search area for the missing malaysia and jet. Investigators are up thenst the lifespan of black boxes that are his. The bank of japan is refrain from adding extra stimulus. Policy makers say the economy continues to recover even with last weeks tax increase. For the first time today, the boj allowed the medias reports to be shown in realtime. Major pharmaceutical companies were ordered to pay billion for a suit involving pharmaceuticals. Up, weve been talking about already. Smartphones have been getting cheaper. Samsung has been struggling to keep up. Can the Worlds Largest smartphone maker continue to work customers. . More on that when we return to the pulse. Welcome back to the pulse. We are live on bloomberg tv and radio. Also streaming on bloomberg. Com. Lets talk tech. Some of the biggest names in the sector falling out of favor with investors. Manus cranny is here with more. Guy, it is the biggest conundrum in the world. Look at these indices. Nasdaq has had its worst run since 2011. Volatility is rising. Traders are beginning to pick up protection. This is concern in the market that the way matt that there may well be a correction on the way. Twitter, linkedin and facebook. Performance years today. Not from a year to date high. Stocksse the kind of that are coming under pressure because of consumer faith . They did much better than the market when the market is rising, but when it turns, theyre the ones that take it on the chin third and leave you with this thought. Brave men and women at oppenheimer. Manus cranny with the very latest. Sales came in below estimates, so how can samsung fight back against this tide . Blitz as the managing director and partner at his research firm. A situation with the top and look saturated. The Smartphone Market has been getting busy up there. At the real action is cheaper end of the market with the chinese are making a big bush with names like lenovo. How does samson deal with this and fight back . Can it fight back . Yeareyve spent the last holding their own. We have had this discussion for almost a year if not slightly longer. How long can samsung hold its own . It does look harder and harder by the day. Lenovos deal with motorola earlier in the year set a benchmark with which samsung is now going to have to fight. Ip andhas western chinese economics. Samsung are going after software solutions. Therein to put out 600 worth of free content into the samsung cut that. Order to are they spending too much on innovation not on innovation, marketing, and not enough on margins, basically. Is such a highis water mark what they achieved before. I think theyre doing incredibly well to be generating 6 billion of profit per quarter from handsets. Not what problem, theyre failing to do, it is what theyre done before that is so amazing. The chinese gave the green light to know kim microsoft deal today. Nokia is going to be giving away microsoft will be giving or the operative system soon. It was to become the third force. How much of a challenge with that pose for samsung . Is another challenge. Ive always been a big fan of microsofts work in the Windows Phone area. I have a nokia 825 myself. I think this is an area where competition has been slow to emerge. Definitely, microsoft has ability to push forward the Windows Phone franchise. If you start looking at the combination of what theyre tablets,h the service with xbox one and stuff like that, theyre coming up with an integrated consumer product. The problem is it is costing them a lot of money. The question has to be how long will the current new ceo put up that . He cost for is a market that is saturated. Apple is nothing sales declines, but they are not growing, either. Well be talking later about this brits app. Etest on wearable technology. Each of these products, it is almost like an addon to the original concept of smart mobility, rather than a revolution. Once it is an addon, then it gets harder. Summary has to come up with a new next big thing. It is not just a marginal issue, which is what were been talking about 30 fewer to produce a Profit Growth that we have enjoyed over the last five years since original, somebodys going to have to come up with something that they. What you think that is going to be . Samsung completely repositioned itself. Is another company waiting to do the same thing . Is that the applet samsung or somebody else . The likelihood is it is going to be one of the existing players just because of the money required. Xiaomire hearing from that they want to sell 100 million handsets in 2015. Not talking about revolution, were talking about evolution. Were talking about it topic the hoovernd make affordable. Is the super highmargin high sales product and come from. It is going to be something that comes up up metro connectivity, perhaps to do with electronics. Why would it not be chinese manufacturer . Automatically looking at google or microsoft or one of the big players. It could be someone much smaller. The problem is ip. This is why i go back to why lenovo acquired motorola. Very few companies have ip that stands out. They can produce handsets cheaply at home because are not running into any pattern problems. This is a start exporting these products, whether or not the patterns are valid or not, of apple will come down them like a ton of bricks. That is why lenovo made a deal, not just to make the ip, but to trade the ip. Done. S why the deals are for most people, they dont have that access. Were going to start to look to see if others come in, they will buy more ip and trade and then theres their two thirds or three citizenry from dream at. Nights as you, thank you for joining us. The cofounder and ceo of squared will be coming in to speak with us. Why researchers are hopping with excitement about this mechanical kangaroo. , welcome back. Youre watching the pulse. So restricting your tablet, your phone and of course on bloomberg. Com. All angles covered. Lets go straight to market editor manus cranny at the touchscreen. And equities is slightly undecided at the moment. Themes, geopolitics and valuation. 500 dead since these markets have had a correction 500 days since these markets have had a correction. Euros equity futures. I just ran through some of the issues on the nasdaq. Correction on the way in Technology Stocks . Are they battered or should we do as oppenheimer suggests which is catch a falling knife. We going to very early trade as far as the u. S. Coming to work is concerned. Three big upgrades that are focusing on and European Equity trading. Sugar, profit warning. It is in part the majority of their business. Are they trying to sell their Telecom Business . Have they been on the phone to telefonica . Huge discount retailer on sports goods here in the united kingdom. Down six percent. Divested a few more shares, 200 Million Pounds worth. Back to you, guy and fran. Do want to read a novel in 19 minutes . And your Speed Reading app says it has the answer if that is what you want to do. It shows you just one word at a time. And we test it out out the technology that may be redefined reading. We will see it a couple of minutes. Welcome back to the pulse. Im francine lacqua. And i am guy johnson. These are bloombergs top headlines. United states says russia is behind new unrest in Eastern Ukraine. It is warning moscow against what it calls a very serious escalation. Prorussian separatists seized buildings in three cities. The white house says theres evidence that protesters are paid provocateurs from outside ukraine. A Central Banks as economy continues to recover even with last weeks sales tax increase. Barclays settle the first lawsuits. Boris johnson has launched medcity today in an attempt to hubte a medical research that will join london with oxford and cambridge. Caroline hyde is live from Imperial College london with more. This is basically launch date for midcity in london. Is. T im very pleased to say them im now joined by the executive it is dr. Dcity, elliott foster. Tell us first of all about what london artie offers in terms of Life Sciences heard we have in london some of the leading medical research centers. Some of five of the top 10 universities of the world are based in london. Million patients are available for Clinical Trials with a whole host of diseases present. Some of the world beating discoveries, much of which is focused around the university complex and a mention. What sort of businesses have you seen eating enticed into the of london. Is it Financial Services and Banking Services . Londony helping propel forward in terms of biotech . The reasonsne of for closing the gap. One of the ambitions of midcity is to bring those two of morety is to Bring Research and investment. Were been talking this morning that already is 50 billion pounds a year in turnover from the Life Sciences. How much bigger could this be . How can you take on the might of the likes of boston, which is a real world hub and later in Life Sciences . Austin, in terms of investment, somewhere around 10 times more than we get in london and the greater southeast. In terms of output and numbers of publications, numbers of new discoveries, theyre very similar. The gap between that investment and the scientific output is what were trying to address with medcity and through that grow the number of jobs and businesses and the number of new medicines coming to patients. What are the tactics . At the moment youre the have the pr guru himself, Boris Johnson, who is very good at singing the praises the praises of london. How else are you going to be pushing this forward, driving that investor up site . One of the things you have to do is make sure everyone understands what is available here in london and the greater southeast with respect to Life Sciences. One of the things that medcity will be aiming to achieve. Support,r government the academic community, and business at all aligned around this mission to make london and the greater southeast a hub for Life Sciences. Has a been a worry that we were losing business interest at one point . In pfizer. Background was her worry that we were losing our place in the world or were we just turn to accentuate where we already stand . I dont think there was a lost. The farmers pharmaceutical industry the pharmaceutical has artie had a pre