We are in new york all week long. Along with sam grow part. We got big news out of china print apple and china mobile have officially announced they are together and will start selling phones this friday. Starting this weekend. And this as potentially 700 million subscribers for apple. It is a huge deal for apple. It definitely gives them a potential boost as they see their market share numbers get a little bit flat or a little down. In context, the largest wireless carrier carrier in the u. S. Is verizon. They have 100 million subscribers. The 700 million figure for china mobile might include many other things that are not phones but conservatively, it is twice as big as verizon if not more. The other big deal is that apple only has 10 stores in china. They are trying to increase that number but this adds 3000 retail outlets where they can sell the iphone. Apple stores have always been very successful around the world. Of tappingbig place into that network of retailers, 3000 of them, is used for apple and gets that phone deep into the country in a way that is more than just the big cities on the coast. When it comes to cost, that has been the big apple problem. It is so expensive, 870 for the 738 for the next cheaper one. Tell you it was never supposed to be the cheaper one. We see that in these unsubsidized prices. Consider how that compares to some of the competition that apple has to face in that market. The cost is somewhere in the 300 range. It is a significant difference between apple and the competition. Mi makes companies that looks like iphones but for less money. The ceo models himself after steve jobs. The other issue is screen size. I spoke with baidu about this. Said Chinese People want bigger screens. Samsung and other Companies Offer this. I spoke to him about apple. Apple has experience in the china, the chinese characters are different from english. Driveed a different engine to do that and apple does not have a good one to be uploaded in the app store. That was interesting. I did not realize the part about chinese characters and the difficulty of the language. It is such a closed system, it is hard for them to adapt to different markets. When it comes to the competition, there is samsung which is the leader in china but apple has a lot of companies nipping at its heels. Many of them are cheaper. Huei is another one offering phones at a cheaper price. They are doing better than apple. Yawe joininghe coo us today, jane lee. You guys are pulling back on your networking and telecom which is your core business in the United States. Mentionedyour ceo this thing. You have had difficulty with u. S. Lawmakers concerned about your relationship with the chinese government. Can you talk to us about your u. S. Business right now and where it stands . Actually, we are not leaving the u. S. On the contrary, we are growing our business in the u. S. There is a lot of news in the media. When you have 40 billion company and focus on innovation and technology, and when you are caught in the crossfire between two lurd two large economic powers, it is hard not to get sentimental about it. This is the that greatest market in the world. We like it here. You are going to continue to sell your Telecom Equipment to u. S. Businesses in the United States . Responsible for the enterprise business. Engaged a lot of partners and it professionals and the u. S. About our product line and so far the reaction has been extremely positive. Many people would like to see us and we have a broad roddick line. We can do computing, storage and networking and we also have a very solid financials. One of your main competitors in the u. S. Globally has been cisco. You trail them right now but you are growing faster than they are. One of the things that people talk about is your ability to come in with much lower profit margins. What are you hearing from your customers about these radically lower prices you can offer . Are they surprised . Actually, what we focus on is the next inflection point. We dont necessarily focus on our competition, per se. It is about the Cloud Computing race. There is a huge growth in Cloud Computing. Is traditional it equipment designed for onsite data centers. Larged a company with a platform like we have. To reinvent the equipment to adapt to the cloud infrastructure. That is what we are good at. We have been in Networking Infrastructure and cloud anduting infrastructure. We are ready. I want to ask you about what has been going on in the United States, the revelations by Edward Snowden and the revelations about the extent of the was government surveillance policy. Has that impacted your business at all . Has that giving you guys a boost with companies saying we are worried about the u. S. Government relationship with some of these Technology Companies . Maybe they want to work with someone else. Contrary, iton the gives everybody perspective that we need a separate to separate politics from business. Government needs to do what they need to do. Situation for both the u. S. And china and others. Meanwhile, for businesses, we are just a private company and. Re trying to innovate of our 40er 14 billion revenue in r d. Janeli from san francisco, thank you so much. Coming up, we will talk more about Artificial Intelligence. You got to the speak to the head of facebook . Newly hired. I saw some amazing stuff. You will see more of that next. Welcome back. Erlichmanbring in jon in l. A. Talking about a really important story happening out of washington that has to do with Net Neutrality. An important story because basically, a court has ruled that, potentially, carriers can charge more for certain kinds of internet access. Bandwidth hog like netflix could be in trouble. They could pass that onto the consumer or absorb it itself. What does this mean for netflix . Immediately, you have seen the stock Market Reaction and that put shares down. Do a they have to change their pricing model . Does that go away . The quick answer is not just yet. If you Everybody Loves to onk about all the new shows netflix. People are using netflix in a big way. The numbers from netflix and others project that spending one hour a netflix everyday, even though that eats up a lot of broadband, is nowhere near the amount of total television that people are watching. I think it is still early days for Something Like this. It is something that everybody in the industry is thinking about. Talk abouts been this among policy groups and advocacy groups about what this may do for competition. Generally speaking, the internet has been flat and open and if we go into a metered model, what does that mean as far as established internet companys and startups . Theink this is lobbying power of all the internet giants in terms of getting their way, thats a whole mother story. When you think about the companies that have been able to set up shop quickly through Something LikeAmazon Web Services, if all of a sudden, what they have to pay changes, maybe that start up does not exist at all. Big is a bad thing for a player like amazon because maybe they dont get the business through their amazon web service. If you think about cable versus the internet, you heard sony at ces talking about plans for an internet tv service. ,ntel was thinking about that maybe amazon goes down that road. Is comingr tv cable through the internet and Internet Companies are offering it for less, cable hates that so they will fight you. Net neutrality title is boring but behind the scenes, you have huge lobbying efforts and battles between the traditional tv world and the internet world. About tv andking cable but Net Neutrality advocates are painting this nightmare scenario whereby internet browsing is one tier and facebook and twitter is another and then you have net lex, youtube and others. This could have major implications for everyone. Yes, i think it could. We talk about the battle with the biggest players. About thethe point smaller players. A company like netflix could rob oblique afford to pay a little bit more whether they are forcing the consumer to pay more or paying whoever is providing the broadband a little bit more. Argument that the the names you mentioned, whether it is facebook or netflix or youtube, they will become more powerful because of their pricing advantage because they got the skill earlier than anyone else. At the end of the day, it will be positioned that the consumer should not have to necessarily pay more because they are watching a lot. This comes down to how much you are actually gobbling up. How much broadband are you using . Nielsen says we watched eight hours of television per day. Diehards are watching a lot but they are not watching that amount. Companieslogy like netflix think about going tohd, but they think about Compression Technology so that you are not eating up the same amount of bandwidth to deliver better content. They are thinking about that in the same way. Maybe the Technology Allows for this to come to you without stop ino get to this the road where everybody is wondering if pricing changes. Lead to possibly sponsored access, sponsored wireless and data access from larger Media Companies which could give them an advantage . I think this opens the door for a lot of people to put their brand or their message on this and positioned themselves in that way. Example ofack to the the Amazon Web Services which has been a great place for people trying to take advantage of the stuff thats available to , yes, absolutely, that is something to watch for. There is a lot of uncertainty and we will continue to watch for the changes down the road. We will he write back. This is bloomberg west. , theis breaking news president is giving a speech on jobs and economy in n c state in raleigh. We have a large market in new york. The pieces are there to restore some of the ground the middle class has lost in recent decades. , start raising wages for American Families but it requires us to take action. This has to be a year of action. Here in north carolina, you are doing your part to create good jobs that pay good wages. Congress has to do its part, two. Restoring the American Dream for everyone willing to work for it is something that should unite the country. That should not divide the country. Thats what we should be aspiring to that everybody has a shot if theyre willing to work hard and take responsibility. [applause] in the short term, congress could listen to the majority of the merkin people and restore the Unemployment Insurance for americans who need it. [applause] aside oran carolina still has a higher than average unemployment rate. This is important to this state. Folks are not looking for a handout. They are not looking for special treatment. There are many people sending out resumes every day. But the market, the job market is still tough in pockets around the country and people need support. Looktle help so they cant after their families while they are looking for a new job. [applause] should do the right thing and extend this vital lifeline for many americans. Of course, that is shortterm. Longterm, the challenge of making sure everybody who works argan get at in todays economy is so important that we cannot wait for congress to solve it. Where i can act on my own without congress, i will do so. Today im here to act, to help make Raleigh Durham and america a magnet for the good, hightech manufacturing jobs that a growing middle class requires and that will continue to keep this country on the cutting edge. [applause] we have already got some success to build on. Manufacturing is a bright spot in this economy. For decades, we have been losing manufacturing jobs. Haveow our manufacturers added, over the last four years, more than 550,000 new jobs including almost 80,000 manufacturing jobs in the last five months alone. We want to keep that trend going. We want to build on the kind of work that is being done in places like nc state to develop technology that was to new jobs and entire new industries. A little over a year ago, we launched americas First ManufacturingInnovation Institute in youngstown, ohio. It is a partnership that includes companies and colleges that came up with a joint plan. They were focusing on developing 3d Printing Technology and training workers with the skills required to master that technology. That was a great start. We got one going at some of the folks from youngstown are here today and we congratulate them on the great work they are doing. The problem is we created one and in germany they have already have about six of them. Weve got some catching up to do. I dont want the next big job creating discovery, the research and technology atpresident obama speaking and see state, talking about jobs and unemployment benefits. We will closely follow another speech he will make this friday, and theabout the nsa surveillance policies. I want to bring in phil mattingly. We have been talking about the speech coming up on friday. New reports today about revelations that the nsa surveillance capabilities are even deeper and broader than we thought and that they can connect two computers that are not even on the internet. What do we expect to hear from the president on friday . I think the president will have a wide range speech when he goes to the Justice Department friday. He will talk about the basis for these programs and why they are in place and white he thinks these programs work for it he will also announce a series of changes. The couple that we know of off the bat, the spying on foreign leaders, particularly allies, will be cut off. We will see the privacy advocates put into the secret court, the fisa court that allows the ball collection of all the data. A lot of the stuff the president is going to push to congress and let congress decide how to go on these restrictions. Lawmakers in both size of this issue are interested to see what he has to say. When it comes to his proposal, it will be interesting to see what he can do on his own and what he wants to capitol hill to see of lawmakers can come to an agreement. Thank you. With more right back of bloomberg west. We are looking at bloomberg on the markets. If you take a look at the markets, we have stocks rising for the second straight session. Estimatedter than Empire Manufacturing data this morning as well as the world and raising its growth forecast for the globe. That has been pushing stocks higher. Solar city is one stock one company that plans to offer similar solar products to individual investors and it will introduce an Online System within the next six months so that Retail Investors can provide solar panels. You are watching bloomberg west. I am emily chang. Apple says it will refund consumers more than 32 million over complaints it made apps too easy for kids to purchase without parents permission. Under the settlement, apple agreed to change its billing practices to make sure it has it has express consent from consumers. Hewlettpackard is hoping to make a comeback in with smartphones. It is watching androidbased smartphones. They stopped production of palm devices two years ago. Linkedin is expanding its job postings, adding a new marketplace for unpaid volunteer work. The career networking sites as it is working with volunteer organizations to make sure the opportunities listed are of the highest quality in a move could could he pull could keep people coming to lincoln even if they are not looking for a regular job. Lets get back your special series on Artificial Intelligence. I have been learning about how we arecompanies talking today about facebook which just formed an ai division but what will they do . Ray they make ray butts will they make robots . Its about working with vast serviceof data that the has been collecting and will be collecting in the future and what can we take out of that that will make the company more money and make it easier for consumers to use it. They will require Artificial Intelligence. I went downtown last week to meet their new head of ai, lets take a look. Artificial intelligence till hs a scifi ring to it. The fact is, it is already behind a lot of our digital lives. From the netflix movie recommendations to amazon shopping suggestions to gmail spam filtering. Most everything you do on facebook or all the others, essentially there is an ai system behind it. Lecun has been studying the first will be facebook at of Artificial Intelligence. It is the companys bet on the future. Now, facebook was focused on getting infrastructure right. Now that they are established in that position, the problem is to look forward 10 years from now. There has been a talent grab among tech outfits. An Important Role on how we interact with computers. We are in a race with companies to establish themselves in the field. Recommendation engines are nice but that is old hat. The next step in the field is using ai to improve the computers ability to see and hear. We feed the image to a webcam. It tells us what category of object it thinks it sees. Its a chelsea boots but lets go with loafer. How would Something Like that apply to my facebook experience in the future . You upload pictures on facebook in the system will identify the objects in your picture and that will make it easier to search. It will allow us to organize your pictures in a way that similar pictures work. More sophisticated sensing abilities and an idea of what you want before you indicated area and yes, they intended to use it for another cool application, making m