The paytv business. Googles annual Developer Convention starts tomorrow and wearable devices will be front and center. The countdown is on for the new iphone which will be bigger and badder than before . Hardingppliers in china production on these new iphones next month. Displayl has a 4. 7 inch and one of the phones will also have a 5. 5 inch screen, bigger than the samsung galaxy. Me whoaros is joining broke the story as well as brian blair from new york. Have been talking about this and expecting this for quite a long time. Is the timeframe important . It is not important, its pretty known and this is the time they typically start production. They have been preparing for the last four months but now is when they start production. If youre going to make 50 million per units, you have to have a couple of months of lead team leadtimes of this is the right time to start. I know your sources are not named but in terms of your story , does this suggest a release in october or earlier . September timeframe. It is the typical release schedule for apple. Whats new is that this is not just a speed bump, its not just fingerprint reader, its a new screen size and the larger screen size is one of the key things that people want. We have seen success with that. Do you expect them to do a four inch screen as well . I dont expect so. We have not been able to confirm that but many suspect they will. We believe they will keep they will have those 4. 7 screen and do a 5. 5 inch screen and they are going to keep the 5s on the production line and keep the five in the production but we dont believe they will continue to make the 4s anymore. Thats the four inch screen, gone . The four inch screen is what you see right now on the 5 and 5s which will remain but the 4s has a 3. 5 screen and that will go away. What does this mean for the cost of the phone . A lot of the components tend to drop out the glass and the battery maybe dont drop as much. Absolutely especially the screen which will be mark spencer. A lot of the key components for apple will still be the same. Those will have declined in price from the last year. I typically think about Semiconductor Price erosion at 15 20 per year which can change the volume. The cost of the glass is more expensive particularly on the 5. 5 inch. Will apple charge more for that . Pricing for ahis number of years now. Im wondering if a raise that price of the entrylevel 5. 5 inch product. There is a great possibility of that because of the higher price point. What do we know about the market for these phones . Where are people in terms of contracts particularly in the u. S. And the upgrade cycle . There is clearly a lot of demand for the larger phones. I think this is a big enough change in the product line that a lot of people will move up. 40 of android phones are this 4. 7 inch screen size or larger. Numbers are five inch and higher that is expected to grow 30 per year were as there will be a slight decline in smartphone growth for smaller screens. This is critical because samsung has been the number one Global Player in mobile smart phone volume were a number of years now. Part of the reason is because samsung decided to take a direction doing the larger screens which seems silly. It turns out this is what consumers have wanted for the last several years. You mentioned 40 in china, everywhere i go in the world, i see people using the larger screens. Apple has been behind in this regard but this is a critical piece of their strategy and i think it will be important to their volumes in the back half of the year. Many people dont want the smaller screen sizes oh apple will see a big surge in demand internationally because of these new screen sizes. I think they will topple samsung and some of these markets as a result. Why does it take apple so long . Its an absolute marvel in every way. So is the galaxy. Why does it take apple so much longer than samsung to come up with a new design and make the changes the market is already responding to . Cowsthink apple has sacred from the steve jobs era. He was always vociferous about the fact that the smaller screen size was the right size and the portability was more important than the ability to have a big screen. Its like the music subscription thing. It took them a long time to get the notion that people wanted to own their music. To some degree, its a cultural thing. Agree, we saw the same thing with the ipad. They said for a while that we dont believe in a seven inch screen and they thought it was to take to compete with the smart phone and too small to compete with a 10 inch tablet but then we saw it in the market. I agree with you. I am hoping we will see some samsung ads making fun of them showing the size of the hand matching the size of the phone. Is there a crow to be near . I think there is. Apple is being reactive in this regard. Appleeople have expected to address this segment of the market for a while. Which is large, 5. 7 inches, they sell 10 Million Units in the first 60 days and apple has ignored that. There is a little crow to be eaten. Move doesnt have to first but they have to move eventually. Thank you both so much for being with us. Apple is expected to release more stuff. They have a dispute with the Justice Department and amazon is facing antitrust complaints from german booksellers. We will see what publishing means and the future of books next on on Bloomberg Television, streaming on your phone, your tablet, and bloomberg. Com and now available on apple tv and amazon fire. Bloomberg west, i am cory johnson and this is bloomberg west. Apple settled up book distributing lawsuit last week and now is turning its focus to its appeal of a july, 2013 ruling in its big dispute with the Justice Department. Ebookto do with a fixed prices. Apple appealed the ruling in february calling the governments arguments absurd and fundamentally flawed and now apple is expected to release and a brief on the case today. Amazon is also facing a big push back from antitrust regulators around the world. What does this mean for Digital Publishing . Its good to see you. Tommy about smash word. Book publishing platform with 100,000 authors. The books andload we distribute them to leading ebook retailers. Amazon . Very few to amazon. They love to boast about the books that are published outside traditional publishing but they ave a huge dispute with cahette. What is the effect of this dispute with chachette have on the rest of the industry . It has had a big effect on the biggest will come down the line once the dispute is settled if its settled. These two companies are fighting for the future of publishing. There is a lot at stake here. Amazon is looking to squeeze cachette and get payments for coop dollars and cachette is trying to hold the line of preserve their margins. Specifically, its interesting that there are you just think amazon takes a cut but they sell little pieces such as what i heard in the last couple of days is that they are trying to exact fees for placement in the store, coop fees, fees for preor button so you can put your book on preorders. Socachette would have to pay more for that. Thats right. At the same time, amazon is trying to get a bigger cut of ebook sales. Weve got this model for ebooks selling at retail called agency were publishers typically keep the retailer takes 30 and publisher keeps 70 and the polish on the publisher sets the price and amazon does not like the agency model. If they dismantle the model, they succeed in being able to take a larger margin from publishers that puts the future of large Book Publishers in jeopardy. Why cachette . T was fascinating to read about the way publishers met in secret and restaurants in new york city and come up with a plan to conspire against amazon. Ishachette very different in this regard . We should state that the socalled conspiracy is only alleged. The publishers were forced to settle at gunpoint. If they did not settle, they faced damages, they faced annihilation of their business. They could not afford the risk of going to trial so they settled. Apple could afford it. Yes, apple could afford it and apple believes, as i believe, that they did not conspire. Apple came to market with a superior Business Model that appeal to publishers and allowed publishers to set the price of their own books and gave publishers control over their destiny. Amazon did not like that. The Justice Department took that as a conspiracy and came down on all of them. Is fighting it and they will appeal it and hopefully take it all the way to the Supreme Court and i hope it prevails. This really was the publishers struggling to respond to amazon and their strongarm tactics. You can see amazon trying to do the same kind of things like in the supermarket model. For payments of where you would appear on the shelf. Definitely, amazons model is all about taking margin and putting the pressure on the suppliers to cut costs. That works in many businesses but it does not work as well in publishing. Ironically since thats where they started. Publishers created amazon and publishers created the amazon problem. Amazon is now commoditizing book of pushing and saying that all books aree interchangeable objects and it does not matter what the consumer buys. Pressure onting the the publishers to give them terms they want. Faces a bigrs now decision will they give in the amazon terms or are they willing to pull the Nuclear Option and pulled her books from the stores . Think the publishers need to quickly diversify their retail distribution so there not so dependent on amazon. Amazon has shown not just they are predatory but a lot of publishers are starting to see amazon as arrested dog, someone they cannot do business with. Rabid dog. They feel amazon will destroy the business. Trying to alienate all the Book Publishers in the supply chain. Very interesting, thank you for being here. At t and directv executives are in the hot seat defending their proposed merger to congress and we will show you how they say the deal will benefit consumers. You can also watch us on Bloomberg Television, streaming on your phone, your tablet, and bloomberg. Com and now available on apple tv and amazon fire. Bloombergback to west. Google is testing the domain registration business doing an invite only test on its site. Is tankingeb. Com today. Will offer domain registrations for 12 annually with free privacy. Most companies charge extra for web privacy. Ceos of at t and directv are testifying in backtoback hearings before Congress Today about their 48 billion proposed merger and megan hughes is on washington. What are these guys saying there . From thee are hearing executives is that this will be a good thing for consumers. At t Ceo Randall Stephenson says this will allow them to offer bundled services if thats what Consumers Want and that they will be able to compete with the big cable providers. Here are a couple of stats content costs would be lowered by 20 for subscribers. He said it would mean 1. 6 billion dollars in cost synergies over the first three years. Broadband extension would be extended to 15 million areas especially in world areas. Directvs Michael White says this to me, the exciting thing about this is not just the commitment we make today but the fact of at t having a profitable video business will support them to continue to invest in increasing speeds and broadband which we know thats where the future is going. Expansion has been a top priority for many lawmakers. We heard that being brought up over and over again today so that is a sweetener. Another sweetener and proposed merger is at t promising they will abide by 2010 Net Neutrality proposals from the administration. They dont have to but they say that is something they will do it this deal goes through. What do the opponents of this deal say . We are also hearing from consumer groups, representatives from smaller cable providers who are against this deal testifying in the earlier hearing today. Consumer groups are arguing the opposite. They say this will put upward pressure on pricing. They are focused on pay tv. There is some overlap because at t does provide Video Services in 21 states. Directv provides Video Services across the country. There is some overlap and they say it will mean higher prices specifically to pay tv. Piece by fredreat hickey last month and he talked about all the places we see inflation that are not measured by the commerce department. Cited cable tve and how much those fees have risen. Is that something that has resonated with lawmakers . We are not hearing a lot of specific opposition from lawmakers or specific concerns when it comes to this deal. We hear some very broad statements of concern about the general landscape of these megamergers specific to telecommunications. It does not really have to do with paytv or content providers as much. We hear more questions about rural broadband, access for rural areas, unions and what this means for workers, those sorts of things. Does not seem there is a lot of direct opposition to this deal as much as there is general concern about this year of megamergers we are in. It sounds like they are having this hearing in 1982. Its worth mentioning we have another hearing coming up on the senate side at 2 30 p. M. Eastern and we will year from senator al franken who is a big proponent for the comcast time warner deal. We may hear more from him this afternoon. We can only hope. Thank you very much. Google io kicks off tomorrow but what will be unveiled at their annual Developers Conference in San Francisco . That is next on bloomberg west. It is 26 minutes after the hour which means Bloomberg Television is on the markets. We are at huge session lows area of the s p 500 is turning lower by 1 10 of one percent and the nasdaq is impoverished is in positive territory. The data has been better. New on sales is up the most in 22 years. The stock market is not listening so we have a lot of headroom at the moment. A couple of stops to stocks to look at the Pharmaceutical Company ce rtex is up. Bloombergwatching west. Google is kicking off its annual twoday developers concert, google io tomorrow. Designers and developers and marketers will be involved with the apple operating system the google operating system. Ofre is a possibility products being announced. What do you expect . I think the key thing for google is you want to hone the developers efforts and focus on certain areas. Will it be chrome or android or mobile or wearables . These are the areas where google has had stakes in Hardware Software combinations. The key thing for me is the three messages i want to take away. There is 10 or more. What are the three areas i want to take away . Wearables is an area of interest. I want to see some new developments there. I would like to personally see something in the automobile area and i want to see advancements in all of their current product platforms. I think how why do you want to see that . Why do you want to see them active and wearables . Its an area that has attracted a lot of buzz and you want to also see something that competes with apple from a competitive standpoint. I want to see what they can do in this industry if they put their minds to it. I know what are the highlights of google i o is that i get quality time with you tomorrow. What do you see . The one story that will probably happen is wearables because we are awaiting the launch of the apple smart watch and the fact that google is ready to go. That got there androidwear software and smart watch partners ranging from lg to motorola to samsung so they have an opportunity to get in front of those developers and say get to work. They will need those developers on their team to really make a difference or make google part of this Big Conversation of where smart watches are going. They can spend time talking about the power of android in butr areas and they will they have already defined a smart phone market. In the first quarter, android was used in some way, shape, or form on more than 80 of the phones that were shipped. I have to think of the next categories and i think thats what people are focused on. We saw samsung announce a fitness band demo a couple of days before the last apple announcement. Do you think we will see a lot of partner products or partner potential products . That is a great question. How they approach and position the product will be key. It could be an android wearable made by samsung or a Samsung Wearable that has android on it. Theres a subtle difference in the two and how they market it will be a big piece of how the roddick is positioned. How the product is positioned. There is a significant amount of integration going on between the various operating systems that apple has. There is subtle integration facets. The ecosystem is coming together. Wearablesd and the are positioned on the competitive side will be important. In terms of tomorrows big show, do you expect a lot of buzz from developers . Everyone has been so google glass. That was the real excitement factor couple of years ago when sergei brin was making a big splash. He parachuted into the event last time, two years ago. He didnt but he got us excited about watching somebody do that. Thats good delegating. Function. Tive there you go. Google glass is really controlled by google right now. Youve got android which is this world that is shared. If they are pushing ahead with software for smart watches under the android label, how does google glass connector that . You will see a lot of people wearing google glass and they will have those questions. I dont think google is ready yet to talk specifically about how those two different wearable categories could come together. I think people are excited to talk about that. Jon will be in San Francisco tomorrow for google i o. Sprint has raised the stakes in his battle with t mobile. They say new customers can now drop their Service Within 30 days with no penalties. Its in response to a new team mobile promotion that gives you a seven day trial period