Sales on the first day and its one of the most expensive video games ever. Intel is holding its Developer Forum in San Francisco. We are live at the event with the very latest on their new products including what they hope our cuttingedge wearables that can be worn everywhere from the golf course to your surfboard. Perhaps the most important product at apple that they introduced is not a smart watch or iphone but apple pay which tim cook says will forever change the way we buy. It will store credit card information on the iphone and allow users to pay for items by holding the phone next to a reader. You can just wave your wrist of youre wearing a watch. Apple has lined up 220,000 retailers along with visa, mastercard, American Express and they claim the product is more secure than a traditional credit card. How does it work . Is it a game changer and can apple succeed in a business where other tech giants like google have not . Is our guests to talk about it. Gentlemen, thank you for joining us. How did your partnership with apple come about . It is a good story for us. They reached out across the aisle and folks have tried to crack the mobile payment space and apple got it right. They realized it was an ecosystem in their platform where they have a hundred million cards on file and recognize that in order to play in this space coming in to work with the banks and the payment networks. They came together well in their leveraging a lot of technology and effectively using what they do well which is devices and software. We do what we do well which is security and putting both together. The newve to wait for device to see how this works but how does it work or how will it work . Whats great about what is happening here is you can expect it to work. As one of the things that apple does well. This is one of those instances where everybody wins. The Card Companies get that her fraud protection, the consumers get a more secure system, the retailers win at ease of transaction. This is really a wonderful moment in time where all the interests of a line very nicely. What makes the way apple is doing it better than the way google tried to do it . Apple has taken what theyve done well in the itunes ecosystem and reaching out to the networks and the banks. They are replacing their cards on file with the new 16 digit digital account number that is tied to the device. It will only work on that device so thats a security layer. Google link there the night respect to the banks, the banks understand what is happening. The authorization system and all the security and trust the niece would happen in payments is preserved. So if i make a purchase at target and theyre one of the Retail Partners that target will never have my credit card . Thats right, they will get a 16 digit number that is linked to your card but not the number your bank gave you. If that number is compromised or use outside of that apple device, the banks and networks know to kill that transaction. What if i make a purchase within an app that is already on my phone . Stripe is already partnering with apple and they make our various apps. Tim cook talked about things like opentable anduber as an example and they are writing to the new ios and will pull it 16 digit number off the device. It will be coded to the new apis that apple has. Does that mean that uber will have my credit card . Just the digital account number not the card number. How long will this work . What about apple bringing in various partners . They pulled another itunes here. They transformed an industry. It looks to me like theyve the Critical Mass with the retailers on board, Card Companies on board, the banks on board. Youre going to have everybody was not on board looking to get on board in short order. It accelerates the Consumer Experience and thats what everybody will want to be a part of. Breakdown for us who gets a cut of what. As i understand it, apple is getting a cut of Bank Transactions . Are they getting cuts of the card fees . There is no contractual relationship with respect to conduct commercial terms and revenue sharing. The banks each have to sign a contract directly with apple that we are not privy to. With respect to the Card Networks and economics inside the payment transaction, nothing has changed. I dont have anything to add on the bank front. Why is this so opec . This is not something apple wants to advertise and its very much par for the course for them to keep things close to the vest. I imagine apple will be making money. They will sell more devices as a result of this. This is a great game changer for the handsets and the watches themselves. Its a really elegant system and it will help with their hardware sales. Whatever their cut is of it exists, they will benefit through increased hardware sales. Visa is also trying to help expand this abroad. What is the outlook for that and what are the challenges . The way we designed this service is we designed the visa piece of it and that is based on our global platform. Anywhere visanet is today, we can provide the service. What we announced yesterday is that capability. We follow apple around the globe as a result and when they go into other markets, we are ready to participate. Will apple pay be more secure than other forms of payment . Potentially its more secure than a waiter taking your credit card. What about other payments that happen electronically . That is part of it. Its an Electronic Security system with unique id so it is more secure than the alternate. Is it perfectly secure . I doubt it is perfectly secure and we might have a learning curve along the way to make it more secure Going Forward but its elegant. We have always built the business on the notion that there is no such thing as her fake security so it is always layers. What they have done is take what we do well in our core network and extended around things like to authenticate the device and the digital account number. You have a card number that is only associated with that device so that everyone if anyone compromises it, there are added layers. How far into the future do you see a time when we will not be using physical credit cards . Change. Behavior has to swiping a credit card may not be the safest but we are all used to that and is not that difficult. Challengesart of the the behavior issues that often times have been left out of the discussion have to change. The good news is the fact that apple is creating a reference platform and a scanner everyone can point to and that really accelerates that Movement Toward digital over physical. How fast . When everyoneon else follows but could be a decade or more. Generally speaking, the fact that the internet of things is going on around us and you have connected cars and devices and wearables now, it effectively takes all the thing that cars do well today and puts it basically in embed a devices. You can start to see the way forward. All right, jim mccarthy of these, thank you a visa, thank you both and its good to see how it will work in practice. Intel is hoping his 14th annual developers form here in San Francisco and the event brings together developers and makers and creators to showcase their products and stay on top of the latest tech trends. Cory johnson is here is at the events at the Mosconi Center with more. Give us the latest. This is a big deal. Most computing happens on these intel chips. Intel is trying to be more relevant and mobile on the front and. Which is a wearables big focus for intel today. All the attention the iwatch got, this is from the opening ceremony. This is a lovely bracelet but on the back end, its got a screen and it will take Text Messages and allow for all kinds of communications. Its one of the innovations they are working on and its coming out in the fourth quarter. Beingmong the things discussed by the thousands of Developers Gathering from all over the World Learning how to program intel chips and what the latest and greatest might be building on those chips. We will talk to a bunch of different people working in those innovative designs and the way intel is changing business on the front and, on the wrist, and on the back and in the nature the internet works and that will be discussed later today. Is it going to be better than the apple watch . That is the question. We are looking forward to it. Cory johnson at the intel it looks good. Still ahead, day three of the alibaba roadshow and jack ma is wrapping up his sales pitch to investors and we will show you a promotional video next. Bloomberg wes. The alibaba roadshow was in baltimore today which is day three. They are trying to convince investors to buy shares of his u. S. Ipo. In a new promotional video posted on the chinese video site ma talks about how it helps Small Businesses grow. I am founder and chairman of alibaba group. 15 years ago, 18 founders in my apartment had a dream that we would create a company that was served millions of Small Businesses. Today, this remains our mission, to make it easy to do business anywhere. For more on alibaba, i am joined from new york by leslie has been oncker and the road with alibaba. How is it going so far on day three . Its busy, theyve got an amazing turnout at both places in new york on monday. We were at the waldorf astoria and yesterday in boston. On monday they had upwards of a hundred people who showed up it is something you see with these bigger deals especially the ones that have gotten a lot of Media Attention with prospects. Many investors say they cannot miss out on this. What kind of questions are investors asking . One of the main questions involves things like your mobile capacity, what they see in terms thisbile pregnant presentation and how they plan to monetize that. Other questions involve corporate governance. They had a special Partnership Structure which allows 30 individuals control over nominating a majority of the board so that is thing that investors want clarity on in terms of what that means for their ability to have a say in this company that theyve plan to potentially take a big stake in. Jack ma potentially has a lot to celebrate because it is also his 50th birthday today. I wonder how he is celebrating. Thank you very much. As for the man who founded alibaba, it is not quite a rag to riches story but its close. His first job paid him 15 per month and now he is worth about 22 billion. Who exactly is jack ma. We took a look. Singing on a stage before thousands of employees, jack ma is not your average corporate chairman. He flunked his College Entrance exam twice. He learned english and became an ingush teacher and then left the classroom to ride the internet wave as chinas economy opened up in the 90s. He contacted 80 people to give him 60,000 and recruited 17 partners and alibaba was born. Even though he is just over five feet tall, his largerthanlife personality has helped alibaba grow into the ecommerce giant it is today. Atsings and performs weddings for employees during corporate events. He is a huge fan of kung fu and started Tai Chi School with actor jet li. He quotes chinese philosophers at meetings and his own wisdom has helped grow his personal fortune to 22 billion. Jack ma is now chinas richest man ahead of other tech titans li butnyma and robin its not just about the money. He said if ali baba cannot surpass microsoft or walmart, he will regret it for the rest of his life. Giving west will be be bringing you a halfhour special, the alabama story the alibaba story. Its a documentary about alibaba. That airs tomorrow right here on bloomberg television. Is intel branching out into fashion . Find out how the Tech Companies going chic next on bloomberg west. Welcome back to bloomberg west. Develops partnered to cuttingedge wearable devices. Lets get back to the intel Developer Forum with cory johnson. He is getting a lesson in fashion which he sorely needs. You saw the apple watch yesterday. How does this intel band compared . The apple watch is interesting. Wear heart rate monitors and i have the pedometer around my wrist and its an interesting the way communication work. These are very early days with vista. Intel is concerned about this and the guy in charge of that, mike bell, who ran mobile chips for intel talk to me about how intel looks at this world because we dont know what it will be. You have to put plans in the grand years before you get to a place and have do you and have you imagine what the industry will look like . We try to imagine what people want to do with this technology and we look at it as not Just Technology but a marriage of fashion. Its very personal what you wear which is a reflection of yourself. Were working with partners who are experts in the fashion feels in the watch feels to help guide what we do and build the products together. , shouldwe see products should wees look at these from the angle of where innovation will happen or should we just accept that we will have an apple watch. . I think we are going to see things change and evolve. I think Technology Companies have brought out things that are somewhat obvious like cell phones attached to your wrist and a niece to be a marriage of fashion and technology. First, there is this watch we showed from the opening ceremony. What am i looking at here it looks so good that people would wear it even if it did not have technology. It does look good. I cannot wear it as well. The Technology Blends in. Forcan check on the bottom notifications but no one would know youre wearing technology. That is the point. This Smart Technology needs to be fashionable. Andrea has this heart rate monitor built into the headphones. Donate to the headphone thing, it reads the heart rate . Yes, it where it reads it optically. There is no battery to charge so it magically works. I use it in cycling every day. Does the stuff have intel chips . Some of it doesnt some of it doesnt. Power the out how to headphone off the earphone jack. The other device has intel chips inside. Is the notion fundamentally that you will drive more traffic to the internet and somewhere intel wins or is the notion that intel will make chips that go into these devices and therefore benefit from those devices . Both, we will produce the best chips on earth that will go into the devices would also have the data center on the backend that these devices talk to. On some level, youve got to say our goal is to sell chips as opposed to using computing. Andur goal is to sell chips help build the best wearable devices on earth. The Data Center Group makes the best service on earth so one plus one equals3. Lets talk about the computing challenge of these things. Make it smaller, make it faster and make it use less power but specifically with wearables, what the computing challenges of the silicone level . You have to be very power efficient and have enough Computing Power to do the test you want to do. Our Technology Lee lets us do both at the same time so we dont have to make any tradeoffs. Lets talk about power efficiency. Compare that to the pentium of 10 years ago. Thats many magnitude less. Its almost as powerful as the pentium of 10 years ago. To changes we have been able do a making Technology Smaller and sell faster and more battery efficient so its not a lot of science, a lot of intel setting goals and marketing . Yes and we have hit it on the mark every time. As it relates to wearables, are there different kinds of chips being developed . Looking at chips for wearable devices that go on your arm, on your head and various places. They are different usage models of are building chips specifically to do something really well like a great ship are doing some the visual and another great shipper doing Something Like your wrist. Five years from now, how big is the wearable chip business for intel . We would like to be a leader in the space. Give me a number. The pundits say the market will be 50 billion devices and we would like to have a good chunk of that. Half . I would rather be cagey. Thank you very much. I think this is early days with this stuff. This starts to get the juices flowing. All right, cory johnson, looking more fashionable already, thank you. ,ctivision has met its destiny the companys latest videogame has generated more than 500 million in sales the first day. We will discuss that next. You are watching bloomberg west. I am emily chang. Theosoft is in talks to buy sweetest Company Behind the popular mind kraft game for more than 2 billion. Microsoft believes it can boost to mind kraft sales by using its leverage in video games and computers. It would be the biggest nudellaion sense sasha took over. Activisions destiny has left a has made a splashing debut. It went on sale around the world yesterday and has generated already more than 500 million. The game also cost nearly as much to make and market. For more on this success, lets ter whon michael pac likes playing games himself. How big a deal is this . \ its a big number. You have to focus on the fact that it is sellin which does not mean that the consumers but that much so it is a whole cell number. That means 10 Million Units were shipped to retail. That tells you that retailers expect they will sell all 10 Million Units and they do not have any plans on having these things gather dust. My guess is its all have that many in the first day and thats a gigantic number. My guess is it will probably sell 10 million by midoctober and you will get some reorders next quarter so its a big game. Does that mean they have to billion dollars they have invested in this game is worth it . Firstnderstand it, the five days of sales are the most important and thats when the majority of the revenue comes in. Pattern on