Personal device we have ever created. We set out to create the best watch in the world. Precise. Is its synchronized with the universal time standard and it is accurate within plus or 50 milliseconds. It is incredibly customizable. Can find one that reflects your personal style and taste. Watch they showed up to new iphones, not just bigger but also thinner. Our editor at large and i spoke who has beenster covering apple since 1995. No. This is the first apple product i am not rushing to buy. Completet feel like a rodda to me. It doesnt have the emotional connection to me. I am an avid watch wearer. I have a lot of watches. I spend a lot of time thinking about watches and how they relate to me as a human being, and do this watch was not speaking to me. Too early and too premature. You and i spent a lot of time talking about watches and about who we are and what we like. How do you respond to that question mark how do you respond to that . I think this is a critical time for apple and as the utility and fashion evolves the opportunity will prevent itself present itself. My response to that would be 2050 is the where year where it will take shape. Is the year where it will take shape. And as Developers Get a hold of it this is the year that it will turn to yes. What i am saying is that as a watch it doesnt have anything that i want to wear right now. Now or 18 months from now it might be different. This is a much more personal expression. Whether it is a watch or a bracelet and has to appeal to your inner self. Right now, it doesnt. That is what i am trying to say. In 2016 or 2017 we dont know. You are as informed as anybody can be. Are you going to buy one . Think omar is a stylistic guide. That is a challenge for the for theis making things company. That most people wont like. There is an elite cross to a lot just becauseucts of what it costs to get into the device. That has not been the approach for apple, as long as everybody has a lot of bread. Stayed in as different kind of business here. The thing isnt available yet and we are debating whether or not we want to buy the thing. I was tweeting out victors on twitter and instagram and sending out video of the watch and i got a lot of interesting reactions from people. They were going to talk to us about how difficult it would be for these guys. Its new in so many ways, not the least of which is that it has this watch os that will take developers time. Developers can do new things especially with all of these sensors, the conductivity to the phone. , is thision statement going to be cool. You wont wear it, but it is a social pariah for the google glass. You would not be uncool if you were that. It is an apple product. It has all the hallmarks of a classic apple product. It is well made, it is beautiful. The os is very smooth. The technology is well thought out and very carefully crafted, but again it is not a slamdunk for them. The iphone and ipad were game changers. I dont feel this is a game changer just yet. Youteve how optimistic are for the watch being a potential game changer how much will it add to apples bottom line . I think in 2015 it will be modest. In 2016 it is the wildcard in terms of what developers do and how the watch evolves. Its important to recognize that wearables are a category for the future. It will take time for the value of this to evolve. Still ahead, apple may have created apple pay but what about the Payment System hoping to power these transactions. You need to work with a payment platform. You need something on the other end that enables you to charge the credit card. Obviously strike is already doing this today. Us and wepproached worked together over the past couple of months how to make it easy for developers to take advantage of that. We will be working with these developers over the coming weeks and ensuring that their apps are ready. No do you do all of the transaction or part of the transaction . For the apps that are built on stripe, there is a really long list, we will be handling all of their apple pay transactions. What do you think the chances are that apple can replace the wallet. The physical wallet. I think it is interesting with stripe. It took so long for it to happen. Stripe didnt launch until the end of september. I think that is because it requires the assembling of so many different components. Developersartups and and financial partners. You see the same dynamic at play in mobile payments. They have assembled so many different pieces. Stuff, thee retail devices. The user front end app that even, i think though there is a half old field of corpses that are present with apples antecedents, i think that apple pay as a really good chance. It is one of the first that has checked all of the boxes. About how fast this can really be adopted . And how fast i can change . I think there are two distinct trends here. Poss have been quietly happening, not just in the u. S. But around the world. Nfc is a technology that makes apple pay possible. Trend other interesting that has a significant bearing is that a lot of these transactions that we think of as offline or retail are shifting into offline or online. Any of these apps, these are supplanting ecommerce transactions they are replacing things at a restaurant or a taxi we would previously have swiped the card. So it has become a nation of these four transactions in general that are moving into apps and the pos systems from large retailers that are already in effect them a i think there is a ready ecosystem. It seems like this is bad news for ebay which owns paypal. Supporte says they will apple how is that different. Apple has worked with a small list of partners. Large payment processors that are owned by banks. Because we work with the fastestgrowing apps, i didnt know what ebay or braintrees plans might be but there is an interesting strategic misalignment at a level between paypal and apple. Paypals strategy is to on the consumer relationship. E wallet system designed in the 90s. Apples fundamental idea is that you should need another wallet. You shouldnt be bounced to another website, you should be able to authenticate with your fingerprint and the transaction is done. Watchl be interesting to that play out and it will require that ebay and paypal will reconsider the value proposition. In any way is what apple is doing could it take braintree and ebay out of the equation . The design today is quite carefully crafted so that it enables apple to provide the User Experience that they want for the user while still maintaining all the other properties that are required for the other parts of the ecosystem. In multipleing countries, on different devices, are selling do these Companies Need to have a kind of infrastructure and it would be an enormous undertaking. I think it is a more obvious strategy to go and work with the most Successful Ecommerce platforms. It would be an entirely different Business Model to aws, justbuild because apple wants to have a backend for things that run on the phone. Visa was on earlier and they say apple isnt getting any cut from what they take in the transaction. Is apple getting anything from what you get. We cant comment on the economics, but there will be no charge for our developers. And the apps that you power like lift, they will still have our credit cards . Interestingly very but neither apple itself nor the phone stores the number. Behindthescenes, what happens tokenizede number is and then token is a unique number . Exactly, to that device. Isn a single use token obtained on a per transaction basis. For the User Experience, that doesnt change. Paymentstore your details and request the right as normal and the billing happens to your credit card as normal. All that is changing is that it is substantially more secure. To be on a seem roll, you powering the twitter by button, how does that work for you from a strategy perspective . It is all very much oriented on the same pieces. We have for a long time talked about this idea of building an economic infrastructure for the internet and how there should be more ways to pay them there are, and a major contributor to the limitations is that the infrastructure hasnt been there to enable them. If it was easy to buy something with a tweet, aliens of dollars would be happening. It is an obvious is this model. There are more Internet Users in china than the u. S. The fact that these Internet Users cannot buy is ludicrous. It is a collective failure on our part that we are not enabling. It should be happening and we have to figure out how to get it. People love to portray the stuff and they in a horserace basis,ty, but on a macro 2 of Consumer Spending happens on the internet. The question is not how it happens, but is how it goes from 2 to 10 to 20 . Patrick ct heard ollison, but will apple pay swipe at from the service . Well hear from bill redding, next. Welcome back to the best of bloomberg west. Im emily chang. Apple pay will launch in just a few weeks. Paypal will be supporting the device, however, it is not on apples list of official partners. Does this spell problems for paypals future . Cory and i spoke with bill ready, the c. E. O. Of braintree, also a paypal executive and asked why it was not an apples list of partners. You look at the list of partners that are not there. I think, you know, it is an interesting product. If you look at n. F. C. , though, it has been around for a decade and it hasnt really gotten traction. There are a lot of Unanswered Questions on security, wholl be responsible for fraudulent transactions . Is the merchant responsible for those . Until those questions get answered, i think a lot of the merchants will be looking at it. For merchants that want to use us, we will support those transactions. We said well support these transactions because they are an open platform but until the questions about security, who holds the responsibility for fraud, i think youll see the players in the ecosystem waiting on walmart and best buy and others. Does the biometric identification, does the security inherent in that change the reluctance of some retailers that might be willing to accept the fraud risk because they know it is great, it is lesser because of i think that is a question that is still left to be answered. I think that the product is not out there yet so it is hard to speak to it. How hard the biometric security is going to work. The fingerprint scanners are better than that they have been, but they are not foolproof. There are a lot of those questions that are there. I think it is still open for the merchant who is going to be responsible for that fraud. It is not just about the finger print scanning. What happens when an account gets hijacked . These things do happen. When that happens, a lot of this rides on tokenization, a Virtual Credit card number. When a transaction happened, rather than having the credit card number pass, the onetime token number passes. Thats exactly right. However that makes it so if one account gets hacked you dont have to reissue plastic cards. At the same time that often gets picked up after many transactions have happened. Who covers the fraud . That is a big unanswered question. There are a lot of questions about where apple pay really succeeds. We spoke yesterday with stripe ceo patrick collison. Take a listen to what he had to say. It is an interesting sort of strategic misalignment at the macro level between paypal and apple. Paypal is a wallet system designed in the 1990s. Apple pay kind of the fundamental idea behind the product is that you shouldnt need another wallet. You shouldnt need to go somewhere else or be bounced to another website or Something Like that. You use your fingerprint and the transaction is done. How do you respond to that . Paypal is big in itunes. Google has Google Wallet but recently added paypal as a payment. One of the things people dont really appreciate is while paypal functions across the ecosystem, it functions from consumer to merchant and everything in between along with being the most trusted digital wallet, it is a Payment Method and platform. The button you push may be itune or google play but paypal is a payment within that. It supports a number of transactions when we are were not necessarily the wallet. We can say we accept other payments like bitcoin. We said were going to make it seamless for merchants to accept a number of wallets and payments. The world will have more of this. Including apple pay. You are compatible with apple pay, however, apple is encouraging people to use the official partners. Right . Does that mean it is risky to develop for apple pay using braintree . Absolutely not. Apple said here are some providers we recommend. But we work with any player that is out there. We strongly recommend you use somebody that has an s. D. K. For these things. We certainly do. Youre requesting the tokenized card number. There is not a lot more there than that. That tokenized card number we support those today. We support that standard. We have been a pioneer in tokenization for years. We more than anybody else has driven these kinds of things. From that perspective were better positioned to handle it than perhaps anybody else in the industry. Braintree c. E. O. Bill ready. Tmobile is doubling down on wifi. Ill speak with john legere about the latest move on the best of bloomberg west. Youre watching the best of bloomberg west where we focus on innovation, technology, and the future of business. Im emily chang. On the heels of apples new product announcements, tmobile made some headlines of its own. The uncarrier announced several updates to use wifi calling, a personal cell spot, and free wifi. I went to their event in downtown San Francisco and sat down with john legere himself. I started by asking how many uncarriers can we expect . This is the seventh one. As many as we have aim points in the industry that need to be solved. One of the things we talked about in the session here was a trivia test to ask people when do you think was the biggest growth month in the history of tmobile. Everybody had a lot of guesses and the answer was august. The momentum of the company is great, and we unleashed wifi, which means every single device we sell from now on will be fully wifi enabled out of the box. Every wifi place will be a tmobile tower. Then we have the personal cell spot, which is our own capability in the home to give five bars of coverage wherever you want it and a relationship with gogo that will give you texting and visual voicemail capabilities on planes. Youre basically giving everyone their own personal cell tower. Personal cell spot. Hard to reach places you are probably one of those wealthy people with a gigantic home and down three stories you have this office. You get five bars worth of coverage. I wish. Is this an admission your network isnt that good and you need help . I love this. The first couple of questions i got generated by one of the three c. E. O. s of at t. They didnt talk to me. I came up with that all by myself. They said what are we going to do when tmobile announces this wifi stuff. Say they had to. My first answer to that is who cares . Who cares if i can give a customer a full five bars capability, who cares the reason i did it . 57 of wireless customers say theyve got some dead spots in their home or have a drop call capability. Not 57 of mine. 57 of all. Historically, that is why tmobile fell to number four. Until you came along its because of the coverage. I know you have been working on it but how much has improved . We were here, we have zero bars of lte. We have 234 million pops. Weve got nationwide volte, which nobody else does. Yesterday there were discussions about their cave billet these and it was clear they are moving to next generation wifi calling and the only ones that have that is tmobile. 17 markets of wideband lte and moving. Its not so much where we were and where we are but where we are going. It is proven. We are the nations fastest 4g lte. Everyone uses us but you and cory. I dont know what your problem is. I need a little convincing. Apple announced you are the first carrier they are working with on wifi calling and texting. Just last year, tmobile did not have the iphone. How did this deal come about . How did you make it happen . Listen. We are not a utility. We are a mobile internet company. We think about things differently. Our network is brandnew. We went from no lte to nationwide volte. We are the only ones who got it. We think differently and we are providing our we are all about providing our customers what they want. Theyve got Utility Company assets and mindsets and try to depreciate technology before they move on. Its not about customers, its about them, what they have what happened they think. Trickery, old assets, i like it. How did this conversation start . Did apple come to you or did you go to them . Are not authorized to talk about it. Apple not speaking about yesterday in particular, they are a game changer. Only apple can change entire industries. What they talked about with mobile payment yesterday with the watch, its taking things mainstream. Frankly, i will tell you when apple mentioned us on the call, we were surprised. That they spoke about us. Obviously new iphones coming out mean a massive opportunity for carriers to potentially gain or lose commerce. You said youll beat everybody and give them an extra 50. A new device is a switching opportunity. When a new iphone comes out, the Biggest Group that risk is the group with the biggest base of iphones, which is really at t. That is the biggest switching pool. We announced something this week what im trying to take the uncertainty out. So much of the industry is trickery. The way people do trading is trickery. It is like old used car deals. I used to go with my father and they would try to screw you with tradein values. So we say we know tradein values. We put out a guarantee you will get the best tradein, and if you dont and see within a week that you didnt, well match that and add 50 to it. You have really shaken up the industry and everyone gives you credit for that. Everyone even cory. Prices are going down but this is coming at cost. These new customers that you are getting is coming at a cost. I wonder how long can the carriers keep doing these kinds of things to each other . Youre not really hurting the business or damaging the business. What things are we talking about . Think about today. We have the same pricing plan. The simple choice pricing plans. Weve been very consistent about it. We have enabled the capability that customers have resident in wifi and utilization of technology in devices. We already have unlimited talk and text. Were simply going to give something additional to customers. Once you get all the customers you want, can you sustain