Transcripts For BLOOMBERG Bloomberg West 20151110 : vimarsan

BLOOMBERG Bloomberg West November 10, 2015

He died today at his home in ham burg at 96 years old. Cory i am cory johnson, in for emily chang. Coming up, emily sits down for an interview with one of the top executives of xiaomi. Apple shares drop after wall street analysts say there is weak demand for the latest iphone. Tmobile betting that free video streaming will drive user growth. Will the move hurt more than it helps . Hourly bottom betting that shopathon will reverse a plunge in market capital. Ma will answer the call for National Champions in technology. Emily chang is in beijing with this report. Emily we are here at the water cube, the olympic venue where Michael Phelps won 8 gold medals. Is kickingre alibaba off single day, the biggest shopping day of the year. It dwarfs cyber monday, black friday. Last year, 9 billion were conducted in transactions on alibabas platform. This is a day they invented to encourage shoppers to go out and buy for themselves. We are seeing more International Brands participating this year, including apple, costco, macys. On majority of the buyers this holiday are still right here in china. I will be sitting down with jack ma, chairman and founder of alibaba to talk with him about his vision for the future of the company, his strategy for international expansion, and how he thinks this singles day will go down in the records book. Cory emily will sit down with jack ma tomorrow morning at 9 30 eastern. Xiaomig of singles day, is selling up to sell 2 million phones tomorrow. 45 billion profit valuation. By some estimates, fourth largest smart phone maker in the world. Since 2011, they have made moves to expand out of china. We sat down with the Vice President of global operations, hugo barra. We asked for an update on business outside of china. We started with our Global Business two years ago. We added markets in singapore and malaysia and finally entered india and brazil. 2014 was just Getting Started for us. 2015 is the beginning of acceleration, particularly with india, 3 million phones sold in one year. It is really beginning to form a meaningful part of the business. I will not give you a specific breakdown yet. Maybe next year. But it is meaningful enough that it really matters. Emily how much of the business is still smartphones . Smartphones are the flagship product. Have a very significant line in consumer electronics, particularly smart devices. It ranges from mobile accessories like powerbands, audio products, speakers. Emily of those devices, which are doing the best . Which are getting the most traction . Probably the most popular smart device is actually this one, our first wearable product. We sell about 1. 5 million a month. It tracks your sleep, exercise. It has a battery that lasts 45 to 60 days. Is doing well around the world. When did you see these accessories becoming a meaningful part of the business . They are already a meaningful part of the business. Ideas, newy neat ideas in consumer electronics, are really beginning to define us as more than a smartphone brand. Emily is that part of the business profitable . This part of the business is very profitable. Emily we are coming up on singles day in china. What kind of promotions are you offering . What does this event mean for you . 1111, is one of the biggest days of the year for ecommerce. As the thirdlargest Ecommerce Company in china, we have to be ready. We have prepared 2 million smartphones to sell in one single day. We have prepared new accessories, new wearables with a heart rate monitor. We are launching a professional grade headphones. A new power bank. A few other things on this day. All the planning we have done for the last two month is for one day. Emily and they are discounted . Some of the products are discounted. Inly xiaomi always comes up the u. S. When they talk about the reorganization of the smartphone hierarchy. I know xiaomi and apple have been jockeying for the top spot. How much does it matter . It does not really matter to us. We are such a different type of company. I almost cringe when someone compares us with other smartphone brands. We are an Ecommerce Company operating at a different frequency. We care about different things. We care about engaging users, care about users using our services. Emily how are you guys handling slowing growth in the chinese economy . China is still a very large Smartphone Market. Over 400 million smartphones a year. , it willhat plateaus be the largest market for the next decade in the world. What matters to us is not so much whether the market as a whole is continuing to grow, but what is happening to ecommerce. Over the next decade, you will see retail in china go from 10 today to 50 or more. That is the way we are riding. We are fundamentally an ecommerce business. 70 of our products are sold online. That growth is not going to slow. Emily last time we spoke, you said you will be launching phones in the united states. What is the timeline . No timeline yet. But it is on our radar, we are thinking about it. It is a complex market that requires Operational Efficiency on the next level, which we are working towards. Emily it is on your radar or it is going to happen . It is going to happen. I just cannot tell you when. I have to ask my obligatory ipo question. Looking at the future of xiaomi, do you see an ipo . What does the future look like . No ipo plans. Being independent allows us to be super nimble, move in the directions we need to. We are a Profitable Company and do not need an ipo. No ipo news for the time being. Cory that was xiaomis Vice President , hugo barra. Up today, butsing apple shares were down solidly. The iphone maker lowered orders by as much as 10 . Sat down with a Credit Suisse analyst. Fundamentally, the iphone business is mature. 150 billion in revenue. Are thetive drivers active users still growing. 500 million users this year, heading towards 600 million. That will be good for sales going forward. Installment has had a positive impact. Cory other analysts were defending their calls on the company, saying, here we go again. We will see. Hugo barra. With xiaomi is more than a phone maker. Emily chang got a chance to test drive the nine bot. Details on that later. Really. Surfing. Ng is office cory we continue with a inside look at xiaomis business ahead of singles day tomorrow. They are trying to carve out a market in india, taking advantage of a booming indian economy. Hugo barra explained what it takes. In one year, we sold 3 million phones. We just passed our First Quarter ever where we sold over one million phones in one quarter. This is primarily an ecommerce business. These are all phones that we sell online. We have been growing at an astonishing pace. , 45 quarter15 over quarter growth. The demand in india is well above expectations. Emily you are also building out the ecommerce business, which is what makes xiaomi a different kind of company. Tell me about that. We are an Ecommerce Company, an Internet Company and an online branding india. Almost every single smartphone we sell their is sold online. Five months ago, we launched our only commerce operation in india, mi. Com. In five months, without investing one dollar in advertising, we had 10 million visits over the last month. We sell through a mobile app. Pp ine the number 8 a india. Without advertising. It is all coming from the demand for smartphones in a market going so quickly. More people are accessing the internet, in most cases, from a mobile phone. Ecommerce is beginning to thrive in india. Emily one of the interesting things you are seeing in india as people buying new phones on a phone. You go to your phone and you buy a better phone. Ecommerce at traffic and transactions in india, already, half, if not more for some websites, are coming from mobile phones. Theh is very different from u. S. , where people use their phones to shop for products. But they end up making the purchase from a pc. In india and china, it is very different. Mobile is such an important sales channel. Emily how many are made in india start to finish . We started manufacturing in august, so it has only been a few months. Are most popular model is actually manufactured in india. We have a manufacturing facility in partnership with foxconn. We have branded the phones made in india. Every model we launched with the word prime in it is manufactured in india. Emily why is it significant to have a phone made in india versus elsewhere . Supply chain efficiency. We reduce the time it makes takes to deliver a phone to a customer. That is really important. The economy gets better locally because you shorten the cycle. There are tax benefits to manufacturing in india as well. Really latched on to the fact that the product is made in india. Is made in india label important for us and has actually increased demand. People are more proud to buy the product. The indian market different than the china market you are used to . Localizeyou doing to the futures of the phones . V india market is growing as fast as china was growing five or seven years ago. Ecommerce is an important part of that. How we localize the experience to a market with a totally different culture is what we have been working on for the last six months. India has been growing as fast as china was seven years ago. In localizing the ecommerce experience, all of that has been important. What we have done on the ecommerce site is incorporate aspects of Indian Culture into the business. Theexample, this week is christmas and black friday in india altogether. Campaign and created a special game just for the Indian Consumer that is very quirky, very indian in how it is designed. We had 5 Million People play the game over the course of a week or so. That brought so much traffic to our ecommerce site. A million users a day, which translated into selling in three days what would have taken two months to sell. All because we are focused on being localized with our message. Emily tell me about Internet Services. We have seen facebook trying to break in with internet. Org, giving Free Basic Services and facebook. What are you doing with your phones in india when it comes to the internet . We are an Internet Company. A lot of the work we do in china is to build Internet Services on top of the offerings to make peoples lives easier. We brought the same philosophy to india. In india, what we are trying to do is, what are some key problems we can solve with the mobile phone . One of them is data charges. Consumery expensive to mobile data in india. Incorporate technology from a partner in two the operating system to compress all the traffic in and out of your phone by 50 . It is cheaper to use your phone. Another thing we did is solve an interesting problem. Everyone accesses your mobile phone bill by phone. Press one for this, press two for this. In india, we created a special service that shows the options you would listen to on the phone on your screen. Instead of pressing the right button, you just choose the screen. It makes life so much easier. Small things like that. Hugo barra. s record posted a thirdquarter profit. Online sales doubled, increasing mobile growth and demand for video content. Titles surged as game and subscription did well. But shares fell as outlooks suggested slower growth. Up, the new York Attorney general calling it securities fraud on steroids. The Lessons Learned from j. P. Morgan. One of the biggest cyberattacks in recent years, three men have allegedly been charged with busting 12 Financial Institutions, including j. P. Morgan. The cyber criminal ring allegedly stole 83 million customer records from the bank and several other Financial Institutions. Federal prosecutors are calling ft ofhe largest the Customer Data from a Financial Institution in history. Joining me now from San Francisco, brian white of red owl analytics. What is unique about these charges . This one is interesting because it demonstrates you have a criminal enterprise operating in cyberspace. As thek about cyber chinese, and this is a criminal enterprise led by an israeli with partners in russia and china to engage in activities to gain money. They are seeking financial gain. Cory imagine that, people on the internet seeking financial gain. What was their technique . What do we know about that . It is ingenious. They were essentially compiling millions and millions of customer records from household name banks, fidelity, jpmorgan. They were harvesting this information to do the classic scheme, dump artificially inflating a stock price, getting people to buy the stock. They were just doing it quicker. The classic method is very slow and took time to a mass information. Now, you can get her so much information and be in and out of so many securities quickly. When you read of indictment, it is quite complex. Cory it is fairly amazing they were able to jack the stocks around, using the leverage of the market to make even more money before they took it out of accounts. Exactly. Really suggests that you continue to need to focus on understanding behavior inside your organization, continue to invest in security. These are some of the most well defended networks. But they are so sprawling. We also think about some of these banks, that they must have complete control. In their defense, they have done so many acquisitions over the years, i have so many various points in a network, that it only takes one. It is often the classic technique of going in via spe arfish. They take that information and harvested to gain money, leverage that information. They took the information, harvested it, and almost did an email Marketing Campaign with it. A sophistication behind how the enterprise operated that continues to suggest that we need continued investment and security and we need to stop focusing on security and look at it as defending your perimeter. You need to understand the people in your organization. Cory jpmorgan among the companies most focused on cyber security. Glad we had you on. Brian white, thank you very much. Bloomberg west will be right back. The only way to get better is to challenge yourself, and thats what were doing at xfinity. We are challenging ourselves to improve every aspect of your experience. And this includes our commitment to being on time. Every time. Thats why if were ever late for an appointment, well credit your account 20. Its our promise to you. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Cory im cory johnson in for my work wife emily chang and this is bloomberg west at 6 30 in the evening here on tuesday in new york but wednesday morning at 7 30 in hong kong. Well have a look at the top stories in asia. Thanks, cory. Looking ahead to another big day of Economic Data out of china here in asia today. Following weak export and Consumer Price reports earlier this week well get further indication of the economy with Industrial Production which economists believe will be little changed from last month. Coincidence or not on singles day well also get retail sales figures analysts predicting the best backtoback monthly performance so far this year. More of the big banks expect the International Monetary fund will grant chinas currency reserve status this month. Several say beijing has fulfilled most of the imf criteria to entry. China wants to underline its growing influence in the global economy. Its been a year since the Shanghai Hong Kong Exchange Line opened for business. While most thought it would narrow the price difference it has actually done the opposite. Valuations on the mainland are growing more expensive than their hong kong counterparts with the gap about 40 bigger than when the bank was established last november. Cory, it seems tim cook has to convince indias Prime Minister that the iphone is cutting edge. India is relaxing rules for Foreign Companies to enter the market so long as they can prove their technology is stateoftheart. The move paves the way for apple to open stores in india set to become the worlds second largest Smartphone Market in the world. Cory that is a wild story to me, the notion they can actually get around this rule by somehow claiming innovation. Absolutely. I dont know they certainly want to take a big slice of this market which currently they only sell 2 of apple phones in india and they want to increase that, obviously, cory. Cory wild story indeed. Fantastic stuff. Thank you very much. Cory breaking news this hour. New York State Attorney general has reportedly slapped a cease and desist order on fanduel and draft king. The New York Times says the attorney general Eric Sneiderman has told the two biggest fantasy companies they can no longer accept bets in new york. He says they are games constituting illegal gambling under new york state law. Both draft kings and fan dual have responded draft king contacting the Attorney Generals Office and fanduel saying its a game of sport and legal under new york law. This is a politician telling hundreds of thousands of new yorkers they are not play a game they love and share with friends, family, coworkers, and players across the country. Okay. This is going to allow free video streaming on phones without increasing data plans. The service is calling it binge on. Works with 23

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