♪ >> live from pier 3 in san francisco, welcome to the late edition of "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i am emily chang. our focus is on innovation, technology, and the future of business. let's get straight to the rundown. ferry serviceut across the san francisco bay, and there is growing tension about the shuttle buses that already transport workers. to weighd gavin newsom in. and the consumer electronics

show is chock-full of new products, and we talked about the successful launches in they's office hours, and self driving car is no longer a thing of the future. we go for a test drive in a car that can drive and parked itself. the carriere lead, wars are getting feisty or than ever. you will remember that the t- mobile ceo. kicked out of an at&t party, and now, he is hoping he has the last laugh. earlier today, he said t-mobile , making it thear fastest growing wireless carrier, 1.6 million in the last quarter. again, they call themselves the "uncarrier," and they say they are going to pay off early cancellation fees for those who switched over. here is what he had to say on

bloomberg television. >> unlike my normal behavior, this is for everyone, verizon, sprint, at&t. i generally like doing things that cause pain to at&t. >> always a character, and we will have more on that interview coming up later this hour, but first, we bring in our editor at cory johnson, and this is the level he is taking this too, and what do you make of the 1.6 million subscribers? is that a big deal? >> i think it is a big deal. it is good they have subscribers. if they are going to be a serious competitor, they are going to have to have a lot more subscribers. the selective release of information, and i wish john were here, because he is probably seething if he hears me say this, but the reason i guess they are giving out the information on how many subscribers and not the revenue is that the revenue per

subscriber has been an issue for t-mobile for some time, meaning that this of drivers -- the subscribers that they are adding are paying less than the at&t subscribers, so he might be getting the low hanging fruit, and that could be not in the long-term benefit of a company that wants to have big spending subscribers, like an at&t subscriber, like a verizon subscriber. >> what about the antics, sneaking into and at&t party. to the at&t ceo, randall stephenson, saying they are desperate, they are bribing customers by giving customers $450 in credit if they switch over from t-mobile. is that childish? >> i love it. >> good business. >> you know me. maybe that is why i love it. he is certainly making noise, and the audience to which he is making noise is not just consumers. .t is the business press

they are very active in terms of borrowing money, and they want that isen as a company aggressive, that could gain share. it is a lot more colorful than when he was at global crossing for years, and he was a suit and tie guy there, and i believe he was also at dell, but it is a way for them to get attention on the cheap create he is clearly a very smart guy and his rate calculated in the moves. , notis venice rodman running off to north korea. he recognizes he can use his personality to do thanks for the company that would otherwise cost them a lot of money, a lot of expensive advertising. he is using himself to get the message out for the company, and i think it is a very calculated one, and as a reporter, i am just grateful because it is very colorful. think solelyo you his personality is responsible

for the progress t-mobile has made in the last few months? >> that is a great question. i do not know. he has been a friend of "bloomberg west," and that has been a great story for us, and that is something we focus on quite a bit, but i think the company is going through some changes, and they are some interesting changes. t-mobile was about to be taken over, and it did not happen, so while become he was lying in dormant, it was not going to moves,y big, aggressive so it was storing up for those types of moves. also, the cops are off, and he can go after things in as heart away as possible -- the xccuffs are off. >> we are going to hear from in the show,ater and our senior west coast correspondent, jon erlichman, was at ces and talk to the qualcomm executive.

talking about the self driving car. >> you are finding consumer electronics are pulling more and more the technology that is required in the smartphone into those new areas, and for us, it is a great opportunity. everything wants to be connected , and everything wants to run some form of mobile os, so the strategy we have had, we think mobile is going to go into everything, and it is a strong reason why we are excited about the business. >> should we be thinking of this as an extension of mobile or as a new area? in these new areas, are they connected? is there a new landscape? >> you should think about qualcomm in the following way. the core business that we have been successful in, we still have a lot of legs in it, and secondly, there are connect to do things like tablets and

that require the same technology that you have to develop to be successful in the smartphone space, so to me, they look like new, adjacent markets, but what you need to be successful is similar to what you would need to be successful in the smartphones and mobile space. >> everybody is talking about wearables. give us your big picture view on this category. can it stand alone? can it follow smartphone and tablets as the next big category? >> in many ways, it is an accessory. for all of the services you run, to get more data, and in some cases, they do that by pulling more and more information off of your body or off of the physical space you are in, but what they do is consolidate that data and send it back. it looks to me like the phone is he a more and more a bigger part of our life through the opportunities through types of

devices. you mentioned tablets. in terms of where you can go, if you are looking to gain market share, what should we be thinking about with respect to all calm strategy? >> we look at the business on top of the smartphone. it tends to leverage the smartphone architecture. the os's. it has been a successful business for us moving forward. in fact, the growth rate of the tablet compared to the traditional pc, we have gone to that point, and we are starting to see more and more different types of tablets, big tablets, 12 inches, all of the way down to the seven inch size, and all of this tablets are starting to use the ecosystem and the technology that we had developed in the smartphone space. you are seeing a lot of devices, and probably a lot of devices that your viewers used it during the holiday season, a number of

samsung the vices and nokia devices, and the google nexus 7. those all use a snapdragon processor, and we are very pleased to be a part of that. >> when you talk about having legs, do you look at markets in china, and you see the explosion of homegrown devices at a lower price point. littlet you getting a bit, sort of the next leg of the smartphone business? >> in the developing world, they are getting smart phones for the first time, and they are getting access to lte for the first time, and we talked about this for our investors, but what you're also seeing in the developing or developed world, still a lot of features left delivered to the smartphone, and you see the smartphone demand continues to be robust, and part of the reason is when you get more and more things like thatbles, the smartphone

you had may not be the smart phone that you need. that is a good trend. when technology continues to move, that is good. >> what about the timetable for all of these things you're looking at right now. return on investment. can these new areas really deliver? what is the timeframe to be able to answer that question? if you look at our decision years ago to get into the smartphone space, they are paying off really well. >> that was the incoming qualcomm ceo with our own jon erlichman, who will be back with us later in the show. erry aftertesting a f their bus got a lot of protesters, and including surrounded by protesters in san francisco, and gavin newsom is here to weigh in, and you can also stream bloomberg online, at bloomberg.com, and on your tablet. ♪

♪

>> i am emily chang, and this is "bloomberg west." buses are causing too much trouble, what about boats? google was starting a ferry service that goes from san francisco down to redwood city, about 11 miles away from the headquarters in mountain view, and a google spokesperson says they do not want to cause any inconvenience to san francisco residents and that they are trying hard to find ways to get googlers to work. there were shuttle buses that took them down to places like facebook, apple, and google, and just this week, it was announced that the tech companies and the shuttle companies are going to have to pay the city to stop at public bus stops. we want to bring back our editor at large, cory johnson, as well as gavin newsom, an author and one who was the mayor of san francisco elected back in 2003,

so how many generations of your family? >> five generations, yes. is my question. do you see a divide between the tech community and everybody else? i not everybody else, but think it is déjà vu all over again, 1999, 2000 -- >> things are good was to my >> things are good. the question is, is it situational, meeting short-term success, or is this sustainable, and there is every thought to think this is a longer-term curve, and that could change the way of san francisco, so there is a lot of legitimate concern out there and a lot of friction, and it is certain manifested with these buses with some of those protests a few weeks ago. >> these employees do not take public transportation. they are on these cushy buses down to silicon valley, and also, real estate prices are now sky high, hard to get an apartment around any of those bus stops or in san fran this

go. -- san francisco. how big of a problem is that? >> all of the stress and gentrification, go back to your articles, it old was the same. we were talking about rent control, and there were convictions, and we had mass supplementals to take care of nonprofits because they were being priced out and could no longer afford the rents, and the question now is going back to that time, and that ended quickly, a boom and bust, and now we are sensing this will continue, so it does require a different type of motivation to get ahead of it. the mayor came together with the tech community, apple and others , facebook and others, and they said, look, we agree. we have to address these shuttle buses. >> do you think it is good that they have to pay?

>> it is good, because it was important for them to say that they play by the same rules as everyone else, and they were taking traditional muni public bus space, and these shuttles are there. if you and i were there, we would get a $270 fine. -- folks use aureus are not in their cars. they are not driving down there and are not contributing to global warming and the like, so it is a win on both sides. >> i want to bring cory johnson him, because he was here during the last bubble. is it ok that it happened then and it is happening now, and are they doing enough? >> i was there during the gold rush also. i am really old. there are a lot of interesting city planning issues. what happened in 1997, 1998, 19 99, these were urban companies, companies, and they were

not profitable businesses, and now we are talking about yahoo! and google and big profitable businesses that are ferrying city workers to suburban sites, and that is not what was going on before. there is this notion that people who want to live in the city are able to, and there are different kinds of companies affecting change in the city, so i think to his point, this could be a much more herman and thing because they are successful, permit businesses, where the workers are choosing to live in the city and not in suburbia. >> silicon valley is moving north. these young folk want to be in a dense, urban environment and want all of the amenities, and they are willing to sacrifice a commute. i want to maintain these campuses, but increasingly, folks are saying, can't you open up a satellite office in san

francisco? >> and we are seeing companies like twitter and salesforce taking up huge, corporate office space, and that is not making people happy either. the day twitter went public, there was a huge road test, and i think we have pictures of that. there was a huge protest in san francisco, and people were claiming they were being pushed out, and in one area, they are revitalizing the city, and in another one, they are being pushed out. story.s an age-old gentrification. when you invest, keep will have prices going up, and people are competing for that newly improved area, so this is, again, going to be a huge challenge for this mayor and the next five to 10 years if we see the kind of sustainability that we believe exists now in this very substantive move towards global local mobile, with real profits with those companies that were built on really

nothing. >> ok, lieutenant governor gavin newsom, and cory johnson will be continuing this after our quick break. ♪

>> welcome back to "bloomberg west." i am emily chang. a growinge talk about inequality due to the tech industry. there were protests outside the headquarters after twitter went public, people talking about high rent prices and eviction, and we have lieutenant governor gavin newsom and cory johnson with us. it is going to get worse? >> i think it will. i think the challenge will be more acute. i do not see this as a negative thing or an evil thing. none of us begrudge success.

the challenge is how do you balance it, and remember, this is a state that has gone to great lengths to try to balance things, the highest minimum care,universal health universal preschool and universal afterschool. >> they still have a lot of work to do. >> the top performing school district. low bar. you are right. >> and the tech industry, some of the smartest people in the world, so there is no excuse. >> there is no excuse. that is another 10 segments. but the city is doing a lot to overcompensate. even close to enough because of this extraordinary surge of success. the tech industry is still relatively small in terms of total number of workers in san francisco, so we have to put it in perspective, but it is so acute, the growth, and it is driving up rents, commercial, and vacancies are all but none,

and obviously on the residential side, we had 1600 millionaires the day the ipo was announced, and they want to stay in san francisco, and they are buying up homes all over san francisco that were cheap, and now they are getting expensive. >> people are choosing to live in an urban environment. they like the city of san francisco and are choosing to be francisco, much like new york that has diversity in terms of race and economics and housing and that those are the things that they like, but changing the city at the same time. it is a difficult issue for city planners and four mayors and even lieutenant governors to try to figure out how to keep the things that make a city wonderful, which include income disparity, without having tremendous income inequality, and clearly, people like this. people want to live in the city in an urban environment, but the urban environment is changed by

their being there, and i think that is the true challenge for these tech workers, to recognize, no, they cannot buy every apartment and have every neighborhood be the way they wanted to be, because that would be a suburb. >> to your point, the symbolism of these buses, these shuttle buses, here you have these beautiful more like limousines, extraordinary buses, wi-fi, on one side of the street, and on the other side of the street is san francisco public transit, certain people waiting in line there and then another line across the street. it is kind of symbolic of the problem. >> in the 1960's, probably the best thing ever written about what makes a city work, and it is that diversity, and that is the real challenge here. toall right, we are going continue that conversation after the break, and i'm going to ask you about being ferries. cory johnson and gavin newsom. we will continue this

conversation about san francisco. ♪

♪ >> welcome back to "bloomberg west." i am emily chang. we are talking about google having ferries to take their employees from mountain view, and there are tech companies like facebook and apple that routinely bust employees from the city to the valley. we are here with the lieutenant california governor gavin newsom as well as our editor at large, cory johnson. the responsibility that these tech companies have. twitter is based in the city. jack dorsey has spoken out on this issue, and he has said it really is disappointing, and it

weighs on everyone, talking about income inequality in general, and the most important thing is that there is a conversation about it, that there is a social responsibility, and we can certainly carry that torch. what responsibility does the company like twitter have? >> twitter, i was mayor at the time we started the negotiation, and they got a nice tax break to locate in the south of market underserved part of the city, and they fulfilled their commitment, and our expectations have been succeeded because of their success, and that area is beginning to change for the better. responsibility comes from tremendous success, and there is no one better in this city than the founders of salesforce.com, mark, and there are all of the tax breaks and everything. >> is it fair? >> i think it was the right thing for the city to do at the time, and i think it has paid

great dividends, and there is a legacy. that said, guys like mark did not necessarily seek out -- twitter and other companies are getting it, but a lot of the tech people i talked to said, look, we are creating jobs. there is all of this ancillary revenue. what are you wanting from us? there are real conversations, trust me, some substantive conversations with these leaders that have made fortunes and now understand their responsibility to community in a much deeper way than just creating a job. >> what about facebook, apple, google, that are not based in the city of san francisco, but that make it very easy for employees to live there and commute? >> it touches on all sorts of things, and it is not just a san francisco issue, but the idea of the income in equality, the rich being so much richer than the poorest people, and that creates risk, and you see it in this

story. it is not just protesting buses, but when the spending of our economy is only happening by the richest people, and that can be so disrupted by say a stock market crash or a slowdown in all of this tech, the beginning or end of that stock market crash, it creates greater risk to the economy, and one reason we had such a great change in the economy after the stock market crash of 1929 was because beforehand, we had a lot of income inequality, and until the big spending was not happening, it was happening with rich people who were taking their gains and spending them, and that is one of the risks to income inequality, and we can see it in this bus story. one of the big differences from many this is affecting other areas in the country. >> as a business owner, i have close to 1000 employees. if this is cannot thrive in a world that is failing, so at the end of the day, we are in this

together, and i think you just hit it on the head. if the fed changes the money policies that are moving markets and putting people in equities, all of a sudden, the pace of this can change, and we will not have the ability to come out of it and i think a real meaningful and sustainable way. i do not want to say it is code red, because that is typical political hyperbole, but these are symbolic flashpoints, these google fairies and the buses and at center, but we are at a point where people will have to step up and substantively address this issue. ferries, and i remember talking to the leaders of google at decade ago about it. publicery good transportation down there? i do not work to google. -- for google. if i want to get down there, that is very difficult.

>> there are two complaints, as a former mayor. homelessness and how lousy the public transportation system is. >> number three, schools. >> and by the way, you're absolutely right. challenges, we do provide an extraordinary world-class public transportation system in the city. every day, we move about the population of san francisco. it works remarkably well, despite the fact that it can be better, and that said, it does not go down to silicon valley, and we had a big part strike that people may have heard of a few months back. theoes not necessarily have directional down into san jose. that is being worked on. it goes to the airport. part two san jose. jose, and now we are working on san jose to bart. they are funding for their employees the shuttles, and they are getting people off the roads

and out of cars and now providing additional services ferries, and before we know i is going to come out with a blimp for people. gavin newsom and cory johnson. we are going to go back to las vegas and the ces, but first, jon erlichman has a behind the scenes. >> some behind the scenes bloomberg television at ces. workspace, glamorous, i know. everybody likes to keep their phones charged. what if you are camping? to put this over the campfire, and it oils the water, and the heat turns into electricity, and, boom, you can charge your phone. $149. ♪

>> welcome back to "bloomberg west."

i am emily chang. a launchpad for new products, but what does it take to launch a new product? office hours a segment, and launching a new product is not easy. how hard is it? >> it is easy to launch a product, but it is hard to launch a successful product. love.ice that consumers that is difficult. >> how much testing should go into a new product? you you just put it out and see what happens? really test it internally, beta testing? >> i think it depends on what kind of testing it is. if it is an app that you built over the weekend, then maybe you go over and test it. ebay, yes,n he built he went live on the web in f for you our days. if you are building a product that is enterprise hardware, you are probably going to be added

years before you ship it. >> what is the leader's job here. should they be a little bit more hands off? >> most ceo's are all over the product. in the beginning, that is all you have. you should be very involved in the product, and you should also be very involved in understanding the timing of the market. there is a lot of cool products. there are many in las vegas that are going to be launched, but the question is, is the timing right for the launch? >> that is it. i can barely remember the products that were launched last year, and how many of these quirky things are going to have staying power, or is ces just an exercise in talking about the trend? cool, and theyis start talking about trends before they actually become mainstream. >> so you think ces still

matters? >> yes, and the products, there are always way more failures than successes in any start up, but think about that. i used the newton, and it was cool before its time, but it led to all of the cool things going on with apple right now. >> let's talk about apple. apple is not at ces. is that a mistake? why theyt speak as to are not there. usually it is because they have their own show at the same time, and i think they are doing quite well. >> what is a mistake that a ceo often will make when trying to launch a new product? >> first, not listening to the knowing how deep to go, how long to go before they have to -- they may love the product so much that they do not listen to why everybody else

does not and not making adjustments to that. and then quality is a big issue. -- user experience is not good, that is going to hurt it a lot. >> if it does not work out the first time, what do you do? how do you go back to the drawing board? >> i call that now what, and even if you have success, that runs out. what is the new product or next iteration, and what is the next release or when do you decide to go international, and those are all good questions if you are successful, and if you are not successful, and you are waiting for that puff of wind to blow sails in the sailboat, or do you need to pivot and redo it? >> how often can you come back from failure? how often does that happen? >> a lot. you can come back from failure

of law. i do not think you can come back the same way over and over again. we were talking about apple, some of their flaming issues, and then there were beautiful products out of it. >> apple is a good example, because when you think of larger companies, companies like apple, there are very few you can think of that have come back. ibm has done it. how do you do that? >> same way. you have to take what you have that is a great asset, and you have to figure out what you need to do with that, and sometimes you have to disrupt yourself to be able to make sure no one else does that to you. >> all right, as always, chairman of yahoo!, thank you so much for joining us today for office hours. well, coming up, the t-mobile first, ourgere, but jon erlichman is checking out more gadgets at ces.

>> this is the ion party box. it will stream your music, and you can have a party on the table, but he knows the edges, so he does not fall off, unlike at my parties. ♪

isi am emily chang, and this "bloomberg west." remember when the t-mobile ceo re made quite a state after being kicked out of the at&t party? they said they would be paying customers hundreds of dollars to leave their carriers, covering their fees if they switch. jon erlichman sat down with legere earlier today in las vegas. the first two parts are

important to answer the third one. what i did is i announced before schedule the q4 subscriber surprise,nd the date 1.64 ads, making the total year 4.4 million. 860 9000, so the growth of t-mobile is growing. that is one, so the revolution continues areas number to, i announced, a fun one, we have the fastest four g lte network in the united states now. so the cease and desist letter is going out to at&t to rip those billboards down, and those poor kids are going to be unemployed, and that is important, because after carrier 1, 2, and three, why would you not switch to t- mobile, and the answer was early termination fees. this is in the program.

we are eliminating forever early termination fees and moving the industry to know contracts completely, so what it can mean, a survey was done last week. consider t-y would mobile if they did not have an etf, and many said they would move or consider moving to t- mobile if they could have those fees paid. it is a revolution. >> the numbers have been very impressive for t-mobile since you launched this plan. as you said,, adding a lot of customers. i have toned at&t, so talk about at&t. >> sure. >> last month, they made their own announcement on the contract side, not that your friend. what are the differences? >> beautiful. there are two fun parts. unlike my normal behavior, this is for everyone, verizon, sprint, at&t.

i generally enjoy doing things that cause vein to at&t. what they did is they came out with then offered -- rexx calling it desperate. >> totally desperate. why would somebody moved to a carrier to take a limited plan into the next upgrade program that nobody wants for hundred dollars? and, by the way, here is what i said just today. at&t.you, i suggest everybody consider our offer, and if it does not work out, at&t will pay you to go over there. it really is not competitive. theirs is a bill credit. ours is cash. her line her family in cash paid for your eft. >> you have done a lot of things and the last year plus. >> just getting started. , and some wonder how far you will go in terms of

this potential price war. are we in a price war already? where are we going? >> a few things. i bet people will not question how far i will go. 12.2 million customers. international three date of roma, up 10 fold. now, this is only considered a price war to the people with 55% margins. i think you will see i am reinforcing and pushing forward. >> what happens next with t- mobile? are you acquired? there are rumors that softbank is doing something right now. what about the rumors? >> first of all, i will give you the standard right out of school, i am sorry, as ceo, i cannot comment on that, but almost all consolidation in the industry was done for someone to acquire spectrum.

all of the people rumored to like t-mobile right now, all they have is spectrum. they do not have a business. this company, this movement, this revolution, this brand will continue, whether we do it alone or do it in consolidation. we will be at the forefront. i talking about at&t, and have to talk about some of the headlines. anty crashing, kicked out of at&t party. >> like a rockstar. macklemorerd, i love , and i wanted to go and see them play, and i was surrounded by a sea of humanity who escorted me out. i would have done something different, but -- >> it was not a stunt? >> no, i tell you one thing, but i was prominently displayed in the new york post right next to self he --an in's spitzer.d

>> t-mobile and others are making aggressive moves. what about how profitable it can be? >> one of the things i quietly did this years is took 1.5 billion dollars out of the cost structure. you do not see me having a macklemore party. these guys do not have the speed to move. they are going to have to wake up. all i can tell you is with these lands, i can very profitably grow, and that is all i can speak to. >> in terms of ultimately how many people you can bring on board, my first question, any idea on how many customers you think this could bring to t- mobile? way.t it this originally, the plan when i came over was hopefully it could be slightly negative in 2013 but

incrementally positive in q4, and then i gave guidance of 1.1 demo 1.2 million, and i raised it, and we did 2 million, so we are seeing this accelerated growth. i will give guidance when we give earnings in february, but the momentum continues, and reporting ratios and in january 1, at&t 2.4 to one. verizon, one point three. so we are moving. >> that is the t-mobile ceo, with jon erlichman is backegas, and jon with us. wow. >> that was great. >> he never ceases to shock me. >> when that was playing in the newsroom, everybody in the newsroom yelled when he started talking about toe sucking.

was not a stunt. do you believe him? >> i think there is a little bit of both. he is very comfortable. we would not talk about it in this way if there were not the numbers to back it up. hence they have added this program, they have added a ton of customers. they were bleeding customers before. >> all right, it is time for the byte. 1.7%. that was the t-mobile customers leaving in the fourth quarter. that is a tremendous improvement over the churn just one year ago, so clearly the t-mobile customers like what they are getting. >> i wonder if they like john legere. that is my question. i wonder how many people know who he actually is? >> maybe not many. >> many people watching t-mobile this year. thank you, guys, and thank you for tuning into this addition --

n of the show. we will see you tomorrow. ♪

>> welcome to "lunch money" where we tie together the best stories and video and business news. first day wishes for the leader of north korea. basketball diplomacy gets stuck. againststreet, the law insider trading. in technology, what is old is new at the consumer electronics show. change agents. domino's pizza, vinyl in sports, a lindsay-list olympics. the battle for your sc