>> welcome to "bloomberg west." where we cover the global technology and media companies that are reshaping every weekend our world. i'm emily chang. every weekend we'll bring you the "best of west," the top interviews with the power players in global technology and media companies that are reshaping our world. big news out of china. this week apple has started selling their iphone on china mobile, the largest carrier. it opened apple to more than seven hundred million potential subscribers. it will broaden their reach within the country. ceo tim cook visited china and

hinted at a deeper partnership in the future. i was joined by sam grobart to discuss. we talked about the deal and what it means for apple. >> a huge deal for apple. its definitely gives them a potential boost as they are seeing their market numbers getting a little bit flat or little bit down. you go put this and the content. the largest carrier in the u.s. is verizon. a hundred million subscribers. 700 million figure for china mobile might include other things that are not phones, but it is twice as big as verizon. >> apple only has 10 stores in china. they are trying to increase the number. this adds 3000 retail outlets. >> apple stores have been very successful. we know that all around the world, but china, obviously, it is a big plays. -- it is a big place.

tap into that network among 3000 of them, it is huge for apple. it gives it way deep into the country that is more than the big cities. >> when it comes to cost, that has been the big problem. the iphone. it is so expensive. $870. $730.e iphone for the 5c. that'll supposedly the cheaper one. >> do not tell tim cook. he said it was pulled to the different one. we see this and the prices. consider how that compares to the competition that apple has to face. unsubsidized cost for xiaomi is $300. significant difference. >> xiamoi makes phones that look like iphones. for a lot less money. >> the ceo models himself off steven jobs. >> i spoke to the ceo of baidu about this.

robin li said chinese people want bigger screens. samsung and other companies offer this. i spoke with robin li about apple. listen to what he hasto say. >> apple has experience in the u.s., but in china, the chinese characters are very different from english. you need an input engine method. apple does not have a good one. they did not allow it to be uploaded. >> that was interesting. i did not realize that about chinese characters. >> apple is such a closed system that it is hard for them to adapt to different market sometimes. -- different markets sometimes. >> when it comes to the competition, there is samsung which is the leader. apple has a lot of competition. there is xiaomi. >> they are doing better than apple. >> a lot going on.

we have the coo of huawei joining us from san francisco. you are pulling back on your core business and in the united states. i believe when you are taught french journalist, you had difficulty with the u.s. lawmakers concerned about your relationship with the chinese government. can you talk to us about your u.s. business right now? >> we are not leaving the u.s. we are growing our business. i know there are a lot of media about the interview. when you have a $40 billion

company and you are caught in the crossfire of two large world economic powers, it is hard to not get sentimental. the truth is, one of the greatest markets. we like it here. >> does it mean you will continue to sell your telecom equipment to u.s. is mrs. across united states? >> i am response will for the -- i am responsible for the enterprise business and mostly i.t. have engaged with a lot of partners and i.t. professionals in the united states about our product line and so far the reaction has been extremely positive. many people would like to see a supplier like huawei, who can do computer storage and networking and who also has a very solid financial.

>> one of your main competitors has been cisco. you trail right now. but you are growing faster than they are. one of the things people talk about is your ability to, with lower profit margins. what are you hearing from your customers about these radically lower prices that you are able to offer? are they surprised? >> well, actually, what we focus on is the next inflection point. we don't necessarily focus on our competition per se. isthink the best competition who can win the cloud computing race. as we all know there is a huge growth in cloud computing. the traditional i.t. equipment is designed for on premise data

centers. we need a company with large r to reinventorm their equipment to adapt to the cloud infrastructure and that is what we are good at. the networking infrastructure and cloud computing infrastructure provider for 15 top world carriers. we are ready. >> jane, i want to ask you a bit about what is going on in the united states, the revelations by edward snowden and the extent of the surveillance policy. has that impacted your business at all? has that given you a boost with companies saying we are worried about the the u.s. government relationship with some of the we havegy companies been working with? >> well, actually, on the contrary.

giving everybody perspective that we need to separate politics from business. government needs to do what they need to do and that is the situation for both of the u.s. and china and others. meanwhile for business, we are private company and trying to just a innovate. we spend over 14% of our our andion revenue in d. it makes the conversation simpler. >> that was jane li. a u.s. appeals court strikes down net neutrality and it can have an impact on tech companies especially netflix. that story is next. ♪

>> this is "that's a bloomberg

-- the best of "bloomberg west." a shift could be coming for everybody who uses the internet. net neutrality rules have been dark down. it basically requires all internet users be treated equally. this means companies may potentially charge more for certain kinds of content. the fcc has vowed to fight it. i spoke to sam grobart and jon erlichman. i asked what it could mean for netflix. >> i think immediately, the stock market reaction with the shares down. do they have to change the pricing model? the all you can eat, does it go away. the quick answer is, not just yet. first of all, everybody loves to talk about house of cards and orange is the new black, people using netflix in a big way.

the numbers would suggest that spending one hour on netflix every day even though it eases up broadband is not near the total television that people are watching. it is the early days for this. i think it is something that but it is something that everybody in the industry is thinking about for sure. >> i am curious. a lot of talk among advocacy there has been groups what it can do for competition. generally speaking, the internet has been flat and open and will going to eight tiered model. -- go into a tiered model. what does it mean? >> if you think about the lobbying power, all of the internet giants getting their way, that's a whole different story. if you think about the companies that have been able to set up shop very quickly through amazon web services, if they have to pay changes, that may not exist. that is a bad thing for a big player because maybe they do not get the business from that player.

i do think if you think about cable versus the internet, sony talking about an internet tv service. we know intel was talking about that. maybe amazon. all of your tv, cable is come to the internet and companies are offering it for less, cable pays that. they will fight you. the net neutrality title is boring. behind thet but scenes you have a huge lobbying effort and battle between traditional tv world and internet. >> we are talking about tv and count. net neutrality advocates are painting a nightmare scenario where browsing is one tier and facebook and twitter is another and you have netflix and spotify, the most expensive on top. it could have major implications

for everyone. but i think it could. we talk about the battle with the biggest players. sam raises the question about probably, and i think the smaller players netflix, they , could probably afford to pay a little bit more, forcing the consumer to pay more or verizon or whoever is dividing. you could make the argument that those names that you mention a facebook or a netflix, they become more powerful because of their price advantage because they got to scale earlier. i really think at the end of the day, it will be positioned that the consumer should not have to pay more just because of that are watching a lot. -- just because they are watching a lot. it comes down to how much you are gobbling up, how much broadband you are using? nielsen said we but eight hours

-- we watch eight hours of television a day. netflix diehards are watching a lot but not that amount. the technology, companies the other thing is, that if concerned about going to hd and ultra hd and also worried about compression technology. not eating up bandwidth. they are thinking about that in the same way. so maybe it allows it to come to you without getting to this stop in the road where everybody is wondering if prices will change. >> might this lead to possibly if it rolls out, sponsored access, wireless and data access from larger media companies which could give them an advantage where a smaller one will eat up your data? >> i think this opens the door for a lot of people to put their brand or message on the desk and

positioned themselves in that way. position themselves in that way. i think if you go to the example of amazon web services which has been the great place for people trying to take advantage of the stuff available to them, so -- absolutely, something to watch for. >> sam grobart and jon erlichman. we are weeks away from a meeting of the minds. apple ceo tim cook will be sitting down with a samsung executive and we would tell you all of the details coming up next. ♪

>> welcome back. i am emily chang. we are a month away from apple and samsung, and samsung, cap agreed to mediation in february.

-- and they have agreed to mediation in february. we started by asking bryan about the meeting and whether he think it will yield anything new. >> i think this is a real effort to put all of the legal battles behind them. it is a distraction for both companies. they are using money that could be going into product. they want to get this behind us and focus on our own products. >> is it possible? >> it is. a lot of bad blood. if they have to come to the table with a solution and hopefully they will and will be great for them not to be tied up in court and focus on what is going on. let them fight it out into the public. >> you talk to either of the companies and they said they were rather not be doing this. cook said i hate litigation. hate it. samsung feels the same way.

there is a lot of law firms that are happy. they have been making a ton of money off of it. >> a lot of people would like to see it. my prediction is it will end at this year. >> it will be worked out. what sounds some will say we copied the iphone early on and one not to do it. -- samsung will say we copied the iphone early on and we will not to do it. >> you saw some interesting stuff. samsung came out with the connected home. >> a big trend. >> it leaves me to wonder what apple is doing right now. >> they are not doing anything with connected home. it is interesting because with google acquisition of nest, google cares a lot about it. connected to the thermostat. other companies are moving.

qualcomm showed the way their devices and appliances are connected to the future. they are doing a new gateway. it will monitor the internet traffic in your home and divert bandwidth where it is needed. apple does not seem to care about this market. it is surprising to some people. >> there is one way that are connected. it all comes through this. >> and that is true. >> if you have these new services and they tie into a smartphone, apple is hoping when you think of a smart phone you think of theirs. >> does it matter if they are missing this a boat? the home is the fabric of everything. >> the perception is apple is not trying to buy any pieces of the puzzle for the smart home. they do have the app. if you do see a television, that could be the way that they get into the smart home business.

they are not going after these appliances. connected appliances. you think the television is going to happen this year? but there is no evidence. there is evidence we could see a smart watch or wearable this year. i do not think there is evidence that we will see a tv this year. >> do you think the tv industry, panel making, it has been a lousy business. >> not a great one. we are at the beginning of right now seeing an upgraded cycle from traditional hd to 4k. twice the resolution. these televisions that are >> samsung came out with a huge one. >> lg. sony. all of them are bendable or curved. this is an opportunity for apple to get in the television business. >> you think they will? >> i think they will. they play around with a lot of things that do not come to market.

this might be one. it is uncertain. >> can i talk about something else i saw at ces? the connected car. >> apps and parcels one of the biggest trends. mercedes the little screen in your car is getting , smart. facebook and pandora and available in the vehicle. >> google with android. apple with ios they are trying they are trying to find , partners. >> it will be a big battleground. ios for cars. they're calling itios for cars. it is going to integrate with ios and we will see it throughout the year. google is trying their own. >> give me a time frame. cars have a long lifecycle. >> if you buy a car, you have an option to the connected car.

if you buy a tesla, you have it. >> toyota models that can do pandora. >> there are a few cars in the act as a wi-fi hotspot. if you buy a new car, you can have that. it depends. >> when you look at google and apple, how do see them stacking up in terms of how much of the territory they will be able to claim? >> i think apple will win the car war because they are not trying to own the screen but be compatible. and let them own the screen. >> google owns the screen in the audi. i think google would love to own the screen across all automobiles. i don't think everybody wants them to own that screen.

it is valuable real estate. >> automakers are conservative. this speaks to apple's strength. it is updated system. android with some of the fragmentation is more the wild west. not sure what you might be getting. the carmakers say i like dealing with one company knowing what i am getting. >> let's talk more about 3-d printing. i mean, will i be wearing 3-d printed clothing and food? >> in 10 years, you will be doing some of those things. ces, a lot of those stocks of moves in 2013. 3-d printing. up 100%. some of the smaller players up even more. what was different is you got a glance at the whole ecosystem. there's a whole ecosystem of companies working on 3-d scanners and to the software to make it easier so you can have

the option of buying the 3-d printer in your home and making an iphone case or a the big watch or hearing's or whatever you want. question is where is the tipping point? we do not know. we do know it is getting easier and cheaper to buy the machines. >> how much does it cost? >> a good one for $1000. it can make anything in a small form factor. for $500, you can buy a mediocre one. there are a few stores right in new york. you can actually go in and see what is possible now. we will see more across the country. a very important trend. >> sam grobart with brian blair. from millions of dollars in debt to equity, foursquare ceo tells us about the mobile tech company

's comeback. ♪

this is "the best of bloomberg west." we're talking about foursquare now which has had its share of doubters. company raised $41 million in debt last year. the company has made a comeback bringing in $35 million from growth. i sat down with sam grobart and their ceo dennis crowley. i asked him how they're using this money for the new foursquare. >> foursquare has always been about location discovery. the two things we found out was how to monetize users that are starting to use the product.

is second big piece exploring what we can do with ambient location awareness. we think about what happens if your device could understand that you are in a new part of town, you are in a restaurant for the first time, you walked into a bookstore you have never been to. what can we do with those interactions e getting the company funded is our way of being able to make sure we can continue to improve and execute. about 6year we talked million chickens per day. is that growing? >> we are entering a world in which it a lot more people are using foursquare. the use case is starting to shift a little bit. >> i will confess i was never a huge foursquare user originally. go out muchg to

anyway because am married and have kids. but i like to use it as a recommendation engine. friends hadwere my been and what they like. all of a sudden it snapped into place. >> we hear this from users all the time. they say the check-in is not for them but they used for search and discovery. they save is so much better than yelp and google. we are continuing to explore that. one of the things i'm most proud of is the ability to recognize when you have entered a place. when you walk into a new restaurant downtown or a clothing store, we can alert you without having to use foursquare. building this version of foursquare tells you about things that are interesting is a really powerful thing. we are one of the only companies that can do that.

>> talk about the moneymaking potential. you are expecting to make more money this year than last year. how? >> we are building tools that are really effective at helping localcustomers into businesses. one of the things we do better than anyone else is eventually prove the effectiveness of the ads we are running. local merchants have not had a way to generate -- >> they are the last link in the chain, right? >>) at we are only paying for the folks we are able to convert. you give us any numbers in terms of what you are expecting this year? to but i would ruin the surprise for 2014. last year was a great year for us in terms of building these products and getting them out of the market. doubled revenue all the way to 2013. we are expecting great things by

the end of this year. >> you're big into wearables. you imagine foursquare having a big future in wearable technology? >> we think a lot about the best version of foursquare. i think the best version is not the one you have to plunder -- the you have to pull out of your pocket. we have done a lot of work looking at displays on the wrist , google glass. we have a prototype running on pebble watch. we can buzz you and tell you that something is nearby. >> foursquare ceo dennis crowley and sam grobart. up next, the man behind ibm's -- beyondries, ai robots. ♪

>> welcome back to "the best of bloomberg west." i'm emily chang. all week we had a series on ai -- the artificial robot. it will change the way we live our lives in the future. i had a chance to sit with david ferrucci. we started by asking how watson as we know it today came to be. >> ibm research is about pushing the envelope in breaking new ground.

some of the executives at ibm thought we could create a computer that could compete with humans in heart challenging tasks like laying jeopardy. we said we could do this. it was allre life about if we could get computers to mimic the way humans think. taking it step by step. isn't one of the things that makes watson so special natural language? >> that is one of the biggest challenges, how we understand language. computers have gone from being data jockeys to thought our nurse. it is not about moving bits from place to place but understanding what they say, what is the meaning behind it. alternately, meaning is going to trump data. there's too much out there, how to get an understanding of it. guard comess -- >> to language understanding are we

at the toddler stage or at the adult stage? we have seen things go from ciri, but how far do we have to go? >> it would take a really smart person hours and hours if not weeks to stitch together and .igure out computers process the data very differently than humans do. i think one of the interesting angst is if we can get a convergence or get machines to think like humans. that is a much harder challenge. we are not there yet. there's a lot of work to do. the ceo of foursquare is here today. you have thought about the future as well. >> we think about the intersection between people asking computers questions and asking for advice versus the

computer being you and recognizing the context and saying oh, i know you didn't ask me for anything but i sense something was going on. >> and managing that dialogue and tuning into that context. toview of how ai is going progress is getting it to think and process like humans. they have to collaborate together. i the computer have to learn from you. humans have to learn from the computer. where the style of learning will change and you get a very different phenomenon. >> can watson feel? can watson sense emotion? and is that a problem? >> you're asking a great question. computers and humans are not the same thing. when you and i talked, you are using language as is indexing system to point to our shared

experience. that is a human experience. you have gone through life and learned things and when you speak -- deal that way i know you are understanding is that you are nodding. that is feedback to say maybe my words are pointing into her this somewhere and we have linkage. humans don't have that shared experience. they have massive amounts of data but they're not really human. nonverbal communication that is happening, obviously. >> you're using all kinds of information around you and you mentioned foursquare. you capture more and more context. the features will allow you to narrow into a particular word or phrase. is going to facilitate that dialogue between humans and machines. >> did you see the movie "her"? >> i loved it.

>> it was amazing and it created a really thought-provoking and seemingly plausible future with a computer that has a sense of humor and understands what you're saying. >> that is the thing. humans are the source of meaning, right? we are the source of >> funny and beautiful. -- we are the source of what is funny and beautiful. while watson can detect upon, it is not laughing at a pun. you should laugh at it. the things that watson will never be able to do? we talk about what he can do. >> i think you want to be careful of saying never. >> always, that is why it is a good question. the shallowrom

understanding of language that we have today with things like watson, to a deeper understanding where computers thereally get the sense of deep meaning and dialogue and collaborate in a meaningful way, things will have to change and advance quite a bit. my view is that we will see interaction between human and machine that is quite intimate. in other words you are working on solving a problem together. the computer does not know the answer, you do not know the to an but you have access enormous number of features. you can see things a computer can't see. the computer can access and process in ways you can't. you complement each other and work to solve that problem. through that process the computer is learning new things, how you interpret that information while it helps you to solve the problem. it will create this joint intelligence and that is really cool. i think that is what the future holds. >> that was the creator of ibm's

watching a long with foursquare's ceo dennis crowley and bloomberg's sam grow bart. grobart.oomberg's sam stay tuned you don't want to miss >> coming next. -- you don't want to miss what is coming next.

welcome back to the best of bloomberg west. we have more of our special series on artificial intelligence, ai -- beyond robots. facebook is opening a new lab in new york dedicated to artificial intelligence. the man charged with that transformation is a french warned mathematician and nyu professor with 30 years of experience in the field. with himrt caught up at the nyu lab where he works. >> artificial intelligence still has a sci-fi ring to it.

it is already behind a lot of our lives from netflix movie recommendations to amazon shopping recommendations to gmail spam filtering. >> most everything you do on facebook or google has an ai system behind it. aihe has been studying intelligence for decades. he will be facebook's first head of artificial intelligence. that on company's the future. >> until now facebook has been concentrating on getting the infrastructure right. now that they are established in that edition, the problem is to look forward up to 15 years from now. >> there is a talent grab among tech outfits. >> ai will play an important -- and how we enter we interact with computers.

>> recommendation engines are toe, but that is old hat today's ai researchers. the next up is using it to improve a computer's ability to see and hear. >> we see the image on the net cam and it tells us what category of object it thinks it is seeing. how would something like that applied to my facebook experience in the future? >> you upload pictures on facebook or instagram and the system will identify the object in the picture. that makes it easier to search and will allow us to organize that theyres in a way are shown. >> it will give you an idea of what you want before you have indicated very at and yes, they will use it for another cool application, the making of money. >> interesting, so basically using ai to make facebook that

are and more useful for me. i wonder could get a little creepy. when you talk about facial recognition and things like that people get scared. >> this is something i talked with him when i went to visit. i asked him if they were trying to balance what they were capable of doing with what the consumer is comfortable with. he agreed very strongly and said it is very important that we balance our approach with the expectation of the user. in the past he thought that things that got creepy. now we are in a more mature point where they are trying to measure things out and get us on board. lookt's talk about how fits into the broader landscape. we talked about google buying nest. they have spent $17 billion buying companies over the last two years. compare that to facebook, apple, amazon, microsoft and yahoo!. they spent $13 billion combined.

do these companies have to worry more about google than they already do? >> they might. jan who isbody like kind of a rock star among artificial intelligence researchers. if he is working at facebook, that means all these other people who work in the field will be paying close attention. maybe they would like to work at facebook. there is competition for other leading lights in that field. google has somebody and they all know each other. this is one other way in which they compete. >> this may tie into mark zuckerberg's grand vision. he sat down with john hennessy the president of stanford university yesterday. him what is the big thing 10 or 20 years out. take a look at what he had to say. >> what is going to be the new thing 10 or 20 years from now? >> one of the things i think

over a five-year tenure. the will exist is just like ability to ask more questions than you can ask a search engine today, something we are actively working on is because we really want facebook and this whole movement of social apps to not the about sharing moments but also real utility. >> google has been working to make search more personalized, but suckers talking about something bigger. >> there is this idea that isn't so much about you searching as services giving you things come presenting them to you actively. it knows that you are going into work this morning. you see some of this with google now and its predictability. facebook, google, other companies all trying to be much more active in presenting you with information you need before you even know you needed. >> the cofounder of twitter came

out with a new question and answer engine called joey whereby it uses your whole social network to answer a question that you asked. it is not just the computer or the algorithm, but all of your friends and the people you know can chime in as well. >> it is a broader contextualization of data. you are multiplying the sets of information and it is too much for ordinary programming and ordinary data management techniques to handle. you have to have some and that is already starting to think on its own and find the right information automatically. >> wouldn't it be nice if computers could solve all the problems? >> maybe in five to 10 years. >> here is what is coming up next week on "bloomberg west." up next, it was an early tech club with some famous members

including the founders of apple, coming up next on "bloomberg west." where going inside a reunion of the famous homebrew computer club.

>> welcome back to the best of bloomberg west. back in 1975, a group of local engineers and diy tinkerers formed a home brew computer club. those early meetings included steve jobs and steve wozniak debuting the apple one. single-handedly kicking off the pc revolution in the process. that group of original homebrew members gathered recently at the computer museum in san jose for a reunion. take a look. , imac or the iphone even a windows pc, members of

the homebrew computer club, steve jobs among them, gathered every other week, first in a garage and later on the campus of stanford university. was the social media of its day. >> lee felsen stein was one of the organizers. 38 years after the club started, apple founder steve wozniak is getting the rockstar treatment at its first reunion in years. >> everybody in the club that ideaso me said -- and had as to what could go into computer. after seeing jobs and wozniak demonstrate their first apple one any homebrew meeting, he invited jobs to his store the next day. >> when he came into the store i told him that if he would

assemble and test the apple one computer that they had, i would buy 50 of them. >> the price? $500 each. it was jobs and wozniak's first deal, landing them 25 grand in 1976. >> that was basically their seed capital to get their company off the ground. >> wozniak has high praise for the entire club. >> i was a geek to his first guilt at having an idea that i could turn into a working device. these are the intellectuals that i admired in the world. >> jon erlichman, bloomberg. >> that is it for this edition of the best of bloomberg west. you can get all those headlines at the top of the hour on bloomberg radio, all the time on bloomberg.com/technology or dinner on your phone, tablet and apple tv as well. see you again soon. ♪

>> we are finding it, we are testing it, we are there as they build it. we are on a quest to show you the most cutting-edge companies on the brink of the future. tonight, we dedicate the entire episode to a brand-new city, built green from the ground up. >> right in the heart of the most oil-rich region in the world. >> who knows energy more than us? >> we will take you inside masdar, a multibillion-dollar experiment in the future of energy. >> it's 300 football fields of solar panels. >> "bloomberg brink." companies that break the mold,