♪ live from pier three in san francisco, welcome to "bloomberg west." microsoft hopes the third time is the charm for its tablet business. roadarger, thinner surface three, will it take a bite out of the apple ipad. we will be live at the service products launch in new york. will talk about the new wholesale platform. and whether an ipos in the pipeline. let's check your top headlines. china is suspending its involvement in its cyber

security working group with united states after the u.s. justice department charged five chinese military officials with stealing trade secrets. the working group was established last year as a way for the u.s. and china to try to find common ground on cyber security. has also banned the use of microsoft windows eight on all government computers. the news agency says it was to ensure security after microsoft stopped supporting windows xp which increased fears of hacking. it is still widely used in china but private computers are not affected by this ban. a top official from the new york city taxi and limousine commission. he will be the head of policy and community engagement. uber had a battle with the new york tlc before winning approval for its service. microsoft tries again when it comes to tablets, this time

unveiling the surface pro3 at an event in new york city. >> ladies and gentlemen, this is the tablet that can replace your laptop, surface pro3. >> we all thought there would be a smaller surface mini announced today but instead, the surface group. the new model has a bigger 12 in screen and is thinner and lighter than the previous promo model. it will cost $799 and hits stores tomorrow. microsoft faces an uphill battle. it had 1.3% of market share in the latest idc numbers with apple leading with more than 32% . cory johnson is at microsoft surface event in downtown manhattan. is this the last chance for microsoft? i love you mentioningtlc because that's what this is about. they are trying to nurture this

struggling device. it has less than a two percent market share. it is right here, it's a little bit smaller and a little bit lighter and has a cool stylist pen. the most interesting thing is the way this device is being positioned. they are suggesting this is not just a tablet. it is a productivity device to work with other microsoft software. they say it's a replacement for laptops which puts microsoft directly in competition with their original equipment manufacturer, companies like dell and lenovo and hewlett packard to whom they are selling their windows product to. >> we are not interested in when itg with our oen's comes to hardware. our goal is to create new categories and spark new demand for our entire ecosystem. that is what inspires us and motivates us with what we are

doing in our devices and hardware. >> they might not be interested in competing with their oem's but with this device as the anti-laptop, they are competing with their oem's. we will keep an eye out. >> you got to play with it. will people want to replace their laptops with it? >> is an interesting device. i see people more and more using their tablets as a replacement for the laptop already. i talked to an analyst who has covered for microsoft and he says while the oem's might complain, they recognize this thing has such a small market share it is not really hurting them. selling a couple of million per year starts to add up to something. microsoft pitching this as a productivity device that uses all the other microsoft software

and the cloud maybe they have a better shot here. >> i read a report that microsoft has lost upwards of $1 billion on surface business. why bother? feel they have got to have something in this arena to offer to their customers. if computing is going to be on smart phones and tablets and not on desk tops, they need to have something there. their partners tend to go another direction is using other software like android software. -- if they did not do it themselves, someone else would. the loss was not expected. they had to write down the cost so much that they had to eat it at lowering the retail price to get it off the shelves. they will try again with this new version. >> cory johnson, thank you. both apple and samsung tablet offerings --how does the price

compare? cost more thanl the apple and the samsung. the founder of culture of profit joins us in boston. he's a consulting firm that helps companies with their pricing strategies. you do a lot of work specifically on price. is this device priced right? >> hi, emily. the pricing strategy that microsoft is using is very strong for two key reasons. it's a great value to consumers and second and more importantly for microsoft, it leverages some of the assets that it has in a competitive way that will be hard for competitors to replicate. it's a win for consumers and they win for microsoft strategy. it's a good strategy. >> we have seen microsoft make pricing mistakes when it comes to the xbox which was priced higher than the ps4 and now they have a cheaper version.

are we seeing a pattern here? >> they clearly made a mistake with the xbox. what's interesting is that they are moving to a razor blade model for their tablet. razors into as many consumers hands as possible and make money on the blades. microsoft has come out and said we are not going to make money off of eric tablets. we will make money off of our apps and cloud services. what is interesting is you got a low price, $799 is low compared to macbook. they are positioning this as sort of a savings instead of buying a tablet, you can do it all in one. it is a great you but more importantly, if microsoft is making its money off of its other assets which are apps as well as the cloud, this is a strategy that its competitors cannot replicate.

it's an all-around win for consumers and microsoft. >> that's assuming that consumers will leave the tablet comparable to a macbook. microsoft has lost money on every surface it's all. maybe there is a problem with the product. >> that's a great question. from a pricing strategy, it makes sense but as you mentioned, the big question is cannot convince consumers that this really is a two-for-one replacement, so to speak. >> interesting. are you convinced? >> i don't know if i'm convinced. the press conference was very innovated and there was a lot of hype and going to a 12 inch screen makes sense. it makes sense that in the future tablets will replace laptops. they are betting the farm on this to see if this is the product that makes it happen. what's good about it is that it

leverages the office suite that they are known for. it has a good chance of doing it if they market it correctly. >> should they consider dropping the price if this does not work out like the previous models? would that be an option? onit could be an option but first glance, looking at the $799 introductory price, that seemed cheap. if i were them, i might have had a higher price on the intro model. xboxthey came out with the pricing in late november, they were very cocky and they felt they could charge a premium. now perhaps lessons from xbox is brought them to the pricing here. it was a very conservative price and a good value to consumers if consumers will believe this tablet camera plays both a laptop and serve as a tablet. ofnteresting, culture

profit founder. a little later, we will speak with the microsoft corporate vice presidents of marketing. coming up, we will have more of "bloomberg west." tom wheeler will be in the hot seat and we will talk about the proposed megamerger. ♪

>> this is "bloomberg west," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com and now available on apple tv and amazon fire. a merger of comcast and time warner cable may create a marriage between some of the most frustrated customers in the nation. the american customer satisfaction index found that comcast and time warner cable ranked at the bottom and customer satisfaction for companies offering subduction tv service. comcast had 60% approval and time warner cable, just 56%. are tied fort&t

the lead at 69% at&t announced it has reached a $48.5 billion deal to buy directv. at&tshington, the proposed merger is just one of the hot topics facing tom wheeler today at the fcc. he is also defending his net neutrality proposal. peter cook is on the hill with more. we hear it from all sides. >> he heard it from all sides britt democrats and republicans -- one republican said the chairman had kicked up a dust storm in his six brief months at the fcc and that was evident in the hearing today. he heard about the net neutrality issue. republicans worried you might consider regulating internet services like a public utility and democrats worry that he might allow for internet service providers to charge for a faster lane of traffic for some content. >> i don't want this to become

an auction, selling off the best in bits and pieces. some will pay for faster lanes and others cannot pay come of a get stuck in the slow lane. >> the internet has indeed flourished under the current light touch regulatory scheme and subjecting it to burdensome regulations is a leap in the wrong direction. was notheeler satisfying either side in the course of the hearing. he dodged a lot of these questions avoiding being handed down but he made clear he wants to make sure the internet stays open for everyone and he did not rule out the possibility of those faster content heels. >> there is one internet. when the consumer buys access to the internet, they are eyeing access to the full internet and that's what our rules attempt to

protect. made clear to these lawmakers that he will hear a lot of comments over the next four months before deciding along with the fcc commissioners to end up on net neutrality. it is a work in progress and neither democrats nor republicans are quite satisfied with what they are hearing. >> what about the at&t/directv deal? >> he was asked to recreate about it and asked about consolidation in the industry and said he will be reviewing this deal as well as the comcast deal but would not weigh in on the specifics. he simply said it will get a full review of thefcc. >> thank you very much. what impact will all of this consolidation in the cable industry have on the companies creating the content?

we will hear with the disney cfo has to say next on "bloomberg west." ♪

>> welcome back. of directvquisition is giving programmers something to think about including disney. jon erlichman spoke with disney's chief financial officer, j rizzo low -- jay riz zulo. whether it's that particular merger that may happen or whether it's the comcast/time warner merger, it is no surprise to us that there is some consolidation in the cable space. we have strong relationships with all of those companies that are involved in those mergers.

we, like everyone else, are in the process of analyzing and trying to understand how that will affect the ecosystem down the road. we don't have anything strongly want to say about that as we continue to look for the implications to us. these are very early days for both of those announcements. >> what about when it comes to acquisitions you make? you have explained the marvel acquisition and beyond just doing the deal, there is integration and part of your job involves bringing these companies together with different cultures. in the case of marvel, you said it's a different way of them doing what they do compared to what you do. what goes into the behind-the-scenes process of bringing these companies inside disney? >> i think we have now done enough acquisition successfully integrated to have a real point of view.

i would say first and foremost, there is the user interface. the user in this case is either the end customer or the employees of that acquired company. we like to leave the user interface in place as much as we can. we like to keep pixar itself and marvel itself and lucasfilm itself. we like to keep them that way and not let what has been so successful for the walt disney company or what has been successful for espn wash over them like a tidal wave. we buy companies that are already well-run that we think and useccess the ip further through our ecosystem. in terms of the user interface to the world and to the employees of those organizations, we like to leave that in place. that has worked extraordinarily well for us. is almost eight years ago. if you go there, it is very much still the way it was from a look

and feel and way of working when we bought it and we don't want to break that. i can say the same thing about marvel and lucasfilm even though it's shorter time. >> that was the disney cfo3 . twitter is in talks to acquire or partner with sound cloud. it allows its more than 250 million users to share and listen to music online. some otherlooking at music services for partnerships including sound hound which is a competitor. we knowmore there it >> that these talks are still very early stage with sound cloud. forter is just looking anyone that can help them think about the future of music strategy. they have their own twitter music app which flopped earlier this year and was shut down. they need to figure out what is

going to be the future of this product and who they need to bring on and if they can build it internally or go externally. >> we spoke with the ceo of sound cloud last year about how he feels how this fits into the broader industry. ofwhen i look at the scope what is happening with media online, the interesting things are sort of what youtube is doing on the video site and what sound cloud is doing on the audio side. it is dramatically different from the applications that others do. we have over 12 hours of sound uploaded every minute and there is over 200 million people interacting with us every month. it is something that makes use of the internet in a different way than other apps do. >> sound cloud has more users than twitter. why would it make sense for sound cloud to sell to twitter? >> twitter has some capital having gone through an ipo recently. they have to figure out what is

the most efficient way for them to spend that. >> is this efficient? >> it could help twitter. they have been successful with the entertainment industry with tv and other types of celebrities. music is one of those things that has propelled other tech companies to greatness. apple had itunes, youtube is very much propelled by music and has been successful for google so it could be a good move. >> i understand that many users on twitter share links to their favorite songs and they do so with sound cloud. does sound cloud want to do this? >> it's hard to say. these are early talks and there is no number they have floated out there yet. we would assume it would be more than $1 billion or in that range based on how sound cloud was valued before. -- twitternot clear would help sound cloud with marketing. it is widely used but maybe -- >> how does sound cloud help

twitter with user growth? >> i think sound cloud is more of a mainstream service. my mom would not use twitter. she knows how to stream music. that's a natural thing people do on the internet these days. twitter has become difficult for people to use. they need to figure out ways to usage, theis core mainstream. fryer, thank you so much. instead of going smaller, microsoft is going bigger. they unveiled a new surface tebow with a 12 inch screen. how do you get consumers to buy a tablet that is bigger? we will ask the microsoft corporate vice president next. ♪ >> bloomberg television is "on the markets." we have a pullback on stocks after and up day yesterday as

the momentum swings in the other direction. stocks, of individual we will talk about that next time. here is target replacing the head of its canadian business. ♪

>> you are watching "bloomberg west." let's get back to the microsoft launch of a new surface tablet, the surface pro3. cory johnson was at the event in downtown manhattan and joins us with more. can this tablet really replace your laptop? that's what the head of corporate development will tell us now. thank you for joining us. is a laptophat this killer -- it seems like the device but better. is that safe to say? >> this is a brand-new device built from the ground up. tablet or laptop?

our answer is both. the surface tro3 is the first device that's a 1/3 ofwer unit and it is an inch thick and super light and incredible screen and it's a tablet. method is veryg different for this advice, tell me about that. >> as a company, we have been trying to find out how to bring a unique point of the -- point of view of our customers. who have an ipad also have a laptop. we are trying to do something no one has ever done which is created -- ed -- which is create a device with the productivity to get things done >> analyst andg to an he thought that was a stronger message. it ties in with what?

vision as aany, our company is focused on helping people do more and be more. it's around that productivity that we say let's take the power of the microsoft cloud, software, and devices to create an experience that helps people be more productive. >> i think the styling is intriguing. >> take the productivity scenario -- you are a student or business professional and you want to write down some notes. most people write with pen and paper. they grab it and they write. in technology, find the app and booted up. here is the tablet, one click, just like that, i will get one note that pots up -- pops up and i can take my notes and one more click, and i have access to the cloud and it's available on all my devices.

note.s one look, you get this rich display of all these graphics and these beautiful pictures. you can just write and edit right on the screen. >> the screen is very impressive. >> it's one of the best screens we've created. it's a full definition screen. we have bonded with gorilla glass which is anti-glare. if you pull that over to the laptop factor, you have full windows so you have microsoft office. we talked about adobe photoshop and bringing creativity to the device. the vision we have is don't just read books, just write books. don't look at art, create art. this is a device that can do both of those things. >> where has the surface has most success? that is probably about 1.8

million sold. in what arenas are we seeing the most success? >> the biggest success is along the lines of productivity. students of any kind of homework to do. they want to be able to edit and rightnow spread business movessionals are on the and take notes to be productive. architects, this is the sweet spot. . >> what is the number one channel so far for the surface? >> we do pretty well across the channel if you're talking about distribution. we do pretty well in best buy. you will see it show up in many more places. . >> is there any nokia magic in here? >> it's probably too early for this particular release. nokia brings a lot of strength the zion and

manufacturing creativity and operations capability so we have had a lot of discussions with the folks who have come over about surface and how we get better and how we work across platforms. it is an exciting time. which isme from xbox the most successful hardware microsoft has ever done. what do you bring from xbox to this? we hadof the best things on xbox that applies to her overall position in the company is that it was not until we built the xbox that we understood the magic of hardware and software to do breakthrough gaming. the understanding about the complete experience is what brings us here. our vision as a company is to do the complete experience around productivity that includes not just portability but the power of a laptop.

the kickstand will let you go from canvas mode to conception mode. we have been asked how long microsoft will continue in this part of the business. what makes this business so crucial to big microsoft? >> the big part goes back to wanting to build these unbelievable experiences that don't exist today. we are trying to do something we are uniquely capable of doing that others in the market cannot. it's the vision of how you make people productive across the cloud like microsoft office and the hardware. that is a big part of what helps bring this to market. >> thank you very much. >> thanks so much. handmade online marketplace etsee is scaling up as sellers find more and more success. cannot redefine handmade and keep it customers -- and keep its customers? ♪

west," on "bloomberg bloomberg television, streaming on your phone, your tablet, and bloomberg.com and now available on apple tv and amazon fire. , the world's biggest marketplace for handmade goods has disrupted traditional retail markets creating an online community of artists/entrepreneurs. the companies on the break of change with $1.35 billion in sales on the site last year and 40 million members. the growing companies crafting new strategies with the wholesale platform and a mobile focus. the ceo joins me in the studio. >> great to be here. >> i am a big etsy customer and when i saw the numbers, i was shocked. how do you see yourself in terms of growth? 2013 acrossllion in the marketplace represents over one million sellers. we are continuing to grow at

similar rates. we are just bringing more and more small artisans onto the marketplace and when you have one million sellers around the world, it starts to add up to significant numbers. >> you make your money by taking a cut? >> we take a small cut and it's an artist friendly model. what you -- when you sell mosthing, we take 3.5% but of that goes to the seller and our sellers are all over the world. our platform is really distributing money to artisans all over the world. >> you guys had a little controversy when you redefined what it means to be handmade. some are less handmade than the used to be. explain that. >> we updated our policies going all the way back to 2008. defining handmade was difficult. we callbet on was what

three principles -- authorship, responsibility, and transparency. whatever you make has to come from you and you have to take responsibility for the whole production process and if you use any help whether you hire people, you have to disclose that. what we have seen when we updated the policy is our sellers using outside production, the vast majority are using production that is fairly local to them. sellers using. outside production are using reduction in the same state. we see this as part of our community building strategy making communities stronger. >> you are also moving into wholesale which should be great for sellers to connect them with retailers as big as nordstrom's. do you have any indication this could change in a bad way for buyers? >> not at all, we are supporting our sellers and helping them grow in our sellers on etsy have always done wholesale deals.

even though online retail is really strong, 90% of retail still happens off-line. we are helping our sellers bring their goods to new customers off-line in neighborhoods and commodities where local boutiques are supporting so we are taking the specialness and distributing it into other retail. >> what if things take longer to get? this stuff is made with love and care and you cannot always get what you want right away. >> it's important to note that etsy is not competing on convenience. we will leave that to the other e-commerce companies. the things that you buy on etsy are worth waiting for. watch i am wearing now, you will not get it over night but when you get it, it will be incredibly unique and something you cherish forever. pinterest is not quite the commerce but how do you see them? are they competition?

are they complementary? see them as complementary, part of the ecosystem. they do a really good job of collecting and inspiring material from around the internet. gedy is the most re-pin domain on pinterest. we are really happy about that. >> what about facebook and twitter which have been trying to do commerce? it will never happen on facebook. what do you think? >> facebook and twitter, i don't see them as e-commerce platforms. of traffic from social platforms like facebook st sowitter and pinteresa it's a way for people to share things in their lives. it's good for us because the

thing you buy on etsy are unique and shareable. they are not really e-commerce players but they contribute to the ecosystem that we represent. >> fred wilson who is an investor says you will be ready for an ipo in one year. >> he said we are well-positioned for an ipo. i agree with them. it's a strong company and we have been profitable for five years. we are in no rush to go public. where building a company for the long term. we want to build a company that last 100 years or more. we are focused on building a company that serves the community that we have been building. an ipo is a possibility but it's not something we are focused on this year. >> you are also becoming a b-corp corporation and could be the first one to go public? what does this mean? >> we are a certified b-corp which is a certified -- testfied -- certification

on how you treat the community, employees, and environment so we get a score. we are certified but what it means is that we really believe that business can and should create social good. in our case, the social good is built into the business model. when you sell on etsy, ray .5% ghost was but 9.5% goes of the community. there was a statute in delaware this past august in which you can become a legal benefit corporation. it is distinct from the certified b-corp but it's something we're taking a look at. >> you have done so much to grow the maker movement. how much do you think that movement can help the overall economy? >> i think quite a bit. itn we look at etsy, represents a whole generation of micro-entrepreneurs. these are people running small production facilities inside their houses and generating economic impact.

in our case, $1.35 billion around the world. with platforms like etsy, largely women, 88% of our women sellers, can start their own businesses and reach a global market and generate supplemental income for their families. 18% of etsy sellers sell full-time. it's important with the economic impact. ceo chad dickerson, thank you for joining us. ever wonder what happened to the original all electric supercar? the car was plagued with problems in the company was forced to do back up say. a chinese billionaire has vowed he has every last yuan to bring the brand back to life. ♪

welcome back to "bloomberg

west." car was hailed for its design but panned for its technical problems on the company went bankrupt but now a chinese billionaire has vowed to burn his fortune to resurrect the brand. he even challenged tesla on his home turf. matt miller gives us details. who is this guy? >> it is such an exciting story from so many different perspectives. lou guang chu already owns an auto parts business. he has over $3 billion and he is really excited and has vowed to not only burn every last dollar but he is 69 years old and says if he dies, his son will take over the fisk or brad. if he dies, his grandson will

take over the brand. he is really determined. elon musk is were we -- is more well-known and has more money that we know about. he made his money with paypal but he has so many businesses with tesla and solar city and spacex that maybe he is not as laser focused. >> the cars seem to be better? >> that is true. i have driven a tesla and i really enjoyed it. it is a quality built car. the torque is amazing and the handling is amazing and here's a picture of me flying around the bronx river parkway in a model s. it does not look as cool as the fisker. it was a divine phenomenon. -- design phenomenon. people loved the delorean and it was a horrible car and they still buy them today. billionaire can figure out a way to make these cars well and make them perform well, i think you will have some success. >> what can he do differently? ande can make them in china

probably can rely on some help from the chinese government. this is the place for elon musk says he wants to put production f 3 often than foreigners. he may have that advantage. the other interesting thing he can do is with the purchase of he bankrupt fisker brand, gets an abandoned general motors factory in wilmington, delaware. he can be the first chinese automaker to produce car successfully over here. that would be an interesting story on its own. but chinese car company coming here and creating jobs and making supercars. >> when does the showdown start? >> it typically takes a while to develop a new car.

that is the process that can take about five years. he's got a head start because he has all of these patents that he bought from fisker. he's got the design. he just needs to make the car work and work better. as technology progresses and people learn more about what it's easiergreat, to copy that technology and use it to make other electric cars great. t works well and bmw has the i8 so there are different options he can look at as inspiration for the technological aspect. >> it will be fun to watch. let's go to cory johnson in new york. he has one number that tells a whole lot. >> how about 800? that is the weight of this new device, the surface. >> the weight in grams, i'm

assuming? >> 800 pounds? >> is an 800 pound gorilla. it is lighter than the macbook. is this a comparison to another tablet or is a comparison to a laptop? microsoft is trying to change that story with this announcement. . >> i just did the math, 1.76 pounds. >> if you add the weight of the operating system, it comes to heavy to handle. >> what about that? the apps are also an issue. the fact that this has a really easy integration with the microsoft office stuff is a big deal for those who use microsoft office. some people spend lots of time on that and there is nothing like it. the ability that this runs the stop better is a selling point for these guys. >> i have not gotten a chance to

see this service pad firsthand and a lot of people love them dearly but if the operating -- michael crofton from philadelphia trust loves them. from the operating system of the lot, it'sch i use a incredibly difficult to use. it's clunky os and it's an absolute nightmare. i don't know where the back button is in it does not work as well as the xbox 360. hopefully they have improved on the ground they lost. >> whenever i see a surface tablet in the wild, i am in shock. i have to ask the person what the experience is like and they say it's great. >> they like it and they probably got it for free. >> the phone is also well loved. cory johnson in new york,

thank you so much and matt miller, great to have you here. thank you all for watching the show. . ♪

>> from bloomberg world headquarters in new york, i'm mark crumpton and this is "bottom line come" in intersection of main street and economics with a dash of wall street and economics with a main street perspective. also, microsoft unveils a new version of its tablets. and eight look at crushing student loan -- and a look at crushing student loan debt. to our viewers here in the united states and those of you joining us from around the world, welcome. we have full coverage of the makingnd stories headlines today. peter co