>> live from pier 3 in san francisco, welcome to "bloomberg west" where we cover innovation, technology, and the future of business. welcome to the best of bloomberg west. i'm emily chang. every weekend we will bring you the best of west, the top interviews with the power players in global technology and media that are reshaping our world. apple makes a bold statement about its product pipeline with senior vice president proclaiming great things to come this year. take a look to him speaking with its cofounder at the code conference. >> later this year, we've got

the best product pipeline that i have seen at apple in my 25 years at apple. >> it is the best product pipeline you have seen in 25 years? >> that's right. >> will you tell us about them? >> i get to see it tomorrow. i have been hanging out with this guy for two months. i'm not kidding. >> that is a really strong statement you made a few minutes ago. i think you set for the rest of this year, you have the best product pipeline you have seen in 25 years. in 25 years, you did the imac, the ipod, the iphone, the ipad, the macbook air, those are all widely recognized as pretty good products, right? >> i agree with you. i believe the products we have coming are great. >> the appearance came just hours after apple struck a deal to buy beats electronics for $3 billion. apple will gain access to the

popular beats headphones and other hardware as well as the new beats streaming music service. tim cook posted this photo of him sharing a laugh with eddie cue and jimmy iovine and dr. dre. i spoke with cory johnson via skype. i started by asking brad what he thought of comments. could the products coming up really be better than the iphone, the ipad and the ipod? >> we will believe it when we see it. >> could you see the eyes rolling when you saw the tape rolling? >> it comes from a position not of strength but of weakness. music is core to the apple franchise. really, over the past couple of years, the hot services in music are pandora, spotify and youtube.

apple has squandered that franchise. by buying beats, they get the credibility of its founders and they get the hardware and the beats music subscription service. >> look, music is what brought apple back. the ipod is what brought apple back. the ipod on windows is when the growth accelerated on apple. this really does show apple trying to fix a problem they have got with their old business, not developing new business. the comments about the product pipeline. what did they invent anywhere near an ipod or the imac, which was the first steve jobs product? the iphone, what could possibly be close to that? it is hard to imagine anything. we said a lot of people are talking about services and cloud services and the way they screwed that up. clearly, they're looking in a

rearview mirror and not looking ahead. >> there are a lot of people criticizing this beats deal. they don't think it is very innovative. >> it is also expensive. beats has an android app and a windows mobile app. apple has this very limiting orthodoxy of developing just for ios. having beats allowing to exist as a separate brand allows them to relax some of that and build an independent service that is basically following consumers and how they are using the internet. >> do you agree? >> i think it is easy to be skeptical. there's no question that apple is doing this deal because it is a reaction to downloads going down in reaction to online streaming. the price tags for this deal came down to $2.6 billion of cash. when you look at it and you look at the business in isolation, that alone is a good business.

it is easy to reject it, but it is a good strong business. let's also not forget that with beats, they're getting an established brand that absolutely has a cool factor these days with the kids. i don't think we should minimize that. one more thing that is really important in this world of on-demand streaming, there's been an artist backlash to overall economics of the streaming services. with the beats deal, with jimmy and dr. dre coming through, that is a big win signifying to the artist community that they matter. >> you can make a lot of friends with $3 billion. i agree with all of that, sort of. $1.3 billion in revenue is probably -- what is the margin of profit on these headphones? >> these margins are pretty good. beats is also getting into the automobile market. when you look at the deal, it is extending apple's brand into areas where it wants to be,

including wearables. i'm not necessarily justifying the price, but i think it is easier -- there are some reluctant behind it that is easy to overlook. there is item after item of why it does make sense for apple. >> what about the cultural differences? you can see the difference between eddie's personality and jimmy's personality. he is very much larger than life and very outspoken. not your typical buttoned-up apple executive. >> apple needed an ambassador for the creative community. content is what is selling hardware. the apple tv, the ipod touch. you need the content and the apps. apple has a limited orthodoxy. it has a download-centric model. consumers want to get content in different ways. jimmy and dr. dre bring that to apple. they have a ton of credibility

with media companies and artists. >> do you think there will be a culture clash? >> they're culturally less dissimilar than you might think. let's not forget the fact that steve jobs was considered by many to be an artist. you have content and then you have the marriage of artistry and technology. i think this is a really exciting deal to signify this convergence of technology meeting great content. content drives great technology. >> i want to make this other point. the biggest deal before this was when they bought next for $400 million. that was not only the biggest deal, but apple was proud of that. they would never do a deal that was bigger than the next deal. m&a folks would say that. apple is willing to take bets to

complement its products and services in areas where it is weak. it is an important step for the company. >> they generated cash from the time that the news leaked. this is so massive that it is a bump on the log for them. >> samsung unveiled its grand plan to become a leader in the health tracking industry, from wearables to a new health database. we got all the details with the president of samsung electronics next. ♪

>> welcome back to "the best of bloomberg west." i'm emily chang. samsung wants to be a leader when it comes to tracking your health with wearable devices. the company showed off a prototype of a new wearable device called the same band -- the simband. is starting a

software platform for developers where all their health load -- all the health care information can be uploaded. i started out by asking why he thinks samsung's wearable tech announcements are so revolutionary. >> is really two things. we announced a platform, it wearable platform that can be able to monitor our vital signs, as well as the cloud data platform where it can be able to deposit all kinds of information about your vital signs, but not only from our device, on many other devices. when you put together, you can make much more sense around that information. and that is what we were announcing. >> is is based on android or something new?

>> we support multiple os. it is linux based. our goal is to let the developers decide which os they want to use. we will provide options based on our platform. >> i've won wristbands for a few days. i'm not compelled to use them everyday. what is a mass-market use case? why should every consumer in the world be wearing something like this? >> is a really great question. i have been communicating with all kinds of wearable devices. most of them do not last more than two weeks. some of them are heavy, some are not very comfortable, some of them are not accurate. some of them have limited functionality. what we're hoping to do going forward through our development platform is the whole world of entrepreneurs join us to make a

platform we can monitor our vital signs. much more about our body. it is what we call voice of body. we think we're going to make a huge trend of progress about understanding our body. in other words, why should you learn about your vital signs when you see a doctor? could you know more about your body signs continuously, not in an invasive way. transit on signs of our heart rate or blood pressure or whatever is important to you. >> do see beyond a path to getting fda approval? is at a gold? >> i think our goal is creating a development platform and then whoever wants to make in products from this development platform should depend on their objective and go through the appropriate regulatory process. >> what is the cool sensor

you're working on. >> is what we showed today. it can be able to monitor multiple things. it can give you heart beat, of course. it can also give you monitoring of your ekg. it can give you -- potentially looking at your body mass, as well as your indicator of stress in terms of some kind of humidity on your body. this is another product. it gives me some idea of my heart rate. this morning i was at 52. it also tells me how much i walked today. i walked 4000 and 85 steps. it also tells me how much i ran

so that i can see the information about what kind of exercise i have done. 41 minutes, that type of thing. one of the cool features is sleep. it monitors your sleep, how long you slept, but also how deep you slept by measuring your motion. >> you have for smart watches on the site at present. would you learn from consumers that you have integrated into what comes next? wanted to have a majority of the smart watch market, the reviews of the watches have been mixed. >> is clearly what we call the early stage. if you recall any new technology in early stage, there's a lot of learning going on. our products will continue to evolve over time as we are adding better sensors. most importantly, better sensors and algorithms. >> they're expected to announce

something fitness tracking related. is the coincidence that you held this event today just ahead of that? >> you know, i think everybody has their own schedule. this is our schedule. we are very excited that we can talk about this critical service of wellness and health. >> you once quoted andy grove am only the paranoid survive. are you paranoid about apple? do you worry about this market? >> i cannot comment on competitors, but we are paranoid about anybody and everybody out there. parts of being where we are is trying to work on a very critical mission, and trying to bring the best product we can. when you create great products, hopefully that will take care of this type of issue. >> your head of strategy and innovation center, which sounds like an awfully big job. what is next? what is the next big thing for samsung? >> i think what we announced today, our engagement in

addressing the need to address the ever increasing health costs, i think the u.s. alone is over $3 trillion per year. given our economy of $50 trillion, it is almost 20%. reducing the cost of health. the more proactive about it so that some of these technologies can be used to really improve our wellness. in the process, we should be able to reduce cost of health care, which would be a good thing. it is very important to work on. >> google is going high speed on a self driving car project. we will tell you about the new prototype google is building next. ♪ >> welcome back to "the best of

bloomberg west." from search giant to carmaker, google is hitting the gas on one of its new -- the self having car. -- the self driving car. it has no gas pedal, no breaks. it runs completely on software. google cofounder spoke about the prototypes. >> the reason i'm super excited about the prototypes and the self driving car project in general is the ability to change the world and the community around you. >> google will start testing the prototypes later this summer with human drivers. if all goes well, a pilot program can be launched in california in the next couple of years. cory johnson and i spoke with john leonard, a professor at mit's department of mechanical engineering. this is the first time google

has launched cars from scratch. i asked john if he sees google as the next u.s. auto manufacturer. >> it is really a transformative potential decision that google is taking on, because you can really distinguish dougal's approach as more revolutionary versus evolutionary with the auto manufacturers approach. i think we are still a long way off from mass scale production, but the value of the software that google will create, if it can really enable these were but cars to navigate through the world safely, that really can be transformative. >> the car itself looks sort of cute. they wanted to look friendly. >> it looks like the vw bug. it does have an innocuous looking about it, something that will stand out. i know you drove a driverless car. crexendo in a driverless car, i didn't drive it. >> f find it really disturbing. i imagine a lot of other drivers

do, too. this will stand out, where people will see this thing coming from a distance. it is an intriguing notion to get this out there. its original goal was to make all the information in the world available. it is going to help them get their way echo >> was listened to a bit more about what sergei had to say about why he is so optimistic about this and why it is such a big idea. take a listen. >> some of the business questions like how the service will be operated or will we operate ourselves or our nurse are things that we will sort out when it is closer to being more widely employed. these initial test vehicles will probably just be operated by us because it is specialized. longer-term, it is not clear. we are almost certain to partner with a lot of companies, possibly uber.

>> the legal issues are going to be massive when it comes to this in terms of proving safety. they will have a lot to go through with washington before the get anywhere. >> john, i want to talk to you about the navigational and mapping issues. you're done a ton of rish gas research on the specific problems that can arise. what challenges is google going to face? >> ogles approach uses very precise writer mapping. large-scale capture of information about the physical world that google is leading. it is kind of like super gps. it gives them down to centered meal -- dundas centimeter level positioning with which gives them the ability to develop these vehicles. there are still some great challenges. google are driven by data. this deployment of 100 test

vehicles will give them data about how the systems will be used and how they can perform. i will help them create the software value. i call it mixed emotions. i'm excited about the technology and the chance to save lives, but there are great challenges. i worry about things like left turns across busy roads, driving on roads that might have snow, interpreting the gestures of crossing guards and traffic cops. it is pretty clear with the releases that had the last few weeks that google really are not letting off the brakes as you have said. they're really making this sustained long-term investment. we might he a long way away, but i do see it as a potentially transformative technology. >> the knee asked you, there are a lot of these types of innovations in cars right now that recognize when a car is drifting out of alain, that can tell when you're backing up into a parking space or even control your car for that parallel parking adventure, but the persistent nature of this that

lets a car drive all the time, what is the biggest difference between the occasional nature of self navigation and the persistent nature that they are proposing? >> there are major differences. the government has defined some levels of economy -- of autonomy. there's autonomy when the human is ready to take control in the event of something going wrong. level four is total autonomy. google has said with its announcement that they're going to level four. most of the other companies are going after more level three. you have this challenge of if something goes wrong, how do you alert the driver and handed back to them? there are liability implications in terms of the software or the driver. google are bypassing that handoff issue completely and just going for a much more ambitious goal. by going to a lower speed, they can do this safer am a smaller scale deployment.

i think we still might be possibly even decades away from full taxi driver capability, say in manhattan, but this is an interesting path to getting the data in a safer, smaller scale way to understand how the future might unfold. >> thought the ability to give the human control, this car only has two buttons, stop and go. what is the stop button -- what if the stop button doesn't work? what do you do? >> i think the paradigm is that the stop button will always work. the software will have so much redundancy and the sensor coverage -- for example, one small detail of the google lexis prototype is that if i'm not mistaken, there's a blind spot close to the car which makes it hard to do precision maneuvering say in a shopping mall parking lot. the smaller vehicle seems to be designed to give complete three under 60 degree coverage all the way around the vehicle up close. >> that was m.i.t. mechanical engineering professor john leonard and cory johnson.

how exactly did the yahoo!/alibaba partnership come together? we will get the information when we come back on the best of bloomberg west. ♪

>> welcome back to the best of "bloomberg west." i am emily chang. he is a tech executive who played a key role in forming yahoo!'s formation. he is the ceo of textbook rental. with alibaba filing for a u.s. ipo, i asked him if he sees any risk to investing. >> all of their success has been in china. the question is how big can the chinese market be?

well they have competitors there? we know people are trying to compete with them. they will get local competition. to this point, they have not had that. when they try to be in the u.s., what is their growth potential in the united states? will they be able to buy companies? there are a whole bunch of unanswered questions. the management is extraordinary and they have tremendous momentum. they have accelerated their growth during these are long-term questions. >> yahoo! will sell half of its stake in ali baba. what should it use the money for? that is up to melissa. it if i were a betting man i would say she would return some of the to the shareholders as she did before. the question is what areas does she want to grow in? it is difficult to buy a company of certain sizes and scales. public companies, there are a lot of public companies that might be interesting for her. she will be judicious about it.

i don't think it is the goal to move immediately. she has a plan and we will see. >> do you think she has done a good job? you know better than almost anyone. >> it has been very difficult. i left at the end of 2006. it has had a string of ceos and competitive issues. it has had hostile takeovers. it has had an activist shareholder. it is not an easy situation. she has brought back energy to the company. she started to rebuild audience growth and to the company. she has followed what she laid out to do. it is not an easy job. it does take time. people did not necessarily have the patience. getting a war chest and getting alibaba sorted out and acquiring a lot of talent, this is a chance to succeed. i think her sheer energy, she is

a force of nature, that gives yahoo! an opportunity to grow. >> i want to talk about the environment because you went to the last bubble. we are seeing uber being valued at $17 billion. is that fair? >> it is fair if some he will pay for it. that is the beauty of a free market economy. it they are an extraordinary companies. it leverages mobility. it leverages location. it leverages software. it is high-growth and high-margin. there are a lot of amazing companies like that. you are seeing the real winners of the private market being reported. you are not seeing the second place players been rewarded at the same level. the market pays what the market pays. $17 billion is a lot.

asker self 10 years from now if they own all the transportation infrastructure. how powerful can that be? >> are we getting into a dangerous situation with valuations and are we in bubble territory? >> there is a private market in a public market. everybody has taken a beating over the last couple of months. some of it may be deserved. in the public markets, they work themselves out. in the private markets there is so much capital. you keep hearing about more and more funds raising $500 billion. that market is going to be pushed up. if you are a founder, if you are thinking about a series b or a series see, you had better think hard. >> the sale of the los angeles clippers could affect $2 billion. are they worth it? we asked the owner of one the clippers' rivals coming up next. ♪ >> welcome back to the best of

"bloomberg west." i am emily chang. the sale of the los angeles clippers is drawing interest from the likes of steve ballmer, grant hill, but with the price tag could swell to $2 billion, what will owners have to do to see a return on their investment? jon erlichman talked to peter guber, who bought the golden state warriors. he asked about the plans to build a new arena in san francisco. >> a lot of gold. a lot of drama. a lot of cement. a lot of planning. it is a arduous and uncertain journey.

you try to create certainty by doing it rectally and engaging with the community. you engage with the architects and the people that are financing it. there are a lot of constituencies. it's like having 12 jugglers juggling perfectly. >> speaking of the community, this is a large tech community. you talked about building the madison square garden of the west. you wanted to be a tech savvy facility. have you spoken to companies like apple or google about ways their technology could be integrated into the facility? >> we have to have a quick strategy. we have to be digitally fit. we have to create a venue and a platform that allows people to interact and participate in the experience of the game, the arena, the site. that participation creates enthusiasm and the money.

not speaking to the people who are the leaders in the tech market, who know how to engage audiences and know how to interact and create that environment would be insane. we are going to draw upon that heavily. we have been drawing upon that heavily. of >> the clippers story has done so much for team valuations. there could be offers north of $2 billion. are they worth it? >> people are worth what people are willing to pay for it. the people bidding arctic stream will he successful and smart. they did not get there by accident. they will measure value and what they think they can add to it. it is a live, location-based entertainment. that is event and a spectacular. it is very valuable in this age. you can't mediate. you can't just dvr it.

that gives a very vital value to that asset. we own the dick clark company. we own a live entertainment company. we own sports teams and baseball teams. we know that live entertainment is critical. when you have a team like the los angeles clippers or the golden state warriors that have a great and robust audience, that is very valuable. >> what about the talent? valuations are going up. salaries could go up. the warriors just signed steve kerr. five years how do you judge , $25 million. these contracts? >> one when a time. you have to win on the floor and in the hearts and minds of your fans. you have to create that mobilization. all of those ingredients are part of it. you can have a great script, but bad actors you will have a bad movie. it is the combination of the

design and the plan and the execution. getting the best talent is crucial to that. you have to get them and not a collection of players but a team. that alchemy is magic. >> you talked about not being able to use the dvr. in the world of television, sports content is king. it does raise questions about distribution. as a part owner of the dodgers, we so the dodgers team up time warner cable to create a channel where the games can live. there were pay-tv providers as well. that dispute has continued. you expect a resolution to that soon? >> the idea of that is to recognize it was their job to get distribution. it is very important to the fans that they get their asset, in

this case the dodgers. we want that to happen. it is for roche is on our part. we don't control it. we sold that asset to a provider who then is in charge of distribution. they are being purchased by comcast. at least it is in the works. the >> do you think that purchase will speed things along? >> there are a lot of amalgamations going on. you have them being purchased by comcast. that is going to change the paradigm on this. people who want to get their sports teams in any city, they will get them. >> you are a big sports guy. we have to talk about movies. you have a long history in the movie business. it is the summer season, the international market is just as

important these days. talk about how the industry is positioning itself for that. >> it is a simple matter of numbers. 300 million people versus 7 billion people. where would you name if you wanted to make money? that market is expanding and not fully mature. our market is not expanding. they make product that is really gleaned by the international market. >> peter guber, owner of the golden state warriors. garmin is still on the trail. they want to make your outdoor experience more enjoyable. ♪ >> welcome back to the best of

"bloomberg west." i am emily chang. as we kick off summer we are taking a look at technology integrated doors. backpackers have turned to garmin for its accurate navigation systems. with more consumers using smart phones, they are making more gadgets. cory jackson spoke with them. >> >> we have always been a diverse company. we feel like it is a value proposition. we build devices around whatever you want to do, is it marine or hiking or cycling or

rockclimbing. we will deliver an innovative solution. >> i remember when i was at yahoo!, we were looking at the map space. we were early. nobody understood just how big all of this could become. how do social and the connected world really change your business model? >> that is a very good question. one example we like to use from a social side is one of our newest products. it is a hub, a bike computer that connects around various applications. if you have a smart phone on your person, they want to use this bike technology easily. we do that with an edge 1000. there are apps out there that can provide basic technology, the ease-of-use around our devices is where the name garmin is well-known. >> i know when you made your first cycling app and

acquisition. at the time, how did you look at that market. how big was it? >> it was relatively small. we had been growing our outdoor space and our fitness category which includes cycling for years. they were becoming large parts of our business. over half of our business has nothing to do with automotive. the way we size that is if you look at the various consumers that have these different activities that they do, garmin

garmin is there for almost everyone of them. >> how do you imagine this fascination with video and location and outdoor, you hear about drop cam. how do you participate in this market? can you get into the whole video base? >> we have a new action camera called the verb. it is the ability to record your activities outdoor. we have remote control access like this on my wrist. this is an outdoor watch. you can do a lot of different tracking of your activities. you can use it as a remote control with an action camera. if you're doing any kind of outdoor activity, you can easily use the watch as a sensor to be able to control and connect to an action camera. >> dogs.

what is the dog product that you have. >> we have a series of dog products. we have some dog training and dog tracking products. they have been very popular. this is one of the reasons why our outdoor segment continues to grow. it is another use case for the outdoor lifestyle that is being used by the consumer. >> cory johnson and garmin cfo kevin rockman. this is the teenager who can help cure cancer. we will introduce you to the 15-year-old who just won $75,000. ♪ >> welcome back to the best of

"bloomberg west." i am emily chang. 15-year-old nathan han was the big winner at the science fair. he won a top prize of $75,000 and got carried off the stage by his friends. his project used big data to identify the characteristics with the gene of cancer. cory johnson asked how he found out that he won. >> i found out as they were calling my name. it was pretty amazing. i was completely speechless. >> how do you define, i have

heard people explain what you did, and you explain it to me? >> i created a process that can be used to predict whether or not mutations are likely because cancer were not. i did this by mining data from public domain databases and doing a statistical analysis and applying machine learning. that is like an algorithm that you can use to teach computers to classify data. >> this is a basic concept. tell me how you wrote this code and what was unique about it. >> i used this language and my rhythm was unique in that it is unsupervised. it is flexible. it allowed me to mine data from public the main databases. i did not have a lot of research access to proprietary databases. previous algorithms only had an accuracy rate of around 40%. mine was 81%. >> i have never heard that before.

>> unsupervised function is one where the data that you train the function on, you don't have to know which category it belongs to. in my case, the data i said in to my algorithm i did not have to know if it caused cancer or not. that is the sort of data that is out there in the public domain databases. you need to know the dated that you input, whether it does cause cancer or does not. >> it was allowed to be an

unstructured format when you approached it and you could process it in a different way. this would not be limited to understanding genetic material. you could use this with all sorts of things. >> my algorithm is custom designed for this biological application. theoretically, you could use it for anything. machine learning is big right now. there are tons of applications for using machine learning. >> why did you pick this? >> there was a biotechnology segment in my biology class. it introduced me to these online public domain databases. there is incredible amount of cutting-edge data. i was so fascinated. what can i use this data for? this was about a year ago. my family visited a close friend who had been diagnosed with ovarian cancer. that inspired me to create a system where you can input mutations and they will tell you if they are likely to cause cancer or not.

>> what is next? >> i am not entirely sure. i just want to get through high school. i need a summer job. i would like to find a research lab that i could continue my project, maybe get a patent or a practical application to apply it the system to save lives in the real world. >> what are you going to do with your 75 grand? >> i am not sure yet about that. i will probably put most of it away for college tuition and take some classes. >> that was nathan han. that doesn't for this edition of the best of "bloomberg west." you can watch us monday through

friday and we will see you next week. ♪

captioned by the national captioning institute --www.ncicap.org-- >> its building blocks are known worldwide. its brand is among the globe's most admired. it is the fastest-growing toymaker on the planet. we are at a company that less than a decade ago was losing a million dollars a day and is being transformed. >> it is becoming a case study in how you turn around a company. >> we are going inside lego. >> awesome. >> everything is awesome >> the theme song for "the lego movie" could be the theme song to the company itself.