>> live from pier 3 in san francisco, welcome to "bloomberg west," where we cover innovation, technology, and the future of business. i'm emily chang. i want to get to our lead story today. there were no blockbuster announcements, but apple has unveiled a wide range of software features and upgrades at this year's worldwide developers conference that kicked off in san francisco today. some of the highlights -- ios 8, a new operating system for mobile. and yosemite, a new system for the desktop. there is deeper integration between macs and mobile devices. a new programming language for the developers called swift. a new health feature called healthkit. a new smart home developers feature called homekit.

ceo tim cook also took the opportunity to jab the competition saying more customers are coming to apple. >> over 130 million customers who bought an ios device in the past 12 months was buying their first apple device. [applause] many of these customers were switchers from android. they had bought an android phone by mistake and then had sought a better experience and a better life. [laughter] and decided to check out iphones and ios. >> he also threw a few punches

at microsoft. new features aside, did apple hit a home run? our editor-at-large cory johnson is with us. we're also joined by one the leading authorities on apple, gene munster, a senior research analyst and has been covering apple since 1995. also with us, brad stone. brad, i will start with you. how would you rate today's conference compared to prior years? >> there was no blockbuster hardware announcements so perhaps disappointing in that respect. it was a genuine developer event. major advancements with ios 8, with yosemite. opening up aspects of the iphone, that touch id so any developer can come. the swift programming language. not as much raw meat here for consumers, but we will be using

these services by the fall. it is the way we are going to live. >> gene, how important are these new features they rolled out? >> it is critical for the hardware that comes out to have exciting features. the three areas that people really want to see is payment, health, and home automation. there wasn't a lot of sizzle for the average consumer, but if you look at the substance of what they are trying to do, they're trying to make cool features in the products. i think there was a lot there today that i think a lot of investors do not fully understand. >> do you agree with that, cory? we were there today. there seemed to be this feeling of wanting more as the hour passed on. >> the story of apple for the past two years -- these events that steve jobs made so exciting by having a band come on stage or doing a garage band

demonstration with john mayer, that is the kind of level of expectation the most successful computing company in the history of the world. one might argue that is what they're looking at. i think what they were saying, what we see is a company taking steps to embed themselves deep into the lives of their users in ways. it is not just, which a lot of the conversation was, marrying the mac and the iphone and the ipad in a tighter synchronized way. also, connecting you to this is how you are going to get into your house and this is how you are going to navigate your car. your body, you're going to monitor your body. if the iphone is wired into all that through the extensions of software we heard about today, the macintosh operating system, the ios 8 system which is closer to one in the same is suddenly embedded into consumers.

>> there were some criticisms about copying today. pulling features from dropbox, skype, whatsapp. i have a tweet from the ceo of whatsapp who says it is very flattering for apple to borrow numerous whatsapp features into ios 8. >> i think they were doing the right thing. whatsapp is super popular. credit apple for taking the cues from whatsapp. they did it for a lot cheaper. cory is hitting on an important point. in the past, apple talked about themselves as the ecosystem and then the hardware piece. the services are the latest piece of that fabric and those are the things we heard about today. getting entrenched is important. >> is this laying the groundwork for iwatch? >> it is. for those that have been

following tim cook's comments, he talked about new product categories in 2014. >> new product categories. have not had those yet. >> some people could interpret some of the stuff today as new product categories but on the services side, around the home and health, they did not check any of those boxes today. we continue to believe they will be doing more hardware updates. >> i wonder like some of these have been on the road map a long time like the touch id. surely, they knew they had problems with the touch id. if they rolled it out with 15 different banking apps and there were small problems, it would've made much bigger problems. same with passport. it is how i use a boarding pass. i watch people at starbucks and they use that at starbucks at all the time. >> last week, when the longtime

apple executive says he thinks the upcoming product line is the greatest line in 25 years, greater than the ipod, you said we should disregard that statement. do you agree? after what you have seen today, do you still believe that? >> hyperbole is no stranger to apple executives and it is characteristic of the kinds of things they would say. they have been promising a lot over the last year. we still have yet to see that big new product category, the hardware, the smart watch. that is clearly coming. homekit, healthkit, these are placeholders. in the fall, i think we will see those products. >> we will dig deeper into homekit and healthkit. gene, brad, cory, stick around. apple is the latest tech giant trying to help you stay healthy. also, the latest company getting in on the growing smart home field. we will look into apple's new features next. ♪

>> welcome back to "bloomberg west." if you are just joining us, we are talking about today's announcements from apple at the worldwide developers conference. cory johnson is still with me. also with me is gene munster and brad stone. let's talk a little more about what this means for apple's bottom line. they ended it slightly down in their shares today. what do these health and smart home initiatives -- what do they actually mean for apple's bottom line? >> this is laying the groundwork for the iwatch which will come out later this year. >> it will come out? >> i say they all but announced it today by coming out with this platform. i think the groundwork is there. let's assume they come out with this watch and they sell about 10 million units. that would add just under 5% to

the street expectations right now for the next 12 months. it could be a little greater. probably won't be much less than that. as far as the home, we don't expect apple will be making lights and smart rocks, but those will build a platform. that is something that probably will take a year or so but that will be more of a service layered type of a revenue which i think is something that is harder to model. >> the former cto of facebook pointed out that apple has never been as good as getting other companies to make products as good as apple products. with this smart home, are the other products that integrate with the iphone actually going to be as good as apple products? >> that is a great question. we have seen other platforms like smart things, a company based in virginia funded on

kickstarter. it has made a lot of its own devices integrated with a lot of hackers to build these devices. they haven't been all that clever in embracing the connected home. google strategy has been going to buy nest to do it themselves. >> nest gives them a lot of information -- they gathered so much information about how people use the devices. >> it is hard to use these devices. we have been talking about the connected device for 15 years. >> i thought the health stuff was really fascinating. i am very geeked out on the wearable stuff. i thought the jawbones opening up this developing environment so that lots of other devices and lots of other trackers. you can use the keep my run app and the information would show up. you saw tim cook showing a lot

of the stuff. the only app he showed was a nike app. it suggested there has to be an input device. there is no discussion of input devices. they sell the up at the apple stores and i think they know a lot about that business already. >> you are thinking iwatch later this year. when? >> september, october -- before the holidays. >> iphone six with a larger screen? same timeframe? >> september. the expectation is it would be two screen sizes. two larger screen sizes. think of it as a 4.7 inch screen. they have been on that annual release cycle. i was recently traveling in europe and met with a company that does components for the iphone and they talked about the launch. back-to-school and holidays.

>> what are the market forces driving that timeframe? they can go off at a better time. >> i think the reason is back to that school and holiday angle. >> apple tv, is that still happening? an apple tv set? >> we still think it will happen this year. i think at the end of the day some of the stuff we saw today actually would bode well for apple television. they are trying to create single interfaces to manage a complex environment. whether it be with health and beauty or around the home. they need to do that around the tv. think about your netflix app. apple is in a great position to do that. even though we didn't see any of the substance, i think that is clearly on their road map. >> we had a discussion earlier

about products they develop and the marketing plan. do you think when we hear these stories, when we get these leaks and find out there is a watch being developed that they get the go time and decide it will never be seen? >> i think that does definitely happen. there are certain categories that're too big for them to deny and too big to shut down long-term. i think the tv is a perfect example of an area that has taken them a lot longer. >> gene munster and brad stone. thank you both. wwdc is apple's chance to dazzle developers. what are app experts and ceos thinking about today's announcements? that is next. ♪

>> welcome back. you can also catch our earlier edition at 10 a.m. pacific, 1 p.m. eastern. apple live streamed it keynote to tech enthusiasts worldwide today. they're putting on a show for developers. cory johnson is here. we have hotel tonight ceo, sam shank, and evernote ceo, phil libin. both companies that rely heavily on developers to build the apps that fuel their businesses. a lot of experience developing for apple and apple products. how important and impactful were the announcements today for you guys? >> it was huge for me. i think that was the most developer-centric note that i've ever been to. it made me remember that i am a

developer. >> which is why consumers alike what about me? >> all the excitement around the new developer environment, the language. it is very developer-centric. more people can work on these apps. it is not something customers will necessarily see. >> i don't code and so i don't really know about it. i heard about new language. >> is based on a lot of javascript, a lot of similar things that people are familiar with. >> it happens faster and cheaper? >> that is what i expect in our guys are excited about. we are starting to see the guys that are developing on android getting excited to do more on ios. >> you developed on android? >> of course. >> we are a mobile only company.

we operate on all the major platforms. >> does apple still have the magic? >> i think they got it back this morning. android has made some big strides in being developer friendly. they went all out on making it easy to do beta testing, to deploy different features to different people. and let's apps communicate with each other. up until recently, a lot of that was missing from apple. i think they caught up. >> it is hard to judge the success of something during a keynote because the apple faithful cheer at everything. the coffee cup -- yay. >> i would buy that. >> the mobile stuff. the apps were interesting.

the crowd was very excited about beta testing. allowing apps to be tested by groups chosen by company and group selling apps. maybe zynga can bundle all the games together. >> the huge thing for us and really productivity in general is all the extensions. is the interactive notifications. it is the extensions that allow apps to look into each other and into the operating system. it is the interoperability. within two or three months, you will see far more. this is going to be huge for consumers. >> i can see that being huge for company like evernote. what about this whole idea of innovation and if apple is still innovating. do you feel it is still there? >> it is where we started as a

company. we started because we were so excited about the iphone and we wanted to build something for it. it was our inspiration still and it is where we developed our first features. it is where we get the feedback on it. our top users are guys using iphones. that is something that has not changed in the past 3.5 years. it says a lot for the platform. also, it continues to deliver and continues to excite people. >> are your most valuable users iphone users or android users? >> apple users are more valuable. measured by money. >> how wealthy they are much they spend? >> how much they spend. android users perform really well too. i think apple is very innovative. i think people who say they are maybe think that innovation is when you have a completely new

look and piece of hardware. that only happens every few years. >> i think the last time it happened was in 2010. maybe that is a long time. >> i am hoping there is new hardware later in the year. some kind of fitness band would be fantastic. i think the developer stuff announced today was greatly innovative. doing it -- putting in this functionality that would preserve the security, the feel of apple products is hard. if they manage to do it right -- >> it is hard to do. the fact they kept this a secret is no small feat. the innovation that is involved in that to orchestrate an entirely new developing language is shocking.

>> they introduce a new computer language and no one knew about it beforehand. you don't do that in secret. >> how long does it take to start implementing? >> i am going to learn it pretty soon. most people are not going to switch to it right away. that is a much longer-term thing. you will start seeing apps appear on it. >> it can add a performance improvement to that part of the app, that will be the first thing you see. >> what was the one thing that really captured, was really exciting for your business? >> the ability to intereact with push notifications. to get people into using hotel tonight without getting into the app. >> the third-party access with the ids.

>> thank you for bringing us the developer perspectives. we will be back with more next. ♪

>> you are watching "bloomberg west" where we cover innovation, technology and the future of business. i'm emily chang. samsung says its first smartphone running on a new operating system will be available in russia. it is called the samsung z and will hit the market about a year later than planned. it is an opensource alternative to android. google is being flooded with requests to remove links to search results after that eu court decision. google got more than 12,000 requests a day after putting up the removal form online. users have a right to be forgotten and that search

engines must remove certain links. more executive moves at microsoft. jeff tepper has been named the new head of corporate strategies. he was previously the vice president of office software. they are focusing on mobile and cloud computing. we turn back today's top story -- apple's 25th developers conference earlier today where ios 8 was unveiled. we have the founder and author of a market intelligence site who was at wwdc earlier today and is one of the widely followed analysts on apple. we have the author of a book about johnny ive, the genius behind apple's greatest product. he is the editor and publisher and covered apple for more than a decade. we will start with you since you flew in from finland.

how does this one rate? >> i think it was one of the best shows i have ever seen. i started out as a developer. >> you should get out more. [laughter] >> you are right. i started as a developer when i was in college. when they announced a new language, this was a watershed event. these things do not come out as often. i think apple has had three of these in its entire existence. what this means for developers is productivity, massive increase in certain types of applications they can build. this was all about releasing all of these building blocks which they flooded in. we are talking about 4000 apis. this is mind-boggling from a developers point of view.

as far as my heart is concerned being in the developer community, i think it was a wonderful event. as a consumer, there wasn't a lot to be excited about. the way i would put it is that this is like going through a cement conference and you are learning all about cement and you want to see the skyscrapers that can be built with it. they hinted with that with the new ios. it is going to be up to developers to build a city full of this new stuff. >> it is a worldwide developers conference, not the worldwide press conference. it is for developers. would you agree? >> i think he is not being as optimistic as he might be. i think they showed us they are looking at three massive areas. the home, health, and mobile payments with unlocking touch id. all of them have huge invocations for the next few years. if what tim cook says is true,

these may be an indication of the three things they looking at. a fitness device, and iwatch, some home innovation technology. >> you are a johnny ive expert. i think of his work is being closed in removing option and fewer buttons on the device whether it is the ipod. you have him right when he is in charge of the software. he is using all sorts of new options that outside developers can label onto the ios experience. explained that. >> it is always been very sophisticated but much simplified to make it easy. if you put three buttons on it, people are going to hit the wrong button. the macintosh has always been really sophisticated. there is a lot of complexity and they're hoping both apple and

developers make it easy for people to use. >> the whole thing in computer design is that it's hard to make systems foolproof. fools are so ingenious. it is hard to make things easy. behind the scenes, they introduced all these things that will make things easier but are complex at the level we are looking at. >> talk to us a little bit about johnny ive as a person and leader. what do you see as his trajectory within apple? >> today was a lot -- it was kind of surprising because i thought they don't sell anywhere near as many computers as the ios devices. you can see how much time they spent on maverick. i think it looks beautiful. all the different features.

they are making it work, play well with ios so that collaboration features, the handoff, the way you're able to start work on one device and move to another. i think it shows that both platforms are very important. there is a unified design. you can move seamlessly from one platform to another. it is more integration. >> their learning more from -- the design cues are coming from ios. what we saw last year is that they were starting to percolate into the mac. you can see from a designer's point of view, devices create constraint. they are smaller and less power. they designing around those constraints. it is a good design direction. constraints make you work harder

as a designer and that is what we are seeing the benefit of. >> the real risk is that think it is safe to play it safe. how does he think about innovation? >> they innovate like crazy. it is funny. google was seeing a lot of praise last week for the driverless car. people are thinking what is apple coming up with? google is reinventing the future of driving and i think people misunderstand. what they have is a demonstration of the potential technology. that is not ready for prime time. what we're seeing today is the result of many years hard work. it is a sort of a glimpse. when you see the hardware later, you see the innovation they have been up to behind closed doors. >> we are going to continue this

conversation after a quick break. talking more about apple and their latest announcement at wwdc. ♪

>> i am emily chang and this is "bloomberg west." we are back with a special roundtable of guests talking about the importance of design at apple on one its most important days. back with us, cory johnson. i want to talk a little bit about the presentation today. who presented, who didn't present, and what it means. we heard from tim cook. nothing from johnny ive. >> phil is heading up.

the two folks that did present -- josie who did the demo of ios innovation. he is represented by his team. essentially, what we're are seeing is a rotation of some fresh faces each year. we are seeing people that we don't see frequently. there was a concerted effort to show it is a team effort. >> there are no stars? >> they are all stars. timothy and the contributors -- there is a conscious effort. >> does johnny not like to be on stage? >> no. that is why he is on videos. he will make a short video

talking about the design challenges and what it is. he tends to do a little bit of designer speak. >> today there was no video. >> they will save him for the industrial design. he is like a huge underused asset because he is very charismatic and very passionate as well. i think -- >> does he refuse sometimes? >> he is only gone once in recent memory. >> i think he probably feels he comes across as more sincere if he speaks from the heart. this is scripted performance. he would feel uncomfortable having to read lines rather than speaking from the heart. that is a personal preference. >> i wondered about that watching tim cook. i was wondering if you would be more comfortable or rehearsed it.

to what degree was it done. >> he could still be fresh and spontaneous. when they did the ipad air, that was so over-rehearsed. >> can we evaluate the company post jobs and the answer has been let us wait. is it about time to start thinking how was the company doing now that steve jobs is gone? >> we saw evidence here in some important ways. what we saw from the developers point of view, we saw a great deal of thinking about architecture, and great deal about thinking about design on a software level. steve jobs apple was created to design level and the user

experience level. i think we are seeing progress. he would've probably asked they not put the effort down below because it was taking a lot of time and it would've taken a lot of resources. under the current management, i think there is more bringing back some of the computer science to apple. i think maybe he would've gone along with it. this is definitely a departure. >> what do you think? >> i was hoping to hear more about beats. >> they called dr. dre but that was it. >> i was told ive was in the audience. >> do you think the beats deal is a good deal for apple? >> i came around to it pretty quickly. at first i didn't. >> why didn't you?

>> initially, i thought it was only a brand that apple did not need to own because it is not an engineering organization or an asset that you can acquire like intellectual property. i thought while that is a great brand but why would apple need a brand? they never had to go outside to get that brand value. i first, i thought -- at first, thought it didn't make sense but then i got to thinking about the future of music and the evolution of the job of music. when i convinced myself was the notion that itunes needed to have a new mission in life. itunes was about ownership and control of your music library and your own personal taste, but over time the job of music became more about discovery. discovery and filling that emptiness. >> finding new music. >> the idea of hoarding content when content is so abundant becomes a little bit -- that is where we saw the evolution

especially if you follow young people. at a certain point of your life, your behavior stops changing. when you are at a certain age -- i think apple is going on with the notion that music is changing. if you go back 100 years, you see a different music used to be before recorded media. >> beats is the most successful wearable technology company in the world. i think that kind of -- i agree with what he is saying. the wearable technology, it is an important brand in that area. if they are going to get into wearables, that is a brand they could do something under. >> i thought the brand sat nicely on top of itunes on either replacing it or potentially being the ipod which is a brand that will go way. maybe they can do something

there with music. >> beats potentially replacing itunes, i haven't heard that one yet. thank you so much for joining us. thank you both. we are going to talk a little more about beats now that it is official. what the headphones and the streaming music business really means for apple is next. ♪

>> welcome back. "this is bloomberg west." you can also catch our earlier edition. after confirming its $3 billion acquisition of beats electronics last week, apple made no major announcements about its future plan for music. dr. dre made an appearance on the phone and now as a full-time apple employee, he wanted to know what time to show up for

work. >> it's pretty early. what time should i show up for work? [laughter] >> if you want to beat tim, it would be about 4:30 a.m. orientation starts at 9 a.m. and you don't want to miss the free t-shirt. >> sounds good. can't wait to get to work. >> our editor-at-large cory johnson and i sat down with monster founder noel lee after the keynote today. he helped design the original beats headphones. we asked him what he thought about the major push now that a deal has been sealed. >> i think it is a great opportunity for the whole industry. when you combine a technology company like apple and an audio company like beats which we are proud to have helped start, i

think this opens up a new whole era of collaboration. >> what does the iphone do to the headphone business? >> it allows you to carry your sources around with you. it wasn't too long ago where you had to carry your records in the case and cds in a cd carrier. now it is ubiquitous. people have their music collections along with it will have to play it on something. the headphones are like speakers. you carry your big speakers around with you that used to be in your living room. >> it is interesting to see dr. dre appear with tim cook. what do you think about the cultural differences between the two companies having worked with beats? >> jimmy really has not worked with anybody. he never really worked under anybodythat is going to be a very interesting dynamic.

we will see how that goes. >> what does jimmy and dr. dre bring to the table that apple does not have? >> jimmy brings to the table an uncanny ability to spot music talent and develop them. he is one of a kind that way. dr. dre brings the relationships with all the artists. he has that insight. it is really all about the music business. i think jimmy and dr. dre can bring that to apple. >> the tech people look at this deal and the financial people look at this deal. i wonder about the headphones business and in fact if they are acquiring a high-quality headphone company. >> i think whatever the margin is -- >> you would know better than almost anyone.

>> anything that consumer electronics is small margins. >> under 10%? >> absolutely. >> under 5%? >> i cannot tell you everything. it takes so much marketing these days. if you look at what beats has spent just in the beginning of this year bringing their name out. maybe because of this acquisition to get into the public limelight, it is immense. it is hard to make a profit. >> you are wearing your monster headphones around your neck. where is innovation and the headphones business going? what is next? >> first of all, the quality of sound. that is where monster has expertise. there is so much more to get. it is like a fine pair of audio speakers. you hear more things and get

closer to the music. it is an exciting thing to experience. when people hear this, they relisten to the whole entire collection. beyond that is wireless. bluetooth and make it flawless. beyond that is personal identification. with our dna headphones, you can tune the sound yourself. those are some personalizations. wearables -- >> what about putting sensors in headphones to track things about your body? >> first of all, i think that the ear has a lot of areas where you can sense all kinds of things for the body. since you are already wearing headphones on your head, that will be a good thing to be able to tie together with your watch or iwatch. >> noel lee, ceo of monster with myself and cory johnson. that does it for us today on apple. ♪

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