>> live from pier three in san francisco, welcome to "bloomberg west" where we cover technology and the future of innovation. amazon fires up its challenge to apple and others, announcing its first smart phone. jeff bezos unveiled the amazon fire phone today at an event in seattle. >> can we build a better phone for our most engaged customers? well, i'm excited to tell you the answer is yes. [applause] >> bezos was key to point out how the phone was different from

the wide selection already on the market. it has 3-d viewing capability and image recognition called firefly. take a picture of anything and it will link you to amazon.com. at&t is the exclusive carrier of the fire phone. it hits the market for $199 and includes a year of free rye membership. cory johnson is live in seattle where it all went down. you got to try out the phone. you got your hands on it. is it any good? >> who knows? things look nice when you first try them. it is in the details. two of the features that were interesting and might bode well,

one is this ability to see things using multiple dimensions. the way it works, what it does is it shows a hologram image on the phone. when you look at something and turn the phone a little the image can adjust like 3-d mapping things will do. as you look at it it adjusts and allows you to have the experience of seeing the images, a 3-d image behind the label. the way it works is interesting. it has a couple of cameras that can tell how you are looking at the phone and the camera makes a map and adjusts. the other thing that is interesting, listen to jeff bezos where he talks about this. listen to how he describes it.

>> what if there were 1000 artists standing by to redraw the picture every time you move your head? what if they could do it 60 times a second? here it is. >> this notion of being able to actually redraw the image as you see it shift, as the recognizes you are farther away. it is a cool factor other phones don't have. you would walk over and say what is that thing. they need the attention to get the business. >> amazon flew in a lot of customers. what has been the reaction? that is neat but i don't know if i need to use that every day and give us the phone i already have. >> that is the thing. you want to give up a phone that

has instagram, google map application that you are used to? this is the switching problem that is difficult. that is why they have to have the cool factor. one of the neat things they have is 24-hour customer service. push a button and talk to someone who can help you and take over your phone. if you think of apple and the genius bar, how genius that turned out to be, this is a portable genius bar and it could prove to be a valuable feature for amazon at securing people on the amazon ecosphere. >> i want to bring in brad stone. also, joe brown and a managing partner at venture firm s k ventures. thank you for joining us. i will start with you. your first day? >> this is a phone that is going to help you buy stuff. the coolest thing was firefly. you can look at anything and it will say we sell that and that is a way to buy it.

it maps it out with its camera and then it looks it up on amazon.com, the everything store. >> i already buy a lot of stuff on amazon. do i want a phone that will make me spend more money? >> how will retailers feel? you're not going to win much for doing that. the phone is need. kudos for getting it out the door after five years of development and coming up with something that is a little bit new with the firefly app. this is a hypercompetitive market. it is priced conventionally. $200 for the two year contract. >> it is not super cheap. what is your first impression of this phone? the 3-d feature, the six cameras? is it more than a gimmick? >> i got motion sick looking at

the pictures of the pictures. i hated so much i feel i must be wrong. it struck me as a couple of novelty features, solving a problem that amazon has, not consumers. not keith price. i can't get it at all. clearly i missing something important but i don't know what it is. >> who is going to buy this phone? who is going to give up their phone to buy a fire phone? is there a person you can imagine? >> i don't think anyone is going to give up their android or iphone. people who don't have a smartphone yet are interested in the guidance that mayday will give you. the kindle fire has made a great

name for itself as the cheap tablet. i think it is going to be a disaster. >> to go back to the sound of jeff bezos, this is a fun for amazon fanatics. maybe they feel older, they don't necessarily have a smartphone already. there may be a small market there. >> what do you think? you have been talking to people. is anyone going to give up their phone? >> i don't have a cynical bone in my body. i'm not much of a downer. i think he could be wrong. it could drive lots of revenue to amazon. this phone could do exactly that.

this they may shut off with firefly that would allow you to listen music like shazam, similarly with a clip of "game of thrones," -- these demos are interesting but the notion that you could watch tv and home the whole thing, read the whole thing, security or later watching, i think this could be a devise of software that drives a lot of consumption on amazon as a shopping platform. that could be a very big deal. >> not so much about the phones, per se. but the connection to the computing power. you may be wrong. how do you respond? >> cory has more experience of being wrong than i do. [laughter] i couldn't help it. it is possible. it is that feature he is describing, it is already on your amazon app. how often do you use it? maybe you don't even know it is there. it is there already for people who want to go and do an image id, and i don't see it changing the world.

most people don't know the feature exists. it doesn't strike me as a compelling sell. >> wal-mart supposedly ruined smalltime america by opening up superstores and driving up business out of town. amazon has done the same thing now they have a ray gun to say to every small business in america and beyond, pointed at stuff in the store, get it cheaper, and get it sent to your stuff while they are building a delivery network? this could have a dramatic effect on business because it destroys small business by lowering the prices that only amazon could get the stuff, have it waiting for you by the time they get home. that either direction this is going. this is a divisive at will be destroying businesses as we know

it in retail locations all over the world. >> this conversation is far from over. we will talk more about amazon after this break. how will the fire phone stack up against the competition? is it a serious threat to the iphone? that is next. ♪

>> welcome back. the amazon fire phone is the latest entry in the crowded smartphone market with 4.7 inch display, 3-d viewing capabilities and a price tag of $199. how does it stack up with the rest of the competition? still with us, brad stone, author of the everything store. joining us via skype, ibc chief

research officer. thank you for joining us. i'm going to ask you to continue a thought you shared in the middle of the brain. this phone is going to be a disaster. >> it is going to be a disaster. a lot of the kindle fire is going to be a disaster. to come at it you have to go hard. kindle fire did not go hard. the same way this does not have a distinguishing feature that you have to have. we don't need little 3-d diorama phones. amazon does not have a good track record of making graphical interface. it is going to be a disaster. >> is that true? has the kindle fire been a disaster?

>> the kindle fire has lost share recently according to our numbers. they have slept. they are in the low single digits. it has been tough to gain traction and differentiate. having said i'm not ready to call the phone a disaster. i worry about the target customer. it is likely already a smart phone user. it is going to be tough to get them to switch. >> brad, your take. amazon did say they have sold tens of millions of kindle fire's. >> it is hard to determine what success means for amazon, because they do not release numbers. they are selling these devices that cost -- the point is to intensify the

relation with the owner. there is evidence they spend more on amazon. they are necessarily playing the same game as an apple. >> computing is going to be everywhere. doesn't matter how money phones they sell? >> tell it to the google glass where or who has been run out of a bar. the smartphone market has a long way ahead of that. >> there is something about holding the devise in your hand. that is one of the things that is troubling for the google glass wearers. most people don't want to spend their entire day in the amazon ecosystem. it has a low selection. the amazon movie system is lackluster. what amazon does well is sell books and sell stuff.

if this phone were free, you're talking about something completely different. >> you get a subscription to prime. >> a mail-in rebate. >> you can use the phone without touching it. you can tilt it around. you can do so many interesting things. are these things that people actually want to use? do people use survey want these kinds of features? >> there's not a lot of data that suggest these are the kinds of features everyone is looking for. they have a risk of being confusing to customers. i want to take a different side of the argument from what you just said. i'm not so sure how much amazon really cares about being the

marketshare leader for phones. this is the same maneuver that apple has made an google has made. tying services and creating an interdependent service experience to the phone. if they can use this to showcase amazon and get people to buy more, and get people using android, i think that is a win. you really have to separate the phone business from the amazon business. this is a showcase product. to showcase what you can do it amazon. >> they do care but making a good phone. they been working on the phone for five years. it is not just a pet project. >> not at all. look, they are trying to have an uninhibited relationship with their best customers. >> can may have an uninhibited experience they don't have a fun? >> it gives them a direct avenue.

likes the amazon ecosystem is not the only one that you consider here. this phone does not have google maps. >> let's talk about what the phone doesn't have. >> no instagram kills microsoft windows phone. windows phone had a suboptimal app ecosystem. it never got great. a cup better and better but missed the marquis apps. this amazon is missing youtube, google maps, snapchat. if you look at the apps you're talking about, those are them. if you don't have that you can't attract people who are more serious about phone use. if somebody is already a great amazon customer, is that the person you need to convert? >> that is the risk. amazon prime customers are already the premium customers. but you are really getting at is can i demonstrate amazon services and can i get people excited about amazon services to get them to do more on whatever smartphone they are using over

time? maybe along the way a track a few people to the platform. i think that they have gone overboard and they made it pretty complex in terms of the kinds of things you can do. you can also do it with others, shazam services, other augmented reality services. they are expanding beyond a direction. it is going to be tough to win the existing smartphone customer over with this product. you can say it is about demonstrating amazon services. >> brad stone of business week, and joe brown of "wired." coming up, google glass is becoming a popular tool. in the operating room. how they are changing the future of medicine, next. ♪

>> welcome back. i'm emily chang. we turn now to our wiring the world series where we look at how tech is shaping the future of health care. surgeons worldwide have been bringing high-tech eyewear into operating rooms. we spoke to one doctor but how he performs surgery. >> i'm an associate professor of orthopedic surgery. ok, glass, record the video. back in october, i obtained my first pair of google glass and i played around with it a little bit in the operating room. but in january when i went to india, that is when i threw to realize the true power of wearable technologies in health

care. when we went to india, we met with the press and in front of the press i happen to take out the google glass was of the media saw the google glass and they said, we want to see that in action. we started to do a live broadcast of the google glass surgery. from india, it got broadcast throughout the world. 15,000 to 20,000 people tuned into the surgery. it started to make me realize this could be a tool versus just a cool gadget that is nice to wear. eye-based technology is going to change health care in a number of ways. being able to pull up cat scan, m.r.i.'s, x-rays, patient medical records so that instantaneously that patient has access to health information. imagine that your surgeon is in

the operating room and in a middle of a case comes up with a difficulty or an anomaly. he can instantly bring in any expert for that material. that expert surgeon can put his hands over that map that they have in his office, and now his hand can be seen through google glass, so the expert surgeon can participate in the operating room. five years down the line, 10 years down the line, i think all of this will have wearable technology in some form on us. this is all going to change how health care is delivered in the next century. >> if you are a u.s. resident over 18, you are now eligible to purchase google glass and join the explorers program for $1500. jeff bezos says amazon has tens of millions of subscribers. will a fire for help the company

beam even more? ♪

>> you are watching "bloomberg west" where we focus on technology and the future of business. i'm emily chang. amazon's new fire phone includes a prime membership for one year. jeff bezos spoke about how popular prime has become and share the secret to its success. >> what is the real story underneath prime? it is patients, persistence, and attention to the smallest of details. >> how will the new phone impact

tens of millions of prime members? i'm joined by cory johnson who is outside in seattle where the phone was unveiled. back with us is paul kedrosky. the irony here is that you talk about how great prime was but he didn't give any numbers on how many people use amazon prime. >> somebody is going to have to shake bezos to get some answers. i think you can walk away with some interesting positioning in the living room. a lot of people of talk about this phone as a standalone devise. yet, the power of prime plays to the living room story of what this could be. if they get a few people to buy this phone who are already using prime or sign up for prime and then they realize that it is

fairly easy to shift in your home from the small screen to the big screen if you own fire tv, maybe they go out and buy that and see the experience you enjoy with prime by owning something like that. if you don't understand it they have the call center basically waiting by with mayday. there are people who are going to sign up for prime because of what amazon is doing. amazon walks away a winner on prime subscribers. we don't how many there are but that is the big number. it has grown significantly. >> how much do you think this phone is going to boost amazon prime? don't people have to buy the phone for amazon prime to benefit for this? >> this is my understanding. the product must be purchased.

that is the obstacle standing in the way. would you buy for your parents? i don't know anyone around me, it is not targeted to anyone i know. maybe a parent or an aunt or uncle. they love to consume content. they've read. now and then they make phone calls pretty consume video and audio content. maybe it is a decent appliance for those kinds of people. at the same time it becomes a gateway product to get someone on amazon prime. i can see the way to get there. it is just not obvious that is a material number that anyway and may have a big impact on the top or bottom line. >> they say they have sold tens of millions of candles. how much of a hit does that give how many phones they will sell? >> i don't think they really know. i think that is one way they're going to keep the risk smaller.

i think this is not a such a benign devise for grandmothers try to use smart phones. i think this is a trojan horse to take over retail. he have done a deal with at&t where they're making a phone that probably cost 600 dollars to manufacture. they have convinced at&t to feed it around the country and subsidize two thirds of the cost to get in the hands of people. it will be used for people to shop almost exclusively on amazon. i think this has the potential to be a great disruptor in business. amazon has spent a vast fortune in developing it. they have the spreading of this spore subsidize by at&t. >> are people already shopping exclusively on amazon.

>> cory may have a herd of a company called best buy. they sold electronics. people going into stores. they are doing great. my point is this is old. the notion this is going to unleash hordes of people previously trapped inside a previous retail stores are not going to be on amazon, that is happening already. the people most liquid to do that already have a smartphone phone. the other segment of the marketplace is the aunt, uncle, grandmother grew. i'm not convinced they are going to be the ones to turn around. >> but now it has steroids. now what happens instantly. it is making the purchases while they are in the store. >> you can do that now the amazon app. no one uses it. [indiscernible] >> the phone has a button on the side when you walk in the door,

and bam you can buy it. >> someone made the point earlier that when you look at something you know what you're looking at. you can type in a few words in the search engine and find that thing. i will give you the last word here, jon. what do you think? >> i think that at the end of the day, amazon is looking to get more people using amazon all the time. this is a great way to very quickly find out if they can get more people using the world of amazon. >> all right. jon erlichman, paul kedrosky, cory, stay with me. you just spoke with an amazon executive about the idea behind the fire phone and how it came to be. what did he have to say? >> it is hard to get him to say anything.

they say a lot in their silence. there focuses so much on the customer, on the people that they want to sell the devise to. one of the guys who led the business of development of this phone about the decisions they made going into this. listen to what he had to say. >> it is priced with great value. it is a premium smartphone. we included extra 16 gigs, an incredible amount of innovation. with this introductory offer of prime, it is a lot to offer. it is a premium phone. it is a great value. it is something customers will appreciate. >> why go with one carrier? >> we have had a long-standing relationship with at&t. they been a great partner for us on kindle. >> how so? >> we have denigrate job within delivering books in 60 seconds for many years.

we think fire phone works incredibly fast because of the at&t network. free backup of photos in the cloud. >> are you able to offer the phone for certain ways? >> one thing that we talked about already was how we're doing the handoff with mayday. if a customer has a question about the phone, a press the mayday button and they get access to customer service on the film. if they have a question with their bill, we can handoff the customer directly to an at&t customer. we think that is one way we are working closely on it. >> you were on the budget for four years. >> i was. >> were you looking at the landscape and saying mobile is happening beyond kindle. we need a bigger presence there. >> our goal was to look at what

was available in the market. we saw a number of companies doing things that were fairly similar. we want to keep focusing on ways that we could invent. we thought up dynamic perspective fairly early. we were able to get demos up and running in a matter of weeks. it took a ton of work from the engineers to make it robust and away that customers can use it every day and all kinds of light conditions. >> how big is the team? >> it is not something we are sharing. it's a great question but not something we are sharing. >> from business use, you talk about how the rest of the business might respond or react or be affected. do you think this will drive a lot more prime shopping of other nondigital items? >> our perspective it is a great product. we know it is a great audit for prime customers. it is one of the reasons we included the introductory offer.

in many ways are prime customers are our best customers. if we keep building great products for them a rest will take care of itself. >> do you have a since the digital stuff will be enhanced by this? >> we will have to wait and see. >> if you would be thinking about the things you learn about prime customers, how they use your product, and optimize for them? or is this going to be more on board new customers? >> we will have to weigh in see. there are some things in the phone, we just announce prime music last week. we know customers use music on phones all the time three customers will be using fire with the music collection quite a bit. >> will i get my hands on one, what is the thing i'm likely to miss? >> some of the small touches, the ability to flip to the right panel, getting lyrics in the

music application, if you're in the calendar, you can just flip and get information about the meeting. tell people you're late. keep looking at those panels and you'll get a lot of innovation there. small touches that matter to customers. >> the business plan behind, they are not going to let us know everything. a lot of the secrets they continue to keep. it is a business they have plotted out. >> cory johnson, are editor-at-large with amazon vice president of the new fire phone. thank you. coming up, continuing our wire the world series. will robots run the future? watch us on your phone, tebow, bloomberg.com, apple tv, and amazon fire tv. ♪

>> i'm emily chang in this is bloomberg west. we turn to our wiring the world series. this week we look at how technology is changing the future of health care. robots have become regulars in operating rooms across the country. tolls like the da vinci surgical system, making surgeries quicker, less invasive. surgeons insert their fingers into computerized controllers to manipulate the arms while looking three high resolution 3-d camera to watch what they are doing. i sat down with the director of nyu robotic surgery center. i started by asking how he got his start in robotics. >> i started knowing that i wanted to do minimally invasive surgery, and when i saw the technology, i realize this would be a game changer. we have been doing robotics at nyu for 10 years.

that is how it started off. >> where are robots so far most in surgery? what kind of surgeries are you seeing the most progress with? >> a great question. we are seeing it in all different subspecialties. we are seeing it at the nyu medical center and using it in cardiac, graphic general surgery, and even with oncology. we are seeing it in all different areas of subspecialties. probably the sweet spot for this technology is getting two very difficult to reach places where you need to do very complex procedures, such as very small suturing or dissecting nerves, that sort of thing. that seems to be one of the sweet spot for the technology at this point.

>> tell us about the risks associated? i know there are some obligations with some robots. some deaths have even been blamed on it. >> it comes down to the surgeon at the end of the day. the surgeon needs to decide which tool, which approach, and which technology is best for he or she. and at the end of the day, this is a tool. if you put someone that does not know how to fly a plane very well into an f-14, they may not do so well with flying that plane. at the end of the day, i don't think it's the technology. it is really the responsibility of the surgeon, and experience is everything. the more experience you have with this technology, we have seen in multiple studies, the better outcomes you have. >> if it depends on the surgeon, talk to us a little bit about what you are doing during the surgery.

it sounds like robots do a lot of the work, but you need to be there controlling them. >> it is somewhat of a misnomer. nothing happens without the surgeon. in standard surgeries, the surgeon is standing next to the patient. and we are controlling the robotic arms through this console. what is so amazing about it is we now have four arms to utilize versus just two. you take a two-armed surgeon and turn him into four. the second piece of this technology is the visualization. again, in surgery, there's a lot of peripheral vision around us and we have to focus in one area. in robotics, you saw earlier that you can place her head into the console and you have complete 3-d high-definition magnification of the surgical field. what the technology is doing is giving better visualization, more arms to work with, more

flexibility and the ability to manipulate the tools and scale them down in a minimally invasive environment. >> looking ahead, the surgeon is very important today, but can you imagine a time where the robots and the robotic tools eliminate the need for a surgeon and they can do it themselves? >> i think that is very, very far from my lifetime. i do not see in the near future, the next 10 to 15 years, that we will be in a situation where there is not the need for the skill or the human hands to do this operation. >> that was the director of nyu robotic surgery center. amazon now has a smartphone to add to its lineup of devices and services. is the giant of e-commerce taking too big of a jump into the crowded smartphone market? that is next. ♪

>> welcome back.

i'm emily chang rae jeff bezos added a smartphone to amazon's lineup of devices to go with the tablet and the recent set top box prayed what challenges will be phone face? i want to bring in my editor-at-large cory johnson in seattle where the phone was revealed. i have a question on twitter. someone once asked why you are so passionate about the phone and who you think it is going to buy it. are you going to buy it? >> it is lack of sleep more than anything. i don't know if i will buy it. i have come close to moving off the iphone. i don't do gadget reviews. no one should do what i do personally. i am interested. we have our own personal experiences. i think that the phone has the

potential to be very important for the business the cousin of the trends in mobile, the things that amazon does, and the way they are trying to grow their business. >> are there any challenges the phone is going to face we haven't talked about, security or malware? >> i mean, not that we know. this is a pork version of android similar to the one on the kindle fire, which is good and bad. from the knowledge standpoint it is no worse off than any other version of android. on the other side, it would mean because it is a another version, there'll be fewer apps available. that is a big part of it. in a sense this is just a reaction to steve jobs deciding years ago that he was going to

charge a tax on everything sold on the iphone. this is jeff bezos' reaction to a four-year program. only steve jobs can make jeff bezos this crazy. >> what you think steve jobs would say about this phone? >> i think he would be dismissive of it. it doesn't bring a lot to the table and doesn't change the iphone outlook. i think he would be as dismissive as steve jobs gets. >> all right. paul kedrosky, thank you. it is time for the bwest byte. we focus on one number that tells a whole lot. jon is with us from l.a. what you have today? >> it is amazon related. 20 million-ish. i never believe numbers in in zero. we don't know how many amazon prime subscribers amazon has. it is a fairly important thing.

they haven't had to reveal it. i have never said in a conference call. the once said tens of millions. it is at least 20 million. >> at least. >> the facts that they are looking out and telling us about their business today shows how different this devices for them. >> your thoughts? >> they don't feel they need to tell us those numbers because it is all about the consumer experience at the end of the day. just because they're not telling us the numbers, don't take from that that the numbers aren't growing quickly. that has been the case. >> all right. jon erlichman, cory johnson in seattle outside the place where the phone was unveiled. think you both. thank you for watching this edition of "bloomberg west." ♪

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