>> live from pier 3 in san francisco, welcome to "bloomberg west," where we cover innovation, technology, and the future of business. i am cory johnson in for emily chang. ahead, oracle buying micros systems for $5.3 billion. it is oracle's largest acquisition since its troubled 2010 purchase of sun microsystems. micros makes software and hardware for the hospitality industry. the oracle ceo was hoping that will boost oracle's sales growth which has been rough for the last 11 quarters. google glass going high style and attracts more customers. they're selling google glass eyewear designed by a famous designer.

the frames will cost the glass $1800. more than a standard pair of google's high-tech glasses. the roar of a harley-davidson engine will be more like a hum. the first electric harley-davidson dubbed project livewire. the company will be taking a few dozen of these on a tour of the u.s. the harley will create something new. to our lead story, oracle strikes a deal to buy micros systems. is the software giant under pressure to produce sales growth? oracle paid $5.3 billion for the maryland-based company. micros is an interesting company. it sells point-of-sale systems to hotels, restaurants, and retailers. oracle had acquisition talks with these guys for six years. the deal fell through six years ago.

this one is a big deal for oracle. it's biggest purchase since 2010 since it purchased sun microsystems. how will this go? we will try to figure it out. joining me now is brian white and a representative of bloomberg industries. brian, this is an interesting deal for oracle because it is not just a software company. >> about two thirds is services. about 20% is hardware. 10% is software. it is really about the push into the retail market. oracle has had an interest in that. here is the deal. >> what do you make of why they are looking at this business right now? >> the way i look at it is companies like oracle and ibm and microsoft -- all of them are trying to take their applications and move it to the cloud. stuff like this only helps oracle's portfolio of application that they can move to the cloud.

they already have a retail suite out there. when you take a full end solution for oracle and you move it over to the cloud, you actually are being more aggressive as you compete with the likes of salesforce and others. >> it is interesting to me that this is a deal that oracle will look at it -- it looks like it will be adding to oracle earnings and revenue with some pretty sizable margins. >> when you look at the company, it looks like they have confirmed that. when you look at revenue, it is about $1.3 billion per year in revenue. the margins are more like 20% so not 45%-50% of oracle. i assume oracle will move that up going forward. selling fast into the micros customer base, which is pretty significant, could be a big opportunity.

>> when they look at this deal, do they see a particular type of information they will be getting from the retail applications? >> the way oracle looks at it -- the three verticals are interested in financial which is a very important one. telecom, we have seen four deals in that area and now retail. they want someone with relationships in that area. some type of proprietary technology in that area and then they can sell their existing solutions. in this case, it is more sas. >> i look at the competitors in the retail area whether it is all the attention that square, google wallet gets. this looks like a cheap way for oracle to get into that business. >> one of the things that has been really been talked about is big data and analytics. retail vertical is one of the most prime candidates to be

primed for big data and analytics. if oracle is going to make sure they can do good about the cloud and analytics, the retail vertical is a good way to start. >> brian, the hardware business -- it struck me there is something more to this than just software, just finding a vertical in software. is the hardware really critical here? does the micros business require the hardware to get into the restaurant, into the hotels? >> the most important is sas. i highlight the engineered -- >> software into service? >> i highlight the engineered business as important because oracle is making a very big push. it is growing double digits. it is a billion dollar business. they hope to get half of the customer base on engineeedr

systems. today it is less than 3000. >> engineered systems is what? the software combined with the sun hardware? >> you have a database and want hardware to support that for the best performance and lowest cost. it is a combination of server storage and networking software that optimizes forms of the database and big data. oracle is making a big push in this market. once you get someone interested in your database and applications, you can sell engineered systems. >> the notion is you got this offering as sort of the back of the system. you have the software in the middle of it. now with micros, you have a front end at least for hotels and restaurants. they sell straight through a company's product line. >> exactly. that is something you would never have in micros technologies and you start to sell your existing technology. that is the focus on the three verticals.

>> that would probably mean lower margins on the front end and the deep back end. what are your thoughts? >> the way we look at things -- we don't really care what is going to happen in the margins in the next year or two. when they bought sun that damaged the margins, but it didn't bother them. at the end of the day, if you were going to win this fight with applications and the cloud, you need a full suite whether it is in retail, financials. whenever you find holes, you need to plug them in and go out with the offering. >> maybe it didn't bother them, but it might bother others hoping for bigger margins. thank you very much. google is adding dropcam. we are going to ask a dropcam board member what google is

planning to do next. you can catch us streaming from your tablet, phone, bloomberg.com, and apple tv. ♪

>> welcome back to "bloomberg west." google's nest labs pushing deeper into the connected home stiking a deal to buy the video monitoring start-up dropcam. the price -- $550 million in cash. dropcam cameras are dropped in the home and users can live stream and watch all kinds of things on their devices. google bought nest labs recently earlier this year for $3.2 billion. andreessen horowitz also spending a lot of money to get deeper into the security

business. he is investing $90 million in the firm called tanium. the company helps detect and stop attacks before they happen. serving as the central nervous system for some of the largest companies in the world. for more on this, we are joined by tanium's newest board member. a former microsoft honcho. tanium? i am pronouncing it right? >> tanium. >> it is hard for me to tell these companies apart. so many claim they prevent attacks and work with mobile. what makes this company different? >> what makes us unique is that it is a magical product. they provide real-time information about the state of your network. it is not just the ability to catalog the pcs on your network or block threats. it is the ability to almost

think of your network as a searchable database. all the attributes that could be interesting in order to detect and analyze and understand. >> it doesn't just give you one metric. >> it gives you any metric you want on any of the endpoints. pcs, data centers, servers. find out anything you want and can do it instantly. >> what kinds of things -- i had a -- one of my personal e-mail accounts got hacked last night or at least i got a warning saying that the password had been accessed in taiwan. i was not in taiwan. were you in taiwan last night? >> i was not. >> that poses risk not just for me, but for bloomberg and other things. how does tanium work and how might it work for things like that? >> what goes on now in the attack and security space is

that the bad guys are really, really clever. they know all the tools that the good guys are using to monitor their networks and put up firewalls and defenses. they are designing their attacks in ways that takes two, three, four little steps that all look like normal operations going on, but they string those together in nefarious ways. then, they break into the network or the system and do bad stuff. what you can do with tanium is you are able to string together all of these data points and look and see what endpoints of your network have this set of attributes on them. maybe this particular file, this particular part of your system was modified or this network packet is traveling in and out of the network or this part of the network like the nodes in a particular office. all instantly. >> who is behind this thing? >> the cofounder is a father and son team. awesome thing to see.

what is so amazing is they are a new breed of enterprise entrepreneurs. they been doing this space for quite some time. what makes it so valuable is they did a company in this space and when they worked on that product, it was state-of-the-art. it still is. their company was acquired by ibm. what they did is instead of resting on their lulls, they thought about it. what would really make a difference in this space of both security and systems management? what came to mind is taking a product and making it 10,000 times faster. not like a little faster. today the state-of-the-art is -- you want to know do all the computers on my network have this attribute? >> you get a report every third thursday. >> exactly. the bad guys are working much faster than that. so, working to defeat them or work against them is kind of

hopeless. let me tell you the first time we saw the demo. we were sitting with andreessen horowitz and all the partners and the members of the team. a lot of experience in this space. we estimated like 200 years of system management watching this demo. he did the demo and -- >> that is the kid. >> he went to berkeley. he did the demo and thought it was cool. we thought it was really fast. it was probably just a mockup of what he was planning to build once he got funding. then, he looked and said, no, i just connected to a real network of several thousand computers. this is the actual network that i am talking to now. to prove it, he asked all the computers and networks to respond back with the time. very quickly, they started reporting the same time of day it was.

in real time, he talked to all the machines in the network in under 15 seconds. >> you know he is selling you something. you guys are smart investors. you've seen demos that look good and products that are bad. do you high-five? what happens? >> this is a space we all care deeply about. it is critical to the world's infrastructure. they have done a magical product that really innovates. the thing we thought was,m wow, there is so much we could really be part of to help the company scale up and bring in a team and connect with enterprise customers. >> does that meeting change where you are like prove it to me, man? then you're like, how much do you want and then they say they are not selling it. >> it is a partnership. what happens is they are there because they think we can offer them some help.

we are there because we think we can help. it works out great for both of us. >> i will monitor this. thank you very much. airbnb's biggest market also its most challenging. we go inside the home sharing battle in new york city next. you can watch us streaming on your tablet, phone, bloomberg.com, apple tv, amazon fire tv. you can see us all the time in any way. ♪

>> welcome back. the shares of the controversial wireless chip designer parkervision plunging today. a patent battle that has been going on for more than a decade.

the latest -- a federal judge throwing out a $173 million patent verdict they won against qualcomm saying there was not enough evidence to support the jury's decision. this has been going on for what seems like forever. converting signals to higher frequencies, lower frequencies. it is important stuff for mobile. parkervision has been trying to assert these rights for a long time. airbnb's biggest market also proving to be one of the most difficult. new york city landlords and legislators have waged an intense battle questioning the legality of the home service. airbnb has countered by spending $120,000 on lobbying groups in new york state and another $176,000 on ad space in the city. this after they recently closed a $450 million round of funding for a $10 billion valuation of the company. airbnb's fight is the subject of the latest edition of bloomberg

businessweek. an interesting story. i am joined by the author of that story. felix, a great piece. there is something about housing in new york city that is so visceral. this gets right at it. >> everything about housing in new york is always chaotic. it is not too surprising that airbnb's biggest battle has broken out here. it is a little awkward for the company since it is happening right here on wall street's backyard. at a time they're presumably preparing for an ipo sometime in the new future. >> how so? does this get to the fundamental value proposition? >> it will get awkward when they have to put in their prospectus their risk factors. they have to say, well, one risk is that it might be all illegal in our biggest market. i think what they are trying to do is -- their head of their

public policy -- he was based in washington, d.c. they have shifted him up to new york city. this is really where the fight is being waged. it is going to be tricky. i think that would like to have everyone believe that similar to the uber fight that really that most of their pushback in new york has been coming from incumbent competitors. what i found fascinating is that actually it is not really the case that it is the hotel industry that is their primary antagonist. it is people in the real estate industry. the building owners, the landlords, the managers that are really, really upset about this. >> new york has a long history as any city in america of the abuse of landlords, slumlords. so many laws written around that not just to protect people renting, but also to protect the

nature of a community. a community with different incomes. you can have artists living next to people in finance. so communities keep their color. is there a notion that the fundamental laws of how rent and rent control works in new york city might change to accommodate airbnb? >> that is their hope. their primary goal is to amend a 2010 law that basically prohibits people from renting out their apartments or homes for less than 30 days unless they are there. if airbnb has their way, they would like to amend it so basically people can do that for less than 30 days if it is their primary or secondary residence. they have two bills in albany right now that would essentially amend the law in their favor. there are a lot of people that opposed that amendment. primarily, i think a lot of the issue comes down to the fact that airbnb has been so good about establishing trust between the guests and the hosts. when airbnb launched, it used to

be -- people were like it is crazy. who would trust a stranger to live in their house? the system has been very effective about letting users and hosts review each other. part of the problem is that the landlords and the building owners don't have any say in that system. >> this way renters can raise the effective value of their places because new york apartments are just not cheap enough. thank you very much. great story. the iconic motorcycle company harley davidson going electric just like bob dylan did a while back. i will show you the new electric bike next. ♪ >> you are watching "bloomberg west" where we focus on --

down 500. we are taking a breather which. record highs.

>> you are watching "bloomberg west" where we focus on innovation, technology, and the future of business. the business of sola increasingly moving away from commercial and towards residential with a new business model from companies like mosaic. mosaic's founder and president joins me now to talk about the new program. the history of business is interesting. you guys have a new model here which is? >> lending for people to go solar in their own home. peer-to-peer lending. people can borrow money from other people and get a 20-year loan. low interest rate and put solar on their home for no money down. >> to whom does this have the

strongest appeal? >> people who want to save money on their utility bills. a lot of people across the country can save money from day one and pay less on their loan payments than they would for utility bills that they are cutting by going solar. >> what kind of investment returns are you talking about for the people providing this lending? >> we are still seeing in the 4%-7% range of returns. >> risk? >> people are able to diversify across a range of investment products. before we were doing just solar project investments and now people can diversify across a whole range of individual home loans. >> you don't really know what the risk profile is. what do you imagine it will be? >> it is hard to characterize at this stage. solar city recently did a securitization. they were projecting very low annual defaults in the .2%-.3%

annual default. >> why? >> people are saving money on their utility bills so if they stopped paying for their solar lease or loan, they're actually paying more than they would've otherwise. it is a net savings unlike other consumer lending. >> one of the criticisms of solar city specifically -- there was a notion of the duration of the panels themselves. how long they would last and what the warranties would be because some of the providers, they might work longer, they might not. the warranties go away and the companies go away. you surely have to figure that in when you figure out the duration of your business agreements with investors. >> you think about most of the panels have 25-year warranties. the inverters have anywhere from 12 to 25 year warranties. >> the inverters are what the solar panels plug in to?

>> a lot of installers are stepping up and saying we will provide a performance guarantee for the whole system for the life of the loan or lease. that is the way it is happening. >> why? >> they need to compete with what people's expectations are for electricity. people want to sign a contract that says they are going to get 20 years of solar power no matter what. >> you guys use things like social media. things like different -- it's a capitalist venture. you are using social media and politics to make this happen. you did a national day of solar action? i saw some tweets. >> we have hundreds of thousands of tweets. the president tweeted and posted on facebook -- >> the president of america, not the president of mosaic.

>> pointing out that people should put solar on it. solar has become more acceptable. the president pointed out that the cost of solar has come down 75% in the last six years. >> that much? >> amazing, right? >> wow. i bought the stuff four years ago, the price is 75% lower. i feel like a rube. the subsidies have also come of quite a bit. what does that mean for subsidies and how does it work? >> it absolutely works. it is important to point out that fossil fuels globally still get 25 times the subsidies that clean energy technology gets. we are still in the early stages of the clean energy development. we still need that support, but it is brought the cost down enormously as we have gotten economies involved. >> they have worked in doing what? >> in getting the technology cost competitive with fossil fuels.

that is the key thing that has happened. that is why we have reached the tipping point that for most people it is cheaper to power your life with clean energy. >> that was not true six years ago. >> not at all. >> interesting stuff. from solar power to battery-powered. the harley-davidson hog going electric. the company unwrapping livewire, the testing of a electric powered bike. they hope that the initiative will give harley-davidson some kind of customer feedback to figure out what kind of electric bike, if any, to bring to market. stephanie ruhle and eric schatzker spoke with harley-davidson ceo keith wandell and asked him why make an electric bike? >> i think we have a lot of v-twins on the road. when we think about the future

and think about urban riders, think about riding in cities, it makes perfect sense in terms of -- >> somebody is going to buy this instead of a vespa? >> it is an alternative. it is really a nimble ride. it is a great ride, particularly for urban areas where there is a lot of traffic. >> is the goal to bring in a new demographic? when i think about a traditional harley davidson customer, they want the loud hog. are you trying to change the taste of your existing customer or do you want a whole new one? >> no. there is no question that we love our traditional customers. they are who made our company what it is today. there is a whole other demographic. younger riders, female riders, others that we are trying to appeal to not only with the electric bike with other bikes we are developing that are more

suitable to those demographics. >> so much of what makes harley is the brand. people identify with it. whether they're looking at this livewire bike or the other bikes you are making which are quite different, don't you run the risk of either diluting the brand or potentially alienating the folks who still make up the very vast majority of your sales? >> we have to be very careful about the brand because of what it stands for. it is the look, sound, and feel of a harley-davidson. this styling, how it is styled. the look, the sound. if you go out on the highway on this bike and ride it, it has a very distinct sound. we were very careful on how we designed the electrification to make that sound. >> what ultimately stands between you and making -- expanding the range -- making

this bike more appealing to a broader number of people? >> the battery technology is certainly part of it. >> have you talked to elon musk? >> i haven't personally, but i think our folks are certainly investigating how do we work with folks like tesla and others to make sure we have leading edge technology and make the very best bike possible. >> tesla and others. interesting. harley davidson ceo keith wandell on "market makers". dreamworks known for animated characters. they're also pushing technology boundaries behind the scenes. we are going to take a look at the software they developed with intel to bring dragons to life on the big screen. they look like they got to life. that is something. you can watch us streaming on your tablet, phone, or bloomberg.com. more "bloomberg west" in a bit. ♪

>> caught you solo riding. you are pouting, big baby? well, try this on. you feeling it, yet? >> that was "how to train your dragon 2." it brought in $25 million this weekend. a total of $95 since its release. while "dragons 2" brings back some familiar characters, dreamworks took a different behind-the-scenes approach to the sequel. jon erlichman will check that out with the dreamworks ceo it is game changing technology. it has been interesting technology since the days of "shrek." >> they have always been thinking about what the next big thing they can do in technology.

you are right. they have generated more than $170 million at the box office. in this case, what happened behind the scenes is fascinating -- both dreamworks and intel working together. here is the full story. >> i sauntered down to breakfast thinking all is right with the world and i get -- >> son, we need to talk. >> this is the main character in "how to train your dragon 2." when bringing him to life in the first movie, dreamworks used this software. making changes took time and rendering those changes took even more time. for "dragons 2," dreamworks rolled out new software called apollo. changes are speedy and rendering happens in real time. >> it is never blocking the artist. it is always up to speed and the latest and greatest. >> they are known for their tech savvy approach from partnering with netflix to its youtube

strategy in the recent launch of dreamworks tv. while its animators love pushing the limits of technology, the company's aging software was not keeping up with computing power. apollo was created with intel over a five-year span. the dreamworks chief technology officer says animators are more agile and the studio can reduce production costs. >> we can play all those games and we are. in terms of the budget, it is tens of millions of dollars. you can see the quality of it in the movie. >> "dragons 2" required 90 million hours worth of work to be rendered. that is like running a computer for 10,273 years. it also required 298 terabytes of storage, equivalent to 25,742 mobile phones with 16 gigabytes of storage. all that technology shows up in complicated characters. >> the size of the creature on screen to watch a play in real time and my director, saying can you change it?

i can do it quickly. that would usually take a couple of days prior. >> intel's engineers walk away from the project with a boatload of information. >> we can take it back and understand how in our own long-term plans about how the processors gets developed. >> along with using apollo on feature films, dreamworks may make the technology available to other industries. >> other sectors make images for various purposes. all of those processes are really enhanced and sped up by apollo. >> hold on! >> that is fairly amazing. that is more technology than it takes to render me. [laughter] >> there you go. you mentioned "shrek" earlier.

our expectations have gotten that much more dramatic over the years as more players have come into this market. more people have wowed us with the cgi technology. for dreamworks, they were getting to a point where they can only go so far as what the current system allowed them to do. they couldn't take full advantage of the computing power. this is a story -- no pun intended as they fly through the clouds -- it is about the cloud. redesigning your software to take advantage of that so you can draw these things in real time and then make the changes you want to make these films look even better. >> jon erlichman, thank you. good stuff. good movie, too. could we all have our own personal 3-d printed robots in the future? intel thinks so. we are back with a special robotic guest next. ♪

>> welcome back. foxconn hiring 100,000 workers to start making a new iphone this summer. apple supplier pegatron is also staffing up. the new phone is scheduled to be unveiled in the fall. the technology for building robots has changed dramatically. intel is teaching people how to use open sourced files to create their own robots and print them on a 3-d printer. brian johnson joins me from new york to discuss robots. you have been telling me about jimmy for about a year or so. i finally get to see him. what do you got? >> here is jimmy. we will walk him around as we

talk. jimmy is part of a 21st-century robot project. he is an open-sourced, 3-d printable robot. >> how big is it? he is knee-high? >> he is about two foot tall. it took us about two weeks to build them from scratch. we worked with a company called trossen robotics. this is a research version. the idea is that you can design the look of it. your robot does not have to look like jimmy. people can design their own robot. they can also make the robot personal by downloading apps. you don't have to understand artificial intelligence. all you really need is to download apps like a smartphone. >> what you have already programmed into this is the ability to the aware of its environment or the moving capabilities and so on? >> right now, we have a minimum platform.

we have the hardware down. we have this version and that we are going to have another one later this year that is powered by the intel edison. we have the hardware set and now we're working on the software where we are going to be releasing an app store. pretty much, he will be able to walk and talk and tweak and talk to you. >> i was playing around with your avatar messaging app. this strikes me -- the intel ceo, your boss -- we went for a walk and he was really jazzed about expanding the places where intel chips are being used so that inventors and people using things like open source are using intel. >> that is what really impresses me about brian's vision. he really understands as intel moves into the 21st century, we certainly have our traditional business that we will continue to do. he is really looking out to makers and educators that has

this competition that is so small. you look at the edison platform, it is so small. we are looking at different places for innovation. we are branching out with makers and students and average folks as well. >> i believe that inventing and business and design is all about taking a fork in the road and making a choice. what decisions have you made about jimmy? he looks cute and not threatening. >> that was purposeful. we worked with an illustrator and he designed jimmy to be cute, not threatening. these robots are here to be our friend and we are really in control. we wanted to make jimmy really approachable. kids love him. i have been traveling around talking to first graders and 10-year-olds about jimmy. getting into their imaginations because that is where i think the innovation comes from. we go to them and say here is some software, what your robot

to be? you can name it. tell me what you want your robot to do. we got amazing feedback from these kids. >> 10-year-olds, me. i'm sure they have better questions. what are they asking? >> this is my scientific research of traveling around talking to young kids about what a robot should be able to do. it turns out if you want a robot to be successful, it has to do two things. the first thing he needs to have is a cape. the second thing it needs to do is fart. [laughter] >> really? >> that is the part i found really interesting is that kids understood that robots should be fun. it should not be serious all the time. we had one young lady who said she wanted her robot to be able to dance with her. we had another young lady who said she lives in a trilingual neighborhood.

she would want her robot to follow her around and be a translator so that everybody she talked to could talk to other people. you begin to see these really beautiful applications that these kids are coming up with. >> i want to keep you around. i want to do a bwest byte with your help. we're always focused on one number that tells us a whole lot. tell us a whole lot with the number. >> for me, the number is zero. the reason why it is zero is as we approach the year 2020, the size of meaningful computational power, the size of the chip that goes into all of our devices approaches zero. we are at 12 nanometers and we are moving to five nanometers. that is 12 atoms across. we can turn anything into a computer and when you do that, the whole landscape changes. >> this is not just the internet of things.

the notion that we have sensors everywhere, but the actual computing happens on the device. >> that is the idea that you can bring intelligence to any object and to any device. that doesn't mean you are going to make everything smart, but you can start to look around you and say what can i do, how can i change the world? how can i make peoples lives better by making my say jacket smart? or making my dinner table smart? they're different areas we can apply that we can have a huge effect. it changes how we think about the businesses we are going to build. >> brian johnson, really cool stuff as always. we appreciate your time. you can always catch us on bloomberg.com as well as your iphone, your tablet, bloomberg radio, pretty much everywhere. see you tomorrow. ♪