from pier three in san francisco, welcome to "bloomberg west," where we cover technology and the future of innovation. i'm emily chang. amazon's first smartphone starts shipping today just hours after the company reported its largest poorly last the 2012. from gadgets like the fire phone to price wars, we will look to see if amazon still has time to prove to investors that it's investing will pay off. officially launching in new york city today. the company will be launching

and in the streets of all five new york city boroughs. we will look at what concessions make.had to china, having issues with qualcomm. whether qualcomm can force chinese handset makers to pay up. first, to our lead story of the day, new questions from investors on whether amazon is really primed for future success. willhether the spending ultimately be worth it. shares are getting hammered today after the company posted a $126 million second order loss, its largest since 2012. in addition, there are concerns about amazon cloud computing business amazon web services. google and microsoft started a cloud price for. amazon will start shipping its first smartphone, the fire phone, today.

johnsonor at large cory joins us, and aol vice president of products. thanks so much for coming. have you gotten a fire phone yet? >> i'm waiting like everyone else. >> features like seeing things in 3-d. but i'm not a believer. -- >> i'm not a believer. i don't think it will be a hit with consumers. >> why not? >> for amazon to be successful, they need to be one of three things. they either need to be lucky enough to have first mover advantage, which they do not have. >> it is last mover. >> pretty much. >> last mover disadvantage. >> yes, and it's -- and it will have to be something so mind blowing that people cannot live without it. or they have to compete on price. also99 with a contract cory johnson, you were looking

at how much amazon is penning on making this phone. did hurt the bottom line. >> i don't think the bottom line ultimately matters to amazon right now. >> well, it hasn't mattered. >> right, it is 1, 2, 3% up or down. it doesn't matter. even when it does turn a profit, it is miniscule. they invest money like crazy. they don't give us a lot of numbers to understand the business. one thing they do show us is technology and content. the percentage of sales has increased in the past couple of years, especially in the first half of this year. we have seen 10% to 12% of sales called to what they technology and content. what they told us in the isference call is that it not really about the development of the phone, but maybe more so the building on of amazon services.

they are dumping early ends dollars of investment into that business. visit miniatures and short-term technology cost, on the phone they said it hired over 1000 people in that division. said almost every startup basing walk to the door is building a business on amazon web services. >> and amazon web services has made it even easier for startups to begin today. a lot of what they are betting customer loyalty, to get people to use amazon and buy on the e-commerce site more easily. i am an amazon customer, i admit. it is already easy for me to buy with the phone ird artie have. why would i need a phone that makes it even easier? customer,ig amazon too. i am obsessed with prime. i buy just about everything there. they are concerned that as everything moves to mobile and customer attrition gets higher in mobile environment that they need to be able to keep up

sales. they are completely within to disrupt people buying things. that said, not know that the answer is to build a phone. maybe the second-generation or third-generation if they can be really competitive on the interface and developer outreach and pricing, they might have something. but this first device is not going to resonate. like everyone not else echo >> i would ask the same thing. >> i cannot believe a gadget guy has not had the phone. i use the phone when they were demonstrating it. is of the things that intriguing is this app that lets you point at something and it optically recognizes the thing. it is called firefly. it is a button on the side of the phone that does it. it is one or two less steps -- one or two fewer steps than opening up an app on the phone. but from what i understand, the battery life is not like what other phones are able to do. it does not fully integrate a lot of the android apps that come with a lot of other android

phones. but i also expect amazon to give this another try or two, as you success -- as used suggest. whoe are geeks out there love their amazon in every possible way. >> who are these people? they are using their own version of android. there are many other apps that people use everyday that are not on the phone. who are these people that constantly want to buy things on amazon all day long? >> it's not us. >> exactly. >> i'm not sure who they are. what amazon got right with their first devices -- the fire tablet. it's all about price for them. they came in with a device way under the competition. this phone is going to cost just as much as any other mid-to high-end smartphone on the market today. your greatest advantage to owning this thing is that firefly feature, but that is a piece of software that could run on just about any android device. why not just distribute that? >> the timing suggest they might be willing to cut price and they

get to the fourth quarter and a holidays. they may adapt their price point overtime. next version has to be more competitive. the first version is -- when it's an entirely new product like a phone, i want to give them the benefit of the doubt two-seamer they go with it. but if this strategy continues going the way it is today, i don't think it is going to do well. >> and we do not know how many candles they are selling. we do not know how many set-top boxes they are selling. we don't know how many of these things they-- wand will be selling. wonder whyds us to they are not giving us these numbers. maybe they are not good. >> for most companies when they do not give us data, it's usually bad news. or the company reducing the metrics that they are giving us. but when it comes to amazon, i think they would just prefer not to give anything out. they are giving the bare

minimum, and the only reason they are a public company is because they need some wall street money and now they need stock options in order to pay their employees, who are otherwise paid sub are -- subpar salaries. does amazon get points for trying? >> yes, and no. they are attempting to respond. there is a gap in perception in the market. he told the new york times that he believes that mobile is still extremely early and that they are not losing the new first mover advantage. i actually disagree. when there is any huge industry, the first five or 10 years are the most important. tail endoming at the of that. i don't know that they will be able to solidify themselves as a player long-term. but if they can shore up their software, for instance, come up with a really good mechanism for people to buy things on amazon on phones, on any phone, that is the ultimate win for them.

>> thank you so much for joining us. the pink mustaches will be hitting the streets of new york city tonight. bigave the latest on their launch in the big apple next on "bloomberg west." ♪

>> i'm emily chang, and this is bloomberg -- "bloomberg west." of a court an update decision saying that citizens be seen right to online. the search giant has removed links and more than half of those cases has rejected about 30% of them and asked for more detail in 15% of those cases.

this comes as the eu has asked for more privacy guidelines. has sifted its way into the big apple. the pink mustaches will hit the streets of all five arrows tonight at -- five boroughs tonight at 7:00 p.m. what concessions did they make to get on the road? miller has followed this very closely. agree totly did lyft to make this happen you -- to make this happen? >> i feel like they sold all of their principles out and decided to become just a regular cap company. i don't see how any of this progress is progress. or positive. they are only allowed to use the taxi and limousine commission cars and only tlc commissions drivers.

the whole point is that it is a pier to pier ridesharing service. peer ridesharing service. your, you can to come with me and we split the cost. it is that idea. this is not that idea. i think it is awful. >> so we will not see you or alexis hitting the streets tonight picking up random's? >> not unless i can figure out how the taxi and limousine commission will give me a license. i think roy johnson is legally allowed to do that because he used to be -- cory johnson is legally allowed to do that because he used to be a yellow driver. >> my license has long since expired. new york city has a history of dangerous and bad drivers, which

is why the licensing requirement began to begin with. class five license in new york state, as well as the training and so on. >> but the yellow cab drivers are the most dangerous and bad drivers in the entire city. >> that is not true. >> i know people who've been hit by cap. not only are they bad drivers, but they are underinsured. >> let's say that standards here are higher and more stringent. how is this different from what uber is doing? >> it isn't. >> it's the same? >> yeah. >> what about the vehicles themselves? uber has to have a tlc licensed driver and vehicle. this is kind of the same thing as uber asked. -- uber x. the one benefit is that it will be all over new york. previously, lyft was going to

launch in brooklyn and queens and they had reasons for that, that they were underserved. but now it will be everywhere. i guess that is a positive. it's competition. >> do you see a way forward for true pier to pier ridesharing peer ridesharing echo is there a door they could get open in the future? yft has claimed a million dollar primary insurance policy for their drivers. i don't think that is stopping them. i think the problem is that regular readers -- regulators in the state are working in 20th century and this kind of idea is to new or too confusing, or may break the code -- the status quo. wheres the kind of city

the commission hold a lot of power. it just seems to be such a bummer. that's my official take on it, bummer. >> bloomberg matt miller in new york, who may never be able to catch a yellow cab again. thank you. coming up, we will look at how smart navigation is changing the way you drive. ♪

>> welcome back. i'm emily chang. we now turn to our wiring the

world series. this become a we are taking a look at technologies shaping the future of transportation. many drivers seat ups technology as a crucial -- gps technology as a crucial tool to get them from place to place. it can also get them there safer and save time and money. gps can pull data from road sensors, cameras, even stoplights. is a consulting firm that helps bring mapping technologies into business. smart navigation right now? how smart can it become? >> it is an evolution. it is getting smarter all the time. sometimes people don't think smart navigation will appear. we are actually getting there now. a few years ago, people were getting very preliminary traffic data. now we are getting pier to pier traffic. peer traffic.

you are starting to see things about driver assistance, where you pull over and something beeps at you. smartercontinue to get as cars start to connect to each other in the infrastructure. >> we are talking about cars being able to talk to stoplights, being able to truly talk to cars. how far out is something like that? >> it is coming bit by bit. waze will tell me when there is a red light camera head. >> and it will tell you what other cars are doing. we are string to look at what is happening with other cars and how to get information out of that. for instance, if you saw a bunch of carsg -- braking ahead of you, that might tell you something about what is in

the road. companies are starting what is called an onboard diagnostic port and it gives a lot of information about the car. when it starts to communicate between cars, that will be powerful. nasa techmployed by and a shareholder back then. they were doing this ambitious was dropping major sensors into the freeways of every major city of america. wheret still something they are gathering information that is more contextual? -- cannot tell the laying the lane that something is in on the map, for example. >> you can tell how fast traffic is going. those phones are being monitored and they know from your phone what the traffic is. the way people like apple and google and other traffic sensors work is they are seeing how fast traffic is moving. that is a very quick response.

those types of things are actually being replaced by -- rather, infrastructure is being replaced by the phones people are carrying around already. >> your car's navigation system can never quite keep up with what you can get on your phone. is that forever going to be the case? system willigation never keep up with technology? >> that will change and is continuing to change. car manufacturers have long development cycles. it's hard for them to get the latest. you got your new cell phone a year ago, and you've got six years jump on it. things are starting to move that way. tesla is a great example. they are updating software to their cars. they are small. >> what is the navigation system in your car? >> the same as on my iphone. i use my sprint phone. and for that very reason.

you can get systems that give you predictive traffic, access to things. we are starting to thing -- see things talking about infrastructure. not a link circling the block -- not circling the block anymore, but where's the parking spot available? apps and a bunch of that needs to be a connective driving experience. i drive here and i get the best way, and i find parking. >> great to have you with us. still ahead, handset makers in china are not paying for qualcomm royalty fees. is costing the company big time. ♪

but it is 26 minutes past the hour, which means longer television is on the markets. i'm julie hyman. let's look at where stocks are trading right now. declines to end the week after the s&p closed at a record yesterday. stocks or did -- are being pulled down today by earnings. consumer discretionary stocks are the worst performers. let's take a look at a couple of individual stocks in that group. the first is "go loco -- el poll o loco. that ipo raised over $100 million for the company, whose current market value has plunged over $800 million. and starbucks, third-quarter earnings and profits were slightly higher than estimated, but shares are on the decline over investor concerns about rises in coffee prices and fears that more cuts are on the way on the company's bottom-line growth going forward.

we will have more on the market later. "bloomberg west" will be right back. ♪

>> you are watching "bloomberg west," where we focus on technology and the future of business. i'm emily chang. the picture of the workforce is slightly more skewed toward the female. the online service company pinterest said women make up roughly 40% of its staff. to othercompared companies like google and facebook. pinterest says while it has made progress, it has a lot of work to do to getting a more diverse workforce.

for many american companies, china is a challenging and commented market. qualcomm says it is having serious challenges collecting licensing revenues from chinese smart phone makers. the missed payment costs qualcomm stock to get hammered this week. on top of that, qualcomm is being invested -- investigated by the chinese government for being a possible monopoly. for more on what is going on of a book about inna and who has worked china for a couple of decades, paul weiss. -- gordon chang. what is going on here? chinese handset manufacturers saying, why do i have to pay qualcomm. it is very difficult for the san diego-based company to be able

to sign up in the buddy to pay them royalties, because they are -- going to see out wait to see how tough beijing will be on the company. >> it is an enormous development, because it suggests that the very basic laws of intellectual property, where qualcomm has 59% of its income coming from licensed chipset it makes, the very basis of intellectual property is not going to hold up if china does not want it to. >> that is certainly the case. we have seen since 2009 with a concerted attack on google a real effort to undermine foreign business in china. if qualcomm wants to see what its future is going to be in the country, it should look at what happens to that search engine. google is still in china, but no longer the force it once was. what the chinese government wants to do is help local companies. big in termsvery of market share. the same thing is going to happen because the chinese government will force manufacturers to try to use other technologies.

i don't know if they will be successful or not, but what it says is that qualcomm is going to have to wage a long-term campaign and it does not have much in the way of assets to do that. >> qualcomm is also being investigated under china's anti-monopoly law. has qualcomm done anything wrong that we know of? >> we really don't know, and we may not know for quite some time. this has nothing to do with right or wrong. they decided they would roll out their four g network in china and they are doing that right now. they were offended by the idea of paying royalties to a foreign company. a were going to attack ball club. -- so they were going to attack qualcomm. qualcomm is not the only company. since the reform commission a year ago has gone after all sorts of companies. a long pattern of targets and almost all of them are foreign.

even if qualcomm did something wrong, most chinese companies end up doing practices that are much worse and they just skate by because this is open season on foreigners. >> we talk so much about facebook and twitter, which are blocked in china. now we are talking about hardware companies. licensing is qualcomm's most profitable business. china is the biggest smartphone market in the world. how much could this hurt qualcomm? >> this is the worst nightmare for qualcomm. they built an entire business that has now become the first or second largest chip company in the world, and yet you have a situation where they're very business is about regional development and enforcing patents and doing intellectual property. if those don't hold up, their model falls apart. companies are saying, if one chip maker is not paying you, why should i?

the other thing that looks like it's happening is some companies are just saying, you know, you think i sold 100,000 phones this quarter, i only sold 10,000 with your chips in it. what are you going to do about it? qualcomm says there are about 2 million phones that they are not getting paid for that they are owed for. big deal. profits --d the process by which a company like qualcomm tries to maintain a foot on the ground, the gladhanding that goes on, the long dinners with chinese officials. i want to hear more about how they actually try to keep these relationships strong. >> what qualcomm has been doing recently is to show it is a good chinese citizen. it has started to invest into tech startups in china. it has something like $150 so far. they are also bringing their production into china. they will be making chips there. that is where the chinese government wants, because once

they start to learn all of this knowhow and technology, they will be able to take it and give it to local companies. essentially, qualcomm is going to lose its business. of course, there's the whining and dining aspect to this, but qualcomm is looking to invest in these companies and i think that is the wrong thing for them to do. the chinese are going to say, o, my gosh, the americans are now owning our companies. we've got to get back at them. i think this makes qualcomm a much bigger target. >> qualcomm, i should say, has been through this before. they have been through this all over the world. and they have eventually prevailed everywhere they have faced this, including china. but it is worrisome for all of the reasons that gordon sites, that china will be the future of wireless and that qualcomm may not have the steak they have had their in the past. chang, asou, gordon always.

from the moment you book your flight to the minute you leave the plane, jet lou is using text -- jetblue is using text to make traveling easier. we sit down with the company's information officer. ♪

>> i'm emily chang. this is "bloomberg west." we turn to how tech is changing the future of transportation. from testing free insight -- offerings,i to other jetblue is looking at how to make the process of flying more enjoyable for passengers. jetblue's chief information officer joins me now from new york. cory johnson is still with us. does automatic check and

work echo -- check in work? >> we just launched automatic hask-in recently and it been a huge success. we look at constantly enhancing our customer service and experience. auto check-in is a great way to move forward. going to ak about baseball game, you don't check in. why do you do that at an airport? we look at airports in the future to be more transitional in nature than transactional. we are looking to eliminate a step in the process, so customers don't have to go through that. the auto check-in is the first of several enhancements we are rolling out in the next 18 months. >> i might understand why you check-in at an airport because of not enough people are checked in for the flight, then you can get in on the flight, which is a

bit different from the baseball game. but one of the things about internetata, you have connections to speed up this whole process. explain how that works. >> when -- with a company like jetblue, we do not oversell tickets, so we do not have that problem. check-in was a 1960's process when airports started using computers. the only way to do that was to check-in as part of the process. bubble technology to know where our customers are and if we can use real-time information to check the customers in and send that to their mobile device, that experience is much more seamless. we may even be able to give a permanent boarding pass to the customer for that experience. >> why is it so hard for the airlines to adopt these things? is it about legacy systems? is

it about legacy hardware? >> is accommodation of both. as you know, airports operate under a common use with several agencies working through it. have grownports through acquisition of several software systems. were example, we have over 400 systems that need to talk to each other. inngs that may be easier other industries get a little bit more difficult, but that does not give us an excuse not to do certain things in a creative way. jetblue, one is personalization. how does that cater to the individual needs of a customer of jetblue? and the second is a lean approach. what do you have to do when you can automate or elevate the process to elevate the customer experience? fax you also use -- >> you also use technology to enable planes to talk to one another. tell us a little bit about that.

>> absolutely, emily. we launched something that is still in the beta phase. four years ago, when jetblue first had connectivity in flight, we were not happy with that experience. we partnered with a company and a satellite from kazakhstan about two years ago. we have spectacular product on airline for the customers. think of the aircraft getting 12 bandwidther second per customer. that is really amazing. now you look at the customers have an access and give it to the crewmembers, whether it is in flight or inside the cockpit. real time, in whether managing the flight operations or the customer experience within that plane. >> what percentage of revenues do you devote to this technology ?

i wonder if you guys have a much bigger budget for technology and i wonder why other airlines don't. >> we are a very tech savvy company, especially being a into its second decade. we look at technology as the connective tissue that will link a highly customers in efficient way. i cannot give you the specifics of the budget, but when you think of wi-fi -- you know, broadband, wi-fi in the air, it is part of our core experience. we do not look at wi-fi as something you offer for a high fee. customers cannot afford it. that experience is absolutely free for the basic service. if you want to stream service -- stream videos and other things, there is a nominal fee for that. you walk into a hotel or to your home and connectivity is expected. we look at it as part of the

core offering. information chief officer, thank you for joining us. of elon musk'se tesla? he shares that and more. ♪

x welcome back. i'm emily chang. musk and spacex's elon stopped by the colbert report to talk about space travel in the future. take a listen about what he says

about making the tesla a more family-friendly car. >> you kind of want the are to be your friend can actually. -- the car to be your friend, actually. with the new software that is coming out, you get to name the car, like a pet or something. >> what would you name your car? >> i have the software and i have named my car. [laughter] i named it "old faithful." yeller." ame it "old [laughter] >> comcast is expanding -- extending fiber-optic cable to certain customers homes in an effort to boost slow internet speeds. 505 megabits per second. cory johnson in -- has more.

>> a lot of changes going on with the very substance of the internet, which is drastically changing right now. inwera,e company like inf gadgets thatting travel at phenomenal speeds across the web. the developments are hard to keep track of for users. but for the business is building it, does not seem like it's really -- the internet seems like it's really changing. >> the internet is changing in the way we use it in all aspects of our lives. look at cloud computing. we are taking our home and at vcr, music, into the cloud. are working not only to increase the capacity of the internet, but also to reduce the cost per bit. it should cost less and get a better service. >> i went out to provo, utah myself.

and the google fiber is in the experimental stage. though there are people watching bloomberg west on google fiber in the cities that have it. will we see that kind of development of fiber to the curb? >> fiber to the curb. a friend of mine used to call it fiber to the four head, everywhere you are. be a mainr this will direction the company is moving. what that has done is spurred competition. you see comcast and verizon announcing it. other people are doing the same thing, because everyone wants to create the ability to attach to the home. inthe technological advances the past two or three years have made it more possible for things like optical switching? >> there is innovation that happened in our industry all the time. teutonicated the

circuit, for instance. >> the optical circuit? >> yes. >> so you switch literally at light speed. >> not quite light speed. but we are switching at an credible speed and that will take down the cost of technology will suspect there is a great concern about the regulatory structure and net neutrality. we did a piece talking about comcast and jed oliver to pick it up -- picked it up and ran with it. it has drawn so much commentary. what is your take on the proposed rules? >> i'm a big believer in free market pitbulls -- principles. somebody has to make a large capital decision to put into the infrastructure that carries the internet traffic. i believe if somebody takes that financial risk and within the infrastructure, i think it is the free market that determines

what you pay for it, not regulation. >> but the concern is that genetic companies will not have access to that once they decide they can charge the providers and not just the users. >> i think that is speculation. in the case of netflix, for example. they are paying for faster download speed. >> i don't consider netflix a start up. i think they have a lucrative business model. >> but that is the point. if there is a startup, they cannot compete with netflix because they will not get their stuff downloaded as easily. >> you are making regulation about what will happen with the free market. i don't think anyone will decide netflix will be penalized by a startup. or that a startup will not have the opportunity to compete. if i were in netflix, i would be worried about paying for the capacity. the startup has a better way of getting in, because they might come up with something better that does not require as much bandwidth. and it could be a new service that someone is willing to pay

more for. tom, thank you very much. interesting stuff, indeed. >> it is time for the bwest byte, one number that tells a whole lot. jon erlichman is in how -- is in l.a. what do you have for us? >> the number today is 10. corporation,gy started trading again today. the stock, of course. the company doesn't trade. today --ly following falling today, 80%. it is a pretty amazing thing. >> it is still up. i know was a petty stock, but it is still up from where he was a year ago. something is -- someone is betting on something. this company promises to connect

you with hollywood stars. has anyone in l.a. even heard of this in? thing?d of this >> i think they are talking about it in terms of movie scripts. this is the social network with the question mark. the fact that you go to the supposedly headquarters of this , suite 400, there is no suite 400. the company never existed there. >> it appears the stock was somehow pumped up on twitter. how often is this happening with penny stocks? >> pump and dump stock promotions are as old as stocks themselves stop -- themselves. it is always the latest thing being used, whether phone calls or faxes she and or twitter. that is how it happens. >> we will see what happens over the weekend. cory johnson, jon erlichman, and thanks to all of you for watching this edition of "bloomberg west."

the latest headlines all the time at bloomberg.com. ♪ . .

click from bloomberg world had -- headquarters, this is "bottom line." former bear stearns chairman is greenberg is dead at 86. then, israel and hamas consider the u.s.-backed truce proposal. starbucks perked up its product offers. to our viewers here in the united states, and to those of you joining us from around the world, welcome. we have full coverage of the st a