>> live from pier 3 in san francisco, welcome to "bloomberg west," where we focus on innovation, technology, and the future of business. i'm emily chang. over the next hour, we will have an in depth look at everything apple unveiled today. we will try to answer questions. , the ceo showed the long-awaited apple smart watch. >> apple is the most personal

device we have ever created. we set out to make the best watch in the world. one that is precise. is synchronize with the universal cam standard and it is accurate with milliseconds. it is incredibly customizable you can find one that reflects your personal style and play. >> decides the watch, apple showed off iphones that are thinner. cites the watch, apple showed off two big-screen iphones. -- besides the watch, apple showed off two big-screen iphones. out someu got to try of this stuff. give us your first reaction. >> i went to show you the new

apple pay kid it is the first one here -- that is my credit card on the back of iphone, but apple pay is as intriguing as anything announced. the biggest market is this apple iphone. these two new iphones. both bigger and interesting. thinner than ever before. better cameras than ever before. a new, faster chip. better resolution and better battery life. it is what we expect with every iphone release. this is a market that is primed to buy a lot of phones. we have more phones coming off contracts right now than we have ever had before. the new devices are literally coming to market that is ready to buy new iphones indeed. , the guyfrom tip cook in the spotlight is also johnny apple's lead designer. you got to speak with them. >> yeah.

i talked to johnny about the watches. i'm intrigued about what it jobs for apple post steve to go into the category that requires specialization and limo edition -- limited edition runs. it is not just one product or the product is more of an expression of a single idea. they showed off three watches. a sport, and they showed up another one called the addition. that suggest very different designs that are not right for everyone. the fashion or expression for an individual. expressing just that individual. i talked to johnny about that. he says it was enormously collocated to get his head around designing for individuals, designing for multiple demographics.

it will be interesting to see what they come up with. they way they are building the --le team to address this without it meant something for the apple store. it might be more for the apple corporate altar imagining a different way to target products for very different people. >> cory johnson, our editor at large, standby. the watch is customizable with bands that could be swapped out. sam grobart got a hands-on look. >> you have heard rumors about it. might have even read articles about it. it is finally here. apple has got a watch. this is the apple watch. it is apple's first new product in four years since the ipad was introduced. there will be more than one apple watch. there will be three different families. watch goes on sale.

this watch is made of stainless steel, all the other metals will be made out of aluminum or gold. the bands is an magnetic closure on a leather band. it will include other materials like stainless steel, robber, and other synthetics as well. there is a new controller -- rubber, and other synthetics as well. there is a new controller. it will allow you to cycle through different apps and different functions. it is backward compatible all the way to the iphone 5. it has a bunch of different apps. apple is expecting that the app community will work on new ones that take advantage of the touchscreen and all of the microphones and speakers and other vibrating devices contained within it. samloomberg businessweek's grobart hands on with apple

watch. for more on the walk and everything that happened at apple, i want to bring in a special roundtable of guests. as well as cory johnson is still with us from cupertino. within is gene munster -- him is gene munster. in the roomher gene today. i wanted to ask you -- will you wear this watch? >> no. this is the first apple product where i'm not rushing out to buy it. >> why not? >> it doesn't feel like a company product to me. i don't think it has the emotional connection with me. i'm an average watch wearer. i have a lot of watches. i have a lot of analog watches. i spend a lot of time thinking

about watches and how they relate to me as a human being. this watch was not speaking to me. it felt a little bit too early and too premature. >> you and i talked a lot about the challenge of wearables because what we wear is an expression of who we are and what we like. gene, how do you respond to that? he is saying flat out i ain't going to wear this thing. a critical starting point for wearables and apple. over time, i think opportunity will present itself. or could be one billion watches sold every year. this is a huge market. my response would be that i think this is somewhere in which one 815 will be the year it starts to take shape. as developers build compelling 2015 will be the year it starts to take shape. as developers build compelling apps -- >> i think what i am saying as a

watch and what they showed off today, it doesn't have anything of which i want to wear right now. a year from now, it might be different. i might change my mind at that point. this is a much more personal expression purchase. you kind of have to, you know, to youro appeal inner self. right now, it doesn't. that is what i'm trying to say. ma>> cory, how about you? gadgeteds gizmo and out. are you going to buy one? well, i think om is a very stylistic guy. that is a real challenge for the company. it is making things and deciding

i want to do this thing with this device of which most people won't like. there is an elite sort of cost a lot of apple products that has given them a certain demographic certainly because of what it cost for this device. the sort of said they want to be for everyone as long as everyone has a lot of breadth. with the watch, they are facing a different business. that is interesting aspect. yes, it is early days. it is not available yet and we are debating whether we want to buy the thing. pictures andg out sending out videos of the watch. i have done a lot of interesting reactions from people. it is very personal. it talks to us on how difficult this market will be for these guys. it is a pretty cool device. ways comein so many at the least of which have got this watch os that will take

developers time to get their heads around. it seems developers can do very new things with this, especially with all of the sensors. the possibilities are remarkable. >> as a fashion statement, om, will this be cool? i know you won't wear it, but google glass is if you wear it, you're like a social pariah. is it going to be cool or uncool? >> you would not be uncool if you wear it. >> you're saying it has got something. >> it is good. it is an apple product should it has all of the hallmarks of a classic apple product. it is well made and beautiful. the os has been smooth. the technology inside it is pretty well crafted. again, it is not -- it is not a slamdunk for them.

the iphone and ipad were game changers. i don't feel this is a game changer just at. e, how optimistic are you about this being a game changer? how much will it add to apple's bottom line? >> i think in 2015, it will be modest. i think in 2016 is the wildcard in terms of what developers do and how the watch evolves. i think it is good for investors to realize that wearables is a category for the future. it is a critical starting point and it will take time for the value of this to evolve. i think it will happen. munster and cory johnson and om in student with me. and apple also unveiled two new iphones today. is it enough to fend off competition?

you can watch a streaming on your phone, tablet, and bloomberg.com. ♪

> these are the new iphones 6+.he iphone 6 and iphone these are the best iphones we have ever done it i hope you will agree that they are the best phones you have ever seen. i'm emily chang. ons is "bloomberg west" bloomberg radio, bloomberg tv, and streaming on bloomberg.com. that was the unveiling of the iphone 6 and iphone plus. inches. now be 4.5

is bigger better for apple? is it enough to win local market share from rivals like samsung? in joined by om malik here san francisco and in cupertino, cory johnson and gene munster, gene, what do you think of the new phones? is it enough to move the needle? absolutely. that was probably one of the biggest surprises for me to walk there and check out the products. six plus, youre blood away by it. they lost about third of android users switch based on the bigger form factors. that is a segment they have been missing out. they basically plugged an important hole that had been in their market share equation. >> at this point, you could get the iphone 5c for free. iphone 6 is $200 with a contract. that is not bad. --, smartphone information

is this more than incremental? donethink apple has not anything incremental on the phone. we just don't see it. they do amazing processors, amazing technology. that is what they don't want us to see. iphone 6 plus and iphone 6 are just another example of great rings that apple does really well. reallygs that apple does well. have a great new motion sensor and great new display. miles highis by far of the competition. lots of little things you don't see. that is the beauty of it. that is where they change the game. this is a no-brainer.

upgrading is a no-brainer if you have the iphone. >> it is globally where they are really under pressure. >> i think they will do well in the upper niches of various countries. people who buy lower-priced android phones or lower-priced android tablets are not going to change their minds with this device despite the price. i think that is the key challenge they have. i do think that they will win market, top tier of the especially tablet business. you will give it a very serious think before you spend your money. >> cory, how did the larger phones feel in your hands? --i mean, i wonder why the what the larger phones are all about. is it a phone or the asian markets where character size is beneficial when using such a phone?

this as a biglike guy who has got big hands? i was really surprised. gene and i were just talking about this. did you think that the 6 plus would be too big? >> yeah. >> it is shockingly thin. >> it was a big surprise. >> there was some functionality that was different. when you turned it sideways, that keyboard have the formatting on the edges. there were couple of apps were you could see listings on one side and a map on the other to compare. it seems like there were new possibilities with it, not the least of which substantially more battery life. >> the battery life on the 6 class is over 100% more. i think that illustrates that some of the significance -- i think that 6 plus definitely lived up to the hype. i don't know about the 6 though.

>> the chip is faster. the physical build is supposedly stronger. the camera is better. the talked about the camera and iphone 6 plus as not just having stabilization softball -- software, but stabilizing that is built into the lens itself that makes for better pictures. a lot of upgrading and that new phone. >> we still don't know about the battery life for the apple watch, by the way. you would need to charge it every single night. we do not know what that means. munsternson and jeagene and om malik. more on apple after this quick break. we will talk about apple pay. what does it mean for paypal and square? we discussed that next. ♪

>> our vision is to replace this . we are going to start by focusing on payments. payments is a huge business. every day between credit and billion. spent $12 that is over $4 trillion a year. that is just in the united states. apple ceo tim cook introducing a new service called apple pay earlier today. will apple reshape the payments business? will players like paypal and square and google wallet are the

current players in this space. we have om malik and gene munst er. om, well this replace the wallet? >> i hope so. i was impressed with the public announcement. it is seamless. they have done a good job grabbing the right partners. the ecosystem is already there. i think what apple has done is given the mobile payment system a massive jump start by just being a player in the marketplace. >> they have partnered with visa, mastercard, american express, and more for this device. optimistic are you about apple pay in terms of truly changing the way we pay for stuff and changing our habits with it is with a swipe of the phone or a swipe of the wrist. part wask the biggest

around payments. we use it so many times a day and there's so much friction and it. apple is in a you meet -- unique ways to capture a small fraction of that payment processes. the phones are impressive. the watch is a great starting point. what they're doing in payments is going to be game changing. >> who does this hurt, on? -- om? >> and does not like someone has to lose for apple to win. e? will paypal los >> i think paypal will come to its own destiny. i think this is a great step forward for mobile payments. i do think it is a company like square a chance to restart itself and the part of sale system as amazon web services for small businesses. --y have an opportunity

things start to get interesting for them. wallet starts to get a big boost from it. gene munster,d thank you both. coming up, security issues. can we trust apple with all of this information? ♪

\ along shotoking atre much longer building. we will have more on apple in a minute. here are other stories making headlines. settlign a lawsuit with the former stanford classmate who claimed part ownership of the

company. they admit that reggie brown came up with the idea and collaborated with them to develop the app during its early days. terms of the settlement are confidential. snap chat has been raising money 10 --alues the company at $10 billion. finally the fcc will vote on whether to do away with them and the move.an rejected move from broadcast. electronic arts will remove ray nfl suspended him indefinitely. a video showed him knocking out his then-fiancé and now-wife. are offering exchanges for his jersey.

turning back to the top story. apple's next-generation and the products it announced today including apple watch and apple pay. nsc capability. the watch also has it. in addition it uses something called secure element. a dedicated chip that stores encrypted payment information. how secure is the system and should you trust apple with your data? that targeted i can't hack, what about the new apple watch, are there privacy concerns there? securitye is the technology -- technologist at avg. apple is asking us for more information. payment information, health information, these devices track things about our bodies. can we trust apple with this

information? rex apple has done a good job. if you look at the payment process a lot of what they have done is they are holding the data on a device and when you transact it is sending certain information to the retailer so it is protecting you from too many -- too much data stored into many places. they are sending an trick -- encrypted traffic to the retailer is well. quacks what happens when you go into target and swipe your card? quacks it will send in a one-time credit card number. it will send it once and you'll hold your real number and that number never sends. quacks what you make of the security issues surrounding the apple announcements today and they think apple pay is perhaps the most innovative thing that came out of today's event erie -- a vent.

quacks it is the most innovative thing. let's say it is the hardest thing. in a sense nothing and apple pay is not surprising. this is a common nation of hardware and encryption. there is some connection to the watch product and the handset and this is what they are doing. here is whattern is adoption going to look like, how quickly will merchants pick it up because there are a plethora of other services providing point-of-sale purchase in one form or another. this happens to be the most comprehensive solution from a single provider. apple has had adoption issues before. look at passbook. about the security of it? 's big scandal, ipod

accounts were hacked. how damaging was this or has this been to the perception of apple security? had happened by itself it would have been a big issue. i think home depot and target and others, michael's are doing apple a host of favors. it seems like everyone has a problem. the data leaks are happening all over the place with respect to transactional data, personal information. there was a leak at one of the major california universities. people are overwhelmed. people are desensitized to it and they say it, oh well, the credit card company will find it out or they say i will never put any information online again because i cannot trust anyone. this is no longer apple-specific area and it is how people respond to a host of leaks.

quacks what do we need to know and do if we are using apple to pay for stuff and to keep track of our health information? took the pay first. we go to the restaurant and hay with a card. do you know where it goes, do you know what is happening? suddenly you have the device in your hand and it will be near the terminal and the payment is in your control rather than seeing your information walk up the restaurant and not know. there is a big change similar to chip and pin in other parts of the world. let's look at health. it is a super interesting topic area and we believe that it is about the user understanding what information is being stored about them, where it is inc. stored, and who has access area that transparency needs to be consumersst in the mind. quacks is apple better at security than other companies?

quacks it is in the development process which is a good place to be rather than after hot -- afterthought. there are lots of other companies were historically it has been an add-on. now you're seeing lots of companies starting to look at how to be secure and keep someone's data private. from the front of the development engineering process. quacks how did the performance jobs' today?eve that is next.

quacks you are looking at live pictures in cupertino where tim the is walking off into

sunset after unveiling two new iphones, a watch, and apple pay. at the apple event in cupertino. tim cook unveiling the first new product under tim cook as opposed to steve jobs. i want to bring in our team of guests. and corey johnson, our editor at large from cupertino. where steve jobs unveiled the first macintosh computer. it was history made today? rex absolutely. apple took this step towards what i like to call invisible computing. i ams a great first step, not a fan of the first product. not like the watch but this is a first step.

quacks would you agree? >> i can see how this is actually where they want to be going. argue withi to that sentiment? a resent or he drives me crazy. i found it clunky and overengineered and he drives points home like he just dropped out of toastmasters or something. is this the first time he said one more thing? really a good enough one more thing? i has been used for the iphone and the ipad. >> steve jobs has used one more

--ng for some pretty late lame things as well. i saw people complaining that the watch is not available. jobs announced products regularly that were not available or when not good enough yet. i think there are some interesting changes here and that are rate challenges. the watch, for example. one of the great mysteries of tim cook is that managing inventory where they have not gotten stuck with crummy products. all of the computer makers have stumbled massively at one point or another. during the chipmakers and disk drive makers, it has been a lasting problem in technology. as thery stocking product is running like fruit. he is taking -- and where he is trying to eat match user demand

that is unknowable. he is taking on a big challenge at his strongest suit. it is a very brave choice for him to make in the thing that has been the best at. going at a very different direction and something that he loves which is fitness. quacks i wonder at what point if --r, when well people start stop talking about steve jobs and start talking about tim cook and his legacy? rex it will be a while which is unfair. tim has done a great job over the last four years or so of running the place. theas managed to bring company to this point where they can enter a new category. they will be successful -- whether they will be successful remains to be seen. i do not know what more he could have done to keep this company on track. quacks is this the product that will define tim cook cost tenure

at apple? it probably will. not this specific watch. this is more like a .6 product given that it does not come for another four months. it will go through a whole bunch of iterations erie it i doubt we see another product line in a category where apple has no products in tim cook's tenure. this will be it for him. >> thank you. we will be back. or startvent home run yet or something in between? we will discuss. ♪

>> welcome back. you can catch our early edition at 10 a.m. and 1 p.m. eastern. items and aled two pay system. the takeaways? our editor at large cory johnson at cupertino. we have not heard from you yet. you were there and you covered many events. what do you think, how big a deal are these phones and how big a deal is this new watch? deal for was a big apple. a lot of energy in the room. bigger crowd than usual. the iphone six and the six plus will be huge hits erie and apple has been a little late but there is a lot of demand and they feel like natural size. it is the apple five that feels smaller.

it starts expensive and goes up from there. i am not sure. quacks there is the gold watch. talked to were interested and they wind best pudding. is in the there was an apple employee curating the experience. they are not quite ready for prime time. quacks maybe they needed to take away some stuff. startedhey should have simpler and focus on two or three behaviors. quacks they needed an editor. what did we not hear about today? rex i was expecting to hear something about apple tv.

think there is still an huge opportunity in the television marketplace erie it i was surprised we did not hear anything. what about apple tv? there is non that am sure heleft, i would take those words back if he could. if they decided not to do it or could not get the agreement there are lots of laces for innovation. i think that the pacing might be the killer app here. how many times are we doing stories, do we do a story about the home depot reach or dislike like the last six breaches. device, the software takes

away the ability of a home depot to event or michael's have your credit card information in the first place and adds the biometric device. this is a game changer. it closes the apple system and has the user have a trusted and more connection with the product. this is a big deal. quacks to me it is the big of payments is convenience erie and --. your finger on the thumbprint and the terminal sense is that you are using apple pay.

>> they already have these scanners. >> apple has made it convenient. >> what about the challenge of scale, can apple deliver on these different sizes and colors and give everyone what they want ? rex that remains to be seen. this is a company which is going to have many more skus and they to seeve to manage them if they can handle it. that is the x factor in this company's operations going forward. ipad, it ist the like it has become the stepchild. >> it is number one. october is the month for the ipad. >> why do you need the mini if you have a 5.5? biggerneed an air and

ipad air to replace your macbook. the lineup is shifting our expectations of different every couple of years. quacks should we be concerned ?bout apple's other products rex i do not think so. the big change is there is so much orthodoxy about one-size-fits-all. up and down the line, it is no longer one-size-fits-all and that is appropriate. these are personal devices and people express themselves with their purchases. quacks it is a problem that apple moved away from when steve jobs returned because they came up with a complicated product line of macintoshes. >> when you reduce the product

line famously but came out with the imac it was a way not just to make things clear for the consumer but make things clear for employees who have been pulled every which way with a lot of different investors and a dramatic falling stoplight -- the consumerse it were telling them the same message. there is a company that can handle more complexity. because the size of every bed is so much bigger. it could be a big deal for apple. it is interesting time to cover this company. what do you got for us? here at the end and they provided this album to all of the itunes users. 500 million people can get this

for free because that is how many accounts apple has set up with itunes. that tells us all those people that credit cards with apple as well. they are potential users of this apple pay business which shows you the kind of leg up they have whether it is musical or not. quacks you have got to download i october. by october. there.ill get tv, in as we get apple will download this thing. assome people do not like u2 much as he is too but i thought it was pretty cool. thank you. thank you for

watching. ♪

>> this is "taking stock" for tuesday, september 9, 2014. today's theme is reaching cult status. apple unveils a new phone and mobile system and a smart watch. tim cook was there and so was the musical band u2. we will take also a look at the home shopping network. this has become a cult success. what keeps them shopping?