>> 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. but first, 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. it's synchronized with the universal time standard and it is accurate within plus or minus fifteen milliseconds. it is incredibly customizable you can find one that reflects your personal style and play. >> besides the watch, apple showed off two big-screen iphones. cori, i know you got to try out some of this stuff. give us your first reaction. >> i want to show you the new apple pay. 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. >> aside from tim cook, the guy in the spotlight is also johnny ides, apple's lead designer. you got to speak with them. >> yeah. i talked to johnny about the watches. i'm intrigued about what it means for apple post steve jobs

to go into the category that requires specialization and 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. it is gold-plated. that suggest very different designs that are not right for everyone. the fashion or expression for an individual. it makes 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. the way they are building the apple team to address this -- it meant something for the apple store. it might be more for the apple

corporate culture 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. in 2015, the 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, 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. >> bloomberg businessweek's sam grobart hands on with apple watch.

for more on the watch 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. with him is gene munster. we have another gene in the room 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 avid 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. >> this is 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 2015 will be the year it starts to take shape. as developers build compelling apps -- answers like the know will change to yes. -- like many -- like the "no" will change to "yes."

>> 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, it has to appeal to your inner self. right now, it doesn't. that is what i'm trying to say. >> cory, how about you? you are as gizmo and gadgeted out as anyone can be. 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. i was tweeting out pictures and 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. it is new in so many ways come 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? there is a name for it. you are a "glasshole." >> 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. >> gene, 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. >> gene 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 us streaming on your phone, tablet, and bloomberg.com. ♪

>> these are the new iphones -- the iphone 6 and iphone 6 plus. 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. this is "bloomberg west" on bloomberg radio, bloomberg tv, and streaming on bloomberg.com. that was the unveiling of the iphone 6 and iphone plus. it could now be 4.5 inches.

-- 4.7 and 5.5 inches. is bigger better for apple? is it enough to win local market share from rivals like samsung? i'm joined by om malik here in 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. when you see the six plus, your blood away by it. -- blown 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. om, smartphone information -- is

this more than incremental? >> i think apple has not done 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 things that apple does really well. have a great new motion sensor and great new display. this phone is by far miles high 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 back the top tier of the market, 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 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? am i going to like this as a big 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. in reality, 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 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. cory johnson and gene munster 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 discuss, 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 debit, we spent $12 billion. 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 munster. 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. gene, how 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. >> i think the biggest part was around payments. we use it so many times a day and there's so much friction and it. apple uses 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, om? >> and does not like someone has to lose for apple to win. >> will paypal lose? >> 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. they have an opportunity -- things start to get interesting for them.

now google wallet starts to get a big boost from it. >> om malik and gene munster, thank you both. coming up, security issues. can we trust apple with all of this information? ♪

♪ >> you are looking at a live shot at that no-longer-mysterious white building. we will have more on apple in a minute. here are other stories making headlines.

settling 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. snapchat has been raising money that values the company at 10 -- $10 billion. finally the fcc will vote on whether to do away with them and the chairman rejected the move. games could move from broadcast. electronic arts will remove ray rice after the nfl suspended him indefinitely. a video showed him knocking out his then-fiance and now-wife. the ravens 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. it included 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? -- turning back now to our top

story. new products announced today, including apple watch and apple a. in addition to the nfc, it uses something called a secure thatnt, a dedicated chip stores encrypted information. how secure is this chip? should we trust apple with data? after the targeted hack last week? joining us today, senior security evangelist and bloomberg distributing -- contributing editor. tony, i will start with you. apple is asking for more information. apple tracks are a lot of things, a lot of things about

our bodies. can we trust apple with our information? >> it is only sending certain information to the retailer. >> what kind of information exchanges happening? >> it only uses a number wants, dispose of it, and that number is never saved. but what you make of the security issues surrounding it the announcement today?

it was paid perhaps the most innovative thing that came out of the event today? >> it is the hardest thing that with a highest reward. nothing in apple pay is particularly surprising. there is some connection to the watch product and the handsets. i think the difficult question is, what will adoption look like? how quickly will people pick it up? a lot of people are providing point-of-sale, picking up in one part or another. apple has had adoption issues before. look at passbook. this is not a deep technology problem, it is adoption. >> what about security of it? week, ipodal last

accounts were hacked. itself breached, but how damaging has it been to the perception of apple's security? >> if it had happened by itself, it would be a big issue. weirdly, home depot, target, and others, it seems like everyone has a problem. data leaks happen all over the place. personal information, credit card, there was a leak about a major university this week, people are overwhelmed with this kind of thing. people are thinking the overall my credit card company will figure it out, or on the other hand they will think you know what, i am never going to put information on line again. this is not apple-specific, it is about many things. >> tony, what do we as users

need to know if we're going to be using apple to pay for stuff and to keep track of our health information. >> when we go to a restaurant and we pay with our card, and the guy runs off with the card, do you know it goes? do you know are the copyists? to know where it goes? is in your control rather than going out of your sight in a restaurant. there is a big change, similar to pins and chips in other parts of the world. watch.ook at the it is a super interesting topic. it is a -- it is about the user understanding what is being stored about them, where it is being stored, it is about transparency. that needs to be foremost in the consumer mind. >> is apple any better about security than other companies?

thinks about security upon, it is better than an afterthought. >> compared to who? who thinks about it as an afterthought? >> i think it has always been an add-on. it now companies are looking at how to be secure, how to stay private. it has to be at the very front of the engineering process. >> senior security evangelist technologies. stick with us, you are get another word in the next block. steve jobs original event. that is next. ♪

>> you are looking at live pictures in cupertino, where tim cook is walking off into the

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. this is where steve jobs unveiled the first macintosh computer. was history made today? >> absolutely. apple took this step towards what i like to call invisible computing. it was a great first step, i am not a fan of the first product.

>> you do not like the watch but this is a first step. >> paul, would you agree? >> i can see how this is actually where they want to be going. and who am i to argue with that sentiment? as a presenter, he drives me crazy. i found the presentation 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"?

is it really a good enough one more thing? it has been used for the iphone and the ipad. >> steve jobs has used one more -- "one more thing" for some pretty lame things as well. i saw people complaining that the watch is not available. steve 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. inventory stocking as the -- 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. >> i wonder at what point if ever, when well people start -- stop talking about steve jobs and start talking about tim cook and his legacy? >> 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.

he has managed to bring the company to this point where they can enter a new category. 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. >> 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. 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. was the event home run or start yet or something in between? we will discuss. ♪

>> welcome back. you can catch our early edition at 10:00 a.m. and 1:00 p.m. eastern. apple unveiled two items and a pay system. what are the takeaways? our editor-at-large cory johnson in 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? >> it was a big deal for 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.

>> there is the gold watch. chris i talked to were interested and they wind best the proof is in the pudding. there was an apple employee curating the experience. they are not quite ready for prime time. >> maybe they needed to take away some stuff. >> they should have started simpler and focus on two or three behaviors. >> they needed an editor. what did we not hear about today? >> i was expecting to hear something about apple tv. i think there is still an huge opportunity in the television

marketplace. it i was surprised we did not hear anything. >> what about apple tv? >> you took my line. i am notng to say leaving here until i get my apple tv. the notion that there is no innovation left, i am sure he 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 places 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. this device, the software takes away the ability of a home depot or target or michael's to even 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. just for the sales of apple products. >> to me it is the big benefit of payments is convenience. you put your finger on the thumbprint and the terminal senses that you are using apple a. this is always been like the chicken and the egg.

american businesses -- >> 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? >> that remains to be seen. this is a company which is going to have many more skus and they will have to manage them to see if they can handle it. that is the x factor in this company's operations going forward. >> what about the ipad, it is like it has become the stepchild. is the ipad in itself being cannibalized at this point? >> it is number one. october is the month for the

ipad. >> why do you need the mini if you have a 5.5? >> you need an air and bigger ipad air to replace your macbook. the lineup is shifting our expectations of different every couple of years. >> should we be concerned about apple's other products? rex i do not think so. the big change is there is so much orthodoxy about one-size-fits-all. apple is going to sell you a four point five inch screen, a five point five and screen, as evidence ipad, 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. >> 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 -- dramatically falling stock price. the consumers were telling them the same message. there is a company that can handle more complexity. because the size of every bet 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? >> u2 was 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. next you have got to download i -- it's by october. >> we are little busy today, but we will get there. as soon as we get apple tv, i will download this thing. >> some people do not like u2 as much as he is too but i thought it was pretty cool. thank you. as always thank you for watching. all of the headlines all of the

time. ♪