>> live from pier three in san francisco, welcome to "bloomberg west," where we cover the global technology and media companies that are reshaping our world. apple has hit with a one-two punch with hardware and software issues liking the apple iphone. they pulled the ios update after numerous users complained about their new iphones bending. how serious are the problems? we discussed. blackberry takes a swipe at apple as it releases the new phone, the passport. they challenged people to try to bend the passport which is their

attempt to get more business customers and gain back market share. how has google been so successful? eric schmidt reveals some of the secrets in his new book and stops by to talk about everything from the apple android fight to whether marissa mayer can save yahoo!. stillhoo! confirms it holds a 15% stake in ali baba after selling 140 million shares in the ipo. have adicate they one-year lockup. before it can sell the remaining shares and also agreed to vote for director nominees of alibaba . to our lead story, apple is supposed to be shining brightly after its record 10 million iphones in the opening weekend. but the glow is starting to rub off dues to some technical difficulties. apple had to pull its ios eight update after some customers could not make phone calls. after reports that

apps were crashing 56% more often. adding to the problems, a number of users complaining the new ones band when sitting in your pocket with this video showing an iphone 6 plus getting very badly bent. joining me is cory johnson and research analyst, and the man behind that viral bending ipod video. we spoke to you about the iphone 6 plus which did not fare well after the ben test. you went on to test the iphone 6. what happened? >> the six did much better as i expected it would, the fact that it had smaller form factor. i put as much pressure as i could in the same location and

attempted to bend it in the same fashion. tiny littlead a bent to it, but nothing significant and completely usable. this point i'm willing to say based on that little piece of evidence that the six is going to be a little bit more durable than the six plus. >> you also compared it to a few other phones. how do the iphones stack up to the other phones? cracks even with the standard iphone 6, it feels that there was a tiny bit of pliability there. it started to seem like it would probably give way sooner than probably some of the other devices i tested. the most impressive was this one moto x.e any kind ofe to get tweaking or cracking or twisting or bending out of it. i can happily -- actually

replicate that right here. this phone is just solid and i did not know that when i first received it because these tests weren't really a thing at that point. htc andmoto x and the eight did very well in similar tests. >> let's start with the bending because there are a few problems happening right now. i think it is topical but ultimately will blow over. if people use the phone reasonably i don't think it's going to cause any sort of significant change in the overall demand but let's assume that it is a big problem just for the sake of argument. we estimate longer-term about 30% of the iphone users will be six loss. ultimately they will sell more o's.

the software problem gets fixed over time. it's pretty easy to fix. >> let me explain to you why you're wrong. this is why this matters. the essential brand argument of apple is you don't have to be an expert. you don't have to know how to control all delete. we take the complexity out of things and you don't have to worry about the updates or the downloads and you don't need a service pack. i wonder if the series of problems in both hardware and theware start to erode brand value itself. >> i think if they don't get the software issues fixed -- in the past, they do have software pickups. when the five s came out, there was touch id that had some problems. trying tot of them work some bugs out is not

anything unique and there have been issues of draining power faster. if they don't get it tightened up, it could potentially be a bigger problem but i think there is a window where people give them the benefit of the doubt. or smaller problem because so many people are eligible for upgrades and phone shopping right now? >> i think it gets magnified. there's no place to hide when you sell 10 million units over a short time. this stuff is going to come out that it's part of developing hardware and software. you go through these factors so more people know about it but if they can get the patch is fixed in a month, people will not be talking about this. millions of people have watched your video. people care about this. >> the real-time analytics and i'm looking at from you to show 16 million views of the last 24 hours.

you have had more views than iphone sold the act oh that's hilarious. >> 16 million in the past 24 hours and accumulating close to one million every hour. this is something that people are interested in whether they are iphone owners or not. it's an incredibly high profile company and an incredibly high profile product. know their to devices intimately and i suppose that's would it he is like this provide. is this going to be a real issue everybody has? probably not. but it doesn't mean that it's not useful information. buy things that are overengineered and tougher and stronger than they need to be. when i tried the same test on the moto x, for example, my

perception changed immediately. it didn't do anything similar to what the six plus did. ownership comes from recognizing yourobust the item purchased is and the fact that the other models from other brands are so much better is meaningful to me. the blackberry ceo challenged everyone to bend the blackberry passport. it.ried to do luckily, he was not successful. i don't know if that means the phone is strong or that cory is weaker. >> i think he needs to hit the gym, personally. >> i agree completely. to me, if the telling thing. emily didn't care if i grab the passport. >> i cared. i almost had a heart attack. >> thought you are more

thissive of the iphone, real intimate relationship. >> it is my primary device and i use my blackberry for business things. take it. but added together, what do you recommend for users? i think you have to make your decision and that the end of the day you'll probably feel like the bigger phone even with the bend ability issues, the six plus is still a great phone. the man behind the iphone bending video, thank you. that's it. blackberry coming up next. ♪

>> i'm emily chang and this is bloomberg west. blackberry is pinning its turnaround hopes on another new phone call the passport. square shaped screen geared towards business professionals.

it is part of the turnaround plan. it will the passport be enough to satisfy investors and you and me? hepoke to him today after unveiled the new passport and asked him why he picked square shape for the new smartphone? >> we talked to customers and look at how they used the device. new apps, the vertical apps, we figured that whatider ratio is everybody will need so that is how we came up with it. >> how many do you think you will sell? posting it right now but we expect to be successful. the market tells me that. where itfferent ideas

is a mother daughter type approach. we will have to gauge the response but so far seems to be pretty good. >> you and i have talked about market share, they say blackberry global shipments are already lower than 1% and that my 2018, market share will be .3%. where do you think it will be my job is to make sure that doesn't happen, right? i think we have a good plan, a good set of folios. by the way, despite everything we are going through, this is the first phone -- the third phone we have released this year and another coming out in a couple months called the classic. it is now on about 13 countries and seems to be received quite well. and we just announced the porsche designed phone on

september 17 and we are obviously doing it here in toronto, myself, my colleagues in dubai and london. i think we can pick up the pace and we should be gaining market share as we move forward. >> your job is also to make sure the phone doesn't bend. you took a jab at apple challenging us to bend the passport. what do you think of the reports that the iphone can band? -- bend? >> i have no idea. i just read before i came here this morning and thought it was a little amusing. and you know me, i crack that it in good humor, not to mean to be mean to anybody. hand, our passport and itemely well-built is somewhat of a challenge but

you do it the same way. put it in your pocket and see if it will bend or not. it passeriously, does the bend test? we do a lot of mechanical testing. i don't know if we particularly do the bending but i can tell you that we have five players of the phone including the antenna later which is a complete frame inside the phone. bending that needs a little effort. >> what do you think of the new iphone and the apple watch? >> what do i think? i really don't know enough. i have been so busy that i don't know to comment on that. they have their audience and i hope to go after mine which is people that strongly need productivity and this should

appeal to them. >> one thing you do know is that the president is also addicted to his blackberry. did you send him a passport to test out? >> i don't think we gave it to the white house yet. i could be wrong. but i would love to have president obama use it. a lot of heads of state use black hairy for extra security and this will continue on. >> blackberry shares are up over, 70% since he took investors are pouncing on you and seem to believe in you. you said blackberry will be par fumble by march of 2016. any likelihood you can do it sooner? bei told people that we will profitable in fiscal year 16 so sometime in 2015 calendar. i still stand by it.

depending on these phones and the classic coming out, our software releases next month, i'm expecting to see some growth next year. if i can get some growth on the top line, i will be able to make it profitable sooner. sebastian's newest endeavor has just raised a fresh round of funding and i sit down with him next to see why he made the leap from google's secretive lab to fixing global education. ♪

>> welcome back to bloomberg west. i'm emily chang. apple isn't the only company benefiting in the enormous demand for new iphones. the newe being used in a iphones and will be in the apple

watch. >> a lot of power and connectivity to run things like iphones. the tear downs, it shows us broadcom chips inside. the semiconductor company has announced they will be leaving the cellular modem market so what does that mean for broadcom? . the ceo will know best. getting out of the baseband business, how is that different than the other businesses you're staying in? >> it required incredible investment and we weren't able to get as much revenue as we wanted. what we can do now is focus on businesses were the core strengths come to bear. >> which also require a lot of investment but is there more in terms of margin? >> we have a market leadership position in those other businesses and we can work on that to drive new areas and other things.

>> is it fundamentally that valuable? its critical mass of investment and mind share with customers. we are the goto partner for networking infrastructure or if somebody wants to do bluetooth or wi-fi. that enables us to have conversations about how to take things forward. the neatk one of things going on as you have companies doing specific ,evelopment for their companies not just buying routers but deciding that they can make a router suited to their needs better off the shelf using chips like years. >> the networking business is growing so fast a cousin social network traffic. you see the traditional boxed makers get incremental business. dataso see the large mega soter guys do custom devices that they can really work on their specific workflow.

they do much more custom work. >> do you have products geared towards them? >> we do and we have been working on that for these mega data firms. these are beyond the scale of anything produced before. huge buildings full of servers and they only run a couple of applications. they just to search or social networking. different load characteristic than many of the enterprise applications of the past. >> are those decisions being driven by issues of cost efficiency and power or is it performance? is ans both but power increasing factor in data centers. the biggest issue and cost is the electrical cost. they consume a hydroelectric power dam worth of power to run these things and you have to get the heat out of them. you can type something quickly and get an instant response. how do you reduce the power and increase the capabilities?

>> i think of myself as a carrot top of business tv but you brought the props today. >> this is a really big chip, relatively huge. this is a device that has over 7 billion transistors. that's more than one perfume in on the planet. this is the thing that takes all the data that comes in, reroutes it, sends it to you in your home or where ever it goes. this is capable of a million simultaneous netflix or amazon prime movies going across the internet. >> who would be using this? >> it will go in all of the large mega data centers. guys the stream movies, implement search, social networking. to build soou had far in advance, do you project that we will see more data centers or more of the amazon

web services kind of thing? >> i think you'll see both. amazon is a great example. they are doing the thing where it is a mixed enterprise load and they provide outsourcing for people that want to provide the data center. orsee things like facebook alibaba were they run their own applications and those are specific eta sets. it's not just one but a relatively small set that will be much more purposeful. don't break it. that i'm week is really all we have proven. it's not bending. >> my heart totally dropped. cory johnson are editor-at-large, thank you. eric schmidt is out with a new book and starts with -- stops by to talk about everything from the android apple battle to whether marissa mayer can turn yahoo! around.

his thoughts, next. ♪

>> welcome back to bloomberg west. i'm emily chang where we focus on innovation, technology, and the future of business. ever wonder about the inner workings of google? you can get a glimpse of life inside the search giant courtesy of eric schmidt who just wrote a book called "how google works." to help develop gmail and android. makers with market erik schatzker and stephanie earlier. take a listen as he talks about the android versus apple battle. the innovationat

on the apple side and on the google side, that how petition i think is the defining fight of the computer industry today and benefits billions of people. x is it as brutal as it ever was? >> it's more so. >> you resolve some of the patent disputes. >> brutal in the sense that the margins are very tough for the operators. for the handset manufacturers and benefits to the consumer of having this product. are $100 here telephones unsubsidized end in india, $70 unsubsidized phones. they give the impact on humanity because those phones are entertainment, education, safety, a window on the world. >> would be better if there is something more than a duopoly? >> it's good to have more competitors but trust me you are seeing enormous racing. about brutalalk competition, amazon is a competitor as well as a partner. how do you balance the two?

how does it work? usas a competitor they keep on our toes but as a partner, they advertise for a variety of products and we work collectively to grow the pie and build the industry as opposed to fighting over smaller portions. >> amazon is an android user. apple is a large google search partner and a very tough maps and phone competitor. >> alibaba? >> they have largely been separated from everybody else because they're primarily focused on china. they had done a fantastic job of anticipating the needs of the emerging middle class in china and china is a very big lace. >> as alibaba expands beyond china, that's very much what he has in mind, what opportunity is there for you? >> jack is incredibly clever and deserves the credit for building

one of the great internet companies in the world. how thens to be seen chinese model moves outside of china. most chinese companies have had trouble exiting and this is the next great challenge for them. obviously we will partner them if we can. >> are you concerned about his ability to acquire? he has an awful lot of money to buy really big businesses. >> so does google. >> there you go. and you think you're going to anytime soon? >> i won't comment on that but google is well positioned as are other companies like apple and facebook. >> what is the best way to enter new markets? acquisition or internal development? >> if i could rephrase the question, you don't enter new markets, you build fantastic new products. and that defines the market strategy. we talk about this in the book and jonathan wrote this very

nearly. you don't define the market. you define the products. and about building an incredible product. >> how many companies do it that way ac? ?" >> huber did that. they took information that was free and conductivity and understood every driver and every consumer has a phone and they can connect their needs of a buyer and a seller and fundamentally change the traditional taxi industry. >> or tesla reinventing the automobile. in every market, someone has reimagined the product in a way that is challenging incumbents. they react by doing their own innovation. >> what product has changed the world the most? >> the internet. 10 years ago, nobody in our

audience was sitting there with a mobile phone next to their bed. internet access was largely offices and occasionally at home. this conductivity has changed everything. picture, where my going, what does the app say? it only happened in five years. >> we talked about alibaba and amazon -- >> do you think that has heard humanity? >> i think it is a great benefit. >> that is the question you ask eric schmidt? >> empowering individuals is the best way to deal with what we face as a society, country, and the globe. empower people. human nature is good. given the tools and let them run. >> does your mom think that? >> yes. >> it's a fair question. some people think that a level of humanity has been lost.

somebody said they don't make them like they used to, what products were they talking about? >> the handwritten love letter. >> there was a thing about bowling alone. byrybody was going to go themselves and be isolated and now it is bowling with everyone all the time. >> i don't want to bowl with anyone. >> you have an off button. >> you have been working for 10 years? .> 13 for jonathan and myself >> can she save yahoo!? >> yes. >> how? >> she is the quintessential smart creative. if anyone can save yahoo!, she can. they are the best -- she is the best they have had in over a decade and she understands the kind of product functionality she needs to build. >> alibaba has been the jewel inside yahoo!.

isbut ultimately leadership around products and not about cash. the fact of the matter is you can invest and make money, google does this and everybody else. does the product make the world better? >> do you see products coming out of yahoo!? >> i use their weather app everyday. >> that will save the company? >> marissa was the chief designer of the single page that you mentioned. she's a very talented product designer. google executive chairman and jonathan rosenberg co-authors of a new book. we will have more of that interview with eric schmidt and his former google partner jonathan rosenberg. ♪

>> welcome back to bloomberg west. i'm emily chang. eric schmidt and jonathan rosenberg sat down with bloomberg earlier today and talked about google's culture and its mission to change the world. take a listen.

>> people actually believe this stuff and we know because we test for it. we talk to them about it. do they understand what we are trying to do? do they care about changing the world? it easier to manage a company framed that way than something where you're telling people you have to work harder to do this and get this extra set of earnings or whatever. if you set an imaginative model and ask people to think better, higher, push themselves higher, you get it. >> if culture is that critical to google's success, is it something you can put a value on? do investors even have a clue how? at the tail end of this process. you set your vision, you hire the people, build the product. investors see growth rates, revenue, and earnings. they probably don't care how the formula work so long as it works for the very long term. the model that we described as a generational model.

it in as muchbout as some companies have it and other companies don't. >> what? >> a successful corporate culture. managing to remain, from what i can tell as an observer, a pretty innovative company even though generate $60 billion of urine revenue. >> a lot of other companies have trouble innovating. verse and foremost about revenue or earnings. and the employees believe that. our goal was to systematize innovation. to make it occur over and over again. it's not just in search. it's been and other internet platforms as well as applications, youtube, and many things. >> i bring up the revenue figure because other companies, it seems to be a size problem.

it becomes difficult after a certain size to innovate in a transformative way. you have the legacy business which is what you build the company on in the first place and they just seem to run out of good ideas. i don't know how much of that is a function of culture or leadership. >> i think you've try to focus on small teams and small teams that are chartered to attack big problems. think 10 ask not 10%. that allows us to attract people that are much more aggressive and interested about solving something grand like a self driving car or giving people all over the world internet access that didn't have it through balloons are much faster connections. >> yesterday we sat down with dennis o'brien, the ceo that says -- i'm going to share what he said. with all those guys is that google, facebook, they are having a party in our house.

they are not, giving us any revenue share for us to connect to customers so we pay all the, the networking. all the telco operators worldwide. and they are having a fantastic party but not bringing any drinks or food to the party. thee saying that you want world to become connected and help the developed world, but you're not doing anything to help that. >> on the contrary, we are building balloons that will allow people all over the world who currently don't have internet access to be able to get online and will be doing it with smartphones that they've never had before. the roads and the mcdonald's franchises to make that happen. these are partners that we need. the mobile revolution is driving because of applications like google and facebook and others that drive revenue. are now seeing

fantastic wireless data growth. >> google executive chairman eric schmidt and armor product chief jonathan rosenberg earlier today with our market makers anchors erik schatzker and stephanie ruhle. mark crumpton from new york. what do you have for us today at obama says the world must reject the cancer of violent extremism. speaking before the united nations general assembly, terrorist groups like islam next day must be eliminated. the president also challenged u.n. member states tanned up to russia's aggression in the ukraine. a software company has agreed to pay to settle accounting fraud allegations. the company is accused of falsifying employee timesheets to help a quarterly financial targets. was also ordered to reimburse the company $2.5 million in bonuses and stock rockets.

inek jeter's final game yankee stadium is in question tomorrow due to heavy rains forecast for the new york area. they could leave people that shelled out big money for the tickets out of luck. -- average resale license price is over $2600 according to the second-most for a baseball game since they started tracking. the microsoft ceo is walking the streets of india. we will be right back with bloomberg west returns. ♪

x i'm emily chang and this is "bloomberg west." the massive open online -- cofounded by google cofounders has $35 million in new funding. i sat down with the inventor of google self driving car to talk about it for an upcoming edition of studio 1.0. >> one of the interesting things i read is that all the education that you have, you don't think you could get a job at google today. >> i could not get a job at google today. >> is this what inspired udacity ? >> yes and my entire history of

learning. i always believe that you learn by doing. i want to learn how to start a company so i start one. a selfed how to build driving car so i do it. >> you have done so many cool things in your career and at google. why leave a great job at google to focus on one of the hardest problems in the world like education? >> the mission of being able to educate people is kind of the biggest thing i can imagine. if i ask myself how do we change the planet, i think we have to admit that the number one thing that matters in the world is us. the people. empowering people should be a basic human right. there should be a constitutional amendment that everybody has a chance to a full education. >> don't miss my full interview

with the google x cofounder and studio ceo this fall on 1.0. in 1992, the microsoft executive told his staff to find a job candidate with three characteristics. andt, gets expletive done doesn't kiss off other people. he was that candidate and returns to his native india for the first time since becoming the ceo of microsoft. pitches to thet man in charge of turning microsoft around, cory johnson has more. a great story and one well told in a bloomberg news profile. it is just a great thing. but that road to silicon valley has been an interesting story. by thened via skype first guy he followed when he

joined twitter. sunday is a former microsoft an index ofat has over one billion consumer products. it has to be an amazing moment to return to india as the ceo. what is going through the mind right now? he is thinking about inspiring people in india. in india, we have role models from molly wood and the cricket team and now the role models are ceos and entrepreneurs. aware he's avery role model for the entire country. i'm sure he's thinking about that. is there something particular that indian executives are bringing to the world of technology that is unique to indian culture or growing up to india? >> i think that underdog mentality. it's not often that you see people at the top of the world but it's becoming more and more

common. humble, being the underdog. seet is interesting to across technology, lots of people in executive positions starting in india, born in india. is there something that is unique that people with that background are bringing to the position? >> it is very competitive. population makes it extremely competitive to get into engineering or medicine so we are just used to competing with lots of people. i think that hard work that is required to compete, that would be great for jobs in technology now. >> microsoft is a much bigger company than it was 15 or 20 years ago. are the particular characteristics something that helps them bring something

together like the disparate parts of the microsoft culture? >> utility is really a strength of his. the business side as well as technology side. but those things together and i think he is the right person for microsoft right now. we don't have a lot of time but i have to ask you, how is his cricket game? --you know >> that doesn't sound good. >> i think he's a little out of practice. >> presumably he has other things to work on. much.you very they famously played cricket games for us. not always the best skill. >> we will be following the trip every step of the way. time for the bwest byte, one number that tells a lot. >> 17. 17 months was the duration that

the former apple and target executive had a jcpenney and is reportedly trying to make a comeback with the high-end delivery service for gadget. he has recruited a former -- a couple former apple executives for the real-time delivery of gadgets. he's an intriguing guy and got a lot of credit for what he did at target to make it the dominant retailer it is and the apple stores were under his weighing and he got a lot of credit for that as well. >> mickey dressler was on the board and get credit for the retail. >> and gap executive. the success of many fathers, failure is an orphan. --cory johnson or etiquette editor-at-large. ask anything i can bend or break? >> i'm going to hide all of my phones. cory johnson, thank you. thank you for watching this

edition of bloomberg west. we will see you later. ♪

>> welcome to "money clip." ebola by the numbers and then there's ebola in reality -- we will get a perspective to the worst outbreak of the deadly virus. buffett versus benmochet. the turf war has not amounted to much. this is a bloomberg exclusive. the mysterious case of the disappearing ceo and missing cash in china has been solved. a story will only see right here on bloomberg.