♪ >> from pier 3 in san francisco, welcome to "bloomberg west," where we cover the future of technology in business. i'm cory johnson. u.s. stock market got hammered again. the s&p 500 posted its fourth drop in a row. crude fell briefly below $50 a barrel for the first time since 2009. the euro hit its lowest level against a stronger dollar since 2006.

this indicates the possible exit of greece from the eurozone. >> before an exit is conceivable that someone would leave -- you cannot keep somebody in. if the greek population decides to leave, then you can leave. you cannot hold anyone back. and that means the contagion effect would be a lot less because this is a greek event. >> internet money transfer company xoom says they were the victim of international fraud. the company says the fraud was not about customer money or

company systems, but "employee impersonation and fraudulent requests." and the spacex gearing up for a major launch tomorrow. they plan to launch the falcon rocket to the international space station. on his return to earth, spacex will attempt to land the rocket on a platform floating in the middle of the atlantic ocean. they have landed rockets on platforms twice before. both exploded after splashing into the water. now to the lead. the holidays are done. that means it is time for the consumer electronics show in las vegas. it opened it to the media today, the public tomorrow. 600,000 people in the crowds there. this year, the internet of things was the major showcase. smart cars, wearable gadgets and tvs. the big names will be there including samsung, sony,

automakers. and some big names will not be there. indeed, apple. neither will microsoft. joining me, the president of tech analysis research as well as our regular contributor joining us from swanky san diego. paul, good to see you. bob, focusing here on the internet of things there is something we have hearing about for a year. it could have talked about any number -- what is new this year in the internet of things? >> i think what is new this year is we are seeing a variety of devices we have never seen in the past. i got press releases about smart toothbrushes. and bracelets. anti-drowing bracelets. we are seeing a range of stuff we have never seen before.

>> [indiscernible] bloomberg.com -- >> the issue is we have a bunch of individual products and what people want, i think, is this idea of a connected home. but the reality is it is more of a disconnected home. i wrote a guest column in "usa today" on friday. you have this that has its own set of apps and this has it set of apps and there is no way of pulling these together. that is the challenge i see. >> paul, there are so many consumer electronics shows. >> i know. >> and as an investor -- there were important points i was able to pull out of this. it was not just me not knowing what was going on, but the circles on the calendar. when you go to the consumer electronics show, how do you separate the signals from noise? >> by not going, actually is the best way to separate. the risk of going, it is so overwhelming.

to separate this incredibly splashy, i don't know connected dishwasher to a genuine signal and say, you know what? this not only has legs for the company, but it will cause problems for companies a, b, and c as well. so, it is really important at shows like ces to stand back and say, this has importance to an individual company, but as far as affecting the stock and that good stuff, it will also cause damage to other people. i kind of look at both of those. it is not enough to have the novelty. it has to be novelty with consequences for somebody else. >> right now we are showing one of my favorite ridiculous connected devices which is the connected refrigerator. i see this year after year after year. someone comes out with a refrigerator with a screen that is connected that no one ever figures out how to use. but because of low power bluetooth and devices like some of the nest devices, the drop

cam and so far acting as hubs and their ability to be controlled by android or the iphone, is this year different for connected devices in the internet of things? paul, to you? >> i am hugely optimistic about what is happening. you have to think about the feverish pace of products and the perspective of wearables right now. i was looking -- the sort of idea of the bluetooth wearable thermometer. helicopter pilots and people who want to max out can monitor their kids's temperature during the night. but the notion this is possible and you can manager with respect to power consumption is really important.

wearables will quickly become the fabric of everything around you and that is when the stuff really becomes interesting. not that you have a great big gadget hanging off your wrist. today we saw a ring wearable which looked like something that might eventually turn into iron man or something. the idea is important. it probably augurs well for apple and the new watch product. >> i think if you buy shares of tesla you may turn into iron man. what makes it different this year? what makes it believable this year? what has been so unbelievable in years past. >> the topic of wearables is a good one.

we see a bunch of low-cost pretty high quality sensors bringing in a huge amount of information. one of the interesting things i think we will see happen this year from this is this idea about big data about you. you can have big data about yourself because of all of the sensor data between your health and fitness wearables, the thermometer, all of these wearables, the environmental information. you combine that with all the tracking online. all of a sudden you have this big potential. scary on one hand. in opportunity on another. then there is the sensors in the quality of the sensors out there. >> paul, you mentioned the damage done. when i went to this as a money manager -- i will give you an example. the firm i went to work for was

a short on shares of what i think is a great company. they had a product that i thought might be undermined by a product coming out of asia. and sure enough, there were dozens of competitors with similar technologies. is that something useful to look for, where other companies might feel pain? >> you know, i really agree. from the standpoint of an investor, that is really where to look. who knows what will help in terms of which products will succeed? garmin's is everyone's great white whale or favorite whipping boy, take your pick. specifically, garmin announced three new wearable products, various watch products that are really interesting, but in some ways they are of what happened in the early days of the pc industry. they are stand alone. they are proprietary devices.

they're really fascinating devices. but then you look at android and ios with respect to using mobile platforms that are emerging. the days of proprietary wearables will pass pretty quickly. so, maybe this will finally be the year that garmin gets harpooned. >> having that against them, i'm not going to take that bet. let me ask you - how do you pick the losers when you go see these new products? >> the losers are the ones who will try to do things that are too outlandish right now. right now, i think you will see some crazy promises, crazy things out there, and to me, those are big red flags. people who think they're going to change the world are medically.

i think we will have to see incremental changes for these things to work. and do not forget when we talk about wearables. we have the apple watch hanging up in the distance. apple brings credibility to a lot of markets. when apple enters the market with their watch, that will give credibility to the category and in general get more people looking at it, considering it. >> the idea generation, it will be an interesting show this year. are you going? >> i am going. >> bob o'donnell, paul kedrosky always appreciate your time. where aereo left off -- dish's new streaming service. we are online on apple tv and amazon fire tv. ♪

>> this is "bloomberg west." i'm cory johnson. dish network plans to unveil the first streaming service from a cable or satellite company.

hbo is also announcing off during an over-the-top service later this year. joining me, paul sweeney in new york. it would appear that the dam has finally broken. the major programmer is saying screw the cable companies. we are going directly to consumers and giving them what we want. >> yet, and they have thrown down the gauntlet here. this is a key issue for the whole media ecosystem. the big thing about these distributing cable companies satellite companies, media companies like disney. they have all lived and died the last 30, 40 years with the concept of the bundle where consumers can pay 80 dollars when hundred dollars a month for a whole suite of channels, and now the question -- is that bundle at risk? is there a market of consumers who want to pay a much lower price point for fewer channels?

dish is putting out a channel lineup that interestingly does include espn and we will see the market a man. >> let's talk about that. espn and hbo are the two single properties that people pay up for and get stuck with a package or whatever. particularly with espn -- i watched a lot of espn this weekend. there was some spectacular football and also the stuart scott coverage. my heart goes out to his family. it just really spoke to how powerful that franchise is for disney, but how espn really

drives the cable business. >> if you talk to the disney folks, when they think about espn, they think about it as a brand, not necessarily a cable channel. multiple channels of espn. online digital properties. they treat espn as they would their other brands, whether it is a disney character. espn is one of the key drivers probably for any package that is going to be brought over the internet. it is going to have to have some major sports component. we do know that consumers continue to watch sports. those ratings continue to be outstanding. the college football semifinals games, the two highest-rated cable shows ever. really be brisk here, if you were a big media company, how much programming do a put out direct over the internet ala hbo, versus how much do i try to keep in the bundle? >> it is pretty clear that is where the customers want to be. but the rapid move toward mobile, people watching tablets, both screens, it is clear that people want to have access to content wherever they are.

>> they absolutely have to be there. again, the fine line that these media companies walked -- and that includes the cable distributors -- how they protect to their existing ecosystem where they are getting $80 to $100 a month, while at the same time realizing a big chunk of their subscriber base is getting content outside of the package online, whether it is net licks or hbo -- netflix or hbo something like that. they have to make sure that they do not suffer the same fate as the music industry 15 years ago. the media companies have to maintain pricing control of their content, to make sure that they get paid every step of the

way, whether it is inside or outside of the bundle. we have seen a lot of baby steps. dish, late last year, it hbo going direct to the consumer. that is one of the things we have highlighted for 2015. how well will be big media companies manage that transition from the mandated cable bundle to a direct consumer approach? >> bloomberg television director of market research, paul sweeney, think you very much. "bloomberg west" will be right back. ♪

>> i'm cory johnson and this is

"bloomberg west." we are constantly hearing about big new things and technology and here is one. it is always a way by about 20 years. wearable technology. a company in rochester, new york has been trying to mine this for years, but has just gotten a big boost from intel. paul travers joins me via skype. your company has been going after this for a long time, and all of a sudden, oculus happens and they invest in your company. why? >> i can't speak to all of intel's reasons for investing in vuzix. one of the holy grails of these spaces wearable display systems. there are some and he things you can do that you just cannot do with any other form of wearable technology. at the problem is, most people do not want to look like a nerd when they are wearing their systems.

oculus is a prime example. google glass also has challenges. you look sort of odd. ultimately these things will look just like a pair of glasses. maybe that is one of the reasons they wanted to invest in vuzix that's because where we are going. by the end of this year, we will have a device that looks like conventional sunglasses. >> from the financials, it looks like you are spinning plates really just staying in existence long enough to get to that spot. talk about the decision to sell your tactical defense unit which seems to be a firm business for you.

i wonder if that is a lesson for something that looks at work that is too far away are taking too long? >> actually our defense business is a $13 million on an annual basis, 50%, 60% up and down between consumer and defense. the technology that we used was good for the defense space, but it was not the technology that was needed in the consumer space and then the industrial space. this is a business that up until just recently was very difficult to fund. typically companies like oculus have changed that paradigm. the market itself is changing in a big way. so, yeah, we sold the defense division because we knew this change is coming. >> tell us something that people could not do before that they will be able to do that we can see from your financial?

>> vuzix is making the smart glasses, and you can maybe see a pair of them here. in the industry, they do a great job. there is a list of companies now that are trying to employ this technology, field service applications, stuff like that. you could see that not everybody would wear this walking down the street. that said, the dollars from intel are being used to help move this technology to the market. >> all right, vuzix ceo paul travers. we will be right back. ♪ >> time now for bloomberg television on the markets. i'm olivia sterns. traders have gone back to work with the full first week of trading after the holidays. we saw energy stocks took the

biggest hit. oil fell below $50 a barrel for the first time in five and a half years. also on concerns of greece leaving the euro. ♪

blogs you are watching bloomberg west, where we focus on technology and the future. a new wearable device, priced that are we don't know can apple pull off another home run? this is a big deal, the apple

watch. obviously, it will lead to a lots of discussion in las vegas this week. how do you size this market? you ask where thinking of it right now as a smart watch market. a smaller initial market. we have been serving a lot of people. we surveyed a lot of it in the u.s. and ask them about their interest in buying an apple watch. a of people did not know what the watch looked like. interest was surprisingly low. it runs about 10% of iphone owners say they are going to buy a watch. clearly, it will take more powerful apps to really drive it the value for consumers. >> so, specifically, you do as much work as anyone i know.

trying to figure out what trends too tired to. fitbit, heart rate monitors. do you take that to him and multiply it? what sort of logic to you apply to that growth rate? x the general wearables market is a good starting point. it is a good starting point. it shows that this is not the phone market. it is not a one billion units a year market. april the apple watch is that it will go beyond fitness. it will be a platform. we look at what kind of fitbit units are out there. this will be in expanded size. a subsection of what the current

iphone that uses are. the boot times this, somewhere between 10 million and 20 million units in the first year. come to about two hundred million iphones. much smaller. down the road, this could be a 50 million business. this is not going to be a 300 million business for apple. x ever? -- >> ever? what is the thing that you will say, oh my god, this is taking off? >> well, some people use their phone as a watch. if you think about the watch the pocket watch was basically

eliminated when the wristwatch came out. there is a lot of utility from having something readily available on your list. the value is going to come from things that can be accessed. rocks. going to check into your hotel you don't even have to talk to anybody, you grew up to your room and wait for your watch. eventually, assuming the battery holds up, you can do that with your car. with your home. everyday things that are annoying that you take out of your pocket. keys. phone. and that on your wrist is going to be some of the initial big value. longer-term, health and wellness will be something bigger. it is up to develop post to build those applications. >> we talked about the entry-level model. this is going to be a big

investment. the additions. the cost of the editions. how much will be apple edition watch cost? >> we think it can be well above $1000. my guess would be 1100 or 1200 dollars. the average seven apple watch will be somewhere around $500 and $550. >> i look at this and wonder if apple is looking at a very different way to market products. places like burberry and other places. various price points and limited ones. different from steve jobs at version of one device for everyone. >> it is definitely personalized. different fans can dramatically change the look of the watch. they have done more of this

personalization than with any other product. i agree with that. they want to the basic platform and the substance of the technology to be mainstream to be consistent across the board. the ability to summarize and is one of the key differences. >> the binding of that personalization is going to be a great story to cover this year. thank you very much. apple rival xiaomi has become one of the biggest smartphone makers. now we note just how large. details on that next. ♪

-- larry jones and you is

bloomberg west. sales doubled last year to -- >> i am cory johnson into this is bloomberg west. bloomberg intelligence senior analyst joins us from new york. i think a lot of people including investors, think this will go across the world with ease. >> the price points of these phones are a lot lower than many smartphones. the emerging markets, russia and india. >> what is it about those markets? everyone likes a bargain. >> absolutely, but a bargain at

a much higher quality as well. one/four of the price is hard to beat. i had a talk about this with a friend when they were selling a xiaomi product sought within six seconds or seven seconds. if you look at that level of excitement, one of the other thing xiaomi does is limit the supply of whatever they are selling. whether it is a phone that when i am on a tablet. that makes it a big deal as well. >> i wonder if they have copyright problems that will make it more difficult to come into the united states. there might get the pants sued off them if they try to sell in the u.s.. or anywhere in the western world. >> maybe they are limited to

places where the copyright protection does not extend. >> not that it doesn't extend but is not as strict as it is in the u.s. and europe. the growth market and emerging markets. if you think about it i would say, how many people in the u.s. need to buy another smartphone and don't already have one? >> the investors in the first round the first russian investor in technology. listen to what he had to say in terms of talking about did that to investment. he said he was attracted by the size of the opportunity. i don't think there is a company that has reached $1 billion in revenue as fast as xiaomi. but, i would add that it is

probably on profitable growth into the company has made a point of saying we're going to offer a top experience because our pets are so small. is that the future of the company in a little bit more risk than it would be otherwise? >> they are trying to make sure they have the biggest mind share possible. they might offer some digital services. gaming. internet videos. once they have a huge customer base they have established the phone as a delivery device not a profit center. >> so they are profiting from the goods and services that come across the phone? >> i would say so. >> so we should be looking for other investments from xiaomi that might not pay

phone-related, but otherwise related. >> yes. they have in the internet tv provider in china. it is possible they might look into gaming. they also have stuff that can be delivered through this particular platform once you have a sizable user is. >> the carriers might have something else to say about that as well. thank you, as always. speaking about tv legends, stuart scott has died of cancer at the age of 49. he was a fixture on the program. monday night countdown. he was known for his catchphrases. such as, you better get some better because he is on a roll. he helped turn it disney's espn into a cable house, so profound was his impact on the sports world.

president obama released a statement. lebron james, magic johnson posted online tributes to that legend who has gone all too soon. bloomberg west will be right back. ♪

>> this is bloomberg west and i

am cory johnson. announcing google for audio. it works like google's comcast for tv. submissively at the press of a button. google is working with samsung and lv to develop a product for spring. sales of songs plummeted in 2014, but final is making a comeback. vinyl records state 9.2 million in sales for 2014. 50% higher they are and that the year before. and 164 billion songs online. data download of songs declined

by 12%. permit downloads down 9%. helping us figure this out is mark mulligan senior director of media research at a firm that focuses on music trends. so streaming music is growing just as fast or a little bit faster than vinyl? so is this back to the future? what is going on here? >> not quite to the future. vinyl sales, great growth. but still a niche market. capturing the sales of the vinyl aficionados, the hipsters. most do not even have a turntable. they are buying this as a way of expressing a fandom of a particular artist. the bigger story is the declining downloads. what is happening is exactly

what happened a decade ago when the itunes music store was just kicking into gear. it the buying cds. stop buying cds and started buying downloads. we're now seeing a similar position to downloads getting into subscriptions instead. >> the most important and powerful in the world of music was apple music and itunes. steve jobs famously said that people want to own their music. is this that he is wrong? ask you here is not wrong. it is just that but ownership means is changing. ownership does not mean having a physical copy of something residing on your shelf. even having a file sitting on your hard drive. ownership can mean having

permanent access to your playlist. ownership can mean being always able to get to the music you love at the scribe of a finger. steve jobs is absolutely making his preference point at a time when ownership did mean having a land holdings sometimes. so strictly speaking, he is wrong, but the language of today, actually without even meaning to, he got it right. >> the access to something on a net basis is actually fleeting. there are recordings that i love on spotify that have disappeared. i presume they have lost the rights to those. do the it's too certain to ask start to become a more permanent item? and will the experience of users can those rights start to hurt the experience overall?

>> these are the teething pains of streaming. ac/dc, led zeppelin, the beatles. >> where is ac/dc on spotify exactly? >> ac/dc only gone on to specify a few years ago. they are pretty conservative. these sort of artists who made their money when life is really simple, you sold at little shiny discs and people came to concerts and that was it. nowadays, it is far more complex. when you look at the way someone like taylor's best, the way these guys make their money, make their careers, they have to be thinking about six or seven or eight sources of income simultaneously. without trying to be too critical of those old guys

change can be hard. that is exactly what is happening with streaming. event a few years. more and more artists will finally realize streaming is below the future lives. whether they wanted to or not. consumer behavior cannot be ignored, otherwise people will just go to illegal methods. >> i just wonder if we will see of some of those really big holdouts might the a cd see and others. -- ac/dc. this frank sinatra, and at least their camps got pretty big settlements. we will see how it shakes out. thank you very much. the bloomberg best bite only focus on one number that means a lot.

-- byte. 674. -- >> 74. mark zuckerberg's resolution is that he will be writing a book every month. is taking up. >> what is "the end of our" at about? >> it has to do with our. connecting the world, giving people more power. zuckerberg said he had no idea this happen. he is overjoyed. >> and zuckerberg is going to

consume these books at what? >> one every two weeks. >> what are you reading? >> right now i am reading marissa mayer's. >> i have been reading reviews of books on instagram. maybe i will get back to writing book reviews on instagram. short form interviews on longform media. is he reading them digitally? he boasts of writing his shareholder letter on his phone. >> he does everything on his phone. facebook messenger. >> i presume he at least say he has even if he does not. you can get the latest headlines at any time on your phone or bloomberg.com or bloomberg radio. you can see more of bloomberg west tomorrow. ♪

>> the following is a pay program. the opinions expressed do not reflect those of bloomberg lp its affiliates, or its employees. >> the following is a paid advertisement from the new face of time life, star vista entertainment. >> here's johnny! >> from the moment he stepped on stage to the day he said goodbye -- the king of late night was johnny carson. >> he went right into the homes acro