>> live from pier 3 in san francisco, welcome to "bloomberg west." we have a check of the top headlines. the snow is intensifying in new york city and surrounding areas. thousands of flights, broadway shows, sporting events,schools all canceled. >> the mta and port authority will be closing the facilities at 11 p.m. if you have to use those facilities, you should plan to use the facilities and get wherever you're going by 11:00

p.m. because that will be a hard stop time. we are also restricting travel on all roads. >> the storm is expected to dump two feet of snow and -- in new york's central park in three parts -- three feet and parts of new england. uber says it will limit price surges to only 280% of their normal rate. they reach an agreement and were exploding events like hurricane sandy in the 2013 storm. they will be donating profits to the american red cross. at&t scoops a bit second mexican wireless divider in three months as it moves forward in mexican expansion. the -- they have 3 million

subscribers on top of 9.2 million subscribers they acquired. this is operated by coinbase. it is licensed for trading in 22 states. it has raised $106 million in venture funding. now to the lead. microsoft reporting second-quarter earnings. they showed a large differential in evolving business. maybe some deeper headway in areas like hardware in the cloud. revenues were up 8% but profits falling 11% as they were hit with job cuts and the integrated

-- integration of new kia' -- nokia. the surface tablet is a $1.1 billion business. licenses fell. what is your big take away not so much for the estimate of the trading of the stock and for how the business materially changed? >> i think there is this continuing -- continued transition to the cloud and mobile. now you're starting to see some of the transition on the consumer. it is heavily tied to the pc environment and we are seeing that riverside -- renaissance of growth starting to wane.

microsoft continues to be a bright star which is standing out relative to these other traditional i.t. companies. >> a bright star from the gloomy skies. i wonder much should this growth was baked in, [inaudible] >> part of this is [inaudible] the seeds of growth were there. the product cycle was underway. part of the reason the stock has done so well is you started to see the product transition started to see the move to the clouds. windows 10 really is the bridge for them to be successful as they move to the cloud on the

consumer as well as the enterprise. >> would you make of the surface, is a real, doesn't matter now? i hate the journals and that starts with i have never seen it, it must not exist but every time i bring up the surface, that is what my colleagues say. >> the last surface has done a better job in terms of a quasi-laptop replacement. grand awareness has been strong with the nfl and the russell wilson ad. it is an uphill battle. they continue to struggle on tablets and struggle and mobile. they need to up their share they need to find areas of success because windows 10, you can talk about the graphics but it can's -- it comes down to the consumers'success.

they have to change the perception and the word folio from the consumer perceptive. no one will argue where they are in the enterprise. we saw the disappointment of windows 8. they could achieve a bit of a transition as this commercial revenue gets pushed out. >> stay with us. i want to bring in an analyst. what do think was the best thing about this quarter for microsoft? >> the -- definitely in areas like cloud. cloud going up 114% and consumer cloud also growing and perhaps surface and lumia sales.' all the relative high pointsse

were -- all of these were relative high points. >> what was the worst thing? >> windows oem revenue was dropping. it is a concerning sighn. -- sign. windows 10 is critical ended success is critical but people still want to see performance at a windows. >> i also noticed that the sales to existing cloud clients look like it was down. >> part of it is they were a victim of their own success. cloud is still a piece of overall revenue. that is -- in order for that to get taken to the next level, a

lot of it is dependent on the windows 10 upgrade cycle and dependent on what we will see out of pc's in terms of this headwind that is forming and currency and some of the softness they talked about with china and japan in the conference call. they will be going through the transition but when it comes through, it will be the microsoft one that with windows 10, much more cloud focused much less focused on the pc. part of that also is they need to be aggressive on m&a. they have more cash than some countries and they need to start to utilize that. they talked about the buyback program. [indiscernible] on cyber security as well as cloud. >> daniel ives and jp thanks,

we appreciate it. china may have overtaken the u.s. when it comes to iphone sales but how important is this country to the overall apple? just ahead of apple's big earnings report when "bloomberg west" continues. ♪

>> this is "bloomberg west." i am cory johnson. snow is falling as fast as forages now are, prompting a state of emergency declaration in new jersey all the way up to massachusetts. we have an update. how does it look? >> it has been snowing here much of the day. it has lit up a little bit. we have a bit of accumulation. behind me in central part -- park, it there is four inches of

accumulation. we are expecting of the blizzard to hit hardest at 10 a.m. tonight and continue until 10 a.m. tomorrow morning with some areas expecting two to three inches of said -- snow to fall every hour. >> i will give you a dollar if you throw that snowball at the bus behind you. that was made to happen. >> my aim is not that good. i would embarrass myself. >> is a good packing snow right now are not yet? -- is it good packing snow right now, or not yet? >> it is -- cold out here. it is packing pretty good. i do not have enough pile that here because it has frozen so well. we have people having a lot of fun and kids out with their sleds and holding snowmen. trying to make the most of it before they close down central park.

tonight they are closing down all streets here to traffic. no taxis, no ubers, nothing except emergency vehicles, salt trucks, and snowplows. >> thank you. stay warm. could apple's number one market be china? china may have overtaken the u.s. and iphone sales in the quarter that just ended. it was the first quarter with iphone 6 and iphone 6 plus sales. china is becoming increasingly important for apple. we are a year into the partnership with china mobile. apple moved a new store drying huge crowds and prompting a tweet from co to tim cook.

-- ceo tim cook. i spoke with an analyst at creative strategies and bob o'donnell. >> a couple of things about apple with the iphone in china. the chinese market has been very focused on large phones. it was the iphone 6 and 6 plus that triggered this interest. the chinese market is not interested in smaller phones. until apple had an offering, that was one of the issues. in a lot of the emerging upper middle and upper class, they are incredibly brand conscious and apple is a luxury brand. you get the combination of this brand affinity and a phone in the size they are looking for, it makes sense that they are a huge hit. it shows you how the company is

moving and adjusting their business worldwide area and >> there were thoughts of this being launched with china in mind. i like the exercise. the notion of the chinese characters acquire that in the phone is attractive has that -- that phone is attractive. has that phone sold worldwide? >> we use a 6 plus and it has done surprisingly well. there were questions early on, did they make enough or too many 6's. 6 plus has done well in lots of places. >> there is -- it is so much more expensive. we have seen the rise of the largest smart phone carrier in

china. >> it is up near the top. you have samsung and lenovo. lenovo is introducing the motorola brand back into china. lenovo just closed motorola. you have an interesting concentration of things. china is enormous and there is an a numerous amount of people in different parts of the country that act very differently. you cannot think of china as one homogenous rue. the coastal cities tend to have much more money and they act more like u.s. consumers. inland, it is a different story with xioaomi being a domestic brand. those things also play an impact. >> if we found out that apple was number one in china, is that

good news and if we found out it was not, is that bad news for apple? >> i do not expect them to break out phone sales by region. that is where all of us during the estimating commend to look at. the key is it is increasing. it will be close. just from the data we saw in retail and network analytics. so the 6 and 6 plus are unprecedented. that goes back to the point of them wanting bigger devices are you -- bigger devices. what this talks to is the upside for china. if you look at the u.s. market, we are reaching saturation in the u.s. with penetration and individual ownership going over 7% but it is less than 50% in

china. the upside is strong and that is where when you look at what apple is doing their -- there, the market is so large and there is so much market share to be distributed but the upside remains to be the largest in that market. whether or not it was close which we think it was or it was number one it will be and apple being extremely committed to growing their share in that region. it is all positive signs for them. >> that was ben bajarin, analyst, creative strategies. new telco business models may emerge. we will talk about the competition shaking up the cellular market next. you can always watch us on bloomberg tv apple tv, and on amazon fire tv. ♪

>> iamb cory johnson, this is "bloomberg west create -- bloomberg west"." ." freewheel will be $10 a month. both of these wi-fi only phones have been seen as a threat on the horizon. >> we are getting closer to a national wi-fi network. more people are using wi-fi and there was a report that said in 2013, 90% of the data was over wi-fi even though we have other plans through horizon -- verizon and at&t. we are using wi-fi more because it seems more reliable and a lot of spots. >> the desire to send more data is a great desire of the phone

company. is this a chance for the number three and number four carriers to get ahead? >> what we're seeing right now is a shift to mobile. what cablevision has done is they are trying to get in on that turf. they're trying to find a way to the mobile device is of that growing data stream. the cable industry has already won the broadband war. you cannot get broadband everywhere. >> and kind of only on cable. they do on that business and we are seeing attempts at consolidation where almost half the people in america will get their high-speed internet from one single company. >> they already have regional monopolies. you do not seek cable companies competing in different areas. every area has a carved out region. they are competing with at&t verizon, etc.

some are losing because they do not offer content. you can pay time warner cable and get your television channels . >> could this wi-fi only really replace -- that extra 10% is where you want that phone to work as well. >> if you are online all the time it will not work out. >> got forbid you are somewhere in the car. >> they want to target places with what they call wi-fi rich environments. where it is easy to be connected. >> they are getting more people online so they can serve more apps. >> they have so many different pieces connected to data and information, whether it is android or the search engine that wants to see more advertising. >> thank you. the space race for private

travel to the moon. -- to the moon is heating up. xprize's president is here with details next. ♪

>> you are watching "bloomberg west." i am cory johnson. spacex settled a lawsuit over military satellite launches. the company called the bidding process unfair after the contracts were awarded to a joint venture between boeing and lockheed martin even though he had yet to launch a ship at all when he sued. spacex will not be getting the contracts. the airport city will explore bidding opportunities for lunch services and will work with spacex to make sure he gets certified for future gigs. lunar x prize is part of a

campaign to revive space exploration. the organization announced five team winners who will take home more than 5 million bucks. the prices were in three areas imaging, mobility, and landing systems. how far are we from a private mission to the moon? very intriguing this x prize thing. it helped launch the spaceship one deal but interesting you're going incremental with the prizes to get a private spacecraft to the mine. >> we took a look at what it would take to promote us as a spacefaring civilization. there are things you have to do to get out there. one of the things is make sure that spacex oration is viable. it is not viable if it is solely financed by the taxpayer and all

prizes have an element of private enterprise. you cannot use government funds or government funds principally to do the work. so the xprize was launched to lower the cost of interplanetary expiration and interest young people in science and technology subjects and careers in to literally extend the commercial sphere to the moon which, at this point stops at geosynchronous orbit around earth where satellites work. >> where do they play in this because there working against each other. are they competing for as well as funding it? >> google is not a competitor. they are the title sponsor of the prize. they are making it possible. virgin galactic is an out growth of our first x prize which was the x prize for suborbital

spaceflight. it is the beginning of an effort, not the end and we look -- >> it looked like it was a one-off. it landed and now it will be a business. >> we look to leave industries that start, nascent industries or industries that have evolved as one of the results of xprize. without doing that all you have is a stunt. we are looking for more than stunt demonstrations. >> imaging, mobility, and landing systems. what are these prizes today and what are the innovations? >> these are three important faces of the lunar mission. you have to get there so you have to be able to land softly. >> landing as hard. getting there is probably harder. >> the getting there is mostly

about capital and not so much about technical innovation. we have the rockets but it is part of the darwinian exercise to capitalize your adventure. once you are in the area you have to safely get to the surface. that is the landing. you have to be able to get from place to place. and finally -- >> i thought that was the landing. then you have imaging. >> you want to be able to send back video pictures and data in a way that everyone can taken. as part of the google lunar xprize you have to send back a month cast of images and panoramic and other views that prove they can do strong imaging from the surface of the non-. >> tell me about one of the innovations you are awarding. >> one of them is for mobility. most people think of spacecraft that go to the surface of

another body another planet as something that rolls on wheels but it is not the only way. people have spacecraft that hop from place to place. spacecraft that literally fly from one spot to the next and not just roll on wheels or tread. we look to award teams that have wrought their mobility systems -- brought their mobility systems along far enough to be recognized. an important part of these prizes is we are looking to have the reward match the risk curve. if you wait till the final prize and you are actually on the moon, the reward curve is a huge hockey stick that is all at the end and we are looking to and sent -- omvincent these teams.

> it seems like it really challenges the mind. thank you very much. how can artificial intelligence help dealmaking in silicon valley? why tech giants are relying on artificial intelligence to make analysis about private companies. you can watch us on bloomberg.com streaming, on amazon fire tv, and apple tv. ♪

>> i am cory johnson and this is "bloomberg west turco -- "bloomberg west." how is ai being used to quantify the new world order? your business is very

interesting. i think of it as dun & bradstreet web powered by computers. >> the modern version. >> is that fair? >> that is fair to say. >> you have bots that scrape the world of information for what? >> private companies are getting started at such a rapid pace, the way that dun & bradstreet use to go about this [indiscernible] >> there are over one billion companies which means they are spending some of that money and hiring people and getting big. they certainly are hiring a lot of people and raising rents and those are potential market opportunities. i do not care of your pitney bowes or xerox. you could be calling these people for business. >> especially for the large

conglomerates in the technology space. you look at samsung looking -- sitting on $60 billion in cash and surrounded by particles that are rising so quickly they need to be increasingly inquisitive and partner with and acquire companies faster. >> this shows us the pace of innovation. it is hard for people to understand what goes on there but if you go all the way back 150 years ago and look at american express becoming a big business, they had the market to themselves for long time. >> it took companies long time to get access to big markets. >> in essentially measures unemployment. how many people they hire. >> we triangulate how similar businesses look to businesses that we determined to be successful. >> if you look at the timeline

american express is a world to excel for -- to itself for 150 years. visa has the world to itself or five years and paypal you have this rapid innovation with lots of hiring and lots of venture capital. >> we have seen as many human companies be founded in the last five years as in the entire history of payments before that. >> if you look five years ago at all the payment companies, that got started as long as 150 years ago, there have been more founded in five years than the previous 150? >> absolutely. they are accessing markets. they have reached 2 million users or 2.1 million wallets. they were founded in 2012. can you imagine visa or mastercard getting that kind of distribution in two years? >> what is the underlying trend

that is letting this happen what let's accompany go from zero to 6000 or whatever the equivalent miles per hour would be. why's that happening now? >> that depends on the industry you are in. bottom line is it is easier to reach consumers at great scale very quickly. if that makes it harder to identify these companies that are up-and-coming early enough that you as a large conglomerate can interact with that company. >> in the jack in the been stop world there are always been stewed the attention to. -- beans to pay attention. >> we are using our algorithms to keep track of a company's online footprint.

they double their headcount and bring on an impressive ward member. these are nuggets of information you will find in a press release or in linkedin profile changes here. these of the kinds of things that you and i as analysts manual -- who monitor these things. you can and for that kind of signal. >> it does show us there is something different happening. there is something different this time around. thank you. we will talk about why the ads seen on the super bowl are not the most important in the battle. ♪ [inaudible] [applause]

>> i am cory johnson and this is "bloomberg west." a 32nd spot on the super bowl

costs $4.5 million. 24.9 million tweets were sent during the big game last year. what makes a super bowl ad successful on social media? such an interesting thing. super bowl ads have been the big deal but maybe that has changed. >> we are talking about super bowl ads. this is the linchpin to what makes everyone talk. we watch them and talk about them on social media. >> right now there is tailgating going on. for example, carl's jr.. we were going to talk about the

carl's jr. approach. instead we ended up talking about their famous ads in the super bowl and around the super bowl. and this is an amazing story of direct targeting. mrs. happening long before the game. they are already eating played all over the internet. >> the economics of eying the ad itself is not enough. if you are getting the impressions you do not have the kind of scale to afford $4.5 million. you get this tremendous reach and if you are good in innovative, and you know how to play into that, you know how to too late the audience, you can get exponential performance. >> nationwide has this funny spot. they are great advertiser.

they are going with an ad that is recovered. does that lay well in social media? >> it is a question of who your audience is. the fact that we talked about that will probably give it a bit of a lift but things that are titillating that gets the most reach. sometimes it is the wrong reach. groupon pushed out a commercial that pissed off everybody. >> there are others classics. victoria's secret is back again this year. what makes they will have a

great dad. is the ad going to play on social media and in what ways do you have to tailor it to social media but at the same time make it more appropriate for that medium but follow the same message? >> it is the classic water cooler. if it is scary or funny, exposes people, in a way that they do not want to be exposed. it will play well on social media. the trick is how it will work with their actual brand. or they get a mismatch twin the ad in the brand. >> the advantage of the super bowl is the audience is mass and in one place. you have to appeal to one certain group. the audience is dispersed and the costs of creating an ad can be less and you can tailor it to a certain audience. there is no brand i would argue

more connected with the super bowl in the last decade. you might argue pepsi. budweiser, huge advertiser in the super bowl. and budweiser is the name associated with it. does that work online? >> i think it does to the extent you want people to share it. you do not have control over the sharing online. when you push out something you do not know how far it will go. they can broadly be spread around. >> and wiser years ago did talking frogs and it was the kind of thing you talk about. but to do clydesdales does that get talked about, does that get tweeted about? >> people still talk about that little dog in that clydesdale. people talk about that in they get excited about some they

enjoy watching. so many commercials are a dead. if you make a good commercial, people will share it. if you make something funny or strong, people will share it. >> on sunday, we will be watching and also watching the bwest byte. one number that tells us a whole lot. what do you got? >> three. the number of words that netflix won. two for "orange is the new black" and "house of cards." you see the streaming services compete with hbo and showtime and everyone else. >> they are racing the price of everything getting made in hollywood. they use those words to get subscribers to the company whether the amount of viewers

are higher. >> you are able to watch the show for free and you could become a prime subscriber for much lower price. i do not anticipate netflix offering a lot of discounts. on the most recent earnings call they said "house of cards" adsds [indiscernible] >> for them it is all about growth. when you look at the u.s., subscriber growth has slowed bit over the past year or so. it is internationally where they are picking it up. anything that can add to the totals is good for netflix and good for its stock price. >> thank you very much. you can always get the latest headlines on bloomberg.com. we will see you tomorrow with more "lumbered west -- bloomberg

west." ♪