♪ >> from pier 3 in san francisco, welcome to the best of "bloomberg west." where we focus on innovation technology, and the future of business. i'm cory johnson. every week, we bring you the top interviewers and power players in tech and media companies that are reshaping the world. to the lead -- apple does it again. revenues rose to a record $74.6 billion in the first quarter, up 30%. profit up 18 billion.

here is ceo tim cook on the conference call. >> interest in apple products is at an all-time high with half a billion customer visits in the first quarter. demand for iphone has been staggering, shattering our high expectation driven by the unprecedented popularity of iphone 6 and iphone 6 plus. >> staggering is right. as cook mentioned, iphones are flying off the shelves. the company sold 74.5 million in the quarter. maybe the only negative note was a decline in ipad sales. the biggest development is the success apple has seen in china, where sales are up 70% year-over-year, opening another potential growth area. for more, i spoke with piper jaffray's gene munster. i asked about the whopping iphone number. >> i wondered what was the catch, if there was some sort of channel fill in their or some explanation. it could just not be that good of a number. it turns out that it was a clean number, that they did not fill the channel.

even though investor expectations were for high $60 million. that $74 million number was well comfortably above that. anyway you cut it, it was impressive. >> we were on live tv and they were talking to somebody else and i saw a number go by. i was waving frantically to the producers to come to me because that was the number. but there were so many other numbers in this quarter. it seems to me that the margins suggest that it wasn't just big iphone sales, but big iphone sales, that is the iphone 6 plus. >> yet. yeah. they talk about on the call some of the geographic mix, they said overall they sold more iphone 6 than any other ones. it sounds like in the emerging markets, the 6 plus has been the big winner. that has been suspected. they haven't had an answer to the larger screens in the market. that, as you mentioned, has a

nice impact on growth margins. there growth martin margin guidance for march was better than expected and would have been even better if not for the fx impact. anyway you look at it, it looks optimistic. >> 46% unit growth on a year-over-year basis on the biggest quarter they ever had a year ago. it is interesting also that the numbers were so strong and the market reacted to it as if it was going to continue to happen. is this going to continue to happen with the iphone? >> they talk about that, the sustainability. that is the core question for investors. at some point, they will have to start comping these incredible numbers. investors think six month ahead, so we are already working through that question. some of the comments from tim cook were that first-time buyers were at an all-time high. that suggest they are gaining share. they have been tracking the switch rate from android to iphone for three years.

it is the fastest turnover market share gain from android which plays into the theme which is the product cycle will have more legs than investors expect. and then you have the benefit of the watch, whatever the expectations are for that, that was not in the march guidance. you put all these together there is still the big elephant in the room, which is what do you do with the big comps for next year? but overall, everything for march look too good. >> average selling price for the iphone is $687. if that kind of stays somewhere in there -- but the price of the components could come down in the margins could get better. >> they could. without the impact of the fx they should be inching about 40%. they did hit a peek margin of 47% a year ago. that was in the march quarter similar time frame. that is obviously unrealistic. but it is safe for investors to

think about margins inching higher in march and in june. if you are a believer that stocks follow margins, that would suggest that shares of apple will move higher in the next six months. >> stocks follow margins interesting. ipad, however, kind of disappointing. they introduced an upgrade. it was the lackluster announcement of this new ipad. maybe the results suggested that maybe they knew it wasn't going to be that big a deal because the ipad sales are down now four quarters in a row. >> it has been a big disappointment. there seems to be this trade-off between some of the ipad and the mac sales. the mac sales where at a decline point, now they grew at 14%, a record mac quarter. i think what you actually see is some people going back to your phone and your computer, your desktop and portable. and the ipad is caught without a home right now. they talked a little bit about this on the call in terms of the business side and ibm having a

positive impact. i know that bloomberg reported about a larger screen ipad which we also believe is in the works in 2015. that may be some hope but i don't think it changes the broader theme which is the ipad is probably a low single-digit grower. >> i have to say this anecdotally -- fred hickey is a high-tech strategist. i look forward to getting on my ipad. i am reading on my new phone now, and i wonder if users are finding that the killer app for the ipad isn't there. once we have big phones and very skinny pcs. >> the ipad unit growth numbers suggest that is exactly what is happening. >> i don't know if it's just the phone, right? we have seen four quarters of this. the phone has only been around for one quarter. could the tablet be a fad? >> i don't think it's going to be a fad. there is clearly a place for it.

i think that there needs to be more applications that are optimized for that form factor to get it to grow again. i think the other piece that plays into this is the replacement rate is a little bit longer than typical phones. i think having -- i think it hasn't grow -- it hasn't normalized the growth yet. i think we will start to normalize it. if single-digit growth is a fad, then it is a fad. if not, then it's a steady grower. it depends on your perspective. >> gene munster of piper jaffray. facebook may be starting to look a little bit like amazon. expenses arising in ceo mark zuckerberg says he has a long-term vision. in the short term, he is doing pretty well. we break down facebook earnings next. ♪

>> this is the best of "bloomberg west." i am cory johnson. facebook is cranking up big time gains, increasingly on mobile. sales in the fourth quarter totaled $3.85 billion, 49% gain. net income and profits up to $696 million, up 34%. the percentage of ad sales for mobile was 69% in the quarter, up from 66% of the prior quarter. facebook's user base keeps growing. the company reporting 1.3 9 billion monthly active users. -- 1.3 9 billion monthly active users. that growth rate of sales and users is slowing. expenses rising big-time. here is ceo mark zuckerberg. >> 2014 was also a year big investments in our future. this year, we made big bets on the next generation of communication and computing platforms by acquiring whatsapp and oculus. we focused on serving our community better across all of our products, raising content on the newsfeed, improving or certain video product, and improving the performance and efficiency of our mobile apps. >> for more, i spoke with former

facebook head of mobile and david kirkpatrick, author of "the facebook effect." >> it is almost boringly predictable. they have beaten 9 or 10 quarters in a row. i thought it was so interesting the way zuckerberg answered a question about how aren't they really putting the wrong emphasis on building up use in the world. he takes such a long-term view. >> i heard that. i love that. it was an amazing moment. i've never heard a ceo say you are not our kind of investor if you do not subscribe to our viewpoint. >> that's basically what he was telling that person who asked the question. if you really want short-term, don't invest with us. we think really long-term and that has paid off. the one thing that most blows me away, less than three years ago, they went public and everybody was saying don't get mobile. this is a big problem.

now they are up to 69% of revenues on mobile. they doubled their mobile ads in the last year in revenue. that is incredible. these guys have turned on a dime. as somebody said today, one of the great analysts, i forget his name, this is a historic thing in business that they achieved this mobile ad result. >> it really is amazing. my old boss used to say you can change a fan belt while the engine is running, but it's not preferable but that's what they have done. it's really amazing, ali. building on your work, of course. >> it is remarkable. when i left facebook, we were not even close to monetizing mobile. it was more of a growth product. very much a growth product, i should say. consistent with marks comments about trying to reach and connect the whole world, we were really reaching users and new users via mobile devices because they were probably the only

device they had access to. so we were very focused on mobile as a product that could reach the ends of the earth and not as focused on monetization. i am blown away by, but not surprised at facebook's ability to blow away their numbers in this category. >> there are 526 million mobile-only users. the percentage of users all in was 37.8% of the users, well over a third of the users now, nearly 38% are only on mobile. >> yeah. >> was there a belief in the early days of mobile at facebook that that is where the world is going or that we should at least dip our toes into these waters and see what happens? >> i think it was a culmination early on of initial inbound demand. people hearing about corporations, other users hearing about facebook growing in the u.s. and wanting exposure to the product. some of it with inbound

initially, but a lot of it was an early recognition on the part of mark and the management team that this was the way users outside the united states, and canada for the most part, would first be acquainted with facebook. it really blew open with the advent of the smartphone, the iphone, and the developer platform. >> what is it that mark said he wrote in the letter in the s1? >> yeah, i heard that. it's remarkable. even if you look at the new ad unit, the video unit they have introduced the phones being , developed today, the network infrastructure that enables you to watch native content in this experience is really remarkable. the fact that mark wrote this letter on the phone was not surprising. the hardware is there. the software is there. and facebook has been there every step of the way. at least over the last couple of years. >> yeah.

david, facebook spent $1.1 billion in r&d in a quarter, 29% of revenues. both those numbers are near records for facebook. the r&d spend is a record. what does this tell you about their plans for the future? >> again, long-term, long-term long-term. virtual reality is the potential next interface for computing that takes a lot of thinking a lot of spending, a lot of experimenting to understand. they bought oculus but that is one of the ton of things they are doing. i think a lot of money is going to internet.org, which is not a nonprofit business. it is the kind of thing that has some quality to it. they have a lot of things we don't hear about, i'm sure. >> david kirkpatrick and ali rosenthal. up next, we head to the campus of the chinese e-commerce giant alibaba. love is in the air. this is an inside look at office romance, alibaba style. ♪

>> welcome back the best of "bloomberg west." i am cory johnson. alibaba is a weird company in about a thousand ways, but one of the most unique way is built around love. mass weddings, office hookups. "bloomberg west" producer candy chang traveled all the way to alibaba headquarters for a look at love alibaba style. >> when you enter alibaba's headquarters in china, it is a lot like walking into any tech campus in silicon valley.

inside, there is a starbucks yoga classes, and three cafeterias serving employees but the perks don't stop there. alibaba takes it one step further, helping employees find love, marriage, and even start families. it may look like any other tech company, but the culture here is unique. employees refer to each other as ali people. and many assume nicknames taken from kung fu novels. >> one of the big influences on jack ma's life was a martial arts novelist. in the early days, people took on nicknames, different characters that were in these novels. >> that fighting spirit has attracted young people to work at alibaba. the average employee is 30 years old with a starting salary of nearly $33,000 a year.

that is more than seven times the average of urban chinese workers. >> alibaba tracks young chinese who are at the top of the field because it is an exciting corporate culture. people feel they can break down barriers and do new, cool, innovative types of things in their work life. >> jack ma is also unlike any tech company founder. >> ♪ can you feel the love tonight ♪ >> from serenading employees to playing matchmaker. a heart-shaped dating board between the gym and the cafeteria is filled with photos and names of employees looking for love. >> jack motte is so revered in the corporate culture that every year, on ali day he actually marries dozens of employees and they have ali babies' photos on the wall of those born to employees. >> those new alibaba families can also get an interest-free loan for a down payment on their

first home, and over the years alibaba has also given birth to a whole new generation of chinese internet companies. former employees have helped start more than 145 new businesses. >> they have attracted people who believe they could do something different, individuals who were dreamers and felt they could change the chinese economy through alibaba. >> this close-knit culture has been a critical part of alibaba's identity and keeping it all in the family has helped the company grow into a global powerhouse with over 24,000 employees. that's more than facebook and yahoo! combined. candy chang, bloomberg, china. >> for more on alibaba, betty liu spoke with alibaba executive vice chairman joe tsai. topic number one, mobile. >> this shift to mobile is

obvious he -- there are two sides to the coin. on the monetization rate, it has been trending up over the last few quarters. the one thing to remember about mobile is we have now 265 million monthly active users that are coming to our mobile apps to buy things. that is a very good results especially in light of the net ads. we believe, as long as you continue to attract users on mobile to buy things, to engage on your platform, at some point, monetization will follow. one thing i would like everyone to remember, in the fourth quarter, alibaba generated $1 billion u.s. in mobile revenue. this is a substantial number. we broke that $1 billion mark. >> joe, on other developments speaking about mobile, yahoo! saw some good mobile ad revenue

growth in their quarter just a day ago. marissa mayer has now spun out her alibaba shares into spinco. would you have any interest in buying all or part of spinco? >> we don't anticipate buying entering into an agreement with yahoo! or spinco. this is their right to do. the board has obviously decided to do the spin off. from our perspective, operating the business day to day, we have a 15% shareholder in us. that is yahoo!. it really doesn't change anything from our perspective. but i would like to just take this opportunity to thank marissa mayer and also jackie reses. they have been great partners

with us over the last couple of years. >> joe, i know you are a great deal maker and you have made lots of deals for alibaba. is yahoo! on your radar at all? can i ask that? >> we are very focused on our business in china. if you look at the deals that we do in terms of investments and m&a activity, over 90% of them are focused on how we grow our user base, how we increase user engagement, and how we expand our categories in china. with the limited activity that we do outside of china, it's very much focused on the cross-border trade, always with one leg in china. that is how to enhance our ability to serve small businesses to sell, chinese businesses to sell to overseas consumers. and more and more so now how to help small businesses from around the world, including the u.s., to sell into chinese consumers.

our platform has 334 million active chinese consumers. >> i mentioned earlier about the fight you have had in recent days -- i'm sure it's not something you wanted to talk about or that you would want to talk about on a day like today -- but the fight you had with the chinese regulators over alleged fraud at alibaba. the fact of the matter is that is one of the risk matters in factors here in buying into your company. what exactly are you doing to combat fraud on your online marketplaces? >> so the underlying issue is an issue that we take very seriously. alibaba runs retail platforms that trade $370 billion a year on a last 12-month basis. that is a lot of transactions. in a way, we very much reflect a very significant part of the

retail economy in china. the issue of fake products counterfeit products, are really a matter for all of the participants in the economy to solve. they involve both online efforts and off-line efforts. let me just say this -- for us there is nothing more important than the trust that consumers have in our platform. that means they should feel comfortable to come to our platform to buy things and trust that our vendors are selling them high-quality goods. so we take a very draconian approach toward counterfeits. we spend a lot of resources and money and people to combat this problem. >> alibaba executive vice chairman joe tsai with "in the loop" anchor betty liu. from redmond washington to the sidelines, we are going to head out onto the field next to show how microsoft surface is

changing the way coaches play. next. ♪

>> you are watching the best of "bloomberg west" where we focus on innovation, technology, and the future of business. i am cory johnson. hey, it's super bowl weekend. patriots back against the defending champions the seattle seahawks. more than deflated balls technology took a center role. i went to seattle ahead of the super bowl a few weeks ago, and i had a chance to talk with russell wilson about how the microsoft surface tablet is helping change the way the team draws plays. check this out. every time russell wilson does this -- >> touchdown! >> the nfl is watching and so is microsoft.

this season, the nfl introduced digital, the custom microsoft surface tablet, on the sidelines. way up here in the catacombs of centurylink field, the clink are where cameras capture the images but the cameras are controlled by the nfl. the league takes the image. the team approves the image instantly, sends it to the server, and then shows up on the sidelines. last year, slow black-and-white printouts on a crummy printer. >> it has not been evolutionary -- it has been revolutionary. >> today, coaches and players are cheering on digital transformation. >> my rookie year, we used paper. with the old system, you only had two pictures. he's going to have him in a flat and cover him man-to-man. with this, you have a lot more views. >> but it's a bureaucratic process negotiated by the league and the techies.

here's how it works -- a guy from nfl films sits in the sidelines in this little booth. he has a computer where he manipulates the images, captures the images, and used to print them on a laser printer and hands them onto the coaches. but now it is all done digitally, sent to the surface where the players and coaches can work their magic on the sidelines. the players come off the field. they have the image taken before the snap and after. they can make the adjustments, compare it to other plays, make whatever notations they want to make, and throw the thing either in there or on the ground for nfl use. but this is only a taste of what the technology could do. the league limits the use of video of different camera angles. microsoft is already planning for more next season. >> the nfl players and coaches are giving us feedback. they want more. they want video. they want to be able to put their playbooks and it. >> when the game is on the line in the fourth quarter and you are playing the san francisco

49ers in an nfc championship you need to know what to do. i think that really helps a lot for me. >> that was russell wilson from the seattle seahawks. up next, more with the super bowl. 70,000 fans heading to the stadium. thousands will be hanging around the phoenix area. can the nfl provide enough bandwidth to deal with those selfies? the nfl's chief information officer and i are going to talk about that next. ♪

>> i'm cory johnson. this is the best of "bloomberg west." you know how to find out if your friends are going to the super bowl? you don't have to find out. they will tell you.

more than 70,000 people are flocking to the game, and this year, it means a lot of selfies. the nfl is taking on the big technological challenge to get the stadium selfie-ready. the nfl is stepping up with a new plan for the league wide requirement for all stadiums. i spoke with the nfl's chief information officer, michelle mckenna-doyle, who joins us from scottsdale, arizona. >> all of our games present a big challenge as far as connectivity goes but nothing quite like the super bowl when you at all the fans along with the amount of media, etc. it definitely creates a challenge for connectivity. >> i want to take you back in time, all the way back to 2008. it was a very different technology world. the iphone had just launched -- a few months old. there was no instagram. the best selling phones were made by nokia. it's a different tech world now. how do you take these stadiums and rewire them? >> you just have to work really hard to make sure they are continuing to reinvest in them.

if you compare it to 2008 and what connectivity we did have, it was primarily focused on downloadability. so if you wanted to do something, you downloaded it. and now you see fans creating their own content and wanting to publish that themselves. that's all about upload speeds. that is what it is all about just making sure that all the clubs, particularly when you are hosting a super bowl, that you have the latest and best connectivity. from a wi-fi -- pervasive throughout the whole bowl for all carriers. >> i remember when mark cuban bought the dallas mavericks and said he would wire all the seats in the new american airlines arena and it sounded crazy. he was leading that. the nba was not doing anything in that regard. talk to me about why the nfl is trying to create some sort of wi-fi standard for its stadiums and what that standard is. >> if you look across our stadiums in the country, they are in varying stages of age or some have recently been open like the 49ers' new stadium that

has the latest and greatest. for investment purposes and planning purposes, we wanted to make sure clubs knew what the standard base expectation would be. that's primarily to make sure our fans get what they want. they want to be connected. we know that the at-home experience has gotten amazing. it's awesome to watch a game at home on your sofa and surfing the net and getting all your data. but we know the best place to watch an nfl game is in an nfl stadium. we want to make sure that fans are not at a disadvantage from a data and connectivity standpoint. we wanted to make sure that all clubs understood there was a minimum requirement and work hard through many partners to help them get to that standard. >> michelle, i have been looking for someone to blame for the crummy 49ers season.

it occurs to me that i can blame you. >> oh, yeah? [laughs] >> here's what i'm thinking. the new stadium is a lovely place. the wi-fi is spectacular. but after halftime, nobody is going back to their seats, and the home field advantage isn't happening. i wonder how you think about putting the butts in the seats instead of having this great experience that does or does not involve the game? >> at the end of the day technology should be about augmenting the game experience and not replacing the game experience. so we not only give standard conductivity guidelines but we also work closely with all the clubs to make sure that to the in-stadium experience creates an awesome game experience for fans and for players that are on the field. and it obviously plays much better on television as well when fans are in their seats cheering and not online or doing something else.

i think a calibration has to happen as you go along and make sure you do keep the game at the center of the attention and not get too carried away by all the cool devices and things you can do. >> i was up at the seahawks centurylink field. those fans are so passionate. >> oh, my gosh. >> and so freaking loud. it was incredible. when you meet with these teams how does this integration happen? you say you work closely with them. what form does that take? are there cio's of every team, as well? >> yeah, there is. each team has a leader of technology and usually a leader of game day presentation, a producer of sorts that produces the live game day experience in the stadium. it's the technology available along with what will happen. using the super bowl as an example, we programmed things that will be happening within the super bowl that is well coordinated with the in-stadium app.

it will be ready for super bowl 49. that coordination has to be tight because it should enhance and augment the game experience. >> that was nfl cio michelle mckenna-doyle. it's a sad day in 'stache land. lyft is losing the fuzzy pink mustache. they are going for a new look. we will sit down with the company's ceo and talk about that next. ♪

>> this is the best of "bloomberg west." i am cory johnson. lyft is getting a new look and new momentum. revenue land rides offered jumped fivefold. capitalizing this momentum, lyft is rolling out its first

national marketing campaign, and they are going for a new look. they are dropping the iconic fuzzy pink mustache. i spoke with lyft ceo and cofounder logan green. >> the pink mustache was an incredible launch device. it is what made the company in a lot of ways. it graced the covers of every newspaper article on it. but last summer, we brought on jesse mcmillin, the creative director at virgin america. he said the mustache has been around for two years now. let's work on what is next. >> they get a little dirty after a while. >> the mustache has had some issues. they did not weather well. >> talk to me about how you look at your business in a world that puts you and uber out there in the lead. there were some other smaller competitors, but how do you define your business against

uber? >> obviously, it's a very competitive space. the way we look at it is there is the bread and butter of fast pickup times. we need enough cars in every city to be able to have a car a few minutes away from you. but it's about the brand and the experience. lyft is focused on having the most welcoming, affordable, and memorable ride. we have developed a system for scaling the lyft community. lyft community is at the core of what makes lyft special, and it is a core of drivers that makes everybody's day a little bit better. we have developed an interesting system for scaling the system across the country, what we call a mentor program. we have top drivers. >> how does that work? >> you hit a button and in 30 seconds you are matched with one of our top drivers who will meet

you in person. they do your first test drive with you and they tell you about the lyft community, what it means to be a lyft driver. how to be great at it. and that is the core of what has allowed this very special community to scale across the country. >> i remember -- i drove a yellow cab in new york. so many stories. i remember in my first moments i took the test the commission had and i paid all the knuckleheads i had to pay and i bribed the dispatch guy to give me a car. then i got behind the wheel and i was like ok, i know how this is supposed to work, but i would get somebody in the car and asked them how do you want to go. i'm sure i gave some crummy rides.

that is not what you mean when you say memorable. what do you mean by memorable, and why is that important? >> we mean having a fantastic experience, whether that is a conversation with the driver -- we have some of the most amazing, phenomenal drivers on the road. we recently did an economic impact study. we found in l.a., 50% of our drivers work in the creative industry. they are artists, photographers, actors, and they use lyft as their primary income source as they pursue their dreams. >> is that a function of l.a. or a goal of your business? >> both. each city is different. in san francisco, the industry is entrepreneurship and people are starting businesses. but they are using lyft to find that business. in any city, you will get some be with an interesting ambition and an interesting life story to tell. if you ask your driver -- why are you driving for lyft? -- you are bound to get an interesting story and what they are saving money to do.

>> you talked about 500% growth last year in top line. is that for onboard new cities or growth in existing cities? i know it is a little bit of both, but your oldest city is san francisco? >> san francisco is two and a half years old. second is l.a. it's two years old now. >> what about the rest of the company? >> it is on track with the rest of the country. >> really? why? >> this is a massive market. the thing that was misunderstood by a lot of folks when we first launched was lyft and uber was going after an $11 million taxi market. we were not created to turn out a better taxi. lyft is out there to compete with personal automobile ownership. we want to create a better way to get to work everyday, a better way to take every trip --

>> a commuting alternative as opposed to the occasional special function or whatever. >> exactly. that's why the growth has just -- we have blown way passed the size of the taxi and limo market. we are taking on every trip. >> what do you think was the purpose of licensing drivers licensing cars when these things first came up? i understand the argument that says this is just meant to keep incumbent players, 13,500 medallions in manhattan or in new york city, i should say. but there was a reason those laws came into play, safety and so on. do you think those have no effect or are not needed anymore? >> no, i think they are incredibly important and we are working with regulators across

the country to create a new wave of regulation. we have done in dozens of jurisdictions already. lyft is a tnc in california. there is a government-prescribed program. we have to do a criminal background check, a dmv record check, a vehicle inspection. those are core ingredients to on boarding a driver in any city. we were doing this and we do this in every city whether there is regulation requiring us to do it or not. >> that was logan green, lyft ceo and cofounder. when will you be able to stream your favorite shows midflight? we will sit down with satellite developer viasat and talk about the future of wi-fi in the skies next on the best of "bloomberg west." ♪

>> this is the best of "bloomberg west." i'm cory johnson. as the government decides

whether to allow in-flight cell service, airlines are racing to bring wi-fi to their fleets. 20 daily flights in each direction already have wireless on those flights. but having wi-fi and having fast wi-fi is an entirely different thing. viasat's ceo mark dankberg and i talk about this space. >> there is a lot of confusion about what makes wi-fi good. it's not just by going by satellite, but what kind of satellite. we talked about this before. we launched a satellite a little over three years ago that had more bandwidth than all of the rest of the satellites over the u.s. combined at the time, and it's all that bandwidth that -- it's all that bandwidth that makes it so fast. >> i was talking to one of your former investors earlier today

and it was described as the most powerful satellite ever launched. is that fair? >> that's right. only do is count the amount of bandwidth. what makes internet access slow is its congestion, too many people trying to use the same amount of bandwidth and interfering with each other. what you have to do is measure the total amount of bandwidth that you get, and that is the design criteria that we did with viasat-1. and the next will make it more capable than it is now. >> and where is the coverage went to be? >> we just covered the continental u.s. with viasat-2, we go from the tip of south america all the way to europe. jetblue has been our launch customer on the in-flight wi-fi. and the caribbean is a big market for them. one thing we wanted to do was cover their markets in the caribbean and cover the atlantic routes to get over to europe to hook up with our partners in europe. we can provide coverage for

viasat-2 for, say, flights from mexico city to dubai with that same quality of service. >> what is it about the ability to send all this wi-fi? it's not just more but the way you do it. it is the bandwidth you use, right? >> the first one had about 41 gigabits of capacity. if you look at the conventional satellites people are using, they literally have 1% of that amount of bandwidth. so 1/100th of the bandwidth. so that means people are just competing to get access to it. so all that bandwidth that we have is what makes it fast and responsive and also allows you to do streaming. for the first time, people can do netflix or download videos, they will be able to watch live sports. >> there's no reason to get off the plane. you can just stay up there. [laughter] suddenly, there are a lot of companies, a handful of companies, spacex and google facebook, all talking about the way to get wi-fi to lots of people. you are competing against a bunch of companies that do not

care how much the business costs. >> right. >> what, are you crazy? >> transmission conductivity is an essential business. it's one of the three legs of information. you think of processing, storage, and transmission. transmission requires facility. you have to have things that are cost-effective. what we are doing is we tried to make the most cost-effective satellite and we think that is the path we are on. these otherwise, they are interesting technology. i don't think they will be as cost-effective as we can be in that timeframe. >> why not? why can't facebook solution to provide internet and google's plans, why can they not be as cost-effective as yours? >> these lower orbit ones, they are talking about large numbers of satellites. think about it in two ways. one, there is an amount of bandwidth you can put through a satellite and there is a capital cost that goes with it. our mantra is how many gigabytes per megabuck we get.

that is a measure of efficiency. how efficiently you are producing that bandwidth. the other is providing that bandwidth on target. what you do not want to do is have tons of bandwidth of the ocean and have tons of demand in bangladesh or certain parts of africa. not only do you have to create that bandwidth effectively, you have to deliver it on target. one of the big issues in dealing with low earth orbit, which we work on. we do stuff for lower orbit. one of the problems that is fairly uniformly distributed over the world. what you find, if you look at any measure of business or economic activity, it is very concentrated. so you can look at concentrations of people, flight routes, minerals, economic activity. so the bandwidth in the world is very focused and that is what we can do. >> that was viasat ceo mark dankberg. that does it for this edition of the best of "bloomberg west." we will see you later.

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