>> from pier 3 in san francisco, welcome to "bloomberg west" where we focus on innovation, technology, and the future of business. the best of the west with top interviews. well, we start with apple. why not? from the back of the iphone to the smart watch to the electric car? yes. apple has hired hundreds of people to build an electric car called project titan. their vehicle might look like a mini van but should tesla worry?

should toyota worry? chevy, its volt? let's go to apple. john leonard. >> you see technology for doing very precise localization in mapping. some of the sort of parts of this what's involved in the google car. so it's a different sort of set of techniques and skills than sort of the traditional detroit auto making industry. >> tim higgins, i love -- i didn't think about this but then i saw it. oh, yeah. tim higgins came from detroit. you come here to cover apple. what are the similarities between these companies? >> for one thing apple is a global company with a lot of

cash. costs, about $1 billion for a new car to be created. >> it costs $1 billion to build a new car? >> generally speaking. it's an expensive time-consuming process. so apple has a lot of money, $178 billion. so not short of cash. they've got global operations used to doing supply chain management around the world, used to doing industrial design. used to dealing with retail network. so they have a lot of things in place. that said, designing and building cars is very complicated. something that trips up even long experienced automakers with regulations and safety and marketing. it's a very long lead time for developing a car. >> let's talk about the r&d spending those companies do. they spend boat loads of money on top of containerships full of money. the history of knowledge that they've built up. i guess it's the question, is there an accumulated bit of knowledge, or is it a calcified bureaucracy that thinks about

the way they do things as opposed to a blank sheet of paper? >> silicon valley feels frustration when they deal with automakers. guys in detroit say there's a reason why we're so slow. some has to do with safety and regulations and the challenges of putting a product on the road where people's lives are going to be in jeopardy. >> is it about the way the cars are made, though? they're wrestling with union contracts and existing factories and relationships with dealers? because they've got to figure out what to put in their pipeline as to what to put on the road. >> exactly. they have a lot of legacy issues. tesla's emergence, you can say what you will about their business model, but they have created an interest in the auto space from new players who have said, look at the challenges in the past but look as these new entrants. i think that's where some of the excitement is coming from.

>> john, when you look at the excitement what is it that you feel like is right there ready to be improved upon the most? is it battery, the duration of the battery? is it self-driving aspects or road awareness? >> i think it's safety. i think that the number of lives lost to traffic accidents over 30,000 per year in the u.s. alone and 1 million worldwide is just a tragedy. i think that with the better sensors and artificial intelligence coming online, we should have the capability to radically reduce accidents. so i think that is the thing that's really exciting about what can happen now. >> safety is a really great thing to talk about, but apple google is probably also looking at what the user is doing with that time when they're driving. these are companies who want to create a business where your digital life is at the center of their devices. right now when you're driving a car, to his point, the safety is important. so if you're pushing a product that allows folks while they're in the car to be in digital

safety, that opens up a whole new marketplace. for commerce. >> well, the horrible irony is the company responsible for more tech-driving accidents, giving people devices, are now looking at cars. i also wonder if there is a different sort of pace of innovation, when you're safely aside from both you witness what goes on in detroit, you see the engineering centers here. is there a different pace of innovation in silicon valley? >> i think so. i've been told that the typical silicon valley investor wants a return in 18-24 months. that's a rapid turn around. interesting, google and building their prototype cars, they've said they want to work with the sort of detroit ecosystem. so there's an acknowledgment that it could be win-win. there's parts silicon valley could be good at and eastern

u.s. industries would be good at, and they could come together. >> bloomberg's tim higgins and m.i.t.'s john leonard. meanwhile, apple is being sued by a-123 systems for poaching employees. i spoke about how critical battery technology is, one of the foremost voices of batteries. >> the battery was invented in 1799. the architecture has not changed much since then. so much of that time we weren't really trying to create the super battery for the last few years we have been. the question today is which way is apple going?

is it going the gm route? will it try to create the super battery? or is it going to go the tesla route, go off the shelf? >> among the interesting things about apple going into the business, is apple the business that it's typically relied on outsource component manufacturer taking the best that other companies are making, the best chips made by qualcome or -- taking the best batteries made by a panasonic and assembling them together in a way the software performs the magic. they've changed it a bit. do you get a sense that they are going to go for their own design and even maybe manufacture the battery? >> the latter part we don't know whether they will manufacture. but yes the signs are that they are trying to inhouse create design the battery. create, design the battery. and the car around it is very exciting because already i have been looking at that race between tesla and gm, the 200-mile car as the inflection point. that's the proving ground. that brings on the electric age. now you have apple coming in and this is critical mass.

was gm going to be able to match tesla? apple can. >> i don't trade stocks now, but when i did that for living i one time decided i've got to find some other crazy bet against something that's not going to work. there's got to be a publicly traded battery company that my firm is not already short. i did a search and found we're already short every single one and every single one worked out to be a pie in the sky promise or a stock fraud outright. is that the nature of this battery business? that it is a pie in the sky dream and it's going to limit -- we look at tesla's car sales you can see the limitations of the market. they're selling more cars than they ever have before but it's not a big number. and in a lot of markets it's already slowing down. i'm wondering if the better battery technology is never going to work out. like perpetual motion or something. >> batteries have been a special province of exaggerators and hucksters.

this is the -- thomas edison said this back in the 1920's. 100 years later it's the same. in the book there is an inflection point where pursuing everyone is pursuing the race and at one point everyone including me finds out that someone has been deceiving everyone the whole time. but i think that there are real players in the race that tesla and gm and now apple have put -- well, two of them. and it seems apple, too, have put their chips down on the battery, on the electric car, i think shows that it's authentic, that it is real. >> that was steve levine the author of "the powerhouse." check out. now, mark zuckerberg. the topic, connecting the world through internet. ♪

>> i'm cory johnson and this is the best of "bloomberg west." facebook ceo mark zuckerberg has revolutionized the way the world communicates, and now he wants to connect the next billion people. to provide free basic mobile internet service to poor areas all around the world. the app has been rolled out in certain african countries as well as india and colombia. emily chang sat down with mark for an exclusive interview. >> it is one of the most populous countries in the world. >> the internet is how we connect to the modern world. but today, unfortunately worldwide only a little more than a third of people have any access to the internet at all. >> in india, the numbers are even more dire. of 1.1 billion people, only 15% are online. and so we find mark zuckerberg visiting students in a village

on the outskirts of new delhi. the founder of facebook revolutionized how people communicate. now he has an even more ambitious goal. >> we believe that connecting everyone in the world is one of the great challenges of our generation. and that's why we're happy to play whatever small part in that that we can. >> zuckerberg calls his plan to wire the world internet.org. and he has been spreading the word. >> we launched internet.org. it's our effort with a handful of other technologies to bring affordable basic services to everyone in the world. >> from the lips of the guy who created facebook, it sounds possible. but his team admits it's been far from easy. >> it's challenging because there are market dynamics in every market that are different. >> you go to these villages and you ask them do you want the internet? and people are like, why would i want the internet? you ask them if they want

facebook, and they are like, absolutely. >> they've been criss-crossing the globe. >> how do you think having the internet has changed people's lives? >> their mission -- to convince mobile carriers to offer a limited version of the internet for free. here's how it works. facebook custom building a website for each partner country. the site links weather, health jobs, resources, and finally to facebook, all at zero cost. the idea is that users get hooked and buy it when the period ends. creating new carriers and new users for facebook. why call it dot org? is this a nonprofit? is this charity? >> if we were primarily focused on profits, the reasonable thing to do would focus on the first billion people. >> you said connectivity is a human right.

you want to do good things. why not give access to the complete access? >> the model that we consider this to be most similar to is 911 in the u.s. so even if you haven't paid for a phone plan, you can always dial 911. >> tim liu is a professor at columbia university and a public policy applicant. >> why would the company want to give a product away for free? they think they can build the world's most powerful device for accessing hearts and minds of the human race and sell that to somebody else. >> and facebook is just one of many internet giants in an epic global battle to win heart and mind share. >> we have about 7 billion people on the planet. whoever gets the biggest share of that might be expected to dominate the future of media period. >> one, two, three. >> not to be dominated, google has project woo, a fleet of high altitude ba loans, beaming the internet down to earth.

a new company called one-web and spacex's elon musk both recently announced plans to launch low orbit satellites that will carry the internet everywhere. and facebook has some moon shots of its own led by a mad scientists of sorts. >> laser communications is a new frontier where you can get much higher data rates than typically done. >> in a southern california lab still being built, mcguire and a team of former nasa engineers are developing lacers that will send the internet to earth in a beam of light. >> for all of the developed markets that we're looking at trying to improve access, we want to use laser communications everywhere. >> he plans to put lasers inside unmanned aerial vehicles solar-powered planes that continuously circle above the earth. >> the world record is around two weeks. we need to figure out how to make these planes last for months to years at a time.

>> they don't rely on cell towers or any earth-based infrastructure. mcguire says connectivity from the sky is still three to five years out for internet.org but expects to test the first facebook drone later this year. >> once you get people connected, once you have the power to reach them, how do you use that power? >> for us it's really all about enabling people. >> whatever that means, in india and indonesia, zuckerberg's plan seems to be working. carriers in both countries recently announced partnerships giving millions of new people access to the internet and to facebook. how will you judge that this has been a success? >> if we can make it to that free basic services are available in 100 or more countries, then that is going to be a huge win for all of these people who will now have access to new information on jobs and health care and education. >> you said you hoped for more than 1 billion people by 2020. do you think you can get there? >> we'll see. >> whether it's the internet or the internet according to facebook, it's the kind of grand plan you can only expect from

mark zuckerberg. the real question is -- can he change the world not once but twice? emily chang, bloomberg, menlo park, california. >> here's more of emily's interview, this time focusing on china where facebook has been officially blocked since 2009. take a listen. >> your mandarin has gotten pretty good. what's the likelihood internet.org could help you get back into china, get facebook back into china? >> i don't know. that's not something that we're focused on right now with internet.org. it's -- right now there are countries where they reach out to us and say, connectivity is a national priority. and a lot of people in our country use facebook. and if there's a way to work together to do that. for example, in malaysia, i was meeting with one of the leaders in the government there and making it so that everyone in their country is connected is one of their top priorities.

similar to indonesia. india i think as well. there's a lot of priority around making sure everyone can get connected. so it makes sense for us to try to connect countries who are reaching out to us. >> you can catch more on line. check out "studio 1.0" airing thursday night on bloomberg tv. is the nsa secretly installing spyware on your desktop computer? a shocking new report about hard drive hacking is out. we'll tell you about that next. ♪

>> i'm cory johnson. this is the best of "bloomberg west." nsa spyware may be hidden in hard drives around the world. researchers in moscow base

kasperski found spy ware made by western digital, toshiba, and ibm, would give the nsa the ability to eavesdrop on the majority of the world's computers. i spoke with the ceo of the cyber firm silence. >> no matter what you do, even if you can find it and it's made to avoid detection, you can try to wipe it but it will come right back. that's usually planted at the manufacturers. this is not the first time the industry has seen this kind of a type of attack inside firmware. it's simply the complication and sophistication of this type of attack that gives it some merit to talk about. >> and it's also widely spread. now, getting the leading manufacturers at western digital or somewhere else -- it's right across the industry. every major manufacturer disk

drive, according to this report, is infected by this software. >> we don't know the full scope quite yet, but the indications are that there are real opportunities with these hard drive manufacturers to implant this kind of stuff in the firmware. whether or not it was preproduction or post production is a little bit up in the air, and i don't know if we will know that quite yet. that needs to be fleshed out quite a bit and investigated. what we do know is the ability to get on to these systems is really quite trivial. and then to stay there with persistence is quite trivial. so it becomes really easy for any adversary, whether a nation state or a simple bad guy cyber criminal to do whatever they want to on the box. >> so what kinds of things do you think the nsa can pick up with a hack such as this as opposed to the data hacks that we know about in the past? >> well, and it could be nsa, it could be even israeli defense as well. they have similar targets in of course middle east and asia that

nsa or other organizations are. and in terms of attribution it's very, very difficult to give smoking gun proof back to the people that are on the keyboard. but certainly possible highly possible and probable that someone like nsa is a part of this. we just don't know definitively yet. in terms of what they can do geez, darn near anything. they could pretend to be the user of the computer. they could infect it in such a way where they could capture screen shots, follow your video. they could capture all your passwords and become you on your internet, take your persona. they could infect your access to your bank account. you name it. it really is just up to the creativity of the adversary. >> so the adversary, again, they don't say who it was. and i say the nsa because reuters reported that and let's go to the kid when it comes to reporting on cyber crime. at least my strong opinion.

but the report out of russia listed the countries most affected. and yes it listed russia. but it went on to list syria china, mali, yemen, algeria, and afghanistan. those seem to be in particular targets of the u.s. is there a notion about what kinds of things they may be after because this is a hard drive attack that tells you maybe these aren't adversaries who are keeping data stored at amazon web services or something? >> they definitely wanted to surveil the targets. so it wasn't a destructive attack like sony where they wanted to humiliate terrorize and destroy. they simply wanted to observe, surveil, understand what they're doing. and allow them to stay one or two steps ahead of the adversary, which is the victim in these cases.

and the countries you're absolutely right. they've long been held target countries for the u.s. as well as israel and neighboring countries that are friendly. so it could easily be those two entities for sure. >> let's talk about what this means for business. when it comes to manufacturers it's a little bit different than selling safe software or microsoft saying to a customer in germany hey host your data with us. so what is the business effect on the company that sells these devices which we now know to be infected? >> well, that's a really good question because i don't think we've really ever seen this example in our industry before. we've certainly seen adversaries hacking into companies and like lenovo and others and back-dooring the actual buys the bootable part of the computer to put their own stuff in here but not to be coming from the manufacturers themselves. if that is truly what's happening i think we've got a really big problem on our hand.

>> that was stuart mcclure, ceo of cylance. up next making money and doing good. ♪

>> you are watching "bloomberg west," where we focus on innovation, technology, and the future of business was up i am cory johnson. here are some stories that made headlines. realty web site zillow, $2.5 billion in stocks. the new combined company called zillow group. 350 billion jobs are being cut in an attempt to integrate operations. carnegie mellon, the top-ranked technology company in the nation apparently has a technology problem on its hands. you mistakenly sent out 800

letters, the problem is the program only accepts 100 a year. carnegie mellon now says it's reviewing its notification process. we now know who plunked down $300,000 for dinner in las vegas. vice ceo shane smith. smith has been on a lucky gambling run. at least he was then, so he chose to treat a dozen friends for a meal at bellagio's prime steakhouse during the electronics show. maybe spending $25 grand a head on dinner may not be the bastion of social responsibility but here in silicon valley it's all the rage from google's do no evil pledge to facebook's pledge.

making money isn't enough any more. tech companies have to do good as well. start with a social impact mission statement often before a business plan. but is this just p.r. or is it something more? i talked to the ceo of midco. >> a lot of companies start with a group of people getting together and saying wouldn't it be cool if -- dot dot dot and then they fill in the blanks with what would be great if this sort of positive change occurred. >> wouldn't it be cool if, my data base works better? >> well, that could create some kind of positive change in the world. i think framing it as positive

change is something that is a significant trend occurring not only in the valley but across the world. people are saying we can organize ourselves in this thing called a company to create some kind of good in the world. and i think the large companies look facebook, google, and others are leading the way and a lot of the founders are getting in on the game. >> silicon valley is the type -- it pokes amazing fun. >> the next day we had this long conversation. then i see this clip, the opening scene of the opening show. take a look at this. >> a few days ago when we were sitting down with barack obama i said, ok, we're making the world a better place. constructing elegant hierarchies for maximum code reusing sensibility. >> elegant hierarchies of making the world a better place. what's a serious company that's focused on this and when is it just -- >> i think that's one of the reason that we need a brand like newco. because if you don't have a brand that's all about identifying, celebrating these

companies and connecting them there's no continuity where you can call people on their b.s. if they're not living up to what they say they're doing. i think there's an opportunity to go beyond empty promises of mission statements and start to tell the stories of companies that are actually creating that change in the world and own it. >> we see venture capital funds also talking about this and investing along those lines. and i would have expected this to develop as such. pension plans would sort of say hey, we need you in the same they that they've suggested the dive vesting of companies contributing to climate change saying you need to invest in companies that lead to social impact or something. but it doesn't seem to be led by that. >> the social impact investing community has something of a nomenclature problem in that they're afraid if too many about social impact then we're going to get lapped on the profits.

companies who don't have a social impact agenda are going to beat the companies that do because they have better profits, better earnings, you know, a better bottom line. i think over time and with the information economy we're getting to the point where we understand the total value of a company not just its profit. and that includes the good it does in the world. >> marc benioff made a very important point of this. yelp is doing things more quietly but both companies giving a portion of their operating profits to charity also insisting that their employees work in volunteer organizations. is that enough or are you talking about something different? >> that's part of it. if you look at organizations they started with a mission statement about creating positive change. sales force wanted to -- the end of software because they thought that was inefficient and there was a better way of doing it.

and yelp had a mission about finding information in real time. and twitter is the same way. building social good and impact into its actual building and they talked about that last year. >> how so? >> so the twitter for good is their approach to corporate philanthropy. they've really changed the traditional approach to where they built the program where they partner with mid market in san francisco. it's a well-known sort of tenderloin depressed area of san francisco. they're partnering with a that actual city district in the actual headquarters of twitter and integrating employees into that program, as opposed to just giving money they're integrating it into the workplace. >> well, can technology fix some of these age-old problems, like getting pot holes filled or garbage picked up? we'll tell you about an experiment in philly next. ♪

>> this is the best of "bloomberg west." i am cory johnson. the last big tech no innovation to come out of philadelphia may

have been tenderized meat. until now the city of brotherly love is now teaming up with sales force to revamp its 3 1 system to make it easier for residents to get easier services. can this spread to other cities? what does this really do on the ground level? salesforces vice president former chief information officer and i talked about this. >> what's so exciting about the city of philadelphia is that the mayor and his leadership have recognized that three big things are going on. the first one is that companies like uber and air bnb have fundamentally reset citizen expectations in terms of what they want their government to look like as far as interactions are concerned. second, there's this third wave of computing with mobile social, cloud, and now analytics that's disrupting every business model including the government.

and third, and the most profound, is the fact that political leaders are recognizing that they need to create a more open transparent and participatory government. what they've been able to do with salesforce is engage citizens, shift power to be able to create communities, so the community cloud, where citizens are self-organizing, and addressing some of the toughest problems the city has around crime and health care and education. >> what's the pushback like from the cities that are not jumping to do this? i also look at a company based out here in the bay area that is similarly trying to go around these issues of permitting county level, city level. it's a ground war to fight to get these deals done. but the results from their success stories are fairly amazing about how much faster things are delivered. i don't understand what the pushback is from the cities. >> what you have is essentially the old guard and literally a set of vendors that were born in the 1960's that continue to

dominate government i.t. that is one of the reasons when you're dealing with the government you have to wait on a long line, hold on the phone or submit a three-part paper form. we talk a lot about how when you're dealing with the government there's a form for that. when you're dealing with the consumer web there's an app for that. so it is the shift to cloud social mobile analytics that is beginning to happen. and the city of philadelphia represents the shining example of where a mirror comes in makes it a priorities and cracks down on wasteful i.t. spending. >> what's the one service that a city offers where you sort of show the best benefit of doing something on the cloud, doing something online fastest improves the delivery of that

service? >> let's look at some of the challenges in the eastern seaboard right now around the snowstorm. so the ability to be able to connect with your citizens in a whole new way to let them know where the snow plows are on a realtime basis to make sure that they're collecting whether it's trash or filling pot holes on a realtime basis. but more importantly, what if city governments could forecast and predict some of these problems they're getting ahead of those issues and they're welcoming their citizens into a better future? in the past the government has been very much around responding to crises instead of getting ahead of the problems that these cities have. and that's so exciting. and another big area is around entrepreneurship. why not demystify the whole process of permitting and licensing to be able to abstract the levels of government whether federal, state, or local, instead of having to apply at the local level and then the state level and then at the federal level? and we're beginning to see this happen not just in the united states but in japan, in australia, and in europe. and that is why you're seeing this one-way street in terms of acceleration as far as the

technology being adopted across the world. >> salesforce executive vice president vivek kundra. how can tech companies cash in on space? nasa's is in town giving tips. we'll talk to an astronaut who just got back to the space station. next. ♪

>> i am cory johnson. this is the best of "bloomberg west." nasa brings space to silicon valley. astronauts and executives are meeting with a handful of companies here on earth. more specifically here in the bay area. and they're promoting research opportunities in space. campaign is called destination station. yes, it rhymes. the companies are meeting with twitter, google, and facebook. for more i spoke with reed, an

astronaut who just returned from a six-month stay where he was tweeting. he even posted the very first vine video from space. take a look. >> for twitter, the outreach portion is amazing. it allows us to bring the science and also the view of the space station into everyone's living room on to their phones and tab let's so that brings them closer. i don't know what they can necessarily test but how they can explore this social outreach from space is great. we had a lot of success when i was up there. for google they're doing all sorts of projects. when you take gravity out of the equation weird things happen. >> is it all about gravity or are there other sorts of unique environments presented in the international space station? >> definitely. you have a different radiation environment than you do on the

earth. but really the big thing is the microgravity environment and what is going on. not only in like -- >> microgravity. not zero gravity. >> not necessarily but it's about 0.000 because it's almost there. >> you're still in orbit. and you have a slight deceleration. so you're never exactly at zero gravity. >> i should have had the video. zero g-flight out of cape canaveral. and while i was there, there was supposed to be a launch. and i've yet to see a rocket launch and it was scrubbed. we do this quite off. there's so many delays. what happens during those kinds of delays? what's going on that sort of -- what every delay into one basket. what's the process? >> it could be anything. it could be like just a few months ago we had a ship come into the safety zone so we had to delay a launch and it got moved to the next day. then there's technical things that could be going on. valves not opening. everything is tested. but once you finally have the

rocket assembled on the pad and fueled up, anything that goes wrong, safety is paramount. so any little glitch and they're going to wait and see. >> i visited with the space x factory in california and was struck with this notion that really technology launching rockets hasn't changed since duct tape in the 1960's. what is most important right now to the new sort of private space race? >> i work at nasa. to me it seems like any way we can reduce complexity, just reducing the complexity and building a more robust rocket -- >> i thought that was the opposite. i thought they weren't really that complex. one of the reasons they're still using the old -- >> i just launched on a russian rocket, and it is simple. but with 3-d printing and modern manufacturing processing, you can simplify the tough parts and make them more robust, much more resistant to debris in the fuel lines. with all of that, yes they were

simple in the 1960's but we're even simplifying the complex parts now. >> so simplifying the path that fuel must -- >> the high speed turbo punches, making their engines more robust. >> is that about advances in science as well? not just 3d design but also the stuff it's made out of? >> definitely. different ways to do the friction welding now. when you can take a complex part and put it in a 3-d printer and make it simple it improves reliability all the way around. >> then there's mars. >> let's go. >> what's that process like? picking people? coming up with a plan? >> for us, it's basically business as usual. once we really have orion built, we just did a test flight in november. we'll do another one. once we get through that process we'll start picking the crew and training them on the rocket.

>> how expensive is that going to be? >> pretty expensive but well worth it. any time you can take humans and put them farther than they've been before it's going to be difficult. what kind of research we're going to do there, you start to discover all sorts of different avenues. >> there is criticism of mars as a mission that scientifically it's not the place where the most information will be gathered. it might be exciting. politicians put a lot of attention to it but there may be experiments tand thing that is can be done in a much closer orbit. >> there's going to be criticism of any major program like this. but just sending a human to mars, on that 500-day journey where we're going from one planet to another. and once we get there the amount that we can learn if you give me a shovel and my mind and a bunch of mission controllers back in houston, it will change our entire understanding, i guarantee it. >> that was reid wiseman. it wasn't long ago that samsung was the dominant company in china but no so now.

we are going to look at how samsung has fallen so far so fast in china next. ♪

>> this is the best of "bloomberg west." i am cory johnson. samsung's dominance in china is over. idc says xiaomi took over the spot. their sales tripled and samsung fell by 22%. second place? in their dreams. they are in fifth place behind

apple and others. what happened? here's my chat with them. >> it reflects an amazing fall. if you go back to 2012 every single quarter from the first -- fourth quarter to the first of 2014 samsung was the leading supplier in china. and basically it's fallen apart. what they're seeing is now is that you've got this upstart in xiaome, market dynamics where some of the other indiginous suppliers used to sell what we in the u.s. call carrier bundles. so china labeled mobile phone. those folks are now selling direct and they're getting a lot more sophisticated with their product designs. and then of course as you pointed out, apple is absolutely moved in and moved in fast. >> when i look at the rise of xiaomi in particular, i look at

a company that decided to have a fairly full featured phone but also just slash any notion of profit and that allows them to get market share. >> so xiaomi is fascinating because they load up historicically will load up top-tier processors, with memory. and it's also a pretty beautiful industrial design. if you've been there and seen the product. they really want to try to make money on their version of androids. a little bit like the jeff bezos model but hasn't shown up on the kindle fire. make money on accessories and apps and other kinds of services that they can offer. i will also say there's an authenticity about the brand where you don't see that with samsung. samsung is sort of the big monolith moving forward with lots of products but not a lot of authenticity and authentic voice people can latch on to there.

>> yet samsung have talked about lowering the number of phones they offer and substantially they'll still make a ton of different kinds of phones but they were up over 100 varieties of phones just over a year ago. >> we saw this in the pc world too. i can remember talking to michael dell about how they have to get rid of the number of skews because people just want one iconic product. that is true to some degree but there's also this idea that the product you create have to be something that people are craving. and that's what samsung is having trouble tapping into and xiaomi has tapped into. samsung has trouble with features getting in the way. people are really excited about this new company. >> talking to michael dell. i got the name drop. >> there you go.

>> should we be talking about market share profit share? apple you say that you've got all these competitors going down market, down the margin scales down maybe sometimes less than single digit margins. apple isn't doing that. apple is making boat loads of money with their very best products over there. >> here's the thing. we should be talking about profit share, and that's the thing we're spending more and more time analyzing. but the profit share battle is going to be really intense because there's only so many of these high-end customers. and apple is now that aspirational brand. and there's a lot of underserved consumers in china that to spend $600 on a phone is a tremendous amount of money. and xiaomi is now starting to do some interesting things. they're swapping out qualcom and putting in media tech for the main processor because they wanted to start to address the needs of the next tier and the tier below that. >> that does it for this edition of the best of "bloomberg west." you can watch us monday through

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