pot in silicon valley. why people think he misunderstands apple. i'm emily chang. this is bloomberg west. take two interactive is getting revved up by grand theft auto. but where is the company's mobile strategy? alibaba says, not a chance. the lawsuit that has them lawyering up. move over, engineers. it designer may be the new hot talent in silicon valley. first, to the top story. carl icahn is once again poking the apple. in a new letter to tim cook, he argues that apple should buyback more shares.

and says this stock is grossly undervalued. he believes the stock should be worth $240 a share, that is up 85% from today's closing price of $130. the increase would give apple a market value of $1.4 trillion. joining me from d.c., tim covers apple. obviously icahn and tim cook have a relationship. what is he trying to a copy which with the open letter? tim: he has been putting pressure on apple to increase buyback. this is the first time apple has responded several times in the past. they said they would increase the capital return program by $70 billion for the neck two years. your is carl icahn a few weeks later saying that we would like to see a bigger buyback. emily: he kept saying that if you focused on cars and television, you could work something out in terms of

raising your value. is tim cook going to listen to what he has to say when it comes to products? tim: he is also talking to the market in general and feeling like investors and the media maybe don't understand the apple story. there is a debate on if the iphone has peaked. the larger 6 and 6plus have help sales. do they have enough to continue going? if it will continue the growth especially in the u.s. where there is intense competition and in china where it has helped sales the last few quarters. emily: they have the apple watch, a new product category but will it change their future? thanks for that update. specifically, they think apple should be focused on cars and television to drive up the market cap big time. with me to discuss the apple

product pipeline, global head of technology. managing director and portfolio manager and design partner at kleiner perkins. let's start with you. what do you make of his comments about cars? i do want to pull from his letter. as a mobile device that is differentiated by design, brand, and consumer experience where software services are increasingly critical, and apple car would seem to be uniquely positioned. what do you make of him suggesting that apple take a greater interest in cars than it has? >> i think he's dead on. i think the car is turning into a smart phone. in february, when the reports were coming out at bloomberg or wall street journal, we said apple car could be the next iphone. that is an area where they should have an interest in and there are data points suggesting

they are doing some work there. emily: john, what is your take on this? john: it's a naïve idea that if you can design a phone you can design a car. tesla is basically an apple car. emily: but is apple going to focus so deeply on cars that it could make a car of its own? john: i think it could. emily: what do they want to see from apple? >> apple is going through a product refresh on the iphone and they came out with apple pay. the apple 6s will probably tweak the 6. the iphone is 70% of apple's entire sales and is by far the highest gross margin product. unless they can switch their business to add more services,

which they are moving to and get away from units driving their revenue, apple will live and die by the results of the iphone. emily: what about television? where is apple making headway beyond the apple tv set-top box? >> i think this is a market they can really kill. there is 250 million tvs sold. it's a billion-dollar revenue market. apple would probably charge three times or four times the market. the aesthetics, and now with over the top coming into its own, i think it's a no-brainer. it's just a matter of time before apple can put all this in. hopefully in the next two to three years they can do a good job in this market. emily: tim cook gave a rare

public speech over the weekend and talked about apple values. he talked a little bit about products. take a quick listen to what he had to say. >> in that first meeting, he convinced me that if we worked hard and made great products, we could help change the world. and, to my surprise, i was hooked. i took the job and changed my life. it has been 17 years, and i have never once looked back. emily: when we talk about steve, he talked about creating products that change the world. i know you have thoughts about the apple watch. is it a product that is going to change the world? >> probably not, but it's messing with the world. if anything, it is showing us a mobile world isn't just mobile. it's everywhere.

emily: how confident are you that they can continue making products to change the world? >> quite confident. it comes down to johnny and tim. it's a combo platter. emily: what would you like to see apple work on? >> i would like them to keep doing what they are doing. it's hard to make a good mobile phone. once they perfect it, they can go on to a new category. emily: the mobile phone and smartphone market is saturated. and the watch, to a certain extent, is very much connected to your phone. what does apple do beyond that? >> the television is a big opportunity. i think the key theme throughout all this, everything is turning into a computer.

the only company in the world that develops this hardware and the software still is apple. i think that is their main competitive advantage. they focus on quality, the world is becoming a computer, and it plays right into their hand. emily: what company do you see as the big threat to apple? >> it depends on where apple takes itself. samsung and android will always be a competitor because as long as apple continues to play in the hardware space, they will have to compete with those companies that will offer products at a lower price. it will all depend on where apple moves on the service side of their business. i think apple tv -- it's not selling a 55 inch tv that may look cool. the juice is the box.

if they can get content deals like they did with hbo and the likes of disney and some others, really get the consumer to cut their chord with the cable company and pay a monthly subscription fee to apple, that is the juice for the stock going forward. it is not selling a 55 inch tv because the margins are so small. apple needs to start transforming its product line. it's more service-oriented and away from the units. to get to the range that he is talking about is very difficult to do. emily: brian, john, and john thank you for staying with me throughout the show. time now for soundbites. tim cook is not the only tech leader offering advice to a class of 2015. nap chat ceo evan spiegel spoke

at the business school graduation. he talked a lot about finding and holding onto a good idea. this is what he said about not selling to facebook. >> no matter whether or not you sell, you will learn something valuable about yourself. you will know immediately that it was not the right dream anyway. and if you don't, you're probably on to something. it you might have the beginning of something meaningful. emily: he does not sound like he has any regrets. >> people called us a lot of things besides crazy. arrogant and entitled. the same words i have heard used to describe our generation. thee millennial generation. it is true. we do have a sense of entitlement. a sense of ownership. this is the world we were born into and we are responsible for it. emily: spiegel does not have a

college degree of his own. he left just before graduating to develop snapchat. coming up, grand theft auto is still a hit. but can take to compete with the rise of mobile? we will discuss, next. ♪

emily: take two interactive earnings out just this hour. a have had the luxury of a massive hit on their hands. grand theft auto. they just released a pc version of the game this spring. cory johnson with us for more on the results. what are the highlights here? they did pretty well this

quarter? cory: i know you are a big grand theft auto fan. still, they have then hand in glove in terms of the success or failures of the company. what interesting about the results this quarter, revenue is up year-over-year. adjusted up 150% in the same quarter. the story of take two has long been thus. they need a second game. what they showed in this quarter was a second game. called evil. a first-person shooter game where a bunch of people fight monsters. it's a second leg of the table for take two. it was very successful. the other big thing was the success they had in digital. they sold more games through digital downloads than to the sale of discs for the first time ever. that's a huge deal not just for this company but for the gaming

industry at large. it shows digital distribution for take-two interactive was the dominant business and the first time they have ever seen that. emily: what about mobile? how are they doing when it comes to mobile? cory: it's important but not near as much as the console games for these guys. the quality of games they bought from rockstar and grand theft auto, the same with evil -- evolve, it's where the money is in this sector. emily: cory johnson, thank you so much. in particularly, this broad trend and movement when it comes to mobile gaming. joining us to discuss his tim o'neil, head of gaming at the mobile marketing company -- head of marketing at the mobile gaming company toon. take two is a company that is still very much reliant on the

console and on pc. we see a lot of disruption on mobile gaming. or do you see them standing in the landscape? >> they are positioned correctly. they are sitting on titles that are unique to them. if they bring a lot of those console titles, they will now be able to have them on their site. >> i don't they focus on mobile? >> it is a unique part of the industry. emily: we are having trouble hearing kevin. why doesn't take to focus on mobile if they have these assets? it seems like a no-brainer. >> sometimes it takes time.

it you can't deny mobile these days. it makes sense that they have some focus in mobile and will be putting more into that. emily: what do you see happening in the gaming landscape? >> they were collecting video games as art. >> are video games art? absolutely. the content, the art of those games helps the titles stand out. emily: if anything, we see two different extremes in gaming. they pour more and more money into creating these games and making them. on the other hand, you have people like king digital and candy crush making games for the lowest common denominator. >> and you hear about how nintendo has woken up to mobile games and how they are making a really big effort in the near future, partnering with another mobile gaming company to bring a lot of their existing ip's like

super mario brothers to mobile. emily: talk about what is happening when it comes to mind share. you have companies like take two for consul -- console. and games on devices, but zynga is laying off hundreds of people. wax mobile will be bigger then we all think. to give you some perspective there have been about 50 million consoles sold. apple's old million iphones in the last quarter alone. we are talking about a global gaming audience that will be in the billions for mobile gaming. it is so different from the console market which is relatively small. emily: closing thoughts for us. what should we be watching for when it comes to gaming and mobile gaming going forward? how

can we think about the attention people are giving to games? >> as big as mobile is, we are just getting started. it will get bigger and bigger. we see companies quickly accelerating. emily: tim, kevin, john, we will be speaking with you a little bit more about the intersection of design and technology. ready, set, fight. alibaba is facing a new lawsuit from the company that owns gucci. it they are not taking it without a fight. luxury goods says that alibaba profited from the sale of goods that infringe on its brand. the suit claims that alibaba uses algorithms to help customers find knock offs. alibaba says the complaint has no basis and the company has been trying to cut counterfeiting. from june to september, the e-commerce giant worked with 40

brands to remove fake products. or than 40,000 sellers were punished as a result. up next, our designers the new engineers? we take a closer look at startups that have been founded by designers. including airbnb and instagram. ♪

emily: it is time now for the daily bite. the number is 330 million. that's how many people will be subscribed to a video streaming service by 2019. a report from juniper research. numbers show there are 92 million subscribers globally across all services. netflix, amazon prime, hulu. a big chunk of those subscribers belong to netflix. take a look at this chart. even they would need to see really dramatic growth for the

forecast to become a reality. devices like the chrome cast fire tv, they connect the regular tv set to the internet. people don't need a new smart tv or settle for watching movies on a small screen. companies will need to look beyond the u.s. for their next growth spurt. netflix is pursuing routes into the chinese market. established carriers will need to fight hard to unbundle expensive cable packages or jump into the space themselves. looking ahead to the intersection of design and technology. i want to bring back john mica. he crunched numbers in a new tech report for kleiner perkins and you had some interesting findings. 27 startups have been cofounded by designers including instagram, airbnb, youtube.

13 agencies were fired by tech companies in the last four years. and six firms were hired last year including you, john. you are the very first. either perkins was the first to bring in design partners. >> they were more out there. >> what is going on and why? design is important, but why does it seem like they are just getting this now? >> technology alone was a good reason to buy things. suddenly, we had the stuff. design comes in to help more people want the stuff. emily: what do we mean by a term designer? not just someone who went to art school. >> it is pretty complex. we are changing the definition of design. it's not just 1000 people, but millions of people at this moment through apps and things like that.

emily: the ceo of airbnb, i talked to him about this issue. silicon valley did not think a designer could build and run a company. they were straight up about it. we were phd students from stanford. they thought we were people that worked for people that ran. has that really changed? >> it changed thanks to brian and joe. the monoliths of 2008, when into it -- intuit acquired mint. emily: you see companies that really put design first. it did not work out. it you see companies like snapchat, twitter, facebook where design was the second or third thought. they are incredible hits. how does a company battle how much to focus on design.

>> design is not going to fix anything. it will make them more desirable and more useful. it depends. emily: design and hiring designers would be a way to bring more diversity and more women to the company. >> completely. emily: why is that? >> it's a different kind of person. someone that thinks with their hands. they need to look at things. they bring a different kind of person. emily: why is that important for kleiner perkins? they captured the fascination. >> diversity is the key to creativity. you don't have things that are many. you can't find fixes. emily: design partner at kleiner

perkins, thank you for joining. it's always great to have you here. thanks for watching this edition of the show. ♪

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♪ >> from our studios in new york city, this is charlie rose. charlie: cardinal jaime ortega y alamino is here, the archdiocese of havana and cardinal of the catholic church. here's just the second to this post. he became archbishop of havana in 1981. he participated in the conclave that selected pope benedict 16 and pope francis. lastly, he was awarded the medal of honor for helping to normalize u.s.-cuban relations. i have known him for several year