>> virtual-reality take center stage in silicon valley. we will show you what companies are poised to be the big winners in vr. brad: i'm brad stone in for emily chang and this is "bloomberg west." amazon milk, amazon baby food -- we will see what jeff bezos has planned. should apple worry? xiaomi opens us to was about the companies plan to expand in the u.s. and the emerging class of social media celebrities. i will introduce you behind twitter's plan to create

original content. that is ahead. now to the lead -- vr. those that only letters you need to know about what is next intact. that is according to a new report. i am talking about virtual reality. this week, it seems like everywhere you turned there were stories about companies pushing into vr technology. in 15 years, we could see virtual-reality everywhere from hospitals to the courtrooms if sales take off and prices come down. so far, facebook, google and microsoft have spent billions in brvr tech. years of development from companies and the markets price will hit the market soon. gene munster joins us and an investor at keenan partners in silicon valley. thank you for joining us. gene i will start with you.

15 years from now, you save er will be everywhere. are people ready? do people really want to strap these headsets on an go into the virtual world? gene: they don't understand what the value that will be created for this in the utility and experiences. ifi think if they could understand, they would be ready. it will take some time for the content and experience to be refined. we think this will be as dramatic of a technology shift for consumers as the smartphone was 10 years ago. we knew it was coming. it has become bigger than we thought. we are probably where we are at in terms of vr and longer in terms of augmented reality. brad: everyone seems to be thinking games will be the first application. you have seen failed attempts in

the past. we were talking about the nintendo virtual boy. what are the obstacles to adoption? >> the days that i walk around like this -- it is probably several years from now. this is a space with a ecosystem clearly has to mature for people to feel comfortable enough to go forward. we saw the precursor of this in google glass and that certainly did not have enough applications in the ecosystem to really make it useful for consumers. i can see vr -- the first phase being in spaces like the courtroom or hospital. having this being a consumer play need to have different exciting apps. most likely games but game developers need to be incentivized to devote tens of millions of dollars. brad: gene i saw the ceo of facebook oculus's unit earlier this week and he said a launch next year could be around

$1500. in your report, you said you think some of these firms will have to give these devices away along with smartphones. what happens? what does the price point need to be? gene: initially, that is not even the starter -- $1500. gear vr is exists for jeweler dollars where you can make this a samsung phone for the vr experience. to answer your question, the price point need to get down to $100 or two under dollars for all the great experiences. we are seeing 500 million units by 2025. this is a decade away but ultimately the price curves will go downward and that should, once the experiences are available, really start to fuel the demand for these devices. brad: let's move from vr to ar.

augmented reality, which is overlapping the virtual frame on top of what we see in the world. apple just bought a german company. tell us what apple wants to do with the company. maha: all ar companies i have seen over the years have been from europe. i don't know what is in the water in europe that is causing them to want augmented reality. brad: you don't think it is a big opportunity? maha: it is. apple knows they will drive this shift if there is one. a lot of the ar companies we have seen have been in the gaming sector where they have been in locations. without that support of a big platform distribution, they have fallen flat. if they are going to take shape and take hold, it will have to be driven by some sort of big brother like apple. brad: i was apprised to see that you think ar lacks vr, but

ultimately it is the bigger opportunity. why? gene: it is the blending of the virtual and the real world. there are applications of the amount of data that we see every day, the amount of information that can be overlaid with that that can create new experiences. think of what google glass tried to do. imagine never forgetting somebody's name or being able to look at a building and know what tenet is in there. it is infinite what can be done in augmented reality. where virtual-reality is a starting point but it will be gaming and live entertainment. we think augmented reality is 70% of the opportunity, but it will take longer to get to this space. brad: do you agree with that? 70% of the opportunity eventually? maha: i think so. apple is trying to own the retail store. with the technology coming out,

they are trying to have better analytics for retailers to understand who was by what and where and what quantities. having ar on top of the apple plot platform allows them to go deeper in the relationships with retailers. brad: i want to ask you both are what you make of google cardboard headset. this alas you to insert your phone and use it as a vr dis play. is google trying to be disruptive and is athis a serious player to compete with apple and microsoft? maha: i love what google is doing. they threw a nuclear bomb into vr right away. they will commoditize it from the get-go. it is a phenomenal way of google entering the market. brad: gene, is google cardboard a serious injury in the market? gene: i think maha pitted right

-- hit it right. they are trying to have a presence in vr. it is a great marketing trick to be a part of it. it increases the average person's awareness of ar. brad: ok, gene munster, thank you. and, maha thank you. it has been a busy week for dealmaking, especially in technology. buying broadcom for $37 billion marking the biggest tech deal of all time. there is also the acquirement of telecity and then there is intel. they are near a deal to buy all terra for $15 billion. facebook and apple alum is selling to daumkama. what is driving all the deals? it is the investors.

they are hoping consolidation can keep slowing technology growth. with cast piles huge and low interest rates, buyers can afford it. next, amazon taking a cue from walmart. we will show you how jeff bezos is looking to expand. plus, hugo barra sits that with emily chang. we will show you what he has to say about expanding. check out this creature from the robotics team. it is called a cheetah. they can clear hurdles all on its own. ♪

brad: some breaking news -- president obama says the senate must act to extend the nsa's dragnet message first exposed by edward snowden. that program would have expired on sunday. another developing story -- ross olbrecht since the life in prison for greeting the drug dealing website silk road. the federal judge believes he tried to arrange the murders of five people he wanted illuminated. -- eliminated. amazon's is expanding its grocery business. it is beefing up its private label lineup to include milk serial and baby food.

what with thisill this mean for its bottom line? joining us is maha. why didn't retailers like amazon -- why do they do white label products? maha: they want to only experience, own the margin structure. amazon in particular wants to own -- brad: the prices of these are cheaper so why are the margins higher? maha: it is higher than going through a branded middleman or a manufacturer because they take those companies out of the picture. they take the middleman out of the picture. in amazon doing this, they are going for the lowest margin products in the grocery shelves. brad: amazon has been trying to private label for 10 years. it started with kitchen stuff. and never really seemed to really work. i thought that was because they

didn't wanted to privilege their own stuff versus their manufacturing partners. and partly because it is not really customer centric. you are putting your products in front of your customer and yet here they are amplifying the program. is this driven by business necessity? maha: it seems to me it is going against the grain. in this on-demand excess capacity, collaborative consumption model, you are seeing companies like instacart pop-up that are taking advantage of the no capitalized model of selling groceries. brad: they don't fulfill from costco or a grocery store. maha: it is a delivery on-demand model for groceries. amazon is going retro and taking the web band circa 1999 approach which is we will own the warehouses the trucks and even own the supply chain in selling milk and baby food --

brad: they did diapers last year and then they have to sell it because of the manufacturer. what are the risks here? what does amazon need to be worried about? maha: amazon becomes a consumer packaged goods companies and there are risks associated with that going as far as having fun with the dealing of outbreaks particularly with dairy foods. and, they are owning the supply chain through the delivery so there is really no one to blame but themselves. for a really low-margin product. brad: they can drive prices down which they love to do. we have seen amazon expand froor deliveries. it seems like they have really started to notice companies like instacart maybe one day uber

that turns stores into delivery nodes. is amazon trying to take into account this next wave of delivery services? maha: without question. they are trying to own the customer experience. in that means going through the grocery chain and actually just providing the last mile, they will do that as long as it is amazon branded. if it means in the case of milk owning the middle, branding them out -- they will do that. as long as you as a customer are feeling like you are immersed in the amazon experience. brad: what do you think amazon milk tastes like? maha: what is amazon prime milk taste like? [laughter] brad: thank you. google is holding its annual developers conference in san francisco this week. xiaomi's hugo barat was out the

event and sounded excited about what he saw. hugo barra: it is possibly the biggest we have ever had in terms of all the announcements that came in because android amp, which we have been waiting for -- android pay which we knew what was going to happen but it is a big deal from an ecosystem perspective. i'm really excited about the internet of things because it really means android finally manages to expand to anything really that one can think of in the home, the office and whatnot. i'm very excited about that. we will be riding all these trends, using all these new stk's. brad: barra made his name as the public face of android. he left google in 2013 for xiaomi. emily chang asked him if he was

going to build his own os to compete with android. hugo: we would not build our own operating system for smartphones or tvs or these products simply because it does not make sense to do that. we would much rather use that engineering horsepower building interesting services and capabilities on top of android that add value versus starting again. there is no real reason to do that. if you think about it, if you build an operating system, you need to build a developer ecosystem and that is one of the hardest things to do. everyone who tried has completely failed despite having the resources we would have as a startup. we would not. brad: catch the full interview with hugo barat on "studio 1.0" right here on bloomberg tv. coming up there are celebrities and then there are internet celebrities.

we are talking social media superstars with a startup. as we had to break, check out this san diego man who thought his iphone was gone for ever when his brother threw it into the ocean. not only did it survive, but it filmed the whole thing. we will be right back. ♪

brad: time now for the daily bite one number that tells a whole lot. today it is $4 million. that is the ucla scholarship fund by the team behind "the big bang theory." they are contributing to the fund for stem cell students.

it was a pay dispute that turned out well for john parsons and kaley cuoco. they now make $1 million an episode. the list to say, the stars can afford ato sponsor aspiring scientists and engineers. it is the age of the social media star. the self regeneration has figured out to build an online following of millions and big brands want in. niche business startup that makes it happen. they pair of social media stars for advertising. three months ago, they were snapped up by twitter and since then the greater account has doubled to 11,000. joining us now is niche cofounder rob fishman and maha is with us as well. rob

rob: over the last few years, the advent of mobile applications like twitter and periscope has given rise to new content creators. they have worked in ad agencies or even high school students that have amassed audiences of millions, tens of millions of followers who tune in every day to see what the latest is with those folks. brad: do they have any hesitance about bringing advertisers into their spots? in previous generation, we might have thought about that as selling out but they seem to be embracing advertisers. rob: we look at it as selling in. they need to support themselves and they are creating free content for their fans every day. we try to pair them up with best brands. the numbers speak to that. brad: maha, tell us what victorious is and what the

advantages are of not just twitter but other platforms like snapchat and youtube. maha: once the social media celebrities have amassed enough of an audience or following, they find the economics do not work in their favor. they are pumping tens of millions of views on a monthly basis on youtube or twitter and really not getting a huge piece of the economics. ofeventually they want more. our company victorious is helping to make mobile apps and marketing so that the social media star can then have their own little place or big place where the followers can truly follow. brad: rob< ni niche was acquired by twitter around the same time twitter acquired periscope. tell us how niche is doing and what role you are planning. rob: it is really exciting for

us. brands were increasingly coming to twitter and saying i love that you have hundreds of millions of viewers, but i don't know what to say on twitter. an tweet is no longer 140 characters -- you need videos and animations. we have the best content creators in the world and we can team up with brands to create content that travels across the twitter universe. it is a perfect combination of the creative force of the talent and the distribution. brad: rob, do brands have any fears about being integrated or accompanying this kind of user generated content were sometimes anything goes? rob: yeah, there was definitely trepidation early on. most of our clients are repeat customers and they come to us because they've get the look and feel of user content. we work very closely with some of the biggest brands in the

world to partner with these creators to get their ideas and concepts. everything is looked at before it goes live. you get the look and feel with the vetting process that brands expect elsewhere. brad: maha how big is this opportunity? maha: that is a mix of authenticity and ugc, yet some sort of production value. we believe the same thing -- i believe the same thing that as the stars grow, they will need to produce content that their mass audience is more comfortable and digestible. brad: ok, rob fishman and maha, my guest host for the show. thank you. that is everything in this edition of "bloomberg west." tune in monday for the conversation with rich riley. we will see you then. ♪

john: i'm john heilemann. mark: with all due respect to sepp blatter, you can count on our support for the right price. ♪ mark: on the show tonight, the music man -- bernie sanders faces the music and the ed gillespie musical. the latest news from the indictment of haster. he allegedly paid a younger male hush money to conceal sexual misconduct that occurred during his time with the high school wrestler c