♪ emily: i'm emily chang and this is the best of "bloomberg west." we have compiled our best interviews of the week. coming up, apple introduces a smaller, cheaper iphone. how are investors digesting it? we will discuss. we remember andy grove, a pluswe remember andy grove, a founding father of silicon , valley and a mentor of the biggest minds. and i sit down with shopify, checking in with the e-commerce company as reports swirl of an acquisition by google. first, to our lead.

apple unveils a new iphone the , iphone s6 with a smaller screen and smaller price tag. starting out at $399, it is the cheapest new iphone ever. the company appealing to both to customer -- loyal to the iphone 5 and new buyers in high-growth markets like china and india. investors initially were not crazy about the reveal. shares dipping as the event got underway, but i do want to point out that investors are typically slow to digest apple product announcements. looking back since steve jobs died in 2011, shares rose 1.5% after product launches, but retreated 1.8% three months later. right after the event, i spoke with gene munster in minneapolis. i started by asking, how will investors look at apple? >> i think investors are already

concerned. they should take away the are being finally more aggressive, may be appropriate the aggressive but the pricing that should be more resonant with the emerging markets. points a great price because it will be more attractive, but at the same time, not at the cost of their margins. so, investors should feel good about that. the second piece, the march guidance they gave, many investors believed that included the anticipated lower that is a end phone. that is a sign that it will not be out until march 31. the quarter ends on march 26. that means the march quarter doesn't benefit. investor, one of their takeaways should be to feel better about the march guidance based on the timing of when the phone is available. emily: porous this is the lowest , priced iphone ever. will this help reinvigorate iphone sales? >> i think iphone sales are doing well, just not growing. let's be clear, there are one billion devices out there, not all of them iphones, but we are

looking at a huge audience that is going to expand. perhaps slower than we are used to, but one billion people potentially using apple devices here. now, how much faster can they grow? how many more users are not consumers alike on? again, there are several billion people on the planet. probably most of them will have smartphones in the next two years. there is always going to be that green opportunity for them. i don't know if this is it. we will see more iteration. they are just going to keep improving this product. emily: cu is going to buy this phone? is it for people in emerging markets? for people who have not upgraded yet? people who already have an iphone but want the smaller , screen? who are they targeting? ben: when we look at intent to purchase and the installments, we see a portion of the base that has not moved. it is not always price-driven.

invite be a portion, 20% of our annual said they wanted to upgrade but are not sure about the size. they will upgrade at some point. which device will they choose? do they like the small? i think the existing base, the holdouts that are adamantly set, that is relatively small. if our panel indicates correctly, that is 10% to 15% of those owners. the important thing is that they are bringing the platform up to current generation technology, but i do think we are seeing, they were very intentional saying that a first-time buyer buys in at this screen size. it also has to do with the price. if you look at rural china india, indonesia, it is the , price point. this is indicative of a maturing middle. consumers, as they grow and mature, saying i'm drawn to apple and like the apps, they are willing to pay more and apple is meeting them at the middle with this price range.

apple to what extent is swimming against the tide? there is an economic slowdown happening in china, potential economic hiccup in russia and brazil. the smartphone market is quickly saturating. to what extent is this outside of apple's control? >> a lot of it is. they are still doing well in some emerging markets. in china, units grew at 18% year-over-year, and deceleration since september, but better than overall industry growth of smartphones in china, close to 10%. so, yes, they are up against the headwind. everyone is up against the headwind. i think the shares reflect that given the multiple that it is trading at. most important, when you put it all together, it should be a mid to high single digit growing

business for the next several years with the benefit of the emerging markets. even with the headwind, it should be a growing business. emily: we are seeing a very low priced iphone and iwatch cut, lowering the price by $50. what you make of that? could this impact the brand? >> my thinking is not on the price of the device purchased, but the per day basis. -- but on a per day basis? if you work out how long they stay in use, are upgraded, you get to an interesting figure. i used to say that an apple a one dollar per day figure. i have refined that, and now it is $.70 per day. on a per product basis we saw $17 for the lowest iphone and up to $31 for the most expensive -- not the most expensive, but the high-end model. think about that. $30 a month, it is $1 a day.

$15 or $17, that is $.50 a day. this is how i think we should think about these products, and ask ourselves, how many of those customers there are and how many services on top of that? we are looking at $10, $20 a year in additional service revenue per device. it can be boiled into one model and reduced to how many users you have, how much they spend on each device, and you get a valuation. emily: you have done a lot of work on the watch. no one knows how well the watch is selling. you are wearing yours. my two guests earlier have them but do not wear them. we are now seeing a price cut. can this be more than a niche product with an update or redesign? >> there is a couple of ways to think about the watch. one thing is that this was not something preceding it that gave us a frame of reference.

the iphone was built, most and of us had future phones and understood cell phones. the ipad was successful because we were familiar with the iphone. this is such a brand-new category of product, it takes time to get your brain around it. we still see high levels of consumer satisfaction, which is not your techies. we see within the mainstream markets, your everyday buyers who are finding value. this is just version one. we are optimistic that this product goes. again, the question is how big is the size of the market? we will have this are all new categories, how big is the opportunity for the markets? the research that we see continues to suggest that there is certain something there. how they that goes is going to be the constant debate. they will continue to evolve this product. putting a modem in it and unbundling it from the iphone would make sense, better improvement of native apps. that will come as it matures.

as a v1 product what we are , seeing in the market is positive. there's something there, but it is in its infancy. emily: ellis piper jaffray and gene munster, horace and ben. coming up, we remember one of silicon valley's founding fathers. intel's former chairman andy grove who died on monday at the age of 79. we will look back at his legacy. that's next. ♪ emily: this week, the tech

world has been mourning the death of andy grove, who died on monday at 79 years old. he played a central role in the creation of the semiconductor industry on which today's turn it ages built. he was a mentor to steve jobs, larry ellison, and mark zuckerberg. all turning to him for advice. i spoke to tech leaders who knew him, including craig barrett, who took over as ceo of intel. he told me about the impact andy grove had on him personally.

craig: i worked with andy for 35 years. and, you know, i greatly respected his inside, his wisdom, his strategic thought, and how straightforward he was. i think he was the most direct human being i ever met on the face of the earth. -- you exactly where knew exactly where he was coming from, and he always had a great strategic idea of what to do next. emily: intel was known as the world's best managed company, yet he was also known as a ruthless leader. yet, people still followed him. what would you say were the hallmarks of his style? craig: i do not think "ruthless" is the right word. i think being straightforward and practicing constructive confrontation, which is one of these intel buzzwords describing their country -- culture. it you always knew where he was coming from.

he would not tolerate shallow thinking. he wanted every strategy well thought out, well considered, and did not manage -- mind challenging anyone in the company, or the industry for that matter. emily: what was it like trying to fill his big shoes? would he continue to try to influence you even when you were the ceo and he wasn't? craig:, no, well intel has had such a tremendous history of , leaders -- icons in the industry. bob noyce, gordon moore and andy grove. following those three is a daunting task for anyone. but, i worked very closely with y on a consulting basis after he left the ceo position. i followed him. he was helpful. he was respectful of decisions i made. so, he was a wonderful mentor. he did not overstep, overreach.

and he respected the next generation of management coming into play. emily: young ceos revere andy grove. his book on management is like the bible. i wonder, do you think his leadership style survives generations, or can other styles be just as successful? craig: certainly, there is not one way to manage a company. andy imprinted his style into the culture of intel. and the company goes to great pains to really indoctrinate all the new hires into the company, into the cultural style, where strategic thought is important, constructive confrontation. addressing issues, running communications up and down the company. the lowest level employee feels free to contact the ceo at any time with an idea. all those were things andy put into the company and into play.

they are still all alive and well. emily: craig barrett. when we return, i will speak with one of the men andy grove mentored. ben horowitz of andreessen horowitz. we will hear more about andy grove and his extraordinary life. i will sit down with a ceo and later in the discussing the hour, issues facing the world of cyber security. ♪

emily: as we remember a pioneer of the tech industry, former ceo and chairman of intel, the late andy grove died on monday, i spoke to ben horowitz, cofounder of andreessen horowitz who had his own special relationship with andy grove, a beloved mentor and teacher. he talked about his role in shaping silicon valley. ben: not only did he build the foundational company, and to get to the microprocessor intel was

in the memory business. that is usually the end when you get to 13 years. and he faced brutal competition from the japanese, including subsidies from the japanese government to his competitors, which forced him to switch the business that late in its life to microprocessors, something he foresaw might be a big market, but at the time was tiny. u.s., as a result, the ended up being the center of the micro -- the microprocessor market and the pc industry, which led us to be the center of the internet. he kind of was the foundation for the u.s.'s leadership in technology. you know, that was a really big thing, but beyond that, he was also the cultural foundation of silicon valley and that his

leadership in turning around once he achieved what he did, and making sure others knew how to do it, was unprecedented. really, nobody has done it as well since, but we have lived and it has made every company off of it and it has made every company that has read the book , or followed andy grove better. that leads me to my next question them a which is the , idea of a turnaround is still elusive to most big tech companies out there, with perhaps only apple truly turning itself around. now, we are seeing yahoo! and ibm going through difficult times. what do you think andy grove's advice would be to them? or, what did he think about them in his final months? ben: yeah. there is probably some things he said to me i should not share. but, i will say this, i think

andy and a steve jobs had in common was the courage to take the company in a direction that maybe nobody at the time really thought was a good idea. and i think what you see a lot is what ihip now would consider more followership. what do the shareholders want us to do or what do the analysts think is a good idea? and you look at what steve jobs did with apple or andy did with intel, no one reported on it. nobody was an armchair strategist. neither would have sent them in the directions they took. but they did the work, they knew what the right direction once, and were ok with whatever happened to them. they were ok doing with doing what they believed was right. i think that defined andy as a leader. the thing that people who follow him take away is that courage

and determination to do what is right. emily: it seems like so many young people want to be opera knowers, want to come to silicon valley and let the silicon valley dream. what was his take on you onto per knowers today? some who may be called overly arrogant or naive, and what lessons should they take from andy grove? reallythink andy continue to believe in people and even the young people, people considered arrogant, he spent time with a lot of the young ceos. drew houston of dropbox, mark zuckerberg, if you look at mark's career and what he has done with the company and philanthropically, you can see that he has learned a lot from andy. he knows the importance of giving back. andy's career was so influenced

by how grateful he was that this country took him in as a refugee at 18 years old, he had nothing. he came over on a boat. he got a few dollars a month and we let him be a citizen. and he never, ever stop trying to repay that. he paid it forward to all of us. it is such an amazing thing. that level of gratitude and belief in humanity is what we all try to take from him. emily: horowitz, speaking to me about the death of former intel ceo andy grove. now with me to discuss, our intel reporter, ian king. he met and become many times. i want to touch on something that ben mentioned, how he became this way. how did he become so great? share a little about his story. ian: he wrote a moving book about that process, his childhood growing up in europe

during the war in eastern europe. being jewish, what happened to his family when the nazis occupied hungary, and when it was fought over by the soviets when they took it over. how his family was persecuted and he had to escape. emily: you met him many times. what was he like? ian: scary. and inspiring, but scary. everybody we have spoken to, they all talk about his intellectual honesty, his love of the truth. that was absolutely what he was like. you couldn't have a flirty, flattering conversation. he was not interested in his own celebrity or power. all he cared about was getting to the truth. he would push people's buttons until he got what he felt was useful out of them. emily: david kirkpatrick is still with me, david i'm sure , you have your own stories about andy grove, having covered silicon valley for so many years. how do you remember him? david: listening to all of these wonderful comments, one thing that has not been mentioned is

that he played a key role in building the ecosystem that is silicon valley now. you know, this complex relationship between microsoft and intel that led to the incredible success of the pca, of which he was one of the great champions of. bill gates is not a pushover. andy grove was a formidable match for him. it was necessary, in those years, that both companies were led by super strong, super intelligent, rational, but feisty leaders who wanted to win and push each other around. in the end, they knew they had to win together. he was not mean, but he was very gruff and straightforward. he was an incredibly nuanced thinker. there are so many wonderful things about him. he was generous, too. that is something that might not have come through some of the other comments. when i first started covering

tech, he got to know me and gave me pointers on what i should think about. emily: quickly, your profile of andy today opened with this amazing anecdote about a conversation with steve jobs and larry ellison. share that with us. ian: they went to his house on his birthday to celebrate. they both thought, by way of tribute, they would tell him that he was the only man in silicon valley that they could work for. his response was that he would not have hired either one of them. he thought they were flaky. [laughter] emily: he told them they were complete flakes. is that the andy you know? david: that sounds very much like andy. he was not going to sugarcoat anything. he wasn't mean, he just told it like it was. you had to be braced for unpalatable truths when you hung around with him. but he wasn't going to mess around, or waste your time. he wanted to make a great company, industry, and he was ultimately a great american that wanted to build the country up.

emily: that was ian king and david kirkpatrick. up next, we will speak to the adobe ceo about the areas of focus beyond products like photoshop. we head to las vegas, next. if you like bloomberg news you can listen on the bloomberg radio app on bloomberg.com and in the u.s. on xm. best of "bloomberg west," continues after this break. ♪