♪ allie: i am allie chang. this is best of bloomberg west. iphoneup, apple unveiled seven in a new watch. what this really -- what is revitalized sales? we will discuss. billions less than they paid for it. it is official, the playstation 4 lands in november. we would hear from the sony chairman about what to expect

from the latest hardware. but first, a new suite of upgrades for the iphone and apple products. the iphone seven is water resistant with better battery life and cameras. meantime, the customers of the apple series to watch will be able to swim, track their fitness, and play pokemon go from there watch. apple also unveiled at the new phone will not have a your phones jack. instead, they unveiled their new airbus. -- air buds. we talked about the reaction. >> i thought it was a big update as far as the camera system. it is very interesting to me that they are actually shipping one of the key features in a softer update later in the year. i thought that was quite odd. i thought the advancement and terms of the

processor was significant. podsught the air pds -- were interesting. about the price was interesting. it is an overall suite of products that make sense when together. interestingly, the dual camera processor you can only get when you buy the bigger iphone. corey, what do you think of that move? potentially, there is a technology reason for this. maybe, -- maybe they want to push people to upgrade to the larger phone? what do you think? corey: once again, i think outside the world of the technology press, people will think it just takes pictures a little bit better than their current phone. i do not think the average user looks for that. they did, i think

actually add to it. when tim cook described the iphone as the gold standard for smartphones, i think he was right. it is important to apple to have the best phone that can do the best. they want to say that their products are the best so they can command the operating margins. a vast majority of the industry is about the apple image. they can lead the industry by having a top-of-the-line product. new,: let's talk about the wireless headphones. mark, do you think we are seeing an important new product category here? mark: i think apple is looking for a new way to generate profits and margins. i think these new headphones with help them with that. business is one booming category of their business. i think showing that apple could introduce new products beyond their current lineup is very significant from an investor perspective.

speaking of margins, i think it is very interesting to see that apple increased the prices of both the new apple watch series to and the iphone seven plus by $20 each over their 20 -- over their predecessors in the prior year. and markry johnson gerber, thank you so much. i want to take a deeper look at the new iphone specifically. we know apple has been under pressure from investors to breathe new life into their flagship product. will the latest updates be enough to reverse two consecutive quarters of decline? he with me to discuss our two longtime apple watchers. so, will they? is it enough to reignite sales? >> there are a couple of interesting things. that there is a lot of discussion about the lifetime

of a phone. that is true. it is moving from 80 26 months to 28 months -- 26 months -- it is moving from 26 months to 28 months. not exactly three years. to the are holding true upgrade cycle, than most people are in line for an upgrade in the next 2-3 months. it is a big upgrade. if you look from the sixth to the seven, it is a big upgrade. it may not look it in some cases, but it is good they are bringing the installment plans to -- but it is. they are bringing the installment plans to china and the u.k.. that is significant for those customers in those markets that have seen it year-over-year increases. they think it is now time to join the program. this program makes sense. is better the camera than ever. we see a lot of people carry their iphones instead of regular cameras.

that said, they only have the dual processing camera on the bigger phone. what you make of that? are notany vendors selling them. they are not shipping many of them. is a -- it is a big technology problem. bring itthey wanted to to the regular iphone seven, it may not just a been -- it may not have been logistically possible. if you look at most of the major markets from u.s. and china, the bulk of the market is on the iphone 6 or the iphone 6 s. i think they are still tried to figure out what size they want. the bigger phones are not the largest portion of that sales makes. -- sales mix. so the question is will the camera be the function that moves people up? allie: how big is the water

resistance part of this? >> it is a big feature. you are not the first. samsung and some other manufacturers did it first. still, it is important to bring it in. the watch is not only just water resistant, but it is also waterproof up to a certain depth. allie: it is up to a depth of 50 meters. >> it is something that in the industry, everybody has to have it. just one ofg is those things like having a high resolution display. allie: battery life is still an issue. >> that is a huge deal. i do not think it got a lot of airplay. the battery life is getting at her, even though performance is increasing. they are talking about 3-4 hours more use out of the device. that is a big deal, i think. personally, i do not feel the pain of battery life because i always seem to be in the green. however, not everyone is as

lucky. allie: i feel the pain every day. >> only talk about the features that drive purchase, we talk about the camera in the battery life. there estimates might be -- the camera and the battery life. there estimates might be conservative. lowery look at efficiency, you might see better gains out of it. that could be the one thing that makes a big difference. the big phone does have amazing battery life compared to the others. mark: -- allie: it does. my husband has that one. i want to talk about the gps tracking some of the software, and the new hardware. we did not know if we were going to get new, better hardware. we did. what you think of the new watch? a very big and of how the product is doing. they told us that it rose in ranks and became the second

best-selling watch brand in the world. they put it between two others, rolex and one other. if you look at the numbers of the two companies, you can see the ranges. we did that and it turns out to be between 3.8 and three point -- $3.8 billion and $3.4 billion. first, the watch was around $5 million. when put that into perspective, five million dollars from zero -- $5 million from zero is a lot. was considered a flop and worthless, generally speaking. allie: why did he not just tell us what the number is? >> they look at it in the terms that they do not want to give the competition any sales figures so that anyone would at what they are doing.

we can figure it out. i think you can do enough backwards math to figure it out. i think they will tell us at some point in time. they are using it in, i suppose. >> i do not quite fully understand the logic, because they are giving us for disclosure on everything else. this has really been one of those sleeper products. look at the performance improvements we are getting in one year. it is a dual core gps, it is waterproof -- it has a dual core processor, gps, it is waterproof. what is next? it took a couple of years to get traction for their other products, so for me this watch is fascinating. allie: i do want to talk about gaming. first, mario is coming to the iphone. second, pokemon go is coming to the watch. there was a big emphasis around gaming. what you think of it?

>> starting with the watch, there has really been no breakout aims with it. sensen go makes a lot of with this product. i'm going to use it like crazy to catch pokemon on my wrist. the gps in the processor are opening up those possibilities for developers. the performance should open up new possibilities on your wrist. mario is a good example of a franchise, and pefully this is in the works for longer than just this. hopefully, between pokemon go and mario, nintendo is looking to embrace the mobile area. -- era. branch outping to there franchise and make it more accessible. coming up, should car companies consider tech company's new competition? this is bloomberg. ♪

emily: automakers may have good reason to fear competition from tech companies. although some have scoffed at the idea that apple or google could cause real concern, these newstudies concern -- these study suggest they should be taken seriously. we caught up with two experts on analysts and -- on analysis and research. take a listen. trying -- wee were were kind to understand what was important to car buyers, everything from technology and features two engines, all that stuff. in terms of the brand, what was fascinating is that over 50% of googlens would consider or apple cars. 52% would modestly consider purchasing one.

12% said they would absolutely buy an apple car. 11% said they would buy a google car. this was a hypothetical question. the point was very specifically -- if this were to occur, what is your level of consideration? i did multiple scales and the results were fascinating. most people had written apple and google off. i even gave people the option to say, "would you not even care about them?" 24% said they would not consider an apple car. 22% said they would not care for a google car. bottom line, a lot of people said yes. they would consider it. car at thispple point is completely mythical. do you think carmakers should be concerned? >> fundamentally, i think there are two interesting things going on in the car company.

first, the move to electrical. second, the move to autonomy. the move to a electric is fundamentally disabling to the car industry. it changes the core way that you build a car where thet to things traditional carmakers do not have a lead in expertise in understand -- and understanding. added autonomy onto that, you start getting a picture where this reminds me of what happened to the phone industry. first, we started with nokia as the company for people that knew how to build phones. quote about the iphone being rumored. they did not think it was possible for a pc company to do it. then, apple came in with a device that everyone laughed at. now, apple is laughing in their faces. i think the transition to electrical on one hand and the potential transition to

semi-autonomy and full autonomy -- we kind of reset the stage for the industry. systems andthe creating the user experience in creating the actual software is not -- and creating the actual software is not something that the traditional automakers have a lot of expertise. from like the transition regular phones to smartphones. emily: there are two interesting trends. one, more people are using ridesharing services. bears areanies like trying to automate ridesharing. what did you find? >> when you survey the entire u.s., it is a very different picture you get than a microcosm of silicon valley. 80% of the united states have neither use -- have either never

haveridesharing her -- or only used it once. if you are younger, it did skew much higher. useked about what they ridesharing for, and it tended to be more supplement things. it was after you were out drinking or if you were out traveling. the people that use it as a actual card replacement were a fraction of a percentage of an actual percentage. i think it will be a long time before we see it makes -- it make a big impact on actual car purchase. second, if ridesharing used autonomous cars, how would that impact your usage of them? not surprisingly, more people said they would use it less. interestingly, even people in the city -- this was the group that had the highest amount of people that said it would absolutely stop using them if they had autonomous driving. up, intel is

teaming up to build up its cyber security unit. how does it built into the broader cyber security landscape. the details next. product.king on a new we would hear from the ceo in the next hour. this is bloomberg. ♪

emily: first, there was mcafee. beefing up their cyber security firm once again. aey will jointly invest in spin out transaction. , coryitor at large johnso joined us to give us the details. this will ultimately be a profitable deal for intel. as it stands right now, they have taken so much profit out of

the mcafee security business. if you look at the intel breakdown of the last two quarters, the mcafee segment did million.7 they are selling about half their stake for $2.1 billion. they are getting about equal the value that semantic traded alone. it is very complicated and how it is put together. it will result in intel getting $3 billion cash on their balance sheet. they will maintain it to 2% ownership of this new company. -- 50% ownership in this new company. it is going to be a much more people he focused company for intel, selling semiconductors. emily: have you seen this new unit fitting into the rest of the cyber security industry? many folks have said it is headed for major corrections, a

lot of m&a. this a lot a smaller players will be snatched up. cory: when i look at cyber security, at all different levels, it to be a company buying it or the government buying it. you hear about these great little solutions. the big umbrella solutions are for companies that can handle things in a lot of complex ways to battle the new threats. they are hard to come by. we know there is a lot of spending in that industry. you can imagine -- i think it is really important here, with the tpg iseal for intel, going to run the show here. the same people running that business unit at intel will -- tpg has a lot of an agile to make it a more

fully, flux will thing. going to bentel is on the sidelines owning 49% of it. they are going to be in a position to add what they need to. intel, meanwhile, are really focused on filling ships. chips foro[s -- mobile devices. security is important, but it is not their main business. cory johnson, live in san francisco, thank you so much. i want to turn out to our conversation with john mcafee, the original cofounder of mcafee. at was the security company that intel bath. it was the security company that intel bought. the plan was to transfer the company into a cyber security

firm. they rebranded it as mcafee security, the pioneer for cyber security. earlier, we spoke about the new venture. take a listen. ceo, wei became the threw out all the existing products and projects. he became a purely cyber security firm. i think we became the most up-to-date cyber security products on the planet. >> google became a verb to search. mcafee is a name, a word like that. with computerit security and online security. what is the technology that will set this new venture that you have joined a part? >> i invented the current technology. it started with antivirus technology. we branched out into a hole system of programs -- whole system of programs that identify

malware. but the time you have identified it them though, it is too late. they are already in your system. in theas a hack government, when 21 million records were taken. they did not find out about it until 2015. all of our products today are reactive. i am identifying an entire line of proactive products. a lot of my friends are hackers. as i got older, i guess i got some kind of grudging respect from them. they actually asked me to which is then worldwide hacking convention. toired a bunch of hackers help me. they are the ones doing the hacking. if you are going to build the best bang fault, hire the best bank vault cracker. otherwise, you'll miss something. products are

catching hackers in the first few seconds when they are sniffing your system. it takes hackers months for them to get what they want. the first few days are just them probing around. since i know how hackers work and the people i have hired know how hackers work, within 10 seconds of them sniffing your system, we have identified them. we have found out where the hacker is, what technique he is using, and we send instant message to the i.t. manager. we tell them that you have a hacker in russia, do something. we do not do something. it is something for them to do. we are the alarm company. emily: that was antivirus company ceo john mcafee. coming up, the speeding up of a flagship product. we will focus on the console wars with the head of a station. if you like bloomberg news, check us out on the radio. you can listen on the bloomberg radio at and on serious xm.

this is bloomberg. ♪

emily: welcome back to the best of bloomberg west. a tech giant released an updated model of its most important product. we are not talking about apple and iphone seven but sony and its new playstation for's - . they confirmed rumors that have swirled for months. in november, it will begin to sell a souped-up version of the ps4 pro. video and runs virtual reality games. existig ps4 the

with a slimmer model and knocking down the price 50 bucks. it's not unusual to release an update for sony, it is. of 122 had a lifecycle years, the ps3, nine years. we caught up with sean ladin and asked that. playstation will be meeting its market this year so we've had a chce to innovate across the technology. we are constantly updating the firmware to give it more abilities and features. we are concentrating on the display aspects of it. we can bring four k gaming to the living room as well as video support. give more power to features and more abilities to both users and developers. >> when you imagine how this will affect your install base, what kind of numbers do we have

now? and what percentage of the users are going to want that up raid and not want to wait for the next gen? of 40 millionth worldwide. in november the pro and in 10 days, bringing the new form factor for the conventional playstation 4, we hope to have a great year of head of us -- ahead of us. >> i will accept that as a nonanswer. the market will step up to the new units. are there things in particular to expand to new audiences as well? unitsther 20 million worldwide this year. we are chasing a significant target in both of these platforms give us a chance to reach that. next month, we will be introducing playstation vr. >> i was just going to get there.

oculus gets so much attention because of the mark zuckerberg thing. you have a massive install base with a machine that will be able to run some pretty complex software. what are your expectations around that? a new experience gamers haven't had before. it's not just an extension of video gaming technology. you'll be launching the platform on october 16 and will bring out 20 new titles that launch and 50 by the end of the year. we think it will allow people to experience entertainment in a way they've never had a chance to before. the technology has been around for a while. cory: how has the duration of play changed? they get dizzy, sick, tired because the experience is so immersive.

it goes against the joy of playing madden football for 18 hours straight. there is still the joy of playing for 18 hours straight. in our experiments and experience, it is so intense and immersive that it lends more to arcade gaming experience. bursts of playse for 15 to 20 minutes. but who knows? its new. cory: and you have development partners? >> all the development partners are taking turn -- are making content. batmanbros. with their series and lucasarts with star wars. emily: the chairman of sony attract live entertainment speaking with cory johnson.

playstation makes up half of the two main competitors. the archrival is the xbox. xbox games tweeting about the upcoming project scorpio, being the most powerful console ever made and the ps 4 pro doesn't support blu-ray. does this latest announcement position sony versus microsoft? >> they have done a good job the last four years per -- outperforming microsoft two to one. you have the strength of not just content studios but this large install base. as microsoft being more powerful, in the end, the developers look for the common

denominator. it will impact sony's momentum much. compared tos4 microsoft's tbd? it is much more powerful graphics wise based on the standalone device that they have. they are positioning it for virtual reality which requires more powerful. -- more power. that way the developer can work on this the next couple of years. emily: talking about halo and vive, isculus, htc it the same addressable market? within the gaming community, there is a large amount of overlap.

but the future for oculus and htc is beyond gaming. projections,t the it is in the commercial space where the big bucks will be. oculus and htc having a much bigger addressable market? >> in the long term. toon't think sony's ability corner the market goes away anytime soon. emily: what about four k capability? >> having youtube and netflix in 4k. it helps push the content forward. base doesn't really 4k yet. for k yet --

up late, we will see better resolution content. emily: that was our bloomberg analyst senior intelligence. products, we on will catch up on the ongoing war for the cloud. this is bloomberg. ♪

emily: boxx is going after businesses. it they developing software with ibm to develop a one-stop experience for companies. it is called boxx relay -- box relay. why does he consider it better than anything else on the years? >> we started 11 ago and wanted to make it easy for people to share, access, and collaborate from anywhere. we're pretty far along. --have 66,000 companies customers. at the same time, even though we've been able to accomplish quite a bit, work is still changing pretty dramatically.

they still lead a hodgepodge set of solutions. software, we don't think companies will be able to operate in a modern way if that is the set of tools they are left with. how all of their work ultimately comes together. it helps you streamline a lot of the routine work you're doing. all of these things that companies do, hundreds of thousands of times a day. it completely changes the set of cases.

we have been working on it for about a year. we started the actual development. it uses the same data, security, and collaboration features. it is built with the user experience so it is simple and easy to use. we have combined forces to use ibm's experience and collaborative tools to come together as a very simple solution. is there already some cloud-based project float tools out there? this will be complementary to products like that because our focus is on content. it has a have a documented center. it is really for task management.

customized workflow for the business. i think we will live among those kinds of solutions. the legacy content management and collaboration technology, they simply don't pay off. dropbox is moving forward with plans to go public. in 2015, it boosted its share of the business files. lead in that particular part of the market. all?that concern you at >> comparing apples to oranges. it we focus on anything from end-users to consumers to media businesses. growth rates are pretty different. grewe past quarter, we

just our large deal segment. -- that grew pretty significantly in the key segments of the enterprise market that the figures don't break down the numbers accurately. emily: does it change the competitive landscape for you? >> it will make the financial comparison more transparent and it will be answer to -- easier nswethese questions in the future. we have a lot of respect for dropbox and what we've been able to develop. microsoft? about they have been increasing their work in the cloud. aney have a larger share the box does. is becoming a bigger partner for us. we will talk about how we are

driving openness and integration oriented strategy with microsoft. you will have a lot of interoperability. it is more of a partner. that the way , it isises work today far too complex a system. emily: you do have a prop for your conference. >> it is a fashion -- will you put it on? emily: explain this to me. >> this is amazing. this is great news. emily: this is not affiliated with any political platform.

>> our conference is about thatg better software works better together with all of our partners and we truly think software needs to be made great again. it's not the official theme of the conference. these hats just look amazing. emily: will you wear this the entire time? >> it does hide my gray hair. there have been a couple more since we've gone public. it's a cool hat. that's free to keep. ahead, officially china's most viable country -- company. the forces that plan the chinese economy. this is bloomberg. ♪

emily: this week, tencent surpassed china mobile to become china's most valuable company. breaking into the ranks of the world's 10 largest public companies. tencentnted 10 sent -- on the rise of leaving government businesses behind. we discuss what was behind this shift.

wax they have a broad range of products. at leading the way early to instant messaging platforms. they own games companies and a bunch of other companies. they have grown very quickly in the market cap has been strong as is alibaba. the second largest in china at this point. you had state backed companies is the most valuable in the sector. you mentioned china mobile and petro china. you see a shift to privately driven innovation and i think it's a good example of that where the state owned companies no longer dominate the economy the way that they once did. emily: is this something you expect to keep up? you mentioned alibaba and by do. had you expect the hierarchy to evolve? >> it is hard to predict how these things will evolve.

they compete more in the private company -- in the private sector. supercell, bought the game company in finland. alibaba has made very ambitious plans not just for e-commerce and china but to move beyond china in the southeast asia. they want to build on that success but nothing is guaranteed. bloomberg asia tech managing editor from new york. giants with chinese tech , the valuation has jumped to $33.8 billion. they just received $119 million from foxconn. after a funding round led by apple.

>> this is a really interesting. they are looking to diversify away from that and they have made other investments in the auto industry. interesting to see what kind of collaboration they will see from this. >> focused on innovation index execution.- and how do you imagine they could collaborate? there are no plans outlined yet but you can imagine a world of possibilities. foxconn is the main apple

supplier. as you mentioned before, apple maybe one billion-dollar investment. apple may be uses foxconn to manufacture and assemble their vehicles. the role of apple and all of this is not clear but it is very interesting. emily: it is still a mythical creature that may or may not exist. likeyou look at a company do you believe it is shaping up to be a monopolistic type versus uber worldwide?

>> they do have a lot of smaller upstarts. they have a lot more saturation to reach in china. as for india, there are local players there around southeast asia. uber cut losses in china. they are rapidly trying to partner with other companies trying to gain in the southeast asian market. we focus on the big names, but remember this is a very fast-moving space. there are new startups trying to push ahead. andy: apple announces new improved iphone seven and seven plus in san francisco. mark attended the event and got

his hands on one in the demo room. take a look. ♪ we're here to look at new iphones. it the new iphone seven and iphone seven plus. overall, they've updated performance. gives youutton here some feedback. it is not a physical click. a new dual lens camera lens iphone sevenarger plus that allows for deeper zoom. when you open up the camera, it has them zoom features. apple announced air pod, a

wireless version and bluetooth headset we will take a look at. they come in this charger case. you can charge the case with a lightning connector. september 16es out come out inuds will october and sell for $159. emily: that does it for this edition of the best of bloomberg west. with a great lineup of guests including our interview with david marcus, vice president of facebook messaging. we will see you then. this is bloomberg. ♪

carol: welcome to bloomberg businessweek. in this week's issue, could ask on be liable for allegedly misleading the public about climate change? david: canada's try minister is a little bit like donald trump. carol: really? david: sort of. carol: and does vladimir putin prefer hillary clinton or donald trump for the white house? david: all that on bloomberg businessweek. ♪ we're here with the editor-in-chief of bloomberg businessweek and we have a story in the market