retired marine corps general james mattis was officially sworn in today is the 26 u.s. secretary of defense. the president had said earlier that he believes hearts interrogation techniques are effective. theident that is has -- president and james mattis have ordered reviews of the f-35's. meanwhile, the president and british time minister that prime minister have kicked off a new era in u.s.-u.k. relations. they held a joint news conference at the white house they stressed the importance of the special relationship between the two countries. maher is the first for leader to meet officially with trump since the inauguration. an confirms he accepted invitation from queen elizabeth for a state dinner. and mexico's president may have put some of their differences behind them. they spoke today on a mutually arranged phone call for one hour. mexico's president called call

constructive. about the they spoke wall, drug trafficking, and the need to work together. on courtney collins, this is bloomberg. >> i'm cory johnson, this is bloomberg technology. first up, text cloud and diction. how does the drive $1 trillion into the sector over the next five years. and we will break down citadels ceo, backup singer. and we will talk to the start of building a private space station -- start up building a private space station. demand for cloud infrastructure is expected to grow

dramatically. that connects the results of all the tech earnings this week. -- $1 trillion will be shifted into the eye injury -- i.t. industry of the next five years. the executive dp of executive worldwide commercial business. i really think this is true, we are in a dramatic time in technology where all the big hardware slingers are losing their business of selling stuff to companies because the companies are looking to the cloud, but your company has made a dramatic turn right. you had 50% of revenues in the closet -- 15% of revenues in the cloud business go -- business? >> we are more excited with the momentum we are seeing with microsoft cloud. fy 18, wetrack for

posted $14 billion in this last announcement, and what we are seeing from aerospace to agriculture, big companies are putting their business on the microsoft cloud. , which ise 95% growth fantastic. number two, what types of customers are you getting? --in the last six months ago alone, we have announced contracts with owning -- boeing, mars, adobe, and others. >> the planet mars? >> know, the candy. enterprises around the world are benefiting from the cloud, and we see companies trying to reinvent themselves with client technology. they are choosing microsoft for that. how many of these are core

microsoft customers that are moving business to the cloud because they are used to using microsoft for a lot of things? >> we are seeing growth from a .ot of customers traditional microsoft customers that have come to trust our credibility over the next few --imate -- decade, as though well as new customers who are investing in things like artificial intelligence to enhance their business. o'lakes, they're known for butter but they have a 13 billion technology business -- $30 billion technology business that is fueled by the microsoft cloud. for their it is long strong for a lot of reasons, but i do not think the dollars will shift. i think they will go to the cloud or disappear. do you have the same notion in microsoft, that the i.t. stem will not be moved to the cloud

but companies will spend less because they go to the cloud? >> we used to think about market opportunity as total number of pcs and data servers on the planet, but now we look at opportunity relative to the total addressable market for i.t. span. if you look at what is happening in digital transformation, big companies like boeing are betting their entire digital aviation business on the cloud, using moves to microsoft ai technology so they can address airlines around the world on a bigger scale. this does not just translate to i.t., this is new business growth coming from this. let's say i have a big fortune 500 company that i am trying to figure out where to go with my cloud business. microsoft?i go to >> at the end of the day, it is because of our scale, trust, and

security we have built into the platform, and also our enterprise credibility and experience with working customers and the space. we know what it takes to partner with industries around the world. for example, the connected car space right now, we think there is a lot of opportunity and we are not taking the tact of building cars but we have major contracts with bmw, nissan, toyota, volvo, every auto manufacturer on the menu -- planet where we are powering their manufacturing. doma ofe facing the having open systems that will allow customers to move out the second day cheap -- second they find a cheaper price, or having closed systems that work better because they had databases that are wedded to microsoft databases. certainly going towards that specific api approach. what is your take on that? >> we

think open is the right way to go. more than two thirds of the workloads we run our open so -- are open-source workloads. when it comes to enterprise, big businesses when they are betting the farm and thinking about how they transform, they want the trust that microsoft can provide them. am business going to -- business going to be bigger than amazon, five years from now? >> that's what we hope. >> good luck with that. up, we will be joined to discuss their company's latest earnings and behind the double digit growth. we're live streaming on twitter right now. mbergtech is the handle. this is bloomberg.

8.8% at vmware, but behind all this vmware ceo's going to help us break it down. it is good to see you. when we look at this quarter, what is the longer trend that we can look back at over the last calendar year, and where is vmware on its transition to do

more? >> it is always great to be with you and have a chance to chat with you. this is a great quarter. we have good performance across lines,our geos, product we exceeded our expectations. it was the perfect quarter in so many dimensions. we have been building momentum throughout the year with multiple raised quarters throughout the year, and we feel like our strategy has resonated well with customers, and they are getting increasingly confident with how we can enable this mobile cloud experience for ,hem and a multi-cloud world and be part of their digital future. it has been a good time for the company. the virtualization business changing? we were talking to microsoft about how their businesses embracing cloud and how many should -- companies are shifting to theeared -- workloads cloud. i wondered how your business is

changing the face of this? >> we think about that most people are building new workloads in the cloud. it is less of a shifting workload to the cloud, and their workloads, a lot of and the environments, aware's strategy is to be uniquely positioned across the two to enable customers and acrease flexibility, to have hybrid environments of customers do not need to change their application so they can harness the incredible power of the public cloud. our partnerships with ibm and amazon have resonated in the marketplace. the growth of our network has been extremely well received in the coretplace, and product have done very well also. we are seeing it on both sides of the business. >> what is the amazon partnership? >> what we announced back in

october with that vmware and amazon were coming together, the leader and public -- in public and leader in private cloud were coming together to have an offer of the full vmware software on the fully scalable amazon footprint. it brought the best of the two worlds together. we have been overwhelmingly ly responded to by the customers, so it really has brought the two leaders together. we are quite excited. it is not available yet. it will be in the middle of next year, but we are seeing customers increase their strategic commitment to vmware as a result of that announcement a couple of months ago. thate of the speculations the way that cloud business is going to grow going forward is that you have different kinds of customers going to different vendors, and there will certainly be exceptions but big

s&p 500 companies that are used to doing a lot of business with microsoft are going to go there, and you will have the startups, the goobers and the airbnb's -- s and airbnb'sr talking to ibm. how do you think that will play out from your standpoint? >> we think there will be a multi-cloud future. not just different kinds of customers, but different workloads as well. if you want office three to 65 -- 365? you get back from microsoft. maybe google and their big data services will be the best. my iot factory will be on premise. it's a multi-cloud future. vmware's strategy is to give the customers the networking and

tools so customers can take it vantage of all them and have the best of clouds. it's like we gave the customers flexible the of their servers in the past, we will give complex ability and control of their cloud services in the future, and that strategy is resonating very well with customers. >> i that you had an eyebrow raised when you saw [indiscernible] which even on a generous protection of revenue growth, which was strong, would 10 times next year's revenue. what do you make of that valuation on a company that is in your space? >> i was bit startled by the acquisition? as a company that is an important partner for us in many domains. it is mostly complementary to overall ifus, and everyone is saying this tech opportunity is moving beyond traditional i.t., and tech is

breaking out of tech and we are in the digital future, and every aspect of the business becomes a technology opportunity. we believe we are coming into a. of accelerated growth -- a moment of accelerated growth overall. we are very uniquely positioned to benefit from it. but you have to think some of these unicorn companies are overvalued, and we might see one or two blowup in the next year. >> i think we win through a major adjustments -- went through a major adjustment in valuations last year. there have not been that many ipos, m&a activity. there have been a steady stream of that but not crazy amounts of forward. it is not an overheated market. it was surprising that the valuation was paid for it. vm has a positive track record.

what has differentiated us in the m&a market out of acquired companies is that we have extraordinary success rates of companies that we have brought in. we will continue to use that as part of our strategy. >> the prices are getting hired. thanks for being on pat, we really appreciate it. this network equipment maker gave a weak outlook to its latest earnings report. investors are focusing on close margin operating forecasts, but also product design. that has been going on since the start of the month, $1 billion -- $1 billion for juniper wiped out. , butey transfer service why payments? we will uncover some secret pain points to the business.

this is bloomberg.

>> this week, we sought to company make that sought to companies make big bets in the payment industries. at&t is buying money gram. -- amt is buying money gram. do seabees companies coming together? >> i think part of it is because of this complexity of the payment infrastructure today. ec airbnb reportedly -- you see airbnb reportedly spending $20 million to solve their payments problem where they have an

using australian dollars and trying to stay in britain using british pound. because we have an air raid that can approach 10%. of the world is why can value not move the way thatmation move today moves today? we can stream information from mars, but i cannot get money to london in three or four days. get $10,000way to to london would be to buy a ticket to london and fly it there. >> when we see this notion, they are looking to offer a beachhead into the u.s. for payments in banking. >> as brett pointed out, payments are such a pain point for global commerce and e-commerce. e-commerce is all about not

using cash, so the pain points include majestic's -- logistics, this we moving products -- physically moving products from a to b. and then the payments. groupsee the alibaba buying money gram, and it is official -- makes sense, seeing that jack wants to get started in the u.s.. goods toto sell u.s. china, but they do not have a payment platform to do that. they in china, but does not exist in the u.s.. the flow ofping goods from u.s. to china, so that is one of the reasons you want to do this purchase. not'm surprised we have seen google, facebook, amazon look at the banking sector or payment sector in any serious way. i read a study recently that

suggested people are willing to look at those companies if they were to offer a service and they happened. why do you think? >> there was a study done that says one out of three global consumers would switch their financial institution to one of the big three if they offered it. and i agree what tim said. and financials acquisition was almost $1 billion to -- yet -- ant financials a question was almost $1 billion to come into this eighth. bank competitors are not other banks, they are these other companies like facebook, apple, and amazon. tnd what we are seeing with an financials acquisition is the first shot across the bow. the banks are trying to offer

better services to they can compete on a level playing field . >> so the transactions would stay the same or they would move to the new technologies, or like the cloud businesses, the value would be the same but the money being spent would be less? >> there is no doubt that the cost and friction will come down to radically over the next 10 years. overn have -- dramatically the next 10 years. at the end of the day, the banks will continue to be at the center of this. some, for example, the bitcoin community have argued down with the banks, down with the government. >> yeah, they want to replace jv sack -- jpmorgan and goldman sachs. currency is not going away. ripple takes the point of view of how can we enable banks to compete on the level playing field by selling them the same technologies that bitcoin is built upon, so they can have real-time reconciliation and an air rate.

vmware is talking about reliability on a very high level. global infrastructure has 1:9 of reliability. >> 90% of the coin trays are happening in china. thinking about that too and want to get a piece of that? basically, they already had so much in the area of financial services. the fact that alibaba tried to make them into a separate company shows it is more than alley pay -- alipay. i do not think that will get selected to -- get so much into bitcoin itself. they already have an infrastructure in place, but as you point out so much of the transaction volume does go through china or is from chinese

business in and out of the country. so the users in china are willing to adapt to these kinds of transactional services that are purely mobile. there is no physical bank to deal with and they don't mind. >> tim, thank you very much. >> coming up, what is up with the bromance between president trump and elon musk? is that why tesla shares have been rising? this is bloomberg.

courtney: i am courtney collins, and you are watching bloomberg technology. donald trump and theresa may have kicked off a new era in u.s.-u.k. relations.

they held a joint news conference at the white house today and stressed the importance of good relations between the two countries. trump: governments must be responsive to every day working people, must represent their own citizens. , we lookime minister forward to working closely with we strengthen our mutual ties in commerce, business, and foreign affairs. courtney: theresa may is the first foreign leader to meet officially with trump since the inauguration. acceptedrmed trump has an invitation to queen elizabeth's birthday dinner. turningmay faces a aint -- angela merkel faces turning point in the development of the european union. she says the need to stay together is all the more

important and that france and germany are bound by their response to extremism. can help keepins track of potential criminals. belgian, france, and the netherlands are introducing passport checks on euro star and your rail services. trump is considering lifting sanctions against russia, according to kellyanne conway. she also said if vladimir putin and wants to join forces against isis, the administration is listening. russia says the next round of syrian peace talks in geneva would be postponed until february. the u.n. mediated talks in switzerland had been scheduled for february 8. rebels fighting to remove bashar

al-assad declined an invitation to meet in moscow. concluded a successful visit to egypt, the first by the group's leader in more than three years, according to egypt plus -- egypt plus state-run news agency. israel'sussed blockade, palestinian reconciliation, and lingering power outages. global news 24 hours a day powered by more than 2600 morealists and analysts in than 120 countries. i am courtney collins. this is bloomberg. cory: this is bloomberg technology. i am cory johnson. mark zuckerberg has come out

against donald trump's orders on immigration. he wrote -- trump signed an executive order friday that aims to deny federal friends -- federal funds to so-called sanctuary cities. this includes trump's own new york city. there are some 11 million undocumented immigrants in the united states. we will stay with the trump sector. this week, bloomberg news reported that ibm is touting a big hiring boom, but firing thousands of workers at the same time. stories we of the are focused on this week. >> 25,000 jobs, they are touting , and yet they just so happen to be doing multiple rounds of

layoffs of potentially thousands of people. they just did their third round in late november, we reported, so it sort of shows that a lot of this is all for appearance, political theater, and the actual job numbers are not so clear. company has had 19 quarters in a row of declining revenues. things are not looking so positive in terms of revenue, profit, and income. >> they are focusing on all of these new areas and the cloudy stuff, but the older things they are selling, the revenue is falling faster than the new sign-up for.n we heard them talk about remixing people in moving people around, but this story is a story we have seen before for them. they promise to hire people in the midwest, then they fire people. they promise to expand in different areas. timing, you know, is

interesting. y: so, to the notion of proof being in the pudding, i was really struck by googles alphabet results. forget the quarter and the analyst's, if you see a company , one of revenue growth the biggest companies in the world, i was amazed by that. >> that was the theme in many of the earnings this week. the promise of a lot of profit .oming through the cloud computing server storage and storage industry, we also saw that with microsoft, intel, and all these companies buying servers. is more clarity from a

lot of these companies. >> it's the other category. again, it's going to be all these things delivered as service. seem to65 and microsoft be doing well. you see the company talking about margin improvement. that aims to be a theme with a lot of enterprise tech companies. they have spent so much of the last few years trying to ramp up data center capacity. now it seems like some of that is shaking out and we are seeing the fruits of those labors. cory: speaking of which, elon musk shows up at the tech summit where everyone was gathered in a room with the president for a short time. and yet the stock, with no other changes in the business, indeed, missing therefore quarter and -- their goal for fourth quarter and year-long

goals for shipping cars, and yet the stock is rallying. >> not many changes in the business, but a lot of changes in the political environment. elon musk has developed -- it doesn't hurt that he has a relationship with peter theo. thiel, who invested in spacex, invested in tesla. they go a long way back. man andump's right-hand his ambassador to silicon valley and has presumably helped broker a connection between these two. so, there is a perception of a andection between trump musk that could benefit tesla, but also just the fact that tesla makes the cars here. they don't import, like other automakers. cracks a bear stearns analyst came out and said look, trump is not part of the investment pieces here.

we are looking at the model three, which is in production now. we are looking at integration and a made in the usa thing doesn't change the business itself. expect clean energy subsidies to come out of trump more than they came out of the obama administration. if the subsidies go away, it is a more expensive car. we shall see. you are an ipo reporter now. you had the easiest job in the world last year, because there were almost no ipo's. but this year, we expect a lot of deals. a big deal this week got kind of away.ed >> at $3.7 billion sticker price for apt dynamics, which was expected to be the away big teco this year. there are no companies on the road right now through basically

mid-february looking to go public. we have all of this talk about a busy year for ipo's, all of this kind of need for exits, need to have a better exited bierman -- exit environment, and we haven't really seen it yet. obviously snapchat is the big name. we still here that's coming in march. ones, terms of the little there are not a lot of names out there. but talking to sources around the appdynamics deal, it was bought for $3.7 billion when the market was looking at closer to 1.7 billion dollars. that premium is a good thing. a fantastically growing company, the fastest growing software company, would have been the fastest growing software company, also cash positive and profitable.

>> and investors are excited. , once aming up, paypal tool in ebay's battle against teamn, is now in talks to up with amazon. what snacks? human sacrifice, dogs and cats next? together, -- what's human sacrifice, dogs and cats living together, mass hysteria? we will discuss. this is bloomberg. ♪

cory: paypal is stepping up its push for partnerships. the css paypal is in talks with amazon about setting up a -- the ceoationship says paypal is in talks with amazon about setting up a payment relationship on the site.

david, really glad to have you on. i remember when paypal was the anti-amazon. ebay acquired paypal right after its ipo to keep it away from amazon. it's kind of amazing that these guys might finally get together. >> right, right. of course, when they split from ebay a couple of years ago, this was the thought that this was the one big retailer they would like to have. the question is, does it make sense for amazon? amazon as a destination site where you go and have various so i'ms already stored, not sure what they gain by in thepaypal, especially u.s., as a new option. paypal business has this rich history of data, right? they have an understanding of how ebay's business has worked

for so many years. ofld that treasure trove information be available to amazon with this partnership? is one thing. the other thing i have been is that as an asset, it has really exploded. , what is a new asset that would perhaps be millennials?o from paypal's side, i think for amazonect option sales, it's really the access to the 2 million plus merchants. that's a new base of merchants that would be attractive to them. paypal back in the day was

blowing through about a hundred million dollars in cash flow per quarter. not by anyone's imagination a successful enterprise. but now it is quite a profitable business on its own. >> absolutely. where they have really succeeded is on the mobile side of the business. that has exploded. and now with the one touch mobile device, they are really starting to increase usage. paypal customers are coming back much more often to use the service. that is what is driving the whole ship -- shift to mobile. the day, the old turn it of payment market continues to be paypal. thank you very much. we appreciate it. up next, meet the commercial space venture trying to replace

the international space station in the next decade.

the international space station is headed toward retirement, set to be decommissioned route 2024. -- around 2024. click's president ronald reagan called on nasa to develop a permanently manned space station. that sparked the most complex engineering project in history, the international space station. five different space agencies representing 1500 countries

cooperated on the $100 million project. in 1998 and it took 40 missions and 30 years to complete. roughly the size of a football than 160 weighing more 8000 pounds, it is the largest structure humans have ever put in place. an estimated $3 billion to maintain. it could cost $4 billion by 2020. nasa's last budget was 9 million -- $9 billion, and we don't know what the trump administration has in store for it. and russians these agencies have said they will use the iss until 2024, at which time a commercial outpost might be available. so, what next? how about a private space station? that is the idea behind acxiom space. be a 37d it could

billion dollars business by 2030. i spoke to the ceo. he ran the iss for nasa, so he knows how this should work. a needained why there is for continued research on board a space station. such a big player in the way interactions occur. when you remove that, you can see the other dominating factors, and when you see the other dominating factors, you can learn more about how to deal with cancers and things of this nature. from a research perspective, it is a huge band. from a manufacturing standpoint, there are a number of reasons manufacturing can benefit from this. there is a fiber that when polled in orbit -- pulled in orbit, you have a very , and youus material

get orbit's 100 times the capability of fibers made on the ground today. infrared through these fibers, and there is a huge market potential there, but you have to get the cost of getting there and getting back down. >> absolutely right. our objective is to build a facility that is much lower cost, increase the access, and reduce the complications you have to go through today to fly. we are building an environment that is plug and play when you get to orbit. there will be special space connectors. the software will be like plugging into your laptop. computers we are designing for our module have kind of like cell phones, very small computers, and when they get old, we are not going to try to

build that same computer, we are just going to get the latest technology and fly it, and users can do the same thing. these are the steps we are taking to drive cost down. working in an office or something is a lot more familiar. >> we are trying to drive all the cost down. special specifications for space flight and things of this nature come, rightfully so, from years of experience with human spaceflight. we have found over the years of working on iss is that there are critical functions you have to worry about and protect four. the environment, for instance. you have pressure in the shell. normal build that to space qualifications like you normally have to. but all this stuff is not

spaceflight critical. we can use components on the maximum possible. that's how we were buying laptops at the end. we were not making modifications. we were buying them basically -- not a cause go, but on the internet, -- not at costco, but and, we bought the exact computer we wanted. cory: there is so much effort going into space tourism. i think of richard branson. what is the role of space tourism? >> you hear about that a lot, , and thendividuals market for that. what branson is doing is giving people an opportunity at a very , tocost, in my opinion experience the curvature of the

earth and the blackness of space. there are other adventures, the balloon, and other ideas you have seen as well. people want to spend time in microgravity, get over feeling no for the first few hours, and then have the view, see the world and be able to talk about it while you are up there. that is a market. what does that have to do with the size of what you are building? >> our particular module will have seven crew quarters. seven, with crew quarters. we will procure that service and accommodate them in orbit. cory: what is the life expectancy of your space station?

>> each structure will be built to last 30 years and we expect to be able to extend matt. our space station starts as a module on iss. all of the major components will be able to be replaced, so theoretically, you could use it forever. but if manufacturing takes off, which i think it will, we could have a special module just for manufacturing. if the airlock gets old, we can throw a new one up there. essentially, we could stay in orbit indefinitely. lagos in space. >> very similar to lagos in space. in space. that was the ceo of acxiom space. that does it for this edition of bloomberg technology.

next week, we will get earnings from apple, facebook, and amazon. we will break down the results right here in bloomberg tv. this is bloomberg. ♪

announcer: from our studios in new york city, this is "charlie rose." charlie: we begin with developments in donald trump's order to build a wall between the united states and mexico. the mexican president canceled a afterg with donald trump outrage at the decision. trump said at a news conference that it is the united states being treated unfairly. mr. trump: the president of