>> it is 1:00 p.m. here in hong kong. china's official factory gate started the new year with a pmi of 51.34 january, narrowly beating estimates. services had a reading of 54.6. along with other private indicators, data suggests that chinese manufacturing remains robust. president donald trump has named ch as his picksu for the supreme court, triggering a showdown with democrats in the senate. the senate earlier postponed his latest executive order, the travel ban lawsuit.

lawmakers have begun debating whether to approve the government plans for leaving the eu. davies says any rejection of the timetable would destroy public trust in politicians. the supreme court could order prime minister may to seek parliamentary approval for her plan. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. you are watching bloomberg. let's get a check of the market action right now. we are seeing hong kong with afternoon trading, down .7%. playing catch up to the global equities sell of, despite the fact that other benchmarks in asia are seeing a rebound. caroline: i am caroline hyde and

this is "bloomberg technology." apple sales are at an all-time high. we will crunch the best ever revenue quarter for the tech giant. the ceo breaks down the most ambitious move yet in a bloomberg exclusive interview. tech rebellion against the travel ban. we will break down a potential thecon valley plan with pipeline to challenge the administration in court. first, to our lead. apple shares popping in after-hours trading. when you look at the bloomberg, you can see just two percentage points higher, reporting a first revenue revenue of $78.5 billion. also encouraging investors, the beat on iphone sales. apple pulled over 78 million iphoneecause of stronger se 7 plus. 18% revenue growth year over

year. julie, great to have you here. >> thank you. caroline: the numbers are pretty share, the share actually rising. and the cfo told me on a call that it seems to be about the iphone 7 plus. >> absolutely. iphone sales make up the majority of apple's revenue. while we look at global smartphones subscribers, that number will grow about 50% over the next five years. that is a big number. apple makes a lot of money selling phones, unlike some of their competitors. when we look at the markets they are pursuing, the middle class and upper class, the growth curve will not be as high. when we take that into account, it is doubly impressive. caroline: speaking to the cfo, but also came across was that they are doubling down on the services area. they said they will double the size of this particular unit, which on a standalone basis is as big as a fortune 100 company.

they will be doubling that over the next four years. how much do you think services is the right bet for apple? >> absolutely the right back. until they start selling other appliances, like refrigerators or cars. there is a lot of upside in the services business. there are also some areas, like apple pay, which has a relatively low consumer adoption of 11% in the u.s. caroline: it was interesting. when you are looking at the other products they sell, there was a slight slowdown. the cfo, trying to say, ipods are included, the apple tv. but do they need another product? it looks like it is selling relatively well. >> i don't know that they need another product. if we look at the adoption of smart watches today, they are only a fraction of total wearables sold today, but they will be about 40% of wearables

sales in five years. there is a lot of upside in that market as we move from 18% of u.s. adults owning a wearable device in four years. caroline: what struck me is the lack of a mention of china this time around. the cfo said brazil and turkey are going really well. china does seem to be a slowdown area. are they write to be focusing on china, or switching attention to india a little bit more? >> they want to cell phones profitably and you have to look at the markets where there is the most upside. in the market like china it is crowded with low-cost android producers. i think they have done well so far. but not where their biggest growth will come from. caroline: would india be the right country, given the average earnings power in india is less than china? do they have as much of an opportunity in that country? >> there is more of an opportunity in india. if we look at the growth of the

smartphone adoption in china, that will grow 50% in the next five years, but that will double in india. if you look at these markets, the middle class and upper class are very large market, even thicker than the u.s. a lot of upside. caroline: a lot of upside. we will have more upside from you because he will be sticking with us. we are going to be sticking on apple, our top story throughout the show. back to another story that continues to spark controversy. donald trump's travel ban. tech titans are continuing to react. amazon's ceo says his company is working hand-in-hand with state officials. on top of that, reuters is reporting a group of tech companies are planning to meet to discuss filing legal documents in support of a lawsuit challenging the ban. among the companies invited, airbnb, netflix, and google. joining us is mark bergen who is

covering the story. are we likely to see a concerted approach from the tech giants? >> i think so. this has touched a nerve in silicon valley. it is likely they will work together. a risk for the one country to stick his neck out without the others. the trumpet of restoration is retaliatory on companies. they are also try to work with him on issues like taxes and trade and antitrust. caroline: you said touched a nerve. you were reporting on how much this has touched a nerve. they were demonstrating all of yesterday as well. >> right. they were over 2004 is that came out. they walked out of their offices among eight different offices around the country and the world. we had the ceo of google that spoke in support. sergey brin shared his story. he came here when he was young as a refugee from russia.

i have talked to a lot of people at google who were inspired by what sergey has done. he was at the protest at the san francisco airport as well. caroline: this is not the only potential executive order they are going to be pushing up against. there will be the one we are expecting, the move on visas that are crucial for the tech giants. what are the other policies that could see tech giants work together on? potentials a proposal about visas affecting immigrants. the bigger issue here is a lot here are in d.c. and unclear about what the administration is going to do on a number of policies. right now they are sort of on their toes, anticipating the next move. caroline: absolutely great to have you on. i know you will be covering this analysis from a google perspectives. the new republican head of the

federal communications commission declined to say whether the agency will enforce ruleet it probably put in place by democrats. secnew chairman says the moves toward granting relief to smaller providers. beyond that, he would not comment. we do know that he is a longtime critic of the role. he dissented in the original vote. coming up, an exclusive conversation with stewart butterfield. how he plans to fend off larger rivals, like microsoft and facebook. and what he thinks of the travel ban. and all throughout the hour, we continue to follow the apple earnings. ,hares remaining up 2.5% trading on an all-time revenue record for the iphone with more than 78 million sold. terminal users can follow along instantlive blog for highlights and analysis.

this is bloomberg. ♪

caroline: slack is taking aim at the corporate sector. aimednching a new product at corporations and other large enterprises. the company hopes this will make slack easier to use on a larger scale. this as competition from microsoft and facebook continues to ramp up. joining us is slack ceo, stewart butterfield. i hear the launch was brilliant today. what exactly are you hoping to achieve with this new platform? how does this change work practices? >> slack has been around for a few youyears now.

we work well obtains. once you get into the thousands, people are only metaphorically one team. what you have is this interconnected tapestry. it is teams of teens and they are overlapping and interconnected. grid is a new product for administered is to gritty structure out of slack that mirrors the shape of their organization. caroline: it is a fresh approach. how will you ensure that the tech heads of businesses will adopt this fresh approach? slack has got into companies by stealth to a certain extent. >> it has very much. it is interesting. a lot of the products we made where shaped by conversations we had with cio's. at our launch event today, we had jeff smith, the cio of ibm. the vehicle to establish a great the kind of

cultural change that executives want to see other companies. as often thinks of a cio enabling technology. jeff is a good example of somebody who is opinionated, who has a point of view, who has a mission to drive agility. we have talked to dozens of people, has of i.t., cio's, other executives, managers. literally, thousands of individual users in shaping this product. caroline: competition is fierce. a lot of startups are focusing on the opportunity. we just had an event here from dropbox. is it microsoft, google that are the big challenge, is it the startups? are you collaborative? >> we try to take a collaborative approach. the regard ourselves as having very few direct competitors. the number of software product categories has proliferated like crazy. we have specialty software for recruiting, for finance, for

i.t. for sales. we will never be able to compete and create products that work in all of those functions. instead, we provide a connective tissue layer throughout the organization and whatever products our customers already use, we want to make the experience better. pbox, we wantro to make their experience better. caroline: you say collaborative. what is your vision for slack? is it your vision to be purchased by microsoft? would it be to stay independent? >> i can tell you this. myself and the three other cofounders of the company, we are all part of the original team that made flickr. we were acquired by yahoo!. we had that experience once. we are clever and we work hard. however, we also have incredible planning. we brought the product to the market when the world wanted

it in the capital markets were looking for something like us. if we ever wanted to see how far we could take something, this is the shot. we will never have this opportunity again. i would like to see how far we could take it. caroline: i am sure the rest of the market will agree. the venture capital on bloomberg llp is an investor. butterfield is staying with me. we have to get your take on a top story. president trump's immigration order, that is still ahead. moments agod just that the company's services business, which covers itunes, apple pay, will be the service of a fortune 100 business in 2017. of a fortune 100 business. here he is with more. tim cook: it was our best quarter ever for services with almost $7.2 billion in revenue. customers broke all-time records during the holiday quarter,

including $3 billion in purchases in december alone, making it the app store's best month ever. ♪

caroline: a story we are watching. sprint shares, popping as much as 5% in trading today. the wireless carrier added more mobile subscribers than expected in the fourth quarter. sales also the estimates because of data offers. sprint is the fourth largest wireless carrier in the u.s. and has completed two years of subscriber growth. president trump's ban has been fueling outrage across the tech sector. many have been condemning the actions and supporting the immigrant employees. slack's ceo is one of them. thing, because it is right over the weekend. stewart is back with us. this is a passionate respective

of yours because you yourself come from polish heritage. what does it mean, not only for you as an individual, but as the head of the company? >> it is a disruption for us. it's something that could in a long-term, have impact our abilities to hire. today we have employees who are affected by this and some who are potentially affected. we cannot tell you because of the ambiguity. we're taking care of that. to me, this is not a business issue. i also want to make sure that i e this isthat whil potentially a problem for technology companies in particular, it is in the background of a lot of changes. we were on the verge as a country of being able to have a real conversation about criminal justice reform. i think we will look back at 25 years from now, as a critical moment in climate change and we are doing nothing. there are many other issues that i think are in the background

very much as we talk about this one issue of immigration reform. not immigration reform, the travel ban. the thing that i am not sure that people understand is, this'll not make us safer. this will make us angrier. and the people who are refugees are by definition, often running for their lives. caroline: inside, you flew in to san francisco. i watched your video on twitter when the demonstrations were happening. this is not only an issue of a travel ban. hit ift else could also we take a back to business? , thatis the hib visas could be looked at as well. how worried are you about the talent pool? >> this company was founded by myself. i am a dual canadian citizen. one brit, one canadian and a russian citizen, and another american.

people from all over the world. from china, india, pakistan, from the u.k., from france and germany and italy. many of these people come in on h1-b visas. i understand the concerns of people who feel this has the potential to displace american workers. these are people who are very well compensated and we are bringing them into the country to improve the overall talent have you been concerned by the

way in which tech giants have been acting. >> i think there is a lot of corporate tax reform. a lot of this is repatriation that would have happened anyway. we are having a discussion without this needless separation. this travel ban is impacting people who have families and houses and jobs. they travel overseas and they want to come home, and they can't. people being asked to relinquish those rights in order to not be detained. so, there is no reason we had to do that to get corporate tax reform. this conversation is entirely independent. caroline: are you optimistic or pessimistic? >> that is almost the problem. i am fundamentally an optimist and if the pendulum will swing back the other way, two steps forward, one step back. but it is hard to know whether you should be one or the either because the degree of uncertainty is so great. caroline: thank you very much for giving up your time on a day

when you have a crucial announcement. we look forward to having you again. stewart butterfield, ceo of slack. and a story we are following. president trump has delayed the signing of the executive order on private security as the white house staff steps up attention to legal challenges on the other recent order of immigration. the trumpet ministration has not yet -- the trump administration has not yet determined when it can reschedule the finding. rudy giuliani discussed the issue tuesday. as we go to the break, another check on apple for you as the earnings call continues. the ceo said just moments ago that the mainland revenue in china was flat versus one year ago. apple is planning a second retail store in dubai and its first in singapore. we will bring you more details, next. this is bloomberg. ♪

>> is 1:30 in hong kong. a senior japanese official has called president trump's comment son the yet off the mark. trump said japan and china play the money markets as america's expense. but the comment has been called totally inaccurate. the finance ministry says are to be policies deflation, not the currencies. south korean and sports rose for a third month in january. -- exports rose for a third month in january. up 11.2% from one year earlier. ,mports also surged

although the corresponding numbers one year ago had fallen sharply. industrial production also rose in december. south korea lawmakers want to ensure no future president will hold as much power. bipartisan committee is reviewing the constitution for the first time since 1987. mass protests forced a presidential vote and the president was impeached. the committee should report this year. the indian government is due to begin the budget presentation, offering the first official estimate on the attack of the prime minister's cash ban. it is too early for the minister to make informed decisions on the impact. the economic shock is still playing out. global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. let's now get a check on the markets trading in the asian

pacific. he was juliette saly. >> it has been a lot for investors. we do have the unveiling of india's budget. and wesex is up by .2% have seen a little bit of strength coming from the indian rupee. we have the fed chrystia freeland meeting and we have had a lot of reaction to those announcements from president trump earlier today, but generally, things are looking quite good. we do have a weaker dollar and that is having a little bit of an impact. but the yen has turned around. the nikkei is that bup by .6%. the vichy motors is -- mitsubishi motors is a standout this year, saying they will return to profit this year. nomura says mitsubishi is doing quite well. we are seeing some downside after the lunar new year,

playing catch-up to the global selloff. over in australia, the asx 200 has closed higher by .6%. we will be live from london at the top of the hour. this is bloomberg. caroline: this is "bloomberg technology." is appleop story reporting its fiscal first-quarter results. shares are continuing to rise in after-hours trading. analysts. now with the company will have all-time revenue records with 78 million units sold, coming up almost 70% of the company's revenue. also encouraging investors, the revenue growth and its services business and growth outside the u.s. apple did say revenue from the mainland china is flat, though

it is an improvement. we were talking earlier about china and about how the opportunities there, they are never going to get a lower price. >> they might. but they are never going to match the prices of some of the manufacturers in china, who are att willing to sell products the low cost to gain that market share. apple has a business model of selling hardware and profiting from those sales. other device manufacturers might be thinking about ad revenue, more services revenue, but not everybody has the same business model. caroline: the business model, it seems to me, is to get the users and make money from each individual user. ecosystem able to keep on luring people in when you have the rivals of google home? how do they compete to keep you so intoxicated by the ios? >> i think the magic of it is, the more devices that somebody owns within an ecosystem and the

more services they use, the better the services get for me. they know what i like to buy, what damage i like my home, when elected go to bed. and the services continue to get better. caroline: so, they need to start rolling out more hardware? >> to the extent that they have the data access, and can learn about me and provide better services to me through the ecosystem, that works as well. they don't have to earn all the touchpoints. caroline: but integrate with them. we just had tim cook saying bigger always looking at acquisitions, companies of any size. if we did see repatriation happening, are you expecting it to go to the shareholders? what the companies could they be looking at? >> where we are today, we have put a lot of burden on the consumer. if i want to use my phone or my television, you put all the hard work on me. what would have to happen three to four years from now is

technology is like artificial intelligence, it is a machine learning. you need to understand who i am and anticipate what i need and push that to me practically. i would expect to see some kind of acquisitions in that space of making experiences for me broadly under the umbrella of cognitive computing. caroline: i think what is interesting is, also on the services side, it has been apple pay. i am surprised how little i can use it over here, in particular, where i was working for in berlin, it was almost impossible. we had tim cook talking bullishly about the integration of apple pay. >> nearly 2 million small businesses are excepting invoice payments through apple pay through quickbooks online, and other billing partners and beginning this quarter, comcast customers can pay their monthly bill in a single touch with apple pay. caroline: this is a much bigger opportunity? >> yes. it is a huge opportunity.

in the u.s. we see 11% of consumers using apple pay, and when they use it, they use it all the time. every time they can, at least 1/3 of the time. and even if we look at the 89% not using it, about 1/3 of them are interested. caroline: i cannot use it on the bus here. it is so easy in london to use apple pay. >> a matter of time. caroline: what are we not talking about on the call. is there any area that you are wanting more information on? or, in the areas you want to see more growth from? >> as we look forward, as the evolution of digital experiences are moving from a point from standalone apps to third-party platforms. and in order for apple to compete, they will have to know more about my day-to-day life. it will be interesting to see if the is one of the opportunities they embrace as we go forward.

caroline: we will talk about it when they do. thank you, julia. the principal analyst at forrester research. now to a deal we are following. daimler has struck an agreement with uber to include the german company's self driving vehicles in coming years. there are few specifics, but details could change in the coming years, depending on how the self driving market evolves. daimler has been aggressive when it comes to developing self driving technology of its own and the partnership could put the carmaker mercedes-benz in a strong position to monetize self driving cars when the technology is ready. still to come, meet the billionaire entrepreneur who is planning a literal moonshot as soon as this year. we are focusing on the business of a lunar outfit. and as we go to the break, another check on apple. the earnings call continues and tim cook managing the new

administration in washington just moments ago. take a listen. tim cook: i am optimistic, given what i am hearing that there would likely be some sort of tax reform this year. and it does seem like there are people in both parties that would favor a repatriation as a part of that. i think that is very good for the country and good for apple. ♪

caroline: in this edition of out of this world, moon express made history by becoming the first

private company to get government provision to fly beyond earth's orbit. it has gotten the money to fund the trip with $45 million raised from the likes of peter thiel. we caught up with the billionaire on to newer behind the company and asked him why he is leading a start up to the moon. on thes humans live spacecraft, which is a single point of failure. if we were to get hit by an asteroid, the whole of humanity would get destroyed, just like dinosaurs did. my goal is to make humanity a multi-planetary society where we could live on the moon and mars and beyond. the first step is to live on our nearby continent. if we can learn to live on the moon, we can expand to future planets. the short-term goal is to really be able to explore the men, both for scientific purposes, and also from the entrepreneur perspective. many people have estimated the worth of the sources of the men.

-- sources of the moon. most important, the helium and the water. helium is the best and cleanest fuel that could power this planet for generations to come. forwater really is the oil the space economy that someday could be used for rocket fuel, and also for the fuel for humans. caroline: i am intrigued. you have been out there raising peter thiel, for example. what is the reward? how do you make money? is it from these materials that you bring back and sell? or is it getting other human beings to them in? john f.could rephrase kennedy, it would go something like, we chose to go to the moon not because it is easy, but because it is a great business. what makes it a great business is the natural resources on the moon, but to use the resources to create a habitat on the moon and really to be able to live on the moon, so it is not simply

tourism. it is to save humanity from a potential disaster. even if you want to live on mars, the best place really is the moon because the problems are very similar. caroline: would you have to raise more funds? or what the resources you bring back from the immune, with that the be able to sustain growth of the business and bring in profits to bring living on the moon about? >> yes. we are fully funded to be able to do our first, second, and third missions. essentially, that is what we want to do. but to us, landing on the moon is not just about us. it is about showing that one small group of entre nous's are capable of doing this. weland on the moon and become the first company to ever do so, but would become the first superpower. that means that someday, the entrepreneurs will be the superpower, not the nationstates.

that means some of the biggest problems facing humanity will be solved by entrepreneurs, whether that happens to be elon musk. caroline: usually a superpower is given to those who are elected. you are just going to have that power t through great today. >> my idea is that people among themselves are starting to become accountable. we all know that just because somebody is elected does not mean they deserve to be a superpower. i am not saying a word after that. [laughter] caroline: give us a sense of your past? you grew with the .com boom. you had some companies that exploded like supernovas, if we stick with the space theme, and then lost their value. how to promise the returns to your investors? how do we know that the moon express will remain a good investment? >> the idea that in the dot come

boom, he did not matter what company you invested in. companies lost value. i think it is very cyclical. , you cannotnt control the stock price, but you can build great companies. and then you build great companies and great things happen to you. michael is too can -- my goal is to continue to inspire entrepreneurs to do great things to be be continued inspired to do great things, whether it is making the humanity a multi-planetary society, or grading a health care system that can keep everybody healthy. caroline: sticking with the moon express, how big will it become if you get to land on the meoon in 2017? will it become one of the biggest companies in the world? >> the way to look at it is,

do we fight land? really everything that we value on planet earth is in abundance in space. there is no doubt that somebody will create a tremendous amount of opportunity and wealth in the space economy. the space economy will be one of the biggest economies and the company leading it will be able to create amazing and large enterprises by doing good and doing well. caroline: that was the moon express chairman and cofounder, naveen jain. another tech giant is reporting earnings. nintendo posted third-quarter earnings that beat estimates thanks to sales over the holidays. investors are paying close attention to where nintendo stands ahead of the rollout of the new gaming console in march. for more, we are joined by peter ellstrom. a beautiful sunrise behind you.

thank you for joining us. break down these nintendo numbers for us. the prophet looked good in some measures, but not others. looked good in some measures, but not others. >> they beat on the net profit number and raised their forecast for net profits for the year, but the quarter revenue fell about 25%, which is a sign of the weakness in the business. they also cut their operating outlook for the business. this raises the stakes for them as they had towards this launch for the switch game console. nintendo has in a traditional consul maker for a while. they are not trying to fuse home gameplaying and mobile game playing in a way that nobody has done before. it will be interesting to see how this is received. the price is seen as a little bit high, $300. they will launch on march 3 and they say they have high expectations. they will need that business to

take off for things to improve for the rest of the year. caroline: the price point did not quite work on that particular phone game. everybody downloaded it, but not upgrading to pay $10 to get the game installed and upgraded. talk to us about where they need to make better inroads into mobile, but also the 3ds. >> sure. nintendo is struggling with the switch to mobile. people play games on phones like never before and they are part of the traditional consul world. they came out with super mario run. it was downloaded a lot, more than 70 million times, but very few people pay the additional money to play additional levels. they are able to put these games out there and they are somewhat popular, but the price point was a little bit high for the consumer base. they are experimenting with mobile and they will have games that come out later this year. when we see them play with the pricing and moved to the models

that other people use to be more successful with these games. caroline: i will use your asian know how on the other tech giant. g apple.x had whenchinderin apart from the fx hit we saw two apple, in large part coming from the emerging markets, talk to us about what we saw with china and asian growth in general. >> sure. it is easy to forget apple has such a high presence in the u.s. it is very popular in japan as well. there are very important markets where apple has little market share and china is one of those. it used to be a big driver for growth for apple and they have been losing shares in that market to domestic competitors. there are a few that have come on very strong. lenovo is more aggressive. there are a couple virtual unknowns, such as vivo, that

have taken on a bunch of the market share in china. that market has been tough. at the same time, india, which will be the fastest-growing smartphone market in the next five years, is another market where apple has a tiny share. their price point is quite high for that market. now they have less than 5% of the market. they have been trying to get their own retail stores open there, which would help. they are looking at negotiating with the government to do manufacturing and that market, which would help them bring down the prices a little bit and compete more aggressively for share. but they need to be able to compete in that market if they want a slice of the fastest growing smartphone market in the world. caroline: the cfo says mainland revenue growth in china is flat. tim cook says the rate of growth in china for apple in the second quarter will be similar to the first quarter. peter, great to get your views across the two tech giants, whether of the nintendo or apple. still to come, more takeaways on apple's record sales quarter as

the earnings call continues. this is bloomberg. ♪

caroline: in the u.k. what members are purchasing up stock after a 21% drop. directors and the relatives want more than $700,000 worth of shares monday and tuesday, providing a vote of confidence in the former telecommunications monopoly. the stock is trading at three-year lows and insiders are showing faith in bt's long-term product. apple shares are still up 3.1%. appearrs an encouraged by the revenue. so, where does the company go next? joining us next is the bloomberg consumer technology reporter. it seemed to me when we spoke to how much they are trying to show a move to the iphone 7 plus, in particular. >> they went out and said they

were not expecting this demand for the iphone 7 plus. a lot of people like it because of the larger screen size, but also because of the dual camera feature that allows you to zoom in more. caroline: you pointed out on the that we are seeing other products showing some slowdown. perhaps that is not something to be worried about. >> apple has this other products category and it came in at a little bit of a year over year decline. this includes the apple tv, and the apple watch. should we be concerned? not really. a lot of the concern is around the apple watch, in terms of not being able to walk into a store and find one. they see the apple watch hit all-time unit sales for this q1 holiday quarter. not a ton of concern there. the cfo told us the apple tv launch at the end of 2015

compared to the end of 2016 aliday quarter really was discrepancy there of why revenue drop in the category. caroline: in the last 30 seconds, kick it on for us. it looks like it is fx. all hopes on the iphone 8? is coming up in the september quarter and will make up the majority of the for thq1 for the next year. they have been hinting at it since the iphone 7 came out last year. we have been reporting that it will have a new glass curve design with a display with more colors. there is a lot riding on it. we will see how it does one year from now. caroline: you will be there to cover it for us. fantastic analysis. that does it for this edition of "bloomberg technology." on wednesday, we have an exclusive interview with one of the biggest names in tech, the cofounder of reddit. be sure to watch the

conversation. that is all for now. mrs. bloomberg. -- this is bloomberg. ♪

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