Apple-Samsung Round 2: Bloomberg West (03/31)

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March 31 (Bloomberg) -- Full episode of "Bloomberg West." Guests: Huffington Post Media Group President Arianna Huffington, 3LP Advisors' Kevin Rivette, Salesforce's Vivek Kundra and the Department of Education’s Richard Culatta. (Source: Bloomberg)

Live from pier three in san francisco, welcome to "bloomberg west," i'm emily chang.

With our editor at large cory johnson.

Two big stories we are following, apple and some son going back to court, same judge.

A different case.

We will explain why things are so different in the trial.

The damage will be in the billions but there will be some different details with the patents.

Also sitting down with arianna huffington.

We will speak about her new book and the latest about the relationship between huffpo and aol.

First a look at our top bloomberg headlines.

Sheryl sandberg received compensation package worth $60 million last year.

Yet another 550,000 easter did units plus a base salary of 395 grand and a bonus of 573 grand.

The facebook ceo receive no bonus or additional equity.

The twitter looking to buy into the tv industry.

This rda facebook partner.

Both companies work with the european broadcast to provide social and elected.

The latest technology company to foul for an ipo.

They make networking equipment with a focus on software.

It counts cisco the three d million dollars last year.

It is quite profitable.

The adjusted profit margins are at 21%. the hope to raise $200 million in the ipo.

Not to our lead story of the day, apple and samsung going back to court in san jose over a patent that many people say this is a fight between apple and google.

A lot of the things they have a problem with our with the google android operating system.

The fundamental question is what was google's alone, what was the cap from samsung, or is samsung the actual violator in the case?

The pretrial has focused on that . it looks like samsung, with a list of people they intend to call, will lean on the fact that google did the bad thing and they did not.

Apple got a huge award the last time they took this to court.

The judge has encouraged them to work this out through mediation but that has not worked.

Why go back this time?

There was a lot learned in the first trial.

Apple has a better understanding of how samsung deals with these issues.

The evidence last time was fairly amazing, meetings where google said, samsung, you cannot do this, but they did so anyways.

That was fairly damning evidence the first time around.

Joining us now from mountain view is the managing director of 3lp advisors.

He served as chairman of the u.s. patent and trademark office overnight -- oversight committee.

How do you think this case is different, is this more of a fight with google and the last time they were in court?

I think you are right.

I think it is a conversation, if you will, between apple and the rest of the smartphone ecosystem.

I think it goes to the operating system this time.

In what ways, kevin?

The way i see it is, you look at microsoft, as you mentioned, bringing in nokia.

That brings the microsoft operating system up.

You look at the developments in the google system.

Then you look at china, which is trying to bring on cos, which will be an alternative to apple.

You look at the smart watch coming out of samsung, which they are looking at moving away from google, to have a different operating system which they may bring into their smart phones.

So apple is saying to the rest of the ecosystem, look, i own these features, these are mine.

If you want to compete, you have to come up with something different.

That is the conversation i think is going on.

Apple is asking for $40 for every samsung device that infringes on these patents.

Is that anywhere near realistic?

That is huge.

I believe microsoft has been reported to be getting about $10 for all of its patents on software, architecture, and everything else, from samsung, five dollars from htc.

So, $40 is almost a shutdown price.

It disrupts costa goods sold, disrupts margins to the point where it is very difficult to move on.

That is partly a consideration of the google operating system being free.

Apple has got to do something to really change the economics for the rest of the industry.

You also wonder if the economics change as apple and samsung starts to look downstream at cheaper smartphones with even lower margins and profits available to them, where losing five percent of an operating line is not that big of a deal with 40% gross margins.

But when the gross margins fall below that, if they were to lose five percent of that, that could make a difference.

If you are in licensing, one of the things you want to do is get what apple is asking for, which is a set rise for each unit.

As opposed to going with a percentage.

As we all know, as the margins or the selling price goes down, the percentage goes down.

This way, the percentage goes up if they keep the price.

Let's talk about the specific things apple is claiming samsung or google essentially copied, some of the swipe to unlock, the ability to click on a phone number in a text message and i'll directly.

Based on what you've seen, who is right?

Does apple have a strong case?

This is the gazing into the crystal ball side of life.

These are interesting patents in the sense that they potentially could be questioned on validity.

The infringement side is pretty clear, but the validity side will be interesting.

Did they really come up with that feature?

Is that feature so novel -- because you have been able to do it in the apple system by clicking on links to other things.

What is universal search?

You have been able to do that with the google system actually on your pc.

That was many years ago.

These are the sorts of things that will need to be worked out in court.

The specifics here matter.

Kevin, managing director of 3lp advisers, thank you.

We will be continuing to follow this. experiences another crisis as millions flock to the site before then deadline.

Why has the web portal been such a disaster?

We are talking about, the deadline to sign up is today.

Yet another glitch at the 11th hour.

It went down for six hours.four hours of which were scheduled maintenance.

I do not know why you would have that tonight before the deadline it is the wrong time to take a pit stop.

It's million people have signed up.

Joining us now to discuss this is the former chief information officer of the united states who is now working with the sales group.

What do you think happened?

I do not think it is a question of what happened at the 11th hour.

The deeper question is whether you look at the federal government or the state and local governments.

You have four states that have core issues around technologies.

A big problem is this gap that exists between the public and private sector, the ability to scale technology.

When you look at what happened with your typical consumer experience, on amazon or google, or opentable, if you make a reservation to your favorite restaurant or book a ticket anywhere on the planet, yet when it comes to these i.t. systems, the issue is the government is still stuck in 1960's technology yet, we look at what is happening with mobile, social, cloud, where you are able to provide some of the most complicated services to the american people, and in health care we believe, from a policy perspective, the absolutely the right policy but the government needs to close the technology gap.

You were working at the highest levels of government, looking at the way the government handles i.t. is there something about that approach -- because a lot of people are thinking cutting edge working for the government.

Why does that get corrupted into this old way of thinking about new problems?

It is not like every single government agency is not doing well.

If you look at agencies like the gsa, they are doing some amazing things when it comes to game changing adoptions when it comes to the people.

But you have a set of leaders within the government that have historically made decisions that take them back to the 1960's era.

When you look at mainframes and computers and here we are with lte networks and social networks that aggregate billions of users -- what are some of the decisions they made that it is back to the 1960's? custom i.t. projects and spending millions of dollars.

Even if you look at the state of oregon, after spending $305 million, there are fundamental problems there.

Maryland, minnesota, same set of issues.

These are legacy technologies designed to serve people who are not used to leveraging technology the way they were designed.

The government contracts.

Who should they not have contracted?

Contractors that solve problems by throwing more bodies at the issue.

The incentives are perverse -- how do you know?

If you are hiring and you think i have to solve this problem, they say they will put 200 people on it, they say 20. you can understand how they would make that decision.

What has to change when they think about efficacy, not the number of people?

It is almost like saying, why would a large enterprise build an e-mail system?

There are companies that do it better, models that are far superior to what was available in the 1960's. this shift to cloud, when you look at government agencies that have made the shift, they have not been able -- not only been able to save millions but they have provided meaningful services to their citizens at the fraction of the cost.

You work at salesforce now.

Why didn't the government take you up on that?

That is a question the government can answer.

We are seeing all over the world , whether it is japan using cloud computing, or the new software house government in australia, or even in the state of colorado, numerous federal agencies, they are leveraging the power of cloud, social, and mobile to serve the american people.

One of the contractors that the government hired was oracle.

You and oracle are competitors.

How did that play into this?

I can talk about salesforce.

We have customers from hp, customers at the local and state double, that are moving millions of transactions and we prosecute over a billion transactions.

It is pretty powerful stuff.

If this were a military contract -- we have seen this time and again -- where there are special optical -- helicopters, where the contractor drives the process to decide but will be in the system.

Was that the case with the affordable care act?

Government contractors deciding how they should be structured?

You cannot blame it purely on the contractor.

Of course, there are issues with the contracts.

This i.t. cartel culture where you continue to throw body more -- throw more bodies of the problem, that is not sustainable.

And when you look at the crisis most governments face around the world where they are printing money, there is nowhere to throw good money after bad.

So there is a broken system here where you have incentives around this i.t. project where you keep adding more and more bodies, building on an hourly basis, when there are even ways to deploy technology.

The way you do it in the 21st-century -- imagine if you had a start up company that said give me a year and $10 million and we will go out there and build my project, and then we will solve the fundamental problem we need to address.

Salesforce executive president, thank you for joining us.

The day is the last day to sign up at

She runs one of the biggest online media sites in the world, so why would she encourage people to disconnect from their technology?

Arianna huffington will be with us later this hour.

? welcome back to "bloomberg west," i'm emily chang.

Amar'e stoudemire has rear hopes beyond basketball.

Relatively media is best known for its movies and tv shows, but is also home to one of the largest sports agencies.

Jon erlichman is with us from l.a. here in hollywood, athletes are becoming a more important part of the agency story.

We recently saw wme buy img.

You are talking about a company with a sports agency, and also has movies and tv shows, opening up the doors for someone like amar'e stoudemire.

I am a behind the cameras type of guy.

I do like to produce.

If there are great opportunities for me to get involved in the film world, i would think about it.

A lot of people do not know, he was one of the producers of "rock of ages." do you hear about the movie business being this big money pit?

Are you looking at places where you can be investing, building on your career?

You want to be smart about what you are doing.

You do not want to do too much.

Pick your opportunities of wisely.

With the help of relativity, we do that.

We do that all the time.

We will say that this is a project that we are working on that is cool.

You should read the coverage.

See if you like it.

Really, the movie that we'd together that comes out in november, it is the first film where he is a partner of ours.

Shot that last summer.

That will come out in november.

That is the first but we did together in that capacity.

We do not want guys investing money where there is any risk at all of not being successful.

Sometimes you do these digital shorts, sometimes you team up with other members of the royal family.

What is the goal of things like that, is it just to show a different side of yourself?

It is fun to do when you can show your acting skills, have a humorous approach to it.

Build your online following, which is good.

Did i hear you are also doing a judd apatow movie?

This summer.

I cannot give it away, but he is a big part of the film.

It shoots in new york.

Is there any actor that you would be interested in producing a movie for, or acting with that you have not had the opportunity to work with yet?

I love will smith's acting skills.

I am a huge fan of brad pitt and his acting skills as well.

George clooney is a big timer as well.

Any other players, looking at their post player career and say that is a model i want to follow?

Magic johnson is a prominent example of how you can do things off the court.

What he was able to do away from the game of basketball, he has become a model of what athletes are trying to achieve.

You originally said you want to be a knick for life.

He did not check with me when he said that.

Is that something that is realistic, to think that way?

It was a great marriage myself and the new york knicks, when i first signed.

It has been going great so far.

Once we made the playoffs, once we had a winning atmosphere, along with that, we should have opportunities that come from off the court.

Are there similarities from producing in your day job?

With the knicks, it is nonstop work.

You are always training, eating right, resting and recovering for the game.

With film, you have a little time in between your films.

Maybe three or four months before the next episode comes along.

There is a lot of sitting around on a movie set.

No plans to hang up the sneakers yet for full-time producing just yet.

Thank you so much.

Arianna huffington has been meeting with tech giants like google, linked in, and twitter, but what does she think about silicon valley, and why is she here?

? you are watching "bloomberg west," where we focus on innovation, technology, and the future of business.

Arianna huffington launched the huffington post in 2005 and then sold it to aol for $15 million.

It continues to be a fascinating business and really elevating her presence on the web and will be on.

Along the way she has written more than a dozen books are the most recent, "thrive." i sat down with arianna and asked her why, of all the things she does, she wrote the book now.

Take a listen.

Millions of people are earned out.

Tell me about that.

You are on the floor bleeding.

I got four stitches in my right eye.

The start of me asking this question.

By conventional measures of success.

You are not successful if you're lying in a pool of blood.

It started with them looking at why was i overworking and not learning to do this.

We realize they are performance enhancements.

That is what led to my idea.

It is how to thrive.

That involves lip wisdom and really bringing joy into your life.

One of your big things as good as much sleep as you can.


The science is a real performance enhancement.

Sleep deprivation is dangerous.

It kills brain cells.

Now we are also discovering that it kills startups.

Do you think you would have been as successful as you have been if you did not sacrifice sleep along the way?


This is the delusion of our civilization.

Because that is how more successful people have done it, we think that is the only way to do it.

But the truth is, people are successful because of their talent, passion, and i think people would be able to navigate their lives -- and i can say that about myself -- much more effectively and with much less sacrifice, if we actually prioritize our own well-being and our own capacity to connect.

This is also about leadership.

If you think about it, leadership is really about seeing the iceberg before it hits the titanic.

If you look at the financial collapse, how many chief executives missed the signals and were completely caught unaware?

I feel right now that there is a new listening.

I have been sitting here 12 years at linkedin, google, twitter, and this is a conversation that is resonating.

One of the things that is paradoxical in a way, here in the belly of the beast, when it comes to technology, the creation of our brave, new digital world, you have people who are beginning to send their children to schools because they do not want them to become addicted to technology at an early age.

You have people who are learning to unplug and recharge.

I say in the book that we are much better at taking care of our smartphones than we are of ourselves.

I'm wondering if you think technology and 24-hour connectedness is better or worse for us.

Technology has been amazing for us in terms of connecting us with people around the world, giving a voice to people who otherwise would not have a voice, but technology is dangerous when it prevents us from connecting with ourselves and renewing and regenerating.

Think on your iphone, you get constant mornings, 20% battery remaining, 16% battery remaining.

Immediately we get concerned, we look around at our recharging shrines in our offices and homes we carry portable rechargers.

When it comes to ourselves, we often are not even aware that we have no battery left until we are below zero.

What do you think of the fitness tractors, the activity trackers?

I think it is great.

I love all of these empowerment tools, because it helps us take charge of our own health.

Right now, if you look at it, three quarters of our health care costs are because of preventable, chronic, stress-related diseases.

If we can actually take charge of our health and get feedback, that is really what i was saying when i spoke at google earlier, that most tech people here love data, and they love experimenting.

So what i'm asking people in the book is to experiment with small, microscopic steps, little changes in our lives that will have an incredible effect, like more sweet, like beginning to meditate five minutes a day.

Those are two of the steps i recommend in the book.

Learning to take our devices out of our bedroom at night and charged them in another room so that we are not tempted to go back and look at our data in the middle of the night.

I wonder if all this data can drive us crazy?

I know some people who gave up their fitness wristbands because it was too much.


That is where we all need to make individual decisions.

There is no question that we may be swimming in data and starving for wisdom.

Data is not wisdom.

I think in order for us to tap into our wisdom we need to have more silence, more pauses in our lives.

It is so hard to cause -- pause and reconnect with ourselves.

The most dreadful thing we can do is multitask, which now scientists tell us does not really exist.

It is task switching, it is stressful, and does not make us more productive.

Hear what it arianna huffington has to say about aol and the future of the huffington post in part two of my interview we will be right back.

? it is time for our special series wiring the world, , focusing on technology in education.

Instructors are combining technology to provide more interaction.

Take a highly trained teacher.

Laptops loaded with education software and 36 students rotating through three activities and you have a new way to teach kids.

It is called blended learning.

Here veronica uses it to introduce her ninth graders to romeo and juliet.

What did romeo do, what is he referring to?

In her classroom, students are divided into groups of 12. to a station of 12, it is very easy.

A student can get the same information three different ways.

While she teaches a lesson.

Another group uses their laptop for collaborative work.

Are you working independently or are you supposed to be working together?


Others work independently that use software that is tailored to their level.

The articles get bigger and you start to go to a bigger great and you are able to be more complex.

The questions are more complex.

It really helps you to become a better reader.

What does blended learning allow you to do in a classroom that you could not do before?

With this model, it forces you, as a teacher, to structure your classroom in such a way that no kid falls by the wayside.

Technology also helps keep these digital natives on the right track.

The principal uses remote desktop to keep an eye on her students.

Let's say i go into mr.

Romero's class.

And here are all of his screens.

I would say the exact same thing, and this is a spanish class.

This person is watching insects versus arachnids.

I can click on that and send a message and say, are you supposed to be watching this video?

And it says from dr.


They change their screen.

The staff here believes using traditional teaching and technology, they can develop skills critical to future success.

What we see our kids who can communicate quickly, who can get data quickly, who can differentiate for themselves or expect their teachers to do so.

Not that we had as kids.

That was a part of our earlier we saw oak with the director of educational technology.

I started by asking about why the education department is encouraging a shift in print to digital.

The thing i am excited about is not the technology or digital part, but the learning part.

One of the things that is fantastic is what you see teachers and students being able to do when they have tools in their hands.

Just a quick example.

My son is learning algebra, using a tool to teach algebra, a game that he goes through.

The awesome piece is after he completes an activity, i get an e-mail as a parent and says how this is what your kid learned today.

Not only this is what they learned, but this is an activity you can do at home to reinforce what he learned.

That is exciting because it makes me a better parent, helps me be more engaged.

From a teacher standpoint, they can personalize learning to the needs of individual students.

I'm a student standpoint, it is powerful because technology helps to create creators.

We are not just helping students memorize facts.

We are building solutions and creating new media and actually reinventing and redesigning their learning.

That is hard to argue with.

What kind of research as -- as a parent, i want to know what kind of research you are relying on to determine that so much digital is good for students and will not be too much.

It has only been so long that we have had computers and tablets and phones in the classroom.

How do we know that in the long run it is, indeed, better?

The important piece here is not the amount of technology.

Some people think about screen time.

What is important is what is being done with the technology, how is it being used?

If the technology is used in a passive way, where students are just watching videos, sitting there and not being engaged, you do not see a whole lot of benefit.

If, on the other hand, students use those tools to create and engage and take ownership of their learning, you see some horrible things happening.

Schools across the country right now are piloting this idea of personalized learning.

Not having every student do the same thing that the student next to them is doing, but learning things that are related to their interests and needs.

If you have a class of early students, to think all of them did the same thing at the same time is kind of a crazy idea.

We know that students have different passions and different backgrounds, so technology allows you to personalize for those individual students.

If you look at where research says technology is helpful, it is in personalizing and adapting learning, making sure students are engaged in the process.

You have talked about the need to use technology to teach different and new things that were not possible without that technology.

I wonder if we really need that.

Reading cannot be replaced by anything.

It cannot be replaced by smelling or surfing -- i do not really know.

We have seen historically, going back to thomas edison introducing the motion picture, a technological tool for learning, but has not always been a great success, indeed quite the opposite.

Actually, that is what we hope to do with technology.

We do not want to replace reading.

We want 1000 times more opportunity to read texts that are engaging and exciting.

One of the challenges we have in this country is there is no shortage of things happening in education.

It is a problem of scaling.

It is a shame right now that there are students who are disadvantaged a cousin they do not have access to great materials to read, access to coaches to help them when they get stuck.

Frankly, it is because the zip code they live in.

That is not fair in a country where we have technology to bridge the gap.

I hope to see this technology that we are rolling out, through the president's connect ed initiative, getting schools connected to broadband, will be a chance to get way more reading and writing and learning of map around topics that are of interest to students.

What they feel is relevant to their life because it ties to their interests.

A lot of these new tools you are talking about involve gathering data, students learning about students, collecting more information about them.

How do you safeguard their privacy and security along the way?

Privacy is an important conversation to have.

We care greatly about pregnancy.

The department this month updated its privacy guidelines, which i hope all schools and cools lookout to -- look at.

On the one hand it is making sure that software tools are in compliance with federal privacy laws, which are -- there are some significant protections in place there.

I would emphasize it is more than that.

One thing is to make sure data is being kept private.

The other is making sure that teachers and parents and students understand what they can and should be doing with the data.

There is a mandate of how to teach digital citizenship.

I used to be a teacher.

We used to say don't steal things from people lockers and do not run the halls.

What does running in the halls look like in the digital age?

With parents and ptas together, we need to say, what does it mean to be a good digital citizen, how do we protect our data, how do we protect our image and reputation, when is it appropriate to interact, and how is it appropriate to interact with people in the other space?

How do we make sure we are creating good digital citizens.

We live in the bay area.

The home of the most advanced technology companies in the world from google to facebook to apple.

San francisco public schools, for example, are struggling.

What are you doing to get tech companies more involved with this effort to help our education system?

There are a number of things underway.

The first thing is the president's connect ed initiative, to make sure there is an infrastructure in place.

There are a lot of schools that are interested, but if you are in a room that does not have connectivity, there is not a lot you can do.

That is the first piece, making schools connected.

The president says that needs to happen in less than five years.

The other piece that is important is private sector engagement in helping to provide these tools good at the moment, there has been $1.25 billion in commitments from private sector companies that have stepped up and said we are going to make sure we help cools get the tools they need.

Now it is on us even we have to make sure the schools are using them in the most effective way.

Richard, glad to hear you are so passionate about this.

Thanks for sharing your views.

Coming up, we will talk about amazon pushing deeper into original content.

We will tell you about its slate of new shows.

? welcome back to "bloomberg west." i'm emily chang.

Amazon has greenlighted three original series.

Amazon is getting ready to hold an event on wednesday where it will announce an update to its video business.

We will bring you complete coverage of the event on wednesday.

It is time for the number that tells a whole lot.

Jon has more from l.a.. it is all about the affordable care act, obamacare, whatever you want to call it.

The amount of money spent on this is amazing.

$360 million according to the last estimate.

If you believe that estimate, $60 spent on every single person to get them at two enrolled thus far if that is the number.

Their speculation is the number is quite a bit larger because spending could be more.

That is just a set of the infrastructure.

The more they spend the more they can advertise.

Jay carney talking about this right now, saying they spec a significant increase in the number of people signing up because of the deadline.

As we have been discussing, jon, technical glitches continuing to hold them back.

And try to do some spin.

If there is one discount they get it is from all the celebrities that seem to be on team obama.

I saw a bunch of them tweeting about it.

Maybe there is a little bit of a discount from the government on that end.

Thank you all for watching this edition of "bloomberg west ." see you later.

? .

This text has been automatically generated. It may not be 100% accurate.


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