? live from pier 3 in san francisco, welcome to the late edition of "bloomberg west" where we cover all the global technology and media companies that are reshaping our world.
I'm emily chang.
Our focus is on technology, innovation, and the future of business.
Let's get straight to the rundown.
's worldwide computer shipments fell 11% and the last quarter.
A shift to tablets is a big part of the slowdown.
T-mobile unveils a new plan to let customers get new phones as often as every six months.
This after they let the users by phones on an installment plan.
What deals can be expect from sun valley?
We take you live to what is known as summer camp for billionaires.
First, to the lead.
The pc industry's freefall sews shows no sign of slowing down.
Pc shipments dropped about 11% in the second quarter, the fifth straight quarterly decline.
Shipments totaled 76 million worldwide.
Lenovo edged out hp for the top spot taking 16.7% global market share.
Much of the defined can be blamed on the huge popularity of mobile devices.
Inexpensive tablets are replacing pc's as the devices of choice, especially for lower and consumers.
One of the companies trying to take advantages t-mobile.
They introduced a new program which will allow customers to upgrade their phones twice a year.
They have also expanded their four g network faster than anticipated.
For more, let's get to cory johnson who was standing by with the t-mobile ceo, john leger.
Glad to have you back on the show.
Talk to me about your news today.
I'm glad you are here.
This way, i don't have to wait until split screen and you can tell me what you are really thinking.
I i can hide, dodge, we've as necessary.
You are announcing more tweaks to your plans, described this to me.
The main thesis for t-mobile is to solve those problems which have made customers absolutely hate the industry.
What we did at the beginning, they hate contracts, we got rid of the contracts.
They hate the complex plans, we came up with a very simple rate plans.
We came out with the equipment installment plan, which they love.
There was a point that was missing and we wish we could have solved this the first time.
Customers cannot stand when they are not allowed to upgrade their devices.
So, this main announcement that we made today, it is called jump.
Emily, you referred to it as every six months.
After six months, you can upgrade twice a year.
You can't jump on month seven and month eight if you choose to.
-- you can jump on month seven and month eight.
For $10 a month, you get full protection and the ability to upgrade twice a year, which is one of the big points.
730 days is too long to wait either because you have a cracked phone, a possessed phone, or you are just because the little girl sitting next to you has a better phone than you.
Our deployment , smoking speed.
We announced a simplified rate land for families.
For lines, $100, no contracts, no credit check.
Fun news for you because you are one of the cities, we did discuss today a tidbit of a coming announcement about our results in 70 major cities, we led all carriers in net new adds to the business.
It is a big day, you have a lot to say.
Last year, a 11% market share , making you the fourth of the carriers.
Do you expect any meaningful change in that this year?
Will this take longer?
These are all efforts in that direction, right?
I gave a number of statistics today that suggest that things are not going as well as we thought, they are going better.
They are continuing to innovate in the space of solving customer pain points.
Talk about a years difference.
They looked at likely switchers.
The switching pool is extremely important.
Potential switchers are likely to switch to 9% sprint, 10%, at&t, 19% verizon, 26%, t- mobile.
It suggests there is a large pool of people stuck in those contracts that are planning on coming.
I took a look at your rates recently and they are good and getting better.
I wonder if the return rates get better on certain devices.
We have seen studies that suggest that people are less likely to switch from an iphone band from an android phone.
Does the device you offer affected the switch rate?
Here is what i do know.
With jump right now, i would say the biggest variable is the psychological variable that they can upgrade.
Statistically, we will learn a lot about when you on limit people's ability to upgrade, how often do the upgrade?
The psychological limitation of not being able to is the biggest variable that we will move.
Our turn rates are better than you have ever seen them.
Jump is not only an offense of play, because it will raise gross adds, it is also defensive.
Is the kind of things we need to do since we are a no contract player to make customers stay with us for a number of variables including great service.
It is unimportant next phase.
The reaction is what we thought it would be.
The customers you're after, the way they spend and consume data, how do they differ from other customers?
Do those people use as much data?
Are they as valuable as a verizon business customer or something like that?
You have to look at each thing we are doing separately.
Phase one, when we deployed on carrier phase one, the traffic in our stores was way up come up virtually double in some places.
Prime credit applications, which is a higher form of customers then naturally over time would have been our customer tripled.
This brought a very high quality of customer.
Now we are shifting and saying, family plants are the number one decision criteria for postpaid decisions.
One out of three families does not qualify for a number of reasons to go through a credit check.
We are moving the other direction.
This is a new group of people.
Through various mechanisms, we think that you can use a deposit up front with a very affordable plan and the ability for them to bring or buy their own devices.
These are good customers.
When you look at the phones themselves, we have heard from carriers who really complain about the iphone subsidy and having to pay that and looking for another option.
Do you see that as a hurdle, the samsung galaxy for, that it hurts your ability to make a profit?
The best part of what you said is the fact that they are telling you off the record that they don't like this a variable about serving the customers.
They don't have the balls to say it either to the manufacturers or the customers.
This is what we do.
We are providing you simple and affordable services.
Here are the devices.
Here is what they charge.
We will help you with an equipment installment plan.
Manufacturers, here is your customers.
Talk directly to them.
We will make it easier for them to upgrade.
If you want to upgrade in price, go at it.
Our job is to give the biggest array of devices coupled with the cheapest services so over the time when the financing is gone, you have a great way that is cheap and affordable.
That is the game.
So far, equipment manufacturers like it.
They are getting to see their customers.
They are not hiding behind carriers and they are able to innovate and go correct.
I say to the customers, i say it to the manufacturers.
The longer they hide and they don't tell the family secrets, it is so beautiful to me.
This is a broken industry with a bunch of arrogant people that do not know how to tell it like it is to a group of intelligent customers who have the wherewithal to buy the most important device in their life.
They want it when they want it as many time as they can.
I know you probably cannot see me in return.
As far as you know, i am wearing exactly the same thing you are wearing, because why would night?
Well, what i want you to know is that there is hope because of the net new adds in san francisco on the we had a 500% take of the pool in may.
If we did not get you in may, we're coming back for for you in july.
There coming for me.
Thank you very much, we appreciate it.
Thank you, cory.
We had now to sun valley, idaho where tech titans are meeting for an annual conference described as a summer camp for billionaires.
This is a breeding ground for major deals like the merger of aol, time warner him and's acquisition of abc.
-- time warner, and disney's acquisition of abc.
Jon erlichman is there.
What do you have for us?
I had a chance to talk with jeff dorsey and dean gordon from the board of zynga.
This is one of the reasons they come back every year.
If you can get a deal done, why not?
They are talking a lot about hulu, time warner cable.
Also the possibility of something stirring with sony.
You will be speaking with former disney ceo michael eisner coming up.
What do you expect to hear from him?
If anyone knows the story, it is michael eisner.
One of the biggest deals in history was done in part in the parking lot here at sun valley.
More importantly, making some interesting investments.
We will talk about that coming up.
We will see you in a moment.
We will be right back.
This is "bloomberg west" , i am emily chang.
Tech titans, ceo's are at a tech conference.
Jon erlichman is there covering the action.
I'm joined now by michael eisner, the former head of disney and currently the head of tornante group.
They are making a lot of interesting media investments.
What sun valley is this for you?
What 25, 30? -- 25, 30? since the first year.
But it is incredible how many new companies have come.
-- it is incredible hominy new companies have come.
What is the biggest change you have seen?
Everything changes and everything stays the same.
We now have sugar-free ice cream.
It started off back in the beginning where i was at disney, i would make presentations.
I generated presentation so that investors could understand.
Over the years emma as the technology group and that information is more and more available, i moved into the political realm.
-- over the years, as the technology group.
The nonprofits , it covers a lot of different things.
Now it is a nonsports camp with some sports activities.
I would not say that it is a place for dealmaking, but you see a lot of people that you have known over the years.
I heard you mention, we made a pretty big deal here.
It was a pretty good deal.
Deals are made here.
Over time, technology companies came in.
Iker soft, google, facebook, others.
-- microsoft, google.
This year, it seems to be back towards the content driven companies and less of the technology companies.
You thought early on about where everything was going.
I like to describe google earth as making content for a lot of different players.
What do you think of that business today versus when you were first getting the idea together?
Works well now it is the flavor of the day.
What has been proved by netflix and others, content is still the most important ingredient of any platform.
If you are charting a platform over internet or wi-fi and they can do "house of cards" and bring attention to their platform, the content makes the platform.
It took maybe 20 years for cable to totally recognize that.
They use movies to define their platform.
Now, whether it is "the sopranos" or a big hit on showtime, or pbs that had a show that was the biggest rated show.
What happened is that something that people discovered in the 20's, content is valuable.
We will loan money to people that make content as well as people who own movie theaters.
That has moved forward to today where you have amazon.
They will be making content.
Verizon will be making content.
Aol, yahoo, of course netflix.
That does not include all of the cable franchises, the networks, the television stations.
It is a heyday for content makers.
Everyone is talking about hulu.
As a content creator, do you have an opinion on what hands it ends up in?
The problem with hulu is that they are selling it as one thing.
The thing they are selling it as is near-term repeats of network program.
The sellers, disney and the other two owners, are selling it and taking away basically the next day availability of their content.
Anybody that is mine it is buying it with the dream that they can be netflix.
-- anybody that is buying it is buying it with the dream that they can be netflix.
I don't have any information, i am just repeating what you say, actually.
If it is bought by a content oriented production kind of company, it will then move from a company that is basically repeat broadcasting to original broadcasting.
That is very expensive.
Therefore, the price you pay for the actual asset will be tempered by what you think you have to spend to make that asset work because nbc, fox, abc are not going to give you a great deal any more of their own content.
We really appreciate your time, michael.
Michael eisner, former head of disney, currently running tornante.
We are here at sun valley where there could be some deals.
We will see you later in the show.
Global pc shipments have dropped for a fifth straight quarter.
Is the pc business dead?
We take a look, next.
? welcome back to the late addition of tornante "bloomberg west." the team is coming through the cockpit voice recorder and has found some red flags.
In the two and a half minutes of the flight from the data on the flight data recorder, we see multiple autopilot modes and we see multiple throttle modes.
We need to understand what those modes where, if they were commanded by the pilot, if they were activated inadvertently, if the pilots understood what the mode was doing.
She said the on-site work could wrap up as soon as tonight and the runway may be opened in the next day or so.
Personal computer shipments dropped 11% in the second quarter according to market research firm gartner ohr.
This is the longest decline in the pc market history.
They predict a bleak future for pcs as well estimating worldwide shipments will decline by 10.6% this year.
I am joined by ari leavy.
It goes from bad, worse, from bad, too worse.
Will it ever get better?
What it is like a death spiral -- it is like a death spiral.
Google gives away its software for free on android.
That is really hard for any traditional pc company to compete with.
If you want to deliver a tablet, you are getting the software for free.
There is a lot of margin you can make up on that.
As a pc company, you are using traditional software and hardware.
If you try to go into the tablet market, you are cannibalizing your existing business.
You are saying that the culprit is not tablets, it is android in particular.
Apple is another interesting story because the ipad business is a 30 $1 billion business, the mac businesses $23 billion business.
-- is a $31 billion business.
Will it it better, will it stabilize?
What's it is hard to imagine it getting better without -- collected is hard to imagine it getting better without the technology -- collected is hard to imagine it getting better without technology improving.
You see people walking around with these tablets in the airports.
They sit down and they start typing immediately and it looks like they are on a laptop.
It is hard to see where the benefits will come from thank you so much.
We turned back to sun valley, idaho, where jon erlichman is live the annual conference.
What do you have coming up?
Doing their very dealer is known for backing aereo.
-- barry diller is known for backing ? you are watching "bloomberg west" where we focus on technology and the future of business.
Pc shipments fall, google chrome books are gaining market share.
They have snagged a quarter of the market.
Last year, the market share was insignificant.
Google has been stepping up support with new marketing efforts and partners.
Wiki leaks has been forced to slow down as contributions have dropped.
A were coming in at a rate of 1300 dollars a day after edwards noted in step down -- edward snowden stepped forward.
Today is the anniversary of apple's app store.
It changed tech history.
More than 50 billion apps have been downloaded.
They are offering free downloads of some of their paid apps to celebrate.
Speaking of apple, the company has lost its antitrust case over e-books and are now facing a trial to determine damages.
The judge sided with the justice department ruling that apple conspired with five major publishers to raise the prices of e-books.
Apple strongly disagreed releasing this statement -- so , what happens next?
Cory johnson is is here with today's drill down.
So, what is the chance that apple will have any luck with the appeal?
This is an interesting case.
The opinion is so clearly written and sites so much of the evidence that it is extraordinarily damning to apple.
The publishers said there was not much dispute about the fact, but the determination of the fact.
The stock price does not tell you everything.
It could get expensive for apple.
There are a lot of factors out there, not the least of which is if they try to tie in high-tech sales.
The thing that the judge had to say about their behavior was siding lots of evidence was damning.
Not the least of which when they were losing the trial, she wrote that apple not only will in the joint the conspiracy but also forcefully facilitated it.
Apple was very much a part of this according to the judge and it is pretty convincing evidence.
And yet, it was the publishers that changed the prices.
Doesn't that work in's favor?
Let's the back to the pre- ipad ara era.
The problem the publishers had was with amazon.com.
90% of the e-books published were sold on amazon.com.
40% came from these big publishers.
They did not like the $9.99 price that amazon was using.
They saw this as a pernicious threat to their business.
Along comes apple and says, i have a fix for you.
He will let you raise prices if we guarantee that no one -- if you guarantee that nobody can offer a lower price.
The judge talked about how they met for a long time without the conspiracy happening.
Then the judge said, quote it provided them with the vision to format the timetable and the coordination they needed to raise e-book prices," what kind of timeline line are we looking at?
The important timeline is the prices.
It was offered up in the original complaint, you can see the prices bounce around a little bit, sort of around the $10 level until the release of the ipad.
All of a sudden, on april 1, there was a big spike in the prices.
You can see this from the chart.
April 1, 2010, they all raise their prices at the exact same time except for random house.
Random house is the only company that did not go along with this until they finally agreed to go ahead and participate.
You can see the effect of the meetings and the secret e-mails on consumers who had to pay a lot more money.
Companies should not be doing meetings like this and try to collude to raise prices against consumers.
While apple prepares for trial, the executives behind the publishing deal is in sun valley, idaho.
He has unexpectedly joined tim cook at the meeting.
Jon erlichman ran into both of them and he joins us now from sun valley.
What could apple be looking into at sun valley?
What deals do they want to strike?
This sends a stronger message than certainly tim cook coming here.
Cue was the point person on dealing with the publishing industry.
As he has been with dealing with the music industry.
And, with the television players.
Apple has been relatively aggressive in striking new deals to bring new content to their apple tv product.
We saw that recently with espn and hbo.
Everybody wants to know what they are going to go with a big tv product that could change the industry.
Of course, they run into hurdles all of the time in terms of the issues in striking deals with media players.
A combination could help to get some of those issues resolved.
The role that they played and plays at apple was highlighted when i spoke to john skipper who runs espn.
They made their app available on apple tv.
Here is more from john skipper.
Our main point of contact was cue and we have a pretty good working relationship.
We were on the first ipad.
They have consistently work with us.
From espn's perspective, here is a company that wants to make sure they are getting their content on all sorts of different platforms because people are not watching cable in the traditional way anymore.
What are these other executives -- what do these other executives have on their agenda?
You have other players in similar boats to apple.
Some of the executives that we have seen around sun valley is the ceo of sony, who is trying to turn a business around.
He talked to bloomberg news about focusing on that tv business.
They are interested in selling a lot more televisions, too.
Samsung is already a dominant player in television and interactive televisions.
Let's not forget that a bloomberg news has reported in the past that some of the pay tv providers, the cable providers, have spoken to content players about trying to get more exclusive content through their pay-tv services.
Basically, that is a shot at apple and others that are looking to move into that area.
Jon erlichman, thank you.
Well, barry diller is the billionaire media executive whose latest venture has taken on the likes of rupert murdoch's empire among others.
He is next on "bloomberg west." ? welcome back.
Sam sun broke ground on a new center in san jose.
-- samsung broke ground.
This is a long term commitment from samsung to do business in silicon valley.
Executives think it will help to move the needle for the company's bottom line.
We think the investment in this community will be about collaboration and innovation.
This will allow us to hire the best employees, to collaborate with our key customers, and will allow us to do things my being here that you cannot do that you are so -- when you're somewhere else.
You might remember that a samsung executive was on the flight when it crashed at sfo.
The publisher of the "los angeles times" and "the chicago tribune" announces that they will split into two separate companies.
This would allow them to focus on their lucrative television stations.
What does this say about the future of the newspaper business?
Could they sell their newspapers?
I am joined by edmund lee.
Why is true given spinning off the papers versus selling them as they once contemplated?
It was a bit of a surprise.
What my sources tell me is that the spinoff or the plans for the spinoff still don't preclude the possibility of that.
A sale could happen.
They could come in and offer a big chunk of change and may contains their minds.
They could sell parts of the papers to different buyers.
That is on the table.
They will spin it off.
One of the big reasons for that, it it is much more tax efficient.
They don't want to take a tax hit if they were to spin it off, but if they were to sail ell the newspapers in one go, that could be as much as $150 million.
Are newspapers just going out of business?
It certainly feels like it, doesn't it?
Especially with all of the spinoffs happening.
News corp., they spun off there ir newspaper assets.
Newspapers are not dying, but it is a smaller business every year.
Until these guys figure something out, it could very well be the beginning of the end.
So then, if that is the case , who would want to invest in a newspaper, let alone buy one?
These days, if you want to buy or invest in newspapers, you need got send money.
You have people like rupert murdoch who has had a long love of newspapers.
Also, warren buffett, who spent money buying smaller newspapers and he is looking to buy more.
He is a long-term investor.
He believes they will come back at it will take some time.
Not everyone has the patient's for that.
You have to have patience and a lot of luck.
Both of them have a lot of money.
Edmund lee of bloomberg news, thank you so much.
As tribune focuses more on television, the online service aereo is a growing threat to the traditional tv business.
They have started a lot of legal battles with broadcast tv networks.
One of the biggest investors is barry diller.
My partner spoke with him at the sun valley conference earlier today.
What did he have to say about aereo?
It is always animated with barry diller.
I had an aereo discussion with him a year ago.
They had just won a key legal victory.
They continue to get into some legal battles.
At the same time, barry diller is not slowing down, nor is aereo.
There is an aggressive rollout of this service across the country.
I was asking him if he was getting tired of all the questions about aereo from the media.
But it is not that i'm tired of it, it is just overblown.
This will not be the end of broadcasting as we know it.
This is not a threat to anyone.
This is simply an alternative for anyone who would say that i would like to have all live television that broadcasters offer but i don't want to spend $100 or $80 for cable or have never even been on cable.
I think it is a net loss plus but it is understandable that the incumbents resisted because that is what incumbents always do.
Is it different in terms of questions you're getting?
No, it is only more to custer is more out there.
We are also expanding to 22 cities.
-- it is only more because there is more out there.
Where do you think the biggest opportunities are?
You were ambitious about the rollout last year.
We have really just started.
We will probably be in 20 cities by september, october, november, something like that.
Newsweek, everybody likes to ask you about that.
Can you give us an update about the process?
We have a lot of customers.
We will see.
It is interesting that jack dorsey is here.
Is there talk about the changing nature of the news business?
Oh, my god.
I've got to go.
Always quick, always colorful.
You had to ask.
We will be right back.
? ? welcome back to "bloomberg west." san francisco's recent bart strike forced many in the bay area to stay home and telecommute adding to an already growing trend.
89% of cisco's workers telecommute to work each week.
Cisco is currently the leader in the web conferencing market.
Their web business has a web conferencing tool that allows people to connect from anywhere, really.
Joining me is the senior vice president at cisco, head of the webex business.
Talk to me about this.
Last week's strike out at me thinking about the adoption rate of videoconferencing but i really don't know what it is.
What is it?
Thanks to things like webex that we are using, the strikes don't have that much of an impact on cisco employees.
You can dial in from home.
You can jump right into it.
And i have been at cisco, i have done a lot of this.
This is just my regular laptop that i am connecting on and you can see the quality.
What are the typical uses that are maybe new to this business as a gross?
So, one of the things we are seeing 38% of our employees , they don't work on the same site as their manager.
They are able to connect with their manager, their boss, with everyone else, without actually having to be there.
We found that connecting in over the high quality video is better than being there.
You can get a lot more done.
I've experienced that myself.
You can get in front of people and get that connection.
This is really an impressive tool and an impressive space that is growing.
What is the biggest change you have seen over the course of the last six months or so?
There has been some macro trends affecting the business, specifically around video.
This used to be relegated to a room.
Sort of like the old days of the phone booth and that is where you did your videoconferencing.
Now you see the cameras, phones.
The expectation is more and more that you can view video from anywhere just like we are doing today.
We are starting to see a lot of adoption at the end user level.
Are still going into rooms and still having meetings.
We think that is a good trend for folks.
Is there a day when people will be working from their own homes and can you see that from the data you see from usage cases?
I think it is already happening.
We are a good example of that with 89% of our employees that work from home at least one day a week.
Backup, 89% of your employees spend one day a week working from home?
It could be from home, it could be from the road, it could be from anywhere.
I am an example of that, usually on friday i will take most of my meetings on video from home.
It makes a big difference when you have high definition because if you are at home on audio, it is hard to follow along on conferences and the quality is not the same.
When you are on video, it makes a huge difference.
We do the same thing with our new york staff.
In terms of corporate sales, is that the key to hanging onto these customers, making bigger sales as opposed to selling one offs?
There is this trend in other i.t. where the users are leading growth.
I wonder if that is happening in videoconferencing as well.
That is a big trend.
A lot of the adoption is pull versus push.
This is not the cio mandated that every users.
There used to doing things like face time.
The expectation is there.
We have seen a ton of pull from users.
They are coming directly from our site or going and just asking the right people.
So, we are getting a tremendous amount of pull from users.
Thank you very much.
Emily, tomorrow i'm doing the show for my kitchen.
I just decided.
Just try and do that.
Up next, stick around for our "bwest byte", one number that reveals a whole lot.
? it is time for the "bwest byte", one number that says a whole lot.
37 is the byte.
Amazon.com lowered the price of their web service business for the 37th time.
It shows the price a strategy that they used for e-books that caused so much consternation in publishing businesses is the same when they used in web services.
You will see if you can get any reaction out from tim and eddie.
There are the sessions here where there are well-known people, the attendees do these sessions.
Last year, bezos talk everybody about the cloud.
He has the session to beat this year.
Thank you, andjon.
We will see much more of you tomorrow from sun valley.
Thank you for joining us on this late edition of "bloomberg west." ?