Lower Demand for iPad Air?: Bloomberg West (11/01)

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Nov. 1 (Bloomberg) -- Full episode of "Bloomberg West." Guests include GigaOm's Om Malik, Google Glass developer Det Ansinn, Bloomberg Contributing Editor Paul Kedrosky, Muddy Waters' Carson Block, NQ Mobile Co-CEO Omar Khan and Baidu's Robin Li. (Source: Bloomberg)

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 innovation, technology, and the future of business.

Let's get straight to the rundown.

It is a launch date for the new ipad air and the demand is not that strong for the newest.

Lines were shorter.

Muddy waters said mobile revenue is safe but the ceo said that is absurd and the company's revenue is very much real.

We hear from both.

It is the mysterious, at first people thought it was a google dado center.

It has people talking.

Does it make it a brilliant marketing move?

First, to the lead.

It may only be the day after halloween of what that one of key that's one of apple's key items have gone on cell.

The ipad air hit 42 countries including the united states.

Lines were reported in asia and australia and the americas.

New york city, people waited in the rain.

Lines were not nearly as long as for the recent iphones.

All models are available to ship within 24 hours on the website.

Couple showers -- apple shares were slightly down.

How much can we read into the information about how well the launch has gone?

Whether we can or not we will.

It is always fun to look at the line.

They have made their name through people cheering as they get their first devices.

It is a really important product launch.

Tim cook at the beginning of the week that he thinks it will be in ipad christmas.

As you highlighted, out of the gate the device they are making available in 42 countries.

Depending on what market you are talking about, you are getting different messages.

There were encouraging reports coming out of new york and hong kong.

People will find the apple stores around the country, around the globe where you could walk in and get a device move on.

It really depends on what the numbers look like.

The holidays last year, they sold nearly 23 million ipass.

With the ipod -- ipad refresh at this time last year there were 3 million sold in the first three days.

Investors will be measuring the success of this product versus those numbers.

But what about the ipad mini?

That does not launch.

Do we know more about why it is not out?

Apple has been very quiet to stop there been a lot of reports about the supply issue, the key issue is the higher resolution screen.

We cannot say definitively whether that is why there are constraints.

If you're out well, you do not want to make people feel disappointed that they cannot get their hands on the device or they cannot get their hands on it for a long stretch of time.

The closer they get to the holiday season without launching a device, let's wait a. we will see.

Jon erlichman.

Thank you.

Turning to twitter.

We are less than a week away from the ipo.

Today stop on the eighth day investor roadshow was in chicago.

Among that, except as will be in san francisco before moving on to los angeles.

And returning back to new york.

How this is expected to play out?

Om malik it here with me now.

You have seen a one to many of these.

You're been following this closely.

How will this play out?

Will be uneventful?

It will be business as usual.

The first couple of hours of trading and then suddenly into a modest pace.

This is a company which has done all things right.

The exact opposite of facebook.

They know how to play.

They are pulling the right strings.

They are doing what they supposed to do.

They will price it at a price that means a lot of money on the table for investors.

But we know all of the orders are full.


I do not think they will raise the price too much.

They want -- from the psychological game which comes from the first-day bump.

This a very smart management team.


you are the first one to point out that the day the fouling came out the expenses -- filing came out and expenses were a lot higher.

How big a problem is that over the longer term?

If they are not growing as a company and their expenses are growing, it is a challenge.

If they keep adding people and add another hundred million people, it is acceptable that cost of doing -- acceptable cost of doing business.

At the same level, why are there so many people?

Why they do certain things in a certain way?

In a way which could help them lower their costs?

All of that is still in the future, we have to give them time.

One of the things investors on the roadshow resort complaint about if they do not talk enough about turning a profit.

I look at that and i just kind of, ok, maybe in a couple of months we will see they will report nice profits.

Two months later, six months later.

They have to keep growing.

A have to do that.

-- they have to do that.

What makes twitter great is also making it very weak.

The reason is that there is an api for this company which is available to developers and to wall street speculators who program and find out a lot more data on what is happening on twitter much more than wall street analysts will ever be able to find out.

It will be depending on the same metrics of what the management tells them or how people use twitter and how many advertisements show up.

That can be accessed by going to the website and looking at the api.

This a very public company in that sense.

That is going to be the most interesting part over the next 12 months.

I do believe the hedge funds will treat it like a yo-yo.

What are the big public changes they have made in the past week if they made photos much more visible on the site.

It definitely changes the look of the time i. some people are complaining and says and looks like facebook.

It is not facebook, what did you think about that?

They have to.

How would you enhance the experience for normals?

For normal people who are not used to 140 characters?

They have to find value in the system.

For many people the value is you can tweak quickly and see what is going and scan through your feet without getting -- through your feed without getting distracted?

Instagram is only 2.5 years old.

That should tell you everything.

Photos have a much more appeal for normal people.

Visual speaks more powerfully on mobile.

They are going mobile.

That is where they have to go.

They have to do this.

You are going to be speaking with jack dorsey as well as instagram next week as your big conference.

What did you plan on asking them question are experience, how experience is a driving force in today's economy.

Honestly, i am going to ask kevin about how the ads are rolling out on instagram and what he expects from them.

Hopefully, jack and i will talk about many things.

I am looking forward.

You have both of these conversations on your website.

Om malik, we will be looking forward.

Google and glass is expanding to your ears.

We get a sneak peak at the latest version next.

? this is "bloomberg west." a california woman has gotten a ticket while wearing a google glass.

She was pulled over in san diego for speeding.

The officer noticed she was wearing a google glass.

She was given a citation for speeding and got distracted driver.

It is illegal for driving without entertainment device and front of you in california.

She was not actively using the class.

They are rolling out new paris of glass and they are expanding the explorer program.

Users can invite three programs as they look to get the hardware into more peoples hands.

Jon erlichman has more on what the glass looks like.

We have traded on a google glass a developer who has the new hardware and his name is det ansinn.

The new glass just arrived.

He does drive with a glass sometimes.

I do not know if yet been pulled over.

Why don't you explain to us, one of the gang acted on one of the advice in the last day or so and there arrived via ups?

One of my employees made me purchase and him fight last night around 7:00 p.m. at the 9:30 a.m. the ups man came.

There you go.

Prompt service.

The old glass, for those who are watching us on television, shows a picture of the old glass versus the new glass.

They are probably not want to see that much of a different -- difference, one of the things you found to be different is the earbud.

Part of the earbud, they really respond to claims about the glass audio not being long enough.

-- loud enough.

If you have long care, you probably could not hear what is happening.

They earbud deals with that.

There really has not been any dramatic change.

On the side-by-side, we have done our code and the device appears to be an evolution.

With google delivers this glass, it does not give you a list of here are the five new things that you can play around and figure out.

How come?

Part of that is the development.

What google has done by expanding the program is getting their device into more hands and what is special about this expansion is if you were developer and you were one of the lucky 2000 or one of the 8000 winners of the glass, with google has called to do is expand that.

These are people who are willing to try the program.

That is something that is fascinating.

We'll go from 10,000 to 40,000. what does your gut tell you?

The press is not change, everybody -- the price is not change, everybody who's got an invite will they act?

Everybody who gets an invite want one.

Can i do that?

I do not think people are looking at the price right now.

You see the opportunity to be on the leading edge and see where the technology is going.

There's a certain mystery with getting glass.

When you got your google glass, you had to make a trip to new york city.

What happened this time around?

You had one pair delivered around ups.

What happens?

Part of the experience is kind of a glamour to that experience.

We tell about the google bar being a glamorous experience.

Google wants to elevate the experience.

For glass, you can simply have it delivered via ups.

Obviously, as you highlighted, google goal of having more applications developed for glass.

Give us a sense of how many apps are being developed right now and how many you think ultimately could be developed based on all of these new pairs being out there.

The glass developer and i am enthusiastic about technology, there are relatively few people writing glass applications.

Of the 10,000 number, 2000 of those are developers.

Dozens of glass applications are being developed.

People are bringing ideas.

Thank you for sharing your insights.

That is part of that.

Part of it is an opportunity to get into more hands.

Thank you for giving us a sneak peak.

Det ansinn, google glass developer who is writing a book for developers on google glass.

Back over to you.

One of the big mysteries and san francisco.

What is google building on that floating bar?

We have new clues to next.

? i am emily chang.

Dish network and disney are still on a standoff as they try to hammer a deal.

Their contract expired at the end of september.

Dish network coo spoke on political capital with al hunt.

We have had a lot of good talks and negotiations.

Nothing is finalized.

I am optimistic.

It has been -- it is not in our best relationship.

We have a great relationship.

Disney has not been our best.

Our focus is to make it the best relationship going forward.

Usually good things happen.

You can catch the full interview tonight at 9:00 8 eastern.

Google marketing stunts are hitting new heights.

You can remember this move at the developers conference when a team of skydivers jumped from the convention center wearing a google glass.

Attendees watch this stream of back alive.

Google is reportedly building a mysterious bar show room in the san francisco bank.

Joint meet as paul kedrosky.

-- joined me as palm could drop ski.

I cannot wait -- joining me now is om malik.

-- paul kedrosky.

What do you think this they show room for google glass?

Anything is possible.

My biggest concern is an this a problem with billionaires worldwide if they do not get the fine line between cool marketing stunts and all my god, a psychotic billionaire.

A difference between richard branson's. when he started building a barges and people's harbors, it makes people understandably nervous.

Something strange.

The possibility from a standpoint if you watch a movie like "water world" a lot of things can go wrong.

The least of which is beset sinks.

It prides itself on making a big bat like google glass and drivers was cars and their new health company.

Does it seem a little bit frivolous?

What's more than a little bit.

It really feels sweaty in a sense.

They are so desperate to have people pay attention to what is happening with google glass.

It is consider a geek product.

Not a broad consumer interest of side of robert and the people he's connected to a facebook.

The problem is how you get beyond that kind of chamber of silicon valley and get normal people do actually know and care about a product from their standpoint seems to be indicative of a lot of things their cell phone does?

We spoke with the coast guard about this project and they and knowledge they did sign a nondisclosure agreement but not to google.

But to the company that oversees on the barge.

Does it sound desperate that they are going to this length to market potentially google glass?

Yeah, the idea that apple is really good at marketing, what can we do to be good at marketing and get attention?

It is what happens when "apocalypse now" what went wrong when they were doing and they said they have much money and they spend too much time in the jungle and slowly went mad.

If they whiff of that.

Watching apple for too long and watching their success and crating new segments as saying, hey, we have a new product.

Why are not enough people washing outside of silicon valley?

An attempt to redefine.

A platform that will allow us to do that, a barge in the bay area that redefines shopping in ships and barges.

It really does feel like a ploy for attention.

If it is indeed true, there are reports there are other similar barges on the east coast that they are making most people -- multiple barges.

If they are true, how big an impact will it be have on sales of google glass?

Between on and not much more than non-. i do not see where it fundamentally changes the problem.

The deep-seated problem is a lack of apps that attracts anybody outside of valley.

They say, wait a minute, is this something different or more important, so i will buy one.

That is not the case.

How many classes eu put on barges, it -- glasses you put on barges, it does not really change it.

We are actually trying to find out more about this project and we will bring you any new details.

Paul kedrosky, thank you so much.

We will see.

Coming up, the final part of my exclusive interview with baidu's ceo robin li.

He tells about his relationship with alibaba.

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

Fairfax financial has been unable to line up another -- enough financial for a bit.

That's according to people with knowledge of the matter and there's still a chance that financing can come through.

Fairfax may ask blackberry to extend the deadline.

A redesigned website.

A new website is designed to make it easier for customers to find deals i give them a personalized homepage and enhanced searching capabilities for the groupon has been adding executives and revamping business.

Kim kardashian and kanye west are suing youtube cofounder for leaking video of the marriage proposal at at&t park.

The lawsuit said he violated not to post video or images from the event.

One of the videos showed up on his site.

He tweeted it out to stop the couple are seeking unspecified damages.

We turn now to the battle for tech talent and china.

Alibaba is planning a major recruitment drive to help improve its mobile presence.

The e-commerce giant plans to offer sellers triple of last year's average paid.

Alibaba which is planning for an ipo is in a battle with baidu for top engineers.

In the final part of my interview with robin li, i asked him about lee baba's ipo and whether baidu is looking to higher and executive.

The first market was japan.

It was not probably the best market for us to go first.

It was a mature market with people had already formed their habit of using the internet.

After that, we tried many other different markets.

We are quite popular in some of the countries like egypt, thailand, brazil.

I think we are gaining momentum.

You are often part trade as 310 chinese in china -- three tech giants in china.

What's the real relationship between you guys?

We meet quite often.

At clubs and parties and conferences.

We share ideas, not only ideas about where the market is going but also experiences in managing people.

I am good at technology.

Jack is good at marketing.

We also compete.

We understand that.

Each company has their own dna.

We are good at certain things and they are good at certain other things.

So does will step up on each other.

But that is ok.

-- sometimes we will step upon each other.

We do not need to worry or spend too much time on the competition.

Alibaba is preparing to go public in the united states.

What does the successful ipo mean for china and eu?

It is always good to see chinese companies but, more successful foot up if an ipo -- successful.

I would be happy to see that.

Chinese internet market is very large.

Good companies coming out every day.

I again, i am more interested in the changing dynamics of that market.

What kind of new opportunities come out from their?

-- there?

I will pay more attention to that.

You guys made the decision to list in the united states by trading on the nasdaq.

Some investors expressed concern that the chinese government could come in and kick all foreign investors out.

What assurances do you have that it will not happen?

It has not happened.

[laughter] we went public in 2005. it has been very stable.

Investors made a lot of money.

Because we are listed here in the united states for many years, we are relatively familiar with the laws and regulations on security.

We follow that.

Xiaming higher a u.s. executive.

Have you thought about hiring a u.s. executive to help you?

We have a u.s. base executive.

Unfortunately, it did not work out.

Maybe we are just not ready to do stuff like that yet.

For me, we do not have a preference on chinese or non- chinese.

We are more market oriented.

The market demand certain talents, we would like to have that talent.

Wilson alibaba make acquisitions in the -- we have seen ali baba make acquisitions in the u.s., will we see it with you?

We do that.

This year we acquired a securities company.

What company?

[indiscernible] it is not disclosed.

It is not that small.

When you look to the future, do you see baidu growing more from acquisitions or organically?

A more organically.

I would not rely on acquisitions.

I have never seen a successful company growth by acquisitions after acquisition.

That is the wrong strategy.

It is just happens in 1991. that was a good fit for us.

Supplementary to our -- we always focus on growing organically.

That is the only way to make a big successful company.

And 2010, you said you hoped it 10 years you hold ali baba would become a worldwide name.

I think baidu has a chance to become one of those companies.

We should be able to compete on a global basis.

How close are you to that goal?

We are doing very well.

We are on track to achieve that.

I am very hopeful that we will be a household name in many, many markets.

That was a baidu ceo, robin li.

If you missed any portion, you can watch it on the bloomberg tv left out.

But whether chinese companies -- we hear from both sides next.

? this is "bloomberg west." chinese security company has been fighting allegations that it is a massive fraud.

It started coming from muddy waters.

The company grossly inflated its sales specifically, they alleged that the biggest customer is a shell company controlled by nq mobile.

And they strongly deny any of the allegation.

We have done our own reporting.

One of our reporters went to beijing and interviewed the ceo.

She said the company shared office space with another company she also and that is why the firm cannot find it.

Muddy waters responded.

Take a listen.

This is just them playing the shell game.

Very poorly trying to recover from the lies they previously told.

That ceo, the company, we caught the company just last week and some massive lies about her involvement.

She has been a more involved with nq mobile than the company had ever been willing to admit.

In short, the largest customer is a shell.

It is controlled by nq mobile.

It is undisclosed related party and it does not exist.

How come the market seems to be rebounding?

The day you came out, it has rebounded.

-- it don't -- it dived.

We see this every time.

This is really -- they took sharp dives.

Then the company were able to pump them back up.

Then they are gone.

From everything, this is so familiar to us, we have seen this movie before.

We have no doubt in a year from now, this company would be delisted and the people of the u.s. side who are right now standing up and saying, i am talking about the u.s. management.

Within a year from now they will have lawyers as say how could we have known, we were not involved?

This process takes a little while but we are happy with the progress so far.

Can you get specific about accounting deceptiveness?

Bloomberg news contact an accountant outside of beijing as well who said it seems their numbers are closer.

I am sorry -- you said accounting deceptiveness, where exactly?

Over 90% of the revenue does not agree.

With the star with the revenue line being inflated as its profits.

The company has made a number of acquisitions a usually pay for them and stocks.

For what we can tell, these companies, some of them are empty boxes but they are paying tens of millions of dollars in shares which we believe is a way of putting more money into the fraudsters pockets.

You published top 10 lies from nq.

What sticks out the most?

I would like to highlight to lies.

The lies about the involvement with nq and timing when she left.

We caught them red-handed and they had to confess.

They did not explain why they lied.

They finally revealed their second and third largest reported customers.

We show that was just a poorly conceived like because of based on nq's disclosures, the names they gave and the numbers could not have actually been the customers.

It was just yet another lie about revenue.

Number one it does not exist in numbers two and three do not exist anywhere near the quantity that nq claims.

That was a muddy waters' cars on block.

I got nq response of the early edition and i spoke with omar khan in an exclusive interview.

I asked him aboutblock' -- block's allegations.

Let's take a step back.

I look at his allegations that 90% of the revenues are false.

That would mean that our products and do not exist, our customers do not exist, our channels or partners do not exist.

Let's break down the business.

Let's look at the second quarter of this year.

20% came from the enterprise business.

Some of the largest companies in greater china are our companies.

What did we do?

We provide mobility.

Partners like ge health care.

At the business is absolutely real.

The revenues are real.

Let's look at our gaming business.

We publish an operating and have some the largest gaming developers in greater china.

Perfect world, we publish those applications and operate like on itunes.

We collected revenues through those channels.

Those are absolutely real.

If you take a look at our security business, we partner with operators.

Distributors, retailers for the our products -- a retailers.

Our products are reviewed and the revenues are absolutely brilliant.

Some of these, we have called some the people you said are your partners.

None of them will comment on what the relationship is with you.

How can we know for sure that you actually have a relationship and it is meaningful?

Normally large companies have a policy of not commenting.

You can validate the preloads and by those phones in the marketplace.

You can open them up.

You can basically on it for yourself.

It is very easy.

Who are your top three customers?

Name 1, 2, and three.

Let's take a step back.

Customers like china mobile.

We are confusing service providers and customers.

Service providers and you try to understand what they are saying, they are intermediates.

Companies like zong.

If i him an -- if i him an application developer and i want to post it, in order for me to generally be able to add that into a bill and charge a customer a subscription or charge that customer for a red sword or green sort, i have to go through many times a service provider to add that item to be bill.

What we do is we go to the service provider.

Those are our service providers that allow us.

They are not customers.

Let's not confuse it.

Who are your top three customers , not service providers?

They are and a users.

Our channels and customers include china mobile.

We do not disclose the tumor by customer.

-- we do not disclose customer by customer.

Why not especially when there is so much about whether your customers are customers?

It is common policy.

Our customers do not want of commenting on our revenues.

We are a channel friendly company.

They do not want us to comment on their business.

For us to disclose the revenue is not something we would normally do.

We protect those relationships.

You have to admit it sounds a little bit suspicious.

You are not willing to tell us who your customers are.

How are we to believe you actually have customers?

You are in a critical situation.

The stock rebounded but is down more than 40% since the report came out.

A lot of investors do not believe you.

And we actually do disclose our partnerships and our customers.

We do not go by revenue by revenue bases and go through that.

That is, -- confidential.

They are very close to our companies.

You can go through whether it is a ct -- zte or china mobile or cricket.

All of these are customers.

They are nouns and validator relationships.

Using gold into their stores.

-- they are validator relationships.

-- you can go into their stores.

All of this is so easy to validate.

If you go into the app store and look at the customers and the applications they provide or publish, it is very easy to validate.

How about this?

Within china, where does nq have the most users?

Which provinces?

We have gone through the top five provinces including hunan -- i cannot remember them.

We publish those earlier this week in a report.

We named the top five provinces where our customers are at.

Would be happy to provide of the list.

I did not bring it with me.

We have provided publicly.

It is publicly available.

The top five provinces where we have our customers.

That is something we have responded to and would have no issue.

It is a gullible in the marketplace.

Battles my interview with omar khan -- that was my interview with omar khan.

Up next, stick around for the bwest byte -- one number that reveals a whole lot.

? it is time for bwest byte where we opens on one number that tells a whole lot.

It is friday, the bar is high.

What do you got?

I know.

The byte its six.

The number of categories for the youtube music awards.

A first.

They have not had their awards show before.

They are following him tv and billboards.

The video categories, some of them are traditional like a video of the year.

Other categories are meant to show off stars of youtube and the power of youtube like engaging people were putting up music.

This is part of their attempt to keep people using youtube.

Speaking of youtube, curious of what you make of the suit.

Kim kardashian and calle was suing the founder.

For uploading video of their wedding.

I am looking at a right now.

We are not going to show it.

We do not want to get sued.

He tweeted it out.


Here in hollywood, there's always paparazzi around.

There are ready to be filled.

Yeah, it is a big store in silicon valley and san francisco.

It will be fun to see how it plays out.

We will be watching.

Thank you all for watching.

Happy friday.

Have a great weekend.


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