Megan Smith Named U.S. CTO: Bloomberg West (09/04)

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Sept. 4 (Bloomberg) -- Full episode of "Bloomberg West." Guests: Former White House CTO Aneesh Chopra, IDC's Ryan Reith, Engadget Editor-In-Chief Michael Gorman, Technalysis Research CEO Bob O’Donnell, Korea Economic Institute’s Troy Stangarone, Tripwire Security's Ken Westin and Sacramento Kings' Chris Granger. (Source: Bloomberg)

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

A check of your top headlines.

A new headquarters going to be built in san francisco.

It has built a joint venture to build it in mission bay and 23,000 square feet.

Google reaches a deal with the f.c.c. and going to pay $19 million for unauthorized app purchases by kids on google play.

Google settled a similar suit and amazon has been sued by the f.c.c. but fighting the lawsuit.

And joan rivers has died at the age of 81. rivers had a 50-year career in show business and was one of the first women to become a star in comedy.

She died at a new york hospital a week after suffering cardiac arrest after a throat procedure.

To our lead story from google to the white house, president obama has named long time google executive smith as the nation's new technology officer.

Smith was most recently part of google's lab where it was creating the self-driving car and delivery drones.

She isn't the only executive heading to washington.

Alexander mygilray.

Their mission, to help the united states stay on top of technological innovations and dealing with free speech issues and for, we are joined by the very first chief technology officer who served from 2009 to 2012. president obama created this position and he made you the first.


What do you make of megan smith being appointed?

Great selection for the country and affirms the opportunity to make sure we have the best team in place to harness the full power of technology, data and innovation to both grow our economy and ensure that the internet is a source of innovation and problem-solving in areas that we need in health, energy and education.

Co-founder of google said megan inspired so many people.

We will miss her and excited to see what the future holds for her in washington.

Google would like a lot of things from washington, they want self-driving cars and drones delivering things to our doorsteps.

Do you know where the origins behind the technology of the self-driving car came from?


That was right.

You have a long history in our country where research and development is a building block for an innovation economy and as our nation invests in r&d, it will open up sectors in the economy not yet known.

Megan has a front-row seat how the commercialization model is working.

Let me rephrase the question.

How does she represent google and silicon valley's interest without it being a conflict of interest?

If you look back at the role of government, as president obama has identified it, he wrote a strategy for american innovation in the first term which continues to be the road map for this role.

It says the country invests in these building blocks and making sure we have the human capital to be successful in a global economy and broadband.

There was a major speech on brondband competition.

What megan will do is continue to advocate for infrastructure investments that will facilitate innovation for decades to come but also about rules of the road.

Will make sure that the internet can be force for innovation by making sure we get privacy and security right.

We had a lot of principles that the president adopted in the first term and will continue to be successful.

Last, but not least, harness all of these technologies to face the challenges of our day, health, energy, education, and more open and collaborative government, megan has done a phenomenal job in all of her history in bringing new ideas to the market.

And so should google and twitter's rival like twitter and facebook be worried?

This is about talent.

Two individuals with incredible capability.

They understand the technology in question and they understand the opportunity to bring seeds of an idea out into big commercial opportunities.

And i think that talent is what matters and will have an impact.

What are the biggest challenges they are going to face?

The president has embraced technology but there are problems like the rollout of

You don't move an $80 billion operation inside the federal government on a dime.

You put the seeds to make sure you have long-term success.

Suggest the following.

One, we are in execution mode.

They are going to take the playbook that my colleagues what we started in the first term and execute, execute, execute.

I wouldn't imagine new surprises or concepts.

They are going to put their stamps on these playbooks.

War what did you find what was the hardest part of the job?

It's culture and change.

It's ok to try new ideas and fail.

Part of innovation is creating the capacity for failure, that doesn't happen every day.

It is less a technological challenge and kind of a cultural change issue, how do you bring the mindset to people.

And provide people the information they need.

There are so many technological issues on the plate.

The hacking of jp morgan, what should be the first thing on megan's to-do list?

Execute the plan that todd park set up for her.

Launching the digital service for the government and ensuring we have r&d investments, to create long-term economic opportunity and working as i hope alex will take the lead on, execute the internet policy principles so when we make these tough decisions on cybersecurity and privacy -- the policies have been written.

We are not inventing new privacy policies but how we execute new ideas and see them to the finish line.

What does it mean in practice for silicon valley and technology companies like google ? i hope it's an opportunity for an interface and not solve problems with government on its own or the private sector on its own but the public-private interface and the principal role is to foster greater improvements between the public and private sector.

As government opens more data, it allows to build new products and services.

As the government works to shape policies, that when we engage on commerce on the internet, we can do so with confidence.

The public-private interface is critical and having an individual at the white house makes the process easier.

Also an engineer, does that help?

What a statement, our third c.t.o. is a woman and see a lot of room for improvement to bring a woman in.

What an inspiration for the country.

Big champion for inclusion in general and has been at google.

Thank you so much for giving us the lowdown, what they are going to be doing out there in washington.

Battle of for the ages, samsung and apple, launching their smartphones.

After samsung vun veiled it yesterday, what should we expect from apple?

Find out, next.

? welcome back to "bloomberg west." the google life backed life science company is teaming up with a job maker.

Together, the two companies will invest $1.5 billion to find treatments for age-related diseases and will build in the bay area.

We are taking a look at the battle between apple and samsung.

The two companies have clashed on a scale almost unprecedented in business history and engaged in lawsuits that has cost more than $1 billion.

The battle is being fought outside the courtroom as well.

Samsung showed its appliances at an event in new york.

So, who will come out on top in the great smartphone war?

Editor in chief and they both gave us wish lists for features they would like to see on the next iphone and your lists are completely different.

Ryan, i'll start with you.

What are you asking for?

This has been confirmed at this point.

This is the most important thing for a few reasons.

You've got this iphone user base that have been using the same screens for the duration of iphone.

This will be the game changer.

It changes the computing experience and more real estate.

Will it be a game changer if they are like the last?

It's a bigger screen.

They have been doing ok without it, but the real opportunity there, i think you had a lot of people that were choosing android and people like more room to look at their tone and you will pull in more folks.

What else is on your list.

A few things, i don't expect it next week, which would be wireless charging.

Pretty confident in that.

For those of you who have used it, makes things a lot easier.


This is their way into making mobile easier and pairing devices with other products as well.

That's something that i expect to see.


From the services side.

But i think this does kind of change the landscape and you see android had widgets as well.

I think it does change how you interact with the device.

But again, not something i expect because i think it's less about software next week.


Let me kind of cast it in terms of what i like.

I don't like cases.

I don't either, but it's dangerous.

A few of mine are making it did yourable.

The satisfy fire display, you don't need a protector.

That is one of those we are likely to see.

They are using that glass on touch buttons and camera lenses.

That is first and foremost and the next is waterproof.

Japanese manufacturers have been making water froof -- waterproof phones.

You hear about people dropping their phones into a toilet or out in the rain, wherever it might be.

It would be nice to have a waterproof iphone.

That would be a way to remove that.

So those are kind of the durkt.

One thing i want that i'm almost guaranteed not to see is better integration with dual services.

I use gmail and google maps.

And i want the same experience on androi dn iphone.

You are wishing for a battery life.

A larger display, mobile payments, a sapphire screen.

Any surprises on tuesday?

We are bound to see that.

For me, the biggest surprise is going to be a lot of emphasis on the battery.

When you double the size of the screen or the device itself, it gives yourself the opportunity to a bigger battery.

Roughlyly the double the size of the battery and 50% increase in battery size as well.

Longer lifetime on the device itself.

Michael and ryan, thank you.

Well basketball fans are looking for a new kind of experience.

Live at the bloomberg sports summit and game-changing snow vacations hitting the courts next on "bloomberg west." ? welcome back to "bloomberg west." i'm emily chang.

We turn to our look to the ongoing battle between apple and samsung.

Apple has yet to release details of the next iphone.

We are in new york city.

"bloomberg west" was at the store earlier.

We spoke to a mississippi couple that has been there since monday.

They say they are waiting for the next iphone.

How much of a slash will apple make next week.

Michael and ryan are back with us now.

This phone hasn't even announced yet and may not be released for a week.

When will it go on sale?

A week or two after the announcement.

They could be in for a haul there.

They have chairs and a whole setup.


It's what is in it for them?

If they want a diss that is few weeks away.

They have a start-up to promote.

And they got what they wanted.

But -- do you think these phones are going to be that impressive?

Are they going to be enough?

I think -- i mentioned this before, i have been saying for a long time, the bigger screen is what people want and iphone users have not necessarily gravitated towards this and this will be the first experience for them to compute on a larger device.

But it really does change how you interact with the device.

I have an iphone and 5 1/2 inches for me is too big.

Am i go go to love it?

Everyone has different preferences.

You came out with a report that it will top tablet sales in a couple of years, right?

Maybe not so much -- well, ok.

There are a lot of places around the world the phone is in.

They don't have laptops and tablets.

And why you are seeing cheaper large-screen phones showing up, because people want to have a bigger screen and be portable.

That is where you see the trend going.


A lot of that is cheaper devices, which is outside of apple's target audience.

This will help drive current customers and apple has the opportunity to steal those who went to samsung just because of the larger screen.

And not just apple and samsung out there.

But i do want to touch a little bit more on the battery problem.

You mentioned that the phone is likely to have a bigger battery and a bigger screen.

How long is the battery going to last?

All about usage and everyone tries to maximize that time.

They will talk about this.

Because there will be a bigger battery.

Why is bigger battery life a big problem?

The chemistry behind batteries has been maxed out.

There are not a whole lot of gains to be there.

They have been able to make it bigger because the phone is bigger or more efficient processors and software usage.

That's where the gains are coming from.

Not because there is a lot of research happening in that.

Is wireless charging a realistic thing?

For apple, now?


down the line?

I would think so.

But you sacrifice design and depth.

I don't think it's worth it for them.

Same thing with waterproof.

You have to have a hinge over the battery cover and that's not apple.

They are focused on the best design.

Michael and ryan, thank you.

Text-savy basketball fans are looking for a new kind of connected experience to follow their favorite teams.

We'll head to the bloomberg sports summit to the latest game-changing innovations next on "bloomberg west." ? time now for bloomberg television.

Stocks started the day higher, but couldn't keep it up through the end of the day.

With oil prices falling, that brought down energy stocks and that was thedown -- was the overall decline.

I'm emily chang.

Jumbotron, sports franchises are stepping up their game to attract new fans.

Our editor-at-large is the sports business summit with the sacramento kings.

When -- there is a lot of speculation as to what this genius might be applied to run this.

Gloog will glass and all this stuff, but are announcing a new initiative that does what?

Crown sports was born of our partners and sponsors telling us we love what you are doing and helping drive our business.

We want more.

We want to go deeper and year round and additional opportunities to grow our brand with you.

We partnered with other active lifestyle, iconic brands throughout northern california.

In other words, what we are going to do is having a marketing and sales relationships with venues like squaw valley and alpine meadows to be able to say when we go to market as crown sports, we can offer you a potential partner, a range of assets that encompass not just the king but all of sacramento, lake tahoe and everything in between.

You are using technology to manage the sales process and invest more and go out and call on those customers that would be willing to buy season tickets?

We think if we have more marketing tools in our tool box, more places to host people, more television opportunities, we become a more interesting partner for the sponsors that exist, not just regionally but nationally as well.

Not just the kings but all the partners, sacramento visitors bureau or squaw valley, the idea that we have an intact sales force that we can grow not just our brands but the brands of our partners as well and the prospects and sponsors, they enjoy the opportunities now available to them.

Tell me the how, because there is a big tech backbone behind this?

Everything is in sustainability or community outreach.

That is what is driving us.

To the extent we can partner with other like-minded brands that have interesting lifestyles and do that with a technology bent, those are the types of businesses we are looking to partner with.

What technology are you using to manage this process?

What is interesting about us so far, we are trying a lot of different things and whether we are partnering with gloog will glass, there are many leading technologies right now we are seeing what works on behalf of our partners and they enjoy that process.

Taking the business all the most basic thing to selling something.

Mark cubin when he was running broadcast dm and he ran into two guys in front of the water cooler and john said, is dan trying to sell you something?

You shouldn't be here and go home.

That's how ticket sales were handled in the nba.

Is it different today?

I don't think it is different.

We are a sales organization, first and foremost.

More than just banging out 100 phone calls a day and who is most likely to buy with what type of seller, with what type of events.

There is more of a science behind to make sure it is successful.

And sacramento, there aren't that many prospects.

We are a sales organization.

Whether it's ticket sales or sons soreships, we want to do things that are cutting edge whether they are sponsors or ticket holders.

Thank you very much.

Apple and samsung dominate the smartphone world but competitors are trying to steal their market share.

That is next on "bloomberg west." watch us streaming on your tablets and apple tv.

? i'm emily chang and this is "bloomberg west." anything that apple can do, samsung wants to do better and vice versa.

And their global dominance is being threatened by china.

How real is that threat and how much do consumer habits impact the future of the global smartphone battle?

Bob, you actually, before we get to who the competitors are and what they are doing, you have done research on what people actually use on their phone.

What do people do on their phones these days?

Really, the name phone is a misnomer.

They are not making phone calls.

I did a survey of 2,500 people around the world and what we find is that phone calls are actually the fourth-most common activity on and only about 11% of the time.

People actually use their phone to make a phone call and what they are doing, they are browsing the web, texting and watching tv and things like that.

All of those things really cry for a bigger screen.

And because of that, i think we are going to see a huge hit for iphone 6 and give further legitimacy to the other large phones.

If you look at korea, but in the korean market, it's about 75% to 80% of all of their smart phones are the large-sized smart phones.

In china, i just got back from china, that's what everybody is using there as well.

Another thing i did in this survey was ask people what is it you are thinking about buying the next year and the number one thing.

A large smartphone.

A tablet?

Nobody likes the name tablet.

It's like a pocket computer.

Interesting, apple is the last to market with a large phone.

Troy, steve jobs was famous for, people don't tell us what they want but we tell them what they want.

Then they come up with the phone?

Samsung is methodical.

Apple may have been first but samsung went through and saw what type of applications people would be using, what types of things they are watching.

If you go to korea, everybody on the subway is sitting on their cell phone watching tv, watching a lot of video.

And video usage needs a slightly larger screen and samsung, they were the first ones into this tablet market.

We can see it now with the announcement of the edge, the galaxy edge, the note edge.

And this is something that is going to be interesting, and it will give you two screens on one phone.

I don't know about the note edge.

It looks really different.

It is intriguing and what samsung is very good at doing is finding every possible niche out there and they will get a phone to fit in that niche.

Not everybody is going to be interested in but it is a cool interesting twist.

The note 4 is taking the pocket computer, kind of next to that next level and they have been doing it for a long time.

People are starting to get it.

It's about adjusting the size to fit in your hand.

You were talking about how is it going to fit in your hand, and there are ways to make bigger screens to fit in your hand.

It can get too big, but i think we are going to see tablets outsell the combination of pc's and tablets by 2016 and 2018. they will be almost half of all smart phones sold.

Everyone will want that bigger screen.

That is quite a prediction.

Troy, not just samsung that has been making larger screen phones.

Tell us about the competitors.

Some of them are established players in this business and they also have tablets.

One of them is lg, a korean competitor.

They speak highly of some of the new lg models as well.

We talked about it in the introwith show me in china and other.

This is the challenge that samsung is facing.

They are facing competition from apple and chinese competitors and in their own domestic market from lg.

Aside from apple, what is the number one competitor that samsung should have its eyes on?

Lg is going to be important.

The combination of motorola is going to be a big deal and local players in different markets.

It's true we will see the price points really being hit hard.

Smartphone growth on a unit perspective, the revenue will peak out and start to decline because the price points are going to be brought down by the less expensive chinese competitors.

Thanks bob and troy.

We are going to be beating the drum until thursday when these new iphones come out and see how they match up to the competition.

We have headlines for us outside the world of technology.

Mark, take it away.

European central bank has set interest rates and going to buy assets as it tries to jump start europe's economy.

The plan from the president pushed the euro to its lowest level in more than a year.

The world health organization gives an update on the ebola virus.

The death toll toll from the virus stands at more than 1,800 deaths.

The i.r.s. has been looking at whether free lunches should be taxable and it was included in administrative priorities for this fiscal year.

Mark, thanks so much.

The culprit that funneled jp morgan bank to russia.

We'll talk about the sophisticated criminals and how they may have attacked banks before.

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

Jp morgan investigators could tell us who is behind the bank's breach.

A global network of computers for hire was used to send the data from jp morgan to russia.

The ring used computers everywhere from asia to latin america.

Criminals based in eastern europe may have used the network in the past to target banks.

Can this information help authorities to track down individuals responsible for the attack?

Michael riley covers cybersecurity and helped break news about the breach and we have ken, who has done extensive research on the black market.

Michael, i will start with you, what new information do we have now about the jp morgan hack attack and this network of computers for hire around the world?

What investigators are doing now trying to retrace the steps of the hackers.

This is a complicated process because hackers take a lot of effort to hide their identity.

In this case, they took over computers all over the world in brazil and asia, and used that first-level of computers to hide their steps.

The way you do this, you extract data and the computers bounce the data to their ultimate destination.

What investigators have done to trace those steps and they all lead back to a city in russia, which increases the possibility this is a russian-connected hack.

If you get to a subservers back in russia, where will the trail lead after that.

That is the next set of questions.

Does it mean that the owners of these computers they didn't know they were being used in a hack attack?

Is that possible?

There are a lot of malware and go into the underground and lease networks of computers where you can use that to get out data and financial services organizations or other companies with robust defenses, they will monitor any sort of connection that goes to russia.

By taking advantage of these networks, it's easier to hide what -- much more difficult for investigators to follow that trail.

We are learning more about the home depot hack attack.

You did a lot of reporting on the target hack attack.

Could this be bigger?

It could be as big or bigger.

Home depot has more stores and looks like the hackers got into the entire network and put malware on registers through the network of stores.

And look like they have been on there for a long time.

If they have been harvesting that data, bottom line, this could be a bigger hit than target.

What is happening on the cyber black market right now?

How much of this information, credit card numbers, how much is on it being sold for?

Quite a bit.

You can get a credit card, depends how much information, how valid it is.

But $10 to couple hundred dollars.

Tons of credit cards on the market right now that there is more supply than there is demand.

There is quite of this information available.

Entire economy that is surrounding these breaches.

The way credit cards get sold, are then used to buy gift cards and used to buy expensive electronic goods and resold to other folks where they are able to cash out.

There are a lot of different groups involved in this and we don't see it letting up any time soon.

If anything, it will be getting worse.

What evidence do we have the russian government is somehow involved in both of these attacks, home depot and jp morgan?

It is tricky.

Jp morgan thinks they are not victims of sophisticated criminals but russia was.

Jp morgan especially.

There may be more specific action that leads jp to believe that.

In terms of something like home depot, a lot of retail hacks that we have seen over the last year, target included or high-level cyber criminals.

But it's also possible that in russia and ukraine and other places that the authorities are getting a cut of what the cyber criminals are taking as protection money.

Bavelly, there is a lot of protection that these guys can flower irish and some of the money floats back to the authorities.

Michael and ken, security, thank you both.

Two stories we will continue to follow.

Time where we focus on the one number that tells us a whole lot.

Sarah is here with the bite.

What do you got?

65,000. that is -- that is the number of women in majors that companies will be able to directly target using a new software made by the startup that the students use any way.

They are saying, if you buy our software, you can directly contact say a woman who just finished her computer science 101 class and is deciding whether to stick with a major.

Contact her directly and say, hey, you know, we think it would be great if we had more computer science events, why don't we groom you.

They launched it today.

Companies like google and facebook said the diversity numbers aren't as big as they would like.

All the data coming out this summer showing 30% of women are in these companies.

Thank you so much.

And thank you all for watching this edition of "bloomberg west." we'll see you later.


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