Basis, the s&p is thatat a record.
If we close it would be a new record.
It would be.
That is it for "lunch money ." it is time to head west for our early edition of "bloomberg west." emily chang is in san francisco . live from pier three in december the go, welcome to the early edition of "bloomberg west," where he talked to media companies that are reshaping our world.
I am emily chang.
Our focus is on innovation, technology, and the focus of business.
Microsoft unveils broad restructuring, getting rid of product focused units.
A move the ceo says will stop the company from used -- being a set of violent.
Shipments are in deep decline.
We catch up with him live in sun valley to ask what does he think now.
And think of it as a csi for a crash team.
Federal investigators were to find out what went wrong with ag and asiana flight.
First, to the lead.
Microsoft has announced a sweeping we organization -- reorganization of the company into compete as pe -- pc sales are falling.
Steve balmer is restructuring around hard work, it is generic, finance, and marketing and eliminating divisions for specific products.
In a memo to employees, he said the move will unite microsoft around a single strategy, writing "although we will deliver multiple devices and services to exercise and monetize strategy, the single or strategy will drive us to share goals for everything we do.
We will see our product line holistically, not as a set of violence." the announcement also -- a set of islands." shares are up today.
Joining me now is our editor-at- large, cory johnson.
Do you understand what is going on here you go?
I kind of get it generally.
Reading the memo does not help much.
Microsoft and a time -- anytime iker's office had steve balmer at the helm since he joined the company, he became sole ceo in january 2000 when bill gates said that, microsoft is that a tough time.
The stock has underperformed over that time period.
That was published as days of the.com bubble.
The company has not done the innovative things it initially did that made it so successful post-up -- but --particularly around operating systems.
What steve ballmer talks about is somewhat convoluted.
He talks with these grandiose goals with sentences going on and on.
Is that in itself a problem?
Today's announcement will announce us -- allow us to -- i mean, i think every pr person in the room but a next or five dollars for every phrase they could put in this memo.
But fundamentally, this reduces the divisions that microsoft will be reporting up to the top.
The end of the memo, he says let's go.
But the direction they are going maybe it's not as clear from the memo at least.
Are you disappointed i picked this?
You do not think the jumping around one.
Everybody wants that one.
The other steve balmer, ok, fine.
Greg there it is.
-- there it is.
That is the steve balmerlmer we know.
Explaining this come around and round, -- who are the winners and losers because a lot of people getting new jobs.
Really 100,000 employees.
To try to read through the tea leaves, one of the things about microsoft as they do not have a lot of division heads.
They did not graduate a lot of people.
I heard people up in seattle say that is because they do not have business unit leaders.
Now they will have fewer.
It is interesting that tony great -- tony bates is now going to run m&a, develop relations, so he graduates to a very senior role of this company.
One other thing is that even less clear now who ballmer's successors could be.
You wonder if this was all part of the same thing.
He probably knew what he was going to do or not going to do in this industry.
Maybe it is because microsoft have a better chance to work things out.
He gives fewer division.
Things will work more closely.
Maybe working a lot of divisions is an oddity, not a regular thing.
Ok, cory johnson, our editor- at-large, thank you for trying to break it down there.
Will the new structure help microsoft compete more effectively against rivals like apple and google?
My next guest says it is a step in the right direction.
I am joined by ed mcguire, managing director of an independent brokerage form -- firm.
Do you understand what is happening?
I do not think anybody will fully grasp all of the applications for several months until we see how this plays out in practice, but the principle in place -- the principal's are quite logical.
They help to rationalize a sprawling bunch of unrelated islands.
Product that really belong together like operating systems, for existence, -- for example, for pc's, phones, service, xbox.
It is interesting to see a device -- and some respects, microsoft has been late to the tablet and windows -- and the phone game.
We certainly expect the medivation there.
Really it comes back to cory's point about innovation.
Their velocity of innovation has been too slow in an environment where mobility and clout are driving the need for changes and new value.
This is a step in the right direction.
So it makes sense, but the request and is -- is it going to make a difference?
Rearranging the deck chairs on the titanic.
Maybe that is a little too extreme here, but is this really going to make a difference?
I think is that is effectively implemented it will.
The prior such -- the prior structure had such diverse goals and aims.
You had different groups working across purposes with one another.
At least grouping together product that makes sense with their applications can bind with being.
-- applications combined with inbing.
That makes quite a bit of sense.
The cloud and enterprise division is basically untouched, i think that made a lot of sense because that is the base performing -- the best- performing part of microsoft's financials.
The key is going to be to drive innovation around the operating system.
That is where pulling together a lot of these eases is going to hopefully make a difference.
As i mentioned with corey earlier, it is even more unclear who might succeed steve balmerlmer.
We have heard he can get a bit paranoid about anybody getting too close or standing out too much among his subordinates.
Have you heard that, and what do you think of this question?
It is a very fair question because in tech companies, you have to balance culture versus leadership here it when you look at a company like ibm, which has been around for a hundred years and manage transitions, my croissant is only on its second ceo.
So you really need to figure out if you are microsoft, if you want to be a company with a very strong, pervasive culture were the leader at the top may not matter, but if balmer lmer's personality so dominating that he has given a lot of folks, that is a real concern.
Possibly rejiggering some controls to give somebody a chance to shine.
But there is really no apparent succession plan in place here.
I think that is unfortunate.
All right, as he said, we will see how it plays out.
Ed maguire, managing director at cl say, thank you so much.
How are some of the names in technology media reacting to the changes that might result gekko -- changes at microsoft.
Our senior west coast correspondent is live.
If you are a tech executive here, how could you not want to gossip at least a little bit about what is going on at microsoft?
Even some of the personality stories, you highlighted on matter, the ceo of zynga.
Don messer is generally a -- don is generally here.
I had a chance to speak with zynga founder mark pincus last night.
He is not here this year because he is busy in his early days on the job back in san francisco.
This also opens the door to the conversations about where technology is going, where mobile computing is going, and summary like microsoft obviously trying to make a better transition.
Coming up on "bloomberg west ," we will talk to the former ceo of intel, which is another company which is obviously trying to make a similar transition.
In it we go we have dismal looking numbers on what is happening in the traditional pc world or so craig barrett coming up shortly here on "bloomberg west." all right, jon, looking forward to that you're sick around for much more in the future of microsoft.
Will be seeking to a senior research officer from the top and he later in the hour.
And the role of technology in the ongoing investigation of asiana flights to 14. catch our interview with the chairman of the national -- national presentation safety board.
Writer on "bloomberg west." welcome back to "bloomberg west ergo i am emily chang.
Chinese computer maker lenovo at the top of the pc market.
Lenovo passed hb at the top computer maker with 16.7% of the market, according to idc.
That compares with hp at 16.4% and dell adds 12.2%. lenovo recently started building some of its pc's right ear in the united states.
Our chief national correspondent carol massar visited the facility in north carolina.
Down to the time nearly forgotten.
We are thrilled to be making computers here in the u.s. we are really the first that has on it and over a decade.
Lenovo is part of the growing trend in the tech community, as company such as apple, google, and motorola are still -- slowly bringing manufacturing jobs to the u.s. a way to literally get closer to the consumer.
The benefit of the facility is the locality of it and being able to get there quicker.
We are importing components, which is much cheaper than the fully built boxes.
We are saving their.
Overall, there is still in a committal cost to manufacture in the u.s. higher labor wages in the cost of shipping goods to china have made manufacturing in china more expensive.
Lenovo is the biggest pc maker in the world.
Headquartered in beijing, and employs over 35,000. 114 of its when i'll be assembling laptops, pc's, and servers and north carolina.
When you say made in the usa, you think what?
We consider ourselves a global company.
This happens to be one part of the globe.
The top giant has made leaves them bounce since purchasing ibm's thinkpad here it -- thinkpad.
You know what the numbers say.
It is a market that people are not interested in.
They want tablets, they want smartphones.
It is crucial for us to move in a direction here and we are focused on winning in pc's, expanding into tablet and servers more aggressively, and then maybe eventually smartphones.
Winning the pc market is key.
They make up 87% of lenovo's revenues.
Also important -- expanding the brand.
Not so easy considering the company is not a household name.
Lenovo is not a consumer brand that people say i have got to have a lenovo.
Christ our brick -- our brand has been a barrier for us because a lot of people do not know was.
But it has no baggage.
The delano low -- the lenovo brand brings number two in the smartphone market in china.
In the u.s., smartphones are not even on the table yet.
We have to build our brand, our distribution network, and ultimately our manufacturing capabilities to make that a reality.
We did not make this multimillion dollar investment thinking that it was an experiment.
We are committed, and we like to believe that this is only the beginning.
Our chief national correspondent carol massar.
Former intel had craig barrett as if the pc is not dead on his left of the right ear on "bloomberg west." what is he saying now.
We have him live from sun valley next?
This is the early edition of "bloomberg west ergo i am emily chang.
You can get a letter later time, 3:00 pacific, physical a pm eastern.
--6:00 p.m. eastern.
We were told us a few months ago that the pc is not dead despite the client -- the decline in sales.
John erlichman is -- during -- john erlichman attending live in sun valley, idaho.
A lot of executives coming to this place, and private jets.
I did a little fishing on the way here.
There you go.
I know you have not seen too many of the big -- the big tex three of the day which is microsoft and its reorganization.
Tell us about the context of this kind of move in terms of the technology.
I don't think reorganization of text -- the tech industry is anything too exciting and new because technology moves so fast.
The business moves fast . you have to continue to organize your workforce, rorty, -- priorities.
I think that is what steve has done.
If you take a company like microsoft or intel, there is this need to continue to move quickly, as ecb shifts to mobile computing.
This week we talked a lot about the new peace and shipment numbers, i think it is now five consecutive quarterly declines.
I know you said on our show before, you talked to emily the last time you're on, the pc era is not dead.
Those charts are looking kind of ugly right now, craig.
The pc market is still alive and healthy.
There have obviously been a lot more movement in the mobile market and in that transition zone in between smart phones and pc's. the altar books or the devices that will serve either as a tablet or as a pc.
I think the pc market is still alive and well.
What are we missing when we see those numbers and the charts do not look good?
You are looking at a combination of the smartphone business, it has really taken off and you see great competition there.
You see leadership changes between nokia, apple, and samsung.
Now intel is starting to play in that field.
From a microprocessor standpoint.
The pc market goes to more slimline, comfortable type devices.
Let's talk a little bit about intel making its move into mobile.
In terms of the market share numbers that are out there, they don't show that much of a lift for intel so far.
You have got to understand even if intel had 100% of the mobile market, the processors and that mobile space sell for a lot less than the processors in the pc space.
So it will not be that big of a dollar movement.
They are making progress with design, putting our competitive with the arm offerings.
I am optimistic.
By the way, i am not an intel spokesperson.
I am retired.
At the same time, i think you did a deal 16 years ago to acquire basically a company that was focusing on the mobile story, which almost makes me wonder -- is intel moving too slowly on this?
You were thinking about it.
When we purchased the old digital corporation, semiconductor capability, there is a strong-arm processor.
We were looking at that space.
But then the company rightly said we can take the architecture, lower the power consumption, use all of that software base behind x86 and move into the mobile space.
They are doing exactly the right thing.
There are a lot of big picture things here at sun valley, education is one of them.
You are a big champion on that front.
And immigration, too.
Mark zuckerberg is here.
He has had his big initiative forwd.us.
Do you know where the tech industry senate immigration right now?
Over 15 years ago, intel was really pushing immigration, still are.
We started the staple a green card to every advanced diploma given by a university to a foreign national.
The tech industry is still the force behind idle effort.
Any highly educated, highly talented foreign national who was to come to work for the united states, i think we ought to welcome them with open arms.
There is a lot more we could discuss on that issue, it is an important one.
We appreciate your time, craig.
Craig barrett, former ceo of intel live here in sun valley.
Emily, back to you.
Greg's thank you, jon.
Well , how technology is helping investigators figure out why asiana flight to 14 crashed in semper cisco.
We will speak with the ntsb chair coming up.
You can also watch is a sermon on your tablet, phone, and bloomberg.com.
This is the early edition of "bloomberg west." you can also catch is that our letter top, 3:00 p.m. pacific, 6:00 p.m. eastern.
Let's get to trish regan in new york.
Egypt is as letting its crackdown on the muslim brotherhood party.
It has ordered the rest of the leader in other high-ranking officials.
New details on china's nuclear weapons program.
According to the pentagon intelligence report, china has been expanding its arsenal of nuclear warheads that can reach the united states.
The report also says china has the most diverse ballistics missiles program.
Chinese defense spending has doubled since 2006. a key ruling can help american casinos attack more foreign gamblers.
The appeals court has ruled that the iris cannot tax foreigners on each bet they make an u.s. casinos.
Under the ruling, foreign gamblers would now be able to offset their losses against their winnings, just like u.s. citizens can hear dozier top headlines for this hour.
Let's get a check of the markets right now.
Julie hyman, ben bernanke, lend me a helping hand.
A big helping hand, trish.
We are seeing the s&p 500 traded what would be a closing high.
As we close today at these levels, it would be a record for stocks.
The s&p , dow, nasdaq, all in the neighborhood of 1% or more.
It is all about comments ben bernanke made yesterday indicating he is ready to let the stimulus keep on going, that we are not going to see the fed -- at least that is the interpretation -- choke off stimulus anytime soon.
We are also seeing the bond market, yields moving lower.
I should mention we had a 30- year option -- auction.
It was the weakest in two years in terms of the demand grew.
In terms of the group suing the best today and stocks, a mixed bag.
Technology is leading the game, up 1.4%. consumers face full -- faithful on the side.
Home builders also rallying bid, there have been concerns about rising rate and the effect that was going to have on the housing markets.
The fact that rates are lower today, giving me sox a booth.
-- giving these stocks a boost . analysts they are both pointing to amd's transcription -- transitional way to tc trip.
In particular, they're talking about demands for various new videogame consoles and at that will be good for amd.
The chips that power some of those consoles.
Thank you, jewelsules.
Bloomberg's julie hyman in new york.
He made a name for himself in -- is one of the first investors in hotmail, interwoven, and others.
As my partner cory johnson will tell you, these days, he is looking to the final frontier.
Many of the top investors on technology investors and space joins me now from earth, new york in particular, steve, good to see you.
Talk to me about this investing 30 you are doing this to make money, not to make inventions.
Where do you see the financial opportunity investing in space?
That is a great question.
We try to make money.
The space of that final frontier.
Companies like space x x proving that it is possible.
This is over the last six years, i they have a $4 billion backlog.
That is enabling the whole second insulation of companies to build a satellite now, giving that the cost to launch is lower.
They make money selling imagery, broadband data.
What are the technology ago -- technological changes that make this possible?
You are seeing here the spacex rocket launching , the first new rocket design and 25 years, led by elon musk.
Using modern materials . they have lowered the cost dramatically of the access to space.
The next step for them will be a reusable rocket, lowering in another tenfold.
Specifically, what kind of software, what kind of materials are different now that were not available 25 years ago?
Part of it is doing what normal software engineers would you, using modern methods, programming i which that we all -- programming language we all learned is not what we had 30 years ago.
That is a different motivation, revenue.
They're making the first reusable rocket ever done where you can fly at more than once.
Imagine an airplane that is thrown away every -- after every flight.
That used to be the history with rockets.
In the future, it will be just like airplane flight, which is hard to believe today, but the feel -- the fuel cost is really the thing to spend money on, and the spacex is pursuing that vision.
Talk to me about rockets.
My son and i have been doing rockets of a hobby for the last 10 years.
We go out to black rock desert and take these supersonic birds with videos and computers on board using modern technology in a toy-like format and exploring what a hobby can be.
I might compare this to the dividend of the cell phone wars, you have comedies like apple and google fighting it out to make phones in extensive, and other companies take those and make satellites, robot out of them.
Use those same technologies to lower the cost of how you build technologies that used to be expensive in the past.
I did not quite get into wi- fi video you made one of your rocket launchers -- get it until i saw iv deal you made one of your rocket launchers.
It grabs you.
The frontier is the unlimited americans want to see space exploration or exploration and to enroll.
Spacex will be doing that, that is its mission.
Most entrepreneurs try to change the world.
Here, we are trying to change other worlds.
That gives you a fresh step.
Maybe some financial returns.
Steve jurvetson, thank you a lot.
Thank you, cory.
Still ahead, we will talk to microsoft's goto expert on social media trends and ask her what the company needs to do to keep innovating in the wake of the shuffle.
This is "bloomberg west," you can also watch us streaming on your phone, tablet, and at bloomberg.com.
Earlier this year, a pew research poll showed that teens are losing enthusiasm for facebook.
Did two more adults, people over sharing, and what they call stressful drama.
Have you ever wondered how these polls are done and where the research comes from?
Our next guest spends most of her time at high school full of games, movie theaters, and mcdonald's interviewing teenagers and spotting social media trends to see -- two feet to research centers.
She is curley at microsoft research center.
"time" magazine recently included her in the top 30 minds of influential minds in technology.
Dana joins us now from new york.
Great company to be in there.
Tell us more about how you do your research.
It is certainly no small task to figure out what teenagers are thinking.
No, but it is quite fun.
I spent most of my time trying to map old troll practices.
-- map cultural practices.
It means i run around the united states talking to teenagers, talking to their families, watching teens, and observing them online as well.
For example, what would you say has changed the most in the last six month over the last year in terms of how teenagers are using technology and social media?
For the long time, we saw a consolidation.
Everybody was moving to specific individual social network sites, the -- first it was my face, then facebook.
Now there is fragmentation again.
You are seeing different apps emerge, snap chat , instagram, we're seeing seeing a variety of different sites, tumblerr, twitter.
Young people are going to a variety of different sites and services and apps.
Mostly just to hang out with their friends to connect with people that share their interests.
Otherwise to really just engage . so capturing the attention of this younger demographic is key to many companies out there.
Does facebook have something to worry about?
Facebook becomes the standard fare for people of all ages.
I think one of the things that has been notable about facebook is that it is being used not just by young people but by people of all ages around the globe.
Facebook is also the home to instagram, which is one of the more popular apps that we have seen.
It is dangerous to assume that technologies will stabilize and people will use them the same way forever.
The facebook we knew five years ago is not going to be the facebook of tomorrow.
The question is how the company in the service is to continue to evolve.
Would you say there is a danger though of facebook being replaced by snap chat or even instagram?
Whenever you have different laces were people go to hang out, of course people go onto different things.
It is a challenge with technology, especially soquel -- social media, as we do not know yet how these companies or services will continue to evolve.
I do not think you can action may give one way or another on facebook here it is not going to be the destination site that we saw five years ago, but that does not mean it won't continue to evolve and that we won't see new innovative things coming out of that company that will end up showing us different ways of interacting.
I don't think this is the place for haiti now like we have seen in the past.
What is your verdict now on instagram versus divine?
-- versus vine?
Instagram is the dominant place for photos, and vine came in first with videos.
Instagram have 15 second videos , and people think more is better.
I'm not consent -- convinced of that is true.
What people do with constraints is show the several ways of participating.
Vine is very interesting because it is so shortcomings quick attention.
It is almost somewhere between a proper video like a youtube video and a photograph.
I'm not sure that longer is better in this case.
Instagram videos may be too long?
They may be too long.
They will be used for a different kind of purpose vanthan vine.
These are totally different kinds of participation.
It seems strange.
Sick seconds, 15 seconds, what is the difference?
It is a huge difference in terms of what you pay attention to.
You obviously work for microsoft, which is a company that is trying very hard to stay innovative.
How does microsoft incorporate research like yours to try to stay ahead of trends when they are a company that has has been criticized for falling behind?
One of the things i love about microsoft its it has invested in the future.
I have been part of microsoft research for 4.5 years, and what is amazing about that organization is in bringing together technology, social sciences, trying to understand the different aspects of different issues.
The company itself integrate these into different kind of products, and we've seen amazing integration coming out of microsoft.
Xbox connect --xbox kinect was part of my work, which i am proud of.
I spent microsoft to innovate going into the future.
Are right, dana boyd -- danah boyd, thank you for joining us here on "bloomberg west." from laser projection to 3-d animation, the national transportation security board is turning to tech to investigate the boeing 777 crashed.
Find out why the chair for -- the chair calls or group the cfi of investigation.
? this is "bloomberg west." i'm emily chang.
Federal investigators have been digging through asiana flight crash trying to figure out what caused the crash.
Those investigators are using technology to understand what happened inside the cockpit during the plane for the final moments.
Like pot her -- my partner, cory johnson, spoke with hersman -- deborah hersman earlier today.
In the past, you might have to rely on a flight data recorder or a voice recorder for recording information.
Today, that availability has just exploded.
It is not just what is in the cockpit, but what is available to all of us.
Years ago, we might have had to rely on air port surveillance video.
Now, everyone has got a video camera in their pockets.
So we have got so much information, many times we are getting information from the public, crash sequence is being filmed by the public.
It is just in the background.
But a huge workload increase for our labs.
Our reporters love anytime that i have been on the board has had a 200% increase in the devices coming into the lab that they have to read out.
We're not talking not talking about just recorders anymore.
What is the actual process for this information?
Is it stored on some kind of avid system?
Some of the information coming from the aircraft is designed to be recorded, used for accident investigation.
Other things in the aircraft are really just for monitoring and help of the engines or nonvolatile memory.
It is there, we can access it, we can use it, we take that information in our investigation.
We are very transparent.
We might summarize it, put that information in our docket, or we might actually put the data, the information right there in our docket so that if people want to take a look at it, they can.
One of the big issues for us is proprietary information or technology.
We have got to make sure that we protect that for the manufacturers.
We want to understand what is happening, but we need to also protect how they do their technology as well.
In terms of the way that you investigate things, there is also the way -- the place of the information comes from.
Does that change the you do an investigation?
Our processes are still the same.
We gather the information, we document the evidence, but when we look at things like technology, we see that flight data recorders that used to have eight parameters in an investigation 20 years ago now today on this 777, we have 1400 parameters on the flight data recorder.
We can see a lot of things about what is happening inside the cockpit that we could never see before.
In this investigation, are you finding a lot of -- is there a process of supplies, or is it narrowing down things to focus on individual things?
The ntsb starts broad.
Everything is on the table when we begin an investigation.
It is not just deciding what things we want to roll out, but things we want to roll in.
Early in the investigation, we are looking at what their criminal activity, no.
We look at whether, what kind of weather do they have.
We are not really looking at a weather-related action.
But we do look at the weather.
We look at it, and if we can roll things out, we roll things out.
Now we continue to do documentation, look at equipment, documentation, that allows us to create a more comprehensive picture.
Health is measured -- narrow our focus.
We're going to focus on those things and spend more time on the thing that we think are central to the accident.
Maybe 20 years ago, what are the tools and investigator would've been using, and what are they today?
20 years ago, certainly take measures to look at distances.
Today, we're using things like total stations, specific gps- based technology.
We can go out and do a laser scan of the accident site.
It is not a paper map or a photograph that we're using anymore.
We can look at things in 3-d on the we can identify them and specifically pinpoint debris, debris field, the aircraft, the damage to the aircraft.
We can overlay the damaged aircraft over the other aircraft and really determine what was damage, how was it impacted, what services were affected.
There is a lot we can do in an investigation now, sophisticated animation i can be driven by the flight data recorder information.
Really a lot of tools available.
I wonder, do you sort of feel that when you are working on a case like this?
The tools necessary to get this thing done.
The very best tool that we have is our investigators.
You cannot change that.
We have got smart people, they are experienced, they know what they are doing, they have better tools to help them do their jobs, but at the end of the day, it is about experience, the investigator has to understand what needs to happen and how it needs to happen.
That was ntsb chair deborah hersman with our cory johnson.
We will be right back with more "bloomberg west" in just a minute.
Will come back.
I am emily chang.
Coming up on the late addition of "bloomberg west," our jon erlichman is back in sun valley, idaho, where some of tech's biggest names are gathering this week.
He will talk to cofounder of the capital firm about which text field could be developing at the conference.
That is 3:00 p.m. pacific, 6:00 p.m. eastern.
Jon joins me now from sun valley, where he caught up with john malone, the billionaire investor.
He would like to see more in players from the cable industry consolidate.
What more can you tell us?
Coming into today, we knew that john malone was giving cable players, charter and time warner, a nudge to see if they would get together.
We talk so much about companies like facebook in particular the amazing scale that a businesslike that's can see -- a business like that can see.
Cable companies in this country don't have that same access to scale.
That is why john malone thinks there should be more consolidation.
He was not just talking about time warner cable today.
He even talked about some of the satellite players like directv and dish.
Here's something else he had to see.
By the way, i will point out, using tell them -- using technology, we saw this on my iphone.
Quite i also think we would be good if directv when combined with dish.
Just because scale economics in the media business drives down cost and makes it possible for larger investments.
So in order to improve the services to the consumer, you need larger, i am not saying monopoly players, but you need a larger players.