Oracle's $5.3B Micros Deal: Bloomberg West (06/23)

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June 23 (Bloomberg) -- Full episode of "Bloomberg West." Guests: Cantor Fitzgerald's Brian White, Andreessen Horowitz's Steven Sinofsky, Mosaic President Billy Parish and Intel futurist Brian David Johnson. (Source: Bloomberg)

Live from pier three in san francisco, welcome to bloomberg west.

I am cory johnson in for emily chang.

Oracle buying microsystem for $5.3 billion.

It is oracle's largest acquisition sentence troubled 2010 purchase of sun microsystems.

Micros makes software and hardware for the hospitality industry.

The ceo was hoping that will boost oracle's sales growth which has been rough for the last 11 quarters.

Google class going high style and attracts more customers.

They're selling google glass eyewear designed by a famous designer.

The frames will cost the glass $1800. more than a standard pair of google's high-tech glasses.

The roar of the harley-davidson engine will be more like a home.

First electric harley-davidson.

The company will be taking a few dozens of these other two are -- to a tour of the u.s. the harley will create something new.

To our lead story, oracle strikes a deal to buy micros systems.

The software giant under pressure to produce sales growth.

They paid $5.3 billion.

Micros is an interesting company.

It sells point-of-sale systems to retail.

Oracle had acquisition for these for six years.

This one is a big deal for oracle.

Its biggest purchase since 2010, since it purchased micros systems.

We both try to figure it out.

Joining me now is an analyst.

Brian, this is an interesting deal for oracle because it is not just a software company.

About two thirds is services.

About 20% is hardware.

10% software.

It is really about the pushing into the retail market.

Oracle has had an interest in that.

Here is the deal.

What do you make of why they are looking at this business right now?

The way i look at it is companies like oracle and ibm and microsoft -- all of them are trying to make the applications and move it over to the cloud.

Stuff like this only hopes oracle's portfolio of application that they can move to the cloud.

They already have a retail sweep out there.

When you take a full and solution for oracle and you move it over to the cloud, you actually are being more aggressive as you compete with the likes of salesforce.

It is interesting to me that this is a deal that oracle will look at it -- it looks like it will be adding to revenue with some pretty sizable margins.

When you look at the company, it looks like they have confirmed that.

When you look at revenue, it is about $1.3 billion per year in revenue.

The margins are more like 20% so not 45% of oracle.

I assume oracle will move that up going forward.

Selling fast into this customer base, which is pretty significant, could be a big opportunity.

When you look at this deal, and see a particular type of information they will be getting from the retail in applications?

The way oracle looks at it -- the three verticals are interested in financial which is a very important one.

Telecom, we have seen deals in that area and now retail.

They want someone with relationships in that area.

Some type of proprietary technology and then they can sell their existing solutions.

In this case, it is more sass.

I look at the competitors in the retail area where all the attention is with square, google wallet.

This looks like a cheap way for oracle to get into that business.

One of the things that has been really been talked about is big data analytics.

Retail vertical is one of the prime candidates to be primed for big data and analytics.

It google -- if google is going to make sure they can do good about the cloud and analytics, retail vertical is a good way to start.

Brian, the hardware business -- it struck me there is something more to this than just software, just finding a vertical in software.

Is the hardware really critical here?

Does the micros business require the hardware to get into the restaurant, the hotels?

The most important is sass.

I highlight -- software into service?

Highlight the engineer business as important because oracle is making a very big push.

It is growing double digits.

It is a billion dollar business.

They hope to get half of the customer base into engineer systems.

Today it is less than 3000. engineer systems is what?

The software combined with the sun hardware?

You have a database and one hardware to support that for the best performance and lowest cost.

It is a combination of server storage and networking software that optimizes database and the data.

Oracle is making a big push in this market.

What you get someone interested in your database and application, you can sell engineer systems.

The notion is you got this sun offering as sort of a back of the system.

You have the software in the middle of it.

Now with micros, you have a front and at least for hotels and restaurants.

Exactly.

That is something you would never have in micros technologies and you start to sell your existing technology.

That is the focus on the three verticals.

It would probably mean lower margins on the front and in the deep back and.

What are your thoughts?

We look at things -- we don't really care what is going to happen in the margins in the next year or two.

When they bought son, that damaged the margins.

At the end of the day, if you were going to win this fight with applications and the cloud, you need a full suite whether it is in retail, financials.

Whenever you find holds, you need to plug them in and go out for the offering.

Maybe it didn't bother them but it might bother others.

Thank you very much.

Google is adding dropcam.

We are going to have dropcam with us next to talk about what google is going to do next.

You can stream from your tablet, phone, and bloomberg.com.

? welcome back to bloomberg west.

Google's nest labs pushing deeper into the tech of home pushing to buy these video monitoring startup, rock cam.

Drop him cameras are dropped in the home and uses can live stream and watch all kinds of things on their devices.

Google bought nest labs recently earlier this year for $3.2 billion.

Horowitz buying a lot of money to get deeper into the security business.

Investing $90 million in the firm called tanium.

The company helps detect and stop attacks before they happen.

Serving as the central nervous system for some of the largest companies in the world.

For more on this, we are joined by the newest board member.

A former microsoft honcho.

Tanium?

Tanium.

It is hard for me to tell these companies apart.

Some of them say they prevent attacks and work with mobile's. what makes us unique is that it is a magical product.

They provide real-time information about the state of your network.

It is not just the ability to catalog the network.

It is the ability to almost think of your network as a searchable database.

All the attributes that could be interesting in order to detect and analyze and understand.

It doesn't just give you one metric.

It gives you any metric you want on any of the endpoints.

Pc's, data centers, servers.

Find out anything you want any can do it instantly.

What kinds of things -- i had a -- one of my personal e-mail account got hacked last night or at least i got a warning saying that password had been accessed in taiwan.

Were you in taiwan last night?

I was not.

That poses risk of not just for me but for bloomberg and other things.

How does tanium and how might it work for things like that?

What goes on now in the ata tack and security space is that the bad guys are really clever.

They know all the tools that the good guys are using to monitor their networks and put up firewalls and defenses.

They are designing their attacks in ways that takes four little steps that all look like normal operations going on, but they string those together in various ways.

Then, they break into the network or the system and do bad stuff.

What you can do with tanium is you are able to string together all of these data points and look and see what end points of your network has the set of attributes on them.

Maybe this particular file, this particular part of your system is modified or this network packet is traveling in and out of the network or is part of the network like the nodes in an office.

All instantly.

Who designed this thing?

The cofounder is a father and son team.

Awesome thing to see.

What is so amazing is they are new breezed of entrepreneur s. they been doing this quite some time.

What makes it so valuable is they did accompany in a space and when they worked on that product, it was state-of-the-art.

It still is.

Their company was acquired by ibm.

What they did is instead of resting on their morals, they thought about it.

What would really make a difference in this space of both security and systems management?

What came to mind is taking a product and making it 10,000 times faster.

Not like a little faster.

Today the state-of-the-art is -- you want to know with all my computers on my network have this attribute?

You have to report every -- exactly.

The bad guys are working much faster than that.

So, working to defeat them or work against them.

Let me tell you the first time we saw the demo.

We were sitting with andreessen horowitz and all the partners and the members of the team.

A lot of experience in this space.

200 years of system management watching this demo.

They did the demo and -- that is the kid.

He went to berkeley.

He did the demo and thought it was cool.

It was really fast.

It was probably just a mockup of what he was planning to build once he got funding.

Then, he looked and said, no, i just connected to a real network of several thousand computers.

This is the actual network i am talking to now.

To prove it, he asked all the computers and networks to respond back with the time.

Very quickly, they started recording the same time of day it was.

In real time, he talked to all the machines and network under 15 seconds.

You know he is selling you something.

You guys are smart investors.

You've seen demos that look good and products that are bad.

Duio you high-five?

This is a space we care deeply about.

They have done a magical product that really is.

The thing we thought is wow, there were so much we could really be part of to help the company scale up and bring in a team and connect with enterprise customers.

Does that meeting change where you were like prove it to me?

Then, how much do you want and then they say they are not selling it.

It is a partnership.

What happens is they are there because they think we can offer them some help.

We are there because we think we can help.

It works out great for both of us.

I will monitor this.

Now, you are a board member.

Airbnb's biggest market -- we go inside the sharing battle in new york city next.

You can watch a streaming on your tablet, phone, bloomberg.com, apple tv, amazon fire tv, you can see us all the time.

? welcome back.

The shares of the controversial wireless designer parkervision plunging today.

A patent battle that is been going on for more than a decade.

The latest -- a federal judge throwing out a patent they won against qualcomm saying there was not enough evidence to support the jury's decision.

This has been going on forever.

Converting signals to higher frequencies, lower frequencies.

It is important stuff for mobile.

Parkervision has been trying to assert this for a long time.

Airbnb's biggest market also could be one of the most difficult.

New york city landlords and legislators raging intense battle questioning the legality of the home service.

They're spending $120,000 for lobbying groups in new york state and more on ad space in the city.

This after they recently closed a $450 million round of funding for the valuation of the company.

Aaron beazer fight -- airbnb's fight is an interesting story.

I am joined by the author of that story.

A great piece.

There were something about housing in new york city that is so visceral.

This gets right at.

T it.

Everything that happens in new york is always chaotic.

That is not too surprising that airbnb's biggest battle has broken out here.

It is a little awkward for the company since it is happening right here on wall street backyard.

Every time they're presumably preparing for an ipo sometime in the new future.

House so?

-- how so?

Does this get to the fundamental value proposition?

It will get awkward when they have to put the rest -- the risk factors.

One risk is that it might be illegal in our biggest market.

I think what they are trying to do is -- their head of their public policy was based in washington, d.c. this is really where the fight is being waged.

It is going to be tricky.

I think that would like to have everyone believe that similar to the uber fight that really that most of their pushback in new york has been coming from incumbent competitors.

What i found fascinating is that actually that is not really the case and that it is the hotel industry that is their primary antagonist.

It is people in the real estate industry.

The building owners, the landlords, the managers that are really upset about this.

New york has a long history is any country in america -- city in america of the abuse of slumlords.

So many laws written around that not just to protect people renting, but also to protect the nature of a community.

A community with different incomes.

You can have artists living next to people in finance so communities keep their color.

Is there a notion that the fundamental laws of how rent and mind control works in new york city might change to accommodate airbnb?

That is their hope.

Their goal is to amend the 2010 law that basically are hibbitts people from that prohibits people from entering out their apartments for less than 30 days unless they are there.

If airbnb has their way, they would like to amend it so basically people can do that for less than 30 days if it is their primary or secondary residence.

They have two bills in albany that would essentially amend the law in their favor.

There are a lot of people that opposed an amendment.

Primarily, i think a lot of the issue comes down to the fact that airbnb has been so good about establishing trust between the guests and the hosts.

When airbnb launched, it used to be -- people were like it is crazy.

Who would trust a stranger to live in that house?

The system has been very effective about letting users and hosts review each other.

Part of the problem is that the landlords and the building owners don't have any say in that system.

This way renters can raise the effective value of their places because new york apartments are not cheap enough.

Thank you very much.

Great story.

Harley davidson going electric just like bob dylan did a while back.

I will show you the new electric bike next.

? time now for on the markets.

Let's get you caught up with where stocks sttraded.

You have the s&p 500 down 0. 01%. chinese manufacturing now at a seven-month high.

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

The business of sold are increasingly moving away from kirsch -- commercial and towards residential with a new business model from companies like mosaic.

The founder joins me now to talk about the new program.

The history of business is interesting.

You guys have a new model here which is?

Lending for people to go solar in their own home.

Peer-to-peer lending.

People can borrow money from other people and get a 20 year loan.

Low interest rate and put solar on their home for no money down.

To whom does this have strongest appeal?

People want to save money on their utility bills.

A lot of people across the country can save money from day one and pay less on the loan payments than they would for utility bills that they are cutting by going solar.

What kind of investment returns are you talking about the the people providing this?

We are still seeing in their 4 %-7%. risk?

People aren't able to diversify.

Before we were doing just solar project investments and now people can diversify across a whole range of individual home loans.

You don't really know what the risk profile is.

What you imagine it will be?

It is hard to characterize at this stage.

Solar city recently did a securitization.

They were projecting very low annual defaults.

In the .3% annual.

Why?

People are saving money on their utility bills so if they stopped paying for their solo release -- soalar lease, they're actually paying more than they would've otherwise.

It is a net savings.

One of the criticisms of solar city specifically -- there was a notion of the duration of the panels themselves.

How long they would last and with the weren't these would be because some of the providers.

The warranties go away and the companies go away.

You surely have to figure that in when you figure out the duration.

You think about most of the panels have 25 year warranties.

The inverters have anywhere from 12 to 25 year warranties.

The inverters are the sole pounder -- are what the solar panels plug-in to?

A lot of installers are stepping up and saying we will provide a performance guarantee for the whole system for the life of the loan or lease.

That is the way it is happening.

Quite to why -- ? the need to compete with what people's expectations or for electricity.

People want to sign a contract that says they are going to get 20 years of solar power no matter what.

You guys use things like social media.

Things like different -- a a capitalist venture.

You are using social media and politics to make this happen.

I saw some tweets.

We have hundreds of thousands of tweets.

The president and post it on facebook -- the president of america not the president of mosaic.

Solar has become more acceptable.

The president pointed out that the cost of solar has come down 75% in the last six years.

That much?

Wow.

If i bought the stuff for years ago, the price is 75% lower.

I feel like a rube.

The subsidies have also come down quite a bit.

What does that mean for subsidies and how does it work?

It absolutely works.

It is important to point out that fossil fuels globally still get 25 times the subsidies that clean energy technology gets.

We are still in the early stages of the clean energy development.

We still need that support, but it is brought the cost down enormously as we have gotten economies involved.

They have worked in doing what?

In getting the technology cost competitive with fossil fuels.

That is the key thing that has happened.

That is why we have reached the tipping point that for most people it is cheaper to empower your life with cheap energy.

That was not true six years ago.

Not at all.

Interesting development.

From solar power to battery-powered.

Hogs going electric.

Unwrapping livewire, the testing of a electric powered bike.

They hope that the initiative will give harley davidson some kind of customer feedback to figure out what kind of electric bike, if any, to bring to market.

Stephanie ruhle and eric spoke with the harley-davidson ceo and asked him why make an electric bike?

I think we have a lot of v-tw ins inon the road.

When we think about the future and think about urban riders, think about writing in cities, it makes perfect sense in terms of -- somebody is going to buy this instead of a vespa?

It is an alternative.

It is a nimble ride.

It is a great ride particularly for urban areas where there was a lot of traffic.

Is the goal to bring in a new demographic?

When i think about a traditional harley davidson customer, they want the loud hog.

Are you trying to change the taste of your chasing customer or do you want a whole new one?

There is no question that we love our traditional customers.

They are who made our company what it is today.

There is a whole other demographic.

Younger riders, female riders, others that we are trying to appeal to not only with the electric bike with other bikes we are galloping the -- developing that are more suitable to those demographics.

So much of what makes harley is the brand.

People identify with it.

Whether they're looking at this bike or the other bikes you are making which are quite different, don't you run the risk of either diluting the brand or potentially alienating the folks who still make up the very vast majority of your sales?

We have to be very careful about the brand because of what it stands for.

It is the look, sound, and feel of a harley-davidson.

This filing, how it is filed.

-- styled.

The look, the sound.

If you go out on the highway on this bike and ride it, it has a very distinct sound.

We were very careful on how we designed the electrification to make that sound.

What stands between you and making -- expanding the range -- making this bike more appealing to a broader number of people?

The battery technology is certainly part of it.

Have you talked to elon musk?

I haven't personally but i think our folks are certainly investigating how do we work with folks like tesla and others to make sure we have leading edge technology and make the very best bike possible.

Tesla and others.

Interesting.

Harley davidson ceo with market makers.

Dreamworks known for animated characters.

They're also pushing technology boundaries behind the scenes.

We are going to take a look at the software developed with intel to bring dragons the life on the big screen.

They look like they got to life.

That is something.

You can watch a streaming on your tablet, bone, or bloomberg.com.

You are pouting, big baby?

Will try this.

You feeling this, yet?

That was three"how to train your dragon 2." while dragon 2 brings back some familiar characters, dreamworks took a different behind-the-scenes approach the sequel.

Jon erlichman will check that out.

It is game changing technology.

It has been interesting technology since the days of "shrek." they have always been thinking about what the next big thing they can do in technology.

You are right.

They have generated a lot of money at the box office.

In this case, what happened behind the scenes is fascinating both dreamworks and intel working together.

Here is the full story.

Thinking all is right with the world and i get -- we need to talk.

This is the main character in how to train your dragon 2. when bringing him to life in the first movie, dreamworks used this software.

Making changes took time and rendering those changes took even more time.

For dragons 2, dreamworks rolled out new software called apollo.

Changes were speedy and rendering happened in real time.

It is never blocking the artist.

It is always up to speed and the latest and greatest.

They are known for the tech savvy approach from partnering with netflix to you term strategy and the recent launch of dreamworks tv.

While animators luck pushing the limits of technology, the company's aging software was not keeping up with computing power.

Apollo was created with intel over a five-year span.

The dreamworks leading technology at of hisexecutive -- we can play all those games and we are.

In terms of the budget, it is tens of millions of dollars.

You can see the quality of it in the movie.

It required 90 million hours worth of work to be rendered.

That is like running a computer for 10,273 years.

And required 298 terabytes of storage, equivalent to 25,742 mobile phones with 16 gigabytes of storage.

All the technology shows up in competition characters -- complicated characters.

The size of the character to watch a play in real time and my director saying can you change it?

I can do it quickly.

That would usually take a couple of days.

Intel's engineers walk away from the project with a boat load of information.

We can take it back and understand how in our own long-term plans about how it gets developed.

Along with using apollo one feature films, dreamworks may make the technology to other industries.

Other sectors make images for various purposes.

All of those processes are really enhanced and sped up by apollo.

Coldhold on!

That is fairly amazing.

That is more technology it takes to render me.

[applause] very go.

-- there you go.

You mentioned "shrek." our expectations have gotten that much more dramatic over the years as more players have come into this market.

More people that allowed us -- have wowed us.

For dreamworks, they were getting to a point where they can only go so far as the current system allow them to do.

They couldn't take full advantage of the computing power.

As they fly through the clouds, it is about the cloud.

Redesigning your software to take advantage of that so you can draw these things in real time and then make the changes you want to make these films look even better.

Jon erlichman, thank you.

Good stuff.

Good movie, too.

Could we all have our own personal 3-d printed robots in the future?

Intel thinks so.

We are back with a special robotic guest next.

? welcome back.

Fox hiring thousands of workers to make the new phone.

Apple supplier megatron is staffing as well.

The new phone is scheduled to be unveiled in the fall.

To technology for building robots has changed dramatically.

Intel is teaching people how to use open source files to great their own robots and print them on a three-day printer -- on a 3-d printer.

Brian johnson joins me from new york to discuss robots.

You of him telling me about jimmy for about a year or so.

What do you got?

Here is jimmy.

We will walk him around as we talk.

Jimmy is part of a 21st-century robot project.

Is an open-source, 3-d printable robot.

How big is it?

He is knee-high?

He is about two foot tall.

It took us about two weeks to build them from scratch.

We worked with a company called trossen robotics.

This is a research version.

The idea is that you can design the look of it.

Your robot does not have to look like jimmy.

People can design their own robot.

They can also make the robot personal by make -- by downloading apps.

You don't have to understand artificial intelligence.

All you really need is to download apps like a smartphone.

What you have already programmed into this is the ability to the aware of its environment or the moving capabilities and so on?

Right now, we have a minimum platform.

We have the hardware down.

We have this version and that we are going to have another one later this year that is powered by the intel edison.

We have the hardware set and now we're working on the software where we are going to be releasing an app store.

Pretty much, he will be able to walk and talk and tweak and talk to you.

I was playing around with your avatar messaging app.

This strikes me -- we went for a walk and he was really jazzed about expanding the places where intel chips are being used so that inventors and people using things like open source are using intel.

That is what really impresses me about brian's vision.

He really understands as intel moves into the 21st century, we certainly have our traditional business that we will continue to do.

He is really lowoking out to makers and educators that has this competition that is so small.

You look at the edison platform, it is so small.

We are looking at different places for innovation.

We are branching out with makers and students and average folks as well.

I believe that inventing and business and design is all about getting the fork in the road and making a choice.

What decisions have you made about jimmy?

He looks cute and not threatening.

That was purposeful.

We worked with an industry -- an illustrator and he designed jimmy to be cute, not threatening.

These robots are here to be our friend and we are really in control.

We wanted to make jimmy really approachable.

Kids love him.

Ivan traveling around talking to first graders and 10-year-olds about jimmy.

Getting into their imaginations because that is where i think the innovation comes from.

We go to them and say here is some software, what your robot to be?

You can name it.

Tell me what you want your robot to do.

We got amazing feedback from these kids.

10-year-olds, me.

I'm sure they have better questions.

What are they asking?

This is my scientific research of traveling around talking to young kids about what a robot should be able to do.

It turns out if you want a robot to be successful, it has to do two things.

The first thing he needs to have indicat -- is a cape.

The second thing you need to do is fart.

[laughter] really?

That is the part i found really interesting is that kids understood that robots should be fun.

It should not be serious all the time.

We had one young lady who said she wanted her robot to be able to dance with her.

We had another robot who said she lives in a trilingual neighborhood.

She would want her robot to follow her around and be a translator so that everybody she talked to could talk to other people.

You begin to see these really beautiful applications that these kids are coming up with.

A want to keep you around -- i want to keep you around.

We are always focus on one number for the bwest byte.

Tell us, brian.

The number is zero for me.

The reason why it is zero is as we approach the year 2020, the size of meaning power, the size of the chip that goes into all other devices approaches zero.

We are at 12 -- five nanometers.

That is 12 atoms across.

Anything to turn anything into a computer and when you do that, the whole landscape changes.

This is not just the internet of things.

The notion that we have sensors everywhere, but the actual computing happens on the device.

That is the idea that you can bring intelligence to any object and to any device.

That doesn't mean you were going to make everything smart, but you can start to look around you and say what can i do, how can i change the world?

How can i make peoples lives better by making my jacket smarter?

Or making my dinner table smarter?

They're different areas we can apply that we can have a huge effect.

We can change how we think about the businesses we are going to build.

Brian johnson, really cool stuff as always.

We appreciate your time.

You can always catch us on bloomberg.com as well as your iphone, your tablet, bloomberg radio, pretty much everywhere.

See you tomorrow.

?

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

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