Room for Disruption in Tech Cloud Shift: Borthwick

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Jan. 21 (Bloomberg) -- John Borthwick, CEO at Betaworks, examines M&A deals in media and technology on Bloomberg Television’s “Bloomberg Surveillance.”

Which is a bigger deal here in terms of changing the game?

I think the lenovo deal.

I think the transition to the cloud and how the big sort of traditional technology companies are making the transition to the crowd -- cloud is a huge shift that is taking place.

I think the verizon-intel deal is interesting, but verizon is under investing in violence, santos even becoming a significant play on the tv side -- in fios come a so i don't see them becoming the second of 10 play on significant player on the tv side.

I think you're focusing a lot of their energy on their wireless business.

It is not core for them right now.

You mentioned the move to the cloud been important.

We just spoke with the sap ceo.

There are the process of doing it.

Does this raise the barriers to entry for the tech start up company if the big guys are going to be doing this?

I don't believe so.

The tech companies start off of their infrastructure in the cloud.

What is happening is there so much disruption taking place and change taking place in all of the services.

Whether it is infrastructure services.

There are tons of niches for startups to play in.

As these companies are making this transition, there's a lot of room for disruption.

Some of them won't make it.

Bill mcdermott was telling us they're looking for companies to acquire.

Will that be the growth model as these companies come in?

And they end up as part of a corporate family.

I think there will be a lot of acquisition activity in this midmarket level.

I think it is critical these companies build the infrastructure to be able to work and make acquired companies part of the whole, which is a hard thing to do and some of them don't have that dna.

John, we always talking about the cloud.

You look at an ibm getting out of hardware in effect, sap in some ways shifting.

I mean, who is still doing old tech well?

It still matters.

You have to have types, plumbing.

There are a couple of schools of thought here which have dominated.

There are a couple of them in complete conflict with one another.

There's one school of thought, you go software.

You just go software.

Another school of thought, on the consumer side you see coming is like motorola, google, acquiring motorola and going into hardware.

You see the moving into the hardware chain.

This question of at what point can you say your services and your business, your business lines are delimited, it is is a complex one.

The guys who created nest came from apple.

It has to be sexy.

You take a thermostat and make it look good.

Now make it smart.

It knows your habits.

Like old tech has to be as sexy as new tech will stop thermostats is classic.

Your traditional thermostat wasn't sexy.

The guys came along and build is amazing thermostat.

I'm afraid they misbehaved during the polar vortex.

Other than that, i love it.

It is very clever technology.

What you see happening is this wave of software driven technology is beginning to reinvent the kind of dumb hardware we have in our lives and that we have in our homes.

I think what is missing today is the degree of dependency that we have as human beings on these things.

It is not fully appreciated.

An interdependency that they have with one another on the data side is not appreciated.

I want to bring in some results from a poll that luber conducted last week.

They asked respondents which asset classes are all ready in a bubble.

The answer was 38% people found the internet and social networking stocks are already in a bubble.

41% said not yet, but on the verge.

14% said the bubble is not forming.

That beat out london housing prices, u.s. treasuries and credit markets for asset classes that are already in a bubble.

You talk about technology getting the attention.

Has the enthusiasm gone too far?

I don't think so.

There's so much more that still needs to happen.

Or has been inflation definitely in prices, asset prices.

I do think today it is very uneven.

You can go across a particular category and you don't see a uniform inflation.

You just see it in selected areas.

Bits and pieces.

In 2014, given the success twitter had in 2013, we will see a rush for the public markets and that is going to transform the whole sector.

Because right now we still have most of these companies are private and the price is kind of what he but he will pay for private investment in these companies, which can often get very inflated.

That is certainly something we will keep an eye on, companies buying up these private companies and really monetizing on that.

Mike, do we have any interesting economic data reports coming out today?

Not today.

It has been kind of a slow period after the jobs report, but it is a very slow week.

We don't get anything until thursday when we get the jobless claims numbers, and those aren't even huge.

Existing home sales at the end of the week will be the highlight.

Ok, that will be the highlight.

In the meantime, futures are a little elevated right now.

A bunch of optimism ahead of ibm, texas instruments coming out after the bell.

It is back to the earnings story.

We got no data.

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

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