What's Next for SAP?: Bloomberg West (07/22)

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July 22 (Bloomberg) -- On today's "Bloomberg West" the focus is on innovation, technology, media and the future of business. Hosted by Emily Chang with Editor-at-Large Cory Johnson and Senior Correspondent Jon Erlichman f22om Bloomberg's San Francisco studio, it showcases the personalities, companies and trends that are transforming the global economy. (Source: Bloomberg)

Live from peer three in san francisco, welcome to the latest edition of "bloomberg west" we talk about the technology companies that are resharing our world.

Let's get straight to the rundown.

14 emmy nominations after spending big on content like "house of cards," today we learn what was a hit from are critics may not have enough subscribers to pay for it.

We have got exclusive details on the last-minute negotiations that led to the exit with yahoo!. s.a.p. moving from two c.e.o.'s to only one.

The sole c.e.o. bill mcdermott tells us about his plans.

First to the lead, the netflix quarterly earnings conference is just getting underway.

It is ditching conference call tradition to do a video google hangout.

We'll be monitoring this odd quarterly call or quarterly hangout whatever you call it and bring you the latest.

Sales are up 20% to $1.1 billion.

Profit up 378% higher to 29.5 million.

Netflix says 630,000 us subscribers, it's the second lowest pace of net additions in the last six quarters.

That helped bring netflix total to nearly 30 million in the u.s., 8 million international members.

Programs like as we mentioned the emmy nominated "house of cards" and rebooted "arrested development" are bringing in subscribers.

Shares are down nearly 7% in after-hours trading.

Our senior west coast correspondent, jon erlichman, has more on the business of netflix.

What do you want?

Your absolute, unquestioning loyalty.

Anything.

In the netflix original show "house of cards" kevin spacey plays frank underwood, a very ambitious politician.

The c.e.o. of netflix is ambitious, too.

He saw a future in streaming video.

People watching movies and tv shows on their phones, tablets, even smart tvs and it's working.

Netflix is predicting it could end its third quarter with 39.9 million streaming subscribers in the u.s. and he says the service is on its way to 90 million.

Compare that to hbo and cinemax, both owned by time warner with a combined 40 million u.s. sub scribers.

What hastings wants is to think of netflix as hbo as an original tv network.

House of cards and "arrested development" don't come cheap.

Add more streaming subscribers at $8 a month and use that money to create more emmy worthy content and hoping that hulu and amazon can't catch up.

Things are about to move very quickly.

And, of course, cory, we venlt reported to give it a bunch of new money to spend it on contract.

Netflix addressed the issue saying hulu is armed with more money.

That could raise the content prices once again.

We have been structuring a lot of these multi-year deals to lock up content to maintain our edge.

Cory.

Curious stuff indeed.

Jon, stay with there.

We want to bring in paul sweeney who follows this company very closely from new york.

Paul, let me start with you.

Let's all talk about this here.

Tell me what you saw in this quarter and maybe what you didn't see.

When you think about netflix right now, it really is a subscriber-driven story much more than the reported revenues and profits that this company generates.

Investors are looking for this company to grow.

Subscribers quickly, domesticcally and internationally.

Investors are sensing this is a land grab for online video subscribers.

Netflix are first to market.

They have a brand in the marketplace.

People are focusing on subscriber numbers.

Unfortunately for netflix, they came in a little bit late in terms of net ads for the quarter up 630,000. that kind of really causes investors to step back.

This stock has been absolutely priced to perfection.

Any little hiccup, investors take a little money off the table.

Jon, i'm wanting, i don't care about stocks, but i do care about the business.

Is that where the battle is, online subscribers and is there a sense that something has changed here?

Last quarter they had many more subscribers than this time around.

Yeah.

You can get into the regular quarterly stuff like the seasonally slower quarter.

This was also a quarter when they had another high profile original series that they introduced, "arrested development"." last quarter they had introduced the high profile original that just got a lot of emmy nominations "house of cards." they quickly said, look at that, that helped us to bump up our subscriber numbers in a big way.

On the spending side, days like this are a reminder that they can spin it two ways.

They can say it's great, the originals are terrific for bringing in the sub describers if the numbers are higher than what wall street think will be.

The originals are a small percentage of the whole content spend right now.

At the end of the day, they don't want to convince people who mike like "house of cards" or "arrested development" to use the service, they want to keep you there, lock you in, get those people who are not paying the service, on the monthly freebies and stay for the term.

In terms of subscribers, is this a situation where you think they're going to have to spend a lot of money on content so that viewers think that there it is going to be there for them in the future?

The service is moving from a focus on movies to original tv-like content, is that what is going to matter to add subscribers?

I absolutely think that is where the battle is being fought.

The netflix of the world are taking a page out of the book that hbo wrote and focusing on originally produce and high quality content.

Think about "the sopranos." we have seen that not just in hbo, but also at showtime and a.m.c. network with "mad men." the streaming video on demand operators such as netflix, they recognize to compete in the marketplace for subscribers, it has to be unique programming.

That's where "house of cards" and "arrested development" comes in and making big bets to get subscribers.

Netflix hasn't been crystal clear when they acquire content, the expense for it, how much is sitting hidden away on the balance sheet and rolled ofover time, based on use or content, is that ok to keep that secret?

They clarified that this quarter.

They talk how they amortize their programming.

Put a number on it, $3 billion of program assets on their balance sheet, significant investment obviously.

They're amortizing it on the four-year straight-line basis.

They mention in their later today, actually, they're based on usage trends that they're seeing.

They may amortize a little bit more in the early part of the term than in the later part.

They might, i think they're trying to really match the usage versus how they amortize their programming.

Right.

They have a two-year deal for "house of cards" and most viewers watch it in a long weekend, that would change the am tore advertisization schedule, the profits would go down.

Also, in this discussion of the increase in the cost of content, is there a frenzy in hollywood to sell to amazon or hulu or netflix or hbo or anyone that will buy it and the price is going up as a result?

You can bet that they're all going to try to maneuver for the best content price possible.

I do think at the same time there is a lot of talent, producers, actors, directors, that are moving to these platforms.

Maybe it all works out for these players at the end of the day.

Higher content cost, we haven't talked about pricing.

Netflix sees as one of the value ads of keeping that monthly price at around $8. we talk a lot about apple and if apple's biggest growth behind it, does it have to lower prices on phones to get more people buying, say, the iphone.

In the case of netflix, the question is if the growth slows, do they have to raise their prices and have a similar monthly-type fee that an hbo has.

Let's not forget that hbo has been a highly profitable business.

Interesting stuff indeed.

Their guidance for next quarter, subscriber ads year over year declined the first i can remember.

We're going to continue to monitor the conference call.

Paul and jon, thank you.

When we come back, activist investor dan lowe's dumping most of his stake in yahoo!

And leaving the board.

What does it say for the future of your company?

You can watch us streaming on your tablet, phone, and at bloomberg.com.

? welcome to "bloomberg west." i'm cory johnson.

Breaking news on the tv news.

The company will have 12 new tv markets in several weeks and aims to reach a quarter of the population within the next five to seven years.

The broadcast networks sue the service which broadcasts tv signals over the internet.

Edmund joins us from new york.

Is this a significant addition for these guys?

Yeah, they have been looking to expand pretty aggressively.

Every time they do it's by order of magnitude.

It's potentially significant.

They're a relatively new service.

We don't know how many subscribers they have.

We don't have the full numbers yet.

Clearly they have got a lot of ambition and expanding as fast as they can.

I wonder about the uptake rates and what it means.

Just the fact that they're available does not mean, it's like when i was single, i was available to all of the supermodels of the world, but the phone didn't ring off the hook there.

Are these guys actually getting the service, or are they just getting the attention of the lawyers from the cable companies and the broadcast networks?

That's a good point.

We don't really know what their consumer bays is as of yet.

They're getting a lot of attention simply for the fact they keep winning in the courts.

The major broadcasters don't like the fact that aereo picks up the signals.

They might present a new model for how broadcast television can be relayed to consumers.

I think that's the reason why we're all paying attention.

Is there a sense that this really does have the potential or jon erlichman is always talking about this idea of people dumping the cable box and going to some combination of netflix and hulu and this would be the rabbits equivalent of the local news.

Could this be the straw that breaks the cable company back?

I don't know if this is the the straw.

You have to do some math on this, $8 for aereo and netflix, maybe throw in amazon, $8 a month as well.

You add that up and you need a broadband subscription, you're getting close to a basic cable fee at that point.

It's not really a matter of you're adding up all of the different providers so much as you choose one or two at the most and have a very basic television package.

The numbers aren't going there yet.

Not everyone is flocking to get these services and dump their cable box.

We're still waiting to see how that's going to happen.

Apparently they have live footage of the fall of the berlin wall.

That's impressive, if dated stuff.

Thank you very much, we'll keep watching that one.

Bloomberg tv is a paid partner of aereo service.

Now to yahoo!. dan loeb selling back 40 million of his 60 million shares.

So what led to this seemingly sudden exit?

Our jon erlichman is back with some exclusive details of what has been happening behind the scenes in recent days joining me now from los angeles.

Jon, how did this happen like that?

It picked up steam pretty quickly, cory.

It has a lot to do with the stock.

Yahoo!

Has been a very impressive performing stock.

Since dan loeb became an investor, an active one at yahoo!, the share price has more than doubled.

He had already sold some of his stock according to regulatory filings and there are windows for people who are in his position who are basically insiders, on the board of directors, they own a lot of shares, when they can sell.

That window opened up mid last week.

That got him talking with yahoo!

About the fact that he was planning on selling some of that stock and that got yahoo!

Talking back to dan loeb about what do you think about a buyback?

We have wiggle room through a current stock buyback plan.

We don't want to use all of our money on buying back all of your stock.

We'll buy a lot of it.

We'll buy enough that it brings your percentage holdings down just enough that it would basically based on an earlier deal they had, give him reason to leave the board of directors.

So this is a very friendly agreement and obviously a very profitable one for dan loeb.

Jon, was there a sense that this was a surprise at all that these guys didn't know this was going to happen?

He is an activist investor.

You would think they would know he would sell his shares at some point and the nod be there for the long haul?

I think you can make the argument, cory, when dan loeb made his investment in yahoo!, he thought there would be a very long time more rye done to -- horizon to see the changes occur.

The best performing stocks in the last couple of years, it would surprise people more than the fact that dan loeb is selling a big portion of his stock because of the fact that it has run up.

I think that it does, though, open the door for marisa meyer to put more of a stamp on yahoo!. she has done a lot of that already as c.e.o. through a lot of the probability innovations.

In the boardroom, when there were healthy and long debates between loeb and mayer and she gets not to have those anymore and have some say on the new board of directors coming in and the chair.

I didn't know of this guy, but who is this person and how much does it matter?

Mickey rosen, she has been with yahoo!

For a couple of years.

I said guy, that shows you how much i know.

I said i didn't know this guy.

Hey, mickey.

That sounds like a guy.

No, mickey rosen is leaving the company.

We have seen a lot of high profile departures since marisa mayer came in, so in a sense, changing of the guard.

Jon, thanks very much.

We will be back with more "bloomberg west" in a moment.

? this is "bloomberg west." i'm cory johnson.

Texas instruments just reported second-quarter earnings sales.

The chip mcnabb fell 9% to $3 billion.

Profit 460%, demand from the auto industry and industrial markets helps t.i. counter the global slowdown in p.c. sales.

It talks about its strategy since naming its new c.e.o. in may.

Intel remains a top priority for its company.

Here to talk about it is diane bryant.

Diane, you guys have done really well in this business while other businesses have struggled.

What is the key to maintaining and growing share in this growing business?

You look at it fundamentally, you're right, the data center business is growing tremendously.

It's sealed by two fundamental things.

Billions and billions connected devices, we are buying more and more devices and connecting to the internet.

They go to a data center to access content and machine devices, the internet of things, billions of machine to machine devices that also connect back to the internet.

So what we see is tremendous growth in services that are being deployed to consumers or to businesses, taking advantage of all of those devices to reach you and that in turn drives tremendous cloud buildout or data center buildout.

When people criticize intel for not having a mobile strategy, it's true that mobile stuff hasn't gone the way that they wanted, but the data center business has been strong.

In terms of computing, how far out do you imagine the ways that data center computing will imagine or is it someone agnostic as to speed and power?

No, it absolutely is very targeted.

You make a good point, you're running a data center at scale, if you're a amazon or yahoo!

Or ibeh, your data center is your business and so you have to run it at incredible levels of efficiency.

It's all about how can i get the maximum performance at the lowest cost of operation.

It wouldn't matter what the usage is, it's any usage, you want more?

It's very targeted on workload.

A web search workload will have a very different model for efficiency than some big data analytic solution which is very computing intensive, a different attribute.

If you're running a cloud, look at each one of your applications and i want the very best technology for each and every one of those to get the maximum result out of my data center.

Margins have come down a little bit over the last, call it six quarters, eight quarters or so.

Is that a strategy or is that just about uptake of new systems?

The margins in the data centers have held very well.

The last quarter, they were slightly down due to underutilization of the factories overall.

We continue to see wonderful margins.

My last question, as you build out these future usages, would you get to a point where you need different kinds of chips for different kinds of usages?

You mentioned sort of computing versus loading web pages, completely different.

Do you figure out certain things that are going to matter most?

Yes, in fact, we just noticed additional details on some of our future products that are targeted at some of the emerging workload.

We see our product portfolio growing tremendously.

We ship microprocessors, some of them custom for a given customer's workload.

A wide, wide range and we have 93% of the servers run on intel and for storage and networking.

Broad range based on the workload.

Cool stuff.

Intel senior vice president diane bryiant thank you.

The servers are still down and find out how it could impact the company's relationship with programmers.

"bloomberg west" returns.

? you're watching "bloomberg west" where we focus on business technology and inknowation.

I'm cory johnson in for emily chang.

Here are your bloomberg top headlines.

Nate silvers is leaving the "new york times" for disney espn taking his website with him.

Besides providing data on sports, he will provide data forecasts for politics and contribute to abc news.

He correctly predicted the results of all 50 states in last year's presidential election.

Google is buying a more than 6% stake in high max display that makes the chips in google glass.

It has the option to buy 14.8 all in.

The investment will enhance production capabilities.

Google glass may hit the market for all consumers by the end of the year.

And there is a disagreement over break-up fees.

Should the proposed buy-out succeed.

Silver lake leaves a $450 million fee.

Dell and the board believe that silver lake should only get reimbursed for expenses.

The vote is set for wednesday.

Apple's developer website is still shut down after a hacker attacked the network late last week.

Developers use the access for soft way download, engineering to help them create apps for apple products.

The sensitive personal data was encrypted, but some names, mailing addresses or email addresses may have been accessed.

To talk about the implications is jordan robinson who covers networking and cyber security, one of the 65 reporters here in bloomberg's headquarters in san francisco or back east.

How big a deal is this?

Hard to tell.

Apple was pretty vague in its statement.

Shocking.

Not surprisingly at all.

What apple did say in its statement was that somebody broke into their developers website and tried to access developers personal information.

That could mean one of two things.

That could mean that hackers are going after the individual developers to access their information and thus customer information in those company sites or more likely, what i suspect is happening is that as we saw back in february, you may recall there was a state of attacks against developer sites affecting microsoft and facebook and twitter.

Basically what happened was the developer sites got ineffected, developers for those companies logged on to those sites, the computers got infected and the hackers were trying to steal corporate secrets.

They're trying to find, i don't know want to malign any company, let's say an angry batsmaker and they have a lot of customer information of their own.

They might not be able to get through apple cyber security, but get the information from the app developers or it could have been someone trying to find out the secret to angry bats, i made that up.

Angry bats.

Or apple secrets as well.

Two ways to look at this.

These developers are really kind of the launching pad to get inside these companies' websites.

It's remarkable the degree to which they interact with the outside world.

They constantly need to download stuff.

They need to download code.

They're constantly interacting with these sites.

These attacks are watering hole attacks.

Like a watering hole in the middle of a desert.

You attack a community gathering location.

Can you try to get the app developers' information from their customer or that can be a launching pad to get inside the company itself.

Is the timing, the new i.o.s. is coming out, developers i imagine are frantically trying to write their apps, new apps or existing businesses to adapt to the new o.s. is this a crucial timing for this problem to happen?

It is.

It certainly doesn't help things.

With the site being down, it's likely to delay some apps from being developed currently.

An important thing to remember, these are not just external apps.

People within apple use these sites as well.

Their develop their own apps through these sites.

It slows down the whole process.

Is it eastern european hackers trying to make a buck or nations they sponsor going after corporations?

I would almost say it's probably the latter.

These developer sites have proven pretty popular with hackers looking for company secrets and spying type of attacks.

We don't know.

It may not be that kind of attack.

Apple is vague.

They're looking for developer contact information.

We don't know what that means.

These developer forums are very, very popular for very sophisticated hackers.

Until apple releases more information, i would err on the side that's the case.

Jordan robinson, thank you very much.

How many could these cyber attacks being costing companies like apple and others companies.

Cyber crimes are $100 billion, draining, every year.

Hack attacks costing americans 508,000 jobs.

How is this happening and how is that expense calculated?

Michael joins me.

Michael, talk about methodology first, big numbers in terms of jobs and numbers.

They are big numbers.

We made sure when we went after these numbers that we took a very conservative model.

We actually engaged with the center for strategic international studies, a 50-year-old bipartisan think tank with traditional economic models.

They looked at the size of the drug trade and where cyber crime fit into that and work backwards and sense the borders to how big a loss this could really be and run that across everything from fill ferage and piracy, crime, look at all of the different areas where this could occur.

Not taking into account pain and suffering, the elements that are just impossible to calculate.

You say it's costing jobs.

I say it's giving people like you jobs to tell us how many jobs it's costing.

Isn't there a massive security effort that is actually being funded quite well as a result of all of these hacks?

Certainly there is a driving cyber security industry, no doubt about that, right, as we look to protect and defend our companies and countries.

The reality is when you have i.p., we have people's key data, their company's core assets change hands unexpectedly, there is a loss to that.

The effort and intent that was put into that.

So clearly when somebody loses that next innovation and now it's common market knowledge or you yourself at home, you know, lose funds from your bank and they get transitioned over, somebody has to cover those losses.

It's that loss that's a direct impact.

So there certainly is a return to the economy on defense, but it's nowhere near the amount of loss.

What's the biggest change in hack attacks say from now to what it was three years ago or so?

To turn to sophistication, previously in your segment you talked about a watering hole attack and the sophistication of delivering on such an attack.

Thinking about the usage model of the people you want to attack and then slipping that code in below the o.s. so that you literally can't find it when you go look at through normal means.

Your average attacker today doesn't make your computer run slower, doesn't alert you he is there and often performs his ill will or harm and gets out of your way again so you never even knew you were infected.

That's really the difference over the last three to four years.

It seems like the solution back in the day, not too long ago was a new cyber security, new firewall on a p.c. that made for real big business for mcafee and symantic, has the astronauts for fighting that created new business opportunities?

They really have.

They have created a lot of new business opportunities.

We find ourselves now have to stretch yourselves on a dispensing -- what is that?

A defense and depth paradigm.

Defense across all of the layers of interaction with cyber traffic.

So whether that's your network layer, your mobile, whether it's your traditional end point like p.c.s like the firewall you mentioned or any virus as well as analytics are a booming marketplace.

To understand all of the data that exists inside of organizations, to figure out anomalous behavior, to understand snyder threat or snyder loss.

Yeah, the industry is diversifying and growing rapidly.

Let me ask you real quick.

A lot of companies, facebook, google among them, microsoft, have started to offer bounties and sizable ones to those who find holes in their security infrastructure in their code.

Apple has taken an approach with this attack where they're saying very little, they're not offering those kind of rewards.

Do you think apple is doing the wrong thing here?

Well, it's hard to place conjecture on what they're dealing with.

Their obligation is to their customers, their employees and then those developers, right.

So if they have shut down the site to protect those users, they probably didn't have a choice in that effort.

As it relates to bounties, those programs often are helpful, but sometimes they provide a level of assurance that really isn't there.

Just because somebody has found a given attack pattern doesn't mean they told you first shall doesn't mean you can get a defense deployed in a while.

Your average system is not patched or up to date.

It doesn't help that the maker of that device understands there is a breach.

He has to decide how to get the defense into the environment.

Each company has to look at whether the bounty programs work or actually distract from their core efforts.

Interesting stuff, no easy answers.

Michael, appreciate your time.

Thank you.

It's a bird, it's a plane, it's superman and batman together.

That's warner brothers announcing two kidnapped crusaders together in a new movie to be released in 2015. that's next on "bloomberg west." ? this is "bloomberg west." i'm cory johnson.

One of the largest business management software companies in the world, s.a.p., has announced an executive shake-up.

Companies say that co-c.e.o. will step down this year, another co-c.e.o. bill mcdermott will become the sole chief executive.

There is competition from the big players like or kl savings force and others and smart phones and tablets that are fundamentally changing the way that most of us do business.

I caught up with mcdermott for an interview during one of his trips in the bay area and what are the keys of s.a.p.'s turnaround in the last few years.

It's innovation.

I like to think of it as customer-driven innovation.

Cory, we said to ourselves, do we matter, if we weren't around, would anyone care?

Running on s.a.p. and an echo system of five times the number of people than we have employees, we felt we had an important purpose in the world.

We had to up the game and make the world run better and improve people's lives.

What does that mean?

I think in this era today it means the consumer.

The power is in the hands of the consumer and the devices driving everything.

As opposed to the old days when the i.t. manager would tell people what you're going to use?

Exactly, those days are gone.

So today, everyone is bringing their own device, but also every consumer has a device.

They expect companies to deal with them on their terms wherever they are in the world and they want what they want in real time.

By the way, if offer number one didn't work, you better be ready with a quick number two.

That customer is in charge.

If you don't get it done, someone else will.

How does that change the way you make a database, for example?

We invented something call hana.

There was this idea of the real time enterprise 41 years ago.

He realized that data in all these data forms, not aggregated in the same place, operating at a fast enough speed was preventing decisionmakers from having the information and the insight they needed to make real time calls and better informed decisions.

It's about two things.

It's about the way the data is structured so you can find it, the front end and what you're looking at?

Exactly.

Really the speed is not only faster than anything else in the world, so you can look through transactional information quicker, but you can look at unstructured data.

You're also connected to social and predictive analytics are built right into it.

You only need one database now in your entire company structured, unstructured, analytics and it can do it all.

That is what fundamentally has changed everything.

You look at companies out here, done some acquisitions of companies out here, how do you figure out what is real and what's not?

What is real is what matters to the customer.

When we looked at our strategy, we knew mobility, mobile applications, mobile security, connecting with the consumer with the device was going to be massive.

We knew big data would be an ongoing challenge, but intelligent data, making better informed decisions.

We knew the cloud and now we know social.

All of these forces come together.

What differentiates us is that consistency of the core where you can manufacture your products, all made your supply chains, connect your supply chains to your ultimate consumer and do all of those things in a global economy with multiple currencies and languages and regulations.

These are the complex things.

We choose to do the simple things now.

Our big problem was we were doing the hard stuff and everybody was getting credit for being cool because they were doing the easy stuff.

We decided to do everything now.

Ha that is bill mcdermott set to be the company's soul c.e.o. next year.

And superman and batman sharing the screen for the first time.

Warner brothers is bringing the superheroes in a new movie to be released in the summer of 2015. could double the superheroes mean double the profits and a change in the box office?

We are joined from los angeles by john.

Is this a big success, failure, or something in-between?

It feels that way, you're right.

What has been working in hollywood this summer, sequels and supermereos.

If your time warner, warner brothers, why not put these two together and the timing is interesting.

Obviously, man of steel, the superman movie that is still in theaters this summer and had the second best opening weekend only to another superhero movie, "iron man 3," why not make the follow-up bringing batman to the follow-up and, of course, at a time when that franchise sort of had a big question mark, christian bale is done with the reborn version of batman and away you go.

Remember that the c.e.o. of time warner has to deal with questions about the disney strategy versus the time warner strategy and recently a bloomberg news reporter asked him, are you jealous of what disney has been able to do with all of their characters?

No, look what we were able to do with superman and batman.

Here is more.

Is there a point when superhero fatigue sets in?

Even a geek like me got tired with the comic book.

True.

I have to say that the fact that there is fast and furious 7 next summer, something i didn't anticipate myself.

This news coming on the same day that we have got a netflix earnings call where they're talking a lot about their original programming, the fact that you're saying a very select type of bet being made by the big studios has opened this door for some of these new media players to get their hands on projects that may be would have been put out by some of the film studios in the past and instead are just making more calculated bets on people in tights and, you know, capes and things.

Tights, capes, what can be wrong with that?

Still to come, meet alice, not a superhero, but a robot of the future.

Watch us streaming on your tablet, phone, and at bloomberg.com.

? this is "bloomberg west." i'm cory johnson.

The robot revolution is coming fast and furious thanks to a boston dynamics company with its robot named petman.

It has also evolved.

Here is atlas.

Here is adam johnson.

At over six feet tall and 300-plus pounds, the robot revolution has a name.

Atlas.

The newest creation from boston dynamics, atlas is an evolutionary step-up from its brother, petman.

He was created to test the type of search and rescue clothing used during reactor meltdowns due to nuclear fallout.

Atlas is one of the most advanced humanoid robots every built with 28 hydraulic joints, the robot is designed to use human tools and climb using its hand and feet.

The military hopes to use atlas as a super soldier to be in conditions that humans were built for.

Seven teams of scientists and engineers are making him effective in the field.

The teams have the hardware.

Now it's their job to come up with the software that can make atlas a truly formidable force in the u.s. military.

Their deadline, this december, and the prize for the winning team, $2 million.

That was atlas and street smart anchor adam johnson.

The teams competing for $2 million represents nasa, virginia tech, drexel and carnegie melon.

Jon, have you the bite today, what is it?

We stay on robots.

The number of robots that have been thrown live on "bloomberg west," cory johnson, the viewers -- there you go.

I did it.

You were somebody in the process.

What's wrong with you?

The camera man, i told the camera man at the time, i said do you want to put it right in front of you.

I lied and i have an accurate arm.

He said you can hit it right in the lens and i did.

That was from the next big thing summit.

That was the robot technology, the first look out in the field to get a first look.

This is a massive growth business.

I-robot company, it is public.

The one just profiled is not.

This company is seeing it's revenue grow quickly because of the government demand in part.

If the government doesn't wasn't to use this stuff, maybe colin kaepernick from the 49ers can put it to use.

He can put more on it than i did right there.

There you go.

Obviously the question outside of the government contracts is, you know, what are some household uses, i robot is trying to go down that road.

I don't know about boston dynamics, we will see.

They need more markets to grow that as well, but cool looking stuff at the very least.

We have the latest headlines at the top of the hour on bloomberg radio and all the time at bloomberg.com/technology.

We will see you back here tomorrow.

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

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