WEBVTT - The FTX Trial and Google Takes On Apple 0:00:01.440 --> 0:00:05.120 From the heart where innovation, money and power Collie in 0:00:05.240 --> 0:00:10.119 Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde 0:00:10.200 --> 0:00:11.120 and Ed Ludlove. 0:00:24.840 --> 0:00:27.760 I'm Caroline Heine blumgg's world headquarters in New York. Ed Ludlow, 0:00:27.800 --> 0:00:30.479 He's off today. This is Bloomberg Technology. Coming up, we 0:00:30.560 --> 0:00:33.839 will go live to the Manhattan Federal Courthouse where the 0:00:33.840 --> 0:00:36.879 opening arguments are set to begin for Sam Mcmanfreed's historic 0:00:37.040 --> 0:00:39.760 Ford trial. Will have the latest for us. We'll talk 0:00:39.800 --> 0:00:43.080 investing in generative AI with a key hedge fund investor. 0:00:43.640 --> 0:00:45.760 And of course we're going to go live to Alphabet's 0:00:45.880 --> 0:00:48.479 Made by Google event as the company takes on Apple 0:00:48.840 --> 0:00:52.200 with a new pixel that's well more like an iPhone. 0:00:52.520 --> 0:00:55.080 But let's go back to the crypto story today. Because 0:00:55.160 --> 0:00:57.960 it is a historic moment. A jury has been selected. 0:00:58.240 --> 0:01:01.240 Opening arguments are set to start today for Sam batman 0:01:01.280 --> 0:01:04.240 Fried's trial, where he's accused of orchestrating one of the 0:01:04.280 --> 0:01:07.840 biggest financial frauds in American history. Joining us now from 0:01:07.840 --> 0:01:10.640 outside that very courthouse with the latest new Oceanani BASEK 0:01:10.680 --> 0:01:12.760 and we'll get us up to speed with who's going 0:01:12.800 --> 0:01:15.240 to be listening in on all these oral arguments. 0:01:17.840 --> 0:01:18.759 Yeah, it's a good point. 0:01:18.760 --> 0:01:21.399 We are just getting an idea of what the jury 0:01:21.440 --> 0:01:24.319 will look like. Here you're looking at a nurse, a 0:01:24.360 --> 0:01:28.240 physician assistant, a social worker who is currently unemployed and 0:01:28.240 --> 0:01:31.640 has previously served on a jury before. Who are looking 0:01:31.720 --> 0:01:36.240 also at, you know, folks who are retired corrections officers, 0:01:36.720 --> 0:01:39.480 other high school graduates. Advertise, you have a mix of 0:01:39.520 --> 0:01:42.679 people here. You have a number of jurors here that 0:01:42.840 --> 0:01:45.840 again have been very heavily questioned here over the last 0:01:45.840 --> 0:01:49.360 twenty four hours Caroline about whether they have preconceived notions 0:01:49.400 --> 0:01:55.000 about cryptocurrencies and other parts of Sam Bankman Fried's world, like, 0:01:55.360 --> 0:01:58.400 for example, effective altruism. That's another thing that the jury 0:01:58.440 --> 0:02:00.960 had asked to make sure that there weren't going to 0:02:00.960 --> 0:02:03.840 be negative vibes coming from that jury headed into this 0:02:03.960 --> 0:02:08.440 six week trial with very serious criminal counts being faced 0:02:08.440 --> 0:02:11.880 by Sam Bankman Freed. Now, as I stand outside the courthouse, 0:02:11.919 --> 0:02:13.960 the jury, as we say, has been selected. We know 0:02:14.120 --> 0:02:18.280 generally who these people are, what they do for a living, 0:02:18.840 --> 0:02:22.320 how they have been questioned. The opening arguments are starting 0:02:22.400 --> 0:02:26.360 imminently as well. We will hear from the prosecution really 0:02:26.400 --> 0:02:28.400 for the first time to lay out their argument, and 0:02:28.520 --> 0:02:32.400 more importantly, we don't know how sam Bankman Freed prepares 0:02:32.440 --> 0:02:35.960 to defend himself against these charges and will hear from 0:02:35.960 --> 0:02:38.560 them as well in a series of thirty to forty 0:02:38.600 --> 0:02:41.080 minute remarks from both sides. 0:02:41.320 --> 0:02:43.680 Of course, thirty one year old pleading not guilty to 0:02:43.720 --> 0:02:47.480 Watford conspiracy to commit Wildford's securities fraud. The list goes 0:02:47.520 --> 0:02:51.239 on Shanali, it's quite a changed samm Munfried who entered 0:02:51.240 --> 0:02:55.320 that courtroom, much slimmer and change well, certainly from a 0:02:55.360 --> 0:02:58.320 half perspective, but how do we think his demeanor has changed. 0:03:01.160 --> 0:03:03.160 In a lot of ways. It's to your point, yere 0:03:03.200 --> 0:03:04.720 A lot of people have been talking about the way 0:03:05.040 --> 0:03:09.000 his appearance has changed. He looks noticeably thinner, according to 0:03:09.040 --> 0:03:11.880 the Wall Street Journal. He has also been dressing a 0:03:11.880 --> 0:03:16.040 lot differently, buying suits from Macy's at a forty percent discount. Remember, 0:03:16.080 --> 0:03:17.880 he was known for that T shirt and shorts and 0:03:17.880 --> 0:03:20.760 even flip flops in front of even world dignitaries in 0:03:20.800 --> 0:03:23.000 the past, but now he has suited up. Indeed, as 0:03:23.040 --> 0:03:26.800 he enters court himself, we'll see. We don't know that 0:03:26.840 --> 0:03:29.560 he will necessarily testify. He's not going only expected to 0:03:29.639 --> 0:03:32.320 testify and what tone he would take if he would, 0:03:32.680 --> 0:03:36.360 but again much more silent. We are not used to 0:03:36.400 --> 0:03:40.080 Sam megmin Fried being so silent leading up to these charges. 0:03:40.120 --> 0:03:42.120 You remember just how much he had taken to the 0:03:42.120 --> 0:03:45.360 media to describe what had happened at FTX, and ever 0:03:45.440 --> 0:03:47.560 since then it's been nothing but silence. 0:03:47.960 --> 0:03:50.320 And so this will be a telling trial. 0:03:50.920 --> 0:03:53.280 Remember after those opening remarks, which will take about an 0:03:53.320 --> 0:03:55.720 hour or so here, we will also start to hear 0:03:55.760 --> 0:03:59.000 from witnesses and that will start to get very important 0:03:59.000 --> 0:04:01.360 as we know that number of his closest friends and 0:04:01.400 --> 0:04:05.000 colleagues over time are expected to testify in this trial. 0:04:05.520 --> 0:04:09.160 Important for the individuals, important for the industry. Liquidity in 0:04:09.200 --> 0:04:11.920 the digital asset market's still only half of what it 0:04:12.000 --> 0:04:15.520 was before the FTX collapse. Shanalo Bassak on the ground 0:04:15.560 --> 0:04:17.760 there for us all day. We thank you for it. Meanwhile, 0:04:17.760 --> 0:04:19.880 coming up, we're going to get the outlook well for 0:04:19.960 --> 0:04:21.920 what we're all now talking about. If it's not crypto, 0:04:22.080 --> 0:04:25.880 we're talking about AI investing and discuss why Apple CEO 0:04:25.920 --> 0:04:29.160 Tim Cook just decided to sell five hundred thousand shares 0:04:29.200 --> 0:04:31.680 of the iPhone maker. Let's have a look on Apple 0:04:31.720 --> 0:04:34.200 stock of course. In fact, it seems to be timed 0:04:34.560 --> 0:04:37.320 along with the downgrade Key Bank. The analyst over there 0:04:37.320 --> 0:04:41.039 saying it's high valuation, weak sales outlook. The analyst really 0:04:41.080 --> 0:04:43.560 worrying about the stock's valuation is a large premium to 0:04:43.600 --> 0:04:46.040 the naws that they say us sales. They'd like me 0:04:46.120 --> 0:04:48.719 to struggle will have more ahead, still managing to tread 0:04:48.720 --> 0:04:50.800 water up three ten percent on a day where the 0:04:50.839 --> 0:04:53.120 nasack is up more than a percentage point. This is 0:04:53.120 --> 0:05:06.920 a BlueBag technology time now for talking tech. First up, 0:05:07.000 --> 0:05:10.039 Apple CEO Tim Cook selling shares of the iPhone maker. 0:05:10.120 --> 0:05:12.560 In his biggest sale and more than two years, Cook 0:05:12.600 --> 0:05:14.920 sold five hundred and eleven thousand shares that's worth about 0:05:14.920 --> 0:05:17.280 forty one million dollars after taxes. It's all according to 0:05:17.320 --> 0:05:20.000 a filing with the SEC. So all comes after Cook 0:05:20.040 --> 0:05:23.440 took a rare pay cut about forty percent to just 0:05:23.520 --> 0:05:27.039 forty nine million for twenty twenty three. Meanwhile, Intel is 0:05:27.080 --> 0:05:30.359 planning to make its ALTERA unit into a standalone business 0:05:30.440 --> 0:05:33.360 and take a public The Programmable Chip Division will become 0:05:33.400 --> 0:05:36.640 an independent entity starting January first. It's all part of 0:05:36.720 --> 0:05:38.800 the CEO pat Girl Singer's efforts to really try and 0:05:38.920 --> 0:05:42.320 ring more value from the semiconductor company. Meanwhile, let's turn 0:05:42.320 --> 0:05:44.520 out at Touch to AI because Masayoshi Son has a 0:05:44.560 --> 0:05:48.320 message for Japan. Adopt artificial intelligence or got left Behind? 0:05:48.680 --> 0:05:51.360 Was a soft bank founder's first public appearance in months 0:05:51.400 --> 0:05:53.599 at SoftBank World. It's an annual event for the tech 0:05:53.600 --> 0:05:57.200 investors domestic corporate clients. Now, the billionaire compared humans with 0:05:57.240 --> 0:06:00.560 that AI to goldfish just in a bowl to process 0:06:00.560 --> 0:06:05.080 information like language. So let's talk more about this AI euphoria, 0:06:05.360 --> 0:06:09.320 AI necessity and how to play it. James fishbacks with us. 0:06:09.320 --> 0:06:11.800 He's the founder and chief investment officer of Zoria Partners. 0:06:11.839 --> 0:06:14.440 It's global macro hedge fund PROJECSORI. Of course you are 0:06:14.520 --> 0:06:17.000 with macro investing over at green Light Capital, and James, 0:06:17.000 --> 0:06:20.240 wefel with your focus on all the ways in which 0:06:20.240 --> 0:06:23.360 you could get long AI. Is it about smaller companies 0:06:23.360 --> 0:06:24.760 bigger companies? How do you play this. 0:06:26.880 --> 0:06:29.640 Well, Carolyn, it's a real pleasure to be here. Let 0:06:29.640 --> 0:06:32.120 me say that to Marsh's point, my name is Fishback, 0:06:32.160 --> 0:06:35.960 so I am the goldfish in this equation. So I'm 0:06:35.960 --> 0:06:37.800 trying to figure that out. But I think the way 0:06:37.839 --> 0:06:39.359 to look at This is to look at some of 0:06:39.400 --> 0:06:43.240 the companies that have the best balance sheets, the best markets, 0:06:43.240 --> 0:06:47.520 and existing user workflows and ecosystems, and then monetize off 0:06:47.560 --> 0:06:50.200 of that. At the risk of sounding like Steve Jobs 0:06:50.200 --> 0:06:52.159 in January of two thousand and seven when you launched 0:06:52.160 --> 0:06:54.880 the iPhone, the types of companies you think you really 0:06:54.880 --> 0:06:57.600 want to look at in this environment are the hyper scalers, 0:06:57.600 --> 0:07:01.000 the ones that are providing the cloud computing infrastructure, the 0:07:01.040 --> 0:07:04.159 amplifiers of this technology that can then deploy it to 0:07:04.279 --> 0:07:07.400 existing users and devices. And the innovators, those who are 0:07:07.440 --> 0:07:11.280 either developing or are strategically partnering with those who are developing. 0:07:11.760 --> 0:07:14.920 And so, much like Steve Jobs said, these are not 0:07:15.280 --> 0:07:19.240 three separate companies. In many cases, there are actually one company. 0:07:19.320 --> 0:07:22.119 In several cases, Microsoft is one of them. I believe 0:07:22.120 --> 0:07:25.400 that Google and Amazon are others as well, and so 0:07:25.480 --> 0:07:29.480 it's a unique opportunity to own strong cash flow generative 0:07:29.480 --> 0:07:33.840 businesses that offer embedded optionality to capitalize on the AI boom. 0:07:34.480 --> 0:07:36.920 Interesting that it really seems to be being owned by 0:07:36.920 --> 0:07:39.560 the United States at this time, James, when you're thinking 0:07:39.600 --> 0:07:43.280 about what's happening with Microsoft's partnership with something like an 0:07:43.320 --> 0:07:46.160 open Ai. How do you see these sort of frenemies continuing. 0:07:46.200 --> 0:07:48.520 How do you see the companies striking these We just 0:07:48.560 --> 0:07:52.200 had Amazon of course taking a big stake and partnership 0:07:52.240 --> 0:07:55.320 as well with other key players in the space. How 0:07:55.040 --> 0:07:58.560 does that accelerate? Is that just the way in which 0:07:58.560 --> 0:08:00.160 you want to see deals being done? 0:08:01.360 --> 0:08:03.400 That's exactly what you want to see. You want to 0:08:03.440 --> 0:08:08.160 see key innovators of this technology, like Anthropic, like open Ai, 0:08:08.680 --> 0:08:13.120 have strategic partners in Amazon and in Microsoft respectively to 0:08:13.160 --> 0:08:16.320 then deploy that technology. Look at Microsoft today. Their three 0:08:16.440 --> 0:08:20.360 sixty five copilot product is now being opened accessed to 0:08:20.440 --> 0:08:23.480 one hundred and sixty million enterprise users who can now 0:08:23.600 --> 0:08:27.360 use it to expedite workflows in Microsoft Word, in Excel, 0:08:27.520 --> 0:08:30.680 and in PowerPoint. And so you now take users who 0:08:30.680 --> 0:08:33.320 are already used to Microsoft Word, already used to the 0:08:33.360 --> 0:08:36.560 existing workflows that they have, and then you're super charging it. 0:08:37.080 --> 0:08:38.400 You know, if I wanted to go to a Fortune 0:08:38.440 --> 0:08:41.120 five hundred company and sell them phishback Ai and say 0:08:41.400 --> 0:08:45.400 it's the best worst word processor out there, I couldn't 0:08:45.400 --> 0:08:47.559 do that because I don't have those kind of relationships. 0:08:47.840 --> 0:08:51.040 Microsoft has a moat in this market. They have their relationships, 0:08:51.240 --> 0:08:54.000 they have the trust they're going to drive value for 0:08:54.160 --> 0:08:57.199 enterprise players and as a result, they can drive pricing 0:08:57.240 --> 0:08:58.280 power longer term. 0:08:58.760 --> 0:09:00.720 Do you think then there's a risk any of these 0:09:00.760 --> 0:09:04.080 really big and in many ways companies trying to fight 0:09:04.280 --> 0:09:08.680 the monopoly oligopoly name that keeps being thrown at them. 0:09:09.120 --> 0:09:11.040 Is there only risk they get displaced? I mean, in 0:09:11.080 --> 0:09:13.679 the same time as the dot com boom and bust, 0:09:13.720 --> 0:09:15.920 in the same way that we've seen some business models 0:09:15.960 --> 0:09:18.040 just eroded. Are all of them ahead of the curve 0:09:18.120 --> 0:09:20.400 or any of them at risk of losing their mantle? 0:09:22.240 --> 0:09:23.319 You're absolutely right. 0:09:23.360 --> 0:09:26.280 I think there's reason to be skeptical Caroline by what 0:09:26.440 --> 0:09:29.160 happened in early two thousand with the dot com bubble. 0:09:29.360 --> 0:09:32.439 But there's a couple key differences here. One is valuation. 0:09:32.840 --> 0:09:35.320 The peak valuation at the dot com bubble was fifty 0:09:35.360 --> 0:09:38.960 two times earnings for these average tech stocks. The average 0:09:39.040 --> 0:09:41.160 AI tech stock today at the top of the list 0:09:41.520 --> 0:09:44.280 has a pe of around twenty five times. And that 0:09:44.480 --> 0:09:48.319 simple comparison is to say nothing about the strong fundamental 0:09:48.320 --> 0:09:50.840 position these companies are in. As they said earlier, they 0:09:50.880 --> 0:09:54.120 are free cash flow generative, they have strong balance sheets, 0:09:54.120 --> 0:09:57.640 They have simple, predictable businesses. They don't need to rely 0:09:57.800 --> 0:10:00.840 on debt and equity markets, increasingly a debt market that's 0:10:00.840 --> 0:10:03.679 seeing rising interest rates. It seems like every single name 0:10:03.880 --> 0:10:07.000 day now to fund the aggressive R and D behind this. 0:10:07.440 --> 0:10:10.199 So I think they're doing all the right things Microsoft 0:10:10.400 --> 0:10:14.000 with open Ai, Amazon with anthropic, Google with deep Mind, 0:10:14.080 --> 0:10:17.280 and its own internal operations to then power this forward. 0:10:17.559 --> 0:10:19.400 And the thing that I'm most excited about is these 0:10:19.440 --> 0:10:23.720 companies already have billions of existing users and device ecosystems 0:10:23.840 --> 0:10:27.479 that they can deploy this new technology to pretty much overnight. 0:10:27.720 --> 0:10:29.440 So you don't have to make a lot of assumptions 0:10:29.440 --> 0:10:33.640 here to see how powerful and how impactful this technology 0:10:33.679 --> 0:10:36.240 can be, not just for the end user, but also 0:10:36.280 --> 0:10:37.760 for their fundamental share prices. 0:10:38.080 --> 0:10:41.880 And it's allowed the NASDAK to really reapin the rewards 0:10:41.880 --> 0:10:44.880 for this year. But September was really ugly, James, and 0:10:44.880 --> 0:10:46.959 September was ugly because of the macro picture, because of 0:10:46.960 --> 0:10:48.600 the warrior, what the Federal Reserve is going to do, 0:10:48.679 --> 0:10:52.360 how we tame inflation, a very strong jobs market. How 0:10:52.400 --> 0:10:56.360 do you think these big tech bets can withstand a 0:10:56.480 --> 0:10:58.679 higher for longer scenario. 0:11:00.000 --> 0:11:02.480 That's a great question, and there's no doubt about it. 0:11:02.520 --> 0:11:05.680 The macro picture over the past month has been challenging, 0:11:05.679 --> 0:11:07.600 to say the least. Look at what's happened to thirty 0:11:07.679 --> 0:11:10.360 year treasury yields in the US and the higher for 0:11:10.440 --> 0:11:13.640 longer hawkish narrative coming from the Federal Reserve. I think 0:11:13.679 --> 0:11:15.720 the key thing to note here is that the aiview 0:11:15.760 --> 0:11:18.520 is not a multi quarter view. It is a multi 0:11:18.800 --> 0:11:21.040 year view, and so if you look at some of 0:11:21.040 --> 0:11:23.320 these companies, they have the potential to compound. In the 0:11:23.320 --> 0:11:26.400 case of Microsoft, it's compounded at twenty five percent over 0:11:26.400 --> 0:11:29.760 the past decade year over year, and that's despite all 0:11:29.800 --> 0:11:32.680 the macro volatility both in the real economy and the 0:11:32.720 --> 0:11:36.280 financial system we've seen. Yet at the same time, it's 0:11:36.320 --> 0:11:39.240 important to look at what this opportunity presents long term. 0:11:39.360 --> 0:11:42.200 I think a key assumption Caroline in this space is 0:11:42.240 --> 0:11:45.320 that higher rates is actually negative for this type of 0:11:45.480 --> 0:11:47.839 narrative for big tech going higher, and I don't think 0:11:47.840 --> 0:11:50.160 that could be further from the truth. And here's why 0:11:50.480 --> 0:11:53.719 companies like Apple, who issued thirty year debt at a 0:11:53.800 --> 0:11:57.280 mid two percentage rate back in twenty twenty one, that 0:11:57.360 --> 0:11:59.679 have turned out debt in many cases for ten or 0:11:59.679 --> 0:12:04.040 fifteen teen years have strong balance sheets, are seeing higher rates, 0:12:04.200 --> 0:12:07.400 but are not actually seeing higher effective interest costs, one 0:12:07.480 --> 0:12:10.280 because their liabilities have been fixed. The large issuance in 0:12:10.320 --> 0:12:12.800 twenty twenty in twenty twenty one that was of course 0:12:12.880 --> 0:12:16.520 aided by quantitative vising at the FED and by their 0:12:16.640 --> 0:12:20.080 libit by their assets rather which are actually increasing in value, 0:12:20.240 --> 0:12:22.640 as in the case of Microsoft one hundred billion dollar 0:12:22.760 --> 0:12:25.640 balance sheet is compounding in line with Treasury rates at 0:12:25.640 --> 0:12:26.520 three to four percent. 0:12:26.679 --> 0:12:28.000 So I would push. 0:12:27.880 --> 0:12:31.040 Back against that narrative just a bit and view opportunities 0:12:31.080 --> 0:12:33.520 like this as an opportunity to actually get in some 0:12:33.600 --> 0:12:36.240 of these positions and develop a longer term view on 0:12:36.280 --> 0:12:38.240 where AI is going to be in three to five years. 0:12:38.480 --> 0:12:40.720 Really thoughtful. Thank you for laying that out for us. 0:12:40.800 --> 0:12:51.040 James Fishback of Azoria Partners, Well. 0:12:50.960 --> 0:12:53.400 We know that Alphabet's Google is be going head to 0:12:53.440 --> 0:12:55.640 head with Apple in many ways for years when it 0:12:55.640 --> 0:12:58.200 comes to hardware, but really it feels head on right now. 0:12:58.280 --> 0:13:00.719 The new Pixel phones have you seen them? They're kind 0:13:00.760 --> 0:13:03.679 of more iPhone like than ever before, particularly when you're 0:13:03.720 --> 0:13:06.200 looking at the price point. Bloomberg's chief correspondent Mark German, 0:13:06.240 --> 0:13:09.080 who has all the insight track around these products announcements, 0:13:09.400 --> 0:13:11.440 give us your thoughts. What did you make of some 0:13:11.480 --> 0:13:14.679 of the updates the camera, the way in which they 0:13:14.720 --> 0:13:15.360 look and feel. 0:13:16.720 --> 0:13:19.160 Yeah, I mean I think Google is continuing to push 0:13:19.200 --> 0:13:23.640 out pretty impressive AI driven products. The new Pixel phones 0:13:23.640 --> 0:13:27.800 the Pixel eight Pixel eight pro very impressive new camera, features, 0:13:28.200 --> 0:13:31.160 new G three tensor processors. This is their third generation 0:13:31.640 --> 0:13:35.000 custom processor. A few upgrades here that make it a 0:13:35.040 --> 0:13:39.160 little bit more like an iPhone. Surprisingly, the facial recognition 0:13:39.320 --> 0:13:42.800 on the previous Pixel phones, at least the last couple generations, 0:13:43.040 --> 0:13:46.640 they weren't graded security wise high enough to be processed 0:13:46.640 --> 0:13:49.600 for payments using your banking apps. Now they've up the 0:13:49.640 --> 0:13:52.319 security on that, as you know, FACESIDD on the iPhone 0:13:52.360 --> 0:13:54.240 since twenty seventeen has had that. 0:13:54.280 --> 0:13:55.320 Level of security. 0:13:55.800 --> 0:13:58.280 The design of the Pixel phones continued to be some 0:13:58.320 --> 0:14:00.840 of the best smartphone designs on the market. It but 0:14:00.880 --> 0:14:03.319 the trend continues here, right. Google is pushing out some 0:14:03.360 --> 0:14:06.640 really nice hardware, great software integrations, probably some of the 0:14:06.640 --> 0:14:10.720 best Android phones you can get globally, but that really 0:14:10.760 --> 0:14:15.079 hasn't translated into really strong amounts of market share, right, 0:14:15.120 --> 0:14:17.400 So that's the problem Google will continue to grapple with 0:14:17.480 --> 0:14:20.880 at least for the foreseeable future, making really good phones 0:14:20.880 --> 0:14:23.600 and really good hardware products that are just not selling 0:14:23.640 --> 0:14:27.480 as well as their competitors from Samsung and Apple. And 0:14:27.720 --> 0:14:28.720 that's what Google now. 0:14:28.560 --> 0:14:29.200 Has to figure out. 0:14:29.240 --> 0:14:31.200 They have the right hardware, how do they get them 0:14:31.240 --> 0:14:32.840 to sell in those bigger quantities? 0:14:33.520 --> 0:14:36.240 Well point, we think Google has about three percent of 0:14:36.240 --> 0:14:39.960 the smartphone shipments during the second quarter according to Counterpoint Research. 0:14:40.040 --> 0:14:42.000 Great and asks some chief correspondent Mark Gum and we 0:14:42.040 --> 0:14:44.000 thank you as always for running us through well what 0:14:44.080 --> 0:14:47.000 the products like? And he liked it. So let's talk 0:14:47.000 --> 0:14:48.720 a little bit more about what's in this product and 0:14:48.760 --> 0:14:50.880 how they do take on market share. Shanazzach is with 0:14:50.960 --> 0:14:53.520 us judge on product management Full Pixel at Google, fresh 0:14:53.560 --> 0:14:56.360 off the stage where you presented, what are these big 0:14:56.440 --> 0:14:59.240 upgrades to the phones? And look, I've been agnostic for years. 0:14:59.280 --> 0:15:02.040 I had Pixels, had iPhones, and I'm interested as to 0:15:02.120 --> 0:15:04.880 whether you like or dislike the idea of becoming more 0:15:05.040 --> 0:15:05.880 like an iPhone. 0:15:07.240 --> 0:15:10.840 I wouldn't compare that because I think Pixel are the 0:15:10.880 --> 0:15:15.800 best phones or Google, especially bringing the hardware plus the software, 0:15:16.120 --> 0:15:20.000 plus the best of AI from Google into people's hands, 0:15:20.040 --> 0:15:22.440 and that's how we think about our phones. Of it's 0:15:22.480 --> 0:15:24.680 bringing the best of Google in people's hands. 0:15:25.160 --> 0:15:27.960 What about the best of AI? It does seem to 0:15:27.960 --> 0:15:30.440 be something people are now referencing far more within their 0:15:30.440 --> 0:15:33.280 product detail. I mean now it's because finding a consumer 0:15:33.320 --> 0:15:35.440 really understands it. They can touch it, feel it, use it. 0:15:35.440 --> 0:15:38.000 When they're using Bard for example, how will that be 0:15:38.120 --> 0:15:40.480 interwoven to make it that much easier product to use? 0:15:41.240 --> 0:15:44.360 So when Pixel started seven years ago, even at that time, 0:15:44.440 --> 0:15:47.960 AI was a core part for Pixel and we continue 0:15:48.000 --> 0:15:50.640 on that line, and as you saw in our announcement, 0:15:50.760 --> 0:15:53.800 we have AI or with our supported by ATTENDSLG three 0:15:53.920 --> 0:15:58.240 across the phone, including our integration of assistant with Bard 0:15:58.320 --> 0:15:59.400 that will be coming soon. 0:16:00.040 --> 0:16:03.000 It's interesting that, of course, you have pushed up the 0:16:03.000 --> 0:16:05.960 price point. What is it? I've owned fifteen pro now 0:16:06.480 --> 0:16:08.960 same as the Pixel eight pro nine hundred and ninety 0:16:09.000 --> 0:16:12.520 nine dollars. Is the consumer ready for that price point? 0:16:12.680 --> 0:16:14.480 I mean, how did you sort of test and feel 0:16:14.520 --> 0:16:16.240 that that was the right amount to be charging. 0:16:17.000 --> 0:16:18.720 There's a lot of testing we do. But as you 0:16:18.760 --> 0:16:21.360 can see in our phones, you've upgraded the hardware. We 0:16:21.400 --> 0:16:24.920 have a completely new camera system. We are also had 0:16:25.000 --> 0:16:27.440 a lot of software, and we're also supporting the phones 0:16:27.480 --> 0:16:29.800 for a longer period of time for seven years of 0:16:30.200 --> 0:16:34.200 OS support security feature jobs. So that's how we think 0:16:34.200 --> 0:16:35.080 about our phone. 0:16:35.160 --> 0:16:37.240 But it's interesting, therefore, isn't it that we're going to 0:16:37.240 --> 0:16:39.360 supporting them and for longer so people might not need 0:16:39.400 --> 0:16:42.320 to renew for longer. How do you start to inch 0:16:42.360 --> 0:16:44.960 away at this market share that is Smart pointed out, 0:16:45.000 --> 0:16:48.400 it's sort of surprisingly low considering the integration of software 0:16:48.400 --> 0:16:48.960 and hardware. 0:16:49.720 --> 0:16:53.360 So from Pixel and Google's perspective, we do want people 0:16:53.400 --> 0:16:55.720 to use their phone longest, and we see that people 0:16:55.880 --> 0:16:58.840 are using their phone longer, right, and so it's part 0:16:58.840 --> 0:17:01.680 of sustainability, so it's important for us, and so that 0:17:01.800 --> 0:17:05.119 support was natural for us to help our users support 0:17:05.160 --> 0:17:06.800 their phones for a longer period of time. 0:17:08.359 --> 0:17:11.159 Overall, when you're thinking as well about some of the 0:17:11.320 --> 0:17:14.840 not just sustainability but security that people want to be seeing, 0:17:14.960 --> 0:17:16.440 you have been up in the ante when it comes 0:17:16.480 --> 0:17:20.240 to facial recognition. Are people going to be frustrated that 0:17:20.280 --> 0:17:22.960 it took so long or what actually goes in too 0:17:23.119 --> 0:17:26.520 needing to ensure that you can qualify for those sorts 0:17:26.520 --> 0:17:28.159 of levels of security. 0:17:28.480 --> 0:17:31.520 In terms of the phone, our phones always were secure. 0:17:31.640 --> 0:17:36.600 We had our titan Ship and our phone security was 0:17:36.600 --> 0:17:39.840 supported for five years, so it's we are upping that 0:17:39.880 --> 0:17:41.600 to seven years. And yes, they are one of the 0:17:41.600 --> 0:17:43.639 most secure phones out there. 0:17:45.000 --> 0:17:48.919 What do you think it will take to get the 0:17:49.000 --> 0:17:52.480 market share higher? Why do you think there has been reticence? 0:17:52.720 --> 0:17:55.879 Has it been? And just because people are used to 0:17:55.920 --> 0:17:58.760 the iPhone ecosystem, it's harder to drag them out. Is 0:17:58.800 --> 0:18:01.440 it more that you therefore, folks sort of an international consumer, 0:18:01.480 --> 0:18:04.440 particularly you've made real inroads in Japan for example. 0:18:05.440 --> 0:18:05.920 That's right. 0:18:06.240 --> 0:18:09.679 Pixel is the fastest growing smartphone in our markets, and 0:18:09.720 --> 0:18:12.520 it's the only phone that grew in units sold your 0:18:12.600 --> 0:18:15.840 over years. So we're definitely seen that and we're looking 0:18:15.840 --> 0:18:17.919 forward to more of that, and especially with all the 0:18:17.960 --> 0:18:21.680 AI features and all the amazing hardware and software, that's 0:18:21.720 --> 0:18:22.720 what we're going after. 0:18:23.040 --> 0:18:25.760 How are you thinking internationally about your supply chain as well? 0:18:27.000 --> 0:18:30.000 In terms of supply, like you mentioned it, Pixel is 0:18:30.040 --> 0:18:33.080 doing very well in our international markets in Japan as well, 0:18:33.280 --> 0:18:35.320 and so that is a core focus of how do 0:18:35.440 --> 0:18:37.840 we make sure that you know users across the world 0:18:37.880 --> 0:18:40.280 in our markets get our phones. 0:18:40.720 --> 0:18:44.320 What about ultimately building the phone because there has I 0:18:44.320 --> 0:18:47.159 think of an Apple that's had to really rethink the 0:18:47.200 --> 0:18:49.920 way in which its product is made, where it is made, 0:18:49.960 --> 0:18:52.920 in this global landscape where suddenly China in US just 0:18:52.960 --> 0:18:54.800 aren't getting on in quite the same way, how do 0:18:54.840 --> 0:18:57.600 you think about with sustainability on the one side, also 0:18:57.680 --> 0:18:59.760 supply chain resilience on the other. 0:19:00.760 --> 0:19:03.960 So, like you said, sustainability is a big focus for us, 0:19:03.960 --> 0:19:05.840 and it's been a years in the making. It's not 0:19:05.920 --> 0:19:08.879 something they're doing right now. As we announced on stage, 0:19:08.880 --> 0:19:11.600 actually on sustainability. This is the first phone which is 0:19:11.920 --> 0:19:15.560 free of plastics. So sustainability where it's made, how it's made, 0:19:15.680 --> 0:19:18.240 is a key has been a key focus and is 0:19:18.280 --> 0:19:19.360 a key focus for us. 0:19:19.720 --> 0:19:22.080 And a lot of this is also about well the 0:19:22.200 --> 0:19:25.399 entire ecosystem, not just a supply chain, but also of 0:19:25.440 --> 0:19:27.920 what you're offering alongside the air buds, the watch, the 0:19:27.960 --> 0:19:30.320 way in which you can interact across all of the software. 0:19:30.520 --> 0:19:30.720 Two. 0:19:31.240 --> 0:19:33.359 I mean, you're someone who's been in Google now for 0:19:33.640 --> 0:19:36.520 seventeen years. I think it is what is it that 0:19:37.280 --> 0:19:41.520 makes you so addicted to continuing to build with this company? 0:19:41.640 --> 0:19:44.080 The people, the people I've been at Google for some 0:19:44.359 --> 0:19:47.119 I grew up with Google, and I you know, it 0:19:47.240 --> 0:19:51.239 might sound cliche, but I do love the people that 0:19:51.280 --> 0:19:54.520 I work with. They push you to think well, that 0:19:54.680 --> 0:19:57.359 push you to do the right thing, and that's what 0:19:57.400 --> 0:20:00.919 I really enjoy about working at Google. The people around us. 0:20:01.440 --> 0:20:03.680 Well, we're thinking about your product todation as Zach, thank 0:20:03.680 --> 0:20:05.040 you very much and Nei for joining us. We've got 0:20:05.080 --> 0:20:06.159 a few more of your people on the show a 0:20:06.160 --> 0:20:09.199 bit later, Director of product management for Pixel at Google. 0:20:09.680 --> 0:20:11.879 Great to have thank you, thank you for having me. 0:20:19.480 --> 0:20:21.880 Welcome back to BLUEBG Technology. Let's have a little turn 0:20:21.920 --> 0:20:24.359 our attention out to VC Spotlight and bring in Morgan 0:20:24.400 --> 0:20:28.159 bella partner at NFX Capital Management who was also one 0:20:28.160 --> 0:20:30.840 of the founders of Facebook's cryptocurrency project Libra. And remember 0:20:30.880 --> 0:20:33.720