WEBVTT - Bloomberg's Rana on Microsoft Paring Back Smartphones (Audio)

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<v Speaker 1>Global business news twenty four hours a day. If Bloomberg

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<v Speaker 1>and as a Bloomberg business flash, you're listening to taking

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<v Speaker 1>stoff with Kathleen Hayes and Kim Fox on Bloomberg Radio.

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<v Speaker 1>We are broadcasting live today from the first ever Bloomberg

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<v Speaker 1>Breakaway Summit here in New York City, top executives, top

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<v Speaker 1>business people from around the country and the world talking

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<v Speaker 1>about how to achieve growth in a company. One more

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<v Speaker 1>signed today that Microsoft's for a into smartphones was not

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<v Speaker 1>a very good way to provide growth and revenue for them.

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<v Speaker 1>Microsoft it's going to cut back as many as one thousand,

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<v Speaker 1>eight hundred fifty jobs and took a new imparamid chart

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<v Speaker 1>charge as CEO Saye Nadella continues to pair back the

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<v Speaker 1>company's ambitions in smartphones. Joining us now discuss all this

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<v Speaker 1>and more is An gran, a senior analyst of software

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<v Speaker 1>and I T Services for Bloomberg Intelligence, joining us from

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<v Speaker 1>our Bloomberg eleven thirties studio in New York. Anorag It

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<v Speaker 1>is just one more step down the path for Microsoft. Yes,

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<v Speaker 1>I mean, once you know, start there inherited this phone

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<v Speaker 1>business and it doesn't look like he was a big

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<v Speaker 1>fan of it. And ever since he has coming, he's

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<v Speaker 1>been you know, kind of right sizing it down to

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<v Speaker 1>um and I would say almost close to zero. At

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<v Speaker 1>this point with um, you know, very few phones left

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<v Speaker 1>in the market at this point that Microsoft will ever make,

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<v Speaker 1>you know, even in the future, for example on a rock.

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<v Speaker 1>How did the business get to be so bad so quickly?

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<v Speaker 1>This is nine and a half billion that they've had

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<v Speaker 1>to write off of the Nokia DEALIM it's it's a

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<v Speaker 1>question of strategy. I don't think that you know, you know,

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<v Speaker 1>he he wants to be in the handset business. Frankly,

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<v Speaker 1>you know, all he wants to do with sell software,

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<v Speaker 1>whether it is to the consumers, all the enterprises, and

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<v Speaker 1>he thinks it can be done without these you know,

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<v Speaker 1>making these math devices, which is contrary to what the

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<v Speaker 1>previous CEO thought. Yeah, you know, but how did two

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<v Speaker 1>very smart people come to very two, two very different conclusions.

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<v Speaker 1>I mean, it just doesn't it kind of spin your

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<v Speaker 1>head a little bit. Well, that's a different approach to

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<v Speaker 1>how to to make sure that you, as the user

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<v Speaker 1>don't leave out of the Microsoft ecosystem. And the way

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<v Speaker 1>Satia has gone about it, it said, it doesn't matter

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<v Speaker 1>to me if you use an iOS divide as an

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<v Speaker 1>Android device. If I just want to make sure you

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<v Speaker 1>don't lose word, you don't loude Excel. You still use

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<v Speaker 1>Skype on all these devices, So he wants to make

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<v Speaker 1>sure that the software connection that you have as a user,

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<v Speaker 1>you know, is not lost, irrespectable platform you have well,

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<v Speaker 1>But isn't also the case that Steve Bomber made a

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<v Speaker 1>bad business decision and starching Adella is making a good one.

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<v Speaker 1>Look at this, Uh, Windows phones have less than one

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<v Speaker 1>percent of the global smartphone market in the first quarter

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<v Speaker 1>according to Gartner, and that compares with Android for Apple's iOS.

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<v Speaker 1>So it seems to me, it doesn't boggle my mind

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<v Speaker 1>at all. Seems that starting Adella is just reading the

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<v Speaker 1>hand running on the wall. What about the business phone market?

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<v Speaker 1>What's going on there for Microsoft? You know? Once again,

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<v Speaker 1>I mean that is a market it's possible that they

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<v Speaker 1>will still try to you know, penetrate given their large

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<v Speaker 1>installed base off Windows operating systems. You know, already within

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<v Speaker 1>the enterprise now that you know, BlackBerry has been the

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<v Speaker 1>leader over there, and you know, the thing that the

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<v Speaker 1>movement that's happening over there is you're bringing your own device.

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<v Speaker 1>You know, you really don't have that many you know,

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<v Speaker 1>company issued phones that at this point and the bulk

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<v Speaker 1>of them are still you know, used by the consumer.

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<v Speaker 1>So I mean it's it's it's an opportunity, but I

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<v Speaker 1>mean I don't think that's that big of a market

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<v Speaker 1>for them. Well, how does that feed into the discussion

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<v Speaker 1>about cybersecurity and Microsoft's role in securing the enterprise. The

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<v Speaker 1>number one thing that you know they're doing is adding

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<v Speaker 1>a lot more security to their co operating system, whether

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<v Speaker 1>it's Windows tent or Microsoft Azure. They are investing a

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<v Speaker 1>lot more money in security than than frankly any of

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<v Speaker 1>the even pure play companies out there. So with that

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<v Speaker 1>in mind, what they want to do is if your

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<v Speaker 1>infrastructure is secured, then whatever endpoint that you use, whether

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<v Speaker 1>it's a phone or a PC, you know, that should

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<v Speaker 1>take care of it. So you're also following today and

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<v Speaker 1>have been for a while on a rug, we're gonna

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<v Speaker 1>uh this announced merger of the services segment of Hewlett

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<v Speaker 1>Hewlett Packard Enterprise and Computer Sciences Corp. What's that about? Well,

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<v Speaker 1>the thing is basic there. I mean, the the infrastructure

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<v Speaker 1>outsourcing market is declining, which is what a large portion

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<v Speaker 1>of what HP Enterprise and IBM and that cat you know,

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<v Speaker 1>C s C these guys do along with Fijitsu now

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<v Speaker 1>that industry has been declining, and what cs C c

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<v Speaker 1>o A has done ever since he came there, he

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<v Speaker 1>cut out a lot of costs, improved margins. Investor liked him,

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<v Speaker 1>and it seems he's going to do the same thing

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<v Speaker 1>for HPS business, you know, consolidated and then start cutting

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<v Speaker 1>a lot of the fact I think the biggest feature

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<v Speaker 1>of this deal, and you know, in my view, is

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<v Speaker 1>the billion dollar plus savings that they are going to

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<v Speaker 1>recognize just in the first field, which means you're going

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<v Speaker 1>to be a lot of job losses. A lot of

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<v Speaker 1>data centers been shut down, and it's possible that even

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<v Speaker 1>the contracts that you know, these companies have the longer

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<v Speaker 1>term contracts, if they come up for the new wells,

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<v Speaker 1>if they're not high really profitable, he might just decide

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<v Speaker 1>not to even bid on them, Anora, Can I just

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<v Speaker 1>steer you back to Microsoft for just a second and

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<v Speaker 1>get your thoughts on the Surface and the laptop that

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<v Speaker 1>Microsoft is selling. Can we see the day when they

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<v Speaker 1>just get out of that hardware business entirely, well, at

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<v Speaker 1>least in the you know, in in both the case

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<v Speaker 1>of Surface and their particular PC, they want to focus

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<v Speaker 1>on the higher end market. And it's not because they

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<v Speaker 1>think they can make a lot of money over there.

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<v Speaker 1>They want to showcase the power of Windows, the power

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<v Speaker 1>of all the applications that they have through these devices,

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<v Speaker 1>and that's their strategy. They will not compete with the

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<v Speaker 1>likes of del HP when it comes to you know,

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<v Speaker 1>the PC market. But I know people who have purchased

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<v Speaker 1>the Surface and they love it. They love it. They

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<v Speaker 1>say it's the best device they've ever gotten, and they've

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<v Speaker 1>had laptops of all kinds. I know a couple of

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<v Speaker 1>people who use them all kinds of you know, economics,

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<v Speaker 1>analysis and charts and graphs. They love them. And my

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<v Speaker 1>wife hases and she loves it too, Anora, thank you

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<v Speaker 1>very much for joining us. Sanara Grana is a senior

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<v Speaker 1>analyst of software and I T services for Bloomberg Intelligence.

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<v Speaker 1>Of course, Bloomberg Intelligence providing unique and real time research

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<v Speaker 1>shares a Microsoft up one and a half percent. Right now,

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<v Speaker 1>we are broadcasting live from the Bloomberg Breakaway Summit. It's

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<v Speaker 1>a two day conference bringing together a select group of

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<v Speaker 1>stock on Bloomberg Radio Broadcasting lives that Bloomberg Breakaway Summit

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<v Speaker 1>coming up in the next half our Jim Metcalf, he's

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<v Speaker 1>a chairman, president and CEO of USG Corporation. We're going

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<v Speaker 1>to find out how a new kind of wallboard helped

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