10:18 am: Walt greets Gore by noting that he has just come from Steve Jobs’s memorial service. What was that like?

10:18 am: “A beautiful and moving event … It’s a terrible loss, of course, for the entire world. We’ll all miss Steve.

But for all of his inventions — “among them all, I actually think his greatest work was Apple itself.”

“He created an organization — and inspired it — that literally creates technology that people love … and that’s going to continue. There’s so many things in the pipeline, and the team that he built is hitting on all cylinders.”

10:20 am: Walt: So, no offense to Tim Cook, at what point does the lack of having Jobs at the helm of the company become apparent? There’s a pipeline, “but at some point that pipeline runs out, and then what happens?”

10:21 am: Gore: Steve cultivated a team, “and we had discussions at every single board meeting, for several years, about cultivating that team.” No one will replace him, and he’s totally unique. “And yet, he also served on the board of Disney … and he used to talk initially about how, after Walt Disney died, the company always got in trouble about asking ‘what would Walt do in this situation?’ And he made it very clear: ‘I don’t want that.’ He made it clear to Tim Cook and everyone else. ‘Don’t ask what Steve would have done. Follow your own voice.’”

10:23 am: Walt: So you still expect risk-taking and game-changing?

10:23 am: Of course. Everyone on that management team could be CEO of a world-class corporation.

10:23 am: Walt: Isn’t that a problem? That people come after them?

10:24 am: Gore: Of course. But that’s not new. And I’m on the compensation committee, and we pay real close attention to that.

10:24 am: Walt: You’re also a Google adviser, and those two companies are competing. How do you handle that?

10:24 am: Gore: After Eric Schmidt left the Apple board because of conflicts, I pulled back as well. I still talk to Larry and Sergey, but never about anything where there’s competition. It’s not really a problem, but “I don’t have as many conversations with them now. And I miss that.” I’ve known them since they were 27 years old.

By the way, I think Larry is doing a great job since he became CEO.

10:27 am: Walt: America has been the big tech innovator for a long time, and in Asia they are still mostly imitating what we’ve done. But Asia is coming up fast. “How much longer can this be an advantage for the United States?”

10:28 am: Gore: That depends on choices we make. “I think our political system is now badly broken.” We’ve been able to use the political equivalent of massively parallel processing to make great decisions over the past 200 years.

Let me digress for a minute: The U.S. formed its superior decision-making in the wake of Gutenberg and the evolution of the print press. Allowed “the rule of reason” to let citizens and their reps make good decisions. Then, 60 years ago, TV surpassed print. And unlike the public square of print, the TV public square is controlled by gatekeepers, and access to that square requires a lot of money. So now we’ve seen a huge degradation of the conversation.

10:31 am: Walt: Hasn’t the Web fixed that?

Gore: Not yet. Right now, TV is by far the dominant medium. If you take primetime out of the picture, the activity on iOS and Android is now rivaling TV. But you include primetime, 7 to 10, TV “blows everything else away. Still.”

“Television is still the big kahuna. It’s because people like to sit back, and the relationship between the television and the human brain is extremely close.”

It’s part of evolution — back on the savannah, the people who didn’t notice the leaves moving suddenly didn’t become our ancestors. We’re hardwired for this stuff; “it becomes a quasi-hypnotic state.” It’s why lead-in shows are so important. (Peter Chernin disagrees — see earlier.)

So that’s why so much political money goes into TV, and that helps explain why the system is so broken.

10:35 am: (Sorry, tech issues here.)

10:35 am: And we’re back. Gore is talking about companies who can take advantage of the innovator’s dilemma, Metcalfe’s law, etc.

Gore: 5.6 billion of the world’s seven billion people have mobile phones. Less than one billion are smartphones. “But that is going to change dramatically” … “Moore’s law makes it inevitable that the low-end phones are going to get smart.” And as those 5.6 billion get smarter and smarter phones — remind me to mention the climate crisis, by the way — that’s going to unleash amazing creativity.

10:38 am: Walt: Okay, let’s talk about the climate. This ties into tech: We love all these devices. Walt gestures to writers sitting in the front row, and Gore notes “All Apple — almost all Apple.” But it seems like people in the developed world have all these great devices, but people in the rest of the world deal with the pollution. Here in Hong Kong, there’s a lot of smog, and I’m told that much of it comes from over the border in mainland China, where much of this stuff is made.

Gore: About two percent of global warming comes from this stuff. “It’s a nontrivial factor.” But the good news is that the IT sector has been really good about addressing this stuff, much more so than other industries. And the other good news is that the information revolution that comes from this tech makes it easier to combat this, as well.

Except for this massive disinformation campaign — reminiscent of the tobacco industry in the 1950s telling us that smoking didn’t cause cancer — that tells us this stuff isn’t a problem. One hundred million people died unnecessarily because of this, because of smoking.

In this case, the largest carbon polluters — starting about 19 years ago, in the U.S., Europe and Australia and other countries — these polluters and their ideological allies “have put out a massive campaign to put out false doubts … they know that they don’t have to prove” anything, “all they have to do is put out enough false doubt.” Meanwhile, there’s nearly unanimous consensus on climate change.

If you had chest pains and you consulted 100 leading doctors, and 98 of them told you to take care of your heart, that’s what you’d do. You wouldn’t pay much attention to the other two.

So now you have more pollution than ever, etc.

10:46 am: Walt: But wait — isn’t a Democrat in the White House? Isn’t that your party?

Gore: I’ve expressed disappointment.

10:46 am: Walt: What do you tell Obama?

Gore: I give him advice, and most of the problem is in the Senate, which is totally broken. But the White House has pulled back from environmental reform, and that’s disappointing.

10:48 am: Gore: Meanwhile, look what’s happening in Pakistan, Thailand, Russia, Colombia, all facing terrible crises because of the climate. Colombia has had five times its normal rainfall this year. The Philippines have had a massive series of downpours for the past two years. Nashville, my hometown, just had “once-in-a-thousand-years rainfall … at some point, there has to be a reality check.”

10:49 am: Walt: And this is all because of pollution?

10:49 am: Gore: Yes.

[Long explanation of how massive downpours are a result of pollution] “It will get a lot worse. Until we take action. Even after we take action, it will be a problem.” And the same factors creating all this rain are also creating droughts. Double, triple whammy.

“I’ve been trying to communicate about this. And I wish I could communicate more effectively about this.”

“This is a global issue … we’re now being assaulted by this 90 milllion tons of global-warming pollution every day … it’s not okay.”

Questions From the Audience

Q: Back to the print-TV-Web conversation. Please keep talking about the evolution of TV, in connection with your involvement with Current TV.

Gore: We’ve done creative stuff at Current TV with Twitter. It’s one of a series of experiments. Last year, we had a drama series with the Sims’s Will Wright, where he had an online story-creation engine online, where people could have input on story line. Many other examples.

But when you look at the opposite direction — TV on the Internet — you run into a broadband capacity problem. In the 1970s, there was only ARPANET, and twisted copper pairs. And we wanted to increase capacity via the information superhighway. But now, with video, the number of digits in a 30-minute video “is like a year’s worth of email.” And even with compression, etc., “there is a crunch coming” and “that is what has impeded the migration of TV proper onto the Internet.” For the majority of people, in the majority of the world, it is still going to be a while before we get full TV on the Internet.

Q: Back to the environment. What’s actually feasible for policymakers to do?

Gore: With individuals, start by “winning the conversation” — like the civil rights movement in the ’60s. Don’t put up with pollution. Then we can make changes on the consumer side.

For politics: Number one, we can start putting a price on carbon. Right now we tell people it’s okay to use the global commons as a sewer. It’s not. The market is telling polluters it’s okay to pollute, so of course they will. A carbon tax and cap are important.

Number two: Governments should create a green bank of development for renewables. Moore’s law is not a law of physics. It’s a law of investment. Chip power grows fast now because investors invest in R&D to make it grow fast. Same thing can be true for green R&D like photovoltaic electricity.

Q: Please talk about Apple. Senior talent there — if you look at their background, prior to joining Apple, they don’t look like world-class guys. Very different background than the resumes of the Google guys. So one’s not better than the other, but how does Apple think about talent? Also: Please talk about the Apple board — lots of folks have criticized the Apple board. (Gore is a member, of course.)

Gore: First of all, the way the executive team at Apple are chosen is not all that different from a lot of other places — they proved themselves in other positions and worked their way up.

As for the Apple board, I won’t talk about what goes on inside. But I will say this: “I have the deepest respect for my fellow board members, we’re all very good friends… I think that people who specialize in kibitzing about these things — I respect them, it’s good for them to think about this kind of stuff, but I wouldn’t change a thing about the way the Apple board has operated.”

We handled privacy and medical issues and succession all correctly there. “If you were running a corporation, and you had a star-studded executive team, would you really think it would be a smart thing to lay out in public your thinking about who’s going to move to what position over the next couple years? Of course not!”

Q: Please talk about impact of tech on the news business.

Gore: I used to be a journalist for the Army. I’ve watched the evolution of the business. The most important part of the problem you’re getting at is that with the transition to Internet journalism you don’t get enough critical mass to throw off enough revenue to create good investigative journalism. Crowdsourcing helps, but that’s not a substitute for real investigative journalists who can make a decent living doing what they do best.

Where will it go? It’s literally impossible to predict. I have a great iPhone 4S and an iPad, but “most of the quality stuff is still produced by newspapers and magazines.”

Walt: You don’t have the model for a new journalism, right? You just want there to be a new one?

Gore: Current TV has won a lot of awards. Those guys do a great job. And “60 Minutes” is great. But, increasingly, shows that used to do news are moving into infotainment.

I turn on the morning news and a program that used to do news is doing a segment about a kid who’s hiccuping. But I do have to confess it’s pretty interesting.

Q: What should Google do in China?

Gore: [Waits a beat.] “God bless you.”

Q: Advice for Obama going into 2012?

Gore: I’ve given it privately.

Q: What about the T-Mobile-AT&T merger. What do you think?

A: My guess is that Justice so rarely takes a move like they made — “I think it’s going to be hard to overturn that decision.” They’ll fight it, but they should think about other plans.

Q: Question about the failing of American education.

A: I’ve tried hard! I have an “our choice” app about environmental education. I had a documentary on TV, etc. But we have a major party embracing the rejection of science, even while the majority of American people believe in the science.

Q: Can you talk about financial reform in the U.S.?

Gore: I think financial reform and political reform are connected. “Money plays such an unhealthy role” in U.S. democracy — “way more than in the past”. There are four anticlimate activists for every member of the Senate.

“We need to move toward sustainable capitalism. Capitalism is the best system for organizing economic activity … but we have to pay careful attention to how those incentives are structured, and what they are applied to. We have to measure the full system of value.” And not just discard things that are difficult to measure — externalities. “So if we’re committed to capitalism, as I am, we have to make it sustainable.” Price tag can’t be the only marker of value.

Lots of conventions of modern-day trading and investing are “functionally insane.”

Q: [Didn't catch.]

Gore: The last century and a half is an exception to the longer history, in which Asia has been the dominant force in the world. China is becoming more competitive, “and I wish them well.” But I also remember when the Soviets were going to eclipse us. Didn’t happen. Japan Inc. Didn’t happen. So, is China’s rise inevitable? I don’t know. Chinese labor costs, inflation are going way up. I’m not so sure that we can predict in a linear way what’s going to happen in the future.

Ends with plug for AllThingsD. Thanks, Al!

Al Gore Session Photos

Korea Telecom demoed the Kibot at AsiaD, showing how the monkey can read books and sing nursery songs (in Korean) to your kid.

Kibot plays language learning games on its touchscreen belly, and if your children don’t interact with it for a few minutes, it will get bored and roam the house looking for a playmate.

Kibot’s aim is to keep kids interacting and learning — which hopefully abates any creepiness about having a child-seeking robot in the home.

Though Kibot primarily serves children ages three through seven, some features are definitely aimed at parents. Not only can they call their children to video chat, they can control the Kibot and use it to watch their children remotely.

How does it work?

After it’s switched on, the Kibot’s monkey body becomes a control panel. Holding the left ear views the next story, song or game. Holding the right ear goes back to the content you just left — an interface that makes sense if you’re used to reading Korean rather than English.

Kibot’s nose doubles as an RFID reader for special Kibot books. Swipe one and it will start reading the book aloud. There are also word cards, to teach vocabulary, and telephone cards, which allow the child to call only numbers that parents have pre-registered.

The Kibot is currently available only in South Korea. Korea Telecom hopes its smartphone-like revenue model will be a hit with parents. Kibot requires an ongoing service plan, and the add-on games, songs and stories are all for purchase.

As president of the company’s Windows Phone division, Lees is working to extend Microsoft’s desktop hegemony to a realm where it doesn’t yet exist: mobile. With Windows Phone 7, Lees is looking to create a third mobile ecosystem that is a viable alternative to Google’s Android operating system and Apple’s iOS. Key to the success of that effort: Winning users in big developing markets like Asia.

Ina Fried welcomes Andy Lees to the AsiaD stage …

Ina Fried: So, yeah, you guys have been out with Windows Phone 7 about a year now.

Andy Lees: That’s right.

Ina Fried: The new version just came out. Still not seeing a lot of these phones, so where are you with kind of the effort to get yourselves back in the phone business?

Andy Lees: Well, obviously, we launched V1 and our main objective with V1 was to go out and have a whole new point of view, and a people-centric point of view, in our user experience. We felt we achieved that. There were a few gaps in terms of functionality. And so, less than a year later, we have 7.5, or Codename Mango. And I think that’s been critically acclaimed as filling those gaps and leapfrogging the competition in many areas. We’re just in that position at the moment where we’re waiting for new phones to come out, and so new phones from Samsung, HTC, and of course one of the things that we did in the last twelve months is our partnership with Nokia. And next week, it’s going to be Nokia World where they’re going to announce their phones and how they’re going to really take, make the most out of the Windows Phone opportunity.

Ina Fried: Now in the last couple of weeks, we’ve seen the latest from your competitors, we’ve seen Apple with both the new version of iOS making it to market and the iPhone 4S, I think they sold four million in a weekend. Are you guys selling that many every six months?

Andy Lees: Well, we haven’t announced exact numbers, but the, certainly, I think, as our new phones come on, we’re eleven months into market, we sold more in the first twelve months than Android sold in the first twelve months. So, we’re waiting for those new devices to come out and new partnerships to take, and we think that our unit volume will climb from there.

Ina Fried: What are the things — you’ve talked about kind of doing the things technologically, to get where you wanted to be, and having done that over the last year, year and a half. What are the things that Microsoft and its partners need to do to get to scale on the phone side, to get a significant share of the business? ’Cause it’s not about getting nice reviews, right?

Andy Lees: Well, I mean, getting nice reviews is really important, because if you don’t have something that’s different to everybody else, then how can you go through and expect customers to go and buy? So, I think having a different point of view, different style of user experience, the key things are built in in what we call people centric are important. It’s also important that the partnerships and the commitment from the partnerships, from people like Nokia, who’s going to be investing very, very aggressively, they bet the whole company on the success of their devices running Windows Phone, will be a big accelerant. And so those, as those things come on stream, that will help our overall unit volume and position in the market.

Ina Fried: When I talk with developers and a lot of hardware makers, carriers, you know, and ask them, you know, “Who’s number one, number two in the market?” obviously they don’t have a hard time. When I say “Who’s number three in the market?” I get generally the answer, “We’re waiting to see.” When I ask them, “Who’s going to be the third player a year from now, two years from now?” you know, they’re not willing to count out RIM, they’re not willing to guarantee you guys’ll be there. Obviously HP and webOS is no longer there. But, is it concerning to you that a couple years into this effort, people still aren’t ready to even call you guys the serious number three player?

Andy Lees: Well, I think if you look at we are twelve months in, or eleven months in to our new effort here. And actually I think the partnerships and the work that we’re doing is starting to be recognized. It was Gartner and IDC, both predicted that we would become number two by 2015. So people are starting to see the stars line up. And I don’t mean to say that’s going to be automatic, we need to earn that position, but I think we’re absolutely putting the right things in place to do that.

Ina Fried: How concerning is it to you, I was at the financial analyst meeting at your hardware developer conference, and Steve Ballmer said that, you know, sales haven’t been what they like. I covered Microsoft for seven years, in general when Steve isn’t happy that’s not a good thing. How concerning is it that, you know, as much as you guys have made progress on the technical front, things on the business side haven’t flowed in quite the way that you would’ve liked.

Andy Lees: Well, so let’s, let’s look at what we’ve achieved so far in our first twelve months. First of all, the reviews of the product, the customer satisfaction ratings, are very high, much higher than other platforms. Our return rates are very low, our quality is very high. The number of applications that we’ve got, which is a measure of support, has been the fastest adoption of any platform, new platform ever, with over 30,000 applications in eleven months. So all of those things have gone well. The partnership with Nokia is really very important to us because it becomes an accelerant. They still sell an awful lot of phones and we think that we’re going to enable them to continue to grow their unit volume, and turn around their fortunes as we work with them. We also, two weeks ago, signed an agreement with Samsung. A lot of the press around that was really to do with the patents. But actually the other part of the agreement is how we’re going to be investing together from an R&D perspective, and also a sales and marketing perspective. And so you’ll see that ramp up in 2012, as well. HDC has been a strong partnership for Microsoft for a long time, and they’re also ramping up in terms of the number of devices and the sales and marketing that they’re putting in place. And then finally we announced new partnerships with new OEMs that have never shipped Windows products before, like ZTE, Fujitsu, etc. So, those are the things that are the leading indicator as to what’s likely to happen next. You know, when you start out, you start with a level and then these things line up and then you get your unit volume. So, we’ve work to do, but certainly those are better predictors of the future.

Ina Fried: One of the theories that I have is that, you know, Windows Phone 7 really strikes me as a very easy, approachable interface for first-time smartphone buyers, but a lot of the people that recommend that first-time smartphone are experienced smartphone users, and they tend to be the Android owners, the iPhone owners. Do you guys think you have a recommender challenge to win those loyalists, so that they’re in your camp when they’re telling their moms, their dads, their friends, their cousins, what to buy?

Andy Lees: I think people recommend a little bit of what they use. And so there is a cycle, but — that once you start to use a product, that you’ll then go through and recommend it. And certainly, with the satisfaction ratings that we have, as we build unit volume, I think that as an issue will go away, because our reputation will build with it. I think Android does appeal to a certain type of user. It is very tech based as opposed to being very people based. You know, you’re presented with a grid of icons and a sea of applications; whereas, we present other people in your life, we present things you want to do in your life. The user interfaces, it’s really very, very different.

Ina Fried: And one of the things that, if you just look at the numbers, Microsoft was in the phone business before Windows Phone 7, and actually Microsoft’s overall market share has gone down, but part of that has to do with the fact that when Windows Phone 7 shipped a year ago, it actually was in fewer markets than its predecessor, Windows Mobile, had been in. And some of the key markets that you haven’t been in are the ones that we’re in right now, in Asia. That’s starting to change with Mango, right?

Andy Lees: Right, so in fact, there’s a number of dimensions to this. There’s the price points, so we are dramatically broadening the set of price points in Mango-related phones, that we can reach, and that’s particularly important because going lower down in price point opens up more addressable market. But the other one is the number of languages, number of countries that we are in. One of the things that we did in Windows Phone 7 is, is the core user experiences are all built into the phone, and it’s people-centric user experience. And so as we go into different countries, it’s important that all of that still works. And we’re announcing today for the first time that we’ll be going into China in 2012. And so, what we’d like to do is show you a demo, where you can see that what we’re doing is not just translating the user experience from English into Mandarin, we want to celebrate things that are unique about the language. So perhaps we can take a look at the demo and see what that looks like. …Derek’s going to help show off this demo.

Derek: So we wanted to give you a quick peek of what we’ve been doing, specifically with a new version of Metro, which is our user interface for Windows Phone, that’s been refreshed for East Asian languages, specifically Mandarin today. So, let’s go ahead and switch over to the demo machine. You also notice this is the same familiar Windows Phone start screen. The thing that you’ll notice right off the bat is that we’ve actually taken advantage of local language and local style. So we’re actually taking advantage of vertical text on the top right where we have things like the date. And so we wanted to take the celebration of the local language, the local culture, and actually bring that to the phone, and do it in a way that would be unique. So we’re not actually just porting the user experience, but we’re in fact bringing it around. I can now go ahead and pop into the email experience, which I’m, it’s not so easy to navigate for a native English speaker, but we have here the same email experience that you have on Windows Phone. But again, we’ve add some local touches. So, I can pivot between my unread mails, my high priority, all that stuff is available right here. But the really interesting thing is when we pop into, for instance, this email, you actually know that the name of the person is actually put vertically, as well. And so we again have found the right touches, and we’ve actually touched about 700 different screens in Windows Phone, to make sure that they were customized in this way, to celebrate the East Asian languages. If I were to go ahead and reply on that, you’ll notice that we have all new keyboards, and one of the things the team has been telling us, which I would be challenged to demo, since I don’t speak Mandarin, is that we have an autocomplete system similar to what we’ve had with Windows Phone 7, where it doesn’t just recommend the next letter, but it actually will start to put letters together and suggest groupings of words and popular phrases. And we’re told by the team that because of this, we’ll actually be able to go about two to three times faster than, for instance, on iOS, or on Android, doing text completion with things like Mandarin.

Ina Fried: And I’m not an expert either, but my understanding is, you know, as hard as we think it is, you know, in the states and in other western languages to enter text on a software keyboard, it’s that much more of a challenge when it takes multiple keystrokes to enter a character.

Derek: That’s exactly right. Now, we wanted to pivot over a little bit and actually show a second demo. And this one is really about how, with Windows 7, we tried to more and more endeavor to have a Microsoft company effort, in terms of the assets that we’re bringing to bear on the phone. And so one of the things we wanted to do is actually show you what the Windows Phone experience looks like, and actually talk through a couple of the scenarios that we’re doing, not just with our own experience, but also with developers and indeed with groups in Microsoft like Xbox. So this is actually the Windows Phone experience now in English, for user care. You’ll actually notice that, like we talked about yesterday, we have these things called “Live Tiles,” this is the different approach that I think Walt was talking about yesterday, where information comes forward and you don’t have to go hunting into them. So, instead of having an application that’s represented by, for instance, a static icon, it actually will tell me things like the weather. My Fourscore app actually has my latest leader board. My “all recipes” app actually shows me the latest recipe of the day. And we even have really convenient ways for developers to write their applications so that components of the app can come to the start screen. So, you’ll actually notice on the bottom left, I have British Airways, and that’s actually my boarding pass. So, unlike other phones where you have to kind of launch the app and find the boarding pass section and find it, we actually use an app shortcut in this case, so that just that part of the application is available to me on the start screen, and I can get to it.

Andy Lees: Now what this does, is it sort of shows, we have this people-centric UI, and applications, instead of it just being about silos where you give this grid of icons and sea of applications, they extend the functionality, but they maintain the totality of the system. Which is completely different to other smartphones today.

Ina Fried: And I think that’s something that other, you guys kind of were first with, and other folks have been gravitating to. But one of the things that I think, and I think this is the next part of the demo, is that you guys can bring to bear is the company as a whole. And actually, from my way of thinking, Windows Phone is one of the first products from the company that really reached across the company and brought in different parts.

Derek: Yeah, one of the things that we really wanted to do is take advantage of assets that we had. So Bing, our search engine; Internet Explorer 9, which is now available not just on the PC but on the phone; and indeed things like Xbox, and have those available across the different screens that you’re using. I’m going to go ahead and fire up one of the Xbox Live games. One of the things that we do with the Windows Phone is that we have a standard set of minimums, so that games indeed work on every single Windows Phone device in a similar way. This is actually a brand new game that has not yet been released, but is coming this holiday, called Kinectimals. And the really interesting thing about Kinectimals, is that it takes off from the experience that is on the console today. So, we have the Kinect, which is actually the fastest-selling consumer electronic item of all time, and then about one in ten of the Kinect users actually have Kinectimals.

Ina Fried: So Kinectimals for those who don’t know is a game that’s already on the Xbox, it lets you have your own virtual pet, play with it, etc. And now you’re going to have a phone version.

Derek: Exactly. But, what we wanted to do is have a different approach where it’s not just a complete port of the experience that you have on the Xbox, but indeed is a companion experience. And we’ll see more and more of these companions. So, I’m going to go ahead and choose a cub here, I’m going to get a Bengal tiger. Now, the tigers are very friendly, they’re very soft and furry and so what better name for a cub than Walt. So we’ll open that up right here. So this is my cub, named Walt.

Ina Fried: I’m sure he’s loving that.

Derek: Yes, absolutely. So, we’ll go ahead and load that up. And so the cub will actually load in, and I can start playing with my cub. And so, the whole idea here is that, you know, you got a couple minutes to kill in between meetings or maybe with your dentist or the doctor’s office or whatever, and so you can start training this cub to do things. So, in this case I’m going to actually figure out, you know, maybe make this cub do some backflips, or well, yeah, a backflip is good. So, it actually has all these different tutorials, you can play catch, you can pet, you can do all these kind of thing, and the cub actually gets smarter over time.

Ina Fried: And now, can you transfer the interactions and the value, whatever leader points you get, from that back to the console version of Kinectimals?

Derek: Yeah, so what we have is, you know, we don’t actually look at these applications with these games in this case as silos. They are all tied to my Xbox Live ID. I get gamer points, I get achievements, I can compare with my friends. And as you’ll see in a moment, we can actually take the work that I’m doing here, and bring it over to the console. So one of the things that we also want to do, of course, is make this really easy so that I can, you know, try out Walt for size, see what Walt’s up to. Maybe I actually want to use my camera. And so it takes advantage of unique features of the phone. So, actually, you know what? Can you help me out by just holding out your hands like this? Actually just pivot, yeah, that’s perfect. So we’re going to, we’re going to see how Walt looks with Ina. Okay, so I’ve got my camera here, I’m going to go ahead and take a picture. Fantastic, we got stage lighting, that’s perfect. I’m going to go ahead and accept this photo. And what we’ll actually do is process the picture, and indeed I can actually take little Walt here, and actually pop over, spin in 3-D, get the tilt just right, and just like that we’ve got you with Walt. I can share that up to Facebook. I’ll choose not to do that for many reasons right now. [laughs] And so we got all of that right here. So that’s just an example of how we again use the unique features of the phone, in this case, to have photos and things like that. So, it’s really easy for people to take photos, share them with their friends, and experience this in a new way. Now the final thing we want to do is of course customize this a little bit. And so one of the things that we’ll do is we can actually go in and find all sorts of things to add. So we’ve got shopping experience, we’ve got bars, drink, foods. I’m going to actually do two things, I’m going to buy a collar, ’cause I want this to be really distinctive. So, I’m thinking the pink chain collar is going to look fantastic.

Ina Fried: I’m sure Walt loves that.

Derek: Yeah, it looks really good. And so that’s one. Okay, and now I’m going to actually go over and grab a pendant as well, and I think rubber duck, what do you think? So we’ll add the pendant, we’ve got that. Now what we want to do is actually take this over to the console. And so, what I’m going to do, is actually load this up and I’m going to actually export this to the console. So, I’m going to take this and I’m going to choose Xbox 360 Transfer. And I’ve got two options here, I can transfer from or I transfer to.

Ina Fried: So here you’re taking it from the phone and putting it on the console.

Derek: And what ends up happening is it actually takes all the information associated with this cub in this case, and puts it into a tag. And so now if I go ahead and switch over to the Xbox console, we can go ahead and switch the screen. Great. We’ve actually got Kinect up and running here, and we have this picture of the Kinect app, that’s called the scanstone. And so I’m going to go ahead and actually select my scanstone here. Which is a place where I can actually import stuff. [game plays] So I’m going to go ahead and take that, hold that up. And then instantly, our favorite cub Walt actually appears, complete with the pendant and the collar and all that stuff. So it’s really easy to move this stuff back and forth.

Andy Lees: So what we’re, what we’re seeing here is how, you know, people’s lives will include multiple different devices. And so, enabling them to, you know, spend time on Xbox, have a companion on the phone, so, so far the Xbox Live has been making the phone better, but now the phone is actually going to make Xbox better. And the same is true with how we work with the PC and tablets, etc.

Ina Fried: And you mention the PC and tablets, and one of the things that Microsoft has done that’s a little different, when you look at your nearest competitors, both Apple and Google have said the phone and the tablet are similar, but they’re different than the computer. So they have one mobile operating system that powers their phone and their tablets, and then a desktop operating system that powers their notebooks and desktops. Microsoft’s taken a different approach. You guys say the phone is different, and you have one operating system, Mango, Windows Phone 7, for the phone, and then you’re saying Windows is the right operating system for tablets and computers. Why is that?

Andy Lees: Well, first of all, we believe that everything that you want to do on a PC you should be able to do on a tablet. Particularly given people often dock tablets, they may want to connect to the keyboard, they may want to connect up a mouse, if they want to use touch on a PC. They should be able to go backwards and forwards. And that’s some of the work that we’re doing in Windows 8, which was announced at the Build Conference. We will share more technology between the PC and the phone over time.

Ina Fried: ’Cause right now you can’t write one application and have it run on the phone and the tablet and the PC without doing a fair bit of work.

Andy Lees: Actually, you don’t need to do much work. What we did is we built the developer tools and you can take a huge chunk of the code that you have written, and what you do is you just make changes to the user interface. And depending on how you’ve written it, then you can take up to 80, sometimes 90 percent of the code across with you, so all your logic and things are kept with you. But you want to celebrate what’s unique about the user interface. So, we demoed, for example, at the Build Conference an application that actually started out as a web application for Silverlight. They then made some modifications, they modified the code onstage, and there’s like three or five lines of code. And made it into a full-blown Windows 8 application. And then they took the same application and made a small number of changes to the user experience, the UI, and then just took that code and ran it on the phone. So, sharing components, you know like the browser that Derek talked about, enables us to get the best of all worlds.

Ina Fried: Now that’s the software piece. And I want to talk a little bit about the hardware makers, because unlike Apple and more like Google, you guys have an approach where you don’t make your own hardware, you rely on HTC and Samsung and now Nokia, and other partners, to make the hardware. Historically, or history, as much history as there is in a year, in this first year, I would say it’s fair to say that you guys have not gotten the latest and greatest when it comes to hardware, from the device makers. Is that changing? What does Microsoft have to do to make sure you’re getting the latest and greatest screens from Samsung, processors from Qualcomm, etc.?

Andy Lees: Right. Well, obviously in our view on — one of the things that we wanted to do was to stop problems like fragmentation. And so, we locked a lot of things down, and then we’ve been building an architecture that allows the hardware manufacturers and software vendors and in some cases mobile operators, to all add their value, but not in a way that’s chaotic. And when we do that, and the way we’ve architected it, allows us to leapfrog our competitors. An example of that is, you know, how we do hardware acceleration of the browser. We put some building blocks in there and no matter which phone that you choose, whether it’s a low cost phone or an expensive phone, it all works in a consistent way. So, we have these things called chassis in this architecture to do that. So we allow the OEMs and increasingly Mango allows that, and some things we’ll do in 2012 will extend that further, to enable us to leapfrog. So let me show you an example. So, I have a couple of phones here that are quite different in terms of how they look, the style of them, the specifications of them.

Ina Fried: And these are new Mango phones.

Andy Lees: These are new Mango phones. They have very different price points that they are available for. And yet the user experience, they both will run the Xbox game that you’ve just seen, so they’ll both be able to do high end graphics, but the performance that you get is very consistent as to how they work. But doing this in a way that still allows the OEMs to differentiate is really the secret source. So, we don’t have the downside of the chaos that can often, and the fragmentation that can appear in other platforms.

Ina Fried: Now, in your right hand is the Samsung Focus S, I believe.

Andy Lees: That’s right.

Ina Fried: And that is, you know, a higher-end phone. Do you think that when consumers walk into the store, that phone that’s in your hand is going to stack up against the iPhone 4S, the Galaxy Nexus that Andy Ruben showed last night?

Andy Lees: Absolutely. And I think we’ll have a range of phones because the user experience that we have from the cheapest phones through to the most expensive phones with high end cameras, super bright screens, lots of memory, and all of the other options that you would want, front-facing camera, etc. So we’re enabling that through architecture, so that they get to do all of that differentiation and that enables us to get the best of both worlds.

Ina Fried: I definitely want to get to folks’ questions, but I have one or two more things to question you about. One is, you know, Nokia. They’re obviously, I think you guys have said, your most important partner. They’re the only hardware maker that’s devoted to you guys. I mean, they’re still going to do some of their own stuff, especially at the low end, but unlike, from what I recall, every other Windows phone maker, they’re not also making Android devices.

Andy Lees: That’s right.

Ina Fried: You know, we’ve heard this year, we haven’t seen anything yet. How important is what they’re doing? And how quickly is it going to come on?

Andy Lees: Well, you have to wait just one more week, because next week Nokia, at Nokia World, are going to be announcing their plans to roll out Windows Phones, amongst other things. And so, we’re very excited for them to be in the market. Certainly they have a lot of resources in many parts of the world, that’ll be a huge accelerant to us. We’re very excited in fact that they’ve chosen, they did an evaluation when they were looking at their future strategy, as to whether they should go Android, or whether they should go Windows Phone or a mixture. They saw our roadmap both for this year and for next year, and I’m assuming that they saw the roadmap for Android and they talked about how the products are going to come together, and they decided to bet the whole company on Windows Phone based on that. So, we’re very excited about that. And we also, seeing from the other hardware makers, that they see that as an accelerant, we’re not buying their competitor or anything. So, as a result, that really allows us to partner with other OEMs, which helps Nokia in turn, but makes a more vibrant ecosystem.

Ina Fried: Last night, Andy Rubin’s pitch to the hardware makers, that he made, you know, via the stage, was basically that you guys aren’t allowing enough customization. That there just isn’t enough room to really shine as a computer maker, as a phone maker, as a device maker. What do you, what do you feel like allows Windows Phone makers to make their phones unique? I mean, I see different hardware sizes, but I actually don’t see a lot that makes that HTC phone look different from that Samsung phone.

Andy Lees: Well, so, and there are different things that you can do in hardware and software. So, for example, if one phone wanted to be NFC and the other one didn’t, you can do that. Different cameras, etc. What we do is we allow OEMs to add, but not replace. And we provide a core set of experiences and a platform within which they can replace, they can extend. And that’s a far better methodology than having people ripping out parts of the system to improve upon them, because then what happens is you get fragmentation. So, I think that when you see this in the store, you will see a whole bunch of unique software and some unique hardware features that HTC has versus the Samsung, and vice versa. And next week, when you see the announcements from Nokia, you will see them doing the same things. They’ll have differentiating hardware and software. So that’s not a limitation. I think the biggest issue is the fragmentation that their model provides.

Ina Fried: And you guys are obviously making the case to your hardware partners that, “Hey, Google’s going out and buying one of your competitors,” do you think that change in the market is going to get any of them to drop Android? Or are you just looking for more of their time and attention and resources within those same hardware makers?

Andy Lees: We’re not forcing anybody to drop anything. Certainly, we’ve seen a lot more motivation from hardware manufacturers since Google made that announcement. I think they’re very nervous about what’s going to happen. And I’m looking forward to making a few announcements of some new OEMs that are coming on board. And I think some of that was motivated by what they see in terms of the pace and the innovation we put in the software. Some of that they see because of the investment that Nokia is, is putting in place. And some of it, frankly, is also because of what Google is doing.

And on to the audience Q&A …

Q: So, the question I have is Andy Rubin last night mentioned a hope for a patent piece, particularly in this smartphone market. And from all appearances, Microsoft doesn’t seem to be very interested in that goal. Case in point is, you know, by making up for it, perhaps a deficiency in sales, you know, Microsoft is now extracting value from the Android environment through patent licensing. So, my question is, you know, is Microsoft, does Microsoft see any interest in moving towards, to this patent piece, or whatever kind of model that Andy had mentioned because this isn’t an issue just for Google. It’s a major issue for patents, or major issue for small and medium businesses. So, you know, where does Microsoft stand?

Ina Fried: So patent piece, you guys are fine with patent piece as long as people pay you for piece, right?

Andy Lees: Well, no, here’s what’s important, is if you are a software based business, you need to be able to protect your intellectual property. And there’s two mechanisms to do that. One is through patents and another one is through copyright. If something infringes on your patents, then it’s much easier to copy something than it is to invent it for the first time. That’s what patents are really about. So, we, Android reads on a whole bunch of patents that we own, inventions that we made, and so as a result, our philosophy here is, we’re not trying to stop Android, we just want to make sure that the principle of protecting intellectual property, which enables all software businesses, it means that you don’t have to be an advertising business that gives software away in order to make money. You’re allowed to be just a software business. So what we do is we have a licensing program for the patents. And that way, if somebody decides to go and to use the patents, we enable that and let them pay for it. It’s critically important for businesses like ourselves, that want to be a software business, and want to make money from selling software, that you can protect your intellectual property.

Ina Fried: And you guys have gotten patent deals at this point with Samsung and HTC, both of which are paying you a royalty for every Android device they ship. You’re not, you’re not in charge of the patent P&L, you’re in charge of the Windows Phone P&L. How much does it bother you that Microsoft right now is making more money from selling Android phones than they are from selling Windows Phones?

Andy Lees: Well, you know, the, what’s important here, as I said, is to have the principle that the patents that people own, through the inventions that they provide, are protectable, and that they get a level of return for those inventions. And that’s certainly what we are doing. We’re not here to stop competition in any way, shape or form. And we want to enable people, and that’s why we have a licensing program.

Ina Fried: But it’s got to be your goal, at some point, that Microsoft makes more money off selling its own phone software than off licensing the patents to a rival.

Andy Lees: Yeah, I don’t know where the, you know, one making more money than the other comes from. We certainly want to sell a lot of Windows Phone.

Ina Fried: When, speaking of that, when we get back a year from now, what would it look like? What does success look like for you? What does it mean when you say, “This is the year we want to gain scale”? What does that look like?

Andy Lees: It looks like, as gaining market share in terms of overall unit volume, we’re starting to see partners come on stream and to bet more aggressively using Windows Phone as a foundation of their products. Like, you know, the number of portfolio products that somebody like Samsung, HTC, the number of products that Nokia brings to market, to satisfy the broadest possible set of users. We want very high satisfaction ratings with our end users, and we want developers to have a thriving ecosystem.

Ina Fried: So if you gain a point or two of market share a year from now, are you happy? Or do you really see this a year that you guys can gain significant percentages of market share?

Andy Lees: Well, we’re not allowed to provide forward predictions, but certainly our goal is to gain market share over the next 12 and 24 months.

Ina Fried: Significant market share?

Andy Lees: Depending on what you determine significant, absolutely. [laughter]

Ina Fried: All right. Other questions for Andy? Be thinking of them. I’ll ask a couple more, but I’d love to hear from all of you, what you would like to see from Microsoft in the phone market. When you look at what the most significant things that are coming into the phones. I mean, one of the things you guys said, when you sort of laid out the roadmap for Windows Phone was, these are going to have the power that your PC or your Xbox had a couple years ago. And built Windows Phone Mango to look like what you could do from that. What are the things that are going to come into the phone capability-wise over the next year or two, that we can’t do with our phones today?

Andy Lees: Well, you know, we see this, what we would call the point of convergence, because the technology in the middle of the phone is not two years behind the PC, it’s the same thing. It’s the same thing. And in fact, enabling that technologically is very important, so the compute power that’s on tap, the connectivity on tap, enables all sorts of different scenarios. The thing that’s also interesting about the phone is the utilization of sensors to provide location, so that you can find out about the world around you — new sensors so that you can use things like augmented reality, through vision and sound — will enable all sorts of new scenarios. And this is where the hardware and the software and the cloud really work together, in really a unique way. And so, for example, on Mango, as you’ve seen, you know, you can start asking it questions about the world around you, you can say, “I want to go for a movie” and then you find out what movies are available, where they are near you, and then you want to find a restaurant near you. So.

Ina Fried: Yeah, I’ve been hearing a lot about this, talking to your phone thing. Is that going to be big?

Andy Lees: Well, certainly you can talk to your Windows Phone in Mango. We hooked that up into Bing, and so as a result you get the full power of the Internet to answer your questions, not just a limited set of services. I don’t know if it’s going to be the major source of input. There’s the whole social element of what it’s like to be talking out loud to your phone. I think it’s useful in some scenarios, in cars, it can be very useful for you to be able to talk to your phone, and it talk back to you in that way. So, not all the time, but sometimes it can be very useful.

Ina Fried: What about payments? We haven’t heard a lot from Microsoft, we hear Google with NFC and Google Wallet. We hear a fair amount about this idea of payments coming to the phone. Where does Microsoft see its role in terms of that?

Andy Lees: Well, we’ll provide the technological building blocks so that payments can easily be done on the phone. We’re not trying to compete with other people that want to provide services on that, so we will have a platform approach rather than necessarily trying to own all of the transactions.

Ina Fried: NFC’s one technology, but it does still strike me that it’s the case that, you know, if there’s a new acronym to come, whether it’s NFC, LTE, all these acronyms come first to the other platforms. Is that by design? Will that start to change? Do you want to be seen as the first phone maker to bring X hardware innovation?

Andy Lees: Yes, we do. And I think we do that via architecting, to be able to leapfrog. So, we’re putting the right pieces in place, that enable the manufacturers as described before, to start adding their own hardware support by using device drivers, in much the same way as we have done on the PC. The PC has introduced all sorts of innovations, first through an architecture of extensibility, and we’re bringing that to the phone.

Q: So, there is a whole lot of content, ecosystem built around — and yesterday, Andy also talked about that that is the critical reason that their tablets probably — how do you see forward – - shipment? Is there anything that you’re doing special and going forward, content market, especially consuming through Windows Phones? And how will you look at content partnerships on Windows platform?

Ina Fried: So on the content side, you guys have generally gone with the, you know, a la carte model on video, and you’ve gone with the subscription or a la carte model on music. So, there’s a Zune pass for those of you who aren’t as familiar. I don’t think it’s in every geography, but at least in many, where you can have a music subscription on the video side, at least from Microsoft directly, it’s an a la carte. Is that enough on the content side? Are you guys keeping up? Do you want to let partners do some of that? Obviously Netflix, that kind of thing.

Andy Lees: Yeah, we’ve been lucky to have, you know, Netflix was first on Windows Phone, versus other platforms. Having a consistent and predictable target is really very useful for people providing content. Because you don’t want to have to relay out things for different form factors. So, content is important. I think that what we’re doing with music and video is a la carte, we’re working through partnerships to be able to provide those things. We do provide the music service ourselves, and we’re expanding the geographic footprint that that’s available in, with Mango, and we’ll continue to do that into the future. Of course, on the Xbox, we’ve just announced a whole bunch of new partnerships, to bring more video and TV and movies, etc. And having that as part of the Microsoft fold does enable us to, you know, work with those partners to bring them across all of the different clients that we would have on different form factors.

Andy Lees Session Photos

Doggedly committed to the company he co-founded, Yang joins us today as a Yahoo director — ironically, one facing many of the same obstacles that confronted him back in 2008. One bright light amid the darkness: Yahoo’s massive and successful business interests Asia, currently overseen by Senior VP Rose Tsou, who joins Yang on the D stage today.

7:57 am: Good morning from Hong Kong. Yahoo’s Jerry Yang and Rose Tsou will be on stage shortly.

In the meantime, I can report that we’re playing Stray Cats in the ballroom here at the Grand Hyatt.

And now, some Devo. Perhaps at some point we’ll move to non-80s music. And if so, I’ll advise.

The Devo’s pretty good, though. If you want to play at home, enjoy.

8:03 am: And here’s Walt Mossberg. (Who walks onstage to Van Halen)

Walt delivers an update on Kara. She’s doing just fine, as you can tell if you follow her Twitter account.

Walt starts out with a D tribute to Steve Jobs. “I personally believe he’s a historical figure. Somebody who will be remembered alongside Ford and Edison.”

Walt talks about Jobs agreeing to come to the first D conference, and four more following. The last year, “he looked extremely frail — I think a lot of people were concerned.” And then he spoke with great vigor for an hour and a half.

“He’s been a terrific supporter of AllThingsD. That doesn’t mean he wouldn’t complain. That doesn’t mean he wouldn’t try to get us not to talk about things, and we would say no, and he would knock it out of the park anyway.”

8:08 am: And now, Jerry Yang and Rose Tsou.

Some discussion of Kara’s health and great affection for writing about Yahoo. Walt notes that Kara filed a couple Yahoo stories while en route to the hospital Wednesday.

8:10 am: Walt: Tell us about the status of the CEO search.

Jerry: There’s a search and a search committee. “I think the board is pretty excited about the prospects, about the way we can invigorate the company, and the search process is one of them.”

Looking at all the options, both for Yahoo, and a prospective CEO.

8:12 am: Walt: How do you look for a CEO while you’re putting yourself up for sale?

Jerry: “The board works for the shareholders, and anything that benefits the shareholders, the board has to listen to.”

8:13 am: So what are some of the real options: A sale, and what else?

Jerry: Yahoo has a great core business “and I feel like we’re making great progress.” Great brand, 700 million users, etc. “It is the thing that everybody is looking at, and saying, “how do we invigorate growth around that?”

And we have investments with Softbank in Yahoo Japan, and here in China with Alibaba. Very valuable.

8:14 am: Walt: That’s the most important asset, according to Wall Street.

Jerry: Yes, there are plenty of options.

Walt: But you need to decide what you are. Last time you were here in 2008, I asked you and Sue Decker “what is Yahoo”? And to be honest, you guys had a lot of answers, but not a crisp answer, like Steve Ballmer or Steve Jobs or Larry Page would have.

So let’s try another version. “Why should 700 million keep going to Yahoo?”

8:16 am: Jerry: Everyone who works at Yahoo gets what we want to do — “we want to be the premier digital media company.”

8:16 am: Walt: Are you that now? Because I think people might say YouTube, or Apple, or Amazon…

Jerry: Yes.

Walt: Really?

Jerry: Sure.

Walt: Give me examples.

Jerry: You can watch videos, for instance, we’ve also got news, finance, sports, entertainment. “We’re probably category leaders across the spectrum, in different regions.” Yahoo Mail is big.

Walt: But hasn’t Yahoo Mail gone down?

Jerry: Yes, people think Yahoo Mail is declining, but the number of messages is up, engagement is up. Web-based mail is being replaced by mobile and other devices. But the fundamental back-end proposition that we offer is stronger than ever.

8:18 am: Rose: People come for Yahoo news, or finance, and they discover other stuff, like videos. A couple of weeks ago, we launched a premium video consumption site in the U.S. In India, where there’s low-bandwidth access, video and entertainment are very big for us.

Providers want to be on our platform, because of our reach, all over the world.

8:20 am: Walt: Jerry, do you have all the Hollywood and big media deals you need to make this happen?

Jerry: If you look at the media part, we’ve evolved from being a pure aggregation play to “having a voice.” We’re creating “color” around other people’s stuff, and we’re making our own. Like last week, when we were the exclusive streamer for the Bill Clinton concert.

Yahoo Sports “is a very well-known service in the United States that routinely breaks news now.”

8:21 am: Walt: Do you need to move more into video, etc.? Sports is big for you but you can’t watch sports on Yahoo.

Jerry: At the end of the day, if you look at what Yahoo’s been for past 15, 16 years, the part we have to sharpen is distributing content for our partners. Outside the U.S., we’ll definitely be distributing TV. In the U.S., less of that, but note our (most recent) partnership with ABC News.

In Silicon Valley there’s one view. But the reality is Yahoo is doing lots of those things.

8:23 am: Walt: Back to the review. What’s the best outcome. Would it be best if Jack Ma bought the whole thing?

Jerry: You’d have to ask him.

Walt: I’m asking you.

Jerry: As the founder, “the true ambition for me is to see Yahoo achieve the potential it’s in the position to achieve.”

I think that’s what the board and management are trying to do.

Walt: So can an entrepreneur like Jack make that happen?

Jerry: We’re looking at everything.

Walt: Do you want to be in the hands of a PE company?

Jerry: I don’t know, Walt. I think all of the options will work themselves out.

8:25 am: Walt: OK. The Microsoft deal, where at one point they were going to buy you, and then it became a search deal. It seems like it hasn’t caught fire and done as much for you as you’d hoped.

Jerry: “I think Microsoft is a very very important partner for us.” We’ve extended our revenue guarantee. But we both realize this has to work for both sides. “It takes trial and error. It takes work. I will probably venture that the Microsoft folks would say the partnership hasn’t gone the way they wanted.”

Walt: Meanwhile other people keep nudging into search. Even Apple’s Siri can represent search.

Jerry: Our focus is simple. We can control the way our users conduct a search. We’ve gotten very good at that. Microsoft is responsible for the back end, and for monetization. And the core focus is monetization. So there will be innovation about the way you find search, and define search, but really the core focus is on monetization, and we can’t help Microsoft much with that.

8:29 am: Walt: Rose, let’s talk about Asia. How important is Asia to Yahoo and consumers as a whole?

Rose: Very important! And growing! Between southeast Asia and India, in the next three years, there will be 100 million users coming online.

Walt: Primarily through mobile, right?

Rose: Yep. And not the smartphone we’re used to, but the $50 feature phone.

Walt: But as you know, smartphones will get even cheaper.

Rose: Yes, and a $100 feature phone now functions much like a smartphone.

Walt: So are you building features for that market segment?

Rose: Absolutely. For starters, we have to make sure media and communication products render well on those phones. And then we have to work on discoverability. People have to find your services. So we do a lot of partnership deals with chipset deals, and handset manufacturers, for instance.

Walt: How does a chipset deal help media discovery?

Rose: Great question. For example, we did a deal with a chip company so the media discoverability is sort of baked into the middleware. So when they pass on the chips to handset makers, it’s that much easier. In the feature phone market, lots of local makers are very happy to have brands like Yahoo baked onto the chipset market. We’ve gotten great feedback from manufacturers in India, Indonesia, China.

8:34 am: Walt: Jerry, there was a good story in the Asian WSJ the other day, tied to Steve Jobs’s death. It wanted to know about the Steve Jobs of China, and whether China was able to harness the energy and wonderful companies and services you have here, “but a lot of it is considered derivative” — they iterate on ideas that originate in the U.S. or elsewhere. Jerry, “what’s the deal there?” Do you think that’s right? When will China “startle the U.S.” by thinking up its own stuff?

Jerry: Two sides to that. I’m an optimist about China and Asia. “It’s just a matter of time… before true innovation comes. Now, it’s just not fair comparing it to Steve. He’s rare even for the U.S.”

Walt: I know. But he did lots of great world-changing things, and it’d be nice if a Chinese entreprenuer did one.

8:37 am: Jerry: “This is a statistics and probability question.” The number of people with technical training, and a Western education and understanding of how platforms work, and experience. Even compared to 10 years ago, management has so much more experience.

Still, there are challenges. “This is not a foregone conclusion.” There’s a question about how does media censorship affect creativity and entrepreneurial spirit. We don’t know yet.

8:39 am: Walt: I’m sure you remember that 20 years ago, it seemed like Japan was going to surpass the U.S., and there was a lot of government organization around that. But it didn’t happen.

Jerry: Please understand. “I’m not saying that China is going to overtake the U.S.” — there’s still a tremendous amount of advantage that Silicon Valley, or New York, or whatever, has with entrepreneurial culture, etc.

8:40 am: Rose: It’s harder to do breakthrough stuff here because the market is really big, and the competition is really fierce. “So I think there is less risk-taking, in going about doing something that’s never been proven elsewhere.” It’s more natural to see what works somewhere else, and replicate that.

Walt: Like those fake Apple stores they have in China.

Rose: Yep. On the other hand, the speed of iteration they have here is amazing. So they take a concept from the West, but they move so fast, that soon it’s a different thing.

8:42 am: Q&A:

Q: As you look at what Yahoo could be, what are the one or two key areas that it could go after to truly transform itself?

Jerry: We’re really focused on trying to “turn Yahoo inside out.” We do a huge amount of services internally: Data, content, personalization. Lots of other people on the Web around the world could use that.

Also, there are going to be multiple platforms: iOS, Android, maybe Microsoft. And we have to be able to play on all of them. And that’s an opportunity for people like us, who can distribute a large amount of content and services.

But this “inside out” idea is a big one.

8:45 am: Q: (via Eric Jackson): Your media answer reminds me of your vision 10 years ago, with Terry Semel, and Lloyd Braun, etc., that you backed down from. What did you learn then and how is that affecting what you’re doing now?

Jerry: The realization is “that we have to continue to disrupt ourselves in terms of how we distribute.” So just publishing on Web pages and HTML, and don’t pay attention to apps, and mobile, and social media, and we’re not being disruptive, then that won’t work. People think that media means you have to stream or pipe data. But it can be more than that. Ten years ago, we didn’t really focus on that disruptive element — “we just tried to put TV on the Internet.” And some of that worked, but some of that didn’t.

And we’re done — though as Jerry walks off stage, he tells Walt “I passed.”

Now, off to a demo from digital camera-maker Lytro.

In a study conducted by SuperData Research on behalf of Viximo, a social games and applications platform, it found that non-Facebook social gaming will explode to $5.6 billion in 2014, up from an estimated $3.2 billion this year.

At that level, the study found that it will represent 65 percent of the overall projected revenue, including both Facebook and non-Facebook social gaming networks, which together are expected to hit $8.6 billion in 2014.

Most of the non-Facebook revenue will be driven by international markets, where Facebook is not dominant, including Asia, Russia, Brazil and Turkey.

Some of the social networks include Hyves in the Netherlands; Tuenti in Spain; StudiVZ, a student-focused site in Germany; and Badoo, a dating site in the U.K. The study does not take into account the entrance of Google into the industry with its games network on Google+.

Other findings:

• Asia is the largest market for social games, with an estimated $2 billion in total revenue for 2011.
• Russia and Brazil also have large social gaming audiences, with 35 million and 32.6 million people, respectively.
• Germany’s social gaming revenue is expected to increase to $250 million in 2014, up from $173 million in 2011.

With AsiaD just a little over a month away, Walt Mossberg and I are adding even more speakers to the list, for what we hope will be an awesome event in Hong Kong.

Taking place from Oct. 19 to 21, the conference lineup is already impressive, with a mix of speakers from China, Japan, Korea and Taiwan, as well as Silicon Valley and more.

The previously announced speakers include: Alibaba’s Jack Ma; Google Android head Andy Rubin; Twitter inventor and product guru, as well as Square co-founder and CEO, Jack Dorsey; Nvidia founder and CEO Jen-Hsun Huang; Asus Chairman Jonney Shih; Sony president and second-in-command Kazuo “Kaz” Hirai; Google+ guru Bradley Horowitz; Hollywood big shot Peter Chernin; Huawei’s North American R&D head John Roese; Microsoft’s Windows Phone head Andy Lees; and a panel of start-up stars — Joyus’ Sukhinder Singh Cassidy, SurveyMonkey’s Dave Goldberg and Airbnb’s Brian Chesky.

Now, to add to the kitty:

Yahoo co-founder and former CEO Jerry Yang, who will appear with the Internet giant’s Asia head Rose Tsou. For all of the noise around the company these days, Yahoo has a huge footprint in the region, maintains a big e-commerce business there and holds massive stakes in key firms, such as Yahoo Japan and China’s Alibaba. One of Yahoo’s first big investments came from Asian investor Masa Son, in fact, way back when.

Also on deck is LivingSocial’s CEO and co-founder Tim O’Shaughnessy, who will appear with Daniel Shin, the CEO and co-founder of South Korea’s Ticket Monster, which the daily deals site just bought as part of its aggressive move into Asia. Competing there with its U.S. rival Groupon, as well as a myriad of local social buying services, the market is a tough one.

Because of Samsung’s increasing importance as a global player in smartphones and tablets, we thought it was important to have Dr. Won-Pyo Hong. He heads global product strategy for Samsung’s mobile business, which has surged in the past year to make the Korean tech giant a leader in Android-based phones and tablets, and a significant challenger to Apple.

Also key in the mobile arena is Cher Wang, the chairwoman of three Taiwan companies, including HTC, the important and innovative handset and tablet maker which has been a key player in Android’s success story. But just this week she talked about the possibility of HTC buying an operating system, which would further strengthen its hand in the competitive market.

That’s it for now, but we will have more big names to come, as well as some pretty cool demos we will be putting onstage at AsiaD. So stay tuned.

A decision by Beijing-based online retailer Jingdong Mall to shun the Hong Kong market, the most popular venue for Asian firms, may be a bet that Internet investors are savvier in the U.S. and may be more willing to give the company a heftier valuation. Asia has few large Internet stocks. The IPO, if it materializes, would be far larger than the listing of Google Inc., which holds the record for the largest U.S. Internet IPO at $1.9 billion in 2004, and of Internet-related offerings elsewhere in the world.

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Needham analyst Charlie Wolf notes today that June marked the 21st consecutive quarter that Mac shipment growth exceeded that of the PC market. Mac shipments grew 14.6 percent for the month — more than five times the PC market’s growth rate of 2.7 percent.

Driving that growth tear: The home and business markets and Asia. Mac shipments rose 13 percent in a global home market that declined .3 percent overall. In the business market, they grew 31.5 percent, more than six times the five percent growth rate charted by the rest of the market. And in Asia, they simply blew the roof off the market with shipments that grew 67.6 percent thanks to soaring demand in China.

Wolf figures the region accounted for a jaw-dropping 55.2 percent of the year-over-year growth in worldwide Mac shipments. And this wasn’t the first quarter of double-digit growth there; it was the sixth. Says Wolf, “The growth of Apple’s sales in China represents a perfect storm between an iconic brand and a rapidly growing middle class that’s more brand conscious than consumers in virtually every other region of the globe.”

This is, of course, something of which Apple is well aware. The company’s leadership has consistently mentioned China as Apple’s next major geographic growth opportunity during recent earnings calls, noting the significant untapped demand for its products there.

“China was very key to our results,” Apple COO Tim Cook said during the company’s July earnings call. “[It] has been a substantial opportunity for Apple, and I firmly believe that we’re just scratching the surface right now. I think there is incredible opportunity for Apple there.”

And now a special word from Phil Schiller, Apple’s senior vice president of Worldwide Product Marketing …

After our grand tour of Asia last week — with stops in Korea and Japan — it seems like a perfect time to update the speaker list for our upcoming AsiaD conference in Hong Kong in October.

As Walt Mossberg and I said, we are trying to mix both U.S.-based speakers with a pan-Asian selection of speakers from across the region, and the new additions are just that.

For the international confab — this one will be held Oct. 19-21 — we’ve already announced a great lineup, including Alibaba’s Jack Ma; Google Android head Andy Rubin; Twitter inventor and product guru, as well as Square co-founder and CEO, Jack Dorsey; Nvidia founder and CEO Jen-Hsun Huang; and Asus Chairman Jonny Shih.

Now, to add to that terrific lineup:

Kazuo “Kaz” Hirai is widely considered the second in command at the consumer electronics giant Sony, in charge of its key computer entertainment division, as well as now serving as executive deputy president of the whole company. In that role, the dynamic exec is at the nexus of the Japanese company’s efforts around tablets, smartphones, gaming and more. As Sony struggles to reassert its dominance over the arena, Hirai will be a key player in that effort.

Bradley Horowitz — as head of product management for Google+, the search giant’s aggressive effort to break Facebook’s hammerlock on social networking — has a perfect perspective to talk about the fast-growing area and where it is going globally. With locally-based social companies springing up all over Asia, can Google establish one the whole world will use? It’s an important question and Horowitz’s job No. 1.

At Microsoft, Andy Lees is leading one of the software giant’s most important initiatives, as president of its Windows Phone division. His come-from-behind job includes mobile software and hardware, as well as its key partnership with Nokia. With Apple’s iPhone and Google’s Android far in the lead, Lees will need to win in markets globally, especially in Asia.

Peter Chernin is one of Hollywood’s top players and execs. The former top News Corp. exec is now a movie producer — his first effort, “Rise of the Planet of the Apes,” is a big hit. But he’s also been increasingly active in media investing in Asia of late, and has a lot to say about the global nature of entertainment in the digital age.

John Roese heads the North American R&D team for Huawei, the Chinese telecom giant making everything from heavy-duty gear for networks to mobile phones and tablets. The former CTO of Nortel, he’s heading up global development of Huawei’s cloud services for both businesses and consumers. Roese will also talk about the phenomenon of a Chinese-owned company emerging on the world technology stage.

Even in the midst of an economic downturn, there is no denying that it has been a golden time for Silicon Valley start-ups, which have enjoyed unprecedented growth and funding in the Web 2.0 era. But as they seek to expand beyond the U.S., a critical move for them all, we’ve assembled a panel of entrepreneurs to discuss it, including:

Brian Chesky is the CEO and co-founder of Airbnb, the popular online vacation rental site that recently got a huge dose of funding and an equally large amount of controversy. How Airbnb can take the company to the next level, including across the world, while dealing with the kinds of challenges the small management team has to face, will be an interesting topic for discussion.

After stints as president of Asia Pacific and Latin America operations at Google and co-founder of the online personal finance company Yodlee, Sukhinder Singh Cassidy is trying her hand at a small start-up again. She’ll talk about how the recently funded Joyus, a new premium video commerce site trying to pioneer a new way to shop online, plans to expand globally.

Finally, longtime tech exec David Goldberg is now running one of tech’s most successful start-ups at SurveyMonkey, the dominant online survey company. With stints as founder of music site Launch Media, which was bought by Yahoo, and as an Entrepreneur in Residence with Benchmark Capital, he is the perfect person to explain what it’s like being an entrepreneur today in Silicon Valley.

We have even more speakers for AsiaD we’ll be announcing in the coming weeks, so get ready for what’s next.

On our weeklong trip to Asia in preparation for our upcoming AsiaD conference in the fall — including a stop in South Korea earlier in the week — Walt Mossberg and I have spent the last few days in Tokyo.

That’s because while AsiaD will have a Chinese flavor — by virtue of its location in Hong Kong and given how increasingly important China is in the digital arena — we also want to make sure that the focus is pan-Asian.

Of course, Japan has always been one of the key centers of the digital world, especially in the area of consumer electronics, so it was interesting to see what it has been up to.

While here, we visited gaming firms such as Nexon (Korean-born, but HQed here) and Gree; met execs from companies such as Mixi, Japan’s largest social networking site (and not Facebook, which is still small here); and visited the big behemoths like Sony (which is up to some very innovative things, from what we saw this week, including the dorktastic head-mounted video device I am wearing above).

We also went to see what’s up with smartphones and other gadgets in the Akihabara area — often referred to as “Electric Town” — of this bustling city, which is one of my favorites in the world.

That’s why Tokyo’s digital companies will be a big part of AsiaD. We’ll soon be announcing even more speakers for the event, which takes place in Hong Kong Oct. 19-21.

Until then, here’s my video of our tour, which includes a look at the latest in rice cooking technology (you’d be surprised!):

And here is a video from a breakfast talk Walt and I did there:

]]> http://allthingsd.com/20110806/asiad-adventures-japan-edition-walt-and-kara-visit-digital-tokyo-video/feed/ 0 http://allthingsd.com/20110803/asiad-adventures-walt-and-kara-in-seoul-video/ http://allthingsd.com/20110803/asiad-adventures-walt-and-kara-in-seoul-video/#comments Wed, 03 Aug 2011 23:01:33 +0000 Kara Swisher http://allthingsd.com/?p=105743

This week, my AllThingsD partner-in-crime Walt Mossberg and I are in Asia as part of our planning for the upcoming AsiaD conference in the fall.

We’ll soon be announcing even more speakers for the event, which takes place in Hong Kong from Oct. 19-21.

And while AsiaD will have a Chinese flavor, by virtue of location and given how increasingly important the country is in the digital arena, we also want to make sure that the focus is pan-Asian.

Hence, our trip to South Korea — as well as to Tokyo, Japan — to meet companies, look at start-ups and get a feel for the key trends of these places.

In Seoul earlier this week, for example, Walt and I went to visit Samsung, the company that dominates most of tech in South Korea.

The giant conglomerate, which has been a major maker of televisions and other consumer electronics, is now aggressively competing in the smartphone and tablet arena.

It has partnered with Google Android as one of many handset and tablet makers using the mobile operating system. But from our talks with execs here, all Samsung seems to think about is Apple and its powerful iPhone and iPad, which it seems to consider its one and only rival.

We’ll be talking about all this and more at AsiaD, but until then, enjoy the video of our tour, which includes us as stars on the video wall at Samsung’s D’light exhibit in Seoul:

]]> http://allthingsd.com/20110803/asiad-adventures-walt-and-kara-in-seoul-video/feed/ 0 http://allthingsd.com/20110801/livingsocial-makes-giant-push-into-asia-with-acquisition-of-south-koreas-ticket-monster/ http://allthingsd.com/20110801/livingsocial-makes-giant-push-into-asia-with-acquisition-of-south-koreas-ticket-monster/#comments Tue, 02 Aug 2011 02:40:15 +0000 Tricia Duryee http://allthingsd.com/?p=105073 LivingSocial has acquired Ticket Monster, one of the largest daily deals sites in South Korea. Terms of the deal were not disclosed.

The move is a major one for LivingSocial in many ways, establishing for the Washington, D.C., start-up a major beachhead in a key Asian country.

It is also the biggest of the nine acquisitions LivingSocial has made over the past year.

Ticket Monster’s name might well refer to the scary growth it has been experiencing. In the past year, Ticket Monster (known popularly in South Korea as TMon) has grown rapidly from virtually no revenues in May 2010, when it was founded, to $24 million last month.

It has more than 600 employees and offers roughly 60 deals a day to South Koreans. The company, which purchased Malaysia’s Integrated Methods in June, had also been preparing for an initial public offering.

For LivingSocial, which is the second-largest deals provider after Groupon, TMon will provide a critical home base in Asia, which has been historically difficult to enter for U.S.-based companies.

As Groupon has demonstrated, it can be both challenging and costly. LivingSocial is expected to follow Groupon and file for an IPO. Groupon runs its own division in South Korea.

So far, LivingSocial operates in a handful of Asian countries, including the Philippines, Thailand and Indonesia, through acquisitions of Ensogo and DealKeren earlier this year. Once the deal is approved by South Korean regulators, LivingSocial will operate in 23 countries in total.

The similarities between TMon and LivingSocial are easy to spot.

In addition to daily deals, TMon has also rolled out specific niches targeting families, events and travel, as well as offering instant deals, which can be purchased and used in the same day. It also sells a variety of products, from books to handbags to other fashion goods, through flash sales.

Its general e-commerce capabilities may have also appealed to Amazon, one of LivingSocial’s major investors.

“They have been studying their favorite U.S.-based company for a bit now,” LivingSocial CEO Tim O’Shaughnessy joked.

More seriously, he added that LivingSocial has been having conversations with TMon for awhile.

“We like the team and how fast they’ve been able to innovate and grow beyond one business line into multiple business lines. They’ve done a lot of the same things we would have asked them to do,” he said.

Ticket Monster CEO Daniel Shin, who is a bit of an Internet star in South Korea, said the company has been modeled after both LivingSocial and Groupon.

“Obviously, we take a lot of best practices from around the world,” said Shin, who moved to the U.S. from South Korea when he was nine and returned in January as one of the company’s founders. “We started last May, and both LivingSocial and Groupon started earlier than that, so any learnings we could take away from them, we did.”

Shin declined to name Groupon as one of the other bidders, but said Ticket Monster was “contacted by a lot of different parties.”

The company raised $11 million in capital from Insight Venture Partners of New York and South Korea’s Stonebridge Capital.

O’Shaughnessy said it will likely continue to make acquistions as it expands globally.

“We’ve been pretty aggressive on that front,” he said.

Photo Credit: Ticket Monster.

]]> http://allthingsd.com/20110801/livingsocial-makes-giant-push-into-asia-with-acquisition-of-south-koreas-ticket-monster/feed/ 0 http://allthingsd.com/20110711/and-so-the-asiad-speakers-begin-google-alibaba-twitter-asus-nvidia-and-more-to-come/ http://allthingsd.com/20110711/and-so-the-asiad-speakers-begin-google-alibaba-twitter-asus-nvidia-and-more-to-come/#comments Mon, 11 Jul 2011 19:31:40 +0000 Kara Swisher http://allthingsd.com/?p=95888

No rest for the weary D conference producers!

Which would be Walt Mossberg and me, since we are now hard at work — after a very successful ninth D: All Things Digital — on our newest event: AsiaD.

An international confab — this one will be held October 19 to 21 in Hong Kong — is a big deal for us and we’re making sure it is up to snuff for our audience there.

That begins with the speakers, which we will start announcing now and continue to as we add them onto the roster. As we have said before, we’re going for a lineup of both Asian and U.S. speakers, as well as demos from the region, with a focus on the critical emerging market.

That’s why with smartphones in ascendance globally, having Andy Rubin, who runs Google’s Android efforts, is a no-brainer. The longtime mobile exec is at the top of an aggressive push by the Silicon Valley Internet giant to dominate the important sector across the world.

Speaking of domination, we are asking Alibaba Group’s Jack Ma onstage to talk more about his efforts to make the company a powerhouse in China and elsewhere. His recent bare-knuckled fight with Yahoo over Alipay, as he has built a wide-ranging Internet giant, should make for an interesting interview.

Expect a deep dive into what makes the future Web work with Twitter and Square founder Jack Dorsey, who is someone breaking new ground as he tears down old digital paradigms. With Twitter, Dorsey redefined the real-time world and how the virtual one communicates; with Square, he is upending the payments arena, even as others try to upend him.

Nvidia is not only a pioneer of graphics chips, but now its processors are widely used in the latest mobile devices. That’s why its founder and CEO Jen-Hsun Huang has a lot to say about the future of the fastest-growing sector of computing, from smartphones to tablets and whatever’s next.

And Asus Chairman Jonney Shih has presided over the Taiwanese tech giant since the early 1990s. Most recently, the company pioneered the netbook market and is now plunging deeply into the tablet business, making Shih perfect to discuss these key issues in Asia and around the world.

As usual with D, there will be more big names to come — and you can find out more here.

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