Bartiromo: Mobile rules, ex-Apple chief says

The economic slowdown in the emerging markets has been a key factor to the U.S. stock market's volatility. And yet, it is those emerging markets where former Apple CEO John Sculley has been investing. Sculley has been co-founding companies after leaving Apple, where he worked for 10 years. Since then, he has been working with entrepreneurs, investing in at least 15 companies involved in big-data analytics, mobility, customer lifestyle and health care around the world. In an era in which technology is changing our lives on so many levels, I caught up with Sculley to get his thoughts on where the innovation is and how it is changing our jobs and lives. Sculley is betting on artificial intelligence and growth in the emerging markets with new game-changing companies. Our interview follows, edited for clarity and length.

Q: You were the CEO of Apple from 1983 to 1993. What do you think of the company's new products? Is there still innovation at Apple?

A: Tim Cook is doing a terrific job of leading Apple. There's probably two years of an installed base of people who already have iPhones who are just waiting to upgrade to the new phones. So there's at least two years of very healthy growth in profits for Apple.

Q: For a while people have been saying the era of the PC is dead as it loses market share to the newer devices out there.

A: In the U.S. and to a large extent, Western Europe, it is a "replacement market." Because there is the largest installed base. But when you go to the emerging markets, about 70% of the global GDP comes from other markets away from North America. The emerging markets are in a very different stage of growth than the U.S. Many people there are getting their first smartphones now. Part of the world is just moving into 3G

.

So many parts of the world haven't even started to get into video. The real growth of the industry globally is in the emerging markets. In that part of the world, we see new brands taking on a strong position in China. An iPhone can cost you $600 to $800 in some of these emerging markets like India. And the result is Apple has a very small market share in those markets. But it makes up for it with its incredible success in markets like North America and Europe. But cheaper phones are taking hold in the emerging markets.

Q: So are we really just at the beginning of the smartphone boom in the emerging markets?

A: Yes, and I'm such a believer that I founded a new mobile device company for just the emerging markets called Obi. We launched a couple of months ago in India. We launched in the United Arab Emirates and the Gulf countries. We're getting ready to go into North Africa and East Africa. We expect to be in all the emerging markets by the middle of 2015. In a market like India, where half the population is under 25 years old and 80% of the smartphones are sold for under $200.

Whereas, if you take Samsung or Apple, phones are selling at $600 to $800 for their high-end products, there is a real opportunity for someone to come in with an international brand at very low price points — $100, $150 — and deliver a very high-quality product.

The world is moving towards the smartphone, which is what Samsung, Apple and others sell. What we saw was that the companies like Sony are hemorrhaging money with their mobile devices. Nokia lost $415 million last quarter. So, those international brands have high overhead, invest heavily in research and development, and will have a hard time making money at these disruptive price points. We chose to go into the mobile device business, because we realized we could focus on design, and on consumer branding, which we know. And we could target building an international mobile smartphone business, but just for emerging markets at low price points.

Q: Look at technology broadly, where does the growth come from in the next five or 10 years?

A: When I joined the high-tech world in Silicon Valley, it was the beginning of the microprocessor. That's what the computers were all based on. Today we are at the beginning of sensors. Cisco CEO John Chambers has said he believes the Internet of things — which are mobile wireless, sensor devices — will be over 40 billion by the early 2020s. These sensors are mostly machine to machine. They're picking up information, communicating to other machines. Add doing what's called machine learning: It is the outgrowth of what we used to call artificial intelligence or expert systems 20 years ago. Machine learning is actually becoming quite sophisticated.

And if you think back to the 32 years I've been in high tech, everyone, no matter what company it was, for 30 years had been focused on one thing: the productivity of the knowledge worker. That productivity of the knowledge worker in the area of PCs and in the era of the Internet was all about driving the global economy, which it's done quite successfully. Now, what's happening is that's not going away. It's commoditizing.

What we're getting into is the very early stages of shifting from the PC as a tool, Microsoft software as a tool. Steve Jobs used to call these tools for the mind. And we are shifting to an era that doesn't replace what you were doing with productivity, but is a parallel path.

And that's the computer as assistant, as a personal visual assistant, or as an automated intelligence system. And that will drive the economy for the next 30 years. And what's really interesting is that over the next five years, we're going to see every industry exposed to reinvention of how people put products and services together, how work was done, what kind of jobs are needed, what kind of skills are needed, what can be handled by technology.

There's never been a better time to start new businesses and to take advantage of these new technologies that are growing exponentially in terms of capability. And their costs are so low for the barriers of entry. Every industry is eventually going to be touched by this, whether it's business to business, consumer businesses, or every part of the world. So, it's exciting times. I wish I were about 20 years younger.

Q: Which is why sensors used in health care are so exciting. Because it's enabling us to really monitor our bodies and live longer lives.

A: Absolutely. We have roughly 26,000 genes, but we have 2 million proteins. It's now possible that cloud computing is so powerful and so inexpensive and data analytics is so sophisticated and sensors are getting so miniaturized, it is totally reasonable that in the future, it's going to be totally possible to monitor every individual down to their proteins, changes and their genes personalized description, all of those things. It's an amazing future that's out there. You'll see more automated intelligence systems, which are the outgrowth of machine learning and these incredible new technologies cloud and analytics and sensors and so forth. The people who are actually out creating the most value are entrepreneurs, many of whom never even went to business school. I started to realize what's missing is a preparation for entrepreneurs to learn how to build companies and build companies that take advantage of this incredible opportunity.

Q: So you created a video series?

A: Yes I put together a book titled "Moonshot" and a 10-hour video series of going around and interviewing my friends who are successful entrepreneurs. People like Dr. Oz and Wolfgang Puck and Steve Wozniak and a bunch of recognizable names, and many young people in their 20s and 30s, who are building companies. And then, started unpacking the things that an entrepreneur has to know.

Q: You have spoken about artificial intelligence and machines speaking to machines. What does this mean for jobs that so many of us need?

A: A lot of the jobs that exist today won't be around. They'll be done by kiosks and automation and things like that. But, on the other hand, we're at the very beginning of an entirely new kind of economy. And the way I think about it because I'm old enough to remember when we didn't have a middle-class economy in the U.S.

You see several billion people aspiring to be in a different middle-class economy in Asia and other emerging markets. And the companies responding to that customer base are doing it at different price points for products and services. It's a different type of aspiration. They don't want a 2,000 square-foot home. They're happy with a 600 square-foot or an apartment. It's a frugal expense model, exactly as we're doing it with Obi. We have very low expenses, very few people in the infrastructure. And ironically, a lot of the things about the American dream have been exported from the U.S. to other parts of the world like the emerging markets.

The challenge is that as we get further into these automated intelligence systems, these higher-skilled jobs, are not going to be needed as much. At the same time, there'll probably be brand-new kinds of jobs that will be created. So, if you go into manufacturing plants now the skills to be in manufacturing, on the job floor, are entirely different than what they were 25 years ago. But there aren't as many people on the floor. A lot of it is being done by computers.

Q: What about privacy? It all sounds exciting but we're worried about hacking, the loss of privacy. How does that play into your thinking?

A: It's a huge challenge. And I don't think anybody has a true answer to it yet. The reality is that data is being collected at an ever-increasing rate on us from every possible source, from, video cameras if you're in a city like New York, people are able to track everything you do on your mobile device, and it's only going to increase.

On the other hand, the concern about people having their bank accounts being broken into or their medical records being exposed are very real, practical problems and they can be addressed, through a combination of technology and regulation and just better business practices. So, that part of it's solvable. The thing which is different this time is young people who grew up in a world where they never knew anything but these kinds of technologies don't really think about privacy the same way, as people who are over 35 do. They will do things that seem almost outrageous to older people.

They'll take pictures of themselves. They'll send out selfies. They love services where the photo stays alive for 15 seconds and then it disappears. But does it really disappear? I mean, who knows? People put an awful lot on social media networks that may come back and haunt them later when they want to get a job interview if the stuff doesn't go away. So, we're all in this messy era where we're learning what technology can do, and what's permissible.

Maria Bartiromo is anchor and global markets editor at Fox Business Network. Her 'Opening Bell' program can be seen each weekday on the FBN from 9 a.m. to 11 a.m. ET. Follow her @mariabartiromo @sundayfutures