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NEWS STREAM

Biggest Technology Stories of the Year.

Aired December 24, 2014 - 08:00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


KRISTIE LU STOUT, CNN ANCHOR: I'm Kristie Lu Stout in Hong Kong. And welcome to a special edition of NEWS STREAM. We look back at some of the

year's biggest technology stories.

Xiaomi stunning success, we look at the growing calls behind the Chinese smartphone maker. The technology is a future. We'll speak to the pioneer

of consumer 3D printing. And these developers, if someone copied their app idea, we'll show you what they did next.

2014 saw Samsung struggle, and Apple build bigger iPhones. But this year's smartphone success story came from China. Xiaomi swept into third place in

the global smartphone market. A remarkable rise for a company that does not sell phones in the U.S. or Europe. The Xiaomi has a fanatical

following in China. We went to their first ever fan event in Hong Kong earlier this year, and had a chance to talk with executive Hugo Barra.

(BEGIN VIDEOTAPE)

LU STOUT: Executives dancing on stage in front of cheering fans. Xiaomi is not your average tech company. Just a few years ago it was a niche

player, but Xiaomi is now China's top smartphone maker.

And the fans were pretty clear on why the company has been so successful.

UNIDENTIFIED FEMALE (through translator): You pay a very reasonable price for a very good product.

UNIDENTIFIED MALE (through translator): The products are cheaper.

UNIDENTIFIED FEMALE (through translator): They have good product. Also, it's cheap.

LU STOUT: Xiaomi gained these fans with the low prices, but they are trying to keep them with fan events like this one. Holding games to win

free prizes, plush toys, portable charges and even phones.

Xiaomi vice president Hugo Barra joined the company one year ago when he left Google for Beijing.

I asked him whether Xiaomi success is sustainable.

HUGO BARRA, VICE PRESIDENT, XIAOMI GLOBAL: We are not just a smartphone vender. In fact, you could say that we are an Internet pop phone company

before we are a smartphone vender company.

LU STOUT: Because of ecommerce?

BARRA: Because of ecommerce, but also because we built an Internet connecting operative system. We called VUI. And the phones are actually

the delivery vehicle for the software. We made the phones because it was the best way to get that software into the hands of as many people as

possible, right? So we are thinking from a software perspective, we are thinking from a harder or smartphone perspective, but, you know, when you

are looking from a distance it looks like we are just another smartphone vender, but that's far from what we actually are.

LU STOUT: In fact, they got (INAUDIBLE) when you founder, the CEO of the company said, don't compare us to Apple, compare us to Amazon, compare us

to those types of companies

BARRA: That's right. That's right.

LU STOUT: Yeah.

BARRA: Xiaomi has a bit of Google, a bit of Apple, a bit of Amazon, but that combination is completely unique. You haven't seen another company

like that yet.

LU STOUT: What about the United States market? Do you plan to go there?

BARRA: We do plan to enter the U.S. and sort of Western Europe, so those tier one markets, but we've got to work up to that. It's not quite the

time yet. It's been fiercely competitive markets. You've got to, you know, take market seriously. You've got to be a grownup.

LU STOUT: Yeah.

BARRA: Right, so? We are going to work our way there, and also because the opportunity in that market is not as significant, as the opportunity in

(INAUDIBLE) Brazil. (INAUDIBLE) software. So, we'll get there eventually.

LU STOUT: Do you even need the U.S. market?

BARRA: Frankly, don't.

LU STOUT: Yeah.

BARRA: We don't. But, of course, it is the transcending market in the world. Right? That's where sort of all the waves on innovation are sent

from. So, it's important for us to be there, but we are not in rush.

LU STOUT: Now, we have to talk about the allegations of Xiaomi being a copycat in terms of your product design, whether it's your smartphones or

your streaming TV devices, et cetera. A lot should put out there in the blogs, on tech blogs, social media, just comparing an Apple device or an

Apple promo to a Xiaomi promo and how they are uncanningly similar. How do you feel when you see those a comparisons being made and how do you respond

to them?

BARRA: Yeah. So, it's hard to respond to, you know, to an accusation or like a point of view that comes from someone who actually hasn't even used

our products, but the majority of these stories and posts I have come out there, they are coming - many of them - from Silicon Valley, and we haven't

had our products in the hands of these journalists, of these users, of these bloggers. So, they are making judgments on - based on screenshots,

they are not making judgments based on real units, right? They don't understand interaction models that we developed, which are in fact very

innovative. And what they also don't realize is that little known Xiaomi has actually been the source of ideas that have been used around the world

over the last couple of years by others.

LU STOUT: For example?

BARRA: For example, the blurry colorful background, when you have an overlaid window. That's been in our pretty system for a couple of years,

right? And it was only recently introduced in another operating system. So, I think that's where a lot of that comes from, right?

The other aspect that I would say, it gives you a bit of insight into Chinese culture, is that we are all Apple fans, we all respect Apple as one

of the most amazing companies that has ever existed, right? So, when we put up a promo on our Web site, you know, designed by - a Chinese designer

from our team that may look like an Apple promo, that's not an attempt of copying someone because you are not creative enough, that's an attempt of

trying to live up to expectations created by the most amazing company in the world.

(END VIDEOTAPE)

LU STOUT: Hugo Barra told us that one of the places he's hoping to target next, is his native Brazil, but it looks like that movement, we have to

wait till 2015.

Another Chinese company that made it big on the world stage is here. It's Alibaba. The e-commerce giant made its debut on New York Stock Exchange in

September. It raised $25 billion making it the biggest IPO ever. And despite that record debut, a lot of people have been having trouble

understanding just what Alibaba is. That's because it combines elements of Amazon, eBay, PayPal and more. But we have a simple way to break down just

what makes Alibaba different.

Now, if you were a retailer in the days before the Internet, it was pretty simple: you had stores, and you sell products in these physical locations

on streets or on malls. Then came the Internet and Amazon. Now, Amazon changed all of that by eliminating stores. Instead, they set up giant

warehouses and sold products online. It allowed Amazon to undercut traditional retailers by not paying rent for shops, but Alibaba's business

model goes a step beyond this: Alibaba doesn't have stores. It doesn't have a warehouse. Alibaba is just a Website, but the Website that helps

connect people who sell things to people who want to buy things.

And cofounder Jack Ma put it this way: "Alibaba helps others to do e- commerce. We do not sell things."

Now, for another perspective on Alibaba, I spoke to former vice president Porter Erisman. He joined Alibaba in 2000, just after he moved his

headquarters from a small apartment, and he directed a documentary on the early years of Alibaba called "Crocodile on the Yangzi." And we spoke just

before the company went public. I began by asking him what it was like to work for cofounder Jack Ma.

(BEGIN VIDEOTAPE)

PORTER ERISMAN, FORMER VICE PRESIDENT, ALIBABA: What you see in the film is hopefully a different side of film - one of the things he did it, his

company meetings, just he, along with the other senior managers would get up and sort of in a self-deprecating way try to make fun of themselves, and

so you see him dressed as a rock star kind of making fun of himself.

Working with him was really just a great experience. I learned a lot about business, but I learned a lot about life. Jack was somewhat of a

philosopher, and even when you ask him if he considers himself a business person, he'd be more likely to say he considers himself an artist, creating

things that hopefully benefit society in some way.

And so, he was a fun guy to work with, he had a great sense of humor, but he had a really strong sense of purpose, and when you didn't perform the

way he wanted you to, he definitely let you know about it. He was very tough boss in that way. But that's because he expected very good results

from everyone, and so it made us all want to work hard to achieve the goas Alibaba was chasing.

LU STOUT: Jack Ma is a big personality, he is a pioneer for the development of the Internet in China. Is he a visionary on par with Mark

Zuckerberg or Steve Jobs?

ERISMAN: Yeah, I really - I really believe that. I mean it's interesting, because he is someone who saw the future, sort of predicted it and then

built the company with the really long term vision. More importantly than having a dream, he just could really see how he could grow ecommerce in

China. To in a way build economic institutions that the government and the other institutions that failed to build. And so, if you think of Steve

Jobs created the operating system for the computer and the smartphone, Jack Ma created the operating system for commerce in China.

LU STOUT: A number of investors in the West are still trying to scratch their heads into decode and understand the business model. How would you

describe the Alibaba overall business model?

ERISMAN: Yeah, for me it's fun to watch Western analysts try to describe the model, because they can't seem to do it. They say, maybe it's an

Amazon plus an eBay, plus a dash of Google and a little bit of PayPal. The reason they can't put their hands around it is because it's a truly unique

model.

LU STOUT: Now, something that's been named as a risk factor for Alibaba and for Alibaba stock, when it starts to list, is the issue of piracy and

counterfeiting, which you can't find on the table (ph) platform. How big of an issue does that pose for Alibaba and what can Alibaba do about it?

ERISMAN: I think counterfeiting, the problem that it poses for Alibaba is really perception issue. You know, when I was at the company we looked at

our society in China, we looked at eBay, China. We both face the same problem. And that's it. When you run a market place for buyers and

sellers that post their products and services online, they each are supposed to take responsibility for what they post, and as the market

place, you are supposed to - when people notify you of things, you (INAUDIBLE). S

So, when I was at c Alibaba we were meeting and exceeding the global standard, but in the China environment, until the Chinese government gets

serious about enforcement, you are not going to see the counterfeit issue addressed really well.

(END VIDEOTAPE)

LU STOUT: And that was Porter Erisman, the former vice president of Alibaba.

Next, on the special edition of "NEWS STREAM" we speak to one of the pioneers of 3-D printing and ask him when the devices will be a fixture in

everyone's home.

And why ridiculous fishing is really in players? We'll give you the story behind the hit mobile app.

(COMMERCIAL BREAK)

LU STOUT: Welcome back. You are watching "NEWS STREAM". You are looking at a visual version of all the stories you've got in this special edition

of the show.

Now, we've already told you about Xiaomi's rapid rise to become the world's third largest smartphone maker.

Well, a bit later on, we'll hear from the creator of the hit mobile game "Ridiculous Fishing", but now, let's focus on 3-D printing. It's the stuff

of science fiction, a machine that can create an object.

But a lot of people have trouble with understanding how 3-D printers work. They are actually similar in principle to a regular printer. Those use

nozzles to spray ink onto a piece of paper. Now, instead of ink, 3-D printers use rolls of plastic. The printer melts down the plastic, and

then lase (ph) it out in whatever shape you want. And it can build tall objects by layering plastic over itself.

We printed the small plastic version of the CNN logo using this printer. Bre Pettis is the cofounder of Makerbot, a pioneer in consumer 3-D

printing. He's now moved on to MakerBot's parent company strategist where he's working in innovation workshop called "Bold Machines." I spoke to

Pettis in New York and he was joined by a couple of 3-D printed friends.

(BEGIN VIDEOTAPE)

BRE PETTIS, CO-FOUNDER, MAKERBOT: 3-D printing technology is amazing. It's been around for a while, but we've only just begun to see the

possibilities of what you can do with .. At "Bold Machines" Innovation Workshop, we are exploring a frontier of what's possible. We are going to be breaking the new industries. We are

going to be pushing the edges. . We are going to be working with partners to really see what we can do to bring more innovation into the world.

LU STOUT: Take us inside the space of "Bold Machines." What does it look like?

PETTIS: So, imagine Iron Man's workshop, right? It's - we've got all the 3-D printers in the (INAUDIBLE) from MakerBots, which make stuff like this,

to wax printers that make wax 3-D models that you can then take to a foundry and make a beautiful customized jewelry. That's the (INAUDIBLE)

stuff. Then there's the object, the polijet line of 3-D printing, which is a - it's like epoxy-like material, and you can do multiple colors, multiple

materials at the same time. And then there's also just super-large scale stuff. I can't wait to do furniture breaking to that industry.

LU STOUT: Incredible. It sounds like a 3-D printing playground. Now, we've got to talk about Mango. It's this feature-length movie, it's

featuring bold machine characters. You've got two next to you, I believe. How is that project coming along?

PETTIS: So, what we wanted to do with Margo's, we wanted to showcase how 3-D printing can - can break into really any industry and change the

workflow, and change the way you do things.

So, in the tradition of like teenage mutant Ninja Turtles, and "My Little Pony," and, you know, movies that start from merchandise, we decided to

start with 3-D models, so the way you can get access to these characters is you have to download them in 3-D printing on your 3-D printer. And we are

going to - this is - we are using this to jumpstart the process of creating a movie about Margo, who's detective, young detective who's like a cross

between like Batman and Nancy Drew, and she's - (INAUDIBLE) a villain, Mr. Walter snap in there in Brooklyn, she's got a laboratory filled with all

the tools that she could possibly need to solve any crime.

LU STOUT: I love these female characters, it's awesome.

I love what you are doing at "Bold Machines," but I'm also thinking about what I could potentially do. I mean 3-D printers are finally getting

somewhat affordable. It's getting a little bit more mainstream. When do you think this technology will be used by people like me?

PETTIS: You know, I think that's our next milestone, actually. When we started, people didn't even know what 3-D printing is, so our first goal

was educate people that what 3-D printing is. Now, we've accomplished that, and our next challenge is to make it - make it really applicable for

people like you, so that you can - when you - if you have practical applications around the house or at work, you can just take care of it. It

will be faster. It's faster than going to the store to make a lot of things that you can use in your life.

LU STOUT: And could you give me some more concrete examples of how we will be able to use it - can we use it for more than just printing out little

plastic parts?

PETTIS: You know, what's funny, is that before people get a 3-D printer, they think OK, what can I practically do with it? And then once they get

it, they just start making wonderful things. So, it's a real mix of stuff, and it really depends on what your passion is, what you're obsessed with,

what you are into. If you are into old cars, you are going to replace all the knobs on your old classic car with your 3-D printer. . If you are

into fixing up your house, you are going to replace fixers into all sorts of amazing things around your house with the machine that you're in

control.

In many ways, this is about taking (INAUDIBLE), and instead of having to go shopping to buy stuff that came from a factory, the factory is on your

desktop, and you've got to make stuff right at your own home.

LU STOUT: And will the 3-D printer work better than my 2-D printer because right now ..

(L) LU STOUT: That's a piece of technology I just can't stand.

PETTIS: You know, it's interesting. As a leader of MakerBot, my obsession is with making it easy to use. And super great experience. So, I really

spend a lot of time, energy and actually we've spent a lot of money developing this technology, and not only making it very powerful to

compress the innovation cycle, but we've made it very easy to use and friendly.

(END VIDEOTAPE)

LU STOUT: Bre Pettis there, and this year, the International Space Station received its first 3-D printer. We talked about that with NASA's project

manager for 3-D printing Niki Werkheiser. She calls the technology a game changer for space exploration. You can hear the rest in our blog,

cnn.com/NEWS STREAM.

Now, still to come on this special edition of "NEWS STREAM", this developer said another company stole their app idea, and we'll show you what they did

next.

(COMMERCIAL BREAK)

LU STOUT: Coming to you from Hong Kong, you are back watching "NEWS STREAM." Imagine working on an app for months, only to see someone else

take your idea and release their version first.

Well, that's what game developer of Vlambeer says happened to them. Now, in our "Game Faces" series we heard how they dealt with it and what they

did next.

(BEGIN VIDEOTAPE)

RAMI ISMAIL: My name is Rami Ismail. I'm one half of Dutch (INAUDIBLE) Studio of Vlambeer.

We made a number of games, and then we have this idea that we would make a game about fishing.

Now, we would make a game about fishing with machine guns.

And we started working on a game called "Ridiculous Fishing" when at some point, we saw (INAUDIBLE) on the news that a games company in the United

States had released a video trailer for a game called "Ninja Fishing." Another company had essentially stolen the idea for a game that we were

still working on. It was painful to the point that we almost decided to quit making games. We didn't work in games for about six to eight months,

we would open our computer in the morning and then stare at a blinking cursor in front of us until we would go home again. And then at some

point, J.W., my colleague at Vlambeer, was in an airplane and decided he would start work on this very tiny game about airplanes.

It was the first time that we had ever felt excited about working on something again. It was this very simple dogfighting game. Every time you

killed an enemy, the next enemy you kill would be worth more points. It's de cambo (ph) system.

(INAUDIBLE), very, very angry and very aggressive and very upset. It is everything that we felt right after we got coned in a way it's first

metaphor for how we felt. And that it's actually kind of exciting that a game -

So, we started working on "Ridiculous Fishing" again almost a year after we'd stopped working on it.

We worked on it like we've never worked on the game before it. Eventually, we released "Ridiculous Fishing" and it was one of the best received games

on the IOS apps forever. It won Apple design award. "Ridiculous Fishing" wasn't just a game anymore to us. It was a statement about creativity,

about making games because you love video games.

A game is a very personal way of expressing. It's a medium in which everything that happens in a game, everything that happens in your

expression is designed and developed and created by its creators. Even whether there's gravity or not, is defined by the creative videogame.

And that is all like any other medium.

(END VIDEOTAPE)

LU STOUT: That was Rami Ismail of Vlambeer. Now, they are currently working on their next game, "Nuclear Throne." And you can watch them make

the game live on Twitch, every Tuesday and Thursday, they put on a live stream from their offices as they build "Nuclear Throne." And fans who

have an early version of the game and making changes based on suggestions.

And that is all for this special look back on the big tech stories of 2014. So, what's next? Find out by watching NEWS STREAM in 2015.

END