Steve Jobs on Apple and Education: Making Great Computers

And now, it's a great honor to introduce Steve Jobs. Steve is chairman and CEO of Pixar, the Academy Award winning computer animation studios which he co-founded in 1986. Pixar's first feature film, Toy Story, was released by Walt Disney Pictures in November 1998 and became the highest grossing domestic film released that year and the third highest animated film of all time. Before Pixar, Steve co-founded Apple Computer Incorporated where he co-designed the Apple II computer, led the development and marketing of the Macintosh computer, and oversaw the growth of Apple into a $2 billion company.

Steve also co-founded NeXT Software which was recently acquired by Apple. Steve was awarded the National Medal of Technology by President Reagan in 1985, the Jefferson Award for Public Service in 1987, and was named Entrepreneur of the Decade in 1989 by Inc. Magazine. Here's to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They're not fond of the rules and they have no respect for the status quo.

You can quote them, disagree with them, glorify or vilify them, but the only thing you can't do is ignore them because they change things and they push the human race forward. And while some may see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world are the ones who do. Thank you.

When we got the invitation to come speak to you today from Brian, we asked him if he'd like us to bring a real razzmatazz presentation up and wow you. And he said, no. What I'd really like you to do is come up and do a fireside chat. Come up and just answer people's questions. Apple is a part of the higher education experience. What is Apple doing? Apple's obviously had some troubled times. Can you shed some light on where Apple is and where Apple's going? And I agreed to do that. In order to get here this morning, I had to get up at about 4.30 a.m. And so your job this morning is to ask questions that wake me up. And my job is to give you answers that don't put you to sleep.

So what I'd love to do is just get right into it and start off, and I think we'll cover a lot of different things, but start off with some of your questions. And I know that some of you have them. I started getting emails about a week ago with questions. So let's just get right into it. I'll try to answer anything I can. I'm very happy to be up here in Seattle. It's the home of one of our key partners, Microsoft, that we work very closely with. No, you laugh. I'm not jesting. No, actually, it's really interesting. When I got to Apple, there was a relationship that a lot of people at Apple thought and a lot of our customers thought that for Apple to win, Microsoft had to lose, which seems like a crazy proposition.

And we've been working to change that, and I think we have changed that. So some of the best software on the Macintosh actually does come from Microsoft. We believe we have the best browser in the world on the Macintosh, which is Internet Explorer. And it's even better than the version of IE on Windows. There's a whole bunch of stuff you get in IE for Mac that you don't get in IE for Windows. We think we have the best version of Microsoft Office. How many of you use Microsoft Office? Raise your hands. Okay, the best version of Office is on the Macintosh. Now, who would have thought it a year ago, right? But it's true. So we work very closely with Microsoft, and it's a good relationship. We have our differences from time to time, but we work things out in a very professional way.

Okay, any questions? No questions? There's some microphones over there if you want to go to the mics. There's microphones in all the IOS. Pleasure for you to be here. Pleasure for us to be here. I've used Apple software for, I guess, since 77. I love it. But one thing I miss, especially in the Office suite, is a database like Access, which is available on the PC. And I know there are other alternatives. I can apply to my career. I can find things. But I'd like something that's sort of like Access available. What's in the future? I think the answer on the Macintosh is FileMaker.

And FileMaker is consistently rated above Access by all the reviewers in the magazine. So I would take a strong look at it. But I'll pass your comments on to Microsoft about a version for Access for the Mac. Although if I were Microsoft, I wouldn't do it because FileMaker continually beats them. So I'm not sure it would be worth their engineering to come up with a MeToo product when FileMaker is so strong on the Mac. Yeah. Yes, anybody else? What can you tell us about your plans for portable computers before January 5th? And, well, that's essentially it, yeah. Okay. We love portable computers. And, as you know, Apple really invented the modern portable computer years ago with their PowerBook, which everybody since copied.

And Apple has not distinguished itself in portables for a number of years until last year, when Apple came out with a new PowerBook, the PowerBook G3, which is the fastest portable in the world. And it's also, in sort of the mid-range, probably the most cost-effective. Apple was the first company to standardize on 14-inch screens. You can now buy a 14-inch screen PowerBook G3 for about $2,500. And they're very, very strong. But that doesn't help out most students. It's just too expensive. Students can't afford 14-inch screens right now. And so, just like Apple designed the iMac as a consumer product that's also being used a lot in education, we are designing an education-slash-consumer portable.

And we are designing it around a design center that's primarily education-based. But we also think, hopefully, consumers will like it. And we think it's going to be pretty hot. We think it's going to be very affordable. And we've said that we're going to announce it and ship it the first half of calendar year 1999, which starts soon. But we will not be announcing it at Macworld. So, you'll see something a little bit later on in the year, and I think you'll be very pleased. Portable computing is really important, as you know. It's got a long ways to go because you've got two things that are fighting each other. One is the desire for mobility, but the other is the desire to be always connected to the Internet, right? Do you find that? And these things really are tugging at each other.

And there's a series of problems to be solved over the next few years so we can have both. And we're really working on those problems. And I think you'll see those start to get solved over the next few years, where you can really have some very hot, very affordable mobile devices that are constantly connected to the Internet. Yes? Steve, thank you for being here. One of the problems I face as an IT manager is that we look around, and we can see that people can build a Windtel machine for about $800. It's got a 300 MHz processor, yadda, yadda, yadda, yadda.

And it's very hard for me to... I've got to support both platforms. And it's very hard for me to go in and say, yep, we can get these Windtel machines for $800, and we can get Apple equipment for significantly more than that. One of the things that I think would help that is that I can put the Mac OS on a Windtel machine, or an Intel machine. The other thing might be a clone, return to cloning, and I don't... Why don't you go to the heart of the matter? The right thing would be if our computers were cheaper, even, still, than they are, right?

No, the $800 computer is not a... It's a piece of junk. You're right. I know. It's a piece of junk, but it looks really attractive. By the way, is that $800 with or without a display? That actually is with a display. Some with a display, some without. So here's what I see out there. What I see is from the white box manufacturers. By the way, what we call the white box manufacturers... I'm sure you all know this is the non-brand name PCs, right? The three guys in a garage, PC companies. And you can buy a white box... No, it's true. The average white box computer company makes about 35 computers a month, you know? There's nothing wrong with that. I'm not saying that's wrong. I'm just saying that's what it is. Those computers, you can get a decent one for somewhere in the neighborhood of 800 bucks with a display.

The brand name computers, you know, the Compaqs, the HPs and stuff like that, they're up, for the most part, about $1,000 with a display for their lower-end models. Some of those don't include networking, so you'd have to add that on and stuff. And where we're at for education is typically around somewhere between... Around $1,100, right? $1,150. That's where we are for education with an iMac. Plus the disk drive. What's that? Plus the disk drive. Well, yeah, I thought you guys were really into the Internet. I thought you were into the Internet here. We're dealing with a lot of people who still believe in the value of a box. Right. Like I said, it's their belief. Right. It may not be ours.

In any event, what we've got to do is clearly, you know, get the cost of an iMac down to under $1,000 at some point so that we can compete with the other brand name guys out there. I don't know if we'll ever track the white box guys because we don't believe in making products at that quality level. And again, I'm not saying they're bad. I'm just saying they're not what we want to do. We don't want to make something that breaks because we'll end up spending more to fix it. You know? If you're not around next year, you don't spend more to fix it. So we'd rather make a higher quality product. We'd rather build in the networking. We'd rather build in a display that's not going to drive you blind when you look at it for a few hours a day. You know, very high quality. We'd rather build in stuff like that to make a very high quality product. So what we're trying to do is get the cost delta between sort of a lower quality product and a much higher quality product to be a lot less.

And I think the iMac for Apple represents a breakthrough. People have been paying $1,700, $1,800, $1,900 for that functionality from Apple. And all of a sudden in higher ed, as an example, it's like, you know, $1,100. Right? And our goal is to drive that lower and lower every single year to where maybe there will be, you know, $100 delta over the white box guys, but you'll gladly pay that $100. So that's our strategy. And I think we're going to get there a lot faster than worrying about trying to run macOS on these white box Intel machines. I think the problem is, you know, the problem is ours in terms of compressing that price delta down. And we have a lot of very smart people working on that.

And I think you'll see results continuously over time. And you'll see that pricing gap erode. Having said that, we're actually as cheap or cheaper than equivalent function computers from Compaq and HP and other people. I mean, the iMac is already as cheap or cheaper than computers with the same functionality from these folks. And, of course, the G3 is much faster than the Pentium chips that you find in these things. So I think we're doing pretty doggone well right now. We're selling iMacs, you know, by the bushel. And I think our goal is to continue to drive the prices down, even as we add more features in these products, to where that delta gets to be so low that you just can't resist. Thank you. Sir, over there. Thank you. Steve, as someone who has obviously been a major part of the computer revolution, I'd really like to know your comments on the recent announcement by Netscape, AOL, and Sun and what kind of ramifications you think that has for e-commerce in general, education in specific, and also for Apple.

Well, as you know, Netscape was acquired by AOL. AOL has had a philosophy in place for several years that basically said, looking in from the outside, appeared to basically say, we've got to get as big as possible as fast as possible because this thing is going to be huge and size is worth more than everything else, which I happen to agree with that philosophy in their case. And they've executed on it brilliantly. And I think what they bought Netscape for was NetCenter. NetCenter represented a tremendous number of new customers for them that are getting to the Internet not necessarily through their access method, their ISP, the AOL service. They're getting there another way, but they want those eyeballs. They want those customers.

They want those transaction fees. They want that advertising. And they want to eventually have a lot of those customers that don't come in through a corporate on-ramp to the Internet but who come in through some ISP to move over to the AOL ISP. Because, as you know, they're the largest ISP in the world with over 50% of the ISP accounts. And the whole world are AOL. So they would like to pull those customers in. It appears from the outside, though, when AOL looked at Netscape, there was a part of Netscape that they really didn't want to buy. And that was the part of Netscape that happened to be making all the money. And that part was to sell all their enterprise software. And so they got Sun to agree to guarantee to kind of take that business over from them. Even though Sun doesn't own it, Sun's made some massive guarantees to resell, you know, a billion, billion and a half dollars worth of the software over the next few years.

And so they kind of got rid of the part that wasn't really what they were after. And I think it was a very smart move on AOL's part. And it was a very smart move on Netscape's part. So I think it's a very good thing. And I think you're going to see continued consolidation in this industry. So we have a very good relationship with AOL. And we think it's just fine. Yeah. In terms of education and the Internet, of course, most educational institutions are getting direct on-ramps onto the Internet, as you know. They don't go through an ISP. They don't pay 20 bucks a month per person. They just get a nice big T1 or T3 onto the Internet. And higher ed, of course, has led the way. Higher ed, of course, basically invented the Internet along with DARPA.

So higher ed pretty much, you know, this is something that's far from higher ed's concerns, I think. Because higher ed is already on the Internet. Wouldn't you agree? Or you think there is some issue? No, but at home, students are now beginning to get on the Internet for their own education. Right. Outside the system. Right. Yeah, that's a good point. I know one of the other things that we're looking at very seriously, and of course AOL is looking at very seriously, and others are too, is how do we provide users in the home a much higher on-ramp to the Internet. And the two competing technologies right now are cable modems and sort of a consumerized form of something called DSL, called G-Lite, which is fundamentally a technology that would give you approximately a megabit and a half download, 384K backup, and very, very simple to plug into at your home, run over the same wires as your telephone.

You could have a telephone conversation simultaneously with computer data flowing back and forth. And that's going to start to become real around this coming summer. So with cable modems and DSL coming out and starting to get robust around this coming summer, I think for about $50 a month, you're going to get to be able to get a much higher speed Internet connection from your home, and I think that's going to be offered by a lot of the regional Bell operating companies, as well as through companies like AOL. Yes, sir. From one point of view, it seems like we're moving backwards in the Internet arena. I don't know if you've heard the term balkanization of the Internet. It's a fairly new term where, in a sense, a lot of the major players, the major carriers are forming closed groups and not peering with each other, and we're losing this public benefit Internet that we had early on.

Do you see any of that? Do you have any comments on that? No, I'm actually ignorant of this phenomenon. Well, that's an easy question then. Yes, I'm sorry. I don't see that. I know that a lot of people are building their own backbones to move some form of data or another around the country in a way that is more predictable than the Internet. So, as an example, if you want to broadcast multimedia, the Internet does not do multicasting yet. So, if I want to broadcast something with video streaming over the Internet, I can't broadcast it from one place in a multicast way and have a bunch of people receive the same stream.

I have to send it to each one individually right now. I have to unicast. So, if I've got 5,000 people listening to a multimedia broadcast, I have to have 5,000 different conversations going on. And to have 5,000 conversations from all over the country get to one server in one place on the public Internet backbone is an unpredictably reliable thing. So, some companies are taking matters into their own hands and building kind of phantom networks that intersect the Internet at various places, let's say, around the country or around the world, but deliver that bandwidth with dedicated infrastructure. And I think that's what you're talking about?

I see that simply as a crutch to the backbone of the Internet. It doesn't prevent anyone from getting anywhere to anywhere. And I think it's a matter of time before the Internet improves. the backbone of the internet improves, in this case with multicasting, to obsolete those crutches. So I'm not worried about the balkanization of the internet. This thing's gone too far. It's not going to balkanize. What I am concerned with is that some of the basic technological issues that are holding back some kinds of things on the internet get resolved in the next 12 months or so, so that these crutches are no longer necessary. Yeah. Thanks. Yes. Hi. Can you hear me? I can. There I go. I'll stand on my toes. Stephen, you've been asked a lot of what I would call technical questions, and I'm more interested in, given that this is an education conference, a more, I guess I would call it a philosophical question.

I've always thought that one of the great powers of computing is the ability to eliminate illiteracy. You know, because you can control the content, you can control the quality, and you can spread it out all over everywhere. And I've had a lot of people ask me all over the world if that were possible, and many years ago it wasn't, but now it is. And I think that that issue has tremendous social, political, and economic implications. Now, I come from Canada, so with our currency these days I feel like a third world country, but that's true. But the fact is, if I look at our native population, or even some of the provinces that are not as advantaged as Ontario, I know that we could take computing power and improve the literacy of our children.

And I'm very interested in your personal opinion about that, and also the opinion of Apple as a company that's been involved in the education business for a long time. Yeah. You know, there is some software, there's many kinds of software approaches to teaching reading, and some of them have proven to be moderately successful, and we probably sell lots of computers to have that software run on since most of it was written and continues to be advanced on Macintosh OS. But after seeing a lot of schools, and traveling a lot of places, and having some kids myself, and watching them learn how to read, I do not believe it is a problem that has a technological answer.

I believe it's a problem that has a human answer. And I think when we all attacked this problem, especially in K-12, 20 years ago with computers, we really thought that technology was going to be a miraculous substitute for parents and teachers and augment them. And it turns out, the more you look, the more you see, the fundamental basics of the situation are really what's important. You know, the fundamental basics of how much time do kids get to spend with their parents day in and day out. How much time do kids get to spend with their teachers day in and day out. These very simple things of student-teacher ratios, right, of parent-kid ratios, you know, these are the basic things that our society has to tackle.

I've been to villages in the outskirts of India that had higher literacy rates than some of our cities, you know. So it's not a technological problem that we face here, and I think we do a disservice to ourselves, and to some extent to our technology, if we try to make it be so simple. It's not so simple. And I don't have any magic answers, but I know that it's not as simple as we thought it was 20 years ago, and the computers are not going to charge in and solve those fundamental problems, because I don't think they can. Once those problems are solved, I think computers can take us to amazing places, but they're not going to substitute for those basic things that we as a society have to figure out how to provide in a better way in many places than we're doing right now.

So. Yeah. Steve, I'm very interested in finding out your, you know, the motto for Apple is think different. And what do you see as Apple's vision of how they, how Apple can change society and higher education in a way that is distinctly different from your competitors? Well, you know, I mean, Apple had to think different because it had a near-death experience, right? You know? I mean, Apple was going to think bankrupt if it didn't think different. So. And believe me, near-death experiences tend to prioritize, you know, your values, and they tend to prioritize what you're going to do.

And that's what happened at Apple. A lot of stuff that people thought was important just completely crumbled. And we had to ask ourselves, what's really, really important to us? And to the folks running Apple and all the folks working hard at Apple right now, the thing that's really, really important to us is making great computer tools. That's what we want to do. And that spans hardware and software and communications and you name it, but making great computer tools. And great's a complicated word, right? It doesn't mean great at any cost. There's balances. But we want to make the best computers in the world. And a corollary to that is that we think computers ain't so good right now.

You know, it's just at the beginning of this whole thing. We tend to think it's a very mature industry, but it's not. It's right at the beginning. And the products that we have right now, you know, I mean, Windows, Macintosh, all of them, they're okay. They could be so much better. And so we're starting out to make them that much better. And we're starting, of course, with the physical computers themselves because that's the fastest thing to change. Software takes longer. And we're saying, well, Apple was last in communications built into its computers, you know, 18 months ago. Right? Apple was last. We back-ranked everybody. The stuff that Apple had available and built into its computers was probably the worst. We now are equal or better than anyone.

And within another year, we'll clearly be the best. Because we felt that computers, in addition to being computational devices, are enablers of communication more than anything these days. And building in communication technology and seamless technology is going to be very, very important. So we're putting a lot of energy into that. We decided that what computers look like and how they work mechanically was really important to people. So we tried to invest a lot in starting to make computers look much better and function much better and not have 300 cables coming out the back, etc., etc. We believe in ease of use. Always have. And we've done a lot of things on the physical side. You'll see us do even more on the software side.

The whole ease of use revolution kind of stalled. And everybody's just doing what we did 10 years ago. Matter of fact, it's gotten more complicated because as the functionality's gotten more complex, we've just stuck warts on the side of what we had 10 years ago instead of rethinking everything. You know? When the UIs that are in use today were thought out at Apple, you know, a dozen years ago or longer, communications wasn't a reality. You know? Local area networks weren't a reality, much less the Internet. What does this mean for user interface? You know? And you have people attempting to describe what that might mean. Microsoft trying to merge the browser and this and that. And we don't think any of it's really any good yet. So I think we have a chance to really continue that ease of use revolution as we go forward.

And lastly, we're really big on making computers our friends can afford. And not all our friends are Larry Ellison. So we've got to make computers that are really affordable. And I think that's another place that Apple got really off track. And we are just driving that really hard. So we've got great operational excellence coming back to the company. I don't know if you know, but last quarter, Apple actually had better inventory management than Dell, which is considered to be the best in the industry. And you'll see that continue, I think. So I think we are bringing back excellence in a lot of areas in the company and focusing on making the best computational products we can, not just ourselves, but with our partners, you know, like Microsoft, like Adobe, like 10,000 other software developers out there, and with some hardware partners as well.

So that's what we're trying to do. And I've always believed that if you manage, I mean, I was told this by one of the wisest business people I've ever met in my life. Early on in my career, he said, if you manage the top line, which is the quality of your people, the quality of your partners, and the quality of your strategy, the bottom line will follow. And I believe that. And so I have tremendous faith that if we do the right stuff, Apple will be very successful financially. But what happened at Apple, to be honest, over the years, was the goal used to be to make the best computers in the world. And that was goal one. Goal two we got from Hewlett-Packard, actually, which was we have to make a profit.

Because if we don't... make a profit, we can't do goal one. So yeah, I mean, we enjoyed making a profit, but the purpose of making a profit was so we could make the best computers in the world. Along the way somewhere, those two got reversed. The goal is to make a lot of money, and well, if we have to make some good computers, well, OK, we'll do that. Because we can make a lot of money doing that. And it's very subtle. It's very subtle at first, but it turns out it's everything. That one little subtle flip takes five years to see it, but that one little subtle flip in five years means everything. And so we've put those things in their proper order again. Yes? To return to the material of your introductory media clip, I was wondering if you could speak to how you encourage creativity, and in particular, how you help people to overcome the fear that might be a block to creativity.

You know, I don't know the answer to that question. What I can tell you is just what I try to do. And I observed very early on that, you know, like in most things in life, what's a good example? I don't know. The car you drove here in, the hotel room you stayed in, the airplane you might have taken to get here, in most things in life, the dynamic range between average and best is around 30%, right? The average taxi versus the best taxi. Maybe the best taxi didn't smell, and it got you there a little faster, maybe give it 50%. The average plane ride versus the best plane ride. First class, well, the meals aren't any good there either.

But first class versus coach, maybe it's 50%. Very rarely in life do you even come across something that's twice as good as the average, right? Would you agree, in general? What I saw very early on, and I saw this first in hardware design, was that the best engineer, the best hardware engineer, in this case, was Steve Wozniak, was 50 times better than the average. The dynamic range was 50 to 1. And as we started hiring people over the years, it became clear that it wasn't really hard, it was hard, but it wasn't really hard to hire people at least 10x better than average. So you can hire people in the 10 to 50x range. And that in general, all those kind of people got along fine with each other, and all those kind of people were very creative, and a really interesting thing happened, which is all those people, if those were the only kind of people you tried to hire, all those people got so excited about working with other people, that they were so excited about working with other people that good, that it became kind of self-policing in a way.

They didn't want to let people into the group that made it less fun to come to work in the morning, right? So that's what I've tried to do, and is to hire those kind of people in everything we do. And I believe that creativity isn't just something that's visual, I mean, it's very technical. You can have technically creative people, you can have artistically creative people. At Pixar, we actually call them creative artists and technical artists, right? Because we don't know the words, so those are the words we make up. But creativity, of course, spans anything you do. And I just find that that top group of people are by far the most creative, so I go out and seek them out, rather than trying to turn water into wine.

Yes? Hello, Steve. First of all, congratulations for what you've done for the past year for Apple. So when you're writing this year's Christmas bonus, please think very hard about your loaner, seemingly loaner, tech support person, Mel Grenat, in Apple QuickTime. Which brings me, for all the abuses that he's taken so far, anyway, I hope to be surprised in January when QuickTime streaming is introduced. Specifically, I'm referring to QuickTime support. I think that this is a very, very key area that is causing a lot of pain for QuickTime users, as well as authors.

So if you have any What's causing a lot of pain, I'm sorry? Seemingly inadequate support for QuickTime. The what? Seemingly inadequate support for QuickTime. I don't know what you're talking about. QuickTime, there is right now a QuickTime list on Apple's site, and it seems like there's this one person supporting. On the website? Yes. Oh, oh, oh. Yeah, we have 100 people doing engineering on QuickTime. I know. So you just want us to move one or two more to the website. Got it. We could do that. I'll take that back. Thank you. Thank you. Actually, in January, I shouldn't be saying this, but in January, we are going to roll out QuickTime 4. And QuickTime 4 has live Internet streaming that's better than you've ever seen before, and you're going to be really happy, I think.

It's really good. Yeah, hopefully it'll be. Some of the improvement will reduce the number of help support calls to Apple. Thanks. Yes? Stephen, one of the hot new buzzwords that we're hearing in a lot of different industries, a lot of media industries and IT, information technology, is convergence. I'm interested in finding out what you make of this term. What you see is convergence in the future. You know, I converged myself last week, actually. Did you tell? I don't know what it means. Here's what it means. What it means is your television's going to make toast. You know? That's what it means. So, I don't know what these people, look.

What is the most successful consumer product in the last ten years? Microwave. I heard that. What else? What's that? Cell phone. VCR. No, you're all wrong. Thank you for playing. It is. It's a PC. Okay? And here's all these PC companies running around looking for a consumer product when that's what they make. Right? Now, Dell doesn't. They sell in the corporate America, mostly. But some other people do. Compaq does. Hewlett Packard does. Packard Bell does. Of course, Apple does. It's the most successful consumer product in the last ten years. So, naturally, we want to combine it with the television.

See, I've spent enough time now in entertainment with Pixar and working with Disney, who's just a terrific company to work with, by the way, is that people go to their television primarily to turn their brain off. You know, I used to think like many of you maybe might used to think, might have thought, that there was this giant conspiracy of the networks to put mediocrity on television and dumb us down. Right? Did you ever think that? I used to think there was a giant conspiracy to rob the American populace of their mind, if not their soul. But I then found out the truth, which is far more depressing. Which is, the networks give people precisely what they want.

And the reason people want this stuff is they come home from a long day, you know, they have dinner with their kids and they're fighting and they get into bed and they just want to turn on the television and turn their brain off for half an hour. Right? Do you ever do that? I mean, I must admit, I don't watch much TV, but I do that every once in a while. After a long, hard day, I will turn on the TV for half an hour and it really does turn your brain off. And so people go to their TV to turn their brain off for the most part. People go to their PC to turn their brain on. These things aren't going to be together. They perform completely different functions. So, I think it's about as crazy as other kinds of combinations that you can imagine. And I don't think it's going to happen.

You know? I also think people want to interact with their computers a lot more. Keyboards, mice up close, better resolutions. They want to sit back from their television sets. You know, web TV has been an utter failure so far. So I just don't see it happening. Now, sure, everybody would like a better online TV guide. Okay. Sony should build in an internet based online TV guide into their television sets. I grant you that. But is this digital convergence? So, that's what I think about it. And so, yeah, that's what I think about it. Okay. Yes.

I wanted to ask you a question about education, higher education in particular, and intellectual property. I work with librarians and faculty every day, and we're trying to do things that will realize the potential of technology that we hear so much about. One of the things that is a barrier to this, is in fact at times crippling, is what's perceived as decreasing space in the public domain and in fair use. Now, this wasn't much of an issue when faculty were giving paper handouts to their students. But when they're creating course websites and trying to spontaneously incorporate, say, images from a Disney film in a critique of that film, perhaps, and making that part up. You know, this becomes an obstacle to the real vigorous incorporation of technology.

some interesting hats. One of them, of course, is as a creator and owner of intellectual property. We also hear words like visionary and leader attached to your name. I wonder if this issue is on your radar, and whether or not you think there's any hope of people like yourself really trying to make it clear that it's a public good that fair use is relatively broadly defined. Well, I guess my take is a little different than yours, maybe. My take is that people spend a lot of money creating intellectual property, and other people shouldn't rip it off. So that's the first thing. And I've always felt that. Because if you deprive people of that protection, they can't attract capital to invest to create it in the first place.

Everybody loses. You go back and you read Thomas Jefferson. You go back and read Edwin Land on the philosophy of patents, and they're very clear and they're very compelling arguments. However, I've also always believed that you've got to let young people horse around. And you've got to not take them to task for it. So we've always tried, with everything we did, to say, hey, education, do what you want with it. Have fun. But that doesn't mean you say broadly, go make money off it. It doesn't say broadly, all you other companies out there, go do what you want with it. I'm not talking about patents. I'm talking primarily about copyright. Copyright's the same thing. Well, apart from the young people fooling around, I think that what faculty are running into is a desire to take snippets of material, not whole films, not things that would compete on the market.

And we're talking not about faculty that are out there getting paid per student, necessarily, but faculty working in typical institutions. And they're finding, increasingly, publishers and others coming down on them. Well, it's in the same way that if they Xeroxed textbooks, they'd come down on them, wouldn't they? I mean, intellectual property is owned by people. Copyrights are a form of ownership. And I think the real issue is that there's been no good clearinghouse mechanism to get people paid the small amounts of money they would want to extract from users of small amounts of their material. I mean, ASCAP's a model that could be applied. But that's the issue. The issue is not should owners of intellectual property have the choice to get paid for it, because they should.

It's theirs. This is America, at least, apparently. So you've got to respect that. The issue is most of these people wouldn't want very much money, if any, if there was a very simple vehicle for them to collect a few cents here and there. And that vehicle is not in place. And I think until that vehicle gets in place, we're going to have these kind of contentions. I think once that vehicle's in place, it's going to really drain the hostility out of these kinds of confrontations, because you're going to be talking a very small amount of money. In most cases, I think. So that's the biggest problem. The problem is the clearinghouse, the mechanism for these things to get tracked and paid. You know, when a radio station plays a song, an artist gets a few cents, right?

I think that's fair, don't you? I think when somebody takes time away from their family and their children to write a book, how many of you have written books here? How many of you get paid a little bit of money for writing books? Do you think it's fair that somebody just stops paying you, because we have this thing called the internet instead of the printing press? I don't think so. I think if somebody's going to take time away from the rest of their life to write a book that they think is of value, and somebody else thinks it's of value, and the person that owns it doesn't want to give it away, they should receive a little something for that. And I think our problem is a constipation in how the buyer and the seller interact on very small quanta of intellectual property transactions. Yes? Hi. I've been around the administrative computing longer than I'd like to admit.

But during that time, I've seen dumb terminals. I saw the desktop computer, and the first one I bought was a Mac Plus, but I used Telnet. Then we heard about client server, and client server came, and we discovered that it was impossible to really service all those clients. And now we're headed back to the thin client. And Larry says, I guess he may not be correct, but the network computing. But we're looking at perhaps a browser being the operating system, and that's the way we access information. One of the ideas that's out there. What's your reaction to all that? When you were telling me this, I remember the dumb terminals. What I was thinking was that over the years, the terminals have gotten smarter, and the users have gotten dumber.

So the constant, the constant. So that's a joke. But the trade-off one makes is in terms of interaction. One can have a thin, quote unquote, thin client, and we'll explore that in a minute today, and one can get some benefits from that. Having an application run only on the server is a plus in some cases. You don't have to administer a zillion copies on the client, et cetera, et cetera. And the clients can be anything, and they can be things we haven't thought of. And basically, there's some real advantages to that.

However, if the client really is going to be thin, the interaction is going to be not very dynamic. And so the more interactive you want to make these applications, the more that approach doesn't work. And the more you have to go to a thicker client, a la Windows, a la Macintosh. Now, what the thin client guys are doing about that, since, of course, they lust after more dynamic user interfaces, is they're making their thin clients thicker. I mean, the Java release that just came out, they call it Java 2, it's like five times bigger than the release before it. It's huge now. So I don't know how you call it a thin client with 15 pounds of stuff in the bag.

So it's just, when does a thin client stop being a thin client? I think we're on the verge of that now. And so I think that's the technical and user interface trade-offs there. And I think that for some types of applications, it's worth the trade-off to give up a great user interface. Like on the internet, it's worth it for a lot of things. In corporations, some of it's worth it. Some of your administrative apps are simple enough that you don't need a dynamic interface. And they're used repetitively enough that you can afford to train people how to use these things, which is one of the consequences of having a less robust user interface.

But for most things people want to use these days, the thin clients aren't quite thick enough. And that's the challenge. That is the challenge. Yes? I would endorse what you said about the computer not being the way to learn to read. There's another technology for that. It's books. And actually, I'd be interested in the complementary nature of the internet as a way to follow on the things children have become interested in and adults get interested in for continuing in. The gateways, how do you look at the future of gateways and the various types of shopping mall approaches to finding out about things?

Well, first of all, the internet is phenomenal. The internet will clearly go down as the most important thing of the last 20 years of the century in terms of computing and maybe even in terms of things beyond computing. It's huge. And I don't know how many of you have sat down with your kids in front of a computer and actually explored a topic on the internet, but for all of those that have done that, it's phenomenal. It's really phenomenal. And it's chaos, but it's sort of wonderful chaos. And it takes a little longer to find stuff than you'd like, but that's OK, especially if you're sitting there with one of your kids or somebody else's kids. So that part's great.

What's not so great is that in that free-for-all, there is no trusted advisor. If you go out and you ask, well, what is the New York Times? I can get all of the news that's in the New York Times, for the most part now, from other sources on the internet. Why would I ever get the New York Times? Well, because not only do they sort of condense it for me, but more importantly, they judge what's important. They have an editorial point of view that I, let's say, trust, although I trust the Wall Street Journal. I trust them to tell me what's important in a concise way, and I trust them, even more important, to get rid of the stuff that they think is not important so that I can focus on what's important.

It's an editorial point of view that I as a consumer trust. Those editorial points of view have not emerged much on the internet yet. As an example, for a parent, where can I go for an editorial point of view that I trust? I don't want my kids seeing certain sites. I want things organized in certain ways. And those things haven't emerged, and I believe they will emerge, because I believe there's value in them. And I think you're starting to see that on a small scale, and I think you'll see that on some larger scales as some of the big players get into this in the next few years. So that's where I think we are today. But of course, it's incredibly fantastic right now. It's like the Wild West, but some people got killed in the Wild West.

The gateway, though, for instance, as Yahoo improves or elaborates itself, same with AOL, same with anybody who's got the front page attention of the searchers. I actually think we're entering a period where it's going to get boring from that point of view. Have you noticed all of these portal sites? Do they look the same to you? You go from one to the next to the next to the next, they all look exactly the same. So what's the future of the market? What's that? What's the future of that market? I don't know, but I know it's not having seven things that all look the same. I think there's going to be some real opportunity here as the first wave of this thing consolidates and everybody thinks it's maturing, same as the computer industry.

And yet everything's going to look the same, same as the computer industry. It's going to be the same as everybody making beige rectangular computers. I just slap a Dell logo on or a Compaq logo on or a Gateway logo on or HP logo on, they all look the same, they all do the same thing. The world doesn't need that. So I think we're starting to see that same thing with internet portals. And I don't think the world needs that, so I think there's going to be an opening for some more interesting things to emerge over the next few years. Yes. Thank you. First of all, congratulations on your successes at Pixar, Toy Story, and A Bug's Life. I recommend anybody who sees A Bug's Life to be sure to watch the closing credits. As someone who's been using the Macintosh since day one, I'm very happy to see the recent successes at Apple.

But it's hard for me to completely restore my faith in a company that doesn't have a permanent CEO yet. What's on your business card? Have you gotten Brunette yet? You know, I don't have any business cards. No, I don't. And forgive me if this is a taboo subject. No, it's not a taboo subject. You know, I was hounded with this early this all through last year, the second half of last year and early this year. There's been a lot of issues and challenges on our plate. And you know, you go to work at 7 in the morning, you come back at 8 at night, you're drained, and then you get 10 emails talking about what's your title.

And I decided, I was actually up and I was brushing my teeth one morning, I looked in the mirror and I decided, Steve, this is not your problem, right? I talk to myself sometimes when I'm brushing my teeth. This is not your problem. This is somebody else's problem. I have enough problems right now. So I decided that I wasn't going to think about this for a year, right? That was in late January, and I'm not going to think about it until sometime early next year. I'm just not even going to think about it. And if other people have a problem with that, I apologize, but it's not my problem. And so we all do the best we can. The other thing I really want to say here, though, is everything I've done in my career is a team sport.

There's two types of things you can do. You can try to go be Michelangelo, or you can try to be part of a team and do things as part of a team. And I picked the latter one, and I get to go to work every morning and hang out with these really great people. Most of them are much smarter than me. And we get to collectively try to do things, right? So people tend to focus on symbols and the contrast ratio between Apple's recent CEOs and stuff is high. So but believe me, there's an incredible team at Apple now. When I got there, I expected most of the good people to have left, to be honest. And I was incredibly surprised that a third of the people were like A to A-plus players.

I mean, the kind of people, these 10 to 50x people, the kind of people that you kill to hire. I mean, seriously, you do anything to hire these people. They come along once in a blue moon. A third of the company. A third of the company was at, let's just say, the other end of the spectrum. And they weren't bad people. They were people that had just been burnt out, or maybe they weren't so good in the first place. Who knows? But they were barnacles. And to be honest, we helped them find other jobs outside of Apple. And so Apple's got some incredibly talented people. We've promoted some very strong people from inside. And once we got rid of the barnacles, which, frankly, were in the upper man, the several top layers for the most part, things got a lot better.

And we let some of the talent really start to shine. We brought in some talent. We promoted some talent. And so there's some incredibly, not only good people, great people, but passionate people at Apple running the place now. And anything that we've been able to accomplish is due almost entirely to their efforts. So I wouldn't lose too much sleep over that. Yes? Moving from the sublime to the ridiculous, or unpleasant, anyway. I was very disappointed last week to, I was all excited to go buy a new Mac. And then I discovered you only have one display for the G3 on the 16.1 visible area. No. And we have three displays.

Three. Not for the educational purchase. The flat panel is not, I guess that makes the second display. Is that true? Yep. No. We have all three displays in the education price list? Yeah. We have all three. Out of your website, you go on the website, and the only video monitor that's available is the one ordinary run of the mill. I was really excited. That's really dumb, isn't it? That's true. So we'll go fix that, if that's true. But on the educational price list, there should be three. There's a really, really good, this is what I use myself, a 15-inch flat panel display, 10 by 7. And it's pretty stunning. It's probably the highest quality one in the marketplace. And then there's the 17-inch 16.1 viewable. And then there's a 21-inch, which has color sync in it.

I called the 800 number because I was so disappointed. And he said it wasn't available either. God, what a stupid company. I will try to go fix that one. Thank you. By the way, we appreciate these things very much. Because you can't fix what you don't know. So yeah. Yeah, kudos on a bug's life. I was wondering if a bug's life, in some ways, is analogous to certain product development cycles or channels of distribution. I have a question. As far as the high-end development of content authoring tools and your motivation to make some of those tools easy to use, what are some of your plans, especially as we start working with faculty who want to get into the next wave, multimedia, simulation, streaming media, and things of that sort?

We are clearly doing a lot in the multimedia, streaming media space. And I can't really talk about that until you see some stuff announced early next year. But we're doing a lot in that space. We've got some of our best people on it. And I think you'll be pleasantly surprised with what we do. In terms of the other kinds of things, I mean, we get asked all the time at Pixar, can we commercialize? Pixar had to, how many of you saw, did any of you see a bug's life here, some of you? Yeah? The rest of you need to go see it. Soon, this weekend, I think. A bug's life is a wonderful, wonderful computer-animated film. The second computer-animated film from a little studio called Pixar Animation Studios that has a great partnership with the Walt Disney Studios.

They help us. They mentor us. We work with some great guys, Peter Schneider and Tom Schumacher down there. We work with Michael Eisner and all the marketing distribution folks. And we created this movie called A Bug's Life. These films take four years to make. And they're done entirely on computers. So there's no hand drawing or anything. Of course, people make them. But they use these very, very powerful pencils that we've developed. And we had to invent this whole field. And we wrote all this proprietary software. And we're sort of the only people in the world that can do it at this level. And we get asked a lot about commercializing those products for the Mac and stuff. But as an example, to make A Bug's Life, we had five terabytes of data, five terabytes. The workstations that we used to animate the film had 1.5 gigabytes of memory in each workstation.

That's on its way to going to three for the next movie. So we're a little beyond what we can do in an iMac. Just quickly, to move from the tools to the content creation, there were some questions about fair use. I'm wanting to write a critique of cultural products using A Bug's Life. I got a few bots. If you give me permission to use some of your screen grabs. Actually, I believe the Disney website for Bugs Life does have a lot of screen grabs that you can download for free. Yes, sir. A few more questions, and I think. A number of years ago, you had an opportunity to go to Xerox Park and see some really innovative people. Doug Engelbart over on the design side, the mouse, the user interface, and so on.

That part of the revolution seems to be making some progress. It's not done yet. The software side seems to have been ignored or paid halfway attention to. I'm talking about Alan Kay and objects, and the fact that Alan Kay still thinks nobody's figured out what objects are yet. He's right. Yeah, he's right. I think he's right. But you were saying you have to move things into the software arena in order to catch up with what the hardware's been doing. Well, how are we going to get people to make that paradigm shift and look at something like Squeak instead of Java or similar kinds of technologies? Well, the hallmark of real object-oriented technology is runtime binding. It's for things to be able to just make decisions at runtime as autonomous elements, rather than a programmer having decided what should happen months, days, years ago.

And the minute you accept that, you can do all sorts of wonderful things in the object space. There's been a few commercial systems that have tried to do it, but it's very hard to get the kind of performance you need out of that. NeXT specialized in that and did a pretty good job, in my opinion, on some of that stuff. And you will see sort of a next generation of that technology from Apple sometime in the coming year. So I think Apple is very committed to that, but as you know, software moves more glacially than hardware. And there's a lot of money invested in lots of apps that are not going to change overnight, even to use a new technology. So you're talking about a longer term process. And that doesn't mean that education can't take advantage of that stuff instantly.

They can. But you have to have software systems capable of running the giant investment that's been made in applications that people also want to run, as well as run the new stuff. And that's the hard part. Just putting something new out on the market with no bridge to the past doesn't succeed, in my opinion. Put it this way. It succeeded a few times in this industry, and Macintosh was one of them. But it's become increasingly more difficult to do that. Yes. I find it a little curious none of us is introducing ourselves to you, so let me do that. I'm Greg Jackson from the University of Chicago. I want to give you seven statistics, one story, and something I heard from an Apple person this morning and ask you to help me reconcile them.

The statistics are these. We did a survey of our students last year. Of our seniors, about 2 thirds were Mac users. Of our freshmen, 15%. We did a slightly different survey, which reconciles well of our freshmen this year, which is down to 10% being Mac users after the introduction of the iMac. We look at installed desktops at the university, somewhere between a half and 2 thirds probably are Macintoshes. We're a major Macintosh site. If we look at institutional purchases of new machines, over 80% of them are Windows machines. Yes. If we look at how many iMacs we've actually sold, and if someone's going to buy an iMac anywhere near us, they should come to us because it's cheaper. We've sold 22 of them. No, they probably don't buy them from you. They probably buy them before they come.

No, most they don't. Nobody brought an iMac with him or her this year. That may be zero. And there's $100 cheaper. So if you're there, we've sold 22 of them. Of those 12 are at our K-12 school that we own. Of those 12, six have been dead since the day they were installed, and they're out of service. Those are the statistics. The story is that I have a son who has been using his Mac avidly ever since he was six or seven. And he's gone through all of my old Macs over the years. And I really wanted to bring an iMac home because I wanted to play with it. And since I already had a computer, I couldn't persuade myself to do it, so I tried to persuade him that this was a perfect thing to do. He wanted nothing to do with it. What he wanted was a Windows machine because that's where everything he wanted was. Those are the statistics in the story.

On the escalator on the way up, we were riding up with someone who is senior in the higher education channel. And she said two things. One is that in her view, things are going great in higher education and that they're way up and that Apple is selling more stuff than ever. And secondly, that her perception is that among school kids of my son's age, that the same thing is happening. And I have trouble reconciling this, and I wonder if you can help me. Oh, I can tell you the situation. It's very easy. Apple forgot some things for some numbers of years. And in many ways, life is like an intestine, right? It's like the snake that ate the rat. You just got to, there's no way to get that rat through that snake faster than it's going to go. And Apple ate a rat.

What can I say? Apple, Apple stopped, Apple, Apple, the company, Apple is the company that invented consumer computing, right? Apple forgot to make a good computer under $2,000 for several years. Apple forgot that games were important, right? You know how many of the top 10 games last year ran on Mac last Christmas? How many? Zero. Zero. Can you believe that? What were they thinking? Zero. OK, this is not good. Because people like your son, the number one thing, your son may or may not be in this category, but we do a lot of market research.

The number one thing they buy computers for is to run games. They want to trade them with their friends. They want to talk about them with their friends. And if you don't have any of the top 10 games in your computer, you are absolutely the most unhip computer in the world to kids, right? That's what's happened. OK, massive efforts are underway. So, and it is true, by the way, that Apple is selling more computers than ever into higher ed and more computers than ever to kids right now. But that's not what you're talking about. What you're talking about is something more fundamental that scares all of us. What scares all of us is that Apple got unhip with kids for several years. And we've got to bring that back. It's not about better marketing.

It's about better products. And so what you're going to see is this Christmas, right, this Christmas, about four, I think it's about four of the top 10, we don't know which games will be the top ones, but my guess is four of the top 10 games will run on Mac. OK? Really hot. Matter of fact, better than, in many cases, better than their PC counterparts. Next Christmas, we think we'll be up to nine of the top 10 games, and the graphics that are going to be offered in Macs is going to blow the PC stuff away. So we are absolutely coming back, but we got a rat inside this snake, OK? I don't know how to say it any other way. And we're going to go through a few years where the kind of thing you're talking about happens. But if we make better products, we will be the cool computer with kids again in a few years.

I promise you that. OK? So stay tuned. It's going to come back. Yes, two more questions, and I think we got to go. Hold on to that snake for a second. Even during the time of the rat, the Mac OS has consistently masked the complexity of the underlying technology of computing. And to that end, the vision of the Macintosh never faltered, at least in that aspect of the Mac. There are a couple of products, however, that are in the process of being digested by the snake, and I'd like to use some of those rat parts. Like what? Well, like emailer on a consistent basis, like AppleWorks on a consistent and expanding basis.

And boy, I'd really like to know what to do with my Newtons. Well, I could tell you what to do with them after. I'll come up and I'll tell you. Yeah, Newtons I can't help you with. AppleWorks is getting a sustained investment. You're going to be very happy with future releases of AppleWorks. We're doing a lot of AppleWorks. But I must also say that we're also working with Microsoft pretty closely, because they want to sell you all Office, which is also, as you know, better than AppleWorks, right? Clearly, it costs a lot more, but it's better. So we're trying to work with them to come up with some even more affordable ways for all of you to use Office. I think we will be successful in that as well. So you'll see better and better AppleWorks. It's a great works product for what it does.

It's very high value. But I also think you're going to see us trying to help Microsoft make Office more available, because Office is the premier product in the category. Emailer. Emailer, I don't know. I'm not familiar with the future of emailer. There's also been some rumors about us canceling HyperCard, which is totally bullshit. Thank you. OK. One last thing I'd like to say, then I think we probably need a break, is again, the reason that we ran the Think Different campaign that you saw. And by the way, we have some books for you outside. We printed these up with some of the heroes that we used in that campaign.

You might want to grab one on the way out. The reason we ran that campaign was because, when a lot of us got back to Apple a little over a year ago, 15 months ago, not only had Apple forgotten who it was, but we felt a lot of our customers had forgotten who we were. And we thought, how do we tell people who we are and what we stand for? And we thought about this a lot. It's not an easy problem. And we decided that the best way, or one really good way anyway, to find out a lot about somebody is to ask them who their heroes are, don't you think?

You can learn a lot about somebody by learning who their heroes are, because what that tells you is what they value. So we decided that the best way we could think of to tell people who we were and what we stand for is to tell people who our heroes are. And that's what the Think Different campaign has been about. And we actually went to these people. And we have permission to use that image of Gandhi for Mahatma Gandhi's grandson. Jim Henson's children said, our father would want to be in this campaign. We want you to use him. Yoko Ono personally gave me the picture that we use of her and John. Person after person. This is a wonderful story. We went to Lucy Arnaz Jr. with a wonderful picture of Lucille Ball.

And we said, we want to use this. And she said, I would love you to use my mother in your campaign, but I want you to use a picture of my mother and father together, because my father was a genius too. So we put a lot of time into this to try to tell you who we admire in hopes that you will understand a little more about us. And what drives us is we don't look at education as a market. What we look at it as an opportunity to make some great products together and to do some cool things together with them. And to do some cool things together with them. And we're excited about education. We're trying to wade back out into education rather than just sell computers, which is what I'm afraid things degenerated to for a while.

And we're really excited about it. So we're constantly interested in new things we could be doing. Most of the great ideas in computing have come from higher education. We want more. We want to wade back out into higher education, hire your best students. We want to do the coolest projects with you. We want to make the coolest computers for you. And we have to know what they are in order to do that. So I hope you're going to see more of us. I hope we're going to be more curious. I hope that when you tell us something's broken, we listen better, and I hope that you know that what's driving us is not to make a dollar and go home. What's driving us is we want to make the best computers in the world with you.

So thank you very much for a chance to be with you today. It's a real privilege.