Steve Jobs on the Digital Hub: iMac, iPhoto, iPod

Good morning! So, we uh, thank you, we have some great stuff to announce today. So, let's get started.

I'd like to go through an update, some cool things that have happened this last quarter. Talk about Mac OS X, talk about the digital hub, talk about the iBook, and then talk about the iMac. Start with the update. First thing I'd like to tell you about is the iPod. This amazing new digital hub device that we announced last quarter. And it has been so well received, I just grabbed a few reviews here. From Newsweek, the iPod is the best digital music player yet. New York Times, it may be the finest portable music player ever built. And the Wall Street Journal, the iPod is simply the best digital music player I've seen.

Now, these guys rarely agree on anything, but they agree on the iPod. And we have been thrilled with the success of the iPod. We introduced it on October 23rd. We shipped our first iPods on November 10th. And a lot of people have asked us, well, how did it do? Between November 10th and December 31st, less than 60 days, I am thrilled to report to you that we sold 125,000 iPods. Even with this number, we stocked out in several places in the U.S. So we're building even more, and we couldn't have asked for more for iPods' first 60 days out in the marketplace. We're thrilled.

The second thing I would like to cover is Apple retail stores. How many of you have been in a retail store? Raise your hands. All right. They are phenomenal. We are carrying over 500 titles of software. There are sections in the store for music, digital photography, movies. You can go in and burn a CD. You can experience the digital hub firsthand in these stores. And our plan was to open 25 retail stores by the end of calendar year 2001. I'm pleased to report to you that we opened 27 retail stores. And that there will be more in 2002. Now, our goal in these stores is not just to be the best buying experience for our Mac customers, but to go after the other 95 percent of the market who don't yet use a Mac and convert them over to.

So how have we done? How have we done at that? Well, we measure a lot of things in our stores. We measure the traffic. We measure who's buying what. And I'm very pleased to report to you that of all the CPUs we've sold in our stores, those customers buying CPUs, 40 percent of them do not own a Mac. Forty percent. And we are thrilled with this number. And we see it climbing as time goes on. One other statistic I want to share with you. Macworld this week is expected to attract about 80,000 people over the four days.

Huge. One of the biggest shows in the industry. How many visitors did our stores have last month? I am pleased to report to you that our 27 stores in the month of December had 800,000 visitors. That is the equivalent of 10 Macworlds going through our 27 stores last month. So that is an update on our retail stores. Last update, the great state of Maine. The state of Maine decided that they want to equip every 7th and 8th grade student and every 7th and 8th grade teacher with a networked wireless portable computer.

And we worked with them and they chose iBooks. And we are partnering with the state of Maine and we have received the largest education order in history from the state of Maine for 36,000 iBooks. So we are very, very proud to be partnering with Maine. And we look at this as one down, 49 to go.

We know that Texas is going to be a challenge, but we are going to work on it. So the state of Maine and those are my updates. So now I would like to talk about Mac OS X. Mac OS X is the most advanced operating system in the world. And it is stunning with its Aqua interface and its graphics. It is like nothing else out there. It makes complex tasks simple, but don't let it fool you. Because every time you move your mouse and click your mouse, you are commanding the most crash-proof, secure OS in the world.

Because Mac OS X has Unix under the hood. And we are seeing more and more Unix programmers become Mac programmers now. And more and more Mac programmers become Unix programmers. And it's fantastic. And again, Mac OS X has gotten rave reviews. Let me show you a few of them. Business Week. Version 10.1 of Apple's new operating system is a triumph. Business Week. ZDNet. David Corsi. OS X is the nicest operating system I've ever seen. And the Detroit Free Press. The new OS X for Mac runs circles around Windows XP.

Mac OS X. Now, we introduced it, as you know, in March 2001. And we said it would be a 12-month transition period to go complete the transition to OS X. And we have always equated those 12 months with the hours on a clock face. So how are we doing? Well, at about 6 o'clock, about 6 months after, in September, we released Mac OS X.1. Mac OS X.1 was our first big upgrade. And it fixed a lot of bugs. The performance went up dramatically. It added some things our developers told us they needed for them to ship their apps. It was a huge, huge move in 6 months. And so, the last 3 months, we have been focused on helping our developers ship their apps.

And it's been a floodgates of open. And we've been focused on applications. And look at what's happened in the last 3 months. We've gone from a little over 500 apps in April to over 1,000 apps in July to a little over 1,500 apps in October. But then look what happened. It's gone up 40% to 2,500 apps. Up 40% in the last 90 days. That's what's happened after 10.1 came out. There are 2,500 OS X applications today. Now, of course, the one we all know about, the one we were all waiting for was Microsoft Office for Mac OS X. It shipped last quarter. And Microsoft did a terrific job on this. And I would just like to give them a round of applause. And they are thrilled with the sales rate.

And we are thrilled with the app. The company that everyone asks about next is, of course, Adobe. Right? And I am very pleased to welcome Shantanu Narayan, Executive Vice President of Adobe up here to tell us what Adobe is doing and show us some very cool stuff. Thanks, Steve. And good morning. It's a pleasure to be here this morning. And like every one of you, I am also looking forward to hearing about the new product announcements and to see how Apple is going to rock this industry once again. At Adobe, we are driven by our vision of helping each one of you create visually rich, impactful communication.

And we think we are working on that. Witnessing a third generation in publishing, from desktop publishing, to web publishing, to a new era that we call network publishing, one that's characterized by the need to create content for video, web, wireless, and print. All of our applications are going to take advantage of the Mac platform, given how important and strategic it is in our vision of network publishing. We're hard at work bringing our best of breed applications onto Mac OS X. We've already shipped the Acrobat Reader. We shipped Illustrator X. And this morning we announced that After Effects 5.5, with some great new 3D capabilities, is now shipping for OS X.

What I'd like to do now is invite Russell Brown, our senior creative director, to show us some of our applications on OS X. Russell? OK. With that, let's get this going. You've seen this great lineup of programs here from Adobe, and great integrations, what we're going to talk about this morning. Let's start with today's theme, Lord of the Rings. We're going to take this through a project here in Illustrator X, running native in OS X. Let's take this, and let's get right over here to Adobe InDesign 2.0. Take another look at InDesign. You can bring in those Illustrator files, native Illustrator files, but also bring in native Photoshop files. This is really cool. Native Photoshop files with transparency.

Really cool. You also want to go in and have the same features that you can find in Photoshop to bring in the mode changes to those. Let's put this back in position, and you can see the quick auto wrap around that graphic. Hey, tables, great table support coming in from Excel or Microsoft Word. But now let's take all of this content. Let's see what the tags, the XML tags on this. We can see those. We can export this file. And next step would be to go over to Adobe, go live. Take all that content, bring it into go live, create a page here. Shantanu? Today we announced both Adobe Go Live 6.0, which is Mac OS native, the most advanced web authoring application with some great site management capabilities, as well as Live Motion 2.0, with brand new support for scripting and animation, as well as support for QuickTime and Flash.

We will bring all our applications integrated onto Mac OS 10. I guess there is one more application that some of you are interested in seeing on Mac OS 10. I just happen to bring that with me here. Can we show that, Russell? Why don't we take a look at Photoshop? So thanks to Michael Elens, a great illustrator out of LA. Let's take a process and go through this whole step by step and build this so you can watch it moving. It's real. It's almost here.

We're going to go through this. Oh, first take a look at these great new icons that light up. Pretty cool. But we've got total integration among Adobe's programs, integrating with OS 10. Why don't we integrate all of that together here with an Apple Script? I'm going to go through. It's going to call an action in Photoshop and start to build this page. Pretty darn fast. We're up to 120 megabytes here. Now, Michael Elens is a great illustrator. Let's go in for a close up and see how he uses these capabilities here with another Apple Script. Let's build some textures on the surface and build this up and bring up some dialogue so you can see these dialogues in OS 10. So here's the Aqua interface. Click, bang, we're moving along here. Gaussian blur, bang, speed, emboss, done.

So we're building up this layer by layer. Let's back off on this image and see what we've got going here. We need our text, again, to an Apple Script. Let's bring in some Illustrator text. Apple Script's going to go over to Illustrator, select this text, copy it, bring it back in. This isn't just normal text. This is a complex path, which is really cool. Bring it in. Add a style to this. As you can see here, it's a classic case where you can see the OS 10 interface in action here. Let's move forward here. Last thing we might need here is to bring in some text, some editable text, directly into this graphics. Let's zoom this up a bit so we can see what's going on. And let's bring in some text. I'm going to click over here, load in some text.

Oh my goodness, can you see that? Somebody's been goofing around with this. Wouldn't it be nice to spell check a document in Photoshop? Oh, spell checking. Remember, keep this in. Spell checking. Change all. Bingo. So there you have it, Shantanu. Thanks, Russell. Earlier today, also, the engineers told us that InDesign 2.0 is release candidate. We're just baking it, and we'll be shipping it soon to every one of you. 10.1 is here. Adobe is here with our best of breed applications. And given the content that you saw, Steve, I think we're the poster child of applications for OS 10.

Thank you. Thank you, Shantanu. So just like we had a countdown to Macworld, we're going to start a countdown to when Photoshop ships. OK, next up, Palm. All of us that have Palms really want to sync them to Mac OS 10. It's my pleasure to introduce Tom Bradley, chief operating officer of Palm, to show us how. Thank you, Tom. All yours. Thanks, Steve. Thanks, Steve. It's great to be here this morning. Mac is a really important platform for Palm, and you are some of our best customers.

And as we looked at OS 10 and looked at what you demanded from a user experience, we looked at how do we make this as simple as we can? Because that's where Palm and Apple both excel. We know that the user experience has to be intuitively easy to use. So we spent some time this last year looking at how do we make our products more Mac savvy. We've done a couple of things. First, we've heard all of you. And we now include, with every Palm branded handheld we ship, USB cradles. We have bonus software. Thanks. We have bonus software for Macs. And every version we have now ships in German, Japanese, Italian, French, and Spanish.

But rather than me just talk about this, I'm going to have Ken Freeman, product manager for the Palm desktop software, help show you how we've included OS 10 to make the user experience really simple. We've done a couple of things. First, we know that the Instant Palm desktop is what you really want. And we've made it very intuitive and very innovative to click and hold on that desktop. Up pops a menu where you can easily look at your to-do list, see your calendar, find your contacts, or create a new item if you want. We've also looked at applications around how we make drag and drop much easier to use as it relates to vCard and vCal.

You simply drag the vCard from the Palm desktop to the Mac desktop, and the information instantly pops up. Or you can take a vCard or vCal, drag the information again to the Mac desktop, and once again, the information pops up. Thank you. Now last, and not least, one of the things I know you've thought about is how do we sync in OS 10. And now you can sync within the OS 10 product. And let me show you how easy it is. All you do is take the Palm handheld, place it in the cradle, hit the Hot Sync button, and your information will instantly sync on the product.

By the way, you can now download the public beta files of Palm Desktop 4.0 at www.palm.com. So Steve, thanks for the opportunity to speak to everybody. I know you're going to have a great show. Now, one of our own, I'm pleased to introduce Mike Evangelist, the Director of Product Marketing at Apple, to tell us about Final Cut Pro 3 running on Mac OS X. Mike? Thanks, Steve. Good morning, everybody. We having a good time yet? Yes.

All right. I am really excited to be here to spend the next few minutes telling you about the great new features of Final Cut Pro 3.0 for Mac OS X. It's got the editing world really excited because, for the first time, we've been able to leverage the power of the G4 and its Velocity Engine and Mac OS X and QuickTime and actually add real-time effects, real-time titles, and real-time color correction, all in software, no additional hardware required. And I want to show you how that works now. I'm using some great footage from ESPN from a program called The Life. Let me just show you a little bit of that first. Hey, this is David Justice. I'm David Robinson. Hi, I'm Sammy Susset. Hey, there's Bruce, quarterback of the New Orleans Saints. So this is a program edited entirely in Final Cut Pro, and the people at ESPN are especially excited about the real-time effects because they do this stuff for a living. They're living in this, and even the old version they love, but now with real-time effects, they're just going crazy for this.

Let me show you a couple things here. As we looked at this, I thought we could use a transition between those two scenes, and it's as simple as dragging it in. Now what you're going to see is this is going to play back in real-time the old way of doing things, which was three weeks ago. We had to wait for this to render, and it wasted time. It broke the concentration and the flow of editing. Now I can just play it back, just like that, all in software. And this real-time effects engine doesn't just apply to dissolves, although the dissolve is a very common effect. Let's put another one in here. This is called a clock wipe. Let's see how that looks. Hi, I'm Sammy Susset.

Hey, there. All in real-time. This is a godsend for editors because you do this hundreds of times every day when you're editing video, and now you no longer have to wait. Another very common thing to do in video editing is adding titles. Final Cut 3 adds real-time titling. Let me show you how that works. Got a couple scenes. This is a lot of light. I want to drop a logo on top of this. What you're going to see, I'm going to take a title, superimpose it on top of those two scenes. So what we're going to play back now will be a real-time title superimposed on top of two scenes with a real-time dissolve between them, and let's play that back. This is the light. The light. The light. And finally, a really breakthrough feature, we have real-time color correction. Any of you who work in video who have ever come back from the field with a shot that looks like this are really going to appreciate this. In the old days, again, three weeks ago, if you had this shot, you had two choices. You could throw it away, which is obviously not an attractive option. You could go out and spend a lot of time and money on hardware-based color correction systems to salvage the shot. But in Final Cut Pro 3, it's much simpler.

I just go into our color correction window, and I'll try not to go too fast because this is only about four clicks, and we're going to fix this. I set the black point, set the white point. You can see the color cast is almost completely gone. I'm just going to bring the levels up a little bit to bring out the flesh tones. Let's have a look at how that plays. Hi, I'm Barrett Christie, and you're watching The Light. All right. In case you missed it, here's what it looked like before and after. Now, what you're seeing here, real-time effects using the G4 chip, the Velocity Engine, and Mac OS X. This works, of course, superbly on our desktop G4 systems, but perhaps the most exciting thing about this is this stuff all works on Power Books, too. So for the first time, at any price, you can take a complete professional video editing system anywhere you go. So that's Final Cut 3. Thank you very much.

Pretty cool stuff. Next, Wolfram Research. One of the most amazing apps ever. Huge in science, engineering, finance, and obviously education as well. Mathematica. My pleasure to welcome Tao Gray, one of the founders of Wolfram Research. Tao? So some of you may be asking yourself, what actually is Mathematica? It's a little hard to pin down. I like to think that what a word processor is to writing, Mathematica is to the whole world of technical computing. So when you sit down in front of a word processor, it's not going to tell you what you can write today. That's your job. And when you sit down in front of Mathematica, it doesn't tell you what you can think today. You could model a stock price, you could do an integral, you could write a program to analyze DNA sequences, you could generate an animation. It's an open box. It's sort of an invitation to explore.

Just like the Macintosh, for example. Which is why we've always worked over many years to make sure that Mathematica is available for the latest Apple technology from the Mac Plus to Power PC and now OS X. And it's thrilling to be able to say that we've been shipping a no compromises, fully native Mathematica for a couple months now on OS X. It's really great. Let me show you some of the things it can do. If it's here. Very good. So of course, given the name, people often think of math. Don't know why. Let me show you, this is an integral. This is all live. Now this is, we'll do integral of one over one minus x to the fifth. Boom. You get that. And look at, I mean, okay, so it's math, but look at the typography on that. I mean, it's just, it's like everything looks better in OS X. Even math. And is this useful to calculus students? Absolutely. As I say, the homework of the world doesn't stand a chance. The other thing it's good for is Dave Berry columns, actually. He recently had what I believe is the world's only known integrals joke.

And in case you didn't get it, there you go. He actually had that in his column. But seriously, let me show you, let me show you, this is a six character input, six type, you know, six letters. And you get, this is approximately 35,000 digit number. It's not that big. But the point is, it's pretty typical in the kinds of things that people do with Mathematica that a very small input will use just an open-ended amount of memory. Hard to predict, you never know. It could be hundreds of megabytes. And that's one of the really nicest things about OS X. How much memory you need, you got it. You don't have to worry about that. And in fact, a good example of that is animations. They take a huge amount of memory to generate and to render. And for the past couple of weeks, I've been making some up for you to see today. And I've been doing that not on some big server, but on my own little power book in the background while I was doing everything else that I needed to do for the past couple of weeks. There is no way I would try that on any other operating system, because these calculations need to run for days without failing.

So let me show you this one. This is the electric potential around a wireframe in the shape of an icosahedron. These are the integrals that somewhere down here, we'll get to the animation. Here we go. Hello. Here we go. So this would have been incredibly useful to people designing vacuum tubes. It's just kind of a pity that I had to wait for the invention of the transistor and Macintosh and Mathematica and all that. But look at the translucency and the sort of texturing there. That's the quartz rendering engine at work. It's really beautiful. Let me, in fact, show you now a side-by-side comparison.

On the left is what you'd see on Windows or anything other than quartz. And on the right is the same data rendered with quartz. Let me now slow it down for you so you can see a little better. And you just look at the smoothness and the sort of... That's what you call world-class anti-aliasing. Only in quartz, only in OS X. And we've been waiting for a long time for an operating system like OS X to come along to really let Mathematica shine. And thanks a lot to Steve. Come visit us, wolfram.com. You can see all our products from student versions... Web servers. Thank you.

So let's move from integrals to games. Games are really important to us. They use a lot of integrals in games, actually. And Aspire has shipped more games on the Mac than anyone else in the last year. It's my pleasure to introduce Mike Rogers, the president of Aspire. Tell us some really cool new stuff. Thank you. Hi. I can't tell you, it's a thrill to be up here today. You know, there's no question about it, there's never been a better time to be a Mac user. And with all the support from Apple and great hardware and, of course, the power of OS X, there's never been a better time to be a Mac gamer. Last year, as Steve said, we released 10 new games for the Mac. Games like Escape from Monkey Island, Tony Hawk's Pro Skater 2, American McGee's Alice.

We got a lot more planned for 2002. So we're going to show one of our new games. It's about a boy you've probably heard of before. It's Harry Potter and the Sorcerer's Stone. We can show the video. Of course, all your favorite characters from the books and movies are there. You get to play the role of Harry. Welcome to Hogwarts School of Witchcraft and Wizardry. I am Albus Dumbledore, your headmaster. Now, it's an adventure game, so it allows you to explore inside and outside, above and even below the Hogwarts school. And of course, Hogwarts has plenty of secrets and quite a few surprises along the way, too.

Well, we won't spoil the ending of that one. No Harry Potter game would be complete without Quidditch. And so don't worry if you don't know how to fly a broom. We'll see how Brandon does up here on stage with everybody. There's plenty of tutorials and stuff in the game. And if you don't know the rules of Quidditch, don't worry. Your kids can teach you. And we'll watch him fly around a little bit. Well, so Harry Potter will be available in a couple of weeks.

You can come by our booth tomorrow and try it out. And along with Return to Castle Wolfenstein, Automatic, Spider-Man. We're also really pleased to make a couple of huge announcements for us today. The Sims Hot Date, which is the item pack to the best selling Mac game last year. The Sims is coming to the Mac and it'll be available first part of this year. And then we've got a brand new addition to our lineup. And I just can't tell you how psyched we are about this. But Star Wars Galactic Battlegrounds from LucasArts is coming to the Mac. The first part of this year. Thanks, everybody at Westlake, Apple, EA, LucasArts, Activision. Have a great show. Don't forget to play a game. Thank you, Mike. Now, lastly, I would like to switch from our third party partners to a customer.

And just this is so cool. I want to show you how some of this stuff all comes together and gets used. That customer is Lucasfilm. And I'd like to introduce Dan Gregoire from Lucasfilm to show us a little bit about how they're using Mac OS X and some of these amazing new applications. All yours, Dan. Thank you, Steve. Before I get started today, I'd actually like to share with you a message from my boss. Hello, Macworld. I'm sorry I can't be there today, but I'm still in the throes of trying to finish the next Star Wars film.

One of the main features of these films is the fact that we're able to pre-visualize a lot of the film before we actually make it. In order to do that, we've created a little animatic department. And they use the Macintosh OS X to create little movies that show me exactly what I'm going to be ultimately turning into the grand movie. And now here's Dan to tell you more about that. Great. As George said, my name is Dan. I work at Skywalker Ranch, and I'm working on episode two. Today I'm here to show you how we've created over 4,000 shots for Star Wars episode two using the Macintosh with OS X, Maya, and After Effects.

Pre-visualization, the typical tools of pre-visualization are storyboards, production paintings, excellent for being able to tell whether or not your story is going to work in the end. For episode two, we wanted to take that a whole new notch up and give George an incredibly new advanced tool to tell his stories well before post-production ever begins. The first thing I'd like to show you today is Maya running on Mac OS X. This is a pretty simple project. It's a shot that you may recognize from the trailer. I'm just going to scrub through this wireframe. Pretty simple stuff. Let's bump that up one notch to flat shaded. Now this is the way you'll see animatics done for most feature presentations if you carry enough to look at the DVDs of any movie out there today.

In fact, on the episode one DVD, you'll see animatics that were done as flat shaded quick time movies. Again, excellent for telling your story. You can tell whether or not things are working with a giant leap. For episode two, we wanted to take that well beyond. With Maya on OS X, we are able to go fully textured mode. We're going to go fully lit mode. Not only does George have the tools to tell whether or not the shot is working, but he can also tell mood, feel. He can tell all the things and answer all the questions that need to get answered before costly post-production ever starts. What if he changes his mind? He's prone to do that occasionally. The opening shot of the movie, I did 20 different revisions of it.

That's where After Effects comes in. We try to work smart. We try to work very fast. 4,000 shots, it's a lot to do. We're rendering layers. I'll build this up in After Effects 5.5 for you on OS X. We have the hero layer. We have traffic. We have our background. At any time, George could change any of this. He may not like the traffic, wants it to go a different direction. He may want to change the ship. No problem. We render it out of Maya as a single layer. It's much faster than actually doing the entire thing. Drop it in After Effects. Add any special effects we need to. Explosions, laser bolts, you name it. Scroll through this a little bit for you. There's our shot in After Effects for OS X. It's the marriage between these two applications that's so wonderful.

Let me play the final movie for you. This is running in QuickTime. You may recognize that from the trailer. It's the marriage between these two applications that's so excellent on a single platform, OS X, Maya, After Effects. It enabled us to do over 4,000 shots. To give you some perspective, 1,800 of those will actually appear in the movie. It's an incredible tool for George to pick apart what he does and does not like before post-production starts. I'll be at the Alias Wavefront booth all week. Please feel free to stop by and ask me any questions. Thank you very much, Steve. Thank you, Dan. So I wanted to give you a sampling of some of the incredible stuff that's going on in Mac OS X.

And most of it shipped in the last three months after 10.1. And in looking at this and looking at the progress we've made, we decided it's time. So starting today, all new Macs will boot up into OS X. Starting with the products introduced here today, they will boot up into OS X. It'll take us throughout the rest of the month to transition every product line. But going out of January, every machine will boot up into OS X. Of course, 9 will still be on the disk, so you can run your 9 apps in classic mode from 10, or even switch the boot up back to 9 if you choose. But all the machines are going to come with Mac OS X as the boot up default OS.

So we're very, very pleased. With the progress we're making on OS X, in the last 90 days, we're just going to get those remaining apps shipping, and I think we will complete our transition in that 12-month window. So Mac OS X. Now, I'd like to move on to one of the major topics today, the digital hub. We introduced the digital hub here at Macworld San Francisco one year ago. And it's a strategy. And that strategy is that personal computers will be the center or digital hub of our new digital lifestyle. What do we mean by this? What is our new digital lifestyle? Well, we are now surrounded by some amazing digital devices.

Digital camcorders, which take stunning video. DVD players, which play stunning video on our televisions. And are now in about one out of every three American households. Portable MP3 players, where we can take our whole music library with us wherever we go. And digital cameras that are revolutionizing photography. And we believe that the computer is going to become the center of this new lifestyle, and using all these amazing digital devices. We think the computer is going to become the center, the digital hub of these devices. Now, let's take a look at them. You can separate them into two categories today. The first category are those devices that are dramatically enhanced with a Mac as their hub.

So you can take your hour and a half of camcorder footage that you'll never watch again because it's so boring. And with iMovie, make it into a three-minute movie that you'll watch over and over and over again. And then with iDVD, you can burn a DVD that you can send to your friends and family that they can watch over and over again on their DVD player. And so the camcorder and the DVD player can be dramatically enhanced with a Mac at the center as the digital hub. But now let's look at the other half of the devices. They are not even useful without a computer at the center. What do you do with an MP3 player without a computer? How do you get the music onto it? What do you do with a digital camera without a computer at the center? Where do you get, how do you get the pictures off and where do they go? These devices require a computer as their digital hub today.

So in this universe of devices, we believe is the next great era of personal computing to be at their hub. And that's our digital hub strategy. Now, again, we rolled it out a year ago. It's been 12 months. What have we done in those 12 months? We went into the year with iMovie 2, the best consumer video editing software in the world. And we added iTunes at the beginning of the year, the best digital music jukebox software in the world. And then we enhanced it with iTunes 2 in the fall to do auto syncing with iPod, another breakthrough that has never been done before. At the beginning of the year, we announced iDVD, a breakthrough app that lets you build your own DVD and then write it out on our SuperDrive.

And in the fall, we enhanced that with iDVD 2 that lets you have motion menus just like professional DVDs. And so in the realm of digital devices, iMovie makes your camcorder much more valuable. iTunes makes your MP3 player possible. iDVD lets you burn DVDs to dramatically enhance the value of your DVD player. And I would just like to give a brief demo of these apps to you right now in case you haven't seen them. iMovie, as you know, iMovie lets you bring your video into the Mac in pristine digital quality over Firewire.

Puts clips right up here. You can simply play the clips just like this. You can drag them down into the movie if you want, anywhere you want. You can add transitions, titles, soundtracks. You can even, in iMovie 2, take them and speed them up or slow them down. So I could take them here and, you know, speed them up a little bit or speed them up a lot. I can even slow them down. So I'm going to show you a movie that was made by a guy named Jonathan Winslow. He's a 13-year-old middle school student and he did this for a project for his class about skateboarding. And he did it over a weekend.

He shot the video on Saturday and he actually edited the movie on Sunday. And I hear he got an A. So let's go ahead and play that now. This is a momentary, this is only a test. Emergency evacuation protest. May impair your ability to operate machinery. Can't quite tell just what it is to me. Keep out of reach until they touch you.

Talk to strangers if you know what's in danger. From above the speaker. Warning, live without warning. I said, warning, live without warning. Without, alright. Warning, live without warning. 13-year-old kid.

You know, we all consume the written word but we also know how to author it. But in the medium of this generation, everyone consumes it but hardly anyone can author it. And this is changing that. We've got 13-year-olds authoring in the primary medium of their generation. So, that's iMovie. Now, let's talk about iDVD. iDVD lets us create our own DVDs that we can burn in the super drive. And iDVD2, you can drag movies on, you can rearrange them. You can play them anytime you want. As an example, here's that movie we just watched.

And we added in iDVD2 the ability to have motion menus which means your movies as buttons can move. But you can also add motion backgrounds, a movie to be the background and a soundtrack. So, here's an example of one. Now, this is just as professional as any DVD you can go buy. And we ship a bunch of canned themes that are like this. This is one of them where we control the background movie, the button shapes, the fonts and the soundtrack. But you can make your own and customize these however you want to. Let me show you a few more. Here's another one.

And you can move anything around however you want to. We have some that just allow the buttons to move and don't have motion backgrounds. Here's a nice one called Parchment that I really like too. Here's another one with a motion background called Sports. Here's another one for Travel. Again, you can drag on as many movies as you want, arrange it wherever you want to. And here's a fun one if you have kids. Now, you can also add more movies. You can fit six on each level, but you can add more movies.

You can fit six on each level, but you can add multiple menus here. So let me just add a folder here. And all of a sudden I've built a hierarchy and I can go in there and iDVD adds my navigation for me. I can go in there and add a few more movies if I want to. Here's an example here. Here's two fun movies. And I can even change the theme of this. I'll go up here to Parchment on this theme. And again, I have navigation, so here I am. My main menu, I can even pick one of those as the thumbnail. And I just click on this and I get to my submenu. Very, very simple. And I can even add a slideshow full of pictures. And I can go into It and I'll pick some photos right here and drag them in. Drag them in.

And iDVD goes and imports them all. And I can make big thumbnails if I want to. I can set the duration. I can even give them a soundtrack. And I can go back here and even pick one of those again for my thumbnail. So that's iDVD. And when I'm done, I simply push one button and it asks me to insert a DVD-R blank disc and it will burn me a disc that will play. in almost any DVD player. So that is iDVD. Now, this is one of our most leading-edge apps. This is going to explode over the next year or two. But even now, since we first shipped iDVD a year ago and the SuperDrive a year ago, we have sold over 1 million blank DVD-R discs.

There's a lot of people out there making DVDs. And finally, iTunes. iTunes is simply the best digital music jukebox player in the world. I can find songs here, you know, type in love, maybe type in part of George Harrison's name and find one of these songs here. And of course, I can build playlists. I've got a playlist of George Harrison's songs right here. I can burn a CD by just hitting a button. And again, it'll ask me to insert a blank disc and burn a whole playlist onto a CD. It's so simple. And now, I can take an iPod and just plug it in. An iPod will just automatically start communicating.

And go ahead and sync up with iTunes here in just a second. So, that is iTunes.

And again, we have distributed over 8 million copies of iTunes. And we've got a lot of really, really happy iTunes users out there. So, these are our first three digital hub applications. And they are sensational. And each one is on version 2. So, we're well on our way to building the complete digital hub. But what about this? What about the digital camera? Digital cameras are exploding. And as I said, they are revolutionizing the way we take pictures. Last year, 2001, 6 million digital cameras were sold in the U.S. alone.

That's a pretty big number. As a matter of fact, if you look at all the cameras that were sold in the U.S. and you exclude only those one-time use throwaway cameras, digital cameras were 30% of all cameras sold in the U.S. 30%. This is exploding. What are we going to do about it? Well, today, we are introducing our fourth digital hub application, iPhoto. And it's killer. So, what was the problem that iPhoto was supposed to solve? We started off listening to folks and they said, you know, what you have to do, the chain of events you do when you plug a digital camera into your computer is you've got to import your photos, which can be a nightmare.

You've got to edit them, which can be a nightmare, and you've got to print them, which can be a nightmare. Use multiple applications, it's a mess. And if you could solve this, it would be huge. As a matter of fact, this is such a difficult thing that some of the magazines have dubbed this the chain of pain. So what did we do with iPhoto? We made iPhoto so that when you plug it in to your Mac's USB or FireWire port, iPhoto launches automatically. And with one button, you can import all of your photos in. It stores them, catalogs them, automatically builds thumbnails and displays them. One button. Great. Off to a good start. What about editing? Do I have to go to another program to crop my photos, which is the number one thing people want to do?

No. iPhoto has super easy, super precise cropping. It makes it so easy to crop your photos and undo them and try them another way until you get exactly what you're looking for. And what about printing? Printing's a nightmare. These inkjet printers are marvels of the modern world, but they have so many settings that you could spend years finding the optimum settings to print photography on these things. And each one's different. You change printers, you've got to relearn everything. We have unified this all under a special print panel for iPhoto that hides all of that complexity. All you have to do is pick your printer, pick the type of paper you're using and set your margins and push print and you will get dynamite prints.

And all of the magic is under the hood. So import, edit, print. The chain of pain, iPhoto is going to revolutionize. And we also have ColorSync, this amazing technology that was invented at Apple over a decade ago that keeps your colors looking pure and true every step of the way in iPhoto. From importing to editing to printing, all managed by ColorSync. So you get what you think you want to get. Now, we thought we had solved the problem with these breakthroughs in importing, editing and printing. But as we started to get deeper into it, we realized we hadn't even scratched the surface. This is just the ante to play the game. Because when you take photographs with film, you end up with this.

A shoebox with your prints and even more importantly, your negatives in it. It's hard to find stuff, but it's still there. With digital photography, you end up with a bunch of .jpg files and folders that are real easy to throw away and very, very hard to find something in. So the first thing we realized is that we had to safely store your photos, to create, if you will, the digital shoebox, right? The second thing was we have to organize your photos so you can not only find them fast, but go way beyond the shoebox. And the third thing was we want to help you share them in ways that will blow your mind, way beyond four by six inch prints. And so it's not just import, edit and print.

It's really about save, organize and share. And that's what iPhoto is about. And I'd like to show you now. I've got a little Canon digital camera here. I'm going to turn it on. Great. Connie, come here for a minute. Come on, don't be bashful. There's only 100,000 people watching on the web here. Thanks. OK, now I've got some photos on here and I'm going to plug my camera in.

And when I plug my camera in, it'll take a second and iPhoto is launching automatically. You just saw it. And boom, there is iPhoto. Now you see that I've got this bar along the bottom, sort of my control bar with import, organize, edit, book and share. And that is the flow of things, my workflow for photos. So in the import panel, it's already found my photos. And all I have to do is say import. I press this button and iPhoto will just import them. I even have an option of checking this box to erase them on the camera after they're imported. So I don't even have to do that manually. So it's pulling in my 12 photographs over USB. And you'll also see over here on the left, looks a lot like iTunes, doesn't it?

I have a library of all my photos. And iPhoto has just finished importing and put all my photos at the end of the library. And I have albums of photos and we'll get to those in a minute. So I've imported. Now let me go to organize. Organize lets me do a lot of things. But the most important thing with iPhoto is I built thumbnails. I didn't have to do anything. I don't have to deal with names. I have the pictures themselves. And in this case, they're worth over 1,000 words. And I've got over 1,000 pictures in here. And I can just scroll through my pictures like this. Here's all my pictures in my library. Again, over 1,000 of them. It's easy to find something. But if I want to see them even more as groups, I can make them smaller or larger. And so, at its smallest setting, I've got a few hundred photos on the screen at once.

And I'm going through 1,000 photos just like this. You can scroll through thousands of photos and find the one you're looking for in no time. Now, every time we do an import, we also assign a film roll to it. And so, you can see things by film rolls as well. If you think, well, that was on the same roll as another photo, I can see that as well. And I can see them. I can work with whatever size photos I want to. And these are the photos I just brought in. I can record them with my cell phone. Rotate them at any time I want to very very simple All right, I can also create photo albums, and that's what these are over here. I can make a new one I'll call it Mac world And I have a new album here, and I can just drag photos into it very easy to do I can you know take a bunch of photos if I want to and just drag them all in and I'm just click on this and it's just think if you're familiar with iTunes think of it as playlists for pictures These are my photo albums matter of fact iTunes I photo even builds one for me called my last import to show me the pictures that I just imported of which these are All right Now let's go to editing So we go to editing and I'm going to go to my kids album right here And I'm going to pick one of these pictures to edit So I'm going to edit mode now the thing I want to do the most is crop my photo. How do I do that?

it's really simple I just button down and drag and That is my crop right there, and I push crop and boom there's my crop Let's do another one. I can undo that any time. I want to Boom there's another one now If I want to print these out I might want to constrain my crop and so I can constrain my crop to anything Here's a 4 by 6 and It'll let me make it any size, but it'll keep it that 4 by 6 aspect ratio Boom and let me crop it Or I may want to crop as a 5 by 7 portrait Boom Or if I want to put these photos on a DVD which is fantastic to put photos on I might want a 4 by 3 Aspect ratio because that's what televisions have Boom and that's how simple cropping is it's amazing. Let me show you another example of this I'll take another photo here and go into edit and Just make it black and white And I photo will take a few seconds to do the computations and boom I have a black and white photo very very simple now if you noticed When I am in iPhoto In the organized view I can just click on a photo when I immediately click on it And I immediately been transferred into edit view But you can change that if you love Photoshop if you love to do all these amazing effects in Photoshop I can go into iPhotos preferences right here and pick other and I can set that with any app I have unfortunately. I don't have Photoshop running on 10 yet I'll love

I'll have to pick preview here, and I'll set it to preview and and now when I go back And I I click on this it'll launch the app that I've selected in this case preview and throw the photo right into it so Now I want to talk about sharing we've talked about importing Organizing editing I want to jump over to share iPhoto lets you share your photographs in amazing new ways This stuff is is Unbelievable now my favorite of all actually is the slideshow this is an album of photos here of matter of fact our our chief architects of iPhotos as a daughter and I'm going to go into share, and I'm going to pick slideshow and slideshow We'll put these let me will create a slideshow of these photos on the screen and use open GL to cross dissolve between them beautifully and Let me put my own music to it, and so let me just show you this You can take all the tea in China Put it in a big round bad Sit right around all the seven ocean There I put straight into She

This is why we do what we do so I Want to show you another amazing thing here's another photo album here of some pictures from a hawaiian vacation. I Want to make a home page of these pictures. I want to put these on the web so that anyone Anywhere in the world on any computer can access them and see them They don't even have to be in the world They don't even need a Mac Now we allow you to do that in I tools, but you have to do it manually iPhoto takes that to a whole new level. What do I do I push a button called home page and iPhoto goes out on the internet and connects with our servers at Apple and builds that page automatically here and Here's all my photos. I can put any picture frame on it Right and I can change the type and when I want to publish that I simply push a button and It's going to connect to I tools transfer all the photos and we are going to host your website for you on I tools with all your photos So your home page has been published visit your page So your home page has been published visit your page and again, I'm going to launch ie and Boom, here's my page of photos. I can pick any one. I want to I'll just pick this one and we've built in a slideshow feature with some buttons here So you can just look at your pictures just like this From any computer anywhere in the world pretty cool. All righty

So Now what if we want hard copy well, as I said earlier, let's go back and Print on an inkjet printer. I push print and up pops our print panel and All I have to do is select the printer select the paper. I'm using right photo on photo paper and Set the margins Okay, that's all I have to do and push print and I will get great prints I can also print greeting cards if I want to, you know Double-folded single-folded and I can also have contact sheets with as many as I want on there just by dragging this So That is printing Now, let's say I want to order some prints made on an inkjet printer Let's say I want to order some prints made on photographic paper How do I do that right now? I've got to get into one of these strange photo services and do it Not what I thought With iPhoto I go over here and I say let's go pick my Hawaii album again here. I say order prints Again, we connect to Apple servers and BAM. Oh, I can order Kodak prints right here off the server It puts each photograph up there And it gives me a list of 4 by 6 5 by 7 8 by 10 16 by 20 Even a 20 by 30 inch printout. I've got one here. You can order one of these it costs $20 So

I just go type my numbers in here. You know, I can just go typing, you know any number in here I want one of those and I want two of those and it automatically makes my total down here I can even say I want one 4 by 6 or 2 4 by 6 is and 2 5 by 7 is just of every print I've got if I'm used to doing it the old way and To buy these prints I can ship it to anywhere that I have registered and turn I'll ship to my mother-in-law And I can ship it standard or Express and to buy these I click want and buy now with one click We have taken the one-click shopping off our Apple online store and put it right into iPhoto One-click boom the prints are on their way But I've saved the best for last I I Love the slideshow. It's one of my favorite things. I love the web page I love printing on my inkjet printer, and I love ordering prints, but What I really want Is a hardbound book of my photos That's what I really want and we're gonna let you have that We're gonna let you order a hardbound book of your photos online But before you do that you have to create the book Multiple images multiple photos per page you want to add some text well great Let's let's get out in design or quark and design our book no Let's not do that We have built We have built a page layout program into iPhoto that is completely automatic

Never been done before so I'm going to Take this Hawaii album again, and I'm going to say I'm going to go back to book I skipped over this tab here And when I go into book I photo automatically takes those photos and lays them out in a book automatically I do nothing and here is a book I've got myself a 20 page book right here and all and I did nothing now. I can go back in and Customize it I can say How many pictures per page I want one two three or four? so here I can say I want those two in one page and and I photo will automatically lay it out a Portrait a landscape two portraits two landscapes doesn't matter it lays it out beautifully I can go over here and say well for these for these parasailing ones. Let's go with four up for those You know and there it is For the beach let's go up. Let's go with three up boom there it is And I can do anything I want I can change it if I want to experiment around and I Photo will automatically lay out my book for me So I want to pick another album now summertime And it turns out that we don't ship just one book design. We ship six catalog classic picture book Portfolio storybook and yearbook and we ship a lot of book design And so you can pick whatever book design you want for your photo album. I'm going to pick storybook for this one and This is one of my favorites, and I just want to show you this right now We have a preview feature so you can look at your book Before you order it and let me just show you a storybook These are my photos it takes my photos and shrinks them down and turns them like this

I can put in text in storybook to tell a story. I can just type it right in There's a landscape here's a that was a portrait. Here's a landscape Here's two landscapes Here's a portrait in a landscape Isn't this beautiful all automatic all I do is pick the book design and tell it how many photos per page I want and Type in the text if that's what I want, and I feel like that's what I'm going to be able to do I'm going to be able to do it. I'm going to be able to do it I Look at this This is a first. Now I've laid out my book How do I order it? I go back to share and I push order book and again iPhoto assembles my book and now is going to connect with servers at Apple It's going to transfer the book over and let me order my book online without ever leaving iPhoto without ever having to go to another application Okay, here's the order panel. I'm going to click on the order panel and I'm going to click on the order panel Okay, here's the order panel right here and What I can do I get a nine by eleven and a quarter inch layout design Acid-free glossy paper and a linen cover in my choice of color. I can choose black or burgundy or light gray or Navy I'm going to choose burgundy and I can again ship it to whoever I want I'll pick my mother-in-law again standard or express and buy now with one-click shopping and when you click this you'll have your book

Hardbound book in about one week with your photos There's never been anything like this before so I photo an amazing amazing application so We solve the import edit print problem the chain of pain, but we went much further and said we have to solve this too Saving organizing and sharing and again. Let me just review the sharing for a second the slideshow. I'm I'm Incredibly moving. I think it's going to be the most popular way people view their pictures Building a home page with one click Write an I photo that we will host on I tools for you that can be accessed from anywhere in the world on any computer for hard copy a way to print that is an order of magnitude easier and better than exists today with inkjet printers and the crazy numbers of settings that they have Ordering prints off the internet get Kodak prints again without ever leaving I photo all the way up to these 20 by 30 beautiful beautiful posters and the book built in page layout from your mortals They'll lay out your book into one of six different book designs You can customize it for the number of photos per page and then order it right from I photo Over the internet and get a

Beautiful book in about a week and let me just show you some of the books I mean what they look like when you get them look at how beautiful these things are. This is the storybook design that we had Here's another one. This is portfolio. It's a little more of a pro design Really beautiful This is classic Very classic book here captions on the bottom and this is called picture book full page bleeds very stunning very dramatic so You can get these books again in one of four colors a 10 to 50 page custom printed linen covered hardbound book of your photos for as little as $29.99 for the first 10 pages $29.99 and three dollars a page thereafter We think this is going to be very popular and you can do it all without ever leaving I photo So a lot of ways to share save organize and share The real breakthrough in iPhoto now none of this None of this would have been possible without Mac OS 10 iPhotos a Mac OS 10 app it takes advantage of the quartz graphics to resize those photos and the Robustness of Mac OS 10 to do all of that online stuff that you saw now. How much should we charge for this amazing application?

For Mac OS 10 owners it is free It is a free download And it is available today We have been building our digital hub applications for a year now we started with iMovie We added iTunes the best digital music software iDVD a breakthrough that lets you build your own DVDs and Now iPhoto and as we've done this throughout the year We've also done a little bit of marketing around the digital hub You might have seen an advertisement we ran that we call concert about digital music and iTunes You might have seen an ad called middle seat that we ran with the iBook to talk about it being the center of the digital hub and when we introduced iDVD we ran an ad called a lope about making DVDs and sending them out and Our latest one is we call beats is about iTunes and the iPod Well, we have a new ad that I'd like to share with you today about iPhoto. It's really sweet. It's called baby Jack We run it now That's it honey, don't forget to breathe We're almost there Congratulations dad, thank you

I Want to show you something This is your mother on the way to the hospital. She had to drive because I was too nervous These are suitcases you really think she needs all those bags and these are your grandparents You don't know them yet, but you will and that's your mom holding you for the first time Look how handsome you are. I think you look like me iPhone shoot it save it share it So iPhoto Completes our suite of digital hub applications. We now can enhance Everyone of the popular amazing digital devices We've now got the complete digital hub for the new digital lifestyle. So that's the digital hub Now Like to talk for a moment about iBook iBook has been a huge success for us and it again has been received so well critically, you know The Wall Street Journal the new iBook is the lightest smallest full-featured consumer portable I've seen Again, David Corsi at ZDNet. The new iBook is simply the best consumer laptop on the market today And the LA Times. I have a new favorite laptop We have been just very very gratified by the reception that we've gotten

from iBook, the new iBook since we introduced it this spring. And we've got three great models of the iBook, but today we're going to make them even better. We're going to start with the $12.99 model. We're going to lower its price by $100 to $11.99. We're next going to move to the middle model, the DVD model, and we're going to eliminate it. Because what everybody wants, the hottest thing out there, is the combo drive that lets you not only play DVDs, but burn CDs as well. And we're going to take that 600 megahertz combo drive unit and sell it for $14.99 as of today. There's room for a third model. What should we do? What should we do? Today, we're introducing a 14-inch iBook.

So there's the 12-inch iBook. That's the 14. It's a big brother. It's beautiful, the 12, the 14. 14-inch LCD, 600 megahertz processor, 256 megabytes of RAM, 20 gigabyte disk, and a combo drive. It's the same exact thickness as the 12-inch iBook, 1.35 inches thick, much thinner than our competitors' consumer notebooks, under 6 pounds with a 14-inch display, and the longest battery life of any portable we ship at 6 hours, $17.99. So this is the new iBook lineup. And I just want to point out the two of the three models have the incredibly popular combo drives in them.

So enjoy them. They are all available starting today. And that's the iBook. Lastly, let's talk about the iMac. We introduced the iMac in May of 1998, and it was huge. It changed the way we use computers. It changed the way we look at technology. It had influence way beyond the computer industry. And this original iMac evolved over the next three-year period. And I wanted to go through how it evolved. And in trying to figure out how to communicate that, I actually realized that the ads that we've run tell the story best.

And so I'd like to actually run an ad reel of a few ads that we've run on iMacs over the years right now. The PC, perpetually complicated, profusely corded, physically conspicuous, particularly costly. Oh, and then there's the new iMac, which is about as un-PC as you can get. Presenting three easy steps to the internet.

Step one, plug in. Step one, plug in. Step two, get connected. Step three, there's no step three. There's no step three. αν She comes in colors, everywhere.

She calls her hate. Such a rainbow. You don't want to look in the air. Oh, everywhere. She comes in color. Aerodynamic design, breathtaking acceleration, air-cooled turbocharged engine, standard built-in DVD player, and, of course, tinted windows.

Introducing the IMAX Special Edition, heated leather seats sold separately. In a white room with black curtains near the station. It's not easy being green.

Having to spend each day the color of the leaves. When I think it could be nicer being red or yellow or gold or something much more colorful like that. So it's been a three-year evolution from this to the IMAX of today. And in that three, three and a half years, I'm really amazed to report that we've sold six million IMAX. Six million IMAX users out there. This is making it one of the most popular computers ever.

And we'd like to say thank you to those six million customers. But today, we're going to say goodbye to that IMAX. Because today, we're announcing a new IMAX. Completely redesigned from the ground up. Our goal was to design it to be the ultimate digital hub. To connect to all your digital devices. To run the applications. The suite of digital hub applications better than ever before. We also listened to our customers really carefully. And it turned out they wanted the same things we did. Their loudest request, flat screen. We said yes.

And so the new IMAX has a 15-inch LCD screen standard across the line. It's got the same viewing area as a 17-inch CRT. And yet, it's twice as bright and twice as sharp as CRTs. And there is no flicker. This thing is so much easier on your eyes than CRT displays. 1024 by 768 resolution. Millions of colors. It is gorgeous. And I think this is the official death of the CRT today. The second loudest request from our customers, put a G4 in it with the Velocity engine. And we said yes. Every new IMAX has a G4 in it.

Running at 700 megahertz or 800 megahertz. And this is incredible. Because it speeds up every single one of our digital hub applications. In iMovie, creating transitions and effects goes much faster with a G4. In iTunes, you rip your CDs and burn CDs faster with a G4. iDVD isn't even possible without a G4. Because you need the G4 to compress the video into MPEG-2, which is the standard for DVDs. And again, in iPhoto, everything goes faster. The resizing the photos, et cetera. Third loudest request from our customers, let us get a SuperDrive in it. And we have said yes. We want to be able to read and write CDs and read and write DVDs.

We want to make our own DVDs with movies and pictures. We want to make our own DVDs with movies and pictures. We want to make our own DVDs with movies and pictures. We want to make our own DVDs with movies and pictures on them. And this is really going to explode. And as of today, the discs just cost $5 a piece. We've lowered the pack, the five-pack price to $24.99. $5 a piece. You can burn an hour or 90 minutes worth of video and have 10,000 photographs on a DVD. So these are the core technologies in the new iMac. They are all pro features. We didn't stop there. Every new iMac has an NVIDIA GeForce 2MX graphics chip in it with 32 megabytes of video memory, 24-bit at all resolutions.

This is three times faster 3D graphics. than the IMAX of yesterday. We've built in five USB ports, two FireWire ports, 100 megabit ethernet, built-in modem, airport-ready with antennas. We're the only desktop manufacturer that does that. Built-in microphone, built-in headphone jack, a really nice internal digital amplifier and digital speaker, and in two of the three models, Apple Pro speakers as well. On every model, of course, our optical mouse. So amazing technology. What about the design? We have been working on this for two years. I know some of you wanted this sooner, but I think you'll agree it's going to be worth the wait.

This is the best thing I think we've ever done. It's an all-in-one. We passionately believe that consumer computers should be all-in-ones, so you don't have these boxes spewing all over your house. And it solves the whole cable mess problem as well. All-in-ones are clearly the way to go. And everyone has a flat screen. Now, the move to flat screens we recognized early on is going to be the biggest single change in desktop computers in the next decade. And we realized that we had the opportunity of the decade to reshape desktop computers. Now, normally, what we might have done, and I think what everybody else will do, we could have taken our iMac and taken a hacksaw to it, chopped off the back. So we're going to put a flat display on the front.

Who needs the back? There it is, the new iMac, ladies and gentlemen. But there are some problems with this. There are some fatal flaws in this approach. With the flat screen in the front, you notice it's not very flat anymore, is it? Because we've glommed the back on with all the rest of the stuff. There's nothing flat about this computer. But the other problems go deeper. We have to put the logic board parallel to the display in back of it, which means the connectors come out on the side, making the worst kind of cable mess right in front of your eyes. And even worse, we have to turn the drives on the side. And in particular, with the optical drives, they can't run at full speed on the side. We have to slow them way down. The performance goes way down when you turn them on their sides. And you could never fit a SuperDrive in here.

So this approach is far less than great. And we rejected it. And then we had our big idea. And the big idea was that rather than glomme these things all together and ruin them all, a lower performance computer and a flat screen that isn't flat anymore, why don't we let each element be true to itself? If the screen is flat, let it be flat. If the computer wants to be horizontal, let it be horizontal. And we came up with a radically new design. It is a technical tour de force. John Rubinstein and his hardware team have outdone themselves this time. It's got superior ergonomics to anything we've ever built, and I would dare say maybe the industry's ever built.

And it has a beauty and a grace that is going to last the next decade. So it is my privilege to now present to you the new iMac. Come on over.

This thing is a marvel. The whole computer is in this tiny little base, and the screen is incredibly flat. Let's get the video up. You can see this thing. Take a look at the screen, and I can move the screen with just a touch. Isn't that incredible? And notice that the display stays parallel, but I can change its angle, of course, as well. So I can move this with just a touch anywhere I want. If I want to show something off, if I want to hunker down with a spreadsheet, anything I want. And it swivels 180 degrees as well. Amazing.

And the screen literally floats in midair. It's unbelievable. The entire computer's here. Come on around. You see the disk drive slot in the front that opens when the tray comes out. And around the back, we've got all the connectors right there. Now, the whole computer is in the base. Everything, the entire computer, the hard drive, the optical drive, and the power supply. There's no power brick dangling off here somewhere. The whole thing is in the base. And to give you a feeling for how small this is, I've got a jewel case CD. Let me just put that up here. You can get a feel for how small this thing really is. Thank you.

Thank you. So the new iMac, again, it's really wonderful. OK. So our big idea, let each element be true to itself. So let's take the base. The base is only 10 and 1 1⁄2 inches in diameter. And yet, in that is the entire computer, both the drives, including a full-size super drive, and the power supply. So let's take a look at what's going on in the base. So the base is only 10 and 1 1⁄2 inches in diameter, including a full-size super drive, and the power supply.

The drives come out, the tray in the front, like that. And the connectors, again, are all in the back, so your cables are routed off the back of your desk, making it as neat and clean as possible. Now, what happens when you want to expand your iMac? We thought of that, too. You just flip it up. There's four screws to pop off. Isn't that the most beautiful bottom of a computer you've ever seen? They hold up to a gigabyte of memory. And you can add an airport card right there. And again, the antennas are built in up in the display for the best reception. Pop the cover on, and you've expanded your iMac. Now, the second element, the screen, look at how thin it is. Nothing glomming up the screen. It wants to be flat. Let's let it be flat. And connecting them is a marvel of mechanical and electrical engineering, the neck, which lets us move it from all the way vertical to 90 degrees horizontal and adjust our tilt at any point.

It's amazing. The new iMac. Now, this is going to blow your mind. We've got three models. All models, of course, come with a keyboard and the optical mouse, digital amplifier, and internal speaker. And two of the three come with Apple Pro speakers. The first model, 15-inch LCD, stunning, 700 megahertz G4, 128 megabytes of memory, 40 gigabytes of hard drive, and a CD-RW to burn your own CDs. This specification of a computer last year from us cost over $3,500 to have bought the tower and the 15-inch display.

The new iMac with this performance level, $1,299. We think flat displays and G4s are so cool, we want everybody to have them. We want every one of those 6 million iMac customers to upgrade, and we want the other 95% to upgrade as well. Second model, we've upped the memory to 256 megabytes and put in a combo drive so you can watch movies as well on your new iMac. And this model, $1,499.

Third model, 800 megahertz, upped the hard drive to 60 gigabytes, and a SuperDrive. This capability and this performance level cost $4,500 a year ago here when we announced the first tower with the SuperDrive in it. And this incredible SKU, $1,799. So three incredible models. When are they available? We're going to start with the SuperDrive model because we think it's going to be the most popular. We're going to ship this before the end of this month.

The $1,499 model, as we ramp up into production, we'll ship that in February. And the $1,299 model, we'll ship in March. We're going to ramp up. As fast as we can, we expect the demand for these products to be large. So three incredible models. We'll get them all in high volume production this quarter, starting at just twelve ninety nine. And as of today, we are taking orders. If you wanted to place the first order, I'm going to have to disappoint you because we've already taken our first order. And it is from Genentech. Genentech is one of the leading biotechnology companies, the company that invented the entire field. And they've got just a super smart guy running Genentech named Art Levinson.

And we are privileged to have him on our board of directors. And so Art saw the new iMac as it was under development. He said, you've got to let me show this to my folks because biotech uses a lot of Macs. And recently we did. And I'm I'm pleased to announce that Genentech has ordered a thousand of them. So not only are we going to see the new iMacs in homes, but we're going to see them in small businesses and large businesses and universities as well. The new iMac, it works perfectly with our digital hub applications. It connects perfectly to the most popular of these amazing new digital devices. It is the ultimate digital hub. And we made a video.

And I'd love to show that to you now. For those of you that think we've gone too far, you think we've gotten too radical with our message. Well, I got news for you. You ain't heard nothing yet. You've got to put them hands together and act like you know what's in here. Gee, gee, gee, gee, gee, gee, gee, gee, gee, gee, gee, gee, gee. When we set out to design the new iMac, there definitely was a tendency for us to be evolutionary.

But one of the things that was great about the original iMac was that it was so revolutionary. So the new iMac had to be revolutionary, too. The easy part was knowing that we were going to use a flat panel display. The hard part was trying to figure out how. Our solution appears to defy gravity. It's just this very simple, pure frame that appears to just float in space. When you look at it now, it seems so simple. It seems so obvious. And yet again, you know, as usual, the simplest, most efficient solution has been the most elusive.

This is an iMac on steroids. It has up to an 800 megahertz G4 chip with velocity engine, NVIDIA GeForce 2MX graphics, up to one gigabyte of memory, 60 gigabytes of hard drive space, and your choice of a CDRW, combo, or super drive. The new iMac is the first computer built from the ground up to be the ultimate engine for your digital lifestyle. It has a powerful new operating system and the world's easiest to use applications. iTunes for managing all your music, iMovie for making your own movies, iDVD for creating and burning DVDs, and now iPhoto, the world's coolest digital photography software. iPhoto is a breakthrough in digital photography.

It's the first software written to make it easy for you to import all your pictures into the computer, organize thousands of them and find them in a snap, eliminate red eye, and then share them with your family and friends via print, the web, and even a professionally bound book. Apple is the only company that makes the hardware, the operating system, and the software, all completely integrated with Apple's legendary ease of use. This is Sarah. See, she has the duck in between her feet. Apple is introducing iPhoto and I'm introducing Sarah.

They're both new little babies. I'm really impressed with what iPhoto can do. It was like magic to have the camera sitting there and just downloading everything right into the computer and to be able to bring up a whole roll and then have all these different ways to package it, so to speak. I mean, I love the little photo book. I mean, that actually is what I'm most excited about. I think the sensibility is very tender and very beautiful. It is going to be the family photo album of the future to be able to create your own little books like that. Oh, how gorgeous is that? I want one. Immediately. I won't leave without one.

The way that iPod and iTunes work together is amazing. I think iTunes and the iPod are perfect examples of organic technology. They work with you. You plug the iPod in and you get a replica of what is on your desktop for you to take with you anywhere you please. It reminds me of something out of 2001 A Space Odyssey or even beyond that. It's perfect. And with iTunes, iMovie, iDVD and now iPhoto, the digital hub seems pretty much complete. I was kind of a boy scientist, so I was always totally convinced that the cinema would be electronic.

This little machine I'm looking at is the home base of a media factory. And all it needs are a number of pieces of hardware, a still camera, the iPod, a digital moving camera or camcorder. You can make a book. You can make a presentation. You can make a slideshow. You can make a feature film on this. Why not? Tell the story of your life. With stills and things you shoot with your digital camera, there's no limitation. Sooner or later, someone with these tools is going to make a great masterpiece. It's one thing to solve design problems, but it's much, much harder to give a personality, to give life to a product.

It's much harder, but it's infinitely more satisfying. And I think the new iMac has that. It looks like it's a face smiling at you with this little mouth down here. It's incredible. So you're going to leave this here, right? I'm a sucker for things that look really futuristic, and this is about as futuristic as you're going to get. It's beautiful. I look at something like this, I think, well, I want three million of them, so I can put them, you know, with three million young people. I'm very close to it.

A lot of really, really smart people have been working so hard for the last two years on this, and we wanted it to be perfect for you, and I think we got pretty close. And I'd like to thank all those folks who've worked so hard on this. Our hardware team, John Ruby's hardware team, incredible industrial design team, mechanical engineering teams, electrical engineering teams, unbelievable effort. Our operations teams, which have figured out how to build this incredible computer for such an affordable price.

Just unbelievable amounts of work. Our applications group, who've come up with iPhoto and the rest of the digital hub applications that really make this sing. And the rest of Apple, who supported us in doing this. And I hope you love it as much as we do. So, the new iMac. Now, I'd like to just end by talking for a few seconds about our strategy. Our strategy can be expressed in one word, and that's to innovate. If you look at the products that we've introduced here today and the products we've introduced over the last year, it's a pretty interesting list.

Mac OS X, a completely new operating system, the most advanced operating system in the business. The Titanium PowerBook G4, still by far the most advanced portable in the entire industry. The iBook, the best consumer notebook in the industry. iPod, the best portable digital music player in the world. The revolutionary Super Drives, you can burn your own DVDs. And then iDVD 1 and 2 to let that be possible for mere mortals. iTunes, the best digital music software. And now iPhoto and the new iMac. We have been busy in the last 12 months coming out with all these products and innovating. While most of our competitors have been restructuring and retrenching and laying off thousands of people.

Now why? Because we think we see the future. We think we see the next golden age of personal computing and that that future is the digital hub. And so we have been investing in Mac OS X. There's more engineers working on Mac OS X today than ever. And it's come out really wonderful and we are not going to stop. We've invested in our suite of digital hub applications. We've completed it now. We have a lot more ideas. We're not going to stop. And we have the first of our computers designed from the ground up to sit at the center of the digital hub. The new iMac. And we have retail stores that can show these products in the light that we designed them to be shown in.

Where you can go in and make a custom CD. You can burn a DVD. You can take your digital camera in or even buy one there and take some photos. And see how iPhoto works and order a book on the spot. They're all around the digital hub. And we believe that the digital hub is the future of the PC. And as of this morning, we're not the only ones who think so. If you haven't already heard, Time Magazine put the new iMac on its cover this week. And to save you the trouble of going to get one of these at the newsstand, we're going to give you one on the way out the door.

So, flat out cool. Thank you very, very much. And please go to the booth tomorrow and get your hands on these incredible products. And all of us at Apple hope you love them as much as we do. Thank you so much.