Steve Jobs on iPod Hi-Fi: Home Stereo Reinvented

joining us this morning. We've got some fun things to introduce today, sort of some medium scale things. But all of us want every single one of them, so we hope our customers do too. Today, we're introducing our third Intel machine, a Mac Mini based on Intel. Mac Mini is a really cool product. It's been received really well. People are doing all sorts of things with it that we never dreamed of when we introduced it. And so today, we are introducing a Mac Mini with an Intel Core Solo. This is a single processor Intel chip inside the Mac Mini. So how's the performance stack up against the G4 that we had? Well, if we compare it against the Mac Mini G4, in integer spec marks, it's 2 and 1 half times faster.

In floating point spec marks, it's over three times faster. So 2 and 1 half to three times faster in the same size box. But we're also putting a dual processor in there in the same size box, an Intel Core Duo. And now, the performance just goes into the stratosphere. Compared to the prior product, basically five times faster on integer spec marks and over five times faster on floating point. Now, we have a few other additions to the product that people have requested. If we look in the back of the product, we've added gigabit ethernet. That's an upgrade from 100 megabit ethernet in the prior product. Firewire, DVI, and VGA out. We've added double the number of USB 2 ports to 4 now based on users' requests.

Analog and SPDIF optical sound audio input and outputs. And this thing's really quiet. Now, as you know, the Mac Mini has always been what we call BYODKM, bring your own display, keyboard, and mouse. And it continues to be that way. So you can use it with our products if you want, our displays, and keyboards, and mice. Looks the best. But you can use it pretty much with any industry standard display, keyboard, and mouse. So if you've got a PC, you can basically just chuck the tower, bring in a Mac Mini, and have a much faster, nicer computer using the same display, keyboard, and mouse.

And of course, you can also hook it up to televisions. This happens to be a real nice one. It's one of the most popular flat screen TVs, the Sony Bravia. And it's even got a nice VGA port that's easy to plug into and looks real good. Doesn't plug into cell phones, though. One of the other things that we're adding to the Mac Mini is front row. And that means we had to add a remote control. So we've added the IR sensor right in the front, next to the disk slot. And of course, we use the same Apple remote, the six-button Apple remote that's a little different than everybody else's remote out there, which they seem to take a few more buttons than we do to get the same job done.

So what I'd love to do now is actually give you a demo of front row running on the Mac Mini. So I'll just stand out here. There's my Mac Mini. And to get to front row, I just push the Menu button. So there's the screen of the Mac Mini. I push this button. And now I'm in front row. That's how easy it is. And so I can look at my music or my photos, DVD, videos. So let's go to Music. And I'll go into Music. And I'm saying, well, let me shuffle songs. Oh, god, they forgot to load the content on this. Hold on. Let me go back. Songs. Jeez. Well, they forgot to load all the content on this Mac Mini.

I guess I'm going to have to demo a new feature that we've built into front row. Shared Music. We have this technology called Bonjour. It allows devices to find themselves completely automatically over a network and communicate with each other without any configuration or setup over wired networks, wireless networks, anything. And so if you have Bonjour running on your Macs, they can find each other, or your PCs, they can find each other all throughout your house. So we've built that into front row. And so I go into Shared Music. And Phil's sitting right here. And he's got a portable with all the content that was supposed to be on here, probably. And so I'm just going to go into Shared Music.

Here's Phil's songs. I have no idea what these songs are. Anyway. We'll just pick it. Here we go. So pretty cool. This is all found Phil's MacBook Pro over Bonjour, over showed me his content, let me pick his content all through front row.

And when I decided to play it, just streamed it over and played it. So let's go back here. And I'll go back up to here. And I could take a look at some photos. Let's see what Phil's got for photos. Well, I haven't got any. So I better look at shared photos. And we'll take a look and see what Phil's got. So here's some photo albums he's got. Antarctica. Let's see what that one is. Let's see what Phil's got.

You know, when I saw these photos a few days ago, I said, we can't use these. They're too perfect. Obviously, you didn't take those. And Phil said, no, I didn't take them. Ken Bereskin took them, one of the guys that works with Phil, just got back from Antarctica and took these photos himself. It's amazing. So anyway, the photos on Phil's machine are pretty amazing. And so let's go see what else we got. Let's go into videos. So we're back on Phil's MacBook Pro again. And let's look at TV shows. And old Desperate Housewives, why not? Silly people. Fairview Society.

So this is streaming, again, over Phil's PowerBook, over to this MacBook Pro, and we're seeing it up there. Video, photos, audio. So this is a brand new feature that we're adding to Front Row, which is we're adding Bonjour to it. We're releasing this as an update this week for the new Mac Mini and all of the other machines that run Front Row. So if you've got, let's say, a Mac Mini hooked up to your television in your living room, you're going to be able to see the media that you've got on every other Mac and Windows computer that's running iTunes in your whole house.

Every desktop, every portable that comes in the house, you'll be able to see the media while it's there. It'll disappear when it goes. Just all happens dynamically. No configuration, no setup. So it's pretty cool. So let's take a look at the standard features in the Mac Mini. OS X and Tiger come standard, of course, and iLife06. OS X, Tiger, and iLife06, sorry. The Apple Remote and Front Row. AirPort Extreme and Bluetooth built in to every Mac Mini. Four USB ports, FireWire, gigabit Ethernet built in. DVI video out, so you can connect to just about anything, and VGA included in that. SPDIF and analog audio in and out. And we've got two models.

The first has the single core processor, the Intel Core Solo, 1.5 gigahertz. It's got a really fast front side bus on it, half a gig of memory, integrated graphics, 60 gig hard drive, and a combo optical drive, so you can play. DVDs as well as burn CDs and the price of this is just $5.99. The second model features the dual processor Core Duo, 1.67 gigahertz, same fast front side bus, same memory, same graphics and 80 gig hard drive and a super drive so you can burn DVDs as well, $7.99. And both of these models are available starting today.

So this is the new Mac Mini and with the Mac Mini this comprises 50% of our entire product line is now available with Intel processors in less than 60 days since we announced the shipment of the first products at Macworld last month. Half our product line in less than 60 days. Now let's move over and talk about music. I think you're all familiar with our latest two iPod models, the Nano and the fifth generation iPod. We've sold 42 million iPods through the end of last year and the market share data just came out for January, it's the latest data we have from NPD but iPods have a 78% market share of the entire MP3 market and we're very proud of that.

iTunes just passed a major milestone which we hope you heard about. We sold our billionth song and we would have never thought this was possible when we launched iTunes three years ago but in less than three years we sold a billion songs. A billion sold in less than three years. We beat McDonald's and that's great. Our iTunes team is doing an incredible job. So let's move on to some new products in the music space. The first one, relatively simple product but something that a lot of us use. We're going to have iPod leather cases. We've been working on these for a while, wanted to get them just right.

These are sort of a, well I'd say they're a higher end case but you could pay $1,000 for an iPod case if you want to so this is nothing like that but for us it's a higher end product. Really nice leather cases for the fifth generation iPod and the iPod Nano. The iPods just push into them and you pull this little thing to get them out. They're really, really nice and they're going to sell for $99 and they go on sale in about two weeks, mid-March. So we think these are going to be really good actually. We can't wait to get them ourselves. So that's the first thing. Second thing, you know, we put a lot of work into making iPod an indispensable part of on-the-go living.

Whether you're commuting or walking or driving or skiing or whatever you're doing and I think we've done a pretty good job of that. You see a lot of people enjoying iPods and all sorts of on-the-go activities. In automobiles in this country, 40% of all autos sold this year are offering iPod connectivity as an option, 40% of all the autos sold in this country this year. So whether it's driving or other on-the-go activities, we think we've done a pretty good job here and we'll continue to. And so now it's time, I think, to add a second focus which is in the home. You know, people like to use their iPods not just individually but, you know, with their families or in groups in the home, in the living room, the kitchen, the ski cabin, wherever.

And there are some products on the market that help you do that. They're powered speakers. They're all reasonably priced. This is probably the, you know, one of the better quality ones, the Bose one that sells for $299 has been a big hit. But the problem with these products is that none of them really offer home stereo quality. While you might get one of these, you're not getting rid of your home stereo, you know, because the quality level just isn't quite there. And, you know, what is home stereo quality, you could ask? Well, if you're an audiophile, what you'd say is four things. One, if you close your eyes, there's a sound stage around the speakers. The speakers disappear acoustically and there's like a stage around the speakers where you can hear the performers performing that's much larger than the speakers, right?

So a large sound stage. The second thing, maybe the most important in some ways, is precise imaging and separation. Each instrument you can place in space individually, right? Each instrument you can imagine where it is in that sound stage and they're not all muddled together, right? They're separate, they're clear, and you can almost imagine, you can almost see where they are if you close your eyes in that sound stage. The third thing is a wide frequency range. You know, you want to be able to have great bass, but you also want to be able to hear, you know, the highest frequencies as well. And lastly, you do want room-filling power, but without distortion.

And most of these products, you know, a lot of products really distort when you crank the volume up. So today we're introducing the iPod Hi-Fi. And it's a companion product to the iPod. It's really home stereo reinvented because what we see is your music is not in CDs in your cabinet anymore, it's on your iPod. And so your stereo is really ready to move to an iPod-based stereo if we could just get the quality up on the rest of the system. And we're doing that today with iPod Hi-Fi. This is iPod Hi-Fi. Take the grill off. It's a three-driver system. This is what it looks like from the top a little bit. And one of the keys is right on the top, we've got a place to plug in your iPod.

We've got a universal iPod dock built right into the top of it. And we've got these plug-ins for every iPod that has a connector on it that we've ever shipped. So our two most recent ones, there's the one for the Nano, there's the one for the fifth generation iPod. But there's inserts that come with the iPod Hi-Fi for every iPod we've ever shipped with a dock connector. And there's even an auxiliary input on the back. So if you have a shuffle and you go out and buy a cable, you can plug your shuffle in too if you want to. And you can see the volume controls and everything right on the top. So you can actually just drop your iPod right in it, whether it's a Nano or a fifth generation iPod. Now let's take a look inside. This thing is a lot more than it looks like on the surface. You can see the handles, by the way, built-in handles right on the side. Let's take a look inside, though. There's a lot going on in here.

The first thing we see, let's take a look at the back. We've integrated not only the electronics, but the power supply right in there. So there's no power brick. It just plugs right into the wall, because you get tired of all these power bricks dangling around, especially in your kitchen and places where you see them right out in the open. And you can power this off six D-size batteries. So if you want to take this out to the cabana or the pool and listen to it out there, you just pop in six D-cells and go out and listen to it for several hours outside and get great sound wherever you are. Then we've got two 80-millimeter mid-range drivers, and these are in a sealed acoustic suspension. So we've got sealed chambers to get the most out of these mid-range drivers.

They're actually kind of wide-range drivers that handle from the base all the way up. And now the base system, we've got 130-millimeter dual voice coil woofer, and it is a ported base reflex design. So you can see the ports coming right out the front. We get great bass out of this thing, and it doesn't distort when you crank it up. A lot of work went into this. So this thing's a lot more under the hood than it seems like. And on top of that, of course, the universal dock connector and the integrated handles. And again, to make great sound, you've got to have a sealed enclosure that doesn't vibrate. This thing is a sealed resin enclosure, and it's really, really good.

And when you hear it, you'll be hearing the results of partially that. One of the little things we did was we made it so that when an iPod plugs into this, there's a little software update going out for the iPods. It actually puts a speaker menu item in the main menu. Software update's going out? It's already out. Great. Even better. And speaker main menu item pops up, and when you look under there, you can set the tone control for flat, or you can boost the treble, you can boost the bass. You can have the backlight always go off or always stay on while things are playing. And then there's the large album art, which I like. You can basically, rather than watching this, you can just have the screen go black and put up the album art and leave it on, which is really nice in the fifth-generation iPod especially.

So integration with the iPod. And of course, you control it with the Apple remote, the same exact Apple remote we use on the computers. And so home stereo quality. We think we can deliver this really for the first time in the iPod ecosystem. And how much does this cost? Well, you know, this Bose product costs over $1,000. These kinds of products, you know, $800 and up. A lot of them cost over $1,000, and we're delivering audio quality that is absolutely competitive with these products in the new iPod Hi-Fi. And we're going to price it really more in the iPod economy space at $349.

$349, and it goes on sale today. So iPod Hi-Fi, it's home stereo reinvented for the iPod age. And I've got to tell you, this thing is so good, I've been using one for the last month, keeping it, you know, a little cloth over it at home and stuff. I'm an audiophile. I've had stereos costing, well, I won't say, but you'd think I was crazy, but a lot. And I'm actually getting rid of my stereo. They cost a lot to go with these things. They have phenomenal sound. And I think a lot of our customers are going to have more than one of these around their house.

They are really, really good. So thank you very much for coming today, and we'll see you all real soon. Thanks.