Steve Jobs on the iPod Touch: Music, Web, and Wi-Fi

I said warning, live without warning I said warning, live without warning This is a public service and nothing, this is only a test Good morning Welcome Thank you Today, we get to talk about music So, let's start Let's start with iTunes iTunes is a pretty amazing phenomenon I want to just give you a few facts and figures to start off the day Pretty amazing to me, see what you think So, we have distributed over 600 million copies of iTunes so far 600 million copies And customers have bought and downloaded over 3 billion songs from iTunes We're pretty amazed at this And iTunes is the number one online music store in every single one of the 21 countries that it operates in

We started just in the US, but we're now in 21 countries And it's the number one online music store in every single one of those And these are a list of the countries The only one that's not up here is New Zealand, we've added I haven't made a little button for them, but we're working on it And so, 22 countries, sorry Number one in every single one Now, we started with just 200,000 songs But we have over 6 million songs in every single one of those stores in the 22 countries So, not just in aggregate, but in every single store, we have over 6 million songs It's amazing, millions ahead of anyone else And we've become the number three music retailer in the US We are behind Walmart and Best Buy and ahead of Amazon and Target So, the digital music revolution is happening We also carry over 550 television shows from 58 broadcast and cable networks And we've sold just shy of 100 million shows We've sold over 95,000 TV shows to date We'll clearly pass 100 million this month as the new season starts And we have over 125,000 podcasts This is amazing material, it's free And over 25,000 of those are video podcasts that you can watch for free Now, this last statistic I want to share with you blew my mind when I read it In the US, of all the music releases in 2006, 32% of them were digital only releases

Which means they were not released on a CD 32% of 2006 US music releases were released only digitally and not on a CD This is live concerts, this is a lot of the independents But, wow, look how far we've come A third of the music released last year in this country was not even released on a CD But digital only So that gives you a feeling for how far we've come in the last five years of this digital music revolution And iTunes is clearly leading the way Now, we're going to ship a new version of iTunes tonight To support some of the new products that you're going to hear about shortly And the biggest feature, new feature, is going to be ringtones We're going to do ringtones in our own special way And, of course, these are for the iPhone And what we want is rather than just let somebody else make our ringtones for us We think people want to make their own So we're going to give you a custom ringtone maker We're going to build it into iTunes And you can make ringtones from many songs purchased from iTunes Including some of the ones you've already purchased And there's over a half a million participating songs And we think this will increase over time And once you make your ringtones, you can sync them right to your iPhone It's that simple Now, competitive ringtones like this, high-quality competitive ringtones

Are about two and a half dollars And, again, somebody else gets to choose which segment of a song you want to listen to Our ringtones, where you get to make them yourself Are going to cost just 99 cents in addition to the cost of the song So, in other words You buy the song for 99 cents from iTunes You may have already purchased it already, you don't have to buy it again You pay another 99 cents to make the ringtone So for $1.98 you get both You get the whole song to listen to on your iPhone or your iPod or your computer And you get a ringtone on your phone for $1.98 And if you've already bought the song, it's even less, obviously So here's how it works The new version of iTunes, we're here in our music library All the songs that you can make ringtones out of When you plug in your iPhone next, a new column will pop up with those bells in it See those bells right there? Here's a little blow-up of that Those bells show you which songs are eligible to make ringtones with And you just click on the bell and up pops a ringtone maker Right there in iTunes, let me give you a zoom in on this And it'll show you the whole song You can pick any segment, up to 30 seconds long Professional fade-ins, fade-outs You can loop it around and make the ringtone you want Preview it, play with it until it's just right And when you're ready to buy it, push the buy button And for $0.99, you will make a ringtone And it will go into this new folder in your library called ringtones And when you plug your phone in, there's a new tab called ringtones And you can decide whether you want to sync all of them Or just certain ringtones onto your iPhone It's that easy, and I'd love to show it to you right now So let's go make a ringtone So here I am in iTunes

And I'm going to go ahead and click favorites here And as you can see, I've got a playlist And some of those songs I can make ringtones out of Which is really great And so, you know, we can I like Aretha Franklin with respect So you've all heard this song So I can just tell this is going to make a great ringtone And I can put it on my iPhone I can make it my default ringtone Or I can assign it to any person in an address book So I might assign this one to my wife calls And so I'm going to go I've already picked out a segment I like But I can just click anywhere here And I can adjust the duration Do anything I want to here And so I'm going to go, actually I've picked out a spot here Which is, oh, let's see Right about Right about here So let's preview that A little bit further in, like right about there Oops Oops I want to go a little bit further back here How about right there There we go, that's what I want And I'm going to just buy this ringtone now So it's going to Go ahead and make it right here

And it's already put it in my ringtone thing And here it is So whenever my wife calls This is what I'm going to hear on my phone I made a few other ones yesterday Isn't this great that you can just make You can pick the exact section of the song you like And make a ringtone out of it Here we go That's when NBC calls That's when NBC calls So, you get the idea. And this is what it's like to make ringtones. You can assign them to be the default ringtone or you can assign them to your favorite people when they call.

It's that simple. So, making ringtones in iTunes for the iPhone, custom ringtone maker built in to iTunes. We've got over half a million participating songs and we think that's going to grow nicely in the future and you can just sync them right on your iPhone. They cost 99 cents in addition to the cost of the song from iTunes and we're going to turn this on next week. So, you'll need the new version of iTunes which we're going to ship tonight and then next week when we turn this on, when you plug your iPhone in, the column with the bells will pop up and you'll be able to make ringtones for your iPhone. So, that's the first thing today is ringtones. So, now let's talk about the iPod. The iPod is doing really well. Let's just look at the cumulative iPod sales. They're rather strong. We've sold over 110 million iPods to date. And if you'll notice, the place where the sales curve is the strongest is, of course, during the holiday seasons. Well, we're approaching holiday 2007 and we want to get ready for it and this is our current iPod lineup. And today, we are going to refresh or replace every single product in this lineup to get ready for this holiday season. So, let's get going. Let's start off easy with the iPod Shuffle. This is just going to be a refresh for the iPod Shuffle. The iPod Shuffle is an awesome product, you know, the built-in clip. It's just fantastic. It comes in these great colors. For holiday 2007,

we're going to refresh the colors with some really, really nice new colors. When you see these in person, I think you're going to love them. And, you know, as you know, we have what we call a Product Red Nano, iPod Nano. This is a program where if you want to do something about AIDS in Africa, it's AIDS, malaria, and tuberculosis in Africa. If you buy a Product Red product from a variety of manufacturers, and from us, this has been the iPod Nano, we will donate a certain amount of money to the Global Fund to fight these diseases in Africa. We are adding now a Product Red Shuffle. So, again, if you want to buy a Shuffle, you want to do something about these diseases in Africa, you can buy a Product Red Shuffle. And the new Shuffles, the same one gigabytes of storage, $79, and they're shipping today, so they should be available very shortly. So, a color refresh for the holidays, that's iPod Shuffle. Now, let's move on to something more substantial, the iPod Nano. The iPod Nano is the most popular music player in history. And people just love it. But we want to make it even better, and customers have told us some ways they'd like us to make it better too. And at the top of the list is, they want to watch video on their iPod Nanos. They can do it on their video iPods, they want to watch video on their Nanos, and they want to watch that on an even larger, brighter display. They would like, we would like to put CoverFlow in. We think they're going to enjoy that a lot. CoverFlow is a great way to browse your music library

by album artwork, which you have in iTunes today, and on the iPhone as well. Games, we've had games on the video iPod, people would like to have games on their Nanos. More storage, and a full metal design. We've got an almost all metal design, love to get rid of the plastic caps on the top and the bottom. Well, we are introducing a new Nano here today, and let me show it to you. Here it is, right here. It's incredibly tiny. And I will turn it on for you right here. This is the new Nano. It's incredibly thin. So, let me show you some bigger pictures of it, for safekeeping. This is what the new Nano looks like. It's going to come in all these great colors. It's super thin, and we think really, really beautiful.

And of course, we have a product red version of the iPod Nano as we have in the past. Really beautiful colors. Now, so what's the video like? Well, let's take a look at the iPod video and compare it to the new Nano. iPod video, two and a half inch screen, new Nano, a larger two inch screen, but still smaller than the iPod video. So, how is video going to look on this thing? Well, it's going to look the same way it did on the iPod video because you don't lose one pixel when you watch video on the iPod Nano. It's the same 320 by 240, and we've achieved this with a screen with the highest pixel density we've ever shipped, not only on an iPod, but on a Mac, on any product we've ever shipped. 304 pixels per inch. So, every pixel that was on the iPod video is on the iPod Nano, and the screen is just gorgeous. When you see it, I think you're going to really love it. We've also got an enhanced user interface, a great user interface. Now, on the main menu, it's going to show you album artwork floating by when you're on videos, the content from your videos, the content from your photos. Even when you're in places like extras, it's going to show you what you're going to get if you enter that particular extra. And we have cover flow on the Nano. Just take your thumb, run it around the wheel, you're browsing your whole music collection by album artwork. It's really, really nice. And when you pick something, here's the new Now Playing screen. When you're viewing photographs, they look dynamite, and the same with video. It's pretty stunning, all in such a tiny device. So, we're really, really happy with this. We also are including three games bundled in with the

new iPod Nano. Let me just show you one of them now. It's called Vortex. So, that's one of the three games that comes bundled with the Nano. We've also done some other games that we're going to be selling on iTunes for the Nano. Some of them we've done in partnership with Electronic Arts. They've done a great Sudoku game. Let me just show you a little preview of that here too.

Isn't that incredible? All in a product this big. It's amazing. So, video. New user interface with CoverFlow. Games. Let me show you a little bit of this now. Let's go take a look at the new iPod Nano. All righty. Here we go. So, here we are on music and we're seeing album artwork float by. Take a look at that. And I'm going to go into CoverFlow. Just go into music. Actually, let me go back and just show you a little bit of that, you know, videos here. We're going to see video content float by. Photos.

There's some of my photos that we've taken. It's really, really cool. So, let me go into music and let me go into CoverFlow. And here are all my albums and I can just scroll past them like this. It's incredible. And if I find something I want, let me just go find the, where's that album? Yeah, there it is. Let's look for the killers here. And, well, what's a good song here? Yeah, that's a good song. And so, here's the new now playing screen. It's really beautiful. It's that simple. It's that simple to browse your music collection. Let me show you some video. Go to video and I'll go to TV shows. And I love Jon Stewart.

I hope all of you watch his show. It's the best place to get the news every day. And, so what is net neutrality? Well, let's say we're both computers here on the mesh. What kind of computer would you be? I could be a home computer or a network server, sometimes. What type of operating system would you be? Well, statistically speaking, it would probably be a Windows operating system. So, you'd be like a personal computer, or do you use, I guess, the common abbreviation? Okay. I'm a PC.

Okay. So that's an episode of Jon Stewart. Let's go down to podcasts here. I've got one on here that's kind of fun. Let's use a look at the first episode here. Hey, yo, what's up, y'all? This is Peace of Freestyle Fellowship, a.k.a. DDK, K&P, Freestyle Fellowship once again. Just to let you know like this. You know what? There are like 25,000 video podcasts like this on iTunes that you can watch for free, and it's amazing.

Just so you know also, this video is coming off this little nano right here. So everything you're seeing there is exactly the number of pixels and the quality that I'm seeing right here. It's pretty amazing. I just want to go back now and just show you some photos. So go into photos, and I can just click through all the thumbnails here. Just look at all my photos, but I'm going to go back and just pick, you know, a trip to Mammoth, let's say. And, you know, I can just scroll through these photos here. Just very easily scroll through them all. Or I can go back here and just go to the top and just hit play and see a slideshow. ♪♪ You know, when we went about replacing the most popular music player in the world, we took this really seriously.

We listened to everybody's concerns, and we think we've nailed it with the new iPod Nano. It's just fantastic. The battery life on the new iPod Nano is awesome. 24 hours of audio playback and 5 hours of video playback. So the new Nanos. There's the colors. Video. Larger, brighter displays. Enhanced user interface with CoverFlow. Three games built in, more to buy on iTunes. More storage and a full metal enclosure. So let's talk about the storage. We're going to offer the new Nano in two versions.

A 4 gigabyte version and an 8 gigabyte version. The 4 gigabyte version is going to be priced, well, actually is going to come in silver. And the 8 gigabyte version is going to come in all the colors. The 4 gigabyte version is going to be priced at just $149. That is twice the memory for the same price as its predecessor. And the 8 gigabyte version at just $199. Again, twice the memory of its predecessor. And these new Nanos have left our factories already. They've shipped today.

They're on planes, and they should be in stores, many stores, by this weekend. So go check them out. We think you're going to love them. We've also shipped a bunch of accessories like armbands. And, of course, the new Nano works with the Nike Plus iPod kit for over a million runners out there using it. We've logged over 12 million miles on it. Works perfectly. So the new iPod Nano, our line for it is a little video for everyone. And we've got a new ad I'd love to show you that we just finished. If you'd like to see it. So let's go ahead and run it. Here we go. Video.

So. A little video for everyone. That's what we set out to do. We think we've done a pretty good job of it with the new iPod Nano. We hope you love it as much as we do. So we've got new colors for the iPod Shuffle. We've got an all new iPod Nano. And that brings us to the iPod. Now, the iPod's got a funny name. It's just called the iPod because it was the first one. We never put a suffix on it. People have called it the third, fourth, fifth, sixth generation iPod.

Most people call it the video iPod. We thought it's time to give it a name. So today we're going to give it a name. We're going to call it the iPod Classic because it's the original iPod. And these are the iPod Classics, of course, today. We have new iPod Classics. And this is what they look like. They are a full metal design. And they are even thinner than their predecessors. Now, their predecessors came in a 30 gig model, which was the thin one, and an 80 gig model, which was the slightly thicker one. This is thinner than the thinner one. And the new iPod Classic is starting off with 80 gigabytes of storage.

80 gigabytes in an even thinner design. And the battery life is sensational. Audio is 30 hours and video is 5 hours. So we're very excited about these products. And we've got the whole enhanced user interface that you just saw on the Nano on the new iPod Classic as well. Cover flow, everything that you've just seen is on the new iPod Classic as well. So we're really pleased with these products. Now, we're going to offer a slightly thicker one as well. Again, thinner than its predecessor. And it's going to have 160 gigabytes. Now, this boggles the mind.

When we started with our first iPod five years ago, it put 1,000 songs in your pockets. This new 160 gigabyte iPod Classic, which is far smaller than the original iPod, puts 40,000 songs in your pockets. It's amazing. It's just amazing. Even better battery life, 40 hours of audio playback and 7 hours of video playback. So 80 and 160 gigabyte models for the new iPod Classics. The 80 gigabyte used to sell for $349. It's going to now sell for $249.

And the 160 gigabyte is going to sell for just $349. The new iPod Classics are both available today. Their shipping should be in stores by this weekend, in many stores. New enhanced user interface. We think you're going to love them. And the enclosure is just gorgeous. So the iPod Classic. So let's take a look at the iPod lineup for the holiday season. We've got the Shuffle and some great new colors. We've got an all-new iPod Nano.

And we've got the enhanced iPod Classic in some amazing new capacities for storage. And we have the enhanced user interface on both the Nano and the Classic. And all of these products are available today. And this is an incredible iPod lineup for this holiday season. But we're not done yet. Far from it. You know, when we introduced the iPhone in January, we said it was the best iPod ever.

And iPhone owners agree with us. It's incredible with its multi-touch user interface. It's incredible album artwork and video. It is the best iPod ever. And people have been asking us and wondering, when are we going to bring this technology to an iPod? Well, the answer to that question is we're going to do it today. And this is what the product looks like. Woo! It's called the iPod Touch. Woo! I happen to have one right here.

It's just about the same size screen as the iPhone, but it's even thinner. It's eight millimeters thin. It's unbelievable. The new iPod Touch. We think it's one of the seven wonders of the world. It's just incredible. It features our revolutionary multi-touch interface that you've come to know and love on the iPhone. So let's take a look at it. Let's take a look at its music capabilities. If you've used an iPhone, you'll feel very much at home. It's exactly the same.

Five buttons across the bottom, playlist, artists, songs, albums, and more. You can scroll through your artists as an example with a flick of your finger. Find one you like, look at all of their albums, pick an album, pick a song, and play it and look at gorgeous album artwork. You turn it into the landscape position and you're in cover flow. You can flick through your entire music collection with your finger and look at it by album cover art. It's just magical. All on this eight millimeter thin device. Let's look at it for video. Again, you can look at your video, movies, TV shows, podcasts, pick something and watch it. The on-screen controls, tap to get them, tap to get rid of them.

And on this gorgeous three and a half inch widescreen display, video looks better than on any other portable device. Same as the iPhone. Gorgeous, gorgeous video. And photos. Just like the iPhone, this is the best way to share photos on a portable device ever. You can flick through your photo library, find photos. And again, you can flick through them, you can pinch them to make them larger or smaller. When you get to a photo that's in landscape, you just rotate your iPhone and it'll display it in landscape aspect ratio because there's an accelerometer inside that detects that and automatically does the right thing. So that's photos. So let me go ahead and show you the new iPod Touch.

Again, slide to unlock. Here we are. And let's go into music. And again, you can see the five buttons at the bottom. Playlists, songs, albums. I'm just going to stick with artists. And again, you can just scroll like this with your finger. It's incredibly nice. And I'm going to go find, oh, let's find, Beck's a good one here. And pick an album here. And I'll pick one of his songs. I just flip this around here. See all the songs on the album. Pick another one. Really great. Full on-screen controls to change volume here. Go to the next song.

I can just tap. If I want to shuffle, if I want to repeat songs, if I want to go to a different part of the song, just scrub like this. Real easy. Now I can go to CoverFlow just by turning the iPod into landscape mode. And it automatically switches to CoverFlow. And I can browse all my albums by CoverFlow. It's pretty amazing. I love Bob Dylan. I can just pick a Dylan album and say, Tangled Up in Blue. So those of you that are familiar with the iPhone are very familiar with this.

But for the millions and millions that aren't yet, this is a revelation in how to enjoy your music. So let's go back and take a look at some video. I've got some movies and TV shows here. And I've got some music videos and podcasts. I'm going to play Wild Hogs. Again, we play video in landscape. You're not going to push me around. Look, we agreed on a price, and that's a price I'm going to pay. You got it? And if you don't like it, just walk away. And I'll tell you this, you can kiss your business goodbye. Because if you screw with Woody Stevens, you go down hard. You got that? What? No, money is not a problem. Don't insult me. Don't insult me. Money's never a problem. You just have to honor the correct price.

You got that? What? Well, then go home, Toby. You make me sick. I can't do this many leads for $10. It'll take. So you get the idea. And then let's take a look at photos here. Again, just looking at photos, thumbing through them like this, it's great. And let's go into a photo album. Let's pick Becky's birthday. And I can just go like this and just flick through these photos, get to landscape mode. Again, I just turn it. There's just never been a better way to share photos with friends on the go. It's so nice.

Just turn it back. Boom. So that is music, video, and photos on the new iPod Touch. It's pretty amazing. But there's more. When I showed you the side view of the iPod Touch, I was keeping a secret. I showed you the clean side. Let me show you the other side. See, there's something in that upper corner. It's an antenna, because we've built in Wi-Fi to the new iPod Touch. And 802.11 b and g for really fast Wi-Fi.

Now, some others have done this, and it's failed. And we took a long look at this and think we understand why it failed and think we know what to do to make it successful, where others have failed before us. So what's the problem with adding Wi-Fi? Well, part of the problem is just getting on Wi-Fi itself. When you're at home, you can get on your Wi-Fi network. You might have a password. You need to type a code in for your privacy to get on the network. When you're in the office, you might have a protected network there. You can type in a password and get on the network in the office. So you're fine at home. You may be fine in the office. But everywhere in between can be challenging.

You go to any hotel, and to log into their Wi-Fi network, even if it's free, they throw up a web page. Well, portable devices don't know how to deal with web pages very well. You go to an airport, you're going to see a web page something like this, where you have to log in. Even if you're a member, you have to log in. The thing that really got me was even walking through Stanford University to use their Wi-Fi network, you're given a web page. You have to log in with that web page. If you can't do that, you can't get on most Wi-Fi networks outside of your home and office. And so you could build in the hardware, but you're not going to get the network. And so what are we going to do about that? Well, we're going to add an application to iPod Touch.

And the application we're going to add is the Safari web browser. And we're going to add it. We're going to build it right in to iPod Touch. And so what you can do with it is view all those web pages, zoom in, log in to any Wi-Fi network pretty much, whether it's at the airport or a hotel or Stanford University or anywhere else. But besides that, you get an incredible web browser. As a matter of fact, the best web browser on any mobile platform. And so you can go to any website, The New York Times in this case, flip the landscape and see it in landscape, double click on something and zoom in and pan around with your finger.

It is the best web browser on any mobile device. And it's built in to iPod Touch. In addition to that, you get full Google and Yahoo search built in as well. So you can find anything on the go over that. Wi-Fi network that you just logged into with your Safari web browser. So we're very, very excited about this Safari built-in to iPod Touch so we can actually use that Wi-Fi network. First time ever on a music player to have a browser like this built-in. We didn't want to stop there, though, because we love entertainment. And so what better way to provide even more entertainment than millions of free videos on YouTube.

So we're building YouTube in. So you can go to YouTube now and see all your favorite videos, the featured ones, the most popular ones, you can search for any of them, and just watch millions of free videos streaming over Wi-Fi to your iPod Touch. It's pretty amazing. The videos are a lot of fun, as you know. And that is now YouTube built-in to iPod Touch. And so let me just show you these things right now. Let's go look. Let's go back and let me show you those icons. Had them hidden here.

So let's go ahead and go to the New York Times. It's a fun website to go to because everybody's very recognizable. And here we are, loading in the New York Times. It's a very complicated webpage. And as you see, we can turn sideways and see it in landscape mode here. We can scroll through it if we want to, go back to portrait, and we can zoom in on it. We can go over here if we want, just, you know, boom, and just go through it like this and read it. Double-click again, double-tap again, excuse me, to go back to the full page. So that's pretty cool. Let me show us searching something in Google right here.

Let's go ahead and search for, oh, Dylan. I like the Bob Dylan here. And so let's go ahead and Google Bob Dylan. And, yeah, let's go to Columbia Records, his website. And here's Bob Dylan's website. Again, I can zoom in on any part of it I want. Let's go read the text and see any part of his website. And here I am on my portable music player, browsing the web over Wi-Fi, going to an artist's website. Pretty amazing. I can go to the multi-page button down here, and let's go get a new page.

And let's go to a bookmark I have for this really cool app that Facebook wrote that works on the iPhone and now the iPod Touch. And so here's all my friends in Facebook, and I can go into any of those, and I've got an inbox right here, and I can see messages that my friends have sent me on Facebook right here over Wi-Fi on my iPod Touch. So we're pretty excited about this. Now let's go into YouTube here, and this is what YouTube looks like. Again, I've got my featured videos here and the most viewed videos that I can view by today or this week or all time, and then I've got some that I've bookmarked here.

And here's a fun one that I bookmarked. Let's watch this one. You get the idea. So this gives you a feeling for what Safari and YouTube are like on the new iPod Touch. We've built Wi-Fi in, and we've made it usable.

So we're really, really excited about this. On the bottom of the iPod Touch is a standard iPod 30-pin connector, so it plugs into the iPod ecosystem like every other iPod, and it's a worldwide product. This is the first Touch product that Apple is going to ship outside the U.S., and these are the languages it's localized to. So it's going to be shipping all around the world. The battery life is also fantastic, 22 hours of audio playback and 5 hours of video playback, all in something this thin.

It's amazing to me. So the new iPod Touch, multi-touch user interface, 3.5-inch widescreen display, delivers stunning video and photos, fantastic way to browse your music library with CoverFlow, find music that you haven't listened to in a while that you still love. It's great. And Wi-Fi with Safari and YouTube and Google and Yahoo search. There's something cool to do with Wi-Fi now, so let's go ahead and build it in, all in an incredibly thin form factor, just 8 millimeters thin. So we're going to offer the iPod Touch in two configurations.

The first is 8 gigabytes of storage. The second is 16 gigabytes of storage. Again, how do you fit all this in here? It's amazing. So 8 gigabytes, the price for the new iPod Touch with 8 gigabytes of storage, $299. The price with 16 gigabytes of storage, $399. And we're shipping these, both models will be available in just a few weeks, we're shipping them this month, plenty of time for the holiday season.

So we're very, very excited about the new iPod Touch. We've got an ad that we actually just finished up a rough version of it for this morning. So it's still a little fuzzy and it's not as good as it's going to be. But if you want, I'd love to show it to you now. Let's go ahead and run it. So, iPod Touch, we're really, really proud of this and I hope you love it as much as we do.

But there is one more thing, if you'll bear with us for a few more minutes. You might have noticed that there's an empty spot there on that dock of the new iPod Touch. What could that possibly be for, you might ask? Well, it's for a new application we've written for the iPod Touch, it's called the iTunes Wi-Fi Music Store. So, finally, some of you are saying, it's so cool.

So let's go ahead and add it and let's take a look at what it is. You go in to the iTunes Wi-Fi Music Store and this is what you see, four buttons, Featured, Top 10 Search and Downloads. So on Top 10s, you can pick Top 10s from all of iTunes or from any genre that you love. So let's go into all of iTunes and you can look at the top songs or the top albums and now it starts to get really cool because if you see one you like, you just tap it and you start previewing the song. Free previews over Wi-Fi for every song in the store and you're previewing the song and if you like it, you tap and you confirm with a Buy Now button and you are now downloading the song. You can go into the Download button right there and see it downloading and when it's done you can listen to it on your iPod Touch and the next time you dock your iPod Touch with your computer, it syncs back up to iTunes.

So, this is the featured button, we're going to feature a bunch of songs and you can search for anything in the entire iTunes store. Same prices, same selection. So, I'm searching for Dylan here as you can see. You can search for any artist, any song name, any album name and find it very, very quickly and then go preview it and if you love it, buy it. Buy songs, buy whole albums if you like. So, it's very, very cool. This is the new iTunes Wi-Fi Music Store and let me show it to you right now. So, let me bring up the icon here and so, I'm in featured right now and across the top, I have new releases, what's hot and genres and so, I can just scroll through what's being featured here and this is live coming over Wi-Fi and I can go to what's hot and see what's hot right here and, you know, take a look and see what they've got. Some, looks like some interesting stuff. I love John Lennon so I'm going to go into John Lennon here and this is an album and I can, you know, I can just preview Imagine. And I'm going to buy this, of course, so I just tap that and confirm it with a buy now and you can see it scooted down there into the downloads folder and it

is now downloading and it takes a few seconds and once it's downloaded, I can go to a downloads playlist right in my iPod where it is and I can play it with album art and everything else. This is all live. Isn't this incredible? Thank you. Let me now go to John Lennon here and let me now go to, you know, top tens here and I'll go into the whole store's top tens and I can look at the top ten songs here and, you know, I can say, okay, let's, you know, let's preview one. Here's that one that's, you know. Okay. And I can go see what top albums are and, you know, I can just go into one, pick something here and, you know, pick a song. Again, buy that. So that's now being bought, as you can see. And so let me go search for something. I want to search for, just tap up here in the search field and, of course,

I'm going to search for Dylan. And so I, you can see the live searches. I just type a few letters. It comes back from the store showing me what I might be looking for. Of course, I'm looking for Bob Dylan. And it shows me a few albums and it shows me his most popular songs on the store and I can, again, pick like a rolling stone. I'm going to buy that. So there we go. And now I'm just going to go to downloads and, again, it's going to buy that Bob Dylan song here. Wi-Fi, as you may know, is faster not only than 2.5G but faster than any 3G cellular network. So it's really nice and fast. And so now when I go to purchase, I've got those three songs I bought. I've got Imagine. I've got Bubbly.

And I've got like a rolling stone. So, not so bad for the new iTunes Wi-Fi music store. The new iTunes Wi-Fi music store is going to be available internationally in every one of those 22 countries that iTunes operates in. And we're going to do something else too.

We're going to bring it to the iPhone. It's going to come to the iPhone a little later this month with an iPhone software update, a free software update. Everybody with an iPhone is going to get it too. And you can start buying songs on your iPhone and have them delivered right to the iPhone, have them synced back up to iTunes on your computer the next time you dock your iPhone. So we're really, really excited about it, the iTunes Wi-Fi music store. There's even one more incredible part of this. We have been working on this for two years and I cannot tell you how much pleasure it gives me today to announce that we've got a great partnership with Starbucks that we're announcing today. Starbucks, we love Starbucks. It's an incredible phenomenon in our culture. And a lot of us are great customers. And what we want to be able to do is combine our great iPods and our love of music with their great coffee and their love of music. And we found an incredible way to do that. Because in the new iTunes Wi-Fi store, when you get near a participating Starbucks with their own Wi-Fi network, automatically a fifth button is going to pop up in the store with the Starbucks logo on it. And you're going to be able to push that and go into

it and see something like this. Now, the first thing is, you may have been in a Starbucks a lot of times when you're running, what cool song is that that they're playing? Well, now you're not only going to know what that song is but you can buy it with one tap of your finger and download it right to your iPad. And if you just missed it, if it just ended, you can look at the last 10 songs they've played and find it, preview them, find the one and buy it there. They're going to program some really cool music for us as well in terms of their collections. And it's just fantastic. So I'd love to show that to you right now. Let's go see it. So they've just built a Starbucks backstage. And, yeah, so I'm going to go back into iTunes and I should now. There it is, the Starbucks logo, you can see it.

And I'm going to go ahead and it's pushed. And here it is right here. I can now, they're playing a KT Tunstall song and I can go in here and preview it. Isn't that cool? And I can go back in and take a look at what's recently been played here. And, you know, here's a Paul McCartney song, Dance Tonight. Let's try that. And as you can see, it's downloading and it will be right on my iPod Touch and sync right back to iTunes when I get home.

So we are really, really excited about this partnership with Starbucks and being able to take the iTunes Wi-Fi Music Store right into Starbucks and buy music, hear music, buy music, share music right there. It's my great pleasure now to welcome Howard Schultz, the founder and chairman of Starbucks. Thank you, Steve. I was not backstage visiting the store but I was waiting. for you. I'm thrilled to be here today and really honored to have been invited. Before I talk about the partnership and how it's going to work, let me provide you with a snapshot into the global reach and the ubiquity of Starbucks around the world. We currently have over 14,000 stores in 42 countries. We serve about 50 million customers a week. And we have become the most frequented retailer in the world. The average customer is visiting Starbucks about 18 times a month. Obviously, you as well. In addition to that, we open stores at a very rapid pace, about seven new stores every single day. And we are still in the embryonic stages of the growth and development of the company. It's true. But

beyond the statistics about the growth and number of stores and customers, really lies the attachment and the trust that our customers have in the experience. And that experience comes to life every single day by the intimacy of the relationship we have between our customers and our people. And for 35 plus years, that experience has been built on the foundation of the coffee experience. But over the last three, five years, we've gotten pretty serious about the music business as well. Who would have thought that a coffee company could win a Grammy Award, let alone eight Grammy Awards, including Album of the Year, when we co-produced with Concord Records Ray Charles' last album. And that was the beginning of recognizing that our customer base would give us license to extend the brand and the experience beyond coffee to other forms of entertainment, publishing, films, and clearly the core of it all, music. Starbucks really has become this third place between home and work, an extension of people's lives. We are all searching for community, and I think Starbucks has been able to do that around the world. And I think about this partnership and what's possible, we are in a unique position, I think, to leverage the physical assets and the global footprint of Starbucks with obviously the innovation, the technology, and the trust that our collective customers have around Starbucks, Apple, iTunes, and bringing that together to literally transform the marketplace. And it's rare that a physical retailer, we're

not a technology company, has a opportunity to transform the marketplace. And this is going to be transformational. The iTunes Wi-Fi Music Store will be accessible at Starbucks, free access to iTunes. Accessible on your, accessible on the Mac, the PC, the iPhone, and as Steve just said, the new iPod. And we think we're going to drive incremental traffic into our stores and really, I think, be able to be a physical place in which music will be discovered. You know, when I was a kid, music was discovered on radio. It's really hard to find new music on radio today. And hopefully, our collective customers will find that music at Starbucks and want to buy it instantaneously. So let me share with you how I think it's going to work in a practical sense. Steve gave a great demo, but customers will walk into a Starbucks store, as they always have. And I should mention that one of the most asked questions at Starbucks today is, what song is that that I'm listening to?

And unfortunately, we really had no vehicle to be able to share that with them. Our people are pretty busy and certainly no vehicle to be able to have them acquire it. Well, those days are over. You walk into a Starbucks store, the iPod and the iPhone will instantaneously recognize the specific store that you're in, recognize the song that is playing overhead. And as Steve just demonstrated, not only that, but the 10 previous songs. And with literally one click, you'll be able to buy the song. I think this is going to be so significant in terms of being able to bring this level of technology to this unique environment that we've created over the last 30-plus years. And we know that music is so important and so relevant to our customers. And I think the assets of our two companies bringing this together is going to provide a unique opportunity. We built a unique, robust level of Wi-Fi network with the help of T-Mobile. And we're just getting started here. So this is exclusive with iTunes. We couldn't be more excited. It really is a privilege for me to be here on behalf of all the people at Starbucks. We are really, really enthused about this.

And we think our collective customers are going to respond extremely enthusiastically. Let me share with you how it's going to work in terms of the aggressive rollout that we have planned. These are physical stores. We can't do this overnight. I wish we could. But you're looking at a map that demonstrates that we have approximately 5,800 Wi-Fi-enabled stores. And we can't do it overnight, so we will start instantaneously around October 2nd. October 2nd, we will light up New York and Seattle, two markets that are important to me personally. I live in Seattle. I'm from New York. Steve wanted us to go to New York. It was easy. That will be about 600 stores on October 2nd. We'll follow that up in November when we go to San Francisco with about 350 stores. I know you'll be happy about that.

We'll take the Christmas retail season off because we're busy being a merchant and doing the things that we have to do. And then we'll start up again beginning in 08. In February, we'll go to Los Angeles with about 600 stores, and then to Chicago in March. By that time, we will be 25% of the way through the national footprint of Wi-Fi-enabled stores. We'll spend the balance of 08 doing as much as we can. And I think by the end of 08, we'll have most of the metropolitan markets covered. And then in 09, we hope to have all of the Wi-Fi-enabled stores completed. This is, as Steve said, we've been working on this for a number of years. And I just want to say personally, this is a big moment for Starbucks, and I think a big moment for Apple and iTunes, really to be able to take this kind of technology and bring it to the customers where they live, where they work, where they play. And Starbucks is so close in terms of the lifestyle of our customers, they're really going to respond to this. I also want to say that, you know, to build a great, enduring company, you can't embrace the status quo. You've got to keep pushing for reinvention and self-renewal.

And really, no one has done it better than Apple and iTunes and Steve Jobs. It's an honor for Starbucks to be their partner. Thank you very much. We know a lot of people that are going to be very happy with this new combination of coffee and iPods. So, Starbucks, we are really excited about this. It's part of the iTunes Wi-Fi Music Store, which is one of the three applications using Wi-Fi that are built in to the new iPod Touch. So, let's take a look at our lineup for this holiday season that is rapidly approaching. The iPod Shuffle in five great new colors, the all-new iPod Nano, the renewed iPod Classic with up to 40,000 songs in your pockets, the revolutionary iPod Touch that you've seen here today. We think this is going to set a lot of people's worlds on fire. And I'm going to include the iPhone because, as we've said, it's the best iPod

ever. And look at this lineup. Price ranges that start as low as $79 for the Shuffle, $149 and $199 for the brand new Nano, $249 and $349 for the iPod Classic, $299 and $399 for the iPod Touch, and $499 and $599 for the iPhone. It's pretty amazing. And this is what we're going into the holiday season But we want to get even more aggressive than this. Take a look at the iPhone.

You know, the surveys are in. And the customer satisfaction numbers on the iPhone are off the charts. The customer sat numbers are higher from iPhone owners for iPhone than any Apple product ever. Any product we've ever shipped in the history of the company. iPhone owners are more satisfied with their iPhones than anything we've ever done. They love them. And so we want to make iPhone even more affordable for even more people this holiday season. And so we're going to do something about that today. We're on track to ship our millionth iPhone by the end of this month and to get ready for the holiday season, here's what we're going to do.

We've had a lot of customers buy a lot of iPhones and the vast majority of them have picked the 8 gigabyte model. It's clear that customers want the 8 gigabyte iPhone. And so today, we're going to focus on just the 8 gigabyte model. The 8 gigabyte model is not going to sell for $599 anymore. Starting today, effective immediately, going into this holiday season, we are going to price the 8 gigabyte model of the iPhone at just $399. We want to put iPhones in a lot of stockings this holiday season.

So let's see how that fits in with the rest of the line. Look at this. And now, for only $100 more than the 8 gigabyte iPod Touch, you get an 8 gigabyte iPhone for $399. This is an incredible lineup for this holiday season. These are some of the best products we've ever created. They're the best iPods ever. And we are ready. So thank you very, very much for coming today. Now, a lot of people at Apple have worked on all these products, as you can imagine.

Some of them are here today. Some of them are watching from our campus in Cupertino. I'd like all the folks that worked on these products to stand up so we can give them a round of applause. One of the traditions we have at our music events is, at the end, to remind ourselves why we do all this. We love making great products, but what really drives us with our music products is we all love music, too.

And there's nothing to remind us of our love of music than to have a musician come and perform for us. And we're really lucky today. We've got a very talented young musician coming to perform for us who's here, flew in from across the pond, KT Tungstall, and she's very talented and she's very hot. Her first album last year set the world on fire, sold four million copies. It was one of the biggest selling albums last year. She's got her second album coming out this month, I think September 18th, on iTunes. Please give me a hand in welcoming KT Tungstall. Whoo-hoo.

Whoo-hoo. Whoo-hoo. Whoo-hoo. Whoo-hoo. Whoo-hoo. Whoo-hoo. Whoo-hoo. Whoo-hoo.

Whoo-hoo. Whoo-hoo. Whoo-hoo. No, no, no, no. No, no. You're not the one for me. No, no. No, no, no, no. No, no. You're not the one for me. Whoo-hoo. Whoo-hoo. Oh, I had hit a problem in the head. I was so stuck to death for a beat or two. Whoo-hoo. Whoo-hoo. Well, I caught some cold. But I shouldn't have done that. Won't forgive me after all these years. Whoo-hoo.

Whoo-hoo. So I sent her to a place in the middle of nowhere with a big black horse and a chair. Whoo-hoo. Whoo-hoo. But it won't come back because it's all so happy. Now I got a whole other world to see. Whoo-hoo. Whoo-hoo. And I said, no, no. No, no, no, no. No, no, no, no. No, no. You're not the one for me. Whoo-hoo. No, no. No, no-no-no. No, no. You're not the one for me. Whoo-hoo. Not the one for me. Yeah. Said, no, no, no, no.

Whoo-hoo. No, no-no-no. No, no-no-no. You're not the one for me. Whoo-hoo. No, no-no-no-no. No, no-no-no-no. You're not the one for me. Whoo-hoo. Doo-doo-doo, doo-doo-doo. Whoo-hoo. Doo-doo-doo, doo-doo-doo. Whoo-hoo. Big black hearts and a cherry tree. Can't quite get that, cause my heart forsake of me. Big black hearts and a cherry tree. Can't quite get that, cause my heart forsake of me. Big black hearts, my heart forsake of me.

Oh, I said, no, no, no, no. No, no-no-no. No, no-no-no-no. No, no-no-no-no. No, no-no-no-no. No, no-no-no-no. You're not the one for me. Whoo-hoo. I said, no, no-no-no-no. Whoo-hoo. No, no-no-no. You're not the one for me. Big black hearts and a cherry tree. Can't quite get that, cause my heart forsake of me. Big black hearts and a cherry tree. I can't quite get that, cause my heart forsake of me.

Thanks very much. Thank you. I'm very much looking forward to the iLoop pedal. I'll be able to phone my mum during gigs. I'm absolutely thrilled to be here and playing at this. As a musician, he writes my own stuff and really has a lot of value invested in the artwork. It's fantastic that Steve Jobs is actually making it more fun to pay for it than steal it, which is great. Thank you. Anyway, I'm going to play the new single from the new album.

This is my my lovely helpers, Kat and Cece. So thanks very much. Thanks for having us. Say you to me, you're a bird with an eye that ain't shiny Searching the land for a hero of a man You say I need more than my fair share of attention But I think you know that just isn't so Underneath, I felt the fire of a burning question Tearing me apart, right from the very start Now I see, it won't take a trick of the light to excite me so strong So long, you'll see Hold on to what you've been given lately Hold on to what you know you got Hold on to what you've been given lately Hold on, cause the world will turn if you're ready on now Simplicity, a heart of gold and old and young shoulders Quiet and lovely, becoming part of me Now I see, from a handful of names and a thousand faces One life, burning fiercely

I was tired of January, tired of June I felt a change a-coming Tired of January, tired of June I felt a change a-coming I felt a change a-coming I felt a change a-coming I felt a change a-coming Hold on to what you've been given lately Hold on to what you know you got Hold on to what you've been given lately Hold on, cause the world will turn if you're ready on now Hold on to what you've been given lately Hold on to what you know you got Hold on to what you've been given lately Hold on, cause the world will turn if you're ready on now Oh yeah, well the world will turn if you're ready on now Whoa, yes the world will turn if you're ready on now Hey, thanks for coming.

Thanks so much for the opportunity. Congratulations, it's so cool. It's good, thank you. So thank you for coming today. And not very long from now, when KT releases her new albums, when Starbucks gets New York and Seattle lit up with the new iTunes Wi-Fi music store, we'll be able to go there, listen to her song in Starbucks, preview it, buy it on our iPod touches, and add it to our collection when we get home in our iTunes music library. So thank you all for coming very much, and we'll see you soon. Bye bye.