Steve Jobs on Mac OS X: Aqua and the New Apple

Thank you. We have some great stuff this morning. Uh, I hope you're pleased. It's going to be a long show, so I hope we keep you glued to your seats for a while. Okay, let's get started. For the last two years, we've been reinventing Apple. We've reinvented almost everything about the way we run our business, about the way we market our products, about the way we distribute our products, about the way we engineer our

products, and it's been a lot of work by a lot of folks at Apple. We've had an incredibly loyal customer base that's stuck by us, and where we find ourselves today after this process is with the strongest product line in Apple's history. And last quarter, we filled out our product matrix with our last product, the iBook. And last quarter, for the first time, we were firing on all cylinders. And I've got some great news to tell you about last quarter. I'm going to—we're going to save most of it for our earnings call two weeks from today. But one thing I want to share with you is that we have a reason to

celebrate. Um, because last quarter, we sold over 1,350,000 Macintoshes. Incredible. That is more Macs in one quarter than in any quarter in Apple's entire history. 1,350,000 is one Mac every six seconds of every minute of every hour of every day in the quarter. And a lot of

people worked really hard, uh, in our operations team to make that happen, and, uh, in our engineering teams as well. So, uh, congratulations, everybody. Uh, I think the team did a great job. Thank you. And the greatest thanks go to the Mac community for really believing with us, sticking with us, believing in us, and, uh, buying these great new products. So thank you very, very much. So this is our product line today. I just want to review a few things about each product with you. Uh, obviously our Pro desktop is our Power Mac G4. It's the fastest Macintosh we've ever built. At its heart, it's got a G4 chip with a

Velocity Engine. The Velocity Engine brings supercomputer performance right to the personal computer desktop and it's incredible. Uh, we also have, of course, the incredible packaging where you can get to any part inside in a matter of a few seconds; there's nothing else like it on the market. And we recently started shipping our new Cinema Display. This is our 22-inch LCD display that goes with the G4. It is the largest LCD display ever brought to market. It is the finest computer display in the world, and when you pair it up with the G4, we have got the hottest Pro desktop lineup on the planet. So that is our Power G4. Portables, our portables did fantastic

last quarter. Last quarter, our two portables, our iBooks and our PowerBooks, garnered an 11% market share in the month of November, which is the latest data we have, the most recent data. An 11% share of the U.S. retail and mail order market. That is as large as— that's larger than Apple's portable market share has been in years. And of course, the volume was led by the iBook. Now, the iBook has been a runaway success for us, and in the months of October and November, which are the most recent data we've got, iBook was the number one selling consumer portable in the U.S. Now, we do a lot of market research to

find out who's buying our products and why, and what problems they may be having with them. So I've got some to share with you that's really interesting. First-time buyers of iBooks: 11%. Right? So most of them already own a computer, obviously. But Wintel switchers: 17%. Which means, which means that 28% of iMac buyers are new customers to Apple, which is great. Now, first portable in the home, over half. So we really have built the first true consumer portable; no other portable has statistics like this. The first true consumer portable, rather than yesterday's business portable war up for

consumers. 16% have already installed AirPort in the first few months of the life of the product. That's one out of every six iBook owners who has already installed AirPort. We're really happy about that. 90% of these folks are on the internet again—one out of six of them wirelessly. 90% on the internet, and 70% have already purchased goods and services over the internet. So we're extraordinarily pleased with these numbers, our first quarter of iBook sales that we have market research on. So iBook has been a huge success. We could not be happier with our portable product line right now, which brings us to, of course, iMac. The new iMac started

shipping last quarter, and these are incredible products. I—I am so proud of the team, uh, that engineered this product. It is phenomenally good. It is one of my favorites. And, uh, of course, they come in five colors, but we also broke it down into three product options: the $995 iMac, the $1,299 iMac DV, and the $1,499 iMac DV Special Edition. And what happened last quarter was the Special Edition was the hit among the three hits, and we couldn't even make enough. We shipped a lot of Special Editions, but it wasn't enough, and, uh, this product took off like a rocket. We have some market research on

the iMac. Who's buying them? 30% first-time buyers, 14% Wintel switchers, which means that 44% of iMac customers are new customers. 93% on the internet. 93%, phenomenal. 62% of those on the internet got on the first day of buying the product. 57% have purchased on the internet. This is my favorite of all: what percent of iMac buyers did not seriously

consider buying any other computer? Two out of three. So what was that? Oh yeah. So anyway, that's iMac. So we have got the strongest product lineup that Apple has ever had, and I want to share with you some cool new peripheral products and software products, uh, that are coming out as well. Uh, first one is IBM's VI voice. We now have incredible voice recognition on the Macintosh thanks to IBM VI Voice that is now shipping. If you haven't tried it, try

It’s great. Another thing that is being announced today is Microsoft’s IE5. Oh yeah, I heard a few hisses. Oh, contr—this thing, they've sped this thing up 50%. It’s really fast now. They’re shipping it next month, and they’ve really cleaned up the UI. It’s really quite nice. I think it’s the best browser on the platform, so go check this out at the booth. It’s shipping next month, and it’s free. Another thing, AppleWorks 6—we’re announcing AppleWorks 6. It’s got over a

100 new features. It’s shipping next month. It’s not free; it’s $79, but it’s pretty good. It also sports a whole new user interface, and it’s got presentations in it now as well. This is the number one selling productivity application package for education. It’s been thoroughly updated. Go check it out; it’s pretty cool. This thing is really cool. A company called Scaler has brought a USB microscope out for the Mac that is phenomenal. It looks like something else, but it’s really a microscope. And I have not had a chance to bring one of these home and play with my kids, but I think it’s going to be one of the coolest peripherals on the Mac. And one last one: this thing is amazing. VST is announcing at the show

here a 100 GB portable RAID drive. Okay, this thing’s got four 25-gig drives in it, all FireWire, so they’re all hot pluggable. And that little slot at the bottom is where you put a PowerBook battery if you want. Okay? So you can plug it in, or you can use a PowerBook battery to take it on the road with you—100 gigabytes. I’ve got one here. That’s what it looks like. Isn’t that cool? Whoops. All right, and on the back, all you’ve got is a switch and two FireWire jacks, right? That’s all you have to do is

just pop a FireWire jack in and you’re off and running. One last product I brought along: this thing is a scanner from Canon, a brand new scanner. It’s USB. The only jack on the back is a USB jack. It gets its power from the computer. Just take this up to any Mac, plug it into USB, and you’re scanning. Very cool. So there’s some awesome stuff going on out there to make our Macs even better. But one of the ones I think is the best, of course, is AirPort. AirPort is a landmark product for us, and we just started shipping it. It’s 11 megabits per

second without wires. You buy a base station for $299. You buy an AirPort card for $99 and throw it in any product we make. It’s industry standard, so it works with third-party products as well. And every single computer we make now is AirPort ready. You plug it in, and you’ve got AirPort. 11 megabits a second. Up to 10 computers can share one base station. Up to 10 computers can be on the internet simultaneously, and it is a phenomenal product. So I think we believe that Apple is now leading the wireless networking revolution, and we intend to stay in the lead. This is an incredibly strategic product for us.

And next, something we rolled out last quarter with the iMac—the new iMac is also incredibly strategic—and that is desktop movies. Now, desktop movies are possible because of the new iMac DV, right? FireWire, which is built in and is built into all the digital camcorders. So you can just go buy any Sony or Canon or any other digital camcorder and hook it right up to your iMac with a FireWire cable with no additional cards or any mess. No mess, no fuss. And QuickTime, the QuickTime foundation in every Mac, allowed us to write an application in-house called iMovie, which is a breakthrough application. Anybody can be

making, creating their own desktop movies in a matter of 5 to 10 minutes. It’s unbelievable. If there ever was a killer app, this is one. And so these things have come together to make desktop movies, and it’s unbelievable. Our research now shows that 10% of the iMac DV customers have already made an iMovie. Remember, it’s 90 days old. Ten percent have already made an iMovie, and if you factor in the number who say they’re going to make an iMovie in the next few months, that number goes up to one in three iMac DV owners. So this is going to—isn’t that great? Anybody with kids

understands why you need to get iMovie. So desktop movies, we think it’s going to be huge, really huge, and we’re putting a lot of energy into it. Now, you know we have our Think Different ad campaign that we’ve been running for almost two and a half years now, and this campaign is designed to honor our heroes, people that inspire us and have changed the world. And we’ve had some incredibly great people that have allowed us to honor them in this campaign. Going forward for the next six months, we’ve chosen to actually honor people that tie in with desktop movies. We’re going to be honoring film

directors. So we’re bringing back Alfred Hitchcock, who we’ve honored before. We’re adding to that Charles Chaplin, Frank Capra, who directed It’s a Wonderful Life, which I hope many of you saw recently; Stanley Kubrick and Francis Coppola. So I hope you have a chance to see these on the backs of magazines and on billboards throughout the country. The other thing we’ve got is we’ve got some television commercials that try to communicate what iMovie and what desktop movies are all about. And what I’d like to do is actually run three commercials right now for you, and I’d love to know. I'm going to do an applause meter after they’re all done to see.

Which one do you like the best? Okay, so let's go ahead and run them, presenting three easy steps to making home movies. Step one: have some fun. Step two: connect your digital camcorder. Step three: well, have more fun. Repeat step one, move scenes around, add titles, make somebody a star. It's as easy as, well, using an iMac. So take the photograph still friends in

your mind for what it's worth. It was worth all the while—something unpredictable but in the end is right. I hope you had the time of your life. You already know the best actors, the best comedians, the best stunt people, and the best costume

designers. Hey, maybe you should be a director. Desktop movies now premiering on an... that he... you. This is a part of the presentation where you get to help us decide how to spend a lot of money, so you can vote for more than one. (Applause) Meter number one: three steps. Okay. Number two: Cena kids. Number three. Number three

actors, very helpful, more than you know. Thank you very much. So we have had the great opportunity, with your support, to reinvent Apple in the last two years, and we now have the strongest product line in the company's history. And so, with this incredible foundation, it is now time for us to move beyond just the box. We love making computers. We've got the most incredible product lineup for the next 18 months, but today I'm going to talk about things where we are extending ourselves beyond just the box. And so the first thing I

get to do today is to unveil our Internet strategy. Now, we've been thinking about this for a long time. As a matter of fact, we've been working at this really hard for the last two years, and we've already built up four key Internet assets at Apple, and you already know what they are. And I'm going to run through them very briefly. The first is QuickTime. QuickTime has become huge for us. We announced QuickTime for our latest revision player with Internet live Internet streaming in May, shipped it in May. We also introduced at that time QuickTime TV, which was broadcasters that were going to broadcast QuickTime streaming content 24 hours a day, some of them

seven days a week. We got some great partners—people like CNN, people like Disney, people like Fox, HBO, ABC News, etc.—some fantastic broadcast partners. And what's happened is, since May, seven months ago, over 25 million downloads of QuickTime 4. It's been huge. Now, how's it done in the marketplace? Well, Neilsen, one of the most respected market research firms, comes out with net ratings, and their latest most recent data is for the month of November. Who used which media players in the month of November? Amazing data. The first was Real Networks with their Real Player; they had a 53% market share. That's great. They're in number one position. Number

two, though, was QuickTime with a 33% share in the month of November, and that handily beat Microsoft's Media Player with only a 14% share. So, what does this mean? What this means is that in seven short months, QuickTime has vaulted into the number two position with a 33% market share. This is phenomenal. There's even more good news. One of the other things they measure is the age of people using these things, and in particular the percentage of young surfers that's under 21, because these are the people that buy most of the stuff—the music, CDs, etc.—off the

Internet. And here, QuickTime came out on top: 30%. Real Player’s looking a little like your father's media player. So now we get asked a lot: how are you going to monetize this? You give away the player, you make the server free—that's our strategy. How are you going to make money off this? Well, our answer is simple: first of all, we do sell Pro players for $29.99, and we do sell a lot of them, which is great. But another thing that happened to us was, it turns out you can't broadcast all your content from California if you've got people trying to watch it over the Internet in New York. It doesn't work. The Internet's too busy for video traffic to travel that

distance. You've got to broadcast locally to where it's being watched, and so you have to set up servers all around the Internet to rebroadcast your content. And we were getting ready to spend a lot of money to go do that when we heard of this little company out east called Akamai. Right? Never heard of them before. We met with them and, you know what, they had better technology than we did. And so we decided to throw in with them. We gave them an order, we became their largest customer, we also invested $122.5 million in them. Never would have heard of these guys had we not been involved with QuickTime, and they probably would have not let us invest. Well, they went public, and our $122.5 million investment is now worth over a billion dollars. So, so far we have made more

profits off Internet streaming than any other company in the world that we know of. So that's QuickTime. The second is our core OS. We've been adding key Internet things into that OS like Sherlock 2, an incredibly powerful Internet search engine. We've added the ability to have multiple users, which is going to come in really handy in a few minutes, as you'll see. If you have a household with parents and kids, you can set up your Mac so that your kids have a separate environment. They can't get into your folders. When they log in, everybody gets their own browser preference, their own favorites, etc. And you can even log in using a voice password. We've added a keychain where

You can put all your Internet passwords on this electronic keychain, and when you log in, they're all open for you at once. You don't ever have to type in these 300 passwords, uh, that you now do; they'll automatically be sent once you've unlocked your keychain, your single keychain with one login. Auto-updating, so we can update the OS over the Internet now, so you'll never have an out-of-date OS. Since we released OS 9 in the last two months of selling it both as an upgrade and on our computers, over 1 million copies in the last 60 days. So this has been extremely well received, and that's our second Internet asset. Our third one might surprise you; it's apple.com, our

website. Our website is now getting one and a half million visitors each day and 9 and a half million visitors each week. This is phenomenal, and it's an incredible asset that we have that we'll talk more about in just a minute. And the last of the four is a part of apple.com that I want to highlight specifically, which is the Apple Online Store. The Apple Online Store was new for us; it opened in November of '97, about two years ago. We had no experience at it and we had a lot to learn, but we've learned a lot in the last two years, and I can report to you now that the Apple Online Store is a big success. We are running

now at the annualized sales rate of over $1 billion on the Apple Store. Last quarter, the holiday quarter, we did over $300 million on the Apple Store. We're extremely pleased with this, and the entire Apple Store runs on Apple technology. It runs on WebObjects running on Mac OS 10 Server. So we really do eat our own dog food at Apple. So we've got these four foundation Internet assets; let's build on them. So let's get started. We start with

apple.com because we're getting almost 10 million viewers each week. What do we do? The first thing we're doing is we're adding a tab bar on the top of apple.com so that we can get viewers more easily and readily to the places they like to go. Under the Apple logo will be the home page that you're very familiar with on apple.com, but we've elevated the store to a tab right next to it, as well as QuickTime and Support. These are the most highly trafficked areas of apple.com: Support, QuickTime, and the Store, all right on the top on every single page of apple.com. But there's three new tabs in

the middle. What are they? iReview, iTools, and iCards. Let's find out. iReview: Have you ever helped somebody get started in computing, maybe set up an iMac for them? They want to get on the Internet; they find a way on the Internet, but then they don't know where to go. Where can you point them that's going to tell them where, what's good? There's nowhere on the entire Internet that's got great reviews of websites that you can trust, and that's what iReview is. It is quality website reviews and rankings by Apple.

They're fantastic. We've got 250 reviews in today, 250 different websites. We'll have a thousand by April, and we'll be continuing on that ramp, reviewing them and ranking them. And Mac users can append their own reviews to our reviews, so we can involve the community. We're going to do for website reviews what Amazon has done for CDs and books in terms of being able to read great reviews, objective reviews, and then look at the user reviews; and you can look at our rankings, and we average all the user review rankings to give you an average user review ranking as well. Totally unique on the web, and we think it's going to be very hot not just for beginners but actually for all of us.

Because we're all looking for websites in a category that we know nothing about; we need a trusted adviser, and that's what iReview, we hope, will be. The second big thing we're adding is iCards. What is iCards? It is the Apple of Internet greeting cards. Right? Greeting cards are one of the most popular things people do on the Internet now. What is the Apple of Internet greeting cards mean? Well, let's look at the other guys for a minute. This is taken right off the most popular greeting card site on the Internet. I won't name names, but you know, they spared no expense. They use several colors; it's incredible. And here's another one you

know: May your New Year be something. Here's a third: Happy New Year. Now, these things make me slightly embarrassed to be a human. We can do better than this. So what does it mean to be the Apple of Internet greeting card sites? Well, we have gone out and licensed some great artwork, and we have written some software. You can type in your messages; we anti-alias it; we put it next to the cards, and we send them, and you just... we've got phenomenal stuff, phenomenal stuff. So this is what it means to be the Apple of Internet greeting card sites. Now, when these cards are sent, they're

sent in email; they show up in email, and you can view them inline. They're not an attachment; you don't have to go to a website to read them. They're right in your email. So iReview and iCards: I'd like to show them to you now. Here is the new apple.com right here, and, um, you can see the store right here; here's QuickTime; here's

Support. It's all right there. You can just... it's really fantastic. You know, back to the homepage here, look at all these subheads we've got. We've got hot news right here, submenu; we've got Hardware, much easier to find things now, Software, etc. So let me go to iReview. This is iReview. Boom. We've got 15 different categories that these reviews are in; we've got some feature reviews, and we have the most popular reviews, which is updated constantly, uh, showing what, uh, what our viewers are doing and what ones they're looking at. So let's go to movies.

When you go into a category, you'll see all the reviews in that category right there. They just bump up the size a little bit, and you can see the stars. Here's a whole line of them here, right? Boom. And you can go to any one of these places if you want to. Let me go to a few others here just to show you what the different sections look like. Each one has a theme, right? Let me go to News here as an example, and again, there's 14 different reviews for different news sites. Uh, I love the New York Times. Let's go see what they've got here. So again, here's what a specific review looks like: overall rating up there, average member rating you see right there, so they get

four stars for an average member rating. I can bump this up a little bit here, you can read the review, and um, at the bottom, there are two buttons: Take Me to the Site and Submit a Review. So, and I can, by the way, I can sort these different reviews. Here's the member reviews, right? Bunch of different ones down here. And um, so let's go ahead and go to that site. Take a second. We're going to the New York Times site right now. So this is the New York Times for today and um, here we are. You can see that, and we can actually review this site if we want to. So I can say, Review This Site, and uh, I get this. You know, is it a dud? Ho-hum? Good? Very? I think it's outstanding. I love the New York Times. You can write a summary, you

can fill out a few other things, and you can just submit your review. Isn't that great? And um, when you're done, you can just return to Other Review. Very simple, very, very simple. And again, you can go to any one of these categories. Here's another one: Sports. All of these sites you can sort by rating or site name or the date they were submitted, you know. Let me go back. There's one more I want to show you here. Uh, Games is a great one, and just to show you that we don't love everything, um, you know, we do have some, some negative reviews in here. Here's one for Happy Puppy. You can read: you know, Happy Puppy's long been a popular source for gaming information for both PC and console platforms, but

frankly, its Mac section is worse than mediocre, and we're very blunt about these things. So I know it's, uh, so this is our review. And there's nothing like it on the Internet. It's open to anybody who wants to come to our site. We think it's going to be a boon to beginners and people getting on the Internet, uh, in the early stages. But actually, even for a lot of us that surf all the time, we think it's going to be a tremendous resource. So, secondly, iCards, the Apple of greeting cards. So here's iCards. Here are the different categories of cards we have right here, and so let's take a look at some of

them. Let’s go in to Birthday. Whoops! Oops, I didn't want to go there. All right, let's try this again. That... all right, I have to sign in. That should give me—no, I want to go here. All right, let's try again. Eddie, just refresh. Okay, I'm refreshing. All right, here we go. So now, golly, golly, golly, golly. All right, refresh. Right here. Got

it. All right, here's some birthday cards as example, and I just click on one of these things and boom, I have the opportunity to see the card. I can edit it, do whatever I want, and uh, so let me go back again, back to Categories. I'm going to go in Fine Art, and uh, I'll pick a card, one of the ones I showed you here. And so I want to edit this card. All I do is click on this thing, and um, oh, I'll go ahead and leave it in Comic Sands, and I'm going to write uh this here, and I'm going to send it to my wife, and uh, then I'm going to go down

and I'm just going to preview the card, and there it is, right? I could edit it some more, etc., etc. So I can just go through and pick out cards. Let me show you some of the get well cards. They're great. This one's fun and that great. You know, here's another good one. I like this one, you know, and now there's one more here that's fun. Is that great? And uh, let me show you just a few more here. Um, oh, Vacations has got some great ones in it. So you know, here's a good one. Let me go ahead and edit this one. Uh, let me go ahead and pick maybe a bigger font here. Whoops, Bo, I'm having a tough time

uh, okay, so I'm gonna say, let's see. Um, okay, and I'll send this to uh, I'll send this to Obby, and uh, have to put in uh, apple.com. Let's go ahead and preview it here. What? Give me a break.

Oh, well, you get the idea. Yeah, woo, few little bugs to work out. All right, just going to refresh this for the heck of it, and I just want to show you one more that was really fun here. We've got vacation cards for any place you'd like to go on the planet: the Great Wall, Moscow, the Taj Mahal, uh, you name it. But I, I like Venice here, and I just wanted to edit this one. I thought this one was a great one. Oh, oh boy, all

right, there we go. So you get the idea. You can make these really beautiful cards really fast and just go ahead and send them. So that's iCards, and um, I think you get the idea. So we've got iReview, I think, going to be one of the great resources for not only the Mac community but everybody on the web to find out about great websites. We've got iCards, the best greeting card site on the web; and what's this middle button? iTools. This middle button, iTools, is revolutionary. It's totally revolutionary, and I want to spend some time taking you

Through it. So on the internet, you've got users, you've got access, and you've got applications running on servers. And normally, what you do is you go to places like Yahoo for content, or Amazon for commerce, or eBay for services. A lot of people, though, are also coming to apple.com, right? Almost 10 million visitors a week. And when they're coming, most of them are using Macintoshes and they're running our operating systems. And we were looking at this, and we were staring at it and said, "Wait a minute, wait a minute, our software is on both ends of the internet in this situation. What does this

mean?" Hmm. We realized that we could make both ends work together far more seamlessly than anyone has ever done before, and that our applications running on the server could take unfair advantage of the fact that we own the client OS. So we own one of only two high volume client OS's in the whole wide world. Not everybody can do this. Why don't we do this? Because if we do that, we can do things far beyond what you can do with a simple browser, far beyond what a browser can do. We could create an entirely new

class of Internet services called iTools. And that's what iTools is. It's a new class of Internet services from Apple created exclusively for Macintosh users. So let's take a look at what it is. Let's take a look at what it is. It's only possible if you own a high volume client OS, again, which we do. And all of this is based on OS 9. OS 9's got the technology we need to make this a reality. So today we're going to introduce our first four iTools, and the first is called KidSafe.

KidSafe is a breakthrough way to protect our kids on the Internet. This is one of our biggest problems on the Internet, and I think we've solved it with KidSafe. Now today's solution is filtering, and filtering approach is to specify what you can't see, specify what the kids can't see. And here's how it works. Imagine that the white circle is all the sites on the Internet, and the black circle is what the filtering is trying to filter out. Unfortunately, the Internet is growing so fast that the filtering can't keep up with it, and so there's a whole bunch of bad sites that are not filtered out at any moment in time, and we've all come to

realize that filtering is a bankrupt strategy. It doesn't work to protect our kids, right? You've all heard about whitehouse.com, right? You type in whitehouse.gov and you get the White House, but any kid walking up would type in whitehouse.com, and it's a porn site. Now the filtering didn't catch that for months, right? So this strategy just doesn't work. KidSafe is an entirely new approach. What KidSafe says is, let's specify what they can see rather than try to specify what they can't. Let's only let them go to sites that we know are safe. And we've got now

a database of over 50,000 approved safe websites that are great for kids to go to, and all of these sites have been approved by certified teachers and librarians throughout this country and in Canada. And so normally when you want to go to a website xyz.com, you just type it in and your operating system and browser take you right there. But if you go to iTools, one of the things that iTools does is it downloads an app, Apple KidSafe module, into OS 9, right into the operating system. And so when you want to go to xyz.com or any

other destination on the Internet, that module first checks with our database running on Apple's Internet servers to find out if that site is in our database. That server communicates back with the KidSafe module in OS 9, and if it's safe, it then takes you there. A totally different approach than has been used before. And if the site isn't safe, this is what you get, right? This is what you get: "The website you are trying to access is not available to you." Now we have over 50,000 websites in the database today that are all safe, all approved. We're adding 10,000 per month, and again every single site is approved

by certified teachers and librarians. KidSafe can also disable chat rooms, email downloads, and other things that can be dangerous for kids at parental discretion, and it works with Mac OS 9's multi-user features. Now why is this important? Well, I may not want KidSafe turned on when I'm on my system, but I want it turned on for my kids. And so KidSafe works seamlessly. When you set Mac OS 9 up to have multiple users, you can set it up so your kids have KidSafe turned on, and when they log in, there's nothing they can do to turn it off. So we think KidSafe is a breakthrough approach to protecting our kids on the

Internet. That's our first iTool. Our second iTool, Mail. Apple is going to run its own mail for Macintosh users, and we wanted to get a great domain name, a great email address for all of our users, and we found a really good one. What is it? mac.com. So today we're unveiling mac.com, industrial strength email for Macintosh users. It's run by Apple, so it's reliable, private, and secure, and it works with all POP email

clients. So it works with Outlook Express, Netscape Navigator, Eudora, works with all the popular email clients out there. It's got a lot of convenient features. If you're going on vacation, you can just go and say, "I want an auto reply" and type in the message, and the server will handle that for you. You can forward mail to other email addresses. It's all very simple. And, um, again, this is what that looks like. You just go onto the website and do it right, right on a web page. And, uh, naturally, with any new great Internet address in town, there's going to be a gold rush for names. So if you want to get on mac.com, I'd suggest you go lock up the name you'd like. There are some advantages to being the interim CEO. So if you try to get Steve, you might find it's already

Taken. So this is our second iTool, email. And when you get your email account, you can send out an iCard to all your friends telling them that you now have a new email address. So, our second iTool, mac.com. Our third iTool, in many ways, is the most profound, and it's called iDisk. What is iDisk? iDisk is your personal 20 megabytes of Internet storage hosted securely on Apple's Internet servers, so we're going to give everybody 20 megabytes of storage hosted on our

servers. But the most remarkable part is how easy it is to use. iDisk is an entirely new way of sharing and transferring and storing files over the Internet, and it's so incredibly easy, easy to use. You go to iTools, go into iDisk, you hit a button, and iDisk will magically put its icon right on your desk, your Mac desktop. And then you just double-click on it like any disk drive. It opens up into a window with folders in it, and anything you drag and drop into those folders is automatically transferred over the Internet to our Internet service, and anything you drag back is

automatically copied. It's incredible. And so, as an example, you know, again, you get this downloaded on your desktop, just drag and drop, and you're dragging and dropping things off of our Internet server all over the Internet, all really simple. So what does this mean? It means when you're at work, you can go to iTools, click a button, get an iDisk on your Mac's desktop, drag some work into it, shut down on your Mac, go home, go into iTools from your home system, click the button, get an iTools disk on your home desktop, drag some stuff out, and just move some stuff from work to home, move it back to work tomorrow, school to home, to school,

and there's a Public folder in your iDisk, and you can put anything you want in it and other people can look at it. All they have to do is know your login name. They can go to iTools and type in your login name and your Public folder will appear on their desktop and they can drag stuff out of it. So you can share things with anybody. It's incredible. So photos, iMovies, documents, anything. And you can use iDisk with iCards. You can drag your personal photos in and iCards knows how to read your photo folder in iDisk and it'll give you your personal photos for your cars. So iDisk is your personal 20 megabytes

of Internet storage on our servers. It's as easy as using a folder on your Mac desktop. We think this is going to be a big deal. iDisk is our third iTool and our fourth is Homepage. Homepage is remarkable. I know so many people that want a website and they just don't know how to make one and some of them buy some of the tools and some of the tools are great, Macromedia, Adobe, these guys got made great tools but they're just over the heads of a lot of people. So Homepage is a way to build your personal website in less than 10 minutes and we are hosting them on our Internet servers so you can put electronic photo albums, you can have

iMovies, resumés, birth announcements, anything you want and again you can use iDisk to import the content from your Mac. So you want to put photos in your website, just drag them into your photos folder and Homepage knows how to go look there, same with iMovies, and again your website's hosted on our Internet servers so it's available to everybody 24/7 and you can update it as often as you like. You get an iCard to send out when you get your website done and that is the fourth of our iTools. And now I'd like to show them to you. I know we're having some trouble with

the system, so excuse me in advance if it continues. So let's go to iTools. This is what you see when you go to iTools. Again, these tabs are on the top of every page all throughout apple.com so it's so easy to get to this stuff. So the first thing I want to do is show you what happens. Show you what happens when you go to KidSafe. When you go in there, you get something like this. It says, "Welcome to KidSafe," goes through the steps to download it and turn it on. I've already got it turned on, so I'm just going to. And if you turn it on and one of your kids goes there, this is what they get: "Editing KidSafe settings requires you to be logged in to this Macintosh as the owner," and you're

not. So, oops. So that's KidSafe. Now let me go ahead and try to go somewhere. Why don't I try to go to www.whitehouse.com and really let's try refreshing this. Oh yeah, I can't go to.com. I can go... oops, www. I can go to, go... I hope there it is. Boom, it's afternoon, so

I can, I can go to Time Magazine. Let's try CNN. I should be able to go to Time. I can go to CNN, right? I cannot go to Playboy, right? But let me show you something even more incredible. I'm going to bring up Sherlock now. Sherlock, we've added a KidSafe channel, so if you're KidSafe, all the other channels are pretty much removed for you and you have a KidSafe channel now. One of the problems with filtering again is that it filters out

everything, it's indiscriminate. So as an example, the word sex, it will filter out everywhere, and yet there are things about sex that I want our kids to know. So I can type in "sex" to Sherlock and there was a lot of KidSafe sites that will permit that word because they are KidSafe sites: Life Expectancy Calculator, Basic Genetics, etcetera, etcetera, right? And I can go to one of them as an example and go to Basic Genetics. Now this happens to be a site that I want my kids to see, right? And yet it filters out all of the sites that you might imagine have to do with sex that you don't want your kids to see. So this is KidSafe.mac.com. This is mac.com again. We can

Forward email. We can set an auto reply right from the server. If we want to set an auto reply message, here, very easy to do. You don't have to fuss around with your client. Really great email service. Now, let me go show you iDisk. This is iDisk. I think it's really revolutionary, and all you have to do is this: you just go here and say "Open my iDisk." Wait a second or two, and there it is. The iDisk just popped up on my desk right there, and let me go ahead and open it up. And here's my folders: documents, pictures, movies, public, and sites, right? And I can go into pictures if I want, and there's nothing there. I happen to

have some pictures, some holiday pictures. Let me just go ahead and drag them in. And I just literally drag them in and drop them, and it's going to copy them in there. It's actually copying them over the internet right now to our internet servers, and it's just like copying files from any folder in a Mac to another folder in a Mac. It's very, very simple, and there they are right there. And so those are now stored securely on Apple's internet servers. Now, I can do something else pretty cool with iDisk. I can actually go look at

somebody else's stuff in their public folder only. I can't see their private stuff, but I can see what they put in their public folder. So I'm going to go to Phil's public folder, and Phil is Phil S. So I just type in Phils because that's his login name. He's told me that. And I say open public folder, and what that's going to do now is put Phil's public folder iDisk right on my desktop. And I can go inside there, and here's now Phil's a product geek. He loves products. So he's got some product photographs in here of all of our products, and I can just click on them and look at them, right? And again, these are loading right off Apple's internet server. I can even look at a QuickTime streaming movie that he has put in his public folder. Let me click on

this, and it comes up, and I can say, okay, show me this aerodynamic design. So Phil has dragged this movie into his public folder, and I'm looking at it from anywhere else by mounting his public folder on my desktop. Pretty cool. Standard built-in DVD, of course. Now let me do something else here. Let me go to iCards if it'll let me in, and let me go to create your own. No, it's not going to let me in. Okay, so anyway, I could actually go to iCards and take some of

those photos that I had and make my own card with it. It's very, very cool. So now I'm going to go to HomePage, our fourth iTool, and here's HomePage. It's three steps to make your own website. So we're just going to make a website now, if that's okay. So what I'm going to do is I'm going to say, well, here's the things I can put in my website: photo albums, iMovie theaters, invites, announcements, resumés. So I'm going to say I want to make a photo album, and I can automatically make a photo album by pushing one button. It's going to go to my iDisk pictures folder, grab all the pictures in there, and make a website page automatically for me. So let's have it do that. There it is, and this is my template here, and those are all the

photos I have dragged into my iDisk, right? And I can say, well, let's go ahead and remove this one, and let's say I want to make a new title here. So I will say, oops, what's going on here? Let's say our—how about Rocky Mount vacation? And we'll apply that, and a subtitle here, let's say, boy, did we have fun. And I'll just get rid of the rest of

the stuff here. Boom, and apply that, and let's say I want to call this page Photo Album, and all I have to do now—now that I've taken out a picture and changed a few things—is say, Publish this. And this is now published on Apple's web server as your personal web page. It gives you the URL, and I can go see it, and this is it right here. There it is. And I can click on one of these, see the photos, click on any one of these, get a blow-up with a photo. Anybody can do this now from any browser in the world. This is all published on the website except for that one. Okay, so you get the general idea. Pretty cool,

huh? All right, so now I can go back to Home. I've done that, and what I want to do now is add another page to my website. So I want to add an iMovie Theater. Now I actually have—I'll go back—I'll go—I actually have a movie in my iDisk that I put in my iDisk. And so when I click iMovie Theater, I think I've got two of them in there. I say I want to edit this, and it'll show me the movies I've got, right? So I've got Cena's movie in there, and I say, apply. And so now I've got Cena's movie here, and I'm going to say, edit the title, and I'll say, Cena's movie, let's

say, or I'll say Our Kids, right? Our Kids, apply that, and I'm not going to bother editing this other thing. And so now I can just say, Publish this, and I can go back to my page now, and I've got my photo album here, which is what I had before, but now I've got my movie theater too, and this is my QuickTime movie theater, and I can stream streaming QuickTime. Anybody on the web can come see. This isn't this cool? And you can go back and edit this as much as you want, any time.

So we think this is going to be a really, really big deal, and um, we're really thrilled about it. So, that's Homepage Builder, Idis, KidSafe, and Mac.com—all of these iTools are premiering today. You can go use them as soon as you get out of here. You can access them from any ISP, although we're going to recommend the best one in a

minute, and they are free. They are all free, and iTools requires OS 9 because it's the only way it's possible. So, you have to be running OS 9 for iTools, but iReview and iCards are for everybody on any kind of computer. www.apple.com—now there it is. That's what you'll see. So, iTools. We get asked a lot though, again, how are you going to monetize this? You're giving iTools away. You're giving 20 megabytes of storage to everybody. You're running their email for

them, etc., etc., etc. Well, it turns out that we have a lot of customers. We have 25 million awesome customers, and we spend a lot to get new customers. We spend a lot on marketing, and we ought to be able to somehow monetize that by giving people great service in some area. And when we looked at this and we said, "Well, we're already selling great computers, we've got iTools on the server," but there is the matter of access. There is the matter of Internet access, and we would like to make sure our customers have the best Internet access on the planet. And so, we thought, should we do this ourselves or should we get a partner? And there were pluses and minuses to each. We explored

them all thoroughly, but in the end, we said, "You know, we should get a partner because we want to focus our energies on making the setup experience great and things like iTools to make the web experience great. Let's partner with somebody who knows how to provide the best access in the world." And so, we looked at the three biggest: America Online, with 20 million subs—pretty formidable; EarthLink, which is just completing their merger with MindSpring, 3 and a half million subs, number two; solid number two; and Microsoft Network with two million subs. These are the top three ISPs in the world. And after looking at them all very thoroughly, we

picked the best one. We picked EarthLink. We've had the opportunity—we've been working with EarthLink for over two years now—and these guys are great because they are passionate about providing the best ISP service in the world to Mac customers. They've won every award in the book for being the best ISP, and we are thrilled to be working with them. And so, we're partnering to provide the best ISP service for Mac customers with EarthLink. EarthLink is going to bring the best access, the best support, all the infrastructure like billing. We're bringing email from iTools and all the rest of the iTools

in the start page that we're going to work together on. And this is a multi-year deal for EarthLink to be Apple's ISP partner. They're going to be the default ISP on every computer we ship out, and we are going to be working together with them to make the experience of using a Mac and Internet access seamless way beyond anything else out there. And Apple profits from every new EarthLink Mac customer. So, if you want to help Apple, switch your ISP account to EarthLink, and we will in turn take those funds and invest them in even

more R&D to make great products for you. So, another part of this is we have decided to make a major investment in EarthLink. The more we studied these guys, the more we decided we're really going to be very strategic partners with them, and they are way undervalued. And so, we want to own a piece of EarthLink for strategic and financial reasons. And so, Apple is announcing today that we're going to invest $200 million in EarthLink. So, it's my pleasure to invite the CEO of EarthLink, Gary Betty, up on stage. I'd like you to meet him. He's going to be a

big part of our future. Gary, come on up. Thank you. Wow, a lot of show, Steve. That's, uh, quite a demonstration. We are very excited about this relationship with Apple. EarthLink was founded in 1984 by Sky Dayton. He actually created a software product for the Mac. We didn't have our first Windows software package until about 17 months after the company provisioned its first account. So, Macintosh has always been near and dear to our heart. We also, I think, are one of the few companies who actually have specialized support people who,

understand the Macintosh environment, and we're dedicated to ensuring that the Macintosh user, which Steve talks about, gets the absolute best access and support they possibly can from our company going forward. Steve is right: this is a big deal for us. It's a great source of new customers. When you look at the economics of our business, scale is everything. Having the ability to continue our position as a default provider on this platform, which is becoming more and more important in the consumer environment, is going to be a big part of our future growth and success. And I think, I hope that Apple's investment in EarthLink turns out to be like Akaba in the next

12 months, showing similar types of returns for his $12 million to a billion. With Apple support, with your support, I'm sure that we can do that. And with that, I'll turn it back over to Steve. Thank you. So, we're going to be doing a lot of great stuff together. We're very excited about this. So, again, Apple profits from every new EarthLink Mac customer. Tell your friends, and because of this, we believe Apple will be one of the 10 most profitable Internet companies in the next few years. We're pretty excited.

About this, and, um, it's a way for us to monetize the fact that we put all of this engineering into making getting on the Internet so easy. So we can, again, take that money and plow it into making even better products for everybody. So that's clearly— we are moving to extend ourselves beyond the box with our four foundation products or foundation Internet assets, leveraging off apple.com with almost 10 million viewers a week, adding a much better way to navigate, bringing the store up to the top level, QuickTime and support up to the top level, adding three major new areas: iReview, iTools, and iCards. iReview—the finest place to

go find out where to go on the Internet; iCards—the Apple of greeting card sites; and iTools—revolutionary tools which are only possible because we take advantage of the fact that we own the client OS to create an entirely new class of Internet services available exclusively to Mac users. And our deal with EarthLink to provide the best access in the world. So we are clearly moving beyond the box, but we're not done yet, because it's my pleasure today to

announce Mac OS. This is, I hope, also going to blow you away. We are announcing Mac OS 10 here today. I'd like to go over the goals for Mac OS 10. First, we are going to have a single OS strategy at Apple. We're not going to have a dual or a triple or a quadruple OS strategy like some others. We're going to have one OS, and that's very important to us. The second is the Mac OS needs state-of-the-art plumbing. We need the

best operating system kernel technology, the best Internet networking in the world, right? We need the best plumbing of any operating system out there. Third, we need killer graphics. Almost every app depends on graphics, whether it's design and publishing apps for our pro customers down to things that we use every day. We need killer graphics in this system, and we need to design it for the Internet from the start. We need to design it in a way that most users who are always plugged into the Internet get full benefits. We need to design it in such a way that we use Internet standards throughout, and we've done that. And we need a general migration because

we have 25 million users using our current generation operating systems. So these were the goals for Mac OS 10, but to sum it up it was, make the next great personal computer operating system. Now, there's going to be a 12-month rollout of Mac OS 10. You can't do these things overnight— it's going to be a 12-month rollout. So we are announcing it today, January 2000. Our developers have already had a few betas of the software. They're going to get another pre-release of the software at the end of this month. The final beta will go out to developers. The

spring, Mac OS 10 will be on sale as a software product starting this summer, and we will be preloading it on all machines a year from now. So that is our rollout strategy. Now, I'd like to go through the architecture of Mac OS 10 with you. To start off with, we need a kernel, and that kernel we call Darwin. Darwin's amazing. It's a super modern kernel, and it's got protected memory, preemptive multitasking, modern networking—all the things you'd expect—done in a very elegant way, and it's very

Linux-like. Very much so. It's got FreeBSD Unix, which is the same as Linux, so it looks almost the same to developers. It's got a Mach microkernel, and it's completely open source. You can go to Apple's website today and download it as 75,000 people already have. It's completely open source, and we're getting a lot of help from the Mac community to make it better and better and better. So we're extremely excited about Darwin. The next layer on top of Darwin is killer graphics. We've got three components: our 2D, which is Quartz; our 3D, which is OpenGL; and our media layer, which is QuickTime, and they're all seamlessly integrated right into the operating system. So let's take a look at Quartz. Quartz is PDF

based. What does that mean? You know when you go to the web and you see PDF documents, you read them with Acrobat, this great technology invented by Adobe? Well, that technology is now at the core of Mac OS 10's graphics, so you can image PDFs instantly. We have on-the-fly PDF rendering, anti-aliasing, and compositing, which will blow you away, built at the core of the OS, so now all applications get this for free. And we have built-in transparency into the model, and I'll show you that in a few minutes. Our OpenGL 3D standard is the most widely supported 3D standard in the industry. It's very advanced, and we have full hardware support for it, built in again

to the core of the operating system. And obviously QuickTime, for digital video and audio, live Internet streaming—Internet standard, 33% market share, built into the core of the OS. So those are our killer graphics. The next layer are our APIs, the things that our developers program to, and there are three of them in Mac OS 10: Classic, Carbon, and Cocoa. Classic, and—and the reason for this is to provide a general migration for people from the left to the right over time. Mac OS 9 Classic runs Mac OS 9 apps as is, without modification, so you can run your

Mac OS 9 apps right on Mac OS 10. You do not get all of the new features, however, because it's impossible to do that, but they all run, and they run well. Carbonized apps get the new features now. What's a carbonized app? It's something that takes a developer a few months—one to three months—to carbonize their app to get it ready for OS 10, and all of a sudden it springs to life with all of the new features of OS 10. And the third API is Cocoa. It's completely different. It's fully object-oriented. You can write applications in Java or other object-oriented languages and get all of those benefits. So

Developers can choose any one of these they want. They can run the existing apps in Classic, they can spend a very short amount of time carbonizing their app to get all the new features, which we think everybody will, or for new applications, they can write them in Cocoa and get all of the benefits of Apple's incredibly advanced object-oriented technology. So that is the API. So this is the architecture. Except there's one more thing. The one more thing is, we have been secretly, for the last 18 months, designing a completely new user interface, and that new user interface

builds on Apple's legacy and carries it into the next century. And we call that new user interface Aqua because it's liquid. One of the design goals, when you saw it, you wanted to lick it. And so we call it Aqua. And this is the architecture for Mac OS 10, and we are incredibly, incredibly excited and pleased with how this has turned out. Now, when we talk about user interfaces, um, let me show you. This is it. No, um, this, this is what started it all, right?

The original Macintosh in 1984, 512 x 384 dots on the screen, black and white, kicked off a revolution. And, uh, we saw others follow. In the late '80s, uh, this was Windows 3.1 in the late '80s, and, uh, Apple followed up in the mid-'90s with the current user interface called Platinum, still the best thing out there. And, uh, and then this is Windows 98, which obviously came out '98. So these are the user interfaces out there. They're all credible, they all work. How do we take this to the next level? Well, let me show you a few slides on Aqua, and then I'd like to demonstrate it for you so this you get a little feeling for what Aqua may be like. So I'd like to just start

off. You know, when you design a new user interface, you have to start off humbly. You have to start off saying, what are the simplest elements in it? What, what does a button look like? And you spend months working on a button. That's a button in Aqua. This is what radio buttons look like. Simple things. This is what checkboxes look like. This is what pop-up lists look like. Again, you're starting to get the feel of this, a little different. This is what sliders can look like. Right now, let me show you your windows. This is what the top of windows

look like. These three buttons look like a traffic signal, don't they? Red means close the window. Yellow means minimize the window. And green means maximize the window. Pretty simple and tremendous fit and finish in this operating system. When you roll over these things, you get those, you see them, you know. And when you are no longer the key window, you know, they go transparent, right? So a lot of fit and finish in this. In addition to the fit and finish, we paid a lot of attention to dynamics, not only how do things look, but how do they move, how do they behave. And our goal in this user interface was, was

twofold. One, we wanted to give a much more powerful user interface to our Pro customers. But two, at the very same time, we wanted to make this the dream user interface for somebody who's never even touched a computer before. And that's really hard to do. It's like when we do films at Pixar, it's really easy. It's a lot easier to make a film that appeals to five-year-olds and under, but it's very difficult to make one film that five-year-olds love and that their parents also love. And that was the goal of this user interface: to make it span the range so that our people turning on their IM for the first time were enchanted with

it and was super easy to use, and yet our Pro customers also felt, "My God, this takes me to places I thought I could never get to," and that's what we try to do. We also have proxies built right in, so when you want to drag a document off, you can just drag this little proxy off very nicely. And these are what scroll bars look like, right? So let me go ahead and show this to you. If everything works, this is, um, very few people have seen this until today. We've kept this very secret, and, um, it's my pleasure to show

it to you now. So let me first show you, uh, what a control panel looks like. Just some controls. So I'll just open one of these preferences control panels. This is Sound. Again, you see what sliders look like here, pop-up lists, check boxes, you know, radio buttons, check boxes. Now, one of the things we didn't want to do was put a big black circle around the button that gets activated when you hit Return. So what did we do? We're using the fact that, you know, we have a gigaflop sitting here, uh, maybe, uh, maybe we can do something with it. And so very gently, we just dim and brighten the button to say, "Hey, this is the one that's going to get activated if you hit Return," and clean up the user

interface. Let me just show you another one here real quick, another preference panel. And so we think these look a little bit better than the current system does. Here, same sort of thing, right? Very, very simple. So those are some panels. Now I'd like to show you some windows. This is a window here, and notice when I drag the windows around, it drags the contents around. Uh, it also does that on resizing. You notice this kind of nice, and you see the scroll bars here, again proportional scroll bars. You see what happens when they move? They come and go as necessary. And, uh, you can see our three buttons at the

Top here, right? So, put the window away, etc., and you'll also notice—let me bring up another one here—you'll also notice that, uh, the windows have wonderful shadows on them. You can—you see the shadows on the right of this window. Maybe if I bring up a text document, you can see it even better against white. Um, can you see that against the white there? Right, see that? Very, very subtle, very nice. And, uh, windows don't even need to be the activated window to put them away. These controls, I can roll over and just put this thing away, right? Very nice. So, um, now what I'm going to do is show you an incredible thing that that

some of our Geniuses came up with. You know, in Mac OS—and we'll touch upon this a lot—Mac OS generates a ton of windows, and you get to be the janitor and clean them all up. And one of the most annoying is panels, right? Like a save panel. So you go to save, and a save panel comes up. Now, a lot of times it's modal, so you can't do anything else in the machine—even if, even on another app. That's ridiculous. But even if you could do something on another app, by the time you come back, you've forgotten which window or document that save panel's for, and you got to manage it, move it all around. How could we simplify this whole thing? Well, let me show you. So here's a window and I'll do a save as, right now. See,

that? Right, simple. And, um, so, you know, I could be—oh yes—and I can have, as an example, I can have a few of these up here, right? And I can just say, you know, let's save this one, and it's very clear, you know, what that pertains to. I can go do something else if I want to, and, uh, when I come back, I know exactly what that thing pertains to. Now what happens, though, if the window's really small? I mean, we got to think these things through, you know, and I want to save that. Well, this is what happens. And, and what happens now? What happens if

this thing's up against the side and I save as well? That's what happens: just puts it back when you're done. Now, let me show you something else that's cool. Um, you'll notice that the save panel looks a little different than you've seen before. Um, it, um, it actually is very simple. You might be able to understand it. And so you could type something in here, and you have this popup list which has your favorite places, which you get to manage what's in there, and your recent places you save stuff. And so most of the time, 99% of the time, when you want to save something, you just pick somewhere like Documents and go save. Pretty simple, huh? But if a place that you want to save something isn't there, you just hit this button and you get a full browser here. And so if you know your network, you can just go around

your network, you know, pick, pick wherever you want, right? Boom, boom, wherever you'd like to save it, or just hide that. Very, very simple. Very, very simple. Make sense? Right? Okay, we're just getting started now. Menus: we thought a lot about menus, and what we came to the conclusion was that Mac menus are the best menus in the world. Uh, there's nothing better. They work great. There's 25 million people that know how to use them, and they're wonderful. So let's just do a great implementation of pull-down menus. You'll see that they actually fade out like

this. Very nice. But you'll also notice that they're actually, uh, semi-transparent too, except for the text. Isn't that cool? Let me just give you another example of that. See that? Pretty cool, huh? So what else do I want to show you on menus? That's pretty much it for menus. So now what I'd like to do is into a topic that I think a lot of the developers were worried about, which is the Finder. Were we going to make a radically new Finder? The answer to that is yes and no. The Mac Finder was a brilliant

invention and is a great way to store documents, and nobody's invented anything better, but we can do a better implementation of it that does a lot more for you. So let me show you the new Finder. It's completely new, and yet I think you'll—you'll recognize it. This is the new Macintosh Finder now. It works just like your old Finder if you want it to. Now, again, the old Finder, when I clicked on things, it spawns windows, right? So here I am clicking on things, getting a lot of windows, and I get to be the janitor. Well, if you want to be the janitor, you can be, um, and clean up all these windows, but the

default way it works is to just do that for you. And every time I click, it just takes me somewhere; doesn't just replace the window with the place I want to go. And if I want to get back, there's this popup list right here shows me everywhere I've been. I can go anywhere back there. Boom, I'm back to the computer. Or I have something that's also very easy: I have a back button, just like on a browser, that takes me back to the last place I was. Very simple. We also have a search field where you can type in anything and find documents by both name and content almost instantly. So it's really easy to find stuff. It's really easy to navigate. Now let me show you some things we've added to make it even easier to navigate.

We have icon view here, right? So I can go into here and go into Documents, go into Documents and follow it down that way. Or, of course, I have list view, which you're all familiar with, right? But we've added another view called browser view, which lets me see my whole tree here, everywhere I've been, all the way back, every choice I've made. And you can click between these views so easily. Right now in browser view, there's another fun thing, which is if you click on one of these, we've added a preview mode, and so I can preview any kind of documents right here just by clicking on them. As a matter of fact, I can even preview QuickTime movies. Pretty cool. I love these.

Outtakes. So we have all sorts of different ways to view your files at a click of a button right here up on the Finder. You can just pick whichever one you want, change it as often as you like. Now, in addition to this, we've added some buttons here, and these buttons are shortcuts. They're shortcuts to the places that you go all the time. And so we have one called Computer. It takes you to your computer. You can see your disc drives, you can see the network if you want to go on the network, whatever you want to do. We have another one called Home. What's that about? Well, if you're the only user on your computer, your home is just going to be on your computer right there next to the hard disk. But if you set up your computer on a network or

set it up even at home or in a classroom to be multi-user, that we talked about, like Mac OS 9 does, everybody will have their own home, and this takes you to your home whether it's on your local hard disk somewhere down the tree or even in another building on a file server. It'll just take you right to your home. This button here takes you right to your apps. You ever have trouble finding your apps? Boom, there they are. This button takes you to all your documents, and again, you can have folders in here and organize this however you want, make the hierarchy however deep you want. You know, it's up to you. But one button takes you to the top level of your documents. Favorites, this is your favorite places to go. Now remember on the save panel when I popped up that list and it showed me my favorite places to go? The way I set that is by dragging

things into this Favorites folder. And every time I have an open or save panel, it just reads this folder and shows me those places in that popup list. It's as easy as changing my favorites. It's as easy as dragging in, out folders from this one place. And if I'm in a multi-user system at home or in a classroom or on a network and I want to see the other people on the network, I just push People. And if I have permission, I just click on one of these and I go right to, like in this case, obvious home directory if I have permission, so I can find people very, very easily and get to their home directories to share stuff. So Computer, Home, Apps, Docs, Favorites, People. Pretty cool, huh? And this is the new Mac Finder. It offers far greater power to professional

users, such as things like the browser and inline viewing. And yet for the beginner, having these buttons up here taking them to places that are so easy to find things, it is far easier to use than the current Finder on the Macintosh. And we think now sets the new standard for excellence on personal computers. So remember I told you we had three APIs. We have Classic that runs existing Mac OS 9 apps without modification, we have Carbon which allows the developers to tune up their Mac apps really fast and

get all the features of 10, and then we have our very advanced object-oriented APIs Cocoa which lets you write apps in a tenth of the time. I'm going to show you apps from each one of those right now. So first, let's begin with a Classic app. So I just go to my Docs folder and I've got one here. I've got an Excel spreadsheet. I just click on it, launches Excel, and there's Excel. You know, I just go change something and you can see the pie chart change here. Boom. And there's Excel running just like normal, launches, you see the launch time on this, really fast, it's really, really nice. So that is Excel as you see. You don't get all the nice bennies, right? Here's the the save panel or the quit

panel with Excel, and it looks like Mac OS 9, so it does not inherit the new user interface. Now the next thing I would like to show you is an app that's running in Carbon. And this app is really interesting. The company that authored this app has never seen this incarnation of Mac OS 10, they've never seen the new user interface. And what you're, what I'm going to show you is an app that has been carbonized and runs on 9 when you recompile it and run it on 10 with literally no changes to the code to take advantage of the new features. And that app I'm going to show you is Internet Explorer 5.

We've been working with Microsoft to help them carbonize their app. We got a copy of it and let me run it here. It comes. This is Internet Explorer 5. What you just saw on the slide of that runs on 9 and again it's inheriting all of the benefits of 10 in terms of its new scroll bars, its new window bars, all of its behaviors, its shadowing, etc., etc., and they can now go back in here inside their app and take whatever advantage they want of our new control elements and otherwise in a very short period of time. So here's Internet Explorer, a carbonized app running just perfectly on 10. So here's Apple.

Let me go to, you know, here's the Time site. Let's go see what's in Time Magazine. You know, I just go to Amazon here if I want to, and it's all working great. And again, Microsoft, this today is the first day that Microsoft's even seen this user interface. We wanted to do a test to see if the code would just work, and it does. Okay, so and now I'd like to show you a Cocoa app. We think, what's the most used application on the Internet? It's not a browser, it's email. And we want to take

more responsibility for providing a great email client for those Mac users that want to take advantage of it. So Mac OS 10 comes with a built-in email client that we think is the best in the world, and it supports full POP and full IMAP for those of you that know what that is. And, uh, you can just click on messages, you see the contents. We have full inline graphics, so these things were sent as attachments, but they just image inline there. There we go. Again, that was an attachment. Just images them right in line automatically. I've gotten a bunch of holiday cards here from Apple, and, uh, again, you know, real-time resizing, real-time repartitioning, and I can get new mail

here. I'll show you something cool. This is the progress bar in OS 10. So you just go fetch email, and, uh, we've got some other fun things we've built into it. Uh, I can, uh, take a message and just say I want to reply to it. And in the CC field, once I start typing, I've got really smart addressing, so it just goes back and just shows me, as an example, you know, and each time I type, right, I type Obby, boom, I get it, boom, I'm done. Really smart addressing built into this thing. And let me go ahead and, uh, show you another cool thing we built in. Yes, please close this. Um, we've built in, uh, systemwide a whole new font panel, and, uh, so I can select this and

bring up our font panel. And in the font panel, we've got a few new things. First of all, of course, we have the ability to change fonts. Let me make a much bigger size so you can see it, um, here. And, uh, you know, I can just change fonts and it all images beautifully. And by the way, you'll notice that all the text is fully anti-aliased, so it looks really gorgeous all in the fly, right? But we've added this concept of collections, so I can look at all my fonts, or I can look at a collection I have called Fun Fonts. And people can organize their fonts into collections, right? Is this nice? And it's very easy to manage all those things. In addition, I've got this little button on the bottom now called

Buy Fonts. And when I hit that button, it takes me to a website where you can buy fonts online and have them automatically downloaded into your computer. So if you ever want to buy more fonts, it's going to be really easy. Okay, now one last thing I want to show you is what about different mailboxes? Well, we've built that into it, so you push this button called Mailboxes, and out they come, right? Very simple. And I can transfer something just by dragging it here and just put it in any one of these mailboxes. Very easy to look at another one of these mailboxes here just by clicking on it. And, uh, now what happens if my mailbox isn't out and I want to save something? Again, I just drag it and it comes out and transfer it. It goes back in. And, uh, if I prefer the other side, I can just drag that way and do the

same thing. Very simple. So this email client will ship, uh, with Mac OS 10 and it will be built in. Let me show you now I want to, um, regress and show you one other, uh, Carbon app which is really cool, and it's an app that we have up and running called QuickTime. QuickTime is all up and running on Mac OS 10. First history, a personal computer has been classified as a weapon by the US government. That's cool with the power to perform over 1 billion calculations per second. The Pentagon wants to ensure that the new Power Macintosh. You get the idea.

Isn't that incredible? Now let me show you another one. This is the new Mission, the tra—new trailer for Mission Impossible 2, and, uh, this is a great trailer here too. Let me move it ahead a little bit here. Agent, good morning, M. This is going—you get the idea. Pretty

cool. Now we've seen some pretty cool apps. We've seen existing Mac OS 9 apps work without modification. We've seen carbonized apps that were really easy to tune up to get all the benefits of Mac OS 10. We've seen, uh, Cocoa apps like Mail built from scratch using very advanced object-oriented technology. I want to show you an app that I hope you never see, um, and, uh, I'm going to go back, uh, and, uh, go to the Finder and I'm going to go to apps. And this one's called the Bomb app, and we actually wrote this app, uh, and we wrote it because we wanted to make sure and also to demonstrate that when an app crashes in Mac OS 10, it does not bring

the system down like we all are used to. So I'm going to launch the Bomb app now. This Bomb app does everything it can to kill the system. It goes walking through low memory. It does all these heinous things, and, uh, and so I'm going to—I'm actually just gonna go ahead and, uh, play the, uh, play the trailer here maybe a little bit, and, uh, you know, just I'll just go ahead and light this thing. No problem. Good morning, Mr. H. Sorry I bodged in on your vacation again. So let me just run that again because

Believe it or not, a lot of people have been waiting for this for 10 years, and it's actually here. And again, this is going to do everything it can to trash the system. Nothing. Good morning, Mr. H. Sorry, I.B. Okay, next. All of this, all of what you've seen now is possible because of the killer graphics that are built right into Mac OS.

10, and these killer graphics are extraordinary. And what I'd like to do now is demonstrate Quartz to you, just some of the features of Quartz. First of all, again, Quartz is totally PDF-based, and so what I can do is I can go get some things here. Let's go to the Finder, let's go to Documents, and down here I've got some things from Toy Story here. Hey, by the way, how many of you saw Toy Story 2? We're very fortunate today to have the director of Toy Story 2, John Lasseter, and the co-directors Lee Unkrich and Ash Brannon in the audience. Where are they?

Where are you? Stand up guys, where are you? So I'm going to use some Toy Story logo stuff because I love Toy Story. And here I just dragged a PDF right into here; you notice how fast it imaged, by the way, and you notice that it's fully anti-aliased. And I can size it like this if I want to, I can rotate it, I can do whatever I want, and I can put a shadow on it if I want to. And again, just to do anything I really want to, this is all being calculated on the fly. And you notice the shadows on the bottom now, and they stay on the...

bottom right, so very simple. And so I've got Toy Story here. Let me just go ahead and drag in the story here, and we'll put that maybe up here like this. And we'll drag in our "two" and make that a little bit smaller. Maybe make it a little bit smaller here. And now, let me just show you something: let me take "Story" here, and I'll go ahead and put shadows and everything because it makes it harder actually. And let me go ahead and show you transparency. This is what transparency is. See that? So we can do any partial transparency all throughout the system so easily now. Every app can do this; it...

gets it for free. Let me go ahead and drag in a photograph as an example. Now, you know what every kid in the country has on their minds? You know, right? A't that great. So another thing I can do, if I want to, is again I could open up Mail and decide I want to send this to somebody. And since the whole system is PDF-based, I can just drag this into a—oh, I gotta get a new viewer—and let me just get a compose window up here. And I can just take this thing and drag it out here. Notice how it makes a little PDF icon and drag it over here and just drop it...

in. Boom. Now it's imaged in my Mail view. Okay, so that's what we're doing with PDF, and it's systemwide. These incredibly killer graphics systemwide. Now, to give you another example of graphics, what I'd like to do now is show you an incredible 3D application of graphics running on Mac OS 10, using OpenGL hardware acceleration, the works. And that is Quake 3, one of the hottest new games. John Carmack and his team have ported Quake 3 to Mac OS 10 very easily. And to demonstrate it now I'd like to...

bring up Phil Schiller, Apple's Vice President of Worldwide Product Marketing. Phil! Hey, Steve. I get to do one of the most fun things, and that's to play games. I go home late at night, play these games all night long, and my wife doesn't really believe it's part of my job, but it is. And there's nothing cooler than being able to work on Mac OS 10 and try out and demonstrate to all of you the very first game ever demonstrated on Mac OS 10. And so for me, it's a pretty big moment, a pretty exciting thing. OpenGL is just built right into the core of the system, very high performance, very...

powerful, and Mac OS 10 is going to be a tremendous, great gaming platform for all our great developers and all of our great customers. So let me bring up Quake 3 on my system here. Get my keyboard set up with all my favorite Quake settings—for all those who play Quake, you know what I mean. And this gives really ultimate meaning to the term "killer graphics." So we're launching Quake 3 now, the Mac OS 10 version, right on top of Mac OS 10. I'm going to go into single-player mode and actually start a fight. Now, this is going to be a no blood and guts demo. For everybody who wants that, you know, after the show I'd be happy to...

show them how good I can really be. So I'll keep it at the lowest setting. We're going to launch right into the first arena of Quake 3. It's going to load in its graphics, maps, all its sound files, its characters, its weapons. And this is one of the best 3D games to show off the performance of OpenGL and Mac OS 10. And it's loading—or not. Not having luck...

today. So we're going to have to try this again later. Okay. That's great; it's pretty awesome when it works. Thanks, Phil. All right. Okay, so now I'd like to show you one of the coolest things about Mac OS 10. When Apple shipped the original Macintosh, it introduced to the market an organizing principle called the desktop, to organize your work, to keep track of things. And as computers got more complicated—i.e., you could work on many things at once—we have internet connections and email coming in and out and stuff. There has never been an...

Enhancement of that organizing principle that worked really well to help you manage all these things you're doing at once. And we have come up with something really great for Mac OS 10, and it's called The Dock, and I'd like to show it to you now. This is the Dock. It's at the bottom of the screen. It always stays centered and it allows me to put things into it. I can put all sorts of different things into it. How do I put things into it? Well, I can drag things into it, but let me show you a much cooler way to get things into

it. I've got these three buttons up here. One puts closes the window, the other maximizes it, the third minimizes it. The middle one — where does it go when a window minimizes? Well, it goes here, and you notice my dock just grows, right? Let me open another one, minimize it, and of course I can move these things around in the dock anywhere I want to, right? Whoops, I didn't want to do that, sorry. And I can just hit them, resize them, boom, boom. Pretty cool, huh? Let me even show— I can slow this down. We built in a

special slow-mo mode for the demo here today. Look at this. Ain't that cool? It's just— it's just magical, and it shows you exactly where they go. Again, it's that same — we call it the genie effect — that the sheets use when they come out, and I can just play with it all day long actually. So let me even show you one other thing here. This is — this is particularly amazing. I'm going to get my Mission Impossible QuickTime movie back up here, and there it is. And so why don't we go

ahead and, you know, play some of this, Agent. Let's go ahead and minimize it. Huh, pretty cool, huh? Good morning. Sorry, I about on vacation, and we're going to make it so you can even watch them when they're in the dock. So pretty cool. Now let me go ahead and show you, though, what happens, let's say, with the Dock. Let's— let's open a few more of these

things, and let's say I go ahead and, you know, miniaturize these things, and I'll go ahead and turn the speed back up here. And you—I miniaturize more things, and then I can also drag things into the Dock. But what happens now? The Dock is full. What do I do? Well, it just shrinks a little bit, right? And I can put anything in here I want. I can put websites, I can put documents, I can put anything — applications, anything that I use — and I can rearrange them at will, and the Dock just accommodates anything I want. When I drag something out, it gets

bigger, right? Now a question would be, well, how small can it get? Well, it can get pretty small actually. You can actually set the maximum tile size, and it'll shrink from there if you have more stuff. But, you know, you can actually say, well, it'll get really small. I can hold like 128 things here. How would I ever see them though if they get this small? Or if I even prefer them this small? Well, we have something we call magnification, which works kind of like this, right? And so you can turn magnification

on, you know, as large as you want, just set how, like, you know, how big you want them when they magnify, and you can set the maximum tile size so you can keep them like this, and, you know, do anything you want. It's really, really cool. And if you don't like it at all, you can just hide it, and it'll just come up when you go down there. Very, very simple. Okay, so now let me show you one last thing. I'm going to take some of these things out of the Dock. I'm turning magnification off. I'm going to get the Dock back up a little bit bigger again. Oh yeah, this thing is, let's just

quit that. And so my Dock's a little bit bigger again, and, oops, I can also change the size of icons on my desktop by the way. That's cool, very simple. I'm going to set my maximum tile size up large again, and drag this out. And so I've got—let me just go back here now to where I've got a few images up here, and so I've got two images up here. And let me go ahead and click a button that's on the right side of the top of the window pane. And this button is pretty cool. What it does is, it says, you know, when we have a lot of windows

around on our system, it can get rather confusing for beginners and even for pros if you're working back and forth between Illustrator and Photoshop, or Photoshop and something else. These things can get very complicated on the screen. What could we do to make life easier for our Pro customers and for beginners? We came up with something pretty neat, and you can click it from any window. You can turn it off and on. And it's called single window mode. So you just click this, and every other window on the screen is miniaturized. And when I click another window, boom, they switch places. It's very easy. So let me put this one over here. I say, boom, I want that one. No, I want that one. No, I really want that one. And let me go ahead and show this to you in slow-mo

here. It's kind of fun, pretty cool. Hi. I can even show you some text here again. I launched the new app. The other one put itself away. Whoops, there we go. You know, pretty cool, huh? So this — this is Mac OS 10. This is our foundation for the next decade of Macintosh operating systems. And we are

Thrilled with it. Now we have some incredible developers in the Mac community, and over a hundred of them have already committed to Mac OS X. Most, none of them have seen this yet, what you saw here today, because we've been keeping the user interface very quiet. And we've already gotten pretty much the top 100 developers committed. And I'd like to bring a few of them up on stage right now just to say a few words about Mac OS X. Like to start at the beginning of the alphabet and ask Bruce Chizen, the Executive Vice President of Adobe, one of our closest partners, to come up here and say a few.

Words? Thanks, Bruce. Steve, this is so damn cool. Awesome. Adobe just had an incredible year. We surpassed the billion-dollar mark, Steve. If it wasn't for you, it wouldn't have happened. Almost half of our revenue, close to $500 million of our revenue, was because of sales of Macintosh applications. Thank you. We demonstrated with the release of

Photoshop 5.5 for the G4 that we probably, more than anybody else, will optimize our applications for Steve's products and Apple's products. We are absolutely committed to OS X and we are going to do everything possible to get all of our apps running, all of our key apps running at least carbonized by the Steve Jobs' OS 1. Thanks, Steve. Next, Kevin Brown from Microsoft. Kevin, what do you think? Thank

you. Well, as you can see, it's a great time to be a Mac user these days. It's also a terrific time to be a Mac developer. Microsoft, our Macintosh business unit, has had its best year ever as well. We've had over 2 million downloads of Internet Explorer 4.5. As you see from the work that Steve briefly previewed, Internet Explorer 5 is shaping up to be a pretty exciting product as well. And so I'm excited to announce this morning that Microsoft is fully behind Steve and his OS X product. We're going to be there on day one with Internet Explorer 5 and Outlook Express 5 for OS X. We've got a great new version of Office in the works to ship later this year. We'll go to OS X on that as soon as we can as well. I think you'll be stunned by the work that we're doing, not quite as visually

appealing as that, but certainly every bit as useful as the work that we've done before. So thanks, Steve. Thanks, Kevin. Thank you. You know, when we announced our partnership with Microsoft two and a half years ago, most people couldn't understand it and didn't think anything good would come of it. And I gotta tell you, we're working very closely with these guys. Kevin has an awesome team up there of Mac developers and they're doing some great applications on Macintosh. So next, from Macromedia, Rob

Burgess. Macromedia is on fire these days, and I'd like to bring Rob up on stage. You like it? I'm spent. I've never seen anything like this. It's just unbelievable. I'm speechless. This isn't your daddy's operating system launch. You know, come to, come to, you know, lend support for the new operating system and you just don't expect anything like this.

I mean, I'm sitting here in the audience 15 minutes into it and, you know, we're watching the movie "Seeing as Kids," and I realize I'm welling up with tears. I am. I mean, probably a lot of you with kids are doing the same thing. And I just, I mean, Apple, Apple is design; you know, everything you see here, you want as a consumer. You just look at it and it's beautiful. I'm actually really digging his new shoes too. Anyway, we just got, we just got a

new system in about a month ago and we decided to try porting our most popular application, which is Flash. 200 million people have Flash Player today, and so we decided to port it, so put an engineer on it, one engineer for a week and a half, and it's running. So the guy actually isn't even that good—that's a joke. Anyway, you can count on Macromedia. All the applications that you love — Dreamweaver, Fireworks, Flash — they'll all be there. We love this stuff. Congratulations.

Thank you. Next, Richard Jones from Cork, who's president of the desktop division. Thanks, Rich. Wow. I'm, I'm, I'm excited and delighted to be here and let you know that Cork is committed and dedicated to Apple in general and to our HTS in specific. This is just amazing stuff, and it's really exciting. I wish I could say that ours was only going to take a week and a half. Cork Express, however, is a bit more of an effort. We've been getting a lot of help from Apple and we really appreciate that.

But we're going to make it there, and it's fantastic stuff. And as all of you know, or some of you know probably, that Express originated on the Mac. We have been Apple fans and partners for years, since Cork was founded in the mid-'80s, and it hasn't slowed down since. We're going to continue to be with OS X and whatever Apple comes out with beyond this, which I don't know, my imagination kind of dies after some of this. But we're there for the long, long term. So thanks a lot. Thank you very much. John Karmack, the co-founder of id...

John got married today, and this guy is so great, he offered to postpone his wedding to be here and we said no way, we'll make a video. And he said, I never thought of that. And so we have a video of John Carmack here that I'd like to show you, and he is on some tropical island now, I think, by now probably married. It was a year ago just about today that Apple announced that they were going to be supporting OpenGL on the operating system, and we announced that we were going to be doing simultaneous development for our current project on the Macintosh platform. Apple's now shipping.

Accelerated OpenGL on every single platform, and we've shipped our game. Now it works well pretty much across the board, and I'm quite happy with how that's gone. What we've got with OS X is a fully modern operating system that has really the best elements that we find on a wide variety of Unix platforms, and it still has the user-friendliness and the environment that Macintosh users are used to. Quake 3 will continue to be supported on the existing Apple platforms throughout its entire lifetime. We've got updates and modifications coming along through the course of next year, but our next new product development that we start on for the Macintosh is going to be deployed exclusively on OS 10. There's just too many things that I look forward to in moving to that environment that I don't

plan on looking back. And lastly, a company that we've been doing a lot with lately, Palm Computing, they're going to be spinning out very soon, and I'm happy to introduce their new CEO, Carl Yanowski, a great choice. This is awesome; we were very, very fortunate at Palm to have one of the early seeds of OS X 10. We're very excited and committed to the Macintosh community. I think we share a common philosophy of simplicity and seamless integration and

design. Most of our development work—a significant amount of it—is done on the Mac platform. I'm pleased to announce that we now have about 35,000 developers. We're growing at the rate of about 1,000 per week. Middle of December was 29,000, so we look forward to a long and strong partnership, and it's good to be back in Silicon Valley. All the best. So Mac OS 10 G to be rolling out on a Macintosh near you the second half of this year, and I think we have a lot to look forward to in it. We're really excited about it.

So I want to zoom out and talk about the big picture of how we see all of these things playing together. You know, I remember two and a half years ago when I got back to Apple there were people throwing spears saying Apple is the last vertically integrated personal computer manufacturer; it should be broken up into a hardware company, a software company, what have you. And it's true that Apple is the last company in our industry that makes the whole widget, but what that also means, if managed properly, is it's the last company in our industry that can

take responsibility for a customer experience. There's nobody left. And it also means that we don't have to get 10 companies in a room to agree on everything to innovate. We can decide ourselves to place our bets like we did for USB on the original iMac hardware: let's build it in software, let's build it in marketing, let's go evangelize it to the developers and tell our customers why it's better, and let's not wait for three years for an agreement. And now Apple's leading in USB desktop movies. Let's take our hardware and put FireWire ports in iMac. Let's take—let's write applications

called iMovie to take advantage of QuickTime and allow us to do these things, and let's go market it so people understand this and how easy it is to use. There's no other company left in this industry that can bring innovation to the marketplace like Apple can. And so we really care deeply about the hardware. We think this is where everything starts, and we've got, again, the finest hardware lineup in Apple's history. We are so proud of these products. But we also do software at Apple. Again, we own the second highest volume operating system in the world, and one of only two high volume operating systems in the world. We make a lot of

other software: Mac OS 10, coming iMovie, etc. And the greatest thing is when we put them together and we integrate them, like the examples I just gave you, like iMovie and the new iMac, seamlessly integrated into desktop movies. Right? Another example is AirPort, where we could seamlessly integrate this whole new wireless networking technology into OS. So when you plug in an AirPort card into an iBook, you don't have to spend a half an hour flipping settings. It just boom pops to life and works right. This is the kind of innovation we can bring through this integration. And now we're adding internet stuff. We've got our first four eye tools today that

wouldn't be possible if we couldn't take unfair advantage of the fact that we supplied OS 9, the client operating system, and so that our servers and our clients couldn't work together in a more intimate way than anyone else can do. And so we're going to integrate these things together in ways that no one else in this industry can do to provide a seamless user experience where the whole is greater than the sum of the parts. And we're the last guys left in this industry that can do it, and that's what we're about. I got just one last brief thing after

this. You see, we're going beyond the box, definitely spreading our wings in software and in our internet strategy. So I got one last thing. I got back to Apple along with several other people two and a half years ago. What we found was a great company that needed a little bit of help, a lot of incredibly talented people, and as a matter of fact, while I'm on that, I would like all the folks from Apple that have been working on OS 10 and have been working on our internet stuff to stand up right now. I'd like to give them a hand. We also have some incredible partners we

work with, CKS on the graphic side, Shy on the advertising side. Can you guys just quickly stand up for a minute? Thank you. Everybody at Apple's been working really hard these two and a half years. And during this time, I've been the interim CEO. I have another job at Pixar as the CEO, which I love. And so I was the interim CEO at Apple. Well, I think after two and a half years, I hope that we've been able to prove to our shareholders at Pixar and our shareholders at Apple that maybe we can pull this dual CEO thing off, and so I'm not going to be

Changing any of my duties at either Pixar or Apple, but I'm, uh, pleased to announce today that I'm going to drop the interim title. I, uh...