Steve Jobs on NextStep 3.0: The networked future

On behalf of Next World Magazine, Next Computer Inc. and World Expo Corp., welcome to the first ever Next World Expo. I'm Dan Ruby, the editor-in-chief of Next World Magazine. Thank you. Next World Expo is the defining event that kicks off what I believe will be Next's breakthrough year. 1991 was the year that confirmed Next's technical leadership and established its sales momentum. 1992 will be the year that the computer market as a whole recognizes that Next is one of the very few computer companies driving the industry forward. Next World Expo gathers all that momentum, imagination and excitement for three days under this roof. This is a show that offers something for everyone in the Next community. It combines a product exposition of more than 125 booths, a user conference and panel discussions covering issues and trends in Next-related products, technologies and markets, a developer conference covering technical information for Next developers, and a user group conference for members of Next user groups around the globe. This is indeed an international conference, appropriate for a computer platform that is indeed global.

We have attendees here from as far away as Moscow and the Commonwealth of Independent States and from countries on every continent on the earth as well as virtually every state of the United States. Next World Expo was planned and produced in record time. Most computer trade shows take up to a year to put together. This one took exactly 88 days from the day in early October that Next and Next World agreed to put on the show. We all know that Next's subject-oriented development environment allows you to build applications faster and better, and it turns out that the energy in this market allows you to accelerate many other processes as well. So congratulations to each of you for putting aside your other priorities and making it here for these three days. This is a unique chance to learn, to do business, to help set the agenda for the Next market in 1992 and beyond. We expect that there will be other expos both here and in Next's international markets in the future, but you'll have the pleasure of telling those Johnny-come-latelies that you were here when it all began.

I've got just a couple of announcements to make, starting with a self-serving plug. The spring issue of Next World magazine, which was held back by three weeks in order to coincide with this Expo, is available on the show floor immediately after this keynote, and we're also distributing a show-special edition of our Next World Extra newsletter. Tomorrow's keynote address, beginning here in this room at 9 a.m. and open to all Expo attendees, has two parts. There will be a warm-up session with Next World's irrepressible reviews columnists Barlow and Lavin, and they'll be followed by another dynamic duo, industry pundits Stuart Alsop and Jonathan Sebold, who are certain to stir up some controversy with their views on various issues confronting the Next community. This afternoon at 6 p.m., following the general session Ten Most Wanted in Polk Hall, the Next Organizations International, or NOIR, will host an auction of Next-related products and memorabilia, and I encourage you to attend and bid unabashedly to help raise funds for this worthwhile user organization.

Finally, I'd like to thank the many people who helped make this Expo possible. They're too numerous to mention, but the three individuals who devoted their lives for the past three months to making this Expo happen are Janine Bernard, the Associate Publisher of Next World, Liz Statmore, the Show Project Manager from Next Computer, and Bill Sell, the Show Manager from World Expo Corp. Also, the Expo would not have come off without the contributions of almost 200 volunteer researchers, mostly recruited from Next user groups around the country and the world. Thanks to everybody who pitched in to make this event possible. And now, to kick off the show in grand fashion, it's my great pleasure to introduce the man who's responsible for all of us being here today, the founder, CEO, and Chairman of Next Computer, Inc., Steve Jobs.

Good morning, and welcome to the first Next World Expo. Isn't this remarkable? As Dan said, there are people here from users groups all over the planet. Moscow, Yugoslavia, Finland, Australia. It's incredibly remarkable to all of us at Next that this entire community has gotten together at Next World Expo. We have a lot to tell you today, and let me just jump right into it. It's going to take us about an hour, an hour and a half, and I think you're going to really find it exciting. Okay. We want to cover four things today.

1991 in review. We're going to tell you how we did in 1991. What did we learn from 1991? Tell you all about Next Step release 3.0, and then the new Next Step hardware for 1992. That's our agenda for today. Let's jump into it. How did we do in 1991? We grew over 400% in revenues. As you can see, the recession got to our whole industry, and Next was no exception in Q3. We saw some moderate recovery in Q4, and we expect Q1 to be back on the growth track for 1992. So we worked very, very hard in 1991, along with many of the people in this room, and grew over 400% in probably the worst recessionary environment in memory.

Another accomplishment in 91 was we dramatically increased the percentage of our business that has come from commercial and government markets. Higher education continues to be a very strong foundation for us, but now over 80% of our business is coming from commercial and government markets, where we see very strong growth ahead for 1992. Another very bright light in 1991 was that 43% of our business came from outside of North America, and that's been a percentage that's been holding pretty constant, and we think it's going to hold and possibly grow in 1992. We feel good about spreading our risks around the globe, and we think there's a lot of opportunity in places everywhere on the globe for Next Computers.

Now, in North America and in Europe, we have built our own sales forces. But in the Pacific, we decided to partner with Canon, and they distribute our products in Japan and in several Pacific Rim countries. And Dr. Kaijo Yamaji, the president and managing director of Canon, is one of our best partners and dearest friends. He actually called us up the seventh day we were in business and said, I don't know what you're doing, and I don't know where you're going to do it, but I and Canon would like to help you. And since that day, Canon has been helping us, in this case, distribute our products in the Pacific. And Dr. Yamaji, when he heard that Next World Expo was going to be held, asked if he could fly all the way over here from Tokyo and say a few words at the first Next World Expo. And I'm delighted to introduce him to you now, Dr. Kaijo Yamaji of Canon.

Good morning, everyone. My name is Yamaji, president of Canon. I would like to send my warmest congratulations for the first Next World Expo. This is a joyous occasion in which we can witness the growth that is still to come for Next Computer, Incorporated. It is not only a special occasion for Next Computer, Incorporated, but for Canon as well. If we were to observe Next in the U.S., we can say with confidence that we can expect Next to take a tremendous leap in 1992. I can personally see this by the people turning out to the Expo and the level of application software displayed here. If we were to observe Next in the U.S., I think I could turn your attention to the Japanese market, the market Canon is responsible for. The sales of Next have picked up tremendously in the latter half of last year, and we are expecting even more growth in 1992. Principally, there are three reasons why we believe we can expect Next to do well in 1992. The first reason and foremost reason is the release of the Japanese OS for Next. The Japanese OS for

Next was jointly developed by Next and Canon, and its performance has been given high praise in the industry. This has given positive encouragement to Japanese third parties developing application software and also for the third parties. of the NEXT computer. The second reason is a shipment of Japanese application software for NEXT. As a proof of already acclaimed excellent development environment of NEXT, there are already several application software released after only six months of the Japanese OS introduction.

In the first quarter of this year, software for major application software fields, such as spreadsheet, word processor, database, draw, and of course, multimedia, are expected to commence shipment. Several of these software packages are on display at the Canon booth, and we appreciate your visiting our booth. As I walked about the expo, I found many solid applications software that I would like to introduce to Japanese users.

Canon is willing to provide the localization work, and we would appreciate the positive support in this endeavor. The third reason is the downsizing, which has become a major trend in Japan, as well as in the US. The trend is shifting from a traditional approach of mainframes first to the distributed processing using workstations. The users are starting to adopt the approach as a viable solution. A case in point is Osaka University, a top national university in Japan.

At Osaka University, mainframes computer were used to manage the entire educational information system of the university. But this centralized system will be replaced by a distributed system of about 400 next computers. The fact that such a prestigious university has switched has made a profound effect on the Japanese market. We have been flooded by calls from other universities. And indeed, just before I left for the expo, I have contracted to install hundreds of next computers at more than three other universities.

The next computer is really taking off in Japan, and Canon is strengthening its marketing organization, in part by increasing the size of the sales force to promote the tremendous growth we expect in 1992. Now, I would like to change the topic somewhat and talk about the Japanese localization of the next step. As I had mentioned before, Next and Canon have jointly developed Japanese Next Step for the Next workstation. Canon intend to continue working with Next to jointly develop the future Japanese version of Next Step.

In order to propagate Next Step not only in the US, but in Japan also, we are conducting training and various promotional activities. And we are starting to witness the Japanese market acceptance of Next Step as the best development environment available in Japan. I would like to briefly mention about hardware from Canon. Canon, as many of you know, has been a supplier of premier peripherals. We will continue to develop new and exciting products. The Next computer has already adopted Canon's laser beam printer and magnet optical disk.

In the future, we would like color bubble jet printer, ferro-liquid crystal display, and other advanced peripherals incorporated into the Next system, thereby supporting Next, building a strong system. Last, but not least, I, as many of you, believe in the unlimited talent of Steve Jobs. Steve Jobs and I have built a personal trust in each other over the years. Canon, of course, is only a minority shareholder in the company.

But we feel so close to each other that our company is committed to relying on the Next computer as a keystone in our computer strategy. Canon, acting as a good partner, intend to continue supporting Next in every way so that Next business flourish even more. Thank you. Thank you, Dr. Yamaji. I hope I can do as well speaking in Japanese at the first Next World Expo in Tokyo one day.

And as Dr. Yamaji highlighted, a significant share of our revenues are coming from the Pacific region. And we'd like to increase that even more. And it represents a very strong opportunity for our developers to increase the size of their market with their application software. Application software. We saw a phenomenal growth in the number of shipping applications for Next Step in 1991, 4x. We entered the year with a strong base of good applications, but not enough. And what we saw in 91 was developers living up to what they said they were going to do and getting those applications out. And as you see, very strong momentum in the last quarter.

And we see that momentum continuing into 92. On the exhibit floor today, you're going to see some remarkable applications, the likes of which you cannot get on any PC or workstation other than Next. Users groups. Again, we saw a fourfold increase in users groups in 1991. This is remarkable to me, that we have 15,000 members in 260 users groups in 28 countries around the globe. And lastly, we invested a lot in our distribution channels in 1991. We saw our direct sales force around the world grow from 124 to over 250.

We saw our resellers go up over an order of magnitude, primarily in Europe, but also here in the US. And higher ed, the number of contracted schools we deal with, almost doubled in 1991. So we invested a lot in the channel, and we expect most of that investment to start paying back in 1992. So that's how we did in 1991. And I wanted to give you that data as we proceed to say, well, what did we learn from it? As we stand back, we look at the year, what did we learn in 1992? There were three things that we learned in 1992. What is our compelling advantage as we compete with all these other platforms out there?

Who is our customer, and who is our competitor? Now, you might think, well, didn't you know that going into 91? No, we did not. We did not know these things, and we know them solidly now. Let's examine the first one, our compelling advantage. What is a compelling advantage? What we've determined through talking to lots of customers is that there is so much inertia and momentum out there in the marketplace that if you're 50% better than someone else, they won't switch. If you're 100% better than your competitor, the customer may not switch. You've got to be three, four, five times better than your competitor to cause enough of a compelling advantage for that customer to switch gears and go in your new direction.

Now, your compelling advantage is not always clear to you when you begin. And let me use a little bit of history in the Macintosh to illustrate that point. Believe it or not, when we created the Macintosh, we never anticipated desktop publishing. We put the Mac in place. We put the PostScript laser printer in place. But we never, ever anticipated PageMaker and the revolution that would cause. But we were smart enough to see it happening out in the marketplace 9 to 12 months later. And we started to change our entire sales and marketing strategy to focus on desktop. Publishing and Desktop publishing became the Trojan horse that got the Macintosh into corporate America where it could then display to its new owners all the other Wonderful things it could do right The same thing happened to us When we created next step our revolutionary software that lets people build applications five to ten times faster our Target customer that we had in mind was the shrink-wrap software developers Lotus word perfect Adobe Because that was the world we came from the PC world and it worked These developers have been able to turn out incredibly breakthrough apps in record time But a remarkable thing happened in 1991 corporate America Discovered that they could use next step to build their in-house mission-critical custom apps five to ten times faster, too These things that have been taking them two to three years they could build in three or four months and They came to us and said you don't realize what you have

You have potentially the biggest breakthrough in the computer industry that we have seen in the last decade And what's happened is is we have mobilized our entire sales and marketing strategy around Our compelling advantage, which is next step which enables our customers to create these mission-critical custom apps and mission-critical custom apps Have become our Trojan horse. That's getting us in through the front door of corporate America and So it became clear in 1991 that mission-critical custom apps enabled by next step is Our focus and next step is our compelling advantage Where we are five to ten times better than our competition Next step allows them to create their custom apps up to an order of magnitude faster these apps Have the same quality and reliability of shrink-wrapped apps. They buy off the shelf They're not typical homebrew apps that they've seen in the past this object oriented programming environment of next step allows a reliability and a smoothness Beyond comparison These apps are usable by mere mortals Typically if they've developed them on workstations in the past It's taken them two years and when they were done They were only usable by rock by a rocket scientists and when they tried to deploy them widely in their corporations they had major major problems and These custom apps integrate seamlessly now with hundreds of awesome productivity apps And this is very very important to these customers, too

Because they don't want to write every app themselves if they can go buy one off the shelf That is much more cost-effective and yet they want them to fully integrate So that's why these customers love next step now if you don't believe us there's a new survey out from Booz Allen, which you can pick up a copy of on the exhibit floor and Booz Allen went and surveyed over a hundred senior programmers and The conclusions and they can pay they asked them to compare next step with the development environments that they were currently using usually workstation development environments and The conclusions that they found were that these senior programmers Were able to develop apps two to five times faster on average in next step compared with their historical development environment The savings were as great as 90 percent. That's nine times faster on Average these programmers had 83 percent fewer lines of code in their applications you can imagine the implications for reliability and maintenance in addition to time to market and 82% of these programmers ranked next step superior in all categories This is the first independent Quantitative study that's been done on next step. I'm sure it won't be the last and the conclusions are stunning So this we believe is our compelling advantage Now who's our customer?

what we found out was our customers are medium and large business and Government the people who build mission-critical custom apps what happened to most of them was they got some initial competitive advantage in the 80s through the early deployment of PCs and the aggressive use of off-the-shelf apps but that competitive advantage has eroded over the last five years that all their competitors have done the same thing and They're all telling us that to regain competitive advantage in the 90s They've got to now start to write some mission-critical custom apps and deploy them widely in their companies That's the next big phase of competitive advantage In addition a lot of these companies are downsizing They're getting their apps off the mainframes off the big mini computers where they're very expensive to run very expensive to create and maintain and they want to run the apps on the desktop and bang servers running SQL databases In addition The goal used to be to put a computer on every desk, right?

Now the goal is to put only one computer on every desk because a lot of these companies have two and three computers We've seen this a lot a terminal talking to the mainframe to run a database application a workstation Running some cobbled together app and a PC next to it to do the presentations for their peers They want to unify these into one system and to do this requires Workstation power and PC ease of use because they have to deploy these things widely if they're going to get the productivity advantage in the 90s Now we've signed up a lot of customers in 1991. I wanted to review a few of them with you now There are three Vertical markets that we are focusing on now and we did not Sit down and do a lot of analysis and pick them and then figure out how to sell to them The way we found them was that they found us They started buying a lot of our products and we started noticing it on our radar screen saying what's going on went out and talked to them and learned that this vertical market had a real need for what we had hired a bunch of people focused on them and We're going like Like crazy in these three vertical markets. The first is financial services Financial services is probably the first marketplace that son saw some success in the commercial workstations versus technical and engineering and We have had enormous success in this marketplace to taking a lot of business away from others including son Here's a partial list of some of the customers that we had in 1991 Fibro energy a billion dollar division of Solomon Fibro

largest oil and gas trading company in the world Hundreds of next computers completely rewritten their entire trading system on next step O'Connor one of the most sophisticated commodities option traders in the world in Chicago hundreds of next computers displacing their prior workstations Swiss bank right below them actually merged with O'Connor recently. We don't like that because it shortens our customer lists, but it is a good thing That's what we're selling to in financial services a sample of our customers another market That's been really Coming on strong in 1991 is the government market. That's it both at the federal and the state level At the federal level Department of Defense a lot of customers we can't talk about here DARPA DARPA is one of the most aggressive agencies in the federal government as concerns technology Funded a lot of the great technology research in the 60s and the 70s that got us where we are today DARPA had a giant bake-off between IBM Sun and next next one Few hundred workstations all their principal investigators have them LA County Sheriff's largest Sheriff's Department in the country Hundreds of next computers. They are writing over 30 mission-critical custom apps to run their department better Sample of customers in the government market health care health care is our newest one We noticed that a few large health care institutions. We're buying hundreds of computers We went out and talked to them. And what we've learned is that this market is Exploding in their need for mission-critical custom apps and we see a very very healthy market for us in the next few years

Helping these customers do what they need to get done to improve their lives Here's a few of the customers preferred health care, San Diego hospice Mount Clemens Hospital University of Alabama Health Services Foundation each of these customers has over a hundred next systems and Then the bedrock of next higher education Even though it's gone down as a percentage. It's gone up as absolute volume in 91 We've made some tremendous gains the current system is the best system in the world It's gone up as absolute volume in 91 We've made some tremendous gains the customers, of course are too numerous to list But I thought I'd point out a few things in almost every school now We are the largest selling workstation on campus and in several schools such as MIT and Stanford We are the second largest selling computer of any kind on the campus right behind the Macintosh We've seen some tremendous growth here in 91. We expect that to continue in 92 So these are our customers Who's our competitor? Well, sometimes we compete against PCs and CPUs But almost all the time, our customers realize they need workstation power to get the job done.

And there is only one workstation company that we see having any success in the commercial market versus the scientific and engineering market. And that one competitor is Sun. Now, the good news is that we are getting a chance to suit up with Sun more and more. And every time we do, over 80 percent of the time, we're beating them in the commercial workstation market. Now, why is that? Well, you don't buy a Sun to do spreadsheets and word processors, right? You buy it to write a mission-critical custom app. And those customers that have let us have the opportunity to educate them about Nextstep almost all decide that Nextstep is a vastly superior solution to get their custom apps done.

So we're seeing tremendous success competing against Sun. They are our number one competitor. We did a fun thing. We got a great Nextstep programmer and a great Sun programmer, and we locked them in a room for a week, and we gave them each instructions about a mission-critical custom app they had to write, the same app for both programmers, and we videotaped them for a week. And you can see the results for yourself. It's night and day. We didn't know how this was going to turn out when we started, and it's really some great evening viewing. So this is who we think is our competitor. And these are the three things we learned in 1991.

I'm sorry it took us so long to learn them, but sometimes you just have to let your customers teach you what you really got. And boy, do we know these things now. Okay. Let's get on with the future now. Nextstep 3.0. Today, we're announcing Nextstep 3.0. It's the third release of the most popular, the most powerful object-oriented environment in the world. And there are six areas where we're raising the bar. State-of-the-art color graphics. Communication. Release 3.0 communicates with almost everything on the planet.

In the database area, we had some of our early customers come to us in 91 and say, you know, Nextstep's awesome for allowing me to build my mission-critical custom apps. But, you know, almost all my mission-critical custom apps talk to an SQL database on a server. You could go even further by writing some objects which allow me to talk to SQL databases even easier than you do now. Great idea. Object linking. We've heard a lot about object linking from other people, but we haven't seen anything yet. You're about to see the first real implementation that works today. Security. People want more and more security as they get on bigger and bigger networks. And global computing.

We want our solutions to work around the world, and we want to make it really easy for the developers. Rather than show you a bunch of slides on this stuff, I decided I'd just show it to you. What I'm about to demo to you on these computers right here is all running on our new hardware, which we'll get to a little bit later. It is all running on an alpha version of release 3.0. And so have a little compassion if something goes wrong. Okay. Now, for those of you not familiar with Nextstep out there, and I hope there's a few of you, when we move windows, we move them real-time with their contents, windows and menus, and we're a multitasking system.

We don't have to quit things. We can hide them. And we can instantly get them back. And we do color. And we do color right. These are full 32-bit images moving around real-time. If you were doing this on a Mac, we'd be waiting till next week for these windows to repaint. And again, we can hide them and get them back almost instantly. You can see how fast the graphics run. Okay. I'm going to use our mailbox for this demo. And I've got some mail messages that are very typical of what an organization that's working collaboratively is going to do, generate, and get. So here's my mail system. And I have a mail message here. Tons of applications.

It's one of the slides that I used in my presentation, as you can see. And as you can see, we can use PostScript fonts in any size or style. We can have full graphics in all these applications. If I want to forward this to somebody, I just push my Compose button here, and up pops a Compose window. And I can forward it. And here's my mail message. We have smooth scrolling throughout the system. I can reply. And I can look up people's addresses over here. I can start typing my name. And there's me. I can CC myself. And I can even put in some voicemail if I want to. Hi, could you check this out and let me know what you think? Thanks. And insert it. And the customer will simply click on these lips and play it. Hi, could you check this out and let me know what you think? Thanks. And, of course, I can then deliver it, which I won't do now.

So this is how simple the mail system is. We find even executives can use it without reading a manual. In addition to diagrams, we have photographs, full-color photographs just scanned in. And the way the whole Next system works, and we'll see a lot more of this later, is drag and drop. So I can push down on this and just drag this right out into another application if I want to. We also have voice. This is Ross Perot. Ross couldn't be here, so he sent us a voicemail message. Steve, congratulations to you and the entire Next team for a very successful 1991. Congratulations on your great new products and your new software. I'm really looking forward to watching you in action in 1992. I know it'll be a great year. Good luck to all of you. Thanks, Ross.

And we have another picture here, but this one's a little special for me. This is my son. We also have CD-quality sound. He reads them. Four months old today, by the way. Okay. You get the idea.

Okay. Now, we've had PostScript, we've had diagrams, we've had pictures, we've had sound. I want to send an attachment to somebody. I don't have to look it up in a 300-page manual. I can just say, check this out. And I might want the person to really understand that, so I'll get out our font object. This is how we handle all the fonts and make it so developers don't have to worry about all this stuff. So we'll make this maybe even bigger, maybe 48-point, nice and big. And we'll just go over to our place where we keep all our files, and we'll go into Spreadsheets, and we'll just take one and drag it out right in the mail message, and it sticks. And this is how we send an attachment. I can put another one over here if I want, just by going back and dragging another one over there.

And this is it. That's all you have to do to send an attachment. You can have as many different kinds of documents, as many voicemail messages in the same mail message as you choose. And every new application works with this because they're just objects. Now, when the recipient gets this, they just see, in this case, a load of spreadsheets stuck right in their mail message, and they just double-click on it. It launches the parent application that created this document, and in a second or two, up pops the spreadsheet. There it is. And for those of you that haven't seen Improv, you've got to go see this on the show floor. I don't have time to demo it now, but as an example in this worksheet with cars, if we want to take a look and say, well, I'm the brand manager for sports cars. I'd really like to see it by car type. Well, okay. There you go.

There's sports cars. Or if I'm the CFO and I'm really into quarters, which, unfortunately, some of them are, we can go like this and see it by quarters or by company and quarter. So go check Improv out. It's a really amazing application. And let's take a look at some others. This is another amazing application called Datafile. It says regional sales managers. We now have our entire third-party catalog online. And I click on Datafile, and it'll bring that up. Datafile is a personal database manager that completes the suite of the three most popular productivity apps, word processing, spreadsheets, and databases. And yet, this is the best personal data manager there is. We built this in a matter of about an hour or two, just putting in some of our third-party products right out of the catalog.

And we can do things like go to sort and say rather than on app name, let's sort it on company name, and let's sort it back to front or front to back. It doesn't really matter. and Now this will change the database around and we're sorted by company name instead of application name as you can see So this really fills a great hole and it is the best of its breed on any platform PC or workstation Here's old word perfect we have fun showing this to people because in every corporate account They're standardized on word perfect and yet They've never really seen their documents before because most of the versions they're using don't support graphics don't support WYSIWYG When they created this version for next step only compare it to Windows they shipped their DOS Windows version recently It took them 24 programmers over two years to do it their next version which if you call them up, they'll tell you is by far their best took them three programmers six months and When we show this to people when we say well, you've never seen this picture before but how would you like to see it move?

or how would you like to take the text and actually see two columns or Three columns and maybe what we'll do is we'll take this picture and we'll make it smaller Even put it in between the columns Our customers just don't believe this stuff and yet it's totally compatible with the word perfect They're using just like improv is totally compatible with the one-two-three. They're using Okay, now we get interesting when we design this computer we looked at workstation networking and What we saw in workstation networking was far superior to PCs and Macs in its capability but you had to be a propeller head to know how to use it and We knew that it could never be deployed widely so we asked ourselves could we do workstation networking and make it even easier to use than a Mac and We think we did and for those of you that haven't seen it. Let me show it to you mail message Hey, Ross was in the Wall Street Journal last week. Just go over the network to my home directory I'm on the marketing server to see the digital librarian bookshelf with last week's Wall Street Journal issues Well, the digital librarian is an app that we bundle with the system You can drop any text you've ever written into it like your love letters or your policy manual and it'll it'll build a keyword index To let you find anything instantly in this case we put a Wall Street Journal feed into it and kept several days worth of Wall Street Journals and Gary's telling me that if I go over the network to his home directory, I can find it well, we navigate around our system this way and What we do is we go back to our computer and here's all the stuff on my computer. And if you notice

This globe is the network Everything over the network goes through the globe and Gary's in marketing He says he's on the marketing server. And so I click here and sure enough. Here's everybody else's home directory They show up as little neighborhoods here and I click on Gary and sure enough. There's the Wall Street Journal now if you've noticed Every time I clicked on something it put it up in this middle window here and I have a complete trail or path of Everywhere I've been off My machine over the network onto the marketing server into Gary's home directory and to these Wall Street Journal bookshelves now This is really great. And if I want to go as an example back to the marketing department I just click and I'm back there instantly. I pick somebody else if I wanted to and if I'm gonna be interacting a lot with Gary This is like finding a radio station, right if I'm gonna listen to that radio station a lot I want to program a button so I don't have to find it every time I can just grab Gary up here what we call the shelf and just drop him anywhere and now Gary's programmed on a button Well, my home directory the place where I put all my files is automatically put up here for me And if I click with one button, I'm instantly back there. But now if I click with one button I'm instantly back at Gary's home directory whether he's next door or in Tokyo It doesn't matter and we have there are in these major corporations There are secretaries navigating around the largest Unix networks in their cities and they don't even know it Now let me launch the digital librarian now that we found it and we can see what's in it Okay, here's all these Wall Street Journals that said find Ross Perot, let's find Perot here's one article

H Ross Perot, I think the president taking us except he was a serious mistake said H Ross Perot Executives divided on Bush trade trip. Okay, let's go back and look up Bush how about that? And we've got it finds 135 articles about George Bush. I don't want to go look through all of them. So how about Bush in Japan? 64 well, how about Bush Japan and General Motors? 10 right so I can click on one and take a look and find out what the article is all about Click on another You know Oops, what's new? Okay so That's our digital librarian. And but more importantly, this is how we navigate around the network to do collaborative work We think we've made it even easier to use than a Macintosh And certainly an order of magnitude more powerful now Let's combine the last two things we saw of Having a document and using the network for collaborative work Our Steve our autumn newsletter has been a truly collaborative effort Each person has the files in their home directory Ralph has the template on his son Vicky has the headline on her next Kevin has the text file on his PC and Cynthia has the picture on her Mac We're starting to move in to some new hot 3.0 stuff When we talk to our customers this year, they said this stuff's great But I have existing stuff. I have to have it in or operate with

I've got some of the best software out there. I've got some of the best software out there I've got to have it in or operate with I've got sons. You've got to work with them. We did this year Okay, what about PCs? Can you work with them? Well, you could add a bunch of stuff on to your PCs so it could talk workstation networking No, no, no, you've got to work with Novell So we called up Novell and we said let's work together. Can you give us your client software? They said it only exists for DOS. We said great. Let's work together and write it for Unix So we've done that. It's bundled in 3.0 Seamless network integration out of the box. Nothing else to buy And some of our customers said Some of our customers said can you do the same for Macintosh?

And we did. We wrote our own Apple share for EtherTalk Out of the box. Plug it in to your EtherTalk networks Communication with Macintosh And this stuff is remarkable and we're going to see it work now because right over here I happen to have A SparkStation 2 workstation, a Macintosh 2 CI and a Compact something or other PC all right here They are all connected via ethernet to the network I am on right here So let's go see how people can collaborate now working with all these different systems Ralph has the template for the autumn newsletter on his son Well, we go here we go back and we say okay here over the network, right the Sun. Let's go on to the Sun Let's find Ralph Ralph's in the marketing department Right there. He is there's Ralph and sure enough. There's that frame template right And by the way, we might want to go back to Ralph so we'll put him up here so let's launch this frame template For our autumn newsletter. There it is Okay I'll click on the headline because we're gonna go get the headline next now. Let's go back to the mail message Vicki has the headline on her next Well, let's go back and take a look over the network and Vicki's in the marketing department. This is a pretty simple one there she is and There's the headline. Let's go ahead and put Vicki up here, too Just in case and let's what we'll do now is we'll take out this template here I have to arrange all these so I can drag some things and we'll just drag this

Headline right over and drop it in the frame template Now these applications know nothing about each other and yet the headline just automatically images Okay, let's go click where the text is gonna go. Let's go back to our mail message Kevin has the text file on his PC. Okay, let's go back to our globe Let's go over network. See this bright red network icon. I just click on it. There's Novell. I click in Novell right, I go into marketing and there's Kevin sure enough and there's the text and I take the text and I drag it over and drop it where the text is supposed to go and Frame asks me if I want to treat line innings as paragraphs and I say sure I have no idea and there's the text All off that PC over there over the Novell network seamlessly integrated into the next environment and we'll go ahead and put Kevin up here and Now we go back to our mail message Cynthia has the picture on her Mac. Okay, let's go back here back to the net Onto the non logoed Apple there Onto the Mac to into The marketing into Cynthia and there is that EPS file.

We go over here, we click where the EPS is supposed to go right here. We take it, we drop it over here and it images. And so here is our autumn newsletter created with collaborative work. Some people working on Macs, some people working on PCs, some people working on Suns and not forcing them to buy any extra stuff or do anything different. Everything we needed to do this was out of the box. And let me go ahead and put Cynthia up here and you just take a look at this. There's Cynthia on Apple share. There's Kevin on Netware. There's Vicky on Next.

There's Ralph on his son. It all just works out of the box. OK. This is really cool what I'm about to show you now. In our current 2.0 release, of course, since we're fully object oriented, there is this incredibly elegant way to send messages between two objects as long as they're in the same program, right? As long as they're in the same program. And this is how our entire system works, this beautiful, elegant way that objects send messages to each other.

Someone asked, why wouldn't it be great if we could write truly distributed applications where objects could send messages to other objects, even if they weren't in the same program, even if they weren't on the same machine, but rather connected over a network? Some people have thought of this idea and are spending hundreds and hundreds of programmers writing these giant big things to glom on the sides of their systems to try and do this a few years from now. We took a different approach. We said, let's look at what we've already done. And what we've done for release 3.0 is not added any new stuff, not added any new big thick manuals full of syntax for the programmers to learn.

We've simply done some phenomenal engineering and removed the restriction that the objects can only be sent to other objects in your own program. The same exact syntax that messages other objects in your program can now go across networks to other programs on other machines. And let me show you that now. It's called object linking. OK, here's our new employee handbook, except for the org chart. Please object link the current chart in so that it will always be updated. The artwork for the chart is in local library. Great. Now, the two apps I'm going to run are a simple program called Edit and another one called Draw that we ship as an example, both bundled on the next computer. To work with object linking requires the programmers for the current apps to spend about a day or two adding this to their programs.

Not a week and not a month, about a day or two. And so I'm going to use two of our programs that we've added this to. OK. Here is our employee handbook. And I'm going to hide mail for right now. This is our employee handbook. And as you see, it says the company's organization changes faster than the personnel compartment can publish new employee handbooks. Here at our company, we're always going to have an up-to-date employee handbook even if our organization changes every five minutes. OK. So what I'm going to do now is this is on my system. I'm going to go over the network here to local library. And inside local library, there is the org chart that I want, right?

What I'm going to do is I'm going to open it. And it's going to pull it from over the network and open it on my machine. OK. I have two documents, each created by a completely different application running, residing on two different machines. Now what I'm going to do is I'm going to go over to the org chart and I'm going to select everything and I'm going to just copy it like I normally would if I was going to paste it in over here. And I'm going to go over here and I'm going to select where I want to paste it, move my edit menu over here. But rather than pasting it in normally, I have this new menu command called links. And I'm going to paste and link. And when I do that, it pastes it in. It looks like normal except it's linked.

And now I'm going to select what I just pasted in. And I'm going to go to the link inspector because normally links are set to update whenever I save the source document. But to demo this, I want to have it update continually. OK. And now I'm going to go back to the charts and I'm going to update it and we're going to see what happens over on this document here. So I'm going to go get a color panel out and we're going to pick some colors. Presidents usually like to stand out. So we'll take the president and we'll make him blue. And you notice instantly we've updated.

And VPs like to be colorful too, so we'll color them a little bit. And it just works. It just works. And so now when, yeah, we'll select the whole thing, I guess, right? Now when, you know, VPs get promoted here, right? And there we go. And things will just work, right? Maybe this VP didn't quite make it, you know. But again, over-the-network, real-time object linking. And if you notice, it was no more difficult than cutting and pasting.

There were no new bizarre commands to learn, no new file types, just cutting and pasting with a link. Okay. Great. Now, as you know, in our last release of Next Step, we built in full faxing so that you could fax from any app. And here's our press release about our revenues growing. We might want to fax this here. And as you know, we say print it, but instead of printing it and finding a fax machine, we just push the fax button. New for release 3.0 is full groups so that we can have groups of fax people.

We can fax to groups or we can fax to individuals. As you know, when we push the fax button, because everything is in PostScript, our faxes are composed beautifully in full PostScript WYSIWYG faxes. And as you also know, we use the network so that we can share one $500 fax modem with 50 NextComputer users to send and receive faxes. So we've enhanced this a little bit for 3.0, and it's quite nice. And as you know, when you receive faxes, we ship a little fax reader program, and you can take a look at them right on the screen here. Here's a fax from George Fisher, who's the CEO of Motorola, telling us how fast the 040 is. And as you also know, you can look at these things, you can save trees by sending these around your company instead of printing them.

This is captured right off the fax modem. You can forward them. But if it's your speech for tonight or if it's some numbers that you want to cut and paste and improv, you can't because a fax is just a picture, right? Well, in our last release of NextStep, we added an amazing feature called Services. And what Services did is it allows you to message another application from the one you're in. And what I'm going to do is take the data that I want to be able to manipulate, and I want to OCR it. I want to do optical character recognition on it. And it turns out there's a wonderful company called HSD exhibiting down below that wrote a neat program called OCR Servant. And we can invoke it by just going to our Services menu, and there it is, and I can say OCR the selection.

And OCR Servant will be launched. All this data will be transferred into it. And instantly, it'll be OCR-ed so that I can manipulate it. And if we go check it out now, we can cut it and paste it. We can edit it. We can pick a word like success and go use Services again to look it up in Webster's. And here's the word success. So again, seamless integration, mail message, got a fax, read the fax, OCR-ed it, manipulated it, looked it up in Digital Webster. Okay, security.

We've had a real breakthrough in the area of security. A lot of our customers came to us and said, as our networks expand, we are worried about security. We are sending extremely sensitive information around. We know our own company is populated with computer scientists, and we worry that others will tap onto our network. networks. What can you do to help us? We have a breakthrough. One of our senior scientists invented a radical breakthrough in public key encryption technology, the most secure technology that is known for encryption of data and files. And we have bundled it in to release 3.0. We call it FEE, Field Elliptical Encryption. We have shared this with the United States government, and they are evaluating it in an extremely serious way. Let me show you how it works in mail. You can also encrypt files. If you want to encrypt a file, when you send it, it's as easy as flipping this little lock right here. See that? That's it.

And what it does is it looks up the public key automatically for all the recipients, the individual public keys, and encrypts a version with their public key for each one and sends it to them. When they get it, it looks like this. And it will not let you see the message until you enter your private key, which I will do right here. And watch what happens. And this is decrypting the message live. So this is fully built into 3.0. You can encrypt and decrypt files. You can, of course, send encrypted mail. And we think this is going to be a very, very big breakthrough.

OK. A few last things here. We made a decision a year ago to do something radical in what we call global computing. As you know, when you plug in our hardware anywhere in the world, it works because the power supplies and everything else just adapt automatically. No switches, no fuses, nothing. We like that. We said, why can't our software work the same way? If we want to create a global market and a global opportunity for all of our application developers, let's put the tools in our system that allow our developers to localize their apps very easily and also to ship one version of their apps that will work anywhere in the world.

Now, we're not totally there yet, but we've made enormous breakthroughs in 3.0. 3.0 is shipping in seven languages. There are two versions of it, one that's kanji in English and the other is English in the rest of the European languages. And when the user first launches their system, they will see something like this. And they get to select which language they want their computer to run in and which of several keyboards they have. And these can be changed, of course, at any time. And when they hit OK, it will localize their computer because all of our bundled apps are fully localized in all of these languages on every single system. And we are encouraging the application developers to do exactly the same thing so that someday one version of the app will run in every language. And we think this is a very big thing.

In Japan, we started shipping our kanji version in July. We will ship the kanji version of release 3.0 concurrent with the other versions. And it has got an exceptional reception. And it's got an exceptional reception for two reasons. One, as you know, you can think of kanji as an alphabet with 7,000 or more letters in it. As such, our competitors, who do not run PostScript on the screen but have to store the bitmap screen fonts, spend megabytes storing one size screen font and cannot provide the user with more than one size screen font on their disk. We went and got the gorgeous outline fonts that Adobe spent millions developing for printers. And we run them on the screen, as you see here. You can have fonts in any size you want. And they also work on the printers. It's been a very big thing in Japan.

The second big thing has been when developers create applications, most of the time they have to convert these, they have to enter these kanji characters. People tried making keyboards with 7,000 keys on them and it didn't work. And so they enter them phonetically and they convert to the kanji from the phonetics. And usually there's a window at the bottom of the screen to do this. And that's called non-inline entry. And people don't like it. What people want is inline entry, where you can just go right up to the cell of the spreadsheet, click, and convert from phonetics to kanji right there. The mainstream developers invest enormously to do this. Lotus spent two years adding inline entry to improv. We took a different approach. Our system's object-oriented. Dr. Yamaji said earlier that we collaborated on the kanji system. Canon has the best input technology for kanji in the world to convert from phonetics to kanji. We collaborated with them and created a kanji version of our text object, which allows you to convert from phonetics to kanji in any text object. And as you know, every cell of a Lotus spreadsheet on Next is a text object. We took Lotus improv out of the box, US version binaries, ran it on the kanji system. You go up to any cell and type, and you're converting from phonetics to kanji. Developers in Tokyo went wild. So we expect a very, very healthy market in the Pacific Rim for these products.

Okay. Now I want to show you something pretty remarkable. It's got two parts to it. For the developers in the audience, they will recognize Interface Builder here. Every single application on Next is built using this tool. And it is sort of the frosting on top of this object-oriented cake that we have called Next Step. And as these developers were building applications to connect to SQL databases, as I mentioned earlier, they asked us to write some objects to help them connect to databases. And we have. And because Interface Builder is extensible, we have added them right here. And it is called our Database Kit. And I'm going to build a database application for you now. And to help me do that, I want to use a live Sybase, an Oracle database, running on some servers.

Now, we have an interesting server philosophy that we learned in 1991. We make a small departmental server and it works real well and we sell several of them. But we don't make a big server. And we thought this was a deficiency. And we actually had plans in place to go make a big server. But then we looked at the market and we said, wait a minute. All these servers are turning into commodities. They're all the same. By definition, the desktop should not know what server it's running on. And you can buy great servers from a lot of people. So we decided that sort of being server virgins was a plus rather than a minus. Because all the server companies love us, which is a big contrast to what they think of Sun, who is their competitor. And so we have a philosophy now of working with all of the server companies and making sure we interoperate seamlessly and helping them sell into very large accounts.

And they're doing the same for us. So to demonstrate this, I'd like to actually use a few big servers, if that's OK. Can we see them now? Let's take a look at these servers. I happen to have with me on stage here a few servers. We have in the middle a Teradata. That's about a million, half a million to a million dollar server. We have a Sequent and we have a Pyramid. And these are just a few of the many servers we interoperate with. And I couldn't fit that many more up here. So let's go build an application now using our object oriented system, using our database kit, using the networking and using these three servers. So an interface builder, I say I want a new application. And for those of you that have never seen interface builder before, interface builder gives me a menu and a window. And I can go back here and say I want to add things to my menu just by dragging them down. And they add them. And menus are very, very easy to build. Just like this, I can add my own custom ones if I want to. And of course, interface builder will make the menu bigger to accommodate them. I can put quit at the top if I want to and this at the bottom. It doesn't really matter. And I can make more windows just by dragging them out, panels, et cetera. I can make buttons and other controls. I'll just drag over a button. And as you know, we can make lots of buttons if we want to. We can space them out a little bit differently.

I just want one button for this so we'll just make one button and what we're going to do is we're going to call this button search And so that you can read it out there we'll go to our font object again the same old font object and We'll just make this maybe big Helvetica, it's probably fine maybe even 24-point, okay So now we've got ourselves a search button Now let's go all the way over to our database kit, and I'm going to select the sequent here and I'm going to drag off a table on this database which is departments and I just simply drag it over here and drop it on my app if I want to and Now I go get out of another database kit palette of view and I drag my view over here and I'll make it a little bit wider and Now I'm going to connect these objects. Just like I do an interface builder by dragging a line and Up pops my inspector and shows me all the columns in this table in this database And I'm going to pick department name and I'm going to make the connection and now I'm going to take my button And I'm going to hook it up to the database here and I'm going to pick fetch data as the message I want sent to that whenever I push the button and Now without any compiling or anything Here's my app. Here's my wacko menu, and I say search Ah, and I've got a login to Sybase for security reasons and There out of the Sybase database running on that sequent right over there is all the department names, right?

Okay, kind of boring. What can we do now? well Let's do a little more. Let's go get another Another viewer here and Now let's do a multi-level join now I'm not a database wizard here, but when we show this to people they fall out of their chairs. So see what you think we connect this up to here and We go into employees, which is inside this department name database and we say last name first name Maybe what else can we hook up salary? Maybe what else can we hook up salary and how about phone phone great and Now let's go hook up some other stuff. Let's say we want to hook up one of you an image and we stretch it out right here and Let's go ahead and hook it up and now we go into location and there's a photo of the location where these people work and Now let's maybe move these guys down a little bit as we make our app bigger and let's grab a few fields and Maybe let's make them 18 points again so we can read them and let's stretch them out and Let's go ahead and hook them up. Let's hook up the bottom one to location and let's go ahead and put the location in there And let's hook up the top one What else can we hook up?

employees Title let's go into title and show the person's title and As a matter of fact, we haven't have a picture of the person in the database So let's go ahead and put the picture down here Employees Their photo. Yeah photo photo right, and these are all in different levels of the database and now we go say test it and Here's our app. And now when we say search We get the departments up here Right and we pick different departments and we see that they're in different buildings and the people in those departments we can now see like this We can go down here and maybe pick art design So Again I I don't know that much about this stuff But people seem to go wild over this and what I do know is that our customers tell us that they spend years building these class of applications and That the database kit coupled with next step is a breakthrough that they have never ever seen before in building database driven applications And we can do the same thing on the Teradata. Let me just go back to interface builder here again and We can go back and just pull off another window and We can go back to our database kit and say let's go grab some off the Teradata. Let's grab the employees off here And let's grab another button

And let's grab another view And we can just hook these up to Anything we want. Here's a different database on the Teradata. We can say project Project name and get the list of all the projects and hook the button up Say fetch data Let's go test it out And There it is right there we say give me all the project names ask me to log into the Teradata and It just blew itself away That's how you know this is a live demo Ah, okay Last thing I want to talk about for 3.0 Is some state-of-the-art color graphics Now most people think next has state-of-the-art graphics in 2.0 in our current systems And we do much better than you can get on any other desktop platform. We know we're going even further We're going further in three or four areas number one We've added as you can see a lot of color to the user interface, and we're not even done yet Secondly we have bundled the whole Pantone database in our color panel so that the third-party developers don't have to waste their time all doing that independently We have taken Postscript to a new level called level 2 it is Adobe's latest rendition of Postscript it is

Dramatically more advanced than Postscript level 1 and the most significant advance is calibrated color You need this to do great color We even wanted to go beyond 2d Now as you recall When we first created our computer we wanted a unified imaging model for both what was on the display and what was on the printer and we went to Adobe and Created display Postscript the best decision we ever made and that's why we could add Faxing in a few months and all the other imaging things that we do we have one unified imaging model We didn't we wanted to learn from that and not go backwards on 3d And so we looked and we said photorealistic rendering is going to be very important in the 90s the ability to take models and photorealistically render them and The one standard that everyone is now using is Pixar's render man It's the standard that they make their own Academy award-winning films on it is the standard that Disney is betting on funding them for the first computer animated feature film It is bundled in release 3.0 But There's even more and we'll get to it in just a sec, so let me show you a little bit of this stuff First of all the way we treat color is just like everything else drag and drop so let's go back and get our color panel here and Let's take a look first at Pantone here We've got Pantone selected and here is the entire Pantone list right here

We can take go ahead and select some of this stuff right here and we can just take a color off of here anywhere we want and Drag it and drop it and we got color So very very easy drag-and-drop color Pantone bundle Now what I'd like to do is show you some amazing stuff with render man What we did on render man Was ask ourselves Photorealistic rendering is great, but people also want interactive 3d graphics And if we're going to do interactive 3d graphics We don't want to pick a graphic standard that's going to be obsolete in a few years we want to pick one that will keep growing with us in the 90s and We decided that that standard didn't exist Because ten years from now we're going to be able to run photorealistic render man real-time as the hardware gets faster And if we pick one of these other standards, it won't grow We're going to be throwing it away every few years and when we throw it away we throw our applications with it So wouldn't the best thing be to create a real-time version an interactive version of render man itself?

With some of the switches turned off so it is the hardware gets faster in the 90s We can just leave more and more of the switches on and still run in real time And we've worked with Pixar, and that's exactly what we've done. It's bundled in 3.0. It's a beginner And we will see this stuff get faster and faster and faster with each generation of hardware, and I'd like to show it to you now So the first thing I think I'll do is I'll get a background. Let's say some clouds and I will go ahead and put our login window in there and I can say great. Let's make it Smaller here There we go There's our login window. And now what I'll do is just I can rotate it around as you can see And all this stuff. This is an app that was built, you know, not very long using all these tools we can rotate at any dimension we want to and We have this fidelity knob We can actually turn it up and you'll see more and more Lines being added to the drawings as we turn them up. Of course, we can still rotate them all around Right And we also have some other modes where we can show shading. There we go. There's some flat shading there's some even better flat shading and again when we go to move these things around they go to wireframe until we get them where We want them and move completely around and all of this is Bundled in 3.0. Now, let me go get Let me go get a slightly more complex model of an airplane here and Again we'll let's see here now

All right Well cockpit air here There we go. Let's move this little guy back and let's rotate him around And as you see Even these complex models we can move in real time on the o40. So this is a beginning it's going to get a lot better as the hardware gets faster over the 1990s and we think that this is going to be pretty important as we start to write some even more Sophisticated apps in the business community that want to visualize data using 3d graphics Now the last thing I wanted to show you here was What I think one of the things we do best and that is looking out for the programmer Even though we add these features we have kept the programmatic model Enormously Elegant and simple for the developer and I'm going to go back now and I'm going to show you Some of the things that we have bundled in the software so here's a picture of some trees and I can say go get me a Ferrari and We get these black boxes around them, of course next can show transparency and So here we now see and you can actually see through the window of the Ferrari. You'll notice there All right Because it's partially transparent Around the Ferrari is fully transparent The Ferrari is fully opaque and the windshield is partially transparent And of course we can now say great the Ferrari goes behind this tree All right, or the Ferrari goes behind both trees

We can bring up Donald Duck and We can say Donald's got a great shadow. You can see him there in the grass We can put Donald even if we want to behind the trees and behind the Ferrari So then again, we have Ferrari behind the trees and in front of Donald and you can see this compositing now If you're writing a publishing app, this just saved you six months of development time Okay now and let me give you another example this by the way here's some text and I will go ahead and change the I Will go ahead and change the background to the financial services slide, which I showed you earlier and I'll show you how I actually Compose this slide So here's this text right and we can actually change the transparency value and you can see the text See now you can see actually through it all This stuff is just built in to the next step imaging model Okay, last thing I wanted to show you here Which has never been done before is in addition to adding three-dimensional graphics We have enabled you to mix two and three-dimensional graphics in the same window without concern for The types this is being generated by real-time render man in real time. It's not just a film loop Why don't we go ahead and even put it behind the trees here and we'll notice it still goes

You can even view it behind the window of the car and for people doing 3d apps. Oh, oops For people doing 3d apps We've shown this to them and they cannot believe how quick it is to create these things So this is what we're doing to enhance the graphics even further Okay Should have the slides up here Okay Now we think we are about three to five years ahead of our competitors with what you've just seen The only real object oriented development environment shipping today, and We intend to increase that lead with 3.0, but eventually we will have some competition Let's examine who they might be there's only three of them that we can think of that could potentially be Competitive and we're going to do that in a couple of weeks Competition let's examine who they might be there's only three of them that we can think of that could potentially be competition Sun Solaris Microsoft NT and Intelligent let's take a look at it next step 3.0 is in beta test this quarter We'll ship next quarter and of course. It's object oriented Sun Solaris is going into beta they say about mid this year We hear it's going to ship about the end of the year could slip into 93. It is not object oriented at all

Would require a major overhaul to make it object oriented The next one Microsoft NT isn't an operating environment like the rest It's just an operating system sort of another Unix wannabe, and it is going into beta test the middle of this year It will take probably a year to shake down because it's a new operating system And it is not object oriented at all it is just an operating system akin to Unix which is about a tenth of what next step is and The last is our rethink our first potential object oriented competitor Talented which will probably be real about 95 now by then GM may be making object oriented cars by then who knows but? We think that if everything goes well with talents. They will have by then roughly what we have today And we're not standing still and I must say this is probably intelligence probably the best thing that happened to us because it endorsed the direction that we have already taken and Every one of our customers is saying why should I wait and we have of course a ready answer for that?

Next step 3.0 is going to be delivered on a CD-ROM Customer-Driven It is going to be factory installed on new next-step computers And of course we will ship a CD-ROM as a backup for every computer The upgrade price is going to be two hundred and ninety five dollars substantially cheaper than workstation prices And it will ship in q2 And it will ship in q2 Now I'm sick and tired of people saying we're proprietary We support Standards wherever there are standards that make any sense in the world we support them And I hope you've seen some demonstrations of that up here today Everything from our imaging standards to our networking standards to file system standards to language standards the database Standards we support them, and if anyone tells you that next is proprietary and doesn't support standards Please tell them poppycock So that's 3.0. What do you think?

you Okay, now that we got the software clear. What are we going to run it on as? You know we introduced our next stations a year ago. They took off like a rocket they were by far the majority of what we sold in 1991 and We decided to keep a good thing going and make it even better as you know the current next stations Run at 15 mips. They're powered by Motorola 68 or 40 microprocessors running at 25 megahertz for 1992 We have increased the clock frequencies to 33 megahertz. We have made some compiler improvements.

And I'm pleased to report to you that the new next station turbos, as we're calling them, upped the performance from 15 MIPS to 25 MIPS. And the configurations we're going to support are two of the current configurations running at 15 MIPS. We're not really going to call them classics, got the point across. The two current configurations at 4,995 and 7,995 running at 15 MIPS. But the turbo configurations are priced very aggressively. They start at 5,995 for 25 MIP machines. As you see, the smallest disk drives we're going to offer are 250 megabytes. Now, let's take a look at our most popular configurations today in terms of what's replacing them.

This one is extremely popular today. And it is $500 more expensive than its turbo replacement, which is 25 MIPS. We've reduced the price $500 and upped the MIPS to 25. This is our second most popular configuration, our most popular color one. We have reduced the price over what it is today by $1,000 and upped the MIPS to 25. So we've been working pretty hard to deliver these things higher performance, lower prices. How do we compare with our arch competitor, Sun? Let's take a look. This is a typical black and white system. These are list prices. Nextstations, Sparkstation IPCs, 16 megabytes. We have a little bit bigger disk than them.

But look at the difference in suggested retail price. They are $5,000 more expensive than we are. Yes, you get 3 and 1 half MIPS more for that $5,000. But look at the dollars per MIP. It's staggeringly better with the Nextstation turbos. Let's take a look at a color system. Sparkstation 2s, 32 mega RAM, same disks. Look at those SRPs, $7,000 more. Look at the cost per MIP. Are those 3 and 1 half MIPS really worth it? Now, another new product that we're introducing is an amazing color printer to go with these products. An increasing share of what we're selling is color-based. It's moving up towards 50% now.

And we see it going even higher in 92. We've got to have as good of a color printer as we have a black and white printer today. We found one. Canon has an awesome bubble jet printer. It uses plain paper up to tabloid size. That's 11 by 17. Graphic artists love this. 360 dots per inch. It uses the PostScript Level 2 and all the CPU horsepower in the Next computer to do its imaging. So it has full PostScript Level 2, full accurate color. It's available in Q2 with NextStep 3.0. And it's $3,495. We think this is a great product. This printer blows away the $10,000 PostScript printers that you've been looking at in 1991 for $3,495.

And to convince you of that, I'd like to raise the lights, please. Can I get the house lights up? Under every third chair is scotch taped, a sample printout. There's an envelope under every third chair. And it's a sample printout. And it's a sample printout. And it's a sample printout. And it's a sample printout. And it's a sample printout. And it's a sample printout. Envelope under every third chair. Can you please take them out now? Can we get the house lights all the way up, please? Take a look. This is printed on the Next color printer. These are real samples. We were up the last few nights printing these out. Share them with your neighbor, please. Share them with your neighbor, please. What do you think?

We are not aware of any color printer, even two to three times more expensive, that is producing output of this quality on plain paper. We're extremely happy to be offering this printer. Now, can we get the lights back down? You can take these with you. We have one new piece of hardware for 1992, in addition to what you've seen. And it ain't black. It's a PC. What we have decided to do, what we have done, is we've created a version of Next Step that runs on the Intel 486-based machines. If there is one word you could take away from this slide, it is same.

It is exactly the same stuff that runs on Next computers. It's got the same user interface and training. It's got the same exact Next Step development environment, the same apps. We're shipping the same bundled apps. Most of the same third-party apps will run. Same networking bundled, NFS for workstations, Novell for PCs, Apple Share for Macs, all bundled. Same state-of-the-art color, same mock Unix. Same, same, same. On the application side, we have some incredible news to report. First of all, we're bundling our apps, Mail, Webster's, Librarian, et cetera. We have over 25 major developers committed. And my suspicion is that all of them will be committed in the next 90 days. We just didn't have time to call them all and prep them on this.

Most important, the first dozen third-party apps are now ported. And they ported from one hour to seven days. Now, to calibrate you, anything in the software industry that requires less than six months to port is considered a miracle to these developers. Adobe Illustrator, a very sophisticated, very large app ported with zero lines of source code change in two hours. Lotus Improv, very sophisticated, very large app ported in about three or four days. There are about a dozen next-step apps that you can see running on a Compaq and Dell 486 machines in our booth today downstairs.

This stuff is very, very real. System requirements. Takes a 486 machine, takes 8 to 16 megabytes of memory, same as next stations, at least 100 megabyte of disk. On the graphics, we can do black and white in Super VGA so we can work with the entire installed base. To do our amazing color requires a little bit more than most of the original machines came from. And we've worked with several board vendors who are coming out with ESA graphics boards to plug into the installed base to do the dazzling color that you've seen here today. And fortunately, the PC world has woken up to the fact that their graphics can be improved. And we've worked with several of the manufacturers who are coming out with a new standard called JAWS Graphics, where they put the video RAM right on the processor bus to give the same kind of graphics that we'll get with this ESA graphics board, but even faster, built right under the motherboard.

The first 486s with that will be shipping in the springtime. And we expect the majority of the powerful 486 machines by the end of the year to be shipping with JAWS Graphics. We will support all three of these so that any 486 will work. The better graphics, the better color. And a soundboard, we're going to support several of the existing soundboards out there. This is an optional accessory to make it work. So pretty much, it'll work with any 486 out there. Pricing, $9.95 for the user system. This includes all the bundled apps and everything you need to run Next Step apps. $24.95 for the developer system. These are shrink-wrap prices. We're offering this in a shrink-wrap box. We are also going to be announcing several OEM customers for Next Step 486 who will supply it installed on their Winchester disk drives.

And you'll be hearing about a lot of those announcements as the quarter progresses. Timing, alpha, today, beta, Q2. Reel and shipping, Q3. This is not vapor. Now what I'd like to do is I'd like to introduce to you Dave House, who's the executive vice president at Intel. Tell us a little bit about what they think about Next Step 486. Thanks. Thanks, Steve. Thank you, Steve. Isn't Next Step 3.0 great? I mean, don't you love it? Now I don't have to tell this crowd that Steve Jobs and his team, over the last 10 or 20 years, has come up with most of the real significant innovations that have happened in the computer world.

So it shouldn't be surprising to this crowd that for at least 15 years, I've been working very hard to get an Intel microprocessor to be the delivery vehicle for that great innovation. Thank you. I'm happy to be here today. day. I also don't have to tell this crowd that Next Step is great. It has the capabilities that other people are promising in the future. And while they're talking about it, Next is delivering that capability, and everybody else in the industry is scurrying to make that possible at some future time on their software environment and in their products.

It shouldn't be surprising to this audience for me to tell you that the 486 is great. Now, a few years ago, there were people that were worrying about the x86 architecture. They were afraid that it was running out of gas and it would not be able to compete over time. The 486 has proven that that's not true. And I invite you, when Next Step is demonstrated on the 486, to look at Next Step running on the 486, and you'll see it's fast. And you'll see that demoed very soon. And I'd like you to look at the 486 and its performance comparisons against competitive workstations. I invite, if you're over at Unix World this week, to go to the Intel booth and see a SparkStation 2 and a 486-based PC running the same identical application. And you'll see that the 486 delivers workstation-level performance today. And the 486 and our new products to be introduced later this year will continue to keep that architecture on the leading edge.

So Next Step is great, and I'm telling you the 486 is great. So the combination of Next Step and the 486 is super great. Just as the enormous base of PC users has moved from the 8086 to the 286, and a few years after that from the 286 to the 386, the big move to the 386 is happening and it's happening now. The installed base of 486 machines is large and it's getting larger. There are over 2 million 486 machines in use today. And that number is growing very rapidly because Intel is making the investment to be able to deliver the product without constraint. At the 386, we were on allocation for two and a half years.

We slowed the change to the 386. This year we're investing a billion dollars in capital. Last year we invested another billion, over 700 million the year before that. Over two and a half billion dollars over the last three years to put capacity in place to deliver 486 systems. What's that going to mean? We've already announced publicly that in the fourth quarter of this year, we will deliver in that quarter alone between four and five million of what we call our second generation processors. 486s for desktops, 386 SLs for notebooks. And something like 75 to 80 percent of the machines are desktops. So the majority of those machines are 486s. So there's over 2 million 486 machines out there today ready to run Next Step. And based on the numbers I just gave you, it's easy to predict that by this time next year, there will be more than 10 million Next Step ready 486 machines in existence at that time. This has got to be a compelling argument for software developers and for corporate MIS users. Now, I'll close by saying I'm also personally happy to see Next Step running because you see, this might be surprising to you, but I'm actually allergic to Motorola microprocessors. I mean, just being up here makes my nose run and I cough and my eyes are watering. It's really terrible. And so as nice as Next Step has been, I haven't been able to use it, but I'm looking forward to being able to use it now.

Congratulations. Finally, some good software on PCs, huh? Now, this wouldn't be complete without a demo. So let's show it to you. I happen to have a PC right over here, and it happens to be running Next Step. Let's see if I can turn the monitor on. All right. There we go. And as you see, we have Next Step right here running. Same old stuff. There's my globe, et cetera. Let me go to my mailboxes, see what we got. Well, here is that tons of application slide right here. Same exact mail system. Here's Andy Grove. What's Andy got to say?

Hi, Steve. This is Andy. I'm sorry I couldn't be with you today, but I wanted to offer my congratulations on Next Step for the 486. This is one powerful operating system, and it will now be made available to a large number of new users and software developers. At Intel, we are really excited because Next Step unleashes the capabilities of our architecture and shows it off in real good light. This is really a happy day for me. You know, I've always had a dream that someday Steve Jobs would have some insanely great software that ran on an Intel microprocessor. Good things do come to those who wait. So congratulations again. All right. Now, let's try this. Let's go back to our demo machine here. Still running. Let's get out our mail system. And let's take this message right here and let's forward it. And let's forward it to sjdemo at I-486. And that just might get there. Deliver it. OK. It's delivering that message with the Lotus improv spreadsheet and the Ferrari over the network, over here to the PC.

The PC is running Next Step 486. It's running its own version of our mail system. It's running Lotus improv. And I can say it'll take a second to get over here. I can say, give me any new mail. And in a second or so, maybe a minute or so, there it is, cars. And if we push on it, there is our mail message. OK. Now for the test. See if Lotus improv runs. All right. There we go. Next Step 486.

OK. So this was our agenda today. We talked about how we did in 91, what we learned from 91, about how Next Step is our compelling advantage, about how it enables corporate and government customers to build mission-critical custom apps five to ten times faster and far more reliably than anything they've ever seen before. We announced to you Next Step 3.0, some amazing new features, shipping in Q2, to extend Next Step even further ahead of our competitors that we expect to show up in three to five years. And new Next Step hardware for 92, new turbo systems running at 25 MIPS that have dramatically better price performance than anything else in the workstation industry, an amazing color printer, and Next Step 486. One last question that I know is going to get asked a lot is now, with Next Step 486, is Next a hardware company or a software company? And I can tell you that there is only one answer that we believe will be true for every successful computer company in the 90s. That answer is yes. We are both a hardware company and a software company. We think we have great hardware, we think we have great software,

and each of them is going to, we think, grow into a very successful business with the help of all of you here today. Thank you very much. Let's enjoy. Thank you very much. Thank you very much.

Thank you very much. Thank you very much.