Steve Jobs on Personal Computers: a fractional horsepower tool

We have to presume any time we do a story that most of the audience hasn't—that any time you introduce any subject or any topic or any big word, really, that you have to familiarize the audience. You were talking about 60 Minutes. Uh, they do the same thing. Harry Reisner did a piece on some guy who was a card counter playing blackjack a couple of weeks ago, and they spent about three minutes in the context of the story establishing how to play blackjack, right? Just, uh, the fact that you have to, uh, sure, go for 20, yeah, for 21. So, yeah, that's... We make this an interesting thing about television is it always, she seems to shoot for the lowest common denominator. Uh, Stephen, to get a two-shot that we

need, it sounds a little peculiar, but you can't, and it'll be painless and over quickly. Great, thank you. I could embrace him if you wish. No. The reason they take these two shots is because they, they do all this market research on television, and they, you know, they go into a shopping center and grab 50 viewers and put them in a trailer and show them tapes and try to find out what they like and what they don't, what bothers them and what doesn't. One of the things that they found bothered viewers was in the typical nightly just like to see, um, the environment that you're talking, and so hence the, the wide shot. Yes. Is it over? Yeah. Steve, when you began to develop this

five years ago, what sort of need did you see that existed then that you felt these computers was going to fill? Well, basically, the question—we are actually doing this now? Oh, great. The question is really what is a personal computer and why is it different than all the other computers that have existed throughout history. Probably the best way to explain that is through an analogy. When you look at the invention of the first electric motor in the late 1800s, it was only possible to build a very large one, and it was very, very expensive, and therefore it could only be cost justified for the most expensive or large applications. And the electric motor really took its next step in proliferation when somebody hooked a long shaft to it and ran it down the

center of a factory through a series of belts and pulleys, brought that power down to maybe 15 or 20 individual workstations, thereby cost justifying sharing that horsepower among some medium-sized applications. But the electric motor really achieved a true proliferation in society with the invention of the fractional horsepower electric motor, and at that point, the horsepower could be brought directly to where it was needed on a personal scale, cost justified for a small number of things. And we see the same thing, the same evolution, if we examine the history of computing. The first computer, ENIAC, in 1946 was designed primarily for weather and ballistic calculations, very large tasks; and the next revolution in computing was in the 1960s with the invention of what's called time

sharing— in essence, sharing one of these very large computers with maybe 40 or 50 terminals scattered through a company, and thereby cost justifying it for medium-sized applications. What we think the personal computer industry is about is the invention of the fractional horsepower computer—something that can be cost justified on the personal level, something that weighs 12 pounds that you can throw out the window if you don't like. And it's really changing the way that people interact with computers. There's a one-on-one relationship that develops between one person and one computer. Now, when you use the term a personal computer, you're avoiding the term a home computer for a deliberate reason, right? Right. We view, we segment our market, uh, really into four major segments: education,

professional, small business, home consumer, and scientific industrial. Now, the home market hasn't really taken off. It's probably the smallest of those four I've listed. We view the home now not as a market really, but as a location in which personal computers are used for a variety of functions sometimes. In other words, you can use a personal computer to do some portfolio management on some stocks; you can use a personal computer to do some educational— uh, can I answer that question? Okay. Yeah, you can just pick it up. Oh, okay, great. Sam, you were... when you grew up, you're saying... Are we still waiting for, uh, yeah, question and we'll pick it up, right?

Okay, John. And when you use the term a personal computer, you're deliberately avoiding the use of the term home computer, aren't you? Right. We, um, we view the home not really as a market yet. We view it more as a location. We sell a lot of personal computers that are used for financial analysis, for education in schools, for running laboratory experiments in, you know, universities, and in scientific applications, and a lot of these personal computers are used in the home as a location some of the time. But there's not enough specific applications to cost justify spending a thousand to three thousand dollars for a personal computer to be used in the home yet, so we don't think the home is quite

yet ready, uh, either culturally or economically. What type of person would need a personal computer today of the type you offer? Well, it gets back to the question of what is a personal computer again. Uh, again, another analogy: there was an article in Scientific American in the early '70s which compared the efficiency of locomotion for various species of things on the planet. In other words, they measured how much energy it took for a bird to get from point A to point B compared with the energy it took a fish to get the same distance, and a goat and a person and all sorts of other things, and they ranked them. And it turns out the condor won; condor was the most efficient, and man came in with a rather unimpressive showing about a third of the way down the list.

Somewhat disappointing, but someone there had the insight to test the efficiency of man riding a bicycle, and man riding a bicycle was twice as good as the Condor, all the way off the end of the list. And what it really illustrated was man's ability as a tool maker to fashion a tool that can amplify an inherent ability that he has. And that's exactly what we think we're doing. We think we're basically fashioning a 21st-century bicycle here, which can amplify an inherent intellectual ability that man has and really take care of a lot of drudgery to free people to do much more creative work. Does this mean, do you think that personal computers in the 21st century will be as much a part of a home as, say,

a refrigerator? Uh, we can always— we can look at what's happening right now as an example. In the state of Minnesota, which is probably the leading state in the country, over 97 percent of the kids that graduate from high school have hands-on experience with an Apple before they graduate. These kids are growing up learning how to use this new tool in many, many phases of their life. They're hitting college, the same thing's happening, and so very rapidly, uh, the process of the integration of personal computers into the society will be accomplished. Let me illustrate two other processes which have happened in our lifetime, very similar to this. You probably haven't used a piece of carbon paper or seen a mimeograph machine in a while, and yet the first Xerox machine was introduced

less than 20 years ago. It'll be 20 years ago next month, and in 20 years it's radically altered the way that we work. Another process: the HP 35, first scientific handheld calculator, was introduced by Hewlett-Packard in 1972, but we all know where that's gone in just nine years. But another interesting sidelight is in 1978, the largest manufacturer of slide rules in the world stopped making them entirely because the market had gone away six years. So we see that it is possible in our lifetimes for a process like this to radically influence the way that we work and even start to look at life. When you say start to look at life, how, where, where is the impact going to be felt most in the intellectual process?

In the day-to-day living process, that is running the household in terms of the way you spend your leisure time, is there any way to pinpoint one of those areas as being the most likely to— what we have seen in almost all applications of personal computers that have happened to date: the industry is only five years old, but we've seen—we've shipped, you know, in excess of 150,000 personal computers ourselves. We've seen a dramatic increase in the creativity of people in dealing with a problem. Rather than doing the drudgery, rather than using traditional tools, people are freed to think about the conceptual issues involved and the creative issues involved.

And use the computer actually to, to plow through the drudgery. This is an education where students can actually learn at their own pace, where they can interact with a computer rather than just having a one-way communication through the medium of television or books that can actually interact with the medium. We're seeing this in the professional sphere where we no longer have, as an example at Apple, we no longer have secretaries. At Apple, we have what we call area administrators. They're using the computers for all their word processing. They do all departmental budgeting on it. We do our entire forecasting using our own tools, and we're actually changing job descriptions based on allowing people to do more creative work rather than more, more work work. You mentioned that the,

that the, the calculators eliminated in at least one case, indeed for slide rules, that your secretarial job descriptions are changing? Yes. Are there any other major areas that personal computers are going to change in that direction that most people would be familiar with or make obsolete? Well, I don't think personal computers are making anything obsolete in the sense of what people do. I think they're enriching what people do. Again, there is a common conception that people have of computers which is more along the lines of 1984, very large, very centralized computers. And I know the privacy issue is very, very hot in the media these days, but what we're finding is that when people actually see what a personal computer is, they see something that looks

you know, approximately, they can hold it in their hands. It weighs 12 pounds. Again, they can throw it out the window if they don't like it, and it is very decentralized. It's very democratic, and it's something that completely is, uh, almost the opposite of the 1984 conception we have. And what we're finding is it is, it is enriching people's lives. It is freeing people to do things like we think people do best. Is there any basis for comparing you to, say, Mattel and Atari, or is that like comparing apples and oranges? Oranges. We describe our business as really making tools and not toys, and, uh, we're really interested in providing that bicycle type of tool to the marketplace. I think, uh, some other people are more

interested in providing an entertainment value, which is, which is valuable, of course, too, but that's not our business. Is there a difference in your technology as well? Um, there's something happening actually in the whole personal computer industry with all the serious competitors. The, again, this process of integrating personal computers into the society is going to take maybe 10 years to conclude, and we, of course, want to continue to sell more and more and more computers. The key to that will be to make the computers easier and easier and easier to use, and the way that that's going to happen is we're going to be spending more and more of the computer power in the box to adapt the computer more to the way people are familiar with doing things so that people have to adapt less to the way computers do things.

And therefore, it will require a more sophisticated computer. That's the paradox in our industry right now. To make a computer simpler to use requires a more sophisticated computer. That's part of the reason the home market doesn't exist yet. Because if you think about it, the home user needs the easiest to use computer, therefore the most sophisticated, therefore one of the most expensive. So we expect prices not to come tumbling down in the next few years, but actually to stay the same. You'll get more computer power for the same dollar. You might even see prices increase a little, but the computers are going to get dramatically easier to use. So you and your partner grew up in this valley, Silicon Valley. What kind of culture existed here that's led to all of the building that's

gone on, all the companies that have been created? This Santa Clara Valley, which we all refer to affectionately as Silicon Valley, is probably one of the finest examples of what I call sort of an entrepreneurial risk culture anywhere in the world. And both my partner Steve Wozniak and I both grew up here, and really some of the people that founded companies around the area—Hewlett and Bill Hewlett and Dave Packard and others—were really our role models, our heroes. And we like to think that we're carrying on that tradition. What is there left for you to do now that you're 25, your company's gone public, yeah, it's worth hundreds of millions of dollars? Well, we don't really feel we've accomplished what we set out to do yet.

We've set out to really help lead this process of getting personal computers into society. And I think, asked me in five years? Great, thank you very much. Okay, all right. Yeah, the only thought I had, even though you and the video game manufacturers really exist in two different worlds, yes, is the fact that children and people in general are becoming so familiar with the use of these video games and the simple computers that go along with them. They are going to make people more

aware of personal computers in the future, do you think, and better able to deal with them? Sure. Matter of fact, it's not even only occurring in the video game area. It's occurring, as an example, with an automated bank teller. People are interacting more and more with intelligent devices, whether it be an intelligent game or an intelligent bank teller or whatever. And we're already seeing it in society now. People are becoming more and more familiar with interacting with intelligent electronic devices, and that's changing things culturally. It's a step along the way. Thank you. Okay, thank you very much. Did you get what you want? Is that—yeah, that was good. I think it doesn't tie you to

them professionally, but I think it does to the idea that Los Angeles, just because there's so much work on that coast, and then the other five or six months in between. What do you need, Steve? Talking? Do you want me to re-ask her? Okay. You don't even need to re-answer. What they'll do is take this and splice it in, right? You know how it works, so I don't need to talk. No. Great. Just not—or something. So when they make the edit, it'll look as if you're making some physical emotions. But yeah, all right, I'm going to begin with the reasons. Okay, when you began to— begin, when you began

to develop this business five years ago, what sort of need for personal computers did you perceive? Steve, when you began to develop the business about five years ago, what needs for personal computers did you observe? When you use the word personal computer, you intentionally avoid the word home computers. Now, when you use the term personal computer, you deliberately avoided the use of the term home computer, right? What type of person would have a personal computer today? What type of individual would have a person—what type of individual would buy a personal computer today?

That's right. We always get a lot of good answers. This was just a statement. Does this mean that personal computers in the 21st century would be as ordinary as, say, a refrigerator? Okay, does this mean that personal computers in the 21st century would be as ordinary a part of a household as, say, a refrigerator, a vacuum cleaner? I can't crack this guy up. Oh, yes, you can. I used to be the easiest guy. That's another story. I'm not going to tell it, where they'll have it on tape and somebody will pull it out of the blue for real. I'm not going to like it. Yeah, sure. Okay, next question. Okay, where is the impact of

personal computers going to be felt the most? Okay, where's the impact of personal computers going to be felt most in the future? And then there was a lengthy question that had to do with calculators and secretarial jobs and any other changes he might foresee in the future. Okay, if calculators are making slide rules obsolete, and your computer is allowing you to redefine your secretarial jobs into other categories, more creative categories, what other types of things are going to change as a result of personal computers or be made obsolete? That, do it. Even though you and the video

manufacturers of Apple and the video game manufacturers exist in different worlds, is there some awareness of computing? Even though Apple and the video game manufacturers really exist in two different worlds, are these video games in a sense getting people more accustomed to the idea of personal computers? Okay, that's the end. Great. Now I will listen to Steve, right? And you can say anything. This is the fun farm. Yeah. Where do you do, do you vacation in this area or do you go? Uh, yeah, yeah. No, uh, I don't. I haven't taken

A vacation in a long time. That's how I measure whether I'm successful: is whether I could take off for three months. So far, I'm not successful. Yeah, well, someday. Oh, yeah. How do you build an executive core around a company like this? Obviously, you and your partner had to take an awful lot of responsibility for— Well, one of the things that we always did was we tried to hire somebody who was better than us in a particular thing. That's still my greatest joy around here: is when we hire somebody that's better than I'll ever be at one particular thing. So you try to hire just really outstanding people that are much too—they're actually much too senior for the current jobs that you have, but you know, you're planning to grow so fast that in six months the job's just right for them, and in a year they're scrambling to keep up with it.

So we've grown it, you know, several hundred percent a year, and it's a very, very different type of environment than most people are used to. We've got a whole generation of managers here. They're trained to grow at 400 percent a year, and they'd be bored stiff growing at 30 percent a year.