Steve Jobs on Flash and Tablets: Why Apple Chooses

Without further ado, let's bring out the Steve. I think you all are here to see. Glad you're here. I like the Beatles. Do you like that? Yeah. I don't know. We heard you like them. We can pick between Dylan and the Beatles. But just to begin, we want to say, both Walt and I want to say, professionally and personally, we are thrilled you're here Thank you. After all this I am too. Yes. Yes. I can imagine. Thanks for being here. So we're going to start off with kind of an easy one.

Just this week, you surpassed Microsoft in market valuation, and we thought you might have a thought or two about that. It for those of us that have been in the industry a long time, it's surreal. But it doesn't matter very much. It's not what's important. It's not, you know, what makes you come to work in the morning. It's not why any of our customers buy our products. So I think it's, good for us to keep that in mind and just remember what we're doing and why we're doing it. But I have to I just have to add But it is a little surreal. It is a little surreal. And I remember talking to you right when you were coming back to Apple.

We talked a number of times. And if I remember correctly, the company was sort of on its way to oblivion. Oh, was on the box, yes. So did you could you ever have imagined something like this? Even though I know market cap isn't why people buy our products or anything, it's just like what did it feel like when it happened? Well, Apple was about ninety days away from going bankrupt back then in the early days. And it was much worse than I thought when I went back initially. But there were people there who I'd expected all the good people would have left. And I found these miraculous people, these great people. And I said, what? I tried to ask this as tactically as I could, why are you still here?

And a lot of them had this little phrase. They said, I because I bleed in six colors, which was the old six color Apple logo. And that was code for because I love this what this place stands for or at least stood for. And that just made all of us want to work that much harder to have it survive and have those values survive and bring it back, you know? So we want to spend most of this session talking about your thoughts from your really interesting position because the conference is sort of about the juncture of technology and media, and you're sitting there right at that juncture in a lot of ways.

I want to spend most of the session talking about where you think things are going in the future. But there have been some controversies lately that we want to ask you about. And I guess I'd start with Flash and your sort of war with Adobe. So you published a long open letter, something like... What did you call it? Thoughts on Flash or something like that. So you've clearly stated your case there. But even if... Here's my question. Even if everything you say in there is true about its inferiorities, its technology and other things being available to replace it and already replacing it, is it really fair or the best thing for consumers who buy, say, an iPad or an iPhone to just be abrupt?

In other words, if we're in a transition where there are better things than flash, why be abrupt and cut off consumers? Sure. Well, two things. Number one, I'll come back in a minute to what really happened there because what you said isn't exactly logically correct. But Apple is a company that has doesn't have the most resources of everybody in the world. And the way we've succeeded is by choosing what horses to ride really carefully, technically. We try to look for these technical vectors that have a future and that are headed up. And technology, different pieces of technology kind of go in cycles. They have their springs and summers and autumns, and then they go to the graveyard of technology.

And so we try to pick things that are in their springs. And if you choose wisely, you can save yourself an enormous amount of work versus trying to do everything. And you can really put energy into making those new emerging technologies be great on your platform rather than just okay because you're spreading yourself too thin. So we have a history of doing that. As an example, we went from the five inches floppy disk to the 3.5 inches floppy disk with the Mac. Before other people, right? We were the first to do that. Made the 3.5 inches floppy disk popular. Sony invented it and we put it in the first products. And there were some good reasons we did that.

We got rid of the floppy disk altogether in 1998 with the first iMac. We also got rid of these things called serial and parallel ports, and we were the first to adopt USB even though Intel had invented it. You first saw it in mass on iMacs. And so we have gotten rid of things. We were one of the first to get rid of optical drives with the MacBook Air. And think things are moving in that direction as well. And sometimes when we get rid of things like the floppy disk drive on the original iMac, people call us crazy. Or at least premature, maybe. No, they call us crazy. And... But sometimes you just have to pick the things that look like they're gonna be the right horses to ride going forward.

And and flash looks like a technology that had its day but is really on... Is waning. And HTML5 looks like the technology that's really on the ascendancy right now. And to incorporate flash into systems is a lot of work. There's no smartphone shipping with flash on it now, as you know. But you know that there will be, right? Well, there's going to have been for the last two or three years, and every six months, it gets updated. So I'm sure that eventually they will. And there's a lot of issues with that in terms of battery life and you know, security and other things. But but more importantly, HTML five is starting to emerge. You know, there's been an avalanche of people that have said, we're doing HTML5 video.

And the video looks better and it works better and you don't need a plug in to run it. And so while 75 of the video in the web may be in Flash, 25% going to 50% very shortly is also available in HTML. So do you say that to consumers? Mean, talking besides technology, it's a consumer. I think consumers outside of the valley in our industry aren't having this issue. Except when they hole up their iPad and they go to a web page and there's like a hole there where a video would Well, you know, there are... They don't know... They may not know what flash holes in some websites, but those holes are getting plugged real fast. You know, the holes that exist now are ads.

I understand Not that's a problem for some entirely. Not entirely, but that's the number one holes that are there. And what about the other community that I think is impacted by this and that's developers? Because what I think a lot of the coverage of this flash issue has overlooked is that, yes, flash is a video container and there are other video containers that actually have a very rising share, H. Two sixty four and native HTML5, but it's also a development environment. And there are entire websites, some of them quite beautiful, written on a flash No, one of them an even more popular development environment was HyperCard, and we were okay to axe that. It wasn't more popular than Flash, was it? In its day, sure it was.

On your platform, right? No, no, no, no, no. HyperCard was was huge in its day because it was accessible to anybody. So you could be a HyperCard developer. Yes, I don't know. I don't know about it. But we have over 200,000 apps on the App Store. So something must be going right in terms of attracting developers to our platform. So your goal, just to finish this up, your ultimate goal is to get rid of or just to move will you Our goal is really easy. We didn't start off to have a war with Flash or anything else. We just made a technical decision that we weren't going to put the energy into getting Flash on our platform. We told Adobe, if you ever have this thing running fast, come back and show us, which they never did.

And but we think we're not going to use it. And that was it. And we shipped the iPhone and it doesn't use flash. And it wasn't until we shipped the iPad and it didn't use flash that Adobe started to raise a stink about it. We didn't raise a stink about it. We never mentioned the word Adobe or Flash or anything else. We like Adobe. We in the the opportunity so we're leader we're say a lot of bad things about us the in the the company. Press and this and that, and it went on for months. And that's why I wrote thoughts on Flash was because we were trying to be real professional about this and weren't talking to the press about it.

We didn't think it was a matter for the press. And we finally just said enough is enough. We're tired of these guys trashing us in the press over this. And so we wrote down the reasons why, technically, we didn't choose Flash. And they are just as true today as they were when we wrote it as they were six months or a year before that. And what would just I promise, we're going move on to the next thing you don't want to talk about. But on this flash thing, what would I mean, it's an open market. You do have competitors, particularly in the smartphone side, and you may have significant competitors in the tablet side. We have a couple of companies showing non iPad tablets This here is America. This is America. That's right. Well, it's L.

A, but it's part of America. Yeah. But what if the market says, hey, you know, it's important enough to us to be able to run not just these videos but whole websites? There's a great photo editing site, I don't know if you've ever used it, called Picnic. It's a lovely site. It really works like a smooth, slick native client on your computer, but it's written it's a flashlight on the web as far I mean, probably uses other technologies, too, but it doesn't work on the iPad. What if people say, the iPad is crippled in this respect? Well, you know what? I'd say two things. Number one, things are packages of emphasis.

Some things are emphasized in a product. Some things are not done as well in a product. Some things are chosen not to be done at all in a product. And so different people make different choices. And if the market tells us we're making the wrong choices, we listen to the market. We're people running this company. We're trying to make great products for people. And so we're we have at least the courage of our convictions to say, we don't think this is part of what makes a great product. We're gonna leave it out. Some people are gonna not like that. They're gonna call us names. It's not gonna be in certain companies' vested interests that we do that, but we're gonna take the heat because we want to make the best product in the world for customers. And we're going to instead focus our energy on these technologies, which we think are in their ascendancy and we think are going to be the right technologies for customers.

And you know what? They're paying us to make those choices. That's what a lot of customers pay us to do, is to try to make the best products we can. And if we succeed, they'll buy them. And if we don't, they won't. And it'll all work itself out. So so, you know, so far, I'd have to say that that that people seem to be liking iPads. You know? I mean, we've sold one every three seconds since we launched it. I don't know how it's going to come Take you three whole seconds to sell one? Can't you do that? Right now, I'm just worried that it's taken us three whole seconds to make one.

So we could be selling them faster, it seems like. Obviously, you have shy in retirement opinions about this. You've been e mailing a lot lately. This is riveting to a lot of people. I know it's... So it sounds silly outside of Silicon Valley, but a lot of people are riveted. What... What's happened in your communication style? Because you've been emailing people, you've been emailing you've been emailing people at the Valleywag and stuff like that. Well, he, you know, he never identified himself as a journalist, but I was working late one night. It actually was like two in the morning, I think. And I was working on I'm making a presentation next Monday, and I was working on that presentation. And this guy starts e mailing me these obnoxious e mails. And I'm just enough of a sucker that I I wanna, like, straighten this guy's thinking out. So I start to, you know, respond to him, and he he responds back.

He is not, you know, he is no dummy and he is responding back and we got into this conversation. It was kind of entertaining. Yes. It And then he publishes it. So, you know, well, a lot of you are getting published. What do Yes, I just like to email now? What's happened? But you are like even just customers, not just So that they're very short a lot of Absolutely. I've actually always done a bit of that. Okay. All right. So you had a prototype of one of your products that was wound up in a bar and you've heard of have you heard of has this come to your attention? I don't know because you're the CEO. Don't know whether, you know, lower levels are handling it, but it and and then there was a blog that paid somebody some money. We don't really know the whole story because investigation, I guess, is underway with the police.

But, I just... I wanted to ask you your reaction to some... Sort of a duality about this because I think there are people in the public and in journalism who didn't... Don't approve of somebody... Of sort of checkbook journalism, if you wanna call it that, you know, the way that was done, if what we know is true. And I wanna keep stressing that because I don't know that we know the whole thing yet. But on the other hand, then the police go, and they don't issue a subpoena, which somebody's lawyers could fight in court about taking this guy's computers, but they go and get a search warrant, and they grab them. Mhmm. And one presumes, and, again, I don't know, but I know if they took my computer, there's notes and things from many companies and many sources and stories and things that wouldn't necessarily be relevant Mhmm.

To whatever the police are looking at. It was just like a giant grab of a journalist's sort of assets of all the background and what that guy was doing. Or a guy's assets, at least. Well... You could debate what a journalist is. We could debate it, but I mean, we think bloggers are journalists. You know? Pub... We we run a blog, so we think bloggers are journalists. And The New York Times runs blogs. The Wall Street Journal runs blogs. I don't think that's much of a debate anymore. But anyway, the point is... So if every... Where do people... I can tell you what I do know. Okay. One of our employees, you know, to make a wireless product work well, you have to test it. And there's no way to test it in a lab completely, so you actually have to carry them and test them out. And one of our employees was carrying one. And there is a debate as to whether it was left in a bar or stolen out of his bag, but I don't know the answer to that.

And the person that ended up with the phone decided they would try to sell it to somebody. So they called Engadget and they called Gizmodo. It turned out that the person that got the phone tried to activate it by plugging it into his roommate's computer, a woman. Evidently destroying some evidence, and she's the one that called the the police. And that's why they got the search warrant. Did call the police or did she call Apple? She called the police and because she didn't want to get implicated, supposedly. I'm just telling you what I've been told.

And so the police came and felt that they needed to grab some stuff before it was all... Before it all disappeared. And so this is a story that's amazing. It's it's got theft. It's got buying stolen property. It's got extortion. Got some some movie producers. But and and you know, and and it was reported that the police broke down somebody's door, which they, to my best of my knowledge, never did. And so it's just this whole thing is is is very colorful, and the DA's investigating it. And to my knowledge, they have a a... Somebody from the courts that is making sure that they only see stuff that relates to this case and no other cases.

I believe they're taking great pains to do that. And so I don't know where it will end up. It's really up to the DA. So the last question before we get to really easy stuff like Google and about platforms and bigger where things are going. Do you have any comments on what's going on at Foxconn because of all the press around? Oh, sure. Yes. We're pretty on top of that. I actually think, Apple does one of the best jobs of any companies in our industry and and maybe in any industry of understanding the working conditions in our supply chain. We're extraordinarily diligent and extraordinarily transparent about it. You can go on our website and read, you know, our report that we publish once a year. And we go into these suppliers, and we go into their secondary and tertiary suppliers, places where nobody's ever gone before and audited them before, and we're pretty rigorous about it.

So I can tell you a few things that that we know, and we're we're all over this. Foxconn is not a sweatshop. I mean, you go to this place, and it's a factory. But my gosh, I mean, they've got restaurants and movie theaters and hospitals and swimming pools. And, I mean, it's a it's a... For a factory, it's a pretty nice factory. But they've... We had this in my hometown of Palo Alto. We've had some copycat suicides where high school kids have committed suicide by throwing themselves in front of Amtrak. And... Because it's a difficult situation. They've got a lot of workers who are leaving very poor rural areas, coming to these factories away from home for the first time, 19 years old.

They're probably less prepared to leave home than your typical high school student going to college in this country. And so I think there's some real issues there. And you all are bringing in psychiatrists or any... We're trying to understand right now. Okay. Before we go in and say we know the solution, we need to understand what the problem is. So you have teams, but what kind of folks do you send over? I mean, they have to be some kind of social workers or what do you send over there to find out? Or just lawyers or what? No, not lawyers. Not lawyers? No. Okay. We send over our, first of all, our own people that have been going over there for a long time and are very familiar with them. And second, we've hired some outside folks as well. Okay. Okay. So let's talk about where things are heading.

You spent a good chunk of your career fighting a platform war with Microsoft in the early in the the heyday PC, of the PC era, they won that platform war pretty decisively in terms of operating systems. The Mac is making a nice comeback. But I mean, basically, they got a much huger share, and they do dominate that platform. But now there are new platforms out there. You've done really well on some of them, the really advanced smartphones and now the beginnings of this tablet thing using the same, OS. You have other platforms.

You have Google, a lot of people consider to be building multiple platforms. You know, Android, this forthcoming Chrome OS, and of course, their whole search ecosystem that they have and their app ecosystem around it through the browser, everything through the browser and through search. And then the social graph, the social networks. Facebook is a platform, and it's very big and it's very popular and it runs into controversy. And we have Mark coming, and we're going to talk to him about it. So to Karen and I, there's a platform war going on that you're in. You're a big player in it. Google's a player in it. Facebook's a player in it. Do you see it like that? No. Okay. And I never have.

I mean we never saw ourselves in a platform more with Microsoft. I mean maybe that's why we lost. But it's we always saw ourselves trying to build the best computers we knew how to build for people. That's always what we were trying to do. And you never thought about Windows or Microsoft? Sure, we thought about Windows, but we never thought of ourselves in a platform war. We always thought about how can we build a much better product than them. And I think that's how we still think about it. And how about Google? How do you think about it? Something has evolved and changed in the relationship between company and Google, say, compared to the day you introduced the iPhone What has happened? Well, decided Where are to compete with us, and so they are.

And in what in phones, in what, operating In phones, sure. And how about PC operating systems with this Chrome thing? Well, again, Chrome is not really baked yet, so we'll see. So how do you And browsers, they have a they're competing with you in a number of areas, right? It's not just Well, browsers, I think I mean, I think we all contribute browsers to the mix, but IE still has the biggest share and Mozilla and IE together dwarf what Google and us do together. So... So talk a little about your... And as you know, I mean, Chrome is based on the work that we've done at Apple with WebKit. Yes. So we took a tiny little open source project and we created what's called WebKit out there.

Right. And we did an interesting thing for Apple. We put it in open source. That is an interesting thing It is. For And we've done a fair amount of it, but this is the thing that's been the most successful. And almost every well, every modern mobile browser is now based on WebKit. Google's and Android, Nokias, RIM is coming out with one, Palms, obviously, well as ours. And it's the heart of Safari, it's the heart of Chrome. And so WebKit has picked up substantial momentum, and now all websites testing against it. Every mobile website, but even a ton of desktop websites now because of Safari and Chrome being based on WebKit are now testing against it, and it's turning out to have a lot of momentum.

So although we enabled our competitors to have much better browsers in the mobile space, we've created a real competitor to IE in terms of... If you take all the WebKit stuff Yes, if you take it all together. And in the mobile space, it's number one. So let's get back to the relationship with Google. So you are the basic competition is on these smartphones and smartphone operating systems. How do you look at them as a competitor? How do you feel about the changing relationship? Because it was Eric was on your Board, had a very close relationship. Can you talk about what how you felt happened there besides them competing? Mean... Well, they decided to compete with us. And... That's it. That's it. We didn't go into the search business. Well, I want to ask you about that in a minute. But you just woke up one morning and found and discovered they were going to compete with you?

Yes. Did he call you? Did he... No. They started competing with us and got more and more serious. So how do you look at the competition now? How do you look at the difference between Android and what you're doing? Well, right now, if you look at the smartphone market share, the way people define smartphones is a little funny, but Nokia is still number one. Yes. But I know it's Let's talk about super say super smartphones, the Well, really know, again, everybody does this differently. RIM is number two. We're number three. Google is number four and other is number five. So that's where it is right now. Where's Microsoft? They're in other. Okay. All right. At the moment. At the moment.

Things They're can doing a... But do you consider... We were zero in three years ago. Okay. So things can change. Okay. So those are numbers. But I think what we're trying to get at is Is there a feel betrayed or what's your relationship with Google or are you gonna And also No. Seriously. I mean, My are are you gonna sex sex life is pretty good these days. How's yours? It's great. Thanks for asking. It's great. Don't don't ask. So I'll... But what is the relation? What is the re... How do you how do you that. That. And be do do we're doing a of we try to tell do.

Everybody about it, and every we're person votes for themselves. They go yes or no. And if enough of them say yes, we get to come to work tomorrow. That's how it works. It's really simple. As we're the enterprise market, it's not so simple. The people that use the products don't decide for themselves, and the people that make those decisions sometimes are confused. So it's we're We love just trying to make the best products in the world for people and having them tell us by how they vote with their wallets whether we're on track or not. So you're not going to remove Google from the iPhone and the iPad, but are you going to give users more prominently displayed additional choices to it, for instance, now that because they are a competitor of yours now.

We definitely compete with each other. I noticed in their latest offering, they're allowing their customers to take their iTunes music onto an Android phone, which is fine. They're helping us maybe sell more music. We have some Google properties on our phone. Just because we're competing with somebody doesn't mean we have to be rude. That's nice. Okay. So last year at our conference, we had a small search company called Siri. Yeah. And... Well, I don't know if I would describe Siri as a search company. Okay. But it's a search related company, and I'd like you to describe... I would not... Would... You you now own them. Right? Yeah. We bought them.

So what... And there was a lot of speculation. Well, this company is kind of in the search area. No, after they're not in the search area. What are they in? How would you They're describe in the AI area. Yes. So you bought them for their engineers and their patents and their knowledge about AI more broadly? We like what they do a lot. Okay. What do you want them to do for you? What are you... So you're not going into the search business through them or anything like that? No. We have no plans to go into the search business. That's not something we know about. It's not something we care deeply about. Other people do it well. See, what's hard for people to remember, and this is good, I think, is go back to pre iPhone only three years ago. There was no app market for apps on phones.

Phones were sold in truly walled gardens, as you know. You railed against this. And the thought that a developer could make an app for a phone was unheard of. Well, there were apps for the Palm platform. There were some. Palm didn't operate a store, you're right. But there were apps and... There were a few handfuls, yes. Would sell them and you could download... There were a few handfuls, but there wasn't anything. I mean, there was... No, nothing like this. Even a percent of what there is now. Right. It's huge now. Okay. And and also, when you bought a phone, the carrier we'll worry about what's on the phone.

How are they doing with that network thing here in The U. S? Well, they're doing pretty well, actually, in some ways, and they have some work to do in other ways. And how do you pressure them? Do you when you get so many complaints and... We meet with them once a quarter, and they're doing a lot. I mean, remember, they're handling way more data traffic than all of their competitors combined, way more. And so they're having troubles, and they're having troubles. Their biggest trouble right now is getting equipment out of their suppliers so they can beef up these networks. But they have the fastest three gs network, and I think it's improving.

I wish I could say rapidly, but I think it's moderate rate improving. And I think they're going to end up with a very good, very fast network that is is actually the most robust for handling lots of data simply because they got there first and they had the problems. I'm convinced that any other network, had you put this many iPhones on it, would have had the same problems. So but I do think they have some issues, but You they were hard to feel need to move to another network? Well, that's what I was saying. In The U. K, you went to three carriers. It didn't seem to cannibalize your sales. In The U. S, would there be an advantage to be on more than one carrier? There might be. There might be. Might be.

So are you going to do it? The future is long. How about this year? How about the short term? The short term. You talk about the short term. Yes. I can't talk about that stuff. You know that. Okay. Let's talk about the other things you're making, because you talk about you're not going to be in the search. What is your neck? We we we we've been here, Dee. You talked about, I guess, couple of years ago, not not really doing a phone and not doing a tablet or the tablets. You had you you were sort of different different things. Gave reasons why Right. Tablet PC wasn't such a good idea. Right. And and one other time, you talked about you weren't gonna do a phone because you had to sell it through the... I think you called them the five orifices at the time. Right. Four, I think. The carriers. I was calling them the Soviet ministries, but you had a more colorful phrase.

But... And you're doing both of those. Well, you know, we found a way to change that. We found a way to sell the phone that we wanted to sell and define it the way we wanted to define it, have the control that we wanted to have over what was on the phone versus the carrier controlling that. So we were able to change the rules of the game, and that's what got us excited about getting in the phone business. And when you were talking about it here, you didn't know that you could do that? No, absolutely didn't think we could. We had some discussions and we didn't think we could. But we were able to persuade AT and T, and they took a very big leap on us. I mean we've never been in the handset business before. We've never been in the phone business in any way, shape or form.

So they took a big leap on us and decided they were going to trust us to do the right thing on the phone. And it's worked out very well. So we were able to change the rules of those games in the game, in the same way in the tablet. Yes. Talk about the What I remember telling you on the tablet was that handwriting was probably the slowest input method ever invented and that it was doomed to failure. Well, what we tried to do was reimagine the tablet. In other words, Microsoft did a lot of interesting work on the tablet. What we've done is not compete with what they did. We reimagined it, and what we're doing is completely different than what they did. They're completely stylus based. We...

Their tablet PC that they have now... For ten years. Right. And what we said at the very beginning was if you need a stylus, you've already failed. So let's talk about tablet. And that drove everything. That drove everything. Their tablet PC was based on a PC. Right. Had all the expense of a PC, had the battery life of a PC, had the weight of a PC. It used a PC operating system that really needed the precision of the tip of an arrow of a cursor. Right. Well, the minute you throw a stylus out, you cannot get that precision. You have the precision of a finger, which is much cruder. Therefore, you need to have totally different software.

So you can't use a PC operating system. And you have to bite the bullet and say, we're going have to create this from scratch because all the PC apps won't work without being rewritten anyway. And so we built a very different animal. So when you built this OS, this multi touch gestural OS for fingers, you didn't do it in a tablet right away. You did it in the phone. What was the I mean, did you consider doing a tablet when you did the iPhone? Or was it just a natural progression? The iPhone came out. It was a big hit. I'll actually tell you kind of a secret. Okay. Okay. I actually started on the tablet first. And I had this idea of being able to get rid of the keyboard, type on a multi touch glass display.

And I asked our folks, could we come up with a multi touch display that we type on, I could rest my hands on and actually type on. And about six months later, they called me in and showed me this prototype display. And it was amazing. And I gave it to one of our guys. This was in the early 90s, I mean early 2000s. And gave it to one of our other really brilliant UI folks. And he called me back a few weeks later and he had inertial scrolling working and a few other things. Now we were thinking about building a phone at that time. And when I saw the rubber band inertial scrolling and a few of the other things, I thought, my God, we can build a phone out of this.

And I put the tablet project on the shelf because the phone was more important. And we went and took the next several years into the iPhone. And And when we got our wind back and thought we could take on something next, pulled the tablet off the shelf, took everything we learned from the phone and went back to work on the tablet. So where does the tablet go from here? Now among the many things that people think it's going do is save journalism. That was there was a big there's a lot of stories about you going to visit publishers and talking about it being the hope of journalism. Do you consider that a goal of yours or anything that's important to you? Or is it just that magazines look real pretty on it? Well, we have a lot of goals with it.

But one of my beliefs very strongly is that any democracy depends on a free, healthy press. And so when I think of the most important journalistic endeavors in this country, I think of things like The Washington Post, The New York Times, The Wall Street Journal and publications like that. And we all know what's happened to the economics of those businesses and some of them are in real trouble. So even more than magazines, I think some of these newspapers are the news gathering and editorial organizations are really important. I don't wanna see us descend into a nation of bloggers myself.

I think we need editorial more than ever right now. So anything that we can do to help The New York Times and The Washington Post, The Wall Street Journal and other news gathering organizations find new ways of expression so that they can afford to get paid, so they can afford to keep their news gathering and editorial operations intact, I'm all for. Do you actually think it'll work? I mean, is this something that you think is... Are you thinking people will move to reading? Have you moved yourself? Well, we've all moved to reading our news on the That's why these these newspapers are in dire straits.

And what we have to do is figure out a way to get people to start paying for this hard earned content. And so this provides us a potential opportunity to provide them even more value than just a webpage and to start to charge a little bit for that. Now my what I preach is that I don't know what's going to work, but I can tell you as one of the largest sellers of content on the Internet to date, the biggest lesson Apple's learned is price it aggressively and go for volume. And that's worked for us. And every time we haven't done that as much, we've seen more attenuated success. So I'm trying to get these folks to take more aggressive postures than what they charge traditionally for print because they don't have the expenses of printing, they don't have the expense of delivery, and to to charge a reasonable price and go for volume.

Now... Because I think people are willing to pay for content. Right. I believed it in music. I believe it I believe it in media, and I believe it in in news content. But in books... Yes. And I'm no expert on this agency model and all the stuff that's going on, although our colleagues at the Journal have certainly written about it very well. But it looks like your entry into the book thing actually forced the prices up other than for new, like, bestsellers where there's a lot of competition. So isn't that opposite of what you just said of trying to price more aggressively? And the typical book is up toward $14.99 and Amazon had been kind of holding it down to $9.99 right? Yes. The... It's complicated.

The market right now is such that it is set up to be far more responsive to consumer demand for what the prices need to be than it was six months ago, way more responsive. So we may see prices go up a little bit, but if consumers want the prices to be less, they will be far more responsive to those signals than they were going to be... Because the structure of Because the the structure of how the publishers are approaching this has changed dramatically. So let's talk more broadly about tablets. A second ago, you said you have a lot of plans for tablets or thoughts about what tablets could be. And when you did your presentation on the iPad, you said it's like, here's your phone, here's your laptop, here's this third category.

And if it's not better than a netbook, if it's not of value to people, it's not gonna succeed. Mhmm. And, you know, in my own review, I was... You know, I liked it. I was favorable. I said it had a chance to really change things, but I also said people have to feel like it's not an extra thing to carry. They have to feel like it's enough of the time going to replace enough of the things they do on their laptop, not necessarily 100%. Is the tablet going to be... Eventually replace the laptop, do you think? There are lot people who say, well, you'll never do content creation on it, for instance. Talk about what you think, where it's going, not just the iPad, but the tablet itself as a form factor. I'm trying to think of a good analogy.

When we were an agrarian nation, all cars were trucks because that's what you needed on the farm. But as car as vehicles started to be used in the urban centers and America started to move into those urban and then suburban centers, cars got more popular and innovations like automatic transmission and power steering and things that you didn't care about in a truck as much started to become paramount in cars. And now, probably, I don't know what the statistics are, maybe one out of every 25 vehicles, 30 vehicles is a truck where it used to be 100%. PCs are going to be like trucks.

They're still going to be around. They're still going to have a lot of value, but they're going to be used by one out of x people. And when you say PC, just so I'm clear, you're... It's not PC versus Mac. You mean... I mean personal And you're including laptops and desktops. Yes. Okay. And and this transformation is going to make some people uneasy, people from the PC world like you and me. It's going to make us uneasy because the PC has taken us a long ways. It's brilliant. But and we like to talk about the post PC era, but when it really starts to happen, I think it's uncomfortable for a lot of people because it's changed and a lot of vested interests are going to change and it's going to be different.

So I think that we're embarked on that. Is it the iPad? Who knows? Will it happen next year or five years from now or seven years from now? Who knows? But I think we're heading to But you don't really think it's going to happen next year, right? I mean it's a longer process than that, isn't it? Sure. And what do you imagine? When you talk about adding power transmission and windshield wiper, like intermittent windshield wipers, are there some things you're seeing now that you think will from right now where the iPad started? Do you see anything emerging as important? People laugh at me because I have used the phrase magical to describe the iPad. Yes, they do. And... But it's what I really think. And there's something magical about it.

It's like you have a much more direct and intimate relationship with the Internet and media, your apps, your content Mhmm. It's like something's... Some some intermediate thing has been removed and the the fact that you can move it all around? Is it the fact that you have no cables and ten hour battery life? I I don't know. It's all these things plus other things which I don't understand yet. But there's something about it that's magical.

And I think we have we are just scratching the surface on the kind of apps we can build for it. I think one can create a lot of content on a tablet. We talk about that for a second? Sure. What do you now you shipped it coincidentally or the day you shipped it, you also announced iWork redone for touch, dollars 10 apiece. Those are content creation or at least editing, but that you can create from scratch there. There are a few other companies I noticed today. I got a press release that one of the documents to go, which has been around a long time on phones, is now out on the iPad and it can do or it's about be out on the iPad and it can do Word docs, Excel, PowerPoint, whatever.

But there are a lot of people who don't believe that this class of devices, you know, because of the typing and all that, is right for content creation. You obviously seem to disagree, and I'd just love for you to talk about that a little bit. Yes. Why I guess why wouldn't they be is the question. You could say when I'm going to write that 35 page analyst report, I want to use my Bluetooth keyboard. But that's 1% of the time I'm using it. So I still get the benefits the other 99% of the time.

If you would say, well, the software is not powerful enough, that's just a matter of time. So it can't be that the software is not powerful enough because that can get fixed over time. So I think your vision would have to be fairly short to say that these things can't, over time, grow into tools that can do many things. Such as give us an example of what you would imagine would be something. Well, obviously, the productivity stuff, but things like editing video, things like graphic arts, things like music, you can imagine all of these content creation things on such devices.

Does some of that depend on more powerful processors and so forth? Sure. Yes. Time takes care of lots of this stuff. Do you imagine it being more flexible? Do you see yourself putting out an iPad that is not a hard glass surface? We don't have the technology to do that, and it's not on the horizon. Anytime. Well, horizon implies a finite amount of time. Right. So... But do you but do you ever do you is the problem there? Is it just not is what are the technical technical problems that would prevent that? I'm not an expert in what it takes to make flexible displays, but a lot of people have tried, a lot of people are trying and maybe somebody will have a breakthrough. But flexible, printable displays are probably the...

Pretty bad. Many years away. Can I talk to you about a somewhat different subject, which is curation? So you are, as Rupert said in his opening talk, there's been some blurring. Some technology companies and media companies are in each other's businesses a little bit. And you obviously are a retailer of a lot of content and of apps as well. And there's been a lot of... You know, there these controversies that flare up periodically about your App Store rejecting things, and in some cases, you backtracked and changed your mind after there was an outcry and so forth. And, you know, I don't know of any law that says that any merchant, whether it's you or Walmart or CVS or anyone, has to carry anything they don't want to carry.

But isn't there, as you become pop... More and more popular, you know, we started by talking about your market cap, which is kind of a symbol of that, let's say, and you're selling every three seconds an iPad. There's responsibility along with that, as you have pointed out. And we become big unlike Walmart and what? CVS, they're big, you know. I'm like, right. But you become big. So you've got the most apps. My question to you is, you've talked in some of the things you've written about the responsibility to protect your consumers from malware and from porn and stuff like that. But is there a downside of you guys Here's what we do. Acquiring... Oh, wait a minute. Isn't there a downside of you guys acquiring all this power and saying no to some political cartoonist or no to some political candidate and also doing it in a black box that at least a lot of people on the outside have trouble understanding what the rules are.

So don't you have a problem there? Well, here's... Let me tell you, first of all, we have two platforms we support. One is completely open and uncontrolled, and that's HTML5. HTML5 is a set of standards set by independent standards organizations that are widely respected. So HTML5, CSS, know, stuff like that. JavaScript. JavaScript would be a third one. So we support HTML5. We have the best support HTML5 of anybody in the world in our browsers. And so I think we support this very completely open uncontrolled platform, standards based.

We then support a curated platform, which is the App Store, which has over 200,000 apps in it. It's the most vital applications community on any platform in the world today. So how do we curate this? It's a bunch of people just like you and me coming into work and doing their best every day. And we've got a few rules. Some of the rules are the app has to function as advertised, has to do what the developer advertises it's going to do, can't crash, cannot use unsupported APIs because if a bunch of customers buy the app and we upgrade the OS and they're using unsupported APIs that break, then the apps will break.

And we'll have a whole bunch of unhappy customers. So they can't use they have to use public APIs only. And those turn out to be the three biggest reasons we reject apps. It's for those three things. But we approve 95% of the apps that are submitted every week, which is many, many, many, many thousands every week. We approve 95% of them within seven days. So what happened in these cases like that? Well... The political candidate So here's what happened. Was mad at the... We had a had a rule that said you can't defame other people. That's in your terms of service... Yeah. You can't defame of... You can't defame people. Determined by your app... The people that work at Apple.

Correct? I mean... Yes. But I think it would be determined pretty much universally among rational people. Not not some strange definition. You can't defame people. And the problem is political cartoons got caught in that because by definition, they defame people. Right. So we didn't think of that. That was an unintended consequence of a rule that said you can't defame people. So this guy submits his cartoon, late last year. The rule is still in place. He gets rejected. For other reasons, we realized that this is an unintended consequence. We changed the rule, I think it was in January, except for political cartoons. The guy never puts his app back in again. He wins a Pulitzer Prize.

Somebody asks him. He doesn't actually run to the press, but somebody asks him, how come this isn't, on the office? Goes, oh, I submitted it. They rejected it. He's nice enough guy about it. And then these flurious stories get written several months after we changed the rule because we found out about an unintended consequence. So we are guilty as charged of making mistakes mistakes because nobody's ever done this before. Nobody's ever tried to set rules for 200,000 apps in two years in the most vital app community on any platform before. We're doing the best we can. We're learning as fast as we can. We're changing the rules when it makes sense. But we think it made sense to have a rule that said don't you can't defame people because we didn't want these apps that, you know, that did that.

We didn't think that was right. So we're doing the best we can. We're making mistakes. We're fixing them as fast as we can. And what happens sometimes, though, is that some people lie. Some people used unpublished APIs and their apps get rejected. Some people submit an app that they says... Say does one thing but really does something else. They try to hide it from us. They get very clever about that. They try to hide it from us, and we find it. We reject it, and they run to the press, and they tell the press the story about oppression. And it gets written up, and they get their fifteen minutes of fame because they hope it will convince us to to change our minds, which it never does, but they keep trying to do that.

And it's unfortunate, but we take it in the chin. That's part of what we do. And we don't run to the press and go, this guy is a son of a bitch liar. That's just not appropriate for us to do. Okay. So we take it in the pen, and we move on. Well, if you have a list you wanna read out here, then... The the government is looking into this. Correct? Is that from... Not that we know. Not that you have. Are you... There's over the iAds. Is that correct? Government... That's a different story. We'll talk about So so in terms of publishing these these rules more clearly, is there something that you all could do that is much more transparent to people? I mean I talk to developers all the time, you know, who come and want me to write about their product. And they all want to be on your platform, but they sometimes express to me that they're confused or they can't exactly 95% of the apps that are submitted get approved within seven days.

So you don't think there's any need to improve your I transparency absolutely think we could do better. I just want to remind you, 95% of the 10,000 to 20,000 apps that get submitted every week get approved within seven days. Okay. There's lots we want to talk about. Just curious, it's I'm just sitting here listening to you. What do you do all day? What is your was just... As I was sitting here, was like, wonder what he does. Most people think not enough. No. I think you probably do more than most people. But what what is your day like? I would be curious what do you... How you go into the office. What what is your role at Apple at this moment? I have one of the best jobs in the world. I'm incredibly lucky, And I thank all of our customers and employees for letting me do what I do.

I get to come into work every morning and You speed, by the way, I And do I get to hang around some of the most wonderful, brightest, committed people I've ever met in my life. And together, we get to play in the best sandbox I've ever seen and try to build great we're about be the company. The isn't it funny, a a ship that leaks from the top. They don't have that saying anymore. Okay. You can do that, though. But here's the thing. What's that? You can send me an e mail about it. Yes. But just to use that as an example.

So you have a new iPhone, we presume, that's coming out very shortly, or you're going to announce it very shortly. There's going to be another iPad at some point. There's new Macs at various points in time. What is your personal role in these things? People have different stories about it that you ranging all the way from you design it personally to you kind of to reuse this word, you kind of curate the suggestions of the people who work under you. I mean, give us a sense of that without breaking any of your rules about, product secrecy. What do you do? Of the keys to Apple is Apple's an incredibly collaborative company. And so you know how many committees we have at Apple?

No. Zero. We have no committees. No committees. We are a very we are organized like a start up. One person is in charge of iPhone OS software. One person is in charge of Mac hardware. One person is in charge of iPhone hardware engineering. Another person is in charge of worldwide marketing. To 're able And And we're be do doing, the whole business. And there's tremendous teamwork at the top of the company, which filters down to tremendous teamwork throughout the company.

And teamwork is dependent on trusting the other folks to come through with their part without watching them all the time, but trusting that they're going to come through with their parts. And that's what we do really well. And we're great at figuring out how to divide things up into these great teams that we have and all work on the same thing, touch bases frequently, and bring it all together into a product. We do that really well. And so what I do all day is meet with teams of people and work on ideas and solve problems to make new products, to make new marketing programs, whatever it is. And are people willing to tell you you're wrong? Yes.

I mean, other than snarky journalists. I mean, people have Oh, worked yeah. No. We have wonderful arguments. And do you win them all? Or... Oh, no. I wish I did. No. See, you can't. If you wanna hire great people and have them stay working for you, you have to let them make a lot of decisions, and you have to you have to be run by ideas, not hierarchy. The best ideas have to win. Otherwise, good people don't stay. But you must be more than a facilitator who runs meetings. You obviously contribute your own ideas. I contribute ideas, sure. Well, why would I be there if I didn't? Well, because there are some companies running a different way. That's all. What do you imagine? This has been the past ten years of bringing back Apple, ten, twelve years.

What do you imagine the next ten of your life is going to be about? This is probably a bad example, but I'm gonna use it. How to just let it slide. You can't... Years ago, what would we have done if something like this happened? You go back ten years ago, you know, what would you do if if... Without going into that, we have the same values now as we had then. We're And we come into work wanting to do the same thing today as we did five or ten years ago, which is build the best products for people.

You know, there's nothing that makes my day more than getting an email from some random person in the universe who just bought an iPad over in The UK and tells me the story about how it's the coolest product they've ever brought home, you know, in their lives. That's what keeps me going. And it's what kept me going five years ago. It's what kept me going ten years ago when the doors were almost closed. And it's what will keep me going five years from now, whatever happens. So I don't see why you have to change if you get big. Well, but it isn't about you changing, but are you are you going to be in different businesses? I mean, as you pointed out yourself three years ago, you weren't in the phone business. Who knows? You do. You have No, don't know. Know, come on, Steve, you don't have any thoughts about whether you there are other...

Look, there are... Like you're going to be apparently, you're going into the ad business. You were never in the ad business. That's a new business for you, right? Sure. We're going into the ad business because we want to help our developers make some money so that they can keep providing free or really low cost apps to customers. That's why we're doing it. We're not going to make much money in the ad business. We're doing it for our developers. And why wouldn't you just allow why wouldn't it be just okay for other people who are already in the mobile ad business or are moving into it to have done it rather than you go and buy this? Company. Because we don't think they're going to be able to make our developers as much money because the way they're going about it sucks. Know, you get a mobile Always temporary. He is not letting you buy here. You get a mobile ad and you touch the banner. See, here's what let me start at the beginning.

Go ahead. Something really interesting is happening on mobile phones. They're not mirroring desktops or laptop PCs in that people are not spending their time searching. They're not doing searching anywhere near as much as they do on PCs. We've got all the data. We know this. They're spending their time in apps. So for whatever reason, if people want to find out that restaurant to go to, they're not going to their search engine typing in Japanese in Palo Alto, they're going to Yelp or whatever other app they want to go to to find out if their airplane is on time or this or that or this or that. Right. And I don't know why it's different than on PCs. I think I do, but I'm not sure.

I think it's because there never was one place with 200,000 apps where a ton of them were free and the rest of them were really inexpensive for PCs. I think this app thing is an entirely new phenomenon in in my lifetime, in your lifetime. So I think people are using apps, what we know they are using apps way more than they're using search. So if you want to make developers money, you put ads in the apps. Right. The ads and apps now are banners and you touch them and what is the first thing they do? They take you to a webpage. Yes. They rip you out of your app, send you to the browser and all of a sudden, if you don't if you're interested in that ad, you've got to figure out a way back to your app.

And even if you can do that, you've got to figure out in some cases how to get back to the exact place in your app. If you're playing a game, you're probably not going to make it back to the same place. So wouldn't it be great if mobile ads didn't take you out of the app, but rather took over the screen, gave you this great experience of an interactive ad, but also combining the emotion of television with video. And anytime you wanted, you could hit a little button, takes you right back to where you left off, right where you left off in your app. People would explore the... And you don't have faith that anyone else can do it? Sure, but nobody else is doing it. And so we could build it into the OS so the apps don't have to do it. We can make it so that an app developer can add these interactive ads in their apps with thirty minutes' worth of work versus working with every advertiser to do some custom thing in their app, which is crazy.

And because we own we own the OS, so we can put it right in the in the bowels of the system. Could somebody else figure out a way to do that? Maybe they could, but they weren't, so we did. Okay. I think we need to wrap this up. But one theme that we want to ask everybody here and one speaker at great length is privacy. There seems to be this Sorry, Mark. Sorry, I don't know if Mark is He's here, here. Hey, Mark. So there seems to be to have been a spate of mistakes or false starts or things that have to do with privacy where companies have had to retreat, whether it's things with Facebook, things with Google Buzz, there were some...

Or Google's WiFi collection recently? Yes, that WiFi collection inadvertent. Yes. Talk to me about that. How is privacy looked at differently in Silicon Valley than in the rest of their... No. Silicon Valley is not monolithic. We've always had a very different view of privacy than some of our colleagues in the Valley. We take privacy extremely seriously. As an example, we worry a lot about location in phones, and we worry that some, you know, 14 year old is gonna get stalked and something terrible is gonna happen because of our phone. And so as an example, before any app can get location data, we don't make it a rule that they have to put up a panel and ask because they might not follow that rule.

They call our location services and we put up the panel saying this app wants to use your location data. Is that okay with you? Every time they want to use it. And we do a lot of things like that to to to ensure that people understand what these apps are doing. That's one of the reasons we have the curated app store. We have rejected a lot of apps that want to take a lot of your personal data and suck it up into the cloud. A lot. So we're really old... A lot of people in the Valley think we're really old fashioned about this. And maybe we are, but we worry about stuff like this.

But aren't you also going to be moving more into cloud based things? Are we going to be moving more into cloud based things? Sure. But but... And doesn't that inevitably... No. Privacy means people know what they're signing up for in plain English and repeatedly. That's what it means. I I... I'm an optimist. I believe people are smart, and some people want to share more data than other people do. Ask them. Ask them every time. Make them tell you to stop asking them if they get tired of you asking them. Let them know precisely what you're going to do with their data. Okay. That's what we think. Thank you.

Okay. Why don't we open up We have a little we're running a little late, but we certainly have time for some questions. I think actually you got there first, if I'm so Great. I'm Courtney Lee with Cannon Partners. Steve, thanks for showing up. A few years ago, we were here I was here watching you and Bill Gates speak. So I think that was a very historic moment. So very happy that you came back and came to speak with us again. A few years ago, you gave a commemoration speech at Stanford to the graduating class. Now a few years later and a couple years wiser, would you add anything else to that speech that you gave a couple years ago? Good question. Oh, I have no idea. I have no idea. Probably, I would just turn up the volume on it because the last few years have reminded me that life is fragile.

Thanks. Over there, yes. Hi, Steve. Chris Braylak from First Round Capital. The question is around Apple's terms of services, and there were some changes that were recently made around that made some of your developers think that Apple might want to exclusively own the analytics and the advertising business. And I just wondered if that is the case. And if it's not, could you help clarify when we might have... Yes, sure. We found a really interesting thing. We're real naive about this stuff. So one day, we read in the paper that a company called Flurry Analytics has that we have some new iPhone and other tablet devices that we're using on our campus.

We thought, what the hell? And the way that they detected this was they're getting developers to put their software in their apps, and their software is sending out information about the device and about its geolocation and other things back to Flurry. No customer has ever asked about this. It's violating every rule in our privacy policy with our developers. And we went through the roof about this. So we said, no, we're not going to allow this. This is violating our privacy policies and it's pissing us off that they're publishing data about our new products. So we said that we're only gonna allow these analytics that don't give device information and therefore solely for the purposes of advertising, solely for the purposes of advertising.

In other words, if a developer needs to put some analytics in their app that sends some information out to an advertiser so that they can make some money because we're not going to be the only advertiser. There's others, and we're not banning other advertisers from our platforms. They can do that. But they can't send data out to an analytics firm who's going to sell it to make money and publish it to, tell everybody that we have devices in our campus that we don't want people to know about. That we don't need to do. Okay. Is that clear? It is, but there's a valid use for an app developer wanting to know those things for their own... To make their own app better, to know where people use it, to know where it breaks You know that they may not have. There's no excuse for them not asking the customer whether it's appropriate to send that personal private data to an analytics firm, which they were not doing.

And secondly, after we calm down from being pissed off, then we're willing to talk to some of these analytics firms. It's not today. Hi. Michael Lambert. I'm I'm an owner of Village Roadshow Pictures, which is Oh, I I know you well. Have You guys make some great movies. Weekend. And I also own movie theaters, a thousand screens around the country, the fifth largest circuit in the country. So I'd like you to put your Disney hat on for a moment, not that you have a Disney hat, but being influential in the Walt Disney Company. I'm a Disney cheerleader. I have a hat. So wearing that hat, my question is around, the consumer coming to the content versus the content chasing the consumer.

And this is something that troubles me a lot in the business because as a as a producer of films and a copyright owner, it seems to me we've made a very good business all these years of making the consumer come to us. Forcing him to sit on the couch and interrupting him with commercials was a very good business for the content creator. Maybe not so convenient for the consumer, but very good for us. The economics around interrupting the consumer with commercials was good for us. Making the consumer pay to go to a movie theater is good for the is good for the producer of the content. The technology which allows the consumer to get immediate access to this changes those economics, and you wear both hats. So I wonder if you could speak a little bit about how we preserve the value of the content and still the convenience.

Thanks for asking that because frankly, I was going to ask you about when will the media company... It's really interesting that the opportunities of technology are huge for content owners, in my opinion. They always have been. And as an example, the way that we market movies is undergoing a radical shift. It used to be that you spent a fortune running advertising on TV to run your trailers. And now we can reach that same audience much more effectively on the web through whether it's Facebook, through whether it's targeting, targeted communication with with with loyalty groups, whatever it might be.

You know, when we went to the music companies, we said, who is your customer? And they said, oh, it's it's a it's a a Best Buy and Target. And what was the record Tower. Tower Records. That was it. And Tower Records, they thought their distribution channel was their customer. You know, in the same way that people making movies might think that your movie houses are their customer, but they're not. Their customer is the viewer, just as the music company's customer was the listener. The music companies had no connection with their listeners whatsoever. And so what changed in the music industry was not the back end of the business, the ANR, the seeking out and developing of artists and talent over which is just as important now as it ever was.

What changed was the front end of the business, the distribution and marketing became was able to be done in a much more effective way, bypassing the distribution channel and going direct to the end user. And that's what's going to happen in visual media as well. And the marketing is going to get a lot more interesting, more precise, cheaper, efficient and but the content is going to be just as valuable, if not more valuable in the future. So what the studios need to do is not is to embrace this new front end of the business, to start knowing who their customers are and to start building mechanisms to communicate with them and tell them when their new product is coming out and also to let them watch it wherever they want, whenever they want.

And when do you think that will happen? I'm just curious because... It's starting to happen now in television because people... The studios feel... Same guys, right, that make movies and TVs, shows. They feel less protective or they're more they're more willing to experiment with their television properties than they are their film properties, so you're starting to see it in television. You can get TV shows now, in some cases, for free, the day after they're broadcast. In some cases, in our case, we sell them the day after they're broadcast. And you're starting to see it more and more with film too. So I think that is changing a lot in the next twenty four months. Okay. I even think there's going to be a way to watch a first run movie at home before it comes out on DVD if you're willing to spend a bunch of money.

A bunch of money. A bunch of money. I guess over here. Hey, Steve. Don McCaskell from SmugMug. You may remember a couple of years ago, we talked about this, but I think it's even more pressing. I love my iPad. My two year old loves my iPad, and I buy the the truck versus car analogy, but it seems like there's a sort of a gaping hole in that analogy right now. You have great syncing of contacts and mail and, calendar. I can buy my apps and update them over the air, but I still have to tether to get what is arguably the birth of this platform, which is music and videos on my devices. And my mobile Well, that's exactly true.

You can buy music and get it on your device over the air and you can buy video and get it on your device over the air. There's iTunes stores is on all those devices and it does flow over the air. But I have a large iTunes library that I built up, thanks to you over the last eight years or so. No. What you'd like to do is share your library of media amongst your various devices. Yeah. It's not buying it on Without a wire. Yeah. Without a It's not buying it on that device because you can you can buy it all on that device. Yeah. It's the tethering that I think is syncing. It's the sharing. Yeah. You wanna share your your content that you bought or somehow otherwise acquired Yeah. Amongst your various devices. And you can't do that today, right, with... I... You you can do that today with a wire.

You cannot do that today without a wire. We need to work harder on that. You do. We do. Thank you. You really can't even do it with a wire because it will blow away. It will say, well, if you're going to sync with this PC or this Mac... No, no. But if it's your content, you can do it all real easy. It just takes a wire. So you're going to do better? We need to do better. Okay. Anytime soon? We're working on it. Over here. Hi, Steve. David Roth. I love my iPhone. My wife loves her iPhone. And we have no concerns about the speed of the AT and T network or the data robustness. Our concern is that we can't make a phone call on it. Yeah. We we we live in Houston, not San Francisco or New York. Oh. And the network has gotten so bad in the last year that we we can't be on the phone for more than a minute without dropping a call.

And if we're on the phone for five minutes, the call drops three times every time. Is somebody from Apple working on that? Well, somebody from Apple is talking about that. I mean we don't have people that climb up on poles and adjust antennas because we don't know anything about that. But yes, you can bet we're doing everything we know how to do. Can I expect relief soon? I'll tell you what I'm told and I'm told this by credible people who are extraordinarily open and honest with us about their problems, so... Which makes me tend to believe people when they tell me things. When...

I know little about this stuff technically. This is not my area of expertise. To make things better, people reallocate spectrum. They take spectrum that they weren't using or were using for something else and allocate it to this problem. And they do things like increase the backhaul. So they put in gigabit Ethernet instead of T1s that they had. And they put in more robust switches to switch the data. Things in general when they start to fix them get worse before they get better. That's what I'm told. And if you believe that, things should be getting a lot better soon.

So a serious answer to your question, I am told that a lot of places are getting a lot better, know, certainly by the end of the summer. And I believe the people that are telling me that truly believe it and are high competency people. And if they don't? Then they won't. We'll see. Laura? Hi. My name is Laura Yiesis. I'm the CEO of SugarSync. We're a cloud service that allows you to synchronize your data between Yes. All of I know you guys. Great. My question is related to the one just a couple of questions ago. We're very excited about the possibilities of interacting with your content, with your cloud based content on the device, really as as a smoother way to to get access to your data so you don't have to tether.

And we do a pretty good job of that now, but I think we could do an even better job if we could have access to the file system on the iPad or the iPhone to have a true round trip syncing capability. Any plans to do that? There's a lot of things we're working on. So we should chat. Okay, great. Okay, last three questions, very quick. Start here, here and that's... Right there. Allison Sheridan from Raytheon. I bought the movie Up on Blu ray DVD from Disney. And Thank it came with you're welcome. It came with a digital download. That was great. So I could put it on my portable devices. So I bought my iPad, and I put it on there, and I bought the VGA adapter. And I plugged it into my projector. And because I bought everything, I couldn't play it because high definition copy protection stopped me.

Had I ripped it to reverse copy protection, downloaded from BitTorrent, I would have been able to play it. Can you talk at all about how HDCP is helping the piracy... Anti piracy effort? We didn't invent this stuff. But you did deploy it. Well, the problem is the content owners, and in particular Hollywood, doesn't want the same thing to happen to them as they saw happen with Napster to the music industry. So they are desperately grasping at anything they can to try to keep that from happening. Can't blame them. And it's not their business.

I mean, that they're not in the business of copy protection. They're in the business of content creation. So sometimes they grab the right straws and sometimes they grab the wrong straws. But if we wanna host any of their content, if we wanna sell any of their content, they are setting some of the rules about what we have to do. And if we don't wanna do them, we try to persuade. But if we fail at persuasion, then we have a simple choice. I guess maybe, explain the irony to them of their choice in that case. I I I... Yes. I understand. And I I feel your pain. You. I'm Very Shervin Bischewar from Social Gaming Network. I wrote you a letter when I was in sixth grade with a new design of a Macintosh, and I'm still waiting for my response.

Seriously though, I think games are huge. I built my whole on the iPhone and iPad, I built my whole company at Social Gaming Network on that vision. And I'd like to hear from you what your vision for gaming is on all of the new devices and the post PC era that you've talked about. And I have a couple of suggestions very quickly. On the IAD platform and on the social gaming network that you're launching, One is a unified platform for currency for games and apps. And two is similar types of offer platforms in iAd like OfferPal that have really helped take social gaming on Facebook to such big numbers? So what's your question?

Your vision of social gaming. Your vision of gaming? Social gaming or gaming. Well, clearly, iPhone plus iPod touch have created a new class of gaming. And it's a it's a it's a subset of casual gaming, but it's surprising how good some of the games are. And some of them are even approaching console gaming in their sophistication and graphics. Graphics. And the typical console games, as you know, the software costs $30 to $40 a game. On an iPhone or an iPod Touch, the games cost between free and $3.04 dollars So the market's exploded, and we think it's terrific.

We didn't set out to compete with Nintendo or Sony on their PSP, but we are now a significant part of that market. We using it, using it. Volume. So it's not an insignificant player in this as well. And now we have the iPad, a third product on that same platform. And so it's proving to be really exciting in the gaming area. There are now over 50,000 game and entertainment titles on the App Store, many, many of them for free.

So we take it very seriously. And we're we were the first folks to get OpenGL ES two point zero one point zero and two point zero on a phone and all these kinds of things. If you have any other suggestions for us, I heard the two you made, let us know because we're trying to do the right things to enable, more gaming and and, a lot of stuff in the social gaming. Last one is the microtransaction. No. No. Sure. You can ask him yourself. Dan? I got it. It's fine. Hi. I'm, Dan Simkin, CEO of Hillcrest Labs. Steve, what was a topic that was noticeably absent tonight in your talk was television. And you talked about how to make the iPad and the iPhone, you need to throw out the human interface in order to really make those products interactive.

Do you think it's time to throw out the interface for television, the classic up, down, left, right, and bring in a new human interface to make television truly interactive? And if so, when is Apple going to do something in arena? The problem with the television market the problem with innovation in the television industry is the go to market strategy. The television industry fundamentally has a subsidized business model that gives everybody a set top box for free or for $10 a month. And that pretty much squashes any opportunity for innovation because nobody is willing to buy a set top box.

Ask TiVo, ask Replay TV, ask Roku, ask Vudu, ask us, ask Google in a few months. So all you can do, Sony's tried as well. I mean, Panasonic's tried, a lot of people have tried. They've all failed. So all you can do is add a box onto the TV system. You can say, well, gosh, I noticed my HDTV has a bunch of HDMI ports on it. One of them is coming from the set top box, I'll just add another little box with another one. Well, you just end up with a table full of remotes, cluster full of boxes, bunch of different UIs, and that's the situation we have today. The only way that's ever going to change is if you can really go back to square one and tear up the set top box and redesign it from scratch with a consistent UI across all these different functions and get it to the consumer in a way that they're willing to pay for it.

And right now, there's no way to do that. So that's the problem with the TV market. You know, we decided what product do we want the most, a better TV or a better phone. Well, the phone won out, but there was no chance to do a better TV because there's no way to get it to market. What do we want more, a tablet or a better TV? Well, probably a tablet, but it doesn't matter because if we wanted a better TV, there's no way to get it to market. The TV is gonna lose until there's a better... Until there is a viable go to market strategy. Otherwise, you're just making another TiVo. Does that make sense to you?

Yeah. Absolutely. That's the fundamental problem. It's not a problem with technology. It's not a problem of vision. It's a go it's a fundamental go to market problem. But obviously, in the phone area, you were able to recreate that go to market strategy by working with a carrier. So does it make sense to partner with a cable operator to... Well, then you run into another problem, which is there isn't a cable operator that's national. There's a bunch of cable operators. And then it's not like there's a GSM standard where you build a phone for The US and it also works in all these other countries. No. Every single country has different standards, different government approvals. It's a... It's very it's very...

What's the right word? Gaunting. Channeling. Tower of Babolish. You know? Or that's not the right word. Balkanized. It's very Balkanized. So I'm sure smarter people than us will figure this out. But that's why when we say Apple TV is a hobby, that's why we use that phrase.