Friday, May 30, 2003
The following are my notes from the May, 28, 2003 interview with Steve Jobs, conducted by Walt Mossberg at D: All Things Digital. (Despite their format, please don't mistake these jottings for a verbatim transcript or a complete portrayal. They are necessarily paraphrased and incomplete. That said...)
Interview (intro music, Beatles, "Revolution")
M: You were there at the beginning if the PC era.
J: '77, Apple II.
M: Where are we in the arc of this?
J: The PC is interesting in the way it has morphed. First, there were the hardware hobbyists, the PC served the software hobbyists. Dan Bricklin and Bob Frankston, who's here, invented the first spreadsheet. Lots of productivity growth, but people were speaking of the PC's demise in the early '90's. Then the Internet came along. At Apple we feel there's a third great age of the PC coming, where it becomes your digital hub. Cameras, music: it's becoming central to the digital lifestyle.
M: (to audience) He makes a music player, you guys know that?
J: You need screen real estate to do things like a music store. Portable devices are not perfect for everything, even with 'Net connections.
M: The market share for Apple has not increased dramatically; why?
J: We ask ourselves that a lot. (Audience laughs.) We serve three primary markets: consumers, education and creative professionals. The pro market has been suffering economically for the last few years, same with education. We've more than doubled our share of the consumer market, it's now between 5-10%.
M: A lot of people think given the success you've had with portable devices, you should be making a tablet or a PDA.
J: There are no plans to make a tablet. It turns out people want keyboards. When Apple first started out, "People couldn't type. We realized: Death would eventually take care of this." "We look at the tablet and we think it's going to fail." Tablets appeal to rich guys with plenty of other PCs and devices already. "And people accuse us of niche markets." I get a lot of pressure to do a PDA. What people really seem to want to do with these is get the data out. We believe cell phones are going to carry this information. We didn't think we'd do well in the cell phone business. What we've done instead is we've written what we think is some of the best software in the world to start syncing information between devices. We believe that mode is what cell phones need to get to. We chose to do the iPod instead of a PDA.
M: How many iPods have you sold?
J: We passed the 700,000 mark recently, will probably sell 1 million by some time this summer.
M: Do you have plans for movies on the iPod?
J: I'm not convinced people want to watch movies on a tiny little screen. To paraphrase Bill Clinton, "It's the music, stupid, it's the music!" Music's been around for a long time, will continue to be, it's huge. Not speculative, a real tangible market.
M. Why were you the company that was the last to figure out MP3s?
J: Apple invented FireWire. Then, the only company that forgot to put it in something was Apple. We addressed that with iMovie, and we saw that the brass ring was to be able to create a DVD. We were the first ones out with that. This music thing happened on the side when weren't paying enough attention.
M: Apple was associated with piracy in the recent past.
J: Yes, the slogan was "Rip. Mix. Burn." Some industry executives—who did not have teenagers living at home—thought this meant "rip off." They went to Washington, held us up in effigy. That's not what it meant. It meant rip it to your hard drive. We care deeply about video editing, we care deeply about music. When we did the iPod, we thought this thing could be the coolest thing in the world, and it also could be a theft shuttle. So we crippled it.
M: You could say you crippled it for an honest person. You walked a middle path.
J: We did, we crippled it in a modest way. If you want to get around it, you can. I guarantee you, there's a way to hack anything.
M: Were you looking ahead toward working with the labels?
J: That crossed our minds. (Audience laughs.) We understand about intellectual property issues. We make software.
M: Why did the labels do a better deal with you for the Music Store?
J: The content industry and the technology industry never have understood each other. They're like ships passing in the night. One of the greatest achievements of Pixar was bridging this divide. One of the most important things record companies do is pick which of 500 people will be the next Sheryl Crow. If they don't do that well, the rest of it doesn't matter. It's not surprising that they didn't understand Napster, or that distributing content over the 'Net was going to be big. We approached them initially and they said go away. About nine months ago, we began talking to them about this middle path. One of the things that appealed to them about Apple was its smaller percentage of the market, its control over hardware and software, its ability to be sued.
M: (Suggests that Jobs demonstrate the Music Store.)
J: How many people have never seen the iTunes Music Store, show of hands? (About 1/2 the room. Jobs gets up and demos the Music Store.) It's important and unique to make it easy for a user to find and organize her music library. (Funny moment when software wouldn't recognize Jobs' password. Demonstrates one-click song purchase.)
M: If your seven year old gets on this and starts downloading, you're hosed.
J: Well, you've got a lot of great music.
M: What happens if you upload it to Kazaa?
J: Songs will only play on three Macs, so it won't be very interesting.
J: (Shows how fun it is to look up all the alternate versions of an old classic like "One for the Road:" Willie Nelson, Billie Holiday, Bette Midler, Frank Sinatra. You always hear about how mesmerizing Jobs is as a speaker and presenter. It's especially apparent as he cycles through these versions of "One For The Road." His joy in the coolness of the software is palpable and infectious. Demos the "browse by genre" feature. Pulls up Barry Manilow's "Copa Cabana" at Walt Mossberg's request, because he says it's Kara Swisher's favorite.)
M: By the end of the year, everyone's going to have something like this. Microsoft, Real. What happens when everyone has it?
J: Maybe these guys are a lot smarter than us, they probably are. But it's really hard to get the rights you need from the labels, it's really hard to write the software, and you need a usable jukebox. We'll find out, but I think it might be a little harder than it seems.
Audience member: Where are we when it comes to speech as a user interface?
J: Speech has always been five years away. Most of the smart people in the field I know have gotten out of it. Even 1% error drives you nuts. Everyone has groups working on it, but it doesn't look like it will be real anytime soon.
Audience member: Does Apple plan an equivalent of a breakthrough application like the Music Store for Wifi/wireless?
J: We've sold a lot of WiFi products. We were the first to ship 802.11g earlier this year, and this is clearly the next standard due to its compatibility. We've built it into the computers and software so it's seamless.
M. Except in this room. (Audience laughs. I keep typing and suppress a growl.)
Audience member: Much of the music industry's growth has come from unwanted bundling. It would seem that that industry is heading for a huge leg down on that front.
J: That's the conventional wisdom but I don't think it's true. Over 1/2 the tracks the Music Store has sold were bought as part of complete albums.
M: Do you think the high rate of album purchases is just a function of what people are used to?
J: My personal belief is a significant share of the songs being sold still will be albums. Until now, you could only buy about 20% of a record label's inventory because most of the catalog wasn't on the record store shelves. I expect that the catalogs are going to be worth a lot.
Audience member: What would you do if you were seventeen and starting over?
J: (Jobs talks a bit about his diverse interests, especially at that age.) Intellectually the most exciting thing to me is bioscience.
Audience member: Has Apple thought about finding a way to make medical information more accessible and personal?
J: No, but that's interesting and something our industry hasn't paid enough attention to.
Audience member: What has been your hardest decision in last six years?
J: Letting people go is always the hardest. When I came back to Apple, it was in tough shape, and we had to change the management team. Fortunately, there have been no big recent layoffs, we've decided to innovate our way through this downturn.
(Next up: Meg Whitman and Barry Diller.)
Unless otherwise expressly stated, all original material of whatever nature created by Denise M. Howell and included in the Bag and Baggage weblog and any related pages, including the weblog's archives, is licensed under a Creative Commons License.