The Mac Observer: The Apple Trader – Steve Jobs: "We want to stand at the intersection of computers and humanism"



Steve Jobs: "We want to stand at the intersection of computers and humanism"
July 24th, 2000

"We have pretty detailed plans in terms of what we think we can sell, and what the new products are coming down the pipeline. The question was what to tell you. We don’t forecast much, because frankly I don’t think there is much upside in it. We do the best we can and then we report. But we do want to give you some guidance and we think that’s a reasonable amount of guidance."

Steve Jobs talking with financial analysts after the Keynote Address.

Every one agrees this was the best MACWORLD in a long time. The questions and doubts of shareholders and Mac fans alike were answered in profound detail, unlike the last one in January 2000. Or at least with as much detail as Apple could reveal without tipping off the competition as to what those new products coming down the pipeline are.

But, hey, let’s just let Apple’s visionary CEO explain it himself. I took the liberty of transcribing the most important excerpts from a Q&A session Apple’s leaders held with analysts after last week’s keynote. These are not exact quotes, as the Financial Speak has been turned into understandable English. Mr. Jobs words are as revealing for what they omit as much as for what they include. So read closely.

Question from an analyst: A year ago you said one of things that drove Apple was your vision that PCs are basically bad and so you wanted to make the best computers you could. Now it’s a year later, do you see that anything has changed in the PC industry? And what is going to drive Apple going forward?

Steve Jobs: The same thing. Actually, our new product pipeline is very strong. There’s lots more interesting stuff coming out down the pipe. But in addition to that… our whole premise was and is that the PC market, our industry, has been in a coma for the last several years. Apple was in a coma with it until a few years ago. And what (the PC industry) has been doing is giving everybody more disk space, more megahertz, more megabytes, but fundamentally these devices haven’t been doing anything new. There aren’t more uses — outside the Internet that came along and save the industry. That’s the one thing that really, I think, saved the PC industry and bought it more time. But we believe that there are some tremendous opportunities for the PC to grow and evolve into something that is even more incredible than it is today. It’s going to take a lot of innovation to do that at the hardware and software side, and not just system software, but application software as well.

Without going into much detail here, because we don’t want to — the one thing I would point you to is iMovie. iMovie is huge. We believe that desktop movies are bigger than desktop publishing. We know a lot more people who want to make a movie of their family than want to put out a newsletter from home. Apple knows a lot about creating new markets, it helped created desktop publishing, and we are really far ahead of everyone. iMovie has been a huge hit …There are more of those. We are working on them.

You will see the PC evolve. We believe it will stay the digital epicenter not only in the pro market but in the consumer market as well. What a PC looks like in the future may be substantially enhanced from even what it looks like today. We are not standing still and we believe our ability to do hardware engineering, system software engineering, application software engineering, marketing and operations all tightly integrated under one roof gives us a tremendous opportunity to innovate faster than anyone else in the industry.

Question: Just to follow up on that question — many companies see the PC industry as mature and PCs as a dying business. They’re moving toward beyond-the-box strategies, but you’re betting the company on the PC?

Steve Jobs: We hope all our competitors think what you said.

Question: How does Apple plan to make money with QuickTime?

Steve Jobs: In answering your financial question: Do we make money on QuickTime? Yes, no. Will we in the future? We think yes. Right now companies like Microsoft and us are investing in this. Real (Networks), the industry leader, doesn’t make much money. We are in the investment phase right now and we think our technology is the best of the bunch. We are out to carve out a piece of this market for ourselves.

Question: How is Apple going to make money with iTools?

Steve Jobs: The key thing here is that we are going to start, in a way, to blur where the operating system ends and our Internet services begin. And you’ll start to see more and more of that, to where there is a real compelling end to end solution for the customer. You saw it today with iMovie, where you make an iMovie and very rapidly you can now make a web site and even add QuickTime streaming videos — your QuickTime videos — hosted on Apple Web site for free. So you’ll see more and more of that stuff happening.

Question: How does Apple deal with important applications, especially in the financial community, that are Wintel only?

Steve Jobs: We do one of a few things about it. The first thing we do, sometimes, is we say that’s not an industry we are focusing on. Let it go. Sometimes we do that because we really believe in focus. The second thing we do, often, is we say those applications are useable under virtual PC — one of the Windows emulators that runs really well on a Mac. It will run most Windows apps really well. The third thing we often do is, if this industry segment is really important to us, we go visit those developers and figure out a way to get those apps ported to the Mac. We have a fantastic developer relations team. In the business market there is a fourth way. Almost all of those developers are moving to Web-based front ends for their apps. They run them on their servers. They put web front ends on them acceptable to any Web device including Macintosh. The fact that we have great browsers on Macs makes them great clients. As an example, every Oracle app will soon be certified gold on the Macintosh…

Question: Should Apple be in the handheld market and is there a market for $799 iMacs at a time when some of Apple competitors are abandoning that low end market?

Steve Jobs: You saw the reaction this morning. We think it’s going to be very strong. We’d like to have a Mac for $199. We want to draw the prices down over time as low as we possibly can. (To say that) there’s really not a $799 market, that’s crazy. Of course, there’s a $799 market! If you could buy a BMW for $38 bucks would there be a market for it? Of course there would be. Maybe, our colleagues in this industry aren’t making the right products, I don’t know. But we think there is a very healthy market there. We think there’s a very healthy market at $999, at $1299 and at $1499 too. But as the tip of the arrow, gaining new customers, we are very excited by $799 and someday we hope to drive the price even lower. I’m perplexed that others wouldn’t want to do the same thing.

Phil Schiller: Let me add… Our purpose in this was different then everyone else’s. We did not rush out and make something cheap, which I think a lot of people did. We built what we think is a great home computer, a great school computer and over time brought it down (in price) and kept making it better as we brought it down. What we are bringing down at $799 now is a far better computer than what we originally introduced at $1299 just two years ago. It’s just a really amazing offering… We get there as we can with a really quality leadership product and I think that will create a difference. Secondly, don’t forget, we are the biggest company in education… All of us in America with kids in school know how tight budgets are. How they have to buy very affordable products. It’s critically important that we continue to move that price down on this great education computer, and I think we are doing that with the iMac.

Question: What do you think about PC vendors who are driving growth through the ISP rebate programs?

Steve Jobs: When $400 rebates were first introduced they did have some effect and we saw an upkick in industry sales. But it didn’t take very long for the media to start analyzing this and for people as prominent as Walt Mossberg to figure out this is a lousy deal. Don’t sign up for 3 or 4 years at these prices. ISP prices are going to come down and for you to be locked into this for that amount of time is not a good thing for you. So our sense is, that was sort of a bubble…the wind is out of that balloon, let’s put it that way. That’s not really a major factor right now in the industry. AOL is still doing it and Microsoft is still doing some of it but we don’t think it’s a major driver right now because the time periods associated with those deals is so long.

One of the things we built our company on, and I think Apple always has, is that customers are smart. They’re not stupid. You can do that for awhile but they’re really smart and they’re going to figure it out and if you do that, they are not going to respect you after they figure it out."

Question: What futures apps are driving PC growth in the future?

Steve Jobs: Really good question and we are working on several and we ain’t going to talk about them, because we don’t want other people to be working on them, but we’re working on them. We’ve got some very cool ideas.

Mr. Jobs concluded the meeting on this note

We want to stand at the intersection of computers and humanism. Apple was the first computer that brought typography to computers, brought a graphical user interface to computers, let people who were liberal arts majors use computers and that’s part of what is in Apple’s DNA. iMovie is a prime example of that. We spent an awful lot of energy allowing mere mortals to make movies.

How many people here have made an iMovie? If you really want to understand Apple, you guys make a lot of money and go buy an iMac for about $1,000 bucks and go buy a digital camcorder for about a $1,000 bucks, and make an iMovie. If you really want to understand this company go spend the $2000 bucks and take some videos of your spouse and your kids, or the guy next door, or whatever, and make an iMovie, and then you will understand. It is the most emotional thing you will have ever done with a computer. You will start to get that we are very intellectual but we are also very appealing to the creative side of things. That humanist side of things that nobody else in our industry gives a damn about and we do and we love it. We love it so. So that is what’s driving us, it’s not just making spreadsheets run faster but doing things like iMovie. You gotta go do it if you really care about understanding this company. It’s much more important than crunching your numbers. Trust me on this… I don’t have the words to tell you!

To listen to the full Q&A session along with other analyst meetings click here.

Your comments are welcomed.


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