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  • I've invited here today 3 industry experts to have a panel discussion on software

  • and now ladies and gentleman the Macintosh software dating game welcome to the Macintosh

  • software dating game software CEOs could I please ask you to introduce yourselves

  • Hi Fred Gibbons president of Software Publishing Corporation

  • Hi I'm Mitch Kapor president of Lotus we do a product called 1-2-3 my name is Bill

  • Gates I'm chairman of Microsoft and during 1984

  • Microsoft expects to get half its revenues from Macintosh software

  • software magnate number three, when was your first date with Macintosh?

  • we've been working with the Mac for almost two years now and we put some of our a really

  • good people on it software CEO number three will Macintosh be

  • the third industry standard? well to create a new standard it take something

  • that's not just a little bit different it takes something that's really new and really

  • captures people's imagination and the Macintosh of all the machines I've

  • ever seen is the only one that meet that standard

  • software CEO number three describe your ideal relationship with Apple

  • we'll be selling our software independently so the key thing is that

  • Apple gets a lot of consistent standard machines out there quickly

  • well sorry Steve, time's up ... we'd like to give Steve a few moments to decide

  • today's winner OK Steve, who's the winner?

  • apples are red IBM's blue if Mac's gonna be the third milestone

  • I need all of you

  • Now, I'd like to talk about to talk about meaningful partners.

  • Apple lives in an ecosystem and it needs help from other partners, it needs to help other

  • partners. And relationships that, uhm, that are destructive

  • don't help anybody in this industry as it is today, so, during the last several weeks,

  • we have looked at some of the relationships, and uh, one has stood out as a relationship

  • that, uh, hasn't been going so well but had the potential, I think, to be great for both

  • companies, the discussions actually began because there were some uh, patent disputes.

  • And, uh, rather than, I know, rather than repeating history, I'm extremely proud of

  • both companies that they have resolved these differences in a very very professional way.

  • I happen to have a special guest with me today, uh, via Satellite downlink, and uh, if we

  • could get him up on the stage right now. Some of the most exciting work that I've done

  • in my career has been the work that I've with Steve on the Macintosh. Uh, whether it's the

  • first introduction or doing products like Mac Excel, uh, these have been major milestones.

  • Uh, we're very excited about the new release we're building. This is called Mac Office

  • 98. We do expect to get it out by the end of this year. I think it's going to really,

  • uh, set a new bench mark for doing a good job with performance and exploiting unique

  • Mac features. Uh, in many ways its more advanced than what we've done on the Windows platform.

  • We're also excited about Internet Explorer and we've got a very dedicated team that's

  • down in California that works on that product and, uh, the code is really specially developed

  • for the Macintosh. It's not just a port of what we've done in the Windows environment

  • and we look forward to the feedback from all of you as we move forward doing more Macintosh

  • software. Thanks.

  • The era of setting this up as a competition between Apple and Microsoft is over as far

  • as I'm concerned. This is about getting Apple healthy, and this is about Apple being able

  • to make incredibly great contributions to the industry, to get healthy and prosper again.

  • So thank you all for coming I look forward for earring the grillings and cheerings tonights

  • and for the days to follow Well, thank you.

  • Before we get started, there were some pioneers--of course, we have the pioneers here on the stage,

  • but there were some other really important pioneers in the video we just saw and a couple

  • of them are here in the audience. Mitch Kapor, who is a regular, could you just stand up,

  • wherever you are? There he is. And Fred Gibbons, who has not come to D before,

  • but is here tonight. Fred. There's Fred right there.

  • And I don't know if he's in the room, but I do want to recognize our fellow journalist,

  • Brent Schlender from Fortune, who, to my knowledge, did the last joint interview these guys did.

  • It was not onstage, but it was Fortune magazine. Brent, I don't know if you're in the room.

  • If you are, can you stand? Maybe he's way over there.

  • So let's get started. I wanted to ask, there's been a lot of mano-a-mano/catfight kind of

  • thing in a lot of the blogs and the press and stuff like that, and we wanted to--the

  • first question I was interested in asking is what you think each has contributed to

  • the computer and technology industry, starting with you, Steve, for Bill, and vice versa.

  • Well, you know, Bill built the first software company in the industry and I think he built

  • the first software company before anybody really in our industry knew what a software

  • company was, except for these guys. And that was huge. That was really huge. And the business

  • model that they ended up pursuing turned out to be the one that worked really well, you

  • know, for the industry. I think the biggest thing was, Bill was really focused on software

  • before almost anybody else had a clue that it was really the software.

  • Was important? That's what I see. I mean, a lot of other

  • things you could say, but that's the high order bit. And I think building a company's

  • really hard, and it requires your greatest persuasive abilities to hire the best people

  • you can and keep them at your company and keep them working, doing the best work of

  • their lives, hopefully. And Bill's been able to stay with it for all these years.

  • Bill, how about the contribution of Steve and Apple?

  • Well, first, I want to clarify: I'm not Fake Steve Jobs.

  • What Steve's done is quite phenomenal, and if you look back to 1977, that Apple II computer,

  • the idea that it would be a mass-market machine, you know, the bet that was made there by Apple

  • uniquely--there were other people with products, but the idea that this could be an incredible

  • empowering phenomenon, Apple pursued that dream.

  • Then one of the most fun things we did was the Macintosh and that was so risky. People

  • may not remember that Apple really bet the company. Lisa hadn't done that well, and some

  • people were saying that general approach wasn't good, but the team that Steve built even within

  • the company to pursue that, even some days it felt a little ahead of its time--I don't

  • know if you remember that Twiggy disk drive and...

  • One hundred twenty-eight K. Oh, the Twiggy disk drive, yes.

  • Steve gave a speech once, which is one of my favorites, where he talked about, in a

  • certain sense, we build the products that we want to use ourselves. And so he's really

  • pursued that with incredible taste and elegance that has had a huge impact on the industry.

  • And his ability to always come around and figure out where that next bet should be has

  • been phenomenal. Apple literally was failing when Steve went back and re-infused the innovation

  • and risk-taking that have been phenomenal. So the industry's benefited immensely from

  • his work. We've both been lucky to be part of it, but I'd say he's contributed as much

  • as anyone. We've also both been incredibly lucky to have

  • had great partners that we started the companies with and we've attracted great people. I mean,

  • so everything that's been done at Microsoft and at Apple has been done by just remarkable

  • people, none of which are sitting up here today.

  • Well, not us. Not us. So in a way, you're the stand-ins

  • for all those other people. Yeah, in a way, we are. In a very tangible

  • way. So Bill mentioned the Apple II and 1977 and

  • 30 years ago. And there were a couple of other computers which were aimed at the idea that

  • average people might be able to use them, and looking back on it, a really average-average

  • person might not have been able to use them by today's standards, but it certainly broadened

  • the base of who could use computers. I actually looked at an Apple ad from 1978.

  • It was a print ad. That shows you how ancient it was. And it said, thousands of people have

  • discovered the Apple computer. Thousands of people. And it also said, you don't want to

  • buy one of these computers where you put a cartridge in. I think that was a reference

  • to one of the Atari or something. Oh, no.

  • You want a computer you can write your own programs on. And obviously, people still do.

  • We had some very strange ads back then. We had one where it was in a kitchen and there

  • was a woman that looked like the wife and she was typing in recipes on the computer

  • with the husband looking on approvingly in the back. Stuff like that.

  • How did that work for you? I don't think well.

  • I know you started Microsoft prior to 1977. I think Apple started the year before, in

  • '76. '76.

  • Microsoft in ... '74 was when we started writing BASIC. Then

  • we shipped the BASIC in '75. Some people here, but I don't think most people,

  • know that there was actually some Microsoft software in that Apple II computer. You want

  • to talk about what happened there, how that occurred?

  • Yeah. There had been the Altair and a few other companies--actually, about 24--that

  • had done various machines, but the '77 group included the PET, TRS-80 ...

  • Commodore? Yeah, the Commodore PET, TRS-80 and the Apple

  • II. The original Apple II BASIC, the Integer BASIC, we had nothing to do with. But then

  • there was a floating-point one where--and I mostly worked with Woz on that.

  • Let me tell the story. My partner we started out with, this guy named Steve Wozniak. Brilliant,

  • brilliant guy. He writes this BASIC that is, like, the best BASIC on the planet. It does

  • stuff that no other BASIC's ever done. You don't have to run it to find your error messages.

  • It finds them when you type it in and stuff. It's perfect in every way, except for one

  • thing, which is it's just fixed-point, right? It's not floating-point.

  • So we're getting a lot of input that people want this BASIC to be floating-point. And,

  • like, we're begging Woz, please, please make this floating point.

  • Who's we? How many people are in Apple? Well, me. We're begging Woz to make this floating-point

  • and he just never does it. You know, and he wrote it by hand on paper. I mean, you know,

  • he didn't have an assembler or anything to write it with. It was all just written on

  • paper and he'd type it in. He just never got around to making it floating-point.

  • Why? This is one of the mysteries of life. I don't

  • know, but he never did. So, you know, Microsoft had this very popular, really good floating-point

  • BASIC that we ended up going to them and saying "help."

  • And how much was the--I think you were telling us earlier ...

  • Oh, it was $31,000. That Apple paid you for the ...

  • For the floating-point BASIC. And I flew out to Apple, I spent two days there getting the

  • cassette. The cassette tapes were the main ways that people stored things at the time,

  • right? And, you know, that was fun. I think the most fun is later when we worked

  • together. What was the most fun? Tell the story about

  • the most fun that was later. Or maybe later, not the most fun.

  • Let them talk. Teasing.

  • Well, you know, Steve can probably start it better. The team that was assembled there

  • to do the Macintosh was a very committed team. And there was an equivalent team on our side

  • that just got totally focused on this activity. Jeff Harbers, a lot of incredible people.

  • And we had really bet our future on the Macintosh being successful, and then, hopefully, graphics

  • interfaces in general being successful, but first and foremost, the thing that would popularize

  • that being the Macintosh. So we were working together. The schedules

  • were uncertain. The quality was uncertain. The price. When Steve first came up, it was

  • going to be a lot cheaper computer than it ended up being, but that was fine.

  • So you worked in both places? Well, we were in Seattle and we'd fly down

  • there. But Microsoft, if I remember correctly from

  • what I've read, wasn't Microsoft one of the few companies that were allowed to even have

  • a prototype of the Mac at the time? Yeah. What's interesting, what's hard to remember

  • now is that Microsoft wasn't in the applications business then. They took a big bet on the

  • Mac because this is how they got into the apps business. Lotus dominated the apps business

  • on the PC back then. Right. We'd done just MultiPlan, which was

  • a hit on the Apple II, and then Mitch did an incredible job betting on the IBM PC and

  • 1-2-3 came in and, you know, ruled that part of the business. So the question was, what

  • was the next paradigm shift that would allow for an entry? We had Word, but WordPerfect

  • was by far the strongest in word processing dBase database.

  • And Word was kind of a DOS text ... All of these products I'm saying were DOS-based

  • products. Right.

  • Because Windows wasn't in the picture at the time.

  • Right. That's more early '90s that we get to that.

  • So we made this bet that the paradigm shift would be graphics interface and, in particular,

  • that the Macintosh would make that happen with 128K of memory, 22K of which was for

  • the screen buffer, 14K was for the operating system. So it was ...

  • 14K? Yeah.

  • The original Mac operating system was 14K? 14K that we had to have loaded when our software

  • ran. So when the shell would come up, it had all the 128K.

  • The OS was bigger than 14K. It was in the 20s somewhere.

  • I see. We ship these computers now with, you know,

  • a gigabyte, 2 gigabytes of memory, and nobody remembers 128K.

  • I remember that. I remember paying a lot of money for computers with 128K in those days.

  • So the two companies worked closely on the Mac project because you were maybe not the

  • only, but the principal or one of the principal software creators for it, is that right?

  • Well, Apple did the Mac itself, but we got Bill and his team involved to write these

  • applications. We were doing a few apps ourselves. We did MacPaint, MacDraw and stuff like that,

  • but Bill and his team did some great work. Now, in terms of moving forward after you

  • left and your company grew more and more strong, what did you think was going to happen to

  • Apple after sort of the disasters that occurred after Steve left?

  • Well, Apple, they hung in the balance. We continued to do Macintosh software. Excel,

  • which Steve and I introduced together in New York City, that was kind of a fun event, that

  • went on and did very well. But then, you know, Apple just wasn't differentiating itself well

  • enough from the higher-volume platform. Meaning Windows, right?

  • DOS and Windows. OK. But especially Windows in the '90s began

  • to take off. By 1995, Windows became popular. The big debate

  • wasn't sort of Mac versus Windows. The big debate was character mode interface versus

  • graphics mode interface. And when the 386 came and we got more memory and the speed

  • was adequate and some development tools came along, that paradigm bet on GUI paid off for

  • everybody who'd gotten in early and said, you know, this is the way that's going to

  • go. But Apple wasn't able to leverage its products?

  • After the 512K Mac was done, the product line just didn't evolve as fast--Steve wasn't there--as

  • it needed to. And we were actually negotiating a deal to invest and make some commitments

  • and things with Gil Amelio. No, seriously. Don't be mean to him.

  • I'm sorry? Just saying the word Gil Amelio, you can see

  • his... So I was calling him up on the weekend and

  • all this stuff and next thing I knew, Steve called me up and said, "Don't worry about

  • that negotiation with Gil Amelio. You can just talk to me now." And I said, "Wow."

  • Gil was a nice guy, but he had a saying. He said, "Apple is like a ship with a hole in

  • the bottom leaking water and my job is to get the ship pointed in the right direction."

  • Meanwhile, through all this--I want to get back to the thing we saw in 1997 at Macworld

  • there--but Windows was just going great guns. I mean, Windows 95, to whatever extent earlier

  • versions of Windows had not had all the features, all the GUI stuff that the Mac had, and Windows

  • 95 really was an enormous, enormous leap. Yeah. Windows 95 is when graphics interface

  • became mainstream and when the software industry realized, wow, this is the way applications

  • are going to be done. And it was amazing that it was ridiculed sort of in '93, '94, was

  • not mainstream, and then in '95, the debate was over. It was kind of just a commonsense

  • thing. And it was a combination of hardware and software maturity getting to a point that

  • people could see it. So I don't want to go through every detail,

  • the whole history of how you came back, but... Thank you.

  • But you in that video we all saw, you said you had decided that it was destructive to

  • have this competition with Microsoft. Now, obviously, Apple was in a lot of trouble and

  • I presume that there was some tactical or strategic reason for that, as well as just

  • wanting to be a nice guy, right? You know, Apple was in very serious trouble.

  • And what was really clear was that if the game was a zero-sum game where for Apple to

  • win, Microsoft had to lose, then Apple was going to lose. But a lot of people's heads

  • were still in that place. Why was that, from your perspective?

  • Well, a lot of people's heads were in that place at Apple and even in the customer base

  • because, you know, Apple had invented a lot of this stuff and Microsoft was being successful

  • and Apple wasn't and there was jealousy and this and that. There was just a lot of reasons

  • for it that don't matter. But the net result of it was, was there were

  • too many people at Apple and in the Apple ecosystem playing the game of, for Apple to

  • win, Microsoft has to lose. And it was clear that you didn't have to play that game because

  • Apple wasn't going to beat Microsoft. Apple didn't have to beat Microsoft. Apple had to

  • remember who Apple was because they'd forgotten who Apple was.

  • So to me, it was pretty essential to break that paradigm. And it was also important that,

  • you know, Microsoft was the biggest software developer outside of Apple developing for

  • the Mac. So it was just crazy what was happening at that time. And Apple was very weak and

  • so I called Bill up and we tried to patch things up.

  • And since that time, we've had a team that's fairly dedicated to doing the Mac applications

  • and they've always been treated kind of in a unique way so that they can have a pretty

  • special relationship with Apple. And that's worked out very well. In fact, every couple

  • years or so, there's been something new that we've been able to do on the Mac and it's

  • been a great business for us. And it's actually--the relationship between

  • the Mac development team at Microsoft and Apple is a great relationship. It's one of

  • our best developer relationships. And do you look at yourselves as rivals now?

  • Today as the landscape has evolved--and we'll talk about the Internet landscape and everything

  • else and other companies that have [gone] forward, but how do you look at yourselves

  • in this landscape today? Because, I mean, you are competitors in certain

  • ways, which is the American way, right? We watch the commercials, right?

  • And you get annoyed at each other from time to time.

  • Although you know what? I have to confess, I like PC guy.

  • Yeah, he's great. Yeah, I like him. The young guy, I want to

  • pop him. The art of those commercials is not to be

  • mean, but it's actually for the guys to like each other. Thanks. PC guy is great. Got a

  • big heart. His mother loves him.

  • His mother loves him. I'm telling you, I like PC guy totally much

  • better. Wow.

  • I do. I don't know why. He's endearing. The other guy's a jackass.

  • PC guy's what makes it all work, actually. All right.

  • It's worth thinking about. So how do you look at yourselves?

  • I mean, let me just ask you, Bill. Obviously, Microsoft is a much larger company, you're

  • in many more markets, many more types of products than Apple is. You know, when you were running

  • the company or when Steve Ballmer is running the company, you think obviously about Google,

  • you think about, I don't know, Linux in the enterprise, you think about Sony in the game

  • area. How often is Apple on your radar screen at Microsoft in a business sense?

  • Well, they're on the radar screen as an opportunity. In a few cases like the Zune, if you go over

  • to that group, they think of Apple as a competitor. They love the fact that Apple's created a

  • gigantic market and they're going to try and come in and contribute something to that.

  • And we love them because they're all customers. I have to tell you, I was actually told by

  • J Allard, I'm serious, that because of the nature of the processor, the development platform

  • they used to develop a lot of the software for the Xbox 360 was Macs. And he claimed

  • that at one point, they had, like, placed the biggest order for whatever the Mac tower

  • was at the time of anybody, and it was Microsoft. I don't know if it was the biggest, but, yeah,

  • we had the same processor essentially that the Mac had. This is one of those great ironies

  • is they were switching away from that processor while the Xbox 360 was adopting it. But for

  • good reasons, actually, in both cases. Because we're not in a portable application and that

  • was one of the things that that processor road map didn't have. But yes, it shows pragmatism,

  • but we try and do things that way. So that was the development system for the early people

  • getting their software ready for the introduction of Xbox 360.

  • And we never ran an ad on that. I see. Admirable restraint. That's wonderful

  • restraint. There were hundreds of them.

  • Steve is so known for his restraint. How do you look at Microsoft from an Apple

  • perspective? I mean, you compete in computers and...

  • I mean, you can say you don't compete, you know, the era of destructive whatever, whatever

  • you said in 1997, but you think--you're consciously aware of what they're doing with Windows,

  • you followed Vista closely, I think. You know, what's really interesting is--and

  • we talked about this earlier today--if you look at the reason that the iPod exists and

  • the Apple's in that marketplace, it's because these really great Japanese consumer electronics

  • companies who kind of own the portable music market, invented it and owned it, couldn't

  • do the appropriate software, couldn't conceive of and implement the appropriate software.

  • Because an iPod's really just software. It's software in the iPod itself, it's software

  • on the PC or the Mac, and it's software in the cloud for the store. And it's in a beautiful

  • box, but it's software. If you look at what a Mac is, it's OS X, right? It's in a beautiful

  • box, but it's OS X. And if you look at what an iPhone will hopefully be, it's software.

  • And so the big secret about Apple, of course--not-so-big secret maybe--is that Apple views itself as

  • a software company and there aren't very many software companies left, and Microsoft is

  • a software company. And so, you know, we look at what they do and we think some of it's

  • really great, and we think a little bit of it's competitive and most of it's not. You

  • know, we don't have a belief that the Mac is going to take over 80% of the PC market.

  • You know, we're really happy when our market share goes up a point and we love that and

  • we work real hard at it, but Apple's fundamentally a software company and there's not a lot of

  • us left and Microsoft's one of them. But you may be fundamentally a software company,

  • but you've been known, at least to your customers and to most journalists as the company that

  • kind of pays a lot of attention to integrating software and hardware. Microsoft has made

  • some recent moves to be a little more like that, obviously not in your core biggest businesses,

  • but with Xbox and Zune and, you know, the Surface computing device we saw today is another

  • example. These aren't markets that hold up in size to Windows or Office, but they're

  • some of your more recent initiatives. Are the companies' approaches to this merging

  • a little or ... Alan Kay had a great quote back in the '70s,

  • I think. He said, "People that love software want to build their own hardware."

  • Well, Bill loves software. Oh, I can resist that.

  • The question is, are there markets where the innovation and variety you get is a net positive?

  • The negative is that in the early stage, you really want to do the two together so you

  • want to do prototyping and things like that, you know, really as one thing.

  • And then take the phone market. We think we're on 140 different kinds of hardware. We think

  • it's beneficial to us that even if we did a few ourselves, it wouldn't give us what

  • we have through those partnerships. Likewise, if you take the robotics market,

  • very undeveloped. We have over 140 tiny-volume robots using Microsoft software. And the creativity,

  • building toys, security things, medical things, we love the innovation and the ecosystem that's

  • going to grow up--who knows when, but we're patient--around that and we'll have a great

  • asset with this robotic software platform. So there are things like PC, phone, and robot

  • where the Microsoft choice is to go for the variety.

  • Apple, it's great. For them, they do what works super well for them. And there's a few

  • markets like Xbox 360, Zune, and this year we have two new ones, the Surface thing and

  • this RoundTable, which is the meeting-room thing, where we'll actually, through subcontractors,

  • but the P&L on the risk and all that for the hardware, the design is completely a Microsoft

  • thing. The RoundTable: Is that something you've announced

  • or were you just announcing it here? We've shown prototypes of it. That's the thing

  • where it's got the 360-degree ... Oh, right. It's like Cisco has something in

  • that market and HP too, right? Oh, HP has a very high-end thing that's a

  • tiny bit like it, but anyway. All right. Do you ever regret--was there something

  • you might have wanted to do differently? And maybe you feel like this happened after you

  • left Apple, something you might have done differently where you could have had a much

  • bigger market share for the Mac? Well, before I answer that, let me make a

  • comment on Bill's answer there, which is, it's very interesting, in the consumer market

  • and the enterprise market, they're very different spaces. And in the consumer market, at least,

  • I think one can make a pretty strong case that outside of Windows on PCs, it's hard

  • to see other examples of the software and hardware being decoupled working super well

  • yet. It might in the phone space over time. It might. But it's not clear. It's not clear.

  • You can see a lot more examples of the hardware/software coupling working well.

  • So I think this is one of the reasons we all, you know, come to work every day is because

  • nobody knows the answers to some of these questions. And we'll find out over the coming

  • years and maybe both will work fine and maybe they won't.

  • Yeah. Yeah. It's good to try both approaches. In

  • some product categories--take music players--the solo design worked better. In the PC market,

  • the variety of designs at this stage has a higher share.

  • It has a higher share? It has a lot higher share.

  • It's not that much different than music players the other way around.

  • Is there some moment you feel like I should have done this or Apple should have done that,

  • and we could have had ... You stuck to this idea of the hardware/software

  • integration and it's working very well right now.

  • There's a lot of things that happened that I'm sure I could have done better when I was

  • at a Apple the first time and a lot of things that happened after I left that I thought

  • were wrong turns, but it doesn't matter. It really doesn't matter and you kind of got

  • to let go of that stuff and we are where we are. So we tend to look forward.

  • And, you know, one of the things I did when I got back to Apple 10 years ago was I gave

  • the museum to Stanford and all the papers and all the old machines and kind of cleared

  • out the cobwebs and said, let's stop looking backwards here. It's all about what happens

  • tomorrow. Because you can't look back and say, well, gosh, you know, I wish I hadn't

  • have gotten fired, I wish I was there, I wish this, I wish that. It doesn't matter. And

  • so let's go invent tomorrow rather than worrying about what happened yesterday.

  • We're going to talk a little bit tomorrow, but let's talk about today, the landscape

  • of how you see the different players in the market and how you look at what's developing

  • now. What has surprised both of you since having been around for so long, and still

  • very active and everything, and your companies are still critically key companies? There

  • are many, many companies that are becoming quite powerful. How do you look at the landscape

  • at this moment and what's happening especially in the Internet space?

  • I think it's super healthy right now. I think there's a lot of young people out there building

  • some great companies who want to build companies, who aren't just interested in starting something

  • and selling it to one of the big guys, but who want to build companies. And I think there's

  • some real exciting companies getting built out there. Some next-generation stuff that,

  • you know, some of us play catch-up with and, you know, some of us find ways to partner

  • with and things like that, but there's a lot of activity out there now, wouldn't you say?

  • Yeah, I'd say it's a healthy period. The notion of what the new form factors look like, what

  • natural interface can do, the ability to use the cloud, the Internet, to do part of the

  • task in a complementary way to the local experience, there's a lot of invention that the whole

  • approach of start-ups, the existing companies who do research, we'll look back at this as

  • one of the great periods of invention. I think so, too. There's a lot of things that

  • are risky right now, which is always a good sign, you know, and you can see through them,

  • you can see to the other side and go, yes, this could be huge, but there's a period of

  • risk that, you know, nobody's ever done it before.

  • Do you have an example? I do, but I can't say.

  • OK. But I can say, when you feel like that, that's

  • a great thing. Right.

  • That's what keeps you coming to work in the morning and it tells you there's something

  • exciting around the next corner. OK. So the two of you have certainly--you're

  • involved every day with the Internet, you have Internet products, you have a whole slew

  • of stuff on the Internet, you have iTunes and ".Mac" and all of that, but on another

  • level, you're the guys who represent the rich client, the personal computer, the, you know,

  • big operating system and all that. And there is a certain school of thought--and I'm sure

  • it's shared by some people in the room--that this is all migrating to the cloud and you'll

  • need a fairly light piece of hardware that won't have to have all that investment, all

  • the kind of stuff you guys have done throughout your careers. So as much as people might think

  • of you as rivals, one way to think of you is the two guys ...

  • We're both dinosaurs? Huh?

  • That we're both dinosaurs? Dinosaurs? Yeah, whatever. I can talk about

  • that. No, seriously ... You're betting on a system that is changing.

  • In five years, is the personal computer still going to be the linchpin of all this stuff?

  • Well, you can say that it will be predicted that it won't be. You know, the network computer

  • took this over about, whatever, five years ago we disappeared. Remember the single-function

  • computer? There was somebody who said that these general purpose things are kind of a

  • dumb idea. Larry Ellison.

  • The mainstream is always under attack. The thing that people don't realize is that you're

  • going to have rich local functionality, I mean, at least our bet, whereas you get things

  • like speech and vision, as you get more natural form factors, it's a question of using that

  • local richness together with the richness that's elsewhere.

  • And as you look at the device, say, that's connecting to the TV set or connecting in

  • the car, there are lighter-weight hardware Internet connections, but when you come to

  • the full screen rich, you know, edit the document, create things, you know, I think we're nowhere

  • near where we could be on making that stronger. I'll give you a concrete example. I love Google

  • Maps, use it on my computer, you know, in a browser. But when we were doing the iPhone,

  • we thought, wouldn't it be great to have maps on the iPhone? And so we called up Google

  • and they'd done a few client apps in Java on some phones and they had an API that we

  • worked with them a little on. And we ended up writing a client app for those APIs. They

  • would provide the back-end service. And the app we were able to write, since we're pretty

  • reasonable at writing apps, blows away any Google Maps client. Just blows it away. Same

  • set of data coming off the server, but the experience you have using it is unbelievable.

  • It's way better than the computer. And just in a completely different league than what

  • they'd put on phones before. And, you know, that client is the result of

  • a lot of technology on the client, that client application. So when we show it to them, they're

  • just blown away by how good it is. And you can't do that stuff in a browser.

  • So people are figuring out how to do more in a browser, how to get a persistent state

  • of things when you're disconnected from a browser, how do you actually run apps locally

  • using, you know, apps written in those technologies so they can be pretty transparent, whether

  • you're connected or not. But it's happening fairly slowly and there's

  • still a lot you can do with a rich client environment. At the same time, the hardware

  • is progressing to where you can run a rich client environment on lower and lower cost

  • devices, on lower and lower power devices. And so there's some pretty cool things you

  • can do with clients. OK. So you're saying rich clients still matter,

  • but--maybe I misunderstood you, but your example was about a rich client that is not a personal

  • computer as we have thought of a personal computer.

  • What I'm saying is, I think the marriage of some really great client apps with some really

  • great cloud services is incredibly powerful and right now, can be way more powerful than

  • just having a browser on the client. You're talking about a software company being

  • a software and services company rather than a ...

  • I'm saying the marriage of these services plus a more sophisticated client is a very

  • powerful marriage. Bill?

  • Yeah. Architecturally, the question is, do you run just in the cloud and all you have

  • downloaded locally is the browser? And that is the same question for the phone as it is

  • for the full-screen device. There will always be different screen sizes because these are,

  • you know, the 5-inch screen does not really compete with the 20-inch screen, does not

  • compete with the big living room screen. Those are things that there will be some type of

  • computing behind all of those things, all connected to the Internet, but the idea that

  • locally you have the responsiveness of immediate interaction without the latency or bandwidth

  • limitations that you get if you try and do it all behind, that's what leads to the right

  • balance. What does that device look like in five years?

  • What would be your principal device? Is there one or...

  • I could be wrong, I think you carry a tablet with you, right?

  • Right. Which has not necessarily stormed the world

  • yet. Yeah. This is like Windows 1992, I think.

  • That is, I'm unrepentant on my belief. OK. But to go back to Kara's point, what would

  • you each imagine that you would carry as your principal, let's say, thing to do the Web

  • and... I mean, Jeff Hawkins showed a very lightweight

  • device. Yeah. I don't know if you guys saw, but Jeff

  • Hawkins showed a Linux-based, very small--I think he called it a companion to a smart

  • phone today. A phone companion, which sounded a little

  • naughty. It doesn't matter, you weren't there, but

  • what would you think you each would be--I assume you carry a tablet PC. I don't know

  • what brand it is. Maybe you change them up, I don't know. You obviously carry a MacBook

  • Pro, I would guess, or a MacBook. Yeah. Well, and an iPhone.

  • And an iPhone? You have one?

  • I do. Right here?

  • Yes. Well, he has one. He took it out before. Really.

  • Sorry. He flashed his iPhone earlier today.

  • Anyway, go ahead. So what is your device? What's the device that we should be carrying?

  • What's your device in five years that you rely on the most?

  • I don't think you'll have one device. I think you'll have a full-screen device that you

  • can carry around and you'll do dramatically more reading off of that.

  • Light. Yeah. I mean, I believe in the tablet form

  • factor. I think you'll have voice. I think you'll have ink. You'll have some way of having

  • a hardware keyboard and some settings for that. And then you'll have the device that

  • fits in your pocket, which the whole notion of how much function should you combine in

  • there, you know, there's navigation computers, there's media, there's phone. Technology is

  • letting us put more things in there, but then again, you really want to tune it so people

  • know what they expect. So there's quite a bit of experimentation in that pocket-size

  • device. But I think those are natural form factors and that we'll have the evolution

  • of the portable machine. And the evolution of the phone will both be extremely high volume,

  • complementary--that is, if you own one, you're more likely to own the other.

  • And then at home, you'd have a setup that they all plug into?

  • Well, home, you'll have your living room, which is your 10-foot experience, and that's

  • connected up to the Internet and there you'll have gaming and entertainment and there's

  • a lot of experimentation in terms of what content looks like in that world. And then

  • in your den, you'll have something a lot like you have at your desk at work. You know, the

  • view is that every horizontal and vertical surface will have a projector so you can put

  • information, you know, your desk can be a surface that you can sit and manipulate things.

  • Can I please have a room in my house that doesn't have a screen and a projector in it?

  • You bet. Thanks.

  • The bathroom. Well...

  • That's the perfect place for it, actually. So what's your five-year outlook at the devices

  • you'll carry? You know, it's interesting. The PC has proved

  • to be very resilient because, as Bill said earlier, I mean, the death of the PC has been

  • predicted every few years. And here when you're saying PC, you mean personal

  • computer in general, not just Windows PCs? I mean, personal computer in general.

  • Yeah, OK. And, you know, there was the age of productivity,

  • if you will, you know, the spreadsheets and word processors and that kind of got the whole

  • industry moving. And it kind of plateaued for a while and was getting a little stale

  • and then the Internet came along and everybody needed more powerful computers to get on the

  • Internet, browsers came along, and it was this whole Internet age that came along, access

  • to the Internet. And then some number of years ago, you could start to see that the PC that

  • was taken for granted, things had kind of plateaued a little bit, innovation-wise, at

  • least. And then I think this whole notion of the PC--we called it the digital hub, but

  • you can call it anything you want, sort of the multimedia center of the house, started

  • to take off with digital cameras and digital camcorders and sharing things over the Internet

  • and kind of needing a repository for all that stuff and it was reborn again as sort of the

  • hub of your digital life. And you can sort of see that there's something

  • starting again. It's not clear exactly what it is, but it will be the PC maybe used a

  • little more tightly coupled with some back-end Internet services and some things like that.

  • And, of course, PCs are going mobile in an ever greater degree.

  • So I think the PC is going to continue. This general purpose device is going to continue

  • to be with us and morph with us, whether it's a tablet or a notebook or, you know, a big

  • curved desktop that you have at your house or whatever it might be. So I think that'll

  • be something that most people have, at least in this society. In others, maybe not, but

  • certainly in this one. But then there's an explosion that's starting

  • to happen in what you call post-PC devices, right? You can call the iPod one of them.

  • There's a lot of things that are not... You can get into trouble for using that term.

  • I want you to know that. What?

  • I'm kidding. Post-PC devices. Why?

  • People write letters to the editor, they complain about it. Anyway, go ahead.

  • Okay. Well, anyway, I think there's just a category of devices that aren't as general

  • purpose, that are really more focused on specific functions, whether they're phones or iPods

  • or Zunes or what have you. And I think that category of devices is going to continue to

  • be very innovative and we're going to see lots of them.

  • Give me an example of what that would be. Well, an iPod as a post-PC...

  • Well, yeah. A phone as a post-PC device.

  • Is the iPhone and some of these other smart phones--and I know you believe that the iPhone

  • is much better than these other smart phones at the moment, but are these things--aren't

  • they really just computers in a different form factor? I mean, when we use the word

  • phone, it sounds like... We're getting to the point where everything's

  • a computer in a different form factor. So what, right? So what if it's built with a

  • computer inside it? It doesn't matter. It's, what is it? How do you use it? You know, how

  • does the consumer approach it? And so who cares what's inside it anymore?

  • So what are the core functions of the device formerly known as the cellphone, whatever

  • we want to call it? The pocket device. What would you say the core functions, like, five

  • years out, what are the core functions of that pocket device?

  • How quickly all these things that have been somewhat specialized, the navigation device,

  • the digital wallet, the phone, the camera, the video camera, how quickly those all come

  • together, it's hard to chart out. But eventually, you'll be able to pick something that has

  • the capability to do every one of those things. And yet, given the small size, you still won't

  • want to edit your homework or edit a movie on the screen of that size. And so you'll

  • have something else that lets you do the reading and editing and those things. Now, if we could

  • ever get a screen that would just roll out like a scroll, you know, then you might be

  • able to have the device that did everything. You know, in the very first D conference,

  • we had these guys from E Ink here. Yeah.

  • I'm sure you've both talked to them. They were talking about that. That was five years

  • ago. It's always five years out. So do you... Yeah. There's some advances in projection

  • technology that are more likely to be delivered, I think, than the flexible material guys,

  • but it's not even on the horizon, no matter which of the two approaches are pursued.

  • And any kind of quality. We have some Microsoft research people who

  • work on [that] and there's a lot of investment, but it's at least in the five-year time frame.

  • You, five years from now, what's going to be on that pocket device?

  • I don't know. And the reason I don't know is because I wouldn't have thought that there

  • would have been maps on it five years ago, but something comes along, gets really popular,

  • people love it, get used to it, you want it on there.

  • So people are inventing things constantly and I think the art of it is balancing what's

  • on there and what's not on there, is the editing function. And clearly, most things you carry

  • with you are communications devices. You want to do some entertainment with them as well,

  • but they're primarily communications devices and that's what they're going to be.

  • Outside the computing area, what are the exciting areas in the Internet space at all that you're

  • looking at that's interesting to each of your companies and in general for you? Any social

  • networking, any kind of the Wikis, those kind of things, things we've talked about in the

  • past couple--today, essentially? You know, we're working on some things that

  • I can't talk about, but... Again.

  • Again, yeah. It's very beautiful, I think.

  • There used to be a saying, isn't it at Apple ...

  • Going to blow us away, though, when you can talk about it.

  • Blow us away, wow, it's great. There used to be a saying at Apple, isn't

  • it funny, a ship that leaks from the top. So the...

  • That's kind of like a sweater without sleeves is a vest. I don't get that.

  • That was what they used to say about me when I was in my 20s.

  • OK. There's a zillion interesting things going

  • on on the Internet. The most interesting things to me are these incredible new services that

  • people are bringing up and... Surrounding entertainment or...

  • There's a lot of them surrounding entertainment, but there's a lot of them that have to do

  • with just sort of figuring how to navigate through life a little more efficiently. And

  • I think, you know, it's really great when you show somebody something and you don't

  • have to convince them they have a problem this solves. They know they have a problem,

  • you can show them something, they go, oh, my God, I need this. And I think you're going

  • to see a lot of things like that happen over the next year or two.

  • You obviously have a very large Internet business with iTunes and you sell a lot of stuff in

  • the Apple Store, but, you know, you were early with this idea that when you bought a computer

  • from Apple, you had this kind of Internet service back end, and it was called ".Mac".

  • And I think a lot of people feel you haven't developed it very much.

  • I couldn't agree with you more, and we'll make up for lost time in the near future.

  • And in your case, you obviously have huge things like Hotmail, for instance, which is,

  • I guess--and Windows Messenger, which are both widely used and I don't even know how

  • many users. A gazillion.

  • Huge numbers. But on the other hand, as Steve Ballmer was talking about today, you know,

  • other people have much stronger positions in things like search and other parts of the

  • Internet. So are you guys, because you are the personal computer companies that are,

  • you know, best associated with that, not as nimble as some of these competitors at this

  • point? Do you worry about not being as nimble, both of you? I mean, obviously, Microsoft's

  • a much bigger company, but you're a big company, Steve, Apple is. Do you worry about not being

  • as nimble as somebody sitting out there with, you know, the kind of ten employees that you

  • guys had in 1977? Well, there's always going to be great new

  • things that come out of other companies, and you want to be in a position to benefit from

  • those, to have those inventions drive demand for Windows and personal computers and then

  • some of those upstream things you want to participate in. I hope Steve mentioned we

  • are going to participate in search, hopefully to a higher degree in the future than at present.

  • He did mention that, yeah. So we'll see what we can do there. A lot of

  • the applications are more specialized so they're not areas we'll go into. You know, take what

  • can happen with education now that video is mainstream and all these tools that let you

  • do rich interactions are very mainstream. I'm very excited about that. You know, the

  • idea of empowerment goes back to the very beginning of our industry and some of those

  • dreams that this would be used by students or that teachers could get better and learn

  • from each other in these new ways, we're just at the threshold where some of those things

  • can happen. And, yes, our companies can contribute to that, but as a whole, it's the ecosystem

  • jumping on and building on each other where you can finally say finally technology did

  • something for education. See, I look at this a little bit differently,

  • which is, we're not trying to do a lot of this stuff because it's not what we do. We

  • don't think one company can do everything. So you've got to partner with people that

  • are really good at stuff. Like, we're not, I mean, maybe Microsoft is great at search.

  • We're not. We're not trying to be great at search so we partner with people that are

  • great at search. And we don't know how to do maps on the back end. We know how to do

  • the best maps client in the world, but we don't know how to do the back end so we partner

  • with people that know how to do the back end. And what we want to do is be that consumer's

  • device and that consumer's experience wrapped around all this information and things we

  • can deliver to them in a wonderful user interface, in a coherent product.

  • And so in some cases, you know, we have to do more work than others. You know, in the

  • case of iTunes, there wasn't a music delivery service that was any good and we had to do

  • one, so we'll do one. But in other cases, there's companies doing a way better job because

  • we're not as good at this stuff as other people are and we'd love to partner with them and

  • so, you know, we selectively do that. And I think it's really hard for one company to

  • do everything. Life's complex. Let's talk about entertainment. Entertainment's

  • important to both your companies. For yours with music right now and as you get into Apple

  • TV. Microsoft has been within the Hollywood era. Where do you see that going in the era

  • of YouTube? We've had a couple of network people here talking about changes that are

  • happening in Hollywood and everything else. What is happening now to entertainment delivery

  • and where do you all play? Because you'll be the delivery mechanism in one way or the

  • other for most people. Well, the big milestone is where the delivery

  • platform is the Internet and so you bring the richness and the interactivity. I think

  • you can get a little bit of a glimpse of the future of TV more from looking at community-type

  • things like Xbox Live, where people are talking to each other, finding friends, you know,

  • watching things together, talking about those things.

  • As you map that onto genres like educational shows or sports shows or watching the Olympics,

  • the elections, that ability to navigate becomes very, very powerful. And we're not in entertainment.

  • Yes, we do Halo, which is this big video game, but by and large, we're a platform and so

  • it's the tough software things, whether it's the speech or the ink or the deep graphics,

  • that's where things that take 10 years to get done, the IPTV stuff, the foundation there,

  • you know, took ten years to get it done. Now it's finally coming to fruition and we have

  • people like AT&T betting their company on putting that together.

  • So we're just at the start of having a scale-entertainment delivery vehicle, both through PCs, unfortunately

  • not connected up to the TV set in most cases, but that's a point of innovation, and now

  • things like IPTV and Xbox that are connected up in the living room.

  • Bill, you weren't here, but Steve showed a new function of Apple TV that brings YouTube

  • directly to the TV. Is there going to be more of that from you? Do you see yourself the

  • way Bill says, as an enabler of entertainment or, I mean, putting aside your Disney role,

  • but your Apple role? I mean, I think people want to enjoy their

  • entertainment when they want it and how they want it, on the device that they want it on.

  • So ultimately, that's going to drive the entertainment companies into all sorts of different business

  • models. And that's a good thing. I mean, if you're a content company, that's a great thing.

  • More people wanting to, you know, enjoy your content more often in more different ways,

  • that's why you're in business, but the transitions are hard sometimes.

  • And, you know, the music industry, it turned out that the Internet got fast enough to download

  • songs pretty easily. There was no legal alternative and maybe they made some bad choices in how

  • they reacted to that, but, you know, they're still trying to make the transition to a very

  • different way of doing business, or ways of doing business while they're under attack

  • from piracy. And we can all highlight some of the mistakes that have been made, but,

  • you know, still, it's a tough job. And Hollywood, I think, you know, has watched

  • what's happened in music, learned some things to do, some things not to do, but, you know,

  • they're still trying to map this out. How do they make some of these transitions, some

  • new business models, different platforms, allowing their customers way more freedom

  • on when they want to watch stuff and how they want to watch it. And I think there's a tremendous

  • amount of experimentation and thought going on that's going to be good. It's going to

  • be really good if you're a content owner. Can I ask about the user interface of the

  • personal computer for a minute? Vista has just come out, which is your best version

  • of Windows you've done, has some UI improvements in it. You're about to do yet another version

  • of the Mac OS called Leopard in the fall, which, from what you've shown publicly at

  • least so far, has some improvements. But fundamentally, these are still the kind of file icon, folder

  • icon, drop-down menu. I know I'm minimizing. There's a lot of other things. There's gadgets

  • and widgets and all kinds of other cool things in there now, but, you know, you can see that

  • it's still all built on what you started with, with what Xerox did research on.

  • In the offing in the next four or five years, is it possible there's a new paradigm for

  • organizing the user interface of the personal computer? Let's leave cellphones and things

  • out for a minute, but just the personal computer. Bill?

  • One of the things that's been anticipated for a long time is when 3D comes into that

  • interface. And there was a lot of experimentation, sites on the Internet where you'd kind of

  • walk around and meet people, but in fact, the richness, the speed, it just didn't sustain

  • itself. Now we're starting to see with some of the mapping stuff, a few of the sites,

  • that the quality of that graphics, the tools and things, are getting to the point where

  • 3D can really come in. So I'd definitely say that when you go to a store, bookstore, you'll

  • be able to see the books lined up, you know, the way you might be interested in or lined

  • up the way they are in the real store. So 3D is a way of organizing things, particularly

  • as we're getting much more media information on the computer, a lot more choices, a lot

  • more navigation than we've ever had before. And we can take that into this communications

  • world where the PC is playing a much more central role, kind of taking over what was

  • the PBX, sort of one of the last mainframes in the business environment. That will be

  • a big change that will come to it. And as we get natural input, that will cause a change.

  • And what about this multi-touch stuff? It's really interesting. Obviously, Steve showed

  • some of it on the iPhone when he introduced the iPhone. Steve Ballmer today showed a bunch

  • of it with the Surface computing device. It happens, although it's not part of our program,

  • that HP, which is a sponsor of this conference, has a multi-touch sort of display over here

  • out in the foyer. Will this make its way into... Sort of the Minority Report, this kind of

  • thing. Yeah. Will this make its way into--maybe you

  • call it direct manipulation of objects with your hands and your fingers. Will this make

  • its way into mainstream, let's say, laptop computers as a new UI or an additional part

  • of the UI or is that just a thing for specialized devices?

  • Well, go beyond the laptop. Vision. Software is doing vision and so, you know, imagine

  • a game machine where you're just going to pick up the bat and swing it or the tennis

  • racket and swing it. We have one of those.

  • Yeah. Wii. Well, the Wii.

  • No, that's not it. You can't pick up your tennis racket...

  • Oh, your tennis racket. Oh, I see what you mean, yeah.

  • And swing it. Right.

  • You can't sit there with your friends and do those natural things. That's a 3D positional

  • device. This is video recognition. This is a camera seeing what's going on. And, you

  • know, in the meetings, like you're on a video conference, you don't know who's speaking,

  • you know, they're audio only, things like that. The camera will be ubiquitous. Now,

  • of course, we have to design it in a way that people's expectations about privacy are handled

  • appropriately, but software can do vision and it can do it very, very inexpensively.

  • And that means this stuff becomes pervasive. You don't just talk about it being in a laptop

  • device. You talk about it being part of the meeting room or the living room or...

  • But on the laptop, the way that--and, you know, maybe what we have is great and we don't

  • need any new big radical change, but when I turn on my laptop, whether it's my Vista

  • laptop or my Mac laptop, you know, there have been improvements, but it's a lot like it

  • was 10 years ago. It's much better, the graphics are better and all that.

  • We talked about that radical change to happen for both your companies.

  • But, you know, you have the mouse, you have the icons, you move around, you have the--I

  • mean, and you talked about what a big gamble it was in '84 to do that and then the follow

  • on with Windows. We still essentially have that approach and I'm just wondering is that

  • going to change. Touch, ink, speech, vision, those things come

  • in, but they don't come in as a radical substitute. I think you're also underestimating the degree

  • of evolution. Because you've lived with it year by year, you know, say we'd sent you

  • away for 10 years and you came back and you said, wow, there's a search paradigm and that's

  • more at the center of how you'd find these things. There's tagging. That's more at the

  • center of how you'd find these things. You know, the evolution is a very good thing.

  • In fact, even in that evolution, the stuff we did with Office, there's this balance you

  • strike where, when you make a change--in that case, the ribbon--you're going to have some

  • users who feel like, oh, jeez, I have to spend a little bit of time to be brought along to

  • that. You know, but there has been good evolution, but these natural interface things are the

  • revolutionary change and they will be very revolutionary. That, together with the 3D

  • that I talked about. Steve? I know you're working on something,

  • it's going to be beautiful, we'll see it soon. And you can't talk about it.

  • Yeah. Bill discusses all his secret plans. You don't

  • discuss any. I know, it's not fair. But I think the question

  • is a very simple one, which is how much of the really revolutionary things people are

  • going to do in the next five years are done on the PCs or how much of it is really focused

  • on the post-PC devices. And there's a real temptation to focus it on the post-PC devices

  • because it's a clean slate and because they're more focused devices and because, you know,

  • they don't have the legacy of these zillions of apps that have to run in zillions of markets.

  • And so I think there's going to be tremendous revolution, you know, in the experiences of

  • the post-PC devices. Now, the question is how much to do in the PCs. And I think I'm

  • sure Microsoft is--we're working on some really cool stuff, but some of it has to be tempered

  • a little bit because you do have, you know, these tens of millions, in our case, or hundreds

  • of millions in Bill's case, users that are familiar with something that, you know, they

  • don't want a car with six wheels. They like the car with four wheels. They don't want

  • to drive with a joystick. They like the steering wheel.

  • And so, you know, you have to, as Bill was saying, in some cases, you have to augment

  • what exists there and in some cases, you can replace things. But I think the radical rethinking

  • of things is going to happen in a lot of these post-PC devices.

  • I'm going to ask a more personal question. We have just a minute before we're going to

  • open up for questions. What's the greatest--I'm not going to call this a Barbara Walters moment

  • and ask you what tree you'd like to be, but... She would love to be Barbara Walters, let

  • me just tell you. No, I would not. What's the greatest misunderstanding...

  • Ding. Ding, right. Thank you, Steve. About your

  • relationship. I mean, you're obviously going to go down in history--history books already

  • say it kind of thing. But what's the greatest misunderstanding in your relationship and

  • about each other? What would you say would be--this idea of cat fight? Which one of the

  • many? We've kept our marriage secret for over a

  • decade now. Canada. That trip to Canada.

  • [Laughter and applause] I don't think either of us have anything to

  • complain about, in general. And I know that the projects, like the Mac project, was just

  • an incredible thing, a fun thing where we were taking a risk. We did look a lot younger

  • in that video. We did.

  • You looked 12 in the first one. That's how I try and look.

  • He was 12. But, no, it's been fun to work together. I

  • actually kind of miss some of the people who aren't around anymore. You know, people come

  • and go in this industry. It's nice when somebody sticks around and they have some context of

  • all the things that have worked and not worked. The industry gets all crazy about some new

  • thing, you know, like, there's always this paradigm of the company that's successful

  • is going to go away and stuff like that. It's nice to have people seeing the waves and waves

  • of that and yet, when it counted, to take the risk to bring in something new.

  • One last question and then we'll go to the audience.

  • Oh, no, he didn't answer us. Sorry, what?

  • I haven't answered. Oh, I'm sorry.

  • He only talked about his secret gay marriage so...

  • Oh, I thought that was your answer. No, that wasn't my answer. You know, when

  • Bill and I first met each other and worked together in the early days, generally, we

  • were both the youngest guys in the room, right? Individually or together. I'm about six months

  • older than he is, but roughly the same age. And now when we're working at our respective

  • companies, I don't know about you, but I'm the oldest guy in the room most of the time.

  • And that's why I love being here. Happy to oblige. Happy to oblige.

  • And, you know, I think of most things in life as either a Bob Dylan or a Beatles song, but

  • there's that one line in that one Beatles song, "you and I have memories longer than

  • the road that stretches out ahead." And that's clearly true here.

  • Oh, sweet. Oh, you know what? I think we should end it

  • there. Let's just end it there. I have a little tear right here.

  • Thank you. Thank you very much. Thank you so much.

  • Wow. Okay. So some audience questions, please. Questions. Can we have some lights? Roger.

  • Roger McNamee from Elevation Partners. Hey, guys, that was incredible. Thank you very

  • much. We've got a big election coming up next year and I'm curious if there are any issues

  • that you see in Silicon Valley that we all ought to be focused on communicating effectively

  • to the next potential president of the United States. That is, any common ground that we

  • share. Because it's weird, you don't actually hear any issues that people are talking about

  • right now and I'm curious if you guys have any in mind.

  • Bill? Well, certainly, education is one that I'd

  • put at the top of the list. Are there technological solutions right now

  • that they could do something about or is that just sort of, like...

  • No. Technology is going to be helpful and more and more, but the way that teachers are

  • measured and made excellent, the way that the high schools are designed, the expectations

  • they have, it's not just a pure technology thing. It's more an institutional practice

  • where the opportunity is. You know, there should be a lot of debate about the different

  • ways of doing that. Steve?

  • Boy, we've got some pretty big problems and I think most of them are much bigger than

  • anything Silicon Valley can contribute right now to solve. So hopefully some of those will

  • get solved. I also think we underestimate how much all of our industry depends on stability.

  • We've enjoyed, you know, a long period of stability and we've been able to focus on

  • technology and growing our businesses and stuff and I think we take that for granted

  • sometimes. One of the more interesting areas that we

  • all suffer from, of course, is in the area of energy dependency. And there's a lot of

  • work going on, I know a lot of investing going on, anyway, I don't know if the results are

  • there, but a lot of investing going on in alternative energy and maybe Silicon Valley

  • can play a small role in some of that stuff, too.

  • Are you guys investing in that area personally or...

  • Some. Which might be a lot from you.

  • A billion here or there. Steve, are you investing in that area?

  • No. Just a Prius?

  • Yeah, just appreciating. Over there.

  • Hi. Don Eklund, Sony Pictures. My question is really, at what point is there too much

  • diversity? It was talked about a few times in the discussion, the fact that now microprocessors

  • are very low cost, memory's low cost, software is ubiquitous, but, my life has been made

  • better by standards, like coding standards, network standards. And it seems like we're

  • reaching a point where diversity is starting to take hold to a point where we're not going

  • to be able to have the kinds of convergence devices that I think everyone would really

  • be able to appreciate. And I'm wondering, you know, is this going to be, like, health

  • care or mass transit where you just can never put it back in the bottle again? And I'd like

  • to get your perspective on that, if there's still an opportunity to have some grand convergence

  • devices that can really simplify people's lives and enrich their lives.

  • Steve? Well, I think Bill and I would agree that

  • we can get it down to two. No, I think it's hard to limit imagination and innovation.

  • I think there's always going to be a bunch of new, great things. And I think that's part

  • of what we put up with to get the innovation. We put up with a little bit of aggravation

  • to get the innovation. And I think the marketplace is awfully good

  • at allowing diversity when it should and then getting rid of it when it shouldn't.

  • And then letting it come back sometimes. Yeah. Yeah. I mean, in terms of standards

  • and things. I mean, the Internet standards have been incredibly powerful, you know, video

  • formats, things like this. And so I don't see things that are going to really hold back

  • a convergence device. You know, sure, there's a lot of wireless approaches, but that's pretty

  • healthy right now. They each have various merits. A few of them will end up overlapping

  • the other ones and kill the other ones out, but I think the industry's done very well

  • at latching onto standards for the things that there were no longer any innovation in

  • and then focusing on the places where it wasn't clear which approach was best.

  • Jesse? Jesse: Hi. I'm Jesse Kornbluth, HeadButler.com.

  • But you're not the youngest guys in the room anymore, it's perhaps appropriate to ask you

  • a question about legacy, each of you. Bill, even your harshest critic would have to admit

  • that your philanthropy work is, you know, planet-shaking, incredible, and could be,

  • if you make it, a second act so amazing that it would dwarf what you've actually done at

  • Microsoft. If you had to choose a legacy, what would

  • it be? And Steve, do you look at Bill and you think, gee, that guy is so lucky he had

  • a company so rich with talent that he didn't have to personally come in every day and save

  • it and, you know, I wish I had the opportunity? OK. He's not going to answer that one.

  • Bill? Well, the most important work I got a chance

  • to be involved in, no matter what I do, is the personal computer. You know, that's what

  • I grew up, in my teens, my 20s, my 30s, you know, I even knew not to get married until

  • later because I was so obsessed with it. That's my life's work. And it's lucky for me that

  • some of the skills and resources--but I put skills first--that I was able to develop through

  • those experiences can be applied to the benefit of the people who haven't had technology,

  • including medicine, working for them. So it's an incredible blessing to have two things

  • like that. But the thing that I'll, you know, if you look inside my brain, it's filled with

  • software and, you know, the magic of software and the belief in software and, you know,

  • that's not going to change. So your question was about whether I wish

  • I didn't have to go into Apple every day? No, if you envied Bill a bit, this second

  • act that he has. Oh, no. I think the world's...

  • You want to do anything else. I think the world's a better place because

  • Bill realized that his goal isn't to be the richest guy in the cemetery, right? That's

  • a good thing and so he's doing a lot of good with the money that he made.

  • You know, I'm sure Bill was like me in this way. I mean, I grew up fairly middle-class,

  • lower middle-class, and I never really cared much about money. And Apple was so successful

  • early on in life that I was very lucky that I didn't have to care about money then. And

  • so I've been able to focus on work and then later on, my family.

  • And I sort of look at us as two of the luckiest guys on the planet because we found what we

  • loved to do and we were at the right place at the right time and we've gotten to go to

  • work every day with super bright people for 30 years and do what we love doing.

  • And so it's hard to be happier than that. You know, your family and that. What more

  • can you ask for? And so I don't think about legacy much. I just think about being able

  • to get up every day and go in and hang around these great people and hopefully create something

  • that other people will love as much as we do. And if we can do that, that's great.

  • Yeah. Thanks, Steve and Bill. Rob Killion, here

  • with my business partner. We've got a 100-person Internet media business. I'm wondering what

  • would be the single most valuable piece of advice you'd give us to even attempt to create

  • some of the value that you guys have done in both your very impressive companies.

  • Well, I think actually--it may be in both cases--correct me if I'm wrong--the excitement

  • wasn't really seeing the economic value. You know, even when we wrote down at Microsoft

  • in 1975, "a computer on every desk and in every home," we didn't realize, oh, we'll

  • have to be a big company. Every time, I thought, "Oh, God, can we double in size?" Jeez, can

  • we manage that many people? Will that feel fun still? You know, and so every doubling

  • was, like, okay, this is the last one. And so the economic thing wasn't at the forefront.

  • The idea of being at the forefront and seeing new things and things we wanted to do and

  • being able to bring in different people who were fun to work with eventually with a pretty

  • broad set of skills and figuring out how to get those people those broad skills to work

  • well together has been one of the greatest challenges. You know, I made more of my mistakes

  • in that area maybe than anywhere, but, you know, eventually getting some of those teams

  • to work very well together. So, you know, I think it's a lot about the people and the

  • passion. And it's amazing that the business worked out the way that it did.

  • Yeah. People say you have to have a lot of passion for what you're doing and it's totally

  • true. And the reason is because it's so hard that if you don't, any rational person would

  • give up. It's really hard. And you have to do it over a sustained period of time. So

  • if you don't love it, if you're not having fun doing it, you don't really love it, you're

  • going to give up. And that's what happens to most people, actually. If you really look

  • at the ones that ended up, you know, being "successful" in the eyes of society and the

  • ones that didn't, oftentimes, it's the ones [who] were successful loved what they did

  • so they could persevere, you know, when it got really tough. And the ones that didn't

  • love it quit because they're sane, right? Who would want to put up with this stuff if

  • you don't love it? So it's a lot of hard work and it's a lot

  • of worrying constantly and if you don't love it, you're going to fail. So you've got to

  • love it and you've got to have passion and I think that's the high-order bit.

  • The second thing is, you've got to be a really good talent scout because no matter how smart

  • you are, you need a team of great people and you've got to figure out how to size people

  • up fairly quickly, make decisions without knowing people too well and hire them and,

  • you know, see how you do and refine your intuition and be able to help, you know, build an organization

  • that can eventually just, you know, build itself because you need great people around

  • Lise Buyer. Question, I guess it's historical curiosity. You approached the same opportunity

  • so very differently. What did you learn about running your own business that you wished

  • you had thought of sooner or thought of first by watching the other guy?

  • Well, I'd give a lot to have Steve's taste. [laughter] He has natural--it's not a joke

  • at all. I think in terms of intuitive taste, both for people and products, you know, we

  • sat in Mac product reviews where there were questions about software choices, how things

  • would be done that I viewed as an engineering question, you know, and that's just how my

  • mind works. And I'd see Steve make the decision based on a sense of people and product that,

  • you know, is even hard for me to explain. The way he does things is just different and,

  • you know, I think it's magical. And in that case, wow.

  • You know, because Woz and I started the company based on doing the whole banana, we weren't

  • so good at partnering with people. And, you know, actually, the funny thing is, Microsoft's

  • one of the few companies we were able to partner with that actually worked for both companies.

  • And we weren't so good at that, where Bill and Microsoft were really good at it because

  • they didn't make the whole thing in the early days and they learned how to partner with

  • people really well. And I think if Apple could have had a little

  • more of that in its DNA, it would have served it extremely well. And I don't think Apple

  • learned that until, you know, a few decades later.

  • Over here. Yeah, hi. Charlie Brenner from Fidelity Investments.

  • In our financial services industry, we are focusing very strongly on aging and retiring

  • baby boomers, a huge demographic. We're not that old yet.

  • No, I wasn't-- The question is different from what it sounds like it's going to be here.

  • But most of the innovation that we see coming from computer and Internet companies is kind

  • of youth-oriented. And I'm just wondering if there are activities going on in your companies

  • acknowledging what's going to be happening generationally.

  • Oh, not true. I'll give you one example. So we started building in video cameras into

  • almost all our computers a few years ago. And the response by people of all ages, but

  • in particular seniors, has been off the charts because they're buying these things now and

  • they're buying them for their grandkids, their sons and daughters with their grandkids so

  • they can stay in touch with their grandkids. And they're videoconferencing more than younger

  • people are. And it's incredible what this has done. So that's just one simple example,

  • but there's, like, dozens of them that have clicked with, you know, seniors that are living

  • independently that want to stay in touch with extended families and do other things like

  • that. Yeah, I think it's a very good point, when

  • you look at the size of the market. And that's partly why it's great that there are all these

  • companies out there who can see, okay, what would you do for seniors? I think natural

  • user interface is particularly applicable here because the keyboard, you know, we're

  • sort of warped in that we grew up using the keyboard and so it's extremely natural to

  • us, but things like--and that's partly why when we showed the Surface computer, I showed

  • it privately to a bunch of CEOs a couple weeks ago, I was kind of stunned by how blown away

  • they were. But their ease of navigation is just not the same. And when they saw that,

  • the idea that they could organize their photo album, it meant more to them than it did to

  • me. I'll give you another example. We've got a

  • little shy of 200 retail stores now. And one of the things that stores are doing is personal

  • training now. It's called one-to-one. And we are up to now a run rate of a million personal

  • training sessions--they last an hour--per year. A million per year.

  • You only started a little while ago, right? Yeah, we started about a year ago and we're

  • up to a million training sessions per year run rate now. And a lot of those folks--some

  • of them, anyway, many of them--are seniors. And they're coming in and they're spending

  • an hour learning how to use Office and they're spending an hour learning how to video-conference.

  • They can basically come in as much as they want and they can schedule these things throughout

  • a year and they pay $99, I think, a year for it. And it's been great.

  • Last question. Now the last question over there.

  • We all share our common science-fiction experience of, you know, the metaverse or the matrix

  • where we all could communicate without being in the same place. And by the way, thank you

  • both for providing us the best platforms so far to go to chat rooms or to all go to a

  • MySpace. It's a far cry from these things that we see on Star Trek at the holodeck.

  • What kinds of things can you imagine that are partway there that could be much better

  • than the three-window iChat that we might see in the next five or 10 years?

  • Well, I think Steve's going to announce his transporter.

  • I want Star Trek. Just give me Star Trek. No, I think short of the transporter, most

  • things you see in science fiction are, in the next decade, the kinds of things you'll

  • see. The virtual presence, the virtual worlds that both represent what's going on in the

  • real world and represent whatever people are interested in. This movement in space as a

  • way of interacting with the machine. I think the deep investments that have been made at

  • the research level will pay off with these things in the next 10 years.

  • Steve? I don't know. And that's what makes it exciting

  • to go into work every day, because there's--as we talked about earlier, this is an extraordinarily

  • exciting time in the industry, and lots of new stuff happening. So, you know, I can't

  • even begin to think what it's going to be like 10 years from now.

  • Thank you so much. Thank you so much.

  • Thank you so much. That was great. That's great. Thank you for being here.

I've invited here today 3 industry experts to have a panel discussion on software

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