0:05 Hi. I must apologize to you all for being late. I was driving here 90 miles an hour. I couldn't find a parking place and with all the experiences you've been through this morning, I was

0:19 Um

0:23 had a photographer from Scientific American that wanted to take some pictures in the last few days.

0:30 So, we went over to a school. We thought they decided they wanted to take some pictures of someone from Apple in an educational setting using some computers and we wandered over. Turns out there's a little booklet that is put out in Cupertino and there's about 20 different schools with Apples and we picked one out that had six Apple computers and wandered over there one afternoon. And this happened to be the afternoon at the fourth and fifth graders were going to be there. Once a week, fourth and fifth graders from this one school in the sort of advanced learning program come over and use the Apple computers. And I had the most delightful conversation with some four and five-year-olds and they They they probably know as much about the computer as I do. Maybe more. And

1:09 they're they're totally fluent in it and they're very much at home in it and they beat me in most of the games in it. And it was really quite an experience because we we always talk about all these things happening sort of at an intellectual verbal level, but I actually got a chance to see 20 students interacting with these computers on a one-on-one basis. And I I couldn't help remembering my own school days when none of these things existed and we just get into trouble all the time.

1:39 11:30 at night last night, a friend of mine, Bob Metcalfe, calls me up and uh he's got three German friends visiting from Germany and they want to buy 20 to 30 Apples a month for some god awful, who knows what reason. And they want them in Germany and And want to talk about buying 11:30 at night. Um And you know, a guy in Nebraska is using an Apple computer to calculate soil samples to know what kind of fertilizer to put in the ground. Well, it just It's an endless array of things that people are doing with this. What's your mic plugged into? Oh, excuse me. The other one.

2:18 Ah.

2:26 We had absolutely no idea what people were going to do with these things when we started out. Uh matter of fact, the two people it was designed for was Woz and myself. Because we couldn't afford to buy a computer kit on the market. So, we liberated some parts from Hewlett-Packard and Atari. And uh worked on a design for about 6 months and decided that we would uh build our own computer. So, we built one. And uh Woz was up till 4:00 in the morning for many moons, and we got it working. We showed some of our friends Immediately, everybody wanted one. And it turned out that it took about 40 hours to build one of these things and about another 20, 30, 40 to debug it. And we had a lot of friends that worked at similar companies who could liberate the parts also.

3:10 We found ourselves spending every spare moment of our time helping our friends to build computers. And it was just getting to be a a tremendous drain on our on our lives. So, we got the idea one day that that we could make a printed circuit board without the parts and sell these blank printed boards to our friends and probably cut the assembly and debug time down to you know, 5, 10 hours. So, Woz sold his HP-65 calculator and I sold my van and we got 1,300 bucks together and paid our friend of ours who was this uh PC board layout person 1,300 bucks to do us a layout and decided we'd sell printed circuit boards at twice what it cost to build them and hopefully recoup our calculator and transportation some way today. So, that's what we did. And I was out trying to pedal PC boards one day and walked into a bike shop, the first bike shop in Mountain View. And uh Paul Terrell, the then owner of the bike shop, said uh he would like to take 50 of these computers. And I saw dollar signs in front of my eyes. And but he had one catch, which was that he wanted them fully assembled and tested ready to go, which is a new twist. So, we spent the next 5 days on the phone to distributors and convinced the electronics parts distributors around here to give us about $10,000 for the parts on thin air, just on enthusiasm. So, we got the parts and we built 100 computers and we sold 50 of them for cash in 29 days, paid off the distributors. And that's how we got started. So, we had 50 computers left over. Well, that meant we had to sell them. So, then we started worrying about marketing, worrying about distribution, got on the phone to the other computer stores around the country. And gradually the whole thing began to build momentum. And at that point in time, we had some feeling that we were on to something. But the the feeling was is is so different than the experience of actually seeing it happen right now. It's entirely different. And uh sometimes a lot a lot of people ask, "Well, did you know it was going to mushroom into this phenomenon?" And you could say, "Yeah, you know, we planned it out. We had laid on a piece of paper." But different than the experience of seeing 500 people working at Apple Computer. It's very different than the experience of seeing a 5-year-old kid who uh really understands what he's the tool that he's got in front of him. And it the the best analogy I've ever heard is uh Scientific American, I think it was, did a study in the early '70s on the efficiency of locomotion. And what they did was for all different species of things on the planet, birds and cats and dogs and fish and man and goats and stuff, they measured, "How much energy does it take for a goat to get from here to there?" Right? Kilocalories per kilometer or something. I don't know what they measured in. And they ranked them. They published a list. And and the condor won. The condor took the least amount of energy to get from here to there. And man was didn't do so well. Came in with a rather unimpressive showing about a third of the way down the list.

6:03 But fortunately someone at Scientific American was insightful enough to test man with a bicycle. And man with a bicycle won. Twice as good as the condor. All the way off the list. And what it showed was that man as a toolmaker has the ability to make a tool to amplify an inherent ability that he has. And that's exactly what we're doing here. It's exactly what we're doing here. We're not making bicycles to be ridden between Palo Alto and San Francisco. Okay, we're making bicycles. And yes, certain bicycles have certain generic attributes. Like in general 10 speeds are better riding mountains than one speeds and other things like that. But in general what we're doing is we're building tools that amplify a human ability. Just like the um you could say that the Industrial Revolution was basically an amplification of a human ability. Sweat. Right? We amplified sweat. Fractional horsepower motors, etc. etc. What we're working towards now is the ability to amplify another human ability.

7:11 And we're just starting to get the glimmerings of where it's going to go. As an example, um how many of you have used VisiCalc?

7:22 Quite a few of you.

7:26 At Apple, uh every secretary now has an Apple on his or her desk. And they're doing all their word processing on them. You got to give them credit for that given the software that's out.

7:40 And uh they're doing a tremendous amount of financial modeling on the thing. As an example, I I have to keep a budget for about 40-50 people. And by the 10th of every month my secretary's got all the information from accounting, put it into the VisiCalc model, and given me the actuals versus forecast, and all the variances, and etc., etc. And we're asking what if questions on a daily basis. I I can say I can ask Pat. I can say, "Pat, what happens if I hire five more people this month?" You know, "What's that going to do to the budget?" Hour later, I know. It's incredible. And what's even more incredible is when you go talk to these fifth graders because they're growing up with this thing. You know, it's new for myself. I didn't know anything about this stuff 15 years ago, 10 years ago. But these kids are growing up with it. Um I've seen some of the kids of people that work at Apple I've seen go from being 1 2 years old where they push the return key, you know, they sit on their father's lap, mother's lap, and what their part is is to push the return key to actually know how to program in the last 4 years. It's remarkable.

8:50 So one of the things that

8:56 that Apple is going to try to do over the next 3 or 4 years is to to further that goal. And the key area we're focusing on is the following. Right now, if you buy a computer system and you want to solve one of your problems, we immediately throw a big problem right in the middle of you and your problem, which is learning how to use the the the computer. Right? Substantial problem to overcome. Once you overcome that, it's a a phenomenal tool. But there is a barrier of having to overcome that problem. What we're trying to do, and I think there's a reasonable chance that Apple's going to make a real contribution to solving this problem in the next 36 months, is to remove that barrier so that someone can buy a computer system that knows nothing about it and directly attack their problem without learning how to program a computer. And

9:49 the reason I think that Apple's got a chance of solving that problem versus a lot of other computer companies that we all know of that are much much larger than we are now. Although we're catching up. Uh is that our whole company our whole philosophical base is founded on one principle. And that one principle is that there's something very special and very historically different that takes place when you have one computer and one person. Very different than if you have 10 people and one computer. And let's look at some of the things that that our industry has or our segment of the computer industry has contributed to the computer industry because of that underlying philosophical concept. In general, we were in retail distribution channels 3 4 years before the rest of the computer industries were now waking up to that fact. Why? Because to serve that one-on-one relationship, it was necessary to to distribute the products that way. It was necessary to have products priced so that a person one-on-one could afford the computer system and therefore it was necessary to distribute them through a relatively lower cost distribution channel rather than direct sales force. Interactive software, uh interactive video, a computer system that can be sold for a few thousand dollars that can actually do some animation, that actually has the video that's so tightly coupled to the rest of the computer that you can do real-time We've got a deck 1170 at Apple where the terminals communicate with the 1170 at, you know, 9600 bits per second. That that can't do anything like Visicalc here. Okay? This is $300,000 computer system. And yet my secretary keeps the budgets on an Apple. It's far superior. So and again, that comes from that one-on-one interaction.

11:39 And that perspective is what gives us the feeling that we have an opportunity to really contribute to solving that problem. And that's where Apple's going. Now,

11:56 we're very fortunate because the timing seems to be falling into place. In other words, as we move into the '80s, the amount of of computational power, the amount of raw horsepower we can get into a small box for a reasonable price is is staggering. Even in the last 3 years since you know, 4 years since we started, it's it's increased few orders of magnitude.

12:19 And one of the things that people always ask me is uh you know, what what we've got right now is just fine. This account runs fast enough, you know. Some of the database stuff runs fast enough. What are we going to do with this extra awesome power? And the answer to that is that we're going to put it into applying

12:37 in into solving that problem again. In other words, we're going to start chewing up power specifically

12:48 to help that one-on-one interaction go smoother.

12:53 And specifically not to actually do the number crunching and the database management and the word processing or whatever. We're actually going to start applying a lot of that power specifically to help us remove that barrier.

13:06 And so, assuming that we don't get into World War III, and assuming that we're able to continue to recruit outstanding people,

13:14 it looks like the timing's just right for that to occur. So, hopefully, when we have our international Apple core meeting, you know, the third, fourth one from now, we'll all be able to to talk about how we solved that problem, cuz I really think it's going to happen. And I really think it's going to come out of an industry that 4 years ago didn't exist. That 3 years ago everyone said was a flash in the in the frying pan. You know? And uh but I think right now they're going to wake up. So, thank you very much.

13:48 Sure.

13:55 Yeah. I knew I would get away with it after that.

14:00 You start a company you have to file what's called a fictitious business name statement. And what that is the purpose of that statement which you file with the government uh is to simply tell everyone uh if Apple Computer goes out of business or anything having to do with Apple Computer, these are the in find the the corporate name. And as we would later discover this.

14:26 And not knowing we thought that was important, so we figured we'd file. And everyone was saying names to us like Matrix Electronics or

14:36 all sorts of different names. And uh we simply decided that we were going to call it Apple Computer unless someone suggested a better name by 5:00 that day. And in part because uh I like apples a lot and partially because I had a typewriter in the phone book and I used to work AT ATARI.

15:02 BUT WE RE-EXAMINED IT ON A REGULAR basis and we found that the juxtaposition of something

15:09 that seemed to epitomize what we were going after, which was a simplicity and yet very refined sophistication. You have seen our first brochure, probably some of you have it And title of it was simplicity is the ultimate sophistication. And that wasn't just a [ __ ] slogan. It actually was really what we've been striving for. And uh the Apple seems symbolize that. So, I think we're going to stick with it.

15:38 Yeah. Yeah, on that getting back to what you're talking about about your goals about eliminating this barrier of this obstacle of the computer there. You're talking about all this basically hardware power that's available inside that little box. What sort of things are you talking about that's going to translate that hardware power, the power that's inside there into removing the obstacle of what's inside there on a more concrete level? Uh well, you're asking me to talk about future products. And I don't want to do that. But How about philosophically? Philosophically, um

16:19 First of all, we've done an awful lot, you know, when we first started out, we didn't know how to spell the word software. And uh gradually we've learned. We've gone through the standard motions of setting up an internal application software department, which proceeded to fall on its face, picking it up and watching it fall on its face again. Finally, uh we went through a phase where we decided that what we were selling was solutions, not hardware. And so, we realized that software was a big part of the solution, and therefore we better get our software act together. Matter of fact, now we have more people in software engineering than hardware engineering. You know, our engineering department's over half people are devoted to software. And you know, a lot of times

17:03 we ask ourselves uh what software is. Matter of fact, notice all these um every other word software. That must give you some clue, but what what is software? You know, I've often thought about this. And what is between software and hardware? And the only thing I can think of is that software is something that either is changing too rapidly or is is uh you don't exactly know what you want yet or you didn't have time to get it in the hardware. Or the technology's not there to get it in the hardware. That's all I can think of. So, the And And what I see happening is that more and more software is getting integrated into hardware. Yesterday's software is today's hardware. So,

17:46 those two things are merging, I think. And that the line between hardware and software is going to get finer and finer and finer and finer. And one of the ways that we're approaching the problem of how to remove the barrier is to try to look ahead a few years and make some some predictions as to where the technology will be, both hardware and software technology, and how they're going to be merged together. And

18:16 at the same time looking at

18:24 very carefully looking at the kinds of high-level tools that our customers are going to need and trying to to make those two point at the same target. And I know that's very vague and I guess I really don't want to talk about it anymore than that right now. That's all right. That's all right. Yeah. Um there are a lot of us that that have bought Apple IIs here for Europe and that have that put a tremendous amount of money and effort into using them and planning on using them for many years to come. Sure. What does Apple have in mind for for continuing support with Apple II? In other words, not dropping it like some other companies dropped it. This line and then start up with a new one and everyone has to go and buy a whole new thing and so on and maybe they won't want to or whatever, but but what do you have in mind for the people who want to entertain at a level with There's three different parts of the answer and why not address each one because I think it's a really important question. For some crazy reason in the universe, two people from Los Altos in Cupertino, California managed to to want something that just so happened to be what about a million other people wanted. And it's it's seemed to fit the need fairly well. So well, matter of fact, that in the last two and a half years nobody else has come close.

19:42 So I don't think Apple II's ever going to be obsolete. To answer it in another angle, the second angle. Um

19:53 Apple is eventually going to have a broader line of products. Simply because let's look at automobiles. Compare a Volkswagen Rabbit and a dump truck and a Mercedes-Benz, let's say. They all have transmissions, they all have engines, four wheels, seats. And they basically all perform the same basic function of transportation. What's the difference? It's the difference in emphasis. It's the difference in emphasis. Um And I think that that's what we're going to look at doing is is potentially broadening the product line with with computers with a different emphasis. Slightly different emphasis than than an Apple II. And um

20:39 I hope you're all pleased with the the new products that we'll come out with over the year, but I don't think that many of you are going to actually feel like giving up your Apple II's. I don't see it happening. One other thing, I heard a comment up here as you were asking your question, somebody said like Apple I, right? And Apple I was an instance where we did obsolete our product. We absolutely did obsolete the product. And what we did was uh we decided that we were going to take care of the people who bought Apple ones and the people that contacted us and said, "Listen, I'd really like to have an Apple II." We worked out an arrangement that I think everyone was going to be happy with. So, uh we did take care of those people. And uh I don't think we'll ever be in a situation like that again of actually losing a product. Yeah, we can't afford But, right. We can't afford it.

21:27 We have about 500 people now. And Apple will do this year is probably somewhere between 150 and 200 million dollars worth of sales. And if you actually divide the sales number by the people, you'll find that we probably have the highest sales dollars per employee that you anybody's ever heard of. And the reason is is because we've got the most incredible collection of people on the planet that I at least the most incredible collection I've ever seen among other people I've ever seen. And they're working very, very hard. And if you actually look at why they're there, why people have come to Apple, why people came originally, it certainly wasn't for the salary. A lot of people came to Apple and took 50% cuts in salary initially. We pay competitive salaries now, but we certainly don't attract people on the basis of salary. We attract people on the basis of an opportunity to work your butt off and get something done right, see it out the door without it getting all screwed up. And an opportunity to work with professionals who are as good as you are in other disciplines. So, so what Apple's what we're going to make what we're going to judge ourselves by, the senior management of the company's going to judge itself by, is can we maintain this atmosphere of of uh creativity, tremendous productivity, a company where it's just fine to fall on your face as long as you pick yourself up pretty fast. An an an environment where we give people enough rope to hang themselves by and hope that they don't. If we can maintain that for the next 10 years and beyond, we'll we'll have been successful. And the rest of the stuff will take care of itself. The rest of the stuff will take care of itself.