D8: Steve Jobs Live!

Well, here we go. I’m in Rancho Palos Verdes, California, at the Terranea Resort, for the eighth edition of D: All Things Digital. Kicking things off� is what could be the highlight of the show: Apple (AAPL) CEO Steve Jobs, interviewed on stage by conference co-hosts Kara Swisher and Walt Mossberg.

Actually before the main event, we get a greeting from News Corp. (NWS) CEO Rupert Murdoch. (News Corp., of course, publishes the Wall Street Journal, which sponsors the conference, as well as Barron’s, which publishes this blog.) He says News Corp. is a content company – and stresses that you need content to make technological devices compelling. Murdoch notes that Apple has sold 2 million iPads – and that many other companies are now developing tablets.

Addressing the issue of paid content on the Web, Murdoch says the status quo in the content business was not sustainable. He says “we need a fair price for our content,” and notes that the company has started charging for access to content at some of the company’s newspapers. This year, the Journal was the only one of the top 25 U.S. newspapers to grow weekday circulation, Murdoch says.

OK, so Murdoch hands over the stage to Walt and Kara. They introduce Steve Jobs, who is jeans, black turtleneck and carrying coffee. (Or maybe tea.) Here’s what they said:

• 6:22 p.m. Kara says they are thrilled Jobs is here.
• 6:22 Kara asks about Apple topping Microsoft in market cap; he says it is surreal for those who have been in the industry for a long time, but he adds that it doesn’t matter that much. “But it is a little surreal.”
• 6:23 Jobs notes that Apple was about 90 days away from going bankrupt when he came back – much worse than he had expected. He thought all the good people had left, but found miraculous people. He asked why they stayed, and they said they believed in six colors – the old Apple logo. They believed in the values, and wanted to bring it back.
• 6:24 Mossberg says he wants to know where things are going in the future. Also some recent controversies. He starts by asking about Flash, and the war with Adobe. Mossberg’s question: is it really fair to consumers to be abrupt and cut off consumers?
• 6:26 Jobs says Apple is a company that does not have the most resources of everybody in the world. They have chosen what technical forces to ride really carefully. Different pieces of technology go in cycles. They have springs, summers and autumns and then go to the graveyard of technology. You can really put energy into putting emerging technologies be great on your platform. We have history of doing that. Went from 5 inch floppy to 3.5 inch floppy with the Mac, we were the first to do that. We got rid of floppy altogether in first iMac. Got rid of serial and parallel port – first to use USB, even though Intel invented. One of first to get rid of optical drives with MacBook Air. Sometimes, you just have to pick the things that look like the right horses going forward. Flash looks to be waning, HTML5 is on the ascendancy. He says there are issues with battery life, security and other things. But more importantly, HTML5 is starting to emerge. While 75% of video on Web is Flash, 25% going to 50% very shortly is also available in HTML.
• 6:29 Mossberg asks about the impact on developers. Jobs says HyperCard was even more popular in its day; it was accessible to anybody, he says. Jobs says there are over 200,000 apps in the App Store, so something must be going right.
• 6:31 Jobs says they just made a technical decision not to put Flash on our platform. We shipped the iPhone, which does not use Flash. Not until we shipped the iPad did Adobe raise a stink about it. We were trying to be real professional about it; but finally said enough is enough, we’re tired of these guys trashing us in the press about it.
• 6:32 Mossberg asks, what if the market says, we want to run not just videos, but entire sites written in Flash. What if people say, the iPad is crippled in this respect?
• 6:33 Jobs says things are packages of emphasis. Different people make different choices. We listen to the market. Trying to make great products of people. But we have the courage of our convictions, to leave it out. Some people call us names, and we’ll take the heat. Customers are paying us to make those choices, to make the best products we can. If we succeed, they’ll buy them. And if we don’t, they won’t. People seem to be liking iPads – we’re selling one every three seconds since we launch them. Right now I’m worried that it takes us three whole seconds to make them.
• 6:35 Kara wants to know about all of the e-mails Jobs has been answering lately.
• 6:36 Steve says he has always done a bit of that.
• 6:36 Mossberg is asking about the disappearing iPhone prototype; he wants to know his reaction to the fact that some people don’t like checkbook journalism, but that police also didn’t issue a subpoena, but instead get a search warrant and grab him, of a journalist’s assets.
• 6:38 Jobs says there is an ongoing investigation by the DA. He says to test wireless products – you actually have to try them out. One of the employees either left it in a bar or had it stolen from his bag. The person who ended up with the phone tried to sell it; they tried to activate it by plugging into his roommate’s computer; she called the police. Not Apple. She did not want to get implicated. Police felt they needed to grab some stuff before it all disappeared. Amazing story. Theft, extortion, buying stolen property. I’m sure there is sex in there someplace. This whole thing is very colorful, the DA is investigating, to my knowledge the court is making sure they only see things related to this case.
• 6:40 Jobs on the suicides at Foxconn: He says they are all over this. He says Foxconn is not a sweat shop. They have restaurants, movie theaters, swimming pools. But there have been 13 actual or attempted suicides out of 400,000 people who work there. Still under the U.S. suicide rate, but still really troubling. This happened in Palo Alto with kids throwing themselves in front of trains, he notes. (A reference to recent trouble at Gunn High School.) He says they are trying to understand what the problem is.
• 6:43 Mossberg is moving on. He notes that Microsoft won the PC platform war, with much larger share. Now, he says, there are new platforms – and Apple has done really well on some, including smart phones and tablets. There are other platforms, including Google, which has Android and Chrome OS and their search and app ecosystems. Facebook is a platform. There is a platform war going on, you are a player, Google is, Facebook is. Do you see it like that?
• 6:45 Jobs says he doesn’t see it that away. He says with the Mac they tried to build the best computers they could. We always thought about how to build a better product than Microsoft.
• 6:46 On Google, Jobs says they decided to compete with us.
• 6;48 Kara asks how they look at Google as a competitor.
• 6:48 Jobs, again, says that they decided to compete with us. They started competing with us, and it got more and more serious. In smart phone market share, Nokia is still number one. RIMM is number two, we’re three, Google is four, and other is five. Microsoft is in other, at the moment. Jobs notes they were zero three years ago, so things can change.
• 6:49 Kara asks if they will pull Google Maps from the iPhone, or other Google software. And he says “no.” Jobs says they want to build a better product, and every person votes for themselves. In enterprise market, it is not so simple; the people who use the products don’t decide for themselves, and those who decide are sometimes confused.
• 6:51 Mossberg asks if there will be more prominent choices to Google software on iPhones; Jobs says, just because we are competing with someone doesn’t mean we have to be rude.
• 6:52 Mossberg is asking whether Apple might get into search; Jobs says they have no plans to get into the search business. Other people do it well, he says. Pre iPhone, he says, there was no app market for apps on phones. Phones were sold in truly walled gardens. The thought that a developed could make apps for a phone was unheard of it. There was even a percent of what there is now. And also, when you bought a phone, the carried dictated what was on the phone. With iPhone, a new relationship.
• 6:54 On AT&T’s performance, he notes that they carry way more data than all of their competitors combined. They’re having troubles, including getting equipment from their suppliers to beef up the network. But he says they will end up with very good, very fast network, that is the most robust for handling data. Any other network with this many iPhones on it would have the same problems.
• 6:56 Jobs won’t talk about whether they might add another U.S. carrier.
• 6:57 Jobs says on the tablet, he thought handwriting was doomed to failure as an input method. We re-imagined the tablet. They are stylus based. If you need a stylus, you’ve already failed. Their tablet PC was based on a PC, had the expense, battery life, weight and OS of a PC. The minute you throw a stylus out, you can not get the same precision. With finger, you can’t use a PC operating system. So we built a very different animal.
• 6:50 Jobs says Apple actually started on the tablet before the iPhone; had idea of typing on glass display; 6 months later, saw prototype display. In early 2000s. Gave it to one of our other UI folks, who had inertial scrolling and a few other things working. We were already thinking about building a phone; I saw inertial scrolling and a few other things, and thought we could build a phone, and put the tablet on the shelf.
• 7:01 Kara asks about the role of print publications on the iPad. Jobs says any democracy depends on a free healthy press; he thinks some newspapers are really important. We need editorial more than ever right now, he says. Anything we can do to help the New York Times, The Washington Post, the Wall Street Journal and other newsgathering organizations find new ways to get paid, he’s all for.
• 7:02 Jobs says we have all moved to reading news on the Web, which is why newspapers are in dire straits. Need to get people to start paying for hard earned content. Jobs says he preaches that he does not know what will work, but as one of the largest seller of content on the Web, the lesson is price aggressively and go for volume. I’m trying to get these folks to take more aggressive postures than what they charge in print, without expenses of print and delivery. I believe people are willing to pay for content, he says.
• 7:04 Mossberg says Apple’s entry into books actually pushed prices up.
• 7:04 Jobs responds that it is complicated; the market right now is such that it is set up to be more responsive to consumer demand to what price is going to be than it was six months ago. If consumers want prices to be less, they will be more responsive than they were six months ago. Structure of how publishers are approaching this has changed dramatically.
• 7:05 Mossberg is asking about what tablets can be; he notes that in his own review, he wrote people have to feel that it is not just another thing to carry. Will it replace the laptop? Where is it going?
• 7:06 Jobs says that when we were an agrarian nation, all cars were trucks, because that is what you needed on the farm. As Americans moved to cities, cars got more popular. Now, maybe 1 of every 25 or 30 vehicles is a truck, when it used to be 100%. PCs are going to be like trucks. He says that transition will make some people uneasy. When it starts to happen, it is uncomfortable for a lot of people. We’re headed in that direction.
• 7:08 Kara wants to know what future features are important.
• 7:08 Jobs says there is something magical about the iPad; you have more direct and intimate relationship with media, apps, the Internet. Like some intermediate thing has been removed. Like that Claritin commercial where they strip away the film. There is something about that it magical. I think we are just scratching the surface in terms creating apps for it. You can create a lot of content on the iPad.
• 7:10 Mossberg is asking more about content creation tools on the iPad. A lot of people don’t think this type of device is right for content creation, he says.
• 7:10 Jobs responds that when you are going to write 35 page analyst report, I want to use Bluetooth keyboard. Software not powerful enough? That is just a matter of time.
• 7:11 Kara wants to know what he can imagine in the future.
• 7:11 Jobs says editing video, creating music, productivity stuff.
• 7:12 Switching subjects, Kara asks about display technology; he says technology to do a flexible version – not a hard glass surface – is not on the horizon, and is many, many years away.
• 7:13 Mossberg is asking whether there is a downside of Apple turning down some apps – and in what appears to be a black box?
• 7:14 Jobs says they support two platforms – one is open, and uncontrolled. HTML5, which is a set of standards set by independent standards organizations. We support HTML5. The best of anybody in the world in our browsers. This completely open uncontrolled platform. Then we support a curated platform, which is the App Store. So, how do we curate it? It is a bunch of people. We have a few rules. App has to do what it is advertised to do. Can’t crash. Can’t support unsupported APIs. Have to use public APIs only. Those are the biggest reasons we reject apps. We approve 95% of apps submitted every week – within 7 days.
• 7:16 Mossberg is asking about rejection of political apps; Jobs says they had a rule that you can’t defame people. The problem is that political cartoons got caught in that; an unintended consequence of that rule. We realized it was an unintended consequence, and changed the rule. Flurry of stories were written several months after changing the rules. We are guilty as charged of making mistakes. We are doing the best we can, changing the rules when it makes sense. What happens sometimes is that some people lie, we find it, and reject it, and they run to the press, and get their 15 minutes of fame, and hope it will get us to change our minds. We take it on the chin, and we move on.
• 7:20 Kara wants to know what Steve does all day.
• 7:20 Jobs says he has one of the best jobs in the world. I am incredibly lucky, he says. Come in every morning, and hang around some of the most wonderful, brightest committed people I have ever met in my life.
• 7:21 Mossberg is zeroing in on what Steve actually does. Design? Curate?
• 7:22 Jobs says that one of the keys to Apple is that it is an incredibly collaborative company. But there are no committees. Organized like a start up. The biggest start up on the planet. Meet for three hours once a week and talk about everything we’re doing, the whole business. Tremendous teamwork at the top of the company, which trickles down to the rest of the company. Great at figuring out how to all work on the same thing, touch base, and bring it all together into a product. What I do all day is meet with teams of people, working on new products, new marketing programs…we have wonderful arguments. If you want to hire great people and have them continue to work for you, the best ideas have to win, otherwise the best people don’t win. I contribute ideas – why would I be there if I didn’t?
• 7:25 Kara is asking what the next 10 years will be about for him.
• 7:25 Jobs says when the thing with Gizmodo happened, he got a lot of advice from people who said, you have to let it slide, you shouldn’t go after a journalist, you don’t want the PR, you should let it slide. I concluded the worse thing that could happen as we get big, is if we change our core values and start letting it slide. I can’t do that. I’d rather quit. Go back 5 or 10 years ago, we had the same values then. Core values are the same. We come into work wanting to do the same thing today as we did 5 or 10 years ago, which is build the best products from people.
• 7:27 Mossberg is trying to get Jobs to say what markets they will enter in the future; he’s not biting. It’s turned into a discussion of iAd, which he says is intended to help app developers be more successful. Jobs says on mobile phones people are not spending as much time searching as they do on desktops; they are using apps instead. I think it is because there was never the PC equivalent of the App Store. People using apps way more than using search. If you want to make developers money, you put ads in apps. Now, ads in apps rip you away from your app, and send you to the browser. Wouldn’t it be great, if mobile ads did not take you away from the app, and any time you want to, go right back to where you were in the app. Jobs says they made it so you could add ads to apps with 30 minutes worth of work, they put it right in the bowels of the system.
• 7:31 Mossberg is moving to ask Jobs about privacy. He says there seems to have been a spate of mistakes involving privacy, involving, Facebook, or Google.
• 7:32 Jobs says Apple has always had a very different view of privacy. They worry a lot about location in phones; that some 14-year-old will get stalked. We do a lot of things that people understand what the apps are doing – we have rejected a lot of apps that want to take a lot of personal data and suck it up into the cloud. A lot of people in the Valley think we are really old-fashioned about that. Privacy means people know what they are signing up for, in plain English. Some people want to share more data than other people to. Ask them. Let them know precisely what you are going to do with their data.

That’s it for the formal discussion; it was followed by some Q&A:

• In response to a question on support for third-party analytics on the iPhone, he says they are are angered by attempts of some companies to gather data on user devices and geo locations without their permission; he says it pisses him off, and they aren’t going to allow that. (In particular, he ranted about a company called Flurry Analytics that had detected the use of some unannounced devices on the Apple campus.)
• Jobs says he thinks there will eventually be a way to watch first-run movies at home – if you able to spend a bunch of money.
• On sharing content among various devices, he says they need to work harder on the fact that you can share with a wire, but not without a wire. “We need to do better…we’re working on it.”
• On the problem of dropped phone calls on the iPhone, he says you can bet we are doing everything we know how to do. Jobs says he is told that to make things better, people reallocate spectrum, take spectrum used for something else, and apply it to this problem; they increase the backhaul; and they put in more robust switches; he says things tend to get worse before they get better. “If you believe that, things should get a lot better soon,” he said, to much laughing.
• On selling digital content with copy protection: Jobs says movie content owners are grasping at whatever they can to prevent what happened to the music industry from happening to them; sometimes they grab the right straws, and sometimes they grabs the wrong straws. But we have simple choice. (Sell the content, or don’t, he means.)
• On vision for gaming on the new devices: Jobs says clearly iPhone plus iPod Touch have crated a new class of gamers, a subset of casual gaming, but it surprising how good some of the games are, approaching console gaming in sophistication and graphics. The typical console games are $30-$40 a game; for iPhone and iPod, they range from free to $3-$4. The market has exploded. Did not set out to compete with Sony or Nintendo, but now we are a significant part of the market. Now we have the iPad, a third product on the same platform. It is proving to be really exciting. We take gaming very seriously.
• On TV interfaces: Jobs says problem with TV innovation is go-to-market strategy. Peoeple get set-top boxes for free, which squashes innovation, since people aren’t willing to buy set-top� boxes. Ask Replay TV, ask Roku, ask TiVo, ask us. The only way that changes, he says, is to go back to square one, and redesign set-top box, and get it to consumer in way they are willing to pay for. And right now there is no way to do that. We decided what product do we want most – better TV or better phone – a tablet or a better TV – no way to get a better TV to market. The TV will lose until there is a viable go-to-market strategy. That is the fundamental problem. It is a fundamental go to market problem. It’s very “tower of babelish…balkinized.”

And that’s it.