Steve Jobs at D

Steve Jobs and Walt Mossberg are onstage at the D conference. They're talking Mac marketshare, Apple's commitment to the Mac, whether new iPods are in the works, etc., etc.

Jobs is brandishing the phone he happens to have with him--an iPhone. Apple's hoping to sell a lot of them "through our stores and Cingular, which is now the new AT&T," he says. "Cingular has been really great to us." Apple's deal with Cingular didn't involve the latter company actually sending the phone. "If you talk to great venture capitalists, they're really investing in people, not ideas...and Cingular took a gamble on us."

He's saying Cingular took the risk because music on phones hasn't been too successful to date, and the company wanted to do more. And because the phone companies have built expensive 3G networks, but people aren't doing much with them because the experience is so poor. "What people want is the real Internet on their phone...and they believed we could deliver that."

Mossberg is saying that Apple's sales goals for the iPhone--1 percent of the phone market--aren't huge.

"We're newcomers--people have forgotten more than we know about this," Jobs replies.

Any new iPod features, asks Walt? "Nope, sorry." But they do discuss the new DRM-free songs on iTunes. Jobs says that people will be able to upgrade songs they've already bought for 30 cents a song or 30 percent of the album price.

Any news about other labels doing DRM-free? "We're working on it," says Jobs, who points out that 90 percent of music is DRM free--since it's sold on CD. "Hopefully, over the course of the next year we'll be able to convice most or all of the labels."

Mossberg says that the world looked at Apple's DRM as "lock in" for iPod users, since the songs can't be played on non-Apple devices. He brings up Jobs's open letter to the music industry. Jobs points out that Apple sells only 25 songs for every iPod, so it's clear that most of the music on most of the world's iPods doesn't come from Apple. "They rip their CDs and get music in...other ways."

If Apple has the best music store, it says, it'll sell more music.

More on the iPhone: Jobs says it's the best iPod ever, a really great phone, and the Internet in your pocket. If it was any of the three it'd do well, but it's all three, and they play off each other.

Mossberg asks if real debate goes on at Apple. Jobs says he gets to decide maybe once a year, but there's tons of discussion.

Was there debate over the iPhone not having a keyboard? "None."

"Really?" asks Mossberg. "Once you've used this magical display, there's no going back--it's unbelievable," says Jobs. It takes getting used to, but he bets Mossberg dinner that he'll think it's great. Walt sounds doubtful.

"Once you learn how to trust it, you fly," says Jobs. And Apple can use that physical space for other things when you don't need a keyboard.

How much of a lead does Apple have until there are lots of iPhone-like devices? Jobs says that Apple's skill at software "in the device and in the cloud" is what made the iPod successful. "If you look at handsets, it looks very similar." Phone companies "have handset design down, but they haven't been able to make the leap to software."

"If you look at an iPhone, it's software wrapped in really wonderful hardware." It's five years ahead of anything else, etc., etc.

Mossberg says that the iPhone doesn't have the entire OS X and Safari. Jobs begs to disagree. It doesn't have every desktop pattern, etc. that you'd get on a Mac. But OS X and Safari and e-mail are "real," even though the UI is different to fit the small multi-touch screen.

Could an OS X app run on an iPhone? "We don't think that's a good idea," says Jobs, pointing out that the phone doesn't have a mouse or drop-down menus.

The talk turn to Apple TV, which Jobs had called Apple's "hobby." Why is it just a hobby, Mossberg asks? Jobs expresses skepticism that vast numbers of people want to stream their own stuff to the TV. He says that might be "peas on the side," while the main course is entertainment streamed directly to the Apple TV.

They walk over to a demo stand. Jobs asks how many people in the audience have seen Apple TV, and not all that many hands go up. He shows how Apple streams movie trailers directly to Apple TV. Here's the trailer for Pixar's Ratatouille.

Mossberg asks if the demo involves an ultra-fast connection; Jobs says it works fine with a cable modem. He shows part of The Sixth Sense as purchased off the iTunes Store. Mossberg asks about high-def; Jobs says they don't offer it now, but that might change.

Apple is on its way to selling 100,000,000 TV show downloads, Jobs says. Here's a bit of The Office. It gets laughs and a little applause. "You get the idea." You can store downloads on your computer or on Apple TV's own hard drive.

He's showing it streaming a photo slideshow with music.

"This is all peas," comments Mossberg.

Here's a relatively minor bit of news Apple announced today: It's offering YouTube as a free Apple TV upgrade, due in June. He browses around lists of YouTube videos. "You might have seen some of these, but they're pretty amazing." We see a magic act involving costume quick changes. It goes on for quite awhile. "I know this is fascinating," comments Walt.

Another video. A dancing kid. Here's another kid doing an amazingly rubbery dance. Yup, this is YouTube. "You get the idea" says Jobs.

Walt asks if Steve ever thought he'd associate Apple with videos of this sort. "Since we got this working, we've watched a ton of this stuff," says Steve.

"Does that mean Leopard is slipping again?" asks Walt.

A couple more videos, including "the human slingshot." Groans, laughter, and applause. "Only at D--YouTube on a 100-inch screen!" exults Mossberg.

But will YouTube look good on big screens at home, asks Walt? Jobs says that "you get what you get," but YouTube uploaders are doing better work lately.

"It's one more piece of the puzzle, but it's amazing how fun it is to watch this stuff in your living room."

Mossberg asks about why you can't go anywhere on the Net with Apple TV. "That's a good idea," says Jobs. But "a normal Web browser is not necessarily what people want in their living room."

"I use the word 'hobby' just because it's a little provocative, but the iPod started out this way," says Jobs. Mossberg calls Apple TV a set-top box and Jobs gets a little defensive, saying it's tough to figure out how to build and market cable-type set-top boxes. "We want to be a DVD player for this new Internet age, and that's what we can be."

Mossberg starts to ask how many people are using iTunes who don't have an iPod. Lots and lots, says Jobs. There might be 300,000,000 copies of iTunes out there. "Or more." Mossberg notes that this would make Apple one of the largest Windows software developers, since most of the copies run on Windows PCs.

"The scale of a lot of things we're doing surprises me," says Jobs. "I never thought we'd sell 100,000,000 iPods." Mossberg points out that the big number is really Apple's 80 percent market share.

Walt asks about video on handhelds. "I was more skeptical than customers--with the iPod video, they proved us wrong," says Jobs. "I think video is here to stay on portable devices, and use will only grow."

Mossberg talks about video on cell phones, and the fact that you can't buy content directly from the iPhone. A bunch of companies are trying to make it into a big deal. Jobs says it's failed so far because it's hard to buy video on a phone, it's expensive, and you don't want your only copy of a video you've paid for on a phone anyhow.

Any plans to allow media purchases directly on the iPhone? "We certainly have no plans to announce anything today."

Audience questions: Someone asks about Jobs' philosophy about hiring. Jobs says recruiting is important.

Blake Krikorian, CEO of Sling Media, asks about the fact that the iPhone isn't a 3G phone. Jobs says that it has Wi-Fi and uses it when possible, and that works great--and that EDGE is surprisingly good.

A reporter asks about Apple's advertising, from "1984" to the current Mac and PC spots. Why doesn't Apple advertise the Mac more on the Internet, which is rife with Windows users? Jobs says that it does--"but not on those porn sites you [like]."

Another question from a developer: The iPhone is beautiful software, so why does it appear to be closed? Will it open up to third parties? Jobs talks about the tradeoff between security and openness. "We want both." And sometime later this year, Apple will figure out how to let third parties write secure apps, he says. "We've all used a lot of smartphones that crash more than once a day or more," he says. "We'd like to solve this problem...if you can just be a little more patient with us."

Another audience member says he and his kids love the video iPod. He says he works with Asian device manufacturers to improve battery life so video is more feasible. What does Jobs think? "It's all about power, it's all about battery life," says Steve. Apple has dealt with that issue for years with Macs and iPods, and brought everything they know to the phone.

Another question refers to Steve's health problems of the past. "I'm still vertical! I'm feeling great," he responds, clearly not wanting to talk further.

The next question involves the fact that the DRM-free music from iTunes is in AAC format, which isn't nearly as widely supported as MP3. Why not MP3? Applause from the audience.

Jobs says that MP3s play fine on the iPod, and that AAC is a much better codec with much better audio quality. And anyone can license it, and most of the big players do. "They want to be able to play that stuff, and they do. Anyone can license it." And not from Apple, which doesn't control the standard.

Another question from an exec with "a capture company." Apple has stayed out of capture, but the iPhone has a camera. Will it get into capture products? Jobs says that most Macs have cameras built-in already. "We're not planning on getting into the camcorder business, though."

Last questions from someone who's idolized Jobs since the age of twelve. He asks about blogger Fake Steve Jobs; Steve says he's "pretty funny," but doesn't know who he is. What really changes the world, asks the questioner? Surely not movie trailer downloads.

"I love storytelling," says Jobs, mentioning his long career at Pixar. And at Apple, they build tools and do things like help educators create and distribute courseware. MIT and Stanford and Berkeley are putting classes on iTunes. "That's why I love what we do. We make these tools and they're constantly surprising us in new ways."

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