Steve Jobs and Bill Gates Full Interview D5 2007

0:16 Bill Gates

Why don't you sit here?

0:23 Don Eklund

Well, thank you.

0:25 Jesse Kornbluth

Before we get started, I think, you know, there were some pioneers. Of course, we have the pioneers here on 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. So, Mitch Kapoor, who is a regular D, could you just stand up and... Wherever you are... There he is.

0:55 Jesse Kornbluth

And Fred Gibbons, who has not come to DV4, 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 did the last, to my knowledge, the last joint interview these guys did. It was not on a stage, but it was a Fortune magazine interview. Brent, I don't know if you're in the room, if you are.

1:24 Jesse Kornbluth

Can you stand? Maybe he's... Are we over there? So...

1:35 Don Eklund

So let's get started. I wanted to ask, there's been a lot of like mano-a-mano cat fight 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.

1:57 Bill Gates

Well, you know, Bill built the first software company in the industry. 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 for the industry.

2:25 Bill Gates

But the biggest thing was Bill was really focused on software before almost anybody else had a clue that it was really the software. 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 is really hard.

2:41 Bill Gates

And it requires your greatest persuasive abilities to hire the best people you can and keep them at your company and keep them working, you know, doing the best work of their lives, hopefully. And Bill's been able to stay with it for all these years.

3:01 Jesse Kornbluth

Bill, how about the contribution of Steve and Apple?

3:04 Steve Jobs

Well, first I want to clarify, I'm not fake Steve Jobs. What Steve's done is quite phenomenal. If you look back to 1977, that Apple II computer, the idea that it would be a mass market machine. 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 phenomena

3:35 Steve Jobs

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, OK, 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.

4:03 Steve Jobs

I don't even remember that Twiggy disk drive.

4:10 Don Eklund

The Twiggy disk drive.

4:14 Steve Jobs

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. 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.

4:39 Steve Jobs

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.

5:00 Bill Gates

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, you know, today. Well, not us. Well, you're sort of the...

5:24 Jesse Kornbluth

Not us. So, in a way, you're the stand-ins for all those other people. Yeah.

5:28 Bill Gates

In a way, we are. In a very tangible way.

5:31 Jesse Kornbluth

So, Bill mentioned the Apple II in 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 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.

6:01 Jesse Kornbluth

That shows you how ancient it was. And it said, thousands of people have discovered the Apple computer.

6:07 Steve Jobs

Thousands of people.

6:10 Jesse Kornbluth

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. You want a computer you can write your own programs on. And so the world, and obviously people still do. We had some very strange ads back then.

6:27 Bill Gates

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.

6:40 Jesse Kornbluth

How did that work for you?

6:42 Bill Gates

I don't think well.

6:45 Jesse Kornbluth

But just think back to, I know that you started Microsoft prior to 1977. I think Apple started the year before in 76, Microsoft in 74, 75.

6:56 Steve Jobs

Yeah, then we shipped the basic in 75. OK.

7:04 Jesse Kornbluth

Some people here, but I don't think most people know that there was actually some Microsoft software in that Apple II computer. Do you want to talk about what happened there, how that occurred?

7:14 Steve Jobs

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, 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.

7:43 Steve Jobs

Let me tell this story.

7:50 Bill Gates

My partner, 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 has 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.

8:09 Bill Gates

And so we're getting a lot of input that people want this basic to be floating point. And like we're begging laws, please, please make this floating point. Who's we? How many people are in Apple? Well, me. That's what Begin was to make this floating point. And he just never does it. And he wrote it by hand on paper. He didn't have an assembler or anything to write it with.

8:29 Bill Gates

It was all just written on paper, and he'd type it in. He just never got around to making a floating point. Well, this is one of the mysteries of life. I don't know. But he never did. And so 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.

8:48 Steve Jobs

It was $31,000. That Apple paid you for that. 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 that was fun. I think the most fun is later when we worked together.

9:08 Jesse Kornbluth

What was the most fun? Tell the story about the most fun that was later.

9:11 Don Eklund

And maybe later, not the most fun.

9:15 Jesse Kornbluth

Let him talk, then.

9:16 Don Eklund

I'm teasing. I'm teasing.

9:18 Steve Jobs

Well, 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 Harbors, a lot of incredible people. And we really had bet our future, because on the Macintosh being successful, and then hopefully graphics interface in general being successful.

9:45 Steve Jobs

But first and foremost, the thing that would popularize that being the Macintosh. And 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.

10:04 Don Eklund

So you worked in both places, in both?

10:09 Jesse Kornbluth

Well, we were in Seattle, and we 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.

10:20 Bill Gates

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. I mean, Lotus dominated the apps business on the PC back then. Right. We had done

10:36 Steve Jobs

just multi-plan, which was a hit on the Apple II. And then Mitch did an incredible job betting on the IBM PC, and 123 came in and rule that part of the business. So the question was, what was the next paradigm shift that would allow for an entry? WordPerfect, we had Word, but WordPerfect was by far the strongest in Word Processing, D-Base, and Database.

10:57 Jesse Kornbluth

And Word, that was kind of a DOS text?

11:00 Steve Jobs

All of these products I'm saying were DOS-based products. Because Windows wasn't in the picture at the time. That's more in the early 90s that we get to that. And so we made this bet that the paradigm shift would be graphics interface, 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.

11:29 Steve Jobs

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.

11:40 Bill Gates

It was in the 20s somewhere. I see. So we ship these computers now with, you know, a gigabyte, two gigabytes of memory. And nobody remembers. 128K.

11:54 Jesse Kornbluth

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, right? Is that right?

12:11 Bill Gates

Well, Apple did the Mac itself, but we got Bill and his team involved to write these applications. And we were doing a few apps ourselves. We did Mac Paint and Mac Draw and stuff like that. But Bill and his team did some great work.

12:25 Don Eklund

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 the disasters that occurred after Steve left?

12:37 Steve Jobs

Well, Apple's fate hung in the balance. We continued to do Macintosh software. And 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 Apple just wasn't differentiating itself well enough from the higher volume platform.

13:04 Jesse Kornbluth

And meaning Windows, right? Dawson Windows. OK, but especially Windows in the 90s began to take off.

13:13 Steve Jobs

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.

13:36 Jesse Kornbluth

But Apple wasn't able to leverage its...

13:42 Steve Jobs

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 Emilio. No, seriously. Don't be mean.

14:05 Don Eklund

Don't be mean to him.

14:06 Steve Jobs

I'm sorry? Just saying the word Gil Emilio. And 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 Emilio. You can just talk to me now. And I said, wow.

14:27 Bill Gates

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.

14:55 Jesse Kornbluth

And meanwhile, Through all this, I want to get back to the thing we saw in 1997 at Macworld there. 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 gooey stuff that the Mac had. Windows 95 really was an enormous, enormous leap.

15:19 Steve Jobs

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. It was not mainstream. And then in 95, the debate was over. It was kind of just a common sense thing.

15:38 Steve Jobs

And it was a combination of hardware and software maturity getting to a point that people could see it.

15:50 Jesse Kornbluth

So I don't want to go through every detail, the whole history of how you came back.

15:54 Bill Gates

Thank you.

15:56 Jesse Kornbluth

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?

16:12 Bill Gates

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.

16:30 Don Eklund

Why was that, from your perspective?

16:31 Bill Gates

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

16:47 Bill Gates

But the net result of it 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 it had forgotten who Apple was.

17:07 Bill Gates

And 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. And so it was just crazy what was happening at that time. And Apple was very weak. And so I called Bill up and we

17:27 Steve Jobs

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 a great business for us.

17:50 Bill Gates

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.

17:57 Don Eklund

And do you look at yourself 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 come forward. But how do you look at yourselves in this landscape today?

18:08 Jesse Kornbluth

Because, I mean, you are competitors in certain ways, which is the American way. We watch commercials. We watch the commercials. And you get annoyed at each other from time to time. You know what?

18:16 Don Eklund

I have to confess. I like PC Guy better. Yeah, he's great.

18:21 Bill Gates

I like 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.

18:37 Don Eklund

He's got a big heart.

18:42 Steve Jobs

His mother loves him.

18:43 Don Eklund

His mother loves him.

18:44 Steve Jobs

I'm telling you.

18:46 Don Eklund

I like PC Guy totally much better.

18:48 Bill Gates

Wow.

18:48 Don Eklund

I do. I don't know why. He's endearing. The other guy's a genius. PC Guy is

18:51 Bill Gates

what makes it all work, actually. All right. It's worth thinking about.

19:00 Don Eklund

How do you look at yourselves?

19:02 Jesse Kornbluth

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. 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 lots of, I mean, Sony in the game area.

19:33 Jesse Kornbluth

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

19:38 Steve Jobs

Well, they're on the radar screen as an opportunity. And in a few cases, like the Zoom, 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.

19:59 Jesse Kornbluth

I have to tell you, I was actually told by Jay 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 placed the biggest order for whatever the Mac Tower was at the time of anybody. And it was Microsoft.

20:27 Steve Jobs

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. 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 Roadmap didn't have.

20:48 Steve Jobs

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.

21:04 Bill Gates

And we never ran an ad on that.

21:07 Steve Jobs

I see. Admirable restraint. That's wonderful. There were hundreds of them. Steve is so known for his restraint.

21:19 Don Eklund

How do you look at Microsoft from an Apple perspective? I mean, you compete in computers.

21:23 Jesse Kornbluth

I mean, you could say you don't compete, you know, the era of destructive whatever you said in 1997. you think you're consciously aware of what they're doing with Windows. You've followed Vista closely, I think.

21:37 Bill Gates

What's really interesting is, and we talked about this earlier today, if you look at the reason that the iPod exists and that Apple's in that marketplace, it's because these really great Japanese consumer electronics companies who kind of own the portable music market for a long, long, invented it and owned it, couldn't do the appropriate software.

22:05 Bill Gates

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. 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.

22:29 Bill Gates

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 we look at what they do, and we think some of it's really great. We think a little bit of it's competitive, and most of it's not.

22:52 Bill Gates

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 problem.

23:08 Jesse Kornbluth

But you may be fundamentally a software company, but you've been known, at least to your customers and to most journalists, a company that kind of pays a lot of attention 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 the surface computing device we saw today is another example.

23:33 Jesse Kornbluth

These aren't markets that hold up in size to Windows or Office, but they're some of your more recent initiatives. Are the company's approaches to this

23:45 Bill Gates

Alan Kay had a great quote back in the 70s, I think. He said, people that love software want to do their own hardware.

23:57 Steve Jobs

Well, Bill loves software. No, 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. It really is one thing. And then take the phone market. We think we're on 140 different kinds of hardware.

24:24 Steve Jobs

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 all tiny volume robots using Microsoft software, and the creativity building toys, security things, medical things.

24:45 Steve Jobs

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's, it's great. For them, they do what works super well for them.

25:12 Steve Jobs

And there's a few markets like Xbox 360, Zune, and this year we have two new ones, the Surface thing and this round table, which is the meeting room thing, where we'll actually through subcontractors, but it's the P&L on the RISC and all that for the hardware. The design is completely a Microsoft thing.

25:30 Jesse Kornbluth

The round table, is that something you've announced?

25:33 Steve Jobs

We've shown prototypes of it. That's the thing where it's got the 360-D cameras and all those.

25:39 Jesse Kornbluth

It's like Cisco has something in that market and HP too, right?

25:43 Steve Jobs

HP has a very high-end thing that's a tiny bit like it, but anyway. All right.

25:50 Jesse Kornbluth

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?

26:09 Bill Gates

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.

26:23 Bill Gates

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.

26:54 Bill Gates

you can see a lot more examples of the hardware software coupling working well. And so I think this is one of the reasons we all come to work every day is because nobody knows the answer to some of these questions. And we'll find out over the coming years. Maybe both will work fine.

27:07 Steve Jobs

And maybe they won't. 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? Yeah, it has a lot of higher share. Well, it's not that much different than music players the other way around.

27:32 Jesse Kornbluth

Is there some moment you feel like I should have done this or Apple should have done that and we could have had?

27:38 Don Eklund

You stuck to this idea of these hardware-software integration, and it's working very well now.

27:43 Bill Gates

There's a lot of things that happened that I'm sure I could have done better when I was at 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, you know, we are where we are. So we tend to look forward.

28:00 Bill Gates

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. And because you can't look back and say, well, gosh, I wish I hadn't gotten fired. I wish I was there. I wish this. I wish that.

28:21 Bill Gates

It doesn't matter. And so let's go invent tomorrow rather than worrying about what happened yesterday.

28:27 Don Eklund

We're going to talk a little bit about 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 in everything. I mean, your companies are still critically key companies, but there are many, many companies that are becoming quite powerful.

28:46 Don Eklund

How do you look at the landscape at this moment and what's happening, especially in the internet space?

28:53 Bill Gates

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.

29:06 Bill Gates

And I think there's some really exciting companies getting built out there, some next generation of stuff that some of us play catch up with and 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?

29:20 Steve Jobs

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 startups, the existing companies who do research.

29:51 Steve Jobs

We'll look back at this as one of the great periods of invention. I think so too.

29:55 Bill Gates

There's a lot of things that are risky right now, which is always a good sign. 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 nobody's ever done it before.

30:06 Don Eklund

Do you have an example?

30:08 Bill Gates

I do, but I can't say. But I can say, when you feel like that, that's a great thing. That's what keeps you coming to work in the morning. And it tells you there's something exciting around the next corner.

30:20 Jesse Kornbluth

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 big operating system and all that.

30:45 Jesse Kornbluth

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.

31:06 Bill Gates

Huh? We're both dinosaurs.

31:07 Jesse Kornbluth

Dinosaurs, yeah, whatever. I can talk about that? No. Seriously, in five years, is the personal computer still going to be the linchpin of all this stuff?

31:21 Steve Jobs

Well, you can say that it'll be predicted that it won't be. The network computer took us over about 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. So that took us over. The mainstream is always under attack.

31:42 Steve Jobs

The thing that people don't realize is that you're going to have rich local functionality, at least our bet. where as 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.

32:02 Steve Jobs

And if 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, edit the document, create things, uh... and i think we're nowhere near where we can be on making that stronger

32:25 Bill Gates

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 had some, 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. We ended up writing a client app for those APIs.

32:53 Bill Gates

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.

33:14 Bill Gates

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.

33:27 Bill Gates

So people are figuring out how to do more in a browser, how to get 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.

33:41 Bill Gates

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.

34:01 Jesse Kornbluth

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 trying to

34:13 Bill Gates

say 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.

34:28 Don Eklund

You're talking about a software company being a software and services company rather than a...

34:32 Bill Gates

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

34:39 Steve Jobs

Yeah, architecturally, the question is, do you run just in the cloud, and all you have down 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 the 5-inch screen does not really compete with the 20-inch screen, does not compete with the big living room screen.

35:02 Steve Jobs

There'll 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.

35:22 Don Eklund

What does that device look like in five years? What would be your principal device? Is there one or two?

35:27 Jesse Kornbluth

Is it a, I think you use, I could be wrong, I think you carry a tablet. Right. Which has not necessarily stormed the world yet.

35:36 Steve Jobs

Yeah, this is like Windows 1992, I think. That is, I'm unrepentant on my belief.

35:46 Jesse Kornbluth

Okay. 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

35:54 Don Eklund

the web and email and all that kind of stuff?

35:56 Jesse Kornbluth

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 smartphone today.

36:05 Don Eklund

A phone companion. It sounded a little naughty, frankly.

36:08 Jesse Kornbluth

It doesn't matter if you weren't there. But what would you think? 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.

36:27 Don Eklund

You have one?

36:28 Jesse Kornbluth

I do.

36:29 Don Eklund

Right here?

36:30 Jesse Kornbluth

Yes. Well, he has when he took it out before. Really, he flashed his iPhone earlier today.

36:38 Don Eklund

Anyway, go ahead. So what is your device? What would you say the device should be carrying? What's your device

36:42 Jesse Kornbluth

in five years that you rely on the most?

36:45 Steve Jobs

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. 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.

37:03 Steve Jobs

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. 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.

37:27 Steve Jobs

But I think those are natural form factors. And it will 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.

37:40 Don Eklund

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

37:43 Steve Jobs

Well, at 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.

38:04 Steve Jobs

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.

38:14 Jesse Kornbluth

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.

38:20 Don Eklund

That's the perfect place for it, actually.

38:25 Jesse Kornbluth

So what's your five-year outlook at the devices you'll carry?

38:28 Bill Gates

You know, it's interesting. The PC has proved to be very resilient. Because as Bill said earlier, the death of the PC has been predicted every few years.

38:37 Jesse Kornbluth

Here, when you're saying PC, you mean personal computer in general, not just Windows PCs.

38:42 Bill Gates

I mean personal computer in general. And there was the age of productivity, if you will, the spreadsheets and word processors, and that's 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, right? And everybody needed more powerful computers to get on the internet. Browsers came along.

39:01 Bill Gates

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 that 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.

39:21 Bill Gates

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. You can sort of see that there's something starting again. It's not clear exactly what it is.

39:41 Bill Gates

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

39:56 Bill Gates

be with us and morph with us, whether it's a tablet or a notebook or 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, and others maybe not, but certainly in this one. But then there's an explosion that's starting to happen in these what you call post-PC devices, right? And you call the iPod one of them.

40:20 Bill Gates

There's a lot of things

40:21 Jesse Kornbluth

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.

40:27 Bill Gates

Why?

40:29 Jesse Kornbluth

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

40:33 Bill Gates

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.

40:54 Don Eklund

Give me an example of what that would be.

40:56 Bill Gates

Well, an iPod is a post-PC device. A phone is a post-PC device.

41:00 Jesse Kornbluth

Is the iPhone and are some of these other smartphones, and I know you believe that the iPhone is much better than these other smartphones at the moment, but are these things, aren't they really just computers in a different form factor? I mean, when you use the word phone, it sounds like...

41:16 Bill Gates

We're getting to the point where everything's a computer in a different form factor. So what? 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? How does the consumer approach it? And so who cares what's inside it anymore?

41:33 Jesse Kornbluth

So what are the core functions of the device formerly known as the cell phone, whatever we want to call it, the pocket device? What would you say the core functions? Five years out, what are the core functions of that pocket device?

41:46 Steve Jobs

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 make something that has the capability to do every one of those things.

42:09 Steve Jobs

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, then you might be able to have the device that did everything.

42:34 Jesse Kornbluth

You know, in the very first D conference, we had these guys from E Ink here. 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.

42:44 Steve Jobs

Do you? Yes, we can't. There's some advances in projection technology that are more likely deliver it, I think, than the flexible material guys. But it's not even on the horizon, no matter which of the two approaches. We have some Microsoft research people who work on that. There's a lot of investment, but it's at least in the five-year time frame.

43:06 Jesse Kornbluth

Five years from now, what's going to be on that pocket device?

43:11 Bill Gates

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.

43:36 Bill Gates

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.

43:48 Don Eklund

Outside of the computing area, what are the exciting areas in the internet space at all that you're looking at that you find that's interesting to each of your companies and in general for you? Any kind of social networking, any kind of wikis, those kind of things, things we've talked about in the past couple of them today, essentially.

44:14 Bill Gates

You know, we're working on some things that I can't talk about. Again. Again, yeah. Very beautiful. There used to be a saying, isn't it at Apple? It's going to

44:22 Jesse Kornbluth

blow us away, though, when you can't talk.

44:24 Bill Gates

Wow, it's great. There used to be a saying at Apple, isn't it funny a ship that leaks from the top?

44:30 Don Eklund

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

44:39 Bill Gates

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

44:56 Don Eklund

Surrounding entertainment?

45:01 Bill Gates

There's a lot of them surrounding entertainment, but there's a lot of them that have to do with just sort of figuring out 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 that this solves. They know they have a problem.

45:19 Bill Gates

You can show them something and 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.

45:25 Jesse Kornbluth

Do you, you obviously have a very large internet business with iTunes and And you sell a lot of stuff in the Apple store. But 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 that you haven't developed it very much.

45:47 Bill Gates

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

45:52 Jesse Kornbluth

And in your case, you obviously have huge things like Hotmail, for instance, and Windows Messenger, which are both widely used in I don't even know how many users.

46:04 Don Eklund

A gazillion.

46:05 Jesse Kornbluth

Huge numbers. But on the other hand, you haven't, as Steve Ballmer was talking about today, you have 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 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?

46:35 Jesse Kornbluth

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 the kind of 10 employees that you guys had in 1977?

46:48 Steve Jobs

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.

47:10 Steve Jobs

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. 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. The idea of empowerment goes back to the very beginning of our industry.

47:34 Steve Jobs

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.

48:01 Bill Gates

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. 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.

48:23 Bill Gates

And we don't know how to do maps on the back end. We know how to do a great, 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.

48:46 Bill Gates

And so in some cases, we have to do more work than others. 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 we selectively do that.

49:06 Bill Gates

I think it's really hard for one company to do everything.

49:10 Don Eklund

Let's talk about entertainment. You're both in the entertainment world. Entertainment is important to both your companies. For yours, music right now and as you get into Apple TV, Microsoft has been within the Hollywood area. 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.

49:31 Don Eklund

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.

49:40 Steve Jobs

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, watching things together, talking. about those things.

50:04 Steve Jobs

As you map that onto genres like educational shows or sports shows or watching the Olympics or the elections, that ability to navigate becomes very, very powerful. And we're not an entertainment company. 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.

50:33 Steve Jobs

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

50:56 Steve Jobs

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.

51:11 Jesse Kornbluth

Steve, today, 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? I mean, putting aside your Disney role, but your app...

51:31 Bill Gates

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 enjoy your content more often in more different ways.

51:55 Bill Gates

That's why you're in business. But the transitions are hard sometimes. And the music industry, it turned out that the internet got fast enough to download songs pretty easily. There was no legal alternatives. And maybe they made some bad choices in how they reacted to that.

52:10 Bill Gates

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 still, it's a tough job. And Hollywood, I think, has watched what's happened in music, learned some things to do, some things not to do. But they're still trying to map this out.

52:33 Bill Gates

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, that's going to be really good if you're a content owner.

52:51 Jesse Kornbluth

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.

53:18 Jesse Kornbluth

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

53:41 Jesse Kornbluth

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 cell phones and things out for a minute, but just the personal computer, Bill.

53:57 Steve Jobs

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.

54:13 Steve Jobs

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 definitely say that when you go to a bookstore, you'll be able to see the books lined up the way you might be interested in or lined up the way they are in the real store.

54:33 Steve Jobs

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, taking over what was the PBX, one of the last mainframes in the business environment. That'll be a big change that'll come to it.

54:59 Steve Jobs

And as we get natural input, that'll cause a change. And what about this multi-touch stuff?

55:04 Jesse Kornbluth

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. Is this, will this make its way into... Sort of that minority

55:33 Don Eklund

report, this kind of thing.

55:34 Jesse Kornbluth

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

55:48 Steve Jobs

for specialized devices?

55:49 Jesse Kornbluth

Well, but go beyond the laptop.

55:51 Steve Jobs

Vision, software is doing vision. And so imagine a game machine where you just can pick up the bat and swing it or the tennis racket and swing it. Yeah, we have one of those. No? No, that's not it. You can't pick up your tenno strap and swing it. 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.

56:16 Steve Jobs

And in a meeting, like you're on a video conference, you don't know who's speaking when 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.

56:39 Steve Jobs

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.

56:47 Jesse Kornbluth

But on the laptop, the way that, and you know, maybe I'm wrong. Maybe this is 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, 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.

57:11 Don Eklund

You talked about that radical change that happened for both your companies.

57:14 Jesse Kornbluth

You have the icons. You move around. And you talked about what a big gamble it was in 84 to do that and then follow on with Windows. We still essentially have that approach, and I'm just wondering, is that going to change?

57:28 Steve Jobs

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. 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 find these things. There's tagging.

57:49 Steve Jobs

That's more at the center of how you find these things. 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. But there has been good evolution.

58:16 Steve Jobs

But these natural interface things are the revolutionary change. And they'll be very revolutionary. That together with the 3D that I talked about.

58:25 Don Eklund

I know you're working on something. It's going to be beautiful. We'll see it soon.

58:27 Jesse Kornbluth

Yeah, you can't talk about it. Bill discusses all his secret plans. You don't discuss anything.

58:36 Bill Gates

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?

58:59 Bill Gates

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 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 in the experiences of the post-PC devices. And the question is, how much to do in the PCs?

59:24 Bill Gates

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.

59:48 Bill Gates

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.

1:00:04 Don Eklund

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 the Barbara Walters moment and ask you what tree you'd like to be, She would love to be Barbara

1:00:16 Jesse Kornbluth

Walters, let me just tell you.

1:00:18 Don Eklund

No, I would not. What's the greatest misunderstanding about your relationship? I mean, you're obviously going to go down in history books already set 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 catfight, this idea of which of the many?

1:00:44 Bill Gates

We've kept our marriage secret for over a decade now.

1:00:51 Don Eklund

Canada. That trip to Canada.

1:01:01 Steve Jobs

Was there... 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.

1:01:32 Steve Jobs

No, it's been fun to work together. I actually kind of miss some of the people aren't around anymore. People come and go in this industry. It's nice when somebody sticks around and have some context of all the things that have worked and not worked. The industry gets all crazy about some new thing. You know, there's always this paradigm of the company that's successful is going to go away and stuff like that.

1:01:57 Steve Jobs

It's nice to have people seeing the waves and waves of that and yet been willing when it counted to take the risk to bring in something new.

1:02:06 Jesse Kornbluth

Has it been important? One last question and then we'll go to the audience. He didn't answer us because he just said this. He only talked about his

1:02:14 Don Eklund

secret gay marriage. I thought that

1:02:16 Jesse Kornbluth

was your answer.

1:02:17 Bill Gates

No, that wasn't my answer. 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.

1:02:42 Bill Gates

And that's why I love being here. And...

1:02:50 Jesse Kornbluth

Happy to oblige. Happy to oblige.

1:02:52 Bill Gates

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.

1:03:09 Jesse Kornbluth

Well, you know what? I think we should end it there. Let's just end it there.

1:03:12 Don Eklund

I'm going to have a little tear right here.

1:03:16 Jesse Kornbluth

Thank you. Thank you very much.

1:03:17 Don Eklund

Thank you so much.

1:03:17 Jesse Kornbluth

Thank you.

1:04:06 Don Eklund

Okay, so some audience questions, please.

1:04:08 Jesse Kornbluth

Questions. Can we have the lights?

1:04:12 Walt Mossberg

Roger McKinney 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? It's weird.

1:04:36 Walt Mossberg

You don't actually hear any issues that people are talking about right now. I'm curious if you guys have any in mind.

1:04:43 Steve Jobs

Well, certainly education is one that I'd put at the top of the list.

1:04:50 Walt Mossberg

Are there technological solutions right now that they could do something about, or is that just sort of like the job? No, the technology

1:04:59 Steve Jobs

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. And there should be a lot of debate about the different ways of doing that.

1:05:27 Bill Gates

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 a long period of stability, and we've been able to focus on technology and

1:05:52 Bill Gates

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 dependence. And there's a lot of work going on, I know, a lot of investing going on, anyway.

1:06:07 Bill Gates

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.

1:06:15 Don Eklund

Are you guys investing in that area, personally?

1:06:20 Steve Jobs

Some.

1:06:22 Don Eklund

Which might be a lot. Exactly.

1:06:28 Steve Jobs

A billion here or there.

1:06:29 Jesse Kornbluth

Are you investing in that area?

1:06:34 Bill Gates

No.

1:06:34 Don Eklund

Just a Prius.

1:06:36 Bill Gates

Just appreciating it.

1:06:36 Steve Jobs

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

1:06:47 Steve Jobs

It was talked about a few times in the discussion the fact that now microprocessors are very low cost, memory is 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

1:07:08 Steve Jobs

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.

1:07:28 Steve Jobs

If there's still an opportunity to have some grand convergence devices that can really simplify people's lives and enrich their lives. Steve?

1:07:39 Bill Gates

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.

1:08:01 Steve Jobs

And I think the marketplace is awfully good at allowing diversity when it should and then getting rid of it when it shouldn't.

1:08:10 Bill Gates

And then letting it come back sometimes. Yeah.

1:08:14 Steve Jobs

Well, yeah. I mean in terms of standards and things. The internet standards have been incredibly powerful. Video formats, things like this. And so I don't see things that are going to really hold back a convergence device. 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.

1:08:44 Steve Jobs

But I think the industry's done very well at latching on to 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.

1:09:00 Kara Swisher

Jesse? Hi, I'm Jesse Kornbluth, headbutler.com. Because 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 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.

1:09:39 Kara Swisher

But 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 I wish I had the opportunity.

1:09:58 Don Eklund

OK, he's not going to answer that one.

1:10:04 Steve Jobs

Well, the most important work I got a chance to be involved in no matter what I do is the personal computer. That's what I grew up in my teens, my 20s, my 30s. 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

1:10:36 Steve Jobs

was able to develop through those experiences can be applied to the benefit 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 if you look inside my brain, it's filled with software and the magic of software and a belief in software.

1:11:04 Steve Jobs

And that's not going to change.

1:11:08 Bill Gates

So your question was about whether I wish I didn't have to go into Apple every day.

1:11:17 Kara Swisher

No, if you envy Bill a bit, this second act that he has.

1:11:22 Bill Gates

Oh, no, 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.

1:11:52 Bill Gates

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. 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.

1:12:16 Bill Gates

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. 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.

1:12:43 Bill Gates

And if we can do that, that's great.

1:12:49 Rob Killion

Thanks, Steve and Bill. Rob Kelly. I'm 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.

1:13:10 Steve Jobs

I think, actually, maybe in both cases, correct me if I'm wrong, the excitement wasn't really seeing the economic value. Even when we wrote down at Microsoft in 1975, a computer on every desk in every home, we didn't realize, oh, and we'll have to be a big company. Every time I thought, oh, God, can we double in size? Geez, can you manage that many people?

1:13:40 Steve Jobs

Will that feel fun still? And so every doubling was like, OK, 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 are fun to work with eventually with a pretty broad set of skills.

1:14:03 Steve Jobs

And figuring out how to get those people with those broad skills to work well together has been one of the greatest challenges. I've made more of my mistakes in that area maybe than anywhere, but eventually getting some of those teams to work very well together. So 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.

1:14:45 Roger McNamee

a rational person would give up. It's really hard. 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 gonna give up. And that's what happens to most people actually. If you really look at the ones that ended up being successful in the eyes of society and the ones that didn't, oftentimes it's

1:15:07 Roger McNamee

The ones that were successful loved what they did so they could persevere when it got really tough. And the ones that

1:15:14 Bill Gates

didn't love it quit, because they're sane.

1:15:17 Roger McNamee

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, you've got to have passion.

1:15:31 Bill Gates

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.

1:15:43 Bill Gates

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 see how you do, and refine your intuition, and be able to help build an organization that can eventually just build itself. Because you need great people around you. Liz.

1:16:04 Lise Buyer

Liz Beyer. Question, I guess it's historical curiosity. You approach 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?

1:16:21 Steve Jobs

Well, I'd give a lot to have Steve's taste. He has natural, not a joke at all. I think in terms of intuitive taste, both for people and products, 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. And that's just how my mind works.

1:16:46 Steve Jobs

And I'd see Steve make the decision based on a sense of people and product that is even hard for me to explain. The way he does things, it's just different. And I think it's magical. And in that case, wow.

1:17:07 Bill Gates

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 as where Bill and Microsoft were really good at it because they didn't make the whole thing in the early days.

1:17:32 Bill Gates

And they learned how to partner with people really well. And I think if Apple could have had that, 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, several, a few decades later.

1:17:50 Jesse Kornbluth

Last question. Oh, is there, I'm sorry, over here.

1:17:54 Charlie Brenner

Yeah, hi. Charlie Renner from Fidelity Investments. In our financial services industry, we are focusing very strongly on aging and retiring baby boomers, a huge demographic.

1:18:06 Bill Gates

We're not that old. No, I wasn't.

1:18:12 Charlie Brenner

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.

1:18:31 Bill Gates

Not true. I'll give you one example. So we started building in video cameras into almost all our computers a few years ago. 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.

1:18:53 Bill Gates

And they're video conferencing 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 seniors that are living independently that want to stay in touch with extended families and do other things like that.

1:19:09 Steve Jobs

Yeah, I think that 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.

1:19:33 Steve Jobs

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.

1:19:59 Bill Gates

I'll give you another example. a little shy of 200 retail stores now. And one of the things the 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.

1:20:19 Jesse Kornbluth

You only started a little while ago, right?

1:20:21 Bill Gates

Yeah. You started about a year ago. And we're up to a million training sessions a year run right 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. And they can basically come in as much as they want.

1:20:38 Bill Gates

And they can schedule these things throughout a year. And they pay $99, I think, a year for it. And it's been great.

1:20:48 Jesse Kornbluth

Now the last question over there.

1:20:50 Audience member

We all share a common science fiction experience of 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 platform 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

1:21:17 Audience member

that could be much better than the three-window iChat that we might see in the next five or ten years?

1:21:25 Steve Jobs

I don't think Steve's going to announce his transporter.

1:21:31 Roger McNamee

I want Star Trek. Just give me Star Trek.

1:21:36 Steve Jobs

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 world that both represents what's going on in the real world and represents whatever people are interested in. This movement in space as a way of interacting with the machine.

1:22:03 Steve Jobs

I think the deep investments that have been made at the research level will pay off with these things in the next 10 years.

1:22:13 Bill Gates

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 I can't even begin to think of what it's going to be like 10 years from now. Thank you so much.

1:22:32 Don Eklund

Thank you so much. Thank you so much.