Steve Jobs Meetings, Tablets, and iPhones

[Blue Velvet]

Will Apple's chief executive unveil a tablet Mac or an 'iPhone' at Macworld next week? Former sales boss David Sobotta describes the meeting which explained key thinking

Thursday January 4, 2007
The Guardian

Next week, Steve Jobs will stand on stage in San Francisco to make his keynote speech at the Macworld show, to unveil new - much-rumoured - products. Here's something I discovered in my 22 years at Apple: some of the toughest competition for the best seats, or the first of those new products, comes from former Windows-centric executives who Steve has personally sucked into his "reality distortion zone" in face-to-face executive briefings.

You want to go to one? You want to meet Steve Jobs to persuade him that Apple should build a tablet computer, or an iPhone? Then besides having a big purchasing budget and persuasive reasons, you'd better bring a big ego.

In the spring of 2002, I had been at Apple for nearly 20 years and had risen through the ranks to become its national federal sales manager. I joined a delegation from the prestigious National Institutes of Health, the pre-eminent US federal agency for medical research, for an "executive briefing" at Apple's Cupertino headquarters with Steve Jobs. Most people haven't heard of NIH; but its 2007 budget will be around $28.6bn (£14.6bn). NIH also happens to be one of Apple's premier scientific customers.

Nine key NIH people attended the meeting, including its two highest-ranking technology officers. Setting up an executive briefing at Apple is a bizarre process that takes a couple of months; if you also want Steve to grace the briefing, add another six weeks to run a formal request up the chain of command, including just about every detail but the DNA of the people who want to meet him.

With luck, and if Steve happens to be in town, you will get the commitment that unless something else turns up, he will drop by and stay as long as he feels necessary.

Horror stories

Once you have your ironclad guarantee that Steve might come by, the management chain starts telling horror stories about how the best thing is for Steve not to come. That if he does come, he'll talk about whatever he has immersed himself in recently, whether it is iTunes or Garageband. That whatever Steve has to say might or might not have anything to do with what the customer wants to hear. For a salesman, that's disconcerting; your customers normally only come to these executive briefings to understand where Apple executives stand on key issues. And they're customers, aren't they? They're the ones who pay for it all, the ones who are always right?

Yet it's an amazing experience to take part in a briefing with Steve. Stories about him reprimanding customers are true. Once, when renegotiating a Pixar distribution deal with Disney, he humiliated Disney's chief information officer in front of his staff. Steve pointed to a couple of recent Disney flops, and told the attendees that they could expect more of the same as long as the CIO was stupid enough to keep Macs out of the creative process.

An executive briefing always looks, on paper, like a clash of titanic egos. From what I saw, most wilt quickly in Steve's presence. And customers' reverence for him usually overwhelms any hostility.

In fact, it doesn't really matter who is presenting or what is being discussed. When Steve enters a room, everything stops and attention turns to him. When he walks in you get the feeling that he has sucked all the other thoughts out of the room. As for quoting him precisely - you don't take notes if you want to live. (At Apple's most recent sales briefing, nobody was allowed to have a notebook, phone or computer out while Steve spoke.)

I've checked these recollections with an NIH attendee. Steve did show up wearing shorts, sandals and a few days' stubble. Everyone else was in east coast business casual - sports coats and khaki pants. He also brought his brilliance but not, that day, the arrogance you often hear about.

The NIH delegation wanted to know whether Apple would build a tablet computer that would work in their clinical situation. Actually, more than that: they wanted to convince Steve to make a tablet. After all, Bill Gates had launched one the year before at CES in January, boldly saying "within five years, I predict that it will be the most popular form of PC sold in America". Tablets were the future - weren't they? Not like those music players that Apple had launched the previous October. Pod-somethings?

But as Apple's then vice-president of hardware, Jon Rubenstein, once told me: "Customers do not know what they want to buy. We have to tell them." Steve had not been forewarned about the tablet question, but it became obvious he had given the topic serious consideration. He listed a number of reasons why Apple was not interested. And they provide some of the best insights into why Apple does or does not do a product.

The tablet situation

First, he said, tablet computers were not a big enough market for Apple to spend its limited resources chasing. And even if the market grew, it would not reach a size to be of interest. The form factor was all wrong. Apple was more interested in defining markets than trying to catch other companies that were busy trying to create a market for questionable products. Still, some of the NIH scientists pressed the issue. Steve's follow-up answer was the most impressive I had heard him give.

First, he said, the wireless bandwidth for huge images, plus the security needed to successfully do what NIH wanted, was just not on the horizon. (Apple staff had been notably fuzzy earlier in the briefing about wireless standards after 802.11b.) Plus, tablets' screen resolution was nowhere near that required for NIH's high-quality medical images. Finally, any product designed to work in the medical field would attract significant liability. The hint was that Apple wasn't interested in anything with that kind of potential liability. That pretty well shut down the issue.

So, no tablet. But NIH at the time had more than 2,000 BlackBerry users. The NIH CIO wanted Apple to push RIM for better compatibility. Tough: Steve basically said it was another niche product, and that while there would be convergence of computing and phones, the BlackBerry was not that product. He did not see that compatibility as an area where Apple should spend any effort. So what will the converged product - what is being called the "iPhone" (even though that's a Cisco trademark) - look like? He said the really converged, ubiquitous devices would have to fit in your shirt pocket, and be better than either a phone or a computer by itself.

That was 2002. But let's examine the rumours that Apple will next week unveil a tablet computer or iPhone in light of Steve's comments that day.

The market for a converged computer and phone should be very attractive: Gartner forecast last year that 986m mobiles would be sold in 2006. And there's an "Apple gap": mobile phone users often find their interfaces confusing, even within the same brands. Apple's unique ability to simplify while innovating looks like a good fit there. Plus Apple's deal with Samsung means it is well placed for anything that needs lots of flash memory. It has played around with unique relationships with phone manufacturers: Jobs used a Sony Ericsson phone to demonstrate Bluetooth capability in July 2002, and showed off the Motorola ROKR, the first to play iTunes, in 2005. This fits Apple's pattern of learning what it needs to know through partnership before jumping into a market. Significantly, the first Powerbooks, in 1991, involved Sony. Now the companies' laptops compete, although Sony still makes the batteries. Logically, Apple will make its own phone if it is holding true to pattern.

But a tablet computer? Most analysts would agree the market is growing only slowly, mostly in the healthcare and other specialised industries, and that these models will make at most 5% of the laptop market by 2009 (they account for 1% now). Even Dell doesn't make its own tablet. Furthermore, the tablet was championed by Bill Gates. I don't see Steve stepping up to the plate to help Bill's reputation as a forecaster of computer trends.

I believe there are other reasons why Apple won't make a tablet computer. Even before the iPod gained momentum, Apple executives had a theory that the route to success will not be through selling thousands of relatively expensive things, but millions of very inexpensive things like iPods; and not necessarily computers. Tablet computers remain expensive. Yet the mobile phone market is almost perfect for Apple strategy. There is no real market leader, and it's ripe for simplification. Plus it's worldwide, and engineers from the network operators would be available to do localisation.

Apple might even be able to do a Java-based phone platform which could integrate into current systems. With a focus on simple mail and contact integration with its online .Mac (mac.com) service, Apple could provide advantages for early adopters while making its .Mac service better value (because it isn't right now). Few non-technical people consider doing anything other than transferring numbers to their new mobiles by typing. On anything other than a Mac, the process is just too complex. Apple already knows how to make this easy. It just needs to convince people to buy an Apple phone and a Mac.

Also anti-tablet is Apple's sales force, which often spends so much of its time forecasting what it's going to sell in a given quarter there's precious little time left to actually sell anything. Right now they sell everything from iPods to Xserve RAIDs. However, an Apple phone wouldn't need a new sales force. The network operators' sales force could handle it - probably cutting Apple sales people out of any new commission revenue for phones, much as they have done for the iPod.

Even if Apple partners only with a single national carrier it will get an immediate, huge retail presence.

What about a more targeted tablet - perhaps to control all the devices in your home entertainment stable? Traditionally, Apple stays away from markets where it cannot define all of the standards, so I really don't think Steve will devote resources to make non-Apple stuff work together. Even the vertical markets like healthcare suffer from this problem: too many pieces in a very complex puzzle.

So next week, I'm sure we won't see any kind of tablet computer from Apple. I am 99% confident we will see an Apple phone, with enhanced music capabilities and maybe a few computing features such as email and contacts synchronisation with Macs or through .Mac.

Steve's ability to know where consumers and technology will intersect often creates a road paved in gold. That's why he'll focus his energy on mobiles. The potential there that only Steve can see could well turn into another must-have product for the legions who don't even know they are part of Steve's army. They haven't met him across a table. But they've met the products of his thinking.

· David Sobotta was formerly the federal sales manager at Apple. His blog is at viewfromthemountain.typepad.com/applepeels/

http://technology.guardian.co.uk/wee...981815,00.html

[Cybix]

not a bad read

[kalisphoenix]

That Jobs! What chutzpah. Damn good read.

[adrianblaine]

Very interesting. I agree with him on the whole tablet thing. Most people think they want one, but then it ends up being more of a novelty. I used to want one, and then my dad was given one for his work to try out and I got to use it quite a bit and it wasn't much fun to use at all. Granted it was running Windows, but I don't know how Apple could make it more useful (knock on wood). I'd take a PDA over a Tablet any day. I hope Apple takes their time making a tablet. I want it to be right the first time.

[wako]

I joined a delegation from the prestigious National Institutes of Health

LOL! Prestigious and NIH just doesnt mix in my books... but thats maybe because I live in Bethesda, MD have been there...

[Sdashiki]

People are STILL wanting a friggen tablet? Are you serious?

Its a niche market, thats all I can see it as, ever being.

People dont comfortably hold clipboards, especially ones that weigh 2-5lbs.

[shecky]

i am holding off on a Blackberry Pearl just in case apple comes out with something nearly as good (tho probably in a different way) tuesday.

When Steve enters a room, everything stops and attention turns to him. When he walks in you get the feeling that he has sucked all the other thoughts out of the room.

i have had the good fortune to meet with a number of "celebrity" designers who, in the design world at least, are equal to steve jobs' level of wow-ness and this statement is shockingly accurate - its like they are a little black hole and everything is sucked into them when they walk into the room. its really pretty entertaining to see people just mentally drop to their knees with people like this.

[psychofreak]

Originally Posted by Sdashiki

People are STILL wanting a friggen tablet? Are you serious?

Its a niche market, thats all I can see it as, ever being.

People dont comfortably hold clipboards, especially ones that weigh 2-5lbs.

Tablets suck. MP3 players sucked, and were a niche market.

Sucky MP3 players -> iPod
Sucky tablets -> iTouch

If loads of people have something, people say its a saturated market. If not many people have something, its niche. What market type should apple enter?

[MacBoobsPro]

Good read.

I like.

[Eraserhead]

Originally Posted by psychofreak

Sucky tablets -> iTouch

What market type should apple enter?

The real question is if tablets didn't suck, would people buy them? That's the difference I guess.

[Warbrain]

Tablets will always remain a niche computer that no one ever really wants. Yea, it's neat to be able to take with with you and such, but when you realize that they are usually crippled compared to a portable that could be much, much thinner and lighter, then what's the point?

I, like a poster above, am holding off on deciding what smartphone I want until I see what Apple releases next week. Granted, if the "iPhone" doesn't have Wi-Fi built in, I won't be getting it as the Windows Mobile Treo that Cingular is going to start selling does.

[PlaceofDis]

i hope more for an Apple super compact lappy than for a tablet. who knows. and they could do it well too. that was a good read and very interesting. thanks for posting it BV.

[Warbrain]

Originally Posted by PlaceofDis

i hope more for an Apple super compact lappy than for a tablet. who knows. and they could do it well too. that was a good read and very interesting. thanks for posting it BV.

Except that Apple will probably not make a smaller portable than what they have. 13.3 inches is already pretty small and what you lose in display size by making a 12" portable you gain back in thickness...

[RichP]

Apple is already a niche company, making niche products (the iPod now excluded from that). The resources needed to develop a better MP3 player are much different than a tablet computer, which, to be "better" enough to compete, would require a lot of R&D.

I think tablets are cool in concept. However, what do they really offer that a laptop does not? Do people REALLY want to write notes? Hell, I cant read my own handwriting half the time. How can a computer? I realize there are all sorts of other types of notes that are easier to document by drawing (diagrams, etc) but perhaps a tablet is not the solution to this need.

The phone is where its at for the next step in Apples domination strategy; the article states what we already know. They are ready for Apple simplification and emotional "excitement"

[PlaceofDis]

Originally Posted by Warbrain

Except that Apple will probably not make a smaller portable than what they have. 13.3 inches is already pretty small and what you lose in display size by making a 12" portable you gain back in thickness...

depends. if they were willing to go without the optical drive and make it an external attachment, and even a 11" widescreen would be good enough for me. for what i would like it for. i know there are some nice Sony Vios this size and they feel alright, sell for a high price, but they don't run OS X so i'll never get one. but it sure is possible.

[Warbrain]

Originally Posted by PlaceofDis

depends. if they were willing to go without the optical drive and make it an external attachment, and even a 11" widescreen would be good enough for me. for what i would like it for. i know there are some nice Sony Vios this size and they feel alright, sell for a high price, but they don't run OS X so i'll never get one. but it sure is possible.

Apple will never make a portable with an optical drive that is an external attachment. It limits the usage of the machine and Jobs has had, especially in recent history, the idea that you must be able to use the computer directly out of the box and not have to have extra components like an optical drive to plug in. The computer is meant to be capable of everything that you need it to do for basic tasks and by making the optical drive an extra thing to carry around and plug in will go against Apple's design and will ultimately make it not happen.

[clevin]

I always feel its a bad idea to enter a crowded mobile phone market. lets wait and see if market will embrace or ditch apple's mobile phone, after all, buyers now want more functions in their phones, not just great design.

[mac-er]

Originally Posted by shecky

i am holding off on a Blackberry Pearl just in case apple comes out with something nearly as good (tho probably in a different way) tuesday.

I'm sorry, you can no longer have a Blackberry. Steve has declared them to be a niche product with no future of convergence.

[MacRumors]

This Guardian.co.uk article describes Steve Jobs presence at executive meetings and recounts his comments during a meeting with the National Institutes of Health CIO in 2002.

At the time, the iPod was just a year old, and the Microsoft had recently launched a tablet form factor PC. Jobs reportedly had a number of reasons that tablets were not a product he was interested in producing. These included

- small market
- bad form factor
- high wireless bandwidth not available
- poor screen resolution for medical images

In September 2002, he made a similar public statements expressing doubts about the Tablet form factor

We're not sure the tablet PC will be successful. It's turned into a notebook that you can write on. Do you want to handwrite all your e-mail? We have all the technology ourselves to do that - we just don't know whether it will be successful

When questioned about the iPhone in the same NIH meeting, he described the convergence of computing and phones and said that product would "have to fit in your shirt pocket, and be better than either a phone or a computer by itself."

[scdreger]

Let's hope it really is better than a computer or phone by itself

[Stella]

Well, Steve got the Tablet right - its still niche market today.

Blackberry - well, they are more popular today than in 2002 - but its not the blackberry itself, its the *messaging*. Any smartphone ( Symbian etc ) can do anything that the BB can do - its nothing special. Any iPhone should have excellent messaging abilities - but that messaging ( text, graphics, video ) will have to be compatible with existing phones - otherwise there's not much point ( a lot of phones now have BB compatibility such as SE Pxxx range and Nokia's E-Series ). That messaging already exists - SMS, MMS ( MMS - which has still yet to become popular ) so its all about the applications and phone interface. Sleek design with sleek applications.

Good integration with Macs - Syncing and good range of built in apps. Of course, Music too. Most importantly, ease of use.

Any iPhone should have a good SDK to encourage third party developers. You get a good development base, your on to a winner.

[virus1]

lets not forget what he said about video ipods.

"they're digging in the wrong place!"

[cr2sh]

The author has a blog called apple peels (linked at the bottom of the article) that is quite good also... his opinion is informed but a bit dated it seems.

He seems to have lived a pretty interesting life.

[ero87]

Originally Posted by psychofreak

Tablets suck. MP3 players sucked, and were a niche market.

Sucky MP3 players -> iPod
Sucky tablets -> iTouch

If loads of people have something, people say its a saturated market. If not many people have something, its niche. What market type should apple enter?

smartest post i've seen in a long, long time....

people were writing really funny stuff on this forum when the iPod was released, about what a terrible idea it was. "What a niche market!"

[UnreaL]

I got the impression Steve Jobs was God while reading this... Well it certainly reads that way.

The only flaw I see in the launch of a compact MP3/Phone 'iPhone' to Apple is that it will crush the iPod market. Nothing really combines the features of a MP3 player with a phone seamlessly. It will do just what the camera phone did to the digital camera market and subsequently the video market (videos are a booming sucess just not as a method of communication).

People love intergration.