Apple Special Event 1998 (Full Keynote) | AppleArchivesPro

1998-01-0626:57English

Archive source note: The original catalog dates this recording January 6, 1998. The recording discusses the quarter ending in March and introduces the first iMac, so its catalog date needs review. The original file and identifier are preserved.

Transcript

Machine transcript in the original language. It may contain errors. Select a timestamp to play that moment.

It's been 10 months since a new management team took over at Apple.
People have been working really hard.
You can see a lot of cars in the parking lots and nights and the weekends.
And because of their hard work, I'm really pleased to report to you today that Apple's back on track.
And...
And because of this, the foundation this gives us,
we're going to announce some great new products today.
And we're even going to roll out the whole product strategy today.
Before we do that, I just want to spend a few minutes
and take you through some examples of how Apple is back on track.
The most important thing, of course, is people.
Apple's got now a very wise board of directors.
Apple's got a very strong senior management team.
I would hold the senior management team at Apple up against any other in the industry.
But most important, Apple's got some very talented employees.
Just incredibly talented people.
And when you have great people, the most important thing is to not lose them.
When I came back to Apple last summer, Apple was losing a lot of them.
The attrition rate annualized was 33%, which meant that if Apple kept losing people at that rate,
in a year, a third of them would be gone.
And I'm very pleased to say that 10 months later, the attrition rate is 15%.
And that that is under the Silicon Valley average today.
And that's a very good sign.
And part of that is because people now see how Apple can win again.
Another part of that is because we've made Apple a much more entrepreneurial place.
All of the key employees have lots of stock options.
Another key thing that we've done is distribution.
We've made a lot of changes in the way Apple distributes its products,
a lot of tune-ups across the distribution system.
And, of course, one of the bigger ones was at the national level partnering with CompUSA.
They're the biggest, and they decided to reinvest in Apple, and it's worked out great.
As you know, they put an Apple store within a store in each of their approximately 170 stores throughout the U.S.
When we started this program, Apple represented 3% of the CPU revenues sold by CompUSA.
Six months later, Apple represents 15% of the revenues of CPUs sold at CompUSA.
Another area that we can gauge to see Apple's health is the Internet.
Apple.com.
How many people are interested in Apple?
Now, we've got over 20 million active customers.
They might be interested in coming to our website.
We have tons of prospective customers who might be interested.
A lot of suppliers, a lot of software developers, a lot of competitors.
And so this taken together can give us a general thermometer of what is the interest level of people about Apple.
And we've invested a lot into the website and a lot into the award-winning Apple Store,
which is the gold standard of e-commerce now on the web.
And a year ago, we had a million hits per day.
Now, the average visitor clicks about 5 to 10 times, so that's 100 to 200,000 visitors per day.
Today, 9, 10 months later, we have 10 million hits a day on the website.
That's 1 to 2 million visitors a day coming to the Apple website.
And they're coming because they're interested in Apple.
Growth. The quarter that ended December, IDC reported that Apple had a 3.4% market share.
The quarter that ended in March, we actually grew our market share 15% to 4%. Now, we're
not thrilled with 4% market share, but if we can grow our market share 15% every quarter,
we will see it going in the right direction, which it is now. And I think we expect it
to rise quite a bit more based on some of the things you're going to see here today.
But it is now going in the right direction again.
And finance.
We have some pretty ambitious plans.
We want to develop a lot of great products.
We want to market them.
It takes money.
And our customers need to know that Apple is going to be here 10 years from now.
Well, we were able to turn the company around to profitability.
The first quarter, the management team was in place.
and the quarter ending December, Apple turned a profit of $47 million.
The last quarter, we turned a profit of $55 million.
So the company has made over $100 million in the last six months
in a very turbulent time in the industry
when other companies are breaking even or even losing money.
And I think that's a great accomplishment for the company.
In addition to that, the company is growing cash.
We increased the cash.
cash to $1.6 billion by adding $100 million in the quarter that ended December. And for the last
quarter that ended the end of March, $200 million more was put in the bank. This is really important.
And lastly, last July, if you took the number of shares outstanding and you multiplied it by the
stock price, the company was worth $1.8 billion. We've added $2 billion to the worth of the company
since then and I think it's just getting going so these are some indications about how Apple is back
on so we went back to business school 101 and we said what do our products what do our customers
want in our products what kind of products they want and they wanted two fundamental kinds of
products they wanted consumer products and they wanted pro products our design and publishing
customers primarily wanted the pro products.
Our education customers primarily wanted the consumer products.
But they also wanted two different kinds of each one,
desktop and portable.
And we looked at this and we said, now, this looks pretty simple.
But we couldn't find a way to come up with anything else
that captured what they wanted as succinctly and as clearly as this.
We said, finally, this is it.
We've got to make four great products.
And we can meet the needs of what our customers are telling us
want and we've spent the last 10 months working crazy to try to do just that so
the first one was the desktop pro product right the core of our publishing market
and of course we introduced that product in November based on the g3 chip it's a
power Macintosh g3 and we've had exceptional success with this product
we've sold over 500,000 of these in the first six months of the products life
making it the most successful new Mac in Apple's history.
The team did a superb job on this product.
It's based, of course, on the PowerPC G3 chip, which is a screamer.
Now, its competitor, of course, is the Pentium II.
And what is remarkable, what's hard to fathom but true here,
is that for a given clock rate, a PowerPC chip is twice as fast as a Pentium II chip.
In other words, a 266 megahertz G3 is twice as fast as a 266 Pentium II.
Or a 266 G3 is equal to about a 500 megahertz Pentium II.
Of course, you can't even make one of those, but if you could, that's what it would be equal to.
A 300 megahertz G3 chip is equal to a 600 megahertz Pentium II.
Now, how do we know this?
We know this not only by using the systems,
but we got the best independent benchmark there is,
which is Byte Magazine's Byte Marks.
And these are sort of one of the gold standards in the industry of performance.
And they publish the results.
And here's the results.
The blue bars are the 266 and 300 megahertz Pentium 2s,
and the bars on fire are the G3s.
And they just toast them.
And as a matter of fact, Intel, we've been running some ads, as you know,
Intel went back to Byte Magazine and said, this can't be true.
And Byte Magazine examined all of their tests, and they stood by their results and republished them.
Now, Intel has since come out with a 400 megahertz Pentium II.
How does that stack up? Not much better.
Not much better.

Transcript

Machine transcript in the original language. It may contain errors. Select a timestamp to play that moment.

It's been 10 months since a new management team took over at Apple.

People have been working really hard.

You can see a lot of cars in the parking lots and nights and the weekends.

And because of their hard work, I'm really pleased to report to you today that Apple's back on track.

And...

And because of this, the foundation this gives us,

we're going to announce some great new products today.

And we're even going to roll out the whole product strategy today.

Before we do that, I just want to spend a few minutes

and take you through some examples of how Apple is back on track.

The most important thing, of course, is people.

Apple's got now a very wise board of directors.

Apple's got a very strong senior management team.

I would hold the senior management team at Apple up against any other in the industry.

But most important, Apple's got some very talented employees.

Just incredibly talented people.

And when you have great people, the most important thing is to not lose them.

When I came back to Apple last summer, Apple was losing a lot of them.

The attrition rate annualized was 33%, which meant that if Apple kept losing people at that rate,

in a year, a third of them would be gone.

And I'm very pleased to say that 10 months later, the attrition rate is 15%.

And that that is under the Silicon Valley average today.

And that's a very good sign.

And part of that is because people now see how Apple can win again.

Another part of that is because we've made Apple a much more entrepreneurial place.

All of the key employees have lots of stock options.

Another key thing that we've done is distribution.

We've made a lot of changes in the way Apple distributes its products,

a lot of tune-ups across the distribution system.

And, of course, one of the bigger ones was at the national level partnering with CompUSA.

They're the biggest, and they decided to reinvest in Apple, and it's worked out great.

As you know, they put an Apple store within a store in each of their approximately 170 stores throughout the U.S.

When we started this program, Apple represented 3% of the CPU revenues sold by CompUSA.

Six months later, Apple represents 15% of the revenues of CPUs sold at CompUSA.

Another area that we can gauge to see Apple's health is the Internet.

Apple.com.

How many people are interested in Apple?

Now, we've got over 20 million active customers.

They might be interested in coming to our website.

We have tons of prospective customers who might be interested.

A lot of suppliers, a lot of software developers, a lot of competitors.

And so this taken together can give us a general thermometer of what is the interest level of people about Apple.

And we've invested a lot into the website and a lot into the award-winning Apple Store,

which is the gold standard of e-commerce now on the web.

And a year ago, we had a million hits per day.

Now, the average visitor clicks about 5 to 10 times, so that's 100 to 200,000 visitors per day.

Today, 9, 10 months later, we have 10 million hits a day on the website.

That's 1 to 2 million visitors a day coming to the Apple website.

And they're coming because they're interested in Apple.

Growth. The quarter that ended December, IDC reported that Apple had a 3.4% market share.

The quarter that ended in March, we actually grew our market share 15% to 4%. Now, we're

not thrilled with 4% market share, but if we can grow our market share 15% every quarter,

we will see it going in the right direction, which it is now. And I think we expect it

to rise quite a bit more based on some of the things you're going to see here today.

But it is now going in the right direction again.

And finance.

We have some pretty ambitious plans.

We want to develop a lot of great products.

We want to market them.

It takes money.

And our customers need to know that Apple is going to be here 10 years from now.

Well, we were able to turn the company around to profitability.

The first quarter, the management team was in place.

and the quarter ending December, Apple turned a profit of $47 million.

The last quarter, we turned a profit of $55 million.

So the company has made over $100 million in the last six months

in a very turbulent time in the industry

when other companies are breaking even or even losing money.

And I think that's a great accomplishment for the company.

In addition to that, the company is growing cash.

We increased the cash.

cash to $1.6 billion by adding $100 million in the quarter that ended December. And for the last

quarter that ended the end of March, $200 million more was put in the bank. This is really important.

And lastly, last July, if you took the number of shares outstanding and you multiplied it by the

stock price, the company was worth $1.8 billion. We've added $2 billion to the worth of the company

since then and I think it's just getting going so these are some indications about how Apple is back

on so we went back to business school 101 and we said what do our products what do our customers

want in our products what kind of products they want and they wanted two fundamental kinds of

products they wanted consumer products and they wanted pro products our design and publishing

customers primarily wanted the pro products.

Our education customers primarily wanted the consumer products.

But they also wanted two different kinds of each one,

desktop and portable.

And we looked at this and we said, now, this looks pretty simple.

But we couldn't find a way to come up with anything else

that captured what they wanted as succinctly and as clearly as this.

We said, finally, this is it.

We've got to make four great products.

And we can meet the needs of what our customers are telling us

want and we've spent the last 10 months working crazy to try to do just that so

the first one was the desktop pro product right the core of our publishing market

and of course we introduced that product in November based on the g3 chip it's a

power Macintosh g3 and we've had exceptional success with this product

we've sold over 500,000 of these in the first six months of the products life

making it the most successful new Mac in Apple's history.

The team did a superb job on this product.

It's based, of course, on the PowerPC G3 chip, which is a screamer.

Now, its competitor, of course, is the Pentium II.

And what is remarkable, what's hard to fathom but true here,

is that for a given clock rate, a PowerPC chip is twice as fast as a Pentium II chip.

In other words, a 266 megahertz G3 is twice as fast as a 266 Pentium II.

Or a 266 G3 is equal to about a 500 megahertz Pentium II.

Of course, you can't even make one of those, but if you could, that's what it would be equal to.

A 300 megahertz G3 chip is equal to a 600 megahertz Pentium II.

Now, how do we know this?

We know this not only by using the systems,

but we got the best independent benchmark there is,

which is Byte Magazine's Byte Marks.

And these are sort of one of the gold standards in the industry of performance.

And they publish the results.

And here's the results.

The blue bars are the 266 and 300 megahertz Pentium 2s,

and the bars on fire are the G3s.

And they just toast them.

And as a matter of fact, Intel, we've been running some ads, as you know,

Intel went back to Byte Magazine and said, this can't be true.

And Byte Magazine examined all of their tests, and they stood by their results and republished them.

Now, Intel has since come out with a 400 megahertz Pentium II.

How does that stack up? Not much better.

Not much better.