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hi uh for those of you that don't know
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me my name is Steve jobs and this is the
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first of one of many chalk talks we're
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going to have this year together uh the
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subject of this one is really important
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which is who is our Target
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customer why are they selecting our
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products over our competitions and what
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distribution channels are we going to
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use to reach these customers a lot of
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light bulbs have come on over the last
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90 days um I've Had The Good Fortune to
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be with a lot of you out in the field
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meeting customers getting firsthand
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information uh as to what they're doing
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with our products you have fed a lot of
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information uh to the management of this
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company and we've done a lot of thinking
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and looked at the data and all of a
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sudden out of this data some very very
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important things have come to light I
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want to share them with you
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today we've had historically a very hard
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time figuring out exactly who our
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customer was and I'd like to show you
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why when we first look at the
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workstation
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Marketplace looks something like this
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and the biggest player as you know in
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the workstation Marketplace is
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Sun second biggest player is HP Apollo
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third biggest player is deck and uh IBM
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with the rs6000 is now in the game as
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well and then outside the workstation
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Marketplace the very large market for
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PCs and McIntosh the traditional
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personal computer market now we looked
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at the workstation Marketplace and we
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said wow we have multitasking we have
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great networking just like the
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workstations we use Unix we have a
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pretty good development environment so
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we're a lot like these folks but then
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again these folks don't really care
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about user interface or at least they
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haven't been able to execute on it if
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they do they don't really have great
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third party application software and
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these are not maches for mere mortals so
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we're not like them at all and then we'd
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look at the
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PCS and we do strive to get a suite of
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application software that allows us to
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be just like these folks we do strive to
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attain ease of use and actually are
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easier to use than even a Macintosh
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today so we're a lot like these folks
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but then again we have multitasking and
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networking that is in order of magnitude
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beyond what you can do with a PC today
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so over the last year we've oscillated
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back and forth between thinking that the
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PCS and the Macs were our competitors
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and this is where we wanted to be or the
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workstations were our competitors and
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this is where we wanted to be in essence
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are we an easier to use workstation or
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are we a more powerful
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PC
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and had it not been for a revelation if
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you will five or six months ago uh we
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probably would still be oscillating
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today and what that Revelation was was
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that somebody turned up the power of our
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microscope a little bit and we saw
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something very important and what we saw
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was that the workstation Marketplace is
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really not just one workstation
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Marketplace but
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two there's the traditional half which
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is what we've come to know and love
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science and
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engineering which does indeed look just
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like this but there's a new half
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emerging which we're calling the
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professional
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half that is professionals that are not
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scientists and Engineers who want the
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power of
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workstations and inside this Marketplace
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there are several
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submarkets publishing the high end of
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the publishing Market Tech
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pubs
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medical a lot of database driven
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applications higher education etc etc
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etc legal markets in here many many
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markets are in here and what's very
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interesting is Sun is the only company
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that seems to have eak out a beach head
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over here and our data says that in
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1990 Sun sold around 40,000 computers
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into this market and had about an 80%
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market share so the entire professional
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workstation Market in
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1990 was about about 50,000
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units and Sun had the majority share
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that's why we didn't see it before it
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was such a small blip compared to the
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workstation Marketplace or of course the
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PC Marketplace that it did not show up
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on our radar screen but we've seen it
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now and it's good that we have because
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this is a Marketplace that we can
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Dominate and it's a Marketplace that's
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going to be very large the market
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research data that we have and also our
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gut feelings from many many years in the
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industry say that this Marketplace in 91
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is going to grow to about a 100,000
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units in size it's going to double this
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year and next year in ' 92 it's going to
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Triple to about 300,000
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units that is a substantial Marketplace
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what is also exciting about this
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Marketplace is that 100% of our volume
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goes in here another words if we could
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ship 50,000 computers into all these
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markets this year we would have a 50%
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market share of one of the fastest
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growing segments of the entire computer
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industry now let's examine why this
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thing is going to grow what is going to
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cause this thing to grow from 50 to
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100,000 to 300,000 units clearly it is
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not these people deciding to not to stop
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being engineers and go to business
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school and reemerge over here that's not
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how it's going to grow it's going to
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grow from two factors number one these
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folks moving in PCS and Mac owners
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deciding that they need more s
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phisticated networking more
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sophisticated development environments
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Etc deciding they need to step up to
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workstations and one other class of
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users there's a lot of people now using
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3270 terminals or terminal emulators
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hooked up to a
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Mainframe for database driven
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applications more and more they are
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deciding to move their applications onto
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a powerful desktop workstation connected
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via networking to the Mainframe so that
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they can get the application out of the
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Mainframe and onto desktop for more
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rapid development for better user
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interface and for better economics so
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these two factors are what's going to
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cause this Market to increase almost an
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order of magnitude and size over the
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next 24 months and we can get half of it
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now one of the things that is very
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interesting is that sun is
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today the major participant in this
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marketplace with an 80% market
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share and I personally don't see too
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many other people being able to move
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into this Marketplace over the next few
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years I believe sun will remain our
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major competitor the funny thing is
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while we're convincing these people
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using PCS and Macs and these people
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using 3270 terminals or equivalents to
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move in to the professional workstation
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segment sun is if you will our friend
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because they're to spend their marketing
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money to convince people to move into
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the segment but the minute they've made
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their choice to move into the segment
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whether we've convinced them or son has
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convinced them sun and next are mortal
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enemies and the good news which we'll
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talk about in a minute is that we've had
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a chance to suit up against sun with our
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new products about 15 times in the last
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90 days and we've won 15 out of
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15 now uh we want to address what is
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compelling these people to move into
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this new category of professional
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workstations and secondly once they've
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decided to make the move into the
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category uh why are we going to beat Sun
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let's take a look there's three primary
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reasons the first one is that every
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single customer we've talked to here has
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the need to write one custom application
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they've got one Mission critical app
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that they've got to write and so the
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development environment becomes critical
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in addition to that these applications
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are very Network intensive so they need
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very sophisticated networking
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capabilities which they cannot find in
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PCS and Macs and third these
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applications primarily are database
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driven which means that they want to
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write the application on the desktop
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machine but this application on the
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desktop machine through the
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sophisticated networking is going to
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communicate with SQL databases running
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in either an IBM Mainframe or running
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Oracle or base on a sequent machine
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something like that so they need the
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sophistication of the networking and the
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ability to seamlessly talk to databases
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running on large servers and the
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development environment and the
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networking and the
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database um
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sophistication together are things they
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cannot begin to get from these class of
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products so the first thing we're seeing
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is the custom
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app is the key thing that's driving
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these people to upgrade from PCS and
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workstations and even down here we see
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the same thing people that have Mission
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critical apps they need to do deciding
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they don't want to write the application
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itself on the main frame and use it via
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a terminal but rather they want to write
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the application in a much better
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development environment where they can
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create the app much faster with a much
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better user interface much more cost
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effectively and talk to the database on
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the main frame through sophisticated
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networking so custom applications is our
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number one reason driving people into
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this category now the second reason is
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one that may come up initially or it may
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come up in
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a secondary way for the first sale of
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products to the customer or it may even
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come up in a secondary sale 3 to six
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months down the road and that is the
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desire to use great productivity apps
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that's number two
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great productivity
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apps as an example when it comes up in
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the first sale many times people will
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want their employees to be using the
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custom app 90% of the time but still
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need productivity apps 10% of the
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time but more likely they will start to
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understand that they want to put our
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workstations on the desks of a wider
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audience than just need to use the
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custom app they'll want to include more
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ad administrative Personnel more
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marketing Personnel have them all on the
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same network so that they can share the
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interpersonal Computing that our system
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provides and productivity apps will come
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into play to the extent that we have
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even better productivity apps than are
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available on PCS and to the extent that
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those productivity
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apps use the network so they can tie
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people together we're going to win
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perfect example is of course Lotus
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improv another example is full wizzy wig
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Word Perfect a third example will be of
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course our Advanced version of Adobe
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Illustrator that chips in the next 60
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days so having better productivity apps
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will be important to the primary sale I
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believe what we're starting to see first
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Boston is a good example in the
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financial services Market that I forgot
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to
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draw of a company where we sold 40 or 50
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computers to primarily for the custom
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app in one
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group 3 four months later a second group
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comes back and wants to buy over a
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thousand computers
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for another group that is more concerned
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now with great productivity apps as the
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computer start to spread more widely in
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the
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organization the third reason that
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people are moving in which is one that I
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think will not become Paramount in 1991
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but within 24 months will be the largest
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reason people are buying our computers
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is interpersonal
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Computing improving group productivity
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collaboration through the use of
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sophisticated desktop
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computers and right now when we first
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meet a customer we tell them about
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interpersonal Computing I'm sure most of
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them would rather hear about the custom
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app Solutions and the great productivity
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apps that we have but as these customers
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become educated in the sales cycle I'm
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sure all of you have seen the value of
00:13:20
interpersonal Computing rise in their
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eyes and as we are successful customer
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by customer over the next year to 18
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months interpersonal Computing will be
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something that rises on the customer's
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agenda of what's important even as we
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walk in the door as Regus McKenna once
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said the best marketing is education and
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as we accomplish that education more and
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more customers are going to be asking us
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about interpersonal Computing uh versus
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us having to educate
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them now interpersonal Computing is
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something that again relies on a very
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powerful desktop computer and very
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sophisticated networking neither of
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which are available in these classes of
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machines so to the extent that an
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organization wants to use interpersonal
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Computing again they are compelled into
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the professional workstation category
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now one of the things we pretty much
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know is that everyone who is considering
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a purchase of NeXT computers at one
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point or another in the sales cycle
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calls up Sun they'd be foolish not to
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unfortunately the reciprocal is not yet
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true uh our goal is to make it so that
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everyone who is considering a purchase
00:14:30
of a son calls us up and you'll see more
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and more of our marketing targeted to
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try to make this happen as the year
00:14:36
rolls
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on so let's say sun or next spend their
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hard-earned marketing dollars in sales
00:14:43
energy and convince a customer to move
00:14:46
into this category and the customer
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being a smart one calls up the other
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company so that sun and next are always
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competing for every order what are our
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key competitive strengths against Sun it
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turns out that they are exactly the
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three things that are driving people
00:15:05
into the category in the first place we
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couldn't ask for a much better situation
00:15:09
let's examine them custom applications
00:15:13
it turns out that our development
00:15:14
environment is vastly superior to Suns
00:15:17
and this is being decided not by us but
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by our customers best technical people
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when they return from our software Camp
00:15:26
our best competitive weapon to
00:15:29
illustrate this point is to get our
00:15:31
customers best two or three developers
00:15:33
to spend a week and to come to Redwood
00:15:35
City or Pittsburgh and go through our
00:15:38
developer Camp they will go back raving
00:15:40
about next step and telling their own
00:15:42
management that next step will allow
00:15:44
them to build their custom app three
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times faster than
00:15:48
Sun we've had a lot of experience in
00:15:51
this so far and I think one of the
00:15:53
things we need to do is to use our
00:15:55
software Camp more we're not seeing
00:15:57
enough corporate Developers through the
00:15:59
software Camp we're not getting
00:16:01
potential customers to send their best
00:16:03
technical people through our software
00:16:04
Camp either soon enough in the sales
00:16:06
cycle or at all and it's an area where
00:16:08
we could really get more
00:16:10
benefit
00:16:12
secondly once they're in this category
00:16:14
comparing us with sun the comparison of
00:16:18
productivity apps really tilts in our
00:16:21
favor the productivity App Suite that we
00:16:24
now have and are in the process of
00:16:25
getting dwarfs that of sun not only do
00:16:29
we have more apps that are easier to use
00:16:32
for this customer but we have the
00:16:35
Breakthrough ones we have the Lotus
00:16:37
improv we have the wizzywig word perfect
00:16:40
etc etc so once they're in this category
00:16:43
the productivity app comparison is no
00:16:45
longer against these guys it's against
00:16:48
sun and we're winning hands
00:16:50
down the third inpersonal
00:16:54
Computing a demo will
00:16:56
communicate very rapidly how Superior
00:16:59
next is in interpersonal Computing and
00:17:03
we will be supplying you a videotape of
00:17:04
a demo that we've been using a lot uh I
00:17:07
would suggest you use it to show your
00:17:09
customers and I would suggest that you
00:17:10
get the software that's on this
00:17:12
videotape and learn how to demo it
00:17:14
yourself very rapidly we have been able
00:17:16
to convince customers that because of
00:17:18
our multimedia features and our ease
00:17:20
ofuse
00:17:21
features these people can use
00:17:23
interpersonal Computing on our system to
00:17:25
achieve a far superior result than they
00:17:28
can with Suns
00:17:29
so these are the three competitive
00:17:31
weapons that we have against sun and as
00:17:35
we use them to move people into the
00:17:38
category they are already very well
00:17:41
positioned to see us in a favorable
00:17:43
light once they're inside the
00:17:45
category so I hope this gives you a feel
00:17:49
for what we've learned in the last 90 to
00:17:51
120 days I have no doubt that we will
00:17:54
continue to learn more and more together
00:17:56
at an Ever accelerating rate as we we
00:17:58
get more and more customers we've been
00:18:01
listening a lot to them and we intend to
00:18:03
listen even more to them to continue
00:18:06
refining this professional workstation
00:18:09
market definition and what is important
00:18:11
to these customers and our competitive
00:18:14
position against our number one
00:18:16
competitor Sun I hope this has proved
00:18:19
useful I'm really excited to hear some
00:18:22
of your comments and thoughts about what
00:18:23
you think of all this and of course more
00:18:26
and more information about how we
00:18:28
continue to refine it in the future
00:18:30
thanks a lot give me some feedback if
00:18:32
this is a successful way of
00:18:33
communicating and uh I'm sure I'll see
00:18:35
most of you soon and I'll see you all at
00:18:36
the retreat thanks
