Steve Jobs took the stage following News Corp. President Peter Chernin for an interview with Walt Mossberg at the D conference. He was if full product evangelist, selling mode, describing the magic Apple's products. He attributed Apple's success to "software wrapped in really wonderful hardware. The software [on the iPhone] is at least five years ahead of anyone else," he claimed, and later announced that YouTube's video service will be integrated with Apple TV.
Mossberg asked about any new iPods coming soon. "We are working on the best iPods we have every worked on and they are awesome," Jobs predictably answered. He showed his iPhone and said it was the best iPod Apple has every made and the best phone. The iPhone is still on track to ship the latter part of June, he said, and sold through Apple and Cingular stores.
Mossberg asked about the decision not to have a physical keyboard on the iPhone. "Once you use this magical display, there is no going back. We actually think we have a better keyboard. You have to learn how to trust it. Once you learn to trust it , you can fly," he beamed.
Mossberg asked if Mac OS X could run on the iPhone. "It's not a good idea...there is no mouse or pull down menus. The user interface for phones is very different," he said.
Later Mossberg asked if the iPhone is a wireless iPod or a phone with an iPod in it. "It's the best iPod we have every made, an incredibly great cell phone and the Internet in your pocket for the first time. If it was anyone of the three, it would still be successful," Jobs said.
Cingular worked with Apple because music on phones hasn't been successful so far, Jobs said. Secondly, Cingular and others are spending fortunes to build 3G networks without applications to drive usage. He said the cell phones have lousy Internet experience, a "baby Internet," and that Apple can deliver the "real" Internet and allow carriers to leverage their bandwidth investment.
Apple announced today that the iTunes store is selling non-DRM songs from EMI. "Over half the songs on iTunes will be offered in iTunes Plus, DRM-free and higher quality, by the end of the year," Jobs said. Users can upgrade to the DRM-free, higher quality versions of songs they own for 30 cents or for 30 percent of the album price.
Jobs said that Apple is in three businesses--Mac, iPod, and iPhone-- and has one hobby, Apple TV. "A lot of people failed to make [media centers] a business, such as Tivo and Microsoft. If we work on it and improve over the next 18 months or two years, we can crack that," Jobs said.
He gave a demo of Apple TV (Mossberg and Jobs watching at left), which doesn't support high-definition video because of download times, but said that could change in time.
He announced that Apple worked with YouTube and will include the video site as a main menu item with many of the YouTube features, such as Most Viewed and search, in a mid-June software update of Apple TV. "Our model for Apple TV is we want to be like a DVD player for the Internet," Jobs said.
"It's amazing how much fun it is to watch video in your living room instead of on your PC," Jobs said. "In the fullness of time all things will percolate from us and others, and we are going to have a collections of interesting things."
Jobs noted that Apple sells more notebooks as a percentage of sales compared to other personal computer vendors, also said that he could see a time when notebooks make up 80 to 90 percent of what Apple sells.
Regarding the success of iTunes, possibly on 300 million machines and mostly Windows, triggered Job's quipped, "It's like giving a glass of icewater to somebody in hell."
During the Q&A, Blake Krekorian of Sling Media asked about the iPhone not being a 3G device. Jobs responded that as a 2.5G phone plus Wi-Fi, it switches to fastest network and that Wi-Fi is broadly available. "There's ten times more Wi-Fi out there than I ever thought," Jobs said.
Brian Dear of Eventful asked about opening up the iPhone to third-party developers. "There is an important trade off between security and openness. We want both. We have some pretty good ideas we are working through and later this year everybody can get what they want."
Jan Ziff asked about Jobs' health. A few years ago he had a form of pancreatic cancer. "I'm still vertical and feeling great," Jobs said.
Jobs was asked about standardizing on the MP3 format in iTunes. Apple chose the AAC as a format because of the superior quality and encouraged others to license the encoder. He also said that Apple wasn't planning to get into the camcorder market.