Steve Jobs talks marketing strategy in an internal NeXT video (1991)

Published on Jan 1, 2014
Steve Jobs recorded this first of many ‘Chalk Talk” video targeted at NeXT’s internal marketing/sales staff. HIGHLIGHTS:
01:00. Target market
07:30. Competition
08:27. Customer needs
14:11. Unique Selling Proposition vs. Sun

Location: NeXT headquarters, Redwood city
Steve was 35 years old.

 

 

 

0:00
hi, for those of you that don’t know me my name Steve Jobs
0:03
and this is the first of many chalk-talks were gonna have this year together
0:07
the subject to this one is really important which is
0:10
who is our target customer why
0:13
are they selecting our products over our competitions and what distribution
0:17
channels are we going
0:18
to use to reach these customers a lot of lightbulbs have come on over last 90 days
0:23
I had the good fortune to be with a lot of you out on the field meeting customers
0:26
getting first-hand information
0:28
as to what they’re doing with our products you feed that a lot of information
0:32
to the management of this company we’ve done a lot of thinking
0:35
and look at the data and all the sudden out of that data some very very important
0:40
things have come to light
0:41
I wanna share them with you today
0:44
we’ve had historically a very hard time figuring out exactly who are customer was
0:50
and I’d like to show you why
0:54
when we first look at the workstation marketplace
0:58
look something like this
1:07
and the biggest player as you know in the workstation market place is SUN
1:14
second biggest player is HP Apollo
1:18
third biggest player is Dec
1:20
and IBM with the RS-6000 is now in the game as well
1:24
and then outside the workstation marketplace
1:28
the very large market for PCs and
1:32
Macintosh’s the traditional personal computer market
1:35
now, we look at the workstation marketplace and he said well
1:39
we have multitasking we have great networking just like the workstations
1:44
we use UNIX we have a pretty good development environment
1:47
so we’re a lot like the folks but
1:51
then again these folks don’t really care about user interface
1:54
or at least they haven’t been able to execute on it if they do they don’t
1:58
really have great third-party application software
2:01
and these are not machines for mere mortals
2:04
so we’re not like them at all then we look at the PCs
2:07
and we do strive to get a suite of application software that allows us to
2:12
be just like these folks
2:13
we do strive to attain ease of use
2:16
and actually are easier to use than even a Macintosh today
2:20
so we’re a lot like these folks but then again we have
2:24
multitasking and networking that is an order magnitude beyond what you can do
2:28
the PC today
2:29
so over the last year we’ve oscillated back and forth
2:33
between thinking that the PCs in the Macs were our competitors and
2:37
this is what we wanted to be or the work stations were competitors in
2:41
this is where we want to be in essence are we in easier to use workstation or
2:45
are we a more powerful PC?
2:49
and had it not been
2:52
for a revelation if you will five or six months ago
2:56
are we probably would still be oscillating today and what that revelation was
2:59
was that somebody
3:00
turned up the power of our microscope
3:03
a little bit and we saw something very important and what we saw
3:07
was that the workstation market place is really not just one
3:12
workstation marketplace but two
3:21
there’s the traditional half which is what we come to know and love science
3:24
and engineering
3:26
which does indeed look just like this
3:28
but there’s a new half emerging which
3:32
we’re calling the professional half that is
3:36
professionals that are not scientists and engineers
3:40
who want the power of workstations and inside this marketplace
3:45
there are several submarkets
3:48
publishing the high end of the publishing market, tech pops
3:52
medical
3:56
a lot of database driven applications
4:01
higher education
4:02
etc, etc, etc legal markets in here
4:05
many many markets are in here and
4:09
what’s very interesting is Sun is the only company
4:12
that seems to have eked out a beach head over here
4:16
and our data says that in
4:20
1990 Sun sold around 40,000 computers into this market
4:25
and had about an eighty percent market share so the entire professional
4:28
workstation market
4:30
in nineteen ninety was about 50,000 units
4:37
and Sun had a majority share
4:39
that’s why we didn’t see it before it was such a small blip
4:42
compared to the workstation marketplace or of course the PC marketplace
4:46
they did not show up on our radar screen but we’ve seen it now
4:50
and it’s good that we have because this is a marketplace that we can dominate
4:54
and it’s a marketplace is going to be very large the market research data that
4:58
we have
4:58
and also our gut feelings from many many years in the industry
5:02
say that this marketplace in ninety-one is gonna grow
5:06
to about a hundred thousand units inside its gonna double
5:09
this year and next year in ninety two it’s going to triple
5:13
to about 300,000 units that is a substantial marketplace
5:19
what is also exciting about this marketplace
5:22
is that a hundred percent of our volume goes in here an other words if we could
5:27
ship fifty thousand computers
5:29
into all these markets this year we would have a fifty percent marketshare
5:34
of one of the fastest growing segment in the entire computer industry
5:37
now let’s examine why this thing is gonna grow
5:41
what is gonna cause this thing to grow from fifty to a hundred thousand to
5:44
three hundred thousand units
5:45
clearly it is not these people deciding to
5:49
not to stop being engineers and go to business school and reemerge over here
5:53
that’s not how it’s gonna grow
5:54
its gonna grow from two factors number one these folks moving in
5:58
PCs and Mac owners deciding that they need more sophisticated networking
6:03
more sophisticated development environments, etc deciding they need
6:07
to step up to workstations
6:09
and one other class of users there’s a lot of people now
6:12
using 3270 terminals or terminal emulators
6:15
hooked up to a mainframe for database driven applications more and more
6:21
they are deciding to move their applications onto a powerful desktop
6:26
workstation
6:27
connected via networking to the mainframe so that they can get the
6:30
application at a mainframe in onto the desktop
6:33
for more rapid development for better user interface
6:36
and for better economics so these two factors are what’s going to cause this
6:42
market
6:42
to increase almost in order of magnitude in size
6:46
over the next twenty-four months and we can get
6:49
half of it now one of the things
6:54
that is very interesting is that
6:57
Sun is today the major
7:01
participant in this marketplace with eighty percent market share
7:04
and I personally
7:08
don’t see too many other people being able to move into this marketplace over
7:12
the next few years I believe Sun will remain
7:14
our major competitor the funny thing is
7:18
while were convincing these people
7:21
using PCs and Macs and these people using 3270 terminals or equivalent
7:26
to move in to the professional workstation segment
7:29
Sun is if you will our friend because they’re gonna spend their marketing money
7:34
to convince people to move into this segment but the minute they’ve made
7:38
their choice to move into the segment whether we convince them or Sun is
7:41
convinced them
7:42
Sun and NeXT are mortal enemies
7:45
and the good news which will talk about a minute
7:49
is that we’ve had a chance to suit up against Sun
7:52
with our new products about 15 times in the last 90 days
7:56
and we’ve won 15 out of fifteen
8:01
now we want to address what is compelling these people to move in to
8:05
this new
8:06
category of professional workstations and
8:09
secondly once they decided to make the move into the category
8:12
why are we gonna beat Sun let’s take a look there’s three primary reasons
8:17
the first one is that every single customer we’ve talked to here
8:21
has the need to write one custom application
8:25
they’ve got one mission critical app that they’ve got to write
8:29
and so the development environment becomes critical
8:33
in addition to that these applications are very network intensive
8:37
so they need very sophisticated networking capabilities which they
8:40
cannot find in PCs and Macs
8:43
and third, these applications primarily
8:47
our database driven which means that they want to write the application on
8:50
the desktop machine
8:52
but this application on a desktop machine through the sophisticated
8:55
networking is going to communicate
8:57
with SQL databases running in either IBM mainframe or
9:01
running Oracle or Sybase on a sequent machine something like that
9:05
so they need the sophistication of the networking
9:08
and the ability to seamlessly talk to databases running on
9:12
large servers and the development environment
9:15
in the networking in the database
9:19
sophistication together are things they cannot begin to get
9:24
from these class of products so the first thing we’re seeing is
9:28
the custom app
9:32
is the key thing that’s driving these people to upgrade
9:35
from PCs and workstations
9:39
and even down here we see the same thing
9:42
people that have mission-critical apps they need to do
9:46
deciding they don’t wanna write the application itself on the mainframe
9:49
and use it via a terminal but rather they want to write the application in a much
9:53
better development environment
9:55
where they can create the app much faster with a much better user interface
9:59
much more cost effectively and talk to the database
10:02
on the mainframe through sophisticated networking so custom applications
10:06
is our number one reason driving people into this category now
10:10
the second reason is one that may come up initially
10:13
or it may come up in a
10:17
secondary way for the first sale a product to the customer
10:21
or may even come up in a secondary sale 3 to 6 months down the road
10:25
and that is the desire to use great productivity apps
10:30
that number two great productivity apps
10:37
as an example when it comes up in the first sale many times
10:41
people will want their employees to be using a custom app ninety percent of the time
10:47
but still need productivity apps 10 percent of the time
10:52
but more likely they will start to understand that they wanna
10:55
put our workstations on the desks have a wider audience than just need to use
10:59
the custom app
11:00
they want to include more administrative personnel more marketing personnel
11:04
have them all on the same network so they can share the inner personal
11:08
computing that their system provides
11:10
and productivity apps will come into play
11:13
to the extent that we have even better productivity app that are available on
11:17
PCs
11:18
and to the extent that those productivity apps
11:21
use the network so they can tie people together
11:24
we’re gonna win perfect example is a course Lotus Improv
11:28
another example is Full WYSIWYG Word Perfect
11:31
a third example will be of course our advanced version Adobe Illustrator that
11:35
ships in the next 60 days
11:36
so having better productivity apps will be important to the primary sale
11:41
I believe what we’re starting to see First Boston is a good example
11:45
in the financial services market that I forgot to draw
11:49
up a company where we sold forty or fifty computers to
11:52
primarily for the custom app in one group
11:56
3-4 months later a second group comes back and wants to buy over a thousand
12:01
computers
12:02
for another group that is more concerned now with
12:06
great productivity apps as the computer start to spread more
12:10
widely in the organization the
12:13
third reason that people are moving in which is one
12:17
that I think will not become
12:20
paramount in 1991 but within 24 months will be the largest
12:25
reason people are buying our computers is interpersonal computing
12:29
improving group productivity and collaboration through the use of
12:33
sophisticated desktop computers
12:36
and right now when we first meet a customer
12:39
we tell them about interpersonal computing I’m sure most of them would
12:43
rather hear about the custom app solutions and the great productivity apps
12:46
that we have
12:47
but as these customers become educated in the sales cycle I’m sure all of you
12:51
have seen
12:52
the value interpersonal computing rise
12:55
in their eyes and as we are successful customer by customer over the next year to
13:01
18 months
13:02
interpersonal computing will be something that rises on the customer’s
13:05
agenda of what’s important
13:07
even as we walk in the door as Regis McKenna once said
13:11
the best marketing is education and as we accomplish that education
13:15
more and more customers are gonna be asking us about interpersonal computing
13:20
versus us having to educate them now
13:23
interpersonal computing is something that again relies on a very powerful
13:27
desktop computer and very sophisticated networking
13:31
neither of which are available in these classes the machines
13:35
so to the extent that an organization wants to use interpersonal computing
13:39
again they are compelled into the professional workstation
13:43
category now one of the things we pretty much know
13:47
is that everyone who is considering a purchase up NeXT computers
13:51
at one point or another in the sale cycle calls up Sun
13:54
they’d be foolish not to, unfortunately the reciprocal is not yet true
13:59
our goal is to make it so that everyone was considering a purchase of s
14:03
Sun calls us up
14:04
and you’ll see more and more of our marketing targeted
14:07
to try to make this happen as the year rolls on
14:11
so let’s say Sun or NeXT spend their hard-earned marketing dollars in sales energy
14:17
and convince a customer to move into this category and the customer being a
14:21
smart one
14:22
calls up the other company so that’s Sun and NeXT are always competing for every order
14:27
what are our key competitive strengths against Sun
14:31
it turns out that they are exactly
14:35
the three things that are driving people into the category in the first place
14:40
we couldn’t ask for much better situation let’s examine them
14:44
custom applications it turns out that our development environment is vastly
14:49
superior to Sun’s
14:50
and this is being decided not by us
14:54
but by our customers best technical people when they return from our
14:58
software camp
14:59
our best competitive weapon to illustrate this point
15:03
is to get our customers best two or three developers to spend a week
15:08
and to come to Redwood City or Pittsburgh and go through our developer
15:11
camp they will go back
15:13
raving about NeXTSTEP and telling their own management
15:16
that NeXTSTEP will allow them to build their custom app three times faster than
15:21
Sun
15:22
we’ve had a lot of experience in this so far and
15:25
I think one of the things we need to do is to use our software camp more
15:29
we’re not seeing enough corporate developers through the software camp
15:33
we’re not getting potential customers to send their best technical people to our
15:37
software camp
15:38
either soon up in the cell cycle or at all and it’s an area where we could
15:42
really
15:42
get more benefit secondly
15:46
once they are in this category comparing us with Sun
15:50
the comparison of productivity apps
15:53
really tilt in our favor the productivity app suite that we now have
15:57
and are in the process of getting
15:59
dwarfs that of Sun not only do we have
16:03
more apps that are easier to use for this customer
16:07
but we have the breakthrough ones we have the Lotus Improv
16:11
we have the with the WYSIWYG Word Perfect, etc, etc
16:14
so once they are in this category the productivity app comparison is no longer
16:18
against these guys it’s against Sun
16:21
and we’re winning hands down the third
16:25
interpersonal computing a demo
16:29
will communicate very rapidly how superior NeXT is
16:33
in interpersonal computing and we will be supplying you videotape a demo that
16:38
we’ve been using a lot
16:39
I would suggest you use it to show your customers and I would suggest that you
16:43
get the software that’s on this videotape
16:45
learn how to demo yourself very rapidly
16:49
we’ve been able to convince customers that because of our multimedia features
16:52
and our ease-of-use features
16:55
these people can use interpersonal computing on our system
16:58
to achieve a far superior result than they can with Suns
17:02
so these are the three competitive weapons that we have against Sun
17:07
and as we use them to move people into the category
17:12
they are already very well positioned to see us in a favorable light
17:16
once they’re inside the category so I hope
17:20
this gives you a feel for what we’ve learned in the last 90 to 120 days
17:25
I have no doubt that we will continue to learn more and more together
17:29
and ever excalarating rate as we get more and more customers
17:33
we’ve been listening a lot to them and we intend to listen even more to them
17:37
to continue refining this professional workstation market definition
17:43
and what is important to these customers and our competitive position
17:47
against our number one competitor Sun
17:51
I hope this has proved useful I’m really excited to hear some your comments and
17:55
thoughts about what you think the hall this
17:57
and of course more and more information about how we continue to refine it in the future
18:03
thanks a lot give me some feedback if this is a successful way of communicating
18:07
and I’m sure I’ll see meow of you soon and I’ll see you all at the retreat
18:10
thanks;

[drizzle][/drizzle]