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