Trademark Trial and Appeal Board Electronic Filing System. http://estta.uspto.gov
`ESTTA347974
`ESTTA Tracking number:
`05/17/2010
`
`Filing date:
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`91176659
`Plaintiff
`Apple Inc.
`Joseph Petersen
`Kilpatrick Stockton LLP
`31 West 52nd Street
`New York, NY 10019
`UNITED STATES
`JPetersen@kilpatrickstockton.com, RPotter@kilpatrickstockton.com,
`Agarcia@kilpatrickstockton.com, ipefiling@kilpatrickstockton.com
`Plaintiff's Notice of Reliance
`Robert Potter
`JPetersen@kilpatrickstockton.com, RPotter@kilpatrickstockton.com,
`Agarcia@kilpatrickstockton.com, ipefiling@kilpatrickstockton.com
`/Robert Potter/
`05/17/2010
`10-5-17-[EXECUTED] 8TH Notice of Reliance [with Exhibits A-U].pdf ( 125
`pages )(5040960 bytes )
`
`Proceeding
`Party
`
`Correspondence
`Address
`
`Submission
`Filer's Name
`Filer's e-mail
`
`Signature
`Date
`Attachments
`
`

`
`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE TRADEMARK TRIAL AND APPEAL BOARD
`
`In the Matter of Application Serial No. 78/822,935
`For the mark: GREEN APPLE
`
`Filed: February 24, 2006
`Published: October 10, 2006
`......................................................._-X
`
`APPLE lNC.,
`
`Opposer,
`
`v.
`
`RELIX LLC,
`
`Opposition No. 91,176,659
`
`Applicant.
`_______________________________________________________-_x '
`CONSOLIDATED WITH:
`.......................................................-..X
`
`APPLE CORPS LIMITED,
`
`Opposition No. 91,175,475‘
`
`Opposer,
`
`v.
`
`RELIX LLC,
`
`Applicant.
`.......................................................-..X
`
`:
`
`OPPOSERS’ EIGHTH NOTICE OF RELIANCE
`
`Opposers Apple Inc. and AppleCorps Limited (collectively, “Opposers”), pursuant to
`
`37 C.F.R. §§ 2.122(e), submit of record in connection with this opposition proceeding a
`
`representative sample of unsolicited print publications available to the general public in
`
`' On March 26, 2008, the Board granted Apple Inc.’s motion to consolidate Opposition No. 91,176,659 with
`Opposition No. 91,175,475.
`
`US2000 11780504.]
`
`

`
`libraries and on the NEXIS database or of general circulation among members of the public
`
`and/or that segment of the public that is relevant to the issues in this proceeding.
`
`This evidence is relevant to show, among other things, the fame of Apple Inc.’s
`
`marks, the specific recognition of Apple Inc. by the public, media, and industry as one of the
`
`most valuable brands, and the widespread recognition of Apple Inc.’s brand and marks by the
`
`relevant general public.
`
`EXHIBIT
`
`PUBLICATION
`
`PUBLICATION NAME - ARTICLE TITLE
`
`DATE
`
`(SUMMARY OR RELEVANT QUOTE)
`
`November 1, 2001
`
`Wall Street Journal -
`
`November 17, 2003
`
`Apple Brings Its Flair For Smart Designs To Digital
`Music Player
`
`Time Magazine -
`The 99[cents] Solution; Steve Jobs’ new Music
`Store showed foot-dragging record labels and
`freeloading music pirates that there is a third way
`(“. .
`. Apple’s iTunes Music Store'is TIME’s Coolest
`Invention of 2003.”)
`
`February 2, 2004
`
`‘Business Week -
`
`SHOW TIME!
`
`(“Just as the Mac revolutionized the computer
`industry, Apple is once again in the business of
`changing the world. This time, it’s the world of
`music.’’)
`
`April 5, 2004
`
`Business Week -
`
`The Best Performers
`
`(indicating that Apple Computer had the ninth-largest
`percent increase in earnings among companies in the
`Standard and Poor’s 500 index in 2003)
`
`July 26, 2004
`
`Newsweek —
`
`iPod Nation
`
`(“In just three years, Apple’s adorable mini music
`player has gone from gizmo to life-changing cultural
`icon.”)
`
`US2000 1 1780504.]
`
`

`
`——
`F
`January 12, 2005
`
`USA Today -
`Apple strikes while the iPod is hot
`(“Smash sales of Apple’s iPod digital music player —
`10 million since 2001 and 8.2 million in 2004 alone ——
`
`have transformed the company. Its retail stores, for
`instance, are huge hits.”)
`
`G
`
`February 1, 2005
`
`A
`
`April 3, 2006
`.
`
`USA Today -
`In iPod America, legions in tune
`(‘“This is no fad — the iPod has changed my life.’
`Rival MP3 makers hoping to chase down Apple’s
`runaway hit have their work cut out: Maverick CEO
`Steve Jobs has his foot to the company’s floorboard.”)
`
`.
`
`.
`
`.
`
`
`Business Week -
`The Best Performers 2006
`
`
`
`(valuing Apple Computer Inc. as the best performing
`company among companies in the Standard and Poor’s
`500 index)
`
`
`
`
`
`
`
`
`
` Marketing News -
`
`
`
`
`
`
`September 15, 2006
`
`A few of our favorite things
`(indicating Apple Computer’s ranking as the tenth
`most highly regarded brand among U.S. consumers,
`according to a poll by Harris Interactive, Inc.)
`
`
`
`February 2, 2007
`'
`
`Server IQ.com —
`Survey: Microsoft’s Corporate Reputation Ranks
`Supreme
`(indicating Apple’s place as the 22'”-ranked company
`in terms of corporate reputation, according to a survey
`released by Harris Interactive)
`
`L
`
`March 19, 2007
`
`Fortune —
`
`The World’s Most Admired Companies
`9
`CC
`(notin A le s meteoric rise” to its rankin as the
`g
`PP
`
`US2000 1 1780504.]
`
`
`
`April 24, 2006
`
`Business Week -
`
`The World’s Most Innovative Companies
`(calling Apple Computer Inc. “the creative king” and
`ranking Apple as the most innovative company in the
`world; “To launch the iPod .
`.
`. Apple used no fewer
`than seven types of innovation”)
`
`

`
`fifth most admired company in the world)
`
`M
`
`March 26, 2007
`
`Business Week -
`The 2007 Best Performers
`
`'
`
`(valuing Apple as the 34th-best performing company
`among companies in the Standard and Poor’s 500
`index)
`
`May 14, 2007
`
`Business Week -
`The World’s 25 Most Innovative Companies
`(“Not surprisingly, Apple and Google once again
`prevailed”)
`
`
`August 13, 2007 MR (Mass Market Retailer)-
`
`
`Harris says Coca-Cola is No. 1 brand
`(indicating Apple’s place as the ninth—ranked “best
`brand” among consumers according to the Harris Poll)
`
`March 17, 2008
`
`Fortune —
`
`
`
`
`
`
`
`
`
`
`
`America’s Most Admired Companies
`(“It’s an impressive hat trick: Apple not only takes the
`No. 1 slot on this year’s list of America’s Most
`Admired Companies but also tops the global survey
`and wins the highest marks for innovation too.”)
`
`
`
`
`
`March 17, 2008
`
`Fortune -
`
`April 23, 2008
`
`What Makes Apple Golden
`(“. .
`. Apple .
`.
`. has set the gold standard for corporate
`America with an entirely new business model: creating
`a brand, morphing it, and reincarnating it to thrive in a
`disruptive age.”)
`
`Wall Street Journal —
`Slow Slog for Amazon’s Digital Media --- Earnings
`Today May Provide Data On What Works
`(“Apple’s iTunes, which has more than 80% of the
`U.S. market for digital-music downloads, is now the
`top—ranked music retailer in the U.S., selling more than
`four billion songs since its launch in April 2003.”)
`
`April 28, 2008
`
`
`Fortune —
`
`
`25 Most Innovative Companies: Smart Ideas for
`Tough Times
`
`
`(ranking “three—time winner” Apple as the most
`
`US2000 ll780504.|
`
`

`
`_ innovative company in the world)
`
`
`Fortune —
`
`March 16, 2009
`
`
`
`
`
`
`The World’s Most Admired Companies 2009
`(ranking Apple as the world’s most admired company)
`
`March 22, 2010
`
`
`
`Fortune ~
`The World’s Most Admired Companies 2010
`(ranking Apple as the world’s most admired company
`
`for the second year in a row)
`
`
`Dated: New York, New York
`May 17, 2010
`
`Respectfully submitted,
`
`l\./
`
`Joseph Petersen
`Robert Potter
`
`KILPATRICK STOCKTON LLP
`
`31 West 52nd Street
`
`New York, NY 10019
`212—775—8700 (phone)
`212-775-8800 (fax)
`
`Attorneysfor Opposers Apple Inc. and Apple
`Corps Limited
`
`US2000 11780504.]
`
`

`
`CERTIFICATE OF TRANSMITTAL
`
`This is to certify that a true copy of the foregoing OPPOSERS’ EIGHTH NOTICE
`
`OF RELIANCE is being filed electronically with the TTAB via ESTTA on this day, May 17,
`
`2010.
`
`
`
`Robert Potter
`
`KILPATRICK STOCKTON LLP
`
`31 West 52nd Street
`
`0 New York, NY 10019
`212-775-8700 (phone)
`212-775-8800 (fax)
`
`Attorneysfor Opposers Apple Inc. and Apple
`Corps Limited
`
`US2000 l I780S04.|
`
`

`
`CERTIFICATE OF SERVICE
`
`This is to certify that a copy of the foregoing OPPOSERS’ EIGHTH NOTICE OF
`
`RELIANCE has been served on Applicant by depositing said copy with the United States
`
`Postal Service as First—Class Mail, postage prepaid, in an envelope addressed to:
`
`Michael H. Sproule, Esq.
`Akabas & Cohen
`488 Madison Avenue — 11”‘ Floor
`
`New York, NY 10022
`
`This the 17th day of May, 2010.
`
`Robert Potter
`
`KILPATRICK STOCKTON LLP
`
`31 West 52nd Street
`
`New York, NY 10019
`212-775-8700 (phone)
`212-775-8800 (fax)
`
`Attorneysfor Opposers Apple Inc. and Apple
`Corps Limited
`
`US2000 11780504.!
`
`

`
`EXHIBIT _4_
`
`

`
`J’
`
`
`
`Le.xisNexis*
`
`Page 1
`
`Copyright 2001 Factiva, a Dow Jones and Reuters Company
`All Rights Reserved
`
`Dow Jones Faotiva
`
`(Copyright (c) 2001, Dow Jones & Company, Inc.)
`
`
`
`El
`The Wall Street Journal
`
`November I, 2001 Thursday
`
`SECTION: PERSONAL TECHNOLOGY; Pg. Bl
`
`LENGTH: 855 words
`
`HEADLINE: Apple Brings Its Flair For Smart Designs To Digital Music Player
`
`BYLINE: By Walter S. Mossberg
`
`BODY:
`
`PORTABLE DIGITAL MUSIC players are frustrating gadgets. These hand-held devices, which play songs in the
`MP3 format, seem like a great idea, but they are hobbled by major drawbacks.
`
`Some can hold only a scant 10-20 songs on little memory cards too expensive to buy in quantity. Others include
`built—in hard disks that can hold hundreds or thousands of songs, but are large and bulky with lousy battery life.
`
`For the past 10 days or so, however, I've been testing a terrific digital music player that solves all of these
`problems. It has massive storage capacity, is small and light enough to slip into a pocket and can be run nonstop for an
`impressive amount of time. Its controls are simple and clear, and it downloads music from a computer at blazing speeds.
`
`It's no surprise that this new music player, called the iPod, comes from a company with a long history of great
`engineering and user-oriented design: Apple Computer. This is Apple's first noncomputer product in years, and it's a
`design home run. The iPod is simply the best digital music player I've seen. It costs $399, and will be available Nov. 10.
`
`The one serious drawback of the iPod is that, at the moment, it only works with Apple's own Macintosh computers.
`To fill it with music, you must use Apple's latest Mac—only jukebox software: iTunes 2. You also need an ultrafast
`FireWire port, which all Macs have. FireWire also exists in the Windows world, where it's usually called "1394," but
`relatively few Windows PCs include the port.
`
`THAT SHOULD CHANGE soon. While Apple is being coy about it, I expect the company to produce a Windows
`version of the iPod by next spring. And if the iPod succeeds, I expect it to be just the first in a new line of noncomputer
`products from Apple.
`
`

`
`Page 2
`Apple Brings Its Flair For Smart Designs To Digital Music Player The Wall Street Journal November 1, 2001 Thursday
`
`The iPod is about the size of a deck of cards, weighs just 6.5 ounces and sports a clean, simple white front with a
`roomy screen and a circular button array. The back of the unit is stainless steel.
`
`Inside is a nearly silent five gigabyte hard disk and a small but high-capacity battery. Apple makes strong claims
`for the iPod's storage capacity and battery life, but this is one of those rare products where the manufacturer's claims are
`actually understated, not overstated.
`
`Apple says the iPod can hold 1,000 songs. But the company is basing that claim on an assumption that iPod users
`will create MP3s at a higher-than-average quality level, which requires more disk space. My own calculations, based on
`the lower quality level most commonly used by listeners, shows that the iPod can hold about 1,300 songs, equal to more
`than 100 typical CD5.
`
`As for battery life, Apple claims 10 hours, but in my tests the iPod repeatedly got nearly 12 hours.
`
`Sound quality is excellent. I tested it with the included earbuds and with larger noise-canceling headphones. I even
`plugged it into an automobile speaker system using a cheap cassette adapter from Radio Shack. The iPod sounded great
`in each instance.
`
`The uncluttered, high—resolution screen displays song title, artist and album, assuming your MP3 files contain that
`information. You navigate through directories of artists, albums, playlists and songs using a wheel on the front of the
`unit that speeds up when scrolling through long lists.
`
`LIKE MOST OTHER MP3 players, the iPod must get its music from a computer, but it's cleverer and faster at
`doing so. Most other players connect to a PC using the USB port and require you to manually select which songs you
`want to transfer. But the iPod uses the far faster FireWire port and automatically synchronizes itself with the music
`library on the computer, just like a Palm synchronizes with a PC.
`
`A few seconds after you first plug the iPod into the Mac using the FireWire cable, the iTunes 2 software
`automatically copies its music library, including songs and playlists, onto the device. If you later add or delete songs
`from the music library on the Mac, the changes will be duplicated on the iPod the next time you plug it in. And this
`process is fast. I moved 763 songs onto my test iPod in well under 10 minutes. That would have taken hours using a
`USB connection.
`
`You can turn off synchronization and manually move the songs you like onto the iPod.‘ While the iPod is plugged
`into the Mac, it's also recharging. You don't need a separate power cable.
`
`If you have room left over on the iPod after transferring your music, you can use it as a portable hard disk,
`manually copying any computer file to its hard disk to back up files or move them to another Mac.
`
`The only problem I ran into with the iPod was that, in some cases, there can be a long pause between songs. Apple
`claims this will be less noticeable in shipped iPods than in my test unit.
`
`At $399, the iPod is also a little expensive. Other hard-disk-based players, like Creative's Nomad, offer about the
`same capacity for $100 less, or greater capacity for the same price. But they are inferior designs. All in all, iPod is a
`
`great product, and I recommend it to anyone who loves music.
`
`E-mail me at mossberg@wsj.com. Read these columns online at http://ptech.wsj.com. For answers to your
`computer questions, see Mossberg's Mailbox.
`
`NOTES:
`
`

`
`Page 3
`Apple Brings Its Flair For Smart Designs To Digital Music Player The Wall Street Journal November 1, 2001 Thursday
`
`PUBLISHER: Dow Jones & Company
`
`LOAD-DATE: December 5, 2004
`
`

`
`EXHIBIT _l_3_
`
`

`
`Page 1
`
`fi‘l.exisl\le><is*
`
`Copyright 2003 Time Inc.
`Time Magazine
`
`November 17, 2003
`
`SECTION: TECHNOLOGY/COOLEST INVENTIONS/INVENTION OF THE YEAR; Pg. 66
`
`LENGTH: 1090 words
`
`HEADLINE: The 99[cents] Solution;
`Steve Jobs‘ new Music Store showed foot-dragging record labels and freeloading music pirates that there is a third way
`
`BYLINE: Chris Taylor
`
`BODY:
`
`When Steve Jobs holds forth in public, it's usually to a mob of fawning Apple-ites--the true believers who still
`develop software and accessories for Apple products. Not so last month at the Moscone Center in San Francisco. This
`crowd was more mack daddy than Macworld. Bono, Mick Jagger and Dr. Dre made video appearances. Grateful Dead
`drummer Mickey Hart was in the audience. Sarah McLachlan sang her latest hits live. What was pulling these musical
`supemovas into Jobs’ magnetic field? A software product that just might save their free-falling industry: the iTunes
`Music Store.
`
`It's a disarrningly simple concept: sell songs in digital format for less than a buck and let buyers play them
`whenever and wherever they like—-as long as it's on an Apple iPod. Jobs had proved the idea back in April when he
`launched the Music Store for Mac users, who represent only 3% of the computer world but promptly gobbled up a
`million tracks in the first week of business. By October he was ready to set the Music Store aloft in the 97% of the
`world that uses Windows PCs, and the prospect of converting millions of music pirates into credit-card wielding music
`buyers was enough to make even the most jaded rock stars take notice. How did Jobs do this trick? In a word:
`simplicity—-the transparent ease of use that is the hallmark of Apple's entire product line, including the Music Store. "I'm
`a complete computer dummy," McLachlan told TIME after the event.
`''If I can use this, anyone can."
`
`And, it seems, just about anyone is. Three days after the Moscone event, PC owners had downloaded a million
`copies of the software and paid for a million songs (adding to the 14 million music downloads already made by Mac
`users). In a year when record labels hit a sour note by suing students, grandparents and l2—year—old file sharers, Jobs had
`effectively brokered a peace agreement: he had shown the music industry how to win friends and turn a profit on the
`very Internet that was being used to steal their songs.
`
`Other inventions this year may have more altruistic intentions (like Dean Kamen's water purifier) or be more visible
`on street corners (like those ubiquitous camera cell phones). But for finally finding a middle ground between the
`foot-dragging record labels and the free—for-all digital pirates and for creating a bandwagon onto which its competitors
`immediately jumped, Apple's iTunes Music Store is TIME's Coolest Invention of 2003.
`
`Long before the Music Store came on the scene, frantic record-industry executives had been searching for some
`way to combat their nemesis: Napster, the original file-sharing service, but to no avail. Their first online ventures,
`
`

`
`Page 2
`The 99[cents] Solution;Steve Jobs‘ new Music Store showed foot—dragging record labels and freeloading music pirates
`that there is a third way Time Magazine November 17, 2003
`
`MusicNet and PressPlay, were disasters, largely because the labels didn't trust their users——or one another. High
`subscription fees and poor selections tumed off would—be customers; most skulked off to the underground services, such
`as Kazaa and Limewire, which had sprung up after Napster's demise.
`
`Enter Jobs. Back in April, Apple's CEO revealed that he had spent the previous year negotiating an unprecedented
`deal with all five major labels and thousands of independents. His iTunes software, which had previously been nothing
`more than a place to store and play digital music on a Mac, would become a gateway to the Music Store, where you
`could easily find and save music to your hard drive, CD or iPod music player—-no subscription necessary, just 99[cents]
`per song, or $ 9.99 for an album. Competitors tried to match that price but couldn't come up with a service as free of
`restrictions. They said Jobs had been given a sweet deal by the labels because Apple, with its minuscule share of the
`computer market, was never going to be a real distribution threat. "The Mac world is a walled garden," said
`BuyMusic.com vice president Liz Brooks. "The PC environment is like the Wild West."
`
`Then came iTunes for Windows, and suddenly there was a new sheriff in town. Not content with creating a music
`store for PC users that was a perfect clone of its Mac counterpart, including all of the 400,000 songs Apple now has the
`rights to resell, Jobs added a couple of cool new features. The best is a monthly allowance you can set up for your kids
`to govern their online purchases--a godsend for any parent trying to curb an offspring's downloading habit.
`
`Jobs has another reason not to be concerned about the competition. "The dirty little secret of all this is there's no
`way to make money on these stores," he says. For every 99[cents] Apple gets from your credit card, 65[cents] goes
`straight to the music label. Another quarter or so gets eaten up by distribution costs. At most, Jobs is left with a dime
`per track, so even $ 500 million in annual sales would add up to a paltry $ 50 million profit. Why even bother?
`"Because we're selling iPods," Jobs says, grinning.
`
`That may make iTunes the most benign—looking Trojan horse in software history. The Windows crowd can get
`iTunes free, and it offers almost all the same functionality as the paid versions of MusicMatch and Real One, two
`PC—based rivals. But iTunes is the only music application that will work with the enormously popular iPod, and it has
`features--like its powerful search function-—that are unrivaled. "Once people are locked into using iTunes, the game's
`over," says Charles Wolf, an analyst at the New York City--based Needham & Co. investment bank. "They could sell an
`extra 2 million iPods because of this." And the margins on these devices make the Music Store's arithmetic look like
`child's play. Each $ 499 iPod returns as much as $ 175 in profit, Wolf says.
`
`Such calculation may also explain why iTunes doesn't support Windows Media Audio files—-a Microsoft format
`that Bill Gates had hoped would become the music—industry standard. If iTunes becomes the player of‘choice for PC
`users, it would be a blow for Microsoft's grander audio ambitions——and may well unearth the hatchet that Jobs and Gates
`buried back in 1997.
`
`For now, Jobs faces some smaller hurdles, like filling in a few significant gaps in the iTunes Music Store selection
`(the Beatles are the most glaring omission). Even so, Jobs continues to score points with consumers for making
`available songs so easy to find and so easy to download. The music industry, of course, is anything but simple. That's
`probably why Jobs, an inveterate challenge seeker, likes it. But can it grow his business? Stay tuned.
`
`GRAPHIC: COLOR ILLUSTRATION: ILLUSTRATION FOR TIME BY ULLA PUGGAARD, COLOR PHOTO:
`MICHAEL O'NEILL
`
`LOAD-DATE: November 10, 2003
`
`

`
`EXHIBIT _(_:_
`
`

`
`Page 1
`
`D.
`
`I LxisNexis*
`
`Copyright 2004 The McGraw-Hill Companies, Inc. www.mcgraw—hill.com
`All rights reserved
`
`
`Biisit'iesslE?'helt
`
`
`
`Business Week
`
`February 2, 2004
`
`SECTION: COVER STORY; Number 3868; Pg. 56
`
`LENGTH: 4419 words
`
`HEADLINE: SHOW TIME!
`
`BYLINE: By Peter Burrows; With Ronald Grover in Los Angeles, Tom Lowry in New York, and bureau reports
`
`HIGHLIGHT:
`
`Just as the Mac revolutionized computing, Apple is changing the world of online music. If Steve Jobs plays his cards
`right this time, Apple could end up with a big chunk of the digital-entertainment market
`
`BODY:
`
`On Jan. 6, San Francisco's Moscone convention center pulses with all the energy of a rock concert. A crowd
`sprinkled with hip—hop teenagers, digerati, and aging hippies streams in to hear the annual state-of-the-Mac keynote
`from Apple Computer Inc. Chief Executive Steven P. Jobs.
`
`Every facetof the event bears the fingerprints of the obsessive Jobs —— right down to the music that fills the air.
`This year, it's the King himself, Elvis Presley. Later, Jobs rolls the tape of Apple's famous "l 984" ad thatran on Super
`Bowl Sunday that year —- and hasn't been broadcast since. Only this version has been digitally enhanced. The ad's
`hammer-throwing heroine crashes a meeting of Orwellian automatons and smashes Big Brother to smithereens, just like
`before. But this time, she's sporting a new accessory on her hip: one of Apple's hot-selling iPod digital music players.
`"It's the 20th anniversary of the original Mac, and we're going to make something of it," says Jobs after the cheers
`subside.
`
`The message is clear: Just as the Mac revolutionized the computer industry, Apple is once again in the business of
`changing the world. This time, it's the world of music. Its diminutive iPod, which can store 10,000 songs in a device
`smaller than a deck of cards, is the most radical change in how people listen to music since Sony Corp. introduced the
`Walkman in 1979. Then there's Apple's online music store, iTunes. It was established only after Jobs became the first
`person to persuade all the major record labels to make their music available —- legally -— on one Web site. Since late
`April, 30 million songs have been downloaded from Apple's store, and the trend may one day spell the end ofthe
`compact disk. "[Jobs] is a real visionary, the kind who can change industries,“ says Jimmy lovine, chainnan of
`Interscope Geffen A&M Records, a unit of Universal Music Group.
`
`That's industries, plural. Over in Emeryville, Calif., 50 miles from Apple's Cupertino headquarters, Jobs's other
`
`

`
`SHOW TIME! Business Week February 2, 2004
`
`Page 2
`
`company, Pixar Animation Studios, is turning the movie business on its ear. The company's latest flick, Finding Nemo,
`was the No. 1 box—office hit of 2003 and roared past Walt Disney Co.'s The Lion King as the highest—grossing animated
`hit of all time. That gives Pixar an unprecedented five blockbusters in five tries. (Remember Toy Story and Monsters,
`Inc.?) And it gives Jobs tremendous leverage as he renegotiates Pixar's contract with embattled Magic Kingdom boss
`Michael D. Eisner. For the past nine months, Jobs has been pressing Disney for a bigger cut of the profits from its films
`-— and perhaps much more. With Eisner on the hotseat, Jobs is likely to get much of what he wants.
`
`Add it up, and this may be just the beginning of a brand new Steve Show. For years, Jobs's perfectionist approach
`to product development has been experienced only by Mac users. But now, massive changes are roiling the worlds of
`entertainment, computing, and communications, giving him a broader stage. Increasingly, content —— that magical
`lifeblood of movie studios, record labels, and publishers —- is being transformed into digital form. At the same time, the
`Internet and wireless networks are evolving to deliver those bits almost anywhere, at speeds never before possible.
`Couple all that with disk drives, semiconductors, and high—resolution displays that are growing ever smaller and more
`powerful, and technology is liberating entertainment from its past. How we watch movies, look at photos, listen to
`music, even read a book promises to change profoundly in the next decade.
`
`No one may have a better chance to make order out of this chaos -— and then profit from it -- than Jobs. He bridges
`the marketplace: He has a hand in the worlds of computing, music, and movies to see how they're evolving. He has the
`track record with consumers: His string of hits includes the original Mac, the candy—colored iMac, and the iPod. He has
`the pieces: Apple not only has a combination of software and hardware skills unique in the PC business, it also has
`strong product design and one of the world's best-known brands. And he has the silver tongue: When the record
`companies had dug in their heels against the Net in Napster—induced terror, it was Jobs who persuaded all the major
`labels to put their music on iTunes. "Steve's the right guy with the right style at the right moment," says management
`consultant Geoffrey A. Moore, president of Chasm Group LLC and author of the technology—marketing text Crossing
`the Chasm.
`
`If he doesn't blow it, that is. Jobs can be so enamored of his own vision -— and so bull-headed about pursuing it --
`that it has blinded him at times. In 2000, fresh off the success of the trend-setting iMac, he personally ordered up a
`glistening cube—shaped Mac that carried a sky-high price tag in part because of a fanless design that eliminated that
`annoying hum. Customers, it turned out, weren't willing to pay for noiseless good looks, and the product was pulled off
`the market in a matter of months. Such missteps could cost him dearly in the battle ahead.
`
`Retail Payoff While consumer—electronics giants develop scores of products at once and endure a few flops, Jobs's
`hands—on approach means Apple can focus on only one or two brand-new projects at a time. "Apple's problem is that it's
`just a blip by consumer-electronics measures," says consultant Paul Saffo, research director at Institute for the Future.
`"It's too big to play the Bang & Olufsen angle, but it's just a blip next to Sony or Samsung. That's a really awkward
`place to be."
`
`One advantage Apple has over rivals is its retail stores, which give customers first-hand experience with the
`company's new products. In 2001, when the entire PC industry was bent on boosting online sales to reduce costs, Jobs
`went the opposite way. He started opening swanky retail stores, now numbering 74, in high-rent locations such as
`Chicago's Magnificent Mile and the Ginza district in Tokyo. Products are displayed on uncluttered maple tables, so
`shoppers can comfortably try things they may have never done on a computer before, like create a home movie.
`Mac-savvy salespeople wait at a "Genius Bar" to answer questions, but don't hover. The stores, which turned profitable
`in 2003's third quarter, also offer hundreds of classes in filmmaking, graphic design, and more. "I love the store," says
`Tanika Goudeu, a 26-year-old documentary filmmaker visiting the location in New York's SoHo on a recent January
`afternoon.
`
`What new fare will shoppers find in those stores in the years to come? Near term, an iPod for viewing digital
`photos would need nothing more than a color screen. Then, with its design skills, Apple could create a compact
`entertainment hub for the living room. That could eliminate the usual mess of DVD players, stereos, music CDs, and
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`SHOW TIME! Business Week February 2, 2004
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`remote controls, and loaded with Apple's successful iLife software suite, the hub could be used for managing digital
`photos or watching home movies. A musician could even use it, loaded with Apple's new GarageBand music software,
`to create a backup band while playing lead on the family piano. Such a device might appeal to youngsters who've grown
`up digital —- interacting with technology rather than just watching it. Jobs won't comment on such opportunities, except
`to warn of the difficulty of creating products people really want to use. "I'm not saying we're not going to do these
`things. I'm just saying they are a lot more complicated than they look."
`
`Imaginary Key That goes for watching movies, too. If Jobs and his movie pals one day adopt online distribution of
`films, it's easy to imagine an iTunes-like store for downloading them. Asked if such talks are in the works, he smiles
`and turns an imaginary key in front of his mouth. Still, he doesn't deny Apple has many paths to explore. "There's no
`company in the world that's better at making complex technology simple," he says. "That's Apple's primary skill, and it's
`a skill that has never been more valuable."
`
`All this may be causing Jobs to rethink Apple in fundamental ways. For years, his growth plan was to gain a
`percentage point of PC market share each year. Now, the iPod shows there may be a better way: milk those loyal Mac
`fans for profits, and pioneer new markets to bring in new customers. "If our [PC] market share grows, we're thrilled,"
`says Jobs. But with the iPod, "we're finally getting to compete without our 5% market-share ceiling, and look what's
`happening: We're winning." Merrill Lynch & Co. estimates that the company's revenues will rise 23% in fiscal 2004, to
`$ 7.6 billion, as net income more than doubles, to $ 185 million. Half of that revenue growth is expected to come from
`music as iPod sales nearly triple, to $ 931 million, and iTunes's sales boom tenfold, to $ 220 million. "They're better
`positioned today than they've been in a long time," says Merrill analyst Steven Milunovich. "Despite its up-and-down
`track record, we're confident Apple can stay at the leading edge of innovation."
`
`Still, a stampede of competitors will be trying to elbow their way past Apple. Sony, though struggling of late, still
`dwarfs Apple with an expected $ 66 billion in revenues this year. Korea's Samsung Electronics C0,, a fast—rising force in
`everything from cell phones to high-definition TVs, says it will spend more on capital investment this year than Apple's
`revenues. Even networking giant Cisco Systems Inc., not known for its consumer savvy, has gotten into the market with
`sophisticated wireless products for zapping video and music around the home. The giants are dismissive of Jobs and
`Apple. "They're a one-trick pony," says Hideki "Dick" Komiyama, president of Sony Electronics Inc.
`
`There are many who think Jobs won't even be able to hold on to his lead in music. Skeptics note that he's up
`against the same crew of companies that trounced Apple in PCs, as well as an anny of newcomers, including Wal-Mart
`Stores and Virgin Entertainment Group. Microsoft Corp. is providing the software for more than 60 digital music
`players, and Dell, Samsung, and others are building the hardware. "It doesn't'take a genius to see what comes next:
`lower prices for consumers and lower market share for Apple," says Chris Gorog, CEO of Roxio Inc., which operates a
`rival music service under the Napster brand name. "Steve Jobs is right back to the Mac model."
`
`That is a serious risk. Some 20 years ago, Apple leaped ahead in PCs and then blew its lead because it insisted on
`too much control over its products. While other PC makers used Microsoft software and only made hardware, Apple
`opted to make the Macintosh operating system itself —- and refused to li