10:48 PT: On the desktop, search is where it's at. That's where the money is. But on a mobile device, search hasn't happened. Search isn't where the money's at. What's happening is, they're spending all their time in apps. When people want to find a place to go to dinner, they're not searching, they're opening up the Yelp app. And this is where the opportunity to deliver advertising is. Not as part of search, but as part of apps.
10:47AM DanF: "It's all about helping our developers make money through advertising so they can keep teir free apps free." Unspoken: big benefits to Apple here, too.
10:49 PT: The average iPhone user spends a little over 30 minutes every day using apps. Now, if we said we wanted to put an ad up every 3 minutes, that would be 10 ads per device per day. We're going to soon have 100 million devices. That's a billion ad opportunities per day in the iPhone and iPod touch community. This is a pretty serious opportunity. And it's an incredible demographic. But we want to do more than that. We want to change the quality of the advertising as well.
10:50 PT: Now, we're all familiar with interactive ads on the web. (Shows a picture of a box ad on a web page.) They're not capable of delivering emotion, which is why most ad dollars still flow through television. What we want to do with iAds is deliver interaction but also deliver emotion. So interactive ads have no emotion, some interactivity. And television ads have a lot of emotion, and no interactivity. We want to be more interactive than ads you see on the web, and get some emotion from video. That's what iAd's all about. Emotion plus interactivity.
10:51AM DanF: Everyone's clearly waiting for the demo of this one...
10:51 PT: The ads keep you in your app. On mobile devices today, if you click on a banner ad, it yanks you out of your app and throws you into the browser. You may never find your way back. So people don't click on ads. Because iAd is in the iPhone OS itself, we have figured out how to do interactive and video content without ever taking you out of your app. And the user can return to their app any time they want. And so we think the result is, people are going to be a lot more interested in clicking on these things.
10:52 PT: It's really simple. You can build these in in an afternoon. Apple sells and hosts the ads. 60 percent of revenues go to developers, which Apple says is "industry standard."
10:52 PT: Now time for a demo. These are fake ads from companies who haven't endorsed this product. Steve has an entertainment app up, and there's a toy story 3 banner at the bottom. ("I've seen it, it's really good," he says of Toy Store 3.") Click on banner, ad comes down. All of this is done in HTML5, by the way. Really easy to do. Animation. With an X up at the top corner so you can close the ad out. You can tap into different areas of the ad, listen to the characters of Toy Story, play some videos.
10:53AM DanF: Appropriate that he's demoing it using a Twitter app. Big laugh when he points out this is all done in HTML5. The demo is actually very impressive—Apple has some very good HTML5 people.
10:55 PT: There's even a game in this demo ad. It's a little memory-matching game with Toy Story art. All happening within this in-app ad. (Steve is doing better than he expected.) Advertisers can also give you wallpaper you can save directly to your phone. Theater list with embedded maps. And a game you can buy right from the ad. Don't even have to go to the App Store.
10:56 PT: Fake Nike ad, plays a video for an Air Jordan shoe. Then goes to a menu, with slideshows and other whizzy stuff.
10:59AM DanF: Now a Target ad: these are essentially little apps, but they're all done in HTML5.
11:01 PT: Apparently this tent has seven poles, because Steve is now reviewing the seven tentpoles. "And these are just 7 of the over 100 user features and over 1500 new developer APIs in iPhone 4."
11:01 PT: Now. We are releasing a developer preview today. Developers can start testing this now, and start using these APIs now. We are releasing it to users for iPhone and iPod touch this summer, for iPhone 3GS and the iPod touch 3rd generation (32 and 64GB models from fall 2009). AND for iPhone 3G and iPod touch 2nd generation, they will run "many things," but there are some things they won't run, like multitasking. And we're bringing iPhone OS 4 to the iPad this fall.
11:02AM DanF: Jobs clarifies that the 8GB iPod touch model, which Apple kept around when it introduced the new 16GB and 32GB models last fall, isn't included in the "supports everything" group.
11:02 PT: That's iPhone OS 4, Steve says. We'll have a short break and in about 5 minutes we'll have a Q&A session.
11:06AM DanF: IDC: How is AT&T prepared to compensate for increased data usage from these features? Jobs: Data usage requires attention, so we don't think the assumption that multitasking means more data usage is correct. IDC: Pandora? Jobs: Pandora doesn't use that much data. Video does. We'll see.
11:08AM DanF: CT (Germany): Wireless app distribution was described as an enterprise feature. Will people be able to distribute apps outside the app store? Forstall: No, apps have to be code-signed via enterprise distribution.
11:09AM DanF: (Germany): Will huge popularity of iPad in US affect international launch? Jobs: No, end of April.
11:09AM DanF: SlideToPlay: Will social gaming features supplant Open Feint and similar services? Forstall: Goal is to build something into the platform where everyone is on the same network. We expect developers to use this technology. Jobs: Less work for developers, everyone interacts. Some of those social networks are the ones who asked us to do this. SlideToPlay: Will there be Xbox-style achievements? Forestall: Looking into it.
11:11AM DanF: CNET: Will there be an approval process for ads? Jobs: (long pause) I think there will need to be some boundries, just as you can't run anything you want on ABC. There will probably be some ads that we won't run, but ads need to be well received to be effective. Hopefully we will never have to reject an ad.
11:12AM DanF: InfoWorld: Any change in Apple's position on Java or Flash? Jobs: No.
11:13AM DanF: Our very own Jason: Will Apple provide a development enviroment to make these ads? Jobs: No need, it's all HTML5.
11:14 PT: Jobs says ad agencies are super excited, because so far digital ads haven't been rich enough to warrant having a world-class ad agency. For the first time, they're seeing how to bring their storytelling skills to digital ads. And they're really excited about going and hiring a bunch of technical people to create these types of ads, and combine them with their storytelling people. I think this could be a whole new advenue for the advertising agency people. Because for the first time they can take advantage of all those skills.
11:15AM DanF: Engadget: You don't seem to be providing tech to track Twitter/AIM timelines in background. Forstall: We believe Twitter and similar apps are more effective with notifications. Also, fast app switching means the state is saved and when you switch back, the app can poll for new data (messages). It will be far better than today, where app has to quit, then later relaunch, start up, negotiate a network connection, etc. App will open back to the same place. Engadget: iPad presents great opportunity for "widgets" (Dashboard). Jobs: We just shipped it on Saturday, and rested on Sunday. Everything's possible. One comment on push notification: it's turned out to be the right architecture for a lot of things: saves battery life, wakes up the app at the correct time. Competitors are tripping over themselves to copy it.
11:18AM DanF: MoboNews and Paid Content: Go back over ad impressions?: Jobs: Ave. user spends 30 minutes/day using third-party apps. New ad every 3 minutes meands 10 ads in 30 minutes. We'll soon have 100 million iPhone OS devices = 1 billion ad impressions per day. That's a large number, and the demographics of iPhone OS users are among the most desirable in all of advertising. Schiller: Search is useful on the phone, but not nearly as good as on the desktop. So ads are another way for people to find stuff, making mobile ads more useful, and more appealing to users, than desktop ads.
11:20 PT: This is Apple saying, Google's advantage on the web doesn't exist on the phone, and on the phone it's Game On.
11:22AM DanF: [can't hear questions] Jobs: No plans to become a worldwide ad agency. We don't know much about ad stuff; we're learning. We tried to buy AdMob, but Google snatched them because they didn't want us to have them. We bought Quattro, and they're teaching us a lot. We're babes in the woods, but we think we're going to contribute a lot to the industry.
11:24AM DanF: Technologizer: How did you make the decisions for which devices to support? Jobs: Older devices just couldn't support some of these new features.
11:24 PT: Will new apps degrade gracefully? We allow developers to see what features are available. Schiller: We've done a really good job trying to make an app store where the applications run on the widest number of devices, and customers don't have to worry about if the app will run on their device or not. It's a really simple model for customers and developers. Jobs: This isn't about apps running or not running, this is about end-user features like multitasking.
11:26AM DanF: Question about making phones more safe when driving and in other dangerous situations: Jobs: We do more than most to connect our phones into cars' control systems -- users get hands-free calling, in-car displays, steering-wheel controls. Forestall: OS 4 has even more features for car integration.
11:27AM DanF: Financial Times Germany: Can you say anything about the revenue opportunities for Apple in iAds? Jobs: We're giving most of the revenue to developers, this is a way to help developers survive while keeping app prices reasonable.
11:28AM DanF: GDGT: On other platforms, you can run unsigned apps; it's not simply, but you can do it. Why haven't you done it? Jobs: There's a porn app for Android -- your kids could download them. We don't want to go there.
11:29AM DanF: Bloomberg Business Week: Anything surprise you about the initial reaction to the iPad? Jobs: We've been working on this for a few years, but you still have butterflies in your stomach the week and night before a product launch -- you never know what customers will think until the product is in their hands. Feedback has been great; people get it. We think this is a game-changer. We've been surprised by how quickly the average person has gotten it. I've received thousands of e-mails so far from people talking about how it's going to change their life.
11:30AM DanF: Schiller: The speed has been phenomenal. Developers have done amazing things, too. The pace has been beyond belief. Jobs: competitors would be happy with 3500 apps in the first year; we've seen 3500 in the first week. Also, iPad is standing on the shoulders of the 85 million people who already know how to use it.
11:33AM DanF: GamaSutra: How will the App Store change in iPhone OS 4. Improvements on finding apps? Jobs: App Store is not part of iPhone OS 4; it's a service that's programmed mostly on the server side, so we can improve it on an ongoing basis. We're constantly improving it. We've added Genius recommendations for apps. But we're starting to see an infrastructure develop for finding apps: third-party Websites that review and recommend apps.
11:35AM: DanF: Forestall: Game Center will help with the viral spread of apps, and gifting will help, as well, since you can give games you like to other people.
11:36AM: DanF: Schiller: We do more to promote third-party software than any company in history: billboards, TV ads, print ads. We'll continue to promote apps. We've also worked with developers to improve our top-selling lists and the like.
11:36AM: DanF: Dow Jones Market Watch: Are you concerned about leaving out a significant portion of customer base since all new features won't work on older devices. Jobs: iPhone 3GS and 3rd-generation iPod touch make up the majority of devices because of their sales. And older devices will gain many of these features, just not all.
11:38AM: DanF: San Jose Mercury News: How do you close apps now? Jobs/Forestall: You don't have to. When you switch out of an app, it saves its state and stops using resources. Jobs: Just as we said about the iPad, if you see a stylus, they (the developer) blew it. When it comes to multitasking, if a user has to use a task manager, they blew it. Will game developers be able to continute to use other social-gaming services? Jobs: Yes. No restrictions if you want to use something else.
11:40AM: DanF: [He didn't actually answer the question about how to quit an app -- there's got to be a way or else heavy users would end up with a huge row of apps in the app switcher.]
11:40 PT: And that's that. So endeth the iPhone 4 OS event. Thanks for reading.