tag:blogger.com,1999:blog-58360513840205305362024-02-08T09:36:45.061-08:00AfrosistahBlue Suede BootsDwi Asmarahttp://www.blogger.com/profile/00039073771531798899noreply@blogger.comBlogger35125tag:blogger.com,1999:blog-5836051384020530536.post-76141017347758307602016-12-23T07:25:00.001-08:002016-12-23T22:40:22.123-08:00knee high boots<div style="text-align: center;">
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<div align="justify"><p>kai ryssdal: if you don't knowwho eric schmidt is, you're in the wrong room. this morning as i startedthinking about how to begin this, i of course wentto google, and i googled economic recovery. and i got 47, 500,000 answersin 48/100 of a second. and i said, well, that's aninteresting little statistic, but i'm going to have the manhimself here later on, so why don't i just ask him? </p>
<p>and i think that'swhat i'll do. in all seriousness, eric schmidtis the leader of arguably one of the mostpowerful and well-known companies on the planet. we all use his productsevery single day, multiple times a day. and as such, i think he'sprobably got something of a unique perspective on thiseconomy, how to steer a company through it, how to steerpolicy in that economy. </p>
<p>and that's what we'regoing to talk about. we'll go a little bit, eric andi, and then we are going to open it up for questions. a little bit of housekeeping,there are two microphones in the aisles. we're going to alternateback and forth. we need to be out of here, i'mtold, by 2:15, so we're going to keep it on time. so line yourselves up when weget there and we'll just go </p>
<p>back and forth. sound like a plan? obviously a lot to talk about ina short period of time, but i want to sort of lay a littlebit of a groundwork here and get a sense of where you werementally back in september, when ben bernanke and henrypaulson, the chairmen of the federal reserve, when upto capitol hill and said, this is it. we're done. </p>
<p>we need $700 billion dollars. ready, go. eric schmidt: well,i was scared. let me start by sayingcongratulations to walter and to david and the teams that haveput this amazing ideas festival together. it's really one of the greatevents in america, and i think you all should be proud to bepart of it [unintelligible]. [applause] </p>
<p>eric schmidt: in september,the worst day was the wednesday when the money marketfunds broke the buck, if you remember that day. and that night, tuesday nightovernight, the financial clearing system of the countryalmost failed. and the federal reserve had togo in and hand money to the clearinghouses to essentiallymake sure that the money, the dollar, if you will, that wasclearing overnight was cleared properly the next day. </p>
<p>and i said to myself,how did we get ourselves into this situation? and i still don't know theanswer to that question. kai ryssdal: assuming, though,that google keeps its cash in very safe banks-- eric schmidt: in fact, what wedid is we took it out of the banks, and we put it intosovereign denominated currencies, because we figuredthat the countries would not go bankrupt. </p>
<p>kai ryssdal: this country'scurrency too, yes? just checking. eric schmidt: we dida basket, yes. kai ryssdal: assumingall that's true-- eric schmidt: it is. trust me, it's true. i'm a ceo, i can't lie. it's like a real problem. kai ryssdal: it's my job. </p>
<p>i have to ask those questions. how are you feeling, then,about where we are in terms of fixing it? eric schmidt: well, again, withthe caveat that i don't understand how the learned andsmart people who were running all this could have gotten usinto the situation in the first place, with thatas a caveat, right? and i think we should have adiscussion as to how that happened and not just so muchfrom a regulatory perspective, </p>
<p>but what was the failure ininformation that got us to the point where we were in a reallygood bubble and having a good time and the currencyalmost failed. that's a serious error. it's not a small error. with that as a caveat, we'reroughly on schedule. if you look at the sequence ofevents, that once the crisis occurred everyone realizedthat asset values were too high. </p>
<p>you had first a real estatecrisis, and then you had a credit and finance bubble. the credit and finance bubblewas largely because of unregulated credit instrumentswhich were shut down. with the bankruptcy of lehman,everything sort of collapsed. and then we had october,november, december, where everyone's all panicked. the fed comes in with trillionsof dollars in guarantees. </p>
<p>people forget that there wereabout $2.5 trillion of additional guarantees of bondsand bond debts, most of which will not need to be deliveredon, by the way. the total indebtedness that wasguaranteed by the western world and the united stateswas on the order of $8 trillion to $9 trillion,if you add it all up. these are enormousamounts of money. remember, the us gdpis $14 trillion. so we created all of that. </p>
<p>then we had the stimuluspackage, which was designed as a short term, which i wasstrongly in favor of. and then you have the time thatit takes for the system to work, and we're inthat period now. market low, roughly,in the spring. business cycle low,roughly now. jobless high, roughlyearly 2010. we're on schedule. how do i know this? </p>
<p>because the people who got usinto this have told us that. [laughter] eric schmidt: what'sa better answer? what's a better-- sorry. if you look at the history, oneof the things to learn, as we manage young people, is toexplain to them that things have occurred inhistory before. and young people don't oftenknow that, or ignore it, </p>
<p>because they didn't takethose classes. and in our case, we're in aclassic deep recession, and recessions recover. and i've just outlaid theexact math around a traditional deep recession. kai ryssdal: but hold on asecond, because if you take all of the smarts of google'scomputers and pile it into one-- eric schmidt: we were notpart of that september-- </p>
<p>kai ryssdal: no, you'renot, but let's take-- eric schmidt: we were not-- in fact, had we been doing it,we might have actually been measuring where allthe money was. kai ryssdal: you guys, as asymbol of all the world's knowledge, which are out thereto collate and make useful, if you take that and you combineit with these really smart people and rising asset values,how did so many smart people running the companiesand the economy do so many </p>
<p>stupid things? eric schmidt: well, partlybecause everybody, it was in their self-interestto believe it. people have studiedbubbles for years. remember, high tech, we alreadyhad our own bubble. you had a bigger bubble. we've already-- kai ryssdal: been there,done that? eric schmidt: we've been throughone bubble, which was </p>
<p>2000, the y2k phenomenon. and we had a great time. next time i'm going tosell at the peak. i mean, i'm just waiting forthe next one of these market-induced bubbles. i could have made a lotof money at the time. it's much better to sell atthe high in these bubbles. trust me. kai ryssdal: thereis, though-- </p>
<p>yes, we should sellat the high. eric schmidt: thisis about ideas. there's an idea for you. sell at the top. kai ryssdal: so let's haveanother idea about how we can get ourselves outof this mess. do we just sit here and waitfor it to happen, or can companies and the economydo something smart? eric schmidt: in the firstplace, let's go back to what's </p>
<p>really going to happen. i think the us will recoverfirst. the european economy is slower to recover. the conventional wisdom issix months off-cycle. that's about right. the interesting insight aboutthe europeans is that their central bank, which is calledthe european central bank, has one mission, which isfighting inflation. and ours has two missions,fighting inflation and </p>
<p>promoting growth. and there's a technical namefor this among all the economists. but what's interesting about theeuropean central bank is that they have been givingenormously friendly loans to all of these countries to helpout, which looks awfully stimulative. so the european central bank,will within the charter that it has, is doing somethingsimilar to </p>
<p>what the us is doing. and i think europe willrecover as well. and they're not going to give uptheir vacations or anything like that in the meantime. kai ryssdal: heaven forbid. eric schmidt: so the fact of thematter is i think that's going to happen. in china, you had thestimulus package. and in china they had aninfrastructure stimulus </p>
<p>package, not unlikewhat we did. the difference is theyjust did it. they didn't debate it, somebenefits to a command and control economy or whateveryou want to call china. and it looks like the thirdworld, and in particular the smaller countries, are veryseverely hurt by what happened, because they were inan asset bubble in terms of minerals and so forth. and they also have hugetrade imbalances. </p>
<p>so we're going to go back to astructure where, if you will, the strongest, china, to somedegree india, the united states, and europe, will leadus through this over the next few years. kai ryssdal: why? why is the united states goingto get out first and not china drag us along? eric schmidt: well, i personallythink it has to do with our university systems.ultimately, the reason these </p>
<p>things occur in americahas a lot to do with the culture of america. and americans are optimists. americans believein innovation. 90%, 95% of the top universitiesin the world are in the united states. many people have tried toreplicate these systems. they're very hardto replicate. if you look at venture capital,which i've obviously </p>
<p>benefited from, the financialstructure combined with new young people trying to createnew jobs is phenomenal. we have the fastest growth cyclein terms of new jobs. a typical example is there's aclaim that 15% percent of the jobs every year eliminated andanother 15% percent of course are created. and that's no solace to you ifyou are working in an area where the only kinds of jobs,typical example being the traditional american automobileindustry, those are </p>
<p>the only kinds. the other ones aren'tbeing created. but if you look at the economyas an aggregate, there are other jobs being created. they're just not in your town. and that's difficult, but that'sultimately the genius of the american system. kai ryssdal: can you innovateyour way out of a recession, though? </p>
<p>google is a company that's madeits name with innovation. you give your engineerstime off to innovate, or on company time. eric schmidt: well, it turnsout recessions end on their own, and politicians love totake credit for the recovery. but one of the simplest rules isthe business cycle has not been eliminated, and there isevidence that the business cycle is going to get worse. and the reason it's going toget worse is things have </p>
<p>gotten more interlinked. so we're going to go uptogether more and down together faster. and by the way, in informationmarkets, the cycles are shorter. it's up, down, up, down, up,down, because there's more information. now it may be possible todampen some of these by conversations and regulations. </p>
<p>my favorite examplehere is iceland. and iceland, which has 300,000people and a lot of fish, at the height of the bubble, 3/4 ofits stock market value were the three banks that failed. kai ryssdal: bigger thanthe whole economy. eric schmidt: and they're notknown as a banking center. and of course what was happeningwas they were arbitraging their currencyagainst the euro. they were essentially lendingin one currency and taking </p>
<p>money in another. and there was clearlya regulatory failure at some point. i don't fully understand it. but at what point-- why didn'tsomebody raise their hand and say, by the way, it's an errorto have 3/4 of your entire market tied up in thesebanks, given that that's not your economy. and so, to me, what i hope willhappen as a result of </p>
<p>this terrible thing-- i'm not trying to minimize it,because a lot of people have been hurt by what i consider tobe the errors of the global elite, and hurt very severely. what i hope is people will say,hey, that doesn't make sense anymore. my house went up 20% ayear for 10 years. by the way, that'sa sell signal. it doesn't make any sense. </p>
<p>the math doesn't work. kai ryssdal: well, what kindsof companies then? wait a minute, let me back upand pick up on a thread you keep mentioning, regulatoryoversight. are you confident that thepresident's regulatory reform plan, that he announced a coupleof weeks ago, is going to go far enough, is going tocurb some of these excesses? eric schmidt: i don'tthink anybody knows. the regulations arelong and deep, and </p>
<p>there's a lot of anger. and one of the things to know,and our politicians will, at least privately, explain to you,they are inundated by the anger of the average americanat what they perceive as the bailout of the financial elite,the business elite, people like myself and so on. and that anger is palpable. so they're going to regulate. they're going toget regulated. </p>
<p>and you do not want the government to own your company. you could see this with generalmotors and so forth. the automobile industry globallyis largely now owned, large chunks of it areowned by governments. that's true in europe as wellas in the united states. that's always been true tosome degree in china. and so in many cases they'reultimately going to turn out to be jobs programs. thisis sort of a horrendous </p>
<p>structural issue that we face,because, frankly, the demand for cars is not as high as ourability to build them. kai ryssdal: with the banksgetting better, though, some showing profits, some sort ofbottoming signal out there, whether we're bumping alongthe muddy bottom or-- eric schmidt: those bankingprofits, guess where that money came from? kai ryssdal: yes. raise your hands. </p>
<p>there you go. how do you feel about thisproposition, that maybe what we've done in not steppingmore quickly into the regulatory realm iswasted a crisis. let the banks fester for awhile, given the money, and now they're goingto be through to the business as usual. eric schmidt: my personal viewwould have been to not allow the write-offs that occurredin the banks. </p>
<p>it was explained to me that theproblem with that is that the banks are actually adifferent kind of animal than other businesses. if you look at aig, for example,and again, how quickly we forget. remember it was $20 billion,then it was $40 billion, then it was $65 billion, then it was$85 billion, then it was $185 billion. these are large amountsof money. </p>
<p>how do you lose thatamount of money? if i lost that kind of money,i'd lose my job. i don't have that kind of moneyin my company to lose. kai ryssdal: which is sayingsomething, actually. eric schmidt: thank you. how do you make thatkind of mistake? and so my argument was that youshould allow all of these structures to fail, because thecollective memory, that is the structure, all those losseswill still be around to </p>
<p>remind them not to makethose mistakes again. the problem with that isit's not in fact-- i was just wrong. it's not how banks reallywork, because they lend against an asset base. and if you can't fix the assetbase, which is indeed what the fed in my view correctlydid, you don't get credit going again. and if you don't have credit,you don't have your economy, </p>
<p>because we americanslove credit. kai ryssdal: if it's not goingto be the banks that lead us out of the recovery, i meanthey're stabilizing, but they're not going tolead the way-- eric schmidt: it's theconsumers in america. it's always the consumers. kai ryssdal: my question,though, is what kind of company is going to do it. it won't be the financials. </p>
<p>it's not going to be manufacturing, look at detroit. what kind of company is goingto help us get going? eric schmidt: well, obviouslymy own bias would be to do whatever we can to get the nextgeneration of very smart companies in everyfield going. in the stimulus package therewas a lot of work done to make sure that there's a lotof money to create a green tech sector. </p>
<p>and many of us, the peoplehere in the room who are pioneers in this area, believethat the secret to american manufacturing success is theirability to take the knowledge that comes out of[unintelligible] so quickly and turn those into very highlyprofitable businesses, and move very quickly, theclassic example being the michigan-area manufacturingplant that can be converted to build automobile batteriesfor electric cars. there are example afterexample after example. </p>
<p>and i believe that. the reality is that the problemis so significant that you need to do more than that. you need to look at all thebarriers to business. so for example, people who arearguing against free trade, don't realize how many americanbusinesses are global in nature, and arguing againstfree trade hurts american businesses, thatkind of thing. kai ryssdal: let me askyou specifically </p>
<p>about google, then. i mean, you guysare everywhere. i think it is in your phrase-- eric schmidt: thatis our goal. kai ryssdal: that's right. and you're meeting it. it is, as you called it, theeconomics of ubiquity. how does that help this countryget going again? eric schmidt: well, we believethat information is power. </p>
<p>and because you wereasking about the financial things, i wonder-- i learned a little while agothat the right way to run human systems is transparency,and that almost all of the sort of structural mistakes thatwe're seeing have been caused by information hidingor by poorly integrated systems. and it's true at everylevel of politics and government and howsystems work. so from our perspective, moreinformation is power and that </p>
<p>the internet is this enormouslypowerful platform for very, very rapidinformation flow. you see this in the politicaldynamic, what's going on in iran, and that story is repeatedover and over again. we all understand thatintuitively. it's also true in business. it means that businessescan be more efficient. it means that startups canbe formed more quickly. one way to say it is that thebarrier to entry for a new </p>
<p>company has never been as low,because of the ability to get mass distribution, quick accessto new information, get your perfect out, get itdistributed and so forth. kai ryssdal: exceptfor the fact that nobody can get credit. nobody is hiring. eric schmidt: well, in fact,people are beginning to hire in certain sectors, startingwith the ones that are benefiting from thestimulus package. </p>
<p>so there's some of that. and as long as you have areasonable credit rating, the banks will hire you. the issue with credit in thelast six months is there were an awful lot of non-standardcredit. so think about all thesedevelopers that were busy building these hugeluxury resorts. they didn't use traditionalcredit mechanisms. they used complex credit equity swaps andother kinds of things that </p>
<p>i didn't fully understandthat essentially have all gone away. and their problem is theycan't refinance. one of the issues, by the way,is that there's a significant crisis in commercial creditcoming, because all those buildings were refinanced atvery high debt ratios. and those things roll over,because they don't work like mortgages like we havein our homes. and when they roll over, theywon't be able to refinance. </p>
<p>kai ryssdal: what about thething you were talking about a moment ago, the consumers? there are consumercredit problems coming and there's still-- i'd be curious to getyour take on this-- a trepidation on the part of theconsumer who still fears for his job. eric schmidt: in fact, in marchwe had net savings in this country. </p>
<p>it was historic. we should have had a party. and so what's interesting is,of course, we'll quickly go back to net credit, becausethat's how our economic structure is. kai ryssdal: but do you believe consumers are ready to-- eric schmidt: i do. kai ryssdal: really? </p>
<p>kai ryssdal: even in the faceof rising unemployment? eric schmidt: because what willhappen is, as we bottom through the recession-- we're in the bottomingprocess now. one of the signs of recoveryfrom recessions is that inventories get worked off. there's new demandsfor product. a typical example is cars. they did an analysis of thenumber of cars that you sell </p>
<p>per year, and the numberof cars that get older. and there's an unmet need fornew cars, because people have not been able to get thefinancing and so forth for new cars. well, as financing gets better,as consumer confidence grows, people willbuy those cars. and that's obviously good. kai ryssdal: start gettingyour questions ready. go ahead and line up atthose microphones. </p>
<p>we'll open it up herein just a second. what kinds of conversations,shall we say, have you had with members of theadministration about getting the government back outof the marketplace? eric schmidt: the answer thatthey give is that we're in and we'll get out. kai ryssdal: oh. eric schmidt: and when ilook at the criticism-- and i think it's known i wasa strong supporter of the </p>
<p>president and his program-- the one really legitimate, inmy view, criticism from the other side was that once thisspending and once these tentacles get in from thegovernment into the private sector, and in particular thespecial interests that depend on the temporary spending, itbecomes permanent spending. i think that's a very legitimatecriticism. and the administration has saidthat they're going to answer that question by verystrong steps in favor of </p>
<p>transparency. they're going to show wherethe money went, what it went for. they're using the web in cleverways, and they're good at this stuff. so i think that as citizens weshould hold them to that commitment. and we should see after thestimulus bill, more than $800 billion, let's make sure thatthat part ends and we get back </p>
<p>to our normal business, becausethat's ultimately the secret of america. kai ryssdal: do you thinkthey've met commitment to transparency yet or do theystill have a ways to go? eric schmidt: they have donetheir initial filings. kai ryssdal: so kind of? eric schmidt: well, no, but-- they're on schedule, but it'sa two year program. so so far they've doneit, but again you can </p>
<p>imagine they say it. they meant it. they did it the firsttime, and then they forget about it later. and that would not be ok. so we need to hold themaccountable for the commitments that they make aspart of taking our money, if you will, and make sure thatthey really follow through, using the tools that areavailable on the internet. </p>
<p>and what's great about it isthat, although most of us don't have time to study thesethings in detail, for every program in the government ifyou basically publish what they're up to, there are groupsthat will monitor. they will keep them honest.they will check their commitments and what they say. that's one of the great thingsabout governance in the internet age. kai ryssdal: again, microphonesright there for </p>
<p>those of you whohave questions. there was a panel here thismorning in this room, maria bartiromo, and douglasholtz-eakin from the mccain campaign, and austan goolsbeefrom the white house, and david wessel from thewall street journal. and one of the big themes intheir discussion was business investment. in an economy where consumersare afraid, how do you convince businesses that theyhave to step up and take a </p>
<p>leadership role? eric schmidt: well, businessesare run, american businesses are run pretty rationally. they look at demand andthey make their investments based on that. and the fact of the matteris most companies have-- many companies have actuallyfairly strong cash positions. kai ryssdal: most,in fact, right? i mean even today, most. </p>
<p>eric schmidt: surprisinglyso, and some of that is regulatory in nature. some of it is the way ouraccounting system works. but the fact of thematter is-- again, this is unsung. we always focus on thebusinesses that are credit-sensitive. many businesses, google beingone, have lots and lots of cash, many of the high techbusinesses and so forth so </p>
<p>we're waiting, if you will, forconfidence to come back, for the markets to come back. and we know that they will. kai ryssdal: you'rewaiting for us. we're waiting for you. eric schmidt: but that's whythese things take two years, rather than one week. that's why there isa business cycle. and the funny thing is i cantell you that we're in a </p>
<p>business cycle, and you'll say,no, we're not, because it's like all a disaster. but in fact, a month from now,things will be better. if you look at unemployment,for example, in the most recent report the loss of unemployment has gotten better. kai ryssdal: the rate at whichthe economy is losing jobs. eric schmidt: again, thesigns are there. kai ryssdal: yes, sir? </p>
<p>audience: hi. brian lehrer from wnycradio in new york. eric, i use google all day,every day, like a lot of people in this room, but isthere ever a point at which google becomes so big that it'skind of scary and needs to be regulated asa public utility? we kind of reached that withmicrosoft in the '90s, some of the same discussion. when you're aggregating all thecontents of books, when </p>
<p>google news is the place thatpeople go for news content, instead of the sites, new yorktimes and everything else that you're aggregating and you knowsome traditional media are upset with you for that,seriously, literally, is there a point where you need to beregulated as a public utility? and if you can, please addressthe news content question in particular. eric schmidt: you'llbe surprised that my answer is no. </p>
<p>and i would offer as a scenario,would you prefer to have the government runninginnovative companies, or would you rather have the privatesector running it? and there are models, and thereare countries, where, in fact, the government doestry to do that. and i think the americanmodel works better. audience: but eric, if i couldjump in, i would expect a more sophisticated answer from you,because as we saw with the banks, it's not a question ofsoviet-style communism or free </p>
<p>market capitalism. the banks needed smartregulation that they didn't have, as i think youwere just saying. is it possible that information is in the same boat? eric schmidt: well, again,my answer would be no. and perhaps i should expandon my answer. google plays an importantrole in information. and the reason you're askingthat question is because </p>
<p>information is importantto all of us. we run google based on a set ofvalues and principles, and we work very, very hardto make sure people know what they are. so for example, for you as anend user, if you become dissatisfied with google, we'llmake it easy for you to switch to a competitoror another choice. in fact, we have a group whichis called the data liberation front, which works forus, that actually-- </p>
<p>sorry-- which basically works very hardto make sure that there are no ways in whichwe trap data. so there's a long listof things like that. and companies are defined bythe values that they were founded with and that theyoperate with today. and so if you're concerned aboutthe need for regulation of google's role, part of myanswer would be that the company is, independent of myleadership and the founders' </p>
<p>leadership and so forth,the company is formed in a certain way. a thing that you should beworried about is it that a combination of special interestplus unintended regulation could in fact preventthe kind of consumer benefits that we pushso very hard to do. and part of the other pushbacki would offer is that the things that we do areavailable to others. there's nothing particularlysecret, in the sense that </p>
<p>we've just invented stuff, butwe haven't largely prevented people from doingtheir own thing. it's pretty easy for peopleto try other things. i'd like to see some other folkstrying to lay out an agenda for innovation. with respect to the newsquestion, which i think is what you're reallytalking about, there's a couple of comments. the internet arrived, and asit arrives, it displaces </p>
<p>industries in reallyprofound ways. and it's not necessarilythe players' fault. it's really about how consumersbehave. in the case of news content, news readers,that is the customer, if you will, are busy readingnews online. and we have not yet figuredout the perfect ad model for that. but one of the things that ishappening is it's affecting, for example, the newspapereconomics, along with the loss </p>
<p>of classifieds, cost ofprint, et cetera. i don't know how to solve thegeneric newspaper problems. and we talked a lot about thisto them, because it's a shared interest. it's, from myperspective, a huge tragedy that we would lose investigativereporting in our country, which has driven somuch of what we really know and really driven transparencyin lots of fundamental ways, both in the us and globally. we're working on a whole bunchof products in that area, to </p>
<p>try to do it. there is a tension here, becausethe newspapers give us access to their content, andthen they complain that we don't pay them out of ourother businesses. when we tried that, there's notenough revenue that we can yet get from their content, andso we would essentially be subsidizing them. that's roughly the answer. kai ryssdal: this company's mostfamous value is don't be </p>
<p>evil, right? it became iconic when youguys went public. does don't be evil alsomean always be good? eric schmidt: i didn't majorin that philosophical question, so that's a reallyhard question. a simpler answer mightbe that don't be evil is a way of operating. unfortunately, if there werebook that said what's evil and what's not evil, then wecould just consult it. </p>
<p>what don't be evil says is whenyou face a question, ask the question. and it's almost like a ripcordwithin the company. and when i first ran thecompany, i thought, this is crap, right? this is young peoplehaving a good time. so i'm sitting in the room andwe're having a conversation about a particular ad product. and one of the engineers,whose name is ron, says, </p>
<p>that's evil. and it was like a bomb goingoff in the room, and i felt like hiding under the chair,because all of a sudden the whole conversation stopped. and there was this lengthyconversation as to whether the decision was based onour principles. and the principles of google arebasically about end users. so to answer the earlierfellow's question even more deeply, we try to makeour decisions </p>
<p>based on end user benefit. many industries, whether welike it or not, are not as organized around enduser benefit. they're often organized aroundthe supplier benefit or the shareholder benefit. we try to focus on end users. kai ryssdal: one more spin offof brian's question and then we'll get to this side ofthe room, i promise. a lot of your answer sounded alittle bit like what you said </p>
<p>in the beginning. how do we know that theeconomy's getting better? because the people who gotus here told us so. it was a little bitof, trust us. eric schmidt: well, what'syour alternative? don't trust us? kai ryssdal: not buy yourstock, i guess. i don't know. eric schmidt: but thegood news is-- </p>
<p>kai ryssdal: i can't not useyour products, right? eric schmidt: sure you can. we have competitors. kai ryssdal: yes, but come on. i mean, i'm on reader. i'm on mail. i'm on this. i'm on docs. eric schmidt: i'm glad to haveyou, but every one of those </p>
<p>has an able competitor. they really do. kai ryssdal: yes, ma'am. audience: thank you. shelly porges fromwashington, dc. google has obviouslydone phenomenal-- has promoted the democratizationof information in a great way, and has, infact, promoted the development of a lot of innovation in smallbusinesses, or large </p>
<p>businesses, for that matter. what role can you play goingforward to help us get out of this, or do you envisionyourself playing an active role other than what younormally do as part of your day-to-day business,number one? eric schmidt: democratizationof the society or-- audience: no, democratizationof the information. i'm sorry. information distribution andaccess to information. </p>
<p>and then, related to that, thequestion before came up, where is the turnaround goingto come from? and one thing that has seemedto be not commented much, other than the broad topicof innovation, is small businesses. small businesses created halfa million more jobs in the last recession than they didin this recession, yet you hear all the talk going around,the stimulus package, big companies, big sectors,that sort of thing. </p>
<p>so how do you see google playinga role in all that. eric schmidt: for the secondpart, it's pretty easy. the internet is such a greatfriend of small businesses that much of our partnerships,much of our advertising revenue, is driven by smallbusinesses, because of our self-service advertising. and furthermore, our auction inour business is designed to not favor the big guys, whichis of constant annoyance to the big guys. </p>
<p>and the little people nevercomplain about this, because they know that in traditionalaccounting structures, they're the ones that are disfavored. so we think we make a goodstep forward on that. so with respect todemocratization of information, it first getsback to whether the information is publiclyavailable. and one of the things thatwe've learned is that governments are not asinterested in transparency as </p>
<p>you might think. if you're a governmentbureaucracy, if you're a government bureaucrat,then google shows up. and we're sort of a pain in theass, is a way to describe it, because all that canhappen is you can get embarrassed by access toall this information. it's oversight, andmany organizations don't really have that. so we've argued, for example,that all of the hearings that </p>
<p>happen in the government, in theus and elsewhere, should be webcast raw. and it's easy to do. it's inexpensive. many companies can do it. and that way, you couldliterally see what all the public meetings are doing, andnot have to attend them. audience: so like govtubeinstead of youtube. eric schmidt: yes. </p>
<p>so there's lots ofthings like that. and the technology is veryinexpensive to do this. it's not a big thing. and i think it would helpa lot with oversight. kai ryssdal: yes, over there. audience: eric, sam perryfrom menlo park. eric, you've shared with us inthe past-- one of the other previous panels in this tentthis morning was on energy policy in the future. </p>
<p>and you've been very open insharing what google has been doing the last couple ofyears in that area. to segue off of the lastquestion, what can google do and is it doing to help smallbusinesses, but also individuals-- i know some of the individualstuff is coming to the front now-- to conserve energy,that aspect of the next part of the agenda. </p>
<p>eric schmidt: so you'd have tobe living in a cave to not understand how serious theclimate change threat is at this point. and the people who spend theirtime saying it's not true must not notice the change inseasons, the fact that it gets warmer earlier, the increasedvariability of weather, the loss of biodiversity, the many,many things that are going on that everyone sees. so we're in a situation, as weknow, where climate change is, </p>
<p>with the possible exceptionof a true nuclear war, the greatest threat affectingmankind and our children and grandchildren and so forth. so from our perspective, ourcontribution is, first and foremost, to work on ourown use of energy. so we have the most efficientdata centers and so forth. we use a lot of power. but we've also decided to putour money where our mouth is and begin to invest inthe supply chain. </p>
<p>so we put together a seriesof-- we studied this for a while, and the most promisingthings are, for example, with wind technology, the solarthermal, solar photovoltaic, enhanced geothermal, thosesorts of things. we've been putting money intothose investments to try to build the demand structure,because we have good cash and we're obviously a good customerof this, and we know we're going to need it. we also authored a plan calledthe google energy 2030 plan, </p>
<p>and the thing that was botheringus was, why doesn't somebody just add all the moneyup and figure out how much it's going to costto fix this problem. this is a classic big scalesystems engineering problem. and we were shocked to discoverthat we made a trillion dollarsby doing this. and you sit there and you go,this guy must be mad. well, we work at google. it's sort of a crazy place. </p>
<p>but it turns out that if yousave the capital to build the excess plants, if you save allof the downstream expenses for these enormous capital expenses,and instead you take the equivalent amount of moneyand put it into renewable over, in our case, a22 year period, you actually make money. another example is that if youmove to higher efficiency cars through hybrids and betterefficiencies, better car designs, and get to the 50,60, 70 mile per hour car, </p>
<p>which is clearly technologicallyfeasible, you save so much money in terms ofliterally the gas prices, which drives everybody crazy,that you really can make a dent in this. so i would offer inthe climate change area a note of optimism. i don't know whether thecopenhagen protocols and that are going to be successful ornot, but i do know that in our own country we can, asindividual actors, take the </p>
<p>necessary steps to, by the way,do the most boring thing first, which is to insulateyour house and insulate your building. at google, we were having ameeting and i said, well, ok, how much is it going to cost? and he said, oh, a millionand a half. that's a lot of money. i thought, ok, what'sthe payback? and they said, oh,it's 18 months. </p>
<p>and i said, it's an 18 monthpayback for a million and a half, and you haven'talready done it? and he said, no oneasked us to do it. do it. all you have to do is do it. it's so obvious. kai ryssdal: do you ever getsick and tired of the, what can google do about thehigh cost of milk or health care or-- </p>
<p>i mean, with this ubiquitycomes a certain responsibility, no? eric schmidt: in the audience wehave an author of a book on that subject. kai ryssdal: standing rightthere, in fact. eric schmidt: i guess we'llget to jeff shortly. if google is a metaphor forthinking differently about problems, then i'mhappy to be it. and it clearly helps us froma branding perspective. </p>
<p>there are limits to whatgoogle can do. we are a relatively simplecompany, built around information and serversand the web. many of the problems that peopletalk about are much more complicated. so as i've looked, for example,at the health care bill and so forth, thecomplexity of that system is well beyond what any companyor any architecture could really attack, i think,right now. </p>
<p>kai ryssdal: do you thinkconsumers really buy the fact that you guys are asimple company? eric schmidt: compared to theother companies, believe it or not, google's prettystraightforward. daniel casse. the first questioner asked youa question about microsoft. i wanted to follow up on that,since microsoft was the company that everyone used totalk about in technology, before you came along. </p>
<p>in five years, what businessdo you think microsoft will be in? what business would youadvise them to be in? and in what ways are you goingto compete with them? eric schmidt: sure. these are extraordinarilydangerous questions. we have trouble predicting thenext 12 months at google. you're asking me a fiveyear question in a different company? </p>
<p>kai ryssdal: butyou're google. eric schmidt: you setme up for this one. kai ryssdal: not a plant. eric schmidt: microsoft's corebusiness comes from two products, windows and office. they have very, veryhigh market share. they were found to be a monopolyin one of them. they are clearly a monopolyin the other. they're under variouslegal restraints by </p>
<p>virtue of that behavior. so the first and most obviousanswer is that they're going to continue focusingon those things. the issue that microsoft andmany other companies are facing is that there'sa shift to different architectural model. and sorry to be so technicalhere from a minute, but it's called cloud computing. and basically, it means thatthe network is now reliable </p>
<p>enough that you keep allyour information there. and the idea is that you pickup any kind of computing device and the information isthere, even if somebody just hands you a device. you just say who you areand off it goes. and this is a very, very bigdeal in the computer industry. and it's one which companieslike microsoft need to figure out a way to makethat transition. google is organized aroundmaking what's called cloud </p>
<p>computing a core part ofthe next generation of architecture. kai ryssdal: yes, sir. audience: thanks. my name is randall kempner. i run something called the aspennetwork of development entrepreneurs. it's a group that promotesentrepreneurship as a means to promote sustainable </p>
<p>development in emerging markets. so with that background, myquestion to you is how do you, or how does google, viewinformation technology as a weapon, as a mechanism tosupport sustainable development? and in particular, is googledoing anything to make sure that it's not doing evil inemerging markets like africa and latin america? eric schmidt: weare doing some. </p>
<p>and i would argue we arenot doing enough. africa is a very good example,because this is a continent of people largely trapped withoutvery much information. a curious statistic is that theinternet connections to africa cost more than they doin the united states, even though the country is infinitelypoorer, which has to do with a regulatory failure,a governance failure, and so forth and so on. so we've been working very, veryhard to build what are </p>
<p>called proxy caches, that youcan put in the countries, accelerate the local access. we're also doing things-- mostpeople who are in very, very poor situations have mobilephones, which is a great accomplishment. the rough number is somewherebetween three and three and a half billion mobile phonesin use today. by the time, maybe 10 yearsfrom now, it looks like 5 billion to 5 1/2 billion peoplewill have either a </p>
<p>mobile phone or access to one. and they can use those to dothings like sms texting, where they can get a lotof information. so with respect to sustainabledevelopment, there's this conflict between rapid evolutionof the economics and the sustainable development. we can help market it. my fear is that most of thesecountries, the fundamental problem is a corruption problem,that the industrial </p>
<p>structure and economic andpolitical structure are not mature enough that when you makethe investment that it goes to the right placeand achieves the right regulatory outcome. kai ryssdal: jeff. audience: i'm jeff jarvis. i wrote a book called whatwould google do? and i won't ask you. since doing that, a notionclarified in my mind that i </p>
<p>wanted to try out on you, isthat what we're going through right now is much more thana recession or a financial crisis, that it is a fundamentalrestructuring of the economy and society, goingpast the industrial age of mass production, distribution,marketing media, into something based on knowledge andabundance and the things that i did write thatyou're about. and when we see what's happeningto automotive, and banking, and newspapers andother parts of media, soon </p>
<p>probably advertising, bigswathes of retail, real estate, we're seeing a huge andfundamental restructuring that i don't think is going togo back, and that a lot of new companies, one hopes like yours,are going to start creating new versionsof these industries. am i going too far? eric schmidt: i think so. of course, you're good at it,because your book was about taking some ideas and reallytalking about them in a global </p>
<p>context, and very successful,i might add. i think the evidence right nowis that while i'd like what you said to be true, it'snot today yet true. i'd like us to make it true. and the reason is that almostall of the money, and almost all the people, and almost allof the capital is not going to where you described it. it's going into traditionalbusinesses and traditional industrial and serviceoperations. </p>
<p>i think one of the ideasaround the aspen ideas festival is to talk about newideas, like the one you proposed, is how could youaccelerate that transition. what happens is that you get ayoung entrepreneur in the kind of industries that are difficultto transform, and when you talk to them, they'vehit so many regulatory barriers, so many barriers toentry, so many other ways, that we need to find waysto make it easier. so as a young engineer, i wasvery interested in trying to </p>
<p>make the internet moresuccessful, and i ran into the regulatory structureof the telcos. so, for example, there wassomething called a t1 line, and what happened is everyonefigured out how to build a business beneath the regulatorypricing for a 1.5 megabit t1 line. so an artifact of regulationwas that a whole business was created. had the regulation not beenthere, we would have been five </p>
<p>years farther along. and i think if you look at everyone of these businesses, you'll discover that theincumbents, typically large companies working withregulators, have ended up making a cozy structurefor themselves. and when the truly discontinuousidea comes along, it's not in anyone'sinterest to take it on. and that's why the marketpressure is so fundamental. so getting back to our earlierconversation about the </p>
<p>government and its role,governments are not particularly good at dealingwith change. one executive told me that hightech works three times faster than traditional businessand government works three times slower thantraditional business. so that may be anextreme case. we designed our government notto change very quickly, and yet we are asking forvery rapid change. it has to occur fromthe private sector. </p>
<p>it has to occur from enlightenedleadership. and it has to occur in areaswhere money is being made. audience: so could google onlybe google because you were doing something new? eric schmidt: i would argue thatgoogle is as successful as it is primarily because ofthe openness of the internet, that had you had brilliantfounders such as larry and sergey in a difficult, regulatedindustry, the progress would havebeen much slower. </p>
<p>and people always give us somuch credit, but let's give credit to the people who foresawthe internet, opened it up, designed it in a waythat it did not have significant choke points, madeit be possible for random people, including 24 year oldsin a dorm to enter and create something new. that's a story of innovationthat's very, very precious. and we need to make sure thatwe preserve it for the next competitor, by theway, of google. </p>
<p>kai ryssdal: let mejust zero in for a second on that question. do you not then believe thatthis economy has been, through the past two years and thechanges we've seen, fundamentally reset, that we'rejust going to proceed from here apace? eric schmidt: well, i wouldlike it to be true. my question to you iswhere is the data? when i look at most of where themoney went in the economy, </p>
<p>when i look at all the politicsand all the bills and so forth-- and i've supportedmuch of this-- most of it's going to the incumbents. now, with a counterexample thatthere's now-- we doubled our national science foundationfunding from $3 billion to $6 billion, whichis a drop in the bucket. there's more money forappropriate medical research and those kinds of things, butfundamentally, if you look at it mathematically, the majorityof the power and </p>
<p>control is still not aroundreal innovation. and that needs to change. kai ryssdal: is googlestill a new company? well, hopefully. you guys have been aroundforever, it seems. right? our collective experience is,oh, yes, it's google. eric schmidt: well one of thethings to say about brands is that brands can be createdvery quickly. had anyone heard about twittertwo years ago? </p>
<p>and yet twitter is aphenomenally successful company and brand. who here knew about facebookthree or four years ago? phenomenally successful. so one of the things that's neatabout being in our world is that new companies and newbrands can come along. in google's case, we believethe way we run the company, which is rather unusual,keeps it sort of young. in particular, our engineers areencouraged to spend 20% of </p>
<p>their time working on whateverthey want to work on. and before you get too excited,these are engineers, so they don't move toofar from a field. but virtually everything we'vedone that has been creative has really, reallycome from that. and top down, centralizedcontrol from people like me is not going to drivethe creativity. i've read about google's, say,tracking epidemics by using search information. </p>
<p>and i'm wondering how else youplan on using the search information in the future. and if it will be regulated, ifyou think you'll be able to keep control of that kindof information. eric schmidt: a verygood question. so everybody knows we puttogether a flu trends program and we used anonymized data. that is, we took the searches,but we took away the information about the person. </p>
<p>and we discovered that becausewhen you get a symptom like a disease, the first thing youdo is you type the symptom into google, we could see monthsbefore the official reporting agencies could seethe emergence of a new horrific disease. and the estimates are thatthis will save tens of thousands of lives. that's a huge, huge thingfrom our perspective. we're very excited toparticipate in that. </p>
<p>we don't take that too far. and the reason is that thereis a very fine line between anonymizing information to makepeople healthier and then the sort of spookiness andprivacy issues that we're so concerned about. in the european commission,there are a series of laws, called the european data privacyinitiative, which regulate this to aboutan 18 month period. and so it looks like historicallogs, literally the </p>
<p>things that you've done fiveyears ago, will be deleted both by policy andalso by law. there's a very legitimatetension between the state interests in, for example,police action, and then your interest in privacy. and each country sorts thatout differently, and we're subject to all of those laws. my own guess is that we'll endup with about an 18 month period for search logs and we'llbe very careful about </p>
<p>using much of that beyondthings like flu trends. kai ryssdal: again though,it comes down to trust us with this data. eric schmidt: well, in thiscase, it's also trust the government. and depending on your point ofview of the patriot act, that's a good or a bad thing. so again, this tension-- we made a decision that we don'tknow how to make the </p>
<p>decision about that trade-off,that the political process, that the governments thatdebate this fundamental tension between civil liberty,state interests, safety, and so forth, is not one that weshould have an opinion about. and that was a difficulttransaction, but how could we decide whether it's 18 monthsor 12 months and so forth? kai ryssdal: just a coupleof more, i think. yes, over there. audience: yes. </p>
<p>hi. david [? kunin ?] from new york. can you elaborate-- it's a follow up to jeff'squestion about the old economy, new economy debate. can you expand on the-- so many of what you've donehas been so successful but froogle was a project thatreally wasn't that successful </p>
<p>and has to do-- eric schmidt: why do youhave to remind me? audience: well, can youelaborate a little bit on your view of what didn't happenthere, in terms of being able to use the power of informationon the internet to find low pricing, and to beable, in this economy, where you've got so many stores andtraditional retailers shutting down, what it is about-- so many of the models and somuch of this conversation has </p>
<p>been about advertising modelsor monetization using information, whereas retailabout pricing and the ability to really move the economyinto more of a different distribution model, can youtalk a little bit about pricing and distribution? kai ryssdal: remind us whatfroogle was, and then explain why it didn't work. eric schmidt: so frooglewas our first attempt at product search. </p>
<p>and it didn't work becauseit just didn't work. and we celebrate our failuresinside the company, because we want people to take risks. so we replaced froogle by whatis now google product search, which has been doingpretty well. and froogle was a destinationsite. it had the wronguser interface. it didn't have all theright products. it did not have enoughinventory, that kind of thing, </p>
<p>a long list of thingsthat we did wrong. so one way of stating yourquestion a little differently is to say, how will the commerceworld change now? i think that's roughlywhat you're asking. audience: yes, instead ofadvertising models, commerce. and you have product searchand so forth, and we're exploring that now. let me give you an exampleof a product that we've just released. </p>
<p>it's a product for your mobilephone, and you take a picture with your mobile phone of a upcbar code, and it tells you whether the productis cheaper online. ok, well you can imagine who'sin favor of this product. you can also imagine who'sopposed to this product. but that's an example. and one of the discussions foryou all to think about is what are things that are neat thatwe could do with the collective intelligenceof what people do. </p>
<p>people are smart. and within reason and respectingtheir privacy, could we in fact get betterbargains, better delivery, those sorts of things. and that's just anexample of it. we have, again, googleproduct search, which is doing very well. we have more and more peopleusing product purchasing. you can imagine things likesubscription businesses and so </p>
<p>forth eventually. if you look at the success ofamazon, amazon, i think, proves that this modelworks well. audience: but are you surprisedat how fast or how slow things are moving online,in terms of the growth of online commerce? eric schmidt: i'm prettyhappy with it. i think that most people nowknow that when you buy things for christmas, by far the bestway to do it is to do it </p>
<p>online and then just shipit to the person. and there was a point at whiche-commerce became reliable enough that you wouldn'tbe embarrassed at the christmas party. and so i think e-commerce is notonly here to stay, but now people are arguing over the taxexemption that it has for sales tax and thosesorts of things. so you know that you've arrivedwhen that's happening. kai ryssdal: how hard are youguys working at getting away </p>
<p>from ad revenue as-- eric schmidt: by the way,we love ad revenue. kai ryssdal: absolutely. eric schmidt: we love it. do you know what percentageof our revenue it is? kai ryssdal: over 90%. eric schmidt: 97%. or is it 98%. we love ad revenue. </p>
<p>kai ryssdal: doesn't that numberscare you, though? eric schmidt: no. the serious answer is weare diversified across advertising. we would like, our board memberscall it more legs of the stool, please. and we have a pretty successfulbusiness in the enterprise, which we think isgoing to be pretty exciting. and we've got a number of othersort of subscription, </p>
<p>non-advertising businessesunderway. this one is probably a softball,so it's more of an invitation for your perspectiveon i think what is a reasonably hot topic, andparticularly in your industry. so, talk about immigrationpolicy, outsourcing of jobs, h-1bs, the balance of humancapital trade, how many people are we sending overseas anddoing the same thing yet at the same time trying to shutdown the reciprocal. i'd just be curious aboutyour thoughts. </p>
<p>eric schmidt: again, i don'tknow if this is a softball, but it's like, ok, let'sgo through this. audience: i think i knowwhich direction you want on this one. eric schmidt: let's take thesmartest people the world. let's bring them tothe united states. let's educate them and give themthe top universities, and then let's kick themout of the country. now that makes a lot of sense. </p>
<p>furthermore, they can go tothe other country, create using all of our americanideas, take all of our intellectual property, andcreate businesses to compete with the american firmsand pay taxes to those governments. how am i doing so far? audience: it's a very big swing,so it suggests that-- eric schmidt: do i haveyour vote yet? audience: yes, exactly. </p>
<p>eric schmidt: i've been tryingto figure out what is the intellectual basis foropposing my argument? and there must be-- audience: well, you're engagedwith the administration. you are ubiquitous. so what is-- eric schmidt: i've giventhis speech. i've just been blunterthan i just was. and it seems to me that thereis an intellectually correct </p>
<p>view, which is that everyone isexactly the same and that there's no difference inintelligence or ability between every human being. and if you believe that, thenyou don't live in the same educational system that i do. i just don't understand. we have this amazing, amazingasset in america. the smartest people in theworld want to come to the united states, and thenwe kick them out. </p>
<p>kai ryssdal: do you get anytraction with this discussion in washington? eric schmidt: i justget louder. kai ryssdal: so how doyou really feel? howard, i think this is thelast one right over here. audience: ok. you haven't talked at allabout cyberterrorism, or cybercrime, or just manipulationof data, which is untraceable, and what dangerswe really have as consumers. </p>
<p>kai ryssdal: and it's worthpointing out that people were talking about you as the firstchief technology officer of the united states. eric schmidt: right. better to work for aprivate company. kai ryssdal: you keepsaying that. eric schmidt: we likeprivate companies. innovation is where it occurs. the internet is full-- </p>
<p>it's shocking, butthere is actually criminals on the internet. and when i used to talk aboutthis 10 years ago, people would say, oh, howdo you know that? i said, because there are humanbeings on the internet, and not everyone is perfect. and so the internet has had justgeneration and generation of the kinds of attacks thatyou're talking about. a typical example is peoplewill find 5,000 </p>
<p>computers that are idle. they'll exploit some bug,often in one of our competitors' products. and they will exploit thatbug, and they will do a systematic attack on a website,called a distributed denial of service attack. and the significant players thatare in the industry are all well insulated for that. so we face this all thetime at google. </p>
<p>so the kind of attacks that youworry about are the ones that are not like that. so you could imagine astate-sponsored attack where they used, for example, the nameservers to spoof you and say this isn't google, this issomebody else, which would require sort of an incorrectbehavior by a government. and we worry about that. we worry about the financialsystem, and in particular the money transfer systems, and thechecks and balances for </p>
<p>moving money around. and that's been a problem. i'm not as worried overall,because the problems that we face, we face not just fromcyberterrorism, if you will, from states and horrific peoplelike terrorists, we face them from 16 yearold idiots as well. and so we're sortof used to it. so i'm not as worriedabout it as others. i think we should-- it's a priceof being interconnected </p>
<p>that you're also interconnectedwith the people who are going to donasty things. and we need to make sure thatour systems are designed to prevent it. the internet grew out of thisnotion of communal sharing, and all of us who've been partof it have had a rude awakening when we discoveredthat the internet could be misused. and again, i think we'veaddressed it, largely. </p>
<p>kai ryssdal: and with that, ithink we are done for the day. eric schmidt: well, thankyou very much. kai ryssdal: thankyou for your-- </p></div>
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<div align="justify"><p>>>davis: okay, i think we are going to tryand get started. if i could get everybody's attention.my name is larry davis, and i am the chair of the computer sciencedepartment, and it's my pleasure and honor to introducethis afternoon's colloquium speaker, vint cerf.so i can only tell you a little bit about vint, because if i told you about all hisaccomplishments, you'd never hear from vint. i'd be up here for an hour.so currently he's vice president and he has the interesting title of chief internet evangelistfor google. google is an internet search company [laughter]--forthose of you who don't know. </p>
<p>and the reason for this is back about 20--25years ago vint and his colleague, bob conn, essentially invented the internet.co-designer of the tcp/ip protocols and the architecture of the internet.and he's been widely recognized for this really incredible contribution.a large part of our economy is depends on the internet these days.in 1997, president clinton presented the us national medal of technology to vint and bobconn for founding and developing the internet. all right.and then they also won what's called the--turing award.in computer science that is the highest award given to anybody for truly fundamental contributionsto computer science. </p>
<p>and then in november of 2005, george bushawarded cert and conn the presidential medal of freedom, which is the highest civilianaward for scientists in the united states. now in today's rapidly expanding government,i am sure that barack obama will invent an even more prestigious award, and you can becertain that the first winner of that award will be vint cerf.and so, it's my pleasure to introduce vint, and welcome to the university of maryland. >>cerf: thank you very much, larry. [applause]thank you for not introducing me as al gore. [laughter]okay. are we in?good. </p>
<p>all right.well first of all, i appreciate the warm welcome. i'm just sort of stunned.the room was empty when we walked in about 20 minutes ago, and so--wow. i hope that i have something useful to say.i have to tell you that this interesting title, chief internet evangelist, was not one thati chose. in fact, when they asked me what title didi want at google, i said "how about archduke?" [laughter]that sounded pretty good to me, but somebody pointed out that the previous archduke wasferdinand, and he was assassinated in 1914, and it caused world war one.maybe it's not a good title to have, so i </p>
<p>was happy to settle for internet evangelist.well, let me start by going back into history a little bit.this is what the predecessor to the internet looked like in 1969.around december four nodes had been installed, and i was lucky to be a graduate student atucla at that time and wrote the software that connected this thing called the sigma 7 upto the first node of the arpanet. the sigma 7 is in a museum now.some people think that i should be there along with it. [laughter]but this system was the beginning of experimenting with packet switching, with which i am sureyou're all very familiar. at the time it was considered a really crazyidea. </p>
<p>if you were part of the telecommunicationsworld, you knew that the way to do telecom was circuit switching.and so, at&t had absolutely no interest whatsoever in this technology, but they were willingto sell us--lease lines that we could build our own packet switch.around 1977, after i went from stanford to the defense department to lead the program,we experimented with getting three different packet switch nets interconnected.by the way, that's why it's called the internet. we had the arpanet, and when bob conn cameout to stanford in the spring of '73 and said, "i have two other nets.one's a mobile radio net. one is a multi-access packet satellite net."and, of course, there is the arpanet, which </p>
<p>bob also worked on.and he said, "the problem is how do i get them all interconnected in a way that looksmore or less uniform?" they were different data rates, differentdelays, different error rates, different packet sizes, and so on.the consequence of all that is that bob and i spent about six months trying to figureout a way to do that, and that is where the tcp/ip protocols came from and the ideas ofgateway. so, we built this 3-network system and, forthe first time, did a demonstration that we could get all three of them to work usingthese new tcp/ip protocols. this was a particularly interesting test.there was a van that was built by sri international </p>
<p>and was driving up and down the bay shorefreeway radiating packets in this mobile packet radio network.the packets were artificially forced to go through a gateway--we didn't know they weresupposed to be called routers then--so we called them gateways--between the packet radionet and the arpanet, and the routing for these internet packets was forced to go throughan internal satellite hop inside the arpanet all the way to norway and then down by landlineto university college london. then hopped out of that international extensionof the arpanet, went into another gateway between the arpanet in england, and the packetsatellite net over the atlantic went through the packet satellite net down to a groundstation in _____(??), west virginia, through </p>
<p>another gateway back into the arpanet andthen all the way across the country down to usc, information sciences institute in marinadel rey. well, if you measure the distance betweenmenlopark--which is where sri was--and isi--it's about 440 miles.but if you measure the path of the packet, it was about 100,000 miles--is it went upand down twice to a synchronous altitude all the way back and forth across the atlanticocean and the united states twice. so, it worked.and i have to tell you, we were leaping around saying, "it works, it works!"if you have anything to do with software you know it's a miracle when it works. [laughter]so the chief internet evangelist not only </p>
<p>believes in miracles, but he relies on them.[laughter] so it was pretty exciting to get three differentnetworks inter-operating with the same set of protocols, because you could do almostanything to get two networks to interact by doing all kinds of conversions and whatnot--butthree or more was a big deal. so if you fast-forward to 1999, the internetlooked kind of like this-- bill cheswick, who at the time was--bell labs--didthis automatic mapping program to take the backbone routing tables from bgp protocoland show what the various autonomous systems were in the network and what their connectivitywas. so each color is a different autonomous system.if you look at 10 years later, in 2009, it </p>
<p>looks just like this.it's just bigger. there are more autonomous systems and morecolorful and a larger number of users. speaking of which, the statistics of the netare very interesting. there are 625 million machines that are visiblepublicly on the internet. and i emphasize "visible publicly," becauseover time, more and more machines have come on the net that we can't see in the publicdomain name system. and the reason for that is that people haveput up firewalls to isolate--enterprise systems or university systems and the like--so thatnot everyone can see and interact directly with all the machines on the net.but of the ones that we can see publicly, </p>
<p>there are more than 500 million of them.the number of users on the net is estimated at about 1 ã‚â½ billion--almost 1.6 billion.and the other phenomenon, which has taken place during the last 10 years, is an incrediblyrapid growth of mobiles. 3 ã‚â½ billion are estimated to be in use,and another billion may go into use this year. some of them will be replacements, and somewill be new additions. what is important to us at google and anyonewho is thinking of offering internet services is that an awful lot of people will firsthave their interaction with the internet through a mobile and not a laptop.and so anyone who is thinking seriously about offering internet services has to start thinkingabout the different avenues by which this </p>
<p>interaction will take place and the constraints.now, this is a blackberry. i have a g1 in my bag.this thing has a display the size of a 1928 television set and a keyboard that is suitablefor people that are 3 inches tall--and varying data rates, depending on where you happento be--so it is a very constrained environment, but a very important one for all of us whoare trying to treat, as well as we can, the full range of users on the net.speaking of which, where are they? this is another very interesting statistic.if you look, of course, you can see that asia is now the largest single grouping of userson the internet. that shouldn't be too big a surprise.more than half the world's population is what </p>
<p>we would call asia.and certainly china and india are part of that--malaysia, indonesia, and so on.but they are only at 17.1 percent penetration right now.europe is almost 400 million people, but i've given up making any projections about europebecause they keep adding countries. [laughter] so i don't know what to predict about europe.but they're at about 50 percent penetration. north america, which used to be the largestsingle grouping of users, is now at almost 75 percent penetration.there isn't going to be a lot of growth in north america with regard to absolute numberof users. so if you're thinking business on the internet,you really need to pay attention to these </p>
<p>numbers because the business growth is goingto come from asia and europe and some of the other parts of the world where the penetrationrates are as you see them on the right hand side of the slide.so this has implications for the languages that are needed, the styles and cultures ofinteractions, which vary from one country and one culture to another.if you don't pay attention to that, your business model may not work.and google has learned this very, very clearly. we've opened up engineering offices aroundthe world, in part, to take advantage of people's native knowledge of language and of stylesand customs. people don't interact the same way with searchengines everywhere in the world. </p>
<p>and there are some parts of the world wherethe google homepage is thought to be incomplete because there is almost nothing there andthere's this empty box. and it doesn't occur to them that they shouldtype something in it. they are expecting to see things to choosefrom. and so we've had to vary the appearance ofthe google homepage for some parts of the world in order to accommodate their expectations.if you look here--this is just some other statistical picture of the heavy penetrationof-- i'm sorry--the white penetration but heavyabsolute population in asia and some of why these are the penetration rates as you seeit. </p>
<p>the world on the average is about 23 or 24percent penetrated, which means that the chief internet evangelist at google has about 78percent of the world to convert still. so if you guys want to help, let me know.now, this is a very important chart, and there will be a final exam on this at 5 o'clock.this picture has only one really important graph on it.it's the thing that's going down. and that is the remaining available ipv4 addressspace that the internet assigned numbers authority can hand out to the regional internet registries.it's going to run out somewhere around 2010 or so.and i blushingly admit it's my fault. around 1977, when i was at darpa, about ayear's worth of debate had occurred among </p>
<p>the engineers helping to develop and testand implement the internet as to what the address space should be.one group wanted variable length addressing, and that went away very quickly because theprogrammers hated variable lengths, as it chewed up extra cycles to find the fieldsin the header. and they said that sucked, so that went away.so the only other options were 32 bits and 128 bits, and they couldn't come to any conclusion,so there've been a year of arguments. so finally i had to get this program moving.i said, "it's 32 bits, that's it. it ought to be enough to do an experiment."it's 4.3 billion terminations. i figured even the defense department didn'tneed more than 4.3 billion terminations to </p>
<p>do an experiment, right?now, the problem is the experiment never ended. so here we are, at 2009--we're going to runout. so in order to correct for that, there isipv6, and i hope that the university is preparing itself to implement v4 and v6 in parallel.i'm proud to tell you that google is doing that.we've spent the last 18 months--a little more than that--almost 21 months--implementingipv6, so most of our services are accessible on both the v4 and v6 platforms.the problem, however, is that the v6 environment is not evolving in the same way that the v4environment did. in ipv4 there was a connected core.there was the nsfnet backbone, the arpanet </p>
<p>backbone, and if you connected to any of them,you were implicitly connected to everyone else with the v4 protocol, because that'show it grew. in the ipv6 world, people were implementingit, but it's spotty. and so just because you implement ipv6 doesn'tmean you're necessarily connected to someone else who's implementing ipv6.yes, you can tunnel through the ipv4 backbone, but tunneling is a very fragile way of buildinga system. and so one of the policy arguments that ihad been putting forth is that isps should relax their interconnection and peer sharingpolicies for ipv6, because it's in their best interest to have a fully connected v6 backbone.ultimately, and in the long run, some of the </p>
<p>metrics that are used to decide whether youshould peer as opposed to buying transit will reemerge.but in the early stages of ipv6 deployment, i think it's smart for everybody to be asconnected as possible. 128 bits of address space gives you 340 times10 to the 36th unique addresses. that's a number only the congress can appreciate.[laughter] now, i used to go around saying that thatmeant that every electron in the universe could have it's own webpage if it wanted to,until i got an email from somebody at cal tech:"dear dr. cerf. you jerk, there are 10 to the 88th electrons in the universe, and you'reoff by 50 orders of magnitude." [laughter] </p>
<p>so i don't say that anymore.there are a few other features of ipv6 that are relevant.one of them is that if you want to go into ndm encrypted mode using the ip sect protocol,you're required to enter that mode, whereas before it's optional.and there are some other little features of the ipv6 address structure, including somethingcalled the flow id, which, i would say, has not been experimented around with very much.but anyway, those are some of the important features.the most important thing about ipv6, though, is that it just has a lot more address space,and it will allow the network to continue to grow. </p>
<p>[pause] i mentioned mobility before and the largenumber of mobiles. not all of them are internet enabled, butsome are. maybe 15-20 percent now, but that percentageis bound to go up over time as more and more people choose to use their mobiles as informationwindows or as devices that allow you to authorize payments or to get access to the internetfor its information value. one thing which i find an interesting potentialis not to treat the mobile as a device, which is the sole thing that you use to interactwith the net. i had mentioned earlier that it's a limitedresource ã¢â‚¬â€œ small display, small keyboard. </p>
<p>imagine, though, a mobile which has the abilityto detect other devices that are nearby. for example, if my mobile could detect thatthere are projection units up there and could interact with it, then the small display areaon the mobile could be replaced by something much bigger.or when you walk into a hotel room, if the large screen--flat screen--high res [sic]display were detectable to the mobile, it would be possible to display things that way.so what i'm thinking here is that mobiles should become more aware of their surroundings.we could invent protocols for that, we could use bluetooth, we could use 802.11, or 802.15.4--6lowpan--orsome of the other standards for allowing these devices to interact with each other.in fact, imagine sitting in a car that is </p>
<p>not yet internet enabled, but it has a localarea network--maybe it's got gps receiving and a gps display.you could imagine the mobile participating in that local area network and giving to thecar the ability to access the public internet, so suddenly the automobile becomes internetenabled. i think there are a lot of possibilities here.in fact, another one is that if you're like me, you have entertainment systems at home,and each one of the boxes in the entertainment system has a remote controller.and i usually wind up fumbling around trying to figure out which controller goes with whichbox, and when i finally figure that out, that's the one with a dead battery.so what i propose is that we get rid of all </p>
<p>those remotes, we internet-enable all of theentertainment equipment, put it on the house network, and then the mobile becomes a controller.now the interesting thing about choosing that architecture is that you don't have to bein the same room in order to interact with these devices.in fact, you could have a device on the internet--which you go to through a webpage--at which youdebate and discuss and negotiate what music and video you want to have on the entertainmentdevices, and then let that service figure out how to configure everything and get thematerials downloaded to your entertainment system.so you could be managing this thing from anywhere in the world.of course, so could everybody else. </p>
<p>and so it's pretty clear you need to do somethingabout strong authentication and strong access control, but that's a good thing.i mean, we want to see strong access control--strong authentication--become a part of the normalframework of the internet, because otherwise there are very significant vulnerabilitiesthat we can't protect against. so i am a big fan of forcing ourselves tointroduce very strong access control mechanisms throughout the internet, including these kindsof applications. what we have noticed is that many of the mobiles--youhave access to gps--or in some cases they can at least estimate where they are basedon triangulation and measuring the radio energy level among the various base stations thatthey might be interacting with. </p>
<p>so these devices know where they are, andthe consequence of that has been interesting to see.we watch people making queries. [cough] what we've noticed is that if they are carryinga mobile, they often make queries that are related to where they are.the consequence of that is that geographically indexed information has become increasinglyvaluable. so people who build databases that have informationabout where things are, what's going on there, what used to go on there, what might go onthere in the future--those kinds of information packages have turned out to be increasinglyvaluable. this thing is trying to tell me that i amsupposed to be lecturing now. </p>
<p>okay.now, i sort of intellectually understood the value of this geographically indexed information,but i didn't really viscerally understand it until my family went on a holiday.we went to lake powell in arizona. it's near a little town called page--arizona.as we were driving into page, arizona, we planned to rent a houseboat and go out onlake powell for a few days, and somebody pointed out that there weren't any grocery storeson the lake, and that we were going to have to get all of our provisions before we goton the houseboat. so we started talking about what kind of mealswe were going to prepare, and somebody said, "why don't we make paella?"and i remember thinking, oh, i love paella. </p>
<p>that's great, but you have to have saffronto make a good paella. where the hell am i going to find saffron in page, arizona?well, i was getting a good gprs signal, so i flipped out the blackberry, and i went tothe google homepage, and i typed saffron, page, arizona, grocery store.and i got back three choices with telephone numbers and a little map showing how to getto each one. so i clicked on one of the phone numbers,the phone rings, a voice answers, and i said, "hello, may i speak to the spice department,please?" now, this is probably a little store, andit's probably the owner of the store. "this is the spice department." [laughter]and i said, "do you have any saffron?" </p>
<p>and he said, "i don't know, but i'll go check."so he goes off and he comes back and he says, "yeah, i've got some saffron."so we followed the map to get to the store, and i ran in and i bought $12.99 worth ofsaffron--that's .06 ounces, in case you care. [laughter]and we made a great paella. but as i was walking out of the store, i realizedthat i had just, in real time, gotten exactly the information i needed when i needed it.i didn't get the answer, "you can get saffron new york city 1,500 miles away."so what was important to me is that this ability to carry your information window on your hipor in your purse and to get information that's useful right now is really stunningly valuable.and more and more people are discovering that </p>
<p>as time goes on.well, there are more and more devices showing up on the internet, some of which i neverin my wildest dreams imagined, like refrigerators or picture frames.i remember--somebody ran into my office about 10 years ago and said, "vint, vint, did yousee the internet-enabled picture frame?" and my first thought was, "boy that soundsabout as useful as an electric fork." [audience laughter]it turns out it's actually a very nice gadget, because you don't have to boot up windowsor log in or do anything. you just plug it in to the telephone system or an ethernetjack or some of them, i guess, have 802.11 wi-fi.and it just--every 24 hours--goes and logs </p>
<p>into a website which has been accumulatinguploaded imagery which you put on there from your digital cameras.so we have people around our family with these little automated picture frames--and we allhave digital cameras--so we upload pictures of the nieces and the nephews and the grandchildren.and you get up in the morning, and you get some sense for what everybody is doing, becauseit just cycles through the imagery. now, you can appreciate that if the websitethat these picture frames log into gets hacked, the grandparents may see pictures that theyhope are none of the grandchildren. so suddenly security and access control, onceagain, become an important element of the utility of some of these things.and that theme, i think, is going to recur </p>
<p>more and more as we rely on and make moreuse of this connectivity that the internet confers.there are things that look like telephones that are actually voice-over ip devices.of course, your laptop is doing skype and ichat and some of the other google talk thingsalready. and then there's this guy in the middle whoinvented internet-enabled surfboards. he's in the netherlands, and i guess one day--hemust have been out waiting on the water for the next wave--thinking, "you know, if i hada laptop in my surfboard, i could be surfing the internet while i'm waiting--" [laughter]so he built this laptop into his surfboard, and then he put a wi-fi server on the rescueshack, [laughter] and now he's got a product--an </p>
<p>internet-enabled surfboard.so my prediction is that there are going to be billions of devices on the net--more devicesthan there are people. and many of them you see when you walk intoa hotel room. you see web tv, and a little--radio connected--orir connected keyboard. everybody's pda--here anyway--is probablyinternet-enabled. video games are internet-enabled--people talkto each other while they're shooting at each other--makes for a great video conference.and they're washing machines-- ibm apparently partnered with a company calledmela (??), which makes very high-end washing machines for use in academic settings.students love it, right? </p>
<p>you throw your clothes in the washing machines,start it up, and then it sends you an sms when it is time to move the clothes into thedryer. and that's great.you go to the bar and have a beer and then your clothes tell you when it's time to comeand pick it up. it's very convenient.this internet-enabled refrigerator, when i heard about it, i wondered, "so what do youdo with an internet-enabled refrigerator?" and one thought is that it has a nice liquidcrystal display with a touch-sensitive thing, and it's a way--for americans anyway--to augmentthe family communication system, which typically consists of magnets and paper on the frontof the refrigerator. </p>
<p>now you can augment the family communicationswith blogs and webpages and emails and things of that sort--instant messaging.then i got to thinking about the possibility that you could put rfid chips on the thingsyou put inside the refrigerator so that the refrigerator could know what it has inside.so while you're at school or working, it's surfing the net, looking for recipes thatit could make, and when you come home, you see a nice list of things you could do fordinner. which i thought sounded pretty cool.then the japanese came along and built an internet-enabled bathroom scale.you step on the scale and it figures out which family member you are based on your weight,and it sends that information to the doctor </p>
<p>to become part of your medical record.it seems perfectly okay except for one problem--your refrigerator is on the same network.so you come home, and you see diet recipes coming up on the display, or maybe it justrefuses to open because it knows you're on a diet. [laughter]this is bad! now a lot of you may be in the computer scienceand electrical engineering field. now i have bad news to tell you that you can'tget the nobel prize. and the reason for that is that mr. nobelrefused to allow any branch of mathematics to be given a prize.then you could say, "well what about the economics prize?"and that doesn't use nobel's money--it's somebody </p>
<p>else's money.and it's usually like--john nash and the nash equilibrium--is clearly mathematical.but you don't get nobel prizes for anything in computer science.so i remember thinking, "well we have to do something about this."so i got to thinking about quantum theory and the fact that quantum particles have thisunique property that they can be in more than one state at the same time.then i got to thinking about wine, and it occurred to be that wine in a wine bottleis like a giant quantum particle, because it could be in multiple states at the sametime--it could be absolutely awful, or it could be absolutely spectacular or everythingin between. </p>
<p>but you don't know until you pull the cork.this is like schrodinger's cat. remember the verschrankung experiment, wherehe had the cat inside the box with a little capsule of cyanide and a little piece of radium?if the radium emitted an alpha particle and broke the capsule, the cyanide is released,and the cat would die. so you close the system up and you ask, "what'sthe state of the cat?" and the answer is you have to treat it asboth alive and dead until you open up the box to look inside.if there are any cat lovers in the audience, no cats were harmed. this is a verschrankungexperiment. so i thought about writing up my theory ofquantum wine bottles and sending it to the </p>
<p>nobel prize committee to see if i can getsome credit for that. somebody--well, i'll come back to some other stories about wine in a minute.i don't have time to go through all the rest of these, but sensory networks are turningout to be an important part of our environment on the internet more and more.i have an example of that. i have a commercial sensory network that'srunning ipv6 on 6lowpan, 802.15.4 radio net, and it's sampling every five minutes the temperatureand humidity and light levels in every room in the house and then delivering that to aserver, and the server accumulates that over time.now i had an engineering reason for doing </p>
<p>this.at the end of the year i wanted to be able to go to the engineering people who were lookingat my ventilation and air conditioning and heating system and say it was either too hotor too cold or look what the distribution was.and i didn't want anecdotal stuff. i wanted real data to show these guys, sothat's why i did it. but one of the rooms is the wine cellar, andit's very important that the wine cellar stay below 60ã‚⺠fahrenheit and above about 50or 60 percent humidity. so it's been alarmed, and in case the winetemperature goes up above 60 degrees, i get an sms on my mobile.and that actually happened to me. </p>
<p>i was at argon national laboratory last year,and as i walked in the door, my mobile went off.it was the wine cellar calling [laughter]. "your wine is warming up."so every five minutes for the next three days i kept getting this little message sayingyour wine is getting warmer. my wife was away for two weeks on a holidayand couldn't reset the cooling system. so by the time i got back home, it was at70 degrees, which is not the end of the world, but not a good thing.so i called up the arch rock people and i said, "do you make actuators as well as sensors?"and they said yes, so there's a vacation project to go install the actuator system.another example why access control is important, </p>
<p>because i didn't want the 15 year-old nextdoor to turn my wine cooler off for me. now it gets interesting when you start thinkingabout what else could you do with this instrumentation. the fact that it detects light levels andreports every five minutes means that if somebody goes into the wine cellar and turns the lighton, i may be able to detect that because i'll see a big jump in the lumens in the measure.so that might mean i could tell if somebody has gotten into the wine cellar when i'm notthere. but it doesn't necessarily tell me that theytook any wine out. so the next step is to put rfid chips on thewine bottles. [laughter] that way i might be able to tell if any bottlesleave the wine cellar without my permission. </p>
<p>but somebody pointed out to me you could gointo the wine cellar and drink the wine and leave the bottle there. [laughter]okay, so this has got to get a little more elaborate.we got to put sensors in the cork that can tell whether there's any wine left in thebottle. [chuckles] and as long as we're doing that, we probablyought to start sampling the esters that make the wine tastes--the strawberry flavors andthe blueberry or blackberry and whatnot. so after a while, you get to the point whereyou have a fully instrumented wine cellar, and you interrogate the cork before you openthe bottle. and of course, if you discover that bottlereached 90 degrees fahrenheit because the </p>
<p>cooling system failed, you give that bottleto somebody who won't know the difference. [laughter]a very useful capability. you are going to see more and more sensornetworks becoming a part of the internet environment. part of the reason for this is that thereis an opportunity for you and me to get a better sense for how we use our energy resources.so google recently announced a power meter program that could allow you to put an instrumentin the house that could tell you about which devices are consuming how much electricity.we don't have a very good feedback loop right now.we sort of know what our electric bill is per month, but we don't know what made itup. </p>
<p>and so it's my sense, anyway, that feedbackabout how you're using energy--how efficiently or inefficiently--is a way of helping peopledecide how to be more careful and a bit more green about the energy that they use.so this year, 2009, is turning out to be probably one of the most dramatic years for the internetin its entire history. not only is ipv6 starting to roll out, finally--wehope before its absolutely needed--but the domain name system, which also has numbervulnerabilities, is starting to be modified so that you can get digital signed answersback when you make a query to translate a domain name into an ip address.today there's no guarantee that there hasn't been some interference--some modificationsand cash poisoning in the resolvers--that </p>
<p>give you the wrong address and send you toa fake site. but if you could get a digitally signed answerback which tells you that the integrity of that binding of the domain name, and the ipaddress has not changed since it was put in by the holder of that domain name, then you'dhave more confidence that the data you got back was accurate.so this is a hierarchical structure. each zone file either is digitally signedor points down to and provides signed records for the next level down.one big issue right now is who signs the root zone file of the domain name system, and thereare recent developments at the department of commerce which oversees both verisign andthe internet corporation for sign names and </p>
<p>numbers.and there's some continuing discussion about exactly who should sign the top level rootzone that hasn't been fully resolved yet. the other big change that's happening is thatfor many, many years domain names were mostly written in ascii characters--a very limitedset: 0-9, a-z, and a hyphen. but, there are--those statistics that i showed you showing people all over the world using the internet--formany of them--their languages are not naturally written in ascii characters.so there is great, understandable pressure to augment the domain name system with theability to write domain names in syrillic or arabic or hebrew or urdu or korean or japanese,and so on. </p>
<p>well to do that, the internet engineeringtask force has chosen to use a system called unicode, which encodes the glyphs of about100,000 different characters. the problem is that as soon as you introducesuch a broad range of symbols into the domain name expression, you run into the problemthat some symbols look the same. for example, in greek, latin and syrillic,a lot of the letters look very similar, and it's even worse when you start looking atsome of the more elaborate languages. like paypal, for example, could be writtenwith a syrillic "a," and the computer thinks it's different because a syrillic "a" is encodeddifferently from a latin "a." and so if you innocently click on somethingthat looks like paypal, you may end up at </p>
<p>the wrong site, which invites you to log inand--which you do--and then it says, "oh, there is a little problem," and it sends youover to the real paypal, and you log in again. meanwhile, it's draining the account usingyou username and password. so there are issues associated with the useof this extended character set, which requires some careful attention.i am presently chairing the working group, in fact, on what's called idnabis to try tofinalize what the specs are for which character sets can be used.we cannot guarantee safety here. it's just not possible.it's just like one and zero and "o" and lowercase "l" are confusable in ascii, and there arelots of other cases that we cannot find simple </p>
<p>rules to rule out.so we'll try to rule out as much as we can, like punctuation and things like that.but the registries are going to have to also suppress inappropriate use of domain names.you might say i'm not going to allow you to mix scripts inside of a label in a domainname as a way of resisting some forms of abuse. so that's a big set of changes for the internet--yeah--inthis year. i want to spend a little time here on cloudcomputing. and the reason that i want to is that it isan interesting paradigm that people are addressing. if you read any history of computing, youwill recall that in the 1960s there was a common notion called the computing utility.this is usually shown as a gigantic building </p>
<p>somewhere, with smoke coming out on the topand a huge computer inside, which everybody got to by way of the telephone system.well, 40 years later we have huge computing resources in big buildings with steam comingout the top, and everybody gets access to it through the internet.well--except that the thing inside the building is not a single mainframe--it's actually--inthe case of google anyway--it's literally a classified number of computers in each datacenter, and the data centers are interconnected with each other.the cloud has some very interesting features. one of them is that you get to dynamicallyallocate the resources of the cloud to computation, so as computation demand varies for each user,you get to expand and contract the available </p>
<p>resources for that particular user, ratherthan having a fixed load--fixed assignment--for tasking for each one of the machines.there are a lot of interesting side effects of trying to do computing this way.at google, for example, because we want you to be able to get access to your informationunder all circumstances, we actually replicate a lot of data at multiple data centers.the consequence of that is there's a huge amount of information flowing back and forthbetween the data centers, so we had to build a special, private network, basically, tolink all the data centers together. there are a lot of other interesting questionsabout how to make these data centers work well.moore's law is broken, as i think you've all </p>
<p>noticed.the problem is that the clock speeds are not going up, so the lazy programmers, who gotthe benefit of increasing clock speeds so that their algorithms just ran faster becausethe clock went up, don't have that benefit anymore.and the--let's say the alternative to moore's law--which instead of increasing clock speedis simply increasing total number of cycles available per chip--is achieving that goalby having multiple cores on each chip. but the clock speeds are not going up.the side effect of that is that if you have algorithms running that don't happen to beeasily parallelized, you have a problem. you have to go figure out how to take a serialalgorithm and parallelize it. </p>
<p>you can't even necessarily get a pipelineout of that multi-core chip. it depends on how the chip interconnectionsare done and what kind of access you have to the common bus.now, there's another problem associated with multi-core chips.it has to do with how much data you can push in and out of the chip itself.can you push data back and forth fast enough to keep all the cores running on a set ofproblems? those are issues that have not been fullyresolved, and for people who are looking around for dissertation topics, i can tell you thatlooking at cloud computing and multi-core chips and things of that kind could be a richterritory to do that. </p>
<p>finally, there's this question of--well, actually,let me go one more here. all right.so now, i want you to think back for a minute about what the world was like around 1969when the arpanet was being built. there were networks out there that alreadyexisted. it was not the first computer network.but most of those nets were proprietary, so ibm had sna, digital equipment corporationhad decnet, hewlett-packard had ds, which i think stood for distributed systems.they didn't either [sic] work with each other. occasionally, people would build gadgets.they would let you translate back and forth, but it was not a uniform system.so they were all proprietary, and, in fact, </p>
<p>those networks didn't know that there existedany other nets. they couldn't even express the idea of gofrom this net to that net, particularly from the sna network to a decnet.so the internet was designed to overcome the problem of expressing the idea of moving datafrom one net to another. people are going to build clouds for verygood economic reasons--but they're going to build multiple clouds.the clouds don't have any vocabulary right now for referring to another cloud.we're back in the 1960s and the days when networks didn't know about each other.so i believe that there are some really interesting dissertation topics waiting to be writtento talk about inter-cloud interactions. </p>
<p>example, i've got data sitting in cloud a,and let's even imagine the data is protected--it's access-controlled.there's meta data associated with it that cloud a is responsible for controlling accessto. and you decide you want to either replicatethe data in another cloud or move it to another cloud.so the first problem is how do i say that? the first cloud needs to have a way of sayingsend this to this other cloud. the second problem is how do i convey themeta information that controls access to the data as it goes into cloud b?is that--does that mean i should stop or--? [laughter]or is that just--? </p>
<p>oh, you leaned against the light switch.you have a free _____ ?? butt. [laughter] okay. [laughter]so anyway, the problem here is that we don't have vocabulary for talking about inter-cloudinteraction. so if you're looking for an interesting areato research, you're at the same stage in the cloud world as we were in the internet worldin the early 1970s. and i believe that there's some really interestingtechnical problems and some interesting design problems and invention opportunities thatlie ahead. let's see.gib, i want to make sure that there's some time for a q and a here, so i want to be careful.i think i've already hinted at some of the </p>
<p>access control issues here, but remember imentioned strong authentication repeatedly. we tend not to use authentication very well.a lot of us still use re-useable passwords, which is really a bad idea.if you've ever dealt with online services, and you try to log in, and it doesn't work,and then it says, "if you forgot your password, click here," and then it asks you these secretquestions. well, as some of you will remember, governorpalin had a little problem because the secret answers to the secret questions were discoverableon the internet, so they weren't really very secure.in fact, banks and securities companies often suggest that you should have these secretquestions that nobody else but you should </p>
<p>know the answer to.i believe if you're going to use this kind of technique--i'm not a big fan of it--butif you use that technique, you ought to have the secret questions, and you ought to havesecret answers, but you better have the secret answer plus random numbers that is not goingto be easily guessed or found on the internet by someone else.i would prefer to see strong authentication mechanisms where you'll use non-reusable passwords.public-key crypto gives you an opportunity for some kinds of things like that.i even like the idea of having a device that has multiple keys in it, which can be yourproxy to represent yourself in a variety of different systems.and during the public-key exchanges and the </p>
<p>like, this little device could plug into yourlaptop, and when it needs--when the application needs--a new strongly identified identifier,you let that little device generate the appropriate keys and send the data back and forth.you need to access control that little device so that somebody can't pick it up and becomeyou in the virtual world. you might do that with a fingerprint reader.we aren't quite at the point where we can put an iris reader in these little devices.although, this macintosh here as a little camera that's mounted at exactly the rightplace to do an iris scan, and you can do that from two or three feet away.now, whether this has enough resolution to do it, i don't know.maybe not. </p>
<p>but the notion of being able to do iris scansis an attractive way of authenticating. it's better than doing a retinal scan, whereyou have to get right up close to the thing or sticking your finger into a hole somewhereand hoping that it will be there when you pull it out again. [laughter]so my sense is that we should be able to build strong authentication devices that allow youto authenticate yourself based on what you know and something that you have.and if you lose it, that someone else isn't able to abuse it by representing themselvesas you. so i've actually touched on most of thesepoints here, but the thing i want to emphasize is that i honestly believe there's a lot ofopportunity for people to explore issues associated </p>
<p>with cloud computing that haven't been analyzedyet. let me skip over that.oh, there's another interesting situation here.it's one thing--you just move data back and forth between clouds--and something else ifyou wanted to get multiple clouds to actually cooperate with each other.i'm imagining sitting here with my mobile. it becomes my little cloudlet, right?it's a little access controller. one question is if it's connected to two clouds,does it become an inadvertent channel between the two clouds that was unintentional?this is sometimes known as a covert channel, which was unintended.or can i use it as a controller and essentially </p>
<p>cause things to happen in between the twoclouds? you need a vocabulary for that, includingstrong authentication and other things associated with it.so this list of questions, i hope, will stimulate some of your thinking about research.let me switch gears for just a second and talk a bit about semantic web.now, i'm no authority here. tim berners-lee would be a good guy to bringhere, if you can persuade him to come down from mit to talk about that.and i have to admit i was very skeptical about this whole notion of semantic web, and i stillhave some skepticism, but i think i understood an idea that tim had that i didn't understandbefore. </p>
<p>let me illustrate it by--i may not use the right vocabulary, but let me try anyway.imagine for a moment that we have a way of expressing in our web pages the semantic ambiguitiesthat we're faced with. so let's take the word "jaguar."we know it could mean the animal, could mean the car, could mean the operating system.suppose that you are creating a web page, and you notice that there's this ambiguity,so you actually write into the web page something that says "jaguar" is ambiguous.here is a web page where it's used as the car, here's where it's used as the animal,and here's where it's used as the operating system.and you just imbed that in your web page. </p>
<p>along comes the google crawler, the yahoocrawler, the microsoft crawler, and it stumbles over this piece of semantic information.and it says, "oh, that's an interesting fact. i didn't know that."so i incorporate that into my knowledge base. now someone types in a query with the word"jaguar," and the search engine, which happened to have stumbled over the semantic hit, says,"well did you mean the car or the animal or the operating system?"suddenly we are--you and i--are allowed to contribute semantic knowledge into the system,which is regularized by having a standard way of expressing it.so i get more excited about the fact that the people might be able to contribute tothe growth of semantic knowledge in the internet. </p>
<p>we've all contributed, in one way or another,to the content of the net--increasingly so. and at google--at youtube--we're getting 15hours of video per minute being uploaded. now, who could argue over the value of the15 hours of video, but the idea that people are generating a lot of information and puttingit into the net is indisputable. second thing i'm worried about, every timeyou use a program to produce a file--for example, it's a word file or it's a microsoft spreadsheetor power point or any of the other things that we commonly use--maybe it's a photographprogram or an emulation or simulation--these are complex objects.these complex digital objects are not understandable or interpretable unless you have the softwarethat knows what the format means and how to </p>
<p>interpret it.if we ever loose the software that knows how to interpret the files, all we will have isa pile of rotten bytes, because they won't be meaningful.and what i'm worried about, quite honestly, is that we don't have a regular process ofpreserving enough information to assure that our complex digital files will be meaningfulover a period of time. and here i'm not talking about five yearsor 10 years. i'm talking about hundreds of years.now, i have a picture over here, which i--you may or may not be able to see this very well.this is a manuscript that was written in 1200 a.d., and it's still readable today--800 yearslater. </p>
<p>when you pull out a polycarbonate cd-rom,and somebody says how long is this going to last, you'll be damn lucky if it lasts 10to 15 years. and even if the cd-rom lasts as a physicalmedium, will the software that knows how to interpret the bytes on that cd-rom last?and some people have pooh-poohed this as an irrelevant issue.of course, people will translate the important stuff into the new versions of software, andyou shouldn't worry about it. and the stuff that didn't get translated wasn'timportant anyway. that statement was made in the presence ofabout 50 librarians. it took us half an hour to get the librariansoff the ceiling, because they pointed out </p>
<p>that sometimes the importance of informationisn't known for 100 or 200 years. so i am very concerned that we have a practiceand a process for preserving the software that knows how to interpret these complexdigital files. there is an intellectual property issue hidingin all of this. suppose that you're company a, and you decidethat for good and sundry business reasons you're not going to support this piece ofsoftware anymore. and so you stop.and the next version of something that you make isn't compatible with it.but we have hundreds of gazillions of bytes of data that's based on this thing that you'renot supporting anymore. </p>
<p>so we might come to you and say, "well, you'renot supporting it. will you put that up on the net--put the sourcecode up there?" and you'll say, "no, of course i won't dothat, because i'm using a lot of that source code for another product."so we might say, "well, would you let us run that program so that it's accessible on thenet remotely?" and you may or may not agree to do that.but then you might point out this thing only works on that operating system version, andso you better get the operating system up there too.and say, "oh, we have to go talk to that guy, right?"okay. </p>
<p>so now we have to go talk to you about youroperating system, and you say, "well, actually, i'm using a lot of that code over again in--youcan't have the source code." so we have a question, in my mind, is howdo you create the incentives for preserving the ability to interpret these data files?and worse you may have to emulate the machine that the operating system ran on that theapplication ran on that knows how to interpret the bytes.so this is not a solved problem. and some people will say, "well, open sourcewill solve the problem." i would argue that--not clear that open sourcewill solve the problem. and it certainly isn't clear that everyonewill continue to evolve the open source to </p>
<p>map into--newer versions mapping into olderversions of software. so byte rot is a big issue.all right. final report here is on the interplanetaryextension of the internet. this is not a google project.i get time from google to work on it, but i don't want you to run out of the room sayingyou just figured out that google's business model is to take over the solar system.that's not what this is about. [laughter] basically, this project got started around1998. some of us--when i was actually at mci atthe time--and i met with some people at the jet propulsion laboratory, and we were talkingabout exploring space with man and robotic </p>
<p>systems using the deep space network, whichhas three big 70-meter dishes in madrid, spain; canberra, australia; and goldstone, californiatalking to spacecraft that are in orbit around the planets or flying past the asteroids orlanding on the surface of mars. what you see on the top portion of the screenthere are two of the four mars orbiters--mars express and mars reconnaissance observatory.and on the bottom part you see the rovers on the left--there are two still operatingon mars--and the phoenix lander, which landed and ceased operation after about a month anda half or so at the north pole of mars. what you might not know, though, is that onthe rovers, the long distance radio--the one that was supposed to report results all theway back to earth directly--didn't work. </p>
<p>i mean, it did, but it overheated, and theyhad to reduce the duty cycle. so somebody--first the scientists were upset because the data rate of that radio was only 28.5 kilobytesa second as it was, and so reducing the data rate meant less data came back.so they were all very upset. the engineers at jpl said, "well, we haveanother x-band radio. it's on the rover, and it's on the orbiters,but it can--" and it goes 128 kilobytes a second, but itcan only reach orbital altitude. it can't go all the way back to earth.so they reprogrammed the rovers and the orbiters so that they would pull the data up from therover and hold on to it until they got to </p>
<p>the right place in their orbit, then transmitthe data back directly to the deep space network at 128 kilobytes a second because the orbiterhad better power supplies if it wasn't down on the dusty surface.well, speaking of that, the rovers lasted a lot longer than they expected.the original mission was, like, 90 days. it's now over five years.and one of the reasons it's continued to work is that the solar panels have been cleaner--remainedcleaner--than we expected. we thought they were going to get very dustyvery quickly and then stop converting sunlight to power.and eventually, the batteries wouldn't charge up enough.personally, i think there's somebody up there </p>
<p>dusting them off, [laughter] though we haven'tgot them on the video camera. so the real answer, it turns out, is thereare little dust storms on the surface of mars, and they blow the dust off the solar panels.you can actually see it in the--when you're down in the operation station, and a littledust storm comes along, you watch the voltage level go up coming from the solar panels.so anyway, we started talking about how to improve the networking capacity--not justthe data rate--but the richness of networking that could be done.i'm going to skip over google mars, except to tell you go to google or switch to googlemars. the imagery is spectacular--the three-dimensionalviews of where the rovers have been--all stitched </p>
<p>together.so you can search around there and see what it looked like.we started out saying, "why don't we build an interplanetary internet?"and we thought why don't we use tcp/ip to do that?it seemed to work okay on earth. it ought to work on mars.and it does. the problem is it doesn't work between theplanets. and the reason is obvious, right?the planets have a-- well, the distance between the planets isliterally astronomical. [laughter] and at the speed of light, the distance betweenearth and mars varies from 35 million to 235 </p>
<p>million miles, which translates into 3 ã‚â½minutes to 20 minutes one way. so try to do flow control with tcp with a40-minute, round-trip time. it's a real simple flow control algorithm,right? you say, "i ran out of room.stop!" and if the other guy hears you in about 20or 30 or 60 or 100 milliseconds, that's okay. but what if it's 20 minutes later, and allthis stuff is coming at you full speed, packets are falling on the floor.flow control doesn't work. and there's the other problem.it's called celestial motion. planets rotate, and we haven't figured outhow to stop that. [laughter] </p>
<p>so the problem here is that you're talkingto something on the surface, and if the thing rotates, and you can't talk to it anymoreuntil it comes back around--same problem with the orbiters--it's a very disrupted system,and the delays are: a. inescapable and b. variable.this is not a happy environment for tcp/ip. so we ended up inventing a new set of protocolscalled delay-and-disruption-tolerant networking. and--to make a long story short so we canhave some q and a--we have tested it on the surface of the earth in a lot of differentconfigurations. but we just started the deep space testinglast november. nasa gave us permission to upload our newprotocols to the deep-impact spacecraft, which </p>
<p>had gone up to rendezvous with a comet andlaunched a probe in it. the probe is gone, but the platform is stillin orbit around the sun. it's a very eccentric orbit.so it was on its way back towards earth. we uploaded it in october, and we spent amonth transmitting data back and forth between earth and that spacecraft--didn't drop a byte.i mean, it was a really impressive, even when we had power failures and other kinds of thingsthat were not planned. we tested it.that way, we are going to upload to the international space station this summer, and we're goingto re-load the protocols on board the--what will be re-named--epoxy platform--same one--it'sjust going to a different comet--we're going </p>
<p>to upload the protocols in the fall.so we'll have a 3-node, interplanetary test going on before the end of this year.if those are all successful, then nasa will award us what's called technology readinesslevel 8, which means this technology is ready to deploy in live systems.we've already started talking to the consultative committee on space data systems about standardizingusing the dtm protocols for all the space missions that are launched by the differentspace faring countries. the whole idea here is--and what we hope,frankly--let me just skip through this part--what we hope is that over time, every time a newmission gets launched and then completes its primary responsibilities, it can be convertedinto part of an interplanetary backbone network, </p>
<p>because everything will be compatible.just like when you plug into the internet today, you can talk to the 600 million machinesthat are out there. so we're not trying to build an interplanetarynetwork and hope somebody comes. that's not what we're trying to do.we want to build the capability to allow it to emerge from all the missions that are launchedfor scientific reasons. okay.so that's up to the minute on interplanetary internet.let me stop here and ask if you have questions. [applause]thank you. we have a question here.yes sir. </p>
<p>>> cardiologists--[inaudible] >>cerfabsolutely. and, in fact, one of the things that we wouldlike to do is to get the dtm protocols into mobiles so that we have resilience in thepresence of noise and disconnectivity and everything else, unless you were thinkingof real time transmission. yes.well, if you want to have real time transmission, then you need to have better connectivitythan you get with a mobile. but the point is well-taken.you'd like to do it so you don't have to be tied to the hospital bed.okay. </p>
<p>>> ekgs--[inaudible] >>cerf: i'm sorry? >> ekgs-- >>cerf: ekgs, for example.yes. well--[inaudible]when you're in the emergency vehicles, they'll transmit ekg information back to the emergencyroom. but it would be nice to do that from home,for example, and to be able to get more other kinds of sensors about the state of health. >> [inaudible] </p>
<p>>>cerf: say it again. >> blood sugars. >>cerf: blood sugars. oh, there are a wholeseries of-- >> [inaudible]--possibilities ??-- >>cerf: yeah.there are a whole bunch of things that one would _____ ??that's true. >> there's one other--real quick ?? >>cerf: yeah. >> the only time i've ever emailed you inmy life was--[inaudible]--guys missed an opportunity. </p>
<p>>>cerf: yes. the only one? >> [inaudible]--a very important one. wayback when e-mail wasn't--[inaudible]--calling up other computers on the long distance phonelines at medifax ?? >>cerf: yes. >> back when you and i were grad studentsat ucla. and so it happens that they could never figureout a way of charging for the e-mail because so many people were--[inaudible] >>cerf: well-- >> and then the arpanet had a chance to chargefor e-mail, and if you only had--[laughter] </p>
<p>>>cerf: hey-- no-- actually, let me tell yousomething. i did try to charge for e-mail because i don't_____ ?? mail. if it was a commercial system, i charge adollar for each e-mail message, and it got paid for in 1983.then i made the mistake of connecting it to the internet in 1989, and everybody said,"hey, it's free over there. how come you're charging for it?"and, of course, now here we are. nobody pays for e-mail.what people pay for now is to not deliver e-mail, right? [laughter]it's spam. yes, sir. </p>
<p>>> thanks for a delightful, informative talk.i went to see-- you're focus has been largely on the technologyand devices. >> but arguably, the biggest change in thelast two years is the social aspects of newly generated content.you mentioned youtube, but it's phenomena-- it makes it number three on the web.and twitter has 14 million users, and the number of social applications is--seems arguablythe largest change. how is that affecting the internet? >>cerf: well, it certainly affects in oneway. people use it more and more for various things,and they use it in real time. </p>
<p>twitter is not necessarily--i've seen it create the flash crowd phenomenon. if any of you read david brin, you know aboutflash crowds. and what twitter and instant messaging dois create the moral equivalent of mobs in the virtual space.i'm quite serious about that. if you know anything about mob behavior, youknow how people will assume things and then act on them without really understanding what'sgoing on, because they just see everybody else doing something.we should actually be attentive to the social effects of some of these online environments.now, i just came back from yale university yesterday, where we debated in the yale politicalunion the question whether the virtual social </p>
<p>environments were real or not. yeah.and it was an interesting, very lively debate. the people who believe that the social networkingis as real as the face-to-face interactions--they're different--but they involved real people,real feelings, real concerns--you are--can be as swayed by an online interaction as youcan by a face-to-face interaction. i think we--the vote came 43 to 7 or something like that. there were a few diehards who believe thatthe virtual environment wasn't real. but for most of us, it has a lot of realityto it. it also has some negative form to it. >> [inaudible]--and terrorists--[inaudible]--areequally efficient and empowered by such social </p>
<p>technologies. >>cerf: that's right.although, you know what esther dyson says--i think she's right about--she says that the antidote for bad information is not suppression but more information.but it does put an obligation on each one of us who uses these systems to distinguishgood quality information from bad quality information.so suddenly critical thinking is a very important piece.it always was, right? you could get bad information from radio,television, newspapers, magazines, or friends and your parents.and you had to distinguish what was useful </p>
<p>and what information you're going to use.the internet just sort of highlights that even more because of the huge quantity ofinformation and misinformation that's available. >> we have a question, maybe, further back-- >>cerf: way in the back. okay.so i don't know if i'll be able to hear you from there, because i'm hearing impaired. >> i'll try to shout.so one of the things we basically know now is about net neutrality, right, and the-- >> so my question is do you think that there'sany room in the future of ip, in any conceivable timeframe, to maybe re-look at things like--[inaudible]--preservationsite--[inaudible]--kind of make the discussion </p>
<p>more of a technical one, rather than--[inaudible]--apolitical one. >>cerf: okay. so net neutrality has been abig debate, as you know--and especially here in this part of the world.in fact, time warner just did a little unscheduled experiment [laughter] on that.it didn't work out too well for them. let me start out by saying that i adoptedthe phrase "nondiscriminatory access" to the internet as an alternative to net neutrality.and the only reason for that is that the-- the term net neutrality has been so badlydistorted that people who were against it were claiming that those who were for it believedthat every package should be treated exactly the same way.there should be no priority, you couldn't </p>
<p>charge anybody more for using more capacity,and that's not true. my view is that you want to just assure thateach user is able to reach every supplier of service--or every other user on p2p--fairlyand equitably. if you use more capacity, more bandwidth thati do, it's not unreasonable for the isp to charge you more.but the metrics should not be how many bytes did you transmit, but at what rate did youtransmit them, because the resource crunch is not the total number of bytes moved.it's how quickly you move the bytes. so if i move a terabyte in a month, that'snot nearly the stress on the net as moving a terabyte in two seconds.and so i don't mind being told if you want </p>
<p>higher data rate, that you have to pay more.so that's a tiered structure which i think is reasonable.i don't like the idea of an isp saying to an application provider, "we're not goingto allow your traffic to go over the high-speed lanes unless you pay us."i think it's the-- first of all, i'm already paying to get onto the net in the first place with whatever capacity i can afford and believe is needed.the consumer is the one that wants to be able to say, "if i buy broadband network access,i want to use all of that capacity to get to that service over there, and you can'tinterfere--or shouldn't interfere with that." so first of all, the metric should be datarate, not total data transferred. </p>
<p>and second, i think we should be alert toanti-competitive abuses. but i do accept the idea that you can havetiered pricing, and that you can have--pre-packaged differently--some of them may need low delayor low latency. and some of them are going to be--controltraffic--which you clearly don't want to inhibit. but when the system becomes congested, i thinkit's fair to allocate the capacity in accordance with what the users are willing to pay.i also think users would like to have fixed pricing.so i would much rather know what my cost is going to be for the month and have my trafficrate capped, rather than having a surprise bill at the end of the month.and if i don't like the service i'm getting, </p>
<p>then i should be able to buy more if they'rewilling sell more. the other thing i think is important is transparencyfrom the supplier. the consumer should know what they're actuallygetting, and they should be able to measure that.so we should have tools that let people validate that they're getting what their contract saysthey should get. okay.is that--? that may be all the time we've got. >> i think that there's a reception--that was the last question--[inaudible]--reception outside.you're welcome to--[inaudible] </p>
<p>>>cerf: i'll be happy to chat as long as myvoice holds up >> [inaudible]--we have this plaque to commemorateyour lecture in this ?? university. >>cerf: thank you. >> [inaudible]--cover on that and get thatback in there--[inaudible] [applause] >>cerf: all right. i appreciate that. [applause] </p></div>
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<div align="justify"><p>male speaker: ladies andgentlemen good afternoon. please welcome chairman andchief executive officer of google, dr. eric schmitt. eric schmidt: well goodafternoon and welcome to google's 2008 annual meetingof shareholders. we're delighted tohave you here. first place, did you allenjoy your lunch? ok, very important at google. i'm eric, properly introduced. </p>
<p>i hope everybody here has hada chance to get registered. if you've not been registeredfor the meeting find somebody in the corner who will makesure you get properly registered. and we gave you an agenda, whichhe should have. and a set of rules of conduct and soforth-- the usual stuff-- that you find in shareholdermeetings. so at this time i'd like tocall the meeting to order. before doing anything else,i want to make sure that i </p>
<p>introduce some of ourdirectors and officers that are here. let's see-- we havepaul otellini. you want to raise your hand. john hennessy, ram shriram, annmather, and john doerr. did i miss any of theboard members, aside from larry and sergey? larry stand up. this is larry page. </p>
<p>i think people know larry. and larry's doing his bestimpersonation of sergey who will be here in just a minute. sergey you just showed up. there's sergey. and before i say anything else,the greatest highlight of my personal and professionallife, i think, is the collaboration thati have with these two extraordinary people. </p>
<p>so it's great to be herewith my colleagues. we have a number of executives, from google as well. i see george reyes, cfo. i see elliot schrage. i saw jonathan rosenberg. david drummond of coursein just a sec. anybody else, shout out. we also have debra kelley,representative of </p>
<p>computershare, who will act asour inspector of elections. and dave cabral, arepresentative of ernst & young, our auditors of course,who are independent accountants. i'd also now like to introducedavid drummond, who as i mentioned before, he's here,and he's the chief legal officer and corporatesecretary. david of course is goingto do the formal business of the meeting. </p>
<p>and you all remember having donethis before, we're going to do the formal businessmeeting, as soon we get that over then we're going togo right into a short presentation from me. and then q&a and comments thatthey may have on this or any other subjects. please don't break thepodium here david. you're all set? go ahead. </p>
<p>david drummond: i'm all set. thank you eric. and thanks everyone for comingand let me give you my welcome to the meeting as well. we'll try to be quickwith the actual we've got a q&a session lateron that i'm sure you're eager to get to. a quick note about stockholderquestions, as stated in the rules of conduct, stockholdersshould not address the meeting </p>
<p>until you're actually recognizedfrom the podium. we'll have, as i said, we'llhave a question and answer period later on so you can askquestions, that will be following eric's presentation. now if you want to ask aquestion during the q&a period, a please move to oneof the microphones that we have, i think we have two,one on each aisle, on each side of the room. and after we recognize you,please identify yourself and </p>
<p>your status as eithera shareholder or a representative of a shareholderand then go ahead and ask your question. so thanks in advance forcooperating with these rules. now on to the formal business. i've received the affidavit ofmailing of computershare, which states that the noticeof meeting and the accompanying proxy materials andannual report were mailed to the shareholderson march 11th. </p>
<p>that's all the shareholdersof record as of that date. in addition, i've been advisedby the inspector of elections that the holders of ouroutstanding class a and class b common stock, representingat least a majority of the voting power of our outstandingcapital stock that's entitled to vote, isrepresented today, either in person or by proxy. so as a result, we have aquorum, the meeting is duly constituted and we can proceedwith the actual business. </p>
<p>first item, is the electionof directors. ten directors will be electedat today's meeting. the directors today will holdoffice until next year's annual meeting of shareholdersor until their successors are duly elected and qualified. board of directors has nominatedthe following persons, eric schmitt, sergeybrin, larry page, john doerr, john hennessy, art levinson, annmather, paul otellini, ram shriram, and shirley tilghman. </p>
<p>our bylaws require that astockholder provide advance notice of any intent to nominateanyone as a director. we haven't received any suchnotice, so accordingly, i declare that the nominationsfor director are closed. the next matter being submittedto our stockholders is the ratification of theappointment of ernst & young as our independent auditorsand registered public accounting firm. our board of directors hasrecommended that our </p>
<p>stockholders ratify theappointment of ernst & young. for the fiscal year, endingdecember 31, 2008. the third item of business beingsubmitted today, is to approve an amendment to our 2004stock plan to increase the number of shares of class acommon stock under the plan by an additional numberof 6,500,000 shares. and our board of directors hasalso recommended that our stockholders vote in favor ofthis amendment to the plan. now the next two itemson the agenda </p>
<p>are stockholder proposals. our board of directors hasunanimously recommended that our shareholders vote againstthese proposals. however, one of our founders,sergey brin, who's also a director of the company, willbe abstaining and not voting against these proposals in hiscapacity as a stockholder. now the first stockholderproposal is being brought by the office of the comptrollerof new york city and st. scholastica monastery. </p>
<p>i'd like to introducemr. tony cruise. mr. cruise are you here? great, welcome to google. and mr. cruise will bepresenting this proposal. you have a total of threeminutes to make a statement in support of the proposal today. tony cruise: great, thank you. again my name is tony cruise. and i'm here today using aproxy of the office of </p>
<p>comptroller of new york city,which holds about $200,000,000 worth of google stock. and i'm also here representingamnesty international, the largest human rightsorganization in the world, with more than 2,000,000members worldwide. so i'm here to request yoursupport for a proposal on internet censorship. concerns about google'sparticipation in the chinese government's restriction offreedom of information on-line </p>
<p>has been well documented. including in the amnestyinternational report undermining freedom ofexpression in china. as shareholders may be aware,google is currently participating in amulti-stakeholder initiative to develop a set of voluntaryprinciples which would guide how companies like googlerespond to censorship demands in countries like china. amnesty international has beenparticipating in this </p>
<p>initiative in an effort toensure the outcomes reflect a sincere commitment to upholdingthe highest attainable standard of corporateresponsibility for human rights. specifically we feel stronglythat for the msi to be meaningful, it must include thefollowing: a commitment to independent monitoring andassessment of the company's fulfillment of the principlesthat are agreed to, a public commitment to honoring freedomof expression, transparency </p>
<p>about filtering process usedto limit or restrict search results, including informingusers, development of human rights impact assessments thatwould be disclosed publicly, a commitment to exhaust allpossible remedies and appeals before complying with statedirectives that would violate internationally recognized humanrights, including the rights to free expression,access to information, and privacy, and documentation andpublic disclosure of all cases where legally binding censorshiprequests have been </p>
<p>compiled with. our requests are echoed by theproposal before you for a vote today which requests thatmanagement institute policies to help protect freedom ofexpression on the internet. the proposal additionallyrequests that data that can identify individual usersshould not be hosted in internet restricting countrieswhere political speech can be treated as a crime by the legalsystem and that users should be informed about thecompany's data retention </p>
<p>practices, and the ways whichtheir data is shared with third parties. such policies and standards donot currently exist at google, and while we hope that themulti-stakeholder process will result in such policies andpractices, we've seen little more than talk and defensivenessfrom google since these problemsfirst emerged. while a willingness to engagengos and other experts on these issues as a usefulfirst step. </p>
<p>the truth is that 18 monthslater, the issue of internet censorship in countries likechina has worsened and we still haven't seen concretechanges from google. there is nothing inthe charter of the multi-stakeholder process whichprecludes google from taking proactive steps thatmight ameliorate the situation while conversations about thestandardized principles go on. therefore, on behalf of thecomptroller of new york and amnesty international, i askshareholders to vote in favor </p>
<p>of this proposal as a strongsignal to google that expedited action on theseissues is required. thank you. david drummond: thankyou mr. cruise. sir, gentleman on my right, doyou have a statement that addresses the proposalat hand. male speaker: yes. david drummond: pleaseidentify yourself. male speaker: my nameis [unintelligible]. </p>
<p>i have a smaller shareof google. at first, i want thank google,perform better than yahoo, to help china [unintelligible] to censorship. actually today we read the wallstreet journal, other chinese writer got arrested. and i myself, is a politicalrefugee, i couldn't go back to china for more than10 or 20 years. so what i want to say is i fullysupport the proposal and </p>
<p>i want the boarding especiallywhen you make policy regarding the censorship especially paymore attention on china. because now china, we're a lotinternet user country. thank you very much. david drummond: thank you verymuch for your comment. the gentleman onthe other side. you have a comment addressingthe proposal? shelton ehrlich: yes i do. david drummond: ok, pleaseidentify yourself. </p>
<p>shelton ehrlich: my name isshelton ehrlich, i own 23 shares of google. david drummond: thank you. shelton ehrlich: i used googleon my computer to search amnesty international and thecomptroller of the city of new york, and the board of trusteesof the pension plan that made this proposal. i have nothing to say on themerits of the proposal itself. i just want the shareholders toknow that the comptroller </p>
<p>of the city of new yorkis a politician. he has two campaignsgoing on today. one is condemning ajury verdict in the city of new york. it's as if our cfo got involvedin felony cases in mountain view. the second thing he has goingfor him to maybe rise to mayor or governor is a campaign tocome to shareholder meetings and criticize decent, wonderful,corporations. </p>
<p>it's on his web site,that's his job. i have another comment onamnesty international. today is the 60th birthdayof the nation of israel. amnesty international is one ofthe leaders attempting to stop israel from defendingitself against terrorists. david drummond: thank youvery much sir for your participation. now it's time to move to thesecond stockholder proposal that's being brought tothe meeting today. </p>
<p>this one is being brought byharrington investments inc. and i'd like to introduce mrjohn harrington who is a representative from harringtoninvestments to present the proposal. mr harrington you'vegot three minutes. john harrington: thank youmr. chairman, members. i am not a politicianso you're all safe in your seat today. i'm not advocating anything buthuman rights in china and </p>
<p>nothing but a modest proposalto allow the google board to adopt and amend their bylaws,their laws of the corporation, to create a committeeon human rights. what we're doing is, we arelooking for a constructive way to deal with human rightsissues across the globe. not only in china, but invietnam, and saudi arabia, in a lot of countries that restrictthe internet and censor the internet. management of this companyunfortunately has shown itself </p>
<p>to be unwilling or unable tograsp the gravity of the issue of human rights in china andtake appropriate steps. this world must begin toexercise its fiduciary duty. the directors of google, andthis is directed at the directors of google, notmanagement, because they have the fiduciary duty, and theyare elected by us. and i should say in retrospectwhat's really interesting is when you filled out your ballottoday you had two choices, you can either voteyes, or you could withhold </p>
<p>your proxy. did you know this companydoesn't even have majority voting. we can't nominate directors. we can only vote infavor or withhold. that means in a plurality votingwe can't vote against the directors. we have no say in the waythis company is run. and there's a lot ofsimilarities actually between </p>
<p>the chinese communist partyand the board of google unfortunately. no, i'm seriously, we need tothink about this relative to majority rule. so we have seen the failure of,time and time again, of our board of directors toarticulate and demonstrate morally defensible human rightspolicies and this can result in significant costto the shareholders. our company has come underheavy criticism for </p>
<p>restricting internet contentthat the chinese government deems subversive,that is freedom of speech and assembly. guaranteed, by the way, bythe chinese constitution. which this company unfortunatelyhas not challenged in chinese courts orat the international court of justice. this is censorship and is aviolation of human rights and today's internet consumersreally actually don't like </p>
<p>patronizing companies thatviolate human rights. blatant inhibitions of freeflow of information are commonplace in the people'srepublic of china. which i might remind all of usis a totalitarian regime that tortures its own citizens. google's self censoringtechnology is an important part of that policy. google's refusal to disclose thesearch results it filters, or to legally challenge thechinese government on </p>
<p>violations of its ownconstitution, only furthers the abuses there. google, along with other leadingus technology firms, have helped build the greatfirewall of china. a chinese government initiativethat restricts and monitors the flow of informationbeing transmitted over the internetwithin china. google's influential internetpresence makes its client policy particularlysignificant. </p>
<p>china is a totalitarian,terrorist government. third only in its repressivepolicies after nazi germany and the apartheid systemof south africa. we need more than the moralityof materialistic self interest to lead us into the21st century. i asked the board of directorsto begin to exercise serious fiduciary duty on beginning todeal with the very modest proposal that will allow themto deal with it, as board members and fiduciary. </p>
<p>in creating a board committeeon human rights. david drummond: thankyou mr. harrington. sir, do you have another commentwith respect to the proposal-- this proposal? male speaker: yes i say-- david drummond: okplease go ahead. i'm a shareholder ofgoogle company. i fully support the proposal. i want to-- </p>
<p>[unintelligible] one fact to that. when yahoo or some other companysays this is not the company's business, it'sgovernment business that is totally wrong. because in my experience i wasexpelled from china, and expelled from japan. now the fbi want to expelme from america. so the government can neverdo anything good for that </p>
<p>worldwide citizenship. so i want to get support andlet the shareholder meeting know government willnot help us. so i really need the corporationto take that responsibility. and certainly i can see,we can help google. i'm a president of a us, japan,and china comparative policy research institute anda humanitarian in china. so we have made connectionwith china and </p>
<p>[unintelligible]. i talked with many victims fromchina and they asked me to be presented them in thismeeting to tell google management and the shareholdersto think about doing business when doingthings in china. definitely where we need torespect human rights, like in this proposal, that'smy point. david drummond: thank you sir. sir. </p>
<p>shelton ehrlich: yes, my nameis shelton ehrlich. i still own 23 sharesof google. [laughing] i think i remember themotto of google. don't be evil, or isit don't do evil. david drummond: don't be evil. shelton ehrlich:don't be evil. well i looked up harringtoninvestments using google, and harrington investments iswhat's called a socially </p>
<p>responsible fund. they refused to investin people who manufacture weapons. that includes one ofour big companies nearby, lockheed martin. it includes ibm, that makescomputers from the military. one of their other issuesis electricity from nuclear power. now if we as a nation wantto reduce greenhouse gas </p>
<p>emissions from coal oil, and gasfired power plants, we are going to need nuclear power. harrington investmentsrefuses to do that. now regarding the proposalitself, one second, if silicon valley companies were not todo business in china i wouldn't have my macintoshcomputer, i wouldn't have my nike shoes, i wouldn't have alot of things, so who is not to be censured alone for beingin business in china. david drummond: thankyou very much. </p>
<p>so that ends the discussionover the proposals and the various items on theagenda today. so because there are no furtheritems scheduled to come before the stockholdersthe polls are now open. now if you previously voted byproxy you don't need vote today unless you wish toactually change your vote. now let me just note that we'vereceived sufficient proxies in advance of themeeting to know that the proposals we discussed todaywill pass or fail in </p>
<p>accordance with therecommendations of the board of directors that we've madein a proxy statement. but we want to make surethat everyone votes. so please if you picked up yourballot when you register today, we have some folks whocan come collect that. so we're going to pause for amoment in order for anyone to submit a ballot that they'veused to vote. and when you do that pleasemake sure that you hand in your legal proxies thatare part of that </p>
<p>ballot if you have one. ok, it looks like we'vecollected most of the ballots so i now declare the polls foreach matter that's voted upon at this meeting closed anddirect the inspectors of elections to collectthe ballots-- i guess i've alreadydone that. so the results. i've been advised by theinspector of elections that the nominees for the election tothe board of directors have </p>
<p>been duly elected. i've been further advised thata majority of the shares present at the meeting, inperson or by proxy, have voted in favor of the appointment ofernst & young to act as our independent registered publicaccounting firm for the fiscal year ended december 31, 2008. and they have voted in favor ofthe amendment to our 2004 stock plan that i previouslydescribed. so each of these proposalshas been approved. </p>
<p>i've also been advised by theinspector that a majority of the shares present at themeeting, in person or by proxy, voted against first thestockholder proposal regarding internet censorship and secondthe stockholder proposal regarding the creationof a board committee on human rights. so each of those proposals hasnot been approved by the shareholders today. so that ends the officialportion of the meeting and i </p>
<p>hereby declare the formalmeeting adjourned. eric will now make apresentation to you about google's business andwe'll have a q&a following that, eric. eric schmidt: thank you david,and very well done. i want to give you all a briefupdate on the company and the easiest way to summarize thecompany's is i think things are going well. and it's a good message. </p>
<p>the mission as set by larry andsergey when they founded the company has not changed. what has changed is the scaleof what we're doing. so this simple idea, bornliterally in the dorm room and in the garage and all the thingsthat made google is today, has served as a basisof how we run the company. it's really about broad goals,broad initiatives, that change the world. that really affect many,many people. </p>
<p>and we have as a platform, theinternet which of course has more than 1.3 billion users. and is growing at a couplehundred million a year the average american internet useris spending 13% more time on the internet this yearthan last year. so either productivity is goingup, or down, depending on your view but is definitelychanging and we obviously benefit from that. people have a lot saywhich is great. </p>
<p>70,000,000 blogs exists. 120,000 more createdevery day. this is phenomenal. new expression, new voices,people we haven't heard from before, whether welike them or not. looks like more than half of thenew blogs are created by users who are 18 yearsold or lower. so again it's generationalas well. the number of photographs-- </p>
<p>an alarming statistic from myperspective is that more than 10 hours of youtubevideo is uploaded every minute into youtube. so i hope you all are spendinglots of time on youtube. an even more interestingstatistic, is if you if you plot out moore's law, it wouldbe possible to have an ipod like advice that you click tothe equivalent of your belt, or in your purse, in some numberof years, maybe 5 or 10 years, which will have 85years worth of video. </p>
<p>so you'll be dead before youcan watch all the video on this device. so it's an amazing new world andit's just phenomenal and of course google is wellposition on this. now the business of course-- i don't need to go into this,you've all seen our results-- business is working well. the majority of our revenues, ofcourse, are in advertising. the last quarter we saw a shiftfrom us as the majority </p>
<p>to international fora majority which we think it's great. very much a global business. of course earnings, and cashflow, and operating profit, track with that and it's agreat business to be in. when you see google and yousee this very simple user interface, which sergeyliterally designed right, himself. we've changed a littlebit since then. </p>
<p>you sit there and thinkit looks so easy. but in fact what's beneath it,these acres of servers that we have built and own and power,which in my view are tremendous competitive damage tothe company, is very hard. we did more than 95 quality-- that is search quality--launches in the first quarter, over and over again. whether it's in a languageor for more information or so forth. </p>
<p>and we work on things likemaking our index bigger. so for example now, we you doa search, you search all of the indices. you literally searched throughevery piece of information, in case that relevant thing. if you went through all thosepages that google presents you, you will in factsee everything. of course, it will take youmany, many minutes to get through it. </p>
<p>we've also worked on performanceand relevancy. literally getting thingsto be more correct. and the eventual goal, if wecould do it, is to have exactly the right answer,and only have one. but of course with the explosionof information we may never get there. there may always bemultiple choices. so it's a race between all thatinformation coming in and our scientists and some of thebest brains in the plant to </p>
<p>literally figure out howto deal with all that information. that information explosion, toget you that very one or two or three right answers. and it's a daunting task at thescale that we operation in, with billions and billionsof pieces of information. with more coming, because werealso included personal information now, from your owninformation and so forth. so an example of this is that wehave changed google so that </p>
<p>we show not just the traditionaltext answers, but we now try to find the correctimages, web, audio, and so forth and video. so not only do we have to getthe words right, we've got to get the video right, and theaudio right, and so forth. coldplay is a band that i cantell you my daughters like, so here is all of the relevantinformation, the best video, the best music, the bestinformation about what they're up to. </p>
<p>we've also been workingon personalization. and so all of the sudden theseare much more personal. with a product called igoogle,we can actually deliver very, very specific things thatpeople care about. the primary business of thecompany's advertising. we love advertising. and we think advertising isvery, very helpful to people when it's informative andtargeted to them. we think advertising is not veryuseful when it's for a </p>
<p>product that you'renot going to use. it's not relevant to you, thatyou'll never buy, why waste the advertiser's moneyand your time, which is even more important. wouldn't it be better if weshowed you ads that were relevant to you. and you thought that they wereinteresting, or that you learned something, for youfigured out who the best suppliers are, and that'show we operate. </p>
<p>so we live in an ecosystem whereusers become publishers of information and then theywant to publish information, they can add our ads totheir content and make some money doing it. we have lots of stories ofpeople who were hobbyists in information and all of thesudden gave up some job which they viewed as boring in orderto become the world's expert on something that theycare a lot about. it's a wonderful story aboutinnovation, and information, </p>
<p>and empowerment aboutnew voices. and that model works, and worksnot just in the us it works everywhere. we just recently completedthe acquisition-- an incredibly importantacquisition, called doubleclick. roughly april 7th, westarted operating. and what it does is it allowsus to enter a much larger business that's near the textads business which i've been </p>
<p>talking about. it's called the displayads business. it's interesting that more than90% of our publishers have enabled display ads. so it looks like not just textads, but also display ads-- and display ads here doesn'tmean just little static pictures, it also means littlemovies, and little stories and little things thatare engaging. and we think that a whole newcategory of ads will emerge, </p>
<p>which are narrative. where it's involving the carand you're in the car and you're doing it and so forth. we think that advertisers willlike it and we think people will enjoy it. and remember the greatthing about our ads. if you don't like them you don'thave to click on them. so again you have some controlover the experience as well. we have ads formats,by the way, coming. </p>
<p>we have lots of things come outwith youtube for example. procter & gamble, as an example,ran five contest for gillette, tide, pepto-bismoland swiffer. break up with your mop and fallin love with stiffer. ok, i'm not in chargeof their ads. the ads worked really,really well. did a similar thing with gadgetads, where little gadget programs. andwe did one for example with honda civics. </p>
<p>where you could drive it aroundin the ad networks. really, really fun, reallyinteresting, to see if it works. so by doing this, wecan really give people a lot more control. the same thing is alsotrue in apps. we started a year ago, wechange our strategy from search and ads to search,ads and apps. because it was clear that we hadenough technology, we had </p>
<p>enough investment, enoughpeople, enough platforms, that we could begin to solve otherproblems that were nearby. the problem of who storesyour email. actually a pretty importantquestion for those of you live on email, as most of us do. what about instant messaging? how do we use geographicinformation and that sort of thing. this shift, to shift from pccentric to web centric </p>
<p>applications, is the definingtechnological shift of our generation. it's not going to be donein a year, it's the next 10, 20 years. google is particularly wellpositioned to take advantage of this shift. and indeed you can seecompetitors and so forth responding to the things thatwe're doing and actually trying to figure out how theycan participate in this too. </p>
<p>it's much bigger thanjust google. but we hope will happen, is thatpeople will move more of their information in whatwe call the cloud. and what that means is that youwalk in here, you forgot your computer, or yourmobile device. and you just see a computer likeone of those, and you can get everything over there, thatyou have at home, all your personal information, andagain secure, and nobody else gets access to it, andit just works. </p>
<p>it's really easy to understandwhen you state it that way. why have all these differentdevices and have something over here, and youforgot over here. why not just have everythingavailable to every device, very very, quickly, again withyour permission, with your passwords, in a verysecure way. that's the promise of thisapplications platform. and it's a very profoundtechnological change. so along the way we say whydon't we just entered this </p>
<p>business and let's figure outhow we can make some money. because it's good tomake money too. and so we built something calledapps for domain which is a simple way ifyour business-- that's why i wanted to talkabout this-- it's a simple way for business to dothe same thing. why should the business have-specially smaller businesses-- why should they have all thesetechnical people to try to keep all the computersrunning. </p>
<p>why don't they just have someonelike google do it. let the cloud do it, right, sothe business can get back to running the business. because they probably don'treally know that much about computers and they probablydon't like them that much. in any case it's not a gooduse of their time, even if they like them a lot. here is a list of interestinguniversities and companies which are beginning toadopt google apps. </p>
<p>we have more than 500,000businesses using this. that's a sense of thescale of this. eventually this will be a verylarge, and significant, source of revenue to our company. it's exciting to see itbeginning to take off, as the technology gets there, as thenetworks there, and so forth. same thing is true formobile devices. here you see a blackberry,you see a mobile phone, you see an iphone. </p>
<p>we have amazing resultswith all of these. access everywhere, 81% ofinternet users in japan access the web from theirmobile phones. even more disturbing frommy perspective. the three top books publishedin japan by circulation last year, were first publishedon mobile devices. and only after they were read onmobile devices, were turned into physical books. shows you how far aheadthey are of us in </p>
<p>this sort of model. and it's coming here too. american's send 1.6 billion textmessages a day, clearly lowering productivity. and the mobile highlightshere are phenomenal. the iphone has done very, verywell with the search traffic because again it has a fullbrowser, and there's other ones coming. and of course the youtube stuffis also doing well, and </p>
<p>you can see youtube onall these devices. have a similar story in maps. and i forgot to mention thefella on iphone his name is pegman, he's a googleemployee. he's been viewed more than10,000,000 times. he wears his little orangesuit runs around. and he's the mascot, if you cancall him that, for street view, showing you whereyou are on a street. and we actually use this, likewhere do i turn left, where do </p>
<p>i right, is at store stillthere, that kind of stuff. and you can do that with allthis interesting mapping technology. so we're moving to aplatform which is actually quite different. because here we are, we havethese static maps, got them from satellites, bought themfrom the government, that kind of stuff, why don't wenow have end users adding things to maps. </p>
<p>very, very interesting idea. we can combine userssubmissions, as well as the official stuff. and sometimes the users giveus better data than the government. no surprise, because thepeople live there. so all of a sudden now we have awhole phenomenon around what is called my maps. and submitting and changing andcorrecting the kinds of </p>
<p>things that you seeon our maps. and by the way we think it's funhere in mountain view, but imagine if you're in a city ina developing country where there is no accurate map. and there never has been one. and this is the only map you'regoing to ever use, which is obviously verygood for google. but all of a sudden it goes fromhumorous and exciting, to fundamental to how peopleconduct their lives in this </p>
<p>new internet world. so i'd like to offer to youthat a new part of our strategy is that the web isin fact itself a platform. we have more than 40 developerproducts an apis with a big developer conferencecoming up in a few weeks, up in san francisco. we launched a package calledgoogle gears, which you can plug in your browser. which allow you, for example,to get on an airplane and </p>
<p>still do your email. it fools it and says, heywe're still on a network connection even if we're not,and when you get off the airplane and get back on and onthe internet it reconnect and does the right things. we have a new mobile product,which i've already mentioned, called android, with lots andlots of developer interest. the first and most importantprinciple is there's more smart people elsewhere thanthere are here and we want all </p>
<p>of them building on topof this web platform. that's why the web platformbecome such an important foundation for the nextgeneration of internet services, web services,and all the things i've talked about. so to finish up, and i hope i'vedone this not too long, because obviously we are proudof where we are, the opportunity before us isof the whole world. some statistics are that theinternet is growing in the </p>
<p>united states, is growing fasterin europe, it's growing even faster in asia, it'sgrowing even faster in developing countries. so all of a sudden, here we are,we're very proud of what we've done, and the way we gotthis thing kick started. but this is a globalphenomenon. and those people, simplerule, they want the same things that we. want they want peace, education,food, safety, </p>
<p>entertainment, knowledge,achievement, and excitement. and the internet as it spreadsgives us an opportunity to really touch the whole world. make it safer, make itbetter educated. really bring people who've neverhad a voice, never had information-- my best example is my friendis a computer science professor at kenya, and kenyasaid, we love google for computer science. </p>
<p>i said of course you lovegoogle, i love google too. he said no we use google toteach computer science. why? we don't have any textbooks. this is a phd program. this gives you a sense of howprofound the arrival of the internet and the power ofinformation, which we hope we can bring it, really doeshave an opportunity to affect the world. </p>
<p>in some really, reallyfundamental ways. so with that, thankyou very much. [claping] david i think we're going tohave larry, sergey, myself. you guys just join us. and i think we're justgoing to have q&a from the floor right? david drummond: q&afrom the floor. come on guys. </p>
<p>i'll sit on the end here. eric schmidt: and if you-- i know you have your handraised, would you mind standing at the microphonemadam so that everyone can hear you. let's have the lady go first. may phong: my name is may phong,i'm a shareholder. both doubleclick and youtubeare terrific acquisitions for you. </p>
<p>i was just wondering how long itwould take to monetize them in a way that wouldadd significantly to the bottom line. sergey brin: it's probablyworth mentioning that certainly doubleclick as aprofitable business on its own as is youtube, depending onexactly what you account for, we've been very, very fortunatewith our core business that it's had so muchrevenue and tens of billions of dollars, that it's hard,even for the substantial </p>
<p>acquisitions, to be ahuge portion of that right off the bat. nevertheless, both doubleclickand youtube have a tremendous amount of display inventory. in youtube's case that's ourinventory and in doubleclick's case that we serve and canimprove both the advertiser and a publisher experience on. so i think they both havepotential but i think for it to be a sizable part of ourrevenue, you're going to have </p>
<p>to wait at leasta couple years. eric schmidt: yes sir. tony mezzapelle: tonymezzapelle, shareholder. i'd like to ask about theinternational sales. only 1/3 of our revenue comesfrom countries other than the us and uk, but according to aslide i saw on the intel site, which happens to be by paulotellini, says that 80% of all internet users in the worldcome from countries other than those two. </p>
<p>and that includes about500,000,000 users that are in the rich countries. so what is the bottleneck thegrowing international sales? are we having problemslocalizing our products fast enough or are we having problemsgrowing our local sales groups? eric schmidt: a simple answeris we're not having problems in that area. i agree with the numbers thatyou gave, which paul i assume </p>
<p>are roughly correct for yourview of the global structure. the difference of course,is monitization. because the advertising marketsin those countries are not as mature, the adrates, and so forth. so you take the product ofinternet penetration and the development of the internetadvertising model in may of those country's, internetadvertising is also held up because of lack of creditcards, debit cards, and overnight email, andtransportation options. </p>
<p>the average growthrate outside the united states is higher. as i mentioned last quarter nonon-us is now larger than us has a total revenue and weexpect that gap will continue to increase. we don't know how much larger itwill be, but i could guess at least 65/35 maybe evenhigher, eventually. yes, sir. jack easterling: my name is jackeasterling and i have a </p>
<p>couple shares also. i understand that you say thatyou're going to be bringing in 6.5 more shares, isthat correct? that you were going to bebring to the market. what i want-- david drummond: optionplan, 6.5 million. eric schmidt: go ahead david. david drummond: you're correct,6.5 million shares of the stock option plan. </p>
<p>jack easterling: so my questionis, the two young men that are sitting there, willyou please not split the stock, just keep it together. larry page: you're asking thatwe don't split the stock. jack easterling:that's correct. eric schmidt: i think that's thefirst time we've had that request. sergey brin: we've had notrouble honoring that thus far and i don't expect thatanything will </p>
<p>change in that respect. we certainly appreciateyour support. jack easterling: alright,thank you. eric schmidt: thank you. yes sir, our goodfriend richard. richard brandt: richard brandti'm a writter, and a minuscule google shareholder. i was just wondering if sergeywould be willing to tell us why he decided to abstain onthe censorship proposals. </p>
<p>sergey brin: yeah sure. primarily i agreed with thespirit of both of those proposals in their concern forhuman rights and specifically human rights in china, freedomof expression, and the freedom to receive information. i should say at the outset thati'm pretty proud of what we've been able to accomplishin china. google, has the gentleman whospoke earlier mentioned, has a far superior track record in mymind than other internet or </p>
<p>internet search companies doin china with respect to making informationfreely available. having very strict policiescompared to the opportunities-- compared to the governmentforces that are in that country. when we entered china, anddeveloped google.cn, which by the way was far later than anyothers major search engine had entered, and primarily was dueto the reservations that the </p>
<p>restrictions that we wouldhave to live by were not consistent with our policies. but we were able to have animplementation, i think, that honored many of ourprinciples. and in fact, most of theprincipals that were in shareholder proposalnumber four. we restricted the amount ofsearch results that may have been omitted, in every case wenotified users that there's information missing because ofyour government policies. </p>
<p>as we do also in theus, germany, and france, by the way. and tried an overall greatertransparency to the process. it was still a tough call,but what we've seen as a consequence is in fact morechinese getting more access to more information. not only that, but now we'veseen the local chinese competitors, the principal onebeing baidu, whose market leader in that market, hasadopted some of our policies. </p>
<p>so now baidu when they omitinformation because there's some government requestregarding it, they now also label that there's someinformation missing. so despite our mixed feelingsabout that market entry, i think that the end resultwe've generated has been very positive. and in fact much of theattention, the shareholder proposals, many congressionalbills, and what not, did arise from the publicity surroundingthat entry. </p>
<p>now from where we are today,i think direction the two proposals were correct. i think that we do by the wayhave an internal set of principles by whichwe operate. and i don't know if it's-- i believe it should be sortof shareholder proposal-- there are several inthere that i don't entirely agree with. i think don't make sense. </p>
<p>for example, our recent launchesof bbs type services, we decided instead of havingpersonally identifiable information that could beforced from us in that country, we would actually makeall information public. so when you make a post, youknow that it's going to be identified as this is such andsuch making this post. we don't have any privateinformation on those services. and that's because we didn'tfeel we could launch service which would have privateinformation in a way that we </p>
<p>felt we could safeguardit from the government in that country. these kinds of, i think, novelapproaches have enabled us to bring more informationto the country. again, with respectto the board proposal on human rights. i think human rightsis very important. i think there are other socialresponsibility issues that we also need to think about. </p>
<p>for example our energy usage,carbon neutrality, for an having great environment forother companies to operate in, and so forth. i think there's a broaderscope there. and i think it might make senseto have a separate-- you know these people are allvery busy and so might be interested in these issuesand might be experts, and some may not be. i think there is certainly roomfor us to have a group of </p>
<p>independent people within googlewho meet regularly to discuss these questions. but i didn't strictly supportthe proposals as they were written and that's why i decidedi would have abstain. eric schmidt: and wewelcome the debate. these are complex issuesthat are important for everyone in the world. and we understand that peoplecan disagree on this and we welcome-- we literally welcomethe discussion. </p>
<p>yes sir. andy moore: hi, my nameis andy moore. i'm a stockholder and i recentlygot into podcasting. i'm launching a new podcastnext month, andy'streasuretrove.com. and i don't see any servicesat google related to podcasting, and maybe i missedit, but you've got youtube, but nothing in the audio realmaside from commercial music. anything in the works regardingpodcasting? </p>
<p>sergey brin: we've undertakena broader infrastructure initiative that enables us tohandle data of any type. we don't want to have to buildspecialized product that's just for podcasts, another onethat's just for videos. and like many of the things thatwe've built thus far, we feel that we are now at a scaleand understanding that we can build more genericservices. we have some more generic thingsout there, probably not perfect for podcasts,as of yet. </p>
<p>for example, googlesites enablesyou to host content of any type because you canhave essentially file storage on their. but we have even moreappropriate more generic technologies that we'redeveloping and i hope you'll be able to see in the nextfew months, six months, something like that. andy moore: thank you. mark jacobs: good afternoon. </p>
<p>can you hear me? eric schmidt: yes. mark jacobs: i'm mark jacobs,i'm a patent trademark lawyer from sacramento andi'm a shareholder. i've had several clientscomplain to me that when they've done google searches fortheir trademark, somebody else's listing comes up first.in fact i have specifically written to google about thisissue and all i get back is a very nice form letter fromsomebody who's very, very low </p>
<p>capacity underneaththe ground. and i wondered if google isgoing to take more effort to control trademark misusageon the searches. larry page: so this has been anissue we've spent quite a bit of time on. and it's an important issue. and while we work really hard toprotect people's trademarks and so on, there's also userbenefit to get competitive advertising. </p>
<p>so for example, if you'rethinking about buying a product actually seeingcompetitive products can be really useful to you. mark jacobs: it's not the issuewhen you put in your trademark and somebodyelse's name comes up. it's misleading, it's creatingconfusion, it is not advertising beneficialto the user. they're looking to get afrigidaire, and up comes whirlpool, using a frigidairetrademark. </p>
<p>david drummond: well actually,we actually litigated this very matter. because we think, as larry said,we think it's a really important issue for users tohave competitive advertising. as it turns out, when you dothe survey you actually see what happens with users,they're not confused. so to take the example that youbrought up, frigidaire, whirlpool if you typed infrigidaire and whirlpool ad came up on the side of thesearch results, guess what the </p>
<p>number one search result,i can guarantee you, for frigidaire wouldbe frigidaire. and so-- mark jacobs: notso, not so, i'm sorry, that is not correct. david drummond: we've gonethrough the court, and as you know, we litigated thismatter against-- in the gieco matter. and of course the court held inour favor for that, which i </p>
<p>think was the right result. mark jacobs: the advertising,i have no problem with. but i could give you a specific examples after the meeting. eric schmidt: ok sir, you'rebeing shown a result there, take a look at it. mark jacobs: i don'tneed a result. eric schmidt: no,nojust take a look. mark jacobs: that's fine, buti can show you several. </p>
<p>but i won't belaborthe point now. eric schmidt: there may be someconfusion on your part between the differencein the results from google and the ads. mark jacobs: correct it'sthe results, is what i'm complaining about. eric schmidt: ok solet's just review for everybody's benefit. we have a policy which weenforce globally, and </p>
<p>thoroughly, that the actualgoogle results are not affected by advertising. so important to understand. we thought you were asking aboutthe ads, the things on the right hand side. so we misunderstood you. the things in the right handside, it is in fact possible for advertisers to fightover key words. and as david said, we in factlitigated that, and we're very </p>
<p>happy to be won that case. but the core results, the onesabout how google answers, in fact answer in our best abilitywhat we think the user was looking for, and is notaffected by advertising. mark jacobs: i appreciatethat. but why can't an attorney orsomebody complains that when you go in the search results, oryou type in frigidaire and you're looking for informationfrigidaire that the first hit that comes up is a differentcompany other than the true </p>
<p>trademark holder. that is my problem. johnathan rosenberg: i cansee the first result. it's here, i don't know ifi can project it there. but the first result iswww.fridgidarie.com. mark jacobs: well i can give youhalf a dozen others but i don't want to belaborthe meeting. eric schmidt: i understandso thank you-- this is jonathan who runs allof our products it actually </p>
<p>matters that he get theright answer here. so thank you johnathan. but again, to the best thatour computers can do, they give the first resultbased on the query. if you are aware of errors ingoogle search results, there are relatively fewof that type. but they're certainly notinspired by google. and remember that the actualsearch index answers are not done by humans. </p>
<p>there are no people typingthose things in. so we don't have a way whereyou can go change them by human intervention. why don't we moveon, thank you. audience: [? george bayon, ?] [? bayon ?] capital partners, privateequity and shareholder. has microsoft or any otherprivate equity contact google about buying their class bshares, and if so, where with </p>
<p>the board of directorsvalue the shares at? eric schmidt: david whydon't you explain-- there is confusion here, overthe value of class b, which don't trade separately. you want to talk abouthow that works. david drummond: whichare class b-- our structure is classb or the private-- george bayond: it's not thestructure, it's just has anyone approached google about--the board of directors </p>
<p>about buying theclass b shares? sergey brin: we should probablyclarify, it's not possible to transfer classb shares and have them-- they would convert thento class a shares. david drummond: class b sharesare only held by shareholders before the ipo butany attempt to-- if you transfer them or triedto sell your shares they can become class a shares. eric schmidt: so thescenario you're </p>
<p>describing it was not possible. david drummond: itwouldn't happen. george bayond: i was wonderingif there was a value put on them or not. eric schmidt: the answer is,it's the same value as class a because there's no separatemarket for class b and they trade one to one. george bayond: thank you. joe holmes: hi my is joe holmes,i'm a shareholder. </p>
<p>i can understand policypotentially not to comment on speculation, but i was justwondering if, hypothetically speaking, two of our competitorsin the search space wanted to join forces? eric schmidt: were youof two i can think of a different set? joe holmes: purely hypotheticalsituation. eric schmidt: ok perhapssomething that was very current, as of a week ago. </p>
<p>joe holmes: i was wondering ifyou could provide some color as to how our business riskwould evolve and what our responses to thoserisk might be. eric schmidt: well, we didhave a test case of this, which was the yahoo microsoftproposed merger. and we took a position thatit was bad for consumers. david wrote a blog post whichi would refer you to. i think it's very well arguedthat the combination would have resulted in too much poweraround electronic mail, </p>
<p>instant messaging, very, veryhigh market shares. and given the history ofmicrosoft it would have been possible that could be misused,as rough sum. i'm probably not doing justiceto your argument david. so obviously it's good thatthat's not going to happen, at least at the moment notgoing to happen. next, yes sir. doug mckenzie: hi i'm dougmckenzie, a shareholder. thank you for yourgreat company. </p>
<p>and i like to also thank you forgetting out of the medium a bit more, eric. with you on cnbc and especiallylarry your interview in fortune magazinewith [unintelligible] germination about howto change the world, really excellent. i wondered if you had consideredinteractive, like video game type interactive,advertising as a way to monetize youtube? </p>
<p>for example, a customer or usergets in there and they start looking at somethingthat's interesting to them and then they might play with it. and it could be, for theobvious, would be an advertisement fora video game. but you could be driving a car,or looking at a house, or doing a variety of other things,where the information flow could be two way. sergey brin: yeah, well i shouldfirst mention we've </p>
<p>also looked at just advertisingwithin video games, which is an emergingmarket and one which we're participating in. within youtube itself, i think,you could certainly use one of our gadget ads, the newgadget ads formats which could have embedded withinit a game. i think that's an interestingapproach. and it could work evenbeyond youtube. i guess you know thatthe youtube </p>
<p>viewer has flash installed. so that will give you greaterconfidence that they be able to see the ad. so it's a good user for that. but it might apply evenmore broadly. doug mckenzie: thank you. daniel goldsmith: my name isdaniel goldsmith and i want to speak about my experience withthe investor relations department. </p>
<p>i don't think theyrelate well to investors or at least myself. there's no phone number todirect queries to so email is the way to go and my emailsnever get answered. eric schmidt: ok daniel goldsmith: i'm willingto help you, we if you need some help. eric schmidt: thank youfor that feedback. since they're here, maybeafterwards we could get the </p>
<p>specifics and on top of it. and i apologize on behalfof the company for that. george davis: hi my name isgeorge davis, i own five google stocks. i go to school over thehill in uc santa cruz. got a little anecdote relatedto the cloud that you're talking about earlier. in january or so, i think,maybe, around there, my house, me and three roommates, we ranout of ink in our printer, and </p>
<p>we can't agree on whose turnit is to buy new ink. so what we do is we write ourpapers in microsoft word, gmail them to our ucsu account,and use the printers the university of californiaprovides us. but there's a problemwith this. the problem is we're usingmicrosoft word to write our papers, so my question is, bythe time i graduate, which will be hopefully fingerscrossed, two years, will google docs be as powerfulas microsoft word? </p>
<p>eric schmidt: sergeyand larry. sergey brin: i think in a numberof respects google docs is more powerful than microsoftword today. for example, the ability formultiple people to edit the same document at the same timeand see the changes coming in, in real time. the ability to access thedocument no matter where you are, whether an internetcafe and whatnot. there's certainly a long listof sort of bullet point </p>
<p>features that's in microsoftoffice, some of which i think will be incorporated, andperhaps even succeeded, like succeeded, in google docsand spreadsheets in the forthcoming years. and there might be some featureswhich are perhaps a little too niche or best left tothird parties to implement. maybe specialized bibliographicentries, you know there's-- those pull downs have hundredsof entries, i don't think we </p>
<p>want to do duplicateevery single one. but the general directionis to be more powerful. larry page: i don't read thingsin microsoft word. peter curbie: yes my nameis peter curbie, i'm a shareholder. my question to you is aboutalternate revenue streams. i don't dispute the fact that youhave a great business and a search and would includedoubleclick in that. but i gather from your lastquarter that you now have a </p>
<p>revenue coming in fromprint advertisements. and i was wondering what othernew revenue streams are you opening up and could youinclude any word on android in that. eric schmidt: well remember,we have print, television, radio, youtube, displayall coming. and you also want tomention enterprise. sergey brin: enterprise has beenan important part, as a fraction still small, but stillimportant part of our </p>
<p>revenue for number of years. and since the recent release ofgoogle apps for your domain also for universities andwhatnot, we really see that as an important growtharea for us. and a lot of companies,including our own, because we're going to use our ownstuff, have really benefited because they can really easilyand cheaply deployed email productivity software toall there employees. peter curbie: how do you makemoney from that exactly? </p>
<p>sergey brin: so there's the freeversion, which many, many people use. and then there's a premiumversion, and typically large companies want support, want toincrease storage, and a few administration features, on somemore things like that, they subscribe to thepremium version. which is $50 a user a year. typical, there are a few otherways that we price to. peter curbie: you didn'tanswering my question about </p>
<p>android, do you haveany word there? eric schmidt: do you want tosay anything about android? sergey brin: android is part ofour broader goals to enable more internet access viamore devices, more quickly, and easily. the goal is not the revenuestream itself, but rather by increased usage of the internetvia mobile devices we think we will benefit. eric schmidt: and therevenue might be an </p>
<p>issue, since it's free. android sergey brin: yes, ishould clarify. the android-- we will be open source and freethe available to all. audience: yes, if you can getadvertising into video games, maybe you could get grand theftauto to carry lojack ads and ceradyne, the bulletproof vest company. but i wanted to ask anotherquestion, would you tell us </p>
<p>about the wedding? eric schmidt: which one? there were-- audience: both, all. eric schmidt: larryand sergey. sergey brin: i think we preferto focus on the business in this meeting. but we think those are prettygood ideas for ads within grand theft auto. </p>
<p>eric schmidt: larry? larry page: whateversergey said. david drummond: ok, yes sir. audience: yes, hi, my name isrea, i'm a shareholder. and for first of all, i wantto comment google on such a great company and greatapplications. i use google for almosteverything. i just start my own blog sitelast week, and i'm ready for an android based phone whenit comes out too. </p>
<p>but my question is more of astatement of concern about some of these world issues againgoing on these days. sergey i loved your commentsabout what google is trying to do to make information moreavailable in some of these countries that do do censorship,also providing your functionality. but i'm also concerned thatbecause of your great success google is probably the mostpowerful tool in the world right now, and it can doa lot of great things. </p>
<p>i hope we're all using it todo a lot of great things ourselves and to helpother people too. but i'm also concerned aboutthese other governments of other large countries that havedifferent values from us, that to try to censor andcontrol information in ways against our values here, you'restill trying to grow and some of theseother places. i'm just concerned if you couldfind a way to become number one and make a lotof money there but under </p>
<p>different negotiations that youmight need to go through to modify your software tohave certain restrictions under the request ofthe governments. would you do that or what wouldyou do, how would you get around that? sergey brin: that'sa good question. i should clarify our primarygoal in these countries, for example china, is not by anymeans to generate as much revenue as possible. </p>
<p>in fact, while china's financialperformance has been strong and good it's stillnot material as a fraction of our revenue. we could abandon it tomorrowand would not have material effect on our revenues. our goal has really been, what'sthe most positive we can do, and thus far we feltthat by staying in the market and being revolutionarywithin it, that we can do the most good. </p>
<p>and that's how we apply andit's not just china. we get blocked especiallyyoutube, in many countries around the world,all the time. youtube got blocked in thailandbecause there were videos with people's feetpictured above the king. now we could take an extremeposition saying we will not allow any video to go down andif they don't accept that one they don't get youtube at all. but on balance, we feel we bringmore to the thai people </p>
<p>even if we have to take down thevideo of the feet over the king, by providingyoutube there. and that's not alwaysthe case. in some cases maybe we feelthat we're asked to do something that's reallybeyond our principles. and in each case, it'sa judgment case. that's the strategy i think wewill continue to employ. eric schmidt: we've alreadyrun over a time. so we got three more questions,i'd like to get </p>
<p>those questions, question,answer, question, answer as quickly as we can. audience: yes, thank you.my name is robert [unintelligible], i'm withamnesty international i'm representing the new york citypension funds with over 720,000 shares. i just want to follow on thechina questions, and i recognize you've struggledwith this. and we've been in dialoguewith you for </p>
<p>about 18 months now. and all i have to say is wedo appreciate that it's difficult, but you reallyhaven't come far enough. and we really do need to domore and actually make a greater effort. and i have two specificquestions. the first is why won't yousupport the global online freedom act? which is proposed federallegislation which actually </p>
<p>would help you deal with thechinese on this issue? and second since the chineseconstitution actually guarantees freedom of speech,why aren't you actually engaged, working in the chineselegal system, to deal with these issues. eric schmidt: david. david drummond: on your first,point i don't think it's quite accurate to say thatwe we're-- actually i don't think it'sreally accurate all to say </p>
<p>were not supporting the globalonline freedom act. we actually support theprinciples there, we'd like to see legislation that addressesthe problem and make sense. i think there's a hearing comingup in a couple weeks in the senate where you'llhear our views in a more fulsome way. but we don't actually opposethat, and we'd like to see legislation that makes sense. on the chinese legal question,i think it's </p>
<p>an interesting one. it's not clear to us that wehave the ability, as google to do that, but i think it's aninteresting idea for us to utilize the chinese legal-- orhelp those who are using the chinese legal system, to try toensure those rights and i think it's something we oughtto think about doing. eric schmidt: richard. richard brandt: on advertising,eric you mentioned print, tv, radio adscoming up, that sort of thing, </p>
<p>i've never understoodgoogle strength in moving essentially offline. your strength is relevancy,relating this to what people are doing, are interested in. somebody reading a newspaper, orpassing by a billboard, or watching television, youhave no idea what their interests are. eric schmidt: well actually,we hope to do better than that. </p>
<p>that would be the base case, andwe think with technology improvements so we can actually,at least do a pretty good job compared to what'sbeing done today in offline. the best example is, i'm sureyou have a television at home, you probably have a set topbox, that set top box is a computer, and now thatset top boxes are connected to the internet. with appropriate softwarechanges, technology work, built by google and others,can actually cause more </p>
<p>relevant television to showup on your television. it's a small victory, buta very fundamental one. television industry is amassive and very mature advertising industry, if we canshow more relevant ads, we can fundamentally enter as a newplayer and really provide a better television experiencefrom an advertising perspective. richard brandt: i think littleas an old print guy, it that really confuses me. </p>
<p>david drummond: print is harderbecause we don't have a set top box to play with. but even there, we did an adinterchange with all the major newspapers and publishers werewe actually have tried to get much better distributionfor ads. so that's again a case we'retrying to help them because we need them, and in particularwe need their content. and sir you have the honorof the last question. audience: thank you very much. </p>
<p>my name is rudolph[unintelligible] i am a stockholder. i read most recently googlewas interested in the environment and i was wonderingif you give us stockholders what yourprojections are and how you can help the environment. larry page: well yeah, we areabsolutely very, very interested in the environment. we feel that we have asignificant responsibility due </p>
<p>to our data centers, whichuse a lot of energy. and so we have very smart peoplewho are building those. and as part of those buildswe're trying to do environmental things as we buildthe data centers to make sure that they're using reallygreen energy and so on. we also think there's a hugeopportunity to reduce the power of green electricity tomake it competitive with coal. and we've made investmentsin different areas, solar thermal, for example. </p>
<p>and we're also hiring people,small numbers of people, to work on very exciting and veryinteresting projects to really significantly reduce the costof some of those green technologies. audience: one of the mostimportant things, that i think that google should be targetingis natural sources of energy in order to alleviate are problems worldwide. larry page: we're basicallylooking at </p>
<p>the sun and the earth. the heat in the earth,geothermal power. and we're very optimistic thatthe cost of those things can be competitive with howwe generate power now. audience: very importantthank you. david drummond: and we agree. i want to thank everybodyspending their afternoon here. we will see this year. thanks again. </p>
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<div align="justify"><p>nikesh arora: well, thankyou very much, jamie, for hosting a wonderful panel. and to our panelists, andof course to [? roberta ?] for a wonderful performance. with the rising cost ofzeitgeist this year, we figured we'd try and findmulti-talented speakers who could fill in forentertainment. so, this was your entertainmentfor the evening, ladies and gentlemen. </p>
<p>it is hard to top off a daylike this, where we started with the prime minister andwe had [unintelligible] and a whole host ofwonderful people during the day, as speakers. i did say there was nobodyfrom google, but i guess i wasn't accurate. there will be somebodyfrom google. i'm going to invite ourchairman and ceo, dr. eric schmidt, to comeplease take the stage. </p>
<p>and he has a specialsurprise for us. eric schmidt: thank you. thank you. that panel, and the minister,reminds us why we're alive. it's so great that youwere here, and so great that we could do this. and so great for you all tospend your whole day and tomorrow with us, as well. as a quick summary of google:in the last year, since we </p>
<p>were here last year, wetalked about search. lots and lots of searchimprovements, lots of new products in the search. lots of interesting andunanswered questions about search that we're working on. advertising. many more advertisingtechnologies, many more advertising ideas. much deeper, much more powerfulnotions of how to get </p>
<p>advertising messagesto consumers. and, of course, theacquisition of doubleclick. the emergence of a new wholestrategy for google, involving applications called cloudcomputing, with tremendous implications of how people willstore information, and so forth. the sum of all of that iswhat we're doing now. and rather than having me talkabout it, i thought it'd be much better to bring my twocolleagues, who have shown up </p>
<p>in matching shirts,matching shoes. sergey and larry. one woke up in russia, onewoke up in london, and they dressed the same. [applause] we should take one minute tothank nikesh, lorraine, dj, all the people who put such atremendous amount of effort to make this all happen. and especially with theevening's activities </p>
<p>ahead of us. a phenomenal job,nikesh and team. so, rather than having usspeak, people have comments or questions-- we havemicrophones-- on any subject. anything you all careabout to discuss. we're happy toanswer questions. ok, we have a question. unfortunately, you don't have amicrophone because sergey-- ok, here-- we're working-- oh,here's a microphone over here. </p>
<p>ok, good. progress. audience: hi, i'm brianmcbride from amazon. i just wondered if you couldtalk about your thoughts and implications of yahoo! anda microsoft get-together. sergey brin: test. test, test. oh. yeah, what do you mean? </p>
<p>yahoo! microsoft? eric: sergey, youwere traveling. sergey brin: i was traveling. i actually did-- this on-goingsaga-- i did-- i was surprised to find out when i flew intoday that there was some new developments that i have yetto be fully briefed on. eric: by me. sergey brin: by you. </p>
<p>so, eric, why don't you? i can think of no better time. eric: ok. let's see. a couple of things. there's been rumors thatmicrosoft is going to do another approach at yahoo! we've taken a position that themarkets are more competitive, creativity is stronger, it'sbetter for consumers if </p>
<p>yahoo! remains independent. david drummond, who's here,wrote-- i thought-- a pretty persuasive blog, given thehistory of microsoft and its behavior, that that wasa pretty good outcome. and i think we stand bywhat david has to say. do you agree, larry, orhave you had a chance to look at it yet? larry page: yeah. no, i agree. </p>
<p>great. with us, you never quite know. let's see, you had a question? yes, sir. audience: hi. it's marco from [? dada. ?] a personal question,to each of you. what's the single technologicalthing that excites you the most today? </p>
<p>the one you like the most? sergey brin: i got this kind ofstrange thing at home recently. i bought this reallybig monitor. it's kind of quad-hd. so, it's like 4,000by 2,000 resolution. and it was very, very hard toget and actually make it work with a computer and whatnot. but i finally have gottenit working and it's kind of interesting. </p>
<p>it makes you-- it changes howyou can work if you actually have a really big highresolution display that size. so, that's one toy, if youwill, that i'm playing with. larry page: you can'treally see if you have windows at the top. you can't really see thembecause they're too far away. sergey brin: well, yeah. but then you dragthem to yourself. you do. </p>
<p>it's true. eric: larry, larry? larry page: oh, that'sa hard question. actually, one of the thingsi've been really excited about that we've been workinghard on is street view. which is now, you know, it'sbeen shown in europe a little bit, and so on. and driving in general, ithink, is a very, very interesting thingfor computers. </p>
<p>so, one of the things i did,i visited this thing called the grand challenge. which was, basically, it was acontest for $5 million, for the car that can driveitself the best. with no peopleinside, by the way. and they're actuallyamazingly good. they basically simulated acity, and the cars just drove around all day. and the best cars actuallydrove all day with </p>
<p>basically no errors. in traffic. so, they had human driverswearing helmets and stuff, driving around with them,and hoping the cars wouldn't run into them. but i think the possibilitiesfor some of these technologies are just amazing. there's about 1 million peoplea year that die in auto-related accidents, and certainly we cando better than that now </p>
<p>that we have computers. so, for me it's just seeingthings that you didn't think were possible that computerscan do, and thinking about what the possibilities of those are. audience: thanks a lot. eric: a question over here. audience: yes, hi. i was just wondering if youwould like to comment about what you're doing onalternative energies. </p>
<p>larry page: oh, sure. so, we recently launchedthis initiative called re less than c. it's kind of a geeky way ofsaying that we want renewable energy to be cheaper than coal. and the reason behind this iskind of interesting for us. we had all these data centersthat were launching all the time in all parts of theworld to serve our users. and they basicallyuse a lot of energy. </p>
<p>and so we have people shoppingaround for electricity and buildings and space and so on. and what they notice is thatbasically all the electricity is generated by coal, ina wide variety of places. and that's the cheapestenergy that we have. and in places like china, ofcourse, that's what they're primarily building:coal-fired plants. and it has a lotof implications. it's really a dirty technology. </p>
<p>a lot of carbon emissionseven besides it being dirty. and we started and we wantedto make green data centers. so, we said, well, we shouldreally do better than this. and we started talking to allthe companies in the space, which-- there are many. there's a lot of investment. and it's actuallyvery promising. there are many, manytechnologies in solar and in wind and in geothermal, thatcan really make energy cheaper </p>
<p>than we get it now from coal. and do it at a scalethat's similar to all the energy we use today. so, we can imagine makingrenewable energy that's cheaper than we produce now. and doing it at a scale that'sas much energy or more energy than we produce today. and that's really about gettingpeople to work on that now rather than 5 years from now. </p>
<p>there's a lot of investment inproducing expensive green energy, but if you talk to thepeople who are doing that and say, well, can you makeit a lot cheaper? they say, yeah, we can probablydo that, but we're going to work on that five years fromnow, once we finish the expensive green energy. and what we've been doing ismaking some investments and hiring people, and tellingthem to start working on that now because the worldcan't wait for that. </p>
<p>so, that's-- i think-- is areally exciting area for us and one that couldreally be a big thing. go ahead. audience: kent nicholswith askaninja.com. could i get each of you to goon record as to if you're for ninjas or pirates? larry page: i'm for whateverthe opposite of sergey is. sergey brin: i guess ifi had to choose, i'd probably take the ninja. </p>
<p>eric: but this is aserious question. he seriously asked you. are you sure? sergey brin: ah, no,i'm not certain. what happens after ichoose one or the other? i'm imagining someone jumpsfrom behind the stage. audience: yeah, i mean, aninja could be anywhere, but, you know, piratesare about-- mr. schmidt? eric: i'm too old. </p>
<p>audience: i see. eric: more questions? audience: i have a question. [unintelligible] from [unintelligible] turkey. you're shown as the bestexample when it comes to an innovative company, and ihad the chance to visit headquarters last year. </p>
<p>i'm not sure about theinnovation part, but the environment, it's great. and my question is, we heara lot in the news about why google is innovative. and there are a lot of goodthings said about the company, but two examples are given themost, which is 20% of people's times are spent onpersonal projects. which might actually helpgoogle in the future. the second one is 10% of themoney is usually spent on what </p>
<p>you call the [unintelligible] projects, if iremember correctly. my question is, whoseidea were those two? the second question is, werethere any similar ideas which you weren't able to implement,which you're sorry about? and the third question is,again in the media, there's a lot of discussion going onabout now that you are becoming-- or you're growing--you are having problems with some of these implementations. </p>
<p>do you plan to change those ordo you think these are the core values of google, andyou want to keep those? sergey brin: ok. i'll do a little bitabout the history. i came up with the numbers buti think the concepts were all shared between all of us. i just decided toquantify them. eric: actually, what happenedwas i didn't believe sergey. so, he-- we were in amanagement off-site-- and </p>
<p>sergey actually stood up andproved, mathematically, the numbers. and since no one understoodthe math but sergey, it was obviously correct. larry page: that is anaccurate rendition. sergey brin: i think it's--so, there are two rules we have at google, kind of. one is called the 20% rule,that's for individuals to spend a portion of their time workingon-- not their main projects-- </p>
<p>but other projects that areuseful to google, that they take the initiative on. and the other is similarsounding, but that's the 70/20/10 rule. and that's how we divideour overall resources of the company. not just financially, butalso headcount, and whatnot. and we want to spend 70% of ourresources working on our core, which we generally defined assearch and ads, but now </p>
<p>probably apps fit intothat category, as well. 20% of our effort goto adjacent areas. for example, maybe, androidis an example of that. and 10% is things that arecompletely unrelated. anything goes. and, like renewable energy. though obviously we use a lotof energy, but it's kind of in the 10% category. and the idea is tostrike a balance. </p>
<p>there are two wayscompanies can go. they can get so fragmented theygo from doing one thing to 25 different things, and thenthey're not focused. at the same time, they couldbecome myopic and not try new areas at all, where you mightdo well and you might have great resources andideas for them. so, the idea behind our rulewas to kind of set the balance. and i didn't prove the exactnumbers, but the fact that we should always maintain aroughly constant ratio i did </p>
<p>have a mathematicalargument for. and that you shouldn't have the10%, the out-there things, dwindle, say, down to 1%, asyou become a very large company-- as i think doeshappen to large companies often-- i think thatwas pretty important. eric: and the other part of thequestion was the issues that have been written about today,about the scale of the company, and are those--are those in discussion? larry page: i think, you know,as we get bigger-- every time </p>
<p>we double in size, kind of,everything changes-- most of the things we're doingdon't work anymore. and that's happened to us anumber of times already. things like we're muchmore global now, so time zones are a huge issue. like eric's been yellingthat you can't meet with europeans after noon or so. and those are actually realissues for us, like we have to-- </p>
<p>eric: he means afternoon in california. larry page: u.s. yeah, sorry. eric: that was not areference to siesta. [laughter] larry page: europeans arevery cranky after noon. eric: after lunch. larry page: but we've had, imean, those are real issues. like, we've had to rearrangehow we do our meetings and with what people and what times,and things like that. </p>
<p>and there's just-- it soundskind of trite-- but there's 100 issues like that that you needto address as the scale changes. and it's, i think, it'salways a challenge to keep up with those. you're always-- in asense-- you're behind. what you need to be doingat any given time around communications andorganization and all that. i think we've had a lot ofcomputer systems that have </p>
<p>really helped usdo that, though. we have something called theproject database, which basically contains whateverybody's doing. so, anybody can look at aproject and you can see who's working on it and what theirmilestones are and so on, and that's been really helpful. we also have an automatedsystem that makes sure people's reviews get done, theirperformance reviews and so-- they're peer reviews-- sothey're based on your peers. </p>
<p>and your managers and everybodymakes written feedback, and the system collects all thattogether and there's a process by which it gets reviewed. but i think having a little bitof automation around some of the basic tasks of the companyhave really helped us scale, but it's always a challenge. eric: question? audience: my name ismark [? menesse ?] from paris. </p>
<p>you've been part of a hugerevolution, as we did, but in a micro proportion. i wanted to know followingto you, what is the next revolution? sergey brin: oh, boy. ok. i'll throw out one idea. but, you know, my guessis as good as anyone's. nanotechnology? </p>
<p>that might be a good one. i don't know, maybe youshould ask the ninja. eric: larry? the next revolution? larry page: oh, it's probably-- eric: after you get finishedwith all those cars with no drivers in it? are people going to besitting in the back? larry page: actually, i mean, ithink any of the things that </p>
<p>are speculated on being thenext revolution, you know, biotechnology, nanotechnology--many, many, many different areas-- any of those couldbe the next revolution. but generally nobody'sworking on it. so, one of the things i've beentrying to do is to get more people working on thingsthat could really matter. so, the question i like to askpeople is, is the project you're working on goingto change the world? and, you know, you sort of askpeople that question, and i </p>
<p>think you end up with some verysmall percentage of the population, like .00001%,that's really working on those things. so, the rate at which weaccomplish those changes is very, very slowbecause of that. and this is sergey'spoint in the large. so, how do you get the worldallocating 10% of its resources to the sort of wacky thingsthat we're clear if they would work they wouldchange the world. </p>
<p>and that number is.00001%, instead of 10%. and, from my standpoint, ithink we've got to get more people into engineeringand into technology. because that's where we'veseen really big changes. you know, we don't all haveto farm now, because we have technology to do farming. and that's true formany different areas. i mentioned driving already. there's a lot of labor usedin driving that doesn't </p>
<p>need to be used that way. so, you can kind of look at thedifferent areas and say, where can we really makea big impact? and how do we getpeople to do that? so, i think the quick answer isyou can decide which area is going to be the breakthroughby actually working on it. eric: the other debate that wehave all the time, where i'm always the loser, is that larryand sergey say, we have all this money and cash now, what--we should be taking more risks </p>
<p>than we did when wewere a start-up. because when we were astart-up, we were like, about to go bankrupt all the time. sergey brin: 10% of a bigcompany is a lot more risk than 10% of a small company. eric: anyway, i alwayslose this battle. audience: my name ismohammed [? al-jassan ?] from jordan and google launchesso many different applications and features, and i was justwondering what sort of criteria </p>
<p>do you look at before launchinga new application or a feature on google's many sites? sergey brin: ok, good question. yeah, how do we launch newproducts and features? typically, the initial ideasare kind of born out of a brainstorm, or somebody putstogether a demo and eventually they'll get a go-aheadto start to build it. once we've developed it enough,we will typically test it by putting it out to, say, a smallpercentage of our user base. </p>
<p>certainly for existing productslike search, we'll just put it through a series of tests, andwe'll measure, you know, how many-- how much more quicklywere people able to find information using this thing? do they come back more or lessoften as a result of that? things like that. and once we're confident thatwhat we've built has a good benefit, then we'll goahead and launch it. eric: go ahead. </p>
<p>audience: just to continue withyour theme of innovation. you've recently had a fewhigh-profile departures from google. do you worry that maybe as youbecome a bigger company, the people who want to do that 10%,who want to make a real impact in the world, feel like they'llhave a better chance of doing it outside google, ratherthan inside google? sergey brin: i think we've haddepartures recently that have been more highly-profiled, butwe actually-- you know, in </p>
<p>overall attrition, when i thinkabout it-- we're actually roughly just as we'vebeen all along. we've had very high levelpeople leave in the past, i just think-- don't think itgot noticed quite as much in the press. but the important part of thequestion is can people really feel free to innovate? and we've recently started tohave-- we have a group of about 5 initiatives that we let runsomewhat more independently. </p>
<p>kind of just to experiment withother models and also allow people who have a solid trackrecord within google, once they've demonstrated a success,we say, you know, ok, you're going to do this a littledifferent than we normally do it, but we're going tolet you have a go at it. like i said, we have probablyabout 5 such things going right now. and i think, as a result, thesepeople are able to better invent than they wouldat a separate start-up. </p>
<p>because here they get a gooddegree of autonomy, plus all the resources that googlecan bring to bear. now, you know, those things arefairly recent, so we have yet to really know theirtrue success, but i'm fairly optimistic. larry page: let me say, too,i think that this is a work in progress aroundcorporate structure. so, i do think that there's anissue that we have a start-up model and we have the companymodel where there isn't </p>
<p>much innovation. we don't have anythingin between that's been really successful. and actually we've tried anumber of different things. sergey mentioned we haveabout 5 things going. actually they all kind of havea slightly different structure. and there's several incontemplation that are starting to have even slightly differentstructures than the ones we're running. </p>
<p>so, i think it's a balance:how do you get the compensation right? how do you-- howmilestones based is it? you know, what is the realstructure of how you do these things within companies? we don't really know exactlyhow to do it yet, but we know we'll keep tryinguntil we get it. and i think it's pretty much anunsolved problem for companies. i think it's a very importantone to solve, so that </p>
<p>big companies can get astructure that works. or bigger companies can get astructure that works, and really produce a lot ofinnovation and a lot of things that will make a bigdifference in the world. audience: what's the one thingeach of you worry about most? eric: in my case,larry and sergey. no, just kidding. sergey brin: eric and larry. larry page: sergey and eric. </p>
<p>eric: that question wasfor the two of you. what do you worrythe most about? sergey brin: the thing i worrymost about is opportunity cost. i think that we have somefairly unique opportunities that not all companieshave in terms of some of the resources we have. kind of, we have the brand,the financial resources, the technical expertise. and i worry that we mightbecome a little too myopic and </p>
<p>not use that to maximum effect. you know, the fact that we dohave the ability to say, scan all the world's books andmake them searchable for everyone in the world. you know, things like that,those are exciting to me. and i worry that we may notbe making other similar bets that we could be making. and i think there are manythings that other companies can do that i'd like to make surewe leave it for those third </p>
<p>party companies to do. because if there are plenty ofother people capable of doing certain things there's noreason that we have to do them. larry page: i think the mainthing i worry about is the open internet, basically. actually, i remember in theearly days of google, we worried that all theinformation would got locked up in kind of a proprietary way. and it would be hardto index, and so on. </p>
<p>and that hasn'thappened, obviously. there's still very manyways that it could happen. for example, when we startedgoogle, it worked pretty well everywhere in the world. i mean, we were just acouple of grad students. and then we were 10 people or20 people, and we had several million users, and theywere actually many users all around the world. if we were required to pay forgood transit, in order to make </p>
<p>our service fast, there's noway we could have done that. we didn't even really, couldn'teven answer our phone. we didn't have enough people. so, some of the proposals i seearound-- you know, where isps and so on want to extract moneyfor good transmission-- i think really could really harmthat innovation and new companies coming about. the fact that you can plug onecomputer in somewhere and just magically it can talk toeveryone in the world pretty </p>
<p>well-- that's somethingwe take for granted now. but it's a tremendouslyimportant thing for the world. and it's not necessarily goingto continue to be that way. so, that was one thing. i also think we justreally want to preserve open standards, too. the reason why the internetworks is because it was invented in universities. the standards we have for emailand things like that work </p>
<p>openly because they wereinvented in universities. and that's why you have spamalso, because they could never imagine there'd be badpeople on the internet. so, they didn't reallythink about those issues. but the standards that cameabout more in companies, like instant messaging, havebeen very, very closed. we've announced for a long timethat we'll interoperate with anyone who'll interoperatewith us on instant messaging. you know, amazing! </p>
<p>you should be able to instantmessage anybody, not just people who happen to beon the same network. just like with email. and, you know, we haven'tgotten takers from the big companies. and so i think there's still alot of risk around communications being closed andthat's a great way to make sure those productsnever get better. so, those are the kinds ofthings that i worry about. </p>
<p>audience: my name'sjim [? brickton. ?] i'm from an agency calledthe search works. we spent a lot of money withgoogle last year, about $200 million worth of revenuefor google last year-- eric: thank you very much. audience: --on behalfof our clients. and, you know, there's a lotof agencies in this room. we got a rebate last year, ofabout $14 million from google, which we reinvested in ourpeople, and our technology, </p>
<p>and our clients. and that's being takenaway-- all the rebates-- as of next year. and i know there's a lot ofpain at my agency-- i'm sure there are other agencies herethat are hurting because of that. so, i just wanted to ask, areyou aware of that change in pricing structure? and can you talk me through thereasons behind it, because my </p>
<p>clients are a bit confused. eric: this has been acontroversial decision within the company. we looked at it from thestandpoint of where we thought the value added was, and whatthe total cost structure was, and we compared all thevarious different groups. i'm aware of some of theeconomic changes and i understand that it's painful. the theory here is that themarket's growing quickly </p>
<p>enough, that although thepercentages are smaller, the aggregate-- it's growingquickly enough that there's enough money to cover expensesand have a good profitability. and we can talk offline aboutsome of the-- [laughter] audience: i'd reallylike that, please. eric: but the basic argumentwas we couldn't-- the economic structure had gottenskewed again. and it wasn't a fair playingfield, and that's why we had to make the change. </p>
<p>again, a very, verycomplicated argument. let's see, we had aquestion over here. audience: you spent quite alot of money on the youtube acquisition, and alsoon the myspace deal. what is your planfor monetizing that kind of traffic? on the one side, onlinevideo, and on the other hand, user-generatedcontent in general. eric: one of the most importantunder-- and in my view, not as </p>
<p>well-covered-- stories in thelast year, has been the tremendous growth of youtube. it's shocking to me howmuch is going on in video around the world. the growth and so forth, atvarious points, has almost put google in harm's way, in termsof our ability to actually run all of google. the traffic explosionhas been so great. and as larry put it earlier,we've managed to actually </p>
<p>re-engineer our systems and soforth to handle this traffic. so, what's new this year? and the answer is youtube. out of that we have a number ofinitiatives around advertising, that are not what you think. they're not pre-role orpost-role, which we're beginning to try. so, the outlook thereis very good, but the tests have to proceed. </p>
<p>do you guys want to talk alittle bit about myspace? larry page: i was just goingto say about youtube-- eric: we're already inthat business, go ahead. larry page: i was going to sayon youtube, too, i think the-- you know, google actually ranfor a while before we started running advertisements. and then we tried a couple ofdifferent things and then one of them kind ofworked out well. i think we're in that samephase with youtube, and i'm </p>
<p>very confident that we'llget revenue from that. but i'm not in a hurry to doit, i want to do it right. and i think that's the attitudewe've taken enough, so you know, we told those guyswe want to build traffic. you guys are building tonsand tons of traffic. that's the mostimportant thing. and we're sure we canmonetize it over time. so, i think we've been prettyhappy with that progress. sergey brin: if i can just takea moment to step back to the </p>
<p>agency fees question, just toadd a little more color there. so, we sell our advertisingprincipally by auction. and essentially, we havecustomers-- we've done it historically slightlydifferently, depending on the country-- but this effort waspart of unifying that. we have some customers that useagencies that then will bid on keywords on google, and somecustomers will represent themselves directly. ultimately, to make an auctionfair, we need to make-- </p>
<p>or compare the actualmoney that we make. i mean, just because-- if wesend money back to the agency, then maybe we should besending money back to the direct customer, also acomparable percentage. ultimately, we decided weneeded to compare it, kind of apples to apples. because we didn't want todisadvantage the customer coming to us directly versusthe one coming in through the agency, in terms of how theirbids got set in the auction. </p>
<p>now, this new system, it's notthat the agency doesn't get paid at all, but we leave thatpayment portion to the relationship between theagency and the customer. and that way it'smore transparent. that was the thinking behindit, i mean, there certainly is-- as eric mentioned-- we'rehappy to discuss it further. but this wasn't just some kindof scheme for google to get more money, this was reallyabout how we fairly deal between different customers. </p>
<p>eric: let's make sure weanswer the myspace question. so, we're in the myspaceadvertising business. it's gone well. and again, as we are learningthe tech-- as we're learning how to monetize socialnetworking traffic, it will ultimately be much,much better. it's taken us a while. we said that before. is that a fair summary? </p>
<p>sergey? larry? oh, let's see. audience: my name is ramuyalamanchi from hi5. and i have two questions. eric: from? you're from? audience: ramuyalamanchi from hi5. eric: yes, hi. </p>
<p>audience: i have acouple of questions. the first one is for larry. and in thinking about, ingetting people to think about problems that matter, andworking on problems that matter, how do you actuallydo that for people that are outside of google? and my second questionis for the whole group. and that's what's the singleaccomplishment that makes you most proud, in, kind of,all the things that have </p>
<p>happened over the years? larry page: i don't reallyhave a great answer for the outside of google. it's actually hard eveninside of google. i find pushing people a lothelps, you know you just really need to tell people, like, whyaren't you working on this? why don't you work onsomething bigger? why don't you-- and it'sjust a constant effort. outside, you know, i've startedtalking about it more. </p>
<p>so, i've done an interviewin fortune this last month. i've been working with the xprize to try to define some big challenges for the world. there's also agovernment-funded group called grand challenges forengineering, which is part of the national academy ofengineering, where they're just trying to find the 10 areasthat'd be really great if they were solved. one of them is reverseengineering the brain. </p>
<p>and things like that. and we went through with awhole bunch of really smart people and tried to define someinteresting things for people to work on that wouldreally matter. so, i think it's just,you know, just trying to work on it. eric: sergey? sergey brin: let's see, maybe ishould talk about what kinds of things we're most proud of. </p>
<p>i think that being able todeliver what i hope you think are excellent products-- idon't want to judge them myself-- but things like searchto everyone in the world. well, everyone with an internetconnection anyhow, and we're working on broadening thenumber of people who have internet connections,and that's free. so, the most-- you know,whatever the president of whichever country, or theprime minister, they all probably use google. </p>
<p>i don't know for sure. all of the, no matter howwealthy you are-- you know, i use the same search engine assomebody, an orphan in nigeria, might use ifthey're at the internet. everyone is able to afford thisincredible kind of resource. and the same thing, by theway, is true of gmail. everybody's able to affordthat kind of great communications tool. so, i'm pretty proud that we'vebeen able to not only create </p>
<p>great tools but also deploythem widely to everyone in the world. eric: i think for me i'm mostproud of just being involved with the internet as a whole. i think everybody hereunderstands the power of the internet. try to remember when you didn'tuse the internet and you couldn't rely on it in any way. it's a pretty harsh vision. </p>
<p>audience: guy phillipson,the chief executive of the internet advertising bureau. i just want your views on, iguess, keyword search versus display within your company. and keywords has beenphenomenal growth, it's huge in the uk. we know that. but broadband, you know, makesonline a proper entertainment system and we can see richmedia, video, hence </p>
<p>the acquisition ofyoutube, and so on. and you've got doubleclick,as well, and an ad exchange. and so, where does it all fit? and, you know, how do you seethe ratios working in the future, say, for the next5 years, within google? eric: we agree withyour premise. right? that it's going to bethis amazing platform for advertisers. </p>
<p>we don't necessarily knowexactly what the products are going to look like ontop of that substrate. we know that advertisers wantto use more than text, more than video, more than display. they want to be able to do--think of it as a package, and they want to get itin the right way. we also know that people aredoing creatives, and so there are now agencies-- many of whomare here in the room-- who are doing very interesting thingswith, for example, gadgets, </p>
<p>and gadget ads, andthings like that. click to play video ads. so, we're part ofthose experiments. how will it come together? it's pretty obvious to me thatdisplay advertising will be a very large business. and again, google todayis not the leader there. it's going to be a very largebusiness globally, for a number of players, simply becausepeople care about images, and </p>
<p>video, and so forth and so on. and the company that can figureout all the combinations to produce a valuable targetingsolution that will target that media is probably going toend up being the winner. do you guys agree? audience: and ultimately do yousee keyword search maxing out? you know, way in the future? and, hence-- eric: there's noevidence of that. </p>
<p>there may be some limits, butwe benefit from the fact that the internet is growing very,very quickly, especially outside the united states. broadband adoption is growingagain very, very quickly. and pcs, macintoshs, cellphones, all of that. if you think about it, if youassume that the internet only has about 1.3 billion users,and there's on the order of 6.5 billion people on theplanet, you're only a quarter penetrated. </p>
<p>so, what happens whenanother billion or two people come online? audience: so, raising theaudience is actually just going to-- eric: absolutely. and the pie really doesget a lot bigger. and we take it forgranted here. everybody here uses it,everybody here has a mobile phone, and so forth. </p>
<p>that's not true for a lotof humanity, and it's time to get that fixed. larry page: you should say,too, i mean, if you do a search for something you're trying tobuy-- i mean, i only get ads maybe 80% of the time-- i don'tknow, 60% of the time-- something like that. that's in the u.s., which is areally highly developed market. the uk obviously is similar. but there's a lot of thingsthat i buy and i search for </p>
<p>that i don't get any ads for. and so there's a lot ofopportunity there still. and i think our ad systems arereally probably optimal for medium-sized advertisers. and for really smalladvertisers and really big advertisers, there's just a lotof things that need to be done to really create the coveragethat can generate conversions and clicks and so on. eric: you'll have the honorof the last question. </p>
<p>audience: my nameis [? arnt, ?] from germany. and the last question'sgoing to be a pretty personal question. the incredible success ofgoogle has made you wealthy beyond imagination in avery short amount of time. has that changed your lifeto the better or the worse? larry page: sergey has to spendmore time with his monitor. he's the first one who hasone, so it takes a long time. </p>
<p>sergey brin: yeah, it actually,it cuts both ways to be fair. it probably balancesout somewhat neutral. you know, certainly,yeah, i've got somewhat bigger and better toys. but they come with mehaving to do more of the testing and debugging. eric: you could hire someoneto do that for you. sergey brin: i don't know. that's-- i'd feelawkward about that. </p>
<p>i think, yeah, there area few lifestyle changes. i've tried to limit some ofmy lifestyle changes and not change too much. i've certainly seen a lot ofpeople who have great wealth who seem relatively unhappy. and, in fact, you know, it'skind of as you drive through different neighborhoods, youcan kind of see where people are more secluded because theyhave bigger houses, bigger lots, and they're wealthier. </p>
<p>they have less socialactivities than a lot of the more populated, more urbanareas, that are typically poorer in the u.s. so, i thinkit requires great care for people who come into suddenwealth, if you will, to avoid those kinds of traps. larry page: i was going to say,i think what i mostly feel is just a great sense ofresponsibility-- i mean, you have all this resource-- touse it well, and to think about that. </p>
<p>and that's been, that's beenreally-- i mean, i like challenges, so it's beena great challenge. but also not something thati expected to have to do. we've been spending a lotof time on things like our google.org efforts. some of the energy things,and other things. i've been spending a lot oftime in africa, because i feel like i really needto understand that. so, you know, i've beentaking some vacations there, </p>
<p>and things like that. which has been interesting. but not what i would havethought i was doing, if you had asked me 10 years ago. so, i think having thatresponsibility is a really exciting thing. it causes you to do a lot ofthings that you might not otherwise do that are good. there's also a tremendouschallenge and responsibility </p>
<p>that you feel about it. eric: i want to thank larryand sergey and nikesh, and i both want to thank larryand sergey who made this special trip, just literally tocome here for this meeting. so thank you both. sergey brin: and, if i may,just very quickly, i hope you've all been enjoyingthe conference. i hope you appreciate that aspayment you have to sit here and listen to us torture youwith this q&a for about an </p>
<p>hour, but it's freefrom here on out. eric: nikesh, do you want to sort of--thanks, everybody. </p></div>
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<div align="justify"><p>>> ladies and gentlemen, nikesh arora.>> arora: okay. so, i have some good news and some bad news for you. good news is thatmy head cold is worse than guy's, i was on a flight back from dubai last night, so ican't hear anything. so, if you guys are going to heckle, go crazy. all right. your phones,your pagers, it doesn't matter. the bad news--i've never done this before, like this round thing,standing in the middle because i know there's a bunch of people at my back. i don't knowwhat they're saying, what they're doing, so, after a while, they told me to walk a lotand stand up here, look at these people and make sure they're behaving themselves. so,you guys have to help me a little bit. anyway, so, a part of the challenge is, when you comehere to speak the first time, if you are the </p>
<p>first speaker, you have the benefit and theopportunity that you can say a lot of stuff and then over the rest, or the rest of theday, many people will stand here and repeat some of the things i'm going to say. the goodnews is i get to go first. the bad news that i already saw in the first video that vanput up there, already, you guys are talking about myspace, yahoo, linkendin, et cetera,et cetera; facebook. so, we're going to do a quick poll. i have only 20 minutes, so,i would be speaking very fast. how many of you have myspace or any kind of blogging account?raise your hands, please, quickly. it's early in the morning. you can do it. okay. how manyof you have an instant messaging account? okay. that's not many of you. how many aren'twilling to admit they have an instant, sort </p>
<p>of. how many of you have more than 50 friendson their instant messaging account? a hundred. one, two, three, four, five--more than 150.you're in the wrong age group. sorry. the average teenager has over 200 friends on theirinstant messaging account. they haven't met 75 percent of them in real life ever. so,we are going in to a phase which none of us has seen before. i'm going to start the daywith two very provocative statements. one, i think, about 50% of marketeers out therein the world do not understand what's going on around them. okay. and, at least, 50% ofyou should be willing to stand up and challenge that, but i can't hear, as i said, so it doesn'tmatter. the second thing i will tell you is i'm not here to give a doomsday speech. thisis not the end of the world. all the changes </p>
<p>we're talking about are going to take eight,ten, 15 years to happen. all right. i started my career--by the way, i can, i have about20 slides. i can do 20 minutes without slides, so, don't worry about it. i'll show you theslides in the end if you guys feel so interested or inclined. but, when i started my career,i used to work in the mobile phone industry and i saw this piece of research that said,because there's a phone around the corner, everybody has a phone, you have one in yourhouse, you have one in the phonebox, you have one next to you, the probability that peoplewould want a mobile phone is very low. so the prediction 15 years ago was that therewill be 3% of the people in the world who'd need a mobile phone. how many of you havea mobile phone--never mind, i know the answer. </p>
<p>who doesn't have one? you're definitely inthe wrong place, right. so, clearly it's very hard to sit back and predict those thingsbut, you turn around, you look and you say, "that's pretty obvious. it was very obviousthat people are going to have a mobile phone." well, that's great, how many of you actuallysat there when mobile phones came out and said there is going to be 80 or 100% penetrationof mobile phones in 10 or 15 years. if you did say that and you're still in this room,i feel sorry for you because you have picked up a trend which is very hard to pick up.i moved to the uk seven years ago, and i used to live in the us, in the us we believed inlargesse, and yes, we believe in having lots of things and many of them so i have threevcrs--you know what a vcr is? okay, that was </p>
<p>seven years ago, okay. but, i'm so tickedoff when i moved here because it would not work in the plugs and they don't have thesame format is what i have figured out. so, i decided to dump them and i got myself advd player, right, pretty visionary seven years ago, i'd say. so i went to my localvideo store and they had one small rack in the corner where they would gave out--theyhad dvds for rent and they had like the whole store where three-quarters of the store isfull of videos. seven years later, you go there now, i don't know if they have a videosection. do you guys remember if your video stores have a video section? that's prettyobvious, wasn't it, seven years ago, how many of you picked that up? the reason i'm tellingyou this, is that you sit here, we all sit </p>
<p>here and say, "yes. i get it. i know what'sgoing on out there. i understand what's going out there, i am so smart." well, if you are,try and take this movie and play this forward 10 years from now and look back and say, "whatis the world going to look like 10 years from now with all the trends i'm seeing today?"in that case, how do i want my business, my company, my product, my brand to be positioned10 years from now and what do i need to do today, because 10 years from now it will betoo late. everybody else would have figured it out. so, the question is, what are yougoing to learn today--during the day of the conference--what are you going to pick upand how are you going to turn that around, use it for your brand, use it for your product,use it for what you do? i think it's time </p>
<p>to see some slides, right? okay, there's supposedto be... there you go. so, if i look at what is going on over there from an internet perspective,i think, what's happening out there is as big as the revolution you saw with, you know,water steam, combustion, oil, et cetera. lots of big changes are happening. in the last10 years the internet penetration or the number of people in broadband has gone up from--broadbandis about 450 million by the next two years; it's 250 million now. there's 1.2 billionpeople on the internet today. how many of you remember the internet bubble? do you guysknow what the internet bubble was? sort of, kind of, yeah? that was 1999, right, 2000something like that? there were 350 million on the web at that time and the internet bubbleat that time, i'd say, there was less than </p>
<p>10% broadband penetration. it was all in youroffices, it wasn't at home. today is 1.2 billion people. it's going to be 40% broadband penetrationin two years. what's fascinating is the market gap of the 6 internet companies today is greaterthan the market gap of all the internet companies in 2000. so, i'm not quite sure when the internetbubble was or when the internet bubble is but, hey, i think we're sitting at a pointwhere there's a huge revolution going on. you haven't missed the boat yet because there'slots of stuff that is going to happen in the next ten years. there are three fundamentalreasons i believe this is not going to go away. the first reason is, you know, everybodywho has broadband is not going to give it up. how many of you have broadband at home?fantastic. if you could keep your hands up </p>
<p>for a second please. how many of you are willingto not have it work for a week? fascinating, right. now, this is a phenomenon in marketing,you should all dream of, it's called, going from a nice to have to a must have. and themoment your product goes from a nice to have to a must have, you've made it. i can nowhave a very glib question, how many of you would be willing to live without google searchbut, i'm not going to go there. i hope none of you as well. but, again the point is, you'vegot to figure out a way that your product goes from a nice to have to a must have andi think broadband access has gone from a nice to have to a must have. and because of that,i don't think this trend is going away. if you look at the other phenomenon that's happeningout there is the cost of storage. and today--are </p>
<p>you tapping that because i'm already overrunningmy time yet or--okay--i'm just checking. right, okay. i don't think i'm going to get throughmy slides so it's okay. the second thing that's happening out there is the cost of storage,and i'll go through this quickly. an ipod which stores about 40,000 songs today becausethe fact that storage gets cheaper. so, literally you can buy twice the storage in 13 monthsat today's price. so, 13 months from now, you'll be able to pay half the price of thestorage you buy today, that's how we look at it. if you follow that math, in 10 years,our storage capacity will go up a thousand times. right? what does that mean? that meansthat you can have an ipod in which we can put all the content ever created whether it'smusic or video in about 15 years. every piece </p>
<p>of content ever created can be on an ipodin 15 years. what does that mean? what does that do to your product? does that mean weneed broadband at all? i'll just go to africa and start giving them ipod for $250. theydon't even need broadband access because it costs $7,500 a month in africa to get broadband.so, i don't know, but there is a change going on that is going to impact things. so, froma more technological perspective, what that mean is we as people will be very comfortablestoring all of our data on the web. right, because it's so cheap to store, most companiesoffer free storage for your files, for your data, for your e-mail, et cetera. and lastbut not the least, most of you that are carrying mobile phones are now carrying a tool of contentproduction. you have a digital camera in your </p>
<p>phone which means people are going to getmore participating, more involved. so, we already talked about the fact that there'sa billion people out there, there's three billion people with phones, the new only pointi will make for you people in this room who are "marketers", this is a billion peopleconnected by the same need, right, which is very different. it's never been possible inthe past to find a billion people on a global platform who are connected by the same need.they're all online, they have very similar attributes, they all know many, many, similarthings. if the online community was a country, it'd be the fifth largest country in the world.imagine launching a product into the fifth largest country in the world purely onlinewithout having to need physical space, physical </p>
<p>logistics, there is no wonder that in thelast 10 years the top three brands that have developed had been online, that is amazon,ebay or google. all right. so, there's a lesson in here for all of us. see, if we look atwhat people do on the web, it has primarily been their need for information. now, howdoes that impact your life? well, there is a billion searches done everyday. that sortof one per every person and if i go around the room, all of you will admit, sheepishlythat you actually do more than one search a day. so, there's some people in the worldwho are not searching, who are online and we spend our time trying to find them. we'researching for the people who are not searching, right, come on guys, give me a break, it's9 o'clock in the morning, right? the next </p>
<p>thing that people are doing on the web ischatting, communicating, talking to each other. again, the same mobile phone guys who toldus that there is going to be 3% usage of mobile phones said that when we have mobile phonespeople--if, mobile phones were to take off, people would stop using their fixed line phonesbecause on average our desire to talk as humans is only about 600 minutes a month. well, surprise,surprise now we speak for about 1,800 minutes a month. and we send 60 billion emails a day.we have 23 billion via instant messages a day which means we are turning into a--whatis that?--"constant partial attention society," you guys ever heard this phrase? constantpartial attention, it's sort of the nice way of saying, attention deficit disorder. it'slike a very politically correct for saying, </p>
<p>constant partial attention that means, "i'mpaying attention to you, darling, don't worry i'm also doing this at the same time." right.so, that's what's happening out there, people are communicating. the next thing which hopefullyimpacts you guys more and more specifically is the notion of commerce. oh, my control,i will be able to catch up eventually. the european market is 130 billion euros for e-commerce.it has tripled in the last three years; it's going to double again in the next four years.how many of your company's products are available on the web? i was talking about that in germanyawhile ago and, you know, i talked to somebody and he said, "oh, we have products but theproblem is we're scared of selling our products directly on the web because our dealers aregoing to get really pissed off." everybody </p>
<p>has dealers, they get really pissed off. isaid, "okay. so, what happens?" he said, "well, the problem is in the last six months, oneof our dealers set up a website and now he's selling more product in the country than weare collectively in that whole region." so, again, the opportunity and the challengesis, is your product available for consumption out there because people are willing to dealwith it. now, five years ago, i haven't bought anything on the web. now, it's highly unlikelyanybody who buys anything worth more than 500 pounds or 500 euros is not going to doso without researching it on the web. the next trend which everybody is still tryingto figure out is what grant talked about, his epiphany came two years ago with myspaceand his 12 year-old. there are 250 million </p>
<p>people out there who are on myspace i think,something like that, or even more. since i did the slide, there's more people--betweenmyspace, facebook, yahoo there are 250 million people, i don't know what they do, i haven'tbeen able to spend too much time in them, but clearly you guys raised your hand andsaid, you all participate in it. it's not quite clear how these communities are goingto evolve and, you know, people like guy are going to try and figure it out in telegraphonline tv, but there's still an interesting battle out there. is content going to be atthe center and communities are going to form around it or is community going to be at thecenter and people will find like-minded communities to discuss relevant content? i don't knowthe answer, but i tell you what, every five </p>
<p>seconds somebody out there posts a consumeropinion on the web. and the question is, even if you're not there personally as a marketeer,do you know who's talking about what up there on the web. is there anybody in the room workedfor cadburys, before i tell the story? okay, i'll tell you a story. cadbury has a brandcalled wispa--does anybody know a brand called wispa? good there's some people in the roomwho are old enough to remember wispa. well, cadbury decided to stop producing that productearlier this year, until they found out there where 93 facebook communities about wispa.they found out there were 14,000 fans posting opinions on facebook saying, "bring back wispa,"until the sort of the climax happened in glastonbury when iggy pop was performing, people ran upthe stage where the banner saying, "bring </p>
<p>back wispa." now, as a marketeer, doesn'tthat make your heart go warm and happy? my brand, somebody still loves it. well, cadburyis bringing it back. they are making 23 million this year to test if the product still haslegs in the market. so, i don't know, do you know what people are saying about your producton the web? whose marketeers aren't ready? because the way we like to ask people whatthey think is we bring them into a room, put very, very bright lights on them and tellthem, "if you can imagine the world where people could fly, how would they look like?"and the guy said, "i really don't have an opinion but if you insist and you're payingme $50 an hour, i'll tell you something." i said, "look, i did consumer research. nowi know what consumers want." so, the point </p>
<p>is, you just need to go out there and seewhat people are saying in these communities. and last but not the least, the most recentnotion is people are going up to the web and looking for entertainment; they're lookingto be entertained. there are 5 million playbacks of youtube videos on the web, and youtubeprobably has less than 50% market share of all the entertainment on the web. so, betweenitunes and videos, et cetera, there's lot of stuff happening out there. that's easypart. here's what we did. we tracked that and looked at it, what people are spendingtheir time on. what's fascinating is, people spent about 11 hours--i think that's a month,yes. it is, 11 hours a month online in 2003. that number increased since then to 15 or16, excuse, me, increased to 16 in 2007. it's </p>
<p>going to increase again in the next four years.but what's fascinating is where people are going to be spending most of their time. you'llsee most of the people are going to be spending their time in the community and the entertainmentspace, while we like to believe that search and information is going to be important becauseonly about 10% of the world's content is on the web and it's going to take awhile beforeall of it comes on the web. but that's where people are going to spend their time. thequestion is, are you ready to interact with those people in those forums in what you do.let's see what happens next. so, what does that mean to me? what do i do as a marketeer?what do i do as a person who spends my time trying to figure out how to do my day job?the first interesting observation i had based, </p>
<p>have based on all of this stuff is that mostof--so, there is sort of a reversion happening back to fundamentals and the reversion thatis happening which i don't think ever left is that consumers are sort of blocking advertisingand consumers are beginning to understand that all they give a shit about is the performanceof the product. and if you go back and look at the examples of the companies i said whichhave built brands for the last 10 years it is all been on the back of products and i'llexplain it in second what i mean by that. there is––back again, a greater focuson performance, management and marketing. people want to know what the roi of your functionis. i used to be a chief marketing officer for five years. trust me. i hated the cfo.he always wanted to come and measure what </p>
<p>i was doing. i told him, it's all good. it'sall in the head. it's warm, you wouldn't understand but, eventually, i had to leave. and he'sstill there. the third lesson from this is that if you can find a way of making youradvertising relevant for consumers when they need it, you're going to go very, very, veryfar. and last but not the least, every element of the four ps we all learned in marketingis going to get impacted by the internet. i was in dubai yesterday and i was makinga presentation slightly different, and i sort of said this, not on the slide but generallysaid it, and the gentleman who was going to speak as spoke before me the previous daywas sitting in the front row, his name is philip kotler (ph). do you guys know philipkotler (ph) is? some of you, if you're into </p>
<p>marketing. he's supposedly the grandfatherof marketing and he almost wanted to stand up, stood up on stage and wanted to come hugme and say you're right, read my next book which is about how the four ps are going tobe impacted by the internet." so, clearly, it must be true. so, the first one i toldyou, product performance is going to be relevant. it is relevant. if you look at the last fewyears, the best brands that have been built up to, it have been on the back of performanceof products. what's fascinating is most of those products had been free to the consumerwhich i don't know what to do. that does mean, you start taking your products and make themfree for everybody? i don't know the answer. and third, which is fascinating again is therehas been a community element to those products. </p>
<p>whether it's ebay, whether it's amazon orwhether it's google. it has been all about engaging with the user, engaging with theconsumer, getting them to contribute. and very seldom in today's world, the large brandscommunicate with their users at the same level, which is a challenge. and as i say, that'ssomething which i've mentioned to people in guy's business is--i was talking to the ceoof a newspaper, not the telegraph, and i said, "how many letters of the editors do you geteveryday?" he said, "about 5,000." i said, "that seems like a big number." and i imaginedhow passionately do you have to feel to write a letter to the editor? how many of you havewritten a letter to the editor ever? wow. okay, fantastic. now, i said, "how many dopublish?" he said, "five." that's like, worse </p>
<p>than the lottery. all right. you have 5,000people write letters. you could actually have people who have written 50 letters and neverbeen published. i said, "why don't you put them all in your website so people can actuallyfeel that their letters are being read, and they have been acknowledged. i don't evenknow. i said, "do you send an acknowledgement?" he said, "it's not always possible to sendan acknowledgement every day to 5,000 people." right? i just think of that from a marketeerand a brand person's perspective. here's people desperately wanting to engage with your brand,and you actually say, let me decide which five of you were intelligent enough to saysomething which i deem worthy. all right. try doing that to a consumer, right? so, anyway,long story short, they did not want to put </p>
<p>them on the web because they felt not everyconsumer is articulate enough and yeah, we should talk to the newspaper guys who thinkabout it. but, the point i'm trying to make is that you need to find a way that you'retalking to the community, you're talking to the consumers, you're talking to users ofyour products. most websites i see, most products i see do not engage the consumer. i boughtan expensive music system and put it on my house, and of course, you know, the fact thati'm not so technologically savvy, i tried to get it to work and it blew up. and it happenedto blow up just a few hours before i was supposed to have many people over at my house. so,i tried to figure it out how to fix it. and there's, now everything is software controlled.you can't really go turn the off button, and </p>
<p>turn on, et cetera, whatever. but, eventually,that's what i have to do. but, anyway, i go to their website, i know all about their management.i know all about their wonderful production facilities. i couldn't even find the usermanual on the web. so, i go looking for blogs and there are some people on blogs that haveactually identified that this problem exists. and i go look in the blogs but, i didn't quitefind the answer. so, i thought it was being really smart, and i called a help number inthe us, because the us was still open and the uk had closed. so, i sort of got themtalking to me for about five minutes about, you know, what i own, what i own, whatever.and suddenly, after five minutes, the guy says, "i'm really sorry, sir. i just realizedfrom your product code that you bought this </p>
<p>in the uk. i'm really sorry, i can't helpyou." he hung up on me. i said, "okay." again, the point is, is your brand talking to yourconsumer? are you talking to them? so, i've been given the red lights which means i haveto go really, really fast, right? okay. i knew 20 minutes was never going to be enough.so, i'm now going to show the video i was going to show you, you're going to have...i am. i guess. >> i love my new iphone. it does everything.but will it blend? that is the question. now, you fans on youtube have asked me to blendan iphone so, i did it. but i have another. >> arora: sorry. this was an example to showyou how--there's a blender company. this just doesn't always happen with online brands only.there's a blender company called blendtec </p>
<p>which sells blenders to restaurants and willsell to consumers. they started a small, sort of a viral video in blending things. now,they have a channel in youtube that charge $5,000 if you want to get their product andput it to blend. they blend toothpaste. they blend iphones. they blend whatever you want.all right. but, the users love it. the users are blending shit and sending it to them andsay, "look how i can blend this stuff." all right. so, there is some element of entertainment.okay. let me go to the stuff really quickly because i already talked about most of it.but, there's a greater focus on performance management. if you don't know the roi of yourmarketing spend, don't bother. i sort of disagree with the first slide that showed up when thevideo started this morning that 90% of marketeers </p>
<p>don't understand the value of television.i think 90% of the marketeers don't understand the value of the internet. but, i said 50plus, so, somewhere between there is the answer. all right. the third thing which i talkedabout is the notion of advertising as a service. this is a quick example to show advertisingis the advertising when i don't need it. advertising is information when i need it. so, if you'rehiking in the desert when you see a sign saying one mile to the next juice bar, that's highlyinformational. nobody sees that as an ad. but if i just finished dinner, and you sticka pizza or mcdonald's ad in front of me, i'm not a very happy person. do you guys understandthat? and as i said, most every element of the four ps is going to change for to what'sgoing to happen on the internet. i will tell </p>
<p>you one story and i'll stop right there. there'sa business on the web called threadless. and, again, i have lots of lots of examples. ican talk forever but, i've been told i can't; this is my last story, i promise. all right.there's a business on the internet called threadless. what threadless does if you don'tknow it, they sold 6.2 million t-shirts on the web in 2006, and it's quadrupled everyyear. what they do is they've asked their consumers to design t-shirts, and you uploadyour design onto their website, and then people vote. and whoever votes is implicitly saying,"i'd like to buy that t-shirt." so, the people vote, and they print the top six t-shirtsevery week, and they make limited copies. if they have 20,000 of t-shirt one which had,which had 40,000 votes, they have 5,000 of </p>
<p>t-shirt too; we have, you know, whatever.they'll make the t-shirts, and they sell them to people who voted for the t-shirts. prettystraightforward, right? they have 300,000 people registered in their community. theyhave 140,000 designs which have been uploaded to their website. they do not design anything.they take the design off to web, and then print it on a t-shirt, and sell it to theconsumer. and the reason i find that very fascinating, their philosophy, as i said,we didn't create a product and trying to sell it to an audience. we created an audienceand then decided what they wanted and sold them what they wanted. with that, i'm goingto shut up. thank you very much for listening. i hope you have a fantastic day. </p>
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<b><a href="http://mesoth.net/">Mesoth.net</a></b> - unidentified speaker: --afternoon and welcometo the marian miner cook athenaeum. it is always a pleasure to have an alum speakat the athenaeum, and at that, a repeat guest. jonathan rosenberg, class of 1983, is both.he oversees the teams that manage google's innovative product portfolio and go-to- marketstrategies. he directs the teams with his special focuson delivering exceptional user experience, continuous innovation and a highly relevant,accountable and untraditional marketing. prior to joining google in 2002, [microphone noise] mr.--ooh-- >>unidentified speaker: that was me! sorry!<br />
>>unidentified speaker: okay. [everyone laughs] mr. rosenberg was founding member of @home'sproduct group and served as senior vice president of online products and services after themerger of excite and @home. prior to that, mr. rosenberg managed the eworldproduct line for apple computer. earlier, he was director of product marketingfor knight ridder information services, where he directed the development of one ofthe first commercially deployed online relevance ranking engines.mr. rosenberg graduated from cmc with a degree in economics, with honors and phi beta kappa.he has an mba from the university of chicago.<br />
the robert day school of economics and financeis sponsoring today's talk. please join me in welcoming back jonathanrosenberg to the ath. [audience applauds] >>jonathan rosenberg: thank you!i'm particularly pleased; i have my son, josh in the audience. josh, you can wave. [laughter]his mother looks just like him. you could mistake her for a student.i was going to say that, but she's not here and i'm not going to get the credit for it. [laughter]so in january, a group of cmc students--some<br />
of them are here--visited the google campus.and they were really uncomfortably overdressed in suits and ties, right? you remember that?but worst yet, they were painfully glum about the world's prospects, as well as their own.i thought about this, and i realized that the students' mood should really come as nosurprise. they all go to a school whose motto is--anyone?did you graduate from this school? do you remember the motto? [voice off microphone; unintelligible]no, matthew! [laughter] crescit cum commercio civitas. what does itmean?<br />
[voice off microphone; unintelligible] we're going to give credit for that one.civilization prospers with commerce. and just as you guys all approach graduation,commerce plummets, qed civilization does not prosper.you might as well all hang out at beckett hall with a beer and bemoan to your buddies,"lilliput is doom; the ropes are too big; gulliver is too big; we're all going to die!"and--you know--the data confirms your bias. the dow is down 50%, we've got job lossesof 2.5 million in 2008. you should all be concerned about the futureprosperity of all civilizations. and to add a spark to this depressingly combustiblesituation, as the guy watching the world searches,<br />
i assure you, i have my finger on the pulseof many people. and the apocalypse in fact may well be uponmany of us. search volume on unemployment benefits increasedfive times from over last year. major bummer! it sucks to be alive!no wonder the students who visited me were all glum! remember?so i asked the students, what did general electric, fairchild--which later spawned nationalsemiconductor and intel--apple, oracle, and amgen.what do all these companies have in common, do you remember?they were sprung out of recessions, right? ge in 1876; fairchild in 1957.and during my own career, i watched apple,<br />
oracle and amgen all correctly navigate the1982 recession and emerge much stronger. we also talked about great innovations thatwere born during the great depression, right? what did the great depression give us?the dc-3, the commercial workhorse of aviation for many years in 1935.we did--the beer can! i said the beer can--matt (s/l pikings') personalfavorite, that kept things cold in 1935! and xerography, otherwise known as copying--whichactually was invented in 1938 by a man who was laid off from bell labs,and got tired of copying patents and patent applications at the patent office by hand.so this means that we shouldn't let this recession--no matter how severe it is--convince us thatwe can't achieve great things.<br />
in fact, bad economic times are actually fertilegrounds for innovation. there's an old adage--i believe it's attributedto samuel johnson--"nothing focuses the mind like a hanging at dawn," or a mid-term atdawn. but no one is getting hung in the morning.there's no gallows being erected at your commencement ceremony.but i think we can use the recession to focus our minds, and i'm optimistic that if we alldo that, we'll actually come out okay. so i'm an optimist. why am i an optimist?well, because i am one of those guys from silicon valley and we drink the kool-aid oftechnological optimism. and my optimism was further inspired wheni heard president obama's inauguration speech.<br />
you see, i actually voted for mr. obama, soi wanted to listen to his speech. and for those of you who voted for the otherguy--news flash--obama won, [laughter] so you should listen to his speech--youshould have listened to his speech as well. as an american, i asked myself, "what are--?"so obama actually asserted in his speech that we'll face this challenging moment with whathe called, "new instruments and old values." values that have been the quiet force of progressthroughout history, and which must once again, define our character.so as an american, i asked myself, "what are those new instruments that he was referringto? what can i do for my country?" so i think--and this is not to go back toprofessor snortum's class--an example of maslow's<br />
observation, that when you have a hammer,everything looks like a nail. to me, i think he was referring to the internet.the internet is the most powerful and comprehensive information tool ever developed--and you guysknow all of that. but i think we sometimes forget how earlywe are in the nascent stage of its growth. so today, what i want to do is share fourobservations on the future of the internet, and also the promises that these four trendsportend. and i also want to offer some advice on whati would do if i were like you guys in light of these trends.so for the record, i really do wish i were you and i wish i could trade places with eachof you. it's true.<br />
observation number one: all the world's informationwill be accessible from the palm of every citizen.today we have 1.4 billion people connected to the internet.that's a quarter of the world's population and we're adding people at 200 million a year--hundredsof millions a year. 200 million new people are coming online everyyear. look at the number of servers.back in 1983--when i was here--the commercial internet consisted of just 400 servers worldwide.now, 26 years later, it's got over 600 million. what are--you see these statistics--but likewhat are these servers doing? they're storing information and they're lettingpeople access it.<br />
so we've got all this information exploding,people can access it from everywhere. in many parts of the world, how are they accessingit? they're accessing it on their mobile phones. more than 3 billion people have mobile phones.but what's more interesting is that we're going to see more internet enabled mobilephones sold and activated in 2009, than personal computers.think about that--more phones than personal computers.does anyone remember what apple's tagline was for the mac when it first launched 25years ago? you guys were there with me. "the computer for the rest of us," right?well today, the "computer for the rest of us" is a phone.in just my professional lifetime, we've overcome<br />
all of the issues that basically precludedcomputers and mobile devices from delivering on the promise of ubiquitous information.the marketing people used to call it--in 1980--"winki wink--" we thought it was very clever--whati need to know, when i need to know it. but you couldn't get it because you neededthe information to get online. and you needed massive processing power toindex it. and then you needed to connect by a broadbandpipe, and then you needed to layer on a browseron top of this, and you had to solve all the copyright issues.finally, we got all of that stuff solved and everybody could get the world's informationon a pc.<br />
more recently, we've tackled battery life,fast wireless access, more readable screens and usable input mechanisms,and we can all get all of the world's knowledge on our palms, on a phone.to truly appreciate this whole secular shift of information, go back thousands of years.the library of alexandria, built in 323 bc; it was built for an educated public.that actually meant very, very few people, because the skills of literacy were withheldfrom most of the population. the first universities came about around the4th century ad. you would think that would have been a bigstep forward for everyone. but in the middle ages, professors lecturedin darkened classrooms so that students couldn't<br />
copy and steal the notes.jerry, you could have won "most handsome professor" award in the middle ages.[laughter] the first formal encyclopedias didn't appearuntil the 16th century, and truly public libraries didn't come about until the 19th century.then the internet shows up, right? and from the most remote village on earth,down a long a dirt road in bombay, a kid can have access to all of the information in theworld's libraries. so in other words, information has completeda transition. and the transition--which is very importantif you're an economics student--is from scarce and expensive to ubiquitous and free.when it does this, we're going to see what<br />
i call, "the true democratization of information."everyone who wants to be online will be online, and they will be able to access everything.any change in the means of production has profound implications for the relative valuethat you can add in your career. and i'll talk on that--i'll speak about thatat the end. so here's all this information. well, whatsort of information are people accessing? brings up observation number two: publish.everyone can publish, so everyone will. it's that simple.one think i've learned in the internet industry is that people have a lot to say.there are 900,000 blogs posted every day, most of them have an audience of exactly one.in the u. s., 40% of internet users upload<br />
video on a regular basis, and the number isgoing up fast. globally, we have 15 hours of youtube beinguploaded every minute. this is equivalent to 86,000 full length moviesevery week. i mean, you guys--you guys could just getout in the world and watch youtube videos every day for the rest of your lives,if nobody uploaded another thing, and your parents would be very proud, right?publishing used to be constrained by physical limitations.you had to have a printing press and a way of distributing a newspaper or a magazine,or you had to have a transmitter or something to publish to critical mass.we had freedom of the press, for anyone who<br />
could afford one.but today, most publishing is done by users. how many of you use twitter or facebook?right, like all of you. how many of you upload videos to youtube?how many of you make entries on wikipedia? you guys are all publishers, right?when everyone can publish, free speech becomes no longer just a right granted by law, butone imbued by technology. here's a remarkable example: january 15, theus air jet lands on the hudson river in new york.a man by the name of janis krums happens to be on an adjacent ferry, and he snaps a pictureof it. so what does he do? he could have sold itto the highest bidder.<br />
but instead--that's a process that could takemaybe days or a week or so--instead, he posts it online and he sends a tweet with a link.the photo was available to the world within seconds--instantly--for free.the era of information being more powerful when it is hoarded, has passed.if you have something important, insightful or interesting to say, say it.you will be better off and so will everyone else.unless it's like some of those programs that you're putting up now, but some people watchthem. in the early days of the web, every documenthad at the bottom, what? what was at the bottom of every document 10years ago?<br />
there's no lawyers in the room! "copyright1997, do not redistribute," right? under penalty of whatever.now, what do the same documents have at the bottom? "copyright 2009, click here to sharewith all your friends." sharing--not guarding information--has becomethe golden standard of the web. of course, a lot of what people say onlineis not important, insightful or interesting. it's sort of one of these good news, bad newsthings, right? the good news is, anyone can publish. so what'sthe bad news? the bad news is, just about anybody does,right? have you ever logged on to a stock messageboard?<br />
"stock's going to go up tomorrow.""no, the stock's going to go down tomorrow, you idiot!""no, it's going to go up tomorrow, you idiots, idiots, idiot," right?i have this vision of like two guys in their 30s, and they live in their parents' homesin the basement, and they're like sitting on the other sideof cable modems, hiding behind the anonymity of the internet, firing salvos of mindlessdrivel at each other. well i didn't spend my career making cablemodems ubiquitous, information easy to find and publish, so that we would have to letthese losers ruin our internet. it's a serious problem. the clamor of junkthreatens to drown out the voices of quality.<br />
and there's an obvious place where these voicesare struggling. it's called the newspaper industry.the internet's completely disrupted their business model.it used to be classified ads subsidize the rest of the paper--no more.telling example: last year, in may, a newspaper in myrtle beach announced it would no longershow classified ads. so i thought about like, "what does this mean?"it means the cost of the paper and print exceeds the amount of money they get from printingit. they took the classified ads out.i wrote an e-mail to friends and i called that, "the day print died."if newspapers don't make money from classified<br />
ads, they're in terminal decline.and we're seeing this. last month, the rocky mountain news in denver--a150 year old paper--closed its doors. well this is a problem--this is importantbecause newspapers have historically been the backbone of quality, original reporting.if you actually read something good online--if it's an article, a blog post, or just aboutanything else-- chances are, it originated somewhere alongthe line with an old-fashioned reporter. i spent an afternoon last weekend with bobwoodward, from the washington post. and i can tell you, the world is a betterplace when we have investigative journalists, like bob.to turn this around, the whole field of news<br />
needs to change.the experience of consuming the news on the web today is broken, because it doesn't takefull advantage of the power of technology. when i go to the new york times, it shouldknow what i'm interested in and what i've done since my last visit.if i read a story on obama's budget, 6 hours ago, the next time i go back, why isn't itjust showing me the updates that the reporter has filed since then,and the most interesting responses from informed readers and bloggers or other sources?if thomas friedman posted something, i want to read it.i always read thomas friedman, it should tell me that on the front page.reporters should pay attention to the wikipedia<br />
model.they actually get many things right; there's a name and a unique url for each significantsubject-- the super bowl, the economic stimulus package,claremont mckenna college--and they all have links in them--links matter.and in particular, in reporting, links to original sources matter.most original sources are actually on the web--if you mention a law, or you mentionthe budget, or government spending-- why aren't there links to all these originalsources? that should be the job of the reporter. and then every edit and draft and link matters.journalism is the first draft of history and it should be much more than slapping a bitof customization on an ap or a upi feed.<br />
browsing newspapers needs to be rewardingand serendipitous online, like it is offline. and the way to fix that is technology.the same thing is true of other experts. the web only gets better if we get more informationfrom scientists, doctors, scholars, engineers, professors, architects--everyone can benefitfrom their work. the question is, "how?"that leads to my third observation: when data is abundant, intelligence will win.when you put the power to publish and consume content into the hands of more people andmore places, what does it mean? it means that everyone starts conversationswith facts. with facts, negotiations are no longer aboutwho yells louder, right? i'm very good at<br />
that.but they become about who has the stronger data. the data becomes an equalizer that enablesbetter decisions and more civil discourse. let me give you a couple of examples: thesuri tribe in the amazon used google earth to identify, for government officials,where illegal logging was occurring at the boundaries of their territory. they stoppedthe logging. let me give you another example: senator clintonclaimed during the 2008 campaign, she came under fire on the tarmac in bosnia--you rememberthat? well, youtube videos of her lovely greetingceremony on the tarmac quickly refuted that claim.information transparency helps people decide<br />
who is right and who is wrong, and determinewho is telling the truth. when politicians talk, we should have likea little lever on our chat boards, and people should be able to vote,and it should be clear from the online community whether or not they're telling the truth.and if they're lying, it should go like, [makes an alarm sound] nope she didn't dothat. information and the truth is like an oyster.it has its greatest value when fresh. and soon the truth and updates will be nearlyinstant. value of data is even more transformationalwhen you think about businesses, than it is for politics.coal fueled the industrial revolution; data<br />
is fueling business today.one of the largely unheralded byproducts of the whole internet generation is how the powerof sophisticated, analytical tools are now available to the smallest businesses.let's say you have a blog or a website, right? how many people go, and what do they do, andwhere do they come from, and what time of day do they come in, whatpages do they visit, how often do they actually buy something?a few years ago, an analytics package for that would cost thousands of dollars.today, it's free and it's better. data leads to intelligence and the intelligentbusiness or blogger will be the successful business, regardless of its size.this is why president obama has promised to<br />
do our business in the light of day, and whythat's important. because transparency empowers the populousand demands accountability as its immediate offspring.finally, observation number four: the vast majority of computing will occur in the cloud.if you don't know the technical jargon of silicon valley, the "cloud" is where all ofyour content is--the computer resources that you can access by the web.raise your hand if you use a web-based e-mail system--aha! i'm sort of cheating becauseyou guys all use gmail, but keep them up! how many of you store your photos online--someplacelike picasa or flickr? you--my wife's hand should be up!how many of you access your calendar on both<br />
your phone and your pc? ooh, way to go! hon,you're the future, along with the rest of these people, right?within the next decade, people everywhere will use their computers completely differently.all their files, all their correspondence, all their contacts, all their pictures, alltheir videos will be stored and backed up in the network cloud.access to this data and content will be seamless and more importantly, it will be device agnostic.it's nice that we can keep all our stuff in the cloud, because that means you don't loseeverything when you like drop your pc, or lose your phone, or spill coffee on it.but the real potential of the cloud is not in taking the stuff that used to live on yourpc and putting it online,<br />
but it's the things that we can do that previouslywould have been impossible. for example, computer mediated transactions;computers mediate virtually every commercial transaction;they record it, they collect data, they allow you to process it.why does that matter? monitoring is what makes for better contracts.if you shipped grain in the mediterranean in 8000 bc, before there was written language,how did they make sure that you consummated the contract correctly?you didn't pay attention at the british museum when your parents took you around there whenyou were a kid? okay, clay tokens--they were called bollae--andbasically what you did was you matched the<br />
number of tokens to the grain loaded on theship, you sealed the tokens in a hollow clay envelope,you stuck a stamp on it, you baked the clay in a kiln, you sent it with the shipment.at the other end, the other guy broke open the envelope, counted the number of tokensto the quantity of grain in the ship, and he knew if he got what he was supposedto, or if they ship's captain stole any grain. we've come a long way since then, but theresults are the same. better monitoring means better contracts.cash registers showed up in 1883. have you ever thought about why they had a bell?or why they actually then evolved so that there was tape that recorded all of the transactions?same thing was true in the 90s, with semi<br />
trucks and vehicular monitoring.same thing was true when rental video first came out; it was too expensive for the blockbustersto buy the movies from the studios, but the computer systems in between allowedthe studios to just give them to the blockbusters for free, and only get paid when people rentedthem. online ads is the same thing. since googlegot started, advertisers have only had to pay if the user clicks.and ultimately, they could only pay if there's a conversion. you can think of amazon andlots and lots of other examples. but think about the contracts that could beenforced better today, through computer mediated transactions in the cloud.how many times a day do you interact with<br />
a computer? a mobile device in your car orat the bank? every time you make a purchase at a storeor on a laptop--let me give you an example: would you accept a 30% discount when you renteda car, if you knew the car rental agency could record whether or not you exceeded the postedlimit? maybe, maybe not, but it's your choice. youcould be better off having that choice. so convergence isn't something that's happeningat the device level--that was the vision we all had in the 90s--and it was wrong.devices are proliferating in all sorts of directions and everything is converging inthe cloud. in the near future, the cloud is where allof your stuff--not to mention civilization's<br />
knowledge--will live, and it will change theway we do business. so what does this mean for you in practicalterms? these trends that i gave you are going toform the context of your career. a whole lot has changed since i graduatedin 1983--we didn't have cordless phones, remember--we didn't even have--never mindcell phones--[voice off microphone; unintelligible]-- yeah, i had a computer and you know what?it had two floppy drives and you had to boot off the floppy drives,and then i went to business school and i worked all summer to buy a 10-megabyte everex harddrive, and i had to like flip the dip switches tostick it in the computer<br />
and i had to then borrow from my father tobuy the diablo daisy wheel print--clackity clack--printer that i took to business schoolwith me. i mean, it sounds like a long time ago.but the context for my career at that point was very different from yours today.what did i do? i had a simple observation and insight that information was power.there was a revolution in internal information systems in the 80's, so i went to a companythat was working on software for many computers. then it became clear that pcs and externalinformation were going to become ubiquitous, and so i went to dialog.the problem was, they lived in a proprietary world of closed standards and expensive information,and it was very difficult for users to get<br />
at the information.so i went to apple, where we made a user interface that made getting information easier.it was called eworld, and then i went to @home, where we built the infrastructure for fastaccess, and finally to google, which really takes advantage of pretty muchleveraging all of the above. but many of the aspects of how i approachedmy career are just as true today as they were then.i've given you advice before--some of my original rules from past visits--which i will reviewvery quickly. jonathan 101: don't go into a profession thatonly scales with the number of hours that you put into it. you want to do things thathave leverage.<br />
don't be a dentist, don't be a consultant,don't be a lawyer--unless it's contingency-based--don't be a massage professional.a prostitute is also a yucky career choice! [laughter]careers are like surfing--i gave you a whole lecture on that--it's not enough to be great at what you do, you have to catch one great wave and thatonly happens in growing industries. if you haven't heard my talk on that, youcan ask. i can go do a whole sermon. but it's why i focused on technology.and know the value of a solid liberal arts education. [laughter]learn to learn. there's too much accumulated<br />
knowledge today, to learn everything in college.newton used to say he stood on the shoulders of giants. well the giants are too tall.you can't learn everything anymore, so just learn to learn. you'll use that for the restof your life. so what would i do differently today if iwere you, preparing for a career in this future with ubiquitous information?four things: be open, we're in the midst of a period of innovation and it's driven largelyby openness. our chief economist, hal varian, calls it"combinatorial innovation." there's this availability of different componentparts and innovators can combine them--or recombine them--to create fabulous new inventions.if you think about it, this is what drove<br />
history's great periods of innovation.in the 1800s, it was interchangeable parts that drove the industrial revolution.in 1900, it was the gasoline engine and improvements in manufacturing.and then in the 1960s, it was integrated circuits. but today, the components of innovation arefound in cloud computing. it's got abundant apis, it's got open sourcesoftware, everything is low cost, it's all pay-as-you-go.the components are available to anyone who can get online. they're bits, protocols andlanguages. and note that it costs next to nothing togrow the next great website or software application, or to build online maps, models or mashups.or if you create the world's next great tv<br />
show or movie, you can distribute it quicklyto the entire world. with software, there's no inventory problems,no issues shipping and distributing around the world, working in parallel, and no bigtime to manufacture issues. in this model--which we call "combinatorialinnovation--" individual components have to be compatible with the rest of the system,they have to be complimentors. so these new technologies don't exist in avacuum. companies have to focus on their collaboratorsas much as their competitors. in this environment, open systems win.advice number two: assume a supercomputer. how does that change the way you think oryour career when you assume that storage,<br />
bandwidth and processing are all basicallyfree? when google started, larry and sergey couldn'tactually do the work that they needed the search engine to do,because the processing power that they needed to do it wasn't there.but they just said, "oh well, in a few years, it will be."chad hurley, when he started youtube, had similar observations.we didn't have enough cell phones that had video on them--the bandwidth to actually dovideos wasn't there. the client's software was required to downloadthem and he saw, "no, you'll be able to do this in a browser;we'll be able to do this in an open way, and<br />
these cell phones will be out there."and now, we've got 15 hours of video being uploaded a minute on youtube.there's no limit to the ability of these technical tools that are going to be at your disposal.if the technology doesn't exist today, it will very soon.do a simple moore's law thought exercise; if processing power doubles in 18 months,in five years, it increases by a factor of 10; in ten years, 100; in 15 years, 1000.your kids--which hopefully you won't have in 15 years, maybe make it 20--10,000.imagine what that means in the power of your hand.advice number three: become a data samurai! why? the sexy job in the next ten years isgoing to be statisticians.<br />
why? because once we all have access to freeand ubiquitous data, what is the scarce factor? the scarce factor now becomes the abilityto understand that data and to extract value from it.the democratization of data that i talked about means, those who can analyze it when.and think about the robert day school--it's exactly the type of program a samurai of datawould take. the courses are meant to prepare, in manyways, a student to be something like a quant jock on wall street,but you would take the same courses to be called a "data samurai."if i taught it, it would be called "data mining for fun and profit."<br />
and you would take statistics, data visualizations,communication, machine learning and scripting. that's what google, yahoo, ebay and amazonall need, but more importantly, it's what all the companies,who live in the ecosystem of advertising and publishing online, will need.my own new line, data is the sword of the 21st century. those who wield it well, thesamurai. [makes sound like a swinging sword] remember that! [laughter]fourth observation: think big and solve the biggest problems.so you've got a supercomputer, you've got<br />
data, you're a samurai and you know how touse it, you have open systems through which you canharness the power of the crowd, so why solve a small problem when you can solve a largeone? shortly after we started running ads on google,some people came up with the idea that ads on google search results could be copied,and this set of engineers could run those same ads on other web pages.and they said, "you know--there's hundreds of millions of web pages--hundreds of millionsof searches a day, but there's billions of web pages, we should go after like all ofthose." and today, adsense is a very large, successfulpart of our business.<br />
even if you don't get the outcome that youexpect, if you aim to solve the biggest problem, there's a good chance you'll solve small onesalong the way. take christopher columbus--he was stuck waitingfor eight years for queen isabella to drive the moors out of southern spain, before hecould get funding for his big, big vision. his big vision was--?" find india, right?what did he find? america! who would call him a failure for having found that--not foundthe route to india? when i graduated from business school in 1985,ronald reagan said, "we live in a time ã¢â‚¬ëœlit by lightning,'" and that's what set the tonefor the era in which my career evolved.<br />
today, you guys have come of age in an evenmore remarkable time. facing amazing challenges and armed with theseinstruments that president obama believes you need to surmount them.so i want to conclude by offering my final career advice for all of you today: don'tworry about the recession. don't sit on the sidelines, crying in yourbeer, singing mike and the mechanics', "every generation blames the one before."you can spend your life a critic of those who ruined your shot at making crescit cumcommercio civitas, or you can remember the words of the presidentwho best embodied the spirit that we need today. his name was teddy roosevelt and hesaid,<br />
"it is not the critic that counts, nor theman who points out how the strong man stumbles, or where the doer of deeds could have donethem better. for the credit belongs to the man or womanin the arena, whose face is marred by dust and sweat and blood, who strives mightily,only to err and come up short again. his place or her place shall never be with those coldand timid souls, who will know neither victory nor defeat."now if you're not a fan of presidents and teddy roosevelt, maybe you're partial to pinkfloyd, who sang, "if you should go skating on the thin iceof modern life, don't be surprised if a crack in the ice appears under your feet."so students, don't be roosevelt's "timid soul."<br />
jump through that crack in the ice.come on in, i can assure you the water is freezing! [laughter]thank you!</div>
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<div align="justify"><p>hey it’s vanessa from crafty gemini creates.and we have an awesome tutorial here for you today. i’m going to teach you how to makethis really cute faux leather fringe purse. i like to wear it crossbody with a skinnystrap like this. but i’ve also designed it so that you remove the little lobster claspshere from the d-ring and just use it as a little clutch. i like to store the strap insidethe bag, and that way i don’t lose it. and let me show you the rest of the bag. it’sfully lined. i love to use a bright coordinating or even contrasting fabric that really pops. you can also use a zipper that matches your outer fabric or change it up like i did onthis really fun red one here. but it’s a real simple little pouch. you can fit a tonof stuff in here. we have our zipper, some </p>
<p>zipper ends and the fun fringe. so let’sgo over the materials we’re going to need to create this little fringe purse. so here we have our fabric. we are using fauxleather. and i’m going to make a bag for you today in black. but we also have it inbrown. and you can see how fun that is. it also has the two little d-rings on the backand of course, the fun pop of color, the strap and all of that good stuff. so we’re goingto use black today. and the measurements that you’re going to need for your outer pieceshere are two rectangles that measure 10 ⽠inches by 9 ⽠inches. that’s going to befor the outside. then i have two more pieces of the same faux leather color that measure10 ⽠inches by just seven this way. and these </p>
<p>are going to be for our two panels of fringe.so these are doubled up. if you see here, let me gather it. so this is one and thisis the second one down here. i think it adds more texture and dimension to it to have themoverlap. and with all the fringe there you can’t really tell how it all comes together.so i kind of like the look of that. so we have the two panels for our fringe as well.then you’re going to need two pieces for your lining fabric. and i’m just using regular100% quilting cottons here. this really pretty field study fabric that i love. i think willgo great with that. and then we need a strip. if you’re going to make it as a clutch thenyou won’t need this. but if you want to add that other little bit to of the skinnystrap that clips onto to wear a crossbody, </p>
<p>then you’re going to need a strip of thesame faux leather, your outer fabric, that measures 1 ⽠inches wide by the width ofthe fabric. and as you can see, this faux leather comes a lot wider than your regularcotton. i think this one came about 54†to 58 inches or so, which is going to be longenough for you to trim down depending on the length of the crossbody strap that you want.if you want it just to be over the shoulder, then you can make it to that size as well.so you can customize it to what you need. then you’re going to need an additionalstrip here. and this measures two inches by about 10 ⽠. this doesn’t have to be perfect.we’re just going to make this so that we can turn it into the little strips that weneed to attach the d-rings on the back. so </p>
<p>this will definitely be cut down. and thenwe’re going to need two additional little rectangles. these, the same outer fabric again.and they measure 1 ⾠inches by two inches. these are going to be for our zipper ends.if you see here i’ve finished off this zipper with a nice professional looking finish. wehave a little bit of the faux leather that finishes right here on the ends. and i thinkthat’s going to go great. it really gives it a nicer finished look. and it lays everythingflat so you don’t get really bulky ends. if you’ve made zipper pouches before youmay have seen that you try to turn it out and the zipper is like way bulky on the corners.so i’m going to show you how you can end up with a really nice finish on your zipperend. ok. so i think we’re ready to start. </p>
<p>that looks like all we have to do. so let’sstart prepping our fabrics here. we’re going to grab our two outer piecesfirst, well actually let’s cut up the fringe. so i’ll show you how i do that. there’sa lot of different ways. you can cut these up with a pair of scissors if you want togo that route. i like to just have a steady hand and use my rotary cutter. now i’m justgoing to start. you want to lay it horizontally in front of you this way. and we’re goingto be cutting our strips this way. you can make them as thick or as thin as you’d like.i like that it has more movement when we cut them a little bit thinner. so that’s upto you to decide. and you don’t want to cut all the way up obviously because you’regoing to chop a strip right off of it. so </p>
<p>i like to leave about an inch or so from thetop. if you want an easy way to do it is to grab some type of a marker, like if you havea chalk marker. and just measure yourself an inch line across the top here. i have blackfabric. but i would grab some type of a marker that would show up on the fabric you’reusing and make that line. that way you know that when you’re using your rotary cutteryou don’t want to go past that point. so this is how we’re going to start. i justkeep a steady hand and cut my strips. i think the ideal width here to use is about ⅛ ofan inch to a quarter of an inch. you don’t want to do it too thin because it is syntheticfabric and if you, i mean if you pull on it a little bit, it, chances are it’s goingto break off. so you do want to make sure </p>
<p>that the strips have some kind of body tothem. and that’s it. you’re going to continue to do that to both of those panel pieces.remember they measure seven inches by 10 ⽠. after you do it to both of those, you’llend up with two little fringe things that look like this. so we’ll be attaching theseto the front in a little bit. but let’s start prepping our bag to attach the zipperand the lining. so i have one of my outer pieces here. andi have it laid out so the 10 ⽠inch dimension is going horizontally in front of me. so therectangle is laying this way. and we’re going to grab our zipper. notice that my zipperis bigger than my piece of fabric. as long as your zipper is larger you’re going tobe fine. we’re actually going to be trimming </p>
<p>this one down. so let’s do that now. weneed to trim this down to 9 ⽠inches from end to end, ok? and this is where we’regoing to attach the zipper ends and it’s going to help us when we go to finish makingthe project. it will look a lot neater. so let me grab my ruler here. and i just want,you want to make sure that the zipper tab is somewhere in the middle so you don’tchop it off, it comes off your zipper tape. and i just want to measure 9 ⽠inches. soi’m just going to cut anywhere here first. i got rid of those ends. and then i want tocome down 9 ⽠inches so let me see. i’ll set this end at 9 ⽠. right there is good,so i’ll cut it right here. alright so our zipper has been cut to size. at this pointyou definitely don’t want to try to open </p>
<p>or close it fully because we have no stopson the end. we just cut them off. so leave that zipper pull right in the middle. nowwe’re going to create the tab end for it so we protect our ends and we don’t zipit right off of there. so for that, go ahead and grab the two littlerectangles you have that measure 1 ⾠inches by two inches. and since this faux leatheris great to work with, it doesn’t even fray. there’s no folding or pressing involved.and it’s synthetic anyway so you definitely don’t want to hit this fabric with an iron.what we’re going to do is just fold it in half. and if you want to you can fold it inhalf and mark it. pinch it with your finger a little bit, give yourself a little creaseand you can kind of go back and then mark </p>
<p>yourself that center crease line, ok witha chalk marker or whatever you want to use. then we’re going to line this up. and thisis where the tricky part is. this is what’s going to help you get a nice flat zipper withoutthat bulk on the corners. so here it is. when we go to lay the zipper in, instead of bringingit all the way up to the fold and fold getting caught in there, if we do that we’re goingto end up with super, a lot of extra bulk that we don’t need. you have the fabricand you have the zipper tape. so here’s what you need to do. just bring it down sothat the zipper tape is only about half of an inch in and you should still have abouthalf of an inch before getting to that center crease line. and then we’re going to foldit. so where our seam allowance is going to </p>
<p>be we only have the outer fabric that we’reworking with. so that’s going to reduce bulk and allow those corners to pop out alittle bit easier. so go ahead and take your wonder clips and clip this into place becauseyou’re going to topstitch real close to this top edge right there. oops, i alreadytook the top off. that’s where you’re going to stitch, like super close to thattop edge. and you’re going to do that to the other end as well. and now i’m going to measure this out. theidea is that you end up with a zipper tabs on either end, we end up with this that measuresabout 10 ⽠inches because that’s what we’re going to be working with, with our fabricpieces, ok? so now we can trim it off at the </p>
<p>sides. so just make it flush with the zippertape. so it’s nice and neat. and now of course you can open and close the zipper withno problems, ok? alright, so now let’s start attaching our fabric and our lining pieces.we’re going to do them at the same time to either side of our zipper tape here. so i’m going to take one of my fabric piecesand lay it now so that the rectangle is oriented vertically because the purse is going to belike this, right? and so it’s going that way so to sew it we’re going to put it thisway. and let me grab one of my pieces of fabric as well. so here’s how we’re going tolayer it. i set up the zipper so that the teeth are facing up at me and the zipper tabis all the way at the bottom, ok? now i’m </p>
<p>going to take my outer piece of fabric andlay it with the pretty side of the fabric face down on this right outer edge, righthere. and on this fabric i would use the wonder clips. sometimes if you’re using quiltingcottons i would tell you to use the fabric glue but it will show up on the fabric ifit’s not really concealed on the faux leather so i wouldn’t recommend it right here. justgrab your clips. we’re going to layer all three, the outer, the zipper tape and ourlining. so i have this top one done in place and i’m just going to put a couple of clipshere so that i have all these raw edges matching up. and now let’s add our lining to thebottom side of this. so you want the pretty side of the fabric to the pretty side of yourlining oriented in the same direction. and </p>
<p>lay it so that the right edge now is matchingup with the zipper tape is matching up with your outer fabric. all three of these together.take off my clip and just re-pinch it in the same spot to grab that last piece of fabricof our lining fabric. and then head to the sewing machine and with your zipper foot installedgo ahead and stitch on the right side right here. and before i get to the end, i’m goingto stop with the needle down, lift up my presser foot and i’m going to open that zipper upso that the big zipper pull does not get in my way. so it’s somewhere up here now pastmy presser foot. realign my three raw edges here and stitch off the end. alright. normallywe’d press this but remember you don’t want to do that with the faux leather. soour zipper is inside. once i flip this out, </p>
<p>here’s what we end up with. the pretty sideof the fabric you should be looking at with the zipper teeth and then also the prettyside of your lining fabric, ok. so you’re just going to finger press that to get itto lay flat. let’s add on the other side now. repeating the process. alright so this is what it should look like.the lining side should be both pretty sides of the lining. and the other side, the outerpart, should be both the pretty sides of the outer. ok. now to get this to lay flat, becauseyou see it’s kind of wanting to roll up on us, we need to topstitch this into place.so since you can’t pin, i mean since you </p>
<p>can’t press, go ahead and just smooth itout with your hands as flat as you can get it. and we’re going to topstitch right hereso that this fabric doesn’t roll up, because sometimes if you try to open the zipper andthat fabric is loose in there, it can get caught in the zipper teeth and then you’llget it stuck. so let’s topstitch it flat right along here. alright so you can see itlays a lot flatter and smoother, ok? now let’s move on to the next step which is to attachour fringe before we start stitching the whole thing actually together. so decide which side you want to be your front,ok? and by doing that you can kind of set it on your side like this and look and see,do i want to open the zipper from right to </p>
<p>left? do i want to open it from right to left?and kind of decide that way which side of this you want the fringe to be on. so i’mjust going to pick a side here. flip the lining side back and away because we don’t wantto get that caught. and grab your two little panels of your fringe. and this right here,you can make it as far down as you want or as high as you want to. it’s not reallygoing to make a difference. i just like the layered look of it. so you can play, justkind of place them in position and look at it and say, ok i don’t want too much fringehanging off the end. you definitely don’t want the fringe way too close up here either.but just eyeball it. measure, whatever you want to do. so let’s say 1 ⽠inch downfrom the zipper tape here. i think that will </p>
<p>look good. other side. so we’ll do one thereand we’ll bring one. so that’s kind of too low. see if i put it at 3 ⽠i feel likei have too much fringe hanging out at the bottom and i don’t want it like that. soi’m going to bring it up further. so we’ll say five inches. that’s better. and so that’spart of the fun of making your own stuff, right? you can change it up any way you wantto. so i’m going to line these two up here. and for this i will go put a little bit ofglue just on the underside. make sure that you don’t put the glue on anywhere whereyou might see it. just a little strip right here. to help me keep that steady in placewhile i topstitch it down. and i like to do these one at a time because these little fringethings can really get in your way sometimes. </p>
<p>and i don’t want to get them caught or sewthem down. so i’ll stitch this one down first. alright so it’s starting to cometogether. this is what it’s going to look like. the back. the front, that fringe looksgood right? and then we have our lining pieces already attached. so let’s start by movingonto the next step, ok? at this point, on the back side, right? theside that doesn’t have any fringe, you can go ahead and attach your little clips foryour closure if you’re wanting to have that long skinny crossbody strip. so let’s workon that next. i have my two lobster clasps here. and these measure half an inch and thenhalf inch d-rings. so if we look at one that’s already been completed, we need to add littletabs and just the d-rings to the back of the </p>
<p>purse. and so it’s up to you. you know youcan decide how far in you want to do it. alright so we’re going to come in here and markso that we can attach our little strips here with the d-rings. i’m coming in two inchesfrom the side. so i just make a little mark there. and about an inch or so down from theedge here of my zipper tape. i’ll just do a little crosshair there. and the same thingfrom this side. so two inches in and one inch down. so that’s where we’re going to attachthese. so now let’s make the little strips and attach them to the d-rings so we can getthat in place. so here are my two d-rings and here is thatstrip that we had that measured about two inches or 1 â½. let me see what i did. ya,two inches by just whatever width you want. </p>
<p>we’re going to cut it down. so for this,again our fabric doesn’t fray so i’m just going to fold it in thirds. so just fold itin about half of an inch. and then fold it over another half of an inch. so the finishedsize should be about half of an inch. so we’re using half an inch d-rings and they shouldfit in there nicely. so let me bring it in. remember we can’t press this fabric. sojust work it with your hands to get it in there. and it’s not that big of a pieceif you want to work with a smaller piece that will work as well. just going to head overto the sewing machine and we’re going to stitch it right along here. so here it is. we’re going to cut off chunks that measureabout four inches. there’s one and there’s </p>
<p>two. and we’re going to feed these intoour d-rings. and i kind of like a tight fit. if you don’t like a tight fit then go aheadand cut them a little bit narrower your strips to start off with. ok? so i like it like thatto be totally filled up, filled in. and then we’re going to attach these here into place.i like to attach them when they’re still longer. it’s easier to work with at themachine. and then i’ll trim away the excess. because the fabric doesn’t fray, you won’teven see it. it’s not going to be a big deal. so these are going to go right here.let me put a little clip. and so you basically want to either center the top part. it’snot going to really matter too much where they are exactly since we have our pointsalready. i just don’t want the d-ring to </p>
<p>be too high up so that if i’m using it asa clutch, you actually see the rings. you can’t see them from that side. so that’show i want it to look. so i’m just going to put it right, centering my strip, rightin the center of my little cross here. and if you have pins you can pin them but, actuallylet me put a pin in. just to help. or you can just do them one at a time too. now whati want you to make sure of is that you’re not catching this lining fabric on the backside.you just want to stitch this to the outside part because we’ve still got to flip thewhole thing right side out and we need our lining. so i’m just going to lay it there.i’m just going to do them one at a time. but you’re going to repeat the process.take all your supplies over to the sewing </p>
<p>machine and stitch them right into place. so no lining on the back. make sure you’reonly doing this through the outer fabric. and you’re going to stitch basically a square.you can do a square with an x in it. you just want to reinforce the strip into place. pivot,make a little box around, through all the layers. stitch slowly because it is quitebulky. i did a box and then i can go ahead and just do a diagonal, why not? backstitchand that one is in place. i’ll repeat the same thing to the next one. so now we havethese really chunky ends. let’s grab a good strong pair of scissors here and trim it offclose to that seam line. just don’t snip your fabric. ok, so those two are done. </p>
<p>alright let’s put together the bag and thenall we have to do is make the crossbody strap. so here we go. we’re going to lay thesetwo together, the two outer pieces, pretty sides touching. and here’s what i like todo first of all. on the sides here, some of these little fringe ends are going to be hangingoff. we’re going to be using about a half of an inch seam allowance so i will go inand trim off whatever little fringes are sticking out at the half inch, like within the seamallowance, i’ll trim them down. and do that on both sides. so they don’t get in yourway. and i’ll show you what i do to keep all of this mess from getting in my way aswell. so trim it down and trim away whatever little ones may be getting in your way, ok?on both ends. and here i’ll do these two. </p>
<p>just to give yourself some clearance on eitherside. now i’ll get two wonder clips. usually it works with two for me. and i’ll justkind of jumble this around, like some fresh pasta. make it into little bundles and clipthem. just two usually will do it. now we’re going to lay these two together pretty sidestouching this way. and take your clips, match up those raw edges and clip all the way around.and i’m going to leave an opening here, on the side, of about five or six inches orso. mark it to remind yourself where to start and stop. so i’m going to start or stopon one of these ends. i probably will start here. and i’m going to backstitch, comedown, all the way down. pivot on my corners. come all the way back up. pivot on the cornerand come around and stop here and backstitch </p>
<p>when i get there. so let’s head over tothe sewing machine. ok, so this is what we end up with. let’sclip some corners here to reduce some bulk. and i’m just taking my scissors and trimmingat an angle close to that peak. just don’t cut into your stitching line. so now let’sgo to our opening in the lining. and if you remember to leave your zipper open you shouldn’thave a problem reaching in here. if you left it closed, you’re going to have to workwith it a little bit to get it to open first because it’s inside out when we reach inhere to grab it. but it’s not a big deal. either way flip it all out, the entire bagout through the opening in your lining. take off the wonder clips that are still holdingour fringe into place. shake it out. and i </p>
<p>like to fix everything on the outer fabricfirst like poking out all the corners and stuff before i stitch up that lining openingshut because i can still get my hand all the way in here. if i stitch up the lining firsti’m not going to be able to get in here. you don’t have access to it. so if you havesomething like this happen, i caught the fringe in the seam allowance, no big deal. rememberthe edges don’t fray. so just get really close to that fabric and trim it. and youcan’t see here and you won’t be able to tell there. so it’s a great fabric to workwith. get my hand back in here, poke out all my sides. and you really want to poke outthose corners here where our zipper tabs are, the zipper ends that we added so you can geta nice clean looking zipper. cornered here </p>
<p>on the end. ok. great. so now let’s closeup our lining opening. i’m just going to fold these ends in. and i’m not going tobother to do it by hand. i’m just going to take it straight to the machine and stitchit. you won’t even be able to see it. it’s inside the bag. alright, open my zipper allthe way, stuff that lining in there, poke out my zipper ends. give them a good roll.when you’re working with bulkier fabrics you’ve got to manipulate it a little bitmore especially since we can’t press it. but there it is. here’s the lining. oh ireally love that pop of color in there. that looks great. so there it is closed. you canuse it just like this as a clutch. or if we’re going to make that little crossbody strap,let’s do it now. </p>
<p>we’ll clean up some of this. we have ourstrip here that was the width of the fabric by, what was it, 1 â½ inches wide. so we aregoing to, yep, 1 â½. and so we’re going to fold it in thirds, just like we did beforeto make the little tabs for the bag here. you’re just going to fold it once over andonce over again and topstitch it into place. i don’t need to press it. i don’t needto clip it or anything. i can do this a little chunk at a time, right at the sewing machine.if you don’t feel comfortable doing it this way, you can totally put your wonder clipsand do it that way as well. but i just kind of hold it, do another piece and just keepworking my way down. ok, we have a super long strip here. it’s up to you to decide. youknow put it over yourself, kind of see where </p>
<p>want the crossbody bag to hit. on your hip,on your waist, further down. and so that’s going to be up to you to decide where youwant to cut it. you want to go ahead and give yourself a little bit extra because here’sthe part where you need to do to attach this to the little lobster clasps. so i’m actuallygoing to trim this down. i think about 48 inches, 50 inches may work good for me. soi’m cutting it at 25, would be the finished length. so i’m going to cut it at about26 â½. that’s doubled up, ok? so that’s giving me a little bit extra here. i’m goingto slip it through the half inch lobster clasp. and then you just put it through and bringit here. and you’re just going to topstitch this into place. you don’t want to do ittoo short because you don’t want to be able </p>
<p>to get the presser foot in there without runningthe risk of hitting the metal. so definitely bring it over about an inch or so and thentopstitch it here into place. and do the same thing on the other end. and i just backstitcha couple of times to secure it. ok. let’s trim away the excess. and now all you haveto do if you’re going to wear it crossbody is to click it, clip the little clasp rightonto the d-rings that are already attached to the bag. and there you have it. a fullycompleted, diy faux leather fringe purse. these are super hot right now. i hope thatyou enjoyed making this project and that you’ll give it a try. if you enjoyed this video tutorial,remember to hit it with that thumbs up below. share it across the different social mediasites and don’t forget to click the subscribe </p>
<p>button so you won’t miss out on any of myfuture videos. thanks again for watching and i’ll see you next time. </p></div>
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<div align="justify"><p>janet napolitano: dr. ericschmidt, chairman of the board and ceo of google. since coming to google, erichas focused on building the infrastructure necessaryto maintain google's rapid growth. previously, eric served as thechairman and ceo of novell, marking a 20-year record ofachievement as an internet strategist, entrepreneur, anddeveloper of new and great technologies. </p>
<p>dr. schmidt? eric schmidt: thank youvery much, governor. i completely agree with whatrandall had to say. and i'd like you all to think ofinformation technology in a very different way. i'd like you think of it as away that people can actually change their viewsof government. we're now at the point wherethe quality and the way in which your informationtechnology services work for </p>
<p>your citizens will fundamentallyaffect how they view not only your leadership,but government as a whole. because unlike many otherpeople in our government worldwide, the buck stopswith you guys. you actually run these places,and you have tremendous services that you offer. it's also clear that broadband,as randall said, is about to cross atipping point. we're at 50, 60% percentoverall penetration. </p>
<p>at&t and other companies areleading this way, and they're doing a great job. as it crosses the 2/3 point ofactual usage in american homes, it will become the firstplace that people go that the businesseswill be built on. and i want you to think internetfirst, not second or third or fourth, because that'sultimately how you'll transform your fundamentalmission, which is serving your citizens, and reallychange the world. </p>
<p>what's nice about this thinkinternet first message is that the united states is the leaderin the internet, so you have all of the positivebenefits of both the investment that you make in yourstates, the creativity in your universities, representedhere as part of our leadership task force, and the great storythat is the american dream and entrepreneurship. now, most people, when theythink about the internet, think about, as an example,youtube and candidates. </p>
<p>and you all havelooked at this. and indeed, there is a bigdebate on monday, and then a subsequent one in september inflorida for the two major parties, involving youtube. what people do not appreciateis how fundamentally the internet is changing the normalcourse of business. i've give you the numbers. the internet, by far the fastestgrowing piece of media technology ever, three yearsto get to 50 million users. </p>
<p>it took 37 years to do thesame thing with radio and television. there are more than 1.3 billionusers worldwide. we're adding a couple hundredmillion a year now-- and most of those, of course,outside the united states. the mobile phone growth-- when i travel-- and randall and i do this[unintelligible] -- what sound do i hear? </p>
<p>i hear the sound of mobilephones ringing. it drives me crazy sometimes. i guess it always--he loves it. it's the perfect outcome,ring, ring, ring, ring. and it is of even greater impactto have american-led technology changing the world. and the numbers arefascinating. more than 2.5 billion phones,again, growing at on the order of 400 or 500 million a year. </p>
<p>this is all being driven bysomething called moore's law, which you've heard about before,roughly doubling the density of chips every18 months. there's another law calledkryder's law, which says that storage power is increasingby a factor of 1,000 every 10 years. so you say, oh, no big deal. this has some pretty interestingimplications. in the year 2019, you'll be ableto have in your iphone, </p>
<p>or equivalent, 85years of video. so when you're born, we canhand you this thing, and you'll never be able to watchall the video on your device until you're dead. the rate at which thisconsolidation of data storage and computing power ischanging our world is breathtaking. now, my observation is thatpeople everywhere pretty much want the same things. </p>
<p>they want good family,good health. they want safety, security,happiness, prosperity. and they have a lot to say. and they are going to say it inthis new medium, whether we like it or not. the statistics are phenomenal. there are more than 70 millionblogs that exists today, about 120,000 blogs being createdworldwide each day. so no one is readingthem, except for </p>
<p>their author, i guess. 76% of us internet users overthe age of 15 initiated a video stream monthly. 75% of the users 18 to 25are reading or writing user-generated content,as it is called. and few of them are passiveparticipants. and last night, in our ann arboroffice, where we have a nice big operation, i asked asurvey, how many of you have a home phone?-- which is a verystrange question to ask. </p>
<p>and that was clearlythe wrong question. so i said, how many of youdon't have a home phone? 90% of the people raised theirhands and said that their only phone is their mobile device. it gives you a senseof how rapid this change really is occurring. when you think about search,which is the business that google is in, it really fulfillsthe human need for information. </p>
<p>and of course, this is growingvery, very dramatically. and the billions of pages thatwe index and the many hundreds of millions of users that weservice have to deal with this all the time. our next product is reallyabout personalization. here we are in michigan. you do a search for wolverine. now, are you talking abouta sports team, or are you talking about a particularmarsupial? </p>
<p>we need to know a little bitabout you in order to do that. and we now have algorithms andtechniques where we can more or less figure out whetheryou're a sports fan or whether you're really very interestedin science. and if you're both,maybe we'll be a little bit confused. we're trying to close thegap between what i want and what i typed. and to me, google is reallybuilt around aha moments. </p>
<p>for me, the aha moment was i'vealways wanted to climb mount everest, which, if youlook at me, is clearly not going to happen. so i took google earth, and istarted at the bottom, and i climbed right up to the top inthe safety of my office. and i had a great view. you can't do that without thesekinds of technology. here's another example. all of us give a lotof speeches. </p>
<p>and i was told that the problemis speeches is that the microphone rubsagainst your-- [scratching sound] eric schmidt: everybodyknows this, right? so how do you solvethis problem? you tape it to your skin. how do you do that? you get double-sided tapethat's made for wicks. now, where am i goingto buy this? </p>
<p>how would you find outwhere to buy it? well, it turns out you canuse a search engine. and you'll find there, in fact,a whole industry of people who make thissort of thing. i never knew i neededthis product. and now, i have to have it. what's interesting about allof these aha moments-- and google is really builtaround aha moments-- is that they really do createtrust. and then, trust between </p>
<p>ourselves, company, the enduser, and their searches and information becomes paramount. and this is another issue thatyou all are going to face. how do people trustthe internet? in our case, we've changedour privacy policies. we don't keep logs more than 18months, the cookies that we put in place-- which are a technical term-- expire in two years, andother things like that. </p>
<p>but the important pointis it will face this, is everyone's online. what is the privacy? what is the trust factor? do they believe you? is it really true? if we look at information andmass innovation, it's having a lot of other interestingimpacts. the fellow who runs venezueladid not like a particular </p>
<p>television station,so he banned them. so now, they're rebroadcastingon youtube. very interesting. please don't tell him. i don't want him toshut down youtube. this process makes governingboth harder and more, i think, exciting. it's harder because you have,to some degree, less control over the voices. </p>
<p>on the other hand, you have theability to listen to them. and you can imagine that, notonly can google, for example, track all the things thatpoliticians say-- do we agree, disagree?-- but we can also give youinformation as to what people are thinking, more quickly. and then, you can decide whatyour view is and how you should react to it. this phenomena of jumping tothings is really occurring </p>
<p>very, very quickly. it may very well be that thenext watson and crick-- co-inventors or discoverersof dna-- might meet online insteadof a university. and we want them to be in usuniversities, talking to each other over this broadbandnetwork that randall and others are trying to build. so what should you all do? encourage the expansionof broadband. </p>
<p>we are 100% in agreementwith this. it is the basis of so muchof the future of america. the only analogy-- and it seems obvious-- is here we are in abeautiful part of relatively rural michigan. how do you get here? by a highway. what do you do whenyou're here? </p>
<p>you get on your broadbandnetwork, and you have access to the whole world. the interstate highway systemis the 1950s analogy. this is ours. by making information available,you can finally cross this issue of theopacity, or lack of capability, of governments. we have a project generallyknown as sitemaps. we have projects with statesthat we've done this, for </p>
<p>example, already-- arizona, california, michigan,utah, virginia. the states already hadinformation that was on their websites that none of the searchengines could get to. literally, almost all access togovernment services seems to be starting through thesearch engines, and they can't find your service. working together, a similarexample, arizona-- took, you'll be pleased to know,the governor 46 staff </p>
<p>hours to make all this work,available not just to google, but to the other searchengines, as well. and boom-- millions ofpeople in your state have access to this. let's do this together. it's easy to do. i believe when we talkabout education-- and this group has worked oneducation for a very long time-- we all understand howfundamental this issue of job </p>
<p>training and education andhigher learning is. i believe that this nextgeneration of children process information differentlythan we do. it is the generation gap ofwhich we are the elders and they are the juniors. that you face, we face, theissue of transforming the classroom from a classroomto an internet classroom. and i don't mean getting ridof teachers and so forth. they're crucial to makingthis happen. </p>
<p>when i was a young persongrowing up in virginia-- my home and a great state-- one of the things inseventh grade-- governor-- is that i had to memorize the50 counties in virginia. and i'd managed to do itcorrectly, by the way. and of course, i don't rememberthem anymore. why was that memorization soimportant, if i can carry a device that has that piece ofinformation and everything </p>
<p>else in the world withme at all times. what i really needed to do wasto learn how to search, understand, manipulate, andresearch, learn how to think about the state that i love andthe state of which i was a member, and all thethings going on. it's a fundamentally differentway of teaching. and we're not teachingthat way now. and the tools and the techniquesare now available and ubiquitous. </p>
<p>with energy needs, all of us-- craig and intel, and many othercompanies-- are working to deal with climateand climate issues. with innovation, we're allbuilding innovation models. google is particularlyinnovative because of a model called 70/20/10, where 70% ofour investments are in core things, 20% in adjacent,and 10% in others. i would challenge you asgovernors, how much of your budget is spent on trueinnovation that's not </p>
<p>described to you or regulatedto you, or lobbied to you by the many people who wanta piece of your budgets and your attention? how much of it is true discoverythat's going on in your states? reserve 5% or 10%, and theleverage is enormous. this is a remarkable time tobe here, to be part of the united states, theentrepreneurial system that's represented by randall myself'sview of the world. </p>
<p>school children in rural townsvery much have the same access to the students ofoxford, harvard, cambridge, what have you. it's very different fromwhat it used to be. we are very much at thebeginning of a real revolution in education, informationaccess, and governing, and in serving the citizens ofthe united states. so with that, thankyou very much. janet napolitano: well, thankyou very much, randall, eric, </p>
<p>for your remarks and yourcomments to us on the role of innovation as you see it. let me open up the table toquestions or comments from any of the governors who are here,on this or any of the other innovation topics. phil? you've got to press onit and keep it down. [inaudible] phil bredesen: you haveto hold it down. </p>
<p>all right, i'll hold it down. this is probably for mr.stephenson more. you talked as one of the legsof those [inaudible] free flow of capital. and of course, we had in ourlegislature this year, along with many other states,initiatives generated from you to open it up. it did not succeedin tennessee-- i think, as a sidebar, morebecause so many lobbyists were </p>
<p>making so much money out of itthan it did out of the basic approach of it. but the question i have is,there are real issues surrounding the free flow ofcapital and communications, and the absence of regulation. the phone industry that youdescribed grew in a highly regulated environment. the cable tv industry startedand grew in a highly regulated environment. </p>
<p>the internet may have exploded,but that would have been vastly slower without thehuge infrastructure of copper and fiber and so on that weredeveloped that way. what do you feel the role of astate is in terms of trying to ensure equality of access? mobile phones arevery important. there's huge pieces of tennesseewhere i can't get a mobile phone signal, wherepeople who live in those communities can't get it. </p>
<p>what is our role in makingthat happen? randall stephenson: i think,inherently, the role-- and many may not like this-- ismore and more to stay out of the way. the more truly competitive thesemarkets become, i think the less government interventionis required. there was a day-- eric schmidt: --side theunited states directly subsidized broadband deployment </p>
<p>literally with money. and they have a nationalbroadband policy. it's heavily subsidized. and it is, in fact,accelerating their economic growth. so in the american system,where such subsidies are probably not the right politicaloutcome, i can report to you that thefinancials of broadband are so positive that thetelecommunications companies </p>
<p>and the cable companies, and soforth, are in fact seeing economic returnsfrom broadband. the problem is that there arestill regulations in their way, as randall said. if i were a governor and i heardthis message, what i would do is have a broadbandtask force for my state. and i would sit down and iwould say, tell me the 10 things-- and i wouldn'task the industry. i'd ask my staff and thevarious end users-- </p>
<p>what are the things that arepreventing us from getting what we want? and i'd go to the industry andsay, what are your problems? and i'd try to figure outa way to bridge them. there are many cases wherelocal, relatively antiquated laws are preventing widespreadadoption of something which is economically positive. the spread of broadband is sodirectly related to the creation of jobs in ruralareas, the use of the </p>
<p>internet, advertisingbusinesses, the business we're in, electronic commerce,and so forth, that it's fundamental. i was in rural nevada. and i happened to be driven bythe mayor of this small town. and he was explaining to me thathis basic problem was he could not get thetelecommunications company to put a fiber optic cable to histown because he wanted to create an outsourcing center. </p>
<p>we want all the mayors tothink about where is the fiber, and do they haveenough of it. and that will then putpressure on their own regulatory bodies to work withthe local guys to get this stuff built. janet napolitano: good. governor sebelius? kathleen sebelius: eric, sinceyou're here to give us a new way to look at a lot of theinitiatives moving forward, </p>
<p>i'm struck by the fact thatthe numbers that you gave, which i think all of us knowintuitively about phones-- who has a landline phone, whonow is just using a cell phone-- we can translateinto our own kids. but it has an interestingapplication when you go to polling. eric schmidt: states havemany overlapping lists of their citizens. they have polling data, driver'slicense data, other </p>
<p>kind of regulatory data. and there are tremendousinefficiencies in how those services are delivered becausethey don't have a way of seeing one person as the same. and there are some reasons thatthat structure exists, including concernover privacy. so to the degree that we canaddress privacy and misuse of driver's license data and soforth, it would be very good if states had a better modelof who their citizens were, </p>
<p>and they knew roughly wherethey were, or they had an ability to reach themin an emergency. i'm struck by, as an example,you find out that in your state, there's a mortgagecrisis. and your citizens-- a good percentage ofyour citizens-- are going to default. so you as a good legislatorfigure out a way to give them some credits. </p>
<p>how do you reach them? how do you reach them today? the television they don'twatch as much anymore? you can't call them at home. the canvassers are offdoing something else. you have to find a newway to reach them. and an obvious way would be tohave more use of the web, more use of electronic mail, andget them to choose to communicate with you on theirown terms. people are now </p>
<p>choosing to communicatedirectly. the polling question is muchharder because people are harder to find, if you will. and i think what we'll seein polling is many more estimates, which is notnecessarily good, but probably the best that we can do. janet napolitano: very good. governor sanford,let me just-- governor sanford, then we'llhave governor corzine, </p>
<p>governor douglas, governorbaldacci, and governor pawlenty. and then, we'll have to cutoff the questions-- eric schmidt: --taken strongpositions that more choices are good, whether it's vouchersor charters schools, or so forth. my personal view is that almostanything that we try will give us some experience ofdifferent models, and that we should encouragethat experiment. </p>
<p>one thing i will also tell youis that we now have the ability to measure outcomes. so rather than arguing aboutwhat could happen in these infinite strategy meetings thateverybody seems to have in this subject, why don't yousimply try five different initiatives and see what works, and measure the outcomes. and we'll accept anypositive outcome. janet napolitano: randall? </p>
<p>randall stephenson: verysimplistically, i don't care what endeavour it is, ingovernment, in business, or anything else, competitionis good. it's just inherently part ofa free market society. i just think more competitionis good in every endeavor. and so i would always encouragecompetition. janet napolitano: governorcorzine. jon corzine: thank you. let me first just make anobservation to randall that </p>
<p>this isn't just the spread ofbroadband and implementation of those programs, which we'vedone in new jersey. it isn't just an issueof rural consumers. there are the difficulties ofbringing this into urban areas and actually and may evenbe bigger hurdles associated with it. i wonder if you wouldcomment on that. and then, eric, it's very hardto argue with the evolution of how we disseminate informationand how we communicate. </p>
<p>but the oversight, some mightsay the regulation, of how the internet works is somethingthat's increasingly a concern to our citizenry, particularlyfrom predators who use what is obviously a great leveragedevice in a way that becomes harmful to society. and i wonder if you want tospeak to what you think the role of government is or isn'tin that world as we see this inevitable evolutionand strengthen the technology system. </p>
<p>randall stephenson: in terms ofurban areas and broadband coverage in urban areas, i can'tspeak to new jersey. we don't have thatin our footprint. but as a rule in our 22 states,the urban areas are very, very well covered. i would tell you we have donemore to make it available to urban areas in termsof pricing. we have a $10 broadband productavailable for anybody that wants broadband. </p>
<p>the dilemma we have onpenetrating urban areas that we're working-- and we're working thisvery aggressively-- is the cost of a computer. in urban areas, the density ofcomputers in the homes is not that great. so what can you doto improve that? we're working with intel on adevice that is not a full pc, but it's a device that canaccess and then utilize </p>
<p>internet, and hookto broadband. can you get $100or $200 device? we could subsidize that andtruly begin to penetrate urban areas with broadband access. but i think that is the longpole in the tent, if you will. can we get the computing devicein the house, that cost, down? janet napolitano: eric? eric schmidt: on the wirelessaspect for cities, one of the </p>
<p>good news about cities isthat they're dense. and so wireless broadbandsolutions, including some that are free or very, very low cost,are in developments. i think we have some hopethat technology can really help there. with respect to the oversightand regulation of the internet, one of the great sortof sadnesses of my career is to discover that there areevil people on the internet. those of us who were part of theinternet 20 years ago, we </p>
<p>didn't think therewould be any evil people on the internet. and now, we find themleft and right. and they spend an awful lotof time sending us really terrible emails inthe form of spam. there's a series of thingsthat society has to do. the first is to talk aboutit so that people are aware of it. schools need to spend a fairamount of time educating </p>
<p>children about it because nomatter what we do, on the margin, there willbe a new attack. and they'll find a 13-year-oldboy or girl and potentially put them at risk. and that's a trulyterrible thing. from a government perspective,the interesting thing is that virtually all of the things thatwe're upset about on the internet are, in fact, illegalin the states in which they are performed. </p>
<p>so it does not appear as thoughthere's a need for some a whole new national set of lawsin this area, but rather the development of the toolsand the techniques of law enforcement to discover,track, and so forth. and there, companies like googlecan actually help in the sense that we do have apretty good idea of what people are doing. and under the appropriatelegal systems, that information can be used to help,essentially, apprehend </p>
<p>the bad people. there are issues whenyou cross borders. so for example, you'll havesomebody who's doing something inappropriate, where theus law does not reach. and there are probably issuesaround trade agreements to make sure that we can have quickresponse for sorts of things, as well. janet napolitano: yeah, and iwould also add to that, i think the early childhoodcommittee meeting this week is </p>
<p>going to be talking about onlinepredators as one of their topics, so obviously,an issue of great concern to all of us. governor douglas. jim douglas: thank you. earlier this year, i signed intolaw a bill to create a telecommunications authority toboth get out of the way in terms of expediting permitting,and, as governor rendell suggested, make surethat we deploy infrastructure </p>
<p>in rural, remote parts of thestate that may not be economically feasible forthe telecom providers. but one discussion point thathas come up is, what is the future of infrastructure when,in this era, we have a phone becoming a computer becominga television, providing different types oftelecommunications services? are the federal grants we'regetting to deploy fiber optic cable really forward looking, orare they a generation that perhaps will pass? </p>
<p>we've got a satellite companyoffering to do a pilot program in a rural part of our state. what's the future ofinfrastructure for telecom? janet napolitano: inten words or less. eric schmidt: let me-- a quick summary is that fiberoptic bandwidth has almost no limit of the amount of bits thatyou can put in it with the appropriate upgradesof the ends. so you should be proudest ofall that fiber that you're </p>
<p>busy laying because that fiberwill last for 25, 50 years. and people will be doing amazingthings with that fiber in our lifetimes. randall stephenson: morefiber is a good thing. i don't care where you areor when you're doing it. more fiber is good. janet napolitano: so it'sa pro fiber diet for telecommunicationsis where we are. all right. </p>
<p>governor baldacci. john baldacci: and firstly, iwant to thank you, janet, for your leadership and the issuesthat are being discussed. i find them very interesting[unintelligible]. i would like to ask randall aquestion when he talked about the needs in rural america. governor douglas and governorlynch and myself in maine are coordinating, in the rural partof northern new england, an it cluster to [inaudible] </p>
<p>industry support, to give us acurriculum, to give us some of their recipes and needs fortheir work force, so that we can transition our peoplefrom the old economy to the new economy. and the challenges is to findthose companies that are willing to partner. and there's new studies comingout showing that it's probably better, more productive, moreretention, instead of outsourcing to india, it isto do it in rural america. </p>
<p>and we offer the opportunity inrural northern new england to be able to come out withthese sorts of things because we've changed our educationalsystem from two years of math and science to four years ofmath and science and have eliminated tracking, so thateverybody's thinking about higher education. but industry partnering, ithink, is a huge help to me and to our region. and i would just put thatat your doorstep. </p>
<p>and you're representingindustry today. so i'd appreciate any commentsyou have on that. and i think governor douglasasked the question i asked. at what point is it going tobe either the television or the telephone, or which one isit going to be that's going to end up being the onethat everything ends up coming through? because it just seems like itjust completely evolves and changes, so much sothat it's amazing. </p>
<p>so eric, if you could everlook down that road and just tell us. because it used to be everybodywas in their own compartments. and they had their ownresponsibilities. now, it seems like the wholething is merged. and they're all competing witheach other, which is great. but at what point [inaudible]? randall, and then eric. </p>
<p>randall stephenson: in termsof the partnering, i accept you laying that atour doorstep. i think it's importantfor industry and government to partner. in fact, a few leaders in ourarea where we do business prevalently, we are partneringwith in this regard, especially as it relates tobringing some of these jobs back from india, specifically,and trying to get the skill sets up to make sure that wehave a workforce that can </p>
<p>accommodate the volumesthat we're going to be bringing back. in terms of which device isgoing to win, there are three screens that matterin my world-- this wireless screen, thepc, and the television. all three are going to berelevant for a long time. i think the companies that canmake those kind of work together, and seamlessly,i think will stand a big advantage. </p>
<p>but i'll let mr. internetrespond to that, as well. eric schmidt: thank you. most people assume that allthe devices that you carry will end up as one. and unfortunately, i think theinverse is probably true. you'll probably unfortunatelyhave more devices. you'll have, what we say, ipaddresses even in your shoe because there'll be somethingthat's useful in your shoe that the internet will need toknow about, like how far you </p>
<p>are or where you are. i carry my old phone,my iphone, my blackberry, and my camera. and now, i have a zipdrive that doesn't fit any of the four. thank you very much. this is not convergence. the trick, as randall pointedout, is that all of these devices, along with theseamazing televisions that are </p>
<p>being built, and amazing new pcscreens, will have access to the same information. so you'll be able to use yourphone or your handheld device, or whatever other device youuse, to access the same then, when you go toyour office, you'll be able to see it. and when you go home, you'llbe able to see it. and then, you can workall the time. janet napolitano: oh, boy. </p>
<p>thank you. and governor pawlenty. tim pawlenty: thisis for eric. we talked about the it, or iguess, the internet classroom. we have, of course, thisgeneration behind us, absorbing informationfundamentally differently and transmitting it fundamentallydifferently than even my generation. and so our children-- my14-year-old, my 11-year-old-- </p>
<p>they instant message,text message, myspace, youtube, email. it is completely different. and yet, we are in classrooms,even though we have smart boards and internet classroomopportunities, where we primarily still have peoplestanding up with erasers in front of white boards andlecturing, and boring children, particularly atthe high school level. and we are still usingstandardized textbooks, which </p>
<p>are a one-size-fits-all, kindof assembly line approach. beyond white boards, beyondsome internet classroom opportunities or online learningopportunities, what is the future of the internetclassroom in a way that might allow us to leverage technology,better customize learning opportunities acrossan array of needs and abilities and speeds? what do you see for the futurein that, and what policy suggestions wouldyou have for us? </p>
<p>eric schmidt: a coupleof observations. the teachers of america areamong the most isolated working professionals that wehave. they have relatively few opportunities to spend time withtheir peers, to learn how to be better teachers,and so forth. with the internet-- and thenational governors association has been part of it-- there arenow groups that are trying to standardize not just thetextbooks, but also the teaching tools, the teachingmethodologies, and in fact, </p>
<p>producing videos of the greatteachers to augment that. so that's observationnumber one. the internet, which is nowpresent in pretty much every classroom in one form oranother, we finally now have a way of getting intothat classroom. the second observation is thatthe modality, the way in which people are teaching, has tobecome more interactive. fundamentally, in thisnew world, it's an interactive world. </p>
<p>it's a personal world. and that means two things. it means the teachers actuallyhave to have a conversation. the students have to interactwith the media. and there needs to be a test.and the test needs to be based on the outcome, not the timespent in the classroom. and a simple change, a simplelegislative change, that would allow some flexibility and someexperiments with that and then, test the outcomes, wouldprobably begin to show the way </p>
<p>in each and every one of thestates represented here about how citizens really can takeadvantage of this [inaudible]. what is interesting to me is, ioriginally thought that this information was not availableon the internet. there are tremendous amountsof teaching resources available on the internet, andthey're not being used to teach our students. with that, thankyou very much. thank you, randall. </p>
<p>thank you, eric, very much. </p></div>
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<div align="justify"><p>hey guys! it's me angelo, your 17 year old filipino tinkerer it's been almost half a year since i last posted a video tutorial and to make up for that, i'm back with a very big and special one so this week we are going to build your very own life-sized and fully functional starwars bb-8 droid! (bb-8 reacts) </p>
<p>i went out to buy some materials from the mall, and here are the thing that you will need for the project. for the electronics we have an arduino uno as the brains of the robot. next we have here a high powered pololu vnh5019 motor driver which will drive both of our metal gearbox that we have here we also have </p>
<p>a bluetooth module this would be the one that would communicate to our smartphone so that we could control our bb8 robot using our smartphone. </p></div>
<iframe width="560" height="315" src="https://www.youtube.com/embed/s_LOCS2weNw?rel=0" frameborder="0" allowfullscreen></iframe>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5836051384020530536.post-15037006844255656802016-12-19T07:25:00.000-08:002016-12-23T22:34:51.385-08:00brown suede booties<div style="text-align: center;">
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<div align="justify"><p>ã¯â»â¿>>presenter: i want to great everyonehere tonight. i'm frances beinecke. i'm the president of nrdc, the national resourcesdefense council. we have a lot of friends here from nrdc, andi want to welcome you and also welcome, or at least join, all ofthe people who are here from google. this is a great evening for nrdc. we're ata real moment of change in this country, and the key issue that we'vebeen working long and hard on which is curbing global warming and the intersectionwith global warming and a new clean energy future, and how thatgets addressed in the current economy is absolutely top ofmind for us. </p>
<p>we're very fortunate tonight to haveeric schmidt from google address that issue. he has been a great leader, and as i thinkyou all know, is involved with the president elect's transition economic advisor teams,so i think this will be a wonderful opportunity for us to hear directly from him how he envisionsa clean energy future and how that merges withhow we can move the economy forward. we have many great friends here tonight, andi just want to recognize a few. our chairman dan tishman who is ã¢â‚¬â€œ whereis dan? there is dan. welcome dan. of course, our founding director john adams,who needs no introduction, but is one of the great leaders in the environmentmovement </p>
<p>for many, many, many decades.what we're going to do is eric is going to begin and tell us a little bit about his views,and then i want to introduce two other very important people.dan reicher is the director ã¢â‚¬â€œ i have to get this right ã¢â‚¬â€œ of climate andenergy initiatives at google.org. he's also a former nrdc staffer, of whichwe're very proud. he's currently on the obama energy environmenttransition team too, as well as being a former assistant secretaryfor efficiency and renewables in the department of energy, so he is a trueexpert. joined by our own co-director of our energyprogram, ralph cavanaugh, </p>
<p>who for 30 years, has really been leadingthe charge on how we promote energy efficiency and develop a new energyfuture for the united states as well. this is an amazing team, and eric's goingto start off and give us his views and strategies of how to move forward, andthen we'll have some questions and conversation among us, and thenquestions from you. >>eric: well, thank you. i've had the privilegeof working with nrdc, and with frances, in particular, for someyears here. this organization is the organization thatgets stuff done. there are a lot of organizations that sortof talk a lot, and something about the construction </p>
<p>ã¢â‚¬â€œ and i think we have a few peoplewho know how this was done, and i am certainly in awe of what you didã¢â‚¬â€œ you managed to figure out both the policy and the enforcement side ofwhat you're really trying to do. if there's anything that i can say about thenrdc, this is an organization that's worth supporting, following, and participating in,partly because of frances' leadership, of course,but also because it's a systemic solution to a big problem.it's been around for a long time, and it's got a pretty impressive track record.my story ã¢â‚¬â€œ it's easier if i tell this as a story ã¢â‚¬â€œ is i went to an nrdc event,and someone said 40 percent of the energy </p>
<p>and emissions comes from buildings.i thought, "wow, that's a big number," and they had one of these terrible slides, we'reall going to die and so forth and so on. [laughing] i thought that's one thing that i can ã¢â‚¬â€œwe have a lot of buildings. i called the google folks in, and i said,"hmm-m, what are we doing about the 40 percent?" they go, "oh, well we have this idea, thatidea, this idea, that idea," and i said ã¢â‚¬â€œ i put on my sort of republicanceo tough guy tone ã¢â‚¬â€œ "what's the payback?" and they said, "18 months,"and i said, "what?" i said, "i don't have to pay for this?" theysaid, "no," </p>
<p>so i said, "why don't you do it?""no one asked." this is a real conversation. all of a sudden i realized all i had had todo was to ask. these people had been coming up with ideas.they had done the math. it is relatively straightforward. these arepositive npv investments. i said, "good. do it. come back when you needmore money," so they did it. of course, we have millions of dollars ofsavings at google, which goes, by the way, right to our shareholders, sogood republican behavior, and by the way, it's the right thing, so ilearned a lesson. you have to ask. those of you that are in charge of thingsor participating in this, </p>
<p>it's time to act.you can sit there and you can say, "oh, woe is me. this is a problem,"and so forth. take action yourself. after replacing all the light bulbs, by cflsand so forth and so on, it actually begins to compound.then they show up again, and say we have a new idea, "let's have the world's largest,private solar generating system here on campus." okay, and one of the side benefits is thatyou have carport which has solar panels on it, which shades the cars, plus you can havea little plug. with the electric cars, you can plug themin right to the solar panels. perfect. "how much does it cost?" "oh, i don't know,not that much." </p>
<p>"what's the payback?" "less than ten years,and we have these great tax credits which are about to expire.""even better. do it." all of a sudden and for awhile until aboutsix months ago, we had the largest, 1.6 megawatts in fact, which covers roughly 20 percentof our electric needs in our campus. again, what's the compound of that, as ourelectricity rates rise over 10 years? these are very conservative assumptions.it's a no-brainer from a shareholder perspective. my point in those two stories is that youstart, when you actually do the math, you discover doing the right thing is also theright thing for business. if there's any message that you should takeout of nrdc's involvement in this, </p>
<p>and certainly my involvement, is that youdon't have to choose a good or a bad outcome.meanwhile, dan reicher shows up. we have a philanthropic on him.we give it a couple million dollars grant for energy efficiency to nrdc.we meet all these interesting people. he comes in and he says, "we can do better."we start looking at energy efficiency. we start looking at renewables.we start looking at technology. google's an information company, not so muchan energy company, so we start building things that involve smart grids and so forth,and i'll talk a little bit about that, but of course, he's the expert.this proceeds, we make investments in solar, </p>
<p>in histiothermal, and wind.we have a detailed strategy, tens of millions of dollars in investmentsin companies trying to get it kick-started, because i'm going to run out of normal conventional,oh yes, perfectly reasonable npv decisions as a company,unless these new technologies become available. we're a significant user of power, so i'vegot a good business reason to do it, plus i have a good social influence, also a goodreason to do it. we're having this conversation, is there away ã¢â‚¬â€œ question ã¢â‚¬â€œ is there a way to solve every known problem at once?i'm tired of everyone complaining, right, i've learned something here,which is that you do the right thing, you </p>
<p>can solve multiple problems.let's go through the list, energy prices are too high, energy security ã¢â‚¬â€œhow many wars are being fought over oil now and in the future?what about job creation, especially in the rural areas?what about building businesses that are exportable outside of the united statesto create wealth for americans, always a good thing in my judgment.oh, and by the way, why don't we solve the climate change problem too, at the same time?wouldn't that be great? yeah, sure, right, absolutely, so we had thisdebate. the first calculation was it would cost atrillion dollars, </p>
<p>and i said, "yeah, it's easy to get a trilliondollars, just put to the head of the congress." oh sorry, wrong discussion. sorry, that wasa different conversation. it's only a trillion dollars. you can getit in a week, okay. by the way, that's over 22 years. mtv is 200billion. u.s. energy business is about 1.5 trilliona year. two hundred billion in present value of investmentsover 22 years is not that big of a number.we published that model in september, and i'll take you through it,because it's open, people actually criticized </p>
<p>it.as a result, we discovered some errors in our calculation, and guess what?we started to make money. at $4.00 a gallon, we actually make about$1.8 trillion, as opposed to losing a trillion, so now it'shard to argue with me. at $3.00 a gallon, we'd make a trillion dollars.it is pretty neat. it doesn't get better than this, guys.here i am with my businessman hat on making a trillion dollars,which everyone could use, plus we're going to solve every known problem at once.how do we do this? this is pretty good. the first thing we do is we separate out energy,essentially generation, from transportation. </p>
<p>remember, energy generation is primarily coaland natural gas, mostly coal, in the united states with some nuclear and so forth.is there a way to take all the fossil fuels that are currently being used, roughly 70percent of most of the electric power used in the united states,and replace it, because you remember, these plants die.they have to be replaced and so forth. there's new demand.with some assumption, including holding energy efficiency per citizen,that is energy consumption per citizen, constant ã¢â‚¬â€œwhich has been true in california since 1973, not true in many other states ã¢â‚¬â€œ we'reable to take the money that's saved from that </p>
<p>single idea,and plow that into the construction of solar, wind, enhanced geothermal,as long as there's the proper grid to get the stuff around.i'll come back to that. the math works you say where do we get the trillion dollars?it's turns out that's roughly cost even in the current calculations.you can read all of this, using your favorite search engine,just type "google 2030 energy plan." the second thing that we do is take a lookat transportation. most of the issues around oil are really relatedto cars and trucks. trucks will be solved largely by lng fleetsand other kinds of things like that, but cars </p>
<p>are this huge opportunity.it turns out that in the middle of all of this, google and a number of other companies,but in particular, google ã¢â‚¬â€œ and i think under dan's leadership,so i'll give you a little bit more credit here too ã¢â‚¬â€œcame up with this notion of plug-in hybrids and getting people using them.as you know, what a hybrid is, is it's got a mixture of a battery and ã¢â‚¬â€œessentially think of it as an electric engine and a gasoline engine.the electric engine uses the battery, and so forth.plug-in hybrids essentially have a bigger battery,and they use the battery more, is the easiest </p>
<p>way to understand it.the latest technology uses the battery to power the electric motor,and that when the battery runs down, the gasoline engine turns on, charges the battery, batterypowers the electric motor, car goes off. what kind of efficiency can you get with sucha device? about 100 miles per gallon.if you assume fleet wide increases in roughly doubling from 37 to 70 miles per gallon, allof a sudden you save a trillion dollars, right, because gas prices held constant over thenumber of miles, and so forth. now you've got to get those cars in people'shands. you actually have to build them, so in ourplan ã¢â‚¬â€œ and you'll see this ã¢â‚¬â€œ </p>
<p>we actually accelerate the buy back of pollutingcars, also known as our current cars, and so forth.we presented this, and people said, "way not aggressive enough."i said, "not aggressive enough? we're already making a trillion dollars solving all knownproblems? like, what's your complaint?" "well, the first thing is you haven't accountedfor basically carbon sequestration for coal?" "yeah, but that's positive to our model.""you haven't accounted for the possibility that nuclear can be made safe."this is like skeptical, right? i said, "that's positive to our model. youcan prove that, we'll add that too." then somebody says, "did it ever occur toyou that if you made cars twice as light, </p>
<p>not twice as heavy, so half the weight, usingcarbon fiber and other technologies, and maintaining theircurrent strength and survivability, you'll get 200 miles per gallon?"positive to the model, better design, so forth and so on.you can get the gasoline part of transportation down to 5 percent or 10 percent of what it'sused today, and wouldn't it be nice to cause the demand for petroleum to drop dramatically,after everything that's happened to us and been done to us?let's get back at this. i remember. my point here is you've got a plan that spansboth, so how do we put up this plan?well, in the first place, we need some cash. </p>
<p>thank goodness, there's a whole bunch of cashabout to happen, and i'm not talking about the bank bailout.i'm talking about the stimulus package, and president-elect obama, thank goodness, hastalked about that if you're going to have a stimulus package,you might as well invest in roads, bridges, schools, broadband,and energy efficiency, and these kinds of things.perfect, how much money do we need? "oh, a few billion dollars."these stimulus packages will be big enough in our little corner,the one we're working on, is relatively a rounding error,compared to the scale of the numbers that </p>
<p>they're talking about,so this is achievable, so that's where the money comes from.there's another thing that we need ã¢â‚¬â€œ and this is what i'm going to end on ã¢â‚¬â€œwe need intelligent regulation, and intelligent regulation recognizes a coupleof things. it recognizes first and foremost that mostof the money is not with the government, it's in the private sector.it recognizes that incentives need to be designed so that private money comes in.here's an example. what's the best stimulus that you can do?give money to the energy efficiency programs that are already in place at the state levelrun by the utilities. </p>
<p>in our plan, we have $10 billion for that.it immediately goes to work. what's the best insulation program you cando? there's already a low income weatherizationprogram that's unfunded, authorized, and in place.how much money do you need for advanced r&d? you can't soak up more than $2 to $3 billionin investments, and that money would go to take over plants in places like michigan,where their people don't have any work, where there are sophisticatedand high-tech workers who could actually build the batteryand the battery trains that we need for this kind of architecture.without going through it number by number, </p>
<p>believe me,we're got the numbers that add up. the second thing that has to happen ã¢â‚¬â€œand i want to emphasize this ã¢â‚¬â€œ is that there is this infrastructure problem.now, i'm a computer scientist. i think about the internet,and i look at the electric grid and i say, "why is the electric grid the same as it wasin the 1960s?" because nobody cared. nobody tried to builda grid that was flexible, scalable, decentralized, and had decentralized control and the abilityto get on and off. in the vision, which we'll talk a lot about,of a smart grid ã¢â‚¬â€œ here's an example ã¢â‚¬â€œ you guys have all the batteries sittingin your cars? </p>
<p>what are they doing in your garage?why can they not add to peak load, when peak load is needed?the utilities say that the highest cost of being a utility is not average load, but peakload, which is in the afternoons. right, plug your car in, draw the batterydown, charge it up at night, straightforward. seems obviously, right? you can't do it.because the computerization of the internet and so forth,it seems obvious, right? the grid is not organized that way. that'spart of it. the other part has to do with transmissionlines and sort of a lack thereof. here we are, private sector, billions of dollars,solar, wind, </p>
<p>so forth and so on, plus the stimulus packageto get it going, all those unemployed workers, all the suppliersjust ready to go. all of these people buying up desert in newmexico for cheap, thinking that they're going to put their solar panelthere, and then they discover they can't connect to anything to get it out,and so the land is worthless. there are proposals now for very, very sophisticatedtransmission systems throughout the west which are needed for this,which are currently on a fast track to occur in ten years.we don't have ten years, guys. look at the map of climate change.you want to be in a hurry, look at the compounding, </p>
<p>look at the math.we don't have time, so there's a series of things that the federal government, in particular,can do around renewable improved quality of standards and interconnect agreements to acceleratethat. the money is there. the utilities are willingto do it. the private sector is behind it. i would arguethat the compelling need is there, and i will finish by telling you, i cannot imagine abetter use of everybody's time than getting the energy infrastructure of america rebuilt.it solves every interesting problem, all of the things we care about,all the things you care about, and it is achievable, and it's the perfect american challenge.thank you very much. </p>
<p>[clapping] >> ralph: i'm ralph canvanaugh, the energyprogram co-director for nrdc, and the plan for the rest of the evening is for me to commentvery briefly on eric's remarks, and then initiate a conversation which willquickly draw as many of you in as we can, so be thinking about your questions.now, what i wanted to say about the google 2030 clean energy plan,is that what you've just heard is a quite wonderful rebuttal for the most common mistakethat has characterized american energy policy for 30 years,dominated the congress that entire time. it was referred to during the recent presidentialcampaign as the </p>
<p>"all of the above" strategy.its fundamental insight is that to meet america's climate and energy challenges, you got todo everything as rapidly as possible, all the coal,all the nuclear, all the gas, all the renewables, all the energy efficiency.the congress of the united states never met a resource that it didn't like,and if you've got an articulate lobbyist or an attractive scale model ã¢â‚¬â€œand sometimes you only need one ã¢â‚¬â€œ you can be reasonably assuredof being included in the next federal energy bill.the problem is, we don't have unlimited resources, and eric has laid outthe time constraints that we face, and all </p>
<p>of the above just doesn't work.what he has given you instead, is a system where, after letting winners and losers emergeon their merits, you have a future you can believe in,driven by and dominated by energy efficiency and renewable energy.to tease out just a couple of pieces of it, and give you a sense of what we're tryingto do to realize that vision, notice the importance first of two thingsthat he talked about a lot that most people never talk about in this context.one was the importance of energy efficiency as a resource.when i subject dan reicher and eric schmidt to merciless cross examination,i'm going to ask them a question about energy </p>
<p>efficiency that all of you want me to ask,in terms of why groups like nrdc have not been able to make it sexy. >>eric: why have you not been able to makeit sexy? >>ralph: i'm going to answer that question.i'm going to answer that question by turning to my friend dan reicher and telling ã¢â‚¬â€œ >>eric: he doesn't work there either. >>ralph: he doesn't work there either, buteric, he did at one time. >>eric: you work there. >>ralph: he's a credible guy, and he's goingto give you the first insight </p>
<p>into how we're going to make it work.the good news is even without making it sexy, we have succeeded,eric, to reassure you just a little bit ã¢â‚¬â€œ >>eric: okay. >>ralph: ã¢â‚¬â€œ in actually making it avery high priority resource, an investment candidatefor a sector you also talked about that most people don't,which is america is more boring, down home, hometown utilities.the electric and gas utilities that connect through their wires and pipes to more thanhalf the global warming pollution in the u.s. economy.a critical challenge ã¢â‚¬â€œ if you want </p>
<p>to think about the investment eric was talkingabout, about what we need to do to realize that efficiency and renewables vision ã¢â‚¬â€œthe utilities are incredible. they manage those ancient grids he talkedabout. they make the investments in the renewableenergy resources. they're in a position to push energy efficiencyas an alternative to power plants if you give them an incentive to do it.for most of the utilities in the united states, for most of its history,they had perfectly perverse incentives. if their customers used less energy, theyautomatically lost money. if they bought renewable energy from an independentsupplier ã¢â‚¬â€œ and more and more of them </p>
<p>want to sell ã¢â‚¬â€œ at best, they couldpast the cost through. they had no earnings opportunity, comparableto what they could get if they built one of those coal or nuclearpower plants. what did you get for most of the history ofthe utilities with those sorts of incentives?unsurprising and wholly uninspiring results, and that's changing.what i want you to know is just this past tuesday, nrdc and the nation's utilities,the edison electric institute, which represents them,which i expected to spend my career suing, went before the national association of regulatoryutility commissioners </p>
<p>and essentially embraced eric schmidt's vision.what we said was, "we are prepared to go before all of you state regulators to change therules, so that energy efficiency and renewables are profitablefor utilities, if done well, and so that utilities as a collective whole,those entities that account for half of the global warming pollution,can together work with us, with all of you, to get there.the goal is easy, simple, maybe not sexy, but rather compelling.it's all cost effective energy efficiency, all the energy efficiency we can find at lowercost than power generation it replaces, and the google energy 2030 plangives you some sense of how big a deal that </p>
<p>can make.two other very quick points ã¢â‚¬â€œ one of the most powerful engines for making energyefficiency happen at the scale we need it, as quickly as we need it,is to lock in the gains we get through the incentive programsin efficiency standards. there's a lot more we can do there.the nations utilities pledged on tuesday to join us in advocatingmore aggressive efficiency standards in every category of energy use.to give you an early example of the success of that partnership, most of you probablydidn't even realize that just within the last year,we managed to get an efficiency standard passed </p>
<p>by the federal government,drafted in at nrdc, with google's support, that will affect every oneof america's four billion sockets that light bulbs screw into.i bet you didn't know we had four billion sockets.a large fraction of them represented in the homes in this room. [laughing]every one of those four billion sockets, every one of them, will dramatically improve itsenergy efficiency by 2012, and even more dramatically by 2020.by 2020, the average light bulb will use less than a thirdas much electricity as it does now. the notion is performance-based standards,guys. </p>
<p>you don't dictate the technology. you setthe standard. you let entrepreneurs figure out how to meetit. i think what i want to do now is begin a conversationabout the last, and maybe most important part of this discussion, howare we going to get congress. the one thing we clearly need congress todo is to act on climate, set mandatory limits on global warming pollution.this is a group that will have a lot of say abouthow that happens and how quickly. as a way of initiating that conversation,i want to ask my friend, dan reicher, former assistant secretary for energy efficiencyand renewable energy, </p>
<p>the question that i was asked at the mostrecent nrdc staff meeting, and eric, it was not quite the one i justframed. it was even more embarrassing, from my perspective.it was how can we make energy efficiency as cool as google?dan, i know that you have thought deeply about that from both institutions,and i know that you have at least an initial illustration to provideas to how this might be done. >>dan: well, thank you, ralph, and eric, frances,john adams, great to see you all, great to be here.i'm really thrilled to be able to participate, and this is the questionthat we've been struggling with for decades, </p>
<p>which is the low hanging fruit,as we call it, the low hanging fruit that in fact grows back.you go from incandescent bulbs to compact fluorescent bulbs.you go from there to leds. energy efficiency is what we've really gotto move into this system, and we have not succeeded very well in doingthat, despite lots of good work. i think we're on the verge of this turningaround, thanks to work by organizations like nrdcand people like ralph. i was talking to ralph earlier, and my greatestmoment during my eight years in the clinton administration, my most funmoment, involved energy efficiency standards, </p>
<p>not one of the most exciting achievementsof the clinton administration, but we were, in fact, after lots and lots of work,hundreds of pages of regulations that we set, we were issuing a new standard for the efficiencyof refrigerators, and nrdc had pushed on this very hard, asdid other groups. secretary of energy said to me, "so, dan,i'm getting up to make this announcement about the efficiency of refrigerators and standards."ã¢â‚¬â€œ to him not the most exciting thing in theworld ã¢â‚¬â€œ and he said, "so, what should i say?"i said, and i thought to myself ã¢â‚¬â€œ you know ã¢â‚¬â€œ a week ago, mr. secretary,the president of the united states gave his </p>
<p>second inaugural addressand he talked about building a bridge to the 21st century, and i said,"why don't you get up and announce we're building a frig to the 21st century?" it was the quote of the week in newsweek,front page in the new york times. i said, "that's it. i've done it."two weeks later, we were announcing an agreement with the mining industryabout how to improve their energy use, cut pollution,and he said, "so, reicher, what am i going to say now?"i said, "well, mr. secretary, why don't get up and announce that,"after all, a mine is a terrible thing to </p>
<p>waste." he said, "no, you do that one." in any event, the first step is humor.we've got to put something around this, but more seriously,i do think that energy efficiency is really the opportunitythat we really have to exploit. it achieves everything we need to achievefrom an economic, environmental, and security perspective.i will leave you with one, what i think, is a big thoughton how to make this happen, and that is, the power of information.i think if you sit back and realize what you </p>
<p>get once a month in the mail,which is this paper bill from your utility, and realize how little you understand fromthat other than how much you owe and where to sendthe check. that's all you basically get.imagine if you actually had real time information about your own energy use?that's something we're very interested in at google, bringing this to people,and we've begun to experiment with it, and five days ago,i had a little unit installed in my house, and i now can go on my laptop, and at anygiven moment, get real time information about the electricityi'm using. </p>
<p>>>frances: or that your household is using? >>ralph: that my household is using, so icalled up my wife last night. i had been away for a couple of nights, andi said, "you know those two lights in the front hall?i think you left them on." she hated me for this, but in any event, informationã¢â‚¬â€œ i think ã¢â‚¬â€œ is going to be very empowering for people,in terms of energy use. added to that ã¢â‚¬â€œ i think ã¢â‚¬â€œ >>eric: dan, you should use a different story.we have another engineer that has reduced his consumption by some huge number? </p>
<p>>>dan: yes, so we have an engineer at googlewho did the same-- >>ralph: with no assistance from his wife. >>dan: no assistance from his wife.he started monitoring his own house, and he realized that he had not one,but two refrigerators, and he looked into how old they were. >>eric: this is typical of engineers, notknowing exactly where they live, and those kind of things. he looked into them, and he realized thatthey each were over 20 years old. trying to figure out why he was using so muchelectricity, he went online and, in fact, </p>
<p>discovered that these were among the biggestenergy users of all refrigerators ever built, and he replacedboth of them. his electricity use dropped by 50 percent,so he got some information. it didn't take much time to do something withit. he made a change in his house, and will receivethe benefit. >>ralph: if he's a californian, his utilitypaid to cart that refrigerator away, and captured the chloro-fluoro carbons fromthe insulation. >>dan: he got not one, but two, incentives. >>frances: if he lived in new york, that probablydidn't happen. </p>
<p>>>ralph: what i want to do is ask eric anddan the two skeptical questions that many of you want me to ask them, andthen we're going to open it up to all of you, and frances is going to manage the conversation.the first skeptical question is, okay, guys, that was all very well as of mid 2008, butnow there's a looming recession, fossil fuel prices are going in the opposite directionvery rapidly. why won't we simply slip into apathy and paralysisonce again, and indefinitely defer the future you justdescribed to us?" >>eric: you want to go first, dan?in the first place, i'm not sure that all fossil fuels are falling indefinitely.people are aware that gasoline prices have </p>
<p>come down.all of the arguments are still true, even at the current prices.i suppose if gasoline went down to 10 cents a gallon, we'd have a different situation,but gasoline is still higher than it has been for many, many years.there is every reason to believe that the same incentives are there.in addition to that, the government has wisely increased the standardsto 35 miles per gallon, although it's been delayed.let me point out that china has implemented one to the same number right now.once again, there are many reasons to go forward, and from my perspective,the arguments that we're making are really </p>
<p>independent of the current pricesbecause a long-term trend over a long enough period of time ã¢â‚¬â€œ we're runningout of these things, guys, and when you run out of things, prices go up,it's harder to find them, people fight wars over them, and so forth and so on. >>dan: i'd simply add that ã¢â‚¬â€œ i thinkã¢â‚¬â€œ in this crisis that we're facing is this great opportunity to make the kindof investments that we've long needed, and we finally have the justifications.we've had the environmental justifications. we've had the security justifications. nowwe have an economic justification. the electricity grid desperately needs tobe rebuilt. </p>
<p>we need to build 20,000 miles of transmissionlines, if we're going to move wind from the dakotas to chicago, or from the desert tolos angeles and las vegas. we need to put a smart meter in every homein the united states, so that all of us can, in fact,take advantage of real time information and real time prices.we're tens of billions, hundreds of billions of dollars should be spent,can be spent, with huge economic returns and huge benefitsfrom an environmental. >>eric: the other thing to note is that thereis a series of cap in trade bills in the congress which are clearly going toget debated in 2009. </p>
<p>in my conversations with senators and congressmen,they believe that these systems, in one form or another, will be implemented during thiscoming session, which is a 2-year session.even if you assume, collapse the previous prices, and so forth, with cap in trade inplace, the incentives around efficiency become so much clearer. >>dan: what also comes from that are the revenuesthat are derived from, essentially, auctioning the permits for greenhouse gas emissions,and those revenues are very significant, so instead of having to,in a sense, use taxpayer dollars, as we will in this initial stimulus, we willhave a new source of large amounts of fund </p>
<p>that can be invested in these changes thatwe desperately need to make. >>frances: i was just going to say to eric,you've been talking to members of congress about cap in trade program, but you're alsoin conversations with other ceos, leaders in the business community.do you see them joining you in this view that this legislation has to pass?where do you see the business community, your peers, are they in these same conversationsthat you're in, or what do you think is going to bring them along? >>eric: you have some sympathy for the utilityexecutives, because they have a lot of stuff coming atthem. </p>
<p>they're regulated. they have all these peopleyelling at them all the time. they don't necessarily have a technologicalleverage point that a lot of other businesses do.the ceos that i've spoken with all express a concern that cap and tradebe done in such a way ã¢â‚¬â€œ you have a problem with cap and trade of what'syour starting point. once the starting point is established, itlooks like the market worked pretty well, but the primary concern is actually a tacticalone. if you've already made tremendous efficiencygains, you'd like as part of starting in the cap and trade system, to not be penalizedfor that good work. </p>
<p>you don't want the worse polluter to get thelargest gain, so there are many people working on makingsure that the starting conditions for cap and tradeis such a thing. that's, in fact, what i hear.most of the people that i've talked with either accept, or grudgingly accept, that there willbe a cap in trade, because they all have families and children,and they all understand that eventually, you're going to have to puta price on carbon. there are some people ã¢â‚¬â€œ and i was ina meeting on tuesday where we had this, sort of, i thought, relatively bizarre argumentamong the utility companies </p>
<p>of whether it was better to have a carbontax or a cap in trade system. there are complex arguments in favor of thetwo, but i observed that one has the word tax in it, and the other one does not,therefore the other one will win. >>frances: i want to ask you all to join mein thanking eric for his time. >>frances: thank you, ralph. thank you, dan. thanking our host at google.it's been a great evening, and you will all see how this unfolds over the next many monthsand many years. we have a lot to do, and we've had a greatconversation about what the path is that we need to take, so thank you very muchagain. </p>
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<div align="justify"><p>[introductory music playing] eric schmidt: thank you very,very much for that kind introduction. so why would google be here? right? a very interesting conference,not a conference we would normally attend. and one day we started thinking,how much do people use google for health? </p>
<p>and then i realized, what'sthe most important search i could do? so i typed, how longwill i live? it seems like a reasonablequestion. and up comes an agecalculator. and i programmed it,and it said 67. wrong answer. [laughter] eric schmidt: so i reprogrammedit again and i </p>
<p>got 86, right answer,and i'm done. so you see google is veryimportant to my health because i have to meet the newprogramming goal. nearly one out of every twoamericans have one or more chronic health conditions. i was struck by this. you all are doctors, medicalprofessionals, you all know this. i didn't realize it. </p>
<p>hypertension, arthritis,respiratory diseases, cholesterol chronic mentalconditions, heart disease, eye disorders, asthma, and diabetes,and these are people who live with these things dayin and day out, and they use the internet a lot now. there is emerging evidence-- here's some of the numbers--eight million americans research a health-relatedtopic on the internet. more than 2/3 start theirresearch with a search engine. </p>
<p>it turns out that 2/3 ofinternet search engines, users trust the internet, whereas asmaller percentage trust their own doctors. all right, this islike a problem. it's something we canwork on together. usually it is especially strongfor younger users. doctors are learning how to workwith patients that are better educated abouttheir health. so, for example, 2/3 now of allus physicians are using </p>
<p>the internet. and they use it for prescriptiondrug interaction, this sort of thing. we have a lot of studiesthat show this. so what has emerged is acontroversy over this question of this new form ofinternet use. is it good or is it bad? so time magazine,dr. scott haig-- you know you love thesecontroversies-- </p>
<p>dr. scott haig says, and theseare his words, "a seasoned doc gets good at sizing what kind ofpatient he's got and how to adjust his communication styleaccordingly." and he's talking about his particular patient."i knew susan was a googler, queen, perhaps, ofall googlers. but i couldn't dance with thisone." because he had so much trouble with her aggressiveknowledge and the way she approached it. this elicited a doctor fightwith dr. [? perak ?] </p>
<p>and this is from hima month later. quoting from the earlierarticle, "'i was a unnerved about how she brandished herinformation, too personal and too rude on our firstmeeting,' he wrote. he proceeded to call her the'queen, perhaps, of all googlers, a class of patientshe referred to as brain suckers.'" this isa compliment. he goes on. "so the problem withdr. haig's article, other than petulance, is that he'signoring every single internet </p>
<p>trend in health care overthe past decade. the medical establishment, infact, has taken way too much time to understand that theinternet is a disruptive innovation that has overturnedthe status quo. it has leveled the playingfield between expert and novice, in this case,doctor and patient. and while some doctors likedr. haig may find that challenge threatening to theirstatus as an expert, the web is now providing the kind ofinformation doctors need to be </p>
<p>aware of if we want to continueto be good at our job and the kind of trends thatwill help the patients be healthier and smarter." so i think this sort of funfight between two senior doctors lays out theproblem that google wants to help solve. it is a fundamental problem. it is certainly one of thefundamental medical problems, and it is certainly one of thefundamental information </p>
<p>problems. i was alarmed to find out howmuch information was being used at google about personalinformation. we had no medical training. i have a ph.d. so i'mcalled doctor. and i always say, well,i'm not a real doctor. so my first few weeks at googlei show up, and we get this letter from a fellowthis says, thank you for saving my life. </p>
<p>and i go, that's prettyinteresting, a startup so it turns out he was havingwhat you all would know is heart attack symptoms. and so hetypes them into google, and the first result says, you arehaving a heart attack. dial 911. by the way, that's thecorrect answer. we're very proud of this. so what happens is he does911, and they show up. what is the drug that theygive you to make sure you </p>
<p>don't die in the middleof a heart attack? whatever that drug isthey gave it to him. and they said, hadyou not called us immediately you'd be dead. so we told that story to ourengineers to explain why it was so important to have answerswithin 1/10 of a second because even secondsmatter in health. and we've since receivedmany such you saved my life kind of letters. </p>
<p>and it's one thingto run a company. it's another thing to savesomebody's life. it's pretty phenomenal. so we got interested in thisquestion about medical health and health in general notknowing much about it. and we started looking at theinteresting problems in the world where our technologycould help. we've formed a group calledgoogle.org, and we're working on global public health. </p>
<p>so, for example, we've pickedprevention and cure of blindness where we're donatingmoney to an incredibly important cause. eradication of polio,another huge, huge and important cause. eradicating the guinea wormwhich is called the world's most painful disease. we're working with organizationswho are, in my view, just heroic, just everyone of them a hero trying to </p>
<p>solve something whichwill compound for the next 5,000 years. we've also started looking atprograms related to global public health. and information technology,which is what we do well, can really help here. we like the notion ofpredict and prevent. so, for example, if our computersystems can be programmed in such a way thatthey can detect early </p>
<p>outbreaks we can get ahead ofthese waves of information. so early detection,preparedness, and response systems for emerging threats,especially in the third world where a little bit ofuncorrelated data could give us just enough information thatvoom, all of a sudden there's an outbreak of thisparticular strange disease in like laos. and we can get there before itcrosses over into the much larger, and, in many cases, moredangerous areas because </p>
<p>of the crowding. so in a country like laos whereit could take almost nine weeks for a reported caseto get into the information system, maybe we can get thatinformation into the reporting systems earlier and thendetect them using new mathematical techniques,pretty interesting. we can also, using theinformation that we have, get a lot more information to peoplewho don't have it. it turns out that there aremany, many examples where </p>
<p>textbooks are reallynot available. virtually all of the moneyis going into textbooks. well, if these systems areonline, you don't need the textbook, or you can havethem be current. and, in many cases, we can alsouse google to make sure people know that these services,especially the free services in ghana, for example,that these health services are, in fact,available to them. people in countries which arenot as developed as ours spend </p>
<p>an awful lot of time not knowingabout systems and services that are available justdown the street because the connections arenot so great. so if you take the model thathealth is important, that information is important, andthat we have both the resources and the will to workon it, what is the underlying architectural trend thatwe're working in? and let's just talk about it inthe context of the growth of the internet. </p>
<p>everybody here knows theinternet is a big deal. it is by far the fastest growingmedium in history now, more than $1.3 billion users onthe order of $200 million a year new users, the ray ofunderlying technology innovation is notslowing down. a technology-based case wouldoffer you that moore's law, which is the rule thatsemiconductors double in the capacity or speed every 18months, is going to continue for another at least 10 yearsor so until we hit various </p>
<p>photolithographic limits. there is another bizarre lawcalled kryder's law that says that memory doublesevery 12 months. so if you have cpus going atevery 18, which is, by the way, a factor of a 100 in 10years, and you have memory doubling every 12 months, whichis about a factor 1,000 over 10 years because of thecompounding, you can see the enormous things thatcan happen. an example would be that inthe year 2019, if current </p>
<p>trends continue, a device thesize of an ipod will have 85 years of video in it, whichmeans that you carry a device which you cannot watch untilafter you're dead. it's like the ultimatedissatisfaction device. there's always something i'm notgoing to be able to watch on this device. the one i really got megoing, by the way-- we were reviewingthis yesterday-- there are 10 hours of videobeing uploaded into youtube </p>
<p>every minute. god knows what the qualityof that video is, but it's coming. so you take a look at this rate,and this is going to become much more massive thananything that we have seen. blogging is another one. they're on the order of 70million blogs and 120,000 blogs being created every day. more than half of those arecreated by people who are less </p>
<p>than 18 years old. as we know, if you haveteenagers, they have a lot to say, and they're sayingit online. and if you're a parent youmight want to read it. so users are going to use thistechnology, and they're going to use it to say alot about health. they're going to have variousforms of not only communities but ways in which theyhelp each other. and they provide adviceto each other. </p>
<p>did this work? did this not work,and so forth. and the notion of dailysupport groups, the traditional people around theroom, is now going to become very much online. there's something calleddailystrength which has more than 500 supportgroups online. it works really, really well. there's something called psychcentral which has more than </p>
<p>600,000 users who visit theirwebsites, libraries, and communities. we do things like we have birdflu, we have both reported cases on a google map as well asthe communities to study it so that the scientists and thepeople who think they might be victims of the same diseasecan all see the same information, et cetera. we're beginning to see peopletell their stories on youtube. humanity is fascinating becauseof our need for </p>
<p>self-expression. a young woman named kat createda series of 34 videos about her battle with anorexiaand got more than a million people viewing it as shesuffered through this terrible disease with obviously a lot ofsupport and help to help to try to address her problems. it's interesting, by the way,that the professionals of the room will say, oh my god, we'vegot all of these crazy people out there who havediseases now commenting it and </p>
<p>sharing information. and a lot of people have studiedthis, and it turns out that the vast majority of userreported health information is, in fact, accurate, includingthe diagnosis which is a surprise to me. and the most recent study saidthat only about 6% of it is inaccurate. by the way, 6% still means youshould go to the doctor. you shouldn't just read onlineand just do that. </p>
<p>you should talk toa professional. but the fact of the matter isthat 94% is accurate, and is pretty impressive. and it shows you that peopledo want to share accurate information for each other. now, architecturally, to me thissets up the premise for what google is doing. the change in power here istransformative, and it has occurred in other industries. </p>
<p>and everyone else isstruggling with it. and we want to work withyou to make this one be successful. in the entertainment andmedia industry-- i have lots of statistics-- 42% of users 18 to 29 usethe internet as their primary news source. i find this very disturbing. 30% of users 18 to 29 use avideo sharing site such as </p>
<p>youtube daily. so if you're not in that agegroup, you're not seeing this cultural shift which, if youremember when you were that age, seemed obvious toyou at the time. to them this is obvious. it's obvious thisis how the world is going to be organized. and one of the consequencesof this is the traditional industries are declining. </p>
<p>the one that i worry themost about a cd music. sales of cds have declined 19%because people either purchase or illegally steal theinformation online. these are very, very real issuesfor those industries. now when you use google,you can do a number of interesting things. so one of the things that youstart, is you start learning about the history of medicine. so i said, well, what are someinteresting things to learn? </p>
<p>we're scanning all thesebooks, right? well there are a lot ofbooks written about health 150 years ago. so here's an example, the fulltext of the medical times and gazette, which is a britishmedical journal written, this one, in december, 1858. so it's 150 years ago. the surgical procedure fortreating conjunctivitis, which is pink eye, he gives thepatient a mixture of laxatives </p>
<p>and tells him to apply adozen leached to the eye if the pain returns. i presume that the leachesjust change the pain to a different paradigm. the full text for a treatiseof military surgery and hygiene in 1865 with more than40,000 surgical operations performed during the us civilwar, presumably all with a large amount of alcohol andvodka, including medical treatment for gunshot wounds,amputations, gangrene, </p>
<p>tetanus, and general hygienein military hospitals. so i have all this information,right? i've got this transformativephenomenon. i have all of these searchesand so forth. i need some solution to this. what i really want,by the way, is something very personal. i want access to my cholesteroltest. i want the x-ray on my sprained ankle. </p>
<p>why can't we solvethat problem? now we've decided tobring sort of a different model to it. we're going to partner withleaders in health care to cross-connect, to makethis problem and literally get it fixed. and we want to apply theprinciples of the internet, but we want to apply them inconjunction with the leaders in the medical communityto get the right </p>
<p>outcome for the end user. so the first principle that weestablished was, it's the consumer's data. it's not anybody else's data. it's the consumer's data. so from our perspective we takea consumer focused view. so in this model users canaccess their data and control who gets to see it. and the data follows theconsumer wherever they go. </p>
<p>so if they move from oneprovider or one doctor it's still with them. they take it with them to thenext doctor, institution, insurance company,what have you. and this is an importantdistinction in many of our systems. think aboutclosed versus open. cell phones are typicallyclosed. if you buy a cell phone allyour contacts are there. it's very, very difficultjust to switch phones. </p>
<p>whereas if you think aboutbanking atms when you go from one bank to another, it doesn'tsort of matter except for transaction charges. you can pretty much get anybanking atm to give you the money, the same thing. so you want a system where itsort of doesn't matter. the system takes care of all ofthese complicated things. it's really end user focused. there are more than 200 personalhealth record systems </p>
<p>in the us, and most ofthem are closed. that is they're tethered to aparticular health system. and this is a system thatwe see this commonly in industries that havenot yet been fully internetized, if you will. and it makes sense because it'snot possible to have a single standard. and so smart people tend tobuild a system that solves the problem that they see in frontof them, and then someone else </p>
<p>duplicates some of that work. so here's an opportunity toget these systems tied together and get the best ofbreed out of everyone. so in our case, if you take theposition that 30% switch health insurance companies eachyear, which is data which is a huge surprise to me,maybe not to you all. the benefit of consumerinteroperability is extremely significant. there's one study that saidthat literally open health </p>
<p>care standards, which have been,i think, discussed at the [? hymns ?] for a long time,could deliver savings of $78 billion-- and that'sbillion with a b-- annually just in terms of theability for these systems to interoperate, let alone thehealth care benefits which are very important. so it seems to us that consumercontrol over the user information will only work ifthere's a strong privacy and security policy. </p>
<p>so in our case, our model isthat the owner of the data has control over who can see it,and trust for google is the most important currencyon the internet. it's easy to understand. if you have a user-centricmodel, and you violate that trust, the users willgo somewhere else. so you have to start off withthe premise that the information in your healthrecord, or whatever you want to call it is yours, and itdoesn't get shared or given to </p>
<p>anyone else withoutyour permission. if you do so then it happens,and otherwise is won't. now we're in the midst of thisenormous shift to what we call cloud computing. and cloud computing, the modelhere, is that rather than having all that informationstuck on my personal computer, it's stuck on a setof servers. we call them cloud computing orclouds because we used to draw crowds to describe it. </p>
<p>and then you can pick up anycomputer and just access that. and the easiest way to seethat model is imagine-- everyone here basicallycarries a laptop, one kind or another-- imagine what happens whenyou drop your laptop. it's like a really bad day. sometimes it's a badweek or a year. so what you want to have theability to do is pick up any laptop, and with appropriatepermission, login and </p>
<p>password, get everythingthere. so this new emergent model ofserver-based information, and technically what happensis the computer connects to the internet. the program that you need comesdown really quickly, in less than 1/10 of a second, andthere it is as if it had always been there. but the data is managed, i liketo say, by professionals. because we know how to backyour information up. </p>
<p>we make sure you never lose,and so forth and so on. this is a core part of google'soverall strategy, but it's particularlyapplicable here. because why don't i havemy x-rays in my cloud? after all, they'repictures of me. why doesn't the doctor justpump it in there. and then when i have my nextsituation it'll just be there. and it doesn't matter whatviewing device or so forth? maybe i'm at a differentcountry. </p>
<p>maybe i've upgraded. maybe i've switched froma pc to a mac or something like that. eric schmidt: sorry, sorry,sorry, sorry, sorry sorry. i'm on the board of apple. everyone here has those littleyellow immunization cards. i'm terrified i'm goingto lose this card. and i don't know whatit says, by the way. it's just scribble. </p>
<p>but it's really important to goin and out of the country, and that's my job. so why can't i just have thatin my cloud, and when i get their pop up my thing andjust sort of show it. a more serious example-- i guess these areall serious-- is in hurricane katrina. a tremendous amount of healthinformation was lost during that terrible disaster, whichagain, had it been in a cloud </p>
<p>server it would havebeen kept. so you get the idea. now so you it there and you go,this will never happen. we have skeptics inthe audience. people say, well, he's a niceguy, and he's from google. and they're ahead of things. and 5% of the people willadopt this stuff. that's always truein year one. but in year 10, it's usually70% or 80% have adopted it. </p>
<p>and let me remind you that 10years ago, when we started but looking at electronic commerce,the studies were 80% to 90% of the people will neveruse electronic commerce because they do not trust thattheir credit card will be safe on the internet. and i'm not suggesting yourcredit card is safe on the internet now, by the way. but 80% of people now trustthe internet with their credit cards. </p>
<p>so as people become comfortablewith these models tens and tens of millionsof people switch over. and as they do we develop thesystems that make sense. so when you think about thismodel, it's particularly applicable for something like,let me pick x-rays. there are two billionx-rays annually, and each x-ray is 10 megabytes. that's 200 petabytes. petabytes is a verylarge number. </p>
<p>in my world it isn't. so you could just put them allonline and then we wouldn't have to argue about this. and then wherever you went you'dbe able to have all that information, and you wouldhave it historically. 62 million cat scans annually. these are even biggerfiles than x-rays. why are they are not availableto me wherever i go? why are they in that onebuilding that i can't remember </p>
<p>where i went when ihad my cat scan? and they probably lost it anywaybecause that's not their primary focus. again, this is a problem thatcan be easily solved. so the important thing is thatany scenario where information is sort of isolated is ascenario where health is not well delivered. what we want to do is we wantto make sure that all that information, however wacky,and however relevant, and </p>
<p>however irrelevant, is availableto the professional when they're in a situation likein the emergency room. so, if god forbid, i was inan emergency room here in florida, i'd want whoever issitting there trying to figure how to keep me going to haveaccess to the last n years of my radiological experiences, andi'd like them to have it instantaneously. and we can do that now. so in order to do all of this,we organized ourselves around </p>
<p>a health advisory council. i wanted to take a minute, andwhat i'm going to do is i'm going to show you a videoof what they had to say. and then i want to doa demo of the system that we're now trialing. i think it'll give you agood sense of where we think this is going. this is version one. and before i say anything else,i want to mention that </p>
<p>google is not a company thatdesigns a product then ships it, and then justsort of waits. we iterate, and iterate,and iterate, and iterate, and iterate. and we iterate ona weekly basis. our products are in beta test,if you know what that means, or sort of general testing fora couple of years as we try them here and try them there. and we were fortunate to have aninitial beta test partner, </p>
<p>cleveland clinic, to do this. but first, in looking at thehealth advisory council, we were sort of overwhelmed by39 new pathogens have been identified. how do we deal with this? modern travel is dealing withthese sort of disease and spreading them very quickly. prescription drugs, they're morethan 13,000 prescription drugs on the market today, butonly a few hundred are </p>
<p>actively prescribed. how do we get the other ones,the information of the other ones available? there are 110 medicalspecialties in the ama guide. half of the doctors in the uswork in practices with fewer than five physicians. so we have this explosion ofinformation, but we have the structure and we have thelimitations that exist in the medical community today. </p>
<p>how do we bridge that gap? so we formed this healthadvisory council. and i think maybe what we shoulddo is just run the video, and you'll seefor yourself what they have to say. [video playback] dean ornish, md: i'm trainingis in internal medicine. i'm a clinical professor ofmedicine at ucsf, and i'm also the founder and president ofthe nonprofit preventive </p>
<p>medicine research institute. molly coye, md: i'm a physician,and i was a public health officer in two states. paul tang, md: i'm the vicepresident and chief medical information officer at the paloalto medical foundation. robert m. wachter, md: it's adisparate group of doctors offices, and hospitals, andpharmacies that really aren't tied together. sharon terry: people often saythe health care system, but </p>
<p>there isn't one. molly coye, md: it's about timethat consumers had all of the information they need inorder to really manage their own health. paul tang, md: one of thebiggest challenges is really to promote and supportdeveloping partnerships between patients, their familycaregivers, and their professional healthcare providers. sharon terry: for example, toget my own medical records, </p>
<p>it's almost impossible. to coordinate the various piecesof my medical care is impossible. robert m. wachter, md: what weknow from good research is that 50,000 to 100,000 americansdie every year from medical mistakes. dean ornish, md: so much ofhealth care so fragmented. it's in silos. not only the inefficiency if youhave to fill out the same </p>
<p>form every time you go toanother doctor, but there's so little communication betweenthe doctors. robert m. wachter, md: we havethis extraordinary workforce of doctors, and pharmacists,and nurses. but we abuse them because wehandle information so poorly, and we make their workso difficult. sharon terry: so the ideal rolewould be that we all have the information that we need atour fingertips, that it's really accessible, that it'swell protected in the sense </p>
<p>that it's private. paul tang, md: there's atremendous amount of information available online. what we need is a wayto organize it. robert m. wachter, md: and sosome sort of entity in the use of information technology isnecessary to try to create a level of coordination. dean ornish, md: so workingtogether with the health advisory team at google, we'retrying to change that. </p>
<p>sharon terry: if we accept thatcurrently there isn't a system for health care, and thatwe really need to look at how to interconnect the variouspieces, what we see is the ability of google toaggregate information to give us a great user interfaceto use it. paul tang, md: i think googleis in a terrific position to be able to organize healthinformation so that it's useful to an individual. robert m. wachter, md: hopefullyat the end of the </p>
<p>day the docs and the patientswill actually be looking at the same information so thatwe're not acting across purposes, but we're acting asmembers of the same team. molly coye, md: that'sa powerful weapon to improve health. [end video playback] eric schmidt: so we organizedthis group. we organized a set of partnersboth as advisers, but also some companies thatwe're trying. </p>
<p>and i want to get their logosup so you can see them. but the basic idea here was togo to everyone we could find who had a lot of patient dataand then work with them to develop standards that weresecure, by the way, that would take information that thesefolks have in their proprietary databases and suckit into the google health infrastructure that i havebeen describing. and i suspect when you look atthe list you'll see almost all of us interact with manyof the firms that </p>
<p>are here on the chart. so the basic idea here is thatwe developed a set of protocols-- which is sort of whatgoogle does-- which are easy for these guysto connect their proprietary data systems to, and with userpermission, take that information and put itinto a user place. and that user place, call it apersonal health record, call it what you want, canthen be worked on. </p>
<p>the problem that we have is thatwithout this information we would be making the end userduplicate a lot of work. so we need these folksas partners. and it's in theirinterest because they want better health. they want people to have moreinformation and more choices. it makes good sense. and so, for example, some ofthem will help with lists of doctors because their businessis insurance. </p>
<p>so they know what doctorsthey have, which doctors offer this insurance. others have drug information,drug interaction information. other ones have just healthinformation in general. and obviously we want todo this as broadly as we possibly can. so i think i've talkedenough here. and i think it's moreinteresting </p>
<p>to hear a demo anyway. i'd like to introducedr. roni zeiger. roni is a google employee whois also an emergency room doctor and the unusual aspectthat he's both a doctor as well as a masters in informationtechnology. roni, where are you? dr. roni zeiger: i'm here. eric schmidt: ah, here's roni. there you are, roni. </p>
<p>and roni is one of the chiefarchitects of this vision. he has been working onthis for a long time. his first task was to try tounderstand how accurate or inaccurate google waswithout any help. and he started off lookingat taxonomies. and today when you use google,and you type in one of these long words that are medicalwords, the results have been shaped by the judgment and thealgorithms that roni and his team invented. </p>
<p>so once he put that in placehe decided to work on this broader initiative. roni. dr. roni zeiger: thankyou, eric. ok, the friendly loginpage we see here actually is not live yet. but i assure you that everythingelse you see is real live product. so here we. </p>
<p>this is the home page,the google health homepage, of diana. she's a fictional user who isalso part of the cleveland clinic pilot. now diana just cameback from visiting relatives out of town. unfortunately she came downwith a bad sinusitis. she saw a local doctor, and heprescribed for her amoxicillin to treat her sinusitis. </p>
<p>now if we drill into the detailsof her conditions list we see that some of the data wasentered by diana herself, and some of the datashe imported from the cleveland clinic. now because she explicitlygave the cleveland clinic permission to also pull datafrom her google health account, if we hop over to hercleveland clinic mychart account from epic systems, wesee that it also now contains her new prescription andher new diagnosis. </p>
<p>now some of you probably noticedthat diana's allergic to penicillin. the drug interactions featureof google health checks for interactions between drugs,allergies, and conditions. eric schmidt: i'mstill confused. how did this happen? shouldn't the doctor havefigured that out? dr. roni zeiger: so i'll admit,eric, that when i see patients i do sometimes forgetto ask about allergies. </p>
<p>in this case, diana herself mayhave forgotten about her penicillin allergy. fortunately her cleveland clinicdoctors do know about her penicillin allergy. and we just saw that they'realso now aware that she was prescribed amoxicillin. diana herself now has a safetycheck available to her that reminds her to talk to herdoctor about this. now another very cool featureabout google health is </p>
<p>something that we call googlehealth reference pages. so the user studies that we'vedone so far have taught us that consumers really want somebasic context, especially about conditions that they maynot know much about or that they may be wondering if theyhave. we include here also some informative, if sometimes abit spooky, illustrations as well as relevant and dynamicallygenerated news, web search results, researcharticles from google scholar, and pointers to discussiongroups. </p>
<p>now the last thing i want toshare with you is what i find most exciting about what we'redoing in google health. diana can choose to connect hergoogle health account to any of a growing number of thirdparty services that have integrated with googlehealth using our soon-to-be-published apis. and what we're seeing here is alive application that, with the user's explicit permission,has pulled their data from their medication listsin google health and can </p>
<p>display it in a variety ofinteresting ways that google health does not. eric schmidt: so whowrote this app? did we write this app? dr. roni zeiger: no,this is written a company called solventus. eric schmidt: didwe know this? dr. roni zeiger: we gave themaccess to our apis. eric schmidt: ok,did we pay them? </p>
<p>dr. roni zeiger: wedid not pay them. eric schmidt: good. should they pay us? dr. roni zeiger: i don't thinkthey should pay us either. eric schmidt: sorry,just checking. so it's like they can do whatthey want and just connect into our system. dr. roni zeiger:that's correct. and diana can choose to workwith them if she wants to. </p>
<p>so i might want to print thisout, this weekly view, and put it by my medicine cabinet. another developer created amedication reminder gadget that i can put on mypersonalized igoogle homepage. and i cannot wait to see theamazing and innovative tools other developers can create forthe google health users. eric schmidt: for benefit of theaudience, do you have some tools or ideas? i think drug interactionsis an obvious one. </p>
<p>but, as a doctor, there must belike 500 other categories, if you had all thatinformation, that you could go over. what are some others that youthink would be most powerful? dr. roni zeiger: well i thinkthat from my own experience, and more importantly fromhearing from our users and the experts that we're workingwith, i think some of the things that would be really neatis if i could enter the immunizations of my children andto get a useful dashboard </p>
<p>of everything that they've haddone, what they need to do next, and when. if i could get customized feedsof news and research articles that are targetedto my conditions and my medications. eric schmidt: wouldn't it benice, for example, if there was a corpus, and then theysaid, the disease you have has been cured. call here. </p>
<p>dr. roni zeiger: i would wantto know immediately. eric schmidt: right,speed matters. ok. well, thank you verymuch, roni. dr. roni zeiger: my pleasure. [applause] eric schmidt: i wanted you tosee it because we did this partnership with clevelandclinic. cleveland clinic is areally neat group. </p>
<p>they're very, very large. they're very large in general. they have a lot ofdifferent sites. they have more than 100,000people inside their medical health system. and so they were willing to workwith us to help define this standard whichis, of course, non-exclusive to anyone. but hopefully this willshow you the benefit. </p>
<p>and we'll see how wellthis goes over the next month or two. and as we broaden this, wehope to broaden this to essentially everyone that'spossible in the united states. the technology that's used isextremely simple from our perspective. it's an internal interface whichallows you to move data, and we use it for a lot ofour other applications. it's a security model andso forth, so it's all </p>
<p>standardized. so we've managed to layer thison top of just google. and that's why this will move soquickly and be so exciting. cleveland clinic todayhas more than 1,370 people in this trial. and over the next few weekswe'll find out do we really make a differencein their health? what is missing? what are the next key apps? </p>
<p>and one of our messages toyou are, if you have an opportunity to buildan application on top of this platform-- because remember, this is notjust a personal health system. it's really a platform forinteracting on a user's data with their permission. if you've got an idea that canreally change the world in medicine, we want you to buildit on top of this platform. so with that, thank you very,very much for your time. </p>
<p>male speaker: to moderate ourquestions and answers, let's bring out our president andceo, mr. steve lieber. [music playing] steve lieber: good morning. good morning. well, eric, i think you showedus and told us what we've been waiting to hear this week. you created a lot of buzz withthe announcement last week, and we certainly wanted to seeand hear what you had to show </p>
<p>and tell us today. we're going to turnthe lights up. and we've got some alittle bit of time left for some questions. and while we've got peoplecoming up to the mic, let me ask the first one. you talked about consumeradoption of internet technologies, the uptake, andall that, low percentage first year, picks up after that. </p>
<p>have you got any predictions interms of what that cycle is going to be? eric schmidt: with respect tothese tools, i think it will completely be determined by twothings, the ease of use of the interface and the servicesthat we can provide. ease of use turns out to beone of the most important things in one of theseinternet services. it's true not just for health. if people get confused, if youstart asking them the wrong </p>
<p>questions, they quicklybecome sort of tired and they move on. so we worked hard with this userinterface to be able to capture health information,with people's permission, very, very quickly. the moment you do that you haveto immediately show them something that's useful like anoh wow moment, like, oh my god, i i'm healthier, or i gotthis piece of information, or i'm sick, or something. </p>
<p>and then once they have thatexperience they'll come back and come back. so my guess would be that thiswill grow very quickly to at least early adopters duringthe first year. it's hard to know afterthe earlier adopter phase how quickly. but our goal is everyone or atleast everyone who wants this kind of information. steve lieber: great. </p>
<p>ok, let's start overhere, joyce. audience: it was a great talkand very interesting to see. i'm an analyst in this space. and one of my colleagueswas hired to look at the payment space. we were expecting to find thatgoogle payments was really well received and incrediblysuccessful. and our sense was that in thepayment space it hasn't been that successful and that therehasn't been a sufficient </p>
<p>commitment to that space afterthe product launch. how do we know how committedgoogle is to this space? and how do we get a senseto judge where we'll be in a year? eric schmidt: well i disagreewith your question about google payments. google payments is a productthat was designed to make it quicker for advertisersto get their money. and on that metric it worksextremely well. </p>
<p>and we certainly put a lotof money and focus on it. we have a lot of partners. this is an end user product. payments was not. payments was really aninfrastructure part. so the question here aboutgoogle, a consumer product will be whether consumerslike it. and successful consumerproducts take off extremely quickly. </p>
<p>so you'll know very quickly. but if we make a mistake or ifwe don't get the ui right then it'll take longer. but i can assure you we've beenworking on this for a couple of years. so many of our queries arehealth-related that we must be successful here either with thisapproach or modification of this approach as we learnwhat works and what does not. steve lieber: great, thanks. </p>
<p>yes, my name's corey ziegler. i'm in a small rural hospitalin northern new york. and as i listen to this, firstof all, i applaud you for pushing standards. because those are the issuesthat are really kind of at the core of what we're trying tolink all these separate systems together. but in speaking with ourphysicians, when we present them with the data from anotherphysician or outside </p>
<p>of something they're familiarwith, they have some reluctance to trust that data. and there's some complianceand some risk management issues for the facilitiesin trusting that data. so if they use it for clinicaldecision making i'm concerned about the liability. do you have any commentson that? have you guys discussed that? eric schmidt: we have, andwe have found that more </p>
<p>information usually solvesthis problem. of course there are people whosay, well, that's not my information so i'm goingto ignore it. such groups have existed forthousands of years in our history, and they've oftendone really bad things. it's really much better to beaware of the information that other people have evenif you don't use it as your final diagnosis. so even in a situation whereyou are unwilling or, by </p>
<p>regulation, you're unable touse the information that google health has in it,it has to be helpful. it must fundamentally at leastinform your decision as a high quality caregiver. we're not trying to changethe way doctors work. we think that the doctorprofession is obviously a very, very important andvery well thought of. and doctors need to figure outhow to use this information to achieve their objective whichis greater patient health. </p>
<p>we're providing information. they'll sort it out. steve lieber: ok, overhere on this side. audience: one of the thingsyou spoke about was the building of trust for people touse these kind of systems. and i think a lot of people willprobably feel ok having their information in google'scloud knowing that you're probably real good atkeeping things safe. but a lot of people i've spokento are also wondering </p>
<p>what's in it for google tohave this information. talking to one of your engineersat the booth, the phrase he used is monetizationpath. and is there a monetization pathfor this information that you're going to be holdingfor people? eric schmidt: not inthe short-term. we're making a commitment thatthe data itself will never be shared with anyone withoutthe end user permission. one of the things that we'velearned is that if we have a </p>
<p>powerful, so-called verticalsite that does something really, really neat, that personis more likely to use google in its traditionalways and therefore click on our ads. we have a great success storythere with google news. you can make a lot of money withads and other services on google news, but we've decidednot to because we know that people who use google newsare more likely to do more google searches. </p>
<p>so we believe that if you, asa citizen, as a customer, if you will, of google health,we believe-- and there's lot of anecdotalevidence-- that you will be using googlefor many other things, ultimately click on ads, andit's a net positive. and we'll measure that. and i suspect it will be true. ok, back over hereon the right. audience: my name issreedhar potarazu. </p>
<p>i'm the ceo for a companycalled vitalspring. interestingly enough, abouteight years ago, i was a physician at johns hopkins. i practiced there forseveral years. and my mba thesis eight yearsago was about how we can build community-based networksbuilding communities around that. eight years ago people thoughtthe model would fail. over the last eight years wehave 40 of the fortune 500 </p>
<p>companies now that we've beendoing business with where we're building, essentially,the next facebook model of health care. and essentially, as you saidearlier, there's an open model and a close model. employers are the ones stillpaying for health care today. and i can tell you speaking onbehalf of 40 of the nation's largest employers, they havea big problem in terms of empowering consumers to getinformation outside of a </p>
<p>closed model where advertisingis not allowed. and now we're building,essentially, the next social network amongst consumers'employees to get all of this information in thatclosed model because this is not banking. this isn't buyingconsumer goods. it's financed by people, andyet we're giving them the opportunity to find theinformation outside, and they're not paying for it. </p>
<p>how do we solve that? eric schmidt: [? dossier ?] is actually one ofthe partners. i don't know if you sawthem on the board. our general answer is thatopen standards will allow people to take these proprietaryinformation data, put it into the end user,and then that creates a balance of power. the end user then hasa choice of moving. </p>
<p>the doctor has a choice of usingthat information or not. in my experience, looking asa scientist, in most cases people are not very empoweredin the system. and this is a step to givethem more power. steve lieber: great questions,but we're running out of time. i've only got time forone more, sorry. audience: all right, thankyou very much. i'm paul [? schadler. ?] i am a practising physicianin denver, colorado. </p>
<p>and this is exciting,exciting stuff. i do have an occasional pang ofparanoia about big brother google knowing everything aboutme and everybody else. but as a physician i-- eric schmidt: but wait. it's just me. eric schmidt: sorry. audience: it's just a littleole boy from the country. nothing to worry about here. </p>
<p>eric schmidt: yeah, i grewup in rural virginia. audience: but as a physician, iand my colleagues, waste so much time collecting data that'sbeen collected in the past, and reviewing data that'sbeen reviewed in the past, and going over datathat's been gone over. and the oh wow moment that iperceive is when sarah comes in my office-- patients switch doctorsall the time now-- sarah comes in. </p>
<p>instead of handing me theform we say, do you have the google password. well, yes. can we access it? yes. we access it, boom. does everything look here good? her medical informationcomes in. her payment informationmay come in. </p>
<p>her insurance card number,it all downloads. sarah, the doctor will see youright now because he's not wasting his or her timereviewing the data. it's all in our system. he'll be with you injust a moment. that's an oh wow moment and thatwill improve health care. thank you. eric schmidt: thank you steve lieber: thank you. </p>
<p>thank you very much. was there a question in that? audience: there wasa question. i forgot the questioni was so excited. so then the question was-- and your optimism ledme ask this-- oh that will be simple. 50,000 gargantuabytes,no big deal. so while google is doing allthis easy stuff that you're </p>
<p>about to do, which a lot ofpeople have struggled with, are you going to go ahead andjust easily create a little interface so that these doctors,the 80% of the small practices can just use googleemr to put data into the system and have google emrcreate an scd-9 code and send a bill to the insurancecompany? eric schmidt: what i was goingto suggest is that's a classic example of a third party app. and we've got a number ofentrepreneurs here in the room </p>
<p>who could see. let's take your idea becauseit's a really good one. you've got a situation whereyou've got a patient and you've got their medical historyand you have their business relationships. and with their permission youcould imagine a whole bunch of applications which did exactlythe kind of thing you're talking about. we're unlikely to do it becausewe don't really </p>
<p>understand that partof the business. but our system is designedas a platform. and this is exactly whatwe're looking for. so i hope you found that companyand make yourself a lot of money. steve lieber: thank thankyou very much. eric, you have certainly openedour eyes this morning to a whole new world ofconsumer-facing health care. and we certainly appreciateyou joining us. </p>
<p>please join me again inthanking eric schmidt. </p></div>
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<div align="justify"><p>>> okay everyone, thanks very much for comingand it's my good pleasure to introduce cory doctorow and cory is a very prolific memberof the internet community as i know, i could describe it that way. he's probably knownto most people in this room and someone that i would like to see more of at google heretoday but he's going to speak a little bit about his latest book, "makers", and someother issues that are on his mind. cory? cory doctorow >> thanks. so i thought i wouldstart by - oh and thank you all for coming. i thought i would start a little by readingsomething from "makers" which is the book that's just out from harper collins here inthe uk and touring the us and available for free online. has anyone here actually readany of it or all of it? okay, that's good. </p>
<p>so it's available for free online, as withall my books, creative commons license, craphound.com. i'm easy to find, i'm the first cory in googleso relatively straightforward to find if you'd like to read some more, you can always buythe book and it's a book about economic collapse and rebirth so i wrote it as a parable aboutthe dot com years which i lived through in san francisco which i found really kind ofinspiring and also grim. i moved there at the peak of the boom. i was spending a lotof money on a very small half of an illegal sublet to live in and my window looked atover the yard for the flat i was living in, in which there was a man who was paying $900a month to live in a sears shed without a toilet. the reason he took that is becauseit had a place to park his jag so this was </p>
<p>all he could find and then all the money leftthe valley in like a hot second. it just vanished and a lot of people went home. it was kindof a ghost town. you could walk down the streets and find people having essentially car bootsales of aeron chairs and dot com t-shirts, kind of make an offer going back to oklahomain the morning and then the interesting thing was that it was kind of like that last scenein "how the grinch stole christmas" because people kept on making stuff. all the moneyhad disappeared and it turned out that all you needed to make interesting things wasa laptop and someone's wifi connection, even if it wasn't your wifi connection and allkinds of really interesting start ups emerged from the valley, driven not by some kind ofcrazy search for market opportunity but just </p>
<p>for scratching an itch, doing that classicfree software thing, doing something that just seemed right, that seemed ethical, thatseemed interesting, that seemed like good art and you got everything from flickr totwitter to lots of other kinds of web 2.0 stuff out of it. lots of stuff that didn'tgo anywhere too but it was amazing to see that it turned out,you know not withstanding your wonderful cafeteria here, that you could create all kinds of amazingthings on the internet without a foosball table and that was kind of a revelation ithink for a lot of us. so i wrote this book as a kind of parable about it and for variousreasons, it was delayed in publication and another book my publisher wanted to get outfirst and i luckily happened into the circumstance </p>
<p>that the economy collapsed before the bookwas published so it seems not so much a parable about the dot com years anymore as a prescientprediction of the economic collapse that we just lived through and are living throughindeed today. the premise of the story is that some silicon valley venture capitalistshave bought up a bunch of rust belt companies that had more money on hand then their marketcapitalizations so there's essentially free money if you just broke them up for parts.they took that money and used it to fund little tech start ups in dead wal-marts and mallsin the suburbs of america, which have largely been abandoned thanks to fuel crisis, andin those places inventors just invent interesting stuff and the idea is - i'll give you $10,000,you invent something, we sell it for six weeks </p>
<p>and then it's cloned. we take $30,000 outof the company. that's an incredible 200% roi and then we do it again. invent somethingnew every six weeks. new business every six weeks and won't that be interesting and cool,and that's where the story starts. the journalist for the san jose mercury news, suzanne church,has gone to hollywood, florida, where the first of these start ups is to interview thetwo people and to serve as a kind of embedded journalist through this period and that'swhere the bit that i'm going to read to you today starts.perry gestured with an arm, deep into the center of the junk pile,“all right,check this stuff out as we go.†he stuck his hand through the unglazed window of anever-built shop and plucked out a toy in </p>
<p>a battered box. “i love these things,â€he said, handing it to her.she took it. it was a sesame street elmo doll, labeled boogiewoogie elmo. “that’s from the great elmo crash,†perry said, taking back the boxand expertly extracting the elmo like he was shelling a nut. “the last and greatest generationof elmoid technology, cast into an uncaring world that bought millions of li’l taggerwashable graffiti kits instead after rosie gave them two thumbs up on her christmas shoppingguide. “poor elmo was an orphan, and every junkyard in the world has millions of mint-in-packagebwes, getting rained on, waiting to start their long, half-million-year decomposition.“butcheck this out.†he flicked a multitool off his belt and extracted a short, sharpscalpel-blade. he slit the grinning, disco </p>
<p>suited elmo open from chin to groin and shuckedits furry exterior and the foam tissue that overlaid its skeleton. he slide the bladeunder the plastic cover on its ass and revealed a little printed circuit board.“that’san entire atom processor on a chip, there,†he said. "every limb and head have their ownsubcontrollers and there's a high powered digital-to-analog ring for letting him singand dance to new songs, and an analog-to-digital converter for converting spoken and dancedcommands to motions. basically, you sing and dance for elmo and he'll dance and sing backfor you." suzanne nodded. she’d missed that toy, which was a pity. she had a five yearold goddaughter in minneapolis who would have loved a boogie woogie elmo. they'd come toa giant barn, sat on the edge of a story-and-a-half’s </p>
<p>worth of half built anchor store. “thisused to be where the contractors kept their heavy equipment,†lester rumbled, aiminga car-door remote at the door, which queeped and opened. inside, it was cool and bright,the chugging air-conditioners efficiently blasting purified air overthe many work-surfaces. the barn was a good 25 feet tall, with a loft and a catwalk circlingit halfway up. it was lined with metallic shelves stacked neatly with labeled boxesof parts scrounged from the junkyard. perry set elmo down on a workbench and worked aminiature usb cable into it's chest cavity. the other end terminated with a pda with asmall rubberized photovoltaic cell on the front. “this thing is running installparty - it can recognize any hardware and build </p>
<p>a linux distro for it on the fly without anyhuman intervention. they used a ton of different suppliers for the bwe, so every one is a littledifferent, depending on who was offering the cheapest components the day it was built.installparty doesn’t care though: one click and away it goes.†the pda was doing allkinds of funny dances on its screen, montages of playful photoshopping of public figuresmatted into historical fine art.“all done. now, have a look - this is a linux computerwith some of the most advanced robotics ever engineered. no sweatshop stuff, either, seethis? the solder is too precise to be done by hand—that’s because it’s from india.if it had come from cambodia, you’d see all kinds of wobble in the solder: that meansthat clever, tiny hands were used to create </p>
<p>it, which means that somewhere in the device’skarmic history, there’s a sweatshop full of crippled children inhaling solder fumesuntil they keel over and are dumped in a ditch but this is the good stuff. “so here wehave this karmically clean robot with infinitely malleable computation and a bunch of roboticcapabilities. i’ve turned these things into wall-climbing monkeys; i’ve modded themfor a woman at the university of miami at the jackson memorial who used their capabilityto ape human motions in physiotherapy programs with nerve-damage cases. but the best thingi’ve done with them so far is the distributed boogie woogie elmo motor vehicle operationscluster. come on,†he said, and took off deeper into the barn’s depths. they cameto a dusty, stripped-down smart car, one of </p>
<p>those tiny two-seat electrical cars that youcould literally buy out of a vending machine in europe. it was barely recognizable, havingbeen reduced to its roll cage, drivetrain and a control panel. a gang of naked elmoswere piled into it. “wake up boys, time for a demo!†perry shouted, and they satup and made canned, tinny elmo “oh boy†noises, climbing into position on the pedals,around the wheel, and on the gear tree. “i got the idea when i was teaching some elmosto play super mario brothers. i thought it’d get a decent diggdotting. i could get it tospeed run all of the first level using an old paddle i’d found and rehabilitated,and i was trying to figure out what to do next. the dead mall across the way is a drivein and i was out front watching the silent </p>
<p>movies one night, and one of them showed allthese cute little furry animated whatevers collectively driving a car. it’s a reallyold sight gag, i mean, like racial memory old. i’d seen the little rascals do thatsame bit, with alfalfa on the wheel and buckwheat and spanky on the brake and clutch and thedoggy working the gearshift. “and i thought, shit, i could do that with elmos. they don’thave any networking capability, but they can talk and they can parse spoken commands, soall i need to do is designate one for left and one for right and one for fast and onefor slow and one to be the eyes, barking orders and they should be able to do this. and itworks! they even adjust their balance and centers of gravity for when the car swervesto stay upright at their posts. check this </p>
<p>out." he turned to the car. “driving elmos,ten-hut!†they snapped upright and ticked salutes off their naked plastic noggins. “incircles, drive!" the elmos scrambled into position and fired up the car and in shortorder they were doing donuts in the car’s little indoor pasture. “elmos, halt†perryshouted and the car stopped silently, rocking gently. “stand down.†the elmos sat downwith a series of tiny thumps. suzanne found herself applauding. “that was amazing,â€she said. “really impressive. so that’s what you’re going to do for kodacell?" thecompanies that they bought and liquidated are kodak and duracell, they call them kodacell."that's what you're going to do for kodacell, make these things out of recycled toys?â€lester chuckled. “nope, not quite. that’s </p>
<p>just for starters. the elmos are all aboutthe universal availability of cycles and apparatus. everywhere you look, there’s devices forfree that have everything you need to make anything do anything. “but have a look atpart two, c’mere.†he lumbered off in another direction, and suzanne and perry trailedalong behind him. “this is lester’s workshop,†perry said, as they passed through a set ofswinging double doors and into a cluttered wonderland. where perry’s domain had beenclean and neatly organized, lester’s area was a happy shambles. his shelves weren’torderly, but rather, crammed with looming piles of amazing junk: thrift-store weddingdresses, plaster statues of bowling monkeys, box kites, knee-high tin knights-in-armor,seashells painted with the american flag, </p>
<p>presidential action-figures, paste jewelryand antique cough-drop tins. “you know how they say a sculptor starts with a block ofmarble and chips away everything that doesn’t look like a statue? like he can see the statuein the block? i get like that with garbage: i see the pieces on the heaps and in the roadsidetrash and i can just see how it'll go together, like this." he reached down behind a worktable and hoisted up a huge triptych made out of three hinged car doors stood on end.carefully, he unfolded it and stood it like a screen on the cracked concrete floor. theinside of the car doors had been stripped clean and polished to a high metal gleam thatglowed like sterling silver. spot welded to it were all manner of soda tin cans, poundedflat and cut into gears, chutes, springs and </p>
<p>other mechanical apparatus. “it’s a mechanicalcalculator,†he said proudly. “about half as powerful as univac. i milled all the partsusing a laser cutter. what you do is, you fill this hopper with gi joe heads, andthis hopper with barbie heads. you crank this wheel and it will drop a number of m&ms equalto the product of the two values into this hopper, here.†he put three scuffed gi joeheads in one hopper and four scrofulous barbies in another and began to crank, slowly. a musicboxbeside the crank played a slow, irregular rendition of “pop goes the weasel†whilehundreds of little coin shaped gears turned, flipping switches and adding and removingtension to the springs. after the weasel had popped a few times, twelve brown m&ms fellinto the outstretched rubber hand. he picked </p>
<p>them out carefully and offered them to her.“it’s ok. they’re not from the trash,†he said. “i buy them in bulk.†he turnedhis broad back to her and heaved a huge galvanized tin washtub full of brown m&ms in her direction.“see, it’s a bit bucket!†he said. suzanne giggled in spite of herself. “you guys arehilarious,†she said. “this is really good, exciting nerdy stuff.†the gears onthe mechanical computer were very sharp and precise; they looked like you could cut yourselfon them. when they ground over the polished surfaces on the car doors, they made a soundlike a box of toothpicks falling to the floor: click-click, clickclickclick, click. she turnedthe crank until twelve more brown m&ms fell out. “who’s the van halen fan?†lesterbeamed. “might as well jump, jump!†he </p>
<p>mimed heavy metal air guitar and thrashedhis shorn head up and down as though he were head banging with a mighty mane of hair bandlocks. “you’re the first one to get the joke!†he said. “even perry didn’t getit!†“get what?†perry said, also grinning. “van halen had this thing where if therewere any brown m&ms in their dressing room they’dtrash it and refuse to play. when i was a kid, i used to dream about being so famousthat i could act like that much of a prick. ever since, i’ve afforded a great personalsignificance to the brown m&m.†she laughed again. then she frowned a little. “look,i hate to break this party up, but i came here because kettlewell said that you guysexemplified everything that he wanted to do </p>
<p>with kodacell. this stuff you're doing isvery interesting, i mean, it's killer art but i don’t see the business angle. so,could you help me out here?†“that’s step three,†perry said. “c’mere.â€he led her back to his workspace, to a platform surrounded by articulated arms that terminatedin webcams, like a grocery scale in the embrace of a metal spider. "the 3d scanner," he said,producing a barbie head from lester’s machine and dropping it on the scales. he proddeda button and a nearby screen filled with a three dimensional model of the head, flattenedon the side where it touched the surface. he turned the head over and scanned againand now there were two digital versions of the head on the screen. he moused on overthe other one until they lined up, right clicked </p>
<p>a drop-down menu, selected an option and thenthey were merged, rotating. "once we've got the 3d scan, it’s basically plasticine.â€he distorted the barbie head, stretching it and squeezing it with the mouse. “so wecan take a real object and make this kind of protean hyper object out of it, or dropit down to a wireframe and skin it with any bitmap, like this.†more fast mousing, barbie’shead turned into a gridded mesh, fine filaments stretching off along each mussed strand ofplastic hair. then a campbell’s cream of mushroom soup label wrapped around her likea stocking being pulled over her head. there was something stupendously weird and simultaneouslyvery comic about the sight, the kind of inherent comedy in a cartoon stretched out on a blobof silly putty. “so we can build anything </p>
<p>out of interesting junk, with any shape, andthen we can digitize the shape and then we can do anything with the shape and then wecan output the shape." he typed quickly and another machine, sealed and mammoth like anoutsized photocopier, started to grunt and churn. the air filled with a smell like saranwrap in a microwave. “the goop we use in this thing is epoxy-based. you wouldn’twant to build a car out of it, but it makes a mean dollhouse. the last stage of the outputswitches to inks, so you get whatever bitmap you’ve skinned yourobject with baked right in. it does about one cubic inch per minute, so this job shouldbe almost done now.†he drummed his fingers on top of the machine and then it'd startchunking and something inside it went clunk. </p>
<p>he lifted a lid and reached inside and pluckedout the barbie head, stretched and distorted, skinned with a campbell’s soup label. hehanded it to suzanne. she expected it to be warm, like a squashed penny from a machineon fisherman’s wharf, but it was cool and had the seamless texture of a plastic margarinetub and the heft of a paperweight. “so, that’s the business,†lester said. “orso we’re told. we’ve been making cool stuff and selling it to collectors on theweb for you know, gigantic bucks. we move one or two pieces a month at about ten grandper. but kettlewell says he’s going to industrialize us, alienate us from the product of our labor,and turn us into an assembly line.†“he didn’t say any such thing,†perry said.suzanne was aware that her ears had grown </p>
<p>points. perry gave lester an affectionateslug in the shoulder. “lester’s only kidding. what we need is a couple of dogsbodies andsome bigger printers and we’ll be able to turn out more modest devices by the hundredsor possibly the thousands. we can tweak the designs really easily because nothing is comingoff a mold, so there’s no setup charge, and so we can do limited runs of a hundred,redesign, do another hundred. we can make them to order." so, that's the reading. so i thought i would talk briefly about someof the ideas that went into "makers" and into the way that i publish my work, and specificallyabout copyright and the way that it regulated around the world and here in the uk because"makers" really is a story about a kind of </p>
<p>enterprise that is built around the idea ofcheap coordination over the internet. and it's also a parable about what happens whenpeople who don't think about the value of cheap coordination over the internet but onlyabout what businesses are being displaced by it get to make policy for the internet.so, i used to worry a lot about copyright in terms of what it would do to artist incomeand i would get embroiled, as i still do, in these endless fights about whether or not,without strong copyright, artists can earn a living or they can't. we'd argue about whethermadonna going to a concert promoter and leaving her record label meant that artist's couldfigure out how to earn a living from live performance instead of recordings, or we'dargue about whether or not free software was </p>
<p>a good model for music or books or movies.we'd argue about all these things but i've come to realize that limiting the copyrightdiscussion to whether or not it's good for artists is a deeply parochial way of thinkingabout copyright. think of everything else we do on the net. you know, google is a confessor,right? look at that amazing, terrible thing that aol released when they released all thatsearch corpus and i'm sure some of you have had a look at your raw search corpus and thinkabout just how much we use our information tools for things that go well beyond downloadingthe occasional mp3, whether in the aol case it's how to kill our husbands, or just whatto do if we have disease or what to do if we're having lifestyle problems or if we'redepressed or how we'll find a maid or what </p>
<p>have you. think of how we use the net to getour education. i teach both at the open university and university of waterloo in canada. collectively,i've visited both campuses four times in two years. all of my students i connect to overthe internet but it's also how we learn, obviously. my continuing education is all built aroundthe internet. i basically use the internet as an outboard brain these days. i don't haveto remember anything interesting; my google phone finds it for me. think of how we useit for love. the first six months that i knew my wife we were conducting a long distancerelationship with me in san francisco and she here in london, and how many of us havemet our loved ones over the internet and how many of us use the internet as part of howwe stay in touch with our loved ones, not </p>
<p>just our spouses but everybody we love inthe world and how the network has strengthened our connections to all those people we love.think of how we use it for employment. i mean, obviously no one here could earn a livingwithout the internet but that's increasingly true of everyone, whether you're on a universitycampus, whether you're an engineer working on a job site, whether you are someone whois teaching a classroom full of five year olds. the number of people who can earn aliving without the internet has shrunk to an insignificant slice, i think it gets smallerevery day and also think about how we use it for political action. i mean, many of youi'm sure have signed up for the open rights group mailing list and if you haven't, i'lltalk to you about that at the end of this </p>
<p>talk but you may have also used somethinglike the number 10 petition site or any number of other political tools to contact your legislatores,to weigh in on issues of the day, to organize with other people around you on anything thatyou care about politically, and certainly in the us we recently saw how an entire electioncould be swung based on grassroots organizing, grassroots fundraising, and moving away fromthat centralized top down political infrastructure, and even civic process. i mean, it's veryhard these days to get a permit from the council to build a new shed without theinternet. almost all of the stuff takes place over the network and when it doesn't we getunderstandably very vexed and we call up the council and we demand to know why we can'tregister our marriage over the internet like </p>
<p>a sensible person might, and eventually thecouncils will cave to us. so policy is being written though not with any of those thingsin mind, it's being written essentially by people who think of the internet as a glorifiedtool for delivering tv, movies, and music, and so they don't take any of that stuff intoconsideration and they don't really worry if any of that stuff is implicated as collateraldamage in the way that they intend to regulate the net so look at peter mandelson's latestdigital economy bill, which i've been calling "the analog economy bill" because it's reallybuilt around the idea of preserving businesses whose entire model is built around the difficultyof copying things. the inherent limitations on copying. those inherent limitations oncopying are fast falling away and i'd say </p>
<p>at this point they've basically been completelyput paid to, there are no more real good inherent limitations on copying the way the recordindustry understands them. you know, hard drives are going to get less capacious tomore and more expensive, networks aren't going to get harder to use, libraries won't havetaught fewer oap's to type 'batman returns bit torrent' into google, right? our generalcapacity to copy things is only going to go up from here. as i said in an article thatwas in "the guardian" yesterday, this is the hardest that copying will ever be. here today,november 27, 2009, is as hard as copying will ever be. on november 28th, copying will beincrementally easier. a year from now, copying will be vastly easier. a year after that,copying will be easier still and yet we have </p>
<p>the digital economy bill that kind of comesin two parts. the first part is here are some kind of feel good measures we are going todo. we are going to spawn everyone's internet connection and send angry letters to peoplewho we think are copying the wrong things. we are going to do that for a year and ifin a year copying in britain hasn't fallen by 70%, we are going to do a bunch of otherbad stuff. now let's just examine this 70% business for a minute. i mean, is there anyonewhose ever enacted any measure on any internet connection, anywhere in the world, that hassubstantially reduced copying over any lasting period? i think the answer is generally no.there was a little blip when they got rid of the pirate bay and brought in ipred insweden. swedish internet traffic is higher </p>
<p>then it was before ipred was introduced insweden. it took about four or five months. as far as we can tell, the trajectory of thedigital society is more copying, not less, forever, and there is no legislative measureshort of maybe turning off all the nuclear reactors and plunging us into the dark, thatwe can use to shut down copying. so digital businesses, the businesses that are reallybuilt around the digital economy, don't assume that copying will slow down. these are thebusinesses that profit no matter what happens with copying. one of the most inspiring thingsabout google's history, to my mind, is by in large as google has done its acquisitions,especially the weird ones like this gentleman in his "blogger" shirt. i remember when googlebought "blogger" and no one could really figure </p>
<p>out why they'd done it and i asked aroundand i was writing for business 2.0 then and i talked to a lot of people on and off therecord and there were a couple of answers that really run true for me about why googlehad bought "blogger". the first was that it would just be a crying shame for it to disappearand ev and his team were smart and it was a pretty cheap way to hire them. but the otherone was that generally speaking, the more people used the internet, the more money googlewould make, right? google had a business model that was based on internet use going up andgoogle's income going up at the same time. they'd figure that out. that's what a digitalbusiness looks like. it's not a business that relies on the totally ahistorical and vastlyimprobable proposition that internet use will </p>
<p>decline. so the problem with ascribing liabilityas the digital economy bill does to intermediaries, so that's companies like blogger and youtubebut also any company that hosts or makes copies of user generated content, is that it basicallydestroys the business model for everyone who allows anyone to put anything on the internetwithout a copyright lawyer reviewing it first, right? if you're on the hook for any infringingmaterial that shows up on youtube, not on the hook for taking it down but on the hookas a participant in the infringement itself, and in the us that would be $150,000 per downloadof that infringing youtube clip, you can't run youtube, right? for all that, youtube'sbandwidth bill may be very high, and if you believe the trade press they say a millionand a half dollars a day or something being </p>
<p>lost on youtube. i don't know if that's trueor not but i do know that there aren't enough lawyer hours remaining between now and theheat death of the universe to vent 16 hours of video every sixty seconds, right? and thateven if you could manage to raise that many lawyers, graduate them from university, andfill a boiler room with them, that the cost of paying them all would outstrip the entireincome available to google and probably all internet businesses put together and it'snot just google, of course. it's everyone who has user generated material so many ofyou have probably seen moo cards, those little business cards that you can get your flickrphotos on the back of. so what would it do to moo, which is a relatively profitable smallbusiness based here in clark , well they've </p>
<p>actually just moved up to silicon roundaboutat old street. what would it do to moo if they had to hire a copyright lawyer to ensurethat every photo they printed on the back of every business card didn't contain anycopyright infringement? what would it do to last.fm if they had to ensure that every songthat they streamed didn't contribute to a copyright infringement? basically what we'retalking about is eliminating the internet in favor of something a lot more like cabletelevision. cable television where if you want to put a program on sky, first you goto rupert murdoch's lawyers and you show him the material and they go over it with a finetooth comb with your insurers, you get clearances for anything that may or may not create acopyright liability, and then you get to put </p>
<p>it on and you get a hundred channels, fivehundred channels in some places. you remember the five hundred channel universe about tenyears ago? everyone's talking about how cable television would deliver the five hundredchannel universe and how amazing that is. think of how poor five hundred websites soundslike as the entire internet today, right? the one trillion channeluniverse is a little more like it. i think i'd be okay with a one trillion channel universebut a five hundred channel universe is an extremely poor one and of course from goingback to this parochial artistic cultural perspective, the purpose of copyright isn't to ensure thatlast years winners in the digital economy or in the creative economy remain on top forever.the purpose of copyright is to ensure the </p>
<p>broadest, most diverse participation in cultureas possible, right? so more channels equals good as far as copyright is concerned. soit's the collateral damage that i'm really starting to worry about. it's not culture,it's not the arts. it's what happens to everything else that we do because everything else thatwe do on the internet involves copying and because copying always triggers copyrightlaw. copyright law is a regulation and like any regulation, it has to figure out somewherein it's makeup when it applies and when it doesn't. who should be bound by copyrightlaw and who shouldn't. an easy heuristic for determining who was doing something that cameunder the purview of copyright law historically has been, "are they making copies?" specificallyare they making lots of copies because making </p>
<p>lots of copies of a record involved buyinga 400 million dollar record press and if you are going to spend that kind of money on agiant printing plan and a global distribution network,you can pay a lawyer a couple of hundred thousand dollars a year to make sure that everythingyou do on it is legal. if you are going to make copies of movies, you need a giant filmlab, no more. you and i, we make thousands of copies every morning before breakfast.every i.m, every click, every email involves hundreds if not thousands of copies. so theproblem is that we're left with this heuristic, when should we treat copying as industrialand subject to regulation when mass copying occurs? but that heuristic no longer appliesin contemporary society. my friend jamie boyle, </p>
<p>who is at the duke center for public domain,says that copyright used to be like a tank mine. it only went off if you drove over itwith a giant factory, right? you'd need a huge printing press, a huge record press,a huge film lab for copyright to really come to bear on you. but now it's become the kindof land mine that blows the legs off of children, right? now copyright is triggered when yourkid puts up a harry potter fan site. now copyright istriggered when your kid grabs a little bit of video and turns it into an icon on livejournalor twitter, right? so copyright no longer makes sense, not because there's anythinginherently wrong with regulating the creative industries and their supply chain using asystem of government regulation, but because </p>
<p>that regulation is supremely unsuited to regulatingfor example how we get an education or how we deal with our relatives or how we monitorour children from abroad or how we get our health information or how we do any of thoseother things that we do on the internet. copyright is very unsuited to it. for the same reasonthat you don't have to file papers with the fsa if you take a friend out for lunch, youshouldn't have to concern yourself with copyright if you make some personal copies or sharethem around your office or around with your colleagues, right? the process of puttinga dilbert cartoon or an xkcd cartoon on your cubicle and allowing your coworkers to seeit doesn't trigger copyright because no copying is made, but if you take a photo of that andput it on flickr and your coworkers see it, </p>
<p>you are suddenly in deep dutch because youviolated copyright law because that same transaction that involves a network business like googlewith offices all over the world where your coworkers may not be in the next cubicle butmay be on a different continent triggers copyright because we have a bad heuristic for copyright.so copyright has become the de facto regulator of everything we do in the information societyand copyright policy is not being made with that in mind. instead, it's being made bypeople like peter mandelson who get all expense paid vacations from entertainment executiveslike david geffen and come back with copyright fire in their hearts. you know among the otherthings that we've heard proposed from mr. mandelson is that he would like to have athree strikes regime for the internet here, </p>
<p>like they've passed in france, and the waythat that would work is if anyone in your household was accused of three acts of infringement,not convicted of three acts of infringement, there needn't be any due process or evidence,just the say so of a copyright enforcer, your whole household loses access to the internetand the way this works in france is your household's name is added to a list of people for whomit's illegal to provide internet access and no one in the country can hook you up anymore,right? so imagine if we reversed this. there is an ex-googler named kevin marks who hasjust gone to work for bt who many of you probably know and when kevin heard this he said, "whatif we reversed that?" like we know that universal,for example, sends all kinds of ridiculous </p>
<p>copyright notices, you know? prince and universalsent a copyright notice to youtube over a clip of an adorable two year old dancing inthe kitchen and for a few seconds in the background you could hear prince's "let's go crazy".this is, you know, canonical fair dealing, canonical fair use and yet they filed a copyrightcomplaint and asked youtube to take it down. we know they're very sloppy about this becausethere's no penalty for doing it so what if we turned it around? what if we said, "okay,you can have three strikes but it goes both ways." the day that universal makes threeerroneous copyright claims, we go to every universal office all over the world with abig set of bolt cutters and we go to their wiring closet and we take them offline anduniversal can be the record label that does </p>
<p>all of its business from now on by fax. butwe know that that record label would immediately go bust, right? it is the death penalty fora company to take it off the internet and it's the deathpenalty for our digital lives to take our households off the internet. collective punishment,the idea that you can terminate an entire group of people's access to the internet orpunish them otherwise because one person has done it, it may prevail in the wrong kindof gym classes but its certainly not something that we think of as fundamental to justice.you know, the geneva conventions prohibit it so for the idea that this might becomethe law of the land and it's not just here, it's all over the world - there's an internationalcopyright treaty under way called acta, the </p>
<p>anti counterfeiting trade agreement, whichhas moved copyright negotiations from the un, from the world intellectual property organizationor wipo. i sometimes say it has the same relationship to bad copyright law that mordor has to evilbut wipo has one single virtue which is that non-governmental organizations are allowedin. they have rules, their the un, so we went in and we started writing down everythingthey said and blogging it twice a day and it got slashed on it and it got picked upby lots of people and all of a sudden people all over the world started calling up theirelected representatives and saying, "what the hell are you doing in geneva?" and thetreaty collapsed and millions of dollars worth of entertainment industry lobbying went downthe drain and they reconvened, not at the </p>
<p>united nations, but in a closed door meeting,that only rich countries are invited to, although every country would eventually be bound toit through other trade agreements, right? if you want to stay in the wto, you have toadopt the acta provisions and they declared the text of the treaty a secret, althoughwe've seen drafts of it because it leaks like a sieve because there's, you know, hundredsof negotiators there and they all share them with executives from various industries intheir countries. you know there's a list of people who are allowed to see the us traderepresentatives documents, it's quite long and it includes things like a beer executive,a car executive, a guy who's a fertilizer executive, so once you start telling fertilizerexecutives top secrets, they no longer remain </p>
<p>secret for very long. so we've seen it andit includes things like three strikes, it also includes criminal penalties for simpleinfringement, noncommercial infringement so your kids no longer just stand to use theirlife savings but to go to jail for sharing files the way we all did when we were kids.i mean i don't know about you but if it wasn't for mix tapes, my entire adolescence wouldhave been celibate, you know? so this is a disaster. it also includes a burden for thoseof you who travel, it includes a burden on every country's customs officers to searchhard drives and any other storage media that could be capable of carrying something thatwould be a substantial copyright infringement, and at first they said, "oh, well this wouldn'tinclude ipods and personal stereos because </p>
<p>they don't carry enough music to be a substantialinfringement." and then someone kind of pointed out to them that 80 gigs is a lot of musicand that it's going up from there every year and i think ipods are kind of back in thedefinition here. so, this is where it's headed because we're not making copyright law withan eye to all the other things that happen on the internet. you know, a burden on isp'sto surveil their customers won't really stop pirates. i mean, you and i can figure outa hundred ways to encrypt your traffic so that an isp's depacket inspection would becompletely incapable of discovering it, right? when they sued napster and started to interdictnapster servers and declared victory on the war on file sharing, everyone who looked atit said, "well, no. now that you sued napster, </p>
<p>they'll just reimplement newtella and makeit a little better." and then when they started to sue newtella trackers, they said, "well,okay. they're just going to tracker list newtella's and then they'll start ding tracker list bittorrent." i mean, you're just evolving the world's most perfect antibiotic resistantbacterium here. you know, this isn't going to actually stop it. the only reason thatit's possible to eavesdrop on file sharing traffic is because no can be arsed to encryptit. it's not because encrypting traffic is a particularly challenging problem, we doit every day. bankers manage to do it. if bankers can do it, anyone can do it. [laughing]so, i'm an artist and copyright does effect my livelihood and i'm pretty sure that i canmake a living in a freely copied world. you </p>
<p>know, my books are all available for freefor download. you can buy them in shops and they do very well. "little brother", the lastone that came out, 17 languages and film rights sold to the guy who made "transformers" andyou know, video game rights and cd rights under discussion and so on and so forth, newyork times bestseller. i just got a huge check for it and i'm going to pay off most of mymortgage with it. i mean, generally speaking, i think i can make a living in a copy nativeworld but even if i couldn't, i'd still be a copy fighter and i would be because i'malso a father and i'm a citizen, i'm an immigrant, i'm a son, i'm a husband, i'm a volunteer,i'm a student, and i'm a teacher, and i don't want all those rules to be sacrificed on copyrights'altar. principle is the thing that you stand </p>
<p>on, even when it's not convenient for youpersonally and it's time that we take principle stands on these issues, even if they may eatsome of our lunch. so there's lot of organizations you can join. i talked about the open rightsgroup. i co-founded that here in the uk although i have very little to do with running it.i'm on the advisory board, along with ben laurie, who works out of this office and manyother interesting and good people. also, alan cox who you may know from old linux kernelmaintenance, although he's not doing that anymore famously. but there's also groupslike the electronic frontier foundation, edri, all around the world and we are making seriousheadway, not just by shutting down bad laws although we've done plenty of that but alsoby holding them at bay long enough for people </p>
<p>to understand what's at stake because as soonas the civilians among us, the people who don't work with computers every day, the peoplewho don't understand that cryptography is easy, the people that don't understand thatthe internet is for more then mp3's. as soon as they come to realize all the things thatthey can do with the net, then our fight becomes exponentially easier because it's not justa few anarachs calling up their mp's and saying you are going to do something that you don'tunderstand to something else that you don't understand and that will be bad in a way thatyou don't understand but it's everyone going down to their mp surgeries and saying youcan't do this. you can't do this because we won't vote for you, you can't do this becauseit will destroy fundamental and important </p>
<p>things about our civil society. so that'swhat i'd like to ask you to do. i mean, you can buy my book if you want, you can downloadit for free from the internet if you want. that'd be nice, i'm not bothered because itsells pretty well, although i'll mention it's a 'tenner' today which is a very stellar dealbut what i hope you'll do at the end of this talk is that if you're not already an orgmember, you'll join. it's a 'fiver' a month but you'll get involved with the electronicfrontier foundation with free software foundation europe. i hope that you'll talk to your mp'sand the people in your life because googlers have a lot of moral authority in this world,going to your personal mp at your mp's next surgery and talking to her or him about mandelson'sproposal will make a huge difference as an </p>
<p>employee of google so i hope that you'll dothat and i hope that you'll continue to take action on this and i hope that you won't makethe mistake of thinking that superior technology will make inferior laws irrelevant becausethe internet isn't free because it's inherently free. it's free because we fought it to keepit that way. thank you. [applause] >> so, we have about 20 minutes for questions. >> sorry, i am losing my voice a little. i'mcoming down with a cold or coming over a cold. we have a mic in the back too. >> who has questions? </p>
<p>>> thanks cory. because you give your booksaway online for free and you still have a print business, do you have to butt headswith your publishers in every country every time you do this or are they just now knowit's you and they're okay with it? you're actually the, you know, minority. cory doctorow >> yeah. i was really luckyin that my editor who bought my first novel, patrick nielsen hayden at tor books in newyork, who runs the largest science fiction line in the world and is the most senior editorthere. i've known him since i was 17. i met him on a bbs. he maintains his own linux boxes,he writes his own movable type plugins and when i sat down and said, "there's this newthing coming out called a creative commons </p>
<p>license and i want to try releasing a bookunder it." he said, "e-books have the worst ratio of hours in meetings to dollars in incomegenerated of anything this publisher has ever done. why don't we try it, right? what's theworst that can happen?" publishing like every other business is essentially an it businessthese days. you know, walmart isn't a chinese manufacturer of goods business, walmart isan it business that uses it to manage a supply chain that moves a shipping container onceper second from china to america so they're an it company too and they've experiencedgreat benefits from it and among those is that they can do very short run hard coversso they can print four to six thousand copies of a first novel to hard cover. this is greatfor first novelists because it used to be </p>
<p>that first novels were always in mass marketpaperback and they do 50,000 so unless they felt they could 50,000, they wouldn't takea chance on it. now they are publishing tons of first novels because they can do it. youknow, i come from a big ashkenazi family. if everyone of my relatives buys a copy, we'veearned out. so it's a very low risk experiment, which we did and it worked really well. everybodywas happy and they reprinted the book a whole ton and it generated a lot of publicity whichis nice because it was the first thing but it also generated a lot of secondary publicitywhich was not the publicity of "oh my god, this is a creative commons license book. i'ma slashed out reader. i support them inherently, you should read it", it was the publicitythat went "oh my god, i love this book and </p>
<p>i'd like to press it into your hands the waythat we have done with books since time in memorial except i can press it into your handseven though you live in a different country and i can press it into your hands withoutparting with it", and so that magnification of the good feeling people had about my bookon its own merits was selling lots of books too. so that kind of set the tone for things,right? by the time i'd done three novels that were cc licensed and sold "little brother",both here and in the us, was the first novel i sold in both countries, it was pretty straightforward.there wasn't really anything that harper collins could say or do because it was already cclicensed, right? we weren't going to be able to take that back and so they kind of cameonboard and they were very good about it. </p>
<p>the woman who is running it, she is very kindof it centric, very internet savvy and she invited me in to talk to the whole businessabout copyright, technology, drm and why it doesn't work. you know, to publishers whobelieve in drm i say, "behold: the typist", and it went great. now my foreign publishershave been a little more complicated only because the relationship tends to be more attenuatedso its my agent's sub-agent dealing with an editor and so i often times don't even knowwho the editor at a foreign publisher is and every now and again, i'll get an email froma reader saying, "you know, we just translated your book into bulgarian and your bulgarianpublisher is going crazy." it's not a real example. i won't narc on the real publisherwho did this and i write to my agent and my </p>
<p>agent writes his sub-agent and his sub-agentwrites to the publisher and the publisher writes back and says, "we had no idea. wethought that they were violating copyright. if you're okay with it, i guess we're okaywith it too. it seems like it's working pretty well." so i mean, i think foreign publishersare a lot more worried about the fact that for science fiction, in translation, a goodportion that audience reads english and they will buy the books from amazon before theforeign edition comes out so i think they're way more interested in doing day and datesso now i'm taking pitches of my books and even the roughs of the books and giving themto my agent's foreign agent to take to frankfurt to the book fair and to london to the bookfair to sell the foreign rights so they can </p>
<p>come out at the same time, not for the ccbut just because so many kind of geeky science fiction readers in whatever country read enoughenglish that they'll just happily order the american or british edition off of amazonunless there's an edition in their native language. >> thanks. so you say basically for booksit's a little bit less free because it's harder to consume digitally. what about other media?i mean, it's a lot easier to consume music and tv or tv shows online. is your opiniona little bit differentiated? cory doctorow >> well, i actually say arguablythat music is better online than it is in cd, at least if you live in london, right?every centimeter i give over to a cd is a </p>
<p>centimeter i can't give over to my daughter,you know? in my tiny london flat so yeah i mean, we took all the dvd's out of the sittingroom and ripped them and all of the sudden we got like three more shelves we could usefor books. it was fantastic, right? and we compressed them down to a hard drive about'yay big', right? this is brilliant. so yeah, arguably it's much better. now seventy yearsago, vaudeville and live performance were all but destroyed by the radio and the recordplayer and the vaudeville artists of the day said you know, yes, there may be a businessopportunity for the kind of people who sound good on a record but some of us aren't recordingartists, we're performers, right? you lose something when you move our performance toa record. we are not going to be mere clerks </p>
<p>who sit in a backroom and let you intervenewith our audiences on our behalf, we are doing something old and holy, you know? this isas old as stories told in front of fire so you have no right to tell us how to earn ourliving. those people ended up driving taxis. seventy years later, the people who put themout of business and their spiritual descendents are saying, "what do you mean i have to bea performer? i'm not a performer. i'm a white collar worker. i labor indoors and when i'mdone, i slide my work under the door and some bourgeois man of commerce takes it out tomy audience. you have no right to turn me into a trained monkey." and the ones who saythat will end up driving taxis because that's the way it goes. technology giveth and technologytaketh away. the point of copyright shouldn't </p>
<p>be to ensure that one particular kind of creation,right, music performed in music halls, music performed in record studios, music performedin large venues, music performed in small studios, that one particular kind thrivesat whatever expense it takes, it should be to ensure that the largest number of peoplecan participate at the lowest cost and that's what you get when you move to a 'give yourrecordings away for free on the internet and solicit donations to do live performance'model which is working for everyone from jonathan coulton down at the bottom to madonna up atthe top, and frankly replacing the record industry's opportunities for artists is prettytrivial because 97% of the artists in the united states with a record deal earn $600a year or less from it. you can probably make </p>
<p>that on adsense on a lot of those pages, right?so this is, you know, doing as well as the record industry has done for artists, nothard. i mean, i'd like to set the bar a little higher then that frankly but not hard to atleast do that. as to films, i like seeing robots throwing buildings at each other asmuch as the next guy but maybe we've reached the end of the 300 million dollar movie. youknow, does that mean that we've reached the end of movie making? i think youtube saysno because for all that, there's a few jon stewart clips and what have you on the net,on youtube there is so much more stuff out there that represents the kind of movies thatpeople can make outside of a studio system and their values are different, right? they'renot about the resolution of the cgi, they </p>
<p>are about the intimacy and the importanceto the small but critical audience for whom the movie was made, right? it's not aboutreaching a million people with a beautiful movie, it's about reaching six people witha movie that's so personal that it touches every one of them in a way that's completelyunforeseen and unprecedented in the history of film making and again, if we lose one toget the other, c'est la vie, right? the protestant reformation got rid of all the cathedral buildingsand we got lots and lots of little wee kirks on the hill. religion didn't end, right? soyeah, there's lots of different things that is going to happen to a lot of different kindsof creative enterprise and actually one of the great lies of copyright is that there'ssuch a thing as a copyrighted work. that you </p>
<p>can apply the same regulation incentives tothe creation of crossword puzzles, needlepoint patterns, 300 million dollar movies, cakedecorations, one off sculptures, mass market novels, and pornography and that you'll getthe same outcomes in all of them, right? this is a crazy idea and you know it's kind ofa consequence of a bunch of historical anomalies, that all these things have been grouped underthis odious umbrella we call intellectual property. the actual like on the ground realityis that they all respond to different incentives, they all have different market characteristicsand none of them as a class are threatened, although members of the class are and youknow i weep for the lost poets of days gone by and i miss the days where the man wouldwalk down the street with his bell and a knife </p>
<p>sharpener but technology giveth and technologytaketh away and so long as we've got sharp knives and poetry, we're okay. other questions? >> so i tend to like the user experience thatspotify has built. i am a spotify fan. i'm not sure in your kind of view of principleto copyright if spotify is a good thing or a bad thing. cory doctorow >> i think spotify is a greatthing as far as it goes, although i think that you know streaming is the flawgicineof the 21st century. there is no such thing as 'streaming', right? there's just downloadingand then sometimes your computer keeps the </p>
<p>bits and sometimes it doesn't. so the illusionthat spotify is not giving you copies of the music that it sends to you is a kind of masshysteria among record executives and i worry that eventually they are going to wake upand go, "wait a second. you told us that there was a thing called streaming. it turns outit's just downloading where the client throws away the bits and you can write a client thatdoesn't throw away the bits!" and i also worry that that might lead you on a path to saying,"well, there should be regulations saying that people can't write their own clients."but networks protocols, or that there should be non user accessible components on theircomputer, all of which are not particularly plausible technical premises, right? you know,i'm going to hide a key somewhere on your </p>
<p>computer, i'm going to give that computerto anyone who wants to buy one and trust that no one in the entire world has an electrontunneling microscope and wants to take their computer and look at it, right? it's justnot a really plausible premise and yet we kind of build on that anyway but what i thinkthe problem with spotify, to the extent that there is one, is that people are saying, "well,we've got spotify so we solve file sharing." and the problem isn't that spotify isn't good,the problem is that people haven't voluntarily stopped using p2p mp3 technologies and movedover to spotify and there's not really any reason to believe, i think, that they're goingto in great numbers which leaves you with this bizarre circumstance where kind of everyoneis a copyright criminal to some value of everyone, </p>
<p>even though spotify is going great guns andwhen everyone is presumptively a criminal, it's really bad for society. so in america,at swarthmore college, there was a kid who was maintaining a piece of free software calledflatland. flatland indexed samba shares on the network, in the same way that google indexeshtp shares on the web and it got all the things that you would find on a samba share on auniversity network. it got profs lectures and their notes and all the rest of it butalso you know games, movies, music, porn, whatever kids had so the record industry suedthis kid, not for maintaining a search engine which is of course totally illegal or you'dall be clapped in irons, they sued him for being a music downloader and they knew hewas a music downloader because he is an american </p>
<p>university student and they are all musicdownloaders and because the penalty for being a downloader is a 150 thousand dollars perinfringement, they were able to exert enormous leverage over him so they said, "we not onlywant your entire life savings, as we ask for all the students we go after, we want youto change majors. we don't want you to get a computer science degree because we don'twant people like you programming computers. we want to make an example out of you." nowthis was not very good strategy on their part because it was so obnoxious that we were ableto make a huge stink out of it and they had to back off on the demand but that's the leverageyou get over people when they're presumptively guilty of something, is that you can go afterthem for things that aren't unlawful and you </p>
<p>can use the leverage that they're all criminalsin some other realm to force them to give up things that merely upset your apple cartso that's what i worry about spotify. spotify doesn't solve the big problem, that we'reall criminals, right? you know, we could have a thousand spotify's, it'd be great. i'd bedelighted to see it but it still wouldn't solve the important problem. >> i wondered if the movie rights to yourbooks are given away as freely as the books themselves and whether there were any issueswhen you discussed making "little brother". cory doctorow >> it kind of depends on whatyou mean by the movie rights. so the noncommercial creative commons movie right, the ccncsa,are given away. anyone can make a movie. there </p>
<p>have been a couple of nice little studentfilms based on it. the commercial movie rights are negotiated through a system of regulationthat has been reasonably good at moderating the supply chain of the entertainment industry.copyright, right? so here i am, an industrial player, right? i have a lawyer, i have anagent, i have a publisher, they have lawyers, i have a film company and they have lawyersand agents, and they all sit down and they talk to each other and they use a system ofregulation devised to bound those negotiations and that's how we make the movie, right? butif you're 16 years old or 36 years old or 56 years old and you've just got a flip cameraand you want to spend your christmas break making a little film out of "little brother"that you're going to put on youtube and not </p>
<p>charge any money for, you don't need to talkto copyright because it doesn't make any sense for you to talk to copyright. you don't havea lawyer, my lawyer doesn't want to talk to you, right? i'm not going to pay my lawyer$400 an hour to talk to you to find out to basically make sure that the thing that you'remaking that won't make me any money is going to be good. this is the other tragedy, ofcourse, of copyright. it's not just that it makes no sense for a 12 year old to call warner'sand find out whether or not she can make a harry potter fan site; it's that no one atwarner's will answer the phone when she does, right? because it makes no sense for warner'sto negotiate this with a 12 year old, right? so yeah, i have the same deal for every filmmakerthat i have for everyone who wants to use </p>
<p>my books which is commercial deal: talk tomy agent; noncommercial deal: go crazy and share alike. let other people do stuff withyour stuff and you know, it's working for me. it puts me in this great position whereyou know financially, i'm doing great but artistically, i'm doing great. i'm not insistingthat my art made in the 21st century not be copied which is such a crazy un-21st centuryproposition, right? it's kind of cool that someone is like the blacksmith at the reenactmentof the battle of 1066 once a year but that's not exactly contemporary art, you know? ilike to make contemporary art because it's science fiction and contemporary art has toassume that it's going to be copied because it's the 21st century. so i get to do thething that's artistically right and morally </p>
<p>right because i don't have to go around tellingpeople not to copy when i copy all day long. i don't have to go around pretending that,you know, i live in some great moral olympus and that they're all doing something that'swrong. you know, every movie company, every publisher, every record company, they allcopy their asses off, right? no movie starts without someone going out and making a moodbook by scanning and copying and photocopying bits and pieces of visual stuff that theywant to put together to instruct the design team, right? when kirby dick, who is a wonderfuldocumentary filmmaker, made a movie called "this film was not yet rated" about the americanfilm rating system which is shrouded in secrecy, no one really knows. you know, you go nowand it's like to the cinema here, you know </p>
<p>quentin thomas says you are allowed to watchthis movie but when you go to a movie in the us, it just says the mpaa has rated this whatever,pg, and the identities of the people on the mpaa's rating board are kept a secret andthey're supposed to be rotated every few years and it's supposed to be parents of young kidsand kirby didn't think they were so he hired a private eye to follow them around and hemade a documentary about it. he found out all their identities and submitted it to theratings board for a rating. so he gets a phone call from the mpaa's chief lobbyist who isan ex-congressman living in washington, dc and the man says, "kirby, i've seen your movie.",and he says, "really? that's interesting because as far i know, it's in los angeles and you'rein washington." he says, "well, one of them </p>
<p>sent me a copy." and kirby says, "well, whatdo you mean they sent you a copy? i didn't authorize them to make a copy." and he said,"oh don't worry. it's in my vault." like i don't know if we can get away with that. "yes,i've got a hard drive with twenty thousand infringing mp3's, i keep it in vault though."but they copy all day long. we all copy all day long. the rest of the movie is about incidentallyabout what happens with kirby and the mpaa. it's very good movie. it's called "this filmis not yet rated". it's absolutely brilliant and i think it's a cc download at this pointso there's no excuse not to watch it and he's just done a new movie called "outrageous".that's where he outs gay american right wing senators who oppose gay marriage and gay rightswhich is quite an amazing bit of film as well. </p>
<p>anyway, so that was my talk. thank you verymuch. as i said, these are only a 'tenner' according to my publisher which at the coverprice is fifteen quid so it's a 30% discount and i'm not sure who takes the money. is thatyou guys? yeah, i think so and you can also download them for free and it was very niceto meet you all. if you need to get in touch with me, i am the first cory in google. thanks. </p></div>
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<div align="justify"><p>professor pincushion: welcome to professorpincushion. in this tutorial, we are going to be going over kwik sew's fanciful footwearbaby booties. this is by ellie mae designs and is pattern k141. this particular envelopehas four different designs, and we are actually going to be doing bootie a and bootie c. in order to figure out how much fabric weare going to need we first need to determine what size we're cutting it out, so there'san easy way to do this and that means that you need to cut out the sole pattern piece.so that's either going to be piece number 8, or if you are doing the baby shoe a, itwould be piece number 4, and it says on it sole. </p>
<p>you will take the baby's foot, and you aregoing to place it in the middle and you see they actually have heel and toe marked onthis pattern piece, you know which direction to place the baby's foot. and how it fitsinside there is going to determine the size. so if it fits perfectly inside this innercircle that's going to mean that you are cutting out an extra small, if it's bigger then youmay have to cut out on a bigger line. so if it looks like comfortably, i might need tocut the size small line then that's fine. you know you just need to keep this in mindbecause every other piece that you cut out has to be the same size, so if i cut out asmall in my sole piece then i have to cut out a small in all my other pieces as well. </p>
<p>look at the back of the pattern envelope andthis is going to tell you how much fabric you are going to need. you can see up hereat the top is designed for a lightweight woven fabric such as cotton or cotton blends, youare also going to need gripper fabric, this is going to be for the non-slip soles. youhave to check with your fabric store, so i know mine, they don't sell it by the yard, buti can get a prepackaged precut piece which is enough for several booties which is fine. once you know what type of bootie you aredoing you can see there is four different types then you are going to be able to determinewhat your material list is going to be because they split it up depending on what bootieyou are doing. you could see here there is </p>
<p>fabric 1, 2, fabric 3. now, what this is referringto is, if we look at this one, you can see they have numbers because there isn't moreto one fabric. so if it's light pink it doesn't matter what shoe you are looking at. lightpink is going to mean its fabric 1. yellow is going to be fabric 2, you can see the yellowright here, and three is going to be the bottom so the sole of the shoe which is going tobe the gripper fabric. so if i'm doing for example bootie a theni can look over here because a and b are so similar they just use the same thing. yousee the size is listed, you will find your size, so mine is medium. so with fabric 1and with fabric 2 for a medium i'm going to need one quarter of the yard, and it doesn'tmatter what the width of the fabric is regardless </p>
<p>if its 45 or 60 inch. fabric 3 which is thegripper fabric, you are also going to need a quarter of a yard or one package if it comesby package. in addition to that we are going to need some fusible interfacing, it tellsyou how much you need right here, it's the same for all sizes and then additional itemswhich is one-eight of the yard of one inch velcro. here is another example. if i'm doing bootiesc which is this one right here, they break it up the same way so for fabric 1 and threeif i'm doing a medium i just go right down here. i'm going to need a quarter yard ofeach one of those fabric 2. i need an eighth, because you really don't need that muchthen it tells you again. fusible interfacing, </p>
<p>all the booties need some fusible interfacingand for this one additional items are some grommets and then you need one yard of someribbon which is three-eights of an inch. page one is going to have the diagram of thepattern pieces that are inside this envelope and you could see they're all numbered andthe actual pattern pieces themselves are also numbered with the same numbers which makesit handy and you can actually see a list over here, they're telling you exactly what itis. so piece number one is a strap and it's for view a which means the bootie a. so whateverletter you have at the end that is for that particular bootie but they help you out evenmore because they break it down here, so depending on which shoe you are doing then you knowwhich pattern pieces you need to cut out. </p>
<p>so if for example, i'm doing view c then ionly need to cut out pieces 8 through 10. now remember when you are cutting them outyou need to make sure that whatever size you picked out for your sole, you are going tocut out all your pieces that same size. when cutting out your pattern pieces, youare going to look for your size and then you are going to cut out on the line that's aboveit. now, sometimes you will see these marks like this, these are called notches, and they'revery important because they're important for the placing of our pieces together. so youneed to make sort of indication that they're there so you can see i cut outward, some peoplecut inward, just don't cut in too deep. you have a single notch over here, you havea double notch so the only difference is its </p>
<p>a little bit bigger and then i just flattenthe top so i can readily see that it's a double notch. sometimes they're not all linedup like this, but they're kind of -- they kind of stagger, you just need to make surethat you cut the one that's on your line and for your size. once you have your pieces cut out we can thenlook at our layout instructions as this is just telling us how they recommend that youlayout your pattern pieces so you make the most of your fabric and you don't end uprunning out of fabric. so like we did before all you need to do is find whatever bootiethat you are doing so if i was doing c, i would just need to look at this and i canignore the other ones. they broke it up again </p>
<p>by fabric type. 1 and 2 is the same thingwhen we were looking at the back of the pattern envelope. so for example fabric 2, the fabricis actually folded in half, you can see there's a fold here, so when i cut out piece number10, which you can see 10 will sit right here. out of fabric 2 i only need to cut out piecenumber 10 since the fabric is folded when i cut out, i end up with two pieces of number10 which is important because we're making two shoes. for fabric 1 again the fabric is folded inhalf, this one we need to cut out 10, 8 and then we will do 9. you will see 9 twice becauseyou actually need four pieces of 9 so because it's on the fold you cut one out you get twoand then you are going to do it again. it's </p>
<p>going to be the same case for the other ones.you just see what pattern is listed, make sure you place it on the fabric with the fabricfolded. i like to place my pins parallel to the edge of the pattern pieces, and that wayit will be a lot easier for when i'm cutting them out, i don't have to worry about thepins getting in the way. and then if we scoot this down, it's thesame thing with our gripper fabric, you are going to need to cut out your sole pieces.so for a its going to be piece number 4, for b through d its going to be piece number 8and you need two of each one, and then fusible interfacing is the last thing that we needto cut out, same kind of thing folded in half and whatever piece they tell you for yourbootie go ahead and cut that out. </p>
<p>the last thing we need to do in prepping isto make sure any marks that on our pattern pieces get transferred to our fabric pieces,so that maybe for this one velcro placement we have this box. we have this stitching linesand dots, very important to transfer because this is going to come in handy later. so whati like to do is with this still attached to my fabric, it's not in this case, but if itwas, my pattern piece is still on there whatever mark i need to transfer i just take a straightpin, i place it through all my layers, and then whatever its coming out into my fabrici just use my fabric marker or chalk and i mark it on my fabric. so here is my fabric piece and you can seethere are my marks, so that's exactly what </p>
<p>you want. another example here we have thisis for bootie c or d piece number 10. you are going to see these marks like this, thisis going to help in our grommet placing. you only need to do your size. so if i was doingmedium i would just do this section right here. you don't have to draw this wholeline, they're just connected together so it would be this line and then this line righthere and i had to make sure i do it for all four spots to all four fabric pieces. lastly, i just look over the fabric directionso i can figure out what the seam allowances going to be, in this particular case it'sgoing to be one quarter of an inch. so whenever they tell us to do a seam we are always goingto assume its one quarter of an inch unless </p>
<p>they say something differently in the directions.also when it comes to seams, instead of pressing them open they want us to press it to oneside. if i just scoot this down, we are going to see the fabric key, so this is going tohelp us in reading the pictures that they come with the written directions. so its justtelling you, if you are looking at the right side of the fabric or if you are looking atthe wrong side of the fabric. so the wrong side of the fabric is white, but you couldsee here they broke it up depending on the fabric if we are looking at the right sideor not. so that's just going to help us keep everythingstraight. now, what i'm going to do is i'm going to read through each step and then i'mgoing to demonstrate what you need to do for </p>
<p>that particular step. please click on theshoe of your choice to be taken directly to the start of its instructions or just hangtight and we will start with view a in just a moment. here is an example of what we will be makingfor view a, so let's get started. view a step one, fuse interfacing to wrong side of fabric1 upper piece. so this is going to be pattern piece number two and we're going to only dothis for our main fabric, so this is going to be the outer fabric, and i'm just goingto show you on one, but you need to do it for both pieces. so you are going to take your piece two, youare going to flip it onto your ironing board </p>
<p>on the wrong side because we always fuse ourinterfacing to the wrong side of the fabric, and then i'm going to grab my interfacingpiece. now if you feel your interfacing piece, there will be a slight texture on one sidewhich is the glue bubbles and then it will be smooth on the other side, so the side thathas the glue bubbles that goes to the wrong side because we want to make sure that's thepart that gets fused. so you are just going to lay it on top makingsure everything lines up and then once its all setup; i already have my iron heatingup. i'm going to grab a small pressing cloth that i have here, carefully lay it on top,so we're not shifting anything underneath. you are going to dampen the fabric. i'm justusing a spray bottle here, slightly dampen </p>
<p>it. and then i'm going to place the iron overone section just carefully lay it down for a few seconds and then to do the other section,just i'm carefully just going to lift up and move over, i'm not just going to shift itacross the fabric because that can cause wrinkles. and then i can go ahead, lift it up and seeif i need any other sections that maybe i missed, looks pretty good. so again you aregoing to do this for both pieces. step two, place fabric 1 strap to fabric 2strap, right size together, stitch outer edges leaving short edge with dots open. trim seamallowances, turn strap right side out and press, top stitch close to stitch outer edges,place strap to upper at placement with fabric 1 sides together, stitch across seam allowancesto keep strap in place. </p>
<p>so this is, there are several parts to thiswe are just going to take one part at a time. first thing that you need to do is you aregoing to take your fabric that comes with piece number 1, so this is the strap, andyou should have cut out two out of fabric 1 and then two pieces out of your contrastingfabric 2 pieces. all you are going to do is you are going to take one of this one, oneof this one, and you are going to place them so they're going to be right sides together. so i'm just going to pin all the way aroundand then i'm going to do the same thing with this one but i'm just going to move it sowe can concentrate on this. so after i pin it, i'm just pinning them to hold them inthe place, what you are going to do is you </p>
<p>are going to stitch here, here and here, thisside is going to stay open. so this is the side that i have my small dots from my patternpiece, so i'm just going to leave this open and i'm just going to stitch along these threesides. you are going to do a quarter inch seam allowancewhich means that where the needle is, its going to be a quarter of an inch to the edgeof the fabric. also don't forget to do a couple of back stitches and you are doinga regular length stitch. next you are going to trim your strap, you can see i have alreadystarted here for the corners; i like to cut he corners off, so i just cut diagonally makingsure that you don't ever cut into your stitches and then you are just going to trim most ofthis off. when you finish with that, go ahead, </p>
<p>take your strap, flip it right side out andyou are going to press it, and you get a strap like this, and then i'm going to show you,how you top stitch it. when sewing the top stitch, you are going to get as close to thefinished edges you can. so you are just doing it for the three finished edges not the openingthat you have at the end, and don't forget to back stitch and again you are just doingthe regular length stitch. going back to our piece number 2, you willsee right here we have strap placement and will have two dots, this is going to be awhere we place the strap we just created. so this should have been transferred to yourfabric and you can see mine here. so you are going to take your strap and this is rightside up, you are going to take your strap </p>
<p>with fabric number 2 right side up and youare going to place this. so the open raw edge is going to line up with this raw edge righthere and you are just going to place it so it's between these two dots. go ahead, pinit and stitch your one-quarter inch seam allowance. step three, for fabric 1 upper right sidestogether and stitch the center back seam, for fabric 2 upper right sides together andstitch center back seam, press seam allowances open. so now you are taking us with our strapit's now attached and you are going to match this up with this up because this is our centerback seam. right side is facing up, so then when i fold it in half its going to be rightside together. you are going to do this for all your numbertwo pieces. you are going to pin and stitch </p>
<p>your one-quarter inch seam allowance up here,so i'm doing it for my two fabric 1 pieces and i'm also going to do it with the fabric2 pieces. i have the same thing, right side facing up folded in half, matching this areaup here, the center back seam, you are going to pin and stitch one-quarter of the seamallowance. and in this particular case, you are going to press your seams open. step four, place fabric 1 loop to fabric 2loop right sides together and stitch long outer edges. trim seam allowances, turn loop rightside out and press top stitch close to finished edges, cut loop in 2 1 inch long pieces. foldloop in half with fabric 1 on the outside. pin loop to fabric 1 upper, centering loopover center back seam with raw edges even </p>
<p>stitch across seam allowance to keep loopin place. we are going to create the loop that's going to be on the back heel of thebooties. so for this one for piece number three, youactually only needed to cut one out of fabric 1and one out of fabric 2. just like we didwhen we did the strap, you are going to put the right side together and go ahead and pinthem. this time though you are going to stitch your quarter inch seam allowance on the twolong edges. so these sides are going to remain open and here is the one that i finished andyou are going to go ahead and turn your seam allowances as before. then you are going to take your loop, andyou are going to turn it right side out so </p>
<p>you can press it, and for this i'm just goingto use some heavy duty thread and a needle, and i have a knot on one end. i'm actuallygoing to just maybe eighth of an inch down, i'm just going to go through one side sothrough fabric 2 so my knot sticks. then i'm going to take the eye of the needle and that'sgoing to go down through the opening side here and i'm just going to move it along untili get to the other side because i'm going to use this thread to help me turn it rightside out. so here it comes over here, so i can actuallyloose the needle because i don't need anymore just to help me to kind of pull it through,and then you are seeing its starting to go in. sometimes you need to just help it getit started. then you are just going to gently </p>
<p>pull it. be careful you don't pull it toohard or you might actually just rip the thread through the fabric and then you got to startover. once it gets started though, it will go really fast, it's just the trick of gettingit started, there it goes. so here it comes. this is a -- once it gets started it's apretty quick way. turn it right side out. so once you finish you can then of courseremove this thread, just cut it off if you need to. you are then going to press it, and you aregoing to top stitch it on the two finished sides. these sides again are going to remainopen. you are going to take your strap and you can see i did the top stitching on thetop and the bottom and you are going from </p>
<p>one side, measure over 2 inches and from thatpoint you are going to measure another 2 inches and you are going to make same marks, becausewhat we're going to do is we're going to cut our strap so we have 2, 2 inch pieces. andthen you have little piece which we can toss, we don't need that. so here's my two. so one is going to go withone shoe, and one is going to with the other shoe. i'm just going to show for one. youare going to take this, you are going to fold it in half so fabric 1 is going to be on theoutside. then you are going to take one of your booties, and this is where we have thecenter back seam. i have it right side facing now you can see my seam on the inside. soon the right side, at the top of your bootie, </p>
<p>so the side that's going to have all yourstraps and everything like that. so this is the top, you are going to match up the rawedge with the raw edge of your strap as folded in half. and it's going to go right in themiddle of that center back seam. i'm going to go ahead and pin that and thenstitch a quarter inch seam allowance and i'm just pinning this loop with the top of mybootie. all this other stuff are going to keep it out of the way, and i'm going to doit for both of them. step five pin the fabric 1 upper and the fabric2 upper right sides together at the foot opening of our loop end strap. match the center backseams and the notches. stitch the foot opening and strap edges, clip and trim the seam allowances,turn the upper edge right side out and press. </p>
<p>all you are going to do is you are going totake each bootie, so you are going to have the main which is fabric 1 right side outand you are going to match it with one of fabric 2, and this is going to be the rightside in. so you are going to put one on top of theother, so now, the right sides are together. make sure that your center back seam matches.it's all right if the strap pins down, we are just going to just keep it down and keepit out of the way. so all your notches should match, you are just placing one on top ofthe other so everything lines up and then you are going to pin and stitch your quarterinch seam allowance all along this top and even up here down here and all the way onthe side. </p>
<p>so you see we have this mark from our patternpieces, this going to be your stitching line so you are going to -- when you stitch yourquarter inch seam allowance you are going to come down here, you are going to stitchon the stitching line, you are going to pivot, come up, and then continue stitching hereand do the same thing on this side. this one you can see is already pinned, so i just madesure that everything is lined up and then i pinned it into place. after you finished stitching, go ahead trimyour seam allowance and then i like to do these little notches, inverted notches, beingcareful not to cut into my stitches because this is going to help for the curve areas.and when i'm trimming i'm trimming all the </p>
<p>way down to the point again not cutting intothe stitches. then you are just going to turn it right side out and press it. step six, fold the fabric 1 and fabric 2 upperswrong side together, match the notches and center back seams and stitch raw edges togetherand top stitch close to finished edge. so now, you could see my bootie is folded soi have fabric 2 on the inside, fabric 1 on the outside. all that i want you to do isall this bottom edge here, they want you to take both fabrics match them up and so allthe notches match up, the raw edges match up and our center back seam matches up andyou are going to go ahead and stitch all along the bottom of the shoe. you can go ahead anddo that at the quarter inch mark. </p>
<p>you are also going to make sure that you topstitch all along the top so wherever you have a finished edge, you are going to top stitch.so this is including this part right here and then you go all along the opening of theshoe, you don't have to do the strap because we've already done that. and here you cansee i have already done this one and it's all top stitched and then it's stitched onthe bottom. step seven, place the fabric 1 side upperto fabric 3 sole. at the sole seam, match the notches and stitch close to the edge tokeep layers together. place the fabric 2 sole to fabric 3 sole, soles are now right sidetogether with the upper in between matching the notches and pin. stitch the sole seamleaving an opening on one side for turning </p>
<p>right side out, clip and trim the seam allowances.you are going to take your bootie, and you are going to flip it so fabric 2 is on theoutside so it's basically inside out. then you are going to take one of your solepieces one for each shoe and you will see the gripper fabric that has the bubbles onone side and is smooth on the other side. so the side with the bubble should be facingup. you have a double notch in the back that goes toward the back of the shoe, the singlenotch in the front goes toward the single notch in the front. so this double notch isgoing to match my center back seam and the first part all i'm going to do is i'm goingto pin the edge of the bootie with the edge of the sole piece and you are going to stitchit. you could just stitch it close to the </p>
<p>edge. you are going to stitch it all the wayaround the whole thing. after your sole gripper fabric is sewing onyou are going to grab now the sole piece cut out of your fabric 2 piece. so it's goingto be right side to right side of the soles, and you are basically just making a sandwichso your shoe part is going to be in the middle and you need to make sure that your strapstays out of the way because we don't want to accidentally sew it in our seam. so now, this is going to match up all of thenotches and you are going to stitch all the way around except you are going to leave acouple of inches opening usually between either at the back heel notch and the side, justleave a couple inches open so we are able </p>
<p>to turn the thing right side out. but forthis one you need to go ahead and do it quarter inch seam and then once you finish that, youcan see this one is sewn, there's my strap. you are going to go ahead, trim it, and thenyou are going to clip your notches because you always do that for the curved areas. step eight, turn bootie fabric 2 side out,fold under seam allowance at opening and stitch opening close with hand stitches. turn bootiefabric 1 side out. so now just from this opening you have, you are just going to pull everythingout and when you do that your fabric 2 piece is going to be on the outside. so here it'scoming out. right, so it's still inside out, the fabric 2 on the outside, you are seeingthe right side of fabric 2 for the sole and </p>
<p>you see the gripper fabric on the inside ofthe shoe. all we're going to do is we're going to turn under all these raw edges so we canslip stitch this opening close, but we will get a little closer so we can show you howto do that. at the opening, i folded over all of my rawedges so everything is even and then i pin it into place. so this part you are goingto do it by hand, so you need some matching thread and a needle, i'm going to go aheadand use orange thread so it's a little bit easier for you to see but we're going to startright here where my opening starts. now, i'm going to do is, you just pick a side, youhave this side which is the sole and then you have this side which is the side of theupper. </p>
<p>so i'm going to start here on the sole, andi'm just gabbing right along side that inside fold there and i try to get on the inside fold becausethen i could just tuck my knot in there so my knots not going to show. so now that i'mon the sole side now, i'm going to grab the side of the upper just a little bit you don'tneed much. and now i'm going to go back to this other of the sole side, just grabbingagain on the inside fold line and you want to keep your stitches even and consistentand if you do it nice and neat, then you shouldn't see them once you pull it. you could see minea little bit because it's orange, but pretty much it looks pretty hidden. so i'm goingto go back to this side, you know just going back and forth between the two sides untilyou've stitched the whole opening. </p>
<p>to finish the step just turn your bootiesright side out. step nine, cut one piece of one inch velcro three-quarters of an inchlong. cut velcro in two half inch pieces. set one piece aside for second bootie. stitchthe soft side to end of strap and hard side to upper at placement. so you are going tocut your pieces of velcro and you have your soft side and you have your hard side, andyou also have, well you have two sets one for each shoe. the hard side is going to goto the upper at the side right here, right where you have that box on your pattern piece.if you want to make them a little bit smaller so that they are a little bit more hidden,you can. so i'm going to pin this, and i'm going tostitch around the perimeter of the velcro </p>
<p>and you can either do that by hand or by machine.then the soft side is going to go at the end of the strap. so the same thing i'm goingto pin it, and then i'm going to stitch it into place. last step, step 10, fold over t-strap to insideover strap. stitch and place securely with small hand stitches making sure that strapcan move freely. so now you are going to take your strap that you just sewed your velcroand you can go ahead and velcro it into place like that. now this part right here, thisis the t-strap. all you are going to do is you are going to bend it over the strap andyou can pin it or just hold it into place. i'm just going to flip it to inside out, sothis just a little bit easier for this next </p>
<p>part. so you can see it's folded over and all i'mgoing to do is now i'm going to do my slip stitch or whip stitch whatever one you preferand you are going to hand so the edge of the t-strap to the t-strap, not the strap becausewe want to make sure that this can move through it freely. so all you are going to do is doyour hand stitches right here on this fold, and then your bootie is done. here's viewa completed and now if you are interested in also seeing how we did view c then continuewatching because that one is up next. here is an example of the view c bootie thatwe will be creating in this tutorial, so let's get started. view c step 1, fuse interfacinginto wrong side of fabric 1 front and fabric </p>
<p>2 back pieces. so now we're going to be applyinga fusible interfacing to two of our pieces 10 and 9, and i'm just going to show you withone shoe, but you definitely need to do this twice so you have it for the pair. the first one number 10 that we are lookingat here, this is going to be the fabric 2 piece and you are going to have your matchingfusible interfacing piece with it. the number 9 is with your fabric number 1, and againyou have the matching fusible interfacing. now with this one you were supposed to cutfour pieces out of your fabric 1 piece and two go with one shoe, and two go with theother shoe. so with the shoe i have two of these, but i'm just going to apply the fusibleinterfacing to one. </p>
<p>and you always put the fusible interfacingon the wrong side of the fabric, so i'm just going to show how to apply it on this fabric.so you can see the wrong side there's the right side so the wrong side and then if youfeel the fusible interfacing, you will feel the glue bubbles on one side, and then itwill be nice and smooth on the other side. so the side with the glue bubbles go the wrongside and you are going to lay it down perfectly so all lines up. you are going to grab yourpress cloth. i already have my iron heating up you are going to dampen it and then youare carefully going to set your iron down. and if you can't get the whole piece you canget ahead pick it up, and then move it over, don't just shift if across the fabric oryou might wrinkles on it. </p>
<p>then you can always test it, and see if youneed to apply to certain areas like this part i didn't get, but the rest of it is prettyfused. so i can go ahead and just do this one section if i need to do this and i'm goingto do this for all pieces that needed the fusible interfacing. step two, place front pieces, right sidestogether, stitch top and side edges, trim seam allowances, turn front right side outand press. stitch raw edges together at top stitch close to finished edge. you are goingto take one pair of your piece number 9. so one has the fusible interfacing that we justdid, one does not. you are going to place them so there right sides together. so theright sides on the inside and you just need </p>
<p>to pin along this top curved edge so the sidethat does not have any notches and then we are going to take it to our machine so wecan do a seam. when doing your seam don't forget to makea quarter inch and you are going to back stitch on both ends. like we do with all curved seams,you are going to go ahead and clip these notches into your seam allowance, and then you aregoing to trim it. you probably just get rid of half of the seam allowance and the reasonwhy we clip notches is because when we flip it right side out it will lie a little bitflatter, won't be as bulky that's why you do the little notches. so now, we can go aheadflip this right side out so the seam is going to be in between the two layers and then youare going to press it so we will have a nice </p>
<p>flat curve. the two layers should now line up. so allyou are going to do is you are going to pin them together and on this curve with all thenotches you are going to stitch a quarter of an inch away from the edge and you canjust do a regular stitch. then you are going to top stitch on the finished edge, we aregoing to stitch right along that top fold line where your seam line is, and i will showyou an example. so here's the stitch on the curved edge aquarter of an inch away stitching the two layers together and then here is the top stitch,but we will get a little closer at the machine so i can show you how i did this. the topstitch is a finishing stitch so it's going </p>
<p>to look a lot nicer. what i'm doing its juststitching as close as i can to my finished edge here and you are just doing a regularwidth stitch. you do need to back stitch on both sides and that's all you need to do. step three, place fabrics 2 back to fabric1 back right sides together, stitch top edge, trim seam allowance, turn back right sideout, and press. stitch raw edges together, top stitch close to finished edges, basicallyyou are going to be doing the same thing except for we are doing it with piece 10. so youhave one out of your fabric 2 and this is the one that has the interfacing attachedto it and then you have one out of fabric 1, no interfacing attached to this. </p>
<p>so you are going to put your two pieces rightsides together so my right side is on this side and you are going to pin and stitch yourquarter inch seam allowance starting here going up over the top and back down here.so this side with the notches we do not sew your quarter inch seam allowance, but allthe other edges we do. go ahead and trim your seam allowance and clip in your notches likebefore, and then you are going to flip this one right side out and you are going to pressalong the finished edge. and just like we did with the other one onthe open edge with the notches, you are going to go ahead and stitch a quarter inch fromthe edge and on the finished edge you are going to do your top stitching which i alreadyhave done here. so you could see the quarter </p>
<p>inch stitching down here, and then the topstitching is all along the finished edge. to finish step three, attach grommets to backat placements following manufacturers' instructions. so on our back piece you are going to seelittle xs and this is going to be where we actually placed our grommets or eyelets. sothe grommets they suggest are a little bit too big for the areas. so i'm actually using5, thirty second eyelets so that's 5/32 and to put them in with grommets you need pliersbut with eyelets, you could just do with an eyelet tool and a hammer. so wherever youhave an x you are going to use the tips of your scissors and you are just going to cutin that area and you are cutting through the top part and then also the one underneaththis. you are going to both layers of fabric </p>
<p>and you are just trying to get big enoughso you can take your eyelet and put it through the hole. now, if you look at an eyelet you will seeit has one side that's flat and then one part that sticks out, you only need one for eachsection that you are going to put a hole. so for each shoe you need four of these eyelets.and the part where it's sticking out that is the part that's going to go through myhole so my fabric number 2 is facing up and i'm making sure that the flat side is on thesame side there. so if you need to make your hole a little bit bigger to get it throughand then can go ahead so you could see its just coming through and its not going to looknice and neat on the wrong side, but that's </p>
<p>fine. so once it's through, if you've never doneeyelets before i recommend you buy the package that comes with the kit and all it does comeswith some of the eyelets and then it comes with this little tool here. so we have onelong one, and one short one, and you will see on each side one side will have this littlegrooves. so i'm going to lay the short one down with the groove side up and i'm actuallygoing to flip it to the back side because you want the flat part of the eyelet to fitinto your groove. so you are going to set it right in thereon the tool, and then you are going to take the long part with the groove and it's goingto set right on top of your eyelet. and then </p>
<p>all you need to do grab a hammer, you don'thave to really hit it that hard. just a little few good hits and, well let me try that again,and it's actually going to flatten out and i will show you a better example because idon't have a lot of room to use it. but this is what it's going to end up lookinglike. so you just need to do it for all those areas and again there's going to be four oneach shoe that you need to do and i'm going to go ahead and do my last one, and then wecan move on to the next step. step four, with fabric 2 side up, lot backover front matching notches and placements, stitch across seam allowances to hold in place.so you are going to take the back with the front part here and all you are going to doyou will see we have our single notches right </p>
<p>here which is close to our top stitch finishededge. these are going to match the single notches that you have down here. so all you are going to do is you are justgoing to kind of fold this in half. you are going to take one of this and make sure thatyour fabric 2 side is up here. you are going to match up the single notch with this, andthe single notch here. once they're lined up go ahead and pin it. so they're just overlappinga little bit not much actually. and then i'm just going to fold this over to this otherside so i will just turn it this way and you are going to do the same thing over here.notches are matching up. so now it's starting to look like a -- likea little shoe here. and all you are going </p>
<p>to do is on each side, you are going to goahead and stitch your quarter inch seam allowance, but you only need to do the parts that areoverlapping so you don't have to go over here and you don't have to go back here.just start here and then end where this piece ends right back here. step five, place the fabric 1 to side frontand back to the fabric through sole. at the sole seam match the notches and stitch closeto the edge to keep the layers together. place the fabric 1 sole to fabric 3 sole right sidesare together with the front and back in between, match the notches and pin. stitch the soleseam leaving and opening on one side for turning right side out clip and trim seam allowances. </p>
<p>you are going to take one of your bootiesand you are going to flip it so you just have the fabric 1 showing so it's the insideof the show that basically its wrong side out. you are going to take one of your numberthree sole pieces, so this is out of the gripper fabric. you are going to take this and layit right on top matching the double notch in the back and then all the single notches.you are going to pin and stitch all the way around the whole bottom of the shoe and youjust need to do it close to the edge, you don't need to do at the quarter inch, youcan do it at the one-eighth if you want. so what you end up with is something thatlooks like this. next, you are going to take your sole piece made out of your fabric 1and basically what you are going to be doing </p>
<p>is you are going to be sandwiching the shoebetween two pieces of sole. so we have the number three and then we have the number onein here making sure this is the right side to your shoe, and again you are going to bematching all your notches. we are going to pin all the way around so everything is linedup. now, you are going to quarter inch seam allowance,but you are going to make sure that you leave at least a couple of inches opening on onepart of it because we need to flip the whole thing right side out eventually. so you couldstart about here, don't forget to back stitch again you are doing that quarter inch seamallowance sewing all the way around. and then once you get passed this notch over here,you go ahead and maybe stop right here so </p>
<p>between here and here is going to stay openso we could flip it right side out. now because the shoe keeps wanting to popup, as you are sewing it, you may have to make some adjustments that means just moveit around so you can make sure that in the middle the shoe is staying flat and you arenot accidentally folding it and then stitching it, and then you end up having a wrinkle.so just, you just have to maneuver it a little bit and just be really careful and alwayskeep checking. lastly, you are going to trim your seam allowance and clip these littlenotches because we always do that for curved seams. step six turn, bootie fabric 1 side out, foldunder seam allowance at opening and stitch </p>
<p>opening close with hand stitches. turn thebootie fabric 1 to side out. so here is the bootie and from the opening you are goingto go ahead and pull everything out, so you have your fabric sole showing and you alsohave fabric 1 showing on top. so this is how it ends up looking after you pull everythingthrough your opening. you are going to fold over your opening theseam allowance and pin it together so we can slip stitch this opening close. so we're goingto get a little closer to show you how to slip stitch this area. here is my opening,you could see that i folded over the raw edges so everything lines up, and all i'm goingto do is a slip stitch which is done by hands. you are going to want to get some matchingthread and a needle and i'm just using a contrasting </p>
<p>thread so it's a little bit easier to see. so here we have the folded sole side and thenhere we have the top of the shoe or the bootie then i'm actually going to start on the solesides. so i'm just grabbing a little bit of the inside folded edge and i try to grab theinside folded edge because i just want to be able to tuck that knot inside so it'snot going to be showing. then i grab a little bit in the same area of the shoe and then i'm going to go back to the soleand then to the shoe. so i'm just going back and forth, back andforth between the two sides until your opening is closed and i try to keep my stitches smalland consistent because i don't want them to show that much. and you can see mine obviouslybecause it is white but if you do it really </p>
<p>nice and neat then it should hardly be visible.after you finish slip stitching, then you get to do the fun part, which is flip theshoe right side out. step seven, cut two pieces of ribbon each18 inches long, place one ribbon through grommets, reserve the other piece of ribbon for theremaining bootie. so you are just going to cut your ribbon 18 inches long and i justput it on the big needle so it would be a little bit easier for me to go through myeyelets and then you just lace it as you would a normal shoe. so i'm starting at the bottomone going to the opposite side and going to the eyelet on top, need to pull this off andthen i'm going to do the same thing on the other side. so i'm going to go from here tohere and then i'm going to tie it in the middle. </p>
<p>here's a completed look at view c. now, ifyou are interested in seeing the tutorial on view a, don't forget to check that outas well. make sure to check out our other videos and visit professorpincushion.com toview our complete library through well over a 150 sewing video tutorials. new tutorialsare released regularly, so make sure to subscribe to be notified of the next release. thanksfor watching. </p></div>
<iframe width="560" height="315" src="https://www.youtube.com/embed/LD09qcbYs18?rel=0" frameborder="0" allowfullscreen></iframe>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-5836051384020530536.post-57888994696770848142016-12-14T07:25:00.001-08:002016-12-23T22:33:20.514-08:00blue suede shoes<div style="text-align: center;">
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<div align="justify"><p>>>unidentified speaker: [italian language]nikesh arora, president, europe and italy's africa operationand senior vice president, google. >>arora: thank you. >>unidentified speaker: tsunami is comingfrom america. yes? you had that? >>arora: sunami is coming from america? >>unidentified speaker: yes. >>arora: i heard there are tremendous amountsof opportunity. >>unidentified speaker: [laughs]okay. the floor is yours. >>arora: thank you. thank you.good morning. </p>
<p>i understand half your cars were stuck intraffic jams, or trying to get here. so that bad news is, the room is half empty.the good new is, you will be the only few people with select informationon how to deal with all this crisis. right? [applause] >>arora: okay. let's talk about what happensnext. where are we going?the challenge in speaking after somebody who has so eloquentlytalked about the crisis is, i can't talk about the crisis.right? he already stood here and showed us </p>
<p>tremendous amountsof charts about what's going to happen. we've seen pictures of the crisis and discussionsabout the crisis all over the place. i was in davos with our founder, larry page,and he was asked by a journalist, "what do you think about the crisis?"for those of you who do not know larry page, who have not met larry page,larry is not an economist. he's an engineer.any engineers in the room? anybody here who is an engineer?who made a mistake before they came to the media?okay. none of you. good. so, he answered the question by saying, "ifyou think about the economy </p>
<p>from an engineer's perspective, nothing haschanged. we still have the same number of people inthe world. we still have the same amount of manufacturingmaterial in the worldã¢â‚¬â¦ gold, copper, oil.we still have the same capabilities as individuals. technology is continuing at the same pace.so, in an engineering context, none of the constraints have changed.nothing has changed. in fact, the prices of things have gone down.you can buy oil cheaper. you can buy lots of construction materialcheaper. so why has suddenly the world gone from thisway to this way? </p>
<p>and his hypothesis, which is fascinating,is that what has changed is consumer sentiment.suddenly all of us have become way more apprehensive, way more pessimistic, we're all thinking,"well, maybe i won't buy the next car now. maybe i won't buy the new house."and suddenly, as consumer optimism changes, it actuallyhas an impact on the economy. because all of us don't want to spend money.if you don't want to spend money, it impacts companies.it impacts our ability to keep jobs. so his view, which is interesting, is theway to get out of this crisis is actually to find a way to start makingconsumers more optimistic, </p>
<p>because engineering constraints have not changed.so let's see. so, hopefully, part of this exercise is to try and seeif all of you guys can go out there and create optimism in the minds of consumers.the thing about it; unfortunately, what is this doing to the advertising business?if you look at advertising around the world, the expectations arethat advertising is going to decline. surprise. surprise.everything is declining. the economies are declining.i think, for the first time, the world economy is supposed to growonly at half a per cent in 2009ã¢â‚¬â¦ the first time in 60 years.and as we go through the year, it might be </p>
<p>that the economyactually declines globally as opposed to going up.so we have a situation where advertising is going to decline in 2009.if you look at where that decline is going to come from,these are figures by xena topco media... i'm sure all of you are aware of.i think they're too optimistic. i think they're expecting a decline in televisionby 1.6%. if i look at generally, television is actuallydown between 10% to 15% in most major markets in europe,if you look at franceã¢â‚¬â¦ the u.k. it's down 10% to 15%.another competitor thinks that television </p>
<p>is going to be downabout 8% to 10% this year. so, life is going to look very different froma media perspective. there is one part of this, which you can seeis growing, is the internet, expected to grow at 12%.maybe it doesn't grow at 12%. maybe it grows at 5%.maybe it grows at 2%. as somebody said the other day, flat is thenew up. so if you can stay flat, it's a good thing.if you look at this, and see, what's happening? before this financial crisis came about, theone thing that was happening was we were going through some sort of a revolutionin the media industry. </p>
<p>things were beginning to change in the mediabusiness around us. and all that this crisis has doneã¢â‚¬â¦ithas actually put both effects into the same basket.it's going to both happen at the same time. we have a media revolution going on.we have a financial crisis, which is sort of we're in the midst of.if you think there are about 7 billion, 6-1/2 billion people around the world.there are 1.4 billion people who are online, around the world.that makes it the world's largest information, communication,and broadcasting network that has ever existed. the 1.4 billion represents over 85% of theworld's gdp. </p>
<p>if that was a country, it would be one ofthe most populace countries in the world, competing with india and china.so suddenly, where people are building goods and servicesfor 100 million people, or 40 million people in poland, now you canactually build a good and service for 1.4 billion, becausethey're all connected in the same way. if you look at the successes in the last tenyearsã¢â‚¬â¦ google, my space, facebook,you tube, skike. all these are businesses which have actuallybeen created to target the 1.4 billion consumers that exist on the internet.if you believe the 1.4 billion people are </p>
<p>online, which you have to believebecause they are, and you look at what else is happening around themã¢â‚¬â¦let me start at the top left. there are tremendous amounts of more interactivityin control in the hands of the consumers.for those of you who have children, they actually are way moretechnologically savvy and are able to interact with mediaa lot better than a lot of us can. they are on you tube; they are on my space;they are on facebook; they're talking to each other; they're interacting.this is media. facebook and my space are another form ofcontent creation. </p>
<p>we call it user-generated content, which isslightly different from professionally-generated content, but soã¢â‚¬â¦contentis being created, and consumers are interacting with that content.and they've taken over the control. it's using tremendous amounts of interactivityin control. if you look at the notion of content explosion,how many of you, as i'm sure, all of you know about you tube, right?how many of you have watched a video on the web in the last month?some of you have, at least about 50% of you. in the u.k., where i live, 80% of the peopleclaim to watch one video a week, at least, on the internet.one out of five have admitted to having watched </p>
<p>a full length television program,or a full length tv series, on the internet. fifteen hours of video is uploaded every minute,on you tubeã¢â‚¬â¦ 15 hours. if it makes you understand it better, equivalentto 86,000 movies being released every week by hollywood.that's the amount of content that is being created by consumersand uploaded on a minute by minute basisã¢â‚¬â¦15 hours of content.so, there's a huge explosion on content. suddenly, there's lots and lots of content.now what does that do for people in the media business?it increases the amount of fragmentation. it's very hard.i remember, i grew up in india, and i'm sure </p>
<p>this is not untrue in poland.twenty years ago, we had one channelã¢â‚¬â¦ one television channel.imagine the job of a media buying in television? you want to buy a media?yes. i've got one channel. i've got six slots.which one do you want? today, that problem is slightly more complicated.today, in the u.s., the top five channels account for only 31%of television's consumer viewing. in europe, that number is still in the 70%to 80%. but, as you look at the fragmentation, suddenlythere's competition for tv from you tube; from my space; from onlinejournalism; a whole bunch of stuff. </p>
<p>so if you take all of this together, we aregoing to a world where consumers will take control.there's tremendous amounts of content. and there's tremendous amounts of fragmentation.so where do we go? where are we headed?if you look atã¢â‚¬â¦ i'll give you four different examples.the first one, i think, as we go forwardã¢â‚¬â¦ today we make a mistake.we think of online as a different medium from print, television, newspapers, and radio.i think as we go forward it is a very important thing about onlineas a way of distributing our content, whether it's created for tv,whether it's created for radio, whether it's </p>
<p>created for magazines;because anybody who is creating content is actually putting it on the web,and using that just as another distribution mechanism.so online is not a different beast. it is actually part of the integrated contentcreation and content distribution strategy going forward.it has got to be more personalized and more participatory.the chairman of the bbc, mark thompson, said three years agothat we are five years away from fully individualized drag and droptv and radio stations. if you think about that, today in the u.k.,you can watch most </p>
<p>television programming that you have missed,you can watch it on the internet on the bbc's i-player, oryou can watch it on the sky-player. so what is happening is i'm no longer boundthat i have to watch this program on this channel at 9:00 p.m. on friday, and,if i miss it, life is tough. i just have to wait for the broadcasting guardsto decide to let me see it again. it's not happening any more.so as we go forward, it is not unlikely that consumers will designtheir own channels and design what they watchã¢â‚¬â¦ which, again, feeds into the idea of fragmentationof the media. here, roberta said something as interesting,"content alone can no longer win." </p>
<p>that is an interesting thing.if you look at the sudden surge in television programming, which is user managedã¢â‚¬â¦big brother and reality shows where consumers are getting involved,and getting engaged in the content. there's tremendous amounts of engagement.i will show you how an israeli musician, s/l kokadumanti, decidedã¢â‚¬â¦he went to you tube. he took a whole bunch of different clips fromyou tube, and decided to create his own album.he didn't create any content. he just mixed it.he went to you tube and found a whole amount of music at you tube;took a whole bunch of videos and put them </p>
<p>into an albumand released it through friends. it has now a few million viewers a day, andhe had only three guys who actually helped him.let's see if it works. [played audio/video] okay. well, again, the point of this videowas that this guy actually went to you tube, saw all these videos, andmade this himself. he just took different clips, re-edited it,made it into a cd, and he's now selling this as an album.he gave credit to all the people who are in here.the point i'm trying to make is that these </p>
<p>things havethe tremendous capability of changing the way contentis going to be discovered in the future and how we will find our next artist.it is not longã¢â‚¬â¦ you have to wear a hat and go to a bar in america,and listen to all the people playing overnight and decide who your next star is.in the future, people will find the future leaders, whether it's musicians,artists, etc., somewhere on the internet. at some point, if you follow the media industry,there is a very complicated structure in the past betweentalent agencies, producers, broadcasters, advertisers,and how talent was controlled and managed </p>
<p>in the past.if you look at what's happening today, everybody can go on the internetand go and target the audience, whether it's an 11-year-old girl singing,it's a 16-year-old girl, it's a 20-year-old guy, and it's kokadumanti from israel.everybody has the opportunity of going and targeting the 1.4 billion people.now, what this means for us from a media perspective is, in the futurewe won't be just going to television stations and trying to findthe content that we want to advertise on. we will have to figure out what the most popularform of content is and what the most popular way to get to that contentis going to be. </p>
<p>in the past, if you think about the way advertisinghas worked, we had television, print, and radio.internet advertising came on the scene about seven years ago.when google started, you could buy one link for $15 at the top,$12 in the middle, $10 at the bottom. that's it; you could buy three links on googlefor search advertising. in 2002, we decided to go into an action mechanism,and we started auctioning these ads. last year, google made $20 billion in searchadvertising. i think the total market around the worldis about $30 billion to $40 billion in search advertising.which begins to compete with print; and begins </p>
<p>to competewith radio, in 2007 and 2008. at that time, search was only used as a directmarketing tool. so, if you don't want to market in print,if you don't want to market in radio, you can do direct marketing on the web.what's beginning to happen, i think, is we're beginning to see different ways of advertisingon the web, which allows us to do brands related advertising.if you look at the display of mechanisms. if we are trialing things on you tubeã¢â‚¬â¦we're in the middle of a videoã¢â‚¬â¦ you can show an ad.you can associate your ad with the video. so you're beginning to see branding type ofadvertising come on the internet. </p>
<p>i think that is going to be the next big explosionin online advertising, where it begins to knock on the budget oftelevision; begins to draw on the budgets of brand advertising.and i think that, over the next three to five years, we're likely to go to a phasewhere there's just going to become one part of the integrated campaign.and what i'dã¢â‚¬â¦ rather than trying to explain how this works,let me try and show you what sony did. is anybody aware of the sony foam city campaignwhich they just did? yes? so they took, basically, a city blockin miami and started a foam machine which can fill up an olympic pool in about24 seconds, and then they gave </p>
<p>recording equipment to 200 bloggers and amateursand said, "go ahead and design the best piece of contentin ads that you can." they're using that content now as part oftheir online program; as part of their television programming; andthey're constantly re-using it. they've changed the way they involve users,engage the users; they've changed the way they involved agencies;they've changed the way they create the campaign. so online has become part of their whole strategy.before this, they had the bouncing balls campaign, if you remember.and the bouncing balls campaign did not have any online engagement,online mechanism. </p>
<p>this campaign is 40% online.this was one example; here we go. [music and video playing] this is a classical, traditional media campaigndesigned by users and where users have been engaged.i think this is possibly where we could be going to,if you think about how advertising is done. there is actually a website called openad.netwhere there are 11,000 media professionals who are available,and you can actually ask them to pitch an idea.and within two weeks, they give you a pitch, and then you can chooseamongst their different pitchesã¢â‚¬â¦which </p>
<p>one you want to adapt to your campaign.actually, agencies are beginning to use this as opposed to going outand spending four to eight weeks trying to design a concept.they put the idea over there, and there are 11,000 professionalsand they have to react to it whether they're individuals or agencies,and make pitches. it's going to be interesting to see how thiscomes out. so where are we going?i think you are going to see tremendous amounts of shifts towardinternet distribution, because internet is basically a distribution platform.it is not something that is owned by google, </p>
<p>or you tube,or my space, or facebook, or bevo. it is actually a platform where 1.4 billionpeople are connected. so it allows for very quick and cheap distribution.we are going to see a lot more personalization in the media space.we are going to see the content supply chain open up.content will be created by many, many, many different people out there.and, last but not the least, i think you are going to see a new eraof cross of cross-media advertising. now, what does that mean?what do we do? this is great information, what do we do asmedia agencies; </p>
<p>what do we do as advertisers; what do we doas content creators? i think there are four big things i wouldlike to make that i give you as parting messages.oneã¢â‚¬â¦ one has to get back to your core. it's very interestingã¢â‚¬â¦ i talk to lotsof newspapers, and when i'm talking to newspapers, they feel somehow the internetis destroying their businesses. and they feel that newspapers are going tobe in sequential decline, because their content is free on the internet;their circulations are declining. not quite so the case in poland, just yet,but definitely in the u.s. and the u.k. and they're sitting there and saying, "howdo we [inaudible word] current scenario? both </p>
<p>[inaudible word] economic crisis as well asthe advertising crisis?" and the challenge is, if you go back and think,when we had no internet, every country had four, five, six newspapers;you had regional newspapers. there were 12,000 newspapers around the world,right? and people who would come to a press conference,they would write articles, they would go back home and present them totheir audiences in the different countries.today, if you go to a press conference and you write an article,in about an hour on any given topic, you can find 150 to 500 articleson the internet about that same issue. </p>
<p>and as a consumer, i do not have appetiteto read 500 articles on the internet; maybe two; maybe three onthe same topic, but not 500. so the question becomes, "has the internetdistribution platform created an over commoditization in certain areas ofcontent? and a huge gap in certain other areas of content?"but if you go ask the newspapers, they still write about the same things.i get on a airplane; i pick up three newspapers at the door.by the time i have read my first newspaper and half of the second,i feel like i'm reading the first newspaper. so there's clearly an over commoditizationin that area. </p>
<p>so the question is, what is your true valueas a newspaper? if i go to a newspaper web site, they usedto produce a newspaper which had weather; which had the televisionprogramming; a bit of critics on television.it had a bit of international news and a lot of local news.if i go to the web and read their newspaper, and i want to readinternational news, i can actually read a newspaper in china.or in india in english, get more international news than i can getfrom the one page of the times in the u.k. so the question is, is the times rally propositionin the u.k. on the web </p>
<p>actually an international proposition, oris it a british proposition? the point i'm trying to make is that it isvery important to rethink in the online world, what is your core confidence?what are you doing which is better and different from other people around you,as opposed to what are you doing just because you've been doing itfor the last 10, 15, 20 years? second one is, i think it is very importantto challenge the rules. it is very important to go back and think,"what is it that we need to do differently?" i took the example of the newspapers.there is a principle that we have to do everything ourselves,that our true value is editorial. </p>
<p>but if you look at the content, there is atremendous amount of overlap of content, and tremendous amounts of commoditizationof content. the guardian in the u.k. has actually saidthat the current printing presses they have bought are going to be the lastprinting presses they will ever buy. their press will last about 25 years.so there is a probability, they think, that in 30 years they won't need printing presses.that's a bit hard to believe, right? can you guys believe a world where we maynot have a newspaper? i don't know. it may or may not happen.but, if you play this back, i moved to the u.k. nine years ago.i moved from the u.s., and i had just bought </p>
<p>myself two new vcrs.remember those things? vcrs? i had bought two new vcrs.and i moved to the u.k. and i plugged one in, and it blew.i didn't know that the frequency is different and the power is different,so i stuck it in, and it went boom. i was smart.i did not try that with the second one. i decided to go buy a vcr.so i went to this electronic store, and the guy, who was probably incentivized to selldvd players more than he was to sell vcrs, told me vcrs are history;buy a dvd player. so i said, "okay, i'll buy a dvd players."that was about eight years ago; nine years </p>
<p>ago.i bought a dvd players; i went to my local video store; and they hadthis big store for prime time video, and there was a corner with one rackwhich had dvds. and the only dvd you could rent was a classicdvd, because they felt that classics will alwaysbe in fashion, and people will watch them. but you can't buy the new ones because thereis not enough demand. now, i go there, nine years later, to my localdvd store, not my video store. i think some of the people who give me thedvds don't remember, or don't know what a vcr was.they're about 17 or 18. </p>
<p>i don't think they know what a vcr was.that was only nine years ago. and if i had come to you and said, nine yearsago, can you imagine a world where there will be no vcrs?and people would say, "well, you know there will always be 30% or 40% of peoplein the world who will have vcrs." how many of you have a slr camera?remember the ones where you put the reel and you put it around the other side,and you take pictures? remember that one?how many of you have one? how many of them have been used in the lastweek, or two weeks? i won't ask how many of you have digital cameras.you probably have more than one, and in your </p>
<p>phone, as well, right?do you remember a world when digital cameras came about, and people said,"oh, this is funny. they want to take a picture, and then they want to keep itin their computer, and not go to a photo store and actually print it and use itand watch it?" i think we take, probablyã¢â‚¬â¦ i was drivingup in the car from the hotel, and i took out my blackberry and took a picture.because i saw a big ad for google phone. i said, i have to take a picture of this.i could never do thatã¢â‚¬â¦i would never carry an slr camera with the filmand then put it in there, take a picture, and go get it developed,get it scanned, and send it to my colleagues. </p>
<p>not likely.so i'm taking four to eight times more pictures than i ever did.we all are. again, it's very hard to think about the worldten years out, and say, things are going to vanish.our tendency is, we always overestimate the short term,and underestimate the long term. you always do that.you always think that a lot more is possible in the next one year than it is.and you always think most of these things won't change in ten years, and they do.it actually happens in my objectives. my boss asked me, "what will you do in thenext one year?" </p>
<p>i give him long lists of what i can do, andthen i never do them. but, i think in ten years, i will get themdone. my point is, it is very important to questionevery assumption, especially in the current environment, ifyou are a media business, if you are a print business, because thingsare going to change tremendously because of the internet, in the next eightto ten years. and that applies to newspapers; it appliesto agencies. i'm told, you can't launch a new product withouttelevision. it's possible.google launches a product every few months. </p>
<p>we don't do any advertising.larry page's view is, if you can engage consumers, if you can make it usable,if you make the best product in the world, people will come up and take it;people will enjoy it. again, there are extreme views.i used to work in marketing before this, and i understand there are some productswhich do require some degree of support. but, the point i am trying to make is, thisis the time to go back and rethink about what are the core competenciesthat you have to offer? what is it that some of the fundamental rulesare, whether you're an advertiser, a print media owner, whether you're an agency,in terms of what you believe. </p>
<p>this is one which i think will make or breakthe agency business in the next ten years. i think we have lived in a world where itbecame very clear how you use television; how you use print; we were able to split thefunctions and have creative businesses and media buying businesses.i think going forward, it is going to be impossible to maintain that distinction,because you have to think about what is the best campaign on you tube?what is the best campaign on facebook? what is the best campaign on google?these are not standard media. google is not equal to you tube, is not equalto my space, is not equal to facebook. we are not the same property, like the televisionbroadcasting channel. </p>
<p>so you actually have to think about the mediayou are buying, and design the campaign around the media, as opposedto, "hey, you buy the media. i'll design the campaign."and the risk we run is, if you do not bring these two parts together,especially in the phase where we are rebuilding the world of advertising,we run the risk that you will have disconnections between the two.i think in the future, going forward, digital businesses have to havebought the media and the creative side together. also, it is very important not to have a separateinternet team, compared to the rest of your creative team,because you have to create </p>
<p>the link between all the different cross-medias that you are actually working with. the same thing applies to newspaper ownersand television owners. the bbc, i think, is one of the better examplesof the cross-media platform. you can actually go to their web site; findprint; you can watch them on television; you can have bbc radio; and they're actuallylearning how to bring all the different content together in differentforms. it's very hard for traditional businesses,which have only been newspapers, or only been television channels.what i'm noticing is that tv companies are hiring print journaliststo write on their web site. </p>
<p>i'm noticing newspapers are hiring one ortwo people with video cameras to put videos on their web site.so it's interesting, that we're beginning to see very, very traditional,solid media people trying to go into the other parts.i think this is an interesting time. the question is, "how do you get all kindsof content into your business?" so, again, you will see this happen more,and you will see more and more of a cross-media strategy as content creationis concerned. and, last but not the least, there alwaysis the question, "how are you going to make money?"we have this big spectrum. </p>
<p>in life, content has either been paid forby subscription or by advertising or a mix of the two.whether it's the magazine you buy, you pay for a subscription.whether it's the television, movie, you buy in your hotel room, that's subscription.or, you watch a free movie, and there's lots of ads in the middle of it.that's how we've always monetized content around the world.on the internet, you see a choice. you can have 100,000 users, and ask them fora subscription. or you can 10,000,000 users, and ask themto be supported by advertising. the problem, i think, in most internet businessesis, people still think geographically. </p>
<p>people still think, "this is a polish website." or, "this is a u.k. web site.""this is a german web site." the problem is, you go to 1.4 billion people,if you will automatically create these constraints, saying these arejust for my country, you run the risk that you have limited thesize of your audience, and therefore you cannot monetize the advertisingor spread the cost across the entire internet base.again, my recommendation is, don't think about just monetizing on a national basis.don't think about monetizing on a subscription basis.think about this as a platform of 1.4 billion </p>
<p>people.that is going to give us tremendous opportunity. i will end by saying, relating back to theprevious speaker, who talked about the crisis. crises are wonderful times, in a way, becausethey create scarcity. and scarcity is phenomenal because it breedsclarity. when you have scarcity and you start worryingabout how to best optimize your resources, then youdon't do wasteful things. interestingly, if you go back, and the otherpoint he made was on innovation. if you go back and think, many successfulcompanies were created in the moments of economic crisis.google was started in 1999, which was the </p>
<p>last crisis in the united states.apple was started in a crisis; hewlett-packard was started in a crisis;microsoft was started in a crisis. so, perhaps, this crisis will give birth tomany more googles and create tremendous amounts of clarity becauseof the scarcity. with that, thank you very much for listening. >>unidentified speaker: thank you very much. >>arora: are we taking questions? >>unidentified speaker: we can ask if there'sany questions from theã¢â‚¬â¦ </p></div>
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<div align="justify"><p>sam palmisano: i am, quitehonestly, happy he's here. we are honored, quitehonestly, to have with us today. he's very, very busy. so please join me inwelcoming eric schmidt, chairman of google. eric schmidt: i'm delightedto be here. i started my computing careeron an ibm 360/91, which is a great machine. </p>
<p>water cooled, everythingyou wanted in a computer in the 1960s. when the ibm pc came outthat's what i had. now, of course, we uselots of think pads. and along the way i've alwayshad tremendous respect for the underlying architecture andtechnology folks at ibm. so one day sam calls and says,we'd like your thoughts about distributive computing. and i said, well, i thinkthis, this, this. </p>
<p>he said, he's a very, very niceguy, and he said, well, we've already done those. and all of a sudden i realizedthese guys are ahead of me. they've actually thought throughthe consequences of this new life thatwe're building. and we immediately organizedto partner with the technology, and thetechnologists, and the vision, from an extraordinarily wellled organization of ibm. so the reason i'm here is totalk a little bit about what </p>
<p>that means. what it means to us, to theworld, to you, to our joint customers, and so forth. and i wanted to start by talkingabout information. it is my personal belief thatthe role of information is under appreciated in politics,business, and in the world. the rate of innovation in theinternet is increasing, it's accelerating. we have huge new opportunities,for all of us </p>
<p>together, in mobile platforms,enterprise businesses, and in the role of informationand businesses. and this is a global audienceand, of course, ibm being the most global of all corporationswould have a very global reach. i like to think of four majorexperiments in innovation going on in the world. europe, the sound bites,educated, thoughtful, rule of law, empowering. </p>
<p>that's one model. the us, innovative, creative,surprising, individual, another model. china, monocultural, chaotic,controlling, confronting the individual truths,another model. a fourth model, india,following, accelerating, the merging of languagesand cultures. all of these are worthyexperiments in information. i also believe that the outcomeof each of those major </p>
<p>societies, which cover 80% or soof the world's population, will be determined by how theyembrace information, how they embrace the internet. how they use it, how they usethe tools that we're all together building, there are all sorts ofinteresting examples. rice is in short supply, whichis a terrible world crisis right now. one of the reasons rice is inshort supply is that the rice </p>
<p>farmers are using mobile phonesto discover the world price of rice and discoveringthat the middlemen are denying them their just profits. fisherman are on boats trying tofigure out which port to go into using, again, mobile dataconnections to say, can i get a price over here, or a betterprice over there. this is a profound change ineveryone's lives, and not just in corporations in buildings,but with people and the way they think about markets andinformation and so forth. </p>
<p>and we're on the edge of atruly great breakthrough. ibm has been working on this fora long time, much longer than google has existed. and ibm has figured out that theunderlying platform is the server, services platform, thatthey have literally been driving the modernization. i've been looking atbreakthroughs, and here's a quote for you. great breakthroughsare closer to what </p>
<p>happens in a flood plain. it's not one idea. a dozen separate tributariesconverge and the rising waters lift the genius high enough sothat he or she can see around the conceptual obstructionsof the age. so think of this as not asingle idea or a single company, but rather a set ofrivers that are flowing in which are getting stronger andstronger, and at some point it all coalesces into a model thatbecomes so obvious we </p>
<p>don't understand why wedidn't do it earlier. as a backdrop, the internet,of course, is growing very quickly. 1.3 billion users, on the orderof 200 million new users per year dependingon who you ask. and the underlying phenomenahere is what i'm going to call the technology basecase, moore's law. looks like we've have another10, 15 years of moore's law, cpu performance essentiallydoubling every 18 months. </p>
<p>even more frightening, from myperspective, is a term called crider's law, which says thatdisk drives, literally the disk capacity, is doublingevery 12 months. this is particularly good foribm's revenues, by the way, because they're going to bethe ones putting all this stuff together. and if you think about thosetwo compounding you have amazing consequences,architecturally, that will affect all of us in many,many different ways. </p>
<p>ibm, by the way, is the authorof exabyte, petabyte, [? xylobyte, ?] so forth and so on, all of thenew things, because ibm had to invent the names for theconcentration of storage that are projected over thenext 5 or 10 years. so this, the open approach,the open standard approach that the internet has pioneered,really has allowed us to go from the four networks,including one here in los angeles in 1967, to themore than 500 million networks </p>
<p>that comprise theinternet today. you go from 400 serversin 1983, 500 million servers in july 2007. that scaling is phenomenal. and that scaling occurs becauseyou have one good thing in technology. it can really replicatevery, very quickly. so let's do a littlebit of fun. if you assume current growthrates, which is a reasonable </p>
<p>assumption based in the last10 or 20 years, by the year 2019 it'll be possible to havea device that's on your belt, or in your purse, that will have85 years of video on it. so you'll never be ableto watch all of it. you'll be dead beforeyou've finished. to me this is the ultimatefrustration device. i really wanted that show,i really wanted to do that, but i'm done. or i was, my parents wouldn'tlet me watch it now, when i </p>
<p>was young, but now i'molder and i'm not interested in it anymore. you can imagine allthese dialogues. here's another example. 81% of the internet users injapan access the web from their mobile phones. and just to prove that thejapanese are really wacky, the three top books in 2007 in japanwere first delivered on mobile readers, mobile devices,and were only </p>
<p>subsequently printedin real bookstores. showing, once again, thejapanese are ahead of us in everything. so is this our future? maybe, especially if you spenda lot of time on subways. my point is that the technologyenables some things which are surprising. americans send 1.6 billiontext messages per day. god knows what they're about. </p>
<p>i never really know. in any case, we have theemergence of this massive shift of computing led by ibm,google, and a few others. it's truly a shift from thedesktop centric model to a network centric model. you need the server, you needthe desktops, and you need the network in between. we call it cloud computing,there are other terms for it, but to me this is the storyof our lifetime. </p>
<p>it is the story that will defineour careers and what we do, because this is going togo on for a long time. now how many devices are youall carrying right now? how many chargers did you bringon this trip, wherever you came from? how many remote controls doyou have sitting in your television room that you cannotquite figure how to work all together? that's the consequence of beinghalf way through this. </p>
<p>but eventually all that stuffshould be on the network. it should all be seamless,it all should just work. now you sit there and you go,well, why do i have all these different devices? well, it's combinatoric. the vendors, the manufacturers,build a device, but they can't make surethat everything works. it's an end to end problem. so again, if they have astandard, if they have a way </p>
<p>in which the network works, thenthey can just plug into the network and everythingworks just fine. and, again, you say, what'sthe cost of this? there have been a lot ofstudies about this. the estimate is that 6 out of100 products are returned simply because consumers can'tfigure out a way to work them. think about the efficiency, thewaste and so forth, from this design issues. so we do know that convergencewill occur in this cloud of </p>
<p>servers that is being builtby ibm and others. and the original termcame from a fellow named mark weiser. he called it ubiquitouscomputing, but it's the same principle. and you really do want to beable to watch things on any device, see informationanywhere, and so forth. here's an example. wouldn't you want to be able todo a map search on your pc </p>
<p>and have the same thingon your mobile phone? well, you can do that now. you couldn't do thatfive years ago. and in fact, the interestingterm is everybody kept saying about convergence. people concluded thatconvergence meant that everything went to one device. exactly wrong. convergence is everything endsup on one server, or set of </p>
<p>services in the cloud,and there are many different devices. and excuse the analogy,but it's the best i could come up with. women have multiple purses,and they spend their time, they have this purse for this,this purse for this, this purse for this, and then theymove their contents from one purse to the other. so the analogy here is thatyou have a set of devices, </p>
<p>each of which is very different,it makes perfect sense to you. you use this device here, andthis device here, and this device here, and they're quitedifferent from each other. but every time you turn oneon it has exactly the same contents as the other one. this is a much more profoundchange than you might have originally thought when youthought, well cloud computing sounds pretty interesting. </p>
<p>so when you think about it,and it depends on the generation. with our young employees atgoogle, i was in a meeting yesterday and said, how many ofyou have your friends and your photos and so forth allon a social network? every hand goes up. i suspect that wouldn't betrue in this audience. it's certainly not true of me. my hand was not up. </p>
<p>how many of you put allof your photos on photo sharing sites? google offers one. again, i suspect not likelyfor this audience. it's certainly reallynot true of me. so not only is this visioncorrect, but people of a certain age viewit as obvious. in other words, eric, why areyou giving this speech? that's how profound this changeis, and how important </p>
<p>it is for us to understand. so in this, you could think ofit as the electricity model, computing resources shiftingto electricity. 100 years ago people generatedtheir own electric power. eventually they started to relyon a grid, which is, in fact, remarkably reliable. and basically thesame thing has occurred around web computing. an example, we brought out aproduct called google sites in </p>
<p>march, which is basically basedon a company we acquired called jotspot. what you do is you plug andplay, you build your site, you press the button, and there itis, immediate authoring. it makes perfect sense if youthink about it, because everybody has to have a webpresence and it's all hosted on the google infrastructure. so the cost of innovation hasnever been lower, which means there'll be even moreentrepreneurs, even more </p>
<p>opportunities for you all to gohelp those innovators learn how to use this new model, whichmeans, of course, we all jointly need to understand itand understand it's both limits as well as scale. so to me, the consumers aredriving this and corporations are caught. and the corporations are caughtbecause consumers are demanding it and thecorporations are not operating quickly enough. </p>
<p>they haven't yet mastered howquickly to turn key things. ibm has done a particularly goodjob in the application space of trying to do that. there are other companies aswell, but it's very, very important that our corporatecompanies, many of whom you serve or represent, understandthat the consumer expectation is very, very high on thesesorts of issues. so you can do lots ofinteresting things. the consumer statisticsare quite interesting. </p>
<p>there are more than 70 millionblogs, more than 120 million blogs that are created daily. i looked at the average, andit appears that the average blog has exactly one reader,which is the writer. so not to worry. i would argue maybe it's two,the reader and the reader's mother, in honor ofmother's day. but nevertheless this phenomena is certainly growing. </p>
<p>the statistics are really quite alarming, at least to me. 700 million photos are uploadedto our picasa website photo sharing, which is justone of them, every day. and youtube is particularlydisturbing. there are 10 hours ofvideo uploaded to youtube every minute. so that's the scale of this. this is no longer web sites withtext and funny pictures. </p>
<p>this is integrated storytellingwith video and authoring and so forth to causesome consumer behavior, whether it's information oreducation or games or so forth and so on. the important thing here isthat this cloud computing model really does matterto enterprises. it departments need to focuson productivity. google and ibm have a set ofapplications which are web hosted which allow you to,essentially, let somebody run </p>
<p>it for you. if you look at thevirtualization model that ibm has, they got the model right. it's just much better if,architecturally, you could virtualize those services andlet a set of professionals write it so you canget back to work. the same principle appliesfor email, web authoring, underlying execution, and allthe vm work that they, literally, invented. </p>
<p>so there are many examplesof this. google is a very strange places,as you can imagine. we have meetings whereno one looks at each other, it's a rule. instead everyone looksat their computers. and we're talking while everyoneis typing and editing all the documents, and allof our products are sharable on the net. so one of the key componentsof this new network </p>
<p>architecture is sharing. so all of a sudden you discover,wow, that changed, this changed, and soforth and so on. my talks are written by peoplein some random order and then i have to look at themand say, god, what were they thinking? our business plans arewritten this way. it's just phenomenal, and it'sat least creative, if a little bit out of control. </p>
<p>this decision making processis also very different. you can now ask your customersthings that you couldn't before. you can trial a product andyou'll get the feedback immediately. all of a sudden thewhole product lifestyle is so much quicker. so all of a sudden the notion ofa three year plan and a one year plan and so forth can bethrown out of the window by </p>
<p>new technologies where youcan literally survey your customers the moment one comesout, and you can make the changes along the fly. so if you think about it, it'sno longer sets of separate applications, it'sintegrated apps. for example, you can do chat inour google docs, which is our web hosting services. you can chat inside thedocument all the time. there are things called googlegadgets, and i'll give you </p>
<p>some examples of this later,where you can can basically embed html and javascript insideof these things, so they're active documents inthe old term of activity. and it takes on the order offive minutes to type these things in and author themand stick them in. so as a result you can getdynamic access the world's information. you can, for example, in aspreadsheet, put the look up feature, which is built into ourspreadsheets, and it just </p>
<p>does a search. so all of a sudden all of thatcorpus of information is now embeddable inside of a spreadsheet, and the spreadsheet auto loads and does all theright obvious things. what about calendars? anybody here think calendarsare boring? i've always thought calendarswere really boring. well, they're no longer boring,because not only can you cross link calendars, butwe can search all the </p>
<p>activities that you care aboutand dynamically update your calendar and then you'lldiscover you really are out of control and you really areoverloaded and there really are too many things to do in losangeles while you're here. my point here is that thecomputer can help because of sharing, and because of thedynamic nature of this new web model, and the kinds ofapplications you can make are very interesting. i have lots of exampleshere, flash animation </p>
<p>of data over time. somebody decided thatthey were upset. in switzerland everythingruns exactly on time. so the trains havegpss on them. so we give you a down to themillisecond time estimate of when the train will show up inthe train station and exactly where it is on google maps allthroughout switzerland. most other countries don't payattention that much, they're not that accurate, but in theswiss it's down to the </p>
<p>millisecond, done as a mash upon top of google earth and google maps by a programmerwho had nothing else to do while he was waiting, literally,for the train and annoyed because it was late. we have a platform calledandroid, which is the expression of all this in mobilephones, which is in the process of being delivered. and part of it is it'sa developer. and somebody said, what i'mgoing to do is i'm going to </p>
<p>take my gps location, andremember phones are very interesting. phones have cpus, memory,they have cameras, and they have gpss. so what this person did is hewrote an application which says where am i, what am ilooking at, and then let me tell you what you're seeing. so you can put in a mode whereit says not only this is what i see through my photo lens asa camera, but also i'll tell </p>
<p>you what everything is. because i know the landmarksbecause i'm integrated with maps. it can also, by the way,tell you where to go. you're lost, turn left,turn right. but it's a very different way ofvisualizing where you are. another example which isparticularly scary, there's something calledfriend finder. and what happensis, you have to </p>
<p>choose this, thank goodness. you choose to let other peopleknow where you are and it says where the other people are andhow to get there fastest. so this thing pops up and it saysall my friends are here, turn left for this, turnright for that. again, the off button hereis very important. and it shows you the path, showsyou the visual, shows you a picture of the person. this is this new geocentric,application centric, cloud </p>
<p>computing model before us. now ibm, of course, is busybuilding this architecture inside of a whole bunchof its products. partly because ibm was soforward looking, and it's going to linux, so forwardlooking, and it's coming to java. and all of the web services now,they have a head start. the websphere portalproduct is one. for example, you can basically,using websphere, </p>
<p>you build these web sites,you can embed all these interesting gadgets that i'mtalking about right in your application. now you sit there and you go,what would i use this for if you're doing somethingin manufacturing? well it turns out that gpscoordinates and sharing apply to simple consumer applications,but they provide real value in a businesscontext. that's the secret of ourcollaboration here. </p>
<p>and you can do fun stuff likethe weather, but if you're in a shipping company the weatheractually matters. in the case of lotus noteswe did the same thing. the email reading structurewithin lotus notes, we can now embed the sharing and gadgettags that i described earlier. so the point here is, anda lot of us are jointly developing applications forenterprises, that there's a new layer here. remember i talked about as abreakthrough, and this new </p>
<p>layer is both exciting, whati've done for my whole career and we're finallygetting there. it's just phenomenal. but it's also challenging fordevelopers, because if you think about it, the developernow has to think about not just the pc or the main frameor the unix server, but they have to think about buildingthings for internet enabled devices, game consoles, mobilephones, devices, music players, cars, appliances,and so forth and so on. </p>
<p>you're going to have 500million wi-fi chipsets sold in next year. think about the wi-fienablement of all of these devices. just remember that that settop box on top of your television is, in fact, acomputer with an ip address. people can talk to it, and theycan start having some fun with your television. so my point here is that thearchitecture that's being </p>
<p>built here has to enablemore than just one platform being built. and so developers have tobasically build an application that really anticipates these extraordinarily large data sets. again, go through the numbers,the amount of video, the amount of data. just think of the scale that adeveloper has to deal with. and this is true of yourdevelopers, the people who </p>
<p>work for you as well. and they have to basically bewilling to execute algorithms across computing clusters. they have to be able to writein languages like python and other sort of scripting. they have to have distributivedata storage, something which ibm literally invented. you have to have distributivedata storage where you can actually draw that and theinformation isn't just on one </p>
<p>server but on multiple servers,and you have to put it all into a single platform. and of course this all has tobe available through the mechanisms of the internet. so what happened after samcalled me and said, let's talk, we sat down and we said,what's the most important thing we need to do right now,between the two companies, to accelerate this? and they came back and theysaid, nobody understands this, </p>
<p>but scientists, basically innew york, the scientists at google, and a few otheruniversities, why don't we build a version of thisarchitecture, this is the clever part, and giveit to science? what we'll do is we'll give itto all of the universities, literally worldwide by theway, not just in the us. and we'll give it to thembecause, well it's obviously the right thing to do, pluslet's be blunt, it'll help ibm and google because all thosepeople will get out there and </p>
<p>they'll be able to program andbuild against this new model. so what happened, of course, asa result is that we, after a lot of joint scientific work,we announced an academic cloud computing initiativelast october. and what it does is it takesopen source, literally ibm and google do not own any of this,and it builds a set of data centers that are for the publicthat actually implement this whole computing model. and by the way, itdoes it at scale. </p>
<p>so we started at university ofwashington, we did carnegie mellon, mit, stanford, the usualsuspects, university of california berkeley, and theuniversity of maryland. we also then immediately wentto shinhwa university in beijing and are now going globalwith a whole bunch of other universities. and in fact, what's interestingabout the collaboration, google and ibmhardware and software architecture and tivoli as thenetwork management council </p>
<p>makes perfect sense. so what are some of theinteresting results of this? somebody figured out a wayto build, a 19 year old, literally, physicist, figuredout a way to simulate collisions related to the bigbang that could never have been done before because of thecomputing research that was put out literally throughthis mechanism. another showing you thatintelligence is distributed everywhere, a european 18 yearold developed the largest </p>
<p>collection of prime numbersever, using the same infrastructure, sitting in hishome in eastern germany. this scenario has been sopopular that actually it got out of control. and so we eventually asked thenational science foundation to run this and to actually figureout there are so many interesting applications forthis, we literally couldn't pick the winners anymore. it gives you a sense of thepower of the model that i'm </p>
<p>talking about, and the sensethat we're right on the edge of this taking overalmost everything. and i'm very, very proud of whatwe've done together here to provide for the publicsomething that can actually work on climate modeling, genesequencing, protein mapping, answering the fundamentalquestions of whether the earth is going to be around or arewe going to go kaput. the fundamental issues aboutcures for cancer and other sorts of diseases, all issuesabout viral and protein </p>
<p>mapping and so forth that arenow possible at this level, and you say, well, those aregreat, but how does that translate into my business? it's the same platform. that's what's so interesting. we get such leverage. so when i think about it, and ithink about my history with the ibm 360/91, which was agreat machine at the time, fast loading point processor,one megabyte, was this big, </p>
<p>and i think about wherewe've come today. the key idea here is thatcomputers are not alone. that computers actin networks. that if you can get thearchitecture right, this cloud computing architectures, if youcan get the development layers right you can buildthese platforms. and the platforms are morerobust than the one you did yourself, because youget the sharing. they're architected in a waythat provide tremendous </p>
<p>customer value. and they literally change theworld, and that's what's so exciting to be here, to do whati do, to do it with sam and his team, and franklyto be here today. so with that thankyou very much. sam palmisano: it's justyou in charge. male speaker: yes, so why don'twe make the most of the time we have and get startedright away if we could. and i was very intrigued by the </p>
<p>descriptions of cloud computing. and in addition to the specificapplications it seems to me that there's a new modelof collaboration here. it's different from the oldwe'll develop windows and then people will write softwareapplications for windows. it's different from linux,which is a non commercial entity trying to makethings available for the world at large. so one of the intriguingquestions that was in my mind </p>
<p>as i heard these descriptionsof this cloud computing initiative is how doescollaboration work when there are two organizations both withsignificant resources, somewhat different commercialinterests, trying to pool their efforts to get somethinglike this done? sam palmisano: i'll start. i find it interesting, eric'sheard this story, about how we got to me callingeric one day. it'll get a little bitto your point. </p>
<p>we have a meeting once a yearat ibm where we argue about the future of technology. research comes in and takesa provocative view and the businesses defend, becausethey're obviously grounded in operating income statements andresearch tends to be much more theoretical andfarther out. and we had this big debateabout the cloud. is it real, is it not real,we're doing all this work and research, we have all of thesetech capabilities that eric </p>
<p>has described. and so we had this big debate. and we did it differently thanyou do it, eric, because at ibm they look at each otherand yell at each other. so they don't look at theirmachines, they've got to look at their face. so there's one of their face. might have been better tolook at their screen. so i remember asking mycolleagues the question. </p>
<p>i said, well, are we better offwith working with someone like google or not? we're not really competitors,but it's different model, different business structurethan ours, what do you think? and they had a long discussionthat we all concluded that we should just call and see ifthey'd be interested in talking with us. and you'd say, well, what ledus to this conclusion? that's what you're looking for ithink, the logic that led us </p>
<p>to this conclusion. we really weren't lookingto sell google anything. that wasn't the thought, but thethought was if you saw the future as eric has describedit very, very well, and i won't waste the audience'stime redescribing it. but if you really believe thatthat was a future state and you believe that it wouldn'tbe everything, it never is, there'll always be other sortsof things that go on in this computing world thatwe live in. </p>
<p>and there's a still a lot ofbig large mainframes doing banking transactionsevery day. but this would compliment,if you believed it would compliment, who would be thebest company to partner with to get something like thisat least established? who would that be? and as we thought about it,and a little bit of the comments i made, it had to besomeone committed to the standards, clearly. </p>
<p>common points of view of thefuture that had to align or it wasn't going to work. and the other thing for us isa culture where the teams would come togetherand work together. because the engineers, at theend of the day, as much as eric and i might encouragethem, at the end if the engineers don't believe in thisstuff, i think in both cultures, i know in the ibmculture, it just won't go. the engineers have to believe,the scientists have to </p>
<p>believe, or it's very hard tomove them down this dimension. so that got us there, commonpoint of view of the future, committed to standards andopen architectures. actually, eric was very kind tous in the conversation, it was google's idea to the bestway to get this going was through the academiccommunity. that was really a google idea. eric schmidt: we thinkit was your idea. sam palmisano: historianswill write it was ibm. </p>
<p>perhaps you're beingkind to us. i'm going to pass to eric in asecond, because remember, you were saying that we have to getpeople to understand it and train and develop on it. and how can we do that? and maybe ibm responded bysaying, well, we can get these academic initiatives goingbecause we do these things all the time anyway, as you do. but i think it was you, youframed the problem that day on </p>
<p>the white board. you're going to frame thisproblem with me that day. that led to this next step. so it was that kind of a modelthat led to the collaboration. and i'll pass it tomy colleague. eric schmidt: i was going to saythat we've talked to other companies, and why did this onework and none of the other ones worked, i think isthe real question. and all innovationcomes bottoms up. </p>
<p>and so it's important thatyou have two things. first you have to have reallysmart people who are actually doing the work, which ibmclearly does and hopefully we do as well. and they have to like oneanother, that was easy. and the second thingis there has to be a compatible culture. and it turns out that theculture that ibm had set, surprisingly to us, based onprejudice and so forth, and </p>
<p>not really knowing it, wasreally quite compatible with trying to truly changethe innovation model. and that's because theleadership let it happen. other companies will have verysmart engineers, but the leadership is either suspiciousor they send large numbers of lawyers to visitus, or so forth and so on. and everything bogs down. sam palmisano: we have lotsof lawyers, though. male speaker: so asan academic-- </p>
<p>sam palmisano: having just leftour annual shareholder meeting i've had a lot ofexperience with lawyers this week, eric, so i havea bias right now. male speaker: so as an academic,first of all it's great to hear that academiccustomers are considered desirable for certainpurposes. and the second thingi understand-- sam palmisano: exploitthem if they are. eric schmidt: it'sinteresting. </p>
<p>ibm is, again, much too modest.ibm has always been building specialized hardwarefor universities. sam palmisano: yeah,we have for years. eric schmidt: and so forexample, there was a chess challenge which ibm endedup winning big time. and ibm was willingto build the very best and fastest hardware. i have no idea why that was agood business for you sam, but it was really good from atechnological perspective. </p>
<p>sam palmisano: i thinkit's likely the parallelism of the cloud. we did it in this kind of aserver, it was a unix server, against kasparov. but the logicof it was, and if you think about it, it'sa blue gene. what we do in these massivesupercomputers, protein folding, we simulate the nucleararsenal, et cetera, and those kinds of capabilities,modeled, weather, what have you. </p>
<p>but the reason why we doit is for two reasons. one is, we believe, toadvance the science. why is it important for ibmto advance the science? not because we've always doneit, but beyond that because we do spend a lot of money doingit, we obviously want to get our returns. but we feel we're better offbeing in the forefront of advancing the science, or thestate of the art, or the physics, or the computing model,or the architectures, </p>
<p>in an open standards way thantrailing, in that debate. now, quite honestly, we wouldprefer to have others with us. universities are key to this,governments are key to this. there aren't as many commercialit companies anymore who really havefundamental research left. they've all gone down the modelof very oriented towards wall street, very shortterm oriented. a pc distributor, can pick, onehas 1% in r and d. we have 7 billion a year. </p>
<p>so it's a completely differentbusiness model, but fundamentally we've come to theconclusion that over time we're better off advancing thefield of these competing architectures, and then if we'resuccessful and get it right we get the economicbenefits associated, versus trailing and havingsomeone else lead. so we've always donethis in ibm. if we didn't the scientistswould leave. they'd go to google. </p>
<p>we have 205,000 engineers andscientists, and i'm convinced if we didn't give them theopportunity to create the future the people we've hiredwould find some place to go create the future, becausethat's the individual that's attracted to a placelike that. male speaker: so some of itseems to be the compatibility between engineering orientedcultures, values, interested in pushing things a little bitpast where purely commercial short term optimizationwould take you. </p>
<p>still, those seem likenecessary, but not sufficient, conditions given the differencesin physiognomy that sam was describing duringthe course of his talk. so what other lessons can youoffer the audience, me, in terms of how one makescollaboration work, even when the conditions on the groundare fertile, which is obviously a prerequisite foranything like this to work? sam palmisano: ericmade it real. he's very, very modest, but hegave both teams a challenge to </p>
<p>come back with a prototype. and mapping and shoppingwas the example as i recall, right eric? he defined the challenge to bothteams to come together, work collaboratively on it. he said, this the challenge,come back. he gave the team eight weeks,we were together. but i think because he had thevision of articulating that challenge it did acouple things. </p>
<p>one, it was a hard technicaltask to solve the problem, but it also congealed the teams.they got to know each other, they got to respect each other'scapabilities, they got to learn from each other. and to me, my observations oncewe came back with these prototypes, operational, infact you had to go off and meet with a political leaderthat day, as i recall. you had to leave the meetinga little early. but the teams came together. </p>
<p>they had a lot of respectfor each other. technically they had respect,and then quite honestly, i think we just got out ofthe way and it ran. we didn't have to do muchof anything after that. eric schmidt: i thinksometimes you have to show the future. so i'll be talking to somebodyand people are always very polite and they'll go,yes, yes, yes. and i discover they haven'treally used the internet very </p>
<p>much, they haven't really usedsocial networks very much. so everybody wants to look likethey're real experts, but in fact you have to be embeddedin it to really understand its implicationin your business. so i try to use everything allthe time, even if i hate it. and at my age a fair amountof this stuff makes no sense to me. so nevertheless i try toforce myself to at least understand it. </p>
<p>for people in the audience,you have got to immerse yourself in it. you have to to use your product,you have to use the e-commerce site, you have to buythe product, you have to understand it, you haveto next to it. and if you're not doing thecalls you have to sit next to the person in the call centerand listen to them and experience that with them. you're not going to get thebusiness insights without </p>
<p>doing that. it's really about immersion. male speaker: so just continuingon with cloud computing for just a minuteor two longer. i was wondering, one of thethings that i thought i'd heard was that this may lead toa convergence between the enterprise space andthe consumer space. now, historically ibm andgoogle have focused on largely, not entirely,on different </p>
<p>portions of that space. how did you think about thispossibility of intersecting worlds as you got intothis collaboration? sam palmisano: well, we thinkabout it two different ways. what happens is that we'velearned that many of these new technologies start in theconsumer space earliest, because there's lessrisk to deployment. eric wasn't here this morning,but you heard the cio panel talking about risk of deploymentwith all the things </p>
<p>they have to keep buttoneddown, sarbanes-oxley compliance and allthese things. they're very nervous aboutexperimenting too much with new technologies. so you see a lot of thesethings emerge. the internet emergedin the academic, in the consumer space. some might argue that the $1billion we put behind it made it ready for the enterprise,which was a rather modest </p>
<p>investment, but was viewed aslarge at that point in time. so we've always been attentiveto these sorts of things and try to see if they extendand they can apply. and that's a technologypoint of view. and then there's obviously thebusiness model to mention there as well. but in the technology point ofview, we're looking at this and saying, ok, is therea logical way that an enterprise, as they try to getscale in virtualization, to do </p>
<p>it in their world, we call itbehind the firewall, but in a secure way that they can protectthe transaction, fill out the information identity,et cetera, et cetera? you're not doing the publicnetworks, doing other things you aren't as sensitive to,is there a way to do that? so that was observationaltechnology. how does it apply? and quite honestly, as you lookat this little platform we're now announcing thathopefully our partners will </p>
<p>put their applicationmarketplace on, it is fundamentally a cloud. we will operate the cloud. it is what it is. we've learned a lottogether here. we'll make it available to ourpartners and hopefully they can sell on top of thattheir various kinds of services and offerings. so to us it's the firstinstantiation of taking </p>
<p>something that was prettymuch consumer. we're going to use own economicpurposes with our partners, and also looking atareas, especially a lot of these large enterprises havethousands and thousands of these traffic based servicesjust throwing things at a back end. and is there a way to applythe technology there. so that was how we thought aboutit, as a place to learn that we could thenapply elsewhere. </p>
<p>eric schmidt: my own predictionis that there will not be that much differencebetween the consumer architectures and the enterprisearchitectures. there's one fundamentaldifference between enterprise and consumers, which is that theenterprise customer will pay for things that the consumerwill not, and the enterprise customer has a veryreal need for greater security and greater qualityof service. and that you can build abusiness where you charge for </p>
<p>those and they're willing topay for it and it's a good business decision for them. and again, if i go back to thevirtualization that ibm did starting 15 years ago or so totraditional data centers done off site, you see that ibm hasfigured out a way to do this. google is also trying to dothis with some lower level services where, again, they'refree for unsupported but there's a modest feefor supported use. and that model seemsto be coming along. </p>
<p>i think it's a new modelfor the enterprise. male speaker: so we've talkeda little bit about the enterprise versus consumerworlds, now to switch to another kind of world. we spent some of the morningtalking about globalization, and i wanted to explore that setof issues as well, because one of sam's themes during histalk was accelerating global integration. on the other hand, we knowthat there continue to be </p>
<p>differences across countries. so what's ibm figured out abouthow you simultaneously meet the challenge of beinglocally responsive and relevant versus achieving thekinds of economies of scale that allow you to do better thanyour local competitors? sam palmisano: it's the businessanalogy to eric's comments on these computingarchitectures. and so what do i mean by that? well, the cloud ofthis is process. </p>
<p>all the back of ibm isglobally integrated. it runs for the entire world,accounting, hr, procurements, supply, all that stuff. we don't do it by regionanymore, we do it for the world, and that's howwe run ourselves. and we did it for obviousefficiency purposes, but we've been years doing it. we have a long way to go,but it's been very productive for us. </p>
<p>why is that important? it's important because then youcan spend your time, and we're going into these100 new countries. we've been in them for along time, but we're investing in them. they don't have to dealwith all that anymore. so now when we access both theorganization, probably at the end of the day we'll roll it outin july, 50, 60 countries in it today. </p>
<p>they've all been growingsomewhere between 10%, 30%, some 50%. some are big now, likechina and india. i know russia's small, 300 or400 million, maybe they'll sway to 600 million,so that's not big. others are billions,middle east. but the point of it is what itallows you to do is that those people just worry about whatit takes to serve the front end, the client. </p>
<p>what skills do you need? what partners do we need? because we distribute with alot of people in this room now, it's not just purely ibm. what are those keyrelationships? what government contextdo you have to have? what university relationships doyou have to have so you're viewed as a valued citizenin all those places? but the cloud takescare of the cloud. </p>
<p>you don't worry about an auditor a payable or a receivable and all that treasuryand all that stuff. and so as a result, what itallows you to do is scale a lot faster. it's a business modelthat we talked. eric schmidt: you haven't evenmentioned that you're doing all of our accountingand payables. and you refuse to tell me whichcountry you're doing them in, and i don't care. </p>
<p>i think it's india but i'mnot really quite sure. sam palmisano: i will tell youthis, the best audit we've ever had was in kuala lumpur. kuala lumpur for payableswe received the best ever in the world. eric schmidt: i'm pleased toreport to you that we're still happy with the dealwe did with you. sam palmisano: thankyou very much. so the other side of it is toyour point, the cultural. </p>
<p>so that's the businessmodel side of it. the cultural side of it is youhave to deal with each of these countries differently. you have to be able to do thatbased upon where they are on their societal agendas. and so we have these programsin china, add india, we just did vietnam out, etcetera, et cetera. we're doing middle east out. but we look at what are the mostimportant things for that </p>
<p>society on the ground. and it varies over stages oftheir economic development. and then based upon thatwe try to connect in. but again, we don't have thebenefit of a consumer brand. so we can't go watch a think padin all those countries, or whatever, anymore. so we try to connect withsocietal things, it's very, very important. and then embed ourselves inthat economic expansion. </p>
<p>part of the lenovo deal wasour ability to create a chinese global company thatcan be a success story for china, and it has been. the government's very happy. well, because they're veryhappy, obviously other good things happen forus as a result. so it's this localunderstanding, connecting to the societies, requirements thatpeople do on the ground. they're not burdened with theoverhead of the past. they </p>
<p>don't have to worry abouttreasury and data centers and education centers, and allthat stuff we had to put in 50 years ago. it's in the business processcloud with google and a lot of other people in that cloud doingother kinds of work. eric schmidt: i was going tooffer a simple rule, that people around the worldare exactly the same. they want exactlythe same stuff. they care about their families,they want better </p>
<p>health care, they want safety,they want lower taxes, they want cars, and soforth and so on. so once you understand that,that all of the six billion people inhabiting our fragileearth here, and growing precipitously, they allwant the same things. the only differenceis language and some aspects of culture. so once you understand that youunderstand that they are, as a group, going to want allthe crazy stuff that we have </p>
<p>invented or the thingsthat we've pioneered. they're going to want carsand they're going to want computers and they're going towant to do stupid stuff the photos and use youtube andso forth and so on. so subject to language, weapproach the globe as people are pretty much the same. now the societies differ, buttheir ultimate driving, the individual, very similar. male speaker: so let me justask a follow up on that, </p>
<p>because my impressionis that, say take something like orchid. does well in iran and brazil,and i've spent some time trying to figure out thecultural commonalities between iran and brazil. eric schmidt: and india. male speaker: and india. doesn't have quite those marketshares elsewhere. so what would accountfor that variation? </p>
<p>eric schmidt: we don'treally know. it's an interesting question. for those of you who don't know,social networks have evolved with leadersin each country. and social networks tend to benetwork affect businesses, because if all of your friendsare on one network you're likely to join that networkas opposed to another. my own view on social networks,and this is controversial, is that theyare still too closed. </p>
<p>and that the internetsays that all societal activity is open. and that eventually thesenetworks will become much more open and people will move inand out of the networks. so we don't really know why asocial network takes over in one country or another, but theimportant thing is that to say about those social networksis that they're real. a lot of people, especially ifyou have high school kids or their college kids, you assumethis is some toy that they're </p>
<p>playing with. certainly all my friendsthink that. but these are real phenomenonof people living their lives online, and it has legs. we're going to have to dealwith it as a society. male speaker: well, the clockreads zero, which i take as my cue for trying towrap things up. so it is very interesting thatwe started off by talking about network computing andare back to talking about </p>
<p>networks in some sense. and i think that's a little bitof a reminder of how the traditional monadic,monolithic view of enterprises, and of individuals,is something that we've gone past. and why agathering like this is so important to, obviously, ibm,but i assume also to all the partners in this audience. so with that, thankyou very much. eric schmidt: thank you. </p>
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<div align="justify"><p>nikesh arora: well, thankyou very much, jamie, for hosting a wonderful panel. and to our panelists, andof course to [? roberta ?] for a wonderful performance. with the rising cost ofzeitgeist this year, we figured we'd try and findmulti-talented speakers who could fill in forentertainment. so, this was your entertainmentfor the evening, ladies and gentlemen. </p>
<p>it is hard to top off a daylike this, where we started with the prime minister andwe had [unintelligible] and a whole host ofwonderful people during the day, as speakers. i did say there was nobodyfrom google, but i guess i wasn't accurate. there will be somebodyfrom google. i'm going to invite ourchairman and ceo, dr. eric schmidt, to comeplease take the stage. </p>
<p>and he has a specialsurprise for us. eric schmidt: thank you. thank you. that panel, and the minister,reminds us why we're alive. it's so great that youwere here, and so great that we could do this. and so great for you all tospend your whole day and tomorrow with us, as well. as a quick summary of google:in the last year, since we </p>
<p>were here last year, wetalked about search. lots and lots of searchimprovements, lots of new products in the search. lots of interesting andunanswered questions about search that we're working on. advertising. many more advertisingtechnologies, many more advertising ideas. much deeper, much more powerfulnotions of how to get </p>
<p>advertising messagesto consumers. and, of course, theacquisition of doubleclick. the emergence of a new wholestrategy for google, involving applications called cloudcomputing, with tremendous implications of how people willstore information, and so forth. the sum of all of that iswhat we're doing now. and rather than having me talkabout it, i thought it'd be much better to bring my twocolleagues, who have shown up </p>
<p>in matching shirts,matching shoes. sergey and larry. one woke up in russia, onewoke up in london, and they dressed the same. [applause] we should take one minute tothank nikesh, lorraine, dj, all the people who put such atremendous amount of effort to make this all happen. and especially with theevening's activities </p>
<p>ahead of us. a phenomenal job,nikesh and team. so, rather than having usspeak, people have comments or questions-- we havemicrophones-- on any subject. anything you all careabout to discuss. we're happy toanswer questions. ok, we have a question. unfortunately, you don't have amicrophone because sergey-- ok, here-- we're working-- oh,here's a microphone over here. </p>
<p>ok, good. progress. audience: hi, i'm brianmcbride from amazon. i just wondered if you couldtalk about your thoughts and implications of yahoo! anda microsoft get-together. sergey brin: test. test, test. oh. yeah, what do you mean? </p>
<p>yahoo! microsoft? eric: sergey, youwere traveling. sergey brin: i was traveling. i actually did-- this on-goingsaga-- i did-- i was surprised to find out when i flew intoday that there was some new developments that i have yetto be fully briefed on. eric: by me. sergey brin: by you. </p>
<p>so, eric, why don't you? i can think of no better time. eric: ok. let's see. a couple of things. there's been rumors thatmicrosoft is going to do another approach at yahoo! we've taken a position that themarkets are more competitive, creativity is stronger, it'sbetter for consumers if </p>
<p>yahoo! remains independent. david drummond, who's here,wrote-- i thought-- a pretty persuasive blog, given thehistory of microsoft and its behavior, that that wasa pretty good outcome. and i think we stand bywhat david has to say. do you agree, larry, orhave you had a chance to look at it yet? larry page: yeah. no, i agree. </p>
<p>great. with us, you never quite know. let's see, you had a question? yes, sir. audience: hi. it's marco from [? dada. ?] a personal question,to each of you. what's the single technologicalthing that excites you the most today? </p>
<p>the one you like the most? sergey brin: i got this kind ofstrange thing at home recently. i bought this reallybig monitor. it's kind of quad-hd. so, it's like 4,000by 2,000 resolution. and it was very, very hard toget and actually make it work with a computer and whatnot. but i finally have gottenit working and it's kind of interesting. </p>
<p>it makes you-- it changes howyou can work if you actually have a really big highresolution display that size. so, that's one toy, if youwill, that i'm playing with. larry page: you can'treally see if you have windows at the top. you can't really see thembecause they're too far away. sergey brin: well, yeah. but then you dragthem to yourself. you do. </p>
<p>it's true. eric: larry, larry? larry page: oh, that'sa hard question. actually, one of the thingsi've been really excited about that we've been workinghard on is street view. which is now, you know, it'sbeen shown in europe a little bit, and so on. and driving in general, ithink, is a very, very interesting thingfor computers. </p>
<p>so, one of the things i did,i visited this thing called the grand challenge. which was, basically, it was acontest for $5 million, for the car that can driveitself the best. with no peopleinside, by the way. and they're actuallyamazingly good. they basically simulated acity, and the cars just drove around all day. and the best cars actuallydrove all day with </p>
<p>basically no errors. in traffic. so, they had human driverswearing helmets and stuff, driving around with them,and hoping the cars wouldn't run into them. but i think the possibilitiesfor some of these technologies are just amazing. there's about 1 million peoplea year that die in auto-related accidents, and certainly we cando better than that now </p>
<p>that we have computers. so, for me it's just seeingthings that you didn't think were possible that computerscan do, and thinking about what the possibilities of those are. audience: thanks a lot. eric: a question over here. audience: yes, hi. i was just wondering if youwould like to comment about what you're doing onalternative energies. </p>
<p>larry page: oh, sure. so, we recently launchedthis initiative called re less than c. it's kind of a geeky way ofsaying that we want renewable energy to be cheaper than coal. and the reason behind this iskind of interesting for us. we had all these data centersthat were launching all the time in all parts of theworld to serve our users. and they basicallyuse a lot of energy. </p>
<p>and so we have people shoppingaround for electricity and buildings and space and so on. and what they notice is thatbasically all the electricity is generated by coal, ina wide variety of places. and that's the cheapestenergy that we have. and in places like china, ofcourse, that's what they're primarily building:coal-fired plants. and it has a lotof implications. it's really a dirty technology. </p>
<p>a lot of carbon emissionseven besides it being dirty. and we started and we wantedto make green data centers. so, we said, well, we shouldreally do better than this. and we started talking to allthe companies in the space, which-- there are many. there's a lot of investment. and it's actuallyvery promising. there are many, manytechnologies in solar and in wind and in geothermal, thatcan really make energy cheaper </p>
<p>than we get it now from coal. and do it at a scalethat's similar to all the energy we use today. so, we can imagine makingrenewable energy that's cheaper than we produce now. and doing it at a scale that'sas much energy or more energy than we produce today. and that's really about gettingpeople to work on that now rather than 5 years from now. </p>
<p>there's a lot of investment inproducing expensive green energy, but if you talk to thepeople who are doing that and say, well, can you makeit a lot cheaper? they say, yeah, we can probablydo that, but we're going to work on that five years fromnow, once we finish the expensive green energy. and what we've been doing ismaking some investments and hiring people, and tellingthem to start working on that now because the worldcan't wait for that. </p>
<p>so, that's-- i think-- is areally exciting area for us and one that couldreally be a big thing. go ahead. audience: kent nicholswith askaninja.com. could i get each of you to goon record as to if you're for ninjas or pirates? larry page: i'm for whateverthe opposite of sergey is. sergey brin: i guess ifi had to choose, i'd probably take the ninja. </p>
<p>eric: but this is aserious question. he seriously asked you. are you sure? sergey brin: ah, no,i'm not certain. what happens after ichoose one or the other? i'm imagining someone jumpsfrom behind the stage. audience: yeah, i mean, aninja could be anywhere, but, you know, piratesare about-- mr. schmidt? eric: i'm too old. </p>
<p>audience: i see. eric: more questions? audience: i have a question. [unintelligible] from [unintelligible] turkey. you're shown as the bestexample when it comes to an innovative company, and ihad the chance to visit headquarters last year. </p>
<p>i'm not sure about theinnovation part, but the environment, it's great. and my question is, we heara lot in the news about why google is innovative. and there are a lot of goodthings said about the company, but two examples are given themost, which is 20% of people's times are spent onpersonal projects. which might actually helpgoogle in the future. the second one is 10% of themoney is usually spent on what </p>
<p>you call the [unintelligible] projects, if iremember correctly. my question is, whoseidea were those two? the second question is, werethere any similar ideas which you weren't able to implement,which you're sorry about? and the third question is,again in the media, there's a lot of discussion going onabout now that you are becoming-- or you're growing--you are having problems with some of these implementations. </p>
<p>do you plan to change those ordo you think these are the core values of google, andyou want to keep those? sergey brin: ok. i'll do a little bitabout the history. i came up with the numbers buti think the concepts were all shared between all of us. i just decided toquantify them. eric: actually, what happenedwas i didn't believe sergey. so, he-- we were in amanagement off-site-- and </p>
<p>sergey actually stood up andproved, mathematically, the numbers. and since no one understoodthe math but sergey, it was obviously correct. larry page: that is anaccurate rendition. sergey brin: i think it's--so, there are two rules we have at google, kind of. one is called the 20% rule,that's for individuals to spend a portion of their time workingon-- not their main projects-- </p>
<p>but other projects that areuseful to google, that they take the initiative on. and the other is similarsounding, but that's the 70/20/10 rule. and that's how we divideour overall resources of the company. not just financially, butalso headcount, and whatnot. and we want to spend 70% of ourresources working on our core, which we generally defined assearch and ads, but now </p>
<p>probably apps fit intothat category, as well. 20% of our effort goto adjacent areas. for example, maybe, androidis an example of that. and 10% is things that arecompletely unrelated. anything goes. and, like renewable energy. though obviously we use a lotof energy, but it's kind of in the 10% category. and the idea is tostrike a balance. </p>
<p>there are two wayscompanies can go. they can get so fragmented theygo from doing one thing to 25 different things, and thenthey're not focused. at the same time, they couldbecome myopic and not try new areas at all, where you mightdo well and you might have great resources andideas for them. so, the idea behind our rulewas to kind of set the balance. and i didn't prove the exactnumbers, but the fact that we should always maintain aroughly constant ratio i did </p>
<p>have a mathematicalargument for. and that you shouldn't have the10%, the out-there things, dwindle, say, down to 1%, asyou become a very large company-- as i think doeshappen to large companies often-- i think thatwas pretty important. eric: and the other part of thequestion was the issues that have been written about today,about the scale of the company, and are those--are those in discussion? larry page: i think, you know,as we get bigger-- every time </p>
<p>we double in size, kind of,everything changes-- most of the things we're doingdon't work anymore. and that's happened to us anumber of times already. things like we're muchmore global now, so time zones are a huge issue. like eric's been yellingthat you can't meet with europeans after noon or so. and those are actually realissues for us, like we have to-- </p>
<p>eric: he means afternoon in california. larry page: u.s. yeah, sorry. eric: that was not areference to siesta. [laughter] larry page: europeans arevery cranky after noon. eric: after lunch. larry page: but we've had, imean, those are real issues. like, we've had to rearrangehow we do our meetings and with what people and what times,and things like that. </p>
<p>and there's just-- it soundskind of trite-- but there's 100 issues like that that you needto address as the scale changes. and it's, i think, it'salways a challenge to keep up with those. you're always-- in asense-- you're behind. what you need to be doingat any given time around communications andorganization and all that. i think we've had a lot ofcomputer systems that have </p>
<p>really helped usdo that, though. we have something called theproject database, which basically contains whateverybody's doing. so, anybody can look at aproject and you can see who's working on it and what theirmilestones are and so on, and that's been really helpful. we also have an automatedsystem that makes sure people's reviews get done, theirperformance reviews and so-- they're peer reviews-- sothey're based on your peers. </p>
<p>and your managers and everybodymakes written feedback, and the system collects all thattogether and there's a process by which it gets reviewed. but i think having a little bitof automation around some of the basic tasks of the companyhave really helped us scale, but it's always a challenge. eric: question? audience: my name ismark [? menesse ?] from paris. </p>
<p>you've been part of a hugerevolution, as we did, but in a micro proportion. i wanted to know followingto you, what is the next revolution? sergey brin: oh, boy. ok. i'll throw out one idea. but, you know, my guessis as good as anyone's. nanotechnology? </p>
<p>that might be a good one. i don't know, maybe youshould ask the ninja. eric: larry? the next revolution? larry page: oh, it's probably-- eric: after you get finishedwith all those cars with no drivers in it? are people going to besitting in the back? larry page: actually, i mean, ithink any of the things that </p>
<p>are speculated on being thenext revolution, you know, biotechnology, nanotechnology--many, many, many different areas-- any of those couldbe the next revolution. but generally nobody'sworking on it. so, one of the things i've beentrying to do is to get more people working on thingsthat could really matter. so, the question i like to askpeople is, is the project you're working on goingto change the world? and, you know, you sort of askpeople that question, and i </p>
<p>think you end up with some verysmall percentage of the population, like .00001%,that's really working on those things. so, the rate at which weaccomplish those changes is very, very slowbecause of that. and this is sergey'spoint in the large. so, how do you get the worldallocating 10% of its resources to the sort of wacky thingsthat we're clear if they would work they wouldchange the world. </p>
<p>and that number is.00001%, instead of 10%. and, from my standpoint, ithink we've got to get more people into engineeringand into technology. because that's where we'veseen really big changes. you know, we don't all haveto farm now, because we have technology to do farming. and that's true formany different areas. i mentioned driving already. there's a lot of labor usedin driving that doesn't </p>
<p>need to be used that way. so, you can kind of look at thedifferent areas and say, where can we really makea big impact? and how do we getpeople to do that? so, i think the quick answer isyou can decide which area is going to be the breakthroughby actually working on it. eric: the other debate that wehave all the time, where i'm always the loser, is that larryand sergey say, we have all this money and cash now, what--we should be taking more risks </p>
<p>than we did when wewere a start-up. because when we were astart-up, we were like, about to go bankrupt all the time. sergey brin: 10% of a bigcompany is a lot more risk than 10% of a small company. eric: anyway, i alwayslose this battle. audience: my name ismohammed [? al-jassan ?] from jordan and google launchesso many different applications and features, and i was justwondering what sort of criteria </p>
<p>do you look at before launchinga new application or a feature on google's many sites? sergey brin: ok, good question. yeah, how do we launch newproducts and features? typically, the initial ideasare kind of born out of a brainstorm, or somebody putstogether a demo and eventually they'll get a go-aheadto start to build it. once we've developed it enough,we will typically test it by putting it out to, say, a smallpercentage of our user base. </p>
<p>certainly for existing productslike search, we'll just put it through a series of tests, andwe'll measure, you know, how many-- how much more quicklywere people able to find information using this thing? do they come back more or lessoften as a result of that? things like that. and once we're confident thatwhat we've built has a good benefit, then we'll goahead and launch it. eric: go ahead. </p>
<p>audience: just to continue withyour theme of innovation. you've recently had a fewhigh-profile departures from google. do you worry that maybe as youbecome a bigger company, the people who want to do that 10%,who want to make a real impact in the world, feel like they'llhave a better chance of doing it outside google, ratherthan inside google? sergey brin: i think we've haddepartures recently that have been more highly-profiled, butwe actually-- you know, in </p>
<p>overall attrition, when i thinkabout it-- we're actually roughly just as we'vebeen all along. we've had very high levelpeople leave in the past, i just think-- don't think itgot noticed quite as much in the press. but the important part of thequestion is can people really feel free to innovate? and we've recently started tohave-- we have a group of about 5 initiatives that we let runsomewhat more independently. </p>
<p>kind of just to experiment withother models and also allow people who have a solid trackrecord within google, once they've demonstrated a success,we say, you know, ok, you're going to do this a littledifferent than we normally do it, but we're going tolet you have a go at it. like i said, we have probablyabout 5 such things going right now. and i think, as a result, thesepeople are able to better invent than they wouldat a separate start-up. </p>
<p>because here they get a gooddegree of autonomy, plus all the resources that googlecan bring to bear. now, you know, those things arefairly recent, so we have yet to really know theirtrue success, but i'm fairly optimistic. larry page: let me say, too,i think that this is a work in progress aroundcorporate structure. so, i do think that there's anissue that we have a start-up model and we have the companymodel where there isn't </p>
<p>much innovation. we don't have anythingin between that's been really successful. and actually we've tried anumber of different things. sergey mentioned we haveabout 5 things going. actually they all kind of havea slightly different structure. and there's several incontemplation that are starting to have even slightly differentstructures than the ones we're running. </p>
<p>so, i think it's a balance:how do you get the compensation right? how do you-- howmilestones based is it? you know, what is the realstructure of how you do these things within companies? we don't really know exactlyhow to do it yet, but we know we'll keep tryinguntil we get it. and i think it's pretty much anunsolved problem for companies. i think it's a very importantone to solve, so that </p>
<p>big companies can get astructure that works. or bigger companies can get astructure that works, and really produce a lot ofinnovation and a lot of things that will make a bigdifference in the world. audience: what's the one thingeach of you worry about most? eric: in my case,larry and sergey. no, just kidding. sergey brin: eric and larry. larry page: sergey and eric. </p>
<p>eric: that question wasfor the two of you. what do you worrythe most about? sergey brin: the thing i worrymost about is opportunity cost. i think that we have somefairly unique opportunities that not all companieshave in terms of some of the resources we have. kind of, we have the brand,the financial resources, the technical expertise. and i worry that we mightbecome a little too myopic and </p>
<p>not use that to maximum effect. you know, the fact that we dohave the ability to say, scan all the world's books andmake them searchable for everyone in the world. you know, things like that,those are exciting to me. and i worry that we may notbe making other similar bets that we could be making. and i think there are manythings that other companies can do that i'd like to make surewe leave it for those third </p>
<p>party companies to do. because if there are plenty ofother people capable of doing certain things there's noreason that we have to do them. larry page: i think the mainthing i worry about is the open internet, basically. actually, i remember in theearly days of google, we worried that all theinformation would got locked up in kind of a proprietary way. and it would be hardto index, and so on. </p>
<p>and that hasn'thappened, obviously. there's still very manyways that it could happen. for example, when we startedgoogle, it worked pretty well everywhere in the world. i mean, we were just acouple of grad students. and then we were 10 people or20 people, and we had several million users, and theywere actually many users all around the world. if we were required to pay forgood transit, in order to make </p>
<p>our service fast, there's noway we could have done that. we didn't even really, couldn'teven answer our phone. we didn't have enough people. so, some of the proposals i seearound-- you know, where isps and so on want to extract moneyfor good transmission-- i think really could really harmthat innovation and new companies coming about. the fact that you can plug onecomputer in somewhere and just magically it can talk toeveryone in the world pretty </p>
<p>well-- that's somethingwe take for granted now. but it's a tremendouslyimportant thing for the world. and it's not necessarily goingto continue to be that way. so, that was one thing. i also think we justreally want to preserve open standards, too. the reason why the internetworks is because it was invented in universities. the standards we have for emailand things like that work </p>
<p>openly because they wereinvented in universities. and that's why you have spamalso, because they could never imagine there'd be badpeople on the internet. so, they didn't reallythink about those issues. but the standards that cameabout more in companies, like instant messaging, havebeen very, very closed. we've announced for a long timethat we'll interoperate with anyone who'll interoperatewith us on instant messaging. you know, amazing! </p>
<p>you should be able to instantmessage anybody, not just people who happen to beon the same network. just like with email. and, you know, we haven'tgotten takers from the big companies. and so i think there's still alot of risk around communications being closed andthat's a great way to make sure those productsnever get better. so, those are the kinds ofthings that i worry about. </p>
<p>audience: my name'sjim [? brickton. ?] i'm from an agency calledthe search works. we spent a lot of money withgoogle last year, about $200 million worth of revenuefor google last year-- eric: thank you very much. audience: --on behalfof our clients. and, you know, there's a lotof agencies in this room. we got a rebate last year, ofabout $14 million from google, which we reinvested in ourpeople, and our technology, </p>
<p>and our clients. and that's being takenaway-- all the rebates-- as of next year. and i know there's a lot ofpain at my agency-- i'm sure there are other agencies herethat are hurting because of that. so, i just wanted to ask, areyou aware of that change in pricing structure? and can you talk me through thereasons behind it, because my </p>
<p>clients are a bit confused. eric: this has been acontroversial decision within the company. we looked at it from thestandpoint of where we thought the value added was, and whatthe total cost structure was, and we compared all thevarious different groups. i'm aware of some of theeconomic changes and i understand that it's painful. the theory here is that themarket's growing quickly </p>
<p>enough, that although thepercentages are smaller, the aggregate-- it's growingquickly enough that there's enough money to cover expensesand have a good profitability. and we can talk offline aboutsome of the-- [laughter] audience: i'd reallylike that, please. eric: but the basic argumentwas we couldn't-- the economic structure had gottenskewed again. and it wasn't a fair playingfield, and that's why we had to make the change. </p>
<p>again, a very, verycomplicated argument. let's see, we had aquestion over here. audience: you spent quite alot of money on the youtube acquisition, and alsoon the myspace deal. what is your planfor monetizing that kind of traffic? on the one side, onlinevideo, and on the other hand, user-generatedcontent in general. eric: one of the most importantunder-- and in my view, not as </p>
<p>well-covered-- stories in thelast year, has been the tremendous growth of youtube. it's shocking to me howmuch is going on in video around the world. the growth and so forth, atvarious points, has almost put google in harm's way, in termsof our ability to actually run all of google. the traffic explosionhas been so great. and as larry put it earlier,we've managed to actually </p>
<p>re-engineer our systems and soforth to handle this traffic. so, what's new this year? and the answer is youtube. out of that we have a number ofinitiatives around advertising, that are not what you think. they're not pre-role orpost-role, which we're beginning to try. so, the outlook thereis very good, but the tests have to proceed. </p>
<p>do you guys want to talk alittle bit about myspace? larry page: i was just goingto say about youtube-- eric: we're already inthat business, go ahead. larry page: i was going to sayon youtube, too, i think the-- you know, google actually ranfor a while before we started running advertisements. and then we tried a couple ofdifferent things and then one of them kind ofworked out well. i think we're in that samephase with youtube, and i'm </p>
<p>very confident that we'llget revenue from that. but i'm not in a hurry to doit, i want to do it right. and i think that's the attitudewe've taken enough, so you know, we told those guyswe want to build traffic. you guys are building tonsand tons of traffic. that's the mostimportant thing. and we're sure we canmonetize it over time. so, i think we've been prettyhappy with that progress. sergey brin: if i can just takea moment to step back to the </p>
<p>agency fees question, just toadd a little more color there. so, we sell our advertisingprincipally by auction. and essentially, we havecustomers-- we've done it historically slightlydifferently, depending on the country-- but this effort waspart of unifying that. we have some customers that useagencies that then will bid on keywords on google, and somecustomers will represent themselves directly. ultimately, to make an auctionfair, we need to make-- </p>
<p>or compare the actualmoney that we make. i mean, just because-- if wesend money back to the agency, then maybe we should besending money back to the direct customer, also acomparable percentage. ultimately, we decided weneeded to compare it, kind of apples to apples. because we didn't want todisadvantage the customer coming to us directly versusthe one coming in through the agency, in terms of how theirbids got set in the auction. </p>
<p>now, this new system, it's notthat the agency doesn't get paid at all, but we leave thatpayment portion to the relationship between theagency and the customer. and that way it'smore transparent. that was the thinking behindit, i mean, there certainly is-- as eric mentioned-- we'rehappy to discuss it further. but this wasn't just some kindof scheme for google to get more money, this was reallyabout how we fairly deal between different customers. </p>
<p>eric: let's make sure weanswer the myspace question. so, we're in the myspaceadvertising business. it's gone well. and again, as we are learningthe tech-- as we're learning how to monetize socialnetworking traffic, it will ultimately be much,much better. it's taken us a while. we said that before. is that a fair summary? </p>
<p>sergey? larry? oh, let's see. audience: my name is ramuyalamanchi from hi5. and i have two questions. eric: from? you're from? audience: ramuyalamanchi from hi5. eric: yes, hi. </p>
<p>audience: i have acouple of questions. the first one is for larry. and in thinking about, ingetting people to think about problems that matter, andworking on problems that matter, how do you actuallydo that for people that are outside of google? and my second questionis for the whole group. and that's what's the singleaccomplishment that makes you most proud, in, kind of,all the things that have </p>
<p>happened over the years? larry page: i don't reallyhave a great answer for the outside of google. it's actually hard eveninside of google. i find pushing people a lothelps, you know you just really need to tell people, like, whyaren't you working on this? why don't you work onsomething bigger? why don't you-- and it'sjust a constant effort. outside, you know, i've startedtalking about it more. </p>
<p>so, i've done an interviewin fortune this last month. i've been working with the xprize to try to define some big challenges for the world. there's also agovernment-funded group called grand challenges forengineering, which is part of the national academy ofengineering, where they're just trying to find the 10 areasthat'd be really great if they were solved. one of them is reverseengineering the brain. </p>
<p>and things like that. and we went through with awhole bunch of really smart people and tried to define someinteresting things for people to work on that wouldreally matter. so, i think it's just,you know, just trying to work on it. eric: sergey? sergey brin: let's see, maybe ishould talk about what kinds of things we're most proud of. </p>
<p>i think that being able todeliver what i hope you think are excellent products-- idon't want to judge them myself-- but things like searchto everyone in the world. well, everyone with an internetconnection anyhow, and we're working on broadening thenumber of people who have internet connections,and that's free. so, the most-- you know,whatever the president of whichever country, or theprime minister, they all probably use google. </p>
<p>i don't know for sure. all of the, no matter howwealthy you are-- you know, i use the same search engine assomebody, an orphan in nigeria, might use ifthey're at the internet. everyone is able to afford thisincredible kind of resource. and the same thing, by theway, is true of gmail. everybody's able to affordthat kind of great communications tool. so, i'm pretty proud that we'vebeen able to not only create </p>
<p>great tools but also deploythem widely to everyone in the world. eric: i think for me i'm mostproud of just being involved with the internet as a whole. i think everybody hereunderstands the power of the internet. try to remember when you didn'tuse the internet and you couldn't rely on it in any way. it's a pretty harsh vision. </p>
<p>audience: guy phillipson,the chief executive of the internet advertising bureau. i just want your views on, iguess, keyword search versus display within your company. and keywords has beenphenomenal growth, it's huge in the uk. we know that. but broadband, you know, makesonline a proper entertainment system and we can see richmedia, video, hence </p>
<p>the acquisition ofyoutube, and so on. and you've got doubleclick,as well, and an ad exchange. and so, where does it all fit? and, you know, how do you seethe ratios working in the future, say, for the next5 years, within google? eric: we agree withyour premise. right? that it's going to bethis amazing platform for advertisers. </p>
<p>we don't necessarily knowexactly what the products are going to look like ontop of that substrate. we know that advertisers wantto use more than text, more than video, more than display. they want to be able to do--think of it as a package, and they want to get itin the right way. we also know that people aredoing creatives, and so there are now agencies-- many of whomare here in the room-- who are doing very interesting thingswith, for example, gadgets, </p>
<p>and gadget ads, andthings like that. click to play video ads. so, we're part ofthose experiments. how will it come together? it's pretty obvious to me thatdisplay advertising will be a very large business. and again, google todayis not the leader there. it's going to be a very largebusiness globally, for a number of players, simply becausepeople care about images, and </p>
<p>video, and so forth and so on. and the company that can figureout all the combinations to produce a valuable targetingsolution that will target that media is probably going toend up being the winner. do you guys agree? audience: and ultimately do yousee keyword search maxing out? you know, way in the future? and, hence-- eric: there's noevidence of that. </p>
<p>there may be some limits, butwe benefit from the fact that the internet is growing very,very quickly, especially outside the united states. broadband adoption is growingagain very, very quickly. and pcs, macintoshs, cellphones, all of that. if you think about it, if youassume that the internet only has about 1.3 billion users,and there's on the order of 6.5 billion people on theplanet, you're only a quarter penetrated. </p>
<p>so, what happens whenanother billion or two people come online? audience: so, raising theaudience is actually just going to-- eric: absolutely. and the pie really doesget a lot bigger. and we take it forgranted here. everybody here uses it,everybody here has a mobile phone, and so forth. </p>
<p>that's not true for a lotof humanity, and it's time to get that fixed. larry page: you should say,too, i mean, if you do a search for something you're trying tobuy-- i mean, i only get ads maybe 80% of the time-- i don'tknow, 60% of the time-- something like that. that's in the u.s., which is areally highly developed market. the uk obviously is similar. but there's a lot of thingsthat i buy and i search for </p>
<p>that i don't get any ads for. and so there's a lot ofopportunity there still. and i think our ad systems arereally probably optimal for medium-sized advertisers. and for really smalladvertisers and really big advertisers, there's just a lotof things that need to be done to really create the coveragethat can generate conversions and clicks and so on. eric: you'll have the honorof the last question. </p>
<p>audience: my nameis [? arnt, ?] from germany. and the last question'sgoing to be a pretty personal question. the incredible success ofgoogle has made you wealthy beyond imagination in avery short amount of time. has that changed your lifeto the better or the worse? larry page: sergey has to spendmore time with his monitor. he's the first one who hasone, so it takes a long time. </p>
<p>sergey brin: yeah, it actually,it cuts both ways to be fair. it probably balancesout somewhat neutral. you know, certainly,yeah, i've got somewhat bigger and better toys. but they come with mehaving to do more of the testing and debugging. eric: you could hire someoneto do that for you. sergey brin: i don't know. that's-- i'd feelawkward about that. </p>
<p>i think, yeah, there area few lifestyle changes. i've tried to limit some ofmy lifestyle changes and not change too much. i've certainly seen a lot ofpeople who have great wealth who seem relatively unhappy. and, in fact, you know, it'skind of as you drive through different neighborhoods, youcan kind of see where people are more secluded because theyhave bigger houses, bigger lots, and they're wealthier. </p>
<p>they have less socialactivities than a lot of the more populated, more urbanareas, that are typically poorer in the u.s. so, i thinkit requires great care for people who come into suddenwealth, if you will, to avoid those kinds of traps. larry page: i was going to say,i think what i mostly feel is just a great sense ofresponsibility-- i mean, you have all this resource-- touse it well, and to think about that. </p>
<p>and that's been, that's beenreally-- i mean, i like challenges, so it's beena great challenge. but also not something thati expected to have to do. we've been spending a lotof time on things like our google.org efforts. some of the energy things,and other things. i've been spending a lot oftime in africa, because i feel like i really needto understand that. so, you know, i've beentaking some vacations there, </p>
<p>and things like that. which has been interesting. but not what i would havethought i was doing, if you had asked me 10 years ago. so, i think having thatresponsibility is a really exciting thing. it causes you to do a lot ofthings that you might not otherwise do that are good. there's also a tremendouschallenge and responsibility </p>
<p>that you feel about it. eric: i want to thank larryand sergey and nikesh, and i both want to thank larryand sergey who made this special trip, just literally tocome here for this meeting. so thank you both. sergey brin: and, if i may,just very quickly, i hope you've all been enjoyingthe conference. i hope you appreciate that aspayment you have to sit here and listen to us torture youwith this q&a for about an </p>
<p>hour, but it's freefrom here on out. eric: nikesh, do you want to sort of--thanks, everybody. </p></div>
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<div align="justify"><p>>> mcguire: good afternoon, everyone. my nameis joanne mcguire. i am the executive vice president of lockheed martin space systemscompany, and i am just very pleased to welcome all of you to this second in a series of distinguishedlecture series, co-sponsored by nasa and lockheed martin corporation, in honor of nasa's 50thanniversary. these lectures are designed to highlight the extraordinary ways in whichour nation's space program has brought both tangible and inspirational benefits, not justto the american public, but to the world at large. i'd like to ask all of you to pleasejoin me for a moment in congratulating nasa for nearly 50 years of really truly remarkableachievements.all of us at lockheed martin are proud to have been a strong and trusted partner ofnasa since its inception and this lecture </p>
<p>series is the latest manifestation of ourhalf century relationship. as nasa's partner on the orion crew exploration vehicle, weanticipate our stars will continue to shine together for many decades to come. there isno question that the greatest discoveries are yet to come, as nasa and our nation pursuea bold new era of exploration. joining us today is shana dale, deputy administratorfor nasa. shana, we're delighted to be partnered with nasa for this special lecture seriesand to have partnered with nasa for these many years on our nation's vital space achievements.today, our latest achievement is securing the services of dr. eric schmidt, chairmanand ceo of google with us today as our distinguished speaker. we're honored to have you with ustoday, as well, dr. schmidt, and we look forward </p>
<p>to hearing your comments. to introduce ourspeaker, it is my great pleasure to have congressman bart gordon, chairman of the us house committeeon science and technology and dean of the tennessee congressional delegation. congressmangordon's commitment to responsible, bipartisan efforts to advance science, technology andeducation has been really the hallmark of his congressional service. he is highly regardedfor his work on issues important to nasa and has fought for additional funding to ensurethat the agency maintains a robust and balanced set of programs in science, aeronautics andhuman space flight. congressman, gordon, please. >> gordon: thank you so much, ms. mcguire,and more importantly, i want to thank lockheed and the news museum for your hospitality heretonight, or today, maybe--oh, there's the </p>
<p>capitol there too. that was good timing. thankyou for that. and nasa, thank you for putting together this 50th anniversary lecture series.you know, in that regard, it's interesting to note that the house science & technologycommittee is also celebrating a 50th anniversary this year. both nasa and our committee arechildren of sputnik and as the inspiration for so many of the folks that were early involvedin the nasa program. and it's my great pleasure to be able to introduce dr. eric schmidt today.you know, i can really think of no one that is more appropriate in speaking to us todayabout inspiring innovation and exploration as it is dr. schmidt. i have a long historyof his, or a long sheet of his resume, but i think it's--rather than take his time, youcan all google him; i'm sure he's heard that </p>
<p>before. but you know, he really is in a rarifiedair of those ceos that have been able to take a company and take it from a noun to a verb.you know, my generation, i still say can i xerox this, or may i have a band-aid or akleenex. and so now you have joined that very small realm of verbs or nouns to verbs. andi think also that google exemplifies the critical importance of innovation and r&d to--thatis necessary if we're going to continue the quality of life that we have in this country.i was talking to ms. mcguire, she has a 7-year-old daughter, i have a 6-year-old daughter andi'm very concerned that when you look around the world now, there are almost seven billionpeople in the world, half of which make less than $2 a day. and if our daughters are goingto be able to inherit a nation with a standard </p>
<p>of living that's going to be even better thanours then, we have to do it by through innovation and research. we have to be making 50 or 100widgets for every one widget they're making elsewhere. and that's why i was reading todayabout cloning. i don't know whether dr. schmidt we can clone you or not, but we're going tohave to have increase really emphasis in this country on research and development so thatour kids won't become the first generation of americans to inherit a national standardof living less than their parents. it's a real challenge. you're going to be a partof being able to solve that challenge and i'm glad you're here, and i'm sure peopleare glad that i'm not going to take any more time from your speech. i will say that hopefully,we might get you cloned some day, but we can't--and </p>
<p>we can clone animals now, but we can't clonea congressman and i'm in the middle of a vote. and so i've already missed the first two andso i'm--please accept my apologies, i'll look forward to hearing your remarks that i'm sureare going to be re-telecast later. so, thank you all.>> schmidt: well, thank you very much, congressman, in your busy schedule to come. this is a congressmanwho has led a lot of the most important fights for nasa, for science, and for space exploration.his service is phenomenal. i want to congratulate nasa for its 50th year anniversary. nasa hasbeen a part of all of our lives for so much of the fantasy and the excitement of beingan american and being a citizen of our great country. i want to talk today about architectures,and how systems will work over the next 50 </p>
<p>years. i want to think that architecturesof how we go about science and exploration and technology will be different, right. wewill have to think about it in a different way. i think that the internet will show anew approach for us, how we can actually build these systems. those of you in the audienceare people who actually are in charge of how the system will evolve over the next 50 years.now is the time to think about how to design it so that we have a tremendous next 50 years.the next set of missions that the president and others have articulated, mars and so forthand so on, will span many generations, just as the internet has. and i want to take youthrough some of my observations on that. i also want to take a minute and congratulatethe museum. shelby and the team here are in </p>
<p>the process of getting organized for launchingthis formally later this spring. this is a phenomenal accomplishment by all the peopleinvolved with this, and it's a strong testament to america, to the principles the countryhas been founded and all the things that we care about. and i'm very, very proud to havebeen invited to actually participate in this, i think one of the first major public eventshere. so, let's talk a little bit about nasa and what i'm going to do is have robin getstarted, robin zeigler, get started. we're going to do a few demos here to give you asense of what is possible now with some of the things that nasa has been doing. as apilot, i'm very actually grateful for everything that nasa has done, and i think one of thethings that people always forget is how much </p>
<p>impact nasa has had on things other than space--digitalfly-by wire systems, wind shear and icing; perfect, good opportunities today to takeadvantage of these new systems built by nasa. jet engine combustors, engine nozzle chevrons,all of these interesting parts of the technology that you all simply consume as, you know,as consumers, you don't even notice it. but when i think about nasa and i think aboutgoogle, i think of--both has being in the business of making things that were amazingcommonplace, right? if you look at the history of aviation which i know something about,people were terrified with this sort of weather before nasa came along. it was actually aserious life-threatening problem and now we can deal with it. that's an amazing achievement.it happens every day. and it's going to continue, </p>
<p>given the leadership of nasa and the missionof nasa and the things that nasa is trying to do. when i think about google, we try todo the same thing. we try to do the things that are amazing. the things which were amazinglyimpossible 10 years ago are now routine. i was trying to think of an "aha" moment, ithought, well, what is the most interesting query that i can give? and i thought how longwill i live? it seems like the most important question you could ask google. and since weuse google for everything, i asked google and the answer is, there's an age calculator,i typed in all the parameters and it came up 67. bad answer. bad answer, bad answer,reject that answer. okay. so, i reprogrammed the age calculator a little bit and i cameup to 86; much better answer. i stopped. i </p>
<p>moved to other searches. that's an "aha" momentand i know how long i'm going to live and the answer is 84 not 67 because google toldme. now, robin, let's start. this is the crookedest street in the world in san francisco and you'relooking at with a product called google street view. we started off with a view of the earthand as you saw as we zoomed down. and you notice you see the folks and the cars, youhave street signs and so forth. is that alcatraz in the distance there? maybe you could sortof go, yeah, i'm not sure. it's a tourist destination now, don't worry. and here weare, and here you are and you're just on google wandering around. what's interesting aboutthis is look at the human scale of this experience, this exploration. it seems kind of routine,right? this is, by the way, phenomenal technology </p>
<p>to do this, before we get too ahead of it.let's keep going. when we go to--the same thing in google earth, the first thing wascalled street view, in google earth we can see everything there is around. the firstimage that you saw was the same street in google earth and now we're visiting, lookslike, washington, dc. and of course, here's the capitol, which you're right sort of nextdoor. now we can wander around and so forth. now the pictures here include these 3d modelsof all the buildings. and, the shapes that you're seeing, and the contours were, in fact,calculated in 11 days in missions in the shuttle in 2000. for completely unrelated reasons,they decided to do a topography of the earth and they happened to, by virtue of their publicmission, make it available to everyone. so </p>
<p>we just sort of took it and use it and nowwhen you use google earth you're really following the data that the shuttle mission calculated.keep going. now when you think about washington, there's a lot of discussions, for example,about--let's see what we're going to do next here. yes, it turns out that there's a lotof debate about global warming. and this is a--what is the--how many meters? five meters,15 feet. and so the good news is the capitol is going to be preserved. okay. i'm a littleworried about the smithsonian and i want you all to look at the nasa headquarters. it'sa little bit of a problem. i think it has an underground parking garage; you're in bigtrouble. not to make a point about global warming or any of those things or sea levelchange, but there is an article yesterday </p>
<p>that says that there is a possibility of thisscenario occurring by the years 2100. now, why is it important we show this to you now,because this is an example of the kind of visualization that you can do by taking thisplatform that represents google earth, and then showing what could happen. obviously,we don't want that to happen. keep going. what's interesting about all of this--whatare we going to do next here? yeah, let's take a look. this is another example of nasa.nasa, i think this was langley, gave us some climate models, and the climate models happento show the path of katrina. and so we've now overlaid the images that we got from youall, essentially, and you can see as you see the cloud moving, it has information aboutvelocity and position and so forth and so </p>
<p>on. these models were used real-time in orderto understand what was going on and, of course, you could see the velocity and that kind ofthing. many, many, many more people participated in understanding the phenomena and obviouslyalso the aftermath. we won't show you now, but there's a large amount of imagery thatwas done to help rescue missions and so forth, again, overlaid on top of this work, again,in conjunction with nasa. let's move to our next one. now when i think about the earth,i also would like to think about what are the things that i'd like to do and i've alwayswanted to climb mt. everest. now, if you're looking at me, this is clearly not going tohappen. so what we've decided to do is, i was just sitting in my office one day andi thought, let me just climb mt. everest on </p>
<p>google earth. so here we are and we sort ofwander up and you can see the south call and so forth and so on and this is the vision,and i've achieved my objective. well, have i? yeah, actually i have. i have a sense ofit. i have a sense of what it's like to be at the highest peak of earth. again, i couldparticipate in this new and interesting way. and by the way, it's really cold. okay. ifi then look at--let's see where we're going next. when i think about--what i also liketo do, i was talking about aviation. we have a person who is a blogger who covers googleearth who decided to build a model, a flight stimulator. and he took a publicly availableswiss fighter pilot video of a swiss air force pilot wandering around the alps. you see onone side, you see the actual film and on the </p>
<p>other side, you see the recreation in googleearth.now, again, this is available to all of us through the work that nasa and others andhave done to make it possible to see topography and pictures. this information is satelliteand aviation data and you'll see that--and of course it comes with a great soundtrackand so forth and so on. and again, someone else, just like me flying mt. everest, thisis perhaps a person who is unlikely to be flying his own f-18 in the middle of the swissalps can really recreate this. and it's just a phenomenal experience. we have many, manytechnologies coming that are like this over the next little while. why don't--in fact,here's a picture of the fake pilot, there's a picture of the real pilot. so this authoreven inserted a picture of himself in it. </p>
<p>let's move to our next one. when i think aboutthis whole phenomenon, how we use information, i then think about scale and i was tryingto think about what's the best example that i can use about scale? and i was trying tothink about, well, there's the moon sort of nearby. so what we've done now is we've simplytaken imagery of the moon, thank you, nasa. it's by the way, moon.google.com, in caseyou want to go visit the moon, if you're not currently planning on a moon mission anytimesoon. now, and here we are and let's go visit where neil armstrong went. and you can, you'llsee that we can, in fact, get to the point where you can see a picture of his footprints.now the kind of stuff that i'm talking about which we did under a space act agreement withnasa, and we're showing not just nasa planetary </p>
<p>content, as we've discussed, but also we'reworking on disaster response. here is a picture of neil armstrong's footprints. again, thesepictures are collaborated, are given to us by nasa and others. this mechanism is geneticallyavailable on all of google earth. so, we can, showing off what we can do. let's keep going.now if you're on the moon, perhaps what you're really interested in is space. so let's goto a--i don't know, this is a particular interesting star field. this star field is--looks likea normal star field. it was actually done in the deep space initiative with the hubble.and, this is a picture of the--and to give you an example, the width of that pictureis somewhere around 10 to the 25 centimeters, which is a number that is--here's an analogyfor you. if the interaction between carbon </p>
<p>atoms is maybe 1 over 10 to the minus 12th,because of the way they interact, and 10 to the 12th is on the order of 100,000 years.so what you're seeing is you're seeing something that has the scale or width, something you'venever seen before. there's nothing in the world of the scale, this is the deepest image,it's also the most, the oldest image we have in history because it was done approximately13 billion years ago roughly 10% of what we believe the life of the universe is. and itwas not done with one picture, by the way. the hubble went around and took picture afterpicture after picture because there was so little light. pretty neat, okay? so you saynormal picture. let's see where that picture is in context, so you got a sense of how farit really is. oh, looks like a pretty normal </p>
<p>star field. and by the way, there are billionsand billions of stars and galaxies even in this field. as we move out, we begin to seethat perhaps this is a tiny, tiny, little piece of a tiny, tiny little constellationthat doesn't even show up on our constellation map, as we go deeper, and deeper, and deeperin both time and history. some of our constellations begin to show up and now we begin to see whatis familiar to us. there is no tool and there is no feature i know of on earth that canshow you a resolution that goes from 1 to 10 to the 25th in that amount of time. that'swhat nasa can do. that's what information technology can do and that's, frankly, whywe all work at google. let's thank robin for the demo and let me keep, let me keep talking.so if you think about it, what you really </p>
<p>do is you set up audacious goals and you makethis all happen because you cannot possibly anticipate the challenges that you have tosurmount. it's clear that the assumptions will change and you cannot predict the innovationsthat engineers will make. the internet architecture was invented in 1973. the world wide web wasinvented in 1991, 1992. the protocols that we deal with every day now that are so commonplacewere not even thought about 20 years, until 20 years after the original design. that isa remarkable achievement of technology in computer science. there's no way to understandhow people will take advantage of this technical innovation. a man in italy used earth, googleearth to discover the remains and antiques of an ancient roman villa, literally in hisbackyard. archeologists in france used google </p>
<p>earth to discover a hundred candidate sitesfor ancient celtic settlements. in the search for these various meteor craters, an impactcraters, they're using the satellite imagery from nasa and the other work in order to actuallydo real science on how the earth was formed and shaped. we didn't anticipate all of this,we just put the data out there and people did it. it's also clear to me that the peoplewho start the mission are not the ones that are going to complete it. an interesting factthat i did in researching this is that the average age in the front room for apollo 11was about 32. the average age at google is about 31. the memory of the ibm 360s--i usedas a young programmer on ibm 360-91 which will both date me and also give you, havea sense of sympathy for me; 2.5 megabits in </p>
<p>core memory, a real cores. the memory of theipod that our average employee carries now is 80 gigabytes, which is 256,000 times 2.5megabits. so, the rate of change here has been so phenomenal. it's of the scale thati just showed you in that star field. so the internet is the fastest growing communicationsmedium in history, again, so fitting that we're here at this wonderful museum. morethan 1.3 billion internet users worldwide, on the order of a couple hundred million newusers every year, 8 hours of video get uploaded to youtube every day, that should be everyminute, and there's 70 million blogs exist in a 120,000 created every day. it's a lotof blogs and a lot of writers, not so many readers i suspect. when you, when you--thisdemocratization of information which is fundamental </p>
<p>to what is occurring here has a lot of implicationsfor both nasa and for google, and for the world here in washington. since anyone cancreate, edit, publish and share information, you know, it's a new jump ball, it's a newscenario. and normally what happens is that the rate of progress in field occurs at arelatively predictable rate. examples would be that scientific research, the number ofpapers doubles every 15 years; so sort of a predictable rate. in astronomy, the--sincewe're sort of talking about astronomy right now--the distance of the farthest galaxy wecould see has doubled roughly every 10 years; so again, reasonable rates. the world thati live in, doubling times are much, much shorter. moore's law, of course, everybody knows aboutthis, processing power doubles every 18 months. </p>
<p>that means, by the way, 10 times every 5 years,a hundred times in 10. there's a law called kryder's law which is the memory, disk memory,in particular, doubles every 12 months. so this immense, immense amounts of data storesbeing created over and over again. so, an obvious example is that in 2019, an ipod typedevice would be able to contain 85 years of video. in other words, you could never watchit. you'd be dead. you're going to be carrying it and you'll say, well, i couldn't watchit. i'm sorry, i died. it's actually a serious problem like because it's going to cause alot of stress. you know, if i'd only lived another year longer, i could have watchedthat other episode. so, the other interesting thing about this in spurge [ph] of informationis that there's a lot of new voices and new </p>
<p>ideas. with all that, with all that contentout there, you know, search is obviously what google does, becomes it's more important thanever. over 20% of the searches that we do every day are for items we haven't seen inat least the last 90 days. so people are naturally curious, and i want us to take advantage ofthat curiosity. so here's some ideas for success as we think about this. the buzzwords thatwe use in computer science are open, scalable and flexible architectures. and a lot of thenasa work was done before that became the--that's the most politically correct way i could saythis, before those became the principles of design. these hardware designs that are notextensible ultimately do not serve the mission very well. in my case, to show you how foolishi was, when i was a graduate student at berkley, </p>
<p>i built a network--one of the first networksbuilt of its type--for my master thesis, and by the way, i got my masters thesis and idesigned a protocol where there could only be 26 machines, because there were only fourat the time and i couldn't imagine that the university would ever have more than 26. sothe machines were called a, b, c, d, you know, etcetera. they still gave me my degree andthen shortly there later they tore out my network and put in a proper network. so everybodycan make this mistake. the internet started off with four nodes, now it has somewherebetween 250,000 and a million broad networks, by any definition. it's just phenomenal. thenumber of servers, there are roughly--january 1983, we have an accurate number because ofdarpa, 400 servers. in july 2007, our best </p>
<p>estimate is 489 million servers. and thisis growing and continuing to grow. it's growing faster than you think, because it's growingall the time. so, when you build an innovation model, you want to build it in a way that'scollaborative. and this is often at odds with how people think about government programs,procurements, the traditional structures of business and private groups and so forth andso on. you want to figure out a way to do it in a much more open way. and everybodyloves what nasa is doing. it should be possible to pull this off big time. the web, for example,today is built out of products known as linux, apache, mysql. these are open software technologies.the creators of mysql, by the way, just so you--in cases there's any concern that thesemight be hobby businesses--were just purchased </p>
<p>for about a billion dollars by sun microsystems.these are real businesses with different characteristics, but it shows you that you can really delivertremendous value. so if you solve a big problem, solve it by opening it up to the public. assumethat you don't have all the answers because i can assure you that we don't. and i suspectnobody does. it's too, everything is too connected. you're not getting the benefit of everyoneunless you figure out a way to do it in an open way. there's a couple of really goodones. nasa did something called the centennial challenge program. and i think one of thepeople here was one of the authors of this program, so thank you for that. a particularengineer from maine won $200,000 in may 2007, for designing a new astronaut glove. the innerbladder of the glove used one of his kitchen </p>
<p>cleaning gloves because it was the right solution,and it just worked. and there's example after example that when you bring in the creativityof people who maybe he didn't, maybe he didn't have a lot else going on in his life, youknow, maybe he needed something to work on. you know, you just made his day and you justsaved yourself a million dollars, but more importantly, you served the mission really,really well. the lunar x prize that google has announced. we announced a few months agoa prize which is graduated, but think of it as between $20 and $30 million. basically,get something launched, get it to the moon, make sure when it lands it can still drivearound. okay, very straightforward. that's the non-technical explanation. look at ourwebsite, you can see all the details if you </p>
<p>want to bid. why would we do this? becauseit's fun, right? it's just so much fun. now the people who are going to attempt the lunarx prize, and we think there's a whole bunch of folks are probably going to spend morethan the value of the prize. but what's nice about the prize is it brings everybody together,it gets everybody's competitive juices, and you get the multiplicative effect, not justof the money that we're putting in, the money that nasa's putting in, but the money thatall the other people, all the other universities and other programs, that really want to bepart of this historic opportunity to change science in a good way. another aspect of theproblem that i think we all face has to do with this notion of how do you learn? andin these interconnected worlds, you have to </p>
<p>learn more quickly. part of the success ofthe internet and it's true of all the companies; google is simply one of the examples--is thatwe're built on a ship and iterate philosophy. what happens is basically we try something,we try something, we try something, and we're proud of this, by the way. we celebrate thefact that we tried this, we cancelled this, this didn't work, we shifted and so forth.they wiggle, right, in an interesting way. and not only does the technology allows that,but it's part of our culture. we have programs where we encourage our engineers to spend20% of their time on things of their own interest, not what their manager is telling them thatthey have to do. again, unheard of in traditional engineering that drives much of the creativeprocess inside our company. there are many, </p>
<p>many such examples. so, i don't know. whohere was a big apple lisa user? the old, it was the predecessor to the mac, right. butthey learned a lot from the apple lisa that made the mac a great success way back when.it happens in telecommunications. the at&t long distance network crashed for nine hoursdue to a bug consisting of a single line of c code in 1990. we've all forgotten that,but the fact of the matter is they do it too. so the obvious messages for me is to say,well, nasa, you should just ship and iterate. well, this is a minor problem, but you can'tapply exactly the same approach we do because mars and the earth are only this close onthis day. or saturn is only in this position in this particular place. or you have a particularlaunch window due to orbital mechanics that </p>
<p>you really do have to launch within this window.and there are some--humorous now, but embarrassing at the time examples. gemini 5 splashed downoff course 100 miles because of a programming error involving the way they did the calculationwith a decimal point. an even more famous example, and unfortunately a negative onein 1962, mariner 1, went off course, and nasa at the time had to blow it up because of anerror in the fortran, right. and, a hyphen had been dropped from the guidance programloaded aboard the computer. it's been quoted as the single most expensive hyphen in history.so i don't think it's fair for me to say, well, hey you, guys, you should just adoptthis ship and iterate phenomena. i think what you have to do is you have to recognize thatthe ship and iterate model is the best model </p>
<p>for learning and then adapt it to the constraintsthat are very much in your present. so one way to think about it, and as a manager italk to people a lot about this is that one of the best ways to be lucky is to createmore luck. and the way you create more luck is you have more at bats. you get more shots,more launches, more learning, so forth and so on. so the more you put everything aroundone single event, the less likely it's going to be a perfect success. the more you figureout a way to iterate, and there are many, many ways in which you can iterate. you caniterate with openness. you can iterate with extensibility. remember the story that i usedabout the internet, that the underlying protocols were designed around a simple model of end-to-endconnectivity. no one anticipated all of the </p>
<p>stuff that would be built on top of it. sogiven that you have these real constraints about launches and windows and so forth, makethe platform such that it's the simplest possible platform that people can then build on topof. build open systems, not closed systems. don't try to solve the whole problem rightnow. the problem as correctly defined in my view is to build the platform, the thing thatis extensible to the next example. another example, we were looking at this. most spacecraftcan't talk to each other in any significant way. now you say, well, i'm not sure i wantspacecraft talking to each other. well, actually, it's kind of useful for spacecraft to talkto each other especially when they can relay information and telemetry and other information,and furthermore, we as a country can use that </p>
<p>for many, many different reasons. well, isn'tit obvious that the spacecraft should have an internet on them too? i mean it doesn'thave to be an open internet, you could have your own private copy with a gateway, so peoplearen't randomly steering the spacecraft wherever they want to go. but the fact of the matteris it does make sense. and in fact, there are people now working, and this is a greatstory, people working to build an interplanetary internet. that all the same principles thati'm talking about apply, not just on earth, but to the objects that we're busy launching,and by the way, not just the us, but everybody, but also the moon and mars and so forth andso on. and this internet is interesting because there's this minor problem that as you spin,right, you lose connectivity, you have to </p>
<p>wait for the packet. so the whole notion oflatency is very different. it's like a long time before that packet shows up. but thenit comes very quickly and then there's a long time again. we haven't quite figured a wayto solve planetary rotation yet. so the fact of the matter is you have to design theseprotocols, with a small number of modifications it's possible for nasa and the world to havenot just an internet that is part of the earth, but also an internet that goes all the wayout there. i don't know if it's get all the way out to the deep space fields because itwill take 13 billion years to get there, but it'll get pretty far. so by standardizingthe protocols, by standardizing the ways in which things talk to each other, by makingsure that when you have multiple vendors, </p>
<p>multiple contractors, they're using a commonsubstrate of communication and extensibility, you have a much, much greater chance of creatingan opportunity like the ones i'm describing in the internet where this platform, thisvery interesting thing that was designed for one thing, is in fact now even more valuable,even more powerful, rather than mission limited in one way or the other. so the technology-basedcase continues and i think it's pretty interesting. what does it look like in 10 years? processorsand phones and computers a hundred times more powerful, storage a thousand times cheaper,a ubiquitous wireless broadband, a cell phone for everyone who wants them in the world.this will occur in our lifetimes especially since i'm living, remember to 84. how cannasa take advantage of this? i'll give you </p>
<p>another example, so something fun. norad hasa program where santa--they know where santa lives and they track santa as he goes aroundthe world. and these guys are pretty clever. so, they shot videos of santa visiting variouscities and towns around the world. and they have a route gps as you could track him. andi thought, wow, pretty interesting. how many people look at this? ten million people hadnothing else to do, right, but to follow santa as he wandered the world visiting and spreadingjoy around the world. it had a big impact on families and kids. how can we, how cannasa take advantage of that? to me that's the interesting question. there's a storyabout alan beam, one of the most famous astronauts, that there's a benefit to being an astronaut;obvious, get lost in space. no. the benefit </p>
<p>is that you can get the attention of any kidfor five minutes in rapt attention; if we can't use that observation to further themission of nasa and the things that we care about, we're not doing our jobs right. inmany ways, google and nasa are similar in that they're based on optimism. pete wordenwho's my good friend, one of the directors of nasa, says that, "remember that space ishard. it's really hard. it's hard science. it takes an optimist to want to pull all ofthis off." and i like that a lot. you have to be optimistic to want to send a man tothe moon, to mars, to explore every planet, to build a space station. you also have tobe optimistic to believe that you can cover all the world's information starting withborrowed servers in your stanford dorm room; </p>
<p>it's the same principle. and indeed, we'rebusy doing it as best we can. ed lu who is a good employee and i think the us astronauthas been in the space the longest, i asked him sort of what's it like? what did you doall day? he said, "i looked at the earth. i literally just loved to look at the earthas it was underneath me." so what i was thinking about was, how can we get that, how can weget that feeling? because if you think about it, every person that i know of, basically,looks at the world on their cell phone now, right. how can we get that same passion thated had, that same feeling about the world, the world around them, the sense of wonderment?they spend--today, people spend literally so much time looking at this screen or theother choices as well, how can we get that </p>
<p>information? and i think that is our jointmission. how do we get this amazing amount of information that is being generated aboutthe world and science and the things that can--how can we get that so that it is thesame level of rapt attention as ed had sitting, spinning around, right, looking at the wondermentthat is the world around us. that's why i'm such a strong supporter of nasa. that's whygoogle is such a strong partner for nasa and that's why we're so very, very happy to wishnasa a great 50th anniversary. so thank you very much and i'm interested in your questionsand comments.we have our first question in the middle. >> logsdan: david logsdan, us chamber of commerce,space enterprise council. >> schmidt: let's see if we can get the--ithink the lady has a mike for you, that would </p>
<p>be great if you could--that way they couldhear you on the video tape. >> logsdan: david logsdan, us chamber of commerce,space enterprise council. a few years ago, the futurist, alvin toffler, was at a conference,a space-related conference where he mentioned that the information age was the third wave,that space was the fourth wave. in your mind, what do you consider the fifth wave? is ita combination of space-related activities and applications, coupled with information?what is your vision for the fifth wave and with that vision, how can that be a stimulusfor the economy? >> schmidt: most people that i talked to inthis area actually believe that the next huge phenomena that's going to hit us will be inbiology, in biotechnology, the issues and </p>
<p>opportunities that the genome, recombinantdna, those sorts of things do. i think all of us are to some degree enablers of thatnext wave. and the argument is pretty simple. in order to do the kinds of things that wewant to be able to do for health, society as a whole, improving the lot of the world,we're going to need the kind of information and computing power and networks and learningthat's going on today in the other waves that you described. it's probable that the combinationof the creation of this enormous information network that i talked about earlier, the commercializationof space which the nasa, the nasa leadership has done a tremendous job moving forward,if you think about 10 years ago versus now, again, which also creates a large number ofjobs, a large number of opportunities and </p>
<p>this openness, right, making it possible forpeople to enter the system at the appropriate things. both of those create very large numbersof jobs and probably a significant wealth opportunity for investors. a lot of peoplebelieve that as more and more of the stuff is done in the private sector, people willfigure out a way to make money, because there's economic value. in google's case, for example,these satellite images that we showed you, we buy them from commercial satellite providers.they're making money and doing a great job for us, by the way. there are many, many newthings of that type that can be done. so one of the reasons that i'm here is to say toyou all that there are tremendous private opportunities for investment in space technology,high technology, information technology. google </p>
<p>is an example of it, there will be many others.eventually, i think all of us will be subsumed to some degree under this biology and biotechbecause the promise is so strong. they're not quite there yet because the computersaren't quite fast enough, we don't really quite understand the networks quite well,but everybody is working on it. yes, sir. let's see if we can get a microphone.>> o'connell: matt o'connell of geoeye, one of those commercial satellite operators. weget criticized for taking… >> schmidt: and a partner, thank you. thankyou for all those nice pictures. >> o'connell: thank you. we get criticizedfor taking pictures of areas that some people think are sensitive and i know that at googlethere's been a debate about whether or not </p>
<p>you should show those pictures. i think thearguments in favor of openness are winning, but i'd love to hear your comments, becausei get it all around the world. >> schmidt: from a google perspective, thisquestion about public information, what's public, what's private is turning into beone of the sort of central questions for the internet. and, you all should know that there'sa law that restricts--you certainly know this--commercial satellite imagery to a certain level of resolutionwhich we're governed by and we need that, obviously. so there, in fact, is some legislationand some regulation in this area. we've taken a position that subject to meeting the law,and there are certain countries which have special terms which are even more restrictivewith respect to commercial imagery, we want </p>
<p>to get as close to that as we can becausewe think the society benefits from such, such pictures. the fact of the matter is that ithink we're in a transition period where people are learning that things which are, whichthey thought were not generally known are becoming more generally known. my favoriteexamples are these situations where something from space--people assume that you'd neversee it from space, but in fact, it's embarrassing or the wrong thing or so forth that peopleare making appropriate changes. so i think this is a transitional period. the benefitsof being able to see that third dimension, what pilots see when they fly, turns out tobe phenomenal. i talked to queen noor about her husband who died, who was a pilot, andshe told me that part of the reason he was </p>
<p>a pilot was that when he flew around the middleeast, he never saw any boundaries. he never saw the little lines that we see on the mapwhich is what we assume those lines are like etched in the desert, right. we all know wherethey are. it's right there on the map, but it really isn't. i went to a photography showfrom one of the astronauts who was particularly good at mid-format camera photography, showingwhat the earth really looked like. and i think that it's both a message of peace, but it'salso a message of the importance of the earth that i think we want to get out. there aresome things that we do to be responsive to this. we are very, very careful not to showreal-time because we think real-time could be misused and you could imagine 20 ways inwhich real-time images could be used. and </p>
<p>we also have various mechanisms for thingswhich are sensitive or inappropriate to try to consider whether we should remove thoseas well. so we want to be sensitive to that. but, the overwhelming conclusion is the societybenefits from more of that kind of imagery being available, and thank you for helpingmake that happen. more questions. way at the back.>> kemp [ph]: eric, chris kemp [ph] at ames research center. increasingly, collaborativetechnologies are free and systems are increasingly being developed in open source. and it's hardto procure what's free. what advice do you have for federal agencies that are tryingto use tools which are free? >> schmidt: so let's just do this again. thegovernment which has like a trillion dollar </p>
<p>deficit can't buy something which is free,it has to buy something which costs money. >> kemp [ph]: seemingly.>> schmidt: does that--everyone says yes. okay. welcome to washington, i guess. eventhe technologies that i was describing that are free, are, typically come with a supportburden. so what companies do when they work with the companies that i mentioned is theyactually do a procurement in the washington sense or in the government sense, but theydo it for a service. the software itself is free, but the support, its integration andso forth, and that works pretty well. so, we use the term free, but we all understandthat people are paying for this. they're paying for engineering, they're paying for supportand so forth and so on, and that's where the </p>
<p>revenue is being created. to put it anotherway, sometimes you for the software, sometimes you pay for the service. at the end of theday, you're going to pay for something. so, it has to do with what you're procuring. there'sno question that the generation of computer people that i work with now are all buildingon top of this linux platform which is open source, but they're building tremendous companies.google, of course, is largely linux based, to give you an example, and obviously verysuccessful. more questions.well, thank you for inviting me. thank you all for a wonderful afternoon and i hope youall get home in the middle of the storm. so thank you very much. </p></div>
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<div align="justify"><p>>>unidentified speaker: love it, got my cue.very exciting, really there. but actually mark thompson and an exclusivelive interview with eric schmidt, the ceo and chairman of google live tv.how exciting is that? by the way, how's the bbc in play?i think it's only fair to point out that there are other search engines available, you cangoogle them if you want to find out more. [laughter]so listen, first of all, just a team markup, here's a quick film that tells you five thingsyou need to know about google, by laura s/l trivellion [00:24], in our new york office.thanks. [music] </p>
<p>>>laura: you already know, google is the mostdominant search engine on the planet. but here's a quick guide to the keys usedwhich could define the future of the world's most powerful brand. google made a profit of 1.48 billion in thesecond quarter of this year. while doom and gloom reigns in much of thecorporate media world, google's finances look to be in robust, good health.in the second quarter of this year, the company's profits were up by 18%.while newspapers and tv continue to wave goodbye to their advertising dollars, google is sittingpretty. it gets 97% of its revenue from advertising.so here's the big question: is google moving </p>
<p>away from being merely an aggregator of content,to becoming a provider? on october 7, a new york judge will beginto rule on google's controversial book deal. google has been quietly making digital copiesof 10 million books, including out of print and out of copyright titles.the idea is to revitalize long forgotten works and to make money out of them, of course.after publishers and authors sued google for breach of copyright, a settlement of $125million dollars was reached. now a new york judge will rule on whetheror not to block that settlement. so for now, google's plans to make money outof the past are on hold, but how about the present? </p>
<p>[music] e very minute, 20 hours of video is uploadedto youtube. the billion dollar question is whether googlecan make money out of our obsession with youtube. google bought youtube for a whopping $1.65billion in 2006. the video sharing site has lost money everysince. google won't say how much youtube is in thered, but estimates vary from between $150 to $500 million a year.michael grade famously called google and youtube, "parasites, living off the content of others,"a criticism which may have hit home. google may help newspapers sell their articlesonline. </p>
<p>having fought with the newspaper industryover its new search engine, now google is making nice.the company has revealed that its checkout product, used by internet retailers, couldbe adapted so newspaper sites could sell their articles.all this may come too late to help the ailing newspapers.could the same technology be applied to video? and google's generosity might help stave offthose pesky regulators. the european commission is updating its dataprotection directive. and those eurocrats have google in their sights.the commission is taking a close look at whether google's wildly popular street view is actuallyinvading our privacy. </p>
<p>and the eu is focusing on how internet searchengines store information on our shopping and our surfing, which is often used [music]for unsolicited advertising. the google's business model is highly relianton those cookies, which store the information on us.the company's unofficial motto was, "don't be evil," and that could be resurrected asthe lobbying in brussels intensifies. so that's our view of google from the outside,now for the perspective from the googleplex itself. >>mark thompson: right, so we have eric schmidt,i think, in new york looking at us. can you hear me, eric?it's mark thompson here. </p>
<p>excellent! okay, well we-- >>eric schmidt: yes. hi, mark and-- >>mark thompson: hi there.we've been--spent the whole day debating the future of television--the challenge of differentmonetization models. now one theme that's come up today is an organizationwhich is described as "dominant," has a terrible chilling effect on every aspectof broadcasting in this country. now i have to say, people have generally meantthe bbc when they said that, but i have to say sometimes [laughing] yourname comes up to! this is a big topic--the scale--the scope--andin particular, you heard the famous "parasite" </p>
<p>phrase a moment ago there--the extent to which google sits on other people's investment, the extent to which google actuallyreinvests. let me give you--we've had a lot of questionsfrom people here on this topic--but let me give you an example.janice hughes is here--asks, "having successfully siphoned off hundreds of millions of the u.k.'s media ad spend, in what ways might google invest in original u. k. content?"somebody else asks us, "how much do you actually plow back to u. k. content providers?"how do you answer those questions? >>eric schmidt: well, first, thank you forhaving me. i'm sorry i'm not there.i could not physically get there, given some </p>
<p>commitments i had here in new york.but this is obviously an important group and an important--you all have existed, i think,since the 1930s. this group started as a debating society fortechnology and engineering and television, which is something i care a lot about.i think it's helpful when you have these sort of conversations and questions you're describing,to try to figure out what does the world like 10 years--15--20 years from now,and--you know--all of those cases, the most important thing to know is that people aregoing to have a lot more choices in how they consume television and media.in particular, they're going to consume the kind of media that we think of as television,on a lot of devices that are not traditional </p>
<p>televisions.and over that 10 to 15 year period, the kind of quality and technology that we can bringto, for example, mobile devices, will really change the landscape of how peopleconsume video, news programming, all the things that all of us care about.this is true in television; it's also true in newspapers.so from google's perspective, we're used to the criticism, so we don't mind it at all.in fact, we welcome it, because it helps us understand what we should be doing differently.from our perspective, we are essentially a conduit for how end users want to consumecontent. to the specific charges, the content thatwe make available to end users, we get with </p>
<p>the permission of the people who do the content.so even in the book settlement, the issue was not copyrighted content; the issue wasthings that have lapsed from copyright. so on the specific questions about how muchmoney we're plowing back in, we're beginning to plow a fair amount.as youtube, for example, becomes profitable, more and more of the money that we can make,we will essentially plow back into content. we need the content industries and to be monetized--inour model, primarily using advertising. if you go 10 or 15 years out, it's probablythe case that you're going to end up with advertising models as well as micropaymentand subscription models for content. and we're going to work on all of them, tomake sure that if you have great content--which </p>
<p>people in this audience clearly do--then you can decide whether you want it to be advertiser supported, or whether you wantpeople to pay a subscription, or what have you. >>mark thompson: and clearly i'll ask peoplein the audience here to respond to that, but before they do, sir,can you give us any numbers, eric, in terms of the kind of money that's coming back tocontent providers in this country--in the u. k.--from google and or youtube? >>eric schmidt: well, in the case of contentin general, we ship about $5 or $6 billion globally, back into content through a setof advertising products which are called adsense. </p>
<p>and part of our strategy is to take thoseproducts and make them even more suitable for the video experience, the radio experience,the newspaper experience. these advertising products are highly targetedand so over time, we think that they will actually be more profitable than the traditionaladvertising models. they are not today, fundamentally becausepeople are consuming, if you will, less of the media in the new format,as they did in the old, traditional television format on a time-weighted basis.but our goal is to make large amounts of money for the content partners in all of these categories.so to give you rough numbers--if you assume the u. k. is roughly 15% of that,that would say that we are well above $500 </p>
<p>million--or some number of hundreds of millionsof pounds already. >>mark thompson: okay well, what i want todo, on this topic of the flow back of money-- first of all, janice--janice hughes is here--janice,do you want to ask eric anything after having heard that?is that reassuring? down here in the third row. >>janice hughes: eric, i think my questionwas aimed at the fact that there's a lot of money--everyone's been talking about it today--flowing out of the media sector, but particularly the content production--original content productionindustry here in the u. k. and i mean, at what point in the future willwe actually see that funding possibly coming </p>
<p>back to pay for programs,to support the broadcasters, as opposed to it just simply disappearing and then havingto scramble around for new money, or simply reduce the program budgets--whichis what we're sort of suffering from at the moment--compared with say 5 or 10 years ago? >>eric schmidt: i don't know how to answerthe general question that you asked, because there are so many components that go intothe revenue that you all make. what i do know is that advertisers are movingto the internet, and that the internet should ultimately bea more targeted and therefore more effective advertising vehicle than the traditional televisionmodel. </p>
<p>if you go--again, i appreciate the bbc isnot primarily advertiser supported, but talk about the commercial networks--inthe united states, as an example, my television shows me ads for products that i'll neverbuy. products like baby products and things likethat--there's no baby in the house. that's a waste of a time slot.we have invented, and are in the process of deploying, systems which sit on your set topbox which give targeted ads to the household, to the set top box precisely.and--so a reasonable step is to assume that there's a transition going on, from untargetedbroadcast television advertising to targeted advertising.as to the general question of where the advertising </p>
<p>money is going to go, we know that overall,untargeted advertising is going down and targeted is growing very rapidly.so to me, it's all about a race to getting more targeted advertising.and by the way, that's not just targeted though google, it's also targeted through socialnetworks and things like that. if you think about your mobile phone, eventuallywe know a lot about you on your mobile phone. we know where it is, we know who you are,we know what it's doing; we know a lot about your interests.so it should be possible to sell an advertiser--and of course google is fundamentally an advertisingcompany in the sense of our revenue is 98% advertising.we should be able to show a product that's </p>
<p>highly, highly valuable to an advertiser. >>mark thompson: now eric, you said--i thinkyou used the phrase, "as youtube becomes profitable." i couldn't quite work out whether that meantyou believe it's already profitable, or will become profitable.can you give us a sense of a timeframe and also about whether you believe that that kindof ad funding model is going to be successful and dominant in this space,or whether other kinds of monetization can also work? >>eric schmidt: first place, we believe youtubewill be profitable. we don't have a forecast for when it willbe. </p>
<p>it's not today, but its profitability is improvingreasonably rapidly. and part of the reason is because we've inventednew advertising products that are very similar to the kinds that i've been describing, andwe have a lot more coming. as to the general question of how will moneyget made here, you're seeing a long-term, secular shift awayfrom the model that we've all grown up with-- which is people sitting around watching televisionand listening to the radio--to a much more mobile user, who can consume information inany order and anyway they want. my personal view is that much of that contentwill be advertiser supported or government subsidized, in the case of public entities,but that fundamentally, the viewer experience </p>
<p>is going to shift.you can see this when you look at people who are 5 and 10 years old.children today-- they're extremely comfortable with consuming content on their sony playstations,their iphones and things like that. and--you know--i can't see the screen becausethe screen is too small, but their eyes are good enough that they can see it.because they have every reason to believe that this next generation will have a very,very different viewing consumption pattern. it doesn't mean that they will watch less--iwould argue that they will probably watch more.but they will watch it using a different device. let me give you another example.there's a whole category of companies, who </p>
<p>are startups and even larger companies,that are building boxes that combine the traditional broadcast television experience and viewingon the internet. and roughly what--think of it as a box whichyou connect to your television, and it can show you what's available on satellitetelevision, it can tell you what's available on licensed broadcasting television over theair, it can show you what is on cable, if cableis predominant in your area, and it can also look on the internet.and you can then search and say, "i want to see the best of--" and it will search acrossall those four modalities. that's a big technology shift for the royaltelevision society's members and for all of </p>
<p>us, as consumers.but from my perspective, ultimately, the consumer's going to win.they're going to want to have the convenience of seeing it in whatever its current formatis, regardless of delivery mechanism. in each of those categories, we're going tohave to develop a monetization model, so that the content provider can be properly compensated. >>mark thompson: okay.now a short time ago, rupert murdoch set out a--almost a kind of global call for news aroundthe world-- i guess he's thinking principally of text,but i think he had applied this other forms of use online--to go behind a paywall and to collectively </p>
<p>move to a pay model.do you think that that's a strategy which is likely to succeed, and what's google'sattitude to rupert's call for a distinct shift in journalism towards pay? >>eric schmidt: well, as you all know, a coupleof the properties that news corp owns, particularly the wall street journal,do in fact have paywalls, and you do in fact have their content through subscription.and that's a model that has worked for them. in general, these models have not worked forgeneral public consumption, because there is enough free sources, thatthe marginal value of paying is not justified based on the incremental value of quality.so my guess is that, for niche markets--for </p>
<p>specialized market, a business market is avery important such example--it will be possible to do that.but i think it's unlikely that you'll be able to do it for all kind of news.there's simply too many news sources, there are too many ways in which news gets done,there are too many, if you will, news societies, who will find an advertiser supported as opposedto a paywall model, work. having said that, these are also negotiations,and so you should assume we will be negotiating with all of these players to try to make surethat their content is as available as broadly as possible, to people around the world. >>mark thompson: and so on this point, peterbazalgette, i think you have a question. </p>
<p>down here on the third row. >>peter bazalgette: eric, as youtube strugglesits way towards profitability, we can all see now it's largely doing it on the backof professional content. and it seems to be professional content thatadvertisers most wish to advertise around. just to shift the scene slightly, does thatspell the end of user generated content as a commercial proposition?we've heard so much hype about it in the last ten years; clearly people enjoy it in thesocial sense, but does it spell the end of it as a commercialproposition? >>eric schmidt: yeah.just as a comment, you used the word, "on </p>
<p>the back of," and that implies some kind ofduress, i think. the fact of the matter is that we have anaggressive and very successful commercial licensing program for youtube,where people willingly give us licensed content and we advertise against it.that's part of the why youtube is becoming successful.if people upload content, which has been illegally copied,we now have very sophisticated tools called content it tools, which will allow the copyrightowner to identify those and get them deleted--literally deleted.and this happens all the time, at least for me as a viewer on youtube,when i'll type in some name and i'll discover </p>
<p>that the content owner, in their judgment,decided to take it off of youtube. we understand that and we support that model.on the question of overall user generated content,i think the experiment is over and it's very clear that the average person who generatesuser generated content does not have the skills and quality of the people in this room.i think you just look at the video. and i think anybody who says--who has thissort of utopian view that everyone can be a broadcaster at any reasonable quality justhas to look at what the mass of people produces. so it's important to understand that thesethings are ultimately distributions, there are curves,and there is a very large number of videos </p>
<p>where, frankly, the only audience is a familymember--typically my mother. and she's the only one who would love thisvideo, or my family or what have you. so the important thing here is that's an importantfunction, but it's very hard to imagine that being highly monetized.we have seen some success with what we term as the "torso," that is the part between thehead and the tail. the people who have good talent and they'reprofessional, but they don't have the kind of budget and sophistication that people inthis audience do. and we would like to monetize them as well.i'm sure at the end of the day, this will end up being a 90/10 kind of a percentage,where 90% of the content--or i don't know </p>
<p>the exact percentage--will be essentially unmonetizable, but will be valuable to micro niches--families, friends,sports clubs, what have you. [sneezes] and then the head and the near-head,if you will, will be where virtually of the money is made, simply because of the valueof professionals. >>mark thompson: okay, eric, i want to introduceanother--a big topic--i mean, many of the questions--i'll read one question now andmaybe you can get a microphone to steve hewlett in the hall as well.this is about regulation. you are--you'll be pleased to hear--chillinglybig; almost a monopoly in search, dominant in many other online areas from maps to video.do you accept that google now needs to be </p>
<p>regulated more effectively?and is steve out there? steve hewlett? this area--i know of regulations--also isone that interests you. go for it. >>steve hewlett: i suppose the point is thatone of the consequences of being in the u. k., you're 90% of the market in search; youhave effectively no competitors. and that means--notwithstanding the fact thatyou've got there because your system is good, because people are using it, no one says you'vedone anything wrong--but de facto, you have a monopoly position.and the problem then is that in terms of the way that the other people want to--need torun that business is people need to get recognized </p>
<p>online and so on--everybody is subject to the google algorithm, which is a particular algorithm--good as itis-- and the fact that there's no competition--itmay--you might think in any other marketplace, a 90% share of the business would induce fullseparation or some form of at least regulatory oversight.are you concerned that that is a possibility and what is your attitude towards it? >>eric schmidt: well, the first question iwould ask you is, could you give me an example where a regulator would add some value tothe scenario that you are describing? [audience laughs] </p>
<p>so, would the regulator order google to somehowboost some company over another? would the regulator prevent google, or notallow us to innovate in the ways that we have, which have been proven over time?so it's not obvious to me that--at least as you phrased the question--that the value thatthe regulator would provide would ultimately produce greater consumer benefit. >>steve hewlett: far be it from me to suggestthat a regulator could improve anything, [laughs] because i think our experiences-- [laughter] but notwithstanding that, if somebody dropsoff the end of your algorithm, kind of where </p>
<p>do they go?and it is believed--and i don't say it's true, i don't know--it is believed-- >>eric schmidt: so--you--under--but underyou're--under you're questioning, they would appeal to the prime minister, who would orderthem ranked higher? >>steve hewlett: oh, you just don't understandbritain, do you? [everyone laughs] but yes, essentially the answer is yes, [laughter]they would, [laughter; unintelligible] especially this one.anyway, in essence, the point being, that if you drop off the bottom of your algorithm,there's kind of no way you can go and it is believed by people who run services that couldbe thought of as potentially competitors to </p>
<p>yours,who run smaller scale search engines, they believe--a lot of them--that they drop downthe algorithm, and that there is google's own commercialself interest is playing a role here. and that makes you--the fact you're a 90%player--pretty scary. >>eric schmidt: so, i'm not going to debatewhat percentage market share we have. if what you're really doing in your questionis asking, "is the market open for new search players?"i would offer you that microsoft recently did a deal with yahoo,where they are attempting to become a very strong second--and eventually have said thatthey want to be the leader. </p>
<p>i would also observe to you that google reallyis one click away from our consumers deciding that we are not the best choice.unlike, for example microsoft, where it's relatively difficult to move off of theirplatform, because you have all of this investment insoftware and so forth. if you literally prefer bing, it's easy foryou simply to point your browser to a different one.and so, i disagree with some of the fundamental assertions that you have made.having said that, i think that anybody who has as large a role in information as googledoes, should expect that people will watch whatwe do and people will try to figure out--but </p>
<p>the governments have a natural view of information,that it's important that it be done fairly and of course--according to their own lawsand culture-- and also competitors will do their very bestto induce governments to try to regulate us to basically create an unfair advantage forthem. we would argue very strongly that the internettoday is largely unregulated and successful for a reason.we also work very, very hard with governments around the world to make sure they understandhow we actually operate. there's always this question of, "well, youcould run the company differently," and i say, "well, if that's true, then let's dealwith that later," </p>
<p>but we say over and over again that we runthe company based on--as best we can tell--consumer benefit.and as long as we remain open and consumer focused, i think we're going to be fine inthe regulatory body. to answer your question again, as preciselyas i can, it's when companies start to do things which are not in consumers' interest,but are in the best interest of their own business, that eyebrows get raised.so from our perspective, imagine any of the scenarios that you described;if we did something which had real consumer harm, first consumers would complain, secondthe media would complain very, very vociferously, and third, we would probably be affected byregulators at that point. </p>
<p>>>mark thompson: and eric, if i can ask, theworld's changing dramatically. we've got, to some extent, in the u. k., innew york and also globally, legacy regulations and regulatory bodies--do you think regulationneeds the change? it may well be that you've quite, in someways, favored a world in which regulations are focused intensely on areas of contentlike [s/l lillia] [25:48] television, and don't focus on the internet, but is thereanything you would like to see changed in the regulatory world? >>eric schmidt: again, i'm concerned whenwe have this conversation. the word "regulation" means something to differentpeople. </p>
<p>we are already regulated in the followingsense: we are governed by the laws of each of thecountries in which we operate in. so we are completely governed by the europeanlaws, the european data privacy laws and so forth,as are all of the other internet sites. so it's not fair to say that our industryis sort of the "wild west," using the american phrase.it's--the real question is, should there be a firm which regulates the private companiesthat comprise the internet? and i'm clearly opposed to that.my real concern is actually the inverse. what i'm beginning to see, and what we'rebeginning to be very worried about is that </p>
<p>countries--not in europe, thank goodness, and not in the unites states--are beginning to aggressively moderate or manage content on the internet.and they do so under the rubric of societal benefit, or pornography, or so forth.but it often ultimately affects political descent.and to have a proper functioning democracy, you have to have multiple voices,you have to have a free press, you have to have people willing to stick theirnecks out and report on stories and have controversy and so forth.and if governments are going to somehow quell that,and make their systems less transparent, </p>
<p>i think it's a disservice to the citizensof their country. the internet was designed to be open and tohave all of the voices of the world-- including the ones that you don't like, andall the behaviors that you don't like--be visible.and it's always a surprise to people when they look on the internet and they see peoplebehaving badly. but people were behaving badly before, youjust couldn't see it. i'm not endorsing that, [audience laughs]but that transparency is fundamental, we think, to the success of the internet. >>mark thompson: okay, now i'd just like tosee if there are some other questions for </p>
<p>eric.it's a--sharon. >>sharon bailey: hi eric.my's name's sharon bailey. i work at the bbc.you mentioned about the onset of new technologies, where boxes in the homes are going to openup the ability for online access. and of course in the u. k., that will alsomean a much greater broadband pipe to enable access to that content online,which makes it much more accessible for everybody. when that happens, the youtube model of sortof short form content perhaps may expand into an ability to access longer form content--and in a hulu-like way--and provide a whole different, new programming experienceof providing content to those consumers. </p>
<p>i'm interested to know how you feel aboutthat--your potential proposition in that space-- is that something that you feel youtube, andperhaps google through youtube, will want to start to offer proactively as a providerof long form content, that you could then monetize for advertisingit, and do you have a competitive response tohulu in the states, that you might see also propagate itself whenhulu comes here to the u. k.? >>eric schmidt: well the good news is, we'veactually just announced a product very similar to the one you're describing.we are now able to handle long form content from licensed--licensed from significant studios.we've announced a set of deals and many more </p>
<p>in the work, and they all have the propertythat you described, which is they're advertiser supported,because that is sort of google's business today.eventually, you can imagine that we would offer other forms--subscriptions and so forth--toget the video. so we try not to pick favorites between thestudios and the formats. we simply want to be a provider at the sortof services and pipe level. in the u. k., you actually have a nationalbroadband plan which includes, i believe, a tariff and so forth for getting everybodyup to one or two megabits per second, regardless of where they are within the unitedkingdom. </p>
<p>and i think that kind of a step is a necessarypre-condition to really, the broad roll out of these kinds of things.but i think over the next few years, as we discussed earlier,it's reasonable to expect the average british citizen to have a box which connects bothto whatever the antennae and cable systems they have,as well as directly into the internet, and that that internet connection will be sufficientlyfast, that much of what they consume can be watched.and that companies like google and youtube, and companies like hulu--with whom we aresort of friendly and also compete-- both benefit from the creation of that newplatform. </p>
<p>i should also say that people often do notappreciate the power of the internet speed moving forward.it is technically possible now to build one gigabit per second networks, though they'renot deployed. it is common--for example, japan has 100 megabitinternets--and in 100 megabits, you can stream and carry,for example, all of the current video and so forth.at a gigabit, you can probably stream and carry virtually all of the content that youwould ever want to watch. and of course, that number will only go higher.and so the fiber optic revolution is continuing this every reason to believe that the inversion--all right, where basically telephony used </p>
<p>to be wired, and telephone used to be in theair-- is going to reverse, and the telephony willessentially be a wireless phenomenon. and that very high quality, very high bandwidthviewing will be over a fiber connection. >>mark thompson: very good, and i'll takeone more from the hall. one more question here. >>kate bulkley: hi eric, it's kate bulkley.it's kate bulkley here, an arcomic journalist here in the u. k., but i have an americanaccent. [laughs] you talked a little bit about content already.one of the things that google started out saying--you were cataloguing the world--youweren't really a content creator, </p>
<p>you were just a way for people to get to content.you now seem to be moving much more into content, like with the digital books.what we're interest in here--we've talked a little bit about how to put more money backinto the u. k.-- would you consider commissioning programming?you know--we've seen bebo commission programming, we've seen myspace commission programming.you've talked quite extensively about the need for democracy and different views.well news would obviously love to get a little money [laughs] as well.what are google's views about commissioning programming from the u. k.? >>eric schmidt: so far we have held a lineat that point. </p>
<p>if you look at the actions that we've taken,almost all of them have essentially been to make the content quicker,more available--more generally available, more easily licensed, more easily advertised.we haven't caused it to be created, we haven't purchased it, we haven't started paying forit. and the closer we get to that, the more nervousi get, is that we would then become a content provider,which would then create a competitive issue with the other content providers, for whomwe depend for high quality content. so, so far, we define ourselves, not as acontent provider, but as a technology company--literally an inventor of new products--that enable people to get to the content that </p>
<p>much more quickly.so i think it's unlikely we would take the kind of steps that you're describing.many people, because we make a lot of money from advertising, would like us to simplywrite a large check in their direction, which would be good for them, obviously.but that form of subsidy is not ultimately a good industrial model,because it ultimately would be subject to all sorts of pressures.it's much better for us to work with content providers to find advertising and licensingmodels, where they can actually jointly make moneywith us, where the vast majority of the money goes to the content provider,and ultimately, these are large and profitable </p>
<p>business, and that is our strategic direction. >>mark thompson: okay, eric, i'm going toask you one last question we got on a card. the question is, on average, how many timesdo you google yourself each day? [everyone laughs]the question goes on to say, "i've already googled myself four times and it's only lunchtime."it had to be david kogen, by the way. [audience laughs]i think we should broaden this question, and just tell us a little bit about some of theways you and yours use google. >>eric schmidt: well to me, the most interestingthing about google is, how did i live without it before hand?i was trying to think about how did i make </p>
<p>decisions in my previous jobs before googleexisted? and you had sort of knowledge that other peopletold you. they told you some fact or so forth, and itsort of made sense. and now, essentially, every assertion, everyquestion can be checked. and i've learned to be skeptical.somebody will say, "well, did you know?" or, "did you know?" or "did you know?"and i'll say, "well, let me check and let me just make sure."and often the stories that i'm told are embellished or they're not quite accurate.and so from my perspective, google allows you to have a much more precise lifestyle.i actually know whether the following thing </p>
<p>occurred at this time.so for me, that's been the great personal--the great personal enjoyment of having, essentially,an encyclopedia with you all the time. we have a lot of products that are comingthat make that much stronger. the classic example is you're walking downa street holding your mobile, and your mobile should be able to tell youthe entire history as you're walking along. i was on a train line and i thought--and iwas bored--i had nothing else to do. so i studied the history of the train line,which turned out to be fascinating. there's all sorts of things you can do whenyou have an idle moment, if you're curious. so i hope what google does, is it makes usall be much more intellectually curious about </p>
<p>the world around us.it provides a more interesting life, and it also makes us a more educated citizenry. >>mark thompson: thank you very much, eric,for taking the time to join us, and for offering such a great and differentinsight and perspective on some of the debates we are having.if i can ask everyone to join me in thanking eric schmidt. [audience applauds] >>eric schmidt: thank you.thank you very much. very good. </p>
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<div align="justify"><p>kai ryssdal: if you don't knowwho eric schmidt is, you're in the wrong room. this morning as i startedthinking about how to begin this, i of course wentto google, and i googled economic recovery. and i got 47, 500,000 answersin 48/100 of a second. and i said, well, that's aninteresting little statistic, but i'm going to have the manhimself here later on, so why don't i just ask him? </p>
<p>and i think that'swhat i'll do. in all seriousness, eric schmidtis the leader of arguably one of the mostpowerful and well-known companies on the planet. we all use his productsevery single day, multiple times a day. and as such, i think he'sprobably got something of a unique perspective on thiseconomy, how to steer a company through it, how to steerpolicy in that economy. </p>
<p>and that's what we'regoing to talk about. we'll go a little bit, eric andi, and then we are going to open it up for questions. a little bit of housekeeping,there are two microphones in the aisles. we're going to alternateback and forth. we need to be out of here, i'mtold, by 2:15, so we're going to keep it on time. so line yourselves up when weget there and we'll just go </p>
<p>back and forth. sound like a plan? obviously a lot to talk about ina short period of time, but i want to sort of lay a littlebit of a groundwork here and get a sense of where you werementally back in september, when ben bernanke and henrypaulson, the chairmen of the federal reserve, when upto capitol hill and said, this is it. we're done. </p>
<p>we need $700 billion dollars. ready, go. eric schmidt: well,i was scared. let me start by sayingcongratulations to walter and to david and the teams that haveput this amazing ideas festival together. it's really one of the greatevents in america, and i think you all should be proud to bepart of it [unintelligible]. [applause] </p>
<p>eric schmidt: in september,the worst day was the wednesday when the money marketfunds broke the buck, if you remember that day. and that night, tuesday nightovernight, the financial clearing system of the countryalmost failed. and the federal reserve had togo in and hand money to the clearinghouses to essentiallymake sure that the money, the dollar, if you will, that wasclearing overnight was cleared properly the next day. </p>
<p>and i said to myself,how did we get ourselves into this situation? and i still don't know theanswer to that question. kai ryssdal: assuming, though,that google keeps its cash in very safe banks-- eric schmidt: in fact, what wedid is we took it out of the banks, and we put it intosovereign denominated currencies, because we figuredthat the countries would not go bankrupt. </p>
<p>kai ryssdal: this country'scurrency too, yes? just checking. eric schmidt: we dida basket, yes. kai ryssdal: assumingall that's true-- eric schmidt: it is. trust me, it's true. i'm a ceo, i can't lie. it's like a real problem. kai ryssdal: it's my job. </p>
<p>i have to ask those questions. how are you feeling, then,about where we are in terms of fixing it? eric schmidt: well, again, withthe caveat that i don't understand how the learned andsmart people who were running all this could have gotten usinto the situation in the first place, with thatas a caveat, right? and i think we should have adiscussion as to how that happened and not just so muchfrom a regulatory perspective, </p>
<p>but what was the failure ininformation that got us to the point where we were in a reallygood bubble and having a good time and the currencyalmost failed. that's a serious error. it's not a small error. with that as a caveat, we'reroughly on schedule. if you look at the sequence ofevents, that once the crisis occurred everyone realizedthat asset values were too high. </p>
<p>you had first a real estatecrisis, and then you had a credit and finance bubble. the credit and finance bubblewas largely because of unregulated credit instrumentswhich were shut down. with the bankruptcy of lehman,everything sort of collapsed. and then we had october,november, december, where everyone's all panicked. the fed comes in with trillionsof dollars in guarantees. </p>
<p>people forget that there wereabout $2.5 trillion of additional guarantees of bondsand bond debts, most of which will not need to be deliveredon, by the way. the total indebtedness that wasguaranteed by the western world and the united stateswas on the order of $8 trillion to $9 trillion,if you add it all up. these are enormousamounts of money. remember, the us gdpis $14 trillion. so we created all of that. </p>
<p>then we had the stimuluspackage, which was designed as a short term, which i wasstrongly in favor of. and then you have the time thatit takes for the system to work, and we're inthat period now. market low, roughly,in the spring. business cycle low,roughly now. jobless high, roughlyearly 2010. we're on schedule. how do i know this? </p>
<p>because the people who got usinto this have told us that. [laughter] eric schmidt: what'sa better answer? what's a better-- sorry. if you look at the history, oneof the things to learn, as we manage young people, is toexplain to them that things have occurred inhistory before. and young people don't oftenknow that, or ignore it, </p>
<p>because they didn't takethose classes. and in our case, we're in aclassic deep recession, and recessions recover. and i've just outlaid theexact math around a traditional deep recession. kai ryssdal: but hold on asecond, because if you take all of the smarts of google'scomputers and pile it into one-- eric schmidt: we were notpart of that september-- </p>
<p>kai ryssdal: no, you'renot, but let's take-- eric schmidt: we were not-- in fact, had we been doing it,we might have actually been measuring where allthe money was. kai ryssdal: you guys, as asymbol of all the world's knowledge, which are out thereto collate and make useful, if you take that and you combineit with these really smart people and rising asset values,how did so many smart people running the companiesand the economy do so many </p>
<p>stupid things? eric schmidt: well, partlybecause everybody, it was in their self-interestto believe it. people have studiedbubbles for years. remember, high tech, we alreadyhad our own bubble. you had a bigger bubble. we've already-- kai ryssdal: been there,done that? eric schmidt: we've been throughone bubble, which was </p>
<p>2000, the y2k phenomenon. and we had a great time. next time i'm going tosell at the peak. i mean, i'm just waiting forthe next one of these market-induced bubbles. i could have made a lotof money at the time. it's much better to sell atthe high in these bubbles. trust me. kai ryssdal: thereis, though-- </p>
<p>yes, we should sellat the high. eric schmidt: thisis about ideas. there's an idea for you. sell at the top. kai ryssdal: so let's haveanother idea about how we can get ourselves outof this mess. do we just sit here and waitfor it to happen, or can companies and the economydo something smart? eric schmidt: in the firstplace, let's go back to what's </p>
<p>really going to happen. i think the us will recoverfirst. the european economy is slower to recover. the conventional wisdom issix months off-cycle. that's about right. the interesting insight aboutthe europeans is that their central bank, which is calledthe european central bank, has one mission, which isfighting inflation. and ours has two missions,fighting inflation and </p>
<p>promoting growth. and there's a technical namefor this among all the economists. but what's interesting about theeuropean central bank is that they have been givingenormously friendly loans to all of these countries to helpout, which looks awfully stimulative. so the european central bank,will within the charter that it has, is doing somethingsimilar to </p>
<p>what the us is doing. and i think europe willrecover as well. and they're not going to give uptheir vacations or anything like that in the meantime. kai ryssdal: heaven forbid. eric schmidt: so the fact of thematter is i think that's going to happen. in china, you had thestimulus package. and in china they had aninfrastructure stimulus </p>
<p>package, not unlikewhat we did. the difference is theyjust did it. they didn't debate it, somebenefits to a command and control economy or whateveryou want to call china. and it looks like the thirdworld, and in particular the smaller countries, are veryseverely hurt by what happened, because they were inan asset bubble in terms of minerals and so forth. and they also have hugetrade imbalances. </p>
<p>so we're going to go back to astructure where, if you will, the strongest, china, to somedegree india, the united states, and europe, will leadus through this over the next few years. kai ryssdal: why? why is the united states goingto get out first and not china drag us along? eric schmidt: well, i personallythink it has to do with our university systems.ultimately, the reason these </p>
<p>things occur in americahas a lot to do with the culture of america. and americans are optimists. americans believein innovation. 90%, 95% of the top universitiesin the world are in the united states. many people have tried toreplicate these systems. they're very hardto replicate. if you look at venture capital,which i've obviously </p>
<p>benefited from, the financialstructure combined with new young people trying to createnew jobs is phenomenal. we have the fastest growth cyclein terms of new jobs. a typical example is there's aclaim that 15% percent of the jobs every year eliminated andanother 15% percent of course are created. and that's no solace to you ifyou are working in an area where the only kinds of jobs,typical example being the traditional american automobileindustry, those are </p>
<p>the only kinds. the other ones aren'tbeing created. but if you look at the economyas an aggregate, there are other jobs being created. they're just not in your town. and that's difficult, but that'sultimately the genius of the american system. kai ryssdal: can you innovateyour way out of a recession, though? </p>
<p>google is a company that's madeits name with innovation. you give your engineerstime off to innovate, or on company time. eric schmidt: well, it turnsout recessions end on their own, and politicians love totake credit for the recovery. but one of the simplest rules isthe business cycle has not been eliminated, and there isevidence that the business cycle is going to get worse. and the reason it's going toget worse is things have </p>
<p>gotten more interlinked. so we're going to go uptogether more and down together faster. and by the way, in informationmarkets, the cycles are shorter. it's up, down, up, down, up,down, because there's more information. now it may be possible todampen some of these by conversations and regulations. </p>
<p>my favorite examplehere is iceland. and iceland, which has 300,000people and a lot of fish, at the height of the bubble, 3/4 ofits stock market value were the three banks that failed. kai ryssdal: bigger thanthe whole economy. eric schmidt: and they're notknown as a banking center. and of course what was happeningwas they were arbitraging their currencyagainst the euro. they were essentially lendingin one currency and taking </p>
<p>money in another. and there was clearlya regulatory failure at some point. i don't fully understand it. but at what point-- why didn'tsomebody raise their hand and say, by the way, it's an errorto have 3/4 of your entire market tied up in thesebanks, given that that's not your economy. and so, to me, what i hope willhappen as a result of </p>
<p>this terrible thing-- i'm not trying to minimize it,because a lot of people have been hurt by what i consider tobe the errors of the global elite, and hurt very severely. what i hope is people will say,hey, that doesn't make sense anymore. my house went up 20% ayear for 10 years. by the way, that'sa sell signal. it doesn't make any sense. </p>
<p>the math doesn't work. kai ryssdal: well, what kindsof companies then? wait a minute, let me back upand pick up on a thread you keep mentioning, regulatoryoversight. are you confident that thepresident's regulatory reform plan, that he announced a coupleof weeks ago, is going to go far enough, is going tocurb some of these excesses? eric schmidt: i don'tthink anybody knows. the regulations arelong and deep, and </p>
<p>there's a lot of anger. and one of the things to know,and our politicians will, at least privately, explain to you,they are inundated by the anger of the average americanat what they perceive as the bailout of the financial elite,the business elite, people like myself and so on. and that anger is palpable. so they're going to regulate. they're going toget regulated. </p>
<p>and you do not want the government to own your company. you could see this with generalmotors and so forth. the automobile industry globallyis largely now owned, large chunks of it areowned by governments. that's true in europe as wellas in the united states. that's always been true tosome degree in china. and so in many cases they'reultimately going to turn out to be jobs programs. thisis sort of a horrendous </p>
<p>structural issue that we face,because, frankly, the demand for cars is not as high as ourability to build them. kai ryssdal: with the banksgetting better, though, some showing profits, some sort ofbottoming signal out there, whether we're bumping alongthe muddy bottom or-- eric schmidt: those bankingprofits, guess where that money came from? kai ryssdal: yes. raise your hands. </p>
<p>there you go. how do you feel about thisproposition, that maybe what we've done in not steppingmore quickly into the regulatory realm iswasted a crisis. let the banks fester for awhile, given the money, and now they're goingto be through to the business as usual. eric schmidt: my personal viewwould have been to not allow the write-offs that occurredin the banks. </p>
<p>it was explained to me that theproblem with that is that the banks are actually adifferent kind of animal than other businesses. if you look at aig, for example,and again, how quickly we forget. remember it was $20 billion,then it was $40 billion, then it was $65 billion, then it was$85 billion, then it was $185 billion. these are large amountsof money. </p>
<p>how do you lose thatamount of money? if i lost that kind of money,i'd lose my job. i don't have that kind of moneyin my company to lose. kai ryssdal: which is sayingsomething, actually. eric schmidt: thank you. how do you make thatkind of mistake? and so my argument was that youshould allow all of these structures to fail, because thecollective memory, that is the structure, all those losseswill still be around to </p>
<p>remind them not to makethose mistakes again. the problem with that isit's not in fact-- i was just wrong. it's not how banks reallywork, because they lend against an asset base. and if you can't fix the assetbase, which is indeed what the fed in my view correctlydid, you don't get credit going again. and if you don't have credit,you don't have your economy, </p>
<p>because we americanslove credit. kai ryssdal: if it's not goingto be the banks that lead us out of the recovery, i meanthey're stabilizing, but they're not going tolead the way-- eric schmidt: it's theconsumers in america. it's always the consumers. kai ryssdal: my question,though, is what kind of company is going to do it. it won't be the financials. </p>
<p>it's not going to be manufacturing, look at detroit. what kind of company is goingto help us get going? eric schmidt: well, obviouslymy own bias would be to do whatever we can to get the nextgeneration of very smart companies in everyfield going. in the stimulus package therewas a lot of work done to make sure that there's a lotof money to create a green tech sector. </p>
<p>and many of us, the peoplehere in the room who are pioneers in this area, believethat the secret to american manufacturing success is theirability to take the knowledge that comes out of[unintelligible] so quickly and turn those into very highlyprofitable businesses, and move very quickly, theclassic example being the michigan-area manufacturingplant that can be converted to build automobile batteriesfor electric cars. there are example afterexample after example. </p>
<p>and i believe that. the reality is that the problemis so significant that you need to do more than that. you need to look at all thebarriers to business. so for example, people who arearguing against free trade, don't realize how many americanbusinesses are global in nature, and arguing againstfree trade hurts american businesses, thatkind of thing. kai ryssdal: let me askyou specifically </p>
<p>about google, then. i mean, you guysare everywhere. i think it is in your phrase-- eric schmidt: thatis our goal. kai ryssdal: that's right. and you're meeting it. it is, as you called it, theeconomics of ubiquity. how does that help this countryget going again? eric schmidt: well, we believethat information is power. </p>
<p>and because you wereasking about the financial things, i wonder-- i learned a little while agothat the right way to run human systems is transparency,and that almost all of the sort of structural mistakes thatwe're seeing have been caused by information hidingor by poorly integrated systems. and it's true at everylevel of politics and government and howsystems work. so from our perspective, moreinformation is power and that </p>
<p>the internet is this enormouslypowerful platform for very, very rapidinformation flow. you see this in the politicaldynamic, what's going on in iran, and that story is repeatedover and over again. we all understand thatintuitively. it's also true in business. it means that businessescan be more efficient. it means that startups canbe formed more quickly. one way to say it is that thebarrier to entry for a new </p>
<p>company has never been as low,because of the ability to get mass distribution, quick accessto new information, get your perfect out, get itdistributed and so forth. kai ryssdal: exceptfor the fact that nobody can get credit. nobody is hiring. eric schmidt: well, in fact,people are beginning to hire in certain sectors, startingwith the ones that are benefiting from thestimulus package. </p>
<p>so there's some of that. and as long as you have areasonable credit rating, the banks will hire you. the issue with credit in thelast six months is there were an awful lot of non-standardcredit. so think about all thesedevelopers that were busy building these hugeluxury resorts. they didn't use traditionalcredit mechanisms. they used complex credit equity swaps andother kinds of things that </p>
<p>i didn't fully understandthat essentially have all gone away. and their problem is theycan't refinance. one of the issues, by the way,is that there's a significant crisis in commercial creditcoming, because all those buildings were refinanced atvery high debt ratios. and those things roll over,because they don't work like mortgages like we havein our homes. and when they roll over, theywon't be able to refinance. </p>
<p>kai ryssdal: what about thething you were talking about a moment ago, the consumers? there are consumercredit problems coming and there's still-- i'd be curious to getyour take on this-- a trepidation on the part of theconsumer who still fears for his job. eric schmidt: in fact, in marchwe had net savings in this country. </p>
<p>it was historic. we should have had a party. and so what's interesting is,of course, we'll quickly go back to net credit, becausethat's how our economic structure is. kai ryssdal: but do you believe consumers are ready to-- eric schmidt: i do. kai ryssdal: really? </p>
<p>kai ryssdal: even in the faceof rising unemployment? eric schmidt: because what willhappen is, as we bottom through the recession-- we're in the bottomingprocess now. one of the signs of recoveryfrom recessions is that inventories get worked off. there's new demandsfor product. a typical example is cars. they did an analysis of thenumber of cars that you sell </p>
<p>per year, and the numberof cars that get older. and there's an unmet need fornew cars, because people have not been able to get thefinancing and so forth for new cars. well, as financing gets better,as consumer confidence grows, people willbuy those cars. and that's obviously good. kai ryssdal: start gettingyour questions ready. go ahead and line up atthose microphones. </p>
<p>we'll open it up herein just a second. what kinds of conversations,shall we say, have you had with members of theadministration about getting the government back outof the marketplace? eric schmidt: the answer thatthey give is that we're in and we'll get out. kai ryssdal: oh. eric schmidt: and when ilook at the criticism-- and i think it's known i wasa strong supporter of the </p>
<p>president and his program-- the one really legitimate, inmy view, criticism from the other side was that once thisspending and once these tentacles get in from thegovernment into the private sector, and in particular thespecial interests that depend on the temporary spending, itbecomes permanent spending. i think that's a very legitimatecriticism. and the administration has saidthat they're going to answer that question by verystrong steps in favor of </p>
<p>transparency. they're going to show wherethe money went, what it went for. they're using the web in cleverways, and they're good at this stuff. so i think that as citizens weshould hold them to that commitment. and we should see after thestimulus bill, more than $800 billion, let's make sure thatthat part ends and we get back </p>
<p>to our normal business, becausethat's ultimately the secret of america. kai ryssdal: do you thinkthey've met commitment to transparency yet or do theystill have a ways to go? eric schmidt: they have donetheir initial filings. kai ryssdal: so kind of? eric schmidt: well, no, but-- they're on schedule, but it'sa two year program. so so far they've doneit, but again you can </p>
<p>imagine they say it. they meant it. they did it the firsttime, and then they forget about it later. and that would not be ok. so we need to hold themaccountable for the commitments that they make aspart of taking our money, if you will, and make sure thatthey really follow through, using the tools that areavailable on the internet. </p>
<p>and what's great about it isthat, although most of us don't have time to study thesethings in detail, for every program in the government ifyou basically publish what they're up to, there are groupsthat will monitor. they will keep them honest.they will check their commitments and what they say. that's one of the great thingsabout governance in the internet age. kai ryssdal: again, microphonesright there for </p>
<p>those of you whohave questions. there was a panel here thismorning in this room, maria bartiromo, and douglasholtz-eakin from the mccain campaign, and austan goolsbeefrom the white house, and david wessel from thewall street journal. and one of the big themes intheir discussion was business investment. in an economy where consumersare afraid, how do you convince businesses that theyhave to step up and take a </p>
<p>leadership role? eric schmidt: well, businessesare run, american businesses are run pretty rationally. they look at demand andthey make their investments based on that. and the fact of the matteris most companies have-- many companies have actuallyfairly strong cash positions. kai ryssdal: most,in fact, right? i mean even today, most. </p>
<p>eric schmidt: surprisinglyso, and some of that is regulatory in nature. some of it is the way ouraccounting system works. but the fact of thematter is-- again, this is unsung. we always focus on thebusinesses that are credit-sensitive. many businesses, google beingone, have lots and lots of cash, many of the high techbusinesses and so forth so </p>
<p>we're waiting, if you will, forconfidence to come back, for the markets to come back. and we know that they will. kai ryssdal: you'rewaiting for us. we're waiting for you. eric schmidt: but that's whythese things take two years, rather than one week. that's why there isa business cycle. and the funny thing is i cantell you that we're in a </p>
<p>business cycle, and you'll say,no, we're not, because it's like all a disaster. but in fact, a month from now,things will be better. if you look at unemployment,for example, in the most recent report the loss of unemployment has gotten better. kai ryssdal: the rate at whichthe economy is losing jobs. eric schmidt: again, thesigns are there. kai ryssdal: yes, sir? </p>
<p>audience: hi. brian lehrer from wnycradio in new york. eric, i use google all day,every day, like a lot of people in this room, but isthere ever a point at which google becomes so big that it'skind of scary and needs to be regulated asa public utility? we kind of reached that withmicrosoft in the '90s, some of the same discussion. when you're aggregating all thecontents of books, when </p>
<p>google news is the place thatpeople go for news content, instead of the sites, new yorktimes and everything else that you're aggregating and you knowsome traditional media are upset with you for that,seriously, literally, is there a point where you need to beregulated as a public utility? and if you can, please addressthe news content question in particular. eric schmidt: you'llbe surprised that my answer is no. </p>
<p>and i would offer as a scenario,would you prefer to have the government runninginnovative companies, or would you rather have the privatesector running it? and there are models, and thereare countries, where, in fact, the government doestry to do that. and i think the americanmodel works better. audience: but eric, if i couldjump in, i would expect a more sophisticated answer from you,because as we saw with the banks, it's not a question ofsoviet-style communism or free </p>
<p>market capitalism. the banks needed smartregulation that they didn't have, as i think youwere just saying. is it possible that information is in the same boat? eric schmidt: well, again,my answer would be no. and perhaps i should expandon my answer. google plays an importantrole in information. and the reason you're askingthat question is because </p>
<p>information is importantto all of us. we run google based on a set ofvalues and principles, and we work very, very hardto make sure people know what they are. so for example, for you as anend user, if you become dissatisfied with google, we'llmake it easy for you to switch to a competitoror another choice. in fact, we have a group whichis called the data liberation front, which works forus, that actually-- </p>
<p>sorry-- which basically works very hardto make sure that there are no ways in whichwe trap data. so there's a long listof things like that. and companies are defined bythe values that they were founded with and that theyoperate with today. and so if you're concerned aboutthe need for regulation of google's role, part of myanswer would be that the company is, independent of myleadership and the founders' </p>
<p>leadership and so forth,the company is formed in a certain way. a thing that you should beworried about is it that a combination of special interestplus unintended regulation could in fact preventthe kind of consumer benefits that we pushso very hard to do. and part of the other pushbacki would offer is that the things that we do areavailable to others. there's nothing particularlysecret, in the sense that </p>
<p>we've just invented stuff, butwe haven't largely prevented people from doingtheir own thing. it's pretty easy for peopleto try other things. i'd like to see some other folkstrying to lay out an agenda for innovation. with respect to the newsquestion, which i think is what you're reallytalking about, there's a couple of comments. the internet arrived, and asit arrives, it displaces </p>
<p>industries in reallyprofound ways. and it's not necessarilythe players' fault. it's really about how consumersbehave. in the case of news content, news readers,that is the customer, if you will, are busy readingnews online. and we have not yet figuredout the perfect ad model for that. but one of the things that ishappening is it's affecting, for example, the newspapereconomics, along with the loss </p>
<p>of classifieds, cost ofprint, et cetera. i don't know how to solve thegeneric newspaper problems. and we talked a lot about thisto them, because it's a shared interest. it's, from myperspective, a huge tragedy that we would lose investigativereporting in our country, which has driven somuch of what we really know and really driven transparencyin lots of fundamental ways, both in the us and globally. we're working on a whole bunchof products in that area, to </p>
<p>try to do it. there is a tension here, becausethe newspapers give us access to their content, andthen they complain that we don't pay them out of ourother businesses. when we tried that, there's notenough revenue that we can yet get from their content, andso we would essentially be subsidizing them. that's roughly the answer. kai ryssdal: this company's mostfamous value is don't be </p>
<p>evil, right? it became iconic when youguys went public. does don't be evil alsomean always be good? eric schmidt: i didn't majorin that philosophical question, so that's a reallyhard question. a simpler answer mightbe that don't be evil is a way of operating. unfortunately, if there werebook that said what's evil and what's not evil, then wecould just consult it. </p>
<p>what don't be evil says is whenyou face a question, ask the question. and it's almost like a ripcordwithin the company. and when i first ran thecompany, i thought, this is crap, right? this is young peoplehaving a good time. so i'm sitting in the room andwe're having a conversation about a particular ad product. and one of the engineers,whose name is ron, says, </p>
<p>that's evil. and it was like a bomb goingoff in the room, and i felt like hiding under the chair,because all of a sudden the whole conversation stopped. and there was this lengthyconversation as to whether the decision was based onour principles. and the principles of google arebasically about end users. so to answer the earlierfellow's question even more deeply, we try to makeour decisions </p>
<p>based on end user benefit. many industries, whether welike it or not, are not as organized around enduser benefit. they're often organized aroundthe supplier benefit or the shareholder benefit. we try to focus on end users. kai ryssdal: one more spin offof brian's question and then we'll get to this side ofthe room, i promise. a lot of your answer sounded alittle bit like what you said </p>
<p>in the beginning. how do we know that theeconomy's getting better? because the people who gotus here told us so. it was a little bitof, trust us. eric schmidt: well, what'syour alternative? don't trust us? kai ryssdal: not buy yourstock, i guess. i don't know. eric schmidt: but thegood news is-- </p>
<p>kai ryssdal: i can't not useyour products, right? eric schmidt: sure you can. we have competitors. kai ryssdal: yes, but come on. i mean, i'm on reader. i'm on mail. i'm on this. i'm on docs. eric schmidt: i'm glad to haveyou, but every one of those </p>
<p>has an able competitor. they really do. kai ryssdal: yes, ma'am. audience: thank you. shelly porges fromwashington, dc. google has obviouslydone phenomenal-- has promoted the democratizationof information in a great way, and has, infact, promoted the development of a lot of innovation in smallbusinesses, or large </p>
<p>businesses, for that matter. what role can you play goingforward to help us get out of this, or do you envisionyourself playing an active role other than what younormally do as part of your day-to-day business,number one? eric schmidt: democratizationof the society or-- audience: no, democratizationof the information. i'm sorry. information distribution andaccess to information. </p>
<p>and then, related to that, thequestion before came up, where is the turnaround goingto come from? and one thing that has seemedto be not commented much, other than the broad topicof innovation, is small businesses. small businesses created halfa million more jobs in the last recession than they didin this recession, yet you hear all the talk going around,the stimulus package, big companies, big sectors,that sort of thing. </p>
<p>so how do you see google playinga role in all that. eric schmidt: for the secondpart, it's pretty easy. the internet is such a greatfriend of small businesses that much of our partnerships,much of our advertising revenue, is driven by smallbusinesses, because of our self-service advertising. and furthermore, our auction inour business is designed to not favor the big guys, whichis of constant annoyance to the big guys. </p>
<p>and the little people nevercomplain about this, because they know that in traditionalaccounting structures, they're the ones that are disfavored. so we think we make a goodstep forward on that. so with respect todemocratization of information, it first getsback to whether the information is publiclyavailable. and one of the things thatwe've learned is that governments are not asinterested in transparency as </p>
<p>you might think. if you're a governmentbureaucracy, if you're a government bureaucrat,then google shows up. and we're sort of a pain in theass, is a way to describe it, because all that canhappen is you can get embarrassed by access toall this information. it's oversight, andmany organizations don't really have that. so we've argued, for example,that all of the hearings that </p>
<p>happen in the government, in theus and elsewhere, should be webcast raw. and it's easy to do. it's inexpensive. many companies can do it. and that way, you couldliterally see what all the public meetings are doing, andnot have to attend them. audience: so like govtubeinstead of youtube. eric schmidt: yes. </p>
<p>so there's lots ofthings like that. and the technology is veryinexpensive to do this. it's not a big thing. and i think it would helpa lot with oversight. kai ryssdal: yes, over there. audience: eric, sam perryfrom menlo park. eric, you've shared with us inthe past-- one of the other previous panels in this tentthis morning was on energy policy in the future. </p>
<p>and you've been very open insharing what google has been doing the last couple ofyears in that area. to segue off of the lastquestion, what can google do and is it doing to help smallbusinesses, but also individuals-- i know some of the individualstuff is coming to the front now-- to conserve energy,that aspect of the next part of the agenda. </p>
<p>eric schmidt: so you'd have tobe living in a cave to not understand how serious theclimate change threat is at this point. and the people who spend theirtime saying it's not true must not notice the change inseasons, the fact that it gets warmer earlier, the increasedvariability of weather, the loss of biodiversity, the many,many things that are going on that everyone sees. so we're in a situation, as weknow, where climate change is, </p>
<p>with the possible exceptionof a true nuclear war, the greatest threat affectingmankind and our children and grandchildren and so forth. so from our perspective, ourcontribution is, first and foremost, to work on ourown use of energy. so we have the most efficientdata centers and so forth. we use a lot of power. but we've also decided to putour money where our mouth is and begin to invest inthe supply chain. </p>
<p>so we put together a seriesof-- we studied this for a while, and the most promisingthings are, for example, with wind technology, the solarthermal, solar photovoltaic, enhanced geothermal, thosesorts of things. we've been putting money intothose investments to try to build the demand structure,because we have good cash and we're obviously a good customerof this, and we know we're going to need it. we also authored a plan calledthe google energy 2030 plan, </p>
<p>and the thing that was botheringus was, why doesn't somebody just add all the moneyup and figure out how much it's going to costto fix this problem. this is a classic big scalesystems engineering problem. and we were shocked to discoverthat we made a trillion dollarsby doing this. and you sit there and you go,this guy must be mad. well, we work at google. it's sort of a crazy place. </p>
<p>but it turns out that if yousave the capital to build the excess plants, if you save allof the downstream expenses for these enormous capital expenses,and instead you take the equivalent amount of moneyand put it into renewable over, in our case, a22 year period, you actually make money. another example is that if youmove to higher efficiency cars through hybrids and betterefficiencies, better car designs, and get to the 50,60, 70 mile per hour car, </p>
<p>which is clearly technologicallyfeasible, you save so much money in terms ofliterally the gas prices, which drives everybody crazy,that you really can make a dent in this. so i would offer inthe climate change area a note of optimism. i don't know whether thecopenhagen protocols and that are going to be successful ornot, but i do know that in our own country we can, asindividual actors, take the </p>
<p>necessary steps to, by the way,do the most boring thing first, which is to insulateyour house and insulate your building. at google, we were having ameeting and i said, well, ok, how much is it going to cost? and he said, oh, a millionand a half. that's a lot of money. i thought, ok, what'sthe payback? and they said, oh,it's 18 months. </p>
<p>and i said, it's an 18 monthpayback for a million and a half, and you haven'talready done it? and he said, no oneasked us to do it. do it. all you have to do is do it. it's so obvious. kai ryssdal: do you ever getsick and tired of the, what can google do about thehigh cost of milk or health care or-- </p>
<p>i mean, with this ubiquitycomes a certain responsibility, no? eric schmidt: in the audience wehave an author of a book on that subject. kai ryssdal: standing rightthere, in fact. eric schmidt: i guess we'llget to jeff shortly. if google is a metaphor forthinking differently about problems, then i'mhappy to be it. and it clearly helps us froma branding perspective. </p>
<p>there are limits to whatgoogle can do. we are a relatively simplecompany, built around information and serversand the web. many of the problems that peopletalk about are much more complicated. so as i've looked, for example,at the health care bill and so forth, thecomplexity of that system is well beyond what any companyor any architecture could really attack, i think,right now. </p>
<p>kai ryssdal: do you thinkconsumers really buy the fact that you guys are asimple company? eric schmidt: compared to theother companies, believe it or not, google's prettystraightforward. daniel casse. the first questioner asked youa question about microsoft. i wanted to follow up on that,since microsoft was the company that everyone used totalk about in technology, before you came along. </p>
<p>in five years, what businessdo you think microsoft will be in? what business would youadvise them to be in? and in what ways are you goingto compete with them? eric schmidt: sure. these are extraordinarilydangerous questions. we have trouble predicting thenext 12 months at google. you're asking me a fiveyear question in a different company? </p>
<p>kai ryssdal: butyou're google. eric schmidt: you setme up for this one. kai ryssdal: not a plant. eric schmidt: microsoft's corebusiness comes from two products, windows and office. they have very, veryhigh market share. they were found to be a monopolyin one of them. they are clearly a monopolyin the other. they're under variouslegal restraints by </p>
<p>virtue of that behavior. so the first and most obviousanswer is that they're going to continue focusingon those things. the issue that microsoft andmany other companies are facing is that there'sa shift to different architectural model. and sorry to be so technicalhere from a minute, but it's called cloud computing. and basically, it means thatthe network is now reliable </p>
<p>enough that you keep allyour information there. and the idea is that you pickup any kind of computing device and the information isthere, even if somebody just hands you a device. you just say who you areand off it goes. and this is a very, very bigdeal in the computer industry. and it's one which companieslike microsoft need to figure out a way to makethat transition. google is organized aroundmaking what's called cloud </p>
<p>computing a core part ofthe next generation of architecture. kai ryssdal: yes, sir. audience: thanks. my name is randall kempner. i run something called the aspennetwork of development entrepreneurs. it's a group that promotesentrepreneurship as a means to promote sustainable </p>
<p>development in emerging markets. so with that background, myquestion to you is how do you, or how does google, viewinformation technology as a weapon, as a mechanism tosupport sustainable development? and in particular, is googledoing anything to make sure that it's not doing evil inemerging markets like africa and latin america? eric schmidt: weare doing some. </p>
<p>and i would argue we arenot doing enough. africa is a very good example,because this is a continent of people largely trapped withoutvery much information. a curious statistic is that theinternet connections to africa cost more than they doin the united states, even though the country is infinitelypoorer, which has to do with a regulatory failure,a governance failure, and so forth and so on. so we've been working very, veryhard to build what are </p>
<p>called proxy caches, that youcan put in the countries, accelerate the local access. we're also doing things-- mostpeople who are in very, very poor situations have mobilephones, which is a great accomplishment. the rough number is somewherebetween three and three and a half billion mobile phonesin use today. by the time, maybe 10 yearsfrom now, it looks like 5 billion to 5 1/2 billion peoplewill have either a </p>
<p>mobile phone or access to one. and they can use those to dothings like sms texting, where they can get a lotof information. so with respect to sustainabledevelopment, there's this conflict between rapid evolutionof the economics and the sustainable development. we can help market it. my fear is that most of thesecountries, the fundamental problem is a corruption problem,that the industrial </p>
<p>structure and economic andpolitical structure are not mature enough that when you makethe investment that it goes to the right placeand achieves the right regulatory outcome. kai ryssdal: jeff. audience: i'm jeff jarvis. i wrote a book called whatwould google do? and i won't ask you. since doing that, a notionclarified in my mind that i </p>
<p>wanted to try out on you, isthat what we're going through right now is much more thana recession or a financial crisis, that it is a fundamentalrestructuring of the economy and society, goingpast the industrial age of mass production, distribution,marketing media, into something based on knowledge andabundance and the things that i did write thatyou're about. and when we see what's happeningto automotive, and banking, and newspapers andother parts of media, soon </p>
<p>probably advertising, bigswathes of retail, real estate, we're seeing a huge andfundamental restructuring that i don't think is going togo back, and that a lot of new companies, one hopes like yours,are going to start creating new versionsof these industries. am i going too far? eric schmidt: i think so. of course, you're good at it,because your book was about taking some ideas and reallytalking about them in a global </p>
<p>context, and very successful,i might add. i think the evidence right nowis that while i'd like what you said to be true, it'snot today yet true. i'd like us to make it true. and the reason is that almostall of the money, and almost all the people, and almost allof the capital is not going to where you described it. it's going into traditionalbusinesses and traditional industrial and serviceoperations. </p>
<p>i think one of the ideasaround the aspen ideas festival is to talk about newideas, like the one you proposed, is how could youaccelerate that transition. what happens is that you get ayoung entrepreneur in the kind of industries that are difficultto transform, and when you talk to them, they'vehit so many regulatory barriers, so many barriers toentry, so many other ways, that we need to find waysto make it easier. so as a young engineer, i wasvery interested in trying to </p>
<p>make the internet moresuccessful, and i ran into the regulatory structureof the telcos. so, for example, there wassomething called a t1 line, and what happened is everyonefigured out how to build a business beneath the regulatorypricing for a 1.5 megabit t1 line. so an artifact of regulationwas that a whole business was created. had the regulation not beenthere, we would have been five </p>
<p>years farther along. and i think if you look at everyone of these businesses, you'll discover that theincumbents, typically large companies working withregulators, have ended up making a cozy structurefor themselves. and when the truly discontinuousidea comes along, it's not in anyone'sinterest to take it on. and that's why the marketpressure is so fundamental. so getting back to our earlierconversation about the </p>
<p>government and its role,governments are not particularly good at dealingwith change. one executive told me that hightech works three times faster than traditional businessand government works three times slower thantraditional business. so that may be anextreme case. we designed our government notto change very quickly, and yet we are asking forvery rapid change. it has to occur fromthe private sector. </p>
<p>it has to occur from enlightenedleadership. and it has to occur in areaswhere money is being made. audience: so could google onlybe google because you were doing something new? eric schmidt: i would argue thatgoogle is as successful as it is primarily because ofthe openness of the internet, that had you had brilliantfounders such as larry and sergey in a difficult, regulatedindustry, the progress would havebeen much slower. </p>
<p>and people always give us somuch credit, but let's give credit to the people who foresawthe internet, opened it up, designed it in a waythat it did not have significant choke points, madeit be possible for random people, including 24 year oldsin a dorm to enter and create something new. that's a story of innovationthat's very, very precious. and we need to make sure thatwe preserve it for the next competitor, by theway, of google. </p>
<p>kai ryssdal: let mejust zero in for a second on that question. do you not then believe thatthis economy has been, through the past two years and thechanges we've seen, fundamentally reset, that we'rejust going to proceed from here apace? eric schmidt: well, i wouldlike it to be true. my question to you iswhere is the data? when i look at most of where themoney went in the economy, </p>
<p>when i look at all the politicsand all the bills and so forth-- and i've supportedmuch of this-- most of it's going to the incumbents. now, with a counterexample thatthere's now-- we doubled our national science foundationfunding from $3 billion to $6 billion, whichis a drop in the bucket. there's more money forappropriate medical research and those kinds of things, butfundamentally, if you look at it mathematically, the majorityof the power and </p>
<p>control is still not aroundreal innovation. and that needs to change. kai ryssdal: is googlestill a new company? well, hopefully. you guys have been aroundforever, it seems. right? our collective experience is,oh, yes, it's google. eric schmidt: well one of thethings to say about brands is that brands can be createdvery quickly. had anyone heard about twittertwo years ago? </p>
<p>and yet twitter is aphenomenally successful company and brand. who here knew about facebookthree or four years ago? phenomenally successful. so one of the things that's neatabout being in our world is that new companies and newbrands can come along. in google's case, we believethe way we run the company, which is rather unusual,keeps it sort of young. in particular, our engineers areencouraged to spend 20% of </p>
<p>their time working on whateverthey want to work on. and before you get too excited,these are engineers, so they don't move toofar from a field. but virtually everything we'vedone that has been creative has really, reallycome from that. and top down, centralizedcontrol from people like me is not going to drivethe creativity. i've read about google's, say,tracking epidemics by using search information. </p>
<p>and i'm wondering how else youplan on using the search information in the future. and if it will be regulated, ifyou think you'll be able to keep control of that kindof information. eric schmidt: a verygood question. so everybody knows we puttogether a flu trends program and we used anonymized data. that is, we took the searches,but we took away the information about the person. </p>
<p>and we discovered that becausewhen you get a symptom like a disease, the first thing youdo is you type the symptom into google, we could see monthsbefore the official reporting agencies could seethe emergence of a new horrific disease. and the estimates are thatthis will save tens of thousands of lives. that's a huge, huge thingfrom our perspective. we're very excited toparticipate in that. </p>
<p>we don't take that too far. and the reason is that thereis a very fine line between anonymizing information to makepeople healthier and then the sort of spookiness andprivacy issues that we're so concerned about. in the european commission,there are a series of laws, called the european data privacyinitiative, which regulate this to aboutan 18 month period. and so it looks like historicallogs, literally the </p>
<p>things that you've done fiveyears ago, will be deleted both by policy andalso by law. there's a very legitimatetension between the state interests in, for example,police action, and then your interest in privacy. and each country sorts thatout differently, and we're subject to all of those laws. my own guess is that we'll endup with about an 18 month period for search logs and we'llbe very careful about </p>
<p>using much of that beyondthings like flu trends. kai ryssdal: again though,it comes down to trust us with this data. eric schmidt: well, in thiscase, it's also trust the government. and depending on your point ofview of the patriot act, that's a good or a bad thing. so again, this tension-- we made a decision that we don'tknow how to make the </p>
<p>decision about that trade-off,that the political process, that the governments thatdebate this fundamental tension between civil liberty,state interests, safety, and so forth, is not one that weshould have an opinion about. and that was a difficulttransaction, but how could we decide whether it's 18 monthsor 12 months and so forth? kai ryssdal: just a coupleof more, i think. yes, over there. audience: yes. </p>
<p>hi. david [? kunin ?] from new york. can you elaborate-- it's a follow up to jeff'squestion about the old economy, new economy debate. can you expand on the-- so many of what you've donehas been so successful but froogle was a project thatreally wasn't that successful </p>
<p>and has to do-- eric schmidt: why do youhave to remind me? audience: well, can youelaborate a little bit on your view of what didn't happenthere, in terms of being able to use the power of informationon the internet to find low pricing, and to beable, in this economy, where you've got so many stores andtraditional retailers shutting down, what it is about-- so many of the models and somuch of this conversation has </p>
<p>been about advertising modelsor monetization using information, whereas retailabout pricing and the ability to really move the economyinto more of a different distribution model, can youtalk a little bit about pricing and distribution? kai ryssdal: remind us whatfroogle was, and then explain why it didn't work. eric schmidt: so frooglewas our first attempt at product search. </p>
<p>and it didn't work becauseit just didn't work. and we celebrate our failuresinside the company, because we want people to take risks. so we replaced froogle by whatis now google product search, which has been doingpretty well. and froogle was a destinationsite. it had the wronguser interface. it didn't have all theright products. it did not have enoughinventory, that kind of thing, </p>
<p>a long list of thingsthat we did wrong. so one way of stating yourquestion a little differently is to say, how will the commerceworld change now? i think that's roughlywhat you're asking. audience: yes, instead ofadvertising models, commerce. and you have product searchand so forth, and we're exploring that now. let me give you an exampleof a product that we've just released. </p>
<p>it's a product for your mobilephone, and you take a picture with your mobile phone of a upcbar code, and it tells you whether the productis cheaper online. ok, well you can imagine who'sin favor of this product. you can also imagine who'sopposed to this product. but that's an example. and one of the discussions foryou all to think about is what are things that are neat thatwe could do with the collective intelligenceof what people do. </p>
<p>people are smart. and within reason and respectingtheir privacy, could we in fact get betterbargains, better delivery, those sorts of things. and that's just anexample of it. we have, again, googleproduct search, which is doing very well. we have more and more peopleusing product purchasing. you can imagine things likesubscription businesses and so </p>
<p>forth eventually. if you look at the success ofamazon, amazon, i think, proves that this modelworks well. audience: but are you surprisedat how fast or how slow things are moving online,in terms of the growth of online commerce? eric schmidt: i'm prettyhappy with it. i think that most people nowknow that when you buy things for christmas, by far the bestway to do it is to do it </p>
<p>online and then just shipit to the person. and there was a point at whiche-commerce became reliable enough that you wouldn'tbe embarrassed at the christmas party. and so i think e-commerce is notonly here to stay, but now people are arguing over the taxexemption that it has for sales tax and thosesorts of things. so you know that you've arrivedwhen that's happening. kai ryssdal: how hard are youguys working at getting away </p>
<p>from ad revenue as-- eric schmidt: by the way,we love ad revenue. kai ryssdal: absolutely. eric schmidt: we love it. do you know what percentageof our revenue it is? kai ryssdal: over 90%. eric schmidt: 97%. or is it 98%. we love ad revenue. </p>
<p>kai ryssdal: doesn't that numberscare you, though? eric schmidt: no. the serious answer is weare diversified across advertising. we would like, our board memberscall it more legs of the stool, please. and we have a pretty successfulbusiness in the enterprise, which we think isgoing to be pretty exciting. and we've got a number of othersort of subscription, </p>
<p>non-advertising businessesunderway. this one is probably a softball,so it's more of an invitation for your perspectiveon i think what is a reasonably hot topic, andparticularly in your industry. so, talk about immigrationpolicy, outsourcing of jobs, h-1bs, the balance of humancapital trade, how many people are we sending overseas anddoing the same thing yet at the same time trying to shutdown the reciprocal. i'd just be curious aboutyour thoughts. </p>
<p>eric schmidt: again, i don'tknow if this is a softball, but it's like, ok, let'sgo through this. audience: i think i knowwhich direction you want on this one. eric schmidt: let's take thesmartest people the world. let's bring them tothe united states. let's educate them and give themthe top universities, and then let's kick themout of the country. now that makes a lot of sense. </p>
<p>furthermore, they can go tothe other country, create using all of our americanideas, take all of our intellectual property, andcreate businesses to compete with the american firmsand pay taxes to those governments. how am i doing so far? audience: it's a very big swing,so it suggests that-- eric schmidt: do i haveyour vote yet? audience: yes, exactly. </p>
<p>eric schmidt: i've been tryingto figure out what is the intellectual basis foropposing my argument? and there must be-- audience: well, you're engagedwith the administration. you are ubiquitous. so what is-- eric schmidt: i've giventhis speech. i've just been blunterthan i just was. and it seems to me that thereis an intellectually correct </p>
<p>view, which is that everyone isexactly the same and that there's no difference inintelligence or ability between every human being. and if you believe that, thenyou don't live in the same educational system that i do. i just don't understand. we have this amazing, amazingasset in america. the smartest people in theworld want to come to the united states, and thenwe kick them out. </p>
<p>kai ryssdal: do you get anytraction with this discussion in washington? eric schmidt: i justget louder. kai ryssdal: so how doyou really feel? howard, i think this is thelast one right over here. audience: ok. you haven't talked at allabout cyberterrorism, or cybercrime, or just manipulationof data, which is untraceable, and what dangerswe really have as consumers. </p>
<p>kai ryssdal: and it's worthpointing out that people were talking about you as the firstchief technology officer of the united states. eric schmidt: right. better to work for aprivate company. kai ryssdal: you keepsaying that. eric schmidt: we likeprivate companies. innovation is where it occurs. the internet is full-- </p>
<p>it's shocking, butthere is actually criminals on the internet. and when i used to talk aboutthis 10 years ago, people would say, oh, howdo you know that? i said, because there are humanbeings on the internet, and not everyone is perfect. and so the internet has had justgeneration and generation of the kinds of attacks thatyou're talking about. a typical example is peoplewill find 5,000 </p>
<p>computers that are idle. they'll exploit some bug,often in one of our competitors' products. and they will exploit thatbug, and they will do a systematic attack on a website,called a distributed denial of service attack. and the significant players thatare in the industry are all well insulated for that. so we face this all thetime at google. </p>
<p>so the kind of attacks that youworry about are the ones that are not like that. so you could imagine astate-sponsored attack where they used, for example, the nameservers to spoof you and say this isn't google, this issomebody else, which would require sort of an incorrectbehavior by a government. and we worry about that. we worry about the financialsystem, and in particular the money transfer systems, and thechecks and balances for </p>
<p>moving money around. and that's been a problem. i'm not as worried overall,because the problems that we face, we face not just fromcyberterrorism, if you will, from states and horrific peoplelike terrorists, we face them from 16 yearold idiots as well. and so we're sortof used to it. so i'm not as worriedabout it as others. i think we should-- it's a priceof being interconnected </p>
<p>that you're also interconnectedwith the people who are going to donasty things. and we need to make sure thatour systems are designed to prevent it. the internet grew out of thisnotion of communal sharing, and all of us who've been partof it have had a rude awakening when we discoveredthat the internet could be misused. and again, i think we'veaddressed it, largely. </p>
<p>kai ryssdal: and with that, ithink we are done for the day. eric schmidt: well, thankyou very much. kai ryssdal: thankyou for your-- </p></div>
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<div align="justify"><p>♪ max and ruby ♪ ♪ ruby and max ♪ ♪ ruby and herlittle brother, max ♪ ♪ max and ruby! ♪ where is it? i can't writea report for my bunny scout'sgood neighbour badge without my notebook. ah, here it is! </p>
<p>i'm going toask bunnies what they think makesa good neighbour. then, i'll pick one and tell bunny scout leaderall about him, or her. so all i needis my pencil. (gadget beeping) (banging on door) oh! thanks, max. </p>
<p>oh, i mean,fire chief max. fire truck! woman:yoo-hoo! that's grandma! she's going totake pictures for me. say cheese! i'm ready,grandma! i've got my penciland my notebook. and i havemy camera. </p>
<p>and max has hisfire truck. oh, max. do you really needyour fire truck? it might getin the way. i think it'llbe fine, ruby. besides,i'll feel safer with fire chief maxalong for the ride. (water gushing) mr. huffington, may iask you some questions </p>
<p>for a bunny scoutreport? of course, ruby,fire away. what do you thinkmakes a good neighbour? hmm, that's agood question. max:fire truck! (toy's sirens wailing) that wasn't the answeri was going to give, max. max, why don't youplay over there while i ask mr. huffingtonmy questions. </p>
<p>i'd say agood neighbour is someone who watches overtheir friends. ruby:if i had to pick1 good neighbour, who do you thinkit should be, and why? (gasping) phew,that's a relief. (baby giggling) oh, my!that was close! thank you,fire chief max. </p>
<p>yes, max. if it weren't for youand your fire truck, mrs. huffington andbaby huffington would have beensoaked! that deservesa picture. smile! oh, there's our bus. good bye! thank you! </p>
<p>bye! oh, no! mr. huffington never had achance to answer my questions. now how will iget my badge? there's mr. piazza'sstore! i'll ask himmy questions. good thinking,ruby. mr. piazza,do you mind if i ask you a few questionsfor my report? </p>
<p>sure. what wouldyou like to know? well,first i need to know what you think makesa good neighbour. mr. piazza doesn'thave time for fire trucks. but i could use a handspraying water on my vegetables. now, let's see.what makes a good neighbour? well, i think it's someonewho is always helping others. oh, yes,yes. and if i had to pick 1 goodneighbour to do my report on, </p>
<p>hmm. every bunny hereis a good neighbour in their ownspecial way. it's hard to pickjust 1. hold that pose! lucky thingyou were here! it sure was. oh, come on, kids, we'd betterlet mr. piazza do his work. okay, grandma. bye, mr. piazza. </p>
<p>(sighing and chuckling) (toy siren wailing) ohh!mr. piazza was so busy, he didn't tell me which goodneighbour he would have picked. oh, don't worry, ruby,you'll have other chances. there's katie. i'll ask hermy questions. we're right behind you,ruby. hi, katie. </p>
<p>hello, ruby.what can i get you? i'm writing a report formy good neighbour badge. is it okay ifi ask you some questions? sure. as long as i can finish theseice cream sundaes while we talk. great! okay, katie, what do you thinkmakes a good neighbour? gee, i'd say agood neighbour is someone who comes through for youin an emergency. </p>
<p>oh, that's agood answer! thank you. now i'll be right back afteri deliver these sundaes. oh, my goodness! i would have tripped overthat for sure! oh, my backpack! i'm so sorry,katie! nothing to worry about withfire chief max on the scene. 2 sundaes for you,and 3 cheers for my hero, </p>
<p>fire chief max! ruby and grandma:hurray, for fire chief max! (store bell jingling) more customers! i'm afraid i can'ttalk anymore, ruby. that's okay. thanks anyway. i still don't haveany bunny to talk about for my good neighbourreport. </p>
<p>you never know, the bunnythat you're looking for may be closerthan you think. i sure hope so. i just need 1 bunnywho is always helping to finish mygood neighbour report. hmm, maybemr. piazza's interview. oh, thank you, max! you're my hero! grandma! </p>
<p>i know a really goodneighbour! this report is all aboutthe best neighbour i know: my brother, max. a good neighbour is someonewho watches over his friends, and is alwayshelping others, and comes througheven in emergencies. and my brother,max, did all those things andhelped everyone with his-- (toy sirens wailing) </p>
<p>hi, candi. hiya, ruby.hello, max. (giggling) we're here for thecandy counting contest. great, here's howit works: the first personto tell me how many gummy wormsare in this jar wins a prize! what's the prize? </p>
<p>well, the gummy worms,of course! well, i'm all readyto count them. i've got my penciland notebook. count them? well, you couldjust guess, ruby. i don't want toleave it to chance. the best way to winis to count the gummy worms. count! there are too many,max, </p>
<p>you don't know howto count that high. i think you should leavethe counting to me. well, good luck. i'll be rightover here if you need me. look, max, i'm going tomake a mark in my notebook for each gummy worm. 1, 2, 3, 4. when i count the 5th one,i make a line, like this, so i know that's 5. see? </p>
<p>okay, max, i'm counting,i'm counting! 1, 2, 3, 4, 5. max:count? i know you want tohelp me count, but i need to do thison my own. why don't you try countingyour flipping chicks? they're inyour backpack. (toy chicks chirping) that's 3 sets of 5, </p>
<p>and that's15 gummy worms. count? huh? that's right, max,5. max! you made melose count! you want us to win the jarof gummy worms, right? then you need to let mecount by myself. you know, max,i could really use your help </p>
<p>with these red hotmarshmallow squirters. yup, i need helpcounting. thanks, candi. okay, max, i know i can fitmore boxes on this shelf, but i don't knowhow many. want to help mewith that? why don't you hand me the boxes,and we'll see how many we need. that's 1 box of red hotmarshmallow squirters. and that's 2. </p>
<p>and 3. 4. 5. i think that's all the boxeswe can fit on this shelf. oh, my! there are 2 more boxes of redhot marshmallow squirters left! what are we goingto do with them? whispering:count. good idea, max! </p>
<p>there's 2 boxes of candy:1 for me, and 1 for you. candy is always betterwhen you share it with someone. don't you think,max? and 5 more makes 35. eww! my dress! how did you get those red hotmarshmallow squirters, max? count. well, max was such a big help, igave him the candy as a reward. </p>
<p>and i guess he wantedto share it with you. thanks. but i'm still tryingto count gummy worms and i lostmy place again. do you think there's somethingelse max could help you with? well, i'm sure i canfind something. maybe there's a better way to count. hmm, it looks like there are 10 gummy worms in a row. </p>
<p>if i just count rows, it'll be faster. 1 row is 10, 2 rows, that's 20, and 3 row is 30. well, max, here's what i need you to do. see these slime dribblers? i need you to take them out of the box and make a nice display. </p>
<p>it's a big job, max. do you think i can count on you? that a boy, max! i'm going to get some more boxes from the storeroom. i'll be back in a minute to see how you're doing. 8 rows of 10. that means there's 80 gummy </p>
<p>worms so far. how's it going, max? ooh! (crashing sounds) ohh! what did you do? it's okay, ruby. max was helping me make a display. </p>
<p>i think you've helped candi enough. why don't you come over here by me? no, max. i told you, i need to do the counting by myself. but i know what you can do. why don't you play with these </p>
<p>stickers? now, i have to start over again. 1 row of gummy worms makes 10. (banging noises) 2 rows makes 20. (clearing throat) 3 rows of gummy worms makes 30. shouting: and 4 rows makes 40! whoa! </p>
<p>max, what are you doing? oh, i need to count alone if i'm going to win the gummy worms. i must have told you that 111 times! did you say 111? y-- yes. you're right! </p>
<p>there are exactly 111 gummy worms in that jar! well done, ruby! we won the gummy worms! and all because you helped me-- oh, look, there's louise. hi, louise! oh, hi, ruby! is this line up just to get </p>
<p>in the store? no, it's the line to see super bunny. morris just has to see him. zoom-zoom! super bunny! if you're just shopping, you can go right in that door. if we wait in this big, long </p>
<p>line, we'll be late for the quick pick shoe sale, grandma. well, why don't we get ruby's new shoes first and then come back to see super bunny, when the line up is a bit shorter. does that sound okay to you, max? don't worry, max, you'll get </p>
<p>to see super bunny. after i find some new shoes. there's nothing like a shoe sale to put a spring in your step! you're so right, grandma! (store musak playing) say, "super bunny"! (camera flashing) </p>
<p>hold on, max. we've got to pick out my new shoes first. it's a quick pick sale and they're going fast. we won't be long, max. say, "supper bunny"! (sighing) come on, you can help me pick </p>
<p>out the perfect pair of shoes. oh, look! grandma would just love these! what do you think? maybe you're right. a little too... curly. ruby! come and see what i've found for you! </p>
<p>coming, grandma! let's go, max! ha, ha, gotcha! now, max, you know you can't go running around the store by yourself. you have to stay with me and grandma. super bunny? </p>
<p>i know you want to see super bunny, and you will. just as soon as i pick out my new shoes. these soccer shoes are half price. i can see you scoring a few goals in these! um, thanks, grandma. </p>
<p>but i was hoping to get something a little less... sporty. oh, got ya! i'll keep looking. thanks you, grandma. hmm, no, too casual. now, let's see. nice, but not really me. </p>
<p>too shiny. too dull! i see you, max! okay, super bunny, come around here and help me find some shoes. are you coming? here you go, morris. be sure to show max! </p>
<p>too pointy. oh, too flat. oh, very elegant! what do you think, max? oh, little brothers. how do you like these? i better give them a test run. do you like these on me, grandma? </p>
<p>i was just about to ask you the same question. oh, let me see! they look great on you. but i think i need something a little less tippy. well, you better make up your mind soon, they're going fast! time to get serious about my </p>
<p>well, it's time for super bunny to get back to work, rescuing bunnies in need. thanks for coming out, everyone! bunny, max. i'm only going to be a few more minutes. super bunny...! (wind blowing) </p>
<p>phew! oh, they're perfect! they're definitely you, ruby! oh, i just new i'd find the perfect pair! (grandma clearing throat) with a little help from-- ♪ </p></div>
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<div align="justify"><p>ã¯â»â¿>>pruitt: now we'll move on to our finalsession. before i introduce our esteemed guest, i wantto thank the university of missouri's donald w. reynold's journalism institute for sponsoringthis session. i'd like to welcome our members joining usvia webcast and coveritlive. our keynote speaker this morning leads a companythat not only changed how information is acquired and delivered, it blew the old paradigms tobits. it would organize the great global brain ofthe internet and put the information at the fingertip of the masses.when your company goes from a noun to a verb, you know that you've had an impact.his remarkable journey began with an electrical </p>
<p>engineering degree from princeton, followedby master's degree from the university of california at berkeley,where prophetically, he developed a campus computer network.he also earned his phd in computer science from berkeley and went on to a number of itpositions before landing at sun microsystems, becoming chief technology officerand then, later, ceo of novell. in 2001, he was recruited to an oddly namedbut promising internet search company founded by two stanford students.you could say he was a good hire. that internet startup today is the world'slargest search engine and an information powerhouse. it's one of the defining cultural phenomenaof our times. </p>
<p>you might think that such an internet visionarywould see newspapers in his rear view mirror, but not so.he's a passionate believer in newspapers and their role in democracy.please join me in welcoming the chairman and chief executive officer of google, eric schmidt. [applause] >>schmidt: thank you very much. that was verykind of you. i'm here because i want to talk about newspapers,information, and the american dream. why is america so wonderful? why am i here?because of freedom of speech. without freedom of speech, there can be noeffective democracy. </p>
<p>without freedom of speech, there can be no,if you will, policing of the elites that dominate so many countries.america is a great idea, precisely because it can change.without freedom of speech and without the newspapers that make us understand what'sreally going on, none of the great things that have happenedin the last 200 years in america would have occurred.that's fundamentally why i'm here. when you think about the political environmentthat we've just been through. six months. eight months.a huge set of political changes, leadership changes, business changes all brought aboutthe fact that people got tired of one set </p>
<p>of assumptionsand were now pursuing a different set of assumptions. although we know that things are changing,we don't know how long it will take. we don't know the scope and depth of the recessionthat we're now in. but we do know that change comes in hard times,that it comes in recessions. it doesn't come in times of overall abundance.we know that this is when the issues that everybody faces come front and center.but the principles that i talked about-- freedom of speech, the role of newspapers,the role of a reporter going and discovering the good and the bad and bringing sunshineto everything-- is one that will be with us for many hundredsof years--thousands of years--and is fundamental </p>
<p>to the way i think human systems will workfor the rest of eternity. this current economic situation allows usan opportunity to relearn what creates real value.there was a saying, a year or two ago, that in our system, financial innovation precedesfinancial regulation. i think that one's gone for a while.i think all of a sudden now, we've gotten back to "how do you create wealth in a country?"how do you create jobs? how do you create happiness?how do you make things better? the answer is through business investmentand, in particular, innovation. innovation in all sorts of new ways.innovation in businesses. innovation in serving </p>
<p>customers.literally, new inventions that change the world in ways that are very profound.from my perspective, the recovery that we will have, and that we are very much all lookingforward to, will be very much technology-driven. that the investment that is being made nowin science, technology, environmental services and so forth and so on--all the things thatyou all know about-- will then create the high-paying, export-orientedjobs that will then help define how we go from here.my basic thesis here is that innovation occurs and business success occurs and societal wealthis created, but only in the backdrop of the principles of free speech.think about something we all share, which </p>
<p>is a focus on transparency.don't you think that if there had been better transparency in what was going on,a lot of the excesses that we've seen and that we're all upset about would have beenaddressed much earlier? ask someone who is a victim of a huge bankingbubble or a huge housing scandal if they had known more earlier or, more importantly,if the thoughtful and knowledgeable people had informed them, they would have taken actionearlier. it's the lack of transparency in our governmentand other governments that was one of the great problems that got us into this.again, another example of the importance of free speech.here we are, and we've got a situation where </p>
<p>markets have reprised to historical norms.what's going to happen? if you take my bias and you take my bias aboutinnovation, you can imagine, for example, that audiences--and i want to talk a lot about innovation-- that audiences organize themselves into segments.there's the globe, a couple of billion people, you're going to reach them with advertising.if you're building a business with a couple of million readers, maybe you should use theto-be-invented micropayment systems. it's obvious that you'll need those sortsof things. if you're building a business which has arelatively smaller business, thousands of specialized readers, you use subscriptionservices that are complex and powerful </p>
<p>and people will get great value for that.my point here is not that these models are wrong, but rather that the globalize and thatthis is the time when investment in those models creates the next opportunity for allof us. what happens with the newspaper industry fromour perspective is, first and foremost, a redefinition of what the newspaper of recordmeans. i think everybody here understands the notionof a newspaper of record. it's the one that records what's happeningin your life. it's the local newspaper that records what'shappening in your city or your town. it's the service, the place that you go, forinformation that matters. </p>
<p>it's a national stage and a global stage anda business stage. we have to reinvent, relearn, what the paperof record means in a world where so many different formats and so many different ways that thingsare being consumed. fundamentally, the question is, what do weneed to do to become the newspaper of record in this new form?the answer, of course, is ultimately all about reporting, which is what newspapers reallyare about. it's the relationship that the reporter haswith the local police chief and the courts and so forthand knowing all the things that happen in the local environment or the national environmentor the global environment that we've been </p>
<p>talking about.so you end up with a situation where you have two models of information, both of which areimportant. the paper of record, in its appropriate context,available everywhere and then user-generated content, of whichwikipedia is a phenomenal example. wikipedia which has this enormous depth ofinformation but changes, and then you have the record of what happened.the two coexist. the two merge together. and that's a new model, a new platform ifyou will, for how newspapers will evolve. in that model, newspapers become platformsfor technology to use their services to build businesses on top of themand to interlink and hyperlink all of the </p>
<p>different information sources that end-userswill take. the innovation message is fundamental fromour perspective and from my personal perspective, because i think it's real change occurs, andit's where real, unmet needs are met in our society.innovation is bizarre, because it's very difficult to centrally plan.that innovation fundamentally occurs fromã¢â‚¬â¦ in google's case, we have a notion of 20%time. in universities, it's two graduate studentsand young assistant professor who then spin out and create a new company that changesthis or changes that or so forth and so on. it's small companies that are founded thatprovide the economic innovation engine for </p>
<p>all of us.you can't plan it, but you can architect a structure where innovation is welcome andwhere it's taken advantage of. we're seeing this right now with somethingcalled cloud computing. all of us have grown up with the personalcomputer revolution. we're all familiar with personal computersand macintoshes and so forth and centralized computers in these sort of networks.but there's a new form of computing coming along, generally known as computing, wherevirtually all of the hard work is being done in the servers,and you take the device--the computer, the people here in the room, and on our webcasthave computers in front of them-- </p>
<p>and you just plug them in, and you don't worryabout them too much. they don't have a lot of memory, in termsof they don't retain things. if you drop them, you don't have to worryabout it, because that information is always stored in what we call "the cloud."google and other companies provide these services. why is this important? it's an inversion ofarchitecture. historically, the networks were unreliable,and personal computers were reliable. in this new model, the network is always there,always reliable, and so the hardware can become less reliable and more disposable.you don't have to worry about it. it means, all of a sudden, you can pick upa phone, a netbook as they're called, a pc, </p>
<p>or what have you, and everything works, andyou can get your work done in the right context. how fast will these networks get?the fastest network that i know about is one in japan, about 160 megabits per second.how fast is that? that's enough to handle all of the televisionneeds, all the reading needs, all the communications needs, obviously all the telephone needs--that's one-millionth of that amount of bandwidth--for an inexpensive price at the homes that theyserve. in america, there's a new standard calleddoxis 3 that's coming out, which is 50 megabits roughly.all of a sudden the technology is enabling not only the development of reliable networks,but really a change in the way information </p>
<p>is transmitted,and not just here at a newspaper convention but also movies, television, and so forthonto this new substrate. in fact, that's not the end.it's just the beginning of even more. how fast do these things get better?for those of you who don't know, technology is driven by something called mors law,which is roughly a doubling of capacity over 18 months or a reduction in cost by a factorof 2 every 18 months. to help you with the math, that means thatin 5 years, it's an improvement of basically, if you work it all out, think of it as roughly10. in 15 years, it's roughly a thousand. allof a sudden, off you go. </p>
<p>take all the numbers that i just told youand multiply them by a thousand. a thousand times more than what i just toldyou. a thousand times faster than what i just toldyou. because we're not done yet.the evidence in mors law and other technologies is that this is going to continue for at leastanother 10-15 years because of the great work that's going onin the physics labs and so forth and so on. in that world, there is some nonobvious stuff.for example, it systems, the ones that all of us built over the last 20 years, are endingup being slow and relatively difficult to configure because they're so complicated.this new web system that everybody is excited </p>
<p>about in building is really the new platformfor a lot of things that are happening. it also means that these powerful computerscan do data mining. for example, we build something called flutrends, which looks at the way people use information and tries to predict the outbreakof a flu. there's a lot of concern about a repeat ofa very severe 1918 flu virus that would kill many tens of millions of people.the analysis says that if we were able to get this out a few months earlier, and wethink we can do that, that we can save many tens of thousands of lives because of earlierreporting. there are many examples where that kind ofearly, instantaneous analysis can get us ahead </p>
<p>of everybody else.when you do this, of course, it brings out all sorts of trust issues.what information do you trust? how do you do this?when i think about newspapers, i think about newspapers as fundamentally for standing forsomething about trust, that their brands represent an ethic and acommitment to accuracy and so forth that has served them for many years, which all of youshould be very proud of. what can you do, if you follow my reasoningthat we're going to have these enormous networks that are being built now, and we see the effectsof them already, with everybody interconnected, what can youdo with it? </p>
<p>the most obvious one, since we have all theinformation organized, is we can be sitting here, a politician can be giving you a speech,and we can have the politician bs detector. true? not true? what probability is what heor she said true? then you and your staff can go and do theresearch and try to figure out what the real truth is.we can just listen and figure it out. no problem. for every experience you have, there's a searchquery that you can do. when i wander around, somebody says something,"did you know this?" i check. and you can usually figure out pretty quickly,within a matter of a few seconds, whether what they said is correct or not.again, these are today. imagine 5-10 years </p>
<p>from now.we have an application on our android mobile operating system and phones that are availablenow, and there are others as well, where you go into the store, you take theupc bar code, you take a picture of it, and it tells you if it's cheaper online.from a consumer perspective, that's a tremendous benefit.i'm not sure the stores are very happy with it, but the fact of the matter is this iswhat you can do. if you take a look at another applicationwe have on android is you can hold up your phone. look around.it knows where it is, because it has a gps. it takes a picture of all the buildings, andit tells you what's going on inside of them. </p>
<p>pretty interesting, to the degree that peoplewill tell us that we know what we want. this notion of user empowerment is a nonobviousbut fundamental change brought on by the technological revolutions that i'm talking about.what can you do with the combination of these powerful, new mobile devices, the gpsã¢â‚¬â¦oh, and by the way, a phone as well. i forgot there are more cameras now in phonesthan there are cameras that are not in phones. there are soon to be more movie cameras inmobile phones than there are movie cameras in movie cameras.one of the most obvious ones for me isã¢â‚¬â¦ here you are in san diego, and you walk downthe street, and since i like history, the phone tells me the history of every buildingin every scene i'm in as i'm walking along. </p>
<p>why can't it do that now?well, indeed it can, because we know where you are, we know what happened.we got all that world of information. we've never had these kinds of tools beforein our world to use and, perhaps, to misuse--hopefully not, but it's all there now with a lot ofimplications for all of us. if you tell me about the world right nowã¢â‚¬â¦tell me what's going on right here, right now?i live in a local context. then, later this afternoon, tell me what'sgoing on right now where i am next, and so forth.the goal, if you will, is to get a billion people to have this kind of power in theirhands. </p>
<p>you say, "is this madness? is this achievable?"it's easy! there's that many mobile phones being built in the next couple of years withthis capability! this is not some random technology raving.the underlying platform has been built. indeed, the big news, this year, is essentiallyall of the mobile phone operators are now building devices with the kind of capabilitythat i'm describing with the implication for a lot of us in allthe things that we do. what does this mean?it means a lot to how information will be structured and how all of us will have todeal with it. in thinking about newspapers and how theyevolve, the first and most interesting idea </p>
<p>is to rethink the notion of a story.we think of newspapers. let's think about the story within the newspaper.the story, of course, has a life. today, the newspapers tend to print them today,and there's a revision tomorrow, and so forth and so on.but stories have a start, a middle, and an end.people are fascinated by the beginning and the end.it's possible now, for example, to algorithmically look and see when the first report was doneabout something and the last report was done on something.but it makes sense to us that stories, eventually, will evolve.that there will be a story about secretary </p>
<p>clinton in korea, for example.and it has a start, and it has a life, and it has an end, and then a resolution.that notion of resolution is important. a lot of evidence with newspapers is thatpeople feel that when they read the newspaper, when they finish reading the newspaper, they'redone. they've achieved their objective. they'velearned what they needed to know. we need to come up with the same experienceonline, and we don't do that very well right now.nevertheless, the notion of a living story, if you will--a story that has annotation andso fort--that you can get into at any depth is probably one of the new ideas that willaffect all of us. </p>
<p>one of the other issues that we have withthe web is it's still relatively unpleasant, in my view anyway, to read.think about the joy of reading a magazine. "pretty interesting picture.""oh, okay, i like that article," and so forth and so on.it's the most wonderful experience, because it's the right form factor.you just turn it. it's got pretty pictures and so forth and so on.why can't we recreate the same thing in the web?today, for example, most of the websites use flash and other technologies which are prettybut slow. we need to reinvent the way the web deliversthis content so that the underlying technology </p>
<p>can actually have the kind of experience,when people are wandering around with their phones and so forth, that you can see witha printed magazine. of course, i'm going to come to the monetization,which needs to go along with the same thing. but from my perspective, the online experiencecan be thought of as terrible compared to, what i view, is this wonderful experiencewith magazines and newspapers-- the sense of newspapers, turning it and beingdone, knowing which pages you care about, going to the second or third page if you likethat category versus the fifth page versus the editorial page--is a fundamental thing that we don't do very well in my side of the world that we needto get done, obviously doing it together. </p>
<p>on the format, you have the same problem.the format was one size fits all for good technological reasons.now we have an opportunity to break through that.in particular, this format can be very different. people consume information in many differentways. what we've learned in the web is that thereis not a one-size-fits-all, that people do things very different.we need a new format for journalism that will work on all of these new platforms and allof these new formats that i'm talking about. if you think about all of this, we have anopportunity to redo the way information is processed in our society.in high-tech, there's a lot of venture capital, </p>
<p>and i'll give you an example.i was trying to think about how will the web change in education?i, of course, like, i suspect, most of you, sat and learned in textbooks and so forth.imagine, rather than handing out textbooks in a class, you gave people the equivalentof search queries and wikipedia pages, and you told them to read them and study themand see what interested them. would that produce a better educational experience?i don't know. it would certainly produce a different one.maybe we'll do both. maybe learning how to use this enormous resourcethat exists and that is being built over the next 10-20 years,the paper of record information, the wikipedia-type </p>
<p>information, and the real-time information,which i'll get to in a second, maybe learning how to navigate all of thatwill be just as important as the traditional textbook learning that all of us went through.my friend, bill joy, is a venture capitalist and a very smart person.i asked him what it was like to become a venture capitalist as a computer scientist, and hesaid, "i don't do it the way other people do it."i said, "how do you do it?" "what i do is i search around a topic, andi learn about it, and i read the papers. i try to figure out who are the people who writethe most interesting papers who write the most of them. i eventually makea list, and i call them. since no one ever </p>
<p>calls them, they call me back."interesting. very interesting way to become a venture capitalist.normally, they sit, and they wait for people to make proposals.he calls the people and he says, "would this idea work?" and so forth and so on.what it triggered in my mind is that there's a very different relationship to informationif you take an aggressive position-- if you will, a reportorial position--as opposedto a consuming position. if you engage in it and you learn about itand so forth, it's a different outcome. that opportunity is before all of us withour readers, your readers, and so forth as we make this thing happen.the reality--and we measure this pretty carefully--the </p>
<p>reality is that the vast majority of informationis not being produced by any of the traditional mechanisms for making information.it's being produced user-to-user. sometimes, free speech gets a little pushedwhen you start looking at what they produced. you wonder about taste and judgment and soforth. but the fact of the matter is this is thenew world. a truly fundamental change in the way informationis being processed is that we have given the tools of publication to people who--maybe, they need a better education. let's put it that way.but the important thing is that information is not going to go away.if anything, the growth rates on an aggregate </p>
<p>and percentage basis are much higher.all of us now live in this world of a mixture of professionally produced content and, ifyou will, user-generated content. how could you use that to advantage?the most obvious example to me would beã¢â‚¬â¦ let's build up a product. let's call it wikimed.doctors spend all their time with all this specialized information that they have.why is there not the equivalent of wikipedia for medicine, where all of the canonical andjudgment things that doctors know in their heads,along with shared summaries of outcomes and tests and so forth,why is there not a single repository for that? there are many reasons for that, but it'sobvious that there will be one. </p>
<p>the same thing for every other trade, forevery other specialization maybe even for reporters as to how to be agreat reporters. my point is that the notion of this sort ofcommunity-generated information is already in aggregate more than professionally producedinformation and is likely to become more important.when we build products, when you think about how your users consume things, you'll discoverthat it's really in both places. search, then, becomes fundamentally more personal.it's all about what "i" want, because i'm the one asking the search query.in this model that i'm talking about, why doesn't the newspaper know what i read yesterday?it makes sense to me, but when i turn on the </p>
<p>television, it shows me the same show it showedme yesterday. clearly, a bug in the television.why does it not already know that i watched that show?this is easy. it's easy to remember this kind of stuff.the new model of consuming news, since it's personal--whether it's search or other based--willbe knowing that you've already read this. it'll show you the delta.it'll understand a little bit more about what you care about."i don't like sports, and i do like international." or, "i don't like international, and i onlyread sports, and i only care about these teams or these sports, and occasionally, i wantthis other thing." </p>
<p>if you remember what i looked for yesterday,you can tell me what has changed. you can also tell me, again, with permission,what my friends are focused on. the new model of social networks means thatpeople can take their networks of friends all the way in which that they interact,and they can actually operate as a community around information.this phenomenon, pioneered by facebook and a number of others, looks to us as anotherfundamental change in the way people will consume information,because care a lot about what their friends are doing.combining all of those, too, allows us to build a product which i'm just going to call"entertain me." </p>
<p>what i want--and we've not yet built, buti hope we can do someday--is i want a constant stream of entertainment that's consistentwith the principles that i'm describing. and "entertainment" here, i mean very broadly.i mean news and information and gossip and television and radio and so forth,because the computer can know what i care about.when you do all of this, it's very important to know the first and most important law ofall of this technology, which is you need to know where the off buttonis, because you can get overloaded. in that sense, the most obvious question andthe question on everybody's mind here is "how do we make money doing this?"this is what users want. </p>
<p>one of the fundamental problems with the internetis it doesn't respect traditional scarcity structures.all of us are struggling with that in various ways.the fact of the matter is it's very difficult to hold information back.we think the answer is advertising. since 98% of our revenue comes from advertising,i guess we have a bias. but we think it comes from advertising, becauseadvertising still is the best way to reach a very large audience.i think if you think of it in a hierarchy, not only do you have local audiences, butyou now have national and global audiences for advertisers.the kinds of products that can be built here </p>
<p>in advertising and that we're beginning tobuild are equivalently exciting. what's advertising about?it's about engagement. it's about telling a story.what do marketers care about? they care about telling a story.they tell it in a picture or a word or a phrase. in this new world, they can tell it with timeand engagement. you click on an ad, and all of a sudden, it'sa narrative. why don't we have ads that have narrativesand pictures and so forth? why don't we have ads that are the equivalentof multiuser games, where the other people who are also participating in the ads arealso interacting with each other in real time? </p>
<p>you want to talk about time that a customerspends inside of an ad? that's a way to do it.take the ideas of networks and gaming and so forth and apply them.all of that technology becomes possible over the next few years.those ads, in our view, replace the traditional advertising models that all of us grew upwith, because they're just so much more compelling. they don't replace them all at once, and ittakes a very long time. but the fact of the matter is that advertisingworks when it adds value to a customer, when it tells them something they don't know, whenit gets them educated or excited or passionate. the advertising industry is very good at doingthis. </p>
<p>we've recently brought out our set of productscalled instrument-based advertising that allow us to tailor to people's interests and soforth. importantly, people can opt out if they don'tlike the way we've constructed their tastes and so forth or just turn the whole thingoff precisely. the important thing here is that advertisingthat's useful is going to work. we know it works, because we can measure it.an example would be if you have an ad for an espresso machine, a typical example,today, we would show you a text ad, which is fine, but wouldn't it be better if it hadpictures, prices, how to buy it, and all that kind of stuff?if we take the premise that we have an advertising </p>
<p>model that's going to work,and we have this explosion in mobile content with all of the people working and so forththat i've been talking about, and all of that changes, what does it meanfor how people will use it? to me, the most interesting example is thekindle, which is, i think, very successful. what i like about the kindle is it's anotherexample of cloud computing for specialists, for people who care a lot about newspapersand books and so forth. it's a model that works.it works economically, because it's a subscription-based model.it works technology. imagine, as that platform evolves, how muchmore powerfulã¢â‚¬â¦ </p>
<p>it's the first of, i think, many that aregoing to come in this new model. what happens to this, if you take the worldof radio and television broadcast, internet cable broadcast, newspaper--everything beingonline, these huge pipes that come out of the internetand all of this content and everybody seeking everybody's attention.a lot of new things happen. you can imagine live concerts, where the liveconcerts take the videos that are coming out of people's cell phones and stream them onstage, right there in the local context. you want to talk about something exciting,get the fans involved directly in the performance. when you think about movie theaters, herewe are. </p>
<p>we're all in the same movie theater.we're all watching the same movie. we're all tweeting or twittering to each other,"oh, i think she's wrong," or "oh, i don't think that's the right thing," or "oh, hedidn't kill her," or what have you. this is going to happen because of this notionof being in a shared community drives information so powerfully.here we are, and we're all sitting here listening to me.why don't we have mood-mapping? everybody tweets, "i don't like it," or "ido like it," or so forth. we can do it real time.this is the year when real time gets added to the equation that we are all dealing withnow that i've been talking about so far. </p>
<p>all of a sudden, in addition to professionalcontent, the building of the web, all of the user-generated content, it's now all becomingreal time. it is that sum that defines both the problemand the opportunity that all of us see. i've been thinking about how does this playout globally? one of the great things that's happened inthe last few years is the ability to do simultaneous translation of everything.a hundred languages translated into a hundred other languages.it will be possible, relatively soon, for you to instant message somebody who does notspeak your language, because we'll be able to translate it enoughcontextually to have you be able to have a </p>
<p>conversation.i think that's pretty neat. the same thing for these social communities.language has often been a barrier, not to just misunderstanding, but eventually, toconflict and war and really horrific things. from my perspective, the opportunity, forexample, to use these very large number of mobile phones that are out--not the high-speed ones that are all coming out now, but the ones that came out last yearand the year before, especially those that are in the third world--for things like sms, where you can do search queries, find out about the weather, findout about the news, find out about your local contextis another platform and another opportunity </p>
<p>for news, newspapers to get information.it's one where real-time, life-critical information can be transmitted for people who will neverhave, or likely to have, access to a television or some computer orthe kinds of networks that i'm talking about. my point here is that when you add all ofthis up--and i'll finish upã¢â‚¬â¦ to put it into context, you have the fundamentalprinciple--freedom of speech, freedom of expression, the enormous impact that newspapers have hadin governance, in creating a civil society, in creating agreat country. the sum of all of that has delivered us tothis point economically, politically, and so forth,where it's now an opportunity for us to understand </p>
<p>how innovation really occurs and what willreally get us going again. from our perspective, the innovation opportunitiesare around the cloud-computing platform, all of the technologies that i talked about,and the fact that end users, your readers, our consumers, our searchers, and so forthhave these infinitely larger choices around both professionally produced content and user-generatedcontent and real-time content. they will decide how successful we are basedon the quality of the information that we produce, the number of voices, and so forth.from our perspective, we need those voices. google is not a content company.we're not reporters. we don't understand the stuff particularly well.what we do is build platforms that can enable </p>
<p>the broad use and distribution of many differentforms of content and information and understand and, using clever computertricks, basically assemble all of this information into one place.why has this been so hard? why is everybody so worried?it's a very hard transition. these are models that are changing, becauseconsumers are changing even more quickly than i had ever thought.it will be in all of these industries. five or ten years of very difficult businessrestructuring, business questions, as everybody tries to understand how to move to this newmodel. the fundamental issue, and i'll say it again,is that the internet distribution model doesn't </p>
<p>work on scarcity.it works on ubiquity. what we have to do is find models that involvevery broad distribution and that you make money all along the way.we, of course, are in the advertising business, and we think that money will be there.we think that there's a way to do it with even more targeting and even more immersivekinds of advertising models. we think that that is the ultimate outcomefor all of this will play out. in 1831, de tocqueville toured america--andi'm paraphrasing--and said that america will do well because of its sunny optimism itsabundance of land, and its absence of a king. when i think today, i think the same thingis still true. </p>
<p>the political dynamic, the enormous resourcesthat we have, the ingenuity of our people-- the sum of all of that, i think, creates anext set of opportunities for us to seize, for us to take, for us to build businesseson top of. from my perspective, we have to embrace whatusers want together, and by doing that, i think we can win big.with that, thank you very much. gary, i think you indicated we had time forquestions. we have some microphones, or people can shoutout, and i can repeat it. i'm happy to answer any questions on any subject.and i guess we should say, "it's on the record," since we're in newspaper land. </p>
<p>>>male #1: you had mentioned the importanceof advertising in the future, but in your opening remarks, you also indicated a bitabout micropayments and subscriptions. would you elaborate on each of those othertwo potentials? >>schmidt: i think you're going to end upwith all three. an analogy i would offer is television.there is free television, over-the-air television. there is cable television, and there's paytelevision. they have smaller markets as you go from freeto more highly paid. that structure looks to us like roughly thestructure of all of these businesses. today, there are very effective, subscription-basedmodels, but they're not very good micropayment </p>
<p>systems, "micropayment" meaning 1-cent, 3-centskinds of systems. they clearly need to be developed by the industry.i think from your perspective, you should assume that if there's a category of informationyou'll produce that you want to distribute freely,there's a category that you'll want to have a per click basis,and then, there's some that you want subscription for.the reality is that, in this new model, the vast majority of people will only deal witha free model, and so you'll be forced, whether we like itor not, to have a significant advertising component as well as a micropayment and atraditional payment system. </p>
<p>the technology around micropayments is gettingto be possible now. the transaction cost was so high before thatyou couldn't do the 1-cent, 3-cent kind of a model,but it looks the new technologies around aggregation will allow that at the payment level. >>male #2: if i could follow up, you madea comment regarding trust. this is somewhat of a practical question.you've been quoted as saying a number of times that there's going to be a flight to quality,that there's just an awful lot of garbage out on the internet. >>schmidt: let me just say precisely, it'sa sewer out there. </p>
<p>[laughter] >>male #2: fair. very fair.question, though, is, recognizing that the brands in this room, for the most part, arecredible brands, and following up on your-- >>schmidt: i would say 100% are credible. >>male #2: trust? yes.on your trust comment, is there a way to look at search and, when you search on a particulartopic, that news organizations with credible brands,somehow the algorithm is tweaked or adjusted to reflect that, not only for the benefitof the publishers but for the benefit of the </p>
<p>users? >>schmidt: we actually do that in the caseof google news. google news uses a relatively fixed set ofsources, which are selected based on exactly the kind of trust that you're describing.the answer to your question is "yes" on the google news.for general search, we've been careful not to bias it using our own judgment of trust,because we're never sure if we get it right. so we use complicated ranking signals, asthey're called, to determine ranking relevance. and we change them periodically, which driveseverybody crazy, as our algorithms get better. there's no question, in my experience, thatthe top brands represented here in this room </p>
<p>would, in fact, float to the top in our searchranking. the usual problem is you've got somebody whoreally is very trustworthy, but they're not as well known.they compete against people who are better known, and they don't, in their view, geta high enough ranking. we've not come up with a way to algorithmicallyhandle that in a coherent way, but we're very sensitive to not on the search--literally, the generic answers-- we don't want to go in and do the kind ofthing you're describing, unless we can do it across the board and for all categoriesof trusted institutions, not just newspapers. and that's where we get in trouble.more questions, yes? go ahead. </p>
<p>>>male #3: two-part question. first of all,thank you for coming to speak to us today. >>schmidt: sure. >>male #3: part one. speak frankly, if youwould, about how you feel newspapers have performed digitally over the past 10-15 years.in part two, let's assume that one of your greatest fantasies in life came true and youbecame the ceo of an american newspaper company, what would be the top two or three or fourthings that you would do as the ceo of a newspaper company in the digital space?what would you make sure that this newspaper company did immediately in the digital space? >>schmidt: sorry, and the first question was? </p>
<p>>>male #3: speak frankly about our performance.how do you feel american newspapers have done? >>schmidt: i can answer both questions atthe same time. i was very impressed by how quickly all thenewspapers that i talk with in the mid- to late-90s embraced the web.essentially, all of them quickly understood first, the repurposing of existing print storiesonto the web, and then, the creation of reporter's blog.the criticism, if i can offer one, is that there wasn't an act after that.there wasn't a thing afterã¢â‚¬â¦ in other words, that's great. you guys dida superb job. and the act after that is a much harder question,which is how do you keep the engagement? </p>
<p>how do you avoid being disintermediated intojust a set of stories that are aggregated with your brand on them?--which is what has happened to some newspapers. in the case that you were describing, if iwere involved with the digital part of a newspaper and trying to understand what to do,i would, first and foremost, try to understand what my reader wants.it's obvious to me that the majority of the circulation on a newspaper should be onlinerather than printed. there should be 5 times, 10 times, more circulation,because there's no distribution cost. it doesn't cost anything to read it online,from the end-user perspective. so i would start with my diagnosis is, howdo we get to 10 times more readers online? </p>
<p>what do they want to see? what is their style?my own bias, by the way, is a technology one. i think the sites are slow.they literally are not fast. when i read the paper, they're actually slowerthan reading the paper, and that's something that can be worked on in a technical basis.i should also mention that at google, we're working hard to try to try to address thetechnological question that you're asking. but we don't have easy answers here.this is something where better development tools, better hosting tools, and so forthfrom the industry as a whole will make a big difference for newspaper publishers.more questions. yes? >>male #4: mr schmidt, the associated pressresolved, over the last few days, to take </p>
<p>a more aggressive approach to enforcementof intellectual property rights. speaking from your perspective at google,what impact, if any, do you think that would have on the relationship between google andthe associated press and the members it represents? secondly, looking ahead on intellectual propertygenerally, how effective do you think that more aggressive approach might prove to be? >>schmidt: with respect to the associatedpress, we at google have a multimillion-dollar deal with the associated press, not only todistribute their content but also to host it at our servers.i was a little confused by all of the excitement in the news in the last 24 hours.i'm not quite sure what they were referring </p>
<p>to.but we have a very successful deal with ap, and hopefully, that will continue for manyyears. your second question? >>male #4: if you would look ahead a littlebit on the outlook of the future of intellectual property rights as affected by the growthof digital publishing? >>schmidt: the ultimate resolution of allof these--and we have lawyers in the room--is ultimately determined by how you interpretfair use. in my position, i've come to learn that lawyersgo to different schools. if you went to school a, you learned it oneway, and if you went to school b, you learned </p>
<p>it another way.and if you're google, all your lawyers went to school b, and if you're the other side,all your lawyers went to school a. i am not a lawyer, so i will simply reportwhat the school-b lawyers say. then, if you're a lawyer, and you went toschool a or b, you can just tell me so i can figure out how to talk to you.from our perspective, we've looked at this pretty thoroughly, and there is always attentionaround fair use, but ultimately, fair use is a balance of interestin favor of the consumer. i would encourage everybody, when they thinkabout all the rhetoric and all the concern about this or that,think in terms of what your reader wants. </p>
<p>try to figure out how to solve their problem.these are ultimately consumer businesses, and if you piss off enough of them, you willnot have anymore. or, if you make them happy, you will growthem quickly. we try really hard to think that way.these are often uncomfortable at google, as well as at other companies.you'd have to ask a more specific question, and i could respond more specifically. >>male #4: do you think that the intellectualproperty rights will continue to erode, given the digital future as you see it? >>schmidt: there are laws that cover thesethings. </p>
<p>it's important that all of us respect thelaw. it is a balance of interest between the copyrightholder--and we try very much to respect the copyright holderã¢â‚¬â¦there are all sorts of examples where google is the company in the middle of one of thesedisputes that people never resolved. we came to what looks like a very good settlementwith respect to, for example, books. i disagree with your premise that they willcontinue to erode. what i do believe is that all of these partiallythought-through legal systems are being challenged by the ubiquity of the internet,just as free speech is being affected by the fact that people are now to speak whateverthey think, even if we really don't want to </p>
<p>hear them.it's the same problem. i would tell you, by the way, that we've facedthese issues for many years in our society, generations before us,and we've resolved them in a way that caused the right thing to occur.businesses were built, entrepreneurs were able to create new businesses, and consumerswere ultimately being met. so i disagree with you that it's obvious thatthere's an erosion of future intellectual property rights.if, by that, you mean people stealing, there is a problem where countries outside of americado not have the same kind of laws, and it's really an issue.if that's what you're referring to, then yes, </p>
<p>it is an issue. [pause] >>male #5: thank you again for coming today. >>male #5: to take that same discussion and take thefair-use defense and take that out of the equation and just look at it from a very practicalstandpoint, google has been at the forefront of conditioningour audiences that a headline and extract is enough.they've gotten to the point now where we do a google search, and we come up with a listof topics or from google news, </p>
<p>and we look at the headline and the extract,and that becomes enough news in the twitter world so that what happens isis that now google becomes the point in the middle between that audience, that consumersupporting the creation of that professional content you were talking about.the real question becomes, how can the media industry in general partner with google tohelp support that professional content, when the consumer isã¢â‚¬â¦the headline and the extract is good enough? >>schmidt: again, i want to be careful notto criticize consumers for doing things that are idiotic.you can have your opinion, but my position here is that we love our consumers, even ifi don't like what they're doing. </p>
<p>in google news' case, for example, when wefirst built google news, i remember being absolutely terrified at the first meetingof this category i was in. then, one of the editors came up and said,"this is a great product." and i said, "why?"he said, "because it provides me a summary every day from which i can then do qualitywork." that's a good answer.everybody here understands that everyone here has an opportunity to opt out of this by usingrobots.txt and others. these are one-line changes that can take allof the information out of google. again, it's entirely your content. we respectthat and so forth. </p>
<p>given that it's a problem that we all share,that consumers want to do this thing, i would first observe that google news isnot very much different from the news that i get on the radio.basically, when i listen to the radio, i hear roughly the same headlines that i see on googlenews. so i'm not sure that it's a new form.i think it's a transmitted form. my general answer to this question has todo with getting people to take the next step. if you see a headline, what i want you todo is i want you to think, "oh, that's interesting. i want to know more."then, based on that, i want you to click to the newspaper website or to wikipedia or towhere ever. </p>
<p>if we can build products, and we have teamsat google working on this, which roughly work like that, where there's a one-liner that'sinteresting, and you click there, and you go into layer after layer of information--andby the way, not just text, but also video, entertainment, and so forth--that's personalized, we think that we can build a business, again, with you guys withsignificant advertising resources where the advertising is targeted to the content.to me, that's the only solution we've come up with to this problem.i don't think we're fundamentally going to decrease the fascination that the world haswith britney spears. i think it's just fundamentally going to continue. </p>
<p>gary says i have time for one more question. >>male #6: one of the issues that still isa problem for us is 14-15 years into the net, for us, there are no defined standards ofwhat exactly an eyeball is. there are four or five different providers.if you look at your internal data versus an external source, you will go absolutely crazy.how do you all look at what is truth to you when it comes to either external or internalsources of audience counting that make the most sense to develop into astandard over time? >>schmidt: we look at clicks, and we alsolook at how long people stay on a page. we can then infer interest.your question is so good, because it shows </p>
<p>you how early we are in the industry.we don't have combined, accurate, audited ways of measuring audiences, counting advertisersand so forth, all of which has to be developed as the technologybehind the businesses that all of us are going to build.it took many years for the same business structures, for example, to be designed for the auditcirculation bureaus for magazines. the same thing is going to occur, and it willoccur because it needs to be. from our perspective, we use our internalinformation, which is accurate, but, as i agree, there's not a uniform standard forit, and that will be developed. with that, gary says i'm done, so thank youvery much. </p>
<p>i hope you guys enjoyed this. </p></div>
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<div align="justify"><p>>> mcguire: good afternoon, everyone. my nameis joanne mcguire. i am the executive vice president of lockheed martin space systemscompany, and i am just very pleased to welcome all of you to this second in a series of distinguishedlecture series, co-sponsored by nasa and lockheed martin corporation, in honor of nasa's 50thanniversary. these lectures are designed to highlight the extraordinary ways in whichour nation's space program has brought both tangible and inspirational benefits, not justto the american public, but to the world at large. i'd like to ask all of you to pleasejoin me for a moment in congratulating nasa for nearly 50 years of really truly remarkableachievements.all of us at lockheed martin are proud to have been a strong and trusted partner ofnasa since its inception and this lecture </p>
<p>series is the latest manifestation of ourhalf century relationship. as nasa's partner on the orion crew exploration vehicle, weanticipate our stars will continue to shine together for many decades to come. there isno question that the greatest discoveries are yet to come, as nasa and our nation pursuea bold new era of exploration. joining us today is shana dale, deputy administratorfor nasa. shana, we're delighted to be partnered with nasa for this special lecture seriesand to have partnered with nasa for these many years on our nation's vital space achievements.today, our latest achievement is securing the services of dr. eric schmidt, chairmanand ceo of google with us today as our distinguished speaker. we're honored to have you with ustoday, as well, dr. schmidt, and we look forward </p>
<p>to hearing your comments. to introduce ourspeaker, it is my great pleasure to have congressman bart gordon, chairman of the us house committeeon science and technology and dean of the tennessee congressional delegation. congressmangordon's commitment to responsible, bipartisan efforts to advance science, technology andeducation has been really the hallmark of his congressional service. he is highly regardedfor his work on issues important to nasa and has fought for additional funding to ensurethat the agency maintains a robust and balanced set of programs in science, aeronautics andhuman space flight. congressman, gordon, please. >> gordon: thank you so much, ms. mcguire,and more importantly, i want to thank lockheed and the news museum for your hospitality heretonight, or today, maybe--oh, there's the </p>
<p>capitol there too. that was good timing. thankyou for that. and nasa, thank you for putting together this 50th anniversary lecture series.you know, in that regard, it's interesting to note that the house science & technologycommittee is also celebrating a 50th anniversary this year. both nasa and our committee arechildren of sputnik and as the inspiration for so many of the folks that were early involvedin the nasa program. and it's my great pleasure to be able to introduce dr. eric schmidt today.you know, i can really think of no one that is more appropriate in speaking to us todayabout inspiring innovation and exploration as it is dr. schmidt. i have a long historyof his, or a long sheet of his resume, but i think it's--rather than take his time, youcan all google him; i'm sure he's heard that </p>
<p>before. but you know, he really is in a rarifiedair of those ceos that have been able to take a company and take it from a noun to a verb.you know, my generation, i still say can i xerox this, or may i have a band-aid or akleenex. and so now you have joined that very small realm of verbs or nouns to verbs. andi think also that google exemplifies the critical importance of innovation and r&d to--thatis necessary if we're going to continue the quality of life that we have in this country.i was talking to ms. mcguire, she has a 7-year-old daughter, i have a 6-year-old daughter andi'm very concerned that when you look around the world now, there are almost seven billionpeople in the world, half of which make less than $2 a day. and if our daughters are goingto be able to inherit a nation with a standard </p>
<p>of living that's going to be even better thanours then, we have to do it by through innovation and research. we have to be making 50 or 100widgets for every one widget they're making elsewhere. and that's why i was reading todayabout cloning. i don't know whether dr. schmidt we can clone you or not, but we're going tohave to have increase really emphasis in this country on research and development so thatour kids won't become the first generation of americans to inherit a national standardof living less than their parents. it's a real challenge. you're going to be a partof being able to solve that challenge and i'm glad you're here, and i'm sure peopleare glad that i'm not going to take any more time from your speech. i will say that hopefully,we might get you cloned some day, but we can't--and </p>
<p>we can clone animals now, but we can't clonea congressman and i'm in the middle of a vote. and so i've already missed the first two andso i'm--please accept my apologies, i'll look forward to hearing your remarks that i'm sureare going to be re-telecast later. so, thank you all.>> schmidt: well, thank you very much, congressman, in your busy schedule to come. this is a congressmanwho has led a lot of the most important fights for nasa, for science, and for space exploration.his service is phenomenal. i want to congratulate nasa for its 50th year anniversary. nasa hasbeen a part of all of our lives for so much of the fantasy and the excitement of beingan american and being a citizen of our great country. i want to talk today about architectures,and how systems will work over the next 50 </p>
<p>years. i want to think that architecturesof how we go about science and exploration and technology will be different, right. wewill have to think about it in a different way. i think that the internet will show anew approach for us, how we can actually build these systems. those of you in the audienceare people who actually are in charge of how the system will evolve over the next 50 years.now is the time to think about how to design it so that we have a tremendous next 50 years.the next set of missions that the president and others have articulated, mars and so forthand so on, will span many generations, just as the internet has. and i want to take youthrough some of my observations on that. i also want to take a minute and congratulatethe museum. shelby and the team here are in </p>
<p>the process of getting organized for launchingthis formally later this spring. this is a phenomenal accomplishment by all the peopleinvolved with this, and it's a strong testament to america, to the principles the countryhas been founded and all the things that we care about. and i'm very, very proud to havebeen invited to actually participate in this, i think one of the first major public eventshere. so, let's talk a little bit about nasa and what i'm going to do is have robin getstarted, robin zeigler, get started. we're going to do a few demos here to give you asense of what is possible now with some of the things that nasa has been doing. as apilot, i'm very actually grateful for everything that nasa has done, and i think one of thethings that people always forget is how much </p>
<p>impact nasa has had on things other than space--digitalfly-by wire systems, wind shear and icing; perfect, good opportunities today to takeadvantage of these new systems built by nasa. jet engine combustors, engine nozzle chevrons,all of these interesting parts of the technology that you all simply consume as, you know,as consumers, you don't even notice it. but when i think about nasa and i think aboutgoogle, i think of--both has being in the business of making things that were amazingcommonplace, right? if you look at the history of aviation which i know something about,people were terrified with this sort of weather before nasa came along. it was actually aserious life-threatening problem and now we can deal with it. that's an amazing achievement.it happens every day. and it's going to continue, </p>
<p>given the leadership of nasa and the missionof nasa and the things that nasa is trying to do. when i think about google, we try todo the same thing. we try to do the things that are amazing. the things which were amazinglyimpossible 10 years ago are now routine. i was trying to think of an "aha" moment, ithought, well, what is the most interesting query that i can give? and i thought how longwill i live? it seems like the most important question you could ask google. and since weuse google for everything, i asked google and the answer is, there's an age calculator,i typed in all the parameters and it came up 67. bad answer. bad answer, bad answer,reject that answer. okay. so, i reprogrammed the age calculator a little bit and i cameup to 86; much better answer. i stopped. i </p>
<p>moved to other searches. that's an "aha" momentand i know how long i'm going to live and the answer is 84 not 67 because google toldme. now, robin, let's start. this is the crookedest street in the world in san francisco and you'relooking at with a product called google street view. we started off with a view of the earthand as you saw as we zoomed down. and you notice you see the folks and the cars, youhave street signs and so forth. is that alcatraz in the distance there? maybe you could sortof go, yeah, i'm not sure. it's a tourist destination now, don't worry. and here weare, and here you are and you're just on google wandering around. what's interesting aboutthis is look at the human scale of this experience, this exploration. it seems kind of routine,right? this is, by the way, phenomenal technology </p>
<p>to do this, before we get too ahead of it.let's keep going. when we go to--the same thing in google earth, the first thing wascalled street view, in google earth we can see everything there is around. the firstimage that you saw was the same street in google earth and now we're visiting, lookslike, washington, dc. and of course, here's the capitol, which you're right sort of nextdoor. now we can wander around and so forth. now the pictures here include these 3d modelsof all the buildings. and, the shapes that you're seeing, and the contours were, in fact,calculated in 11 days in missions in the shuttle in 2000. for completely unrelated reasons,they decided to do a topography of the earth and they happened to, by virtue of their publicmission, make it available to everyone. so </p>
<p>we just sort of took it and use it and nowwhen you use google earth you're really following the data that the shuttle mission calculated.keep going. now when you think about washington, there's a lot of discussions, for example,about--let's see what we're going to do next here. yes, it turns out that there's a lotof debate about global warming. and this is a--what is the--how many meters? five meters,15 feet. and so the good news is the capitol is going to be preserved. okay. i'm a littleworried about the smithsonian and i want you all to look at the nasa headquarters. it'sa little bit of a problem. i think it has an underground parking garage; you're in bigtrouble. not to make a point about global warming or any of those things or sea levelchange, but there is an article yesterday </p>
<p>that says that there is a possibility of thisscenario occurring by the years 2100. now, why is it important we show this to you now,because this is an example of the kind of visualization that you can do by taking thisplatform that represents google earth, and then showing what could happen. obviously,we don't want that to happen. keep going. what's interesting about all of this--whatare we going to do next here? yeah, let's take a look. this is another example of nasa.nasa, i think this was langley, gave us some climate models, and the climate models happento show the path of katrina. and so we've now overlaid the images that we got from youall, essentially, and you can see as you see the cloud moving, it has information aboutvelocity and position and so forth and so </p>
<p>on. these models were used real-time in orderto understand what was going on and, of course, you could see the velocity and that kind ofthing. many, many, many more people participated in understanding the phenomena and obviouslyalso the aftermath. we won't show you now, but there's a large amount of imagery thatwas done to help rescue missions and so forth, again, overlaid on top of this work, again,in conjunction with nasa. let's move to our next one. now when i think about the earth,i also would like to think about what are the things that i'd like to do and i've alwayswanted to climb mt. everest. now, if you're looking at me, this is clearly not going tohappen. so what we've decided to do is, i was just sitting in my office one day andi thought, let me just climb mt. everest on </p>
<p>google earth. so here we are and we sort ofwander up and you can see the south call and so forth and so on and this is the vision,and i've achieved my objective. well, have i? yeah, actually i have. i have a sense ofit. i have a sense of what it's like to be at the highest peak of earth. again, i couldparticipate in this new and interesting way. and by the way, it's really cold. okay. ifi then look at--let's see where we're going next. when i think about--what i also liketo do, i was talking about aviation. we have a person who is a blogger who covers googleearth who decided to build a model, a flight stimulator. and he took a publicly availableswiss fighter pilot video of a swiss air force pilot wandering around the alps. you see onone side, you see the actual film and on the </p>
<p>other side, you see the recreation in googleearth.now, again, this is available to all of us through the work that nasa and others andhave done to make it possible to see topography and pictures. this information is satelliteand aviation data and you'll see that--and of course it comes with a great soundtrackand so forth and so on. and again, someone else, just like me flying mt. everest, thisis perhaps a person who is unlikely to be flying his own f-18 in the middle of the swissalps can really recreate this. and it's just a phenomenal experience. we have many, manytechnologies coming that are like this over the next little while. why don't--in fact,here's a picture of the fake pilot, there's a picture of the real pilot. so this authoreven inserted a picture of himself in it. </p>
<p>let's move to our next one. when i think aboutthis whole phenomenon, how we use information, i then think about scale and i was tryingto think about what's the best example that i can use about scale? and i was trying tothink about, well, there's the moon sort of nearby. so what we've done now is we've simplytaken imagery of the moon, thank you, nasa. it's by the way, moon.google.com, in caseyou want to go visit the moon, if you're not currently planning on a moon mission anytimesoon. now, and here we are and let's go visit where neil armstrong went. and you can, you'llsee that we can, in fact, get to the point where you can see a picture of his footprints.now the kind of stuff that i'm talking about which we did under a space act agreement withnasa, and we're showing not just nasa planetary </p>
<p>content, as we've discussed, but also we'reworking on disaster response. here is a picture of neil armstrong's footprints. again, thesepictures are collaborated, are given to us by nasa and others. this mechanism is geneticallyavailable on all of google earth. so, we can, showing off what we can do. let's keep going.now if you're on the moon, perhaps what you're really interested in is space. so let's goto a--i don't know, this is a particular interesting star field. this star field is--looks likea normal star field. it was actually done in the deep space initiative with the hubble.and, this is a picture of the--and to give you an example, the width of that pictureis somewhere around 10 to the 25 centimeters, which is a number that is--here's an analogyfor you. if the interaction between carbon </p>
<p>atoms is maybe 1 over 10 to the minus 12th,because of the way they interact, and 10 to the 12th is on the order of 100,000 years.so what you're seeing is you're seeing something that has the scale or width, something you'venever seen before. there's nothing in the world of the scale, this is the deepest image,it's also the most, the oldest image we have in history because it was done approximately13 billion years ago roughly 10% of what we believe the life of the universe is. and itwas not done with one picture, by the way. the hubble went around and took picture afterpicture after picture because there was so little light. pretty neat, okay? so you saynormal picture. let's see where that picture is in context, so you got a sense of how farit really is. oh, looks like a pretty normal </p>
<p>star field. and by the way, there are billionsand billions of stars and galaxies even in this field. as we move out, we begin to seethat perhaps this is a tiny, tiny, little piece of a tiny, tiny little constellationthat doesn't even show up on our constellation map, as we go deeper, and deeper, and deeperin both time and history. some of our constellations begin to show up and now we begin to see whatis familiar to us. there is no tool and there is no feature i know of on earth that canshow you a resolution that goes from 1 to 10 to the 25th in that amount of time. that'swhat nasa can do. that's what information technology can do and that's, frankly, whywe all work at google. let's thank robin for the demo and let me keep, let me keep talking.so if you think about it, what you really </p>
<p>do is you set up audacious goals and you makethis all happen because you cannot possibly anticipate the challenges that you have tosurmount. it's clear that the assumptions will change and you cannot predict the innovationsthat engineers will make. the internet architecture was invented in 1973. the world wide web wasinvented in 1991, 1992. the protocols that we deal with every day now that are so commonplacewere not even thought about 20 years, until 20 years after the original design. that isa remarkable achievement of technology in computer science. there's no way to understandhow people will take advantage of this technical innovation. a man in italy used earth, googleearth to discover the remains and antiques of an ancient roman villa, literally in hisbackyard. archeologists in france used google </p>
<p>earth to discover a hundred candidate sitesfor ancient celtic settlements. in the search for these various meteor craters, an impactcraters, they're using the satellite imagery from nasa and the other work in order to actuallydo real science on how the earth was formed and shaped. we didn't anticipate all of this,we just put the data out there and people did it. it's also clear to me that the peoplewho start the mission are not the ones that are going to complete it. an interesting factthat i did in researching this is that the average age in the front room for apollo 11was about 32. the average age at google is about 31. the memory of the ibm 360s--i usedas a young programmer on ibm 360-91 which will both date me and also give you, havea sense of sympathy for me; 2.5 megabits in </p>
<p>core memory, a real cores. the memory of theipod that our average employee carries now is 80 gigabytes, which is 256,000 times 2.5megabits. so, the rate of change here has been so phenomenal. it's of the scale thati just showed you in that star field. so the internet is the fastest growing communicationsmedium in history, again, so fitting that we're here at this wonderful museum. morethan 1.3 billion internet users worldwide, on the order of a couple hundred million newusers every year, 8 hours of video get uploaded to youtube every day, that should be everyminute, and there's 70 million blogs exist in a 120,000 created every day. it's a lotof blogs and a lot of writers, not so many readers i suspect. when you, when you--thisdemocratization of information which is fundamental </p>
<p>to what is occurring here has a lot of implicationsfor both nasa and for google, and for the world here in washington. since anyone cancreate, edit, publish and share information, you know, it's a new jump ball, it's a newscenario. and normally what happens is that the rate of progress in field occurs at arelatively predictable rate. examples would be that scientific research, the number ofpapers doubles every 15 years; so sort of a predictable rate. in astronomy, the--sincewe're sort of talking about astronomy right now--the distance of the farthest galaxy wecould see has doubled roughly every 10 years; so again, reasonable rates. the world thati live in, doubling times are much, much shorter. moore's law, of course, everybody knows aboutthis, processing power doubles every 18 months. </p>
<p>that means, by the way, 10 times every 5 years,a hundred times in 10. there's a law called kryder's law which is the memory, disk memory,in particular, doubles every 12 months. so this immense, immense amounts of data storesbeing created over and over again. so, an obvious example is that in 2019, an ipod typedevice would be able to contain 85 years of video. in other words, you could never watchit. you'd be dead. you're going to be carrying it and you'll say, well, i couldn't watchit. i'm sorry, i died. it's actually a serious problem like because it's going to cause alot of stress. you know, if i'd only lived another year longer, i could have watchedthat other episode. so, the other interesting thing about this in spurge [ph] of informationis that there's a lot of new voices and new </p>
<p>ideas. with all that, with all that contentout there, you know, search is obviously what google does, becomes it's more important thanever. over 20% of the searches that we do every day are for items we haven't seen inat least the last 90 days. so people are naturally curious, and i want us to take advantage ofthat curiosity. so here's some ideas for success as we think about this. the buzzwords thatwe use in computer science are open, scalable and flexible architectures. and a lot of thenasa work was done before that became the--that's the most politically correct way i could saythis, before those became the principles of design. these hardware designs that are notextensible ultimately do not serve the mission very well. in my case, to show you how foolishi was, when i was a graduate student at berkley, </p>
<p>i built a network--one of the first networksbuilt of its type--for my master thesis, and by the way, i got my masters thesis and idesigned a protocol where there could only be 26 machines, because there were only fourat the time and i couldn't imagine that the university would ever have more than 26. sothe machines were called a, b, c, d, you know, etcetera. they still gave me my degree andthen shortly there later they tore out my network and put in a proper network. so everybodycan make this mistake. the internet started off with four nodes, now it has somewherebetween 250,000 and a million broad networks, by any definition. it's just phenomenal. thenumber of servers, there are roughly--january 1983, we have an accurate number because ofdarpa, 400 servers. in july 2007, our best </p>
<p>estimate is 489 million servers. and thisis growing and continuing to grow. it's growing faster than you think, because it's growingall the time. so, when you build an innovation model, you want to build it in a way that'scollaborative. and this is often at odds with how people think about government programs,procurements, the traditional structures of business and private groups and so forth andso on. you want to figure out a way to do it in a much more open way. and everybodyloves what nasa is doing. it should be possible to pull this off big time. the web, for example,today is built out of products known as linux, apache, mysql. these are open software technologies.the creators of mysql, by the way, just so you--in cases there's any concern that thesemight be hobby businesses--were just purchased </p>
<p>for about a billion dollars by sun microsystems.these are real businesses with different characteristics, but it shows you that you can really delivertremendous value. so if you solve a big problem, solve it by opening it up to the public. assumethat you don't have all the answers because i can assure you that we don't. and i suspectnobody does. it's too, everything is too connected. you're not getting the benefit of everyoneunless you figure out a way to do it in an open way. there's a couple of really goodones. nasa did something called the centennial challenge program. and i think one of thepeople here was one of the authors of this program, so thank you for that. a particularengineer from maine won $200,000 in may 2007, for designing a new astronaut glove. the innerbladder of the glove used one of his kitchen </p>
<p>cleaning gloves because it was the right solution,and it just worked. and there's example after example that when you bring in the creativityof people who maybe he didn't, maybe he didn't have a lot else going on in his life, youknow, maybe he needed something to work on. you know, you just made his day and you justsaved yourself a million dollars, but more importantly, you served the mission really,really well. the lunar x prize that google has announced. we announced a few months agoa prize which is graduated, but think of it as between $20 and $30 million. basically,get something launched, get it to the moon, make sure when it lands it can still drivearound. okay, very straightforward. that's the non-technical explanation. look at ourwebsite, you can see all the details if you </p>
<p>want to bid. why would we do this? becauseit's fun, right? it's just so much fun. now the people who are going to attempt the lunarx prize, and we think there's a whole bunch of folks are probably going to spend morethan the value of the prize. but what's nice about the prize is it brings everybody together,it gets everybody's competitive juices, and you get the multiplicative effect, not justof the money that we're putting in, the money that nasa's putting in, but the money thatall the other people, all the other universities and other programs, that really want to bepart of this historic opportunity to change science in a good way. another aspect of theproblem that i think we all face has to do with this notion of how do you learn? andin these interconnected worlds, you have to </p>
<p>learn more quickly. part of the success ofthe internet and it's true of all the companies; google is simply one of the examples--is thatwe're built on a ship and iterate philosophy. what happens is basically we try something,we try something, we try something, and we're proud of this, by the way. we celebrate thefact that we tried this, we cancelled this, this didn't work, we shifted and so forth.they wiggle, right, in an interesting way. and not only does the technology allows that,but it's part of our culture. we have programs where we encourage our engineers to spend20% of their time on things of their own interest, not what their manager is telling them thatthey have to do. again, unheard of in traditional engineering that drives much of the creativeprocess inside our company. there are many, </p>
<p>many such examples. so, i don't know. whohere was a big apple lisa user? the old, it was the predecessor to the mac, right. butthey learned a lot from the apple lisa that made the mac a great success way back when.it happens in telecommunications. the at&t long distance network crashed for nine hoursdue to a bug consisting of a single line of c code in 1990. we've all forgotten that,but the fact of the matter is they do it too. so the obvious messages for me is to say,well, nasa, you should just ship and iterate. well, this is a minor problem, but you can'tapply exactly the same approach we do because mars and the earth are only this close onthis day. or saturn is only in this position in this particular place. or you have a particularlaunch window due to orbital mechanics that </p>
<p>you really do have to launch within this window.and there are some--humorous now, but embarrassing at the time examples. gemini 5 splashed downoff course 100 miles because of a programming error involving the way they did the calculationwith a decimal point. an even more famous example, and unfortunately a negative onein 1962, mariner 1, went off course, and nasa at the time had to blow it up because of anerror in the fortran, right. and, a hyphen had been dropped from the guidance programloaded aboard the computer. it's been quoted as the single most expensive hyphen in history.so i don't think it's fair for me to say, well, hey you, guys, you should just adoptthis ship and iterate phenomena. i think what you have to do is you have to recognize thatthe ship and iterate model is the best model </p>
<p>for learning and then adapt it to the constraintsthat are very much in your present. so one way to think about it, and as a manager italk to people a lot about this is that one of the best ways to be lucky is to createmore luck. and the way you create more luck is you have more at bats. you get more shots,more launches, more learning, so forth and so on. so the more you put everything aroundone single event, the less likely it's going to be a perfect success. the more you figureout a way to iterate, and there are many, many ways in which you can iterate. you caniterate with openness. you can iterate with extensibility. remember the story that i usedabout the internet, that the underlying protocols were designed around a simple model of end-to-endconnectivity. no one anticipated all of the </p>
<p>stuff that would be built on top of it. sogiven that you have these real constraints about launches and windows and so forth, makethe platform such that it's the simplest possible platform that people can then build on topof. build open systems, not closed systems. don't try to solve the whole problem rightnow. the problem as correctly defined in my view is to build the platform, the thing thatis extensible to the next example. another example, we were looking at this. most spacecraftcan't talk to each other in any significant way. now you say, well, i'm not sure i wantspacecraft talking to each other. well, actually, it's kind of useful for spacecraft to talkto each other especially when they can relay information and telemetry and other information,and furthermore, we as a country can use that </p>
<p>for many, many different reasons. well, isn'tit obvious that the spacecraft should have an internet on them too? i mean it doesn'thave to be an open internet, you could have your own private copy with a gateway, so peoplearen't randomly steering the spacecraft wherever they want to go. but the fact of the matteris it does make sense. and in fact, there are people now working, and this is a greatstory, people working to build an interplanetary internet. that all the same principles thati'm talking about apply, not just on earth, but to the objects that we're busy launching,and by the way, not just the us, but everybody, but also the moon and mars and so forth andso on. and this internet is interesting because there's this minor problem that as you spin,right, you lose connectivity, you have to </p>
<p>wait for the packet. so the whole notion oflatency is very different. it's like a long time before that packet shows up. but thenit comes very quickly and then there's a long time again. we haven't quite figured a wayto solve planetary rotation yet. so the fact of the matter is you have to design theseprotocols, with a small number of modifications it's possible for nasa and the world to havenot just an internet that is part of the earth, but also an internet that goes all the wayout there. i don't know if it's get all the way out to the deep space fields because itwill take 13 billion years to get there, but it'll get pretty far. so by standardizingthe protocols, by standardizing the ways in which things talk to each other, by makingsure that when you have multiple vendors, </p>
<p>multiple contractors, they're using a commonsubstrate of communication and extensibility, you have a much, much greater chance of creatingan opportunity like the ones i'm describing in the internet where this platform, thisvery interesting thing that was designed for one thing, is in fact now even more valuable,even more powerful, rather than mission limited in one way or the other. so the technology-basedcase continues and i think it's pretty interesting. what does it look like in 10 years? processorsand phones and computers a hundred times more powerful, storage a thousand times cheaper,a ubiquitous wireless broadband, a cell phone for everyone who wants them in the world.this will occur in our lifetimes especially since i'm living, remember to 84. how cannasa take advantage of this? i'll give you </p>
<p>another example, so something fun. norad hasa program where santa--they know where santa lives and they track santa as he goes aroundthe world. and these guys are pretty clever. so, they shot videos of santa visiting variouscities and towns around the world. and they have a route gps as you could track him. andi thought, wow, pretty interesting. how many people look at this? ten million people hadnothing else to do, right, but to follow santa as he wandered the world visiting and spreadingjoy around the world. it had a big impact on families and kids. how can we, how cannasa take advantage of that? to me that's the interesting question. there's a storyabout alan beam, one of the most famous astronauts, that there's a benefit to being an astronaut;obvious, get lost in space. no. the benefit </p>
<p>is that you can get the attention of any kidfor five minutes in rapt attention; if we can't use that observation to further themission of nasa and the things that we care about, we're not doing our jobs right. inmany ways, google and nasa are similar in that they're based on optimism. pete wordenwho's my good friend, one of the directors of nasa, says that, "remember that space ishard. it's really hard. it's hard science. it takes an optimist to want to pull all ofthis off." and i like that a lot. you have to be optimistic to want to send a man tothe moon, to mars, to explore every planet, to build a space station. you also have tobe optimistic to believe that you can cover all the world's information starting withborrowed servers in your stanford dorm room; </p>
<p>it's the same principle. and indeed, we'rebusy doing it as best we can. ed lu who is a good employee and i think the us astronauthas been in the space the longest, i asked him sort of what's it like? what did you doall day? he said, "i looked at the earth. i literally just loved to look at the earthas it was underneath me." so what i was thinking about was, how can we get that, how can weget that feeling? because if you think about it, every person that i know of, basically,looks at the world on their cell phone now, right. how can we get that same passion thated had, that same feeling about the world, the world around them, the sense of wonderment?they spend--today, people spend literally so much time looking at this screen or theother choices as well, how can we get that </p>
<p>information? and i think that is our jointmission. how do we get this amazing amount of information that is being generated aboutthe world and science and the things that can--how can we get that so that it is thesame level of rapt attention as ed had sitting, spinning around, right, looking at the wondermentthat is the world around us. that's why i'm such a strong supporter of nasa. that's whygoogle is such a strong partner for nasa and that's why we're so very, very happy to wishnasa a great 50th anniversary. so thank you very much and i'm interested in your questionsand comments.we have our first question in the middle. >> logsdan: david logsdan, us chamber of commerce,space enterprise council. >> schmidt: let's see if we can get the--ithink the lady has a mike for you, that would </p>
<p>be great if you could--that way they couldhear you on the video tape. >> logsdan: david logsdan, us chamber of commerce,space enterprise council. a few years ago, the futurist, alvin toffler, was at a conference,a space-related conference where he mentioned that the information age was the third wave,that space was the fourth wave. in your mind, what do you consider the fifth wave? is ita combination of space-related activities and applications, coupled with information?what is your vision for the fifth wave and with that vision, how can that be a stimulusfor the economy? >> schmidt: most people that i talked to inthis area actually believe that the next huge phenomena that's going to hit us will be inbiology, in biotechnology, the issues and </p>
<p>opportunities that the genome, recombinantdna, those sorts of things do. i think all of us are to some degree enablers of thatnext wave. and the argument is pretty simple. in order to do the kinds of things that wewant to be able to do for health, society as a whole, improving the lot of the world,we're going to need the kind of information and computing power and networks and learningthat's going on today in the other waves that you described. it's probable that the combinationof the creation of this enormous information network that i talked about earlier, the commercializationof space which the nasa, the nasa leadership has done a tremendous job moving forward,if you think about 10 years ago versus now, again, which also creates a large number ofjobs, a large number of opportunities and </p>
<p>this openness, right, making it possible forpeople to enter the system at the appropriate things. both of those create very large numbersof jobs and probably a significant wealth opportunity for investors. a lot of peoplebelieve that as more and more of the stuff is done in the private sector, people willfigure out a way to make money, because there's economic value. in google's case, for example,these satellite images that we showed you, we buy them from commercial satellite providers.they're making money and doing a great job for us, by the way. there are many, many newthings of that type that can be done. so one of the reasons that i'm here is to say toyou all that there are tremendous private opportunities for investment in space technology,high technology, information technology. google </p>
<p>is an example of it, there will be many others.eventually, i think all of us will be subsumed to some degree under this biology and biotechbecause the promise is so strong. they're not quite there yet because the computersaren't quite fast enough, we don't really quite understand the networks quite well,but everybody is working on it. yes, sir. let's see if we can get a microphone.>> o'connell: matt o'connell of geoeye, one of those commercial satellite operators. weget criticized for taking… >> schmidt: and a partner, thank you. thankyou for all those nice pictures. >> o'connell: thank you. we get criticizedfor taking pictures of areas that some people think are sensitive and i know that at googlethere's been a debate about whether or not </p>
<p>you should show those pictures. i think thearguments in favor of openness are winning, but i'd love to hear your comments, becausei get it all around the world. >> schmidt: from a google perspective, thisquestion about public information, what's public, what's private is turning into beone of the sort of central questions for the internet. and, you all should know that there'sa law that restricts--you certainly know this--commercial satellite imagery to a certain level of resolutionwhich we're governed by and we need that, obviously. so there, in fact, is some legislationand some regulation in this area. we've taken a position that subject to meeting the law,and there are certain countries which have special terms which are even more restrictivewith respect to commercial imagery, we want </p>
<p>to get as close to that as we can becausewe think the society benefits from such, such pictures. the fact of the matter is that ithink we're in a transition period where people are learning that things which are, whichthey thought were not generally known are becoming more generally known. my favoriteexamples are these situations where something from space--people assume that you'd neversee it from space, but in fact, it's embarrassing or the wrong thing or so forth that peopleare making appropriate changes. so i think this is a transitional period. the benefitsof being able to see that third dimension, what pilots see when they fly, turns out tobe phenomenal. i talked to queen noor about her husband who died, who was a pilot, andshe told me that part of the reason he was </p>
<p>a pilot was that when he flew around the middleeast, he never saw any boundaries. he never saw the little lines that we see on the mapwhich is what we assume those lines are like etched in the desert, right. we all know wherethey are. it's right there on the map, but it really isn't. i went to a photography showfrom one of the astronauts who was particularly good at mid-format camera photography, showingwhat the earth really looked like. and i think that it's both a message of peace, but it'salso a message of the importance of the earth that i think we want to get out. there aresome things that we do to be responsive to this. we are very, very careful not to showreal-time because we think real-time could be misused and you could imagine 20 ways inwhich real-time images could be used. and </p>
<p>we also have various mechanisms for thingswhich are sensitive or inappropriate to try to consider whether we should remove thoseas well. so we want to be sensitive to that. but, the overwhelming conclusion is the societybenefits from more of that kind of imagery being available, and thank you for helpingmake that happen. more questions. way at the back.>> kemp [ph]: eric, chris kemp [ph] at ames research center. increasingly, collaborativetechnologies are free and systems are increasingly being developed in open source. and it's hardto procure what's free. what advice do you have for federal agencies that are tryingto use tools which are free? >> schmidt: so let's just do this again. thegovernment which has like a trillion dollar </p>
<p>deficit can't buy something which is free,it has to buy something which costs money. >> kemp [ph]: seemingly.>> schmidt: does that--everyone says yes. okay. welcome to washington, i guess. eventhe technologies that i was describing that are free, are, typically come with a supportburden. so what companies do when they work with the companies that i mentioned is theyactually do a procurement in the washington sense or in the government sense, but theydo it for a service. the software itself is free, but the support, its integration andso forth, and that works pretty well. so, we use the term free, but we all understandthat people are paying for this. they're paying for engineering, they're paying for supportand so forth and so on, and that's where the </p>
<p>revenue is being created. to put it anotherway, sometimes you for the software, sometimes you pay for the service. at the end of theday, you're going to pay for something. so, it has to do with what you're procuring. there'sno question that the generation of computer people that i work with now are all buildingon top of this linux platform which is open source, but they're building tremendous companies.google, of course, is largely linux based, to give you an example, and obviously verysuccessful. more questions.well, thank you for inviting me. thank you all for a wonderful afternoon and i hope youall get home in the middle of the storm. so thank you very much. </p></div>
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<div align="justify"><p>>> mcguire: good afternoon, everyone. my nameis joanne mcguire. i am the executive vice president of lockheed martin space systemscompany, and i am just very pleased to welcome all of you to this second in a series of distinguishedlecture series, co-sponsored by nasa and lockheed martin corporation, in honor of nasa's 50thanniversary. these lectures are designed to highlight the extraordinary ways in whichour nation's space program has brought both tangible and inspirational benefits, not justto the american public, but to the world at large. i'd like to ask all of you to pleasejoin me for a moment in congratulating nasa for nearly 50 years of really truly remarkableachievements.all of us at lockheed martin are proud to have been a strong and trusted partner ofnasa since its inception and this lecture </p>
<p>series is the latest manifestation of ourhalf century relationship. as nasa's partner on the orion crew exploration vehicle, weanticipate our stars will continue to shine together for many decades to come. there isno question that the greatest discoveries are yet to come, as nasa and our nation pursuea bold new era of exploration. joining us today is shana dale, deputy administratorfor nasa. shana, we're delighted to be partnered with nasa for this special lecture seriesand to have partnered with nasa for these many years on our nation's vital space achievements.today, our latest achievement is securing the services of dr. eric schmidt, chairmanand ceo of google with us today as our distinguished speaker. we're honored to have you with ustoday, as well, dr. schmidt, and we look forward </p>
<p>to hearing your comments. to introduce ourspeaker, it is my great pleasure to have congressman bart gordon, chairman of the us house committeeon science and technology and dean of the tennessee congressional delegation. congressmangordon's commitment to responsible, bipartisan efforts to advance science, technology andeducation has been really the hallmark of his congressional service. he is highly regardedfor his work on issues important to nasa and has fought for additional funding to ensurethat the agency maintains a robust and balanced set of programs in science, aeronautics andhuman space flight. congressman, gordon, please. >> gordon: thank you so much, ms. mcguire,and more importantly, i want to thank lockheed and the news museum for your hospitality heretonight, or today, maybe--oh, there's the </p>
<p>capitol there too. that was good timing. thankyou for that. and nasa, thank you for putting together this 50th anniversary lecture series.you know, in that regard, it's interesting to note that the house science & technologycommittee is also celebrating a 50th anniversary this year. both nasa and our committee arechildren of sputnik and as the inspiration for so many of the folks that were early involvedin the nasa program. and it's my great pleasure to be able to introduce dr. eric schmidt today.you know, i can really think of no one that is more appropriate in speaking to us todayabout inspiring innovation and exploration as it is dr. schmidt. i have a long historyof his, or a long sheet of his resume, but i think it's--rather than take his time, youcan all google him; i'm sure he's heard that </p>
<p>before. but you know, he really is in a rarifiedair of those ceos that have been able to take a company and take it from a noun to a verb.you know, my generation, i still say can i xerox this, or may i have a band-aid or akleenex. and so now you have joined that very small realm of verbs or nouns to verbs. andi think also that google exemplifies the critical importance of innovation and r&d to--thatis necessary if we're going to continue the quality of life that we have in this country.i was talking to ms. mcguire, she has a 7-year-old daughter, i have a 6-year-old daughter andi'm very concerned that when you look around the world now, there are almost seven billionpeople in the world, half of which make less than $2 a day. and if our daughters are goingto be able to inherit a nation with a standard </p>
<p>of living that's going to be even better thanours then, we have to do it by through innovation and research. we have to be making 50 or 100widgets for every one widget they're making elsewhere. and that's why i was reading todayabout cloning. i don't know whether dr. schmidt we can clone you or not, but we're going tohave to have increase really emphasis in this country on research and development so thatour kids won't become the first generation of americans to inherit a national standardof living less than their parents. it's a real challenge. you're going to be a partof being able to solve that challenge and i'm glad you're here, and i'm sure peopleare glad that i'm not going to take any more time from your speech. i will say that hopefully,we might get you cloned some day, but we can't--and </p>
<p>we can clone animals now, but we can't clonea congressman and i'm in the middle of a vote. and so i've already missed the first two andso i'm--please accept my apologies, i'll look forward to hearing your remarks that i'm sureare going to be re-telecast later. so, thank you all.>> schmidt: well, thank you very much, congressman, in your busy schedule to come. this is a congressmanwho has led a lot of the most important fights for nasa, for science, and for space exploration.his service is phenomenal. i want to congratulate nasa for its 50th year anniversary. nasa hasbeen a part of all of our lives for so much of the fantasy and the excitement of beingan american and being a citizen of our great country. i want to talk today about architectures,and how systems will work over the next 50 </p>
<p>years. i want to think that architecturesof how we go about science and exploration and technology will be different, right. wewill have to think about it in a different way. i think that the internet will show anew approach for us, how we can actually build these systems. those of you in the audienceare people who actually are in charge of how the system will evolve over the next 50 years.now is the time to think about how to design it so that we have a tremendous next 50 years.the next set of missions that the president and others have articulated, mars and so forthand so on, will span many generations, just as the internet has. and i want to take youthrough some of my observations on that. i also want to take a minute and congratulatethe museum. shelby and the team here are in </p>
<p>the process of getting organized for launchingthis formally later this spring. this is a phenomenal accomplishment by all the peopleinvolved with this, and it's a strong testament to america, to the principles the countryhas been founded and all the things that we care about. and i'm very, very proud to havebeen invited to actually participate in this, i think one of the first major public eventshere. so, let's talk a little bit about nasa and what i'm going to do is have robin getstarted, robin zeigler, get started. we're going to do a few demos here to give you asense of what is possible now with some of the things that nasa has been doing. as apilot, i'm very actually grateful for everything that nasa has done, and i think one of thethings that people always forget is how much </p>
<p>impact nasa has had on things other than space--digitalfly-by wire systems, wind shear and icing; perfect, good opportunities today to takeadvantage of these new systems built by nasa. jet engine combustors, engine nozzle chevrons,all of these interesting parts of the technology that you all simply consume as, you know,as consumers, you don't even notice it. but when i think about nasa and i think aboutgoogle, i think of--both has being in the business of making things that were amazingcommonplace, right? if you look at the history of aviation which i know something about,people were terrified with this sort of weather before nasa came along. it was actually aserious life-threatening problem and now we can deal with it. that's an amazing achievement.it happens every day. and it's going to continue, </p>
<p>given the leadership of nasa and the missionof nasa and the things that nasa is trying to do. when i think about google, we try todo the same thing. we try to do the things that are amazing. the things which were amazinglyimpossible 10 years ago are now routine. i was trying to think of an "aha" moment, ithought, well, what is the most interesting query that i can give? and i thought how longwill i live? it seems like the most important question you could ask google. and since weuse google for everything, i asked google and the answer is, there's an age calculator,i typed in all the parameters and it came up 67. bad answer. bad answer, bad answer,reject that answer. okay. so, i reprogrammed the age calculator a little bit and i cameup to 86; much better answer. i stopped. i </p>
<p>moved to other searches. that's an "aha" momentand i know how long i'm going to live and the answer is 84 not 67 because google toldme. now, robin, let's start. this is the crookedest street in the world in san francisco and you'relooking at with a product called google street view. we started off with a view of the earthand as you saw as we zoomed down. and you notice you see the folks and the cars, youhave street signs and so forth. is that alcatraz in the distance there? maybe you could sortof go, yeah, i'm not sure. it's a tourist destination now, don't worry. and here weare, and here you are and you're just on google wandering around. what's interesting aboutthis is look at the human scale of this experience, this exploration. it seems kind of routine,right? this is, by the way, phenomenal technology </p>
<p>to do this, before we get too ahead of it.let's keep going. when we go to--the same thing in google earth, the first thing wascalled street view, in google earth we can see everything there is around. the firstimage that you saw was the same street in google earth and now we're visiting, lookslike, washington, dc. and of course, here's the capitol, which you're right sort of nextdoor. now we can wander around and so forth. now the pictures here include these 3d modelsof all the buildings. and, the shapes that you're seeing, and the contours were, in fact,calculated in 11 days in missions in the shuttle in 2000. for completely unrelated reasons,they decided to do a topography of the earth and they happened to, by virtue of their publicmission, make it available to everyone. so </p>
<p>we just sort of took it and use it and nowwhen you use google earth you're really following the data that the shuttle mission calculated.keep going. now when you think about washington, there's a lot of discussions, for example,about--let's see what we're going to do next here. yes, it turns out that there's a lotof debate about global warming. and this is a--what is the--how many meters? five meters,15 feet. and so the good news is the capitol is going to be preserved. okay. i'm a littleworried about the smithsonian and i want you all to look at the nasa headquarters. it'sa little bit of a problem. i think it has an underground parking garage; you're in bigtrouble. not to make a point about global warming or any of those things or sea levelchange, but there is an article yesterday </p>
<p>that says that there is a possibility of thisscenario occurring by the years 2100. now, why is it important we show this to you now,because this is an example of the kind of visualization that you can do by taking thisplatform that represents google earth, and then showing what could happen. obviously,we don't want that to happen. keep going. what's interesting about all of this--whatare we going to do next here? yeah, let's take a look. this is another example of nasa.nasa, i think this was langley, gave us some climate models, and the climate models happento show the path of katrina. and so we've now overlaid the images that we got from youall, essentially, and you can see as you see the cloud moving, it has information aboutvelocity and position and so forth and so </p>
<p>on. these models were used real-time in orderto understand what was going on and, of course, you could see the velocity and that kind ofthing. many, many, many more people participated in understanding the phenomena and obviouslyalso the aftermath. we won't show you now, but there's a large amount of imagery thatwas done to help rescue missions and so forth, again, overlaid on top of this work, again,in conjunction with nasa. let's move to our next one. now when i think about the earth,i also would like to think about what are the things that i'd like to do and i've alwayswanted to climb mt. everest. now, if you're looking at me, this is clearly not going tohappen. so what we've decided to do is, i was just sitting in my office one day andi thought, let me just climb mt. everest on </p>
<p>google earth. so here we are and we sort ofwander up and you can see the south call and so forth and so on and this is the vision,and i've achieved my objective. well, have i? yeah, actually i have. i have a sense ofit. i have a sense of what it's like to be at the highest peak of earth. again, i couldparticipate in this new and interesting way. and by the way, it's really cold. okay. ifi then look at--let's see where we're going next. when i think about--what i also liketo do, i was talking about aviation. we have a person who is a blogger who covers googleearth who decided to build a model, a flight stimulator. and he took a publicly availableswiss fighter pilot video of a swiss air force pilot wandering around the alps. you see onone side, you see the actual film and on the </p>
<p>other side, you see the recreation in googleearth.now, again, this is available to all of us through the work that nasa and others andhave done to make it possible to see topography and pictures. this information is satelliteand aviation data and you'll see that--and of course it comes with a great soundtrackand so forth and so on. and again, someone else, just like me flying mt. everest, thisis perhaps a person who is unlikely to be flying his own f-18 in the middle of the swissalps can really recreate this. and it's just a phenomenal experience. we have many, manytechnologies coming that are like this over the next little while. why don't--in fact,here's a picture of the fake pilot, there's a picture of the real pilot. so this authoreven inserted a picture of himself in it. </p>
<p>let's move to our next one. when i think aboutthis whole phenomenon, how we use information, i then think about scale and i was tryingto think about what's the best example that i can use about scale? and i was trying tothink about, well, there's the moon sort of nearby. so what we've done now is we've simplytaken imagery of the moon, thank you, nasa. it's by the way, moon.google.com, in caseyou want to go visit the moon, if you're not currently planning on a moon mission anytimesoon. now, and here we are and let's go visit where neil armstrong went. and you can, you'llsee that we can, in fact, get to the point where you can see a picture of his footprints.now the kind of stuff that i'm talking about which we did under a space act agreement withnasa, and we're showing not just nasa planetary </p>
<p>content, as we've discussed, but also we'reworking on disaster response. here is a picture of neil armstrong's footprints. again, thesepictures are collaborated, are given to us by nasa and others. this mechanism is geneticallyavailable on all of google earth. so, we can, showing off what we can do. let's keep going.now if you're on the moon, perhaps what you're really interested in is space. so let's goto a--i don't know, this is a particular interesting star field. this star field is--looks likea normal star field. it was actually done in the deep space initiative with the hubble.and, this is a picture of the--and to give you an example, the width of that pictureis somewhere around 10 to the 25 centimeters, which is a number that is--here's an analogyfor you. if the interaction between carbon </p>
<p>atoms is maybe 1 over 10 to the minus 12th,because of the way they interact, and 10 to the 12th is on the order of 100,000 years.so what you're seeing is you're seeing something that has the scale or width, something you'venever seen before. there's nothing in the world of the scale, this is the deepest image,it's also the most, the oldest image we have in history because it was done approximately13 billion years ago roughly 10% of what we believe the life of the universe is. and itwas not done with one picture, by the way. the hubble went around and took picture afterpicture after picture because there was so little light. pretty neat, okay? so you saynormal picture. let's see where that picture is in context, so you got a sense of how farit really is. oh, looks like a pretty normal </p>
<p>star field. and by the way, there are billionsand billions of stars and galaxies even in this field. as we move out, we begin to seethat perhaps this is a tiny, tiny, little piece of a tiny, tiny little constellationthat doesn't even show up on our constellation map, as we go deeper, and deeper, and deeperin both time and history. some of our constellations begin to show up and now we begin to see whatis familiar to us. there is no tool and there is no feature i know of on earth that canshow you a resolution that goes from 1 to 10 to the 25th in that amount of time. that'swhat nasa can do. that's what information technology can do and that's, frankly, whywe all work at google. let's thank robin for the demo and let me keep, let me keep talking.so if you think about it, what you really </p>
<p>do is you set up audacious goals and you makethis all happen because you cannot possibly anticipate the challenges that you have tosurmount. it's clear that the assumptions will change and you cannot predict the innovationsthat engineers will make. the internet architecture was invented in 1973. the world wide web wasinvented in 1991, 1992. the protocols that we deal with every day now that are so commonplacewere not even thought about 20 years, until 20 years after the original design. that isa remarkable achievement of technology in computer science. there's no way to understandhow people will take advantage of this technical innovation. a man in italy used earth, googleearth to discover the remains and antiques of an ancient roman villa, literally in hisbackyard. archeologists in france used google </p>
<p>earth to discover a hundred candidate sitesfor ancient celtic settlements. in the search for these various meteor craters, an impactcraters, they're using the satellite imagery from nasa and the other work in order to actuallydo real science on how the earth was formed and shaped. we didn't anticipate all of this,we just put the data out there and people did it. it's also clear to me that the peoplewho start the mission are not the ones that are going to complete it. an interesting factthat i did in researching this is that the average age in the front room for apollo 11was about 32. the average age at google is about 31. the memory of the ibm 360s--i usedas a young programmer on ibm 360-91 which will both date me and also give you, havea sense of sympathy for me; 2.5 megabits in </p>
<p>core memory, a real cores. the memory of theipod that our average employee carries now is 80 gigabytes, which is 256,000 times 2.5megabits. so, the rate of change here has been so phenomenal. it's of the scale thati just showed you in that star field. so the internet is the fastest growing communicationsmedium in history, again, so fitting that we're here at this wonderful museum. morethan 1.3 billion internet users worldwide, on the order of a couple hundred million newusers every year, 8 hours of video get uploaded to youtube every day, that should be everyminute, and there's 70 million blogs exist in a 120,000 created every day. it's a lotof blogs and a lot of writers, not so many readers i suspect. when you, when you--thisdemocratization of information which is fundamental </p>
<p>to what is occurring here has a lot of implicationsfor both nasa and for google, and for the world here in washington. since anyone cancreate, edit, publish and share information, you know, it's a new jump ball, it's a newscenario. and normally what happens is that the rate of progress in field occurs at arelatively predictable rate. examples would be that scientific research, the number ofpapers doubles every 15 years; so sort of a predictable rate. in astronomy, the--sincewe're sort of talking about astronomy right now--the distance of the farthest galaxy wecould see has doubled roughly every 10 years; so again, reasonable rates. the world thati live in, doubling times are much, much shorter. moore's law, of course, everybody knows aboutthis, processing power doubles every 18 months. </p>
<p>that means, by the way, 10 times every 5 years,a hundred times in 10. there's a law called kryder's law which is the memory, disk memory,in particular, doubles every 12 months. so this immense, immense amounts of data storesbeing created over and over again. so, an obvious example is that in 2019, an ipod typedevice would be able to contain 85 years of video. in other words, you could never watchit. you'd be dead. you're going to be carrying it and you'll say, well, i couldn't watchit. i'm sorry, i died. it's actually a serious problem like because it's going to cause alot of stress. you know, if i'd only lived another year longer, i could have watchedthat other episode. so, the other interesting thing about this in spurge [ph] of informationis that there's a lot of new voices and new </p>
<p>ideas. with all that, with all that contentout there, you know, search is obviously what google does, becomes it's more important thanever. over 20% of the searches that we do every day are for items we haven't seen inat least the last 90 days. so people are naturally curious, and i want us to take advantage ofthat curiosity. so here's some ideas for success as we think about this. the buzzwords thatwe use in computer science are open, scalable and flexible architectures. and a lot of thenasa work was done before that became the--that's the most politically correct way i could saythis, before those became the principles of design. these hardware designs that are notextensible ultimately do not serve the mission very well. in my case, to show you how foolishi was, when i was a graduate student at berkley, </p>
<p>i built a network--one of the first networksbuilt of its type--for my master thesis, and by the way, i got my masters thesis and idesigned a protocol where there could only be 26 machines, because there were only fourat the time and i couldn't imagine that the university would ever have more than 26. sothe machines were called a, b, c, d, you know, etcetera. they still gave me my degree andthen shortly there later they tore out my network and put in a proper network. so everybodycan make this mistake. the internet started off with four nodes, now it has somewherebetween 250,000 and a million broad networks, by any definition. it's just phenomenal. thenumber of servers, there are roughly--january 1983, we have an accurate number because ofdarpa, 400 servers. in july 2007, our best </p>
<p>estimate is 489 million servers. and thisis growing and continuing to grow. it's growing faster than you think, because it's growingall the time. so, when you build an innovation model, you want to build it in a way that'scollaborative. and this is often at odds with how people think about government programs,procurements, the traditional structures of business and private groups and so forth andso on. you want to figure out a way to do it in a much more open way. and everybodyloves what nasa is doing. it should be possible to pull this off big time. the web, for example,today is built out of products known as linux, apache, mysql. these are open software technologies.the creators of mysql, by the way, just so you--in cases there's any concern that thesemight be hobby businesses--were just purchased </p>
<p>for about a billion dollars by sun microsystems.these are real businesses with different characteristics, but it shows you that you can really delivertremendous value. so if you solve a big problem, solve it by opening it up to the public. assumethat you don't have all the answers because i can assure you that we don't. and i suspectnobody does. it's too, everything is too connected. you're not getting the benefit of everyoneunless you figure out a way to do it in an open way. there's a couple of really goodones. nasa did something called the centennial challenge program. and i think one of thepeople here was one of the authors of this program, so thank you for that. a particularengineer from maine won $200,000 in may 2007, for designing a new astronaut glove. the innerbladder of the glove used one of his kitchen </p>
<p>cleaning gloves because it was the right solution,and it just worked. and there's example after example that when you bring in the creativityof people who maybe he didn't, maybe he didn't have a lot else going on in his life, youknow, maybe he needed something to work on. you know, you just made his day and you justsaved yourself a million dollars, but more importantly, you served the mission really,really well. the lunar x prize that google has announced. we announced a few months agoa prize which is graduated, but think of it as between $20 and $30 million. basically,get something launched, get it to the moon, make sure when it lands it can still drivearound. okay, very straightforward. that's the non-technical explanation. look at ourwebsite, you can see all the details if you </p>
<p>want to bid. why would we do this? becauseit's fun, right? it's just so much fun. now the people who are going to attempt the lunarx prize, and we think there's a whole bunch of folks are probably going to spend morethan the value of the prize. but what's nice about the prize is it brings everybody together,it gets everybody's competitive juices, and you get the multiplicative effect, not justof the money that we're putting in, the money that nasa's putting in, but the money thatall the other people, all the other universities and other programs, that really want to bepart of this historic opportunity to change science in a good way. another aspect of theproblem that i think we all face has to do with this notion of how do you learn? andin these interconnected worlds, you have to </p>
<p>learn more quickly. part of the success ofthe internet and it's true of all the companies; google is simply one of the examples--is thatwe're built on a ship and iterate philosophy. what happens is basically we try something,we try something, we try something, and we're proud of this, by the way. we celebrate thefact that we tried this, we cancelled this, this didn't work, we shifted and so forth.they wiggle, right, in an interesting way. and not only does the technology allows that,but it's part of our culture. we have programs where we encourage our engineers to spend20% of their time on things of their own interest, not what their manager is telling them thatthey have to do. again, unheard of in traditional engineering that drives much of the creativeprocess inside our company. there are many, </p>
<p>many such examples. so, i don't know. whohere was a big apple lisa user? the old, it was the predecessor to the mac, right. butthey learned a lot from the apple lisa that made the mac a great success way back when.it happens in telecommunications. the at&t long distance network crashed for nine hoursdue to a bug consisting of a single line of c code in 1990. we've all forgotten that,but the fact of the matter is they do it too. so the obvious messages for me is to say,well, nasa, you should just ship and iterate. well, this is a minor problem, but you can'tapply exactly the same approach we do because mars and the earth are only this close onthis day. or saturn is only in this position in this particular place. or you have a particularlaunch window due to orbital mechanics that </p>
<p>you really do have to launch within this window.and there are some--humorous now, but embarrassing at the time examples. gemini 5 splashed downoff course 100 miles because of a programming error involving the way they did the calculationwith a decimal point. an even more famous example, and unfortunately a negative onein 1962, mariner 1, went off course, and nasa at the time had to blow it up because of anerror in the fortran, right. and, a hyphen had been dropped from the guidance programloaded aboard the computer. it's been quoted as the single most expensive hyphen in history.so i don't think it's fair for me to say, well, hey you, guys, you should just adoptthis ship and iterate phenomena. i think what you have to do is you have to recognize thatthe ship and iterate model is the best model </p>
<p>for learning and then adapt it to the constraintsthat are very much in your present. so one way to think about it, and as a manager italk to people a lot about this is that one of the best ways to be lucky is to createmore luck. and the way you create more luck is you have more at bats. you get more shots,more launches, more learning, so forth and so on. so the more you put everything aroundone single event, the less likely it's going to be a perfect success. the more you figureout a way to iterate, and there are many, many ways in which you can iterate. you caniterate with openness. you can iterate with extensibility. remember the story that i usedabout the internet, that the underlying protocols were designed around a simple model of end-to-endconnectivity. no one anticipated all of the </p>
<p>stuff that would be built on top of it. sogiven that you have these real constraints about launches and windows and so forth, makethe platform such that it's the simplest possible platform that people can then build on topof. build open systems, not closed systems. don't try to solve the whole problem rightnow. the problem as correctly defined in my view is to build the platform, the thing thatis extensible to the next example. another example, we were looking at this. most spacecraftcan't talk to each other in any significant way. now you say, well, i'm not sure i wantspacecraft talking to each other. well, actually, it's kind of useful for spacecraft to talkto each other especially when they can relay information and telemetry and other information,and furthermore, we as a country can use that </p>
<p>for many, many different reasons. well, isn'tit obvious that the spacecraft should have an internet on them too? i mean it doesn'thave to be an open internet, you could have your own private copy with a gateway, so peoplearen't randomly steering the spacecraft wherever they want to go. but the fact of the matteris it does make sense. and in fact, there are people now working, and this is a greatstory, people working to build an interplanetary internet. that all the same principles thati'm talking about apply, not just on earth, but to the objects that we're busy launching,and by the way, not just the us, but everybody, but also the moon and mars and so forth andso on. and this internet is interesting because there's this minor problem that as you spin,right, you lose connectivity, you have to </p>
<p>wait for the packet. so the whole notion oflatency is very different. it's like a long time before that packet shows up. but thenit comes very quickly and then there's a long time again. we haven't quite figured a wayto solve planetary rotation yet. so the fact of the matter is you have to design theseprotocols, with a small number of modifications it's possible for nasa and the world to havenot just an internet that is part of the earth, but also an internet that goes all the wayout there. i don't know if it's get all the way out to the deep space fields because itwill take 13 billion years to get there, but it'll get pretty far. so by standardizingthe protocols, by standardizing the ways in which things talk to each other, by makingsure that when you have multiple vendors, </p>
<p>multiple contractors, they're using a commonsubstrate of communication and extensibility, you have a much, much greater chance of creatingan opportunity like the ones i'm describing in the internet where this platform, thisvery interesting thing that was designed for one thing, is in fact now even more valuable,even more powerful, rather than mission limited in one way or the other. so the technology-basedcase continues and i think it's pretty interesting. what does it look like in 10 years? processorsand phones and computers a hundred times more powerful, storage a thousand times cheaper,a ubiquitous wireless broadband, a cell phone for everyone who wants them in the world.this will occur in our lifetimes especially since i'm living, remember to 84. how cannasa take advantage of this? i'll give you </p>
<p>another example, so something fun. norad hasa program where santa--they know where santa lives and they track santa as he goes aroundthe world. and these guys are pretty clever. so, they shot videos of santa visiting variouscities and towns around the world. and they have a route gps as you could track him. andi thought, wow, pretty interesting. how many people look at this? ten million people hadnothing else to do, right, but to follow santa as he wandered the world visiting and spreadingjoy around the world. it had a big impact on families and kids. how can we, how cannasa take advantage of that? to me that's the interesting question. there's a storyabout alan beam, one of the most famous astronauts, that there's a benefit to being an astronaut;obvious, get lost in space. no. the benefit </p>
<p>is that you can get the attention of any kidfor five minutes in rapt attention; if we can't use that observation to further themission of nasa and the things that we care about, we're not doing our jobs right. inmany ways, google and nasa are similar in that they're based on optimism. pete wordenwho's my good friend, one of the directors of nasa, says that, "remember that space ishard. it's really hard. it's hard science. it takes an optimist to want to pull all ofthis off." and i like that a lot. you have to be optimistic to want to send a man tothe moon, to mars, to explore every planet, to build a space station. you also have tobe optimistic to believe that you can cover all the world's information starting withborrowed servers in your stanford dorm room; </p>
<p>it's the same principle. and indeed, we'rebusy doing it as best we can. ed lu who is a good employee and i think the us astronauthas been in the space the longest, i asked him sort of what's it like? what did you doall day? he said, "i looked at the earth. i literally just loved to look at the earthas it was underneath me." so what i was thinking about was, how can we get that, how can weget that feeling? because if you think about it, every person that i know of, basically,looks at the world on their cell phone now, right. how can we get that same passion thated had, that same feeling about the world, the world around them, the sense of wonderment?they spend--today, people spend literally so much time looking at this screen or theother choices as well, how can we get that </p>
<p>information? and i think that is our jointmission. how do we get this amazing amount of information that is being generated aboutthe world and science and the things that can--how can we get that so that it is thesame level of rapt attention as ed had sitting, spinning around, right, looking at the wondermentthat is the world around us. that's why i'm such a strong supporter of nasa. that's whygoogle is such a strong partner for nasa and that's why we're so very, very happy to wishnasa a great 50th anniversary. so thank you very much and i'm interested in your questionsand comments.we have our first question in the middle. >> logsdan: david logsdan, us chamber of commerce,space enterprise council. >> schmidt: let's see if we can get the--ithink the lady has a mike for you, that would </p>
<p>be great if you could--that way they couldhear you on the video tape. >> logsdan: david logsdan, us chamber of commerce,space enterprise council. a few years ago, the futurist, alvin toffler, was at a conference,a space-related conference where he mentioned that the information age was the third wave,that space was the fourth wave. in your mind, what do you consider the fifth wave? is ita combination of space-related activities and applications, coupled with information?what is your vision for the fifth wave and with that vision, how can that be a stimulusfor the economy? >> schmidt: most people that i talked to inthis area actually believe that the next huge phenomena that's going to hit us will be inbiology, in biotechnology, the issues and </p>
<p>opportunities that the genome, recombinantdna, those sorts of things do. i think all of us are to some degree enablers of thatnext wave. and the argument is pretty simple. in order to do the kinds of things that wewant to be able to do for health, society as a whole, improving the lot of the world,we're going to need the kind of information and computing power and networks and learningthat's going on today in the other waves that you described. it's probable that the combinationof the creation of this enormous information network that i talked about earlier, the commercializationof space which the nasa, the nasa leadership has done a tremendous job moving forward,if you think about 10 years ago versus now, again, which also creates a large number ofjobs, a large number of opportunities and </p>
<p>this openness, right, making it possible forpeople to enter the system at the appropriate things. both of those create very large numbersof jobs and probably a significant wealth opportunity for investors. a lot of peoplebelieve that as more and more of the stuff is done in the private sector, people willfigure out a way to make money, because there's economic value. in google's case, for example,these satellite images that we showed you, we buy them from commercial satellite providers.they're making money and doing a great job for us, by the way. there are many, many newthings of that type that can be done. so one of the reasons that i'm here is to say toyou all that there are tremendous private opportunities for investment in space technology,high technology, information technology. google </p>
<p>is an example of it, there will be many others.eventually, i think all of us will be subsumed to some degree under this biology and biotechbecause the promise is so strong. they're not quite there yet because the computersaren't quite fast enough, we don't really quite understand the networks quite well,but everybody is working on it. yes, sir. let's see if we can get a microphone.>> o'connell: matt o'connell of geoeye, one of those commercial satellite operators. weget criticized for taking… >> schmidt: and a partner, thank you. thankyou for all those nice pictures. >> o'connell: thank you. we get criticizedfor taking pictures of areas that some people think are sensitive and i know that at googlethere's been a debate about whether or not </p>
<p>you should show those pictures. i think thearguments in favor of openness are winning, but i'd love to hear your comments, becausei get it all around the world. >> schmidt: from a google perspective, thisquestion about public information, what's public, what's private is turning into beone of the sort of central questions for the internet. and, you all should know that there'sa law that restricts--you certainly know this--commercial satellite imagery to a certain level of resolutionwhich we're governed by and we need that, obviously. so there, in fact, is some legislationand some regulation in this area. we've taken a position that subject to meeting the law,and there are certain countries which have special terms which are even more restrictivewith respect to commercial imagery, we want </p>
<p>to get as close to that as we can becausewe think the society benefits from such, such pictures. the fact of the matter is that ithink we're in a transition period where people are learning that things which are, whichthey thought were not generally known are becoming more generally known. my favoriteexamples are these situations where something from space--people assume that you'd neversee it from space, but in fact, it's embarrassing or the wrong thing or so forth that peopleare making appropriate changes. so i think this is a transitional period. the benefitsof being able to see that third dimension, what pilots see when they fly, turns out tobe phenomenal. i talked to queen noor about her husband who died, who was a pilot, andshe told me that part of the reason he was </p>
<p>a pilot was that when he flew around the middleeast, he never saw any boundaries. he never saw the little lines that we see on the mapwhich is what we assume those lines are like etched in the desert, right. we all know wherethey are. it's right there on the map, but it really isn't. i went to a photography showfrom one of the astronauts who was particularly good at mid-format camera photography, showingwhat the earth really looked like. and i think that it's both a message of peace, but it'salso a message of the importance of the earth that i think we want to get out. there aresome things that we do to be responsive to this. we are very, very careful not to showreal-time because we think real-time could be misused and you could imagine 20 ways inwhich real-time images could be used. and </p>
<p>we also have various mechanisms for thingswhich are sensitive or inappropriate to try to consider whether we should remove thoseas well. so we want to be sensitive to that. but, the overwhelming conclusion is the societybenefits from more of that kind of imagery being available, and thank you for helpingmake that happen. more questions. way at the back.>> kemp [ph]: eric, chris kemp [ph] at ames research center. increasingly, collaborativetechnologies are free and systems are increasingly being developed in open source. and it's hardto procure what's free. what advice do you have for federal agencies that are tryingto use tools which are free? >> schmidt: so let's just do this again. thegovernment which has like a trillion dollar </p>
<p>deficit can't buy something which is free,it has to buy something which costs money. >> kemp [ph]: seemingly.>> schmidt: does that--everyone says yes. okay. welcome to washington, i guess. eventhe technologies that i was describing that are free, are, typically come with a supportburden. so what companies do when they work with the companies that i mentioned is theyactually do a procurement in the washington sense or in the government sense, but theydo it for a service. the software itself is free, but the support, its integration andso forth, and that works pretty well. so, we use the term free, but we all understandthat people are paying for this. they're paying for engineering, they're paying for supportand so forth and so on, and that's where the </p>
<p>revenue is being created. to put it anotherway, sometimes you for the software, sometimes you pay for the service. at the end of theday, you're going to pay for something. so, it has to do with what you're procuring. there'sno question that the generation of computer people that i work with now are all buildingon top of this linux platform which is open source, but they're building tremendous companies.google, of course, is largely linux based, to give you an example, and obviously verysuccessful. more questions.well, thank you for inviting me. thank you all for a wonderful afternoon and i hope youall get home in the middle of the storm. so thank you very much. </p></div>
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