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Steve Jobs talks lost prototype iPhone, Adobe Flash at All Things D

Apple chief executive Steve Jobs took the stage at D8 Tuesday evening to discuss his company's opposition to Adobe Flash on the iPhone OS, as well as the prototype fourth-generation iPhone that turned up in a high profile exposé by Gizmodo.

Jobs was interviewed Tuesday evening by Walt Mossberg and Kara Swisher of of The Wall Street Journal. The talk served as the opening event for the annual D: All Things Digital Conference.

Jobs' segment was preceded by an introduction given by News Corp. chief executive Rupert Murdoch, who went overtime speaking about the future of content creation and the iPad while, somewhat ironically, speaking from notes written on letter sized paper.

Jobs on competition and Flash

Swisher noted that Apple's public valuation had passed Microsoft's this week, calling the event "surreal," to which Jobs replied, "It doesn't matter very much. It's not what's important. It's not what makes you come to work in the morning. It is a little surreal."

Mossberg noted that Apple was in bad shape upon Jobs' return to Apple in 1997. Jobs said, "We were 90 days from going bankrupt," noting that things were worse than he had originally thought. "I thought all the good people had left," Jobs said, "but I found [these] amazing people. I said, why are you still here?" After breaking for laughs from the audience, Jobs added, "They said, because I believe in Apple. I love what this place stands for. That just made us want to work that much harder."

Mossberg introduced the "controversy" of Apple's failure to support Adobe Flash on its iPhone OS devices, asking,"is it really fair or the best thing for consumers to just be abrupt?"

Jobs answered, "Apple is a company that doesn't have the resources that everyone else has. We choose what tech horses to ride, we look for tech that has a future and is headed up. Different pieces of tech go in cycles; they have spring, summer, autumn and then they go to the grave. If you choose wisely, you save yourself an enormous amount of work, versus trying to do everything" noting that Apple popularized, then terminated the 3.5 inch floppy drive.

"We were one of the first to get rid of optical drives, with the MacBook Air," Jobs said. "And when we do this, sometimes people call us crazy. Sometimes you have to pick the right horses. Flash looks like it had its day but it's waning, and HTML5 looks like it's coming up."

There's no smartphone shipping with Flash," Jobs said, to which Mossberg responded "but know that there will be." Jobs quipped, "well there 'will be' for the last two or three years. But HTML5 is starting to emerge," the same point Jobs made in his open letter "Thoughts on Flash."

Addressing the "holes" in the web sites where Flash content is not visible on iPhone OS devices, Jobs said, "Those holes are getting plugged... those holes are mostly ads." He also noted that Apple's own HyperCard was even more popular in its day, until the open web began to emerge.

"Our goal is really easy," Jobs said. "We just made a tech decision. We aren't going to make an effort to put this on our platform. We told Adobe to show us something better, and they never did. It wasn't until we shipped the iPad that Adobe started to raise a stink about it. We werent trying to have a fight, we just decided to not use one of their products. They made a big deal of it. That's why I wrote that letter. I said enough is enough, we're tired of these guys trashing us."

Asked if Apple would ever consider putting Flash on the iPad if the market were to demand it and "people say the iPad is crippled," Jobs replied, "Well things are packages. Some things are good in a product, some things are bad. If the market tells us we're making bad choices, we'll make changes. We're just trying to make great products. We don't think this is great and we're going to leave it out. We're going to take the heat because we want to make the best product in the world for customers!" Jobs also noted that Apple was now selling an iPad every three seconds.

Apple Chief Executive Steve Jobs talks at the D8 Conference. Photo credit Engadget

Addressing the Gizmodo prototype situation

Mossberg brought up the issue of Apple's missing prototype iPhone and asked Jobs about the police seizure of computers and other equipment belonging to the Gizmodo editor who broke the story, saying the police "go and don't issue a search warrant and […] they grab this journalist's assets," at which point Jobs interrupted to say, "well a guy, who can say if [Jason Chen of Gawker Media] is a journalist." The audience gasped.

"There's an ongoing investigation," Jobs continued. "I can tell you what I do know, though. To make a product you need to test it. You have to carry them outside. One of our employees was carrying one. There's a debate about whether he left it in a bar, or it was stolen out of his bag.

"The person who found it tried to sell it, they called Engadget, they called Gizmodo. The person who took the phone plugged it into his roommates computer. And this guy was trying to destroy evidence, and his roommate called the police. So this is a story that's amazing: it's got theft, it's got buying stolen property, it's got extortion, I'm sure there's some sex in there," Jobs quipped to laughter from the audience.

"The whole thing is very colorful," Jobs said. "The DA is looking into it, and to my knowledge they have someone making sure they only see stuff that relates to this case. I don't know how it will end up."

"Foxconn is not a sweatshop"

When Swisher asked about the recent controversy over a number of suicides at the Shenzhen, China, plant of Apple's overseas manufacturing partner, Foxconn, Jobs responded, "We are on top of this. We look at everything at these companies. I can tell you a few things that we know. And we are all over this. Foxconn is not a sweatshop."

Jobs added, "It's a factory, but my gosh, they have restaurants and movie theaters, but it's a factory. But they've had some suicides and attempted suicides, and they have 400,000 people there. The rate is under what the US rate is, but it's still troubling."

The suicide rate at the Foxconn plant was 13 out of 400,000 employees in the first half of the year, less than the U.S. rate of 11 per 100,000. "We had this in my hometown of Palo Alto," Jobs said, "copy cat suicides. We're over there trying to understand this. It's a difficult situation."

Jobs on competing with Google

Mossberg changed the subject to competitors, noting that Jobs had long fought a platform war with Microsoft, but was now making a comeback in smartphones, asking Jobs if he thought there was a platform war going on.

Jobs answered, "No, and I never have. We never saw ourselves in a platform war with Microsoft, and maybe that's why we lost!" Jobs reiterated his stance that Google chose to compete with Apple by entering the smartphone market. "We didn't go into the search business," he said.

Asked if he "was going to remove them from the iPhone," Jobs said no. "We want to make better products then them," he said. "What I love about the marketplace is that we do our products, we tell people about them, and if they like them, we get to come to work tomorrow. It's not like that in enterprise... the people who make those decisions are sometimes confused. Just because we're competing with someone doesn't mean we have to be rude."

Asked about Google as a competitor on the desktop with the Chrome browser, Jobs answered, "Well Chrome is not... you know. And it's based on WebKit, work we did at Apple. Almost every modern browser is based on WebKit: Nokia, Palm, Android, RIM has one, and of course ours. We've created a real competitor to Internet Explorer. In the mobile space it's number one."