Of all the reader suggestions for what I should do with my little film Steve Jobs — The Lost Interview, not one involved showing the movie in theaters. Yet that was the first thing that came to my mind. How old media-like of me and how new media-like of you.  So we’re opening November 16th for a short run in about 20 U.S. theaters. These are mainly Landmark Theaters, but some others are now coming on and we’ve even had inquiries from Europe and Asia (keep them coming, please).  The idea came to me late at night so I e-mailed Landmark owner Mark Cuban who replied in five minutes. proving insomnia has its virtues

Seeing a movie in a theater is a social experience, where most other viewing options generally aren’t. I remember where and when I saw many films that were important to me from Barbarella (it wasn’t the movie but the girl I was with) to Star Wars (it was the movie), mainly because I saw them in theaters with my friends. It’s just not the same watching on YouTube, which is exactly why I decided to start with theaters.

Those who want to wait and see the show online will probably get their chance to do so since I don’t expect a long theatrical run. There will be many ways to see this interview, but theaters come first.

And did I mention that getting a writing credit for a film opening in theaters finally qualifies me for group health insurance through the Writers Guild of America? I haven’t been eligible for group health insurance since 1994.

Other than confirming when and where the film is opening (below) I want to cover the technology involved in turning an old VHS tape into a movie fit for showing on big screens.

Triumph of the Nerds was shot on PAL Digi-Beta SP, a format very advanced for 1995 but obsolete today. It’s true digital with 4:2:2 encoding and a screen resolution of 720-by 576 lines at 25 frames-per-second (remember this was originally shot for European consumption). Taking this to film wouldn’t be that hard, actually, given the number of features that have been shot on DV beginning with the Blair Witch Project.  It’s not great but it’s not bad, either. But the tape we have isn’t Digi-Beta or digital at all — it’s analog PAL VHS with only 288 vertical lines, not even Digi-Beta’s 576, much less HD’s 1080.  And that’s our goal for this film — 1080 vertical lines.

Home movie footage is used all the time in feature films, but it’s usually supposed to look like home movie footage and ours isn’t. Fortunately ours was shot and lighted by professionals and it shows. The VHS dub we have was done on professional equipment and it is likely that the tape was never even played after being recorded, though there are two very obvious instances of tape stretch in the piece — places you’d normally just cut around except we’re on some media honesty kick and determined to share the tape unedited, so we’ve had to work hard to improve those stretchy parts.

Once we had the master tape in the best possible shape it had to go through any number of steps including de-interlacing, de-noising, color correction, and resolution enhancement. The last is the most interesting but it turns out the first is most important because there are right and wrong ways to de-interlace video.

Video is interlaced at all because that’s the way it had to be done in the early days of television with slow TV set phosphors (remember that white dot in the middle of your TV set when you turned it off?) and equally slow camera tubes. So an analog TV frame, whether it is NTSC or PAL has two fields that are recorded sequentially then rendered together as an interlaced signal with a line from Field A followed by a line from Field B and so on. Converting this interlaced signal to the progressive scan used on most HDTVs (and computer screens) requires de-interlacing, which most often means throwing away either Field A or Field B then doubling the lines of the surviving field.

No-can-do for us, though, because that would drop our 288 lines down to 144 lines, from which I am sure we’d never recover. And to be honest no-can-do for most other professional de-interlacing since we now have smarter ways to do it, the point being to not throw away any information.

The general technique is to first make the video look less bad and then make it look better. The former comes through de-noising (removing artifacts that are obviously not part of the original signal) and color correction (making the colors look right or, if not right then at least the way you think they look the best). The latter comes through a process of temporal interpolation that is usually called Super Resolution.

Remember your neighbor who got a home equity loan to install a home theater and how he bragged about his line doubler? How oh-so 1999. A line doubler scales-up resolution by creating new lines in the frame that are interpolated from the lines above and below. Super Resolution does much the same thing but it creates lines using information not just from the lines on either side but from all the lines and other picture elements in several frames before and after. Typically 4-5 frames are involved and if you think that we are going from 288 vertical lines to 1080 that’s about a 4X increase so we’ll need every bit of that temporal data from those extra frames.

I decided when we started this adventure on October 14th that we’d have to take a shotgun approach to tape restoration, so that’s what we have done, using three completely separate approaches in parallel.

First the folks at Red Giant Software up in Portland, Oregon helped us use their plugins for Final Cut Pro and Adobe Premiere. We first thought we’d be using just Red Giant’s Instant HD tool from their Magic Bullet Suite, but soon learned they have separate tools for every stage of the process including de-interlacing, de-noising, color correction and more.

There’s a hardware approach to the same problem courtesy of an Orlando, Florida company called Teranex. Their $3000 box (the one we used was the Teranex Mini) sucks in video in one format and spits it out in another. A smart Teranex operator knows to do the job in several passes accomplishing the different tasks in a specific order, but the process in each case is accomplished in real time, which is astounding.

And finally, from behind Door Number Three comes MotionDSP of Burlingame, California.  MotionDSP sells a $49.95 Windows product called vReveal that does most of this as well as a professional product called Ikena that does it even better for a lot more money. I understand that iKena is particularly popular with certain three-letter agencies for improving the resolution of satellite images.

Which worked best for our little film?  We won’t know for a couple more days when we have a side-by-side comparison and the winner goes out to theaters. So far they all look great.

Steve Jobs — The Lost Interview cities and theaters (so far)

New York – Sunshine
Los Angeles – Regent
San Francisco – Opera Plaza
Berkeley – Shattuck
Palo Alto – Aquarius
Seattle – Metro
San Diego – Hillcrest
Denver – Esquire
Dallas – Magnolia
Houston – River Oaks
Minneapolis- Lagoon
Chicago – Century
Indianapolis – Keystone
Boston – Kendall
Philadelphia – Ritz Bourse
Washington, DC – E Street
Baltimore – Harbor East
Atlanta – Midtown
Milwaukee – Oriental

If you watch the 60 Minutes segment this Sunday with Walter Isaacson, Steve Jobs’ biographer, on the eve of his book being published, you are likely to see up to three clips from my show Triumph of the Nerds. My 1995 interview with Steve for that series is famous for his trashing of Microsoft and has been played over and over on TV for the last 16 years. But that’s not the case with the interview from which that clip came… until now.

The interview we shot that day at NeXT headquarters in Redwood City ran about an hour but we used only 10 minutes in the TV series. It was our second try to meet with Steve, who had felt too ill (I thought too nervous) on our first visit. We were relieved to finally get him.

We planned to use more from the Jobs interview in my followup show Nerds 2.01: A Brief History of the Internet, but the master tapes for TOTN — all of them — were somehow lost while being shipped from London to Portland, Oregon for that second series. The Steve Jobs interview was gone forever.

Then two weeks ago TOTN director Paul Sen found a VHS copy of the Jobs interview stored in his UK garage. This is undoubtedly the only surviving copy of the best TV interview Steve Jobs ever gave yet nobody ever saw.

The tape is PAL-VHS, dubbed on professional equipment from a D1 master, but VHS is still VHS, which is to say crappy. Yet video technology has come a long way since 1995, so we’ve been throwing resolution enhancement voodoo at that tape, trying to get it ready for, well, something, we’re not sure what.

This coming week all the processing will be done, we’ll add a short opener and a few guiding voice annotations to what’s essentially an unedited interview — definitely not the sort of thing you’d normally see on TV.  It’s me coaxing Steve into a great performance.

This interview is a moment in time. NeXT was in trouble in 1995, though Steve would never admit it.  Apple, too, was at a low point. And none of us could know that NeXT would be sold to Apple within a year and Steve would be back minding the store in Cupertino shortly after that. No iMac, iPod, iPhone, or iPad were envisioned at that time, or if they were Steve wasn’t telling. But that younger Steve of 1995 was very much like the older Steve of 2005 or even 2011 — his devotion to design, to the user, and to bluntly speaking his mind shining through.

What we’ll do with the 64-minute video depends on how good it looks this week. Maybe we’ll put it up on the Net, maybe we’ll do something more. I’m open to your ideas.

It’s a piece of history, that’s for sure, and there couldn’t have been a better time to find it.

A lot has been said about Steve Jobs in the 24 hours since his death and some of that has come from me. It has been 24 hours of round-the-world media interviews, most of them live but you can see an edited version of me this Friday on ABC’s 20/20, which is doing a Jobs tribute of some sort. Remember ABC’s parent is Disney and Jobs was Disney’s largest shareholder.  With all that has been said and written, however, I’m hard put to know what there is I can add here. I can tell you though the two Jobs questions I still want answers for, and where I hope to find those answers.

Question #1 — Was there a grand plan for Apple?  Did Steve and his little circle set out in 1997 to do an iMac followed by an iPod with iTunes followed by an iPhone followed by an iPad?  And if they did have such a plan, what was next on their list after the iPad?

Some technical and product transitions are no-brainers. Computers get smaller, faster, and cheaper over time. After a certain point smaller, faster, and cheaper begets mobility.  After mobility gets smaller, faster, and cheaper we want all our stuff to be available anywhere anytime. After we have all our stuff with us anywhere anytime the platform itself begins to disappear.  All of these steps except the last happened in Steve Jobs’s lifetime, and it is easy to see that last step coming, too. But while these steps were no-brainers in retrospect, were they obvious beyond Apple, were they part of a plan?

I like to think that there was a plan, which might explain why Apple never made televisions in Steve’s life, though I know they came very close. If there was a plan I’d love to know the value set and algorithms at its heart.

But my sense is actually that there was no plan or maybe that the plan changed, perhaps many times, explaining the exodus of top Apple talent over the years. I’d like to hear what Avie Tevanian has to say, for example.

Question #2 — What happens to Steve’s money?  This may seem crass to some, but no more crass than a billionaire with no outward signs of philanthropy. It was Steve’s money of course and he could do with it whatever he liked, but what was his reason for outwardly appearing to have little interest in others?  Maybe he was a closet philanthropist. Certainly in recent years the considerable amounts he spent on cancer research aimed at his own cure will benefit thousands of others.  I’d still like to know, though, Steve’s plan for his fortune.

I hope to learn the answers to both questions from Walter Isaacson when his authorized biography of Steve Jobs is released on October 24th. I haven’t read the book yet and know nobody who has, but I hope Walter got around to my silly questions and that Steve answered them.

He was a busy guy, Steve Jobs — so busy living for the moment that maybe he didn’t have to live so far (or indeed at all) into the future. Maybe none of this matters, but I’d still like to know.

What unanswered questions would you have for Steve Jobs?

Tomorrow I’ll respond to the 200+ comments on my Final Frontier column, hopefully setting off another burst of discussion and discovery — just the sort of discourse Steve Jobs would have liked, especially if it riled people up.

And now the frenzy begins. Running this story in reverse it’s suddenly clear why Apple didn’t introduce the iPhone 5 this week. It would have been lost in the news of Jobs’s death, killing the marketing value he would have loved. I’m sure the phone will appear in a week or two with that appearance in part to encourage the recovery of Apple shares from what is sure to be a short-term decline.

I first met Steve Jobs in the spring of 1977 when I helped the two Steves take a prototype computer out of Woz’s Fiat at a Homebrew Computer Club meeting. In the 34 years that followed I was hired and fired by Steve more than once, our relationship conducted in large part through screaming. “Sometimes I can be an asshole,” he said to me many times, and it was true, but I miss him already.

Steve Jobs was an iconic figure. Everybody knows his name. He was perceived as being personally responsible for the growth of the most valuable U.S. corporation. Steve Jobs changed the way people live by making popular everything from desktop publishing to digital music, to revolutionary smart phones and computer-animated films. He changed forever the computer, music, and film industries, doing so through the simple expedient of better design. He redefined the notion of taste in an industry dominated by engineers and a general lack of style. Steve Jobs had a billion dollar eye. No, make that a $300 billion eye.

Jobs was a 21st century combination of Thomas Edison, Henry Ford, and Sam Walton. As an aesthete, a corporate leader, a salesman and a wrangler of geeks there was no person in American business — maybe in the world — who compared to this adopted child of Syrian extraction. Yet who actually knew him? Almost nobody.

I’ll be writing more about Jobs in the coming days, but for now here is the best public moment of insight into this man, the commencement address he gave at Stanford University in 2005.

I was about to board an airplane Wednesday when Apple announced the resignation of Steve Jobs as CEO and his replacement by Tim Cook. With a couple hours to think on my flight to Charleston it became clear to me that this story is far from over and the long-term leadership of Apple has not yet been determined.

There were rumblings a month ago about Apple board members interviewing possible successors to Steve Jobs. There’s nothing surprising in that, given Jobs’ poor health and the fact that the primary function of any board is hiring and firing CEOs. But it evidently didn’t go down well with Steve, perhaps because he had his own succession plan or simply because it showed a crack in Apple’s armor against news leaks. The story was quickly shot down.

Then a week ago the publication date of Walter Isaacson’s authorized biography of Steve Jobs was changed from March 6, 2012 to November 21, 2011. This shocked me, because the last I read Isaacson was still writing his book, which was due with the publisher, Simon & Schuster, in September. Huge biographies aren’t finished early or rushed to completion.  Figuring the book will still be finished in September, that it will take a month to print and ship the books, this means that the publisher’s part of this process — the copy editing, designing, formatting, building indexes and so forth — is being reduced from a normal minimum of at least six months to less than six weeks. It makes business sense to do this, sure, but I don’t think that’s enough: some external force is pushing the deadline.

I suspect that force accelerating the publication may be Steve Jobs.

And now we have Jobs’ resignation. But he’s not going away, not signing-up for Apple COBRA benefits, just giving up to Cook his duties as CEO. Jobs will remain an Apple employee and chairman of the board.  That makes him what’s called an executive chairman — one who is on the job every day. And that job he’ll be doing every day is overseeing Tim Cook’s execution of the corporate strategy designed by Steve Jobs.

This looks to me like Cook continuing to function in his Chief Operating Officer role. Oh he’ll get a big raise and an even bigger bonus, but my sense is that next week the guy really in charge will still be Steve Jobs. And the Apple board, satisfied that the succession question has been answered and their own fiduciary asses are covered (I suspect this is a big part of it) can go back to sleep.

But it isn’t a long-term solution. Steve Jobs won’t be around forever and a true successor will have to be chosen eventually. For all his administrative skills, Cook can’t fill Jobs’ visionary shoes, so I’d look for another leadership change, maybe tied to the release of Isaacson’s book.

I say this based not only on my understanding of Steve and the way things work in Cupertino, but also based on my reading of Isaacson’s last book, a very good biography of Albert Einstein. That book is what attracted Jobs to Isaacson as his biographer. This was no chance encounter.  Steve doesn’t believe in them.

In his Einstein book Isaacson tried (and I think succeeded) to take us into the mind and ideas of the German physicist who changed the world. He’ll do the same with Jobs.  And in the case of Jobs, the understanding that’s missing is less his maturing as a technology visionary and more the vision, itself. Where is Apple going?  What’s the grand plan?

We know there is such a plan — there has to be, Apple’s moves have been too deliberate, if inscrutable, to be some executive random walk.  But nobody near the top has ever tried to explain where the company is going, preferring to be mysterious instead.  Bill Gates had Nathan Myhrvold write his book for him, but Steve is classier than Bill. I believe Walter Isaacson’s book will also function as Steve’s technology manifesto, part of his legacy.

Once we have the grand plan, then it may make more sense just who should lead that plan’s execution during what will clearly be Apple’s best quarter in its 34 year history.  Steve Jobs is setting-up this (and us) for another grand reveal… just one more thing.

In Steve we trust.

All of us were reminded over and over and over during the last few days that Apple has more cash on hand than does the U.S. government. This coincidence means precisely nothing to either outfit.  We won’t see President Obama asking Steve Jobs for a loan, nor will we see Steve Jobs offering one. Yes, the government is broke and yes, Apple has a lot of cash. But GE has almost $50 billion more than Apple, so where are all the GE stories?

There’s a mystery about Apple’s cash and that mystery has to do with Steve’s strategy for holding all that money.  What’s it for? The predominant theory seems to be that Apple intends to make a huge acquisition and periodically there are rumors of Cupertino buying this big company or that, with Hulu being the latest supposed target. And maybe Apple will buy Hulu (actually, I don’t think so, but let’s assume they do) but that will still leave Steve with $74+ billion, so the Apple money story won’t be going away. I think Apple has raised all that money for the sole purpose of….. having a lot of money. I don’t think Steve intends to make any major acquisitions at all, though that says nothing about a post-Steve Apple.

The Silicon Valley corporate tendency to not pay dividends and instead accumulate vast quantities of cash was pioneered by Dave Packard at HP. Starting in the late 1950s, Hewlett-Packard was raking-in the dough but it was at the time also a privately-held company with just two shareholders — Bill Hewlett and Dave Packard.  The founders could easily have demanded dividends or even, I suppose, stock buy-backs, but they were earning plenty of money and preferred to let it ride.  Going further, Packard, as the money guy, didn’t like the Wall Street trend of taking on corporate debt to fund growth.  The less you paid out to shareholders (both of them) he decided, the more growth could be funded internally.  That’s not the way they do it anymore at HP, by the way — that habit having been broken by Fiorina, Hurd, and now Apotheker, though the last can’t really be blamed because the damage was mostly done before he came on watch.

What was pioneered at HP was later emulated at Intel and every other big Silicon Valley company right up through Apple and Cisco today. And since they all did it and their stockholders made plenty of money from capital gains, nobody much complained until fairly recently when some of these companies began paying small dividends.

But not Apple.  Steve Jobs knew what it was like to be poor at Apple from 1976-77 and he knew what it was like to be really poor at NeXT in the early 1990s.  So when he returned to power at Apple in 1997 Steve embraced very conservative financial practices that kept Apple awash with cash to pay for what he was sure would be inevitable missteps. All that money was an insurance policy against Steve’s own inevitable failure.

Only he didn’t fail.

His bets were bold in scope but modest in cost and hardly ever failed.  So Apple’s cash accumulated and accumulated and accumulated until it reached the point where Jobs could no longer view it as an insurance policy. That’s when it became an acquisition fund — not because Steve had particular acquisitions in mind, but because thinking of it as being intended for acquisitions made not spending the money easier to do.

Apple could have made any number of acquisitions. Just as both John Sculley and Gil Amelio tried to sell Apple to Sun Microsystems and failed, Scott McNealy and Jonathan Schwartz tried to sell Sun Microsystems to Apple and failed.  But Steve didn’t make any major acquisitions, saying the opportunities weren’t good enough but also knowing in his heart that buying his way to scale would kill the Apple he was slowly building in his own image.

Remember we’re now 14 years into what is probably a 20-year Apple strategy.  Yes, it has evolved and expanded over time, but the strategy was always headed in the same direction.  Where the typical Silicon Valley CEO thinks about this quarter and next quarter, Steve Jobs had the leisure to think about this decade and next.

When it finally became clear inside Apple that Steve really wasn’t going to buy a big company (Apple’s biggest-ever acquisition, remember, was the recent $2.4 billion purchase of Nortel’s patent portfolio, which got Steve the IP he wanted without the lovely Canadian engineers he didn’t want) the company had to find another plausible reason for holding all that money.

And so Apple today uses its cash to buy parts in huge quantities.  Lately this has mainly meant buying flash RAM and iPhone displays in amounts that move whole markets and guarantee Apple the lowest prices anywhere.  This is important: in an era where interest rates on idling cash are averaging one percent, Apple is using its cash to get 15-20 percent discounts on parts. That’s exactly like earning a 15-20 percent interest rate.

Apple not only gets the lowest prices, they also get the most reliable supply. I won’t call it anti-trust, but I think it is fair to say Apple has an effective consumption-side monopoly for certain mobile components.

IBM tried to do exactly this back in the days of the IBM PC-AT when Big Blue bought Intel’s entire supply of 80286 chips — a bold move that backfired when Intel fell back on second source agreements and quickly doubled production.  IBM was stuck using the same 8 MHz 286 chips for nearly three years to blow through its supply, while Compaq, Dell and others jumped to the 386.  That’s when IBM lost its PC market leadership position, compounding it by requiring OS/2 to work on those stockpiled 286 chips, too.

Apple isn’t IBM.  Cupertino’s purchasing bets are bigger than IBM ever imagined and they’ve paid-off better, too, with Apple keeping an eye on the construction plans of its suppliers so it doesn’t make an IBM-type mistake.

For most Silicon Valley companies, then, holding lots of cash may increase financial flexibility and lower or eliminate short-term borrowing costs, but they also are a persistent drag on earnings just because there’s no way companies can make as much return on their cash holdings as they could make by rolling that money back into their business.  Only Apple is a clear exception to this rule.  Only Apple plays the game big and bold enough to never lose.  But to do that you have to have a bigger pot than the house, or in this case the government.

Who will buy Hulu, the IPTV streaming service and why should we care? I’m not sure I do care, now that Lie to Me has been canceled, but in case you are an American who feels the future of series television is important, here’s what I think is going on.

The Wall $treet Journal says Apple is thinking of making a bid for Hulu and Seattlepi.com says Microsoft’s is no longer interested, which leaves Amazon, Apple, Google, Yahoo, and any unnamed parties. I can’t think of any unnamed parties, by the way, so I’m guessing one of these will walk with Hulu, which went into play a couple weeks ago following an unsolicited (and still unidentified) bid.

Of course the three big network owners of Hulu will guarantee five years of continued program access with the first two years exclusive. That’s because they have no money in Hulu and each stands to walk with $600+ million from the sale, but only if there is a sale. Without such an exclusivity period there will be no sale and no $600+ million. None of these networks can buy out the others for antitrust reasons so the “networks might balk” story is just to sell newspapers (or electrons). Hulu will be sold.

It will be interesting to see how much Hulu will cost the winner, though. The company appears to be managing the press brilliantly to generate buzz. Any of the interested parties could do the deal all in cash, no problem. But who will end up with it? Here’s my score sheet.

Apple will buy Hulu if the price is right, but how much higher than $2 Billion they will go? I suspect Apple may actually be just meddling here, trying to make it more expensive for the eventual winner.

Microsoft has already telegraphed that $2 billion is too high, but since they probably can’t afford to not be in this business that suggests they will put some smaller amount (still $1+ billion) into content deals.

For that matter, all the losers will be looking for content, so I’d say $4+ billion is up for grabs in Hollywood beyond Hulu. New cars all around!

Amazon just did a content deal with CBS (so did Netflix — remember them?) so buying Hulu would round out their content for Amazon Prime, likely bringing-in millions more customer accounts. But there, too, it depends on what is Amazon CEO Jeff Bezos’ price target. He and Jobs are very similar in that they will have a maximum in mind and probably won’t go higher.

My gut suggests that the auction will finally come down to Google and Yahoo, if Google can get this past the feds despite its dominant position with YouTube. Yahoo CEO Carol Bartz probably sees this as her best chance to avoid being fired so I think she’ll bid high. I suspect, too, that Yahoo’s unsolicited interest was what started Hulu in play in the first place, though that’s just a guess on my part.

Buying Hulu could also be Bartz’ undoing, though, because she could blow half her cash or more (I suspect Google will go to $3 billion and Yahoo will beat that) and then find herself in a position where she can’t make a profit on her purchase, especially since she’ll have to do her own CBS deal at that point and CBS CEO Les Moonves won’t make that cheap. Amazon reportedly paid $100+ million to CBS, but Moonves will try to hold out for closer to the $600+ million he would have received had CBS been a Hulu owner, seeing anything less as charity.

The fascinating scenario here, of course, is that Yahoo way overpays, damaging itself fatally in the process and ends up being acquired by one of the others, probably Microsoft.

No wonder Ballmer pulled out of the bidding, he’s playing the long game.

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A good friend of mine pointed out the money phrase from Steve Jobs at this week’s iPad 2 introduction: “This is worth repeating. It’s in Apple’s DNA that technology is not enough. It’s tech married with the liberal arts and the humanities. Nowhere is that more true than in the post-PC products. Our competitors are looking at this like it’s the next PC market. That is not the right approach to this. These are post-PC devices that need to be easier to use than a PC, more intuitive.”

It’s an insightful even brilliant statement that’s 100 percent true. Then why doesn’t Steve Jobs practice what he preaches?

Jobs and Apple definitely have a better handle on the future of mobile devices and interfaces right now than any other CEO and company and are bold enough to come right out and say it: “Our competitors are looking at this like it’s the next PC market. That is not the right approach to this.” It’s a gutsy move, telling your competitors precisely what they are doing wrong to compete.

But then we come to this very rational critique of the iPad 2 from a blogger named Allahpundit who points out that despite the iPad 2 being thinner and faster and just as cheap as the original iPad with two new cameras to boot, it is still a pain in the ass to cut and paste text with one.

Why, given Steve Jobs’s boast that these are post-PC devices that need to be easier to use than a PC, would he build a device that is in this one important area is clearly harder to use than even a Windows PC?

It’s not like Apple couldn’t come up with clever gestures for cut and paste. It’s that they chose not to. And they chose not to because Steve is, well, a little bit of a hypocrite here.

For all Steve’s bold talk, Apple still relies on Mac sales for a quarter of its revenue — about $15 billion per year — which is a lot of revenue, so they have deliberately kept some things like production cutting and pasting text easier to do on a Mac than on an iPad 2.

Surely they have those gestures ready and waiting to go. Waiting for a dip in Mac sales or a blip in cloud capability or just for some other company to finally match or beat the iPad, forcing Apple to reveal these hidden capabilities and blow-up the MacBook line in an act of self-defense and technical imolation.

Yet until one of those precursor events happens Steve seems determined to have it both ways.

Nothing new there.

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President Obama last night had dinner at John Doerr’s house in Silicon Valley and for some reason I wasn’t invited. I wish I had been. Can you imagine Obama making small talk with Steve Jobs? This is an instance where Steve’s lack of an internal censor probably served the event well, or at least I hope it did, because when it comes to the dinner’s goal of stimulating innovation in America every Administration from any political party needs all the help it can get. I should know, because I’ve been working a bit with those White House would-be innovators, trying to get them in the right groove.

Remember Startup America is the name of the TV series on tech startups I’ve been making for most of the last year. Startup America is also the name of the recently-announced White House initiative on entrepreneurship. Interesting coincidence or brand hijacking?

It was, of course, just an interesting coincidence but I used it as an excuse to accuse them of brand hijacking. Wouldn’t you? So we’re literally moving toward the White House getting an IP license from me. I am not making this up. And it also means they are listening ever so slightly to my advice, because my Startup America is 14 months older than their Startup America and we’ve learned many lessons along the way.

So if you’ve been wondering what’s up with the Startup Tour and Startup America, this is the first of at least three announcements coming this week and next that will explain the next phases for both. Today’s announcement is that I am advising the Obama Administration on this topic. Weird, eh?

Here’s the sort of advice I am giving. There’s a great temptation if you have dinner at John Doerr’s very nice house to buy-in to the Silicon Valley innovation model — to attempt to replicate that in other parts of the country possibly with government assistance. But having visited tech startups in 20 states last year I can say with some conviction that it often won’t work, because the Silicon Valley startup ecosystem isn’t the American startup ecosystem.

This is the Silicon Valley innovation model: 1) get a bunch of really smart people and think up ideas for technology startups; 2) choose a dozen of the best ideas and throw some significant money at them for 6-12 months, and; 3) at the end of a year throw even more money at the two surviving ideas knowing that one of those will also be dead before its second birthday. Brainstorming–seed funding–A-round–success, and of course bloodshed along the way — simple as that.

This model works well in Silicon Valley, where everyone knows people who have worked for eight different companies in the last eight years. But for most of America the model doesn’t work well at all. That’s for three reasons:

1) There often isn’t enough technical talent or if there is, that talent is more risk-averse (or less cocky) than the Silicon Valley crowd.

2) There definitely isn’t enough risk capital outside hotspots like Silicon Valley, Boston or Austin or a few other places that are comfortable with a 90+ percent failure rate. Try that argument down at the bank.

3) The strongest difference between Silicon Valley and real America when it comes to tech startups is how the original idea comes to be. In Silicon Valley you decide to start a company then look for ideas. In real America you have an idea that eventually becomes a company.

That third difference may not sound like much but it is critical. Silicon Valley is a boomtown where everyone is looking for the next vein of gold. In the real America founders more often come up simply with ideas they love that morph over time into products. But since no accelerated, laser-zapped, steroid-boosted in vitro fertilization is involved, these ideas take longer to mature than they would be allowed in Silicon Valley, where success is measured in months, not years.

This doesn’t make provincial ideas any worse than Silicon Valley ideas; in fact they are often better. Nor does it mean those ideas go through more or less evolutionary steps on their way to eventual product maturity. Ideas are ideas. But not all ideas are also dreams, and most startup founders outside Silicon Valley are living the dream that is their technology, not the dream that is their startup.

The result is that companies outside of Silicon Valley start slower and grow both slower and more cheaply. Our Startup America companies were an average of six years old and had gone through in those six years an average of $40,000. Time is money, think about it. To do the same job in one year would have cost $240,000. To do it in six months would have cost $480,000. That’s Silicon Valley kind of money, but six-year, $40,000 money is Uncle Phil money.

So here’s the advice President Obama definitely didn’t get last night at John Doerr’s house. Replicating Silicon Valley in other places usually won’t work. Accelerating innovation isn’t the same as nurturing innovation. Debt financing is close to useless for startups (only ONE Startup America company used debt financing that wasn’t a home equity loan or credit cards). Friends-and-family money is key so find ways to encourage it, though that may not really make a difference. Slow nurturing builds good products, too, so don’t assume that a five year-old startup is a failure or penalize it simply for being five years old.

People who are doing what they love are generally doing good work.

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When John Sculley forced Steve Jobs out of Apple back in 1985, the former PepsiCo marketing executive very quickly produced dramatic improvements in Apple’s profitability.  Apple wasn’t losing money before, but Sculley improved the bottom line by about $200 million (a lot in those days) simply by cutting all of Steve Jobs’s pet projects that appeared to have poor prospects. Sculley raised profits by cutting expenses not by increasing sales. Expect the same thing at Nokia where, ignoring for the moment the “enormous payments” Microsoft will be making according to Nokia CEO Stephen Elop, the company can probably cut its software development budget to near-zero, saving $1 billion or more and increasing profits by that amount.

It’s one of those moments like when Cortez burned his ships to concentrate his conquistadores fully on their job of subjugating the Yucatan. Elop is burning his software development capability, betting on Microsoft. Sure, Symbian will be around for awhile in Nokia products, but two years from now it should be gone. And in that interim period, between lower development costs and Microsoft subsidies, Nokia will look better to investors even if its smart phone market share continues to fall.

That’s why Nokia did the deal with Microsoft, which will be assuming the burden of all that software development and paying Nokia for the privilege. It’s a short-term play that makes perfect sense in an industry where CEOs last an average of four years. Stephen Elop’s four years are now fairly certain, his golden parachute packed and ready.

Two years ago such a move would have been impossible in Europe simply because of employment laws making it very difficult to dump workers. But the current European financial crisis has changed that somewhat and Nokia’s obligations probably aren’t as onerous as they once would have been. Austerity is the thing these days in Northern Europe and almost everywhere else.

Now you might think I’d be against all this but I am not. Compared to Android and iOS, Symbian was, in a word, crap. We can have geeky arguments about it all day but the market has spoken loudly and I am right. Elop was right to make a platform change and righter still to do it this way, primarily at Microsoft’s expense. Nokia had to get out from under its bad software culture and this was by far the most elegant way to do it.

But having said that, I still don’t think it will work.

Trading Symbian for Windows Phone 7 with a $100 bill attached is still trading the worst smart phone platform for maybe the third best. With Blackberry retooling and coming up fast and HP’s WebOS as a dark horse backed by massive manufacturing capability, it isn’t at all clear that Nokia has selected a winner. Which is why I have some advice for Stephen Elop.

Nokia should put some of that Microsoft money into emulating Google’s Android development, where 25 programmers humbled the 1000+ working on Symbian. Hire a Bob Lee (or heck, hire Bob Lee), set up a small development office somewhere in the USA, and spend $5 million per year aiming at mobile life after Microsoft. By tying hardware and software as Apple has done with the iPhone and iPad (and Google, by definition, can’t do) Nokia can head Apple off at the pass with the equivalent of the iPhone 7, three years from now.

That’s what Nokia should do, but of course by then Elop will already by gone.