Most of the dinner conversation was about education. Murdoch had just hired Joel Klein, the former chancellor of the New York City Department of Education, to start a digital curriculum division. Murdoch recalled that Jobs was somewhat dismissive of the idea that technology could transform education. But Jobs agreed with Murdoch that the paper textbook business would be blown away by digital learning materials.
In fact Jobs had his sights set on textbooks as the next business he wanted to transform. He believed it was an $8 billion a year industry ripe for digital destruction. He was also struck by the fact that many schools, for security reasons, don’t have lockers, so kids have to lug a heavy backpack around. “The iPad would solve that,” he said. His idea was to hire great textbook writers to create digital versions, and make them a feature of the iPad. In addition, he held meetings with the major publishers, such as Pearson Education, about partnering with Apple. “The process by which states certify textbooks is corrupt,” he said. “But if we can make the textbooks free, and they come with the iPad, then they don’t have to be certified. The crappy economy at the state level will last for a decade, and we can give them an opportunity to circumvent that whole process and save money.”
So it looks like Jobs was planning a little creative destruction. What this means is that he wanted to replace this $8 billion industry in the process of creating a $2 or $3 billion industry that also provided textbooks to students. Apple would of course have a solid chunk of the new industry, and anyone who depended on the old would either have to adapt or die.
And if that's how Steve Jobs was thinking years ago then Apple probably did find a way to pull this off. Whether it will work (and how it works) is a whole other question.