With the initial public offering of Apple Computers in December 1980, Steve Jobs became a multimillionaire – however, he possessed neither enough stock to lead Apple Computers alone nor to determine his own position within Apple. By the beginning of 1981, he actually found himself to be without management responsibility over any specific project. To Jef Raskin’s discomfort, he threw himself into the Macintosh project, which had not been taken really seriously by the Apple board of management at that time.
However, Steve Jobs knew what he wanted. He had seen the graphical user interface of the Xerox Alto at Xerox PARC. Instead of green letters on a dark background, white document windows with black text appeared – just like a sheet of paper. Several different fonts could be selected. The graphics board controlled individual pixels on the screen freely. By means of a mouse, a pointer could be moved on the screen in order to mark texts or issue commands. Files were represented by icons on a virtual desktop.
The Alto was not available on the market. For this experimental computer, the main memory alone would have cost about 7,000 dollars at the time. Jobs wanted a computer even better than the Alto – and also better than Apple’s Lisa. However, the new marvelous machine should cost only a fraction of the Lisa’s price, which was about 12,000 dollars, inclusive of external hard disk.
Pirate flag above the Mac developers’ building “Bandley III”
Within Apple, Jobs gathered a small, conniving team – and he did not care for other projects in the company. Andy Hertzfeld, one of the most important software designers in the Macintosh developers team, remembers:
Steve Jobs kind of came bopping by my cubicle saying OK you’re working on the Mac now. And I said well I have to finish up this Apple 2 stuff I’m doing here. No you don’t that stinks that’s not going to amount to anything you gotta start now. And I said well just give me a few days to finish and he said no and what he did was he pulled the plug on my Apple 2 that I was programming just losing, losing the code I’m working on and start taking my computer and walking away with it and what could I do but follow him out to his car cause he had my machine he plopped it down in the trunk and drove me over to this remote building, took the computer out, walked upstairs, plopped it down on a desk, well you’re working on the Mac now. While Jobs pursued his MacMission he needed a more orthodox chief executive to run the company. A respectable face who could sell to corporate America. He chose Pepsi-Cola executive John Sculley. Sculley refused – leave Pepsi for a 4 year old company that had been set up in a garage! Are you serious?! But it was hard saying no to Steve Jobs.
The Macintosh Pirates
Above the roof of “Bandley III”, a pirate flag with the Apple symbol as eye patch was waving – and on deck of the virtual pirate ship, Steve Jobs was standing as a man who wanted to prove it to them all. Jobs’ first victim was Jef Raskin, who had fought against the application of a mouse and instead preferred a pen or a joystick. After Jobs had relieved his opponent of the responsibility for the software, Raskin gave in exasperatedly and left Apple Computers in March 1982. In retrospect, Raskin can claim that he was the first at Apple to have presented the vision of an inexpensive, easy to handle computer for the masses. Yet in order to keep “his” Macintosh below the price limit of 1,500 dollars, Raskin also wanted to make technical compromises which would have put at risk the Mac’s success. Thus, for instance, he insisted on limiting the main memory to a tiny 64 kilobytes. Jobs accomplished 128 kilobytes – and afterwards, even this space was actually far too tight for the system programmers.
Raskin did not particularly support the innovations the Lisa team had picked up in the Xerox PARC and therefore disapproved of the change to the more capable 68000 processor, which was included in the Lisa as well. It is hardly imaginable what would have become of the Mac if Raskin had asserted his extreme parsimony and his resistance to the mouse. After the internal disputes had been settled, the Mac team now fully concentrated on the in-house competition against the far larger Lisa developing team. Beforehand, Jobs had enticed away from the Lisa team ingenious programmers such as Bill Atkinson and Steve Capps.
Love and Hate
As a project manager, Steve Jobs had been highly controversial not only within Apple. “He’s also obnoxious and this comes from his high standards. He has extremely high standards and he has no patience with people who don’t either share those standards or perform to them,“ Bob Metcalfe remembers. He is the inventor of the networking standard Ethernet, who had worked as a researcher in the neighboring research institute Xerox PARC at that time. “He’s also obnoxious and this comes from his high standards. He has extremely high standards and he has no patience with people who don’t either share those standards or perform to them.” However, Metcalfe still thinks a lot of Jobs as he had made the vision created in the Xerox PARC become reality. “Steve Jobs is on my eternal heroes list, there’s nothing he can ever do to get off it.”
Larry Tessler and Bob Metcalfe about Steve Jobs (quoted from: Triumph of the Nerds)
The respect for Jobs is also shared by Andy Hertzfeld, who had written the Mac’s kernel in the Macintosh ROM, although he was sometimes afflicted with his boss’s tantrums: – quotation – Kenyon set to work again and shortened the booting process by further three seconds.
In the internal competition at Apple over whether the Lisa or the Macintosh would be finished first, Jobs got the short end of the stick. He lost a personal 5,000 dollar bet against the Lisa team leader John Couch when the Apple business computer was launched in January 1983 – at least one year previous to the Macintosh. However, the Lisa computer soon proved to be a huge flop. With a price of 10,000 dollars (exclusive of hard disk), it was far too expensive;the graphical user interface devoured Lisa’s power such that the computer did not work particularly briskly; and it lacked the necessary programs to induce the business world to buy the Lisa in large numbers. Moreover, the newly established distribution team could hardly resort to any experience in handling Corporate America.
The Apple Macintosh had not been a success from the outset. The hardware was not designed particularly generously for the requirements of a graphical user interface. Especially the main memory had been calculated rather tightly. Moreover, there was no hard disk for the Mac at that time. In addition, there was a lack of appropriate software.
The Mac lacked the applications that dragged the Charlie Chaplin figure across the screen box by box in the IBM’s advertising spot for the PC. Therefore, Guy Kawasaki and other “Software Evangelists” of Apple made an effort to convince the developers of other software companies to write programs for the Mac. The Mac’s ROM, which had been calculated far too narrowly at 128 kilobytes, did not make this a simple task. Not until the “Fat Mac” with 512 kilobytes was launched one year after the first Macintosh had this narrow bottleneck been removed.
The problem came to a head when by the beginning of 1985, the Macs that had not found purchasers during the Christmas sales of 1984 were piling up in storage. Apple had to publish the first quarterly loss in the company’s history and release a fifth of the staff. During a marathon meeting on April 10 and 11, 1985, Apple’s CEO John Sculley demanded to have Steve Jobs relieved of his position as an Apple vice president and general manager of the Macintosh department.
Steve Jobs and John Sculley
According to Sculley’s wishes, Steve Jobs was to represent the company externally as a new Apple chairman without influencing the core business. As Jobs got wind of these plans to deprive him of his power, he tried to arrange a coup against Sculley on the Apple board. Sculley told the board: “I’m asking Steve to step down and you can back me on it and then I take responsibility for running the company, or we can do nothing and you’re going to find yourselves a new CEO.” The majority of the board backed the ex-Pepsi man and turned away from Steve Jobs.
On May 31, 1985, Jobs lost his responsibilities and was shuffled off to the chairman position. In September, the Apple co-founder left the company with a few people in order to found NeXT Computer. “I feel like somebody just punched me in the stomach and knocked all my wind out. I’m only 30 years old and I want to have a chance to continue creating things. I know I’ve got at least one more great computer in me. And Apple is not going to give me a chance to do that,” Jobs wrote to Mike Markkula on parting. Ten years later, Steve Jobs also commented on his disempowerment with bitterness in the TV documentary “Nerds in the Valley” (1996): Jobs:
What can I say? I hired the wrong guy. – Question: That was Sculley?
Jobs: Yeah and he destroyed everything I spent ten years working for. Starting with me but that wasn’t the saddest part. I would have gladly left Apple if Apple would have turned out like I wanted it to.
Apple’s Heart and Soul
Andy Hertzfeld, one of the Macintosh’s fathers, later recalled the events:
The conflict came to a head at the April 10th board meeting. The board thought they could convince Steve to transition back to a product visionary role, but instead he went on the attack and lobbied for Sculley’s removal. After long wrenching discussions with both of them, and extending the meeting to the following day, the board decided in favor of John, instructing him to reorganize the Macintosh division, stripping Steve of all authority. Steve would remain the chairman of Apple, but for the time being, no operating role was defined for him. John didn’t want to implement the reorganization immediately, because he still thought that he could reconcile with Steve, and get him to buy into the changes, achieving a smooth transition with his blessing. But after a brief period of depressed cooperation, Steve started attacking John again, behind the scenes in a variety of ways. I won’t go into the details here, but eventually John had to remove Steve from his management role in the Macintosh division involuntarily. Apple announced Steve’s removal, along with the first quarterly loss in their history as well as significant layoffs, on Friday, May 31, 1985, Fridays being the traditional time for companies to announce bad news. It was surely one of the lowest points of Apple history.
Andy Hertzfeld
Hertzfeld mourned for Steve Jobs openly: “Apple never recovered from losing Steve. Steve was the heart and soul and driving force. It would be quite a different place today. They lost their soul.” In contrast, Larry Tessler, who had come to Apple from Xerox, refers to mixed reactions of the Apple staff: “People in the company had very mixed feelings about it. Everyone had been terrorized by Steve Jobs at some point or another and so there was a certain relief that the terrorist had gone but on the other hand I think there was an incredible respect for Steve Jobs by the very same people and we were all very worried – what would happen to this company without the visionary, without the founder without the charisma…”
It is an irony of computer history that, according to industry experts, the Macintosh’s breakthrough on the market was becoming apparent exactly at the time of Jobs’ disempowerment due to the Mac’s poor sales volume. The convincing the “Macintosh Evangelists” were doing gradually began to show results.
Screenshot of PageMaker 1.0 (french version)
New software companies such as Aldus had made an effort to become acquainted with the details of the “Macintosh Toolbox” and written the first desktop publishing programs, such as PageMaker. In combination with the Apple LaserWriter and the page description standard PostScript (designed by Adobe), PageMaker turned the technology of the publishing sector inside out; it did even more when the Mac Plus with 512 kilobytes of ROM entered the market by the beginning of 1986. The Mac Plus even featured cursor keys on its keyboard, which had been resolutely rejected by Steve Jobs for the first Mac, since he intended to force the users to accept the mouse as an input device.
And it is also an irony of computer history that Jobs later saved the struggling Apple Computer company. NeXT’s subsequent 1997 buyout by Apple brought Jobs back to the company he co-founded, and he has served as its CEO since then.
By means of the Macintosh, the Apple management planned to prevent the absolute predominance of IBM. Thereby, they all had underestimated Bill Gates and Microsoft.
Apple boss John Sculley’s marketing strategy for the launch of the Macintosh was obvious. The former Pepsi manager, who had been brought to Apple by Steve Jobs, intended to arrange a duel between IBM and Apple, black vs. white, with Apple playing the role of the underdog. Sculley wrote in his book Odyssey:
So we needed a campaign that would focus on a two-horse race to leverage off of Apple’s underdog status. Dozens of other computer companies were coming out with products and I was afraid we were going to get lost in the crowd. If we could create a two-horse race between us and IBM, we might be able to convince people that there are really only two computer companies competing in the marketplace. In any large consumer industry, few people remember the third- or fourth-largest competitor.
In the fight against competitors such as Atari, Commodore, Sinclair and Amstrad, the Apple strategy paid off well. But Sculley, as well as Steve Jobs, had completely underestimated that Microsoft, being an ally from the outset, would, with the aid of Apple, develop into a dominant power of the PC industry and even dwarf IBM.
Bill Gates and Paul Allen had founded Microsoft as a small software company in Albuquerque (New Mexico) in 1975 and developed the programming language BASIC for the legendary computer MITS Altair in collaboration with other co-workers. Due to fortunate circumstances, Microsoft landed the order from IBM to deliver not only BASIC, but also the operating system for the first IBM PC in 1980. In the negotiation phase, the then leading operating system manufacturer Digital Research (CP/M) did not want to engage in page-filling adhesion contracts from IBM – and thus lost this gigantic deal.
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Though Microsoft did not have any operating system at that time, this did not prevent Bill Gates and his companion Steve Ballmer from playing for high stakes while facing IBM. From their neighboring software shack Seattle Computers (in the mean time, Microsoft had moved to the northwest of the USA) they bought all rights for QDOS (Quick and Dirty Operating System) for no less than 50,000 dollars in July 1981 and renamed it as MS-DOS. Gates had been clever enough at that time not to have all rights to the system negotiated away by the IBM crew and was therefore able to win clone companies such as Compaq as customers later.
Microsoft then provided their BASIC for the Apple II as well. Therefore, Steve Jobs and Bill Gates constantly ran into each other at that time. “Even before we finished our work on the IBM PC, Steve Jobs came and talked about what he wanted to do, what he thought he could do, sort of a Lisa but cheaper. We said boy, we’d love to help out”, Gates remembers. “The Lisa had all its own applications, but of course they required a lot of memory, ah, and we thought we could do better, and so Steve signed a deal with us to actually provide bundled applications for the first Mac, and so we were big believers in the Mac and what Steve was doing there.”
Bill Gates praising the Apple Macintosh by its launch in January 1984
Apple urgently needed software for the Mac, as there did not yet exist any program for the new system except for their in-house products MacWrite and MacPaint. Gates promised to have the programs Chart and File written for the Mac in addition to the spreadsheet program Excel. Steve Jobs appreciated the risk Microsoft took, but was not content with the first results though. “Most people don’t remember, but until the Mac, Microsoft was not in the applications business… it was dominated by Lotus. And Microsoft took a big gamble to write for the Mac.”
Apple still could have coped well with having given Microsoft’s new application business a leg up. However, Bill Gates had tasted blood in the Macintosh project. Jeff Raikes, who was responsible for the Office business at Microsoft until early 2008, reviews: “And so we got started in early 1982 on our Macintosh software effort and I think at that point in time, you know, it really clicked with Bill that, you know, graphic user interface was going to be the way, the way of the future. But while Bill was having his own GUI revelation, Jobs believed that Apple’s true enemy was IBM.”
Quote of the movie: “Pirates of Silicon Valley” – Microsoft steals from Apple
However, it was not until November 1985 that Microsoft introduced the first version 1.01 of Windows, which was two years after Gates had announced Windows in his first Comdex keynote at the Fall 1983 Comdex in Las Vegas. The system was based on DOS and was incredibly slow, but it reminded one of the Macintosh GUI in some features. In order to prevent Apple from taking legal action, Gates put the screws on Apple boss Sculley. His message was: As soon as Apple sends out the lawyers, Microsoft will immediately stop the development of Word and Excel for the Mac. Since Apple was depending on the Microsoft applications, Sculley licensed some of the Mac technologies to Microsoft.
As Microsoft went public with the next large version leap of Windows 2.03 at the beginning of 1988, Sculley tried to pull the ripcord and sued Microsoft and Hewlett-Packard for copyright infringement on March 17, 1988. John Sculley had been in a difficult situation, particularly as he had engaged in vague formulations in the contract with Microsoft in 1985, which gave great leeway to Gates and his lot. Moreover, he knew that his chances to win an action against Microsoft had been, purely from a legal viewpoint, not particularly good: “The look and feel, which is how it looks, the experience of using it, was not patentable, but it was copyrightable, but there was no precedent law. This was going to be a precedent setting case.”
Parody of an advertising spot for Windows featuring Steve Ballmer
Bill Gates recalls also reluctant this time.: “But it was a period of five years where, Microsoft er, our whole strategy would have been ruined because Windows was very important to us. (…) We assumed that the lawyers, the judges would all come to the right conclusion which eventually they did.” Sculley: “And Apple lost. But in that period of about six years that this case was going on it may have lulled us into a bit of complacency thinking that we were going to be insulated, you know, from the Windows attack.”
The introduction of Windows 3.1 in 1992 brought Microsoft the breakthrough in the “GUI war.” The system lacked the elegance and usability of the Macintosh system 7.0, but Windows appeared good enough to most PC users. With the help of Windows 95, which had been introduced with gigantic effort on August 24, 1995, Microsoft caught up closer to the Mac and in some aspects even appeared more progressive than the Mac OS, which had become dated in the meantime.
Steve Jobs, who, as the head of NeXT, had observed the advance of Windows from a distance, did not have any kind words for Bill Gates at the launch of Windows 95:
The only problem with Microsoft is they just have no taste, they have absolutely no taste, and what that means is – I don’t mean that in a small way, I mean that in a big way. In the sense that they don’t think of original ideas and they don’t bring much culture into their product, and you say why is that important – well you know proportionally spaced fonts come from type setting and beautiful books, that’s where one gets the idea – if it weren’t for the Mac, they would never have that in their products and so I guess I am saddened, not by Microsoft’s success – I have no problem with their success, they’ve earned their success for the most part. I have a problem with the fact that they just make really third rate products.
It is claimed that Jobs has apologized to Bill Gates for this remark later.
Steve Jobs about Microsoft (1995)
The relationship between Apple and Microsoft – and thus also the relationship between Steve Jobs and Bill Gates – did not get back to normal before the summer of 1997, when Steve Jobs had returned to Apple and engaged in the support of Microsoft in order to make the troubled company profitable again.
Bill Gates on the video screen at the MacWorld Expo 1997 in Boston
Many faithful Apple fans still remember with horror the moment when Steve Jobs announced the former archrival very pragmatically as the knight in shining armor at the MacWorld Expo 1997 in Boston with Bill Gates appearing on an oversized video screen just like “Big Brother.” Introducing Gates, Jobs said: “”We have to let go of the notion that in order to for Apple to win, Microsoft has to lose. Relationships that are destructive don’t help anybody. The era of setting this up as a competition between Apple and Microsoft is over.”
Microsoft invested 150 million dollars in 150,000 Apple stocks and, according to certain rumors, paid further 100 million dollars for copyright infringement during the past few years. At the same time, Gates obliged himself to continue the development of the Internet Explorer and Microsoft Office for the Mac for the following five years. Gates drew hisses from the audience of Apple faithful. The crowd also groaned when Steve Jobs said Apple would make Microsoft’s Internet Explorer the default browser for viewing the World Wide Web on Macintosh computers. That development was a blow to Netscape Communications Corp., which made a more popular competing browser and lost later on in the famous “browser war” against Microsoft.
Apple CEO Steve Jobs introduced the first iPod seven years ago on 23 October 2001. He announced it as a Mac-compatible product with a 5 GB hard drive that put “1,000 songs in your pocket.” The software bundled with the first generation iPod was Macintosh-only, so Windows users had to use third-party software like ephPod or XPlay to manage their music.
It is quite funny to read the Cnet article by Ina Fried about this event and all the reactions of the experts:
IDC analyst Bryan Ma said Apple may take some heat for entering the consumer electronics market, which typically has lower profit margins than Apple gets from its computers. But, he added, the iPod could serve an important function: convincing people to buy a Mac instead of a PC.
“It’s another incentive for them that can convince people to buy a Mac,” Ma said.
The iPod does cost considerably more than the nearest competitor with a portable hard drive--the $249 6GB Nomad Jukebox from Creative Labs. But Ma said the iPod has significant advantages in terms of its size, battery life and anti-skip protection.
“They’ve totally polished…the product,” Ma said of Apple. “If I were an engineer at Creative Labs, I’d be scrambling.”
Technology Business Research analyst Tim Deal dinged the $399 price as “a little high.” But he noted that the iPod’s FireWire connectivity allows for faster song downloading than USB. The iPod also sports “a significant battery life and a fast recharge speed,” he said.
Deal also praised that fact that the iPod fits into Apple’s digital hub strategy. “However, I question the company’s ability to sell into a tight consumer market right now at the iPod’s current price.”
The iPod is another stab at Sony’s success in the consumer market, Deal noted.
“Clearly Apple is following Sony’s lead by integrating consumer electronics devices into its marketing strategy, but Apple lacks the richness of Sony’s product offering. And introducing new consumer products right now is risky, especially if they cannot be priced attractively,” Deal said.
Stephen Baker, an analyst at NPD Intelect, said that the iPod will likely stand out for its large storage capacity but predicted that the device may have trouble digging out a niche in the market.
The most expensive MP3 players that use flash memory sell for around $249 right now, with the average player selling for less. Many are also adding features for playing mini-CDs. Sonicblue’s Rio 600, for instance, sells for $199. It comes with 64MB of flash memory for storage. Apple’s new device has far more storage--enough for 50 hours of music--but it costs twice as much.
The iPod has “good features, but this is a pretty competitive category,” Baker said. “The question is whether people want that robust of a feature set with that high of a price.”
Ultimately it comes down to taste. It comes down to trying to expose yourself to the best things that humans have done and then try to bring those things in to what you’re doing. I mean Picasso had a saying he said good artists copy great artists steal. And we have always been shameless about stealing great ideas ehm and I think part of what made the Macintosh great was that the people working on it were musicians and poets and artists and zoologists and historians who also happened to be the best computer scientists in the world.
Moira Gunn interviews Steve Wozniak at the Intel Developer Forum 2008 in San Francisco about his career as an engineer, the early days at Apple and the difference between him and Steve Jobs.
Exceptionally detailed account of all of Job’s successes and failures
Cover iCon Steve Jobs
iCon Steve Jobs: The Greatest Second Act in the History of Business, retraces the dizzying path of successes and failures of entrepreneur and life long ambassador of technology Steve Jobs. Authors Jeffrey S. Young and William L. Simon produce a detailed account of Jobs’ life and work which begins with Jobs’ adoption and early childhood and ends with his (and Apple’s) success with the iPod and iTunes.
Young and Simon provide an in depth and seemingly unbiased thrashing and congratulatory depiction of what Steve Jobs has accomplished. There is a lot about Jobs covered in this book, and those with an interest in the man behind Apple, the I-pod, and Pixar will find this book fascinating.
Among Steve Jobs accomplishments:
Created the Apple II, making Apple the first computer giant
Funded Pixar against all logic becoming the largest animator in history
Made more money selling a failed company than he did in the original Apple IPO
Current largest stockholder in Disney, Pixar, and ABC
Negotiated the first music store with the music industry in the wake of a long list of heavy failures by major companies to accomplish the same (and paving the way for countless since)
Beat cancer
Despite a long list of failures, is back on top
Created 7 blockbuster movies in a row
Among his failures:
Pissed off enough co workers/employees to nearly fill a stadium.
Blew a chance to develop the windows system for the PC – paving the way for Microsoft.
Wasted more money on failed projects than any computer company in history.
I had written a summary after I read the book that provides a full overview of the entire account. For those already interested in the book, I suggest reading the book instead of finishing my review. For those seeking a summarization of the content of the book, the rest of my review is for you.
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Apple Founders Steve Wozniak and Steve Jobs
Steve was essentially the muscle early on behind his startup, where the other Steve (Steve “Woz” Wozniak) was the schematic genius. Jobs really couldn’t build a schematic with the complexity that Woz could, but Woz could not convince, sell, market, raise money, or operate a business the way Jobs could. It was a perfect combination of skills. Early on they sold illegal boxes that permitted people to make free long distance calls. At that point, they realized there was money in developing their chips which up to that point had only been a hobby. They set out with no money to develop a computer, with Woz doing the designing and Jobs doing the business and sales. Jobs eventually sold 100 computers to a retail store, which when delivered would make them $25,000. They didn’t get paid until they delivered, so Jobs negotiated to get all the supplies on credit using the agreement he had with the store as collateral. This was the start of Apple, and quite smart money management considering Jobs was still a teenager with long hippie hair and wore only jeans and t-shirts.
Apple was selling a lot of basic kits, but nothing of any great magnitude. With Woz being the brains behind the design of the actual computers, Jobs then took it up a notch. He would go to computer fairs all the time and he began to recognize what people were becoming impressed with. Most of the buyers of computers were what he considered computer geeks who had tech knowledge, so they designed the Apple I to suit them. Jobs recognized that these guys liked to get into the circuitry and see what was going on, so he had Woz design all the wiring in very organized straight lines, as opposed to soldering wires haphazardly, which was common at the time. It was the right call, and they sold enough circuit boards to get the Apple name out there. Next they designed the Apple II, based on Jobs view of what it would take to get into homes. For the early 80′s, the Apple II was such a hit that the company went public and Jobs was worth $300 million by age 24.
At this point, Jobs could do no wrong. Things would change however. He was a visionary in one major way; he focused all his energy on what consumers wanted. This led to his products being known for their quality and design…something Apple is still known for to this day. The problem was that this often times took the focus away from budgeting, producing some fairly unrealistic costs. Apple eventually would put out products that were much better than anything out there but were not priced for the market they aimed at, thus becoming failures. This was evident in the next two huge leaps Apple made at Job’s direction. He was so shrewd that he made a deal with Xerox to view what they were doing behind closed doors in exchange for some big discounts on services Apple was working on for Xerox (Xerox was also an investor/owner). What they discovered was a user interface that inspired Jobs to come up with what we now know today as windows and a mouse. This was revolutionary.
Apple Lisa
Apple went ahead with a windows style computer…two of them. The first, the Lisa, was the beginning of problems with Jobs. He was a visionary, but he also was at times a complete disaster when dealing with people. He was so convinced that what he was working on was the future of computers (which in hindsight is interesting) and thus refused to accept anyone else’s opinion about anything. This resulted in two revolutionary computers being developed, and two total flops. The Lisa had a sales price of $10,000 and never sold. The Macintosh, the computer that is still revered as the most revolutionary breakthrough in computers, although a big seller, never sold what it needed to live up to its reputation as a smashing success. Essentially, the computer was viewed by the public as the best thing since sliced bread, but the cost prevented it from outselling more than IBM PC’s.
Job’s had been spot on about what the computer meant to Apple and the computer industry, but as a result had totally blew the cost analysis of what it would take to become profitable. At this point, people in Apple disagreed so vehemently with him that the board was split about what to do to, and he was eventually voted out. This was the same board of course that was 100% against his view on using the Superbowl commercial Jobs liked to much to present the Mac, which is still the most famous SB commercial ever. Again, Jobs was right, but his total inability to give any focus to cost analysis or people skills got him ousted.
Jobs then went on to start Next. At this point, his net worth was about $90 million (because Apple stock had dropped). He cashed out and used it to fund Next and eventually to buy Pixar, a failing computer company trying to sell computers for artistic design. Both companies were trying to create new computers, something Jobs did at Apple. For years he poured money into both companies, with neither ever developing any notable profit. Early on at Next, IBM approached him about using their operating system to run on IBM computers. They had been negotiating and were coming to an agreement, but Jobs was so difficult to deal with that it caused significant delays. Eventually, the exec at IBM that was interested in Next’s system left the company, and IBM chose to look elsewhere. They went with Microsoft, and the rest of that story is history. This was an eye opener for Jobs, a lesson he would not easily forget.
Jobs eventually was finally willing to admit temporary defeat, and that neither company was producing a computer that was going to challenge on the market. Although Next sold hundreds of millions of dollars in revenue, this was nothing compared to what Apple and leading PC retailers were doing, so while considered a success to most, this was a failure for Jobs who was known as a revolutionary. Thus, Jobs stopped all computer sales in both companies and focused on software. This changed everything.
With Next, the company was in the brink of bankruptcy when Jobs decided he would make an effort to sell the software to Apple (the software what Mac OS X today is based on). When he went to Apple, he found them surprising receptive because the software was very good, and one of Job’s biggest strengths was presentation. Jobs identified that Apple was interested and took the negotiation up a notch. He said that if Apple was interested in the software, they would best be served by gaining all the technology and staff of the whole company, essentially they should buy Next. They did, and paid nearly $1 billion which put half a billion in profit right into Job’s pocket. This was remarkable considering the company didn’t have enough revenue to support itself. In terms of sales, this was among the greatest of all time. But it worked out for Apple as well, because that software was the future of the industry.
With Pixar, Jobs was putting up to a million a month into the company to keep it afloat. He was making so many cuts that the only thing left in the company was its division on animation with 3D graphics. Jobs eventually pressed Disney to do a movie for them, at Disney’s cost. This was the beginning of what became the most profitable venture in Job’s life. After creating Toy Story, they went on to develop seven blockbusters in a row, bringing the company public, and making Job’s far richer than Apple or Next ever did. He was finally a billionaire.
Pixar Blockbuster: Toy Story
In addition, the seven straight blockbusters gained Pixar so much revenue that they became the biggest studio (based on revenue) in Hollywood history, bigger than Paramount, bigger than Lucasfilm, bigger than them all. The bigger they got, the harder Job’s negotiated, and eventually they were more powerful than Disney in the animation department. Disney had no other choice left except to buy Pixar, making Jobs the current largest shareholder in all of Disney, Pixar, and ABC all at once. With that purchase, he became more powerful in the media industry than Ted Turner.
Back at Apple, they were facing serious issues ever since the failure of the Mac. Nothing had worked out, and they decided to try giving Jobs another shot. They never looked back. He cut so many Apple projects that he made the company profitable in six months. However, they were no longer a dominant in the market, taking a huge backseat to other major players. Job’s sold the Next software to Microsoft to get some profits back and Microsoft went on to use it to design Windows 95. Steve was so focused on quality though, that eventually Apple would regain its reputation. He focused on giving to schools, and got all the kids in the current generation using Macs…what would be a brilliant move for the future. Every school in California was given countless Macs and thus all the kids these days using are Macs…as are the teachers.
The hand held market was taking off in the early 2000′s and Job’s had to decide what direction to go. He made an unprecedented move by totally discontinuing all Apple’s interest in the hand help market. He said he just didn’t see a future in it and decided he wanted to go in the direction of music applications. At this point, there were many companies in music that were announcing failures. The invention of Napster had upset the music community so badly that it was near impossible to create anything profitable. Jobs had a different idea. He assessed what the music industry wanted and decided it was a good point to begin negotiations. The music industry feared losing its ability to make residuals because of theft and duplication. They were proposing some of the most ridiculous software which had chased out weaker negotiators, but not Jobs. The music industry wanted features such as monthly subscriptions but no downloads, or, downloads but only onto a single computer, or, downloads that would expire meaning music you bought disappeared after a while. Essentially, the concept of a music store with this type of guidelines would be a ridiculous venture. Steve took the initiative and went to all the top producers and many major labels and bands and presented his case for being able to offer the store with downloads that would have protection, meaning they could not be copied on to other computers or shared, but could be downloaded onto a single music player. In addition, if there was an attempt to transfer the music, it would automatically delete all music on that computer (a feature long gone). This was what Jobs had to doin order for the music industry to agree, and the only way he could offer this was to develop his own software with all these protections. Counter to what is believed to be manipulative marketing strategy to sell his I-pods, this was the reason I-tunes was designed in the limiting manner.
What would happen next changed the industry. Selling music for 99 cents each created billions for the industry, and the music industry eased up considerably as they saw internet sales as a viable way to sell their music and still make a lot of money on residuals. Essentially, Job’s had negotiated so hard with so many restrictions that initially the success of I-tunes meant that the music industry would lessen their desire to have so many restrictions, setting the table for many other music stores with FAR less restrictions.
The first iPod (2001)
The iPod sold on its own merit. Jobs had a goal to make a player that was the easiest to use on the market. If you had to hit more than three buttons to reach any song, it would not be acceptable. He designed the pinwheel approach and the iPod sold on its own accord, and became the bedrock of digital music. Job’s was also brilliant in negotiating music legends to do their advertisements for free. He convinced them that the advertisements were just as much an endorsement for them as it was for Apple, so they agreed. .
At this point, he has been spot on for many projects in a row. Surprisingly, it was Pixar that made Job’s the most money, but his comeback at Apple making it one of the major players and viable competition for Microsoft’s dominance may end up being the ultimate story.
Text by Todd Arone (Thanks for the kind permission)
The fact is that the world is divided between users of the Macintosh computer and users of MS-DOS compatible computers. I am firmly of the opinion that the Macintosh is Catholic and that DOS is Protestant. Indeed, the Macintosh is counter-reformist and has been influenced by the ratio studiorum of the Jesuits. It is cheerful, friendly, conciliatory; it tells the faithful how they must proceed step by step to reach -- if not the kingdom of Heaven -- the moment in which their document is printed. It is catechistic: The essence of revelation is dealt with via simple formulae and sumptuous icons. Everyone has a right to salvation.
The nature of the personal computer is simply not fully understood by companies like Apple (or anyone else for that matter). Apple makes the arrogant assumption of thinking that it knows what you want and need. It, unfortunately, leaves the “why” out of the equation — as in “why would I want this?” The Macintosh uses an experimental pointing device called a ‘mouse’. There is no evidence that people want to use these things. I dont want one of these new fangled devices.
www.mac-history.de
