computers a practical tool for people who do not know how to write their
own programs. VisiCalc was very successful and contributed to the
skyrocketing sales of the Apple II.
The same year, marketing wizard Mike Markkula made another important
decision for Apple future growth. His idea was to create a new market in
the field of education and schools. The Apple Education Foundation was
established, which granted complete Apple systems equipped with learning
software to schools. This market should account for a major part of the
company's sales in the subsequent years, since Apple II soon became the
most popular machine for students.
Turbulences in the early 1980s
The successful stock sale provided Apple with an "extravagant amount of
capital ($1 billion)," which could be spent on developing the "company's
next computer generation.") This time, however, was quite turbulent for
Apple and was marked by crises and inner power struggles.
Designing on Apple III began in 1978. This computer was to be the successor
to Wozniak's Apple II, and was finally introduced to the public in 1981.
But it was not successful - a "disaster" or "fiasco,") since it had too
many faults and did not work properly. Nevertheless, the company was
without any financial troubles, since sales of the Apple II continued to
increase rapidly.
Concurrently, Steve Jobs became the company's visionary and thought about
the next computer generation. Such a visionary is a "person who has both
the vision and the willingness to put everything on the line, including his
career, to further that vision. Jobs became a perfect visionary and
convinced everyone around him with his vision.
In 1979, he and some other Apple employees visited the Xerox PARC (Palo
Alto Research Center), which was known for its advanced research in
computing. What they saw was revolutionary and had never appeared on any
personal computer before. The "environment of the screen was graphically
based" with icons (representing files or programs), with a mouse for
pointing and moving at them, windows and pull-down menus. Thus, the user
could "interact easily with the computer [...] without ever typing a single
letter.
Jobs was quite impressed and wanted to transfer this concept on a new PC
called Lisa, which was intended for the business world. Steve, however,
came up with ever-new ideas for the designers of this project. He "created
chaos because he would get an idea, start a project, then change his mind
two or three times, until people were doing a kind of random walk,
continually scrapping and starting over.")
Markkula and Scott were concerned about the further progress of Lisa. So,
in the course of a reorganization of the company, they decided to put John
Couch, a former software designer at HP, in a charge of the Lisa project.
Jobs was made chairman of the boa rd to represent Apple in the public.
However, Steve was shocked that he was taken the chance to fulfill his
vision, and relations between him and Scott deteriorated.
In February 1981, Wozniak, the technological brains behind the Apple I and
II, crashed his four-seated airplane. He hit his head badly and suffered
from a case of temporary amnesia. For some time, he retired from the
company and he finished his undergraduate degree at U.C. Berkeley.
The company had grown rapidly to 2,000 employees, and some of them had
joined Apple in the hope of a safe job. Setting an example, president Mike
Scott laid off 42 people on a day which came to be called "Black
Wednesday". Apple was shocked since some of t hose people seemed to have
been chosen arbitrarily. Scott's management style became more and more
disliked, and finally Mike Markkula decided to fire Scott and took over his
position until a new president was found.
The Lisa project
Meanwhile, Steve Jobs had discovered his new project. Soon he had taken
control of the Macintosh project, which had been started by Jeff Raskin in
1979 to design a small and handy personal computer. Steve dedicated all his
power to the Macintosh, which was to be a smaller and cheaper Lisa and was
to revolutionize the way of computing.
The company was now separated into three divisions, Apple II, Lisa and
Macintosh, which began competing against each other - particularly between
the latter two.
Lisa was developed by a number of experienced engineers and programmers who
had been recruited from HP, DEC and Xerox. This project was "the most
professional operation ever mounted at Apple") and was in contrast to
Steve's bunch of young hackers at Macintosh.
When Lisa was introduced to the public in August 1983, it was "ahead of its
time:") Lisa was easy to use because of the mouse, graphical interface and
windows, and had additional features such as multitasking. Though is was
first welcomed by the press as revolutionary, Lisa failed. One problem was
Steve's "lack of self-discipline:") When introducing Lisa he talked about
"his" Macintosh which would come out soon and with features like Lisa but
cost only a fraction ($2,000 instead of $10,000 for Lisa). The other
strategic mistake was the announcement that the two computers were not
compatible. So it is no wonder many people waited until the Macintosh would
come.
Finally, Lisa, which was intended for the business market at its price of
$10,000, lacked the ability to communicate with other computers - a fact
which was decisive for this market.
In the meantime, IBM had entered the personal computer market with its
first IBM PC in 1981, and already dominated a large part of it. Its first
PC "wasn't an earth-shattering machine technically") and was much harder to
use than the forthcoming Apple machines. But the fact that it was built by
IBM was enough to make it successful, and many software companies wrote
applications for it. Apple had bravely run a full-page ad saying "Welcome
IBM, Seriously", but it soon seemed to have lost the battle. Nevertheless,
IBM's entry brought Apple a lot of publicity as the only real competition
to Big Blue.
Thus, Lisa was not very successful and the second failure after the Apple
III. Still, Apple's sales increased - only because of the successful Apple
II. But the company needed a successor, and all its hopes were now placed
in the Macintosh.
The Macintosh revolution
The Macintosh was to fulfill Steve Jobs' vision of "computer to the
people". He created a personal computer, which was easy to use and at a low
cost. Steve thought of a tool for all people to broaden their mind - a
revolution towards the modern way of computing.
His Macintosh team was made up of teenagers and self-taught hackers -
"idiot savants, passionate plodders and inspired amateurs" - who "loved to
cut code.") They followed his vision and passionately designed this
outstanding computer. Jobs continuously drove his team to ever-greater
feats. He "kept thinking up crazier things, or more aggressive goals if
they were doing good, or if they were achieving their goals he wanted them
to do more. He couldn't just stop, he had to push you to the edge.") Steve
"gave impossible tasks, never acknowledging that they were impossible,") he
"doesn't have any boundaries, [...] because he has always been able to do
anything he wanted" due to "his early success.") As a consequence, people
usually worked 80 hours a week or more for their project.
Steve's most brilliant hackers were Andy Hertzfeld, Bill Atkinson and
Burrell Smith. The Macintosh was equipped with Motorola's 68000 CPU, a 3.5-
inch floppy disk drive, a detachable keyboard, and the amount of space it
took up from the desk should not be larger then a telephone book (this
meant a revolution in size). The computer was meant to be an open system,
and software applications were to be programmed by other companies, the
work of which was supported by a standard modular toolbox. This box made
sure that all applications were easy to use and appeared in a standardized
way. As well as other fundamental software the standard toolbox was
available from the computer's ROM (Read Only Memory).
Influenced by robotics assembly lines in Japan, Steve decided to "build the
most advanced assembly plant in the world") for the production of the
Macintosh. It was fully automated and the labor component accounted for
only one percent of the total cost.
Simultaneously to feverish efforts to finish the Macintosh, Apple succeeded
in finding a new president. Thanks to Steve's visionary powers of
persuasion, John Sculley, top manager at PepsiCo, finally agreed to join
Apple in April 1983.
The introduction of the Macintosh, which was Steve's revolutionary machine
to change the world, was dated to January 1984 and was to be accompanied by
a massive ad campaign in the media. Chiat/Day agency was asked to create a
commercial referring to the fact that 1984 was the year of Orwell's famous
novel. They produced the sixty-second ad, which was really exceptional, and
proposed running it only once - during the Super Bowl, the most watched
television event of the year.
It would be a million dollar minute, which was to capture public attention.
Macintosh was presented as a milestone product that would revolutionize the
way of computing, breaking IBM's, the "Big Brother's" dominance and
conformity it was about to establish by its IBM PCs.
When the commercial was broadcast, it reached 46.4 percent of America's
households. People were stunned about this outrageous ad, which was "unlike
anything they had seen before.") Suddenly, millions of people knew
something called Macintosh. The "commercial sparked widespread
controversy"), and won the highest advertising awards (more than 30).
The Macintosh (priced at $2,495) was a success from the start. Steve Jobs,
the visionary, compared it to Graham Bell's invention of the telephone a
hundred years ago. It was the "most approachable") and sophisticated
personal computer of the time, which ushered in a new era of easy computing
with a graphical interface and mouse. This feature would be taken over by
many software companies in the subsequent years, particularly by big
Microsoft, which developed Windows. This graphical user interface, which ha
s been established as the industry standard today, is quite similar to
Macintosh’s and makes possible the easy use of IBM PCs.
In the first 100 days, an industry record of more than 70,000 Macintosh
computers were shipped - a number that went up to the total of 250,000 sold
units by the end of the year.
John Sculley and Steve Jobs
Despite the astonishing figures of sold Macintosh computers and a boost in
sales to more than $1.5 billion in 1984 (up 55% from 1983),) Apple soon
fell into its most severe crisis, which would only be overcome by Sculley's
hard measures and led to the firing of its visionary Steve Jobs.
John Sculley had been vice-president at PepsiCo where he had successfully
made Pepsi the number one brand in the Cola Wars. Actually, there was no
reason for him, one of America's top managers with a secure and highly paid
position at PepsiCo, to join a bunch of young computer nerds at the West
coast. The reason why he finally agreed yet is Steve Jobs who impressed him
by his visionary ideas and asked him a question to which he did have no
answer: "Do you want to spend the rest of your life selling sugared water
or do you want a chance to change the world?") This question told him that
his "entire life was at a critical crossroads.")
Sculley and Jobs became close friends. They could "complete each other's
sentences" because they "were on the same wavelength.") The "dynamic duo",
as they were called in an issue of Business Week in October 1983, was
esteemed highly in the press and contributed significantly to Apple's good
reputation in the public at the time.
The downfall came soon, however, when their largely overestimated
expectations of the Macintosh sales could not be met. In their euphoria
about the revolutionary Mac, they thought they would ship 80,000 units by
the end of 1984, and had produced them in advance. When the reality brought
"merely" 20,000 with a falling tendency, the crisis was evident. Reasons
for that decline were that the Macintosh was not as "perfect" as expected -
with its 128 KByte RAM (they were then mounted to 512 KB) it was not
powerful enough, and there were hardly any software applications available
yet. Moreover, at the 1985 annual meeting, Jobs and Sculley neglected the
fact that 70 percent of the company's sales were still due to the Apple II,
whereas the Macintosh accounted for only 30 percent. Many sophisticated
Apple II designers were annoyed and left the company.
Steve Jobs became more and more angry and aggressive because of the
continuing drop in Macintosh sales (merely 2,500 units in March 1985).) He
blamed everyone for it, except for himself. Steve just did not see that the
"problem was with him.") In the end, he blamed even Sculley for the crisis
and wanted to lead the company himself. But this seemed impossible to
everyone else: "Steve was a big thinker, an inspirational motivator, but
not a day-to-day manager. What was sad was that he could not see it.")
When Sculley was informed that Jobs intended to remove him insidiously from
the company, he was quite concerned, but then decided to choose the
company's welfare over his friendship to its visionary co-founder.
Supported by Markkula and the other members of the board, in May 1985, he
dismissed Steve from his positions as the vice-president and as the leader
of the Macintosh division; Jobs did not have any managerial power anymore.
Steve Jobs was quite depressed and made trips to Europe and the Soviet
Union. Finally, he decided to leave Apple in December 1985, and sold all
his Apple shares. He took along some of the best employees to start his new
venture - NeXT. He intended to design a workstation for the university
sector. In February 1987, billionaire Ross Perot invested $20 million for
16 percent of NeXT. The new computer was introduced to the public in
October 1988, priced at $6,000.
At Apple, John Sculley took several measures to save the company, which had
become chaotic. In the course of a major reorganization he dismissed 1,200
employees (20% of the total workforce) and put the broken parts of the
company together to form one unified Apple. His restructuring saved a lot
of costs and consolidated the company.
1986 was Apple's worst year with a decline in net sales from $1.92 (1985)
to $1.90 billion. Gradually, Sculley could persuade software companies,
which had turned away from Apple, to write applications for the Macintosh.
Apple found its new market in desktop publishing (DTP), for which the
Macintosh was predestined. By the time, the Macintosh became a serious tool
for the business market and its sales increased again.
Until today, Apple has grown steadily and now reaches net sales of more
than $7 billion. Although the Macintosh lost the battle against Big Blue,
today it is a successful product and was sold over 2.5 million times
worldwide in 1992. Apple remains the second-biggest personal computer
manufacturer after IBM and has released innovative products such as
QuickTime, an easy to use multimedia software combining sound, video and
animation. Its latest development is Newton, a personal digital assistant
(PDA), which serves as an electronic notepad and "integrates advanced hand-
writing recognition, communication and data-management technologies.")
Apple today.
CUPERTINO, California—December 5, 2000—Apple® today announced that it has
experienced significantly slower than expected sales during October and
November, which will result in revenues and earnings for its quarter ending
December 30, 2000 being substantially below expectations.
The company expects to report revenue of about $1 billion and a net loss,
excluding investment gains, of between $225 and $250 million.
The $600 million revenue shortfall from previous expectations is due to
lower than expected channel sell-through across all geographies and
unplanned sales promotions and pricing actions. The net loss is the result
of the revenue shortfall and cancellation charges related to decreases in
forecasted component purchases for current products.
“The swift industry-wide decline in PC sales will result in Apple’s first
non-profitable quarter in three years,” said Apple’s CEO Steve Jobs. “We’re
not happy about it, and plan to return to sustained profitability next
quarter. We are committed to reducing our channel inventories to normal
levels by the end of this quarter, and remain very excited about the new
products and programs Apple will be rolling out in 2001.”
“In light of the lower results anticipated for the December quarter, we now
expect revenues for fiscal 2001 to be in the $6 to $6.5 billion range,”
said Apple’s CFO Fred Anderson.
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