Apple Computer

Jobs and Wozniak put together their first computer, called the Apple I. They

marketed it in 1976 at a price of $666. The Apple I was the first single-board
computer with built-in video interface, and on-board ROM, which told the machine
how to load other programs from an external source. Jobs was marketing the Apple I
at hobbyists like members of the Homebrew Computer Club who could now perform
their own operations on their personal computers. Jobs and Wozniak managed to earn
$774,000 from the sales of the Apple I. The following year, Jobs and Wozniak
developed the general purpose Apple II. The design of the Apple II did not depart from
Apple I's simplistic and compactness design. The Apple II was the Volkswagon of
computers. The Apple II had built-in circuitry allowing it to interface directly to a color
video monitor. Jobs encouraged independent programmers to invent applications for
Apple II. The result was a library of some 16,000 software programs. [Halliday,
1983, p. 206]

For the Apple II computer to compete against IBM, Jobs needed better marketing

skills. To increase his marketing edge he brought Regis McKenna and Nolan Bushnell
into the company. McKenna was the foremost public relations man in the Silicon
Valley. Nolan Bushnell was Jobs's former supervisor at Atari. Bushnell put Jobs in
touch with Don Valentine, a venture capitalist, who told Markkula, the former
marketing manager at Intel, that Apple was worth looking into. Buying into Apple
with an investment variously estimated between $91,000 and $250,000, Markkula
became chairman of the company in May 1977. The following month Michael Scott,
who was director of manufacturing at Semi-Conductor Inc., became president of
Apple. Through Markkula, Apple accumulated a line of credit with the Bank of
America and $600,000 in venture capital from the Rockefellers and Arthur Roch.
[Halliday, 1983, p. 206]

Quickly setting the standard in personal computers, the Apple II had earnings of

$139,000,000 within three years, a growth of 700 percent. Impressed with that
growth, and a trend indicating an additional worth of 35 to 40 percent, the cautious
underwriting firm of Hambrecht & Quist in cooperation with Wall Street's prestigious
Morgan Stanley, Inc., took Apple public in 1980. The underwriters price of $22 per
share went up to $29 the first day of trading, bringing the market value of Apple to
$1.2 billion. In 1982 Apple had sales of $583,000,000 up 74 percent from 1981.
Its net earnings were $1.06 a share, up 55 percent, and as of December 1982, the
company's stock was selling for approximately $30 a share. [Halliday, 1983, p. 206]

Over the past seven years of Apple's creation, Jobs had created a strong productive

company with a growth curve like a straight line North with no serious competitors.
From 1978 to 1983, its compound growth rate was over 150% a year. Then IBM
muscled into the personal computer business. Two years after introducing its PC, IBM
passed Apple in dollar sales of the machines. IBM's dominance had made its operating
system an industry standard which was not compatible with Apple's products. Jobs
knew in order to compete with IBM, he would have to make the Apple compatible
with IBM computers and needed to introduce new computers that could be marketed
in the business world which IBM controlled. [Morrison, 1984, p. 86] To help him
market these new computers Jobs recruited John Sculley from Pesi Cola for a position
as president at Apple. Jobs enticed Scully to Apple with a challenge: "If you stay at
Pepsi, five years from now all you'll have accomplished is selling a lot more sugar
water to kids. [Gelman and Rogers, 1985, p. 46] If you come to Apple you can
change the world." [Conant and Marbach, 1984, p. 56]

Jobs in 1981 introduced the Apple III, which had never fully recovered from its

traumatic introduction, because Apple had to recall the first 14,000 units to remedy
design flaws, and then had trouble selling the re-engineered version. Another Apple
failure was the mouse-controlled Lisa, announced to stockholders in 1983. It should
have been a world beater, because Lisa was the first personal computer controlled by
a mouse which made it have a user-friendly interface, but had an un-friendly price of
$10,000. The worst thing about Apple's development of computers was they lacked
coherence. Each of Apple's three computers used a separate operating system.

Jobs designed the Macintosh to compete with the PC and, in turn, make Apple's new

products a success. In an effort to revitalize the company and prevent it from falling
victim to corporate bureaucracy, Jobs launched a campaign to bring back the values
and entrepreneurial spirit that characterized Apple in its garage shop days. In
developing the Macintosh, he tried to re-create an atmosphere in which the computer
industry's highly individualistic, talented, and often eccentric software and hardware
designers could flourish. The Macintosh had 128K of memory, twice that of the PC,
and the memory could be expandable up to192K. The Mac's 32-bit microprocessor
did more things and out performed the PC's 16-bit microprocessor. The larger
concern of management concerning the Macintosh was not IBM compatible. This
caused an uphill fight for Apple in trying to sell Macintosh to big corporations that
where IBM territory. "We have thought about this very hard and it old be easy for us
to come out with an IBM look-alike product, and put the Apple logo on it, and sell a lot
of Apples. Our earning per share would go up and our stock holders would be happy,
but we think that would be the wrong thing to do," says Jobs. [Morrison, 1984, p.
86] The strengths of Macintosh design was not memory, power, or manipulative
ability, but friendliness, flexibility, and adaptability to perform creative work. The
Macintosh held the moments possibility that computer technology would evolve
beyond the mindless crunching of numbers for legions of corporate bean-counters. As
the print campaign claimed, the Macintosh was the computer "for the rest of us."
[Scott, 1991, p.71]

The strategy Jobs used to introduce the Macintosh in 1984 was radical. The

Macintosh, with all its apparent vulnerability, was a revolutionary act infused with
altruism, a technological bomb-throwing. When the machine was introduced to the
public on Super Bowl Sunday it was, as Apple Chairman Steve Jobs described it, "kind
of like watching the gladiator going into the arena and saying, 'Here it is." [Scott,
1991, p.71] The commercial had a young woman athlete being chased by faceless
storm-troopers who raced past hundreds of vacant eyed workers and hurled a
sledgehammer into the image of a menacing voice. A transcendent blast. Then a calm,
cultivated speaker assured the astonished multitudes that 1984 would not be like
1984. Macintosh had entered the arena. That week, countless newspapers and
magazines ran stories with titles like "What were you doing when the '1984'
commercial ran?" [Scott, 1991, p.72]

Jobs' invocation of the gladiator image is not incidental here. Throughout the

development of the Macintosh, he had fanned the fervor of the design team by
characterizing them as brilliant, committed marhinals. He repeatedly clothed both
public and private statements about the machine in revolutionary, sometimes violent
imagery, first encouraging his compatriots to see themselves as outlaws, and then
target the audience to imagine themselves as revolutionaries. Jobs, like all those who
worked on the project, saw the Macintosh as something that would change the world.
Jobs described his Macintosh developing team as souls who were "well grounded in
the philosophical traditions of the last 100 years and the sociological traditions of the
60's. The Macintosh team pursued their project through grueling hours and against
formidable odds. A reporter who interviewed the team wrote: "The machine's
development was, in turn, traumatic, joyful, grueling, lunatic, rewarding and
ultimately the major event in the lives of almost everyone involved". [Scott, 1991,
p.72]

The image Jobs wanted the public to have of the Macintosh was young, wears blue

jeans, and lives in an 80's version of the 60's counterculture. Macintosh was
impatient, uncomfortable, and contemptuous of everything that was conventional or
hierarchical. He/she was both creative and committed, believing strongly that his/her
work ultimately matters. Even if we counted beans for a living, we secretly saw
ourselves as Romantic poets. [Scott, 1991, p.73] Jobs approach in developing the
Macintosh was like the history of telephones. When the telegraph became popular for
communication a century ago, some people suggested putting a telegraph machine on
everyone's desk, but everyone would have had to learn Morse code. Just a few years
later Alexander Graham Bell filed his first patents for the telephone, and that
easy-to-use technology became the standard means of communication. "We're at same
juncture; people just are not going to be willing to spend the time learning Morse
code, or reading a 400-page manual on word processing. The current generation of
personal computers just will not any longer. We want to make a product like the first
telephone. We want to make mass market appliances. What we are trying to develop
is a computer that can do all those things that you might expect, but we also offer a
much higher performance which takes the form of a very easy-to-use product."
[Morrison, 1984, p. 98]

As the Macintosh took off in sales and became a big hit, John Sculley felt Jobs was

hurting the company, and persuaded the board to strip him of power. John Sculley
tried to change the discipline of the company by controlling costs, reducing overhead,
rationalizing product lines to an organization that some in the industry called Camp
Runamok. [Morrison, 1984, p. 90] Sculley came to the conclusion that "we could run
a lot better with Steve out of operations," he says. [Gelman and Rogers, 1985, p.
46] Jobs tended to value technological "elegance" over customer needs which is a
costly luxury at a time of slowing sales. And Jobs's intense involvement with the
Macintosh project had a demoralizing effect on Apple's other divisions. [Gelman and
Rogers, 1985, p. 47]

Jobs was exiled to an office in an auxiliary building that he nicknamed "Siberia." Jobs

says he did not get any assignments and gradually found that important company
documents no longer landed on his desk. He told every member of the executive staff
that he wanted to be helpful in any way he could, and he made sure each had his
home phone number. Few ever called back. "It was very clear there was nothing for
me to do," he says, "I need a purpose to make me go." [Gelman and Rogers, 1985, p.
47]

He soon came to believe that he would find no purpose within Apple. In July, Sculley

had told security analysts in a meeting that Jobs would have no role in the operations
of the company "now or in the future." When Jobs heard of the message he said,
"You've probably had somebody punch you in the stomach and it knocks the wind out
you and you cannot breathe. The harder you try to breathe, the more you cannot
breathe. And you know that the only thing you can do is just relax so you can start
breathing again." [Gelman and Rogers, 1985, p. 48]

HOME PAGE

Apple.com