Apple: The Inside Story of Intrigue, Egomania, and Business Blunders

Overview

Apple Computer was once a shining example of the American success story. Having launched the personal computer revolution in 1977 with the first all-purpose desktop PC, Apple became the darling of the national business press and Wall Street. Yet by 1995, the company's change-the-world idealism had all but disappeared in a bitter internal struggle between warring camps. Raging internal mistakes, petty infighting, and gross mismanagement became Apple's hallmark, and today the company clings to a mere 3.7 percent ...

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Overview

Apple Computer was once a shining example of the American success story. Having launched the personal computer revolution in 1977 with the first all-purpose desktop PC, Apple became the darling of the national business press and Wall Street. Yet by 1995, the company's change-the-world idealism had all but disappeared in a bitter internal struggle between warring camps. Raging internal mistakes, petty infighting, and gross mismanagement became Apple's hallmark, and today the company clings to a mere 3.7 percent share of the market it helped to create. Apple is the spellbinding account of what really went on behind closed doors, revealing the forces that dismantled this once great icon of American business.

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Editorial Reviews

Business Week
Delicious reading.
San Francisco Examiner
An impressive, thorough history. . . . Carlton's reporting is stellar.
Wall Street Journal
Do you like high-voltage showdowns, bigger-than-life heroes, and ego-enhanced decisions that could lead to a fatally crippled company? If so, read Apple.
Washington Post Book World
Fascinating. The hubris, missteps, and the missed opportunities [at Apple] are the stuff of legend in the computer industry, [but] Jim Carlton dishes out the best dirt yet.
Washington Post Book World
Fascinating. The hubris, missteps, and the missed opportunities [at Apple] are the stuff of legend in the computer industry, [but] Jim Carlton dishes out the best dirt yet.
Kirkus Reviews
A disappointing book about a lovable company.

Carlton, a West Coast technology reporter for the Wall Street Journal, here provides an in-depth look at Apple's woes through the years. There are no easy answers to its failures, though it's tempting to blame former CEOs like Michael Spindler, the German- born leader so rattled by his job that he left, literally, on life support; Gil Amelio, a techie who didn't understand how to market a brand-name; and even Steve Jobs, a larger-than-life presence ousted by John Sculley, who was later ousted himself. Apple's real downfall may have been how loyal its users became—Sculley, who had been a fantastic marketer at Pepsi, refused to license Macintosh applications and even the Mac "box," a decision that pared down Apple's users to a tiny band of fanatics. Companies were attracted to the elegant Macintosh but were dissuaded when they couldn't buy inexpensive knock-offs, as they could with so many other brands, and the inefficient Microsoft system became the industry standard. Time and again, Apple misunderstood the demands of the market; for example, when the company introduced the PowerBook, it overstocked the cheap model and understocked the top-of-the-line models, ignoring the obvious fact that computer fans are willing to spend money in order to get the latest tech toy. Thousands of orders for the expensive PowerBook went unfilled, and Apple suffered a blow to its ego and its bottom line. But while its problems are fairly evident, Carlton fails to get at the heart of Apple, to what inspired such devotion from users and employees. And like so many products in the high-tech industry, this book is already somewhat obsolete, with the recent resignation of Mike Markkula and the return of Steve Jobs.

Apple fans are a die-hard bunch, and this dry corporate history simply lacks the passion that Mac users feel about their product.

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Product Details

  • ISBN-13: 9780887309656
  • Publisher: HarperCollins Publishers
  • Publication date: 10/21/1998
  • Edition description: REVISED
  • Pages: 480
  • Product dimensions: 6.12 (w) x 9.25 (h) x 1.20 (d)

Meet the Author

Jim Carlton, a West Coast technology reporter for the Wall Street Journal, has been a journalist for twenty years. He has done numerous expos‚s on questionable practices in the airline, chemical, and computer industries, and has won many investigative and feature-writing awards.

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Read an Excerpt

17 Thinking Different Gil Amelio's body was hardly cold when the Mac faithful descended again on Boston in early August 1997 to mark one of the more phenomenal events in the history of the computer industry, the return of Steve Jobs to Apple Computer after years of wandering in the high-tech wilderness. In the weeks preceding his appearance at this Macworld Expo show, Jobs had demonstrated quite clearly that he was more than just an adviser. He was Apple's de facto CEO. He began running product review meetings. He presided over meetings to hone Apple's marketing strategy. He even sent out a company-wide electronic memo, notifying all employees that their Apple options had been repriced to $13.25-about the level of Apple's stock when Amelio was booted. That was a shrewd morale-boosting move, because it suddenly gave value to options that had been worthless on paper. It was tantamount to a bank telling a homeowner that, instead of his property being worth $50,000 less than his outstanding mortgage, it was actually worth $50,000 more. Surely now there would be less incentive to walk away. In testimony to Jobs' new influence over Apple, he signed the memo "Steve and the Executive Team" and closed with this slogan: "You cannot mandate productivity, you must provide the tools to let people become their best. -Steve Jobs." Since it was so clear that Jobs was in charge, I began hounding him for an interview so he could spell out his strategy and intentions for Apple. A number of news publications, including the San Francisco Chronicle, were reporting that Jobs' appointment as the new permanent CEO was imminent, but he repeatedly issued denials to me over the phone from his home in Palo Alto, California. "Don't worry, trust me," Jobs assured in his mesmerizing voice, promising to reveal more later after I pleaded for details as to his real role at Apple. I and the rest of the computer world would not have to wait long. The full measure of Jobs' power became apparent on the morning of August 6, 1997, when he delivered the keynote address at the final Macworld show in Boston. (This East Coast version of Macworld would move to New York City in 1998.) Anticipation was so high that two thousand people packed into the auditorium of a downtown Boston building called the Castle, and another three thousand were jammed into a room nearby. The uncharacteristically cool and dry weather provided a perfect backdrop for the upbeat mood of Macworld's attendees, who were buoyed by the fact that Apple's stock had surged to nearly $20 after Amelio's departure. The company was still losing money but the losses were narrowing, sales were picking up, and the company's leadership seemed more focused than ever under Jobs and the new board member, Edgar Woolard. It was little surprise that the audience of nerds and wannabe nerds gave a standing ovation and chanted "Steve! Steve!" when the legendary showman strolled out on stage, smiling impishly and looking as cool as ever. He was forty-two years old, older and far more mature than in those go-go years when he and Apple had ridden a rocket ship of growth. His charisma was as intoxicating as ever, and as he spoke-stalking the stage without notes, peering at the masses through his wire-rimmed glasses, and occasionally cupping his hands as though in prayer-hardly another sound could be heard in the cavernous room. "What I see are the makings of a very healthy company," Jobs said, adding almost casually that there would have to be dramatic changes at Apple, starting with the board of directors. Bombshell Number One was dropped. Loud applause greeted Jobs' announcement that resignations had been accepted from three of the five board members, including the one-time "king behind the throne" Mike Markkula, as well as Bernard Goldstein and Katherine Hudson. Staying on were Edgar Woolard and Gareth Chang, senior vice president of Hughes Electronics. The applause intensified when Jobs announced the names of the four new board members: Larry Ellison, the flamboyant and powerful CEO of Oracle; Jerome York, former chief financial officer of both IBM and Chrysler, who was well regarded in business for his part in turning around those companies; Bill Campbell, the CEO of Intuit who had earned the nickname "Coach" for his charismatic leadership of Apple's sales force during the mid-eighties; and Jobs himself. This was astonishing news, because it demonstrated that Jobs was, in fact, willing to attack Apple's root problem of directionless leadership to try to fix the company. "I think change should start at the top," he said. Later, Jobs explained his actions in an interview he finally granted me for The Wall Street Journal, after standing me up the night before. Jobs confided that he had been "disengaged" from Apple until the board-at Woolard's behest, Woolard later told me-contacted him shortly before Amelio was to be ousted to ask him to step in as chairman. Jobs said he contemplated the proposal for about a week before turning it down. The board asked him then to become CEO, an offer he said he also rejected. "I've already got the best job in the world, which is to be part of the team at Pixar," he told me. Jobs added that he was also deeply immersed in family life, enjoying his role as father to toddler children and a grown daughter. "The problem is I have a life. I just can't be the CEO of Apple. I just don't have that to give." What he would give was his strategic insight, and his presence as the catalyst for Apple to undertake bold changes, such as the ouster of nearly its entire board. In fact, Jobs said that two weeks before Macworld Expo he called the board members together and asked for resignations from all but Woolard and Chang, who were relatively new to the body. None of the outgoing directors opposed the request, not even the venerable Mike Markkula, to whom Jobs broke the news personally. Jobs would not comment on this, but a person familiar with the conversation said that Markkula was shaken and saddened by the request from the man whom he had financed two decades before. "He knew it was time," said this person. The board shakeup was big news, but it was all but forgotten after Jobs dropped Bombshell Number Two. Gasps of dismay and shouts of "No! No!" greeted Jobs' revelation of his second ingredient for change, a far-reaching alliance with Microsoft, Apple's old nemesis. Under the pact, Jobs said that the two companies would cross-license their patents, in a move to prevent a renewal of the kind of lawsuits that had so badly tarnished relations in the past; Microsoft would commit to supporting the Macintosh for at least five more years with its Microsoft Office productivity suite; Microsoft would invest $150 million in nonvoting shares of Apple stock, in addition to paying an undisclosed sum that two people familiar with the matter said totaled about $100 million, to settle a patent dispute that had been on the verge of litigation; and Apple would bundle Microsoft's Internet Explorer with the Mac, making it the first choice of Apple users over Netscape's rival Navigator. The Mac devotees were initially horrified at the news because so many still viewed Microsoft as the evil empire that had stolen Apple's technology to dominate the market. "I would not be surprised to see the word 'sellout' used to describe this," fumed one Macworld attendee. "It's just a symbol of allowing Microsoft to dominate one more place." The sense of unreality deepened when Jobs introduced a familiar guest, Microsoft Chairman Bill Gates, who addressed the gathering via satellite linkup. A chorus of boos erupted as Gates' still-youthful visage appeared on a giant video screen above the stage. Some compared the moment to a visitation by Big Brother. The poignancy was heightened by the juxtaposition of Jobs, standing deferentially on one side, and Gates, speaking front and center from the screen. Less than two decades earlier, it had been Gates deferring to Jobs, when Steve Jobs stood atop the computer industry. "It's very exciting to renew our commitment to Macintosh," Gates droned in his usual monotone. As Gates spoke, it began to dawn on even the harshest Microsoft critics what this announcement really meant. Apple, fighting for its corporate life, had been given a resounding vote of confidence by the most powerful computer company in the world. Indeed, some actually cheered at the end of Gates' brief remarks. Jobs then told the audience, "We have to let go of the notion that for Apple to win, Microsoft has to lose. For Apple to win, Apple has to do a really good job." As this book has shown, that was exactly Gates' belief all along. Apple and Microsoft could compete, but they could also cooperate in many areas. This concept, called "co-opetition," simply means putting the practicalities of business above all emotional considerations. Apple had always been an emotional company, and certainly Jobs in his early days was as emotional as anyone. But with Apple struggling to remain relevant, the time for acting on emotion was long past. As Jobs said, "We need all the help we can get." Later, in our private meeting, Jobs disclosed that he had telephoned Gates a few weeks earlier to intervene in an alleged patent dispute that Apple was planning to file against Microsoft. "I asked Bill if we could work this out, and he was very receptive," Jobs told me. Later that same day, I also spoke with Gates about the alliance in a telephone interview for The Wall Street Journal. As Gates remembered, Jobs proposed that Microsoft invest in Apple and form a partnership. "I said, 'Hey, that's a great idea'," Gates recalled. "This is smart business for Apple." And smart business for Microsoft. As for Apple, Wall Street reacted to the alliance by boosting Apple's shares 33 percent that day. The following day, Apple's stock neared $30 before slowly subsiding on investors' realizations that Apple's problems were far from over. Steve Jobs had pulled off an amazing strategic feat, but it did not alter Apple's fundamental problem, its reduction to a bit player in the PC industry, with a market share so small that it still faced the danger of losing its customers and software developers. Not only that, but this was also a multibillion-dollar company without a CEO. A search committee composed of Jobs, Fred Anderson, and Edgar Woolard planned to oversee an exhaustive quest for a "world-class" chief executive. But the job of implementing a turnaround could not wait until a new CEO would be named, Jobs decided. He immediately commenced attempting the task by himself. Over the next year, Steve Jobs would shake his old creation to its very core, in a desperate effort to reinvent the company from the ground up. One of his first moves, for example, was to move Apple's headquarters out of the imposing City Center complex and into the more informal atmosphere of the R and D campus at 1 Infinite Loop. Employees were initially delighted; many had chafed at the Ivory Tower demeanor of Amelio and his predecessors. Jobs even dressed as though he were one of the troops. Letting his beard grow out, he showed up almost every day in running shorts, tennis shoes, and a black pullover shirt. But Steve Jobs soon demonstrated he had precious little else in common with the average worker. Jobs, for one thing, was an irrepressible control freak, who insisted on signing off on so many details such as product names and packaging that a number of middle managers became afraid to make decisions at all. "You won't find a product manager who feels empowered," one departing Apple manager told me at the time. One of his first official acts was to send out an internal electronic mail announcing a number of belt-tightening measures, including cancellation of paid sabbaticals. Other e-mails forbade employees on the famously laid-back Apple campus from bringing their pets to work and from smoking even in the parking lots. A fake memo followed, sent out with Jobs' forged e-mail address, announcing that "You've all become lazy and only contribute to Apple's current situation." One of the edicts in the phony e-mail decreed that employees would be charged $3 a day for parking and "only I will be allowed to park in handicapped spaces," a reference to Jobs' well-known habit of parking his Mercedes as close to the headquarters' entrance as possible. Jobs did not laugh. He retaliated by firing out another company-wide memo, this time threatening to fire anyone caught tampering with the e-mail system or leaking internal documents. A prominent Apple veteran was soon ensnared. Jobs summoned Sandy Benett, the general manager of the Newton subsidiary, into a meeting to inform him that Newton Inc. was being melded back into the company. After Benett told his underlings of the decision prior to an official announcement, word leaked out to the press. Incensed, Jobs ordered Benett fired immediately, according to four people with knowledge of the matter. After retaining a lawyer, Benett was able to negotiate a resignation, but a chill swept through the rest of the company. "One of my friends at Apple begged me to delete his e-mails from my hard disk," says Dave Winer, a longtime Macintosh developer. Word spread through the company of "Steveisms," some real and some imagined, including an apocryphal report that Jobs conducted spot interrogations of any poor soul he met on an elevator, demanding that they justify their job in thirty seconds or be fired. Jobs laughingly denied such behavior, saying: "Whenever I see people I don't know, I say, 'Hi, I'm Steve Jobs.'" But Jobs ended up firing or forcing out most of the top executives he inherited, as well as underlings. For example, one of Jobs' personal assistants became a target when he was tardy in arranging the installation at Apple headquarters of the same kind of high-speed digital data line, called a T-1 line, that Jobs had at NeXT and Pixar. When Jobs encountered a delay in receiving e-mail one day, he stormed out of his office, leaned into the cubicle of the assistant, Jim Oliver, and said, "No T-1, you're fired," according to Oliver and another Apple worker. Oliver left, unsure of whether Jobs was serious or not. "His temper can flare up," he notes. The next morning, Jobs apologized to three other staffers for the incident, explaining that "he just gets extremely frustrated when things don't work the way they're supposed to," one of the workers recalls. Word was relayed by coworkers to Oliver that he could return to work, but he resigned soon thereafter. Jobs never personally apologized to him. Jobs was gaining such a reputation as a tyrant that disgruntled workers began quitting the company in droves; most of them were pre-Jobs veterans that he didn't want around anyway. "Steve believes Apple was royally screwed up for the past 10 years, and that if you had stayed around from that time you were either incompetent or an idiot," says one former executive who left in protest over how Jobs was treating people. "He assumes everyone is bad until proven good." A group of five engineers interviewing with Jobs for employment at Apple gained firsthand insight into this mentality, when the de facto CEO leaned forward at one point and, according to one, said, "There are 10,000 mediocre employees at Apple that need to be cleaned out." Since Apple was employing barely that number at the time, that statement effectively covered the entire workforce. Conversely, Jobs seemed to fawn over the employees and managers that Apple had imported from NeXT under terms of the acquisition. "He once told me that five Apple people are worth less than one NeXT guy," one former executive told me. By the early fall of 1997, practically all vestiges of the Amelio management team had been wiped out. Four out of the top five executive positions at Apple were filled by Jobs and his former NeXT underlings, with the fifth occupied by CFO Fred Anderson. Anderson survived the purge, in part, because he sided with Jobs on one of Jobs' more controversial decisions as Apple's new leader, the decision to kill the clones. To appreciate the impact of this momentous decision on September 2, 1997, step back a few months to the early spring of that year when Jobs was still just an advisor to Gil Amelio. At that time, Fred Anderson was arguing internally that Apple force the clone manufacturers, including Power Computing, Motorola, and Umax Technologies of Taiwan, to pay hundreds of dollars more in royalty fees for the Macintosh operating system and related technologies. Anderson's reasoning was that the clones were growing largely at Apple's expense, taking sales from Macintosh customers who otherwise would have purchased from the mother company. As of mid-1997, the clones accounted for 20 percent of the Macintosh market. Therefore, Apple believed it needed to exact a higher toll for the privilege. This was practical reasoning, except for one thing: The clones were operating under contracts that had been worked out by both sides many months before. Anderson was pushing to reopen what the clone makers rightly felt were closed deals. Within Apple, Anderson found himself backed by a powerful ally, none other than Steve Jobs himself. Indeed, Jobs used the term "leeches" in a speech before Macintosh developers in May 1997 to describe some of the cloners who, he said, were picking off Apple's highest margin product markets. Emboldened, Anderson convinced Amelio to let him reopen talks with the clone manufacturers on terms and conditions of their contracts. Not surprisingly, those manufacturers reacted with outrage when told they needed to pony up more money. The talks had made little progress by the time of Macworld Expo in Boston in August 1997, when Jobs announced to the world his clean-up of the board and the peace pact with Microsoft. Almost lost amid the excitement over that news, however, was the near mutiny that had erupted within the show following a fiery speech by a Power Computing executive over what he called Apple's possible total shutdown of the cloning market. In his address before about 700 Mac customers, Power Computing's president Joel Kocher unveiled a Power model that was one of the first to use a powerful new microprocessor called the PowerPC G3. "Hey, this is a great product," Kocher remembers telling the crowd, which responded with a roar of approval. "Well, guess what? You may not get one." Then he explained that Apple had refused to certify the particular model for sale, and warned that the entire cloning program was in jeopardy. Kocher's outspokenness earned him some praise in the Macintosh industry, but it also cost him his job. Within the month, he resigned after Power's soft-spoken chairman and CEO, Steve Kahng, insisted his company pursue a more conciliatory style with Apple. While Kahng was widely criticized within his own company for backing down to Jobs, he really didn't have much choice except to negotiate. Power had become a powerhouse in revenues-soaring to some $400 million in annual sales after just two years of existence-but it was not yet making any money. Steve Kahng, in short, could not afford a drawn-out legal fight with Apple. Steve Jobs surely knew this, since he announced on December 2, 1997, that Apple was buying back Power's Macintosh license for $100 million in stock. Since Power's whole business model was built around the Macintosh industry, the company was left as a purposeless shell to be liquidated scant months later. With the biggest clone vendor out of the way, Jobs that same day took aim at the other two-Motorola and Umax-by announcing Apple would not license any new Macintosh technologies about to be deployed. These included a new hardware design and an operating system for laptops. Since being deprived of these would make the remaining cloners noncompetitive, Jobs had effectively cut off their air, ending Apple's fledgling licensing program after just two years. "It wasn't the first choice I wanted," Jobs told reporters afterwards, explaining that he would have preferred higher fees for extended licenses. Speaking to desktop publishers at the Seybold conference in San Francisco soon after, Jobs insisted that Apple had no choice but to abandon cloning if it wanted to survive. "If we go down the shitter, the Mac ecosystem goes down the shitter," Jobs told the theater of 4,000 attendees, in reinforcing why he demanded the higher royalty fees from the clones. "I said, 'You guys have to pay a fair price.' They basically told me to pound sand." This isn't at all what happened, according to executives involved in the licensing discussions for all three of the major clone vendors. For example, Frank C. Huang, chairman of Taiwan's Umax, had shuttled back and forth across the Pacific to meet with Jobs, agreeing to almost every directive the Apple leader set out, including paying higher fees. "But at their next meeting, Steve told Frank he changed his mind. He didn't really want to do licensing," recalls a person familiar with the discussions. Practically the entire Macintosh industry was stunned and outraged at the shutdown of licensing. In a scathing open letter to Jobs published on the Internet a few days later, Ric Ford, publisher of the highly influential Macintosh news service called MacInTouch, suggested that the Apple co-founder was giving up on the Mac in pursuit of a new foray into network computers. "The current Macintosh is irrelevant to this project, except as a source of funds," Ford wrote. "You will milk the current Macintosh for all the profit you can, minimizing expenses in every way possible." Steve Jobs fired back a response to the letter, in a one-paragraph missive dripping with venom. Calling Ford irresponsible and wrong, Jobs suggested, "Maybe the folks who read your website have something in common with those who buy the National Enquirer [sic], in that they are not really seeking facts or insight but simply entertainment." This was vintage Steve Jobs, the mercurial genius who would not take crap from anyone. Jobs didn't just bully the little guys. He also mixed it up with the big boys, like Chris Galvin, the chief executive of Motorola. According to several people familiar with the situation, Galvin erupted when Jobs, in a telephone conversation, tried to strike a bargain, granting Motorola the right to continue cloning in return for a promise by Motorola to speed up development of microprocessors crucial to Apple's laptop business. Jobs shouted back, and later hung up on Galvin, one of the individuals says. "They did have very strong words with each other," says one official at Motorola, which later took a $100 million charge on closing its fledgling line of StarMax Mac compatibles. Neither CEO would comment, and a Motorola spokesman said the two companies are doing business as usual. But two other Motorola officials, who declined to be identified, said the company will likely be less inclined to give Apple the kind of preferential treatment it has enjoyed in the past. "They will be just another customer," one of the officials said. Indeed, both Motorola and IBM issued a press announcement in late September 1997 that they intended to start pushing PowerPC into the so-called embedded market for non- computer devices. As much as Steve Jobs could antagonize people, he possessed an equal ability to electrify and impress. By the end of that same September, for example, Jobs unveiled a new advertising campaign that was Apple's slickest since the famous "1984" commercial. In fact, this new campaign was created by the same Chiat/Day agency that had masterminded "1984." By this time, the Apple board had formalized the "de facto" in Jobs' title to "interim" CEO, in public recognition of the obvious. A master at marketing, Jobs used his influence to shape the new Apple campaign entitled "Think Different." Although grammatically incorrect, the slogan paid homage "to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes," which included geniuses such as Albert Einstein and Pablo Picasso whose works changed the world. "And it's the people who are crazy enough to think they can change the world, who actually do," intoned the actor Richard Dreyfuss in a television spot for the campaign. "It absolutely strikes at the soul of Apple, to think different," an unabashedly proud Jobs told me by telephone on the eve of the campaign announcement. Strategically, Jobs was orchestrating some very shrewd moves for Apple. In what many considered a long overdue action, he streamlined the product line to just a handful of models from what had been a proliferation of forty and more. He revamped Apple's manufacturing operation to follow the "build- to-order" model pioneered by Dell Computer. Indeed, Jobs made that announcement on stage November 4, 1997, at an auditorium in Cupertino, with a backdrop of Michael Dell's face sporting a bullseye. "We're coming after you, buddy," Jobs said to great cheers from an audience of mostly Apple employees. Given the fact that Dell Computer, by this time, was one of the biggest and fastest growing companies in the industry, while Apple was locked in freefall, the taunt was considered quite a joke to many people elsewhere in the industry. As usual, this attack seemed to be precipitated by emotion on Jobs' part. Just days before, Jobs had fired off an e-mail to Michael Dell, asking him to explain his flip remark when asked by a CNET online interviewer on October 6, 1997, what he would do if he were placed in charge of Apple: "I'd shut it down and give the money back to the shareholders." In his e-mail missive to Dell, Jobs hissed, "CEOs are supposed to have class. I can see that isn't an opinion you hold." In any event, Jobs was making some positive changes, and more were on the way. With its flexible new manufacturing system, Apple entered the business of selling to customers directly via the Internet, in a website called the Apple Store that generated $12 million in revenues in its first month of business. At the same time, Jobs fortified Apple's shaky relations with the sales channel, in moves such as agreeing to a proposal by CompUSA, the computer superstore giant, to dedicate an entire section in each of its stores to Apple products. The move paid dividends. CompUSA's Mac business ballooned to 15 percent of its total PC sales from just 3 percent before the "store within a store" concept was implemented. Jobs also made sure his sales managers began monitoring the status of Mac products in all stores and resellers every week, to avoid the kind of wild inventory swings that had so bedeviled Apple in the past. "They are so in tune with the amount of product they are selling," marveled Michael France, senior partner of Mac Center, a big Apple reseller based in Fort Lauderdale, Florida. It was becoming gradually clear that Jobs was not intent on abandoning the Mac, after all, as so many people had feared after he killed the cloning market. According to those in whom he confided, Jobs said he wanted to keep the Macintosh market as viable as he could for as long as he could, to give Apple time to find new growth opportunities that could rebuild the company into a major industry player. And one of those opportunities, he said, was to parlay the Mac into a consumer appliance. Shortly after taking the helm of Apple, Jobs huddled with his lieutenants and began debating ways to regain the company's status as a pioneer and innovator. According to people in the meetings, Jobs began thinking of the appliance-like devices such as the so-called Network Computer after concluding that Apple possessed one of the world's great consumer brands, with almost no consumer products. "He figured Apple must become a consumer products company," recalls one person in one of the meetings. "He thinks that if the NC does take off, then Apple can become the Sony of NCs." Development work began on a product initially called the Macintosh NC, which people familiar with the project say was being designed to contain minimal features of the Mac operating system but run almost all major software programs off a server powered by Oracle database software. As Jobs envisioned it, this product would be initially targeted as a sub-$1,000 alternative to the personal computer in schools, where administrators could benefit from efficiencies in such areas as performing software upgrades from a central location rather than at each PC. While the concept of a cheap, simplified computer is bound to appeal to some cost-conscious network administrators, many people in the industry question whether many customers will be willing to throw out their considerable investments in PC technology to embrace an unproved one. One major barrier the NC will likely face is the fact that PCs have fallen so dramatically in price-they are priced under $700 in the U.S. now-that the price difference between the two has become negligible. As of this writing in the summer of 1998, the Macintosh NC, believed to be a project code-named Columbus, is still being kept under wraps, and it remains unclear how successful this tact by Jobs might prove. Another uncertainty that has weighed heavily on Apple, at least early on, has been the difficulty in finding someone to step in as a permanent CEO. The search was supposed to have been completed by the end of 1997, but as of this writing the company has opted to leave Jobs in as interim CEO for as long as he likes. Many names were bandied about. Former Apple Chief Operating Officer Del Yocam was mentioned by some as a possibility, given his long association with Jobs. But Yocam, busy himself as CEO of Borland International (now called Inprise Corp.), insisted he was not interested in the job. Apple was known to have negotiated with some other candidates, including Joe Costello, the former CEO of Cadence Systems in Silicon Valley. But Costello moved, instead, to an Internet startup. Even board member Bill Campbell was approached about the job, since he, too, was an Apple alumnus and a friend of Jobs as well as his next-door neighbor. The affable Campbell, though, was content serving as CEO of Intuit Inc., and rejected the overtures, say people familiar with the matter. He is now chairman of Intuit. And, repeatedly, the board members kept asking Jobs himself to reconsider. He remained insistent, however, that a return to active duty at Pixar was uppermost on his mind. As the weeks turned into months, though, people in the industry became doubtful that Apple could ever attract an independent-minded chief executive, with someone as powerful-and meddlesome-as Steve Jobs lurking in the background. Even CFO Fred Anderson has admitted at a press conference that one prerequisite for any new CEO would be a full agreement with the strategic path that Jobs has formulated. "The worst thing that could happen to Apple would be a 180-degree strategy change," Anderson told reporters at the Macworld Expo in San Francisco during January of 1998. In high drama typical of Apple's history, Steve Jobs dropped a bombshell there that erased, at least temporarily, the industry's preoccupation with the CEO search. It came in Jobs' January 6 keynote address before some 4,000 attendees assembled in the Yerba Buena ballroom of the San Francisco Marriott; on the same stage, in fact, where Gil Amelio had flopped so miserably exactly one year before. Since Jobs was known for theatrics, the excitement was high as the lyrics "I get knocked down/But I get up again/You're never gonna keep me down," from the rock tune "Tubthumping" by Chumbawamba pulsated out of giant speakers. At precisely 9 A.M., the living legend himself strode out onto stage, nodding appropriately at the chorus of cheers and applause that greeted his arrival in black leather jacket, black long-sleeved shirt, and faded jeans. Wearing a full and bushy beard streaked with gray, the master of ceremony took the Mac faithful through a litany of the recent accomplishments, drawing requisite applause as speech and product demos continued for the next 90 minutes. The address was well delivered, as usual, but audience members seemed to sag in palpable disappointment as Jobs concluded his remarks and prepared to leave the stage. But he stopped, and added as a seeming afterthought, "Oh, one more thing. Think profit." And with that, he broke the news that sent audience members to their feet with cheers and applause: Apple Computer had earned more than $45 million in the just-ended fiscal first quarter, defying analysts' projections for the company to break even at best. When the official results were announced a week later, they would show Apple earning $47 million on strong sales of new products and belt tightening that had sharply reduced costs. No one at Apple would predict how long the profitability might last, but the news was a welcome respite from all the negativity of the past. "I can tell you for sure," Jobs said, smirking beneath his thick beard, "that Apple is coming back." Afterward, I was ushered upstairs at the Marriott for a one-on-one with Jobs. By this time, he had consented to being interviewed by select members of the press, usually including The Wall Street Journal and some other major publications. As I stood outside waiting with one of the PR people, an aide rushed out with an anguished look, saying, "He's just walked out of a live interview." As it turned out, Jobs was being interviewed live on the cable network CNBC when he yanked off his microphone and stormed away. The provocation? The hapless correspondent had had the temerity to ask him yet again whether he would become Apple's permanent CEO. Yet, when I faced him, moments later, Jobs was as polite and charming as he could be, offering me a seat and patiently sitting through a list of questions. Here it was again, this unpredictable shifting of moods that made him such a difficult person to figure out. I even put the CEO question to him, but apparently in such an offhand manner that he didn't feel the need to throw me out. "I'm the CEO of Pixar," he said calmly, munching from a plate of fruit, "and I'm not giving that up." Before I stood to leave, I asked if he had any parting thoughts. He reflected a moment, looked to aides gathered around the room, and said with a smile, "I'm about as proud as I can be of the team at Apple." From that time through the early spring of 1998, scarcely a week went by without yet another announcement of major change at Steve Jobs' new Apple Computer. Some of the decisions proved wildly unpopular in the Macintosh community. Less than a month after Macworld, for instance, Jobs announced he was disbanding Apple's Claris subsidiary, even though the unit had maintained profitability through all of the parent company's turmoils. While folding some of the Claris programs into Apple's main R and D-ostensibly to bolster the Mac development efforts-skeptics suggested the move represented another callous cost-cutting move by Jobs. "These moves should help staunch Apple's bottom-line bleeding for one more quarter. I'm just worried about the quarters that follow," Charles Piller, a technology columnist, wrote in The Los Angeles Times. Exactly one month later, on February 27, 1998, Steve Jobs provoked more outrage when he unveiled his final solution for the Newton problem, to kill the technology altogether. Poor Newton. It had gone through so many trials and tribulations. First, there was the ignominy of the botched launch of 1993. Then, four years later, Gil Amelio set it up for sale by spinning it into a separate unit. Scant months later, though, Steve Jobs reversed that process, by rolling Newton back into Apple. In a terse press release, Jobs explained only that "This decision is consistent with our strategy to focus all of our software development resources on extending the Macintosh operating system." That was all well and good, but many people in the industry wondered why Jobs did not bother to sell off the technology. At least get something in return for all those hundreds of millions of dollars in R and D the past decade. Jobs, as usual, left his subordinates to answer all media questions. So, we put the question to CFO Fred Anderson, whose penchant for slashing operations and costs was matched in zeal only by Jobs himself. He confirmed in a call with press and analysts that Apple had considered selling the Newton business, but concluded it could not get enough money to offset the loss of engineers needed for a forthcoming line of mobile devices that would use the Mac operating system. Presumably, the Columbus project for a sub-$1,000 Mac NC would fit into this strategy. "You are better off putting the wood behind one arrow," he said. Of course, the move made cold business sense. But for the thousands of enthusiasts who had adopted the Newton, it was one more betrayal by a company with a long history of them. Some staged a peaceful march on Apple's headquarters. "I think it's just hideous, man," a Newton developer who called himself Lunatic E'sex, wearing black leather and waist-length hair, told me in the Newton Source in San Francisco's financial district. Don Crabb, who was well known in the industry for his frequent MacWeek columns, observed in a column for the on-line publication, MacCentral, "Sadly, Apple is now so narrowly focused . . . that it is throwing out the very technologies that consumers need to buy." Morale among Mac users rebounded sharply, though, on a parade of positive developments that Steve Jobs unveiled over the ensuing weeks. The first was his disclosure that Apple had earned another $55 million in its fiscal second quarter, far more than analysts had been expecting, and the second profitable quarter in a row. While the sales of $1.4 billion were still down 13 percent from the same period a year before, the results clearly indicated the balance sheet was replenishing itself. They also showed his strategy of eliminating competition by killing the clones was paying off, at least so far. Besides cost cutting, he attributed the performance to strong sales of a new line of Power Mac G3 computers, using the same chip as in the Power Computing model previewed at Macworld the previous summer. The really big announcements came in May 1998, though. Before Apple's annual Worldwide Developers Conference, in the San Jose Convention Center, Jobs drew polite applause from the 4,000 in attendance when he disclosed that the company was abandoning its risky strategy of replacing the Macintosh operating system with the new one called Rhapsody. Instead, Apple would follow the safer approach of combining the stability features of Rhapsody with the graphical friendliness of the existing Mac to create a next-generation system called Mac OS X (as in ten). For developers, this meant they would only have to make a few adjustments to an existing program for it to take advantage of the new system's enhanced performance. Under Rhapsody, they would have had to rewrite the program from scratch. Since many developers weren't planning to switch to Rhapsody anyway, given Apple's shriveled market share, Jobs' move proved a mandatory one to keep them in the fold. For that reason, the reaction among developers was one of cautious optimism, rather than an outburst of enthusiasm. "Another WWDC and another multi-year operating system strategy," Richard Zulch, chief technical officer of Dantz Development Corp., joked to his colleagues in the hallway later. When I asked him to elaborate, Zulch smiled wanly and added, "We will find out soon how real this strategy is." Much more excitement greeted Jobs' other announcement that same month, for this was the one that demonstrated a radical new direction for Apple. We in the press knew something major was up when we received a cryptic invitation over the business wires to attend "a media event" at the Flint Center auditorium of Cupertino College, the same auditorium where Jobs had first unveiled the Macintosh fourteen years before. More than the media were called out, though. Jobs packed the place with more than 2,000 Apple employees, many of them wearing jeans and ponytails as they filed expectantly to their seats. As we waited for the event to begin, someone began bouncing a beach ball from row to row, amid great cheers. It was largely a symbolic act of juvenile rebellion, though, for those still left at the company had learned that the new Apple of Steve Jobs was no longer a democracy. Indeed, the ball was eventually snapped up by a smiling manager, to mock groans from the employees. Few could have expected differently from a company that didn't even allow smoking in its parking lots. From the walls of the auditorium, great banners unfurled from the ceiling, displaying the latest examples of Jobs' highly unusual "Think Different" campaign. One featured Lucille Ball and Desi Arnaz, in their "I Love Lucy" prime. The lights finally went down a few minutes past 10 A.M., and out strode Steve Jobs-sans beard. A low murmur spread through the crowd at the sight of Jobs in a rare suit, just as he had been at the unveiling of the original Mac. Perched atop a podium to one side was a mystery computer, its identity concealed by a veil, just as the first Mac had been. "Apple is back on track," Jobs began, to cheers that would continue throughout his presentation. "We are going to roll out the whole product strategy today." This, then, was what everyone had been waiting for. Jobs had proven he could cut costs. But could he reignite growth for Apple? That, of course, was the million-dollar question. Savoring the moment, Jobs did not hurry it along. Before pulling back the veil of his newest toy, he spelled out a shift in strategy that had been in the works since shortly after he returned. No longer, he said, would Apple manufacture umpteen different models for the market. Instead, it would produce just four: a desktop and portable for the professional market and a desktop and portable for the consumer and education ones. The Power Mac G3 was the desktop for pros. A PowerBook G3, being introduced that day, would be the professional's portable. The consumer portable would be launched in 1999; Jobs did not give details, but many analysts speculated this was the much-publicized Columbus project for a network computer. As for the consumer desktop, it was beneath the veil. Its moment was almost at hand, but not quite. He had to show off Chiat/Day's latest commercials for Apple. One showed an Intel Pentium II strapped to the back of a snail. The other mocked Intel's TV spots of workers disco dancing in their clean-room "bunny" suits. In this one, one of the bunnies was shown smoking and on fire, having been scorched by Apple's blazing fast G3. The music from the disco song, "Burn Baby Burn," pulsated in the background. "You guys want to see our ads?" he asked rhetorically, clicking the start button as his employees roared their expected approval. Then he previewed another ad, this one of a steamroller crushing a row of Pentium laptops. "The entire Pentium world has just been flattened," a male voice intoned authoritatively. At last, it was time for the main event. "I am incredibly thrilled to tell you that Apple is getting back into the consumer market," Steve Jobs said. Then, he reached over to the podium and pulled away the veil concealing his mystery machine. The audience let out a collective gasp as they looked on the most amazing machine most had ever seen. Colored teal and white, shaped like a cone and able to glow in the dark, this was Steve Jobs' reborn Macintosh, dubbed the iMac (as in Internet Mac). The machine was absolutely beautiful, more resembling a device out of the "Jetsons" cartoon series than the box-like computers adorning most people's offices and homes. With computer and monitor included in the same plastic casing, the iMac fairly reeked of elegance, and bore Steve Jobs' handprint down to little details such as a translucent keyboard that lit up at the user's touch. In recognition of the little computer's strategic importance to Apple, its screen contained the message: "Hello again." The original Macintosh's screen had simply read, "Hello." "It looks like it's from another planet, but a good planet," Jobs said to good-natured laughs as he led a visual tour of the iMac with the assistance of a video cameraman, whose footage of the back side of the machine could be seen on an overhead screen. As Jobs ticked off the iMac's technical features, including a fifteen-inch monitor display, a 233-megahertz G3 processor, and 32 megabytes of memory, he predicted that, at $1,299, "We think iMac is going to be a really big deal." And with that, the incomparable Steve Jobs ended his hour-long presentation, offering this closing thought: "This company can be great again, and I think we're well on the way to it." In the dark of the auditorium, with cheers echoing from across the great walls, I found myself believing that perhaps Jobs was right. Maybe Apple could reclaim its rightful place as the computer industry's shining light. As I stepped blinking into the daylight outside, though, the effect was much the same as when reality hits as one walks outdoors from a movie theater. Suddenly, one can see more clearly. I began questioning how many people would buy an iMac at $1,299, when fully configured Pentium machines were available for well under $1,000. Granted, the Pentiums didn't look nearly as good as the iMac, but since when do most people buy computers for their looks? I was not alone in harboring skepticism. We in the press did not discover until reading the fine print of the iMac later that it did not include a floppy drive-the favorite form of storage for most users. Apple officials later explained in interviews that floppy drives were being made obsolete by the Internet, because files could be stored and downloaded on networks. But that day certainly has not arrived in my household, nor, I believe, in many others. In writing this book, for example, I made duplicate copies of chapters on numerous floppies. I could then mail the floppies to my publisher, or keep them in a place of safekeeping. I certainly would not have been comfortable stockpiling this work on a network that some hacker could crack. "What about little Johnny and Janie, who want to work on their school reports during the day at the school library and in the evening on their home iMac? Or their parents who sometimes have no choice but to bring work home from the office?" wondered the venerable Macintosh analyst Henry Norr, in a column on the MacInTouch web site. "I think [failing to include a floppy is] a horrendous mistake, one that will significantly reduce the appeal of the iMac." Norr pointed out that Jobs' NeXT machine also did not include a standard floppy drive. Indeed, as mentioned earlier in this book, that computer failed to attain many sales in large measure because developers would not support a floppy-less machine. In the end, of course, consumers will decide the fate of the iMac, which began shipping on greating buying demand in August 1998, as well as that of Apple itself. Even if it does not succeed, Steve Jobs is shrewd enough to have some other tricks up his sleeve to keep his old company afloat for awhile. But, in my opinion, Apple's future remains a limited one over the long term, no matter what he does. Indeed, the sheer spectacle of his iMac launch was sad in a way, for it underscored how much had been lost over the years. As much as he tried to emulate the excitement of the first Macintosh launch, this was not a product that was destined to change an industry, as the Mac had done. At best, it stood to breathe more life into a sick and tired company. Apple, after all, had shriveled to a $6 billion-a-year company from $11 billion in the span of just three years. With few resources left to compete against Microsoft, it appears to be a company relegated to defending a shrinking niche of the computer market. Apple Computer had started in a simple garage with a simple goal: To change the world by empowering the masses with the wonders of computer technology. And it was such a noble goal that bright and idealistic youngsters raced to California from all corners of the world to embrace this movement known as Apple Computer. And Apple, for a good many years, did not let them down. The first Apple II had proven a true technological breakthrough, with its complex, intricate circuitry bound in an appealing box that, for the first time, made the computer as non-threatening as a toaster. This gave birth to the personal computer industry. Then, in 1984, came the Macintosh, the machine with the endearing look and feel that Steve Jobs had designed to free the world's office workers from the tyranny of the staid and unimaginative IBM-compatible computers. And through it all, Apple was like a rocket ship soaring into the heavens, never looking back as its band of wide-eyed mavericks recklessly charted the future, laughing in the wind. They were cool. They were hip. Working 90 hours a week, and loving it. And partying hard, too. At the Friday afternoon beer busts. The Halloween parades. The Pointer Sisters concerts. The beach blasts in Hawaii. There is nothing so glorious as the promise of youth, and it was this youthful outlook with all its hope and vitality that Apple's culture embraced and nourished. Apple was not like everyone else, because it never wanted to be. The company, through much of its history, was like the teen-ager who is having the time of his life and refuses to grow up. But just as no youngster can defy the laws of aging, neither could Apple defy the laws of business. Apple, since 1987, had been riding the wave of a multi-billion-dollar business from the Macintosh, without ever focusing its considerable talent and energy into making that once-revolutionary machine a computer that could evolve into the future. As a result, Bill Gates, the king of focus, deftly steered Microsoft past Apple to dominion over an entire industry. It wasn't for lack of talent that Apple failed. So much brain power was concentrated under one roof in Cupertino that Apple Computer arguably boasted a collection of the finest scientific minds in the world. And its executives were among the finest anywhere, at least at other companies. John Sculley, for example, was the Pepsi-Cola whiz kid who surely would have ascended to the very pinnacle of the soda industry had he not answered that taunting challenge from the mesmerizing Steve Jobs atop a Manhattan high rise so many years ago. Like so many others who answered the siren song of Apple, Sculley found himself in a strange new land totally enraptured with the notion of changing the world. But John Sculley was a born-again technologist who lacked the credentials to gain respect from Apple's powerful engineering community. So even though Sculley was CEO of Apple for so many years, he never really ran the place and the ship became steered by a thousand different captains. One day, it would be Jean-Louis GassTe calling the shots. Another, it would be the sales chief Allan Loren. And both of those men were by no means incompetent boobs. GassTe vindicated himself, after Apple, by starting an exciting new computer company from scratch. Loren went on to become one of the very top executives at American Express, a company which surely would not stand long for someone who is not up to snuff. Yet, when all these people were assembled at Apple, the freedom was so limitless and the potential to influence so grand that they all fell under the same spell, throwing rational business practice to the winds. Even Michael Spindler, as eccentric and strange as he was, was a world-class strategist whose theories on global marketing were brilliant and ahead of their time. But Spindler harbored such a passion for Apple that it very nearly killed him in the end. He was the Diesel, but in work habit only. Sputtering and spewing like a firehose in front of his whiteboard, Spindler pointed to where he knew Apple must move as industry forces bore down on the company. But he lacked the strength of will to make the ship turn with him. Deprived of a single-minded leader of the caliber of Bill Gates, Apple, then, was left to run adrift, unable to shift direction even as the alarm bells were sounded of approaching calamity. The calamity being a gargantuan industry commanded by the joint empire of Microsoft and Intel, whose economic forces slowly but surely began squeezing the very life out of Apple Computer. As the controversial human relations chief Kevin Sullivan, puts it, "Apple was like a sandcastle we built on the beach. Once that tide came in, no matter how much we tried to fortify it, in the end we could not keep it together." So what are the lessons, and where lies the blame? The lessons are simple, even if they may not have been obvious to Apple's executives at the time. Be paranoid, not arrogant. Welcome help from others, don't sneer at it. Seek the long-term reward, not just short-term gain. And, above all else, embrace industry standards. Don't live outside them. And the blame for what happened to Apple is largely a collective one. The board shares heavily in this by virtue of sticking its head in the sand for so long it had absolutely no clue as to how badly Apple was really deteriorating. The board's prime interest had been profit above all. As a result, it failed to move in and take action when it became clear that its CEOs were unable to do the job. John Sculley, as fine an individual and accomplished in the field of marketing as he is, erred terribly when he failed to heed all the warnings from some members of his own staff as well as Bill Gates himself to license the Macintosh early on so that Apple would not have ended up so isolated in the world. It is understandable why he did not, given his mild temperament and the fierce opposition he encountered from strong-willed people like GassTe, but that is not an excuse. Sculley was the CEO, after all, and he should have behaved like one. And, while he built the company from a $1 billion enterprise to a giant of more than $10 billion in yearly revenues, Sculley set Apple up for disaster by handing over great power to his subordinate Michael Spindler, who never possessed the skills needed to run a big company. Even without licensing, Apple could have remained a viable force for some years to come, had Spindler not run the company into the ground by his complete inability to manage the basic business. He allowed research and development to continue spinning out of control, and did nothing as manufacturing and product quality slipped so badly that computers started exploding in flames. Spindler had a chance to save Apple before it was too late, by selling the company to IBM, but both he and Apple co-founder Mike Markkula greedily demanded more money and conditions, killing the deal. In terms of shareholder value alone, this was an enormous missed opportunity. IBM's share price in mid-1997 soared to more than $150 from about $70 at the time of that fateful merger meeting in November 1994, while Apple's shares imploded to $13 from about $40. The shares later rallied to more than $40 under Steve Jobs' management, with volatile swings both ways. Apple was already in trouble when Gil Amelio stepped in, but he ended up applying Band-Aids on a wound that required a tourniquet. Amelio also cost the company perhaps its last great opportunity to conduct a merger of equals. Had he not fought against the merger with Sun, Apple likely would have advanced much faster into the Internet than it has on its own, and it would have had a strong partner to buck it up in the painful journey ahead. The jury, as of this writing in the summer of 1998, was still out on Steve Jobs, although he had proven himself the first capable Apple CEO to that point. If nothing else, Jobs should be credited with saving Apple from impending doom under Gil Amelio. Had Amelio continued as CEO, it is highly likely the company would have been near bankruptcy soon, for the business was headed straight off a cliff. Jobs, though, has proven himself a short-sighted manager in the past, as evidenced by his failure at NeXT and his fracture of Apple's engineering teams a decade ago. Many of the moves he has made at Apple, while laudable, were fairly obvious ones to any student of Apple's history. "I don't think he's doing these things because he's a genius, but because he has no choice," observes Mark Macgillivray, an industry consultant in Sunnyvale, California. So, finally, what is left for Apple? Gil Amelio had said before that Apple had two roads to take, one toward prosperity, the other toward irrelevance. Apple was already well on that latter road when he took over and it may be impossible for anybody to reverse course any more. The company's share of the PC market rebounded a bit to about 4 percent in 1998; a level still so low that it is hard to imagine many software developers willing to devote the resources to support it for much longer. Consumers, too, have abandoned the Mac in droves, as evidenced by the miserable sales of the Performa line for two Christmases in a row before the line was pulled. Apple has been forced to retreat into its remaining two strongholds, education and desktop publishing, but these markets are under withering assault by the Wintel competition, too. In short, the real question for Apple is whether it has any real future at all, anymore. The measure of how far it has fallen is reflected in the fact that its fate lies not in its own hands, but in market forces over which it no longer has control. It took many years for the circumstances to build that would begin Apple's inexorable slide. But the company's plunge has taken place so rapidly that it is tantamount to a snowball picking up speed and size as it hurtles down the mountain. Can anyone stop it? Maybe Steve Jobs can. But the odds aren't good that he can do more than slow the fall, perhaps giving Apple a few more years before it is either gobbled up by a bigger company or finally runs out of customers. Whatever happens in the end, the world owes a debt of gratitude to Apple Computer. This was the brave, if foolhardy, pioneer of the Information Age. So new and exciting, Apple carried the banner of the dawning age proudly on its shoulders, paving the way for so many of the technical innovations we take for granted today. And while the Apple story degenerated into one of the strangest and saddest in American business, the company, nevertheless, has secured a place in history that no amount of managerial bungling can ever erase.
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Interviews & Essays

Interview with Jim Carlton

Business editor Laurie Petersen talked recently with Wall Street Journal reporter Jim Carlton about the rebound of Apple Computer. The company's revived fortunes coincide with the paperback release of Carlton's book Apple: The Inside Story of Intrigue, Egomania, and Business Blunders.

barnesandnoble.com: Were you surprised by Apple's comeback?

Jim Carlton: Flabbergasted. When I did the hardcover book (in 1997) it seemed like it would take nothing less than Jesus Christ himself to bring the company back. I gave them 12 to 18 months.

bn.com: What do you think is different about Steve Jobs this time?

JC: I think failure changed him. He was thrown out of the company he founded. Then NeXT failed, in part because he wouldn't put a floppy drive into the box. I think he learned from that. [Although the iMac has no floppy, either.] The success of Pixar gave him a lot of confidence. He returned to Apple more mature. The last two chapters of my book now talk about this.

bn.com: What do you think of the company's long-term prospects?

JC: I'm still skeptical about the long term. Moving from 40 products to four, the G3 at the high end and the iMac at the low end, is a brilliant strategy. Killing clones I thought was a mistake. When I asked Jobs about it, he told me, "Believe me, it was the last thing I wanted to do. But the numbers didn't work out." Their market share was 3.2 percent at the end of the second quarter. With the iMac, it's finally hit 4 percent worldwide. But that's just nothing compared to what the rest of the industry is shipping.

bn.com: How much of the iMac's success do you attribute to the marketing?

JC: Apple for years has had abysmal marketing. But when Jobs unveiled the iMac, I went to the launch and when he pulled off the curtain and it said "hello again," I got goosebumps. Then when I got outside I said, "Let me look at the specs again. Oh, it doesn't have a floppy drive." I thought they'd be backed up, but they're doing very well meeting first-time-buyer demand.

bn.com: What about its power niches?

JC: Apple still has 60 percent of the desktop publishing business. But even places like Dartmouth, which is a Mac-fanatic school, have had to put their foot in the other door because of applications. In the final analysis, it's really too little too late to return Apple to a leadership position in the industry. What they may wind up doing is leading the way for a new generation of computer design. Just the way the Mac revolutionized the interface, the iMac is a revolutionary new design.

bn.com: What do you use?

JC: A Mac at home and Windows at the office.

bn.com: What other books do you recommend?

JC: I recommend AOL.com by my colleague Kara Swisher. I also really like On the Firing Line by Gil Amelio. You very rarely see a CEO spilling his guts the way he did. I think even someone who didn't follow the industry would get something from this book. I'm halfway through The Microsoft File, which I know is under some controversy about its sourcing. Another great book about the industry is Accidental Empires by Robert Cringely. He talks a lot about their personal lives, you know, how Bill Gates could never get a date.

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  • Anonymous

    Posted February 11, 2004

    detailed history with some techie jargon

    computer fans rejoice !! this book offers a great perspective into Apple and the whole computer industry of the 70's and 80's. some of the jargon is a bit tech-minded, but it is still easy and fun to read. i only wish the publisher would have added a picture gallery .

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  • Anonymous

    Posted April 8, 2000

    comprehensive and detailed account of Apple Computer

    a very comprehensive and interesting account of Apple Computer. Written from a journalists perspective. Perhaps a little too negative about the Apple corporate culture?

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