The Apple Story
History of Apple Inc.
Apple Inc., formerly Apple Computer, Inc., is a multinational corporation that creates consumer electronics, computer software, and commercial servers. Apple's core product lines are the iPhone, iPod music player, and Macintosh computer line-up. Founders Steve Jobs and Steve Wozniak effectively created Apple Computer on April 1, 1976, with the release of the Apple I, and incorporated the company on January 3, 1977, in Cupertino, California. For more than two decades, Apple Computer was predominantly a manufacturer of personal computers, including the Apple II, Macintosh, and Power Mac lines, but it faced rocky sales and low market share during the 1990s. Jobs, who had been ousted from the company in 1985, returned to become Apple's CEO in 1996 after his company NeXT was bought by Apple Inc., and he brought with him a new corporate philosophy of recognizable products and simple design. With the introduction of the successful iPod music player in 2001, Apple established itself as a leader in the consumer electronics industry, dropping "Computer" from its name. The latest era of phenomenal success for the company has been in the iOS (Apple) range of products that began with the iPhone, iPod Touch and now iPad. Today, Apple is the largest technology firm in the world, with annual revenues of more than $60 billion.
Steve Jobs and Steve Wozniak were outcasts while they were in high school; by 1975, they had withdrawn from Reed College and UC Berkeley, respectively. Wozniak designed a video teletype that he could use to log on to the minicomputers at Call Computer. Alex Kamradt commissioned the design and sold a small number of them through his firm. Aside from their interest in up-to-date technology, the impetus for "the two Steves" seems to have had another source. In his essay From Satori to Silicon Valley (published 1986), cultural historian Theodore Roszak made the point that the Apple Computer emerged from within the West Coast counterculture and the need to produce print-outs, letter labels, and databases. Roszak offers a bit of background on the development of the two Steves' prototype models.
In 1975, Wozniak started attending meetings of the Homebrew Computer Club. New microcomputers such as the Altair 8800 and the IMSAI inspired him to build a microprocessor into his video teletype and have a complete computer.
At the time the only microcomputer CPUs generally available were the $179 Intel 8080, and the $170 Motorola 6800. Wozniak preferred the 6800, but both were out of his price range. So he watched, and learned, and designed computers on paper, waiting for the day he could afford a CPU.
When MOS Technology released its $20 6502 chip in 1976, Wozniak wrote a version of BASIC for it, then began to design a computer for it to run on. The 6502 was designed by the same people who designed the 6800, as many in Silicon Valley left employers to form their own companies. Wozniak's earlier 6800 paper-computer needed only minor changes to run on the new chip.
Wozniak completed the machine and took it to Homebrew Computer Club meetings to show it off. At the meeting, Wozniak met his old friend Jobs, who was interested in the commercial potential of the small hobby machines.
Steve Jobs and Steve Wozniak had been friends for some time, having met in 1971, when their mutual friend, Bill Fernandez, introduced 21-year-old Wozniak to 16-year-old Jobs. Jobs managed to interest Wozniak in assembling a machine and selling it.
Jobs approached a local computer store, The Byte Shop, who said they would be interested in the machine, but only if it came fully assembled. The owner, Paul Terrell, went further, saying he would order 50 of the machines and pay US $500 each on delivery. Jobs then took the purchase order that he had been given from the Byte Shop to Cramer Electronics, a national electronic parts distributor, and ordered the components he needed to assemble the Apple I Computer. The local credit manager asked Jobs how he was going to pay for the parts and he replied, "I have this purchase order from the Byte Shop chain of computer stores for 50 of my computers and the payment terms are COD. If you give me the parts on a net 30 day terms I can build and deliver the computers in that time frame, collect my money from Terrell at the Byte Shop and pay you."
With that, the credit manager called Paul Terrell who was attending an IEEE computer conference at Asilomar in Pacific Grove and verified the validity of the purchase order. Amazed at the tenacity of Jobs, Terrell assured the credit manager if the computers showed up in his stores Jobs would be paid and would have more than enough money to pay for the parts order. The two Steves and their small crew spent day and night building and testing the computers and delivered to Terrell on time to pay his suppliers and have a tidy profit left over for their celebration and next order. Steve Jobs had found a way to finance his soon-to-be multimillion-dollar company without giving away one share of stock or ownership.
The machine had only a few notable features. One was the use of a TV as the display system, whereas many machines had no display at all. This was not like the displays of later machines, however; text was displayed at a terribly slow 60 characters per second. However, this was still faster than the teletypes used on contemporary machines of that era. The Apple I also included bootstrap code on ROM, which made it easier to start up. Finally, at the insistence of Paul Terrell, Wozniak also designed a cassette interface for loading and saving programs, at the then-rapid pace of 1200 bit/s. Although the machine was fairly simple, it was nevertheless a masterpiece of design, using far fewer parts than anything in its class, and quickly earning Wozniak a reputation as a master designer.
Joined by another friend, Ronald Wayne, the three started to build the machines. Using a variety of methods, including borrowing space from friends and family, selling various prized items (like calculators and a VW bus) and scrounging, Jobs managed to secure the parts needed while Wozniak and Wayne assembled them. But the owner of the Byte Shop was expecting complete computers, not just printed circuit boards. The boards still being a product for the customers Terrell still paid them. Eventually 200 of the Apple I's were built.
But Wozniak had already moved on from the Apple I. Many of the design features of the I were due to the limited amount of money they had to construct the prototype, but with the income from the sales he was able to start construction of a greatly improved machine, the Apple II; it was presented to the public at the first West Coast Computer Faire on April 16 and April 17, 1977. On the first day of exhibition, Jobs introduced Apple II to a Japanese chemist named Toshio Mizushima who became the first authorized Apple dealer in Japan.
The main difference internally was a completely redesigned TV interface, which held the display in memory. Now not only useful for simple text display, the Apple II included graphics, and, eventually, color. Jobs meanwhile pressed for a much improved case and keyboard, with the idea that the machine should be complete and ready to run out of the box. This was almost the case for the Apple I machines sold to The Byte Shop, but one still needed to plug various parts together and type in the code to run BASIC.
Building such a machine was going to be fiscally burdensome. Jobs started looking for cash, but Wayne was somewhat gun shy due to a failed venture four years earlier, and eventually dropped out of the company. Banks were reluctant to lend Jobs money; the idea of a computer for ordinary people seemed absurd at the time. Jobs eventually met "Mike" Markkula who co-signed a bank loan for US$250,000, and the three formed Apple Computer on April 1, 1976. Why Apple? At the time, the company to beat was Atari, and Apple Computer came before Atari alphabetically and thus also in the phone book. Another reason was that Jobs had happy memories of working on an Oregon apple farm one summer.
With both cash and a new case design in hand thanks to designer Jerry Manock, the Apple II was released in 1977 and became the computer generally credited with creating the home computer market. Millions were sold well into the 1980s. A number of different models of the Apple II series were built, including the Apple IIe and Apple IIGS, which could still be found in many schools as late as 2005.
By the early 1980s, Apple Computer faced increasing competition. While the Apple II was already established as a successful business-ready platform because of Visicalc, Apple was not content. The Apple III (Apple 3) was designed to take on the IBM PC in the business environment.
The Apple III was a relatively conservative design for computers of the era. However, Steve Jobs did not want the computer to have a fan; rather, he wanted the heat generated by the electronics to be dissipated through the chassis of the machine, forgoing the cooling fan.
Unfortunately, the physical design of the case was not sufficient to cool the components inside it. By removing the fan from the design, the Apple III was prone to overheating. This caused the integrated circuit chips to disconnect from the motherboard. Customers who contacted Apple customer service were told to "drop the computer on the desk", which would cause the ICs to fall back in to place.
Thousands of Apple III computers were recalled and, although a new model was introduced in 1983 to rectify the problems, the damage was already done.
On December 12, 1980, Apple launched the Initial Public Offering of its stock to the investing public. When Apple went public, it generated more capital than any IPO since Ford Motor Company in 1956 (as claimed in two books and ICon: Steve Jobs) and instantly created more millionaires (about 300) than any company in history. Several venture capitalists cashed out, reaping billions in long-term capital gains.
In January 1981, Apple held its first shareholders meeting as a public company in the Flint Center, a large auditorium at nearby De Anza College, which is often used for symphony concerts. (Previous meetings were held quietly in smaller rooms, because there had only been a few shareholders.) The business of the meeting had been planned (or choreographed) so that the voting could be staged in 15 minutes or less. In most cases, voting proxies are collected by mail and counted days or months before a meeting. In this case, after the IPO, many shares were in new hands.
Steve Jobs started his prepared speech, but after being interrupted by voting several times, he dropped his prepared speech and delivered a long, emotionally charged talk about betrayal, lack of respect, and related topics.
While Apple Computer's business division was focused on the Apple III, a separate group was focused on a computer that would change the world. While the Apple III was another iteration of the text-based computer, this new machine would feature a completely different interface and introduce the words mouse, icon, and desktop into the lexicon of the computing public.
In return for the right to buy US$1,000,000 of pre-IPO stock, Xerox granted Apple Computer three days access to the PARC facilities. After visiting PARC, they came away with new ideas that would complete the foundation for Apple Computer's first GUI computer, the Apple Lisa. (Popular folklore states that "Lisa" was Steve Jobs' first daughter; Apple maintains it means Locally Integrated Software Architecture.
Apple Computer's engineers did not come up with the LISA interface overnight. In fact, the first iteration of the soon-ubiquitous WIMP interface was a poorly-drawn picture of a floppy disk. It was only after months of usability testing and work that Apple settled on the LISA interface of windows and icons.
The Lisa was introduced in 1983 at a cost of US$9,995. Because of the high price, Lisa failed to penetrate the market, however it was a useful proof of concept.
Macintosh and the "1984" commercial
The Macintosh 128k was announced to the press in October 1983, followed by an 18-page brochure included with various magazines in December. Its debut, however, was announced by a single national broadcast of the now famous US$1.5 million television commercial, "1984". It was directed by Ridley Scott, aired during the third quarter of Super Bowl XVIII on January 22, 1984, and is now considered a "watershed event" and a "masterpiece."1984 used an unnamed heroine to represent the coming of the Macintosh (indicated by her white tank top with a Picasso-style picture of Apple's Macintosh computer on it) as a means of saving humanity from "conformity" (Big Brother). These images were an allusion to George Orwell's noted novel, Nineteen Eighty-Four, which described a dystopian future ruled by a televised "Big Brother."
For a special post-election edition of Newsweek in November 1984, Apple spent more than US$2.5 million to buy all 39 of the advertising pages in the issue. Apple also ran a "Test Drive a Macintosh" promotion, in which potential buyers with a credit card could take home a Macintosh for 24 hours and return it to a dealer afterwards. While 200,000 people participated, dealers disliked the promotion, the supply of computers was insufficient for demand, and many were returned in such a bad shape that they could no longer be sold. This marketing campaign caused CEO John Sculley to raise the price from US$1,995 to US$2,495 (adjusting for inflation, about US$5,000 in 2007).
Two days after the 1984 ad aired, the Macintosh went on sale. It came bundled with two applications designed to show off its interface: MacWrite and MacPaint. Although the Mac garnered an immediate, enthusiastic following, it was too radical for some, who labeled it a mere "toy". Because the machine was entirely designed around the GUI, existing text-mode and command-driven applications had to be redesigned and the programming code rewritten; this was a challenging undertaking that many software developers shied away from, and resulted in an initial lack of software for the new system. In April 1984 Microsoft's MultiPlan migrated over from MS-DOS, followed by Microsoft Word in January 1985. In 1985, Lotus Software introduced Lotus Jazz after the success of Lotus 1-2-3 for the IBM PC, although it was largely a flop. Apple introduced Macintosh Office the same year with the lemmings ad, infamous for insulting potential customers. It was not successful.
Macintosh also spawned the concept of Mac evangelism which was pioneered by Apple employee, and later Apple Fellow, Guy Kawasaki.
Despite initial marketing difficulties, the Macintosh brand was eventually a success for Apple. This was due to its introduction of desktop publishing (and later computer animation) through Apple's partnership with Adobe Systems which introduced the laser printer and Adobe PageMaker. Indeed, the Macintosh would become known as the de-facto platform for many industries including cinema, music, advertising, publishing and the arts.
While it did briefly license some of its own designs, Apple did not allow other computer makers to "clone" the Mac until the 1990s, long after Microsoft dominated the marketplace with its broad licensing program. By then, it was too late for Apple to reclaim its lost market share and the Macintosh clones achieved limited success before being axed after Steve Jobs returned to Apple Computer in 1997.
1985: Jobs leaves Apple
After an internal power struggle the board of directors sided with Sculley and Jobs was asked to resign. Jobs then co-founded the visual effects house, Pixar. He also went on to found NeXT Inc., a computer company that built machines with futuristic designs and ran the UNIX-derived NeXTstep operating system. NeXTSTEP would eventually be developed into Mac OS X. While not a commercial success due in part to its high price, the NeXT computer would introduce important concepts to the history of the personal computer (including serving as the initial platform for Tim Berners-Lee as he was developing the World Wide Web).