Steve Jobs, Apple, and Palo Alto
Original post made by Fred Balin, College Terrace, on Sep 14, 2011
When Apple introduces new hardware, there is no grace period in their stores to contemplate the unsold inventory at end-of-life; display items are replaced as soon as new equipment arrives. When the operating system is upgraded to the next feline in the Mac OS X progression, it is immediately imaged onto new products at the factory. Your MacBook Air of today comes loaded with Lion, and there's no retreating to Snow Leopard; the hardware does not allow it.
If there is a glitch in a product transition, as occasionally happens, Apple will issue a software patch, provide a part replacement, or institute a repair program, but it will never turn back. You ride on a breathtaking, perpetual migration to the next wonder from Cupertino.
With rare exception, Steve's interviews and talks adhere to a similar rule. Look ahead, not behind.
For a 1986 Esquire profile, barely a year since his exile from Apple, there was a brief slippage. Writer Joe Nocera and his subject find themselves one evening in Steve's sprawling, but sparsely furnished, Woodside mansion. There he reminisces about the making of the Macintosh and brings out several photo albums to flip through and share.
But in 1994, the 10th anniversary of the introduction of the Mac and with Steven Levy's excellent homage "Insanely Great" on bookstore shelves, there is scant word on the topic from Steve Jobs.
In June 2005 there was a noticeable change from the norm: Steve's 15-minute poignant and personal commencement address at Stanford. It was a year since his cancer diagnosis, in which he was initially and incorrectly led to believe he would have only months to live.
At his MacWorld 2007 keynote, two years before his need for a liver transplant, a nimble, hearty, and smiling Steve, unexpectedly finds that his presentation clicker is not working. As the crew scrambles around for a fix, an association registers inside, and Steve pulls out a tale of two young pranksters to pass the time. Steve and his older friend, Berkeley student Steve Wozniak, are in the dormitory with a homemade TV jammer and surreptitiously driving the residents batty, who try unsuccessfully to adjust their TV antennas.
Later this year, we will be privy to another, and probably extensive, window into Steve's retrospection, via a forthcoming, authorized biography scheduled for release by Simon and Shuster on November 21, including material from over 40 interviews with Steve over the past two years.
The completed manuscript is being updated to include his August 24th resignation as Apple CEO, a sad announcement, leading to the thoughts in this lengthy post.
I refer to the co-founder of Apple by first name alone not because I am a personal friend or even an acquaintance. But I am deeply steeped in the lasting aura of the two Steves in the Garage, have been a member of The Faithful since the Apple II, and most people I know in and around town have personal tales to tell, comments to make, and over the past several years, heartfelt concerns to express.
There are many metrics to define the enormity of Apple's success under Steve's second tenure, but the one that packed the greatest kick for me was the news in May of last year that Apple had passed Microsoft in market capitalization.
Step back for a moment to the summer of 1997. Steve, having returned to Apple, appeared on stage at MacWorld Boston, and in a practical decision announced an arrangement with Apple's arch rival in the battle for the desktop. Microsoft would bolster a shaky Apple with a 5-year commitment to new Mac versions of Office and an investment in the company of $150 million. In return, Apple would bundle Internet Explorer as the default browser on the Mac OS.
The two companies also settled some minor remaining claims related to the "you-stole-our-GUI" lawsuit, but the major elements of Apple's copyright infringement case against Microsoft's knockoff of the Mac's look and feel had long been decided in favor of a tough and crafty Bill Gates. Twelve years earlier, he had successfully used the threat of withholding further development of Office against Apple CEO John Sculley, who then agreed to license elements of the Mac interface for use in Windows 1.0, and, in what would be a pivotal contract insertion, future versions of Windows.
So at the time of MacWorld Boston 1997, the OS wars between the two companies were, at least in practicality, over. Apple had won the paradigm via the Mac's elegant, engaging, and easy-to-use graphical approach, but Microsoft had read the early writing and via steady incremental advances in Windows and shrewd leverage of its power in the marketplace, dominated at the cash register and in the industry.
But many in the audience were not having any of the entente, and when a giant live video image of Bill Gates appeared, towering over Steve on the MacWorld stage, the diehards expressed their displeasure, signifying their shift from IBM as Big Brother in "1984" (the commercial) Web Link to Microsoft, as depicted in the 1999 docudrama "The Pirates of Silicon Valley." Web Link
But whether you were realist or warrior on that day 14 years ago, Apple's market capitalization stood at a little over $2 billion. Microsoft's was just under $150 billion, almost 75 times greater. Fast forward to May 26 of last year: Microsoft had grown by about 50% to $226 billion, and Apple, once on the ropes, had edged passed them! Today Apple closed at over $360 billion, with Microsoft relatively unchanged.
Of course, Apple is not the same company as it was back then. It is now four and half years since Apple dropped the descriptor "computer" from its name, to be known simply as Apple Inc. By then the company was raking in more cash from iPods than from Macs, and with the iPhone and iPad still waiting in the wings. The playing field had shifted, and Apple was dominating on the new turf. Mac sales continued to do well, but as part of the company's revenue, it was just a little more than 20%.
Possibly even harder to fathom than Apple's amazing success since Steve's return is how terribly close it came to disappearing as an independent company in the years prior.
The combination of Woz's genius in creating The Apple II and Steve's for marketing and design made Apple an icon, the leader of a new industry, and racing along the fastest trajectory from inception to Fortune 500 status. While making early shareholders wealthy, the Apple II also paid for the development of the Macintosh and sustained the company when the Mac's critical acclaim was not matched by expected sales. In 1985, the Apple II line was running toward empty as a cash cow, and the Macintosh was struggling.
In the resulting crisis and intrigue, John Sculley prevailed in a "Steve-or-I" power struggle, and Apple's co-founder was removed as head of the Macintosh Division and soon to leave the company.
Sculley did deliver a number of productive and expansive years for the company before things started to turn downhill again.
But despite Apple's iconic history, powerful brand, record of innovation, fervently loyal core customer base, and dedicated employees, Sculley, his successor as CEO, Michael Spindler, and the majority of the Apple board were privately and desperately trying to sell the company, viewing absorption as the only path to survival.
During this disturbing period, Apple was in private talks with Kodak, AT&T, IBM (its recent partner on the PowerPC chip), Compaq, HP, Sony, Toshiba, Philips, and then in Spindler's final gambit, the supposedly ideal match with Sun Microsystems.
By an improbable collection of circumstances, thankfully, nothing came together.
With Spindler's final failure to sell Apple to Sun and impending losses to be announced, he was out, and Apple board member Gil Amelio, head of National Semiconductor, became CEO in early 1996.
And within a week, Amelio made the first of two pivotal decisions for which we must be forever grateful. He released a statement to the press: "This company is not for sale."
The second momentous decision, made on that remarkable Friday before Christmas that year, was, of course, his decision to purchase NeXT.
Apple needed a new operating system to supersede the fundamental code base that had been running on the Mac, and the company had been working for several years toward one, codenamed "Copland." It had innovative elements, but was disjointed among a number of separate teams, way behind schedule, and eventually deemed hopeless in becoming an integrated product. The company would need to look outside, and NeXT now had something of real value.
On a visit to Carnegie Mellon University, Steve, ever on the lookout for emerging paradigms and top talent, learned about a new, advanced operating system kernel (the main component of an OS), named "Mach" and of a key contributor, software engineer Avie Tevenian. Steve brought Tevenian to NeXT to create a computer operating system and object-oriented tools for what he planned would be a new machine destined to surpass the Macintosh. The hardware effort failed, but ironically the NeXT OS would instead become the foundation for Apple's new operating system, Mac OS X. In addition, NeXT's Web application tools would be become the building block for the Apple and iTunes Online Stores.
Apple's purchase of NeXT, however, was not a sure thing. There were competitors and alternatives. Amelio had broached the idea of Microsoft running the Mac OS on top of Windows NT, and Bill Gates was very excited about it. Sun came back into the mix, this time as a potential licensor of its Unix-based Solaris OS, and the man who had replaced Steve as head of the Macintosh Division, Jean-Louis Gassée was pushing his company's well-received BeOS.
In eventually choosing NeXT, Amelio was also fully aware of Steve's desire to return to Apple and lead the company, and of the potential for problems in working with him. Three years earlier, having been named to the Apple board while still CEO at National Semiconductor, Amelio received a call from Steve, who asked to see him. Amelio agreed, and at the meeting, according to "Icon" by Jeffrey S. Young and William L. Simon, he told Amelio that there was only one person who could straighten out Apple, and that Amelio should convince the board to bring him back as CEO.
Amelio did not follow through and later put that datapoint aside in making the NeXT acquisition.
As part of the final deal with NeXT, according to Amelio's 1998 book "On the Firing Line," Steve wanted a straight cash deal, but Amelio insisted that he signify his stake in Apple's future with stock, and Steve agreed to take 1.5 million shares as part of the arrangement.
Steve was also ambivalent about what role if any to take on at Apple.
At Pixar, he had finally escaped from the same trap as at NeXT, pouring tens of millions of dollars, this time, however, from his own dwindling personal fortune, into beautifully designed, but pricey hardware that would not sell. But finally he had discovered and was mining the real gold: the creative genius of John Lasseter. Lasseter had created brief animated shorts for industry trade shows to show off what the Pixar workstation could do, but their reach extended much further. "Luxo Jr" and "Tin Toy" were nominated for Academy Awards as best animated short, and "Tin Toy" won the Oscar. Disney, who had dominated animation the old-fashioned, pre-computer way, bankrolled Pixar to develop "Toy Story." It was smash at the box office. Pixar went IPO. The Hollywood skies were within Steve's reach. Where did Apple fit in?
Amelio writes that he insisted that Steve have a defined position at Apple, and they agreed upon the amorphous slot of advisor to the chairman (i.e., to Amelio).
Would it work out?
In many ways it did. According to Amelio, they spoke several times a day and agreed on 90% of the topics. But other actions created suspicion and concern in his mind, including Steve's dumping of his Apple shares and the public threats of a hostile takeover of Apple by his close friend Larry Ellison.
On the weekend of July 4, 1997, just six months after Apple absorbed NeXT, the Board voted Amelio out, and Steve was back in charge, a status he would not relinquish until last month.
In his book, Amelio writes that Steve called him right after his ouster and said he had absolutely nothing to do with the board's decision. Then in a sincere voice, he extolls Amelio's integrity, offers suggestions for his next steps, and an open hand for future contacts.
Amelio's response to the reader is somewhat philosophical: "I think there are two people inside the body of Steve Jobs, and you can never be sure in advance which one is going to be talking to you."
In the book's Epilogue, the wound begins to fester. He complains that Steve appropriated his successes and did not give him deserved credit. Then he cautions about an Apple future with Steve as head: Gut-level decision-making would drag managers into quagmire, and Apple would not survive under such methods of leadership.
Did Steve engage in behavior behind the scenes that amounted to a betrayal of the Apple CEO?
Amelio thinks so.
Did Steve fail to give credit to Amelio where it was due?
Sure, but that is not unexpected when you are replaced.
Did Steve feel bad about any of this?
I like to think so and that it is at least part of the reason he took the title of interim CEO for three years with a salary of $1 a year.
And what of Amelio's warning of Apple's future under Steve?
He could not have been further off base. Because there is no question that in The Particular Case of The Return of Steve Jobs, the results would he very hard to match, by any CEO, in any corporate environment.
Palo Alto as a locale of at least some note for Steve dates back to at least his middle school years. After his family moved from South San Francisco to Mountain View in 1960, he was greatly influenced by the aura of Hewlett-Packard and it's engineers turned weekend garage tinkerers, who lived in the area. At 12, a neighbor and HP engineer Larry Lange helped enroll Steve in the company's Explorer's Club for adolescent engineers, which met one night a week in the company cafeteria in Palo Alto.
When the Atlair 8800, an assemble-it-yourself-kit, trumpeted as the world's first personal computer, hit the cover of the January 1975 edition of Popular Electronics (Web Link) it created a tsunami of excitement among a cadre of hobbyists, engineers, and students who had longed to have their own computer. Bill Gates dropped out of Harvard and headed directly to Albuquerque and the offices of inventor Ed Roberts. In our area, HP engineer Allen Baum enticed his friend Steve Wozniak to attend the first meeting of a new group, the Homebrew Computer Club, in a Menlo Park garage.
While club members bought and assembled the Altair and worked on hardware add software for the device, Woz figured he could make a personal computer that was not a kit, that was more compact, and with a whole lot more capability. The next year his fully assembled circuit board, the Apple I, was ready, and his buddy Steve Jobs arranged for Woz to show it off before the packed Homebrew crowds that now gathered at the Stanford Linear Accelerator auditorium.
Impressed, club members were ready to place orders and Paul Terrell's Byte Shop was on board to sell the product. The Apple I circuit boards were assembled in the Jobs family home now in Los Altos. In determining retail pricing, Woz liked repeating digits, so the final units were sold for $666.66. Less than 200 were purchased, but enough for Apple Computer, established a few months earlier on April Fools Day, to return a small profit.
Ten years ago, at a lighthearted Homebrew Computer Club reunion at SLAC, Allen Baum brought an Apple I logic board, and Marty Spergel, the club's go-to guy for parts, asked him to read the curious imprint on the underside of the board: "Apple Computer, Palo Alto." Web Link
Baum explained: "Steve Jobs really thought ahead and figured if anyone would want to buy a computer from Los Altos, which no one had ever heard of, or Cupertino, which no one had ever heard of, they'd think Apple Computer was a joke, and he wanted something that was firm and upright like Hewlett-Packard. So he got a mail drop box on Welch Road, 777 Welch Road, and that was the address for quite awhile."
The Apple I was, of course, just a dry run for Woz. He was soon working on the Apple II, combining CPU and video instructions on newer dynamic RAM, adding slots for expansion boards, and input/output for storage. Steve designed a sleek plastic case and handled the marketing. The fledgling company rented an office off Steven's Creek Boulevard near Bandley Drive in Cupertino. Mike Markkula with serious investor money was in the mix. It wasn't long before the Apple II ensured that both Cupertino and Los Altos were indeed firmly planted on the map.
There are many other early Steve-to-Palo Alto connections: significant, trivial, curious, and meaningless. But in 1991, Steve and Laurene Powell were married, and at her insistence, according to "Icon", he agreed that they would move out of the Woodside mansion into something more modest and manageable. As a result, Steve has resided in Palo Alto, during his period of triumph at Pixar, vindication at NeXT, unexpected return to Apple, and incomparable second act in Cupertino.
By all accounts Steve is an intensively private person, but he also appears to be one who likes to get around town, blend into his surroundings, and as much as possible for someone of his notoriety, live a normal life.
And so, as one does personal, family, business, or recreational activities, in and around town, you just might see him.
I've noticed him walking out of Whole Foods with a beverage, and riding a bike with his children through my neighborhood.
One Saturday morning years ago, I was in that great old shoe of a Palo Alto Macintosh store, ComputerWare, and there he was along one of the aisles looking at software packages. But I'm sure now, he must have been thinking, "I can do this so much better." And of course, he did. Next month marks the 10th anniversary of the opening of the University Avenue Apple Store: 2nd in California, 10th in the nation, now part of a collection over 330 worldwide, and soon to move into a larger space two blocks away. Steve was there early that opening Saturday morning for a staff pep talk and to greet the large crowd lined up outside. And over the years, he would periodically return to the store for a product release, to demo something for a guest, or maybe just to see how things were going.
Apple had a big hole to climb out of after MacWorld Boston 97. And somehow almost every turn Steve made was the right one.
Like a master politician re-energizing his base for a key primary, he launched an advertising campaign that thrilled The Faithful. It was pure imagery, produced by Chiat / Day, the creators of "1984." In the TV spots, there were no product shots or info, just black and white video of truly remarkable people appearing under Richard Dreyfus's voiceover ("Here's to the Crazy Ones ..."). At the end of the parade, the Apple logo appeared over the words "Think Different." Then fade to black. Web Link
Of course, it was over the top. What in the world do Mahatma Gandhi and Martin Luther King, Jr. have to do with Apple?
Still the commercials and follow-up print campaign made a visceral connection not only to the "crazy ones" who created the personal computer industry, but to those who identified with Apple's underdog status versus giants IBM and Microsoft.
And Steve followed up masterfully, beginning with the first product of what would be a hugely successful and productive collaboration with industrial designer Jonathan Ive. The bondi blue iMac, a single unit enclosed in translucent plastic -- sort of a futuristic reprise of the original Mac -- was a hit, and brought in new customers. It also pushed the bar forward on technologies. Serial, SCSI, and Apple Desktop ports were all replaced by USB, and the floppy drive was abandoned, although to the consternation of some critics.
Together with upticks in speeds and feeds, the iMac kaleidoscope expanded to the fruit colors, then more muted tones like graphite and indigo, back to a more playful Blue Dalmatian, and finally as a last good-bye to Apple's roots to the counterculture, Flower Power.
The iMac line continues today, but the product has gone through radical changes. Jonathan Ive's walk through Steve's Palo Alto garden inspired the unique "sunflower" iMac G4 introduced in 2002. A flat panel display "floating in space" via a flexible metal armature, attached to a mushroom base containing all the technical innards. "Each element true to itself," Steve said.
But two years later, the concept was completely reversed in the new iMac G5. Now almost everything was in the monitor casing, a single white plastic frame hanging on a metal L-beam. "A harmony and wholeness," said Ive.
While the complete change in concept led to some chuckles, the design did make sense, especially with the advent of larger flat panel displays. Today that basic design concept continues with a glass panel front, anodized aluminum replacing the white plastic case, and "Intel Inside." Yes, for those last holdouts, you now could run Windows on your Macintosh.
Married to the success of the iMac as a consumer product was the continued fruition of Steve's goal to bring creative tools into the hands of the masses. The original Mac, of course, had MacPaint and MacDraw and a slew of follow-on products from other developers, but in his reprise at Apple, Steve took creative access to a whole other level.
It began at the high end, but then rapidly gravitated downward.
In 1998, Apple purchased a video-editing product from Macromedia, which would in time become Final Cut Pro. The product would overturn an industry beholden to very expensive proprietary hardware and move it to personal computers and software that were within reach of aspiring and independent professionals and then later to the overall industry. Combined with the digital-video revolution impacting cameras, storage, and file-transfer mechanisms, Final Cut Pro was a breakthrough product and together with sales of high-end Power Macs and PowerBooks, would be the start of another big market for Apple.
But concurrent with Apple's internal development of Final Cut Pro, they also created a much simpler, easy-to-use video-editing product, iMovie, first included in the release of the iMac DV in 1999. Since 2006, it's newer iterations are bundled free on every Mac together with its creative cousins, iPhoto, iDVD, iWeb, and Garage Band. A huge new class of users could create impressive, creative works of their own all with software that came on their Mac.
On another front, Apple had missed the early sounds of the digital music revolution, but would make up for it fast and big time. They purchased a program called Sound Jam from a small developer and turned it into what would become iTunes. Recordable optical drives were added to the Mac so with iTunes you could finally "rip, mix, and burn" your music.
The first iPod in 2001 signaled the ascension of Apple's future dominance of the MP3 player space. The initial product was a success, but it would take time for sales to reach the stratosphere. Next generations would support a version of iTunes for Windows. And then, one more thing. Amid the swirl of peer-to-peer file-sharing services, which included a whole lot of copyrighted music, Steve Jobs, the man who had once partnered with Woz to create and sell "blue boxes" enabling other pranksters to make free phone calls, would now turn music downloading legit. With deals from the major record labels in hand, the iTunes Music Store opened in 2003. The iPod and iTunes Store were on a roll that has not stopped.
The original iPhone hit the market in January 2007. Another breakthrough product, but it also needed some time to hit its stride. The move to 3G cellular speeds and new models dramatically increased sales, and the iPhone 4 with choice of carrier and two cameras pushed it much higher.
Moving toward the present, one of the most amazing things about the iPad, aside from the great technology was that sales took off immediately. No wait, no ramp up. Just announcement and go, go, go. Three million in the first 80 days and no looking back.
Coupled with this period of creativity, eye for the market, operational excellence, and delight among users, there was also the unique treat of each Steve Jobs product introduction. These are highly polished presentations, but they also include whimsy, humor, personalities, and showmanship to match the signature designs and product capabilities. A longtime member of The Faithful should be able to clearly recall his or her main highlight reel drawn from Steve's keynotes and other product presentations. I know mine.
Steve's most recent presentation was in June at Apple's WorldWide Developers Conference. Known for two-plus hour talks, interrupted only by sips for water and audience reaction, he led a 40-minute closing segment on iCloud, Apple's upcoming storage and synchronization service. Two staffers ran the hands-on demos.
His voice was more muted and the cadence slower than at other times, but the personality, preparation, connection to the audience, and humor were all there.
"You like everything so far? Good. Well, I'll try not blow it," he started with some self-deprecation.
Then he launched into his opening thesis on the simplicity, value, and ease of use of the new service. As usual, phrasing melded expertly with corresponding graphics, as he clearly and cleverly made his initial case. Then his summary conclusion: "Everything happens automatically ... It all just works ... It just works."
But this was a crowd of developers, and they certainly knew both the successes and notable stumbles of Apple's current cloud-based system, Mobile Me.
But, of course, Steve knew that, too.
"Now you might ask," he posed to the crowd, "why should I believe them? They're the ones that brought me Mobile Me." A roar of laughter arose from the audience.
Then he made his decisive move forward. "So as of today this product ceases to exist."
The words were punctuated by the smashing to bits of Mobile Me and its $99 a year price point on the big projection screen.
Steve had already explained that the core applications of Mobile Me had been rewritten from scratch, that they were greatly improved, and would now be free as part of iCloud. Oh, and by the way, they were just part of a collection of a lot of new and great stuff.
Will iCloud really "just work" as billed? Apple's track record of late has been pretty darn good.
But no matter what the outcome, I'll be waiting for the next big thing from Apple and with Steve to introduce it.