“God dammit, Gil,” shouted Bill Gates. “Why are you spending $400 million on this junk? Steve knows nothing about technology. He’s just a kind of super salesman. Virtually everything he thinks and says is wrong.”
The year was 1997 and Microsoft CEO Bill Gates was expostulating in a conference call with Apple CEO Gil Amelio. By the year’s end, Apple had purchased Steve Jobs’ NeXT Inc., and Jobs had mounted a successful boardroom coup, ousting Amelio.
When Jobs took the reins in 1997, Apple was a veritable minnow in an industry dominated by Dell, Hewlett Packard and Microsoft.
But earlier this month, Apple briefly overtook Exxon Mobil to become the most valuable firm in the world, worth almost $US350 billion, with $US76 billion in cash and $US100 billion in annual turnover.
While Jobs has stepped aside as Apple CEO, it’s hard to believe he will every truly loosen his grip on the company he brought back to life.
An abortive boardroom coup
The events of 1997 did not mark the first time that Steve Jobs had attempted to overthrow an Apple CEO.
In the early 1980s, he had personally recruited John Sculley, formerly boss of Pepsi, who had taken on Coca Cola and won. Sculley, a marketing guru, had demurred when offered the Apple gig. But Jobs made Sculley an offer he couldn’t refuse: “Do you want to keep making sugared water? Or do you want to change the world?”
Sculley took the job. But conflict between Jobs and Sculley emerged rapidly. In 1985, Jobs sought Sculley’s dismissal, but Apple’s board would have none of it.
In a fit of pique, Jobs sold all his Apple shares except one and left the company he had founded in 1976. He would spend 11 long years in the wilderness.
Steve, Bill and Steve
Apple’s story really started with two Steves: Jobs and Wozniak. ‘Woz’ is a genius, a genuine once-in-a-lifetime inventor.
In Jobs’ parents’ garage, Woz singlehandedly invented the Apple I and Apple II. He wrote the operating system and, later, reinvented the floppy disk drive in two weeks flat. When Apple went public in 1980, it was the biggest initial public offering in US corporate history.
By this stage, Apple held 50% of the personal computer market. But Big Blue – IBM – flexed its considerable corporate muscle in 1981 and introduced its own variant: the personal computer (PC). But to run it, they bought an operating system called DOS from a guy called Bill Gates who ran an adolescent outfit called Microsoft.
Steve Jobs and Bill Gates share a long and often acrimonious history. They are giants in the tech world, where they ran their respective companies as personal fiefdoms.
IBM, long the dominant player in mainframes and personal computers, admitted defeat and sold its PC division to Lenovo in 2004. In the mid-1980s, Apple and Microsoft dominated Silicon Valley. In 2011, little has changed as the two behemoths remain virtually unchallenged astride the global IT market.
Unlike their contemporaries, Jobs and Gates are household names. While Gates wore the crown as the world’s richest man by the late 1990s, Jobs held the throne as the IT industry’s only rock star, an instantly-recognisable tech icon invariably dressed in black turtleneck, jeans and sneakers.
His keynotes (known as ‘Stevenotes’ among the cognoscenti) at MacWorld conferences attracted devotees from around the world, who would applaud hysterically and hang onto his every word – even when his product launches demonstrated that the emperor really had no clothes.
This was known as Jobs’ legendary “Reality Distortion Field”. Steve could convince an R&D team that their task was not impossible – that a tangerine-coloured iMac was ground-breaking, and that a transparent plastic cube with no upgrade capacity was the computer of the future.
Jobs was also notoriously short-tempered. Apple employees swore not to ride the lift with him because of an apocryphal story that you would be fired by the time you got to the fifth floor.
From zero to hero
When Jobs returned to Apple in 1997, the company was virtually out of cash and close to bankruptcy.
Dell CEO Michael Dell infamously suggested that Apple should give shareholders their money back.
Quickly, Jobs set about reorganising the company. He closed software spinoff Claris Inc, jettisoning 9,000 employees worldwide.
He convinced the otherwise-sceptical Bill Gates to invest $150 million in the beleaguered Apple and put Gates on a giant screen at MacWorld Boston in 1997, where the Microsoft CEO committed to delivering a new version of Microsoft Office for Macintosh.
For Jobs’ acolytes, Boston was an Orwellian moment as Jobs humbly thanked the towering pixelated image of Gates for his confidence in Apple. Mac zealots gaped. Surely things couldn’t be that bad?
They were that bad, but Jobs had a plan. He spent $100 million launching Apple’s “Think Different” marketing campaign, placing giant pictures of Gandhi, Bob Dylan and John Lennon on New York billboards.
In 1998, Apple released the iMac, a modest, egg-shaped Bondi blue computer with no floppy drive. By Apple standards, it was inexpensive, given the stratospheric prices the company had charged traditionally for their rainbow-coloured icon.
PC aficionados scoffed. No floppy drive? Their scoffs turned to disdain as Apple released the transparent iMac in five fruity flavours, like strawberry, grape and lime.
But the iMac sold millions. And it brought Apple back to profitability, although the 2000 tech-wreck destroyed Apple’s share price and revenues plummeted. However, throughout Jobs’ tenure as CEO from 1997, this proved the only blip on the radar.
A key part of Jobs’ success was his ability to deliver hit product after hit product. As with the Macintosh graphical user interface, none was an Apple invention.
The iPod, a horrifically expensive 5GB MP3 player appeared to be nothing special upon its 2001 launch. But it quickly evolved into an entire range of MP3 players of different shapes and sizes. By 2005, it dominated the market totally.
By 2007, the iPod had morphed into the iPhone. Again, Apple was not the innovator in smartphones, a market segment that was owned by RIM’s Blackberry.
Moreover, neither Jobs nor Apple had any experience of cell phone technology. But the pricey iPhone repeated the iPod’s success, eschewing a keypad for touchscreen technology. The iPad, launched in 2010, has redefined its market category and swept all competitors aside.
The road ahead
Steve Jobs has captured the tech zeitgeist better than anybody in the industry. He spoke of the “digital lifestyle” a decade ago.
He emphasised the “look and feel” of Apple’s products and prioritised user experience over feature bloat. Price was seemingly unimportant, although Apple continued to amass the largest profit margins in the industry, even though this meant the Mac’s market share was minuscule.
“It’s an eternal mystery,” wrote one scribe on the Macintosh, “why a company with 5% market share continues to soak up so much ink.”
Jobs has been both shrewd and fortunate in having a talented team surround him in the executive suite at 1 Infinite Loop. Marketing VP Phil Schiller, industrial designer Jonathan Ive, CFO Peter Oppenheimer and CEO-designate Tim Cook have proven capable managers.
Cook has already filled in as CEO on several occasions while Jobs underwent cancer treatment. Unlike the Apple of old, management is not riddled with smouldering jealousies, rivalries and subterfuge.
Moreover, Jobs remains as Apple’s chairman and his aesthetic sensibility, attention to detail and Type A-personality approach to micromanagement is likely to dominate the company as long as he wants to remain in charge.
Dell, HP and Google may breathe an inward sigh of relief at Jobs’ resignation, but a betting person would wager that the tech world’s most iconoclastic character still has a few more tricks up his sleeve.