Over its thirty year history, Apple has survived and even thrived despite boneheaded business decisions. From pricing the Macintosh out of most consumers’ reach to creating some really ugly computers, Apple has made a lot of bad decisions.
Overpricing the Original Macintosh
John Sculley had demonstrated an affinity for public relations while he was at Pepsi. He took the ‘Pepsi Challenge’ campaign national, and championed the ‘Pepsi Generation’ campaign that still defines Pepsi’s brand today. Unfortunately, he had a lot to learn about computers. His two major contributions to the Macintosh project during the first two years of his tenure as Apple CEO were to covertly fund the Macworld magazine and to inflate the price from $1,495 to $2,495. Macworld went on to become a respected publication, but the price hike did little other than to temporarily inflate Apple’s financials.
Steve Jobs had tripled the price of the Macintosh in the years following his takeover from Jef Raskin. Sculley’s price hike merely made the Macintosh less palatable to consumers. Jobs had forecasted that he would be able to sell 2 million by the end of 1985, but only 250,000 Macintoshes were sold. Sculley later defended the price hikes because of the incredibly expensive advertising campaigns for the Macintosh, but the damage had already been done.
Macintosh Office
1984 and the advertising inserts in Newsweek and TIME were clearly targeted to consumers and small businesses. If Apple wanted to challenge the IBM hegemony (which it felt it needed to in order to survive), it would have to establish the Macintosh as a universal standard, in enterprise and the home alike. The Macintosh Office was Apple’s failed attempt to make the Macintosh a serious contender in enterprise.
The Macintosh Office centered around two products that never materialized the FileServer and BigMac. FileServer was to be the original network appliance. It would be the size of the external hard drives Apple was already selling to business users, and would plug directly into a LocalTalk or PhoneNet network.
The BigMac was much more ambitious. It was to be the replacement for the original Macintosh and the hacked Macintosh XL. The hardware was comparable to the wave of ‘3M’ (named for their megaflop processors, megapixel displays and megabytes of memory) workstations that IBM, Sun and Apollo all had in the pipeline. The software was a radical departure. It would port the Macintosh user interface to UNIX. Apple had gotten as far as ponying up the hundreds of thousands of dollars required for a UNIX license, but development bogged down. When Jobs left the Macintosh/Lisa division in the summer of 1985, his replacement, Jean-Louis Gassee cancelled the project.
FileServer was equally doomed. Supposedly, the hardware was largely completed, but the software development got bogged down. The FileServer was slated for release in late 1985, but never made it to the market. In 1989, AppleShare Server was released, but it required a dedicated Macintosh to run.
The most notable failure in the Macintosh Office was its inaugural ad. Apple and Chiat/Day scored a hit with 1984, and Sculley and Jobs reasoned that 1985 should be no different. Another expensive spot, titled Lemmings, was produced for the 1985 SuperBowl. The ad depicted a line of blindfolded men and women walking off a cliff. The last man in the line stops and takes off his blindfold just before he falls into the precipice. The ad stunned the audience in Stanford Stadium, but not for a good reason. The ad just didn’t make sense. Were businesspeople that used PC’s or Apple II’s suicidal Lemmings’
The Macintosh Office could very well have won Apple a stronghold in the enterprise and small business market, but it only served to alienate it. The LaserWriter was the only successful product to be released under the brand, and it was largely developed by Canon and Adobe. Worse than the vaporware FileServer and BigMac, Lemmings actually offended many of the people who Apple hoped to sell Macintoshes to.
Not Firing/Demoting Jobs Sooner
Steve Jobs was a visionary at Apple, and was able to motivate people to work feverishly towards a single goal. That said, he was a bad manager. The Macintosh/Lisa division had been working at a breakneck pace for over two years, and had a lot to show for it. The Lisa, though a bad seller, was the original graphical workstation. It was used in some applications for years after it had been rendered obsolete by other Apple products. The Macintosh was a phenomenal success in its debut year, but the Macintosh/Lisa division failed to capitalize on that success. BigMac was making little progress despite a big budget and the rest of the Macintosh Office were nonstarters as well.
Jobs management style worked with the small Macintosh team before 1984. He convinced his engineers that they were working towards a revolution in the computer industry. They put in 80 hours a week and were incredibly devoted. That kind of energy would not last long. After the Macintosh launched, many of the senior developers took extended vacations, and many of them never returned. That meant that brand new engineers had to work on important projects like the BigMac and FileServer, and unsurprisingly, they made little progress.
The fact that Jobs was actually leading the Macintosh/Lisa division was startling. For years, Jobs had taunted the Lisa developers and tried to divert its resources from to the Macintosh. Sculley was eager to make his mark on Apple, and one of his first acts as CEO was to combine the Macintosh and Lisa divisions.
On the day the teams merged, he told the assembled engineers that the Lisa team ‘really fucked up’, alienating almost half of the engineers he would have to manage. Unsurprisingly, the Lisa flagged. After the Lisa 2 was released in 1984 with the Macintosh, the Lisa had only one revision, the Macintosh XL, which was actually a Lisa running a Macintosh emulator.
Jobs tried to press his new staff into developing great software, fast, but he failed. The projects were either too advanced or the engineers were too fresh. The end result was that Apple had no major product in 1985, and profits tumbled. Eventually, Jobs was ousted from the Macintosh/Lisa division, and would resign from Apple on Friday, September 13, 1985, but it was too late to rescue any of the failed projects.
Licensing the Mac OS to Power Computing
Apple’s goal in licensing the Mac OS to outside developers was to flood the market with low cost Macs that were more powerful and less expensive than PC’s. Apple would profit from the increased Mac OS sales, the Mac OS ecosystem would benefit from greater developer interest and the cloners would make a bit of profit to boot. That’s not what happened, though.
CEO Michael Spindler started talks with several PC companies, the most prominent of which was Gateway 2000. Inexplicably, Spindler cancelled discussions after Gateway 2000 demanded that Apple cut its licensing fee. As a result, one of the biggest consumer PC companies in the world would never sell Macs.
Spindler had to settle for smaller companies, like Radius, Motorola and Power Computing. None of the companies had any experience selling PC’s. Worse, they lacked the sales teams that would be able to get them into big businesses, where a low cost Macintosh would be particularly attractive. Radius did not even have the facilities to build computers, it subcontracted to IBM, which produced Radius-branded clones.
Power Computing initially released low end Mac clones like Apple expected, but like Apple, Power Computing’s founder, Steve Kahng, discovered that there weren’t profits in the low end. Power Computing started selling souped up clones that competed directly with Apple, and came out ahead. Its machines were cheaper and faster. Power Computing’s sales grew from $21.5 million in the first quarter of 1996 to $98.5 million in the fourth quarter.
Many of Apple’s most demanding customers jumped ship to Power Computing, depriving the company of much needed revenues during a desperate period in Apple history (the company would have to write of $1 billion in unsold computers that year). Eventually, Steve Jobs bought Power Computing’s license and effectively killed the company.
Firing John Sculley
Measured by marketshare, Apple was the largest PC company in the world in 1992. Though it would quickly lose that title to Compaq, the growth in sales should have been excellent news for John Sculley and Apple, but it wasn’t.
The first five years of Sculley’s tenure at Apple were dominated by his cadre of executives, first by Steve Jobs, later by Jean-Louis Gass’e and Alan Loren and finally by Michael Spindler. He had not been well served by any of them. Jobs demoralized the Macintosh/Lisa division, Jean-Louis Gass’e presided over grotesque profit margins at the expense of growth during a critical period of growth in the PC industry and Michael Spindler couldn’t handle the stress of managing Apple’s international operations.
But after he started running Apple himself, he enjoyed a great deal of success. Successful products like the Macintosh LC, Macintosh Classic and the PowerBooks buoyed Apple’s reputation and padded financial results. In fact, the PowerBook would remain the most powerful notebook in the world from the year it was released to 1995 and the 5300 debacle.
Despite the great successes, Sculley’s reputation was sullied in the eyes of the board by the tainted Newton and failed negotiations with IBM and AT&T. Unlike many at Apple, Sculley believed that Apple did not have the resources to compete with Microsoft, Intel and the clone manufacturers on its own. It needed the money and brand of a company that corporate America could trust. Sculley had nearly convinced AT&T to buy Apple in its entirety, but AT&T dropped out at the behest of its existing PC division, NCR.
Two years later, in 1992, Sculley was contacted by a headhunter looking for a successor to IBM’s CEO, Jack Keuler. Unbeknownst to Sculley, he was actually very low on the list of candidates, but the contact piqued his interest. Sculley started talks with Jack Keuler about IBM buying Apple. Keuler wanted to build a relationship with Apple first, and then consider buying Apple. The relationship turned into the AIM alliance and the PowerPC, but that was still years away.
The board wanted results now, not in a few years. Their impatience and the machinations of Michael Spindler ultimately cost Sculley his job. The man who had led Apple for almost a decade was out of his job, despite the fact that Apple was enjoying record sales. Apple quickly spiraled into a dark period, and would never see its marketshare recover.
Hiring Michael Spindler
Michael Spindler was a good marketer. He had gotten his start at DEC’s European division in Paris, where he helped the company develop a presence almost totally controlled by IBM. In 1980, Spindler was handpicked to run Apple’s marketing department in the nascent Apple Europe division, based in tiny offices in Brussels. From there, Spindler pioneered a strategy of releasing specialized products in every region while still taking advantage of the Apple brand. He made sure that there were products available in every language Apple Europe sold to, unique amongst the other PC manufacturers. As a result of his ‘multi-localism’ strategy, Apple was able to compete with cheaper local products like the Acorn BBC Micro.
Spindler did an excellent job in marketing, but he was not a good manager. He didn’t take dissent well, staffers were terrified of even asking questions during his meetings. Worse than his inability to handle dissent was his problems with managing stress. Several times during his career at Apple, staffers found him huddled up under his desk or passed out on his couch apparently from a panic attack.
Sculley was impressed with Apple Europe’s performance, and promoted Spindler to head of all the international divisions. Luckily for Spindler, there were always able staffers who could translate his impassioned speeches on ‘multi-localism’ and other strategies into concrete steps for his managers to follow. They did such a good job, that Sculley promoted him again, to replace the universally popular Del Yocam as COO. Around the same time, Gass’e left with a few Newton staffers to found Be Inc., so Spindler’s main competition in the corporate hierarchy was gone.
Spindler was dishonest with Sculley. He would spread rumors and bash Sculley’s management style, and lie to Sculley’s face about it. Spindler was determined to become CEO, and he did.
On June 17, 1993, Apple’s board met to discuss Apple’s declining stock price. Weeks before the meeting, Spindler personally met with most of the board members to gather votes for a coup d”tat against Sculley, and succeeded. The board broke the news to a distraught Sculley. Spindler attempted to cheer up his old boss by telling him that he had only heard of the decisions fifteen minutes before the board broke the news to Sculley. He lied.
Spindler’s career at Apple was to be characterized by staggering losses and missteps that cost the company the gains it had made in the early nineties. By 1996, Apple had to write off a billion dollars in unsold inventory because of channel stuffing. That year, the company would lose hundreds of millions of dollars. Eventually, Spindler was ousted for his mismanagement, but not before he nearly killed Apple.
Not Buying or Licensing an Outside OS Sooner
In the mid-nineties, Apple was in trouble. Microsoft had released Windows NT in 1993, and it had taken the business world by storm. Finally, there was an inexpensive workstation-class operating system for relatively inexpensive PC’s. Apple had already ceded the business market to Microsoft, so NT posed little threat to the Macintosh.
Windows 95 was a direct attack on the Macintosh. It was easy to use, relatively stable and had the full resources of Microsoft and every clone manufacturer in the world behind it. The Macintosh did not stand a chance. Worse still, Microsoft claimed that its next consumer version of Windows would be a modified version of NT, known as Cairo. Cairo never developed, but the announcement scared a lot of users into jumping ship. AT&T, major universities and even Motorola were cancelling orders for new Macs.
Apple could have addressed all of these problems, and even gotten some new customers, if it had recognized that it would be unable to develop an operating system to rival Windows NT on its own. If it had licensed Solaris, AIX or bought NeXT a year earlier, it would have been able to negate Microsoft’s PR boost and get new customers. Unfortunately, Copland, the project to ‘extend’ the Mac OS, was doomed and it would take a new CEO, Gil Amelio, to recognize that.
Firing frogdesign
Style and aesthetics are personal opinions, but Apple hurt itself when it stopped using frogdesign’s Snow White language. Before 1994, Apple had distinctive, even cool looking products, like the Apple IIc and the Macintosh. As part of the cost-cutting measures introduced by Spindler, Apple spent less on cases, and it showed. Suddenly, the Macintosh was no more attractive than any other PC in the world. Notable products include the Power Macintosh 4400 and the PowerBook 520. The 4400 is almost indistinguishable from a PC, and the 520 looked dated, with its space age curves, even before it was released. It’s hard to place a value on good aesthetics, but Apple’s products lost one of their most distinguishing features when it dropped frog, looks.
Contracting iPod Manufacturing to Chinese Firms
The Apple mythos is incredible. When people think about Apple’s early history, they think of Steve Jobs walking around Silicon Valley barefoot extolling the virtues of the Apple I. They think of Wozniak and Jobs assembling the computers in the Jobs’ garage. They don’t think of Chinese workers doing 15 hour days and being paid less than minimum wage to produce cheap iPods. Apple really ought to bite the bullet and fire Foxconn, the owner of the offending facilities, or even move manufacturing state side. Bad PR is hard to fight off.
Making Jobs Indispensable
Steve Jobs is widely credited with Apple’s turnaround in recent years. He personally took control of Apple’s product line and created the famous ‘matrix’ of Macs. He personally oversaw development of the iMac, iMovie, iTunes, iPod, Mac OS X (he picked the Aqua color scheme) and just about every other successful (and not so successful) Apple product released in the past decade. Unlike every other Apple CEO since the days of Mike Scott, Jobs has no clear successor. Avie Tevanian and Jon Rubinstein were once the most famous former NeXT executives to follow Jobs to Apple, but both left this year. The lack of a successor might make for less infighting, but could cause problems should something happen to him.
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Jobs wasn’t fired. This is a common misconception. He resigned because of power struggles. Although you could say it’s similar to being fired, they just made life more difficult for him, making his decision a no-brainer.
This is according to Woz himself in his book iWoz. It’s nice that this article states that. Most people think the movie “Pirates of Silicon Valley” is accurate.
Edited 2006-10-02 19:36
To be fair, he was fired from the Macintosh/Lisa division. He resigned from Apple on September 13, 1985, but was fired from the division in the summer, and was replaced by JLG.
He was removed from the Lisa team and relegated to the Mac team. At the time the Mac was the replacement for the Apple II and was in no ways similar to the lisa. Jobs turned the Mac into what the Lisa should have been. An inexpensive GUI based computer that could sell for 1/3 to 1/2 the price of a Lisa.
This was a demotion – not a firing. It also was not the thing that forced Jobs to resign, but was the beginnings of the fallout with Scully that eventually led to Steve Jobs trying to get the board to oust Scully, when the board sided with Scully, Jobs resigned and took the best and brightest to form NeXT. Apple sued and in a settlement with Apple, NeXT was banned from producing any systems for a lower price than Apple’s highest priced system. Apple (Scully) then proceeded to raise the price of the Mac and produce ever bigger and more expensive systems thus assuring that neither company could compete with the PC market that was rapidly becoming a commodity market with ever shrinking prices and margins.
…it is necessary for the betterment of the industry that apple thrive.
The world would be a sea of cheap beige were it not for the likes of apple.
The indistry will do just fine without Apple. They are not unique, they don’t drive technology, they don’t really do anything other than marketing and design. The real people who make the computer industry work are Intel, AMD, Ati, Nvidia et al…
Mac OS X has had no effect on the computer industry? What about Final Cut Pro, iMovie, iTunes and the Mac mini?
Yes, what about them? I’ve never used them. Is there something special about them?
(I’m not allowed to reply to myself, so I’m gonna have to edit it to point out that I’m being a Sarcastipundit(tm) in the vein of Stephen Colbert …
)
Edited 2006-10-03 07:03
The indistry will do just fine without Apple. They are not unique, they don’t drive technology, they don’t really do anything other than marketing and design. The real people who make the computer industry work are Intel, AMD, Ati, Nvidia et al…
I didn’t say that apple drives anything.
apple is the kind of agent that sits on the sidelines merrily doing it’s own thing…forcing everybody else to keep one eye on them, thereby keeping the industry in ‘check’.
To say that apple does nothing other than marketing and design (some will say those two are the hardest parts of business, btw), is ignorant.
OSX, as one example, is a great take on how to build a marvelous operating system *experience*.
And that’s what apple does best…create experiences. And that’s one of the hardest things to do.
Take your blinders off…don’t hate the apple.
Actually generic PC manufacturers are even less unique. Will the “industry” do fine without them?
Have you taken your meds today?
Apple has driven the market since it’s inception with the brief period from 1995 till 2000. Windows arguably caught a then stagnating Apple in 1995 with Windows 95. But even during this time the “innovations” were often simply improvements on earlier ideas. ie. MS copies “Publish and Subscribe” on the Mac as OLE and then extends it to become Active-X. NeXT was innovating but not many people noticed.
The return of Jobs to Apple marked a return to Apple’s position as the primary innovator as it assimilated NeXT and Introduced the world to OpenStep with a Mac UI wrapper – OS X. Now once again the new ideas are coming out of Cupertino!
Apple’s influence? We all use Macs – either the cheap imitation that is windows, X11 (a better imitation) or the real thing – OS X (technically it is an imitator but because it has the Apple name you can’t call it that).
The roots go back to Palo Alto and AT&T, but the modern computer all follow the look and feel of the first computer to put them together – the Mac.
X11 (a better imitation)
X11 is NOT an imitation of QuickDraw, CoreGraphics or any Apple technology. In fact, it could be said that the server/client separation and remote desktop feature, pioneered by X11 (in 1987!) influenced both Apple and MS in the design of the graphics layer of OS X and Vista respectively.
CoreImage, CoreGraphics, CoreVideo, CoreData, Applescript (no, AS is far more than an automation that sends keystrokes and mouse clicks), Firewire and MPEG4 (uses QT container) are just a few examples how Apple has helped to drive innovation in the computing industry.
While I highly doubt that Apple came up with many of those ideas itself (maybe some of them), they recognized the value of the ideas and made them accessible to developers and consumers.
Also, the user experience is more than the look of the product. Apple did not just design something that worked. They designed something that’s convenient to use by packing useful programs, designing GUIs that require less clicking and navigation, adding the ability to automate programs and transfer data between one and another (Applescript), making the OS unobtrusive, providing dictionary popup tips etc. While anyone of these changes would be insignificant, hundreds of such changes will add up and create a positive user experience.
you said: “CoreImage, CoreGraphics, CoreVideo, CoreData, Applescript (no, AS is far more than an automation that sends keystrokes and mouse clicks), Firewire and MPEG4 (uses QT container) are just a few examples how Apple has helped to drive innovation in the computing industry.
While I highly doubt that Apple came up with many of those ideas itself (maybe some of them), they recognized the value of the ideas and made them accessible to developers and consumers.”
Actually, all of them were created at Apple, except the MPEG-4 codecs (and the file format is Apple, as you correctly noted).
Throw in Automator (and anyone who thinks for a second that VIsual Basic is anything like it hasn’t looked at Automator) and iTunes while you’re at it.
Edited 2006-10-04 16:29
Gone are the days when Apple used premium hardware and justified the price premium.
Hate ’em or love ’em, they’re too expensive. I can get a PC with identical hardware for half the price.
nalf38
>>Hate ’em or love ’em, they’re too expensive. I can get a PC with identical hardware for half the price <<
OK list your parts and provide links for prices.
This is claimed all the time (esp on these boards) and no one has successfully backed it up yet.
OK list your parts and provide links for prices.
This is claimed all the time (esp on these boards) and no one has successfully backed it up yet.
Why was this post modded 5? I’ve done so in the past, only to be attacked first on not using a ‘big name brand like Apple’, and then when I switched to a computer from a big name brand for comparison, I was attacked for not providing EXACTLY the same specs (including firewire).
And even then ‘It didn’t include OS X, which you should take into the price’. Grr.
I concluded there was no arguing with Apple fanboys, and subsequently ceased trying.
Have you looked at the new Macs? The closest Dell to a Mac Pro comes in at $1k more, and it doesn’t look anywhere near as nice. The closest Dell to the 24″ iMac is about 10% cheaper, which is about right considering the iMac uses laptop parts to achieve a slim/quiet design. If you’ve priced SFF PCs, you’ll know that a 10% premium for a space-efficient design as an absolute bargain. And then there’s the mini. For half the price of a mini, you can get some VIA mini-ITX piece of shit that’ll be a fraction of the speed and bigger to boot.
The only machines Apple has right now that aren’t price-competitive with Dell are the Macbooks and the Macbook Pros, which haven’t been updated to Core 2 yet (which is just a matter of Dell’s faster product cycle). If you look at the Core 1 models from a month or two ago, the Macbook was fully price-competitive, within a $100 or so with more features (Bluetooth, webcam, remote).
rayiner is right and wrong.
Its right that duplicating a mac in hardware terms will usually end up with the same price or higher. And its right that doing this in particular with the Mini will end up either with a higher priced AOpen version or a very poorly performing mini-ITX.
But its wrong to think this shows that Apple is a price effective choice. If you want to see why this is so, go to http://www.macwarehouse.co.uk and see what you get for less than the price of a Mini on the non-Mac side of the house.
However, in all those tens of better performing lower priced systems, you’ll not find one that duplicates the form factor or the precise configuration.
Nevertheless, for most people, they are better and cheaper buys.
http://sys.us.shuttle.com/BuildXPC.aspx?id=1175“>Shuttle is basically the same as the mini. It’s a hundred dollars more, but it’s easier to work on which definitely makes up for the price difference.
Actually, it’s more than $200 more expensive, or a full 30%, if you match the CPU speed (1.67 GHz Core Duo) and the WiFi functionality.
Yeah, you’re right. They changed the default options, and I didn’t look close enough. Whoops.
you said: “Shuttle X100 is basically the same as the mini. It’s a hundred dollars more, but it’s easier to work on which definitely makes up for the price difference.”
Nothing is the same as the mini if it doesn’t run Mac OS X. Sorry, but like many on this topic, you seem to think that the hardware is all that matters.
Which may be true in your world… but not in mine.
Edited 2006-10-04 16:30
My aren’t you smug.
It was stated that the Mini does not have an equivalent in the PC world, and it does the Shuttle X100. While not the same price, it has equivalent features, and the hardware is probably identical aside from the softROM that Apple uses instead of a hard BIOS. It having to run OS X wasn’t part of the statement; it was form factor versus form factor.
So it won’t run OS X, big deal. To be accurate, it won’t run Aqua; the core of OS X, Darwin, can be downloaded and ran on x86 hardware. I’d suggest to anyone that they just buy commodity hardware and run Linux, FreeBSD, Solaris, or Darwin on it if they want a Unix since it would serve them better in the long run rather then using OS X. The only thing that was attractive about Apple hardware was the PowerPC architecture. Now that is gone, I don’t have a reason to look at Apples anymore.
By the way, I’m posting this from my PowerBook G4 running OS X 10.4. There are some cool programs that run on OS X, so I’ll probably keep it around for now. I’m less married to an OS then I am to either what it runs on or what I can do with it.
It depends on the machine. The Mini is definitely in this category (you can get better and cheaper machines if you ignore form factor). The new iMacs are only partially in that category (you pay a $100 or $200 for the form factor, which is tolerable on a $1000-$2000 machine). The Mac Pro is completely not in this category. For the price of a Mac Pro, you could barely buy the parts that go in it.
On a $2500 Mac Pro, the wholesale price of the CPUs (2x $750), motherboard ($350), and RAM ($200) comes to over $2000. Throw in a case comparable to those Lian-Li ones costing $150+, a good PSU, a 7300GT, a HDD, bluetooth/wifi card, etc, you’re going to be hard pressed to keep it under $2500, even before you consider shipping costs and the cost of assembly.
Sure, because when Apple would be gone there would be noone that developes BSD or builds PCs with ASUS Hardware right?
Thanks – entertaining reading, and a definite point of view to turn over and think about. Good one!
Agreed. Well written and entertaining article.
Edited 2006-10-02 20:21
A lot of things didn’t happen quickly enough at Apple because Steve Jobs wasn’t there any longer.
Yes, he’s a bad manager, pressing people for excellence, and far too quickly and far too vocally. We can see however, in his absence, that things became a bit too relaxed and almost killed Apple.
Had Apple entertained the idea of clones after the first successful year of Macintosh, they’d be ahead of the game now. Instead, they chose to file lawsuits against Digital Research and Atari over GEM.
Had they brought Digital Research into the fold, they could have accelerated their GUI grip on the computing world. Atari were selling computers for about a third of the price of the equivalent Macintosh. Had Apple struck a deal instead of a lawsuit, all three companies could have profited and ended up as leaders before the Windows 3.x monster took over.
It was almost 10 years later that the clone business finally got into gear and Power Computing was the first licensee, as I recall. They were people from APS Technologies, a Macintosh peripherals supplier, and from Dell, for the most part. They had a handle on the market, had different goals, and outsold Apple in many respects, including some deal involving 5000 machines going to NASA, I believe.
Power Computing was a build-to-order business so they could change more quickly. The first few clones were barely more than Apple motherboards in typical PC metal wrapped with nicer beige plastic. Later, they enhanced the motherboards for faster bus speed, taking Apple’s 40 MHz bus to 60 MHz. They pushed PowerPC for all it was worth and pushed Apple in the process. Apple slumped in response.
Apple and Steve Jobs won in the end by buying back the license for $100 million but it was the consumers who truly won because we got more for less. It’s just too bad Apple didn’t do clones earlier. Of course, the majority of people might be complaining about Apple now, instead of Microsoft.
The title is “Apple’s Worst Business Decisions”. There may haev been numerous bad decisions but this is the list of the “worst”
Then I find somewhat contradicting subheadings:
– Overpricing the original Macintosh
— John Scully
1. Covertly funded Macworld magazine
2. Set the trend to overprice the Mac
– Firing John Sculley
Leaving me confused about John Scully’s original “worst” decisions for Apple. I guess in business even those who make the worst decisions deserve a second chance.
Edited 2006-10-02 20:25
This article seems(*) like a hurried summary of random bits of http://www.folklore.org/
I mean, some of the descriptions and opinions would make no sense for anyone who hasn’t heard anything about the people involved beforehand. Sort of preaching to the chorus, if you want.
(*)’seems like’, I’m not suggesting it ‘is’
Edited 2006-10-02 20:35
Well for that matter, what company hasn’t made mistakes? They probably just covered em up.
Nice to read a nice, well informed piece from time to time. Thanks.
Actual quote from the article:
Were businesspeople that used PC’s or Apple II’s suicidal Lemmings’
…and that’s it. The sentence doesn’t end there, the PARAGRAPH ends there. This isn’t well written; large parts of it are flat-out illegible. Other parts are non-sequiturs that look like gratuitous slams at Apple (the bit about iPods manufactured in sweatshops, while interesting and informative, is unsubstantiated and, worse, involves a huge chronological jump).
What is legible is quite interesting. I can tolerate typos and bad English, especially when English isn’t the author’s native language, but incomplete sentences? Grand claims unsubstantiated by sources? Where were the editors on this?
Aye. I really like the article, but it could’ve done with a thorough proofreading. The incomprehensible sentences are slightly too numerous.
Why its so easy to find storyes about Apple, mystakes, etc, and nothing about Microsoft? Microsoft did not make mistakes? (Yes, I know Windows ME is the worst product ever, but in the business, there are nothing bad?)
Windows ME wasn’t the worst product ever.
Microsoft BOB was.
I thought New Coke was the worst product ever….
“I thought New Coke was the worst product ever….”
No, it wasn’t… Coca-Cola “Blak” truely *is*!
Coke + coffee… they oughta call it Coca-Cola “BLECH!”
It amazes (and disgusts) me that it’s still on store shelves today. It’s the nastiest thing come out of the Coca-Cola factory since… EVER! I couldn’t bear to drink a few sips before chucking it in the trash, the first time I tried it, when it was first released.
I’d drink those “cherry cough syrup” (blech!) energy drinks like Red Bull, looooong before I’ll EVER take another sip of Blak.
Don’tcha just love off-topic posts like these?
Well, MSFT’s biggest mistake was creating Windows, and, as you know, they still haven’t acknowledged that one. Every other blunder on their part pales by comparison. The whole industry is at least 10 years behind where it should be.
a) … the choice of the intel platform is not a mistake but an exit strategy: Apple might bet on content more than hardware like sony
b) … they plan a merge between Apple mac os and windows
c) … MS plan to buy Mac OS technologies in order to be the only platform for intel HW
d) … apple will focus on high design (like Nike) and leave the lost battle on OS
are these possible future mistakes or future opportunities ?
“b) … they plan a merge between Apple mac os and windows ”
Ummm– what part of Windows would you keep? MSFT had their chance to reamin relevant, but went Vista instead of UNIX.
Bring back the Newton, with NewtonOS 3.0 as the iPhone
This is a good decision
Style and aesthetics are personal opinions, but Apple hurt itself when it stopped using frogdesign’s Snow White language. Before 1994, Apple had distinctive, even cool looking products, like the Apple IIc and the Macintosh. As part of the cost-cutting measures introduced by Spindler, Apple spent less on cases, and it showed. Suddenly, the Macintosh was no more attractive than any other PC in the world.
Am I the only one to see little difference in the aesthetics of post-1993 Macs? I certainly didn’t notice either desktop Macs or Powerbooks instantly become more ugly or PC like in 1994.
The author picks out the Powerbook 520/540 design as “dated… even before it was released”, yet I remember it receiving rave reviews for its ergonomics and aesthetics, both in the Mac press and in PC magazines. For example, Mobile PC Magazine placed it #22 on their list of the 100 best gadgets of all time, here’s a quote:
“The PowerBook 500 wowed the notebook market with a long string of firsts: The first touch pad; the first stereo speakers (with 16-bit sound); the first expansion bay — and the first PC Card slot; the first ‘intelligent’ nickel metal hydride battery, with a processor that communicated battery status to the operating system; and, last but not least, the first curvaceous case, with gratuitously swooped edges and corners instead of the boxy angles of previous notebooks. Make no mistake, this notebook set the agenda for the following 10 years of portable computer design.”
In comparison the Powerbook 100 series were quite chunky looking. The original Powerbook 100 was an innovative laptop, but by the time the 140/170 were released, there was little to distinguish the design from PC laptops that were available at the time. For people who’ve never seen these computers, you can compare them here and judge for yourself:
http://upload.wikimedia.org/wikipedia/commons/1/1f/Powerbook_150.jp…
http://upload.wikimedia.org/wikipedia/commons/e/e8/540c_open.jpg
As for desktop Macs, I’d agree that the Power Mac 4400/7220 was one of Apple’s worst products. It was Apple’s attempt to create an inexpensive Power Mac by cutting corners and using industry standard components. As bad as it was, it wasn’t really representative of Apple’s design ability at the time, and its aesthetic design wasn’t actually that different to earlier Macs. I doubt many people who aren’t Apple historians would notice the difference between the 4400/7220 and a pre-1994 Quadra, again you can judge for yourself:
http://upload.wikimedia.org/wikipedia/commons/e/e0/Power_Macintosh_…
http://upload.wikimedia.org/wikipedia/commons/c/c5/Macintosh_Quadra…
where are IBM in the PC industry now? They allowed clones, in the end they lost out. Apple’s only route had they continued would have been to spin off the OS devision so that that could have saved.
IBM didn’t “allow” clones. They figured the only way they could bring a PC to market in the time frame they wanted was to use off-the-shelf parts, but kept the BIOS secret to try and force lock-in. Compaq opened the doors to the clone market by reverse engineering the BIOS and the rest is history.
Since IBM published the source to the BIOS in the back of the Manual… No, they didn’t keep it secret.
And to copy the BIOS and put it into a Taiwanese Clone Motherboard was as easy as burning an EPROM.
I know, because I worked for a company that did just that.
I left, because I couldn’t deal with the blatant theft.
Phenix reverse engineered the IBM ROM which was NOT published. What was published was the supervisory calls (software interrupts) – the API. This is almost all that was needed to reverse engineer a compatible BIOS. They did intend to keep it secret, but because they only included the the most basic hardware interfacing code in the ROM (about 2K of assembly) this was a much easier task than reverse engineering the Apple ROM that included much of the OS (128K as I remember it).
Even although they have now left the market, I argue that they have done better out of it than they ever would have had they kept the architecture closed. The open architecture stole market share, but it drove down prices, allowing the less well-off to buy machines and therefore increase the size of the market in total (99% of 100 is 99, but 58% of 200 is 116 – lower marketshare, but bigger numbers). Indeed, it seems that keeping technology closed is the best way of eventually pricing/driving your technology (or worse, your company) out of a market. All companies die eventually, but it happens even quicker with proprietary stuff.
The list of companies that have made this mistake and been killed off (or had their technologies killed off) is legion.
Apple (got *near* it several times, and was arguably saved only by buying more and more off-the-shelf parts)
Commodore
Atari
Digital
Data General
IBM (yes, even using proprietary technology, IBM saw strong competition from clone-makers (Amdahl) and companies exploiting new markets (DEC, Digital)
Apollo
HP (with MPE and then PA-RISC)
Note that in several cases, having a *better* technology (cf Amigas with 1990 PC-compatibles, or IRIX versus Windows) did nothing to save the company in the long run. Producing a *generic* product – that sells!
The only things that will save you and/or your technology is (a) being open, intentionally or otherwise (IBM, AMD, AT&T (Unix)), (c) being massively entrenched (guess who), or (c) corporate welfare. Sooner or later the movers and shakers of the buyers’ market move on, and if you don’t compete with a compatible product, You’re Dead.
And the Acorn Risc architecture of course………
The only things that will save you and/or your technology is (a) being open, intentionally or otherwise
MS is a closed as you get. They go out of their way to make sure their products don’t play nice with others.
No-one who reads this website will tell you I was defending Microsoft! Far from it.
Apple isn’t going to move iPod manufacturing to the US because it would just make it easier for competitors to catch up.
Where do you think all of the iPod components come from? My guess it China. It doesn’t make sense to ship over a bunch of components from China and then assemble them in the US.
OSAlert Worst Business Decisions
1) to put advertisements directly into the text in articles
2) and expect readers to accept it
This was probably a very fine article, thanks
OT, sorry.
Edited 2006-10-03 04:16
No, licensing to Power Computing wasn’t a mistake.
Yanking all the cloners licenses was.
And not having a provision in the License giving Apple a free or low cost license in return for any hardware innovations the Licensees came up with.
Apple could have simply licensed back PCC and Motorola’s better logic board designs and sold the same units as Apple Branded.
Instead Apple killed a growing Mac Market that approaching 10% of all PC’s sold at it’s height, and went back to about 4% or so until recent times.
I *LOVE* my PcwerCenter 132, and if it would run MacOS X, I’d still be using it today. The PowerCenter 132 is based on the 7200 Logic board, so will never run MacOS X.
…but I don’t know what’s coming next in the line of products. I plan to buy a Mac somewhere in January.Question is if I should wait to see whether Apple will come out with something powerfull for iMac series.
I’d wait until the Core 2 processors trickle down from the Mac Pros. They’re much more powerful then the regular Core processors.
The Apple mythos is incredible. When people think about Apple’s early history, they think of Steve Jobs walking around Silicon Valley barefoot extolling the virtues of the Apple I. They think of Wozniak and Jobs assembling the computers in the Jobs’ garage. They don’t think of Chinese workers doing 15 hour days and being paid less than minimum wage to produce cheap iPods. Apple really ought to bite the bullet and fire Foxconn, the owner of the offending facilities, or even move manufacturing state side. Bad PR is hard to fight off.
Please, this isn’t the Trotsky, Marxist or Leninist revival site – people holding their hands singing, “we will over come”.
Study already has come back, and the doom and gloom scenario spoken of is not as bad as it is made out – move it to the US? please, to the third most expensive country in the world to do business in? please.
Bad PR is hard to fight? Pulease, look at Nike, Reebok and Adidas – all use cheap overseas labour, and yet, you don’t see a sudden backlash against them – heck, I have a look at my Creative Zen:M Vision, and its assembled in Malaysia, which funny enough has the same GDP per capita in US$ as I do; I certainly harbour no grudges to the fact that its assembled overseas.
All it seems to me that when I hear people scream about ‘poor labour conditions’ and ‘poor pay’ when it is nothing more than a veiled attempt to justify their hatred, bigotry and straight out xenophobia.
What’s political about being upset over 12 hour days, forced over time and a sleazy company?
“The reporter, You Wang, and editor, Bao Wen, work for the China Business News, a Shanghai-based daily newspaper. Wang confirmed that they have had their credit cards, apartments and car confiscated for writing an article on June 15 that said employees at Foxconn’s Shenzhen factory work 12 hours a day, exceeding the hours-per-week work limit.
The report also alleged that workers had to stand while working for 12 hours every day without rest and were not allowed to talk. Female workers reportedly fainted during the long hours.”
http://www.eetimes.com/news/semi/showArticle.jhtml?articleID=192501…
“When people think about Apple’s early history, they think of Steve Jobs walking around Silicon Valley barefoot extolling the virtues of the Apple I. They think of Wozniak and Jobs assembling the computers in the Jobs’ garage. They don’t think of Chinese workers doing 15 hour days and being paid less than minimum wage to produce cheap iPods. Apple really ought to bite the bullet and fire Foxconn,”
Since when is the iPod part of Apple’s “early History”. And who are you to criticize Apple? You think Lenovo is any better? You wear Nike’s? I wear them; they suit my feet. I wish they paid their workers a living wage, but I am not a Nike stockholder and a boycott would be overkill. I AM an AAPL stockholder and DO vote “FOR” any matters aimed towards improving corporate ethics or governance.
Since when is getting cheap iPods more important than Apple’s public image?
Apparently since it cuts into Apple’s profits.
“All it seems to me that when I hear people scream about ‘poor labour conditions’ and ‘poor pay’ when it is nothing more than a veiled attempt to justify their hatred, bigotry and straight out xenophobia.”
Really? So my empathy for people who are getting exploited is not a reflection of the kindness of my soul, but some hard hearted impulse to justify depriving people of a lively hood.
Just because I don’t like see people exploited doesn’t mean I hate them; it just means I know corporations know better.
We often call underpayment by US standards exploitation and bigotry. Often the low wages are the quite high in the country where the work is performed. We hear things like these poor workers are paid only $3 a day, however if the average salary in the area is $2 a day then the “exploited” people are not being harmed at all.
I do not claim to know about the conditions that the manufacturing company that Apple uses for iPods is, but Apple investigated it and did not find bad conditions. Of course the question is do you trust Apple to perform this audit or not.
To me, the deciding factor is if you as the worker, do they want the job to go away because they are being “exploited.” If the answer is no, then they are not being “exploited.”
Often these charges are made by Americans that fear that these are potential American Jobs. They wish to have people say that they would rather pay more for an iPod built in America. However, part of what allows us to enjoy the low prices we want is the use of cheap foreign labor. In most cases it is a win-win as the workers can be paid above the norm of the area they live in, while we get inexpensive goods.
I do not think that we can say it is bigotry as much as it is ignorance that makes people look for these statements.
I do not claim to know about the conditions that the manufacturing company that Apple uses for iPods is, but Apple investigated it and did not find bad conditions. Of course the question is do you trust Apple to perform this audit or not.
In my opinion it’s unwise to trust any company or organisation to conduct its own audit. This is why even the police has an internal affairs department, or equivalent. Of course, then you have the problem of “who polices internal affairs?”!
Any entity auditing itself is not a valid audit. But that is not what Apple did. They audited their contract manufacturers. So if you are Apple, you do want to find the truth and you hope that it is that they are acting properly. However, you know that third parties will discover the truth and it will come out. So there is not a big reason to hide it. If the conditions are bad you make a big public insistence that they change the conditions allowing you to negotiate with other manufactures incase they can not come up to standards.
Unlike an INTERNAL audit, there is a reason that you may be able to trust the Apple one. Apple does not want it’s name to be associated with inhumane treatment, so they have a positive incentive to have an accurate report.
So which do you trust more? An Apple audit or rumors? Until I see a reason to think otherwise I prefer to trust Apple. If someone has real evidence, let them come forward with it. Without any evidence to the contract I will even accept a truly internal report.
Yes, there is a difference between being “exploited” where they are happily employed, I’ve been “exploited”, and actually being exploited where they are close to slave labor.
My original statement didn’t have room for the above semantics.
Agreed; want to know what I get paid? I get paid $11.20 per hour NZ$, translated into US dollars, that is around US$6.8 per hour – to the average US person here, US$6.8 is bloody terrible.
I work 10 1/2 – 11 hour days, 6 days a week (I did work 4 weeks straight at 11 hours per day, collapsed on a pallet of goods; kinda funny when I look back at it).
So please, stop the whining, you yanks have it good, unlike you, we don’t have the luxury of having a government invading countries secure cheap resources and push legislation upon other countries under threat of sanctions to satisfy large corporate interests, which then give over the top wages to their local US employees.
Edited 2006-10-04 06:30
“we don’t have the luxury of having a government invading countries secure cheap resources”
If you think that’s a luxury, why don’t you get out and vote for it? I think it’s a crime, myself. But first you have to prove it’s happening… seriously, from exactly which country has the US extracted cheap resources? And when you say sanctions, what do you mean? Not GIVING the rest of the world some part of the bucks we do? Look at the record, my friend. Which nation is ALWAYS involved in worldwide relief? And exactly WHICH ones came to US aid in relief for Hurricane Katrina?
OTOH, the UN (which really does try to push legislation on other countries under threat of sanctions) has Food for Oil, and when Americans point out the incredible corruption in that system, we’re mocked.
To quote you: please, stop the whining.
What I really miss now are the fantastic Apple mechanical keyboards…the magnicificent Apple Extended Keyboard I/II and the funky and geeky Apple IIGS. The best keyboard ever produced — with except of IBM model M line — I believe!!!
With venerable Apls mechanical keyswithes, a simple but graceful design and a durable steel plating installed, the ol’ Apple keyboards are the typists’ most ideal dream…and that subliminated key top print never become worn out like cheap silk-screen or laser engraving todays cheap keyboards have.
Wow, I really sound like a keyboard geek!
I’m reminded of the line I usually reply back at people whenever they use the Bill Gates “Nobody needs more than 640k” quote…
Yeah, and as Jobs said “nobody needs a color monitor”.
You want BAD business decisions, how about introducing 640×480 at 256 color and calling it a innovation when the RoW (rest of world) was already running truecolor, at 1024×768 or higher in many cases.
Not to say that video technology-wise, since the introduction of the Mac, Apple has always lagged a generation behind the PC world – oh wait, YES IT HAS.
Edited 2006-10-03 14:57
Not to say that video technology-wise, since the introduction of the Mac, Apple has always lagged a generation behind the PC world – oh wait, YES IT HAS.
I thought the PC world lagged behind the Amiga and, for awhile, the C64.
CGA graphics and a blippy speaker versus 16 color graphics, hardware sprites, and the mighty SID.
Who is behind whom?
Are there any tech docs or articles that go into details on BigMac and FileServer? I would love to see some internal docs on that like they have for early Lisa GUI mock-ups et cetera.
There are some factual errors. The Jobs fired thing comes to mind. Jobs was kicked off the Lisa team (demoted) to the macintosh team where he turned the Mac from an Apple II successor to Lisa-Lite. The power struggle that followed lead Jobs to to try to oust Sculley and after failing, resigning to create NeXT. This was Apple’s big mistake, letting him go along with much of the creative talent.
In most cases the article get things absolutely backwards, with some exceptions like the early high pricing of the mac – this was the most critical mistake.
The underlying premise of the article is that relying on Job’s was a huge business mistake. However, Apple’s decline was during the years without Jobs – the time with Jobs are the growth years.
The PERCEPTION of Job’s indispensability is a valid concern but not a business mistake. This comes from the success the company has had with him at the helm vs. without, combined with his famous charisma. However it is not Jobs that is indispensable, but the creative core of the company. Sure when he steps down (hopefully decades from now) there will be a hit, but if they can get the right person to take over that shares the creative vision, Apple will be fine.
Take this article for what it is, someone’s opinion, no more valid than yours or mine, but MY opinion is that they do not understand the history or value of Apple.