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From: "Forrest"
To: "Montgomery Gabrys" Subject: RE: your mail This dates back to 1994 or 1993 (and was written by someone who thought Apple shouldn't have said "Apple II Forever" if they didn't mean it). Looks best in monospace. (ed: it's DAMN LONG! - and I EDITED IT DOWN! I snipped out comparison dialogue that was more editorial than bibliographic at the very end.) Let's begin more or less at the beginning... ______ During Apple's third fiscal year, which ended on September 30, 1979, sales of the Apple II increased to 35,100, more than quadruple those of the previous year. Nevertheless, the company recognized a need to develop another product soon. No one believed that the Apple II could remain a best seller for more than another year or two. ....In 1980 Apple II sales doubled to more than 78,000. Nevertheless the marketing people were worried. [Fire In The Valley, quoted in A+, Jan 1985, pp. 46, 51.] Apple's sales alone went from $770,000 in 1977, the year the Apple II came out, to $7.9 million in 1978 to $49 million in 1979. [West Of Eden 47] The formal company's first product, shipped in 1977, was a redesigned prototype in a light, attractive plastic case, dubbed the Apple II. The company went public in December 1980. The annual report, only Apple's second as a public company, charted its extraordinary performance since then. Apple already boasted the largest installed base of any computer company in the world. Net income: up 56 percent to $61.3 million in the year ended September 24, 1982. Sales: up 74 percent to $583.1 million. [Odyssey 59] _____ Apple II sales started out in 1977 at 2500 units, tripled the next year to 8000, quadrupled the year after that to 35,000, more than octupled to 300,000 units in 1982 and doubled again in 1983 to a total of 700,000 units. In 1984, 800,000 Apple II's were sold -- one hundred times as many as had been sold a mere seven years earlier. Let's see that quote again: _____ No one believed [in 1979] that the Apple II could remain a best seller for more than another year or two. _____ Apple Computer became a Fortune 500 company in then-record time, less than five years, on the strength of one product: the Apple II. Yet did the product garner any respect from the corporate entity? Absolutely not; it was always considered to be a product six months from death, and the death would be mourned by few. Apple began plans to replace it as early as 1978. The eventual result of this was the 1980 introduction of the well known disaster called... THE APPLE III _____ Wozniak was totally disgusted. "I strongly disagreed with the direction the company was taking relative to displacing the Apple II with the Apple III," he said. "I saw a lot of inside stuff that almost no one on the outside knew anything about. I thought it was very wrong. It was deceptive and misleading. I never spoke up, because I didn't want to be political, but you could always more or less assume what my position was." [Accidental Millionaire 143] [Interviewer]: "If you had to do it all over again with Apple, what would you do differently?" [Wozniak]: "I'd be very outspoken about what Apple should be doing with the product line relative to the real world, to build the company and build sales. We were going to have very large revenues coming in between 1980 and 1983 from the Apple II, and Apple didn't allow any project at all on the Apple II, especially an expansion, for the sake of one product -- the Apple III. "The Apple II was the largest selling computer in the world. I travelled a lot on the outside then, to a lot of user groups and clubs, and I knew what people were doing in the real world. But inside Apple, nobody then knew of any product you could plug into the Apple II to add memory or mass storage. There were no 64K Apple II systems inside Apple, period. No Apple II was allowed to have more than 48K of memory or to have more than one floppy disk, because then it could do the same thing an Apple III could." Int: "All those businesses that should have been buying Apple III's were buying Apple II's and putting as much other stuff on them as they could--" Woz: "And Apple didn't support them, deliberately, very deliberately. The ProFile [hard disk] was designed for the Apple II, but Marketing said "No, no, we can't have a concept in peoples' heads that an Apple II can do this. We're only going to aim the Apple II towards low-end uses, and we will put the ProFile only on the Apple III." But then to stick with that for three years was wrong. Maybe stick fully with it for half a year, then they should have started merging the two. To stick with it for a whole year and try to make the III go is reasonable, it's understandable. But three years? There's no way in the world to understand why every ad for three years was Apple III. It was three percent of our business. "Only a few percent of the engineers at any one time were working on Apple II development projects, until products like the IIe had to get phased in. It's an untold story. The Apple III had a poor introduction, and they could have either dropped it or let it remain very small and supported it at that level forever. They put all the money into making the Apple III compete head-to-head with the IBM PC for the sales that occurred in 1983. The Apple II should have shared those, and Apple was the only company that absolutely never allowed the Apple II to be expanded. They made enemies -- anybody who expanded it in an outside company was an enemy of the system software and the system engineering people inside [Apple], and we would sometimes turn them off and not talk to them. Apple totally disallowed the Apple II because the Apple III failure was kind of a personal failure to Steve Jobs and Mike Markkula, and they tried with hundreds of millions of dollars to buy success for their ideas." [Reprinted in II Computing, Dec/Jan 86, from Computer Currents] [I]n the case of the Apple III there were other mistakes. We had artificially decided that it would be a professional machine, which meant that the Apple II was unsuitable for high-level work. We even gave the Apple III a hard disk with what was at that time a large capacity, and in order to protect the III we decided not to do the same thing for the Apple II. [The Third Apple 102] Everybody had a wish list: Jobs, who was then vice-president of research and development; Tom Whitney, the executive vice-president of engineering; marketing people of all stripes. The III would have more memory than the II, a better display, an upper-and-lower-case keyboard, and a better operating system. [West Of Eden 95] _____ Naturally it would be impossible to implement any of those things on the Apple II. Create an 80-column display card? Add more memory? The eight slots in the Apple II obviously could not be used for such things. Upgrade the keyboard? A ridiculous notion. In the period of 1977 to 1980 inclusive the Apple II was the world's only serious microcomputer available to businesses. It was the successful combination of the Apple II and the VisiCalc spreadsheet program that convinced IBM (after its false start circa 1975) that there was such a thing as a microcomputer market. Yet Apple turned its back on the Apple II as a business machine, despite the fact that it was already the choice of thousands of businessmen. In so doing Apple turned its back on all the customers who bought the Apple II for business purposes. Let's move a little further ahead in time. The Apple III bombed due to a combination of design and manufacturing problems that eventually led Apple to replace fourteen thousand units free of charge. But Apple tried to make it fly, and knew where to get the money to do it... _____ In 1981....the company was doing flips to make the III look profitable. Most of the work in the newly created Apple II division was being done on the III, but it seemed like all the expenses--for engineering, advertising, office space--ended up being charged against the II. Yet to make sure the II and the III didn't compete with one another, the II's capabilities were deliberately kept limited. It was perverse. [West of Eden 104-5] _____ Apple, as noted, was split down the middle: _____ When Scotty divisionalised the company after the Apple III introduction, the II and the III got lumped together in a single unit under Whitney, who was soon to be fired. Then Jobs took over the Macintosh project, and one by one he lured the hobbyists away. Whitney was replaced by Wil Houde, a former Hewlett-Packard man who'd been in charge of service and distribution--"the distribution orifice," Jobs liked to call it, in a phrase that fully captured his feelings about its necessary but lowly function. Houde looked the part of a division manager, with his square jaw and his trim gray beard, but there was no way he could stand up to Jobs's ferocious attacks. Jobs--Steven P. Jobs, chairman of the board and chief stockholder, multimillionaire entrepreneur, hero of the personal-computer revolution--would walk into their cramped quarters on Bandley Drived peer over the shoulder of some hapless engineer and say, "What are you doing here? That's a dumb idea. That's shitty!" Houde would make a presentation to the exec staff and Jobs would cry, "That's the shittiest thing I ever heard!" He called them all "Clydesdales" because they seemed so slow and deliberate. He said they were HP plodders. He called them "the dull and boring division." Macintosh was going to be out in January 1982 for $995, he reminded them; and once that happened, there'd be no need for them at all. Macintosh didn't come out in 1982, but it seemed like there was no need for the Apple II people anyway. That fall they found themselves exiled from Bandley Drive: Macintosh was outgrowing its quarters and Jobs wanted their building. There was no more room on Bandley, so the whole division packed up and moved to a new building a mile down Stevens Creek Boulevard--a six-story, three sided office building, its black glass skin scarred across one side by an ugly white portico, the whole thing awkwardly situated on an oversized traffic island between a major expressway and the freeway to San Francisco. They called it the Triangle Building. In their grimmer moments they called it the Bermuda Triangle, because obviously Apple had sent them there to get lost. [West of Eden 98] _____ The Apple III was dead on arrival but the Apple II Plus was surging ahead, with 1982 sales in the vicinity of 300,000 units. Did Apple change its basic attitude? No; it still disallowed the Apple II as a business machine. Apple was not a market-driven company, preferring instead to drive the market -- spending its development dollars on machines that businessmen should have wanted rather than on machines that businessmen did want. The money went to nice "business machines" like... LISA _____ ...Rick Auricchio was a programmer who worked in PCS [Personal Computer Systems, the Apple II and III division of Apple]. "We felt that the Lisa Division was full of prima donnas. They wanted a thirty-thousand-dollar laser printer and they got it. They went out and hired high-powered people. We didn't. Their working cubicles were bigger. They had more plants. Even though we were paying all the bills and pumping cash across the street, we were dull and boring and not doing anything. There was a perception that they would be nine feet tall and scowl at you, and turn up their noses. Without the right color badge and an escort, you couldn't get into the Lisa building. That was an insult. People started thinking that they didn't want to be cretins for the rest of their lives so they left PCS and joined POS." [The Little Kingdom 251] Lisa was our great hope to capture the business market. [Odyssey 145] _____ For the record, Apple had already captured the business market and was busy losing it. Lisa bombed upon its 1983 introduction due to an outrageous price tag and severe performance problems resulting from its use of graphics for all screen operations. Yet Apple survived -- even thrived. Why? Simple -- Apple wasn't dependent on Lisa. _____ There was one bright spot during 1983. The much maligned Apple II division introduced the Apple IIe and sold more than 700,000 units, about 400,000 more than during the previous year. [Accidental Millionaire 181] _____ Did somebody say maligned? _____ ...two years of neglect and abuse had turned the whole division into an embattled underground. These weren't hotshot professionals like the men John Couch put in charge of Lisa or messianic hackers like the wizards Jobs had recruited for Macintosh, who were known behind their backs as "Moonies." They were practical people who worked on a practical computer. They'd been called "C players" for so long they hardly heard it anymore, but their stoicism was tempered by the knowledge that they were the heirs to Woz's dream. With its immense library of available software, the Apple II had become the Volkswagen [B]eetle of personal computers, an unassuming yet useful little machine with a personality as distinctive as its inventor's. Since what the dealers paid Apple was three times the manufacturing cost, it was also a cash cow of incredible proportions. And by that May of 1983 the Apple IIe--the evolutionary advance on the II+ that had been introduced with Lisa--was turning out to be the most successful II of all. It was selling sixty to seventy thousand units a month, more than double the average sales of the II+. But what was most remarkable about the IIe was the way it had been developed--by a handful of engineers, working almost in secrecy from the rest of the company. The main force behind it was Walt Brodener [sic?], an engineer who'd worked with Woz on an earlier, abortive attempt to update the II and who pursued this one in the face of Jobs's ridicule. Jobs wanted him to work on Macintosh; he told Brodener any idiot could do the IIe. Brodener told him this was one idiot who was going to finish He did it because he loved the II. It was going to die of obsolescence if somebody didn't do something, and it was all that was carrying the company. That was the division in microcosm: loyal to the memory of Woz, stubborn in their resistance to Jobs, committed to the Apple dream, and resentful that the dream seemed to have passed them by. [West of Eden 99] _____ Some might think that generating a billion dollars of gross revenue would have generated some respect for the Apple II; that doubling sales might suggest that the product might be worth something. Try again: _____ [Apple] was essentially a one-product company. The Apple II contributed most of the....revenue, but Jobs hated the computer because he considered its design 'inelegant'. [Accidental Millionaire 140] Steve Wozniak found himself reluctantly embroiled in corporate politics. "I was lucky to find two hours a day to devote to work," he said. As for the newcomers, they turned up their noses at the Apple II, which was the backbone of the company. The younger engineers said, "The Apple II isn't a computer, it's a joke." [Accidental Millionaire 156] _____ In 1983 Apple finally lost its position as the number-one personal computer company; hardly surprising after having spent four years trying to kill off its only significant product. It was inevitable, in retrospect, that IBM and its imitators won the prize. _____ The ground rules of the marketplace were swiftly changing as the computer industry shuffled behind the IBM PC. Until 1983, businessmen universally used the VisiCalc spreadsheet program which was largely responsible for putting the Apple II on many business desks. But the debut of a new faster and more powerful spreadsheet program called Lotus 1-2-3 and the introduction in the summer of 1983 of the more powerful lBM XT forever altered the business market in IBM's favor. Their acceptance by business allowed them to capture nearly 28 percent of the market, compared with Apple's 24 percent. [Odyssey 147] Software developers, such as VisiCalc and Lotus, now had to make programs for two standards, the Apple II and the IBM PC; dealers had to decide which of a limited number of machines they could stock; and consumers had to puzzle over which one was better. [Odyssey 142] _____ Apple had willingly, if unintentionally, ceded the top spot in business computing to IBM (where "IBM" = "IBM PC clones") by ignoring the product that had made Apple the industry leader. Those who think that it might have been appropriate to try to recapture lost ground by promoting the Apple II again would be right...and in fact this was tried for a little while (remember the radio ads for the "Apple IIe business system", priced at $2995?)...but then something happened. John Sculley had come to Apple from Pepsi to take over as company president, and teach them about marketing. And he'd fallen right into the hypnotic stare of Steve Jobs. _____ Under Sculley's 1983 reorganization, Jobs....as chairman of the corporation and largest stockholder....was disproportionately powerful. He continued to view the Apple II products as dinosaurs and told marketing managers for Apple II that they were working in a clumsy, out-dated division. Sculley's reorganization had the effect of making Jobs even more powerful than he had been, although some people believe that Sculley was giving Jobs enough rope to hang himself. Sculley was lenient with Jobs, much to the dismay of people in the Apple II division, who were being bullied by Jobs while they were bringing in most of the company's profits. "We were all absolutely astounded that Sculley seemed to be buying Jobs," said a senior programmer. "He sat with Jobs and listened to his ideas politely and often went along with him. Scotty [Apple's former president Mike Scott] used to shout him down, but now Jobs seemed to have the ear of the company's president and chief executive officer." [Accidental Millionaire 180] I was quickly shedding my Pepsi education. At Apple, the conversation was sprinkled with words like "vision" and "values," words that were nonexistent back in Purchase, New York. They replaced other words in the vocabulary of the traditional manager, words like "discipline," "accountability," "competition," and "market wants." [Irony his. --S] Until now, I had lived my entire professional life being measured on market share and had great respect for it. But at Apple there were no Nielsens to lean back on. In an industry changing and growing as rapidly as ours, careful and considered positions of our products had to be the highest priority. Market positioning was more important than market share. We needed to develop a product line that would strongly position Apple in the office, education, and serious home user markets. [Odyssey 142] _____ Since Apple already had a product line in a strong position in the office, education and serious home user markets, the previous statement may seem strange; but Sculley was listening to Jobs (who, incidentally, had the nickname "The Reality Distortion Field"), and there was a favorite project of Steve Jobs in development... MACINTOSH It was supposed to be a revolutionary product, but its developers' attitudes towards the evolutionary product that was providing all their funding were old news: _____ The Macintosh group, though, believed its product would be better than Lisa or anything else that Apple had ever done. The Apple II people highly resented the fact that they had been pushed into a building that was two and a half miles from the Apple campus on Highway 280. Macintosh people routinely referred to the Apple II people as "bozos." They maintained that all the best people were working on Macintosh; those who weren't were automatically bozos. The elitism was blatant. Apple kept the refrigerator for the Macintosh team stocked with free fruit juice [the fridge alone accounted for $100,000 per year of misspent Apple II revenue. --S]; and it paid a masseuse to work the tense backs of the Mac engineers. No other part of the company benefited from such perks. The Macintosh would be incompatible with any other Apple computer, creating potential software and retail headaches. Steve correctly thought that the Macintosh represented a new generation of personal computers and that another standard was worth developing. Efforts to achieve some compatibility among Lisa and Macintosh were underway, but required greater resources for any chance of success. Our research efforts had to be consistent with our corporate mission to bring high-technology products within the reach of the consumer. [Odyssey 144] _____ Note the "incompatibility" problem. Jobs glossed over it, and others followed Jobs: _____ In the case of a true technological breakthrough rather than a minor improvement, incompatibility is necessary. This is true when it comes to the creation of a new standard, a family of machines, a dynasty. Why is Macintosh not compatible with the Apple II? Because its designers wanted to create something radically different: a machine that talked in pictures rather than text, that can perceive a movement of the hand, and whose standard should last ten years. [The Third Apple 123] _____ It should be noted that the above statement by Jean-Louis Gassee is completely wrong, and not merely because there are now many Apple II emulators for the Macintosh. Pictures? The Macintosh didn't make it out the door until 1984, and when it did it was limited to a screen resolution of 512 dots by 342 dots in two colors: black and white. By mid-1983, on the other hand, the Apple II had video cards available that gave a screen resolution of 512 dots by 512 dots in 16 colors, or 724 dots by 724 dots in four colors, or 1024 dots by 1024 dots in two colors. Even by today's standards that's nothing to sneeze at. Movement of the hand? The Apple II had had paddles and joysticks since 1978. Mice came along at about the same time as Mac mice, and would have been earlier if anyone had asked Woz to invent a mouse controller. Ten year standard? The Macintosh standard, as introduced, lasted all of three years. Then Apple gave up, lifted the open-architecture concept from the Apple II and retrofitted slots onto the machine. You want a ten year standard? The Apple IIe is now in its tenth year of continuous production despite a total absence of advertising. The typical model of Macintosh is lucky to last one fifth as long. But I digress. Somebody at Apple should have noticed the oncoming problems of the Mac from the beginning... _____ [Said Jobs:] "All the Xerox PARC-type guys who came to interview [to work on the Macintosh] said, 'You don't have the megabytes? Forget it. I don't want to work on this thing.' ..." [Steve Jobs: The Journey Is The Reward 253] Steve also thoroughly miscalled the need for better storage solutions. One of his major mistakes was not providing compatibility with a hard disk, a mass storage device with the capacity of many disks, on the original Macintosh. Then he also refused to provide help to hardware manufacturers who saw the Mac as a viable business opportunity. Companies such as Tecmar, Corvus, and Davong tried to make their equipment work with the Mac, but because of the design of the Macintosh hardware system and the lack of aid from Apple, their equipment was unreliable and had to work in decidedly un-Macintosh ways in order to function at all. [SJ:TJIR 359] _____ Jobs had already decided that the users didn't know what they wanted; now he decided that the people he'd stolen his ideas from didn't know the minimum hardware requirements for the graphics-based machine. Whoops! As we now know, you need at least two megabytes to do anything serious on a Macintosh. 128K is enough for...what, defining a menu bar? While Jobs and his cohorts were dreaming visions of future doorstops, er, products, the ignored Apple II division was inventing a new Apple II... _____ ...a new-generation Apple II was in the works, a project they called the IIx. While the IIe was an incremental improvement over the old II+, the IIx would be a dramatic update. It was being built around the 65816 microprocessor, a successor to the 6502 that was currently under development at the Western Design Center, a semiconductor laboratory in Phoenix. What was amazing about the 65816 was that it promised to be as fast and as powerful as the Motorola 68000 at the center of Macintosh--which meant that this new-generation II could be the equal of Macintosh, and yet it could run all the Apple II software as well. Woz got really excited. He signed up immediately. And the people who were working on it were thrilled to have him, because obviously any project he was involved in wasn't likely to get canceled. [West of Eden 104-5] _____ Unfortunately, Wozniak was a low-key, non-political person, and in the absence of any heavy hitters to go to bat for it, the IIx was canceled in April 1984. When it came to things valuable to the Macintosh, Apple made commitments. It made a commitment to Motorola to buy so many 68000s; it bought Adobe stock; in general it invested in products that would be used in the Macintosh. The Apple II on the other hand could take a leap. Western Design Center, a relatively tiny company, didn't have the resources to come up with a sufficient number of 65816s for Apple's "desires" by their due date. Apple didn't care to make it possible for WDC to do a better job, and killed the IIx instead. Besides, the engineers had forgotten that they were bozos and had come up with an Apple II with a coprocessor slot that would effectively allow the machine to be turned into a Macintosh, or an IBM PC, or any other computer that you could put on a card. Steve Jobs certainly wasn't going to allow the existence of an Apple II that was better than a Macintosh. Also, the sales people said it would only sell about 300,000 units per year, so why bother with it? Returning to 1983: Sculley, an admitted computer neophyte, listened to Jobs and was converted to Macintosh; he decided to use the Apple II as a cash cow to launch the product. _____ IBM's decision to launch the PCjr. in mid-October [1983] didn't help. Many analysts initially thought the product would smother us. We were very concerned that the Apple IIe would be overpriced against a real powerhouse of a product from lBM. Yet we could not successfully launch the Macintosh in January from a failing company. Somehow, we had to gain momentum through the seasonal period to help us introduce Macintosh. To stimulate Lisa sales, we dropped the price, unbundled the software, and expanded the dealers who carried the product from 150 to 350. I believed this strategy would increase sales, but I knew it wasn't enough to get us out of the woods. We had to depend upon Apple II for a successful Christmas. If we were wrong, we were going to have a disastrous Christmas selling season. But we had little choice. How could we introduce a revolutionary new product like Macintosh from a failing company? Momentum and timing are everything in marketing. Few people would want to buy a computer from a company that isn't doing well. We had to get the momentum back. [Odyssey 149] _____ It is of slight interest to note that Apple II momentum had been increasing by leaps and bounds for six years at that point. With no signs of stopping. The strange part about losing to the PC was how intentional it was. _____ "[Said Jobs:] The IBM PC fundamentally brought no new technology to the industry. It was just a repackaging and slight extension of Apple II technology." [SJ:TJIR 243] The [IBM] PC was a big success and rapidly became the top-selling microcomputer. But it wasn't a significantly better VisiCalc machine than was the Apple II.... VisiCalc and Multiplan looked exactly the same on the screen of an Apple II or an IBM PC, and neither program was significantly faster on the IBM platform either. [AE 138] In early January [1984], things looked bright. Our pricing and advertising strategy for the IIe worked handsomely. We shipped a record 110,000 computers in December alone, some $160 million in revenues. Lisa, although not strong, had picked up a little bit. [Odyssey 177] _____ In January, of course, Apple premiered the Macintosh amid a multi-million-dollar blitz of publicity. _____ Sculley told _Fortune_ he wanted to sell 250,000 computers the first year; Jobs said he wanted to sell 500,000. "The Macintosh is just the best we can do," he announced. "If it fails, we deserve to fail." [West of Eden 161] _____ It did and they did. After an strong start, sales nosedived after May -- i.e., after people started getting an idea of how well the machine actually worked as opposed to what the advertising said. The Macintosh was bogged down with graphics -- like Lisa, and unlike the IBM PC and Apple II, it didn't have the option of a fast text-only mode -- and it came with only 128K of memory, which wasn't nearly enough on a graphics-based system. And lo! It failed. _____ The Macintosh was the first attempt Jobs had made at creating a computer -- and it was a failure. Nevertheless, he remained committed to the Mac technology and philosophy, even while sales continued to slide. He succeeded in compounding his difficulties with Apple by becoming even more protective of the Macintosh, and taking his frustration on the Apple II division. Sculley had attempted to improve morale within the company by consolidating divisions, but Jobs would have no part of that. He was intensely jealous of the continuing success of [the] Apple II and chagrined over his own failure with the Macintosh. Jealousy, coupled with failure, in a man with monumental ego can create enormous negative reactions. Jobs struck out viciously at the Apple II group, reiterating his often heard litany that employees in the group were creating clumsy, outdated, and inelegant machines. [Accidental Millionaire 188-9] Steve stubbornly refused to believe that something could be wrong with the product. It had to be something else or someone else -- the marketing or sales operations, the dealers, or even the customers. It couldn't possibly be the Macintosh. Mac was a great product. [Odyssey 231] When customer research finally got done -- which was only after the Mac began to fail -- it was discovered that although potential buyers liked the graphics and ease of use, they disliked the closed architecture and tiny monochrome screen even more. The Wendy's hamburger chain showed a TV commercial in 1984 called "Where's the Beef?" That was exactly the question that might have been asked about the Mac. The first 100 days had stood up on sizzle and flash, but then the promotion gave out and people began to realize the machine had no substance. Little software was available for it, though it was competing with a computer supported by thousands of programs. Hardware couldn't be hooked up to it, but the IBM PC offered an open architecture. (IBM had ironically taken its cue from the Apple II.) The Mac was seen as a toy.... [SJ:TJIR 366] _____ The marketing budget for the Mac's second year exceeded a million dollars per week. The Apple II was lucky to get so much in a year, after 1988. Even ads can't make up for a bad product. _____ ...the world around them was crumbling. Macintosh sales in September were less than two-thirds of the 30,000 projected; October sales were projected at 50,000 and came in below September's. In November, after the October sales figures came in, Steve walked into his regular Wednesday-afternoon staff meeting and cast a chill across the room. The usual cocky dynamism was gone; he looked like a man who'd been blind-sided by--fate, numbers, whatever. I've failed, he announced. What's the price I have to pay? What's the cost? [West of Eden 217] _____ In 1984 the Apple IIc came out, and received a fair send-off itself -- to the extent that Jobs permitted such... _____ "To introduce the [Apple IIc] in April of 1984, the company rented the Moscone Center, San Francisco's new underground exhibition hall, and put on an extravaganza. In the middle of all the acclaim for the Apple II family, which was highlighted by the theme 'Apple II Forever', Steve gave a little speech about his Macintosh, bragging about how the 100-day sales had exceeded his wildest hopes. He went on to say that the Mac was the Apple II of the eighties. The audience roared its approval, and next-day coverage of the event generally highlighted the exceptional sales of the Macintosh and mentioned how Apple was trying to breathe life into its obsolete and dying Apple II family. Steve had struck yet another blow against Woz's machine." [SJ:TJIR 352] _____ Apple's obsolete, dying, immensely popular bread and butter product: _____ ...the venerable Apple II turned in a record performance in 1984. With Jobs hounding the division's managers, and even refusing to allow the Apple II to be advertised as a business computer so it wouldn't compete with his Macintosh, the division sold 800,000 Apple IIe's and portable Apple IIc's. It generated revenues of nearly one billion dollars, which accounted for at least two-thirds of the company's products. [Accidental Millionaire 189-90] _____ The Apple II sold so well in 1984 that -- at least according to the Feb 1985 issue of Personal Computing -- it was again the best selling PC of all time. In 1985 Apple announced the Macintosh Office, something designed to make the machine attractive to the business market, and hyped it at the annual stockholders' meeting... _____ ...Jobs, playing the role of corporate evangelist, whipped the audience into frenzies of excitement. Key members of the Macintosh division were given front row seats while Apple II managers....were seated in a separate room where they listened to Jobs promote the Macintosh through a speaker system.... Jobs's fanatical devotion to the Macintosh division almost resulted in a mass walk-out of Apple II employees. Wozniak relates the story: "....when I came to work the next morning, there were a bunch of people ready to resign. They had already typed out their resignation letters. I managed to talk them out of it." [Accidental Millionaire 143-4] Woz had gone to work at the Triangle Building that morning and found the engineers in a bad state because they'd been left out of the stockholders' meeting the day before. They'd wanted to show that an Apple II could run a LaserWriter as well as Macintosh, but the demonstration had been yanked at the last moment. Instead, the II had barely been mentioned all morning. Woz himself was used to this kind of treatment -- the II had been shoved aside for years, first in favor of the III, then for Lisa, now for Macintosh. But the others weren't, and it made him angry to see them so demoralized. Some of them were saying they were going to write a protest letter to Sculley. When he heard that, he went straight for the phone because he knew his voice would be heard. [West of Eden 239] "As the third-largest shareholder, I want you to know I'm upset and so are a lot of people in the Apple II group," he told me. "These people work on Apple IIs and all they hear is Mac, Mac, Mac. It hurts me to see people so demoralized. When I came to work this morning, the engineers, managers, and secretaries were just ready to send in their resignations, they were so angry about it. The shareholders were given the impression that the company's total revenues were coming from Macintosh." "Steve," I said, "we really did mention the Apple II and the education markets." "Yeah," he countered, "I heard the word two times in the entire thing, once in a question from the audience and once in a film clip at the start. It was the wrong impression to give." [Odyssey 334] He knew that would get the guy's attention. And he knew that the thing the board of directors -- any board of directors -- feared the most was a lawsuit alleging deceptive actions. So he told Sculley that the stockholders' meeting had presented a deceptive and fraudulent portrayal of the company's earnings. He told him that the people who own the company ought to be given an accurate picture of where their earnings were coming from. John tried to tell him it was just event marketing -- that the Apple II had gotten its day in April at Moscone Center [when the Apple IIc had been introduced] and this new product announcement just happened to coincide with the annual meeting. Woz pointed out that Jobs had plenty of time to talk about Macintosh at the Moscone event, and besides, the II wasn't even mentioned during the formal business session, when the officers got up to report on the state of the company. John tried to argue; Woz wouldn't have it. John tried to tell him they were providing the analysts with the numbers: there, at least, the II was getting fair credit. But he found himself talking to a dial tone. Woz had hung up on him. [West of Eden] He said virtually everyone in the Apple II group was upset. He didn't understand why I had sold out and was only backing Macintosh. It wasn't intentional, I told him. We wanted to give the Macintosh a lot of attention because its success in the corporate environment was so crucial to the company's future. Yet it was true that the Apple II, not the Macintosh, had gotten us through the difficult Christmas period. The conversation culminated in his resignation from Apple. [Odyssey 229] The Macintosh was starved for business software. We were really getting by with mirrors at that point. Unfortunately, we weren't doing it well. Unlike 1984, the Mac Office event became mere hype. As the months wore on, our critics knew our announcement was contrived and premature. The media turned against us. We'd created the anti-event. It was like anti-matter; it swung the other way on us. Some of it was a backlash from the previous year. We had told the world the Macintosh was going to change the world. Now it was failing. [Odyssey 229] The Macintosh division was going down in flames. Not only were there mass defections, but the FileServer was delayed until at least the end of the year [1985]. Sculley wasn't pleased. He thought he had been misled by Belleville and by Steve. Sales weren't picking up, and he commissioned some research that showed that the Macintosh was perceived as a yuppie computer, not a serious business machine. [SJ:TJIR 395] _____ The Mac was starved for business software; the Apple II, however, had AppleWorks. Apple never advertised the product after its 1984 introduction, but AppleWorks went on to provide Lotus 1-2-3 its major sales competition in the integrated software market (and in fact outsold 1-2-3 at various times). Naturally, Apple's management neither noticed nor cared. It is of slight interest to note that on April 11, 1985, Steve Jobs made a presentation to Apple's board of directors. He demonstrated a flat-panel display, made by Woodside Design, that he wanted to incorporate into a future Macintosh. He demonstrated the display on an Apple IIe, of course. The Macintosh wasn't capable of using it. This irony is not known to have registered with anyone in Apple's management. Jobs himself was fired for incompetence in 1985, but even in the wake of that he found time to hurt the Apple II by calling a press conference to announce his 'resignation': _____ His timing was impeccable. [The] press conference was staged to coordinate with the overnight deadlines of the big Eastern papers, and it superseded coverage of an enhanced Apple II product announcement scheduled for the same day. It was vintage Steve Jobs. [SJ:TJIR 6] _____ Things got even worse for the Macintosh. In early 1986 Sculley made desperate appeals: _____ Many in the [third-party] network were suspicious and questioned our sincerity over a new partnership. We had a reputation for not being an easy company to work with. They'd develop add-on products for the Apple III and then we'd introduce Lisa. And when they made products for Lisa, we were ready to release Macintosh. "The words sound right," they said, "but we want to see hard evidence." We couldn't afford to have them on the fence. We needed a few big wins. Both the general and the trade press suggested that developers were abandoning the Macintosh. "Venture capitalists are running, not walking, away from the Mac," claimed one software publisher. The San Francisco Examiner reported that even Gates of Microsoft was saying privately that his company wouldn't develop new Mac programs. "Development of innovative new Macintosh software by major software publishers is dead," stated one analyst. [Odyssey 341] _____ In other words, the Mac was effectively dead at the beginning of 1986. Lisa, also a failure, had been canceled after a similar length of time. If not for the tremendously strong Apple II, Apple would have gone belly-up. Surprisingly, Apple had recognized this and reactivated a previously cancelled Apple II project... THE APPLE IIGS This new Apple II would sport a Mac interface, improved graphics, and a state-of-the-art sound chip. So was the Apple II finally getting respect? It looked that way for a moment...but: In 1986, 480,000 Macintoshes were sold, up from 245,000 the year before. The machine, thanks to massive advertising and elimination of some of its gross defects (small memory, for one), was slowly catching up to where the Apple II had been four years earlier. The quarter-billion dollars in development was paying off, albeit two years late. So Apple decided -- again -- that it didn't need the Apple II any more. September 1986 saw the introduction of the Apple IIgs. Because it was an Apple II it sold well at Christmas (even though Apple had deliberately redesigned the case in order to make it not look like an Apple II) but this meant nothing to Apple's management. They had a successful non-Apple II product. In the following years, Apple II mainstream advertising was quickly cut to zero and kept there. (Unrelated trivium: Not content merely to kill the IIgs, Apple likes to dismiss its Mac-like aspect -- QuickDraw II -- by saying it was merely reverse-engineered from QuickDraw on the Macintosh, and by presumption nowhere near as good. Naturally they never mention that Mac QuickDraw was a renamed port of Bill Atkinson's LisaGraf routines for that earlier machine.) Apple introduced a revised and faster Apple IIc shortly after the IIgs. Curiously, the IIc Plus was dropped from Apple's price list within a year despite enormous initial demand -- demand that occurred sans any advertising. Sculley made noises about better support for the Apple II several times between 1987 and 1992, but somehow nothing of any significance ever emerged. Some people believed Apple when it made promises; others did not: _____ [Barney Stone:] We're not billion dollar companies. We are the ones who sell the Apple IIs. We sell them because you're not doing it. You're talking about putting more money into developer services, more into engineering and so forth. Where's the money for marketing the Apple IIs? I have been selling Apple II business software for about ten years now. And I'm tired of Apple hiding the fact that the Apple II can work in business. I feel that rather than Apple helping me as a publisher, I'm fighting you. Obviously I'm not the only one who feels this way. You keep developing better Apple IIs and your marketing people every year cut the market more. Last year it was K-12, this year it's K-8. Next year, it will be Apple IIs for every nursery school. You are losing users every single day to MS-DOS because not everyone who wants more power wants a Macintosh. There are all kinds of flavors out there. You have home office displays with Macintoshes here at AppleFest. This is an Apple II show. The home owner display has five or six Macintoshes and zero Apple IIs. I think it's time to do us all a favor. It's time to split the Apple II back into a separate division. It's time to give the Apple II to the people at Apple who still believe in it and love it. Tell them to go out there and sell it not to just some very limited market, but to everybody who wants it -- market it to the businesses, market it to the home user. Only when you do this will you really be able to say Apple II Forever. [Del Yocam:] I appreciate your remarks and I heard everything you said. We have really tried to focus our marketing on education and on business. It's only been within the last three months that we have split our marketing organization into those two organizations. Now the focus. It is going to be education for the Apple II and business for the Macintosh. Now, obviously they cross over. There are plenty of Apple II business users, small business users, or activity users. And yes, I'm very sensitive to the fact that we have not done a good job in providing internal support for those Apple II users. We are trying to rectify this. It's not going to happen overnight, but we are increasing our resources on Apple IIs. I will take this information back and we'll sit down and discuss what we can do to help support you in these efforts. However, our major thrust again is going to be Macintosh in business and Apple II in the K-12 marketplace. As far as the home market, we will continue to push Apple II into the home for education, but Macintosh into the home for business use. [Barney Stone:] As a developer, what you are saying to me is that the Apple II is not a productivity machine. Therefore, there will be no money invested for Apple II products along this line. And what you are really doing is kicking us in the teeth -- all the Apple II developers and all the Apple II owners. Because you're cutting off our future. [Del Yocam:] I hear what you are saying and I will go back to Apple and we will discuss these issues. [Excerpt from the article "AppleFest/Boston", Call-APPLE, Sep 1988] Barney Stone is retiring DB Master (and himself) from the Apple II world. He is selling remaining copies of DB Master Professional at $100 each plus $5 shipping. Remaining copies of the BASIC Programmer's Pak or Developer's Pak are $50 each, and copies of the Medical Billing Template are $75 each. Barney will use the proceeds toward Stone Edge Technologies's (P.O. Box 3200, Maple Glen, Pa. 19002) accrued debt. Barney hasn't been able to draw a salary from DB Master sales for over a year.... [A2-Central, Oct 1991] _____ Apple sure knows how to handle those uppity developers. In the USA, Apple made empty promises to the Apple II users. Overseas, where the US press was less likely to notice, Apple showed its true colors... _____ Bad news from Italy: Apple has completely withdrawn from the personal computer market. At least if the term personal computer means "computer for the individual," including professionals and small firms. After discarding the Apple II, they didn't support the IIGS, and were rather surprised (their words) at the good sales results. After two years of continued efforts, they at last succeeded in putting the IIGS out of the market, leaving behind many angry customers. They abandoned the huge school market (in which they were dominant) to MS-DOS without raising a finger. ....I was commissioned [by Apple Italy] to write a technical support package for C developers. They paid me, then virtually locked it in a drawer. The same thing happened (the year before) to a rather large assembly program (~60K) I wrote (in ten days) just before the IIGS was announced. No developer ever saw it. Now they are in a frenzy for their new toy/target: large customers. That, of course, means that traditional Apple users are regarded with ill-concealed dislike: Go away, stupid student, you are tarnishing my image! Just an example: HyperCard was (badly) translated seven months after its appearance in the U.S. In the meanwhile, they refused to sell the English version because the translation was "on the way." Of course, everyone had it anyway and laughed at them. I am now told that they are making money selling over-priced Macs to large corporations. Good for them, while it lasts (ever seen a PS/2-70?). As for small firms, my partners in an electronic firm chose to buy two MS-DOS machines (with hard disk) instead of another Mac. Given the prices and Apple Italy's attitude, I can scarcely blame them. They used Apple IIs before.... -- Enrico Colombini [Letter to Call-APPLE, Nov 1988] I'd like to comment on the problems Apple II owners are facing here in Italy. The Firm "Apple ITALIA SpA" (Apple SpA for short) has put all their efforts into selling the Macintosh leaving Apple IIc/e/GS owners out in the cold. If you go into an Apple Center and inquire [about] an Apple IIGS, they do everything in their power to discourage you. They usually conclude their discussion with, "why don't you buy a Macintosh?" If you insist on buying an Apple II, you will be faced with several dilemmas. (For example, an Apple IIe owner will have problems obtaining an enhancement kit for an old IIe since Apple IIe/c's are no longer on the official price lists of Apple Italia SpA.) In Italy we have one big computer exposition in September called SMAU. This and one other exposition are the only two Apple SpA attends. In the last exposition (in the beginning of October last year) there were no Apple IIGS's, only Macs, Macs, Macs... When I buy a computer, I'm not buying just a piece of plastic with some iron, but I buy a product for the brand name I've grown to trust. Many owners of IIGS's and Apple II's feel Apple has forgotten us. I have written this letter filled with frustration and even rage. Yesterday I read that Sculley is planning to stop support for the Apple II line in Europe. (I hope this is not true.) We purchased Apple products expecting the support we had grown accustomed to. Now we find ourselves frustrated and alone. -- Cecconi Maurizio [Letter to Call-APPLE, Mar 1989] _____ How does Apple now treat the computer that allowed it to survive until 1987, when the first Macintosh to adopt the open-system Apple II philosophy was born? Here are some letters collected from the newsletter now known as A2-Central (called Open-Apple until threats from Apple's legal department became excessive); see how the Apple II fares around the world at the hands of its parent company: _____ My problem (and that of thousands of other Apple II users in my country) is that Apple Netherlands is killing the Apple II. - the IIgs upgrade for the Apple IIe isn't available here. - Apple Netherlands hasn't run a single ad for the Apple IIgs since its introduction. - Apple Netherlands discourages dealers from selling the IIgs. In all those beautiful Apple Centres you don't see any IIgs machines. There is only one serious Apple II dealer left, Compudress in Kamerik. - The people here at Apple practically deny the existence of the Apple IIgs in a highty-tighty manner -- they seem to think there is only one type of Apple user, the Mac user. - When you write Apple Netherlands with an Apple II question, you can expect to get no answer. I do understand that Apple isn't a computer firm just for hobbyists and small businesses, but I do also believe there is a lot of potential in this reservoir of Apple II users. Why is Apple throwing away this potential knowledge, enthusiasm, and revenue? Apple Netherlands has antagonized the Apple II user. We shiver, we are left out in the cold. -- Jack van Soest, Vlaardingen, The Netherlands Here is a letter from a lonesome Apple II user. Why am I lonesome? Because France has been invaded by the Macintosh and the Apple II is no longer sold. What's wrong with Apple in Europe? Just to show how much they disgust me, I have some brochures about the Commodore Amiga on my desk. -- Nicolas Renon, Villeurbanne, France Apple Italy is about to sink the IIgs -- poor support, lack of accessories and devices. Surviving is very hard. We love the IIgs, but Apple Italy doesn't love us. Neither the Apple IIe nor the IIc are available here. Will the IIgs come next? We won't upgrade to the Mac, we'll die with the Apple II. -- Walter Ferlazzo, Genova, Italy Apple Canada is a farce and a shambles. I don't even want to know what their definition of service is. I love Apple's computers, but I no longer have faith in the company behind them. -- Ephraim Dickstein, Halifax, Nova Scotia ...I tried to buy a LaserWriter for my IIe and every dealer I talked to -- even Apple Computer's "technical support" line -- told me it wouldn't work. One dealer refused outright to sell it to me even after I assured him I knew how to operate it with my system. The technical people at Apple and another dealer told me a IIe couldn't do PostScript! So I went out and bought an NEC PostScript for my Apple IIe and am having a ball with it. It turned out to be a heckuva lot cheaper than Apple's anyhow. ...I've talked to so many Apple II people who refuse to move to a Macintosh that I don't see how Apple can continue to profit without them. I'm doing everything possible to keep my IIes and IIgs healthy. When they die, it's gonna be IBM for our family. -- C. Roberts, Lafayette, CA __________ As it turned out, one of the new products being seeded was an enhanced IIgs with built-in hard drive; this machine was cancelled by Robert Puette, president of Apple USA, two weeks before it was scheduled to go into mass production. Apple's most brilliant, if Machiavellian, move of this era was of course the creation of the "Apple II Business Unit". The name was brilliantly crafted: to the Apple II fans, it suggested that Apple was thinking in terms of Apple II's for business users and that they should stick it out a while longer, while at the same time stating quite clearly that it was the unit created to handle the company's Apple II business. (Any old business? Any new business? Meeting adjourned.) And all this time Apple has claimed that the company is not about to walk away from the billion-dollar Apple II line, while simultaneously doing all it could to turn it into a million-dollar product line that can be walked away from... _____ "...In fiscal 1988 Apple Computer's Apple II family revenues were over $1 billion for the year. Product lines that generate $1 billion a year are rare. Just five years later, in fiscal 1993, Apple II revenues will be less than a tenth as much. Product lines that fall from such heights so quickly are extremely rare. But what is unique is that Apple's executives collected big bonuses while doing nothing to rescue the product line. Nobody on earth is worth the kind of money Apple's president makes. This is one of the biggest scandals in American business history. If it happened in any other company, executive heads would roll in baskets instead of in cash." -- Tom Weishaar [A2-Central Mar 1992] "...Apple abandoned the $1-billion-per-year Apple II business. Steve Jobs had wanted the Apple II to die because it wasn't his vision. Then Jean-Louis Gassee came in from Apple France and used his background in minicomputers to claim there really wasn't a home market for personal computers. Earth to Jean-Louis! Earth to Jean-Louis! ....and all the while, the company's market share continued to drop." [AE 203] _____ Apple will never regain the top spot in the industry, having sold ten million Macs at the cost of not selling thirty million Apple II's. They'll try to regain lost ground with cheap Macs; this will not help, for cheaper PC clones are now the irrevocable standard. Apple has created its garden of pure ideology and will forever be stunted as a company as a result.
The source material for this work includes, but is not limited to:
THE LITTLE KINGDOM: The Private Story of Apple Computer
WEST OF EDEN
ODYSSEY
ACCIDENTAL MILLIONAIRE
THE THIRD APPLE
ACCIDENTAL EMPIRES
STEVE JOBS: THE JOURNEY IS THE REWARD
Yes it's damn long - but it's the most complete and comprehensive bibliography and summ-up of one of the most idiotic decisions for Apple to ever make with one of it's own products that could have made them more relevant than IBM. Steve Jobs liked to point out that Xerox could have been bigger than Microsoft. Certainly, Apple could have been bigger than IBM's home PC operations - easy. Makes you wonder why they didn't - or perhaps - why "HE" didn't. It's so damn on target I've got pretty much the same take on the sources (except West of Eden - took too many footnotes from other works IMO)
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