eWEEK at 30: Steve Jobs Returns in 1997 to Revive a Moribund Apple

 
 
By Chris Preimesberger  |  Posted 2013-11-08
 
 
 

eWEEK at 30: Steve Jobs Returns in 1997 to Revive a Moribund Apple


Apple, with its high-flying stock price, millions of devoted customers and $200 billion-plus in total assets, may be on top of the world now. But it survived some dark years to get to where it is today as one of the world's richest and most successful companies.

A mere 16 months after introducing its then-signature product in 1984, the Macintosh desktop personal computer, the company's visionary co-founder, Steve Jobs, was effectively shown the door at age 30 on May 31, 1985.

He had clashed for two years with his hand-chosen successor, former PepsiCo CEO John Sculley and the Apple board of directors over a great many things— not the least of which were the company's enterprise versus consumer direction and its sacrosanct creative culture.

"I remember distinctly the day of that board meeting where he was ousted, and it had the quality of the day Kennedy was shot," a longtime former Apple manager, who asked not to be identified in this article, recalled to eWEEK. "Without him, it just wasn't the same company. When you look back, it was something of a miracle the company survived until he returned."

By 1985, nine-year-old Apple had cut daily operations ties from both its founders, Jobs and Steve Wozniak, who had come up with the most user-friendly and useful—if not the most powerful and business-oriented—desktop computer that had existed up to that time. Apple was now in the hands of corporate leadership that had no connection to the company' founding principles.

Apple wanted a more businesslike approach and that was Sculley's promise. Sculley served 10 years as CEO until 1993, when he was forced to step down despite presiding over a revenue increase from $800 million to $8 billion in 1993. Sculley hadn't been responsible for the development of the Mac and Mac Office, which spurred most of that growth. But he had the good fortune to make the most of the technology that was created by Jobs, Wozniak and other Apple developers in the 1980s.

However, Sculley's aim was to make the Mac the best-selling business computer in the world and the company did attain that goal, but in the process, he changed Apple's consumer-oriented sales and marketing culture. This caused much consternation among the staff, many of whom left for other companies.

By 1992, Apple indeed had passed IBM as the best-selling PC maker in the world. But Sculley ultimately was forced to vacate the Apple CEO office because of his continuous clash with the Apple culture and also because he didn't want to license Macintosh software—preferring to keep it all in house and proprietary. Finally, he wanted to divide Apple into two companies, and that idea didn't fly at all with the board and employees.

 

eWEEK at 30: Steve Jobs Returns in 1997 to Revive a Moribund Apple


Sculley Out After 10 Years, Spindler In

When Sculley was ousted by the board of directors in June 1993, he left the company financially comfortable. Apple had $2 billion in the bank and only $200 million in debt.  In business terms, Sculley was an unqualified success; he had accomplished his goals. However, many on the board and staff detested him for trying to carve up the company and because they saw him as "back-stabbing" Jobs a decade previously.

Longtime Apple executive Michael Spindler served as president and CEO at Apple from 1993 to 1996. Spindler supervised a successful project, the PowerPC, to go with some failures, such as the Newton connected handheld device and the Copland operating system.

But Spindler proved not to be the long-term, visionary leader the company needed. The company was flailing and it was hemorrhaging cash. Apple stock was in the tank. There were no innovative products on the horizon. Longtime loyal staff people were bailing out.

Sun Almost Bought Apple for a Song

Then Apple hit bottom. Spindler had to resort to takeover discussions with IBM, Sun Microsystems and Philips in 1995. In fact, Apple's situation looked so bleak during that dark period that it was almost sold to Sun for a pittance: $6 per share.

Would there be iPhones, iPads and iPods on the market today if Sun Microsystems had been able to close a deal to buy out Apple in the mid-1990s?

Probably not, said then-Sun CEO Scott McNealy. "If we had bought Apple, there wouldn't have been iPods or iPads ... I'd have screwed that up," McNealy said with a wry laugh during a 2011 talk at a Churchill Club dinner with another former Sun top executive, ex-President Ed Zander.

"Back in late 1995 early '96, when we were at our peak, we were literally hours away from buying Apple for about $5 to $6 a share," said Zander, who had built Sun's software business into a powerhouse and was rewarded with a promotion to president by his mentor, McNealy.

"Honest to gosh, I was at an analysts' meeting in San Diego on a Tuesday morning and was getting ready to announce that we were going to buy Apple. I don't know what we were going to do with it, but we were going to buy it. [Apple] had no CEO at the time; Steve [Jobs] wasn't there, but we didn't get it. Why didn't we buy it?"

But there were last-minute road blocks. "We wanted to do it," McNealy said. "There was an investment banker on the Apple side, an absolute disaster, and he basically blocked it. He put so many terms into the deal that we couldn't afford to go do it."

"Just think, that if that night had been different, I don't know what would have happened," Zander said.

Apple Buys NeXT, Jobs Comes Back

Jobs was not idle during the years of his exile. Between 1985 and 1997, Jobs continued his entrepreneurial ways by founding NeXT Computer and the digital movie studio Pixar. Jobs later said he learned how to be a real CEO in those years.

 

eWEEK at 30: Steve Jobs Returns in 1997 to Revive a Moribund Apple


Meanwhile, Apple again went outside to hire former National Semiconductor CEO Gil Amelio to replace Spindler in 1996. However, Amelio wasn't able to restore Apple's fortunes, and perhaps his biggest contribution to the company was championing the acquisition of Job's second computer company, NeXT, for $425 million in February 1997, bringing Jobs back to Apple.

NeXT's intellectual property became the basis for the iMac desktop computer. When the Apple board finally came to its senses later that year and convinced Jobs to return as CEO and giving him the authority to run the company as he saw fit, the fortunes of the company changed for the better.

Jobs obtained an infusion of cash from Microsoft and other investors. He led development of the iMac with its landmark transparent PC casing design in multiple colors. He also started development on more connected products, such as the iPod and iPhone. Then he starting thinking about more ways for Apple to make money on the Internet.

Amid Turmoil, Core Apple Staff Held Fast

During the 12-year period when Jobs was away, and amid all the chief executive changes and the requisite department reformations, product decisions and business indecisions, a core group of dedicated Apple staff members remained. They had longed for the days of old, when there was clear direction from the top, a shared corporate vision and a similar operational style. None of those characteristics were evident in the 12 Jobs-less years, according to several sources contacted by eWEEK.

"We all were looking for the 'God particle,' so to speak, in the new leadership that came and went," a longtime Apple department manager, who asked not to be identified by name for this article, told eWEEK. "None of them had anything close to it. To be fair, not too many people have it."

"It was a miracle that we were able to evolve the brand in the face of that tumult," the manager, who worked at Apple from 1984 to 1997 and saw Jobs leave and return, said.

"Steve was really good at bringing out the best in people, in getting them to reach beyond what they even knew they could do."

Jobs, who brought that "God particle" back to Cupertino headquarters, stayed on as CEO until the summer of 2011, when he turned the job over to a fellow longtime Apple exec, Tim Cook.

Jobs died on Oct 5, 2011, at age 56 as a result of complications from pancreatic cancer, taking his "God particle" talent and determination with him. But before he left the scene permanently, he led development of Apple's now-iconic wireless devices along with iTunes, the App Store and numerous other successful products and services that are now part of the business and cultural legend that is Apple.

 

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