some months. Then he went back to California and to his work at Atari.

After attending three different colleges, Wozniak had begun work for

Hewlett-Packard in summer 1973. When Atari planned to develop a new game

called "Breakout," Jobs boasted he could design it in only four days -

quicker and better than anyone else. Jobs t old his friend Woz about it,

and the two designed the game in record time, working four nights and days,

and were paid the promised $700 for it. This experience showed them that

they could work together on a tough project and succeed.

The first Apple

When the Homebrew Computer Club came into existence, Wozniak began

attending its meetings. As he later would recall, Homebrew was a revelation

for him and changed his life. He met people who "shared his love for

computers") and learned from them as well a s he encouraged them with his

technical expertise. Others brought along their Altairs, which Wozniak was

interested in but could not afford. He realized this computer resembled the

Cream Soda Computer he had built some time ago.

Soon after, Chuck Peddle at MOS Tech released his new 6502 microprocessor

chip for only $20, which was a sensation compared to the usual price of

$400 for those chips then. Suddenly, Woz saw his chance and decided to

write the first BASIC for it, which was the most spread programming

language. After finishing with the BASIC, he made a computer for it to run

on. The other hobbyists at Homebrew were impressed by Wozniak's kit, which

actually was a board with chips and interfaces for a keyboard and a video

monitor.

Steve Jobs saw the opportunity of this machine, which they named Apple, and

finally persuaded Wozniak to start a company in April 1976. The two raised

the money for the prototype model with a printed circuit board by selling

Jobs' VW microbus and Wozniak's HP calculators. With the Apple I, Steve

Wozniak had designed a "technological wonder") and made his dream of owning

a computer come true. His friend Steve Jobs played the role of a salesman

and his ambitious promotion made the Apple I "a star in the tight world of

computer freaks.")

The breakthrough for the two Steves came in July, when Paul Terrell ordered

50 Apples for his Byte Shop, however on condition the computers were fully

assembled in a case and equipped with a cassette interface to enable

external data storage.

Jobs could "obtain net 30 days credit") for the parts they needed for their

computer. Working hard in Jobs parents' garage, they managed to construct

the 50 Apples within those 30 days.

The Apple I was continuously refined by Wozniak, and its sales made the

young company known, partly because the company's name appeared on top of

computer lists, which were published by electronics magazines in

alphabetical order.

Building up the company

While the first Apple was being sold, Steve Wozniak had already begun work

on another computer, the Apple II. This machine would have several special

features which had not appeared in any microcomputer before and would make

it "the milestone product that would usher in the age of the personal

computer.")

Jobs and Wozniak sensed the market potential their new computer would have,

but realized they did not have the necessary capital for constructing the

machines. So they tried to sell their computer to several established

companies such as Atari, HP and MOS Tech, which, however, rejected. Looking

out for some venture capital to produce the new computers by themselves,

Steve Jobs met with Mike Markkula, who had been a marketing manager at

Fairchild and Intel.

Markkula was at the age of 38, but had already retired, since he had made a

fortune of many million dollars by his stock option at Intel. He visited

Jobs's garage and became interested in their project. Markkula, the former

marketing wizard at Intel, thought it "made sense to provide computing

power to individuals in the home and workplace" and offered to help them

"draw up a business plan.") Finally, he decided to join the two Steves. He

offered $250,000 of his own money and his marketing expertise for on e

third of the company, which was incorporated as Apple Computer in January

1977. Markkula's decision marked the turning point in Apple's history; he

took care of the business side and arranged all the things necessary to

create a successful company. Markkula's know-how was crucial for Apple,

since Woz and Jobs did not have any business expertise. This knowledge is

very important for new firms. A lot of other start-ups in Silicon Valley

failed as their founders were only engineers, who lost control over their

enterprises when they could not meet the skyrocketing demand for their

products.

In 1977, Markkula hired Mike Scott, who had worked for product marketing at

Fairchild, as the company's president, because he felt Apple needed an

experienced person to run the company.

Jobs, who wanted only the best for his company, also persuaded Regis

McKenna, who ran the biggest and most influential agency in Silicon Valley,

to do public relations and advertising for Apple. McKenna, who worked for

successful Intel and many other companies, brought Apple legitimacy and,

among other things, designed the famous Apple logo. Another important

contribution was the fact that he made Apple the first company to advertise

personal computers in consumer magazines to "get national attention" and "

popularize this idea of low-cost computers.")

Steve Jobs's persistency had persuaded Wozniak, the electronics genius who

designed the machine, McKenna, and Markkula, the business expert. Jobs

himself was the driving force that brought the key components together to

build up a successful company.

Apple II - starting the personal computer boom

In April 1977, the Apple II was introduced to the public at the West coast

Computer Faire (market), where Apple had rented the largest booth just

opposite the entrance. Wozniak's "technological wonder") was a great

success and the first orders were already made. The Apple II was the "first

true personal computer.") It was the first microcomputer able to generate

color graphics and the first with BASIC in ROM and included a keyboard,

power supply and an attractive lightweight and beige plastic case, which

would become standard for subsequent PCs. The Apple II was more

sophisticated than any microcomputer before, and represented a machine,

which could be worked with effectively. Steve Wozniak had put all his

"engineering savvy") into it, and had created a computer he would like to

own.

The Apple II was given a rapturous welcome in the public. In 1977, the

company sold more than 4,000 computers, which were priced at $1,300, and

grew rapidly.

Programs and data for the Apple II were stored on cassette tapes. But this

common way of storage turned out to be quite unreliable and awkward. Mike

Markkula saw the future in floppy disks, which had been developed by IBM in

the early 1970s, and asked Wozniak to design a disk drive for the Apple II.

Woz took the challenge and finished in record time (only one month). His

final design was brilliant: he developed a new technique ("self-sync") and

created the fastest minifloppy disk drive. It was shipped in June 1978 and

proved vital for Apple's further growth. It made possible the development

of serious software such as word processors and data base packages,") which

increased the practical use of the computer decisively.

In 1979, Daniel Fylstra, a programmer from Boston, released VisiCalc for

the Apple II. This spreadsheet was a novelty in computer software. It

relieved business calculations considerably and could be used to do

financial forecasting. It was the first application that made personal

computers a practical tool for people who do not know how to write their

own programs. VisiCalc was very successful and contributed to the

skyrocketing sales of the Apple II.

The same year, marketing wizard Mike Markkula made another important

decision for Apple future growth. His idea was to create a new market in

the field of education and schools. The Apple Education Foundation was

established, which granted complete Apple systems equipped with learning

software to schools. This market should account for a major part of the

company's sales in the subsequent years, since Apple II soon became the

most popular machine for students.

Turbulences in the early 1980s

The successful stock sale provided Apple with an "extravagant amount of

capital ($1 billion)," which could be spent on developing the "company's

next computer generation.") This time, however, was quite turbulent for

Apple and was marked by crises and inner power struggles.

Designing on Apple III began in 1978. This computer was to be the successor

to Wozniak's Apple II, and was finally introduced to the public in 1981.

But it was not successful - a "disaster" or "fiasco,") since it had too

many faults and did not work properly. Nevertheless, the company was

without any financial troubles, since sales of the Apple II continued to

increase rapidly.

Concurrently, Steve Jobs became the company's visionary and thought about

the next computer generation. Such a visionary is a "person who has both

the vision and the willingness to put everything on the line, including his

career, to further that vision. Jobs became a perfect visionary and

convinced everyone around him with his vision.

In 1979, he and some other Apple employees visited the Xerox PARC (Palo

Alto Research Center), which was known for its advanced research in

computing. What they saw was revolutionary and had never appeared on any

personal computer before. The "environment of the screen was graphically

based" with icons (representing files or programs), with a mouse for

pointing and moving at them, windows and pull-down menus. Thus, the user

could "interact easily with the computer [...] without ever typing a single

letter.

Jobs was quite impressed and wanted to transfer this concept on a new PC

called Lisa, which was intended for the business world. Steve, however,

came up with ever-new ideas for the designers of this project. He "created

chaos because he would get an idea, start a project, then change his mind

two or three times, until people were doing a kind of random walk,

continually scrapping and starting over.")

Markkula and Scott were concerned about the further progress of Lisa. So,

in the course of a reorganization of the company, they decided to put John

Couch, a former software designer at HP, in a charge of the Lisa project.

Jobs was made chairman of the boa rd to represent Apple in the public.

However, Steve was shocked that he was taken the chance to fulfill his

vision, and relations between him and Scott deteriorated.

In February 1981, Wozniak, the technological brains behind the Apple I and

II, crashed his four-seated airplane. He hit his head badly and suffered

from a case of temporary amnesia. For some time, he retired from the

company and he finished his undergraduate degree at U.C. Berkeley.

The company had grown rapidly to 2,000 employees, and some of them had

joined Apple in the hope of a safe job. Setting an example, president Mike

Scott laid off 42 people on a day which came to be called "Black

Wednesday". Apple was shocked since some of t hose people seemed to have

been chosen arbitrarily. Scott's management style became more and more

disliked, and finally Mike Markkula decided to fire Scott and took over his

position until a new president was found.

The Lisa project

Meanwhile, Steve Jobs had discovered his new project. Soon he had taken

control of the Macintosh project, which had been started by Jeff Raskin in

1979 to design a small and handy personal computer. Steve dedicated all his

power to the Macintosh, which was to be a smaller and cheaper Lisa and was

to revolutionize the way of computing.

The company was now separated into three divisions, Apple II, Lisa and

Macintosh, which began competing against each other - particularly between

the latter two.

Lisa was developed by a number of experienced engineers and programmers who

had been recruited from HP, DEC and Xerox. This project was "the most

professional operation ever mounted at Apple") and was in contrast to

Steve's bunch of young hackers at Macintosh.

When Lisa was introduced to the public in August 1983, it was "ahead of its

time:") Lisa was easy to use because of the mouse, graphical interface and

windows, and had additional features such as multitasking. Though is was

first welcomed by the press as revolutionary, Lisa failed. One problem was

Steve's "lack of self-discipline:") When introducing Lisa he talked about

"his" Macintosh which would come out soon and with features like Lisa but

cost only a fraction ($2,000 instead of $10,000 for Lisa). The other

strategic mistake was the announcement that the two computers were not

compatible. So it is no wonder many people waited until the Macintosh would

come.

Finally, Lisa, which was intended for the business market at its price of

$10,000, lacked the ability to communicate with other computers - a fact

which was decisive for this market.

In the meantime, IBM had entered the personal computer market with its

first IBM PC in 1981, and already dominated a large part of it. Its first

PC "wasn't an earth-shattering machine technically") and was much harder to

use than the forthcoming Apple machines. But the fact that it was built by

IBM was enough to make it successful, and many software companies wrote

applications for it. Apple had bravely run a full-page ad saying "Welcome

IBM, Seriously", but it soon seemed to have lost the battle. Nevertheless,

IBM's entry brought Apple a lot of publicity as the only real competition

to Big Blue.

Thus, Lisa was not very successful and the second failure after the Apple

III. Still, Apple's sales increased - only because of the successful Apple

II. But the company needed a successor, and all its hopes were now placed

in the Macintosh.

The Macintosh revolution

The Macintosh was to fulfill Steve Jobs' vision of "computer to the

people". He created a personal computer, which was easy to use and at a low

cost. Steve thought of a tool for all people to broaden their mind - a

revolution towards the modern way of computing.

His Macintosh team was made up of teenagers and self-taught hackers -

"idiot savants, passionate plodders and inspired amateurs" - who "loved to

cut code.") They followed his vision and passionately designed this

outstanding computer. Jobs continuously drove his team to ever-greater

feats. He "kept thinking up crazier things, or more aggressive goals if

they were doing good, or if they were achieving their goals he wanted them

to do more. He couldn't just stop, he had to push you to the edge.") Steve

"gave impossible tasks, never acknowledging that they were impossible,") he

"doesn't have any boundaries, [...] because he has always been able to do

anything he wanted" due to "his early success.") As a consequence, people

usually worked 80 hours a week or more for their project.

Steve's most brilliant hackers were Andy Hertzfeld, Bill Atkinson and

Burrell Smith. The Macintosh was equipped with Motorola's 68000 CPU, a 3.5-

inch floppy disk drive, a detachable keyboard, and the amount of space it

took up from the desk should not be larger then a telephone book (this

meant a revolution in size). The computer was meant to be an open system,

and software applications were to be programmed by other companies, the

work of which was supported by a standard modular toolbox. This box made

sure that all applications were easy to use and appeared in a standardized

way. As well as other fundamental software the standard toolbox was

available from the computer's ROM (Read Only Memory).

Influenced by robotics assembly lines in Japan, Steve decided to "build the

most advanced assembly plant in the world") for the production of the

Macintosh. It was fully automated and the labor component accounted for

only one percent of the total cost.

Simultaneously to feverish efforts to finish the Macintosh, Apple succeeded

in finding a new president. Thanks to Steve's visionary powers of

persuasion, John Sculley, top manager at PepsiCo, finally agreed to join

Apple in April 1983.

The introduction of the Macintosh, which was Steve's revolutionary machine

to change the world, was dated to January 1984 and was to be accompanied by

a massive ad campaign in the media. Chiat/Day agency was asked to create a

commercial referring to the fact that 1984 was the year of Orwell's famous

novel. They produced the sixty-second ad, which was really exceptional, and

proposed running it only once - during the Super Bowl, the most watched

television event of the year.

It would be a million dollar minute, which was to capture public attention.

Macintosh was presented as a milestone product that would revolutionize the

way of computing, breaking IBM's, the "Big Brother's" dominance and

conformity it was about to establish by its IBM PCs.

When the commercial was broadcast, it reached 46.4 percent of America's

households. People were stunned about this outrageous ad, which was "unlike

anything they had seen before.") Suddenly, millions of people knew

something called Macintosh. The "commercial sparked widespread

controversy"), and won the highest advertising awards (more than 30).

The Macintosh (priced at $2,495) was a success from the start. Steve Jobs,

the visionary, compared it to Graham Bell's invention of the telephone a

hundred years ago. It was the "most approachable") and sophisticated

personal computer of the time, which ushered in a new era of easy computing

with a graphical interface and mouse. This feature would be taken over by

many software companies in the subsequent years, particularly by big

Microsoft, which developed Windows. This graphical user interface, which ha

s been established as the industry standard today, is quite similar to

Macintosh’s and makes possible the easy use of IBM PCs.

In the first 100 days, an industry record of more than 70,000 Macintosh

computers were shipped - a number that went up to the total of 250,000 sold

units by the end of the year.

John Sculley and Steve Jobs

Despite the astonishing figures of sold Macintosh computers and a boost in

sales to more than $1.5 billion in 1984 (up 55% from 1983),) Apple soon

fell into its most severe crisis, which would only be overcome by Sculley's

hard measures and led to the firing of its visionary Steve Jobs.

John Sculley had been vice-president at PepsiCo where he had successfully

made Pepsi the number one brand in the Cola Wars. Actually, there was no

reason for him, one of America's top managers with a secure and highly paid

position at PepsiCo, to join a bunch of young computer nerds at the West

coast. The reason why he finally agreed yet is Steve Jobs who impressed him

by his visionary ideas and asked him a question to which he did have no

answer: "Do you want to spend the rest of your life selling sugared water

or do you want a chance to change the world?") This question told him that

his "entire life was at a critical crossroads.")

Sculley and Jobs became close friends. They could "complete each other's

sentences" because they "were on the same wavelength.") The "dynamic duo",

as they were called in an issue of Business Week in October 1983, was

esteemed highly in the press and contributed significantly to Apple's good

reputation in the public at the time.

The downfall came soon, however, when their largely overestimated

expectations of the Macintosh sales could not be met. In their euphoria

about the revolutionary Mac, they thought they would ship 80,000 units by

the end of 1984, and had produced them in advance. When the reality brought

"merely" 20,000 with a falling tendency, the crisis was evident. Reasons

for that decline were that the Macintosh was not as "perfect" as expected -

with its 128 KByte RAM (they were then mounted to 512 KB) it was not

powerful enough, and there were hardly any software applications available

yet. Moreover, at the 1985 annual meeting, Jobs and Sculley neglected the

fact that 70 percent of the company's sales were still due to the Apple II,

whereas the Macintosh accounted for only 30 percent. Many sophisticated

Apple II designers were annoyed and left the company.

Steve Jobs became more and more angry and aggressive because of the

continuing drop in Macintosh sales (merely 2,500 units in March 1985).) He

blamed everyone for it, except for himself. Steve just did not see that the

"problem was with him.") In the end, he blamed even Sculley for the crisis

and wanted to lead the company himself. But this seemed impossible to

everyone else: "Steve was a big thinker, an inspirational motivator, but

not a day-to-day manager. What was sad was that he could not see it.")

When Sculley was informed that Jobs intended to remove him insidiously from

the company, he was quite concerned, but then decided to choose the

company's welfare over his friendship to its visionary co-founder.

Supported by Markkula and the other members of the board, in May 1985, he

dismissed Steve from his positions as the vice-president and as the leader

of the Macintosh division; Jobs did not have any managerial power anymore.

Steve Jobs was quite depressed and made trips to Europe and the Soviet

Union. Finally, he decided to leave Apple in December 1985, and sold all

his Apple shares. He took along some of the best employees to start his new

venture - NeXT. He intended to design a workstation for the university

sector. In February 1987, billionaire Ross Perot invested $20 million for

16 percent of NeXT. The new computer was introduced to the public in

October 1988, priced at $6,000.

At Apple, John Sculley took several measures to save the company, which had

become chaotic. In the course of a major reorganization he dismissed 1,200

employees (20% of the total workforce) and put the broken parts of the

company together to form one unified Apple. His restructuring saved a lot

of costs and consolidated the company.

1986 was Apple's worst year with a decline in net sales from $1.92 (1985)

to $1.90 billion. Gradually, Sculley could persuade software companies,

which had turned away from Apple, to write applications for the Macintosh.

Apple found its new market in desktop publishing (DTP), for which the

Macintosh was predestined. By the time, the Macintosh became a serious tool

for the business market and its sales increased again.

Until today, Apple has grown steadily and now reaches net sales of more

than $7 billion. Although the Macintosh lost the battle against Big Blue,

today it is a successful product and was sold over 2.5 million times

worldwide in 1992. Apple remains the second-biggest personal computer

manufacturer after IBM and has released innovative products such as

QuickTime, an easy to use multimedia software combining sound, video and

animation. Its latest development is Newton, a personal digital assistant

(PDA), which serves as an electronic notepad and "integrates advanced hand-

writing recognition, communication and data-management technologies.")

Apple today.

CUPERTINO, California—December 5, 2000—Apple® today announced that it has

experienced significantly slower than expected sales during October and

November, which will result in revenues and earnings for its quarter ending

December 30, 2000 being substantially below expectations.

The company expects to report revenue of about $1 billion and a net loss,

excluding investment gains, of between $225 and $250 million.

The $600 million revenue shortfall from previous expectations is due to

lower than expected channel sell-through across all geographies and

unplanned sales promotions and pricing actions. The net loss is the result

of the revenue shortfall and cancellation charges related to decreases in

forecasted component purchases for current products.

“The swift industry-wide decline in PC sales will result in Apple’s first

non-profitable quarter in three years,” said Apple’s CEO Steve Jobs. “We’re

not happy about it, and plan to return to sustained profitability next

quarter. We are committed to reducing our channel inventories to normal

levels by the end of this quarter, and remain very excited about the new

products and programs Apple will be rolling out in 2001.”

“In light of the lower results anticipated for the December quarter, we now

expect revenues for fiscal 2001 to be in the $6 to $6.5 billion range,”

said Apple’s CFO Fred Anderson.

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