BUSINESS/ECONOMY

Apple’s homey new computer

Ian Austen January 30 1984
BUSINESS/ECONOMY

Apple’s homey new computer

Ian Austen January 30 1984

Apple’s homey new computer

BUSINESS/ECONOMY

Ian Austen

The public relations woman was clearly nervous. “You do not want to be insanely great,” she told Steven Jobs, the 28-year-old chairman of Apple Computer Inc., after he created the phrase on his company’s latest computer model.

But Jobs was adamant and he permitted a photographer in his harborside Toronto hotel room to take his picture with the brash slogan glaring from the screen of Apple’s newly unveiled Macintosh personal computer. But the multimillionaire and his firm are deadly serious about the Macintosh. Jobs acknowledges that the new product—which will be released to dealers this week—will likely determine whether or not Apple can regain its badly eroded role as the leader of the $8-billion personal computer market.

In the past, the description “insanely great” would have been only a modest overstatement of the role of Jobs’s California-based company in pioneering the microchip technology that has revolutionized the computer industry.

Apple’s early success has not entirely dissipated. The company ended 1983 with sales of nearly $1 billion, up 73 per cent from 1982. But Apple is currently in a head-to-head struggle with International Business Machines for the lead in the industry. In the two years since IBM unveiled its popular Personal Computer, Apple’s U.S. market share has dropped from 41 per cent to about 24 per cent. Now Apple is trying to reverse that trend with the widely advertised technical prowess of the Macintosh—and with a corporate shakeup designed to produce a leaner, more aggressive company.

Computer experts who have seen the “Mac” are enthusiastic about the machine’s merits. But Apple may still have difficulty marketing it. The firm devel-

oped the machine after it had produced two major products that proved embarrassing for the company. The first setback was the Apple III, introduced in 1980. The Apple Ill’s design was fine, but the first machines on dealers’ shelves were riddled with small— but significant—production-line engi-

neering errors. The faults proved so harmful to sales that Apple was forced to take the machines back and reconstruct some of their parts.

Then last year the company produced the Lisa, which received positive technical reviews. But it was a marketing disappointment. Industry observers estimated that Apple had hoped to sell as many as 50,000 Lisas last year, but only about 15,000 were shipped. The reasons: the $9,995 (U.S.) price tag was too much (it has since been reduced to $8,190); machines were not sent to dealers until six months after their highly publicized introduction; and there was relatively little software (programming) available. Acknowledged Apple President and Chief Executive John Sculley: “Lisa

captured the world’s imagination, but IBM captured corporate America’s desk tops.”

Sculley himself was hired by Apple as part of the campaign to regain its preeminence. Last April Sculley was lured to Apple’s Cupertino, Calif., headquarters from his job as president of the

Pepsi Cola Co., a Manhattan-based unit of PepsiCo Inc. Attracting the successful soft drink company executive was a difficult task for Jobs. In three months of transcontinental trips to New York, Jobs failed to convince Sculley of the merits of moving. Then, Apple’s chairman made one last attempt. According to Jobs, it was his idealism (he fervently preaches Apple’s mission to populate the earth with affordable, easy-to-use computers) that eventually resulted in the East Coast businessman’s switch to Silicon Valley. He told the 44-year-old Sculley, “If you stay at Pepsi and you look back five years from now, the only thing you will have accomplished is that you will have sold a lot of sugar water to kids. But if you came to Apple, five years from now you’ll be able to look back and say, T changed the world a little bit.’ ”

Sculley will have to overcome a number of formidable obstacles before he reshapes the planet. But he has already forged major changes at Apple. Sculley has not departed from Jobs’s strategy of eliminating middle management and large decision-making committees (a group of only 100 people developed the Macintosh), but he has brought more discipline to the company. Some of it has been elementary—insisting that employees meet their deadlines—but other aspects of his plan have been more severe. Since his arrival, about half of the 15 top people at Apple have left. As well, a decline in profits (in spite of sales gains) inspired him to eliminate 700 employees from the 5,300person staff last summer. For his part,

Jobs—who codeveloped the first Apple with Steve Wozniak, 33, in a garage nine years ago—now wears two corporate hats. Besides his role as chairman or, as Jobs says, “the keeper of the vision,” he is also the general manager for the Apple divisions producing the Lisa and Macintosh.

Sculley has also improved Apple’s marketing efforts. To avoid leaving the newest Apple stranded without enough software at the time of its introduction to the market, Apple has given more than 100 outside software firms early Macintosh prototypes in the past year to enable them to begin developing programs for it. Relationships with

dealers, which were somewhat abrasive, especially in the United States, have been improved. In Canada Apple severed its links with 17 branches of the Computerland chain last week because the chain was not selling enough of its products. Indeed, Jobs and Sculley personally met roughly 3,000 dealers during the past few weeks as they previewed the Mac. The highly automated $20-million Macintosh assembly line has already produced several thousand machines to ensure that salesmen have demonstrator models to show to customers.

IBM does have an advantage in marketing, service and image, but many

experts believe that Apple’s new Macintosh has a substantial technological lead. For one thing, the Macintosh weighs less than 20 lb. and its base is 20 in. square, which allows the owner to carry it around in a tote bag, unlike the much larger 25-lb., IBM machine. It is priced at $2,495 in the United States. The Canadian price is $3,595, about $1,400 less than IBM’s PC. But more important, Mac, like the Lisa, has a 32-bit microprocessor at its heart. (Each bit represents one unit of electronic information.) That allows the Macintosh to operate faster than IBM’s 16-bit PC. (Mac software works in Lisa but it will not operate IBM machines.) Like Lisa,

the Mac is controlled by a “mouse,” a small hand-held device connected to the computer which rolls on a desktop and directs a pointer on the computer’s screen. The pointer selects commands largely through a series of pictures. Unwanted material is removed by placing the pointer on a drawing of a trash can.

At the same time, the computer’s high-resolution screen displays material exactly the way it will appear when it is printed out. That, combined with a fairly sophisticated graphics creation program, makes it easy for users to combine printed material with charts or even artwork. But the Macintosh also possesses a feature that could improve

Apple’s fortunes in Quebec and overseas. A new programming design allows computer novices to translate software language from English into another language in hours (in the past it took months and only programmers could carry out the task). As a result, Jobs claims, a properly equipped Mac does not require its owner to understand English.

There are some early encouraging signs that the Macintosh will be a success. Even before the machine was available, Apple had signed $50 million in contracts with 24 U.S. universities for Macintoshes and Lisas. On top of that, the large U.S.-based accounting

firm Peat Marwick Mitchell & Co. has agreed to buy about 3,200 Macintoshes for its field auditors throughout North America.

For Jobs, a success with the Macintosh could push his corporate offspring into the realm of multibillion-dollar companies. And that would further enhance his personal fortune—already estimated to be roughly $185 million. But his personal motives apparently also play a big role in the workaholic schedule he has maintained in bringing the new machine to market. Said Jobs: “I think you should follow your dreams rather than just give up and go to work for IBM.”