A very long portrait of Jonathan Ive. There are way too many things to quote here, so I’m picking this one.
One morning at Apple’s headquarters, a few weeks earlier, Ive recalled how, in 1997, the company seemed to be dying around him. “Every story you’d read, every morning before coming to work, started with the phrase ‘The beleaguered computer maker, Apple,’ ” he said. Ive was then thirty; after five years at the company, he had become its head of industrial design. “There was a Wired cover that had a big Apple logo with a crown of barbed wire, as thorns, and underneath it just said, ‘PRAY.’ I remember this because of how upsetting it was. Basically saying: either it’s going to just go out of business or be bought.”
It’s remarkable how Apple went from effectively bankrupt (no joke: the company was 90 days from going bankrupt) to what it is today. A lot of Apple fans like to make fun of Michael Dell’s comment that Apple should just shut down and give its money to shareholders, but at that time, that comment was entirely, 100% accurate.
The only reason Apple got back up on its feet was Steve Jobs, and nothing else. This recovery was a miracle, and nobody – nobody – saw it coming. This miraculous recovery will be taught in schools and universities for centuries to come.
Microsoft’s $150M was the only real reason for the imminent survival – of course, it can be argued that Steve Jobs was instrumental in making that happen, but truth to be told, that process was already almost complete by the time he did his iCEO stint. Get the history right, Mr. Editor.
Not true, Apple was screwed even with 150M from Microsoft (that was just a momentary financial help).
The iMac was the first Apple’s “savior”, and the iMac was an Steve’s project.
The Apple path to heaven is the following:
iMac -> iBook -> iPod -> iPhone -> iPad
100% Steve Jobs’ job.
But you’re forgetting that without the $150M from MS, the iMac would have never happened. As Thom mentioned, Apple was within 90 days from bankruptcy. How were they going launch the iMac while in bankruptcy?
Hindsight being 20/20, purchasing NeXT proved to be an excellent decision. But who is to say BeOS wouldn’t have had the same effect? That’s kind of why I don’t like these types of articles. The reason Apple was in the hole back then was because of 1 bad decision after another. Heck, their OS didn’t even have pre-emptive multitasking or protected memory in 2001 (OS 9 only had cooperative multitasking)!
Without a doubt, the Apple of today was only possible because of Steve Jobs. But who’s to guarantee it was the only path to success?
The MS deal showed that Apple would be kept alive and instilled confidence in investors.
100% Steve Jobs ?
Like, no talented engineers worked like crazy, and no partners got exploited to death ?
Sure they did, but obviously someone needed to direct them. We didn’t see these talented engineers turning the company around before, after all.
The “100% Steve Jobs” must be referring to the amount of credit that iFanboys give him, rather than any actual contribution.
At least that’s the only explanation I can think of, given that the Mac never would have even existed if Jobs had had his way – after failing in all of his efforts to kill the project (because he’d hitched his wagon to the LISA & saw the Macintosh project as a threat), he only jumped on that bandwagon as a last-ditch act of desperation.
… which was sorely needed and a requirement for future success. Learn logic.
the imac and ibook may have kept the ship afloat, but i think the ipod (once itunes was ported to wintel) was what got them into the mass market outside USA.
Some stupidities refuse to die.
The “Microsoft’s $150 million kept Apple afloat” is a prime example of a stupidity that won’t die. Stupidities that won’t die usually stay alive because they play well with some peoples prejudices and the idea that poor Apple was saved by Microsoft money plays well with some peoples view of how the world worked (or at least used to work). God knows why.
I hate to puncture anyone ones precious illusions but it is worth taking just a moment to check the facts.
Apple’s annual revenue in 1997 was $7 billion.
At the time of the Microsoft investment Apple was holding $1.2 billion in cash.
That means that the Microsoft $150 million was just about 2% of Apple’s annual revenues and added only 12.5% to Apple’s cash holdings.
The Microsoft deal was not about the money. Microsoft’s deal was not about funding Apple’s business to stave off bankruptcy.
The deal with Microsoft was a package. It consisted of the settlement of series of legal cases against Microsoft (about copied code which both Apple and Microsoft knew Apple was likely to win and which might well have generated hundreds of millions in damages), along with the investment and the announcement about ongoing support for Office on the Mac.
Steve Jobs knew that hundreds of millions of dollars (or even more absurdly peanuts like $150 million) was not going to make much difference to Apple’s finances. If a company could sell $7 billion in products annually and still make a loss the problem was structural and Jobs thought (correctly) that he knew how to fix those problems but he also knew it would take time, at least months and probably years. At the time confidence in the company had collapsed and, among other problems, share holders and developers were on the edge of deserting the company. Jobs position at the company was still vulnerable.
What Jobs needed was a series of big splashy announcements at his keynote that would show that Apple had turned the corner and would also cause a surge of confidence inside and outside the company about Apple’s future, which in turn would take the shareholders off his back and allow Jobs to get on and fix the company. The immediate fix required, in order to move back to profitability, was all about inventory control, it was inventory slipping out of control that had tipped Apple in the red. Luckily for Jobs, Gil Amelio had already done most of leg work on inventory control but the internal reforms still needed some time to play out in Apple’s bottom line.
The Microsoft deal was part of the process of rebuilding confidence. The deal consisted of giving up on the legal cases, even though that meant forging probable damage payments, and in return Microsoft would make a public gesture of confidence by buying shares (thus helping to calm shareholder nerves) and much more importantly guarantee publicly to continue to develop the Office suite for the Mac platform. The latter was much more important than the former in terms of Apple’s immediate future.
Could Jobs have turned the company around without the the $150? Almost certainly. Could he have done it if Microsoft had stopped selling Office for Mac? That would have made life much more difficult – although whether Microsoft mired in it’s anti-trust case could have gotten away with that is another question.
The Microsoft deal was a passing moment in the rebuilding of Apple. A series of splashy announcements at the keynote, a lot of buzz in the press (and importantly not ‘Apple’s doomed’ buzz) and then it was over. The £150 million? Jobs tossed that into the drawer with the rest of the change and got on with rebuilding Apple. And rest is history.
People like simple stories even when they don’t make sense. So of course Apple, with $1.2bn in the bank and revenue of $7bn was doomed were it not for Microsoft investing a rather paltry $150m.
People don’t even want to sense-check their own arguments. Maybe they need to translate it into something they can relate to, like I don’t know, their own salary.
Imagine someone saying to someone else, that $1,500 was the difference between that person earning $70,000 going bust or staying solvent.
It wouldn’t make sense, and neither does this story. I would expect better from tech “journalists”.
They were also burning through that cash rather quickly and were 90-days from going bankrupt.
Steve Jobs even credited Microsoft’s $150 million investment with helping to save Apple, as did many that did a real analysis on it.
The only people that want to deny it are the Apple Fanboys that don’t want to admit their most hated enemy saved their beloved platform. Any business analysis will find that it was the combination of Steve Jobs taking back control and the $150M investment from Microsoft that saved the company.
Wrong. The terms of Jobs returning was such the he would only come back if he was given the unquestioned authority to do what he wanted to do.
Well, that would have been even better since £1 ~= $2 USD at the time. No, it was only $150M USD.
But needless to say, they didn’t have the cash to do anything required to save the company. The investment was 100% necessary to keep the company solvent in any meaningful manner.
As I said some stupidities refuse to die. If you really believe that a company with a turnover of $7 billion and with $1.2 billion in cash needed $150 million in order to “keep the company solvent in any meaningful manner” then I pity you.
The reason that people like you focus on such utter trivia is because the big, important and, lets face it, amazing things about Apple’s gigantic transformation are simply beyond you. You can’t even begin to explore the complex and difficult job of understand what happened at Apple between 1997 and 2014 because to do so would stretch your brittle world view to breaking point. Thats why I pity you. Being stupid is not bad, choosing to be stupid is.
Actually it goes back to the fact that some of people that were involved in that whole ordeal have actually admitted that the cash inflow was required; and others that have actually studied it have come to the same conclusion.
Just because you have a lot of cash on hand does not mean you have enough to keep from going bankrupt.
Now, there may have been other PR benefits too, which would have added to the cumulative effect of the $150M investment, but it was nonetheless required.
The $150 million “investment” is a red herring, the important contribution from Microsoft was their guarantee that they would not drop Macintosh software development at that time. Which is the signal of confidence that investors needed to hear then, since Microsoft was at that time one of the biggest (if not the biggest) providers of software for the Mac platform.
In any case, the whole Apple bankrupt meme is a narrative that Jobs loved to put forth, because megalomaniacs more often than not love to be the star at the center of a good messianic savior story. The reality is a bit more complex, i.e. Apple was not in as bad of a shape, far from ideal obviously but also not as close to demise.
Many even outside of the Steve Jobs circle have confirmed it. It wasn’t a misnomer as fanboys like to make out.
Jobs management did indeed increase the profitability of Apple significantly, no doubt about it. However, It’s still a matter of basic math; Apple at that time had enough money in the bank to continue operations for far longer than 120 days. Apple was stagnant, no doubt about it. But there is a biiig difference between stagnant and bankrupt.
Still, the point is that one should be careful when parroting narratives put forth by people whose main genius/abilities are regarding marketing. What you’re reading from jobs is his narrative justifying his take over that organization. It’s not necessarily the objective truth whatsoever.
As I noted, it wasn’t a narrative that was simply put forth by Jobs. Others have confirmed it.
And what does that say about them now that he’s gone? People seem to think that Apple will automatically win the smart watch market, when they haven’t even released a product yet:
http://betanews.com/2015/02/11/amazing-apple-wins-the-smartwatch-wa…
I’m honestly surprised that the reality distortion field is still as strong as it is, esp with the articles that have popped up on here as of late, where people are talking about how janky Apple products are becoming. People seem to think that if Apple ever releases a TV, it’s going to change the game forever, when their main innovator is gone. How much longer will the notion of ‘well, it’s made by Apple so it MUST be superior’ continue?
Edited 2015-02-16 21:07 UTC
When did Apple last have a successful completely new product?
You mean a successful product that made their competitors shit their pants and copy them wholesale? About 5 years ago.
Edited 2015-02-16 23:06 UTC
You mean the iPad? That’s basically a large iPhone. The iPhone was their last successful completely new product.
Apple just seems to make iPhones in lot’s of different sizes.
Dude, I’m in my 40’s. I cant remember that far back.
The only reason Apple survived was because of the Microsoft antitrust lawsuits. MS needed a viable competitor to avoid being broken up for antitrust violations.
I see farce is strong today.
It wasn’t so much Steve Jobs that saved the company as it was NeXTSTEP which he brought with him.
Of course, his gift in making people believe the near-impossible could be done, also worked wonders.
This piece of history is one of the reasons I hold out hope for Blackberry. Apple was, at its lowest point, far worse off than modern Blackberry. A big part of the problem for Apple was that its CEO situation was pretty dismal. A change in vision and direction can be a game-changer, IF the technology is good enough.
MacOS X was okay in its first iteration, much better than OS9 overall, but it still showed its rough edges at the beginning. Similarly, the iPhone was simply not that great when it first came out. The app ecosystem was far more extensive for my Windows CE phone, and the functionality of the iPhone itself was limited(copy/paste were conspicuously absent, for example). However, technology that was “good enough”, combined with a coherent long-term strategy, including the deal w/Microsoft, paved the way for Apple’s rise.
Today Blackberry 10.3 is a very good mobile OS, but continuous changes made to the company indicating a coherent strategy could really be the difference. We’ll see, but I’m hopeful.
Blackberry will probably not get a large money injection from Microsoft.
BlackBerry has enough cash at bank ($3 Billions), an excellent CEO and excellent products (Passport, Classic, BES12, Blend, BBM) to make possible a turnaround. Money injection is not needed
Edited 2015-02-17 08:13 UTC
You think the Microsoft’s Apple share purchase was large? Compared to what?
Compared to other similar cash injections in other industries where the dominant player keeps a competitor alive, in 1990’s pre-techbubble money.
Compared to other similar cash injections in other industries where the dominant player keeps a competitor alive, in 1990’s pre-techbubble money. [/q]
See my other comment. $150million is a trivial amount in relation to the size of the Apple business in 1997. Its peanuts and its purpose was purely PR. Its a tiny footnote in the history of the Apple turn-around.
I think that people obsess about this incident so much because the subsequent recovery of Apple and it’s stupendous and astonishing rise to become the biggest tech company on the planet is a rather disturbing mystery. So it’s easier to invent reassuring fairy tales such as ‘Microsoft bailed out Apple’ because that makes things seem easier to understand. Unfortunately if one depends on fairy tales to explain the world you will be continuously surprised by it’s unexpected actual development.
You forget to mention that that 7 billion is down from 11 billion 2 years earlier and that all their small profits had turned into big losses. When you are having a 1 billion loss and are crashing down a 150 million plus is a big welcome help. And when that money comes from the tech giant called Microsoft with a promise to keep supporting that platform you squeeze your hands and say thank you. Normally goodwill is very exagerated on the balance sheet, but this promise was worth way more than the 150 million in the longer run. So Apple received all three: Immediate cash, lots of goodwill and the best company shake-up ever. Indeed a situation to study in business school like few other.
See this graph that shows just how bad Apple was crashing:
http://2yj23r14cytosbxol4cavq337g.wpengine.netdna-cdn.com/wp-conten…
When your graph looks like that it doesn’t matter that you have 1.2 billion left because it will be gone before you know it, hence the “90 days from bankruptcy”
I’m not so sure that “get lucky” is something that will be taught in schools.
Why not? Given the deliberate suppression of critical thinking skills in modern education, “get lucky” is about all they’ll dare to teach them.
I’ve found conflicting information, but Prince Al-Waleed bin Talal bin Abdulaziz al Saud bought a very large stake in Apple in 1997. I actually remember it being the news. (Yes, I’m old.) I didn’t think it was a great investment, but, hey, he’s the billionaire, not me. I can’t find the exact date, so I don’t know if he bought before or after Jobs’s return. At any rate, it seems likely that Apple could have gotten some cash flow from him or other big investors if they were actually going to go bankrupt.
Remember, too, that bankruptcy doesn’t mean death. There are plenty of examples of companies coming back from bankruptcy. Sometimes that involves being bought out (Eddie Bauer), sometimes it involves help from the government (GM, Chrysler), and sometimes it’s a real recovery (Continental Airlines, Harry & David.) So even if Apple was “90 days from bankruptcy” (which may have been exaggerated), that doesn’t mean they were 90 days from death.
Clearly Jobs was instrumental in turning Apple around. I don’t think he was the only one on the planet who could have done it. I wouldn’t have bought Apple stock in 1997, but Michael Dell’s headline-grabbing comment was grand-standing horse sh**. Getting Microsoft on board was important to Apple’s success, and one reason they did was that they were worried about anti-trust issues.
There was no one thing responsible for Apple’s turn-around. (Sorry, Thom.) It is nevertheless an incredible story, and they will absolutely be studying it in B-schools for a long time to come. They’ll be studying it BECAUSE it was a complicated scenario, one that Steve Jobs managed to navigate. Love him or hate him (or both), he definitely made some noise.