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At a trade conference on October 6, 1997, exactly three weeks after Steve announced that he was taking on the title of iCEO, Michael Dell, the billionaire founder of his eponymous build-to-order PC clone business, was asked what he would do if he were put in charge of Apple Computer. “What would I do?” brayed the CEO, who was a decade younger than Steve. “I’d shut it down and give the money back to shareholders.” Steve shot back an email: “CEOs are supposed to have class,” he wrote. But just a year and a half earlier he had told me pretty much the same thing: “Apple ain’t worth anything like the price of its stock,” he’d said.
Dell’s flippant suggestion was not just a reflection of conventional wisdom—it also sounded like a much safer idea than putting the company in the hands of Steve Jobs. There was no evidence to suggest that someone with Steve’s record had the chops to turn around a mess as daunting as Apple. He had shown himself to be erratic, undisciplined, and petulant. He had only succeeded when leading small groups of people; Apple had thousands of employees scattered from Cupertino to Ireland to Singapore. He had been a prima donna and a spendthrift, but this job seemed to call for a cold-blooded CEO who understood the value of patience, discipline, and cutting costs in a hurry. Perhaps Steve was a genius—the success of Pixar seemed to reinforce that. Perhaps he was an opportunist—selling NeXT to Apple seemed to bear that out. But a great CEO? A proper leader? The world could be forgiven its skepticism.
Yet here in the fall of 1997, facing a corporate mess that would have challenged the world’s greatest managers, Steve slowly started to show what he had learned in the eleven years since he was last at Apple. He had developed some discipline as he salvaged NeXT and negotiated a deal and an IPO for Pixar. He had learned the value of patience and had absorbed from Ed Catmull some proven managerial principles for leading a company loaded with creative talent. He had seen the long, slow, and twisting build of a great product, as John Lasseter and his crew followed their instincts for good and for bad, bit by bit, until their little idea of making a movie about playthings turned into the masterpiece of Toy Story. He had taken all this to heart, in a way no one could have predicted and he could not have explained. Now, decision by careful decision, he would start to combine this new understanding with his old talents, and shape a slow, careful comeback for Apple.
“I CALLED STEVE a couple of times after he sold NeXT to Apple,” Lee Clow remembers, “and every time, he said he wasn’t sure if he was going back, that the place was a mess, that Amelio was a dummy. Then one day in the summer, I get a call and it’s Steve. ‘Hey, Lee,’ he says, ‘Amelio resigned!’ as if it was a big surprise even to him. ‘Can you get up here? We’ve got work to do.’ ”
Talk about an understatement. Apple’s litany of woes seemed never-ending.
Just about everything was headed in the wrong direction. In Apple’s fiscal year ending September 26, 1997, the company lost a whopping $816 million. Its annual revenues had shrunk to $7.1 billion, down precipitously from a peak of $11 billion in fiscal 1995. The steady erosion of Apple’s business had punctured investor confidence, and the stock price since 1995 had lost nearly two-thirds of its value: a block of shares purchased in late 1995 for $3,000 was now worth roughly $1,000.
Those weren’t even the scariest numbers. These were the glory years for the PC industry; 80 million personal computers were sold in 1997, up 14 percent from the year before. Sales of Macs, however, had dropped by 27 percent, to a mere 2.9 million machines, giving Apple a minuscule 3.6 percent sliver of the market that year. Much of the pain was self-inflicted: the few buyers who didn’t opt for PCs were often making purchases from the growing number of manufacturers turning out Macintosh clones.
But the deepest reason demand had softened was that Apple’s products were stale, expensive, and increasingly irrelevant. Lacking the technological advantage of a state-of-the-art operating system, Spindler and Amelio had allowed Apple’s marketing teams to order up all kinds of different models of the Macintosh, in hopes that computers with specialized features would appeal to particular customer niches. The effort was a fiasco, littering the market with a confusing and redundant array of slightly different Macs, each requiring unique parts and assembly methods, each promoted with its own inconsistent and frequently conflicting marketing message.
There was also a grab bag of other failures. Apple had spent nearly a half billion dollars developing and promoting Sculley’s Newton, but had managed to sell only 200,000 since its 1993 debut. That hadn’t stopped Amelio from hatching a Newton sibling, albeit with a keyboard, for elementary school students. Called the eMate, it was an oddly intriguing device that looked like a junior laptop done up in translucent aquamarine, with a bulbous cover and an oblong hole along one edge that functioned as a handle. It too failed to sell well. And then there were the printers. Believing that it had to offer a full-service office solution, Apple still sold its own printers. But its only noticeable contribution to the product was the plastic shell it designed to go around printer engines it purchased from Canon. Apple usually sold the machines at a loss. A hybrid Mac/TV for college students and a cheap consumer multimedia computer/game machine called the Pippin rounded out Apple’s desperate array of ill-defined, marketing-driven products. Seen together, this mishmash of offerings represented a company that had lost its soul and become derivative. By the winter of 1997, hundreds of thousands of unsold machines gathered dust in warehouses.
THAT PHONE CALL to Clow was the beginning of Steve’s first big move as iCEO. Steve decided Apple needed an advertising campaign to reaffirm Apple’s old core values: creativity and the power of the individual. It needed to be something radically unlike the meek and confused product advertising that Apple had been offering consumers for years. Instead, this campaign would celebrate the company—not the company as it was that summer of 1997, but the company Steve imagined Apple should be. On the surface, it seemed an outrageous and perhaps spendthrift goal, given the company’s losses and layoffs. But Steve was insistent. And that’s why Clow made the journey north from TBWA\Chiat\Day’s offices in the Venice section of Los Angeles to Apple headquarters in Cupertino.
Technically, Steve made Clow compete for the Apple account with two other agencies. “But he basically told me that it was ours, if I could deliver what he wanted,” remembers Clow. He had several advantages over his competitors. First, of course, he had created the most memorable ad in Apple history (and arguably in the history of advertising), the “1984” Super Bowl spot for the original Mac. Second, he and Steve had a good rapport. They were both middle-class kids with limited formal educations, and they both abhorred the conventional patterns of corporate behavior. While Steve had by now given up the open-toed-sandals look for jeans and a standard T-shirt, Clow came to work in Hawaiian shirts and zipped around the offices on a skateboard. Furthermore, Clow admired Steve’s brilliance and was unafraid of his temper. “I grew up working for Jay Chiat,” he remembers, “and Jay could let loose some tantrums of his own. He was just as ferocious as Steve. But their goals were both the same. Extraordinary work, at any cost. And like Steve, Jay wouldn’t get in your way as you tried to achieve that. Both of them understood that you were going to fail a lot.”
When the time came for Clow to present his work, he and his team had “Think Different” ready. Steve hesitated briefly when shown the first boards for the campaign, which paired the phrase with photos of noteworthy creative mavericks. His worry? That any campaign celebrating individual genius would suffer from the idea that Steve was simply out to celebrate his own creative genius. But he went with Chiat\Day anyway. “His decisiveness was so different from the crew that had been there,” Clow remembers. “No sending things off to some marketing exec somewhere for approval, no vetting by some committee. In the old regime, you never knew who was making the decision. With Steve it was totally different. It was him and me. You don’t get that at any companies—no CEO gets involved the way he does.” The campaign went through several iterations over the course of a few anxious weeks, with Steve fretting the details right up until the final night. Clow pushed hard for Apple to go with a recording of Steve narrating the stirring free-verse essay that elaborated upon the campaign’s motto. He sent the studio that was to broadcast the ad during the network premiere of Toy Story both Steve’s version and another read by the actor Richard Dreyfuss. In the morning, Steve called Clow to tell him they had to run Dreyfuss’s version. “If we go with mine,” Steve said, “it’ll become about me. And this can’t be about me. It’s about the company.” It was not the decision of an egomaniac, of someone only out for himself. “Which is why,” Clow remembers, “he’s the real genius and I’m just the ad guy.”
So on the day of the broadcast, it was Dreyfuss’s voice behind a slide show of portraits of Albert Einstein, John Lennon, Pablo Picasso, Martha Graham, Miles Davis, Frank Lloyd Wright, Amelia Earhart, Charlie Chaplin, and Thomas Edison, among others:
Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes.
The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can quote them, disagree with them, glorify or vilify them.
About the only thing you can’t do is ignore them. Because they change things. They invent. They imagine. They heal. They explore. They create. They inspire. They push the human race forward.
Maybe they have to be crazy.
How else can you stare at an empty canvas and see a work of art? Or sit in silence and hear a song that’s never been written? Or gaze at a red planet and see a laboratory on wheels?
We make tools for these kinds of people.
While some see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do.
The campaign, which played out in posters, billboards, TV spots, and print ads, received unanimous critical praise. The brilliance of “Think Different” is that it celebrated a counterculture philosophy in a way that allowed almost everyone to feel part of the celebration. Its message was the advertising equivalent of an ideal Apple product—bold and aspirational and accessible all at the same time. It was heartfelt. The language, which Steve worked on along with Clow and others at TBWA\Chiat\Day, focused outward, defining the quality of an Apple buyer, rather than of a particular machine itself. There’s no computer mentioned, in fact. Just “tools,” created for the creative. The campaign’s clarity and simplicity stood out prominently from the morass of other computer advertising and reminded people of the fresh spirit so many had once loved about Apple. The $100 million campaign began the polishing up of Apple’s image, a necessary task that would take years.
It paid off in two immediate ways. First, Think Different started a process of bringing pride back to Apple’s employees. Billboards and posters went up across the Cupertino campus. Steve’s narrated version was featured in a video promoting the whole campaign inside the company, and later, after Apple won the Emmy Award for the best television ad campaign for 1998, the company gave a fifty-page commemorative book to all its employees. “Our audience was the employees as much as anyone else,” says Clow. Inspiring them was challenging, especially when Steve was shuttering divisions of the company and laying off thousands of workers. But Think Different gave the surviving employees a sense that they might see better days ahead, for the first time in years.
Think Different also bought Apple some precious time at a moment when the company had little of tangible value to show off. Steve knew, of course, that he would eventually have to deliver products that lived up to the campaign. But he didn’t have them in the fall of 1997. The campaign offered cover while Steve and his team began the hard slog ahead.
Even without Steve’s own voiceover some in the press did indeed view Think Different as yet another moment of Steve’s grandiosity, and as such, cause for more concern than applause. But in retrospect, it seems clear that it was the exact opposite of grandiose: it was the first step of a leader who would now progress only in steps, not by leaps and bounds. “He was so focused,” remembers Fred Anderson. “He was intense and both patient and impatient at the same time.” Steve had begun to move incrementally.
WHILE THE THINK DIFFERENT campaign captured the public’s attention, Steve was busy throwing out all kinds of pieces of the old Apple. The restructuring touched every corner of the company. Out went the Newton and eMate product lines, and the stores and engineering and marketing groups that supported them. (In an odd twist of fate, ex-CEO Amelio came back to visit Steve at Apple headquarters late in 1998 with an offer to buy the assets and intellectual property of the mothballed Newton operations. A few days after the meeting, Steve told me he was flabbergasted that Amelio would have any interest in trying to make a go of it with the Newton. But selling it to him would have been “a cruel joke,” he told me. “I can be mean, but I could never be that mean. No way would I let him further humiliate himself—or Apple.” So the Newton stayed dead. Many of its key engineers were retained, however.)
Out went the contracts that licensed the MacOS to the clone manufacturers. Steve hated the idea of having his operating system in the hands of others, and he had refused to sign on as iCEO without the promise that he could shut down the clones. This was the most expensive of the many decisions Steve made in the course of stabilizing the company. To avoid the litigation that would naturally arise from Apple abrogating the contracts, the company had to pay the clonemakers to disappear quietly. The most successful of these was Power Computing, which had commandeered a 10 percent share of the market for MacOS-compatible computers. Apple paid $110 million in cash and stock to acquire the company and hire some of its engineers.
Out went the inventory. Tim Cook became a new member of the team in March 1998 when he was hired away from Compaq—where he had been called “the Attila the Hun of inventory”—to be Apple’s chief of operations. Cook was a wiry bird of a southerner, thin and bookish-looking despite his athleticism—he biked and ran long distances regularly. Cook spoke quietly, with a soft Alabama drawl, but he may have been the toughest executive at Apple. Cook’s work drew no public attention, but it was crucial to trimming the company. In the nine months after he arrived, Apple reduced its inventory from $400 million worth of unsold, unwanted Macs down to $78 million. Cook was responsible for perhaps the most dramatic example of Steve’s hurry to rid himself of the burdens of Apple’s recent past: the bulldozing of tens of thousands of unsold Macs into a landfill in early 1998.
Finally, out went another 1,900 employees. This was the last tranche of Anderson’s resizing of the company. All in all, Anderson had taken the company from 10,896 full-time employees down to 6,658. Steve told me that being a father made firing people much harder than it had been. “I still do it,” he said, “because that’s my job. But when I look at people when this happens, I also think of them as being five years old, kind of like I look at my kids. And I think that that could be me coming home to tell my wife and kids that I just got laid off. Or that it could be one of my kids in twenty years. I never took it so personally before.”
But if he had perhaps grown more sensitive, he had also grown more focused. As Steve pushed through the downsizing, Anderson discerned a profound difference between the iCEO and his predecessors: Steve kept the greater needs of the company first and foremost, whatever the cost. Sometimes his ability to do so could seem almost cruel, as when, in 1998, he decided that 3,600 layoffs wasn’t enough and ordered 400 more people to be let go. But he was determined to lead a company staffed by the best people possible—he wanted Apple’s staff to brim with the exceptionalism he had witnessed at Pixar. “When I returned to Apple, I was blown away by the fact that a third of the people there really were A to A-plus people—the kind you’d do anything to hire,” he told me. “Despite Apple’s troubles, they’d stayed, which was the miracle. That was the good karma of Apple. It was carried through by those people deciding to stay through it all. Another third were very good—you know, the really solid kind of people every company needs. And then there was another third who were unfortunate. I don’t know whether they’d ever been good or not, but it was time for them to leave. Unfortunately, a lot of those people were in management. Not only were they not doing the right things, but they were instructing everybody else to do the wrong things, too.” Steve’s narrow determination was critical: the core team could unite around Steve, knowing that he would do absolutely whatever it would take to turn this company around. He was all in, and working as hard as anyone. “It was pretty bleak those first six months,” he told me later. “I was running on vapor.”
Still, even though Steve had been disciplined about cutting the company down to its proper size, nobody could really be sure that he was the man to lead Apple forward. Despite ostentatiously declining to receive a salary, Steve was an expensive, unproven bet. Some $450 million of Apple’s $816 million loss for 1997 could be attributed to the acquisitions of NeXT and to the purchase and liquidation of Power Computing. One way to understand that number is to realize that Apple had paid out more than a half billion dollars for two acquisitions whose asset value, mere months after the deals were concluded, was just one-fifth that number. A more revealing way to think of it is that Apple had shelled out more than a half billion dollars to rehire Steve Jobs.
A FEW MONTHS before Steve came back to Apple, I asked him what he thought Apple’s top priority should be. Should it be a new operating system, now that Avie Tevanian was there to create it? “Not at all,” he replied, with a forcefulness I hadn’t been expecting. “What Apple needs more than anything is to ship a great new product, not necessarily some new technology. The trouble is, I don’t think they even know how to make a great product anymore.” He paused as if he realized how damning that statement sounded, and abruptly added, “That doesn’t mean they can’t.”
This time, Steve didn’t immediately set out to solve everything with the introduction of some groundbreaking new machine. This was a big change from what he’d attempted at NeXT and at Apple the first time around. Instead, he laid out a plan in broad strokes for the company’s entire product line. Before Steve would ask his engineers to come up with a particular new product, he wanted to be sure they understood how it would fit into Apple’s overall plan. He wanted everyone working from the same playbook, and he wanted that game plan to be crystal clear. He couldn’t afford any of the strategic confusion that had hampered the development of the NeXT computer.
The key was to simplify Apple’s ambitions so that the company could sharply focus its substantial engineering talent and brand equity on a few key products and broad markets. To understand why Steve could pare down Apple’s offerings so drastically in 1997, it helps to think of personal computers as protean devices that can be programmed to be any of a number of tools—a word processor, a supercalculator, a digital easel, a searchable library of research materials, an inventory control system, a tutor, you name it. There’s no need for the machine to have a different physical form to perform each different service. All it needs is powerful, adaptable software within. And in the mid-1990s, the capability of software was expanding faster than ever, thanks to the advent of local area networks and the burgeoning Internet. When software can link you to other people, and to databases housed on other computers far away from yours, it becomes much more powerful than an application that is limited strictly to whatever is stored on your own personal computer.
Steve set out to show how Apple could transform itself into a profitable company while offering no more than four basic products: two separate models of desktop PCs, one for consumers and one for professionals; and two separate laptop versions aimed at those same constituencies. That’s it. Four quadrants, four product lines. No more redundant engineering efforts, extraneous manufacturing processes, or sales pitches aimed at tricking consumers into buying unnecessary features. With only four basic products to design, Apple’s engineers and industrial designers could invest the time and effort to make their hardware and their software distinctive.
This critical decision was as controversial as anything Steve did during this period. Employees were outraged that their pet projects, including some truly valuable technologies that Apple had been developing for years, were being cast aside. Some technologies provided consumers with a tangible benefit, but if they didn’t fit into Steve’s quadrant structure, they had to go—the institution, he decided, could only focus on so much.
The core executive team understood the necessity of the quadrant structure, even though it meant killing projects that were dear to staffers they respected. And eventually the rest of the company came around. They could see that the quadrants put Apple on the exact opposite course of the Windows PC manufacturers, who were busy churning out all manner of unremarkable, albeit faster and more powerful boxes. The quadrants returned Apple to its historic mission—to serve the high end of the consumer and professional markets with leading-edge products.
What the quadrant strategy wasn’t is equally important. It was not an effort to solve all problems with one insanely great machine. Steve had been twice burned by that strategy. He had developed enough cautious wisdom to see that breakthroughs were not the solution now. Apple’s customers—past, present, and potential—would first have to be shown that the company would survive, that it knew how to consistently produce and deliver distinctive products, and that it could reliably turn a profit. Only after that was accomplished—and Steve was the first to admit that it would take several years—could he think about how to exploit emerging technologies to break new ground again.
“SAVE APPLE WAS the mission,” remembers Jon Rubinstein. “When we came in the company was almost dead. So let’s save Apple—it’s worth saving. It was that simple.”
Steve ran the new Apple through a remarkably strong, remarkably motivated core group, consisting of Anderson, Cook, Rubinstein, and Tevanian, as well as sales head Mitch Mandich from NeXT; marketing chief Phil Schiller, a former Apple guy whom Steve brought back from Adobe; and Sina Tamaddon, a software guy from NeXT who also engineered several key deals. This group—minus Mandich, who would leave in 2000, and with the eventual addition of design chief Jony Ive—would drive operations at the company well through the mid-2000s. Given Steve’s volatile reputation and track record as a manager, it’s remarkable that they remained together for so many years.
Steve didn’t do the kinds of things that leaders often do to cement a strong group. He didn’t take the guys out to dinner. “We had good relationships within the senior executive team,” remembers Tevanian, “but we built them ourselves. It wasn’t through Steve. I can count on one hand the times, in the eight years that I was there, that we went to dinner together, mostly to an Indian restaurant nearby.”
Steve didn’t give his team much formal feedback. “During the U.S. versus Microsoft antitrust case,” says Tevanian, “Microsoft subpoenaed all my personnel records at Apple. So I’m sitting down with our lawyer, George Riley, and he says, ‘I’ve gotten your file from HR.’ He pulls it out and there’s one piece of paper in it, something meaningless. He’s like, ‘Avie, where is your file? Where’s your annual reviews and all that?’ I told him that I’d never had an annual review!”
“Steve didn’t believe in reviews,” remembers Jon Rubinstein. “He disliked all that formality. His feeling was, ‘I give you feedback all the time, so what do you need a review for?’ At one point I hired an executive coach so I could do three-sixty reviews with my own team. He was a really good guy, and I tried to get Steve to talk to him, but he wouldn’t. In fact, he asked me, ‘What do you need that for? That’s a waste of time!”
Steve didn’t lavish anyone with praise, or make them available to reporters who wanted to get behind the scenes of what would become a remarkable comeback. This was not because Steve was hungry for personal press coverage. He wasn’t, anymore. In his twenties, he had craved the limelight during his first flush of celebrity: “friendships” with Yoko Ono and Mick Jagger, the heady feeling of things like owning a penthouse suite in the San Remo in Manhattan, and attention from Time and Rolling Stone and Playboy confirmed that he had left his prosaic, middle-class upbringing in the suburbia of Northern California far behind. When he started NeXT, he had for a brief time courted the press to help give his startup a boost. But by the mid-nineties, playing up his celebrity held little appeal to Jobs. While he craved recognition for the quality of his work, he didn’t desire fame in and of itself. He directed Katie Cotton, his communications chief at Apple, to adopt a policy in which Steve made himself available only to a few print outlets, including Fortune, the Wall Street Journal, Time, Newsweek, BusinessWeek, and the New York Times. Whenever he had a product to hawk, he and Cotton would decide which of this handful of trusted outlets would get the story. And Steve would tell it, alone.
Steve and I talked many times about his reluctance to share the spotlight with the others on his team, since I asked repeatedly to speak with them and was largely unsuccessful. Sometimes he’d aver that he didn’t want anyone to know who was doing great work at Apple, since he didn’t want them to get recruited by other companies. That was disingenuous, since Silicon Valley was an incestuous place where tech talent was tracked as closely as the stock market. What was true was that Steve didn’t think anyone else could tell the story of his product, or his company, as well as he could. Steve was a great performer in any setting, and he considered most interviews to be just another performance. He was a terrific extemporaneous thinker and talker, always confident that he could make the most of an opportunity to promote the company. He cared intensely about the look of any article he participated in, because he thought that photography and typography and a stylish layout helped convey the import of whatever message he wanted to get across.
Under Steve’s guidance, Apple would develop one of the clearest brand identities in the world. So, while Steve’s policy irked some members of his core team, it was hard to argue with his success. Working for Steve meant accepting a whole range of idiosyncratic behaviors. Policies that seemed selfish often turned out to be good for the company. Strategies that at first appeared quixotic might well prove farsighted. The members of Steve’s core team learned to anticipate and live with his unpredictability. They knew they were working for someone special.
Steve made sure in his own way that they knew he thought they were outstanding as well. Sometimes he’d ask one of them to join him on a long walk, whether around the Apple campus or near his home in Palo Alto. “Those walks mattered,” Ruby remembers. “You’d think to yourself, ‘Steve is a rock star,’ so getting quality time felt like an honor in some ways.” Steve also compensated his key employees richly, arranging lucrative long-term contracts loaded with stock options for everyone in the inner circle. “He was really good at surrounding himself with really good people and motivating them both philosophically and financially. You have to have the right mix. You have to provide just enough financial motivation in there so that people don’t just say, ‘Fuck you, I’m not taking this anymore.’ ”
Steve also understood that the personal satisfaction of accomplishing something insanely great was the best motivation of all for a group as talented as his. “You had to believe that it was going to take some time; that you weren’t going to wake up tomorrow morning and it was all going to be fixed,” Tevanian once told me. “And that two years, three years down the road you were going to look back and say, ‘Gee, we got through it.’ If you didn’t believe that, you were sunk. Because there was a lot of pain along the way, there were a lot of people saying it’s going to fail, it’s not going to work, this is wrong with it, that’s wrong with it, finding a million things wrong. But you just had to know that if you kept your head down, kept working, kept trying to do the right things, it would work out.” Saving Apple was an accomplishment everyone on the team would take pride in for the rest of their lives.
“He cared deeply,” says Rubinstein. “And that made him a great manager when things weren’t going well. At the beginning of this time at Apple, it was such a pleasure because we were all in it together.”
“When it was tough,” Avie adds, “he’d think carefully about all the decisions. He’d think through the impact of everything very carefully.” While Steve never hesitated to emphatically assert his opinion, sometimes his fretting would drive the group crazy, as he delayed important projects by fussing endlessly over minute considerations, such as whether to change the plug connectors for mice and keyboards. Mike Slade, the head of marketing for a brief period at NeXT, went back to work at Apple in 1998 as a consultant to Steve. “People want to paint him like he’s Michelangelo, you know?” says Slade. “But he was a real nervous Nelly, like an old-fashioned, tiny, old, small businessman saying, ‘Shall I cut another nickel off it?’ Like a junk merchant.”
His attention to the job at hand was intense, and he set up his schedule to ensure that each of his key deputies was equally focused. Every Monday morning at nine o’clock, he convened the executive team (the ET, as it came to be known) in a conference room located in Building 1 of the Apple campus. Attendance was required. Referring to an agenda he himself had written up and distributed, he’d go around the table, asking specific questions about projects under development and getting updates from the team. Each person was expected to be fully prepared for any question he might ask about their area of responsibility. For some, like Fred Anderson or Nancy Heinen, the general counsel, this might be their main encounter with Steve for the week. Others, however, knew to expect rigorous follow-ups. The pressure was intense. Their past successes had earned them a place in the room, but Steve didn’t care about the past. With Steve, says Ed Catmull, “The past can be a lesson, but the past is gone. His question was always, ‘What are we going to do moving forward?’ ”
That’s why “That’s shit!” was as common a response from Steve as a pointed question or a thoughtful discussion. He wanted smart answers, and he didn’t want to waste time on niceties when it was simpler to be clear, no matter how critical his response. “The reason you sugarcoat things is that you don’t want anyone to think you’re an asshole. So, that’s vanity,” explains Jony Ive, a crisply articulate Brit with the muscled frame of a boxer and a tendency to hunch forward over a table as he leans in to speak to you. As design chief, Ive was on the receiving end of Steve’s blunt criticisms as much as anyone. Whenever he felt abused, he would tell himself that someone who sugarcoats his true opinions “might not really even be all that concerned about the other person’s feelings. He just doesn’t want to appear to be a jerk. But if he really cared about the work he would be less vain, and would talk directly about the work. That’s the way Steve was. That’s why he’d say ‘That’s shit!’ But then the next day or the day after, he also would just as likely come back saying, ‘Jony, I’ve been thinking a lot about what you showed me, and I think it’s very interesting after all. Let’s talk about it some more.’ ”
Steve put it this way: “You hire people who are better than you are at certain things, and then make sure they know that they need to tell you when you’re wrong. The executive teams at Apple and Pixar are constantly arguing with each other. Everybody wears their thoughts on their sleeves at Pixar. Everybody’s totally straight with what they think, and the same is beginning to happen at Apple.” His inner circle understood that Steve’s acerbic criticism wasn’t personal. They’d all learned how to, as Susan Barnes said, “get through the yelling to the reason for the yelling.” Steve expected them to do that, and he expected them to push back when he was wrong. “I fought with him for sixteen years,” remembers Rubinstein. “I mean, it was almost comedic. I remember one Christmas morning, we’re on the phone screaming at each other and both of our significant others are in the background, saying, ‘Come on, we have to get going, get off the damn phone.’ He was always screaming about something or other. Once, we were in this huge fight. And I’m standing, I think, in Target down in Cupertino, pushing my cart around buying toilet paper or whatever the hell it was, right? And Steve and I are on the phone, yelling at each other. It’s just how we operate. I grew up in New York City. My family was out of a Woody Allen movie, you know that scene in Annie Hall where they’re underneath the Thunderbolt roller coaster? That’s my family. So fighting all the time didn’t bother me. That was probably one of the reasons we were successful together.”
From 850 miles up the Pacific Coast, Bill Gates watched with great interest as the limping company he had helped with that $150 million investment and a commitment to make software for the Mac struggled to survive. “It was a much more mature group,” he observes. “With the Mac team or even at NeXT, when Steve went on a jag everybody just scattered into their own corner. But this Apple management team would push back and coalesce as a group. When Steve would pull any one individual out of the pack and say, ‘Your work is such shit and you’re such an idiot,’ the pack had to decide, okay, are we going to let this one go or do we really like this guy. And they could go to Steve afterwards and say, ‘Hey, come on, there aren’t that many people we can hire that are near as good as that guy, go back and apologize.’ And he would, even though his intensity was still just incredible.
“That is a really crack team that has gone through hell, and bonded with each other in toughness,” Gates continues, falling into the present tense. “I mean, you can point to everybody on that team and say, okay, he earned his pay, he earned his pay, he earned his pay. There’s no weakness in that team, nor is there a backup plan or a forward-looking alternative team. It’s just this one team.”
Steve had assembled a group that was strong enough to deal with who he was, and autonomous enough to compensate for his weaknesses. They developed their own tactics for managing him. “It was like we had a common enemy,” says Rubinstein. Members of the team would meet regularly with one another to plan how to get Steve to authorize the decisions they felt would be best, to figure out a way through or around Steve’s more imperious or ill-considered decisions or prejudices, and to try to anticipate where Steve would steer things next. They had the sense that Steve knew this was going on behind his back. “He knew that he could count on us to make things work,” says Tevanian, “even when there was friction or problems. We faced some really hard problems, you know, and he knew he could trust us to do the right thing.”
I watched Steve closely, both as he steadily and patiently composed his strategies and as he cajoled this stable, impressive team to execute them. I was skeptical because of his past failures as a manager, but intrigued. One day I asked him if he had come to enjoy the process of building companies, now that he was trying to do so for a third time. “Uh, no,” he started, as if I were a fool. But if he didn’t enjoy building companies, he sure had a thoughtful and convincing way of describing why he kept doing it. “The only purpose, for me, in building a company is so that that company can make products. One is a means to the other. Over a period of time you realize that building a very strong company and a very strong foundation of talent and culture in a company is essential to keep making great products.
“The company is one of the most amazing inventions of humans, this abstract construct that’s incredibly powerful. Even so, for me, it’s about the products. It’s about working together with really fun, smart, creative people and making wonderful things. It’s not about the money. What a company is, then, is a group of people who can make more than just the next big thing. It’s a talent, it’s a capability, it’s a culture, it’s a point of view, and it’s a way of working together to make the next thing, and the next one, and the next one.” A talent, a capability, a culture, and a point of view: the Apple he was in the midst of re-creating would have all these things, as would the products it would create.
STEVE KNEW HE had to deliver Apple’s first new product in 1998. He certainly couldn’t expect Apple’s millions of investors to wait around for years and years, as Perot and Canon had been forced to do at NeXT. But Apple didn’t have any great software applications ready to unveil, and Steve had no desire to offer any hardware that had been in the Amelio pipeline. He needed something new, and it had to have enough of his DNA to signal that serious changes were afoot. The personal computer business had been bereft of creativity and excitement for so long that it was now simply known as the “box” business. Steve needed a lot more than just another box.
He found his answer in the skunkworks of a building several blocks away from the corporate offices. That’s where Jony Ive, the designer who had so impressed Fred Anderson, was toiling away.
Ive, Apple’s head designer, was not yet a member of Steve’s inner circle. An unassuming self-starter who turned thirty at about the time that Steve arrived in 1997, Ive had signed on with Apple as a contract designer in 1992 when he still lived in London, working for a design consultancy called Tangerine. The son of a silversmith who taught at the local college in the London suburb of Chingford, Ive gravitated toward industrial design at an early age, and went on to study at what is now called Northumbria University in Newcastle. There he became an admirer of Dieter Rams, the legendary onetime chief of design for Braun, the German small appliance maker, who in the 1970s was one of the pioneers of what is now called sustainable design, and who railed against the industrial practice of planned obsolescence. Rams, who still designs furniture for a Danish company called Vitsœ, had become known for his “Ten Principles of Good Design.” According to Rams, Good Design is:
innovative
what makes a product useful
aesthetic
what makes a product understandable
unobtrusive
honest
long-lasting
thorough down to the last detail
environmentally friendly
- as little design as possible
During Amelio’s short tenure I had visited Jony in his workspace, called the Design Lab. After Steve returned, the lab would be moved into the main headquarters complex on Infinite Loop, and would become as off-limits as Los Alamos during the Manhattan Project. But under Amelio it was accessible on the late Friday afternoon when I visited. Ive was the only employee still around that day. The space was piled high with gray plastic or Styrofoam mockups of the multitudes of previous, rather ordinary Macs he and his team had designed. Back then, his objective was to repackage computers in an artfully austere way, more than to create radically new designs. There were just two exceptions, both vivid in their own way.
The first one that he showed me was the eMate, his counterintuitive version of the Newton Message Pad for elementary school students. The clamshell-type device really did look somewhat like a mussel. Its subtle curves gave it a playful look, but what really grabbed your eyes was its translucent aquamarine plastic shell—a throbbing color that seemed to glow as if lit from within.
The other brilliant design Jony showed me was his prototype of a limited-edition machine Apple would release belatedly to commemorate the company’s twentieth anniversary. The 20th Anniversary Macintosh was his pride and joy at the time. It was a striking piece of out-of-the-box industrial design thinking. Jony and his team had placed the guts of a top-of-the-line laptop inside a svelte and slightly curved vertical slab, which had on the top half of its surface a color LCD monitor, and on the bottom half a vertical CD-ROM drive, all of which was framed by specially designed Bose stereo speakers. It was packed with state-of-the-art technology, including cable television and FM tuners and the circuitry necessary for the computer to double as TV set or a radio. Finally, Ive and his team had concocted a conch-shaped floor module to house the power supply, a subwoofer, and a powerful hi-fi audio amplifier so that the computer would supply the sonic fullness of a high-powered stereo system without generating too much heat or seeming bulky. The whole package looked as if it belonged on display in the sculpture gallery of New York’s Museum of Modern Art. (In fact, one did wind up in the museum’s industrial design section.) Technovores lusted after the machines.
The first time Steve made the long trek over to the Design Lab, Ive was nervous and apprehensive. “That very first time we met, he had already started to talk about reengaging Harmut Esslinger [the founder of Frog Design, who had designed the first Mac],” Ive says. “He came over to the studio, I think, essentially to fire me. And he should have done that, based on the products that we were shipping at the time, which weren’t very good at all.” The products and the prototypes didn’t thrill Steve, but Ive himself made a bigger impression. He is quiet and earnest, and can be beguilingly engaging when describing what he is trying to accomplish with his designs, in his proper British accent. Like Steve, Jony has a gift for clearly explaining complex ideas. Steve was impressed. “You know Jony. He’s kind of a cherub,” Steve told me in late 1997. “I liked him right away. And I could tell after that first meeting that Amelio had wasted his talent.”
Just as important, Jony was impressed by Steve. Thousands of Apple employees had scattered their résumés across Silicon Valley as they tried to abandon Amelio’s leaky ship, and Jony had resolved to look around himself. But he quickly saw that Steve and Amelio couldn’t have been more different. “Amelio described himself as the turnaround king,” Ive remembers. “So he was focused on turnaround, which is mainly about not losing money. The way you don’t lose money is you don’t spend it. But Steve’s focus was completely different, and it never changed. It was exactly the same focus from the first time I met him to right to the very end: the product. We trust if we do a good job and the product’s good, people will like it. And we trust that if they like it, they’ll buy it. If we’re competent operationally, we will make money.” It was that simple. So Jony decided not to leave Apple, a choice that would lead to the closest and most fruitful creative collaboration of Steve’s entire career, even more symbiotic than his original partnership with Steve Wozniak.
Nonetheless, Steve killed both of Jony’s pet projects. The eMate disappeared along with all other traces of the Newton (save a few key patents), and the 20th Anniversary bit the dust after selling just 12,000 units. The products didn’t fit into his quadrants. Besides, he told me one day, “I just don’t like television. Apple will never make a TV again.” This was Jony’s introduction to Steve’s coldhearted decision-making. Like Avie and Ruby and Fred and Tim, he had come to understand that Apple’s best chance forward was with Steve, and that if you were in with Steve, you were in all the way, bumps and all.
THERE WAS ONE thing that especially intrigued Steve at the Design Lab: the odd texture and eerie translucence of the eMate’s plastic shell. That detail became a seed idea for the iMac, the first product of the new Steve Jobs era at Apple.
Technologically, the iMac was not a radical departure from the past. But working closely with Steve, Ive designed a cosmetic standout that, for the first time in years, gave the personal computer some personality. The iMac was a dramatically rounded shell made of material similar to the eMate’s. Through its “Bondi blue” (named for the evocative tropical waters of Bondi Beach, near Sydney, Australia) translucent plastic exterior, a buyer could see the inner workings of the computer, its rigorously arranged wires and circuit boards loaded with chips that looked like 3-D maps of cities. The computer and monitor were housed in a single bulbous module with a circular hatch on the back that doubled as a handle, to allow access for repairs or modifications. Steve loved the handle despite its impracticality, because it was a throwback to the original Mac. The machine weighed thirty-eight pounds, so it wasn’t likely that anyone would actually treat it like a laptop to be carried around from one workspace to another. But the handle, the shape, and the translucence combined to make the iMac seem like a bottle of blue fun. It was exactly the kind of hot new product he needed to once again differentiate Apple from the “box” crowd—the Dells and Compaqs and HPs and IBMs.
Two other decisions—one technological, one driven by marketing—also made the iMac stand out from that crowd of putty-colored rectangular slabs. Steve and Jon Rubinstein opted for a CD-ROM drive instead of a standard floppy disk drive, despite the fact that most people at the time still stored their data on floppy disks. You could buy a separate, external floppy disk drive to plug into the iMac, but Steve reasoned that most software would soon be delivered on CD-ROM optical discs—a technology that was already fast displacing vinyl and tape cassettes as the primary medium for recorded music. He also felt certain that within a year or two, recordable CD-ROM drives would render floppy disk drives redundant. As he had before, he was betting that users would accept a slightly uncomfortable move into the future, one that would force them to convert their data to a new format. This time he got it right.
Steve’s other noteworthy decision was to slot the letter i in before Mac. The iMac was built to be plugged into the Internet, via sockets that could handle either a phone line or, for those lucky enough to have access, a connection to a full-fledged Ethernet network. It sported a built-in telephone modem as standard equipment, while most computer makers sold those only as an optional add-on. Steve had foreseen that buyers would see this “Internet” Mac as a forward-looking computer with an eye toward the future of personal computing, which was clearly going to revolve around the Internet. But the i did more than that. The i was personal, in that this was “my” computer, and even, perhaps, an expression of who “I” am. And what a bold expression it was, fresh and transparent and different. It seemed like the kind of computer that an individual who could “think different” would use.
Many critics in the burgeoning computer press sneered that the iMac was neither faster nor more powerful than machines from its competitors. After all, for a decade speed and power had been the only way personal computers differentiated themselves. Those same critics disliked the fact that this blue, rotund thing looked more like a toy than a computer. But they had missed the point completely. The iMac’s radical design sent exactly the kind of reassuring, friendly, and differentiating message that Steve wanted to send. With one product, Apple had reinforced its position as the “personal” computer company. The iMac was a vivid reminder that personal computers are tools for people, and that they should both reflect and amplify an individual’s own personality. That’s why the iMac was an instant success, selling nearly two million units in the first twelve months of production, and becoming Apple’s first bona fide hit in years.
Its success was critical to Steve’s plans for a rebound. Steve had returned to Apple believing strongly that design could be a significant part of Apple’s resurrection; the iMac supported his theory. “When we did the first iMac,” he later told me, “there was such resistance in hardware engineering. A lot of people thought it wasn’t a Mac, that it would fail. But the minute that everybody saw it succeed in the marketplace, a lot of the people started to turn around and go, ‘Okay, this design stuff is important I guess.’ They felt the thrill of success again.” Steve and Jony’s iMac enabled Apple to make a bold first step toward recovery, buying Apple some precious time at a moment when most observers thought it was headed to its grave.
ONE OF STEVE’S great failures during his first tenure at Apple had been his inability to deliver strong sequels to the Mac or even the Apple II. But that wasn’t the case with the iMac. Just one year after its introduction, the company started to sell a new version in five gumdrop colors. They were even cooler than the Bondi blue machines, because they came with a simple slot drive for CDs, replacing the clunkier drawer that came with the first ones. And their optimistic, brilliant colors played well into Apple’s marketing, which kept redefining the Apple brand as forward-looking, lively, and creative.
But Steve didn’t just focus on the flashy iMacs—that too was a mistake the old Steve would have made. He made sure that his team did an equally excellent job filling the other three quadrants of the grand plan. The so-called towers, as the desktop computers for professionals were known, were the machines that paid the bills. Loaded with faster chips, more memory, better graphics, and slots for adding hard drives and CD burners and other accessories, the towers were engineered for power users—hence their name, the Power Mac. These big machines sat under your desk, linked to a monitor on your desktop, and were so fast that Apple marketed them as the first “personal supercomputers.” They were hefty, but Ive’s design gave the impression that they were sleek and manageable—they even had dual handles that mimicked the iMac’s, and one side that opened up to make tinkering with the innards easier. The base model cost at least a thousand dollars more than the iMac, but it also carried much higher profit margins.
Here, too, Steve avoided a mistake Apple had made the first time around. He didn’t claim that the Power Mac was the computer for all businesses, and in so doing try to push Wintel-based PCs out of the market. Instead, he targeted the Power Macs at the new, more entrepreneurial class of small businesses emerging with the rise of the Internet economy: engineers, architects, publishers, advertising agencies, website designers, and so on. This was a world that could tolerate and even celebrate “Think Different,” while the dominant class of big corporations looked on fearfully at the radical and potentially undermining change the Internet seemed to promise.
The design and engineering genius that was applied to the iMacs and towers was applied to the laptops as well. The personal models, called iBooks, mimicked the fun of the iMac with a beguiling, bright orange clamshell design that echoed the shape of the old eMate. The higher-end PowerBooks for professionals were curvy, too, but they were sheathed in a rubbery-feeling black shell and powered by a PowerPC microprocessor that briefly allowed Apple to claim the somewhat dubious title of “fastest laptop in the world.” The cumulative effect of these revitalized iMacs was simple but profound: just three years removed from near death, Apple had reestablished itself as the most, if not the only, truly creative company in the computer business. “When we returned to Apple,” Steve told me around this time, “our industry was in a coma. There was not a lot of innovation. At Apple we’re working hard to get that innovation kickstarted again. The rest of the PC industry reminds one of Detroit in the seventies. Their cars were boats on wheels. Since then, Chrysler innovated by inventing the mini-van and popularizing the Jeep, and Ford got itself back in the game with its Taurus. Near-death experiences can help one see more clearly sometimes.”
The turnaround, however, did not come without expensive failures. Apple had done a good job embracing the Internet, by making the process of getting access to the Web as simple as any other function of an iMac. But Apple’s eWorld, a proprietary online subscription service bundled with new iMacs, was a flop, despite a friendly interface that suggested that going online could be as easy as walking from one neighborhood to the next. All it really offered was email services and a way to download software, and in practice it wasn’t any easier to use than bigger services like EarthLink and AOL, which came bundled on Wintel PCs.
A costlier failure was a pet project that Ruby and Steve worked on together and argued about endlessly, the so-called Power Mac “Cube,” which was introduced in 2000. Harking back to the design of the NeXTcube, but one-eighth the size, Apple’s G4 Cube was such a stunning, clean design that it too wound up in the Museum of Modern Art. Unfortunately, it didn’t wind up in many homes or offices.
Steve loved the Cube. It packed a lot of power—although not quite enough to qualify as a true power user’s computer—into a translucent cube just seven inches by seven inches all around. Its cables plugged into Apple’s first super-wide flat-screen monitor for the desktop. My monitor measured twenty-five inches diagonally, and it rested on my office desk next to the Cube like a minimalist sculpture. But in this case, Steve made similar mistakes to ones he made at NeXT. He overlooked some of the engineering idiosyncrasies necessitated by the stark design he loved. Worse yet, the Cube seemed snakebit by a host of manufacturing problems. Its clear plastic shell cracked on many machines, a flaw that ruined what had seemed a design masterpiece. My Cube never cracked, but the monitor developed its own, strange, aesthetic problem: ants and other insects were somehow attracted to squeeze through seams in the clear plastic frame that surrounded the screen, and once inside they couldn’t get out. Over time, the two transparent “feet” of the screen filled up with bug carcasses, but the effect was not as pleasing as when a prehistoric fly is trapped in amber. I teased Steve about the bug-friendly screen he’d developed a couple of times, but he never found it all that amusing. He pulled the plug on the Cube early, and it never sold anything near the numbers he had forecast.
STEVE HAD SURROUNDED himself with a mature, experienced, and disciplined team, made up of people who could argue back fiercely. And for once, he allowed them significant authority—Apple was simply too big for him to make all the decisions himself. Gradually, the organization developed in a way that allowed him to get the details he needed without micromanaging those areas of the company where he added a lot less. He primarily managed through his inner circle (although he convened meetings of the top one hundred people from time to time), and the Monday morning executive team meeting became the linchpin of the week. His attempt to delegate worked well, for the most part. In matters of finance, for instance, “I would get him involved when I needed him,” remembers Anderson. Steve was trying to keep his fingers on the pulse of a growing company without stifling it.
He also liked having a confidant—someone he could banter with outside the formal lines responsibility of daily corporate life. In the early years of Steve’s return, Mike Slade served that function. Slade, by his own admission, isn’t any kind of creative “genius,” like Lee Clow or Woz. But he had lots of real-world experience, he spoke his mind, and was both easygoing and independent enough to engage in spirited repartee with Steve without any qualms. He also had made it clear he did not want an executive position at Apple, which made it easier for him to have a good personal relationship with Steve. They would sometimes jog together in the early morning, and he even went Rollerblading with Steve and Laurene.
Slade showed up in Cupertino on Mondays and Tuesdays, flying down from Seattle. No one reported to him, and Steve had told the group that he had no particular authority. But when he was at Apple he almost never left Steve’s side. Their Mondays would begin with the executive management team meeting. After that the two would usually go eat in the cafeteria, and later venture into the Design Lab. Slade tried to participate in their discussions. “Jony would say stuff like, ‘Steve, I’m not sure the design language and the way it’s joining with this is quite right. What do you think?’ ” says Slade, laughing. “And I’m going, ‘Yeah, it’s cool. Can I have a Coke now?’ They’d ask me, ‘Do you think we’ve got the right degree of opacity,’ and all I can think is, ‘Why am I here?’ ” Of course, Slade knew more than he’ll admit. But his sense of humor and realism appealed to Steve. Steve didn’t allow himself to relax with his inner circle the way he would with Slade. “Slade was the court jester,” says Ruby, who also became good friends with Slade over the years.
Most Mondays, their visit to Ive would be followed by one to Avie and the team working on Apple’s new operating system, which would eventually be called OS X. The radical new operating system would be the flywheel of all the extraordinary developments that would follow over the next decade, from Apple’s suite of iLife applications, to iOS—the slimmed-down operating system that would give life to the iPhone and iPad—to the entirely new software industry that emerged to produce the millions of apps written for those devices.
While Steve’s gadgets and computers drew the most attention, the software that made them go was every bit as important. Steve always said that Apple’s primary competitive advantage was that it created the whole widget: the finely tuned symbiosis between the hardware and the software together defined a superior user experience. In the PC world, hardware and software technologies came from different companies that didn’t always even get along, including IBM and the PC-clone manufacturers, Microsoft, and Intel.
Without a new operating system that could outshine Windows, the revival of the Macintosh could never be complete. The existing one was based on technology that had been developed fifteen years earlier for the original Mac, and the look and feel on the screen had come to seem passé.
Back at NeXT, Avie had developed a version of Unix that presented a friendlier face to nontechnical users, while also retaining its bona fides as a serious, world-class computing environment. There, too, the goal had been to create the whole widget, so he designed it to dovetail nicely with the NeXTcube. But when the company was forced to refocus solely on software, Avie and his team knew that the only way they could sell the NeXT OS was to make it attractive to users of workstations made by other manufacturers, like Sun, IBM, or Sony, and perhaps even to users of standard PCs. That’s why they had created experimental working versions on Sun workstations using SPARC microprocessors, on other personal computers and engineering workstations using Intel’s best Pentium PC microprocessors, and even on the PowerPC chip that was now the heart of Apple’s latest Macintoshes. This experience of “porting” NeXT OS to other machines would pay off in two ways for Apple. For starters, Tevanian and his crew walked in the door at Cupertino with the code base and the know-how to support the troubled company no matter which microprocessor would be at the core of future Macintoshes. Apple had already switched Macintosh microprocessors once before, and Steve wanted the flexibility to do so again if it made sense. Since his old NeXT programmers had learned the technological idiosyncrasies of several computing platforms, they could help him make a much more objective decision when it came time to switch again. Technologically agnostic, they would push for the architecture that would get the most out of their operating system—in other words, the one that would help them build the best whole widget possible. This was an ace up Steve’s sleeve, one he would play to great effect several years down the road.
Second, and more immediately important, the travails at NeXT had turned Tevanian’s crew into a first-rate team. The primary task they faced was to turn the NeXT operating system into something that remained robust but had a modernized look and feel that bore enough similarity to the original Apple system for Mac users to migrate over with as little discomfort as possible. Another priority was to preserve compatibility with software applications that ran on the old Mac OS 9, at least in the short run. Finally, they had to build tools for software developers to help them adapt their old applications to OS X or even rewrite them altogether to take full advantage of its capabilities.
The challenges in developing any new operating system are many and varied, and even though OS X was essentially a modified version of a proven, existing operating system, the “Apple-ization” of it was still an enormous job. Steve understood this, and he didn’t create unreasonable deadlines for his programmers. Instead, he oversaw them with a mix of patience and impatience that allowed him to be forceful and yet respectful. What eventually resulted was an operating system that mixed the best of Steve’s intuitive understanding of the needs of regular people with deep, robust, and flexible code written by some of the greatest programmers in the world. It preserved the winsome onscreen personality that had made Apple customers so loyal through thick and thin.
Steve was particularly obsessed with the operating system’s look and feel. In the afternoon OS X meetings that Slade would attend with Steve, each of Avie’s direct reports would be admitted into a locked conference room to demonstrate the latest developments on whatever aspect of OS X they were handling. “We went over OS X again and again,” remembers Slade, “pixel by pixel, feature by feature, screen by screen. Should the genie effect look like this? How big should the dock icons magnify? What’s the type style? Why does this dial look the way it does? Every week, the agenda was to get Steve to approve the look and feel of each item.
“There is nothing in the operating system that he didn’t approve,” continues Slade. “It was the opposite of how things were done at Microsoft, where they relied on these five-hundred-page specs [documents laying out in detail every feature to be created by the software developers]. We had specs, too, but Steve never looked at them. He just looked at the product.”
When Steve saw something he didn’t like, he would tell a user interface designer by the name of Bas Ording to mock it up the way he wanted it. “Bas was a wizard,” says Slade. “He’d take ninety seconds pecking away, he’d hit a button, and there it was—a picture of whatever Steve had asked for. The guy was a god. Steve just laughed about it. ‘Basification in progress!’ he’d announce.”
What made the OS X development even harder was ensuring that the new operating system wouldn’t instantly render users’ old applications useless. This backwards-compatibility is one of the most difficult challenges a computer company can face—it was a real problem for Apple back in the early 1980s, when Apple II customers found that their software didn’t work particularly well on an Apple III.
Steve believed that Apple’s consumers would adapt more easily than conventional wisdom suggested, since they were far more enthusiastic about their Macs than Microsoft’s customers were about their PCs. He believed they would be quite willing to make a big leap to a new operating system, even if it also required eventually buying all-new hardware and software. And he was right. Over the next decade, in its quest to keep the OS lean and modern, Apple would slowly stop supporting for a variety of carryover features from previous generations of hardware and software that were dearly beloved by a sometimes-vocal minority. Most Mac customers figured the trade-offs involved in a steadily improving computer platform were worth it, however.
Still, Steve and Avie did everything they could to make the transition to OS X as benign as possible for customers. One thing they exploited was a new way of delivering software updates. With more and more computers constantly connected to the Web, Apple could update users’ software frequently by delivering improvements, modifications, and bug fixes directly over the Internet. This applied not just to operating system software but to all manner of applications, and made sense both for the customers and for the software developers, who by nature love to continue tweaking their work once it is “finished.” Avie and his team were among the first mainstream operating system developers to take full advantage of this capability, and their approach would change the expectations of hundreds of millions of people, from corporate IT managers all the way down to the individual smartphone user who wants the very latest version of his favorite game.
Indeed, when Apple first released OS X in September 2000, the company called it a “public beta” version, implying that it was a work in progress. The price was $29.95—about a fifth of what was typically charged for a significant operating system upgrade. It was shrewd marketing, because it implied that early adopters would effectively be putting OS X through a shakedown cruise, and thus some bugs and glitches were to be expected. It also gave Apple a test period during which it could work out how to manage those online software upgrades. And during that period Avie’s team used the Internet to provide numerous updates that improved the software. This way of maintaining and fixing software would quickly become the industry norm. It also transformed customers’ expectations: no longer would they be willing to wait months for their software providers to fix a problem.
Given the breathing room that the success of the iMac had bought them, the UNIX core upon which they built their system, and their own coding expertise, Avie and his programmers had been able to shoot for the moon. So when OS X was finally ready to go, it could make the Mac do things no PC had ever been able to do. Users reveled in the obvious cosmetic improvements, like the ability to have video continue to play even as you used a mouse to move a window around the screen. And OS X was truly beautiful to behold, creating a screen with the illusion of three dimensions, where windows appeared to cast shadows on the layers of objects “behind” them. It still ran most old Mac programs, especially when their makers made a few slight modifications that could be downloaded and installed easily. But underneath it all was Unix, the core operating system that geeks love to tweak.
With OS X, then, Apple finally had a genuinely industrial-strength computing framework. Macs crashed far less than Wintel PCs. A single haywire program wouldn’t take down the whole system. The machines seemed almost immune to software viruses. And its basic file system was easy to navigate and gave users the choice of three different ways to view and locate files in a list format. Under the hood, OS X was the state-of-the-art software foundation for everything Steve would want to create in the years ahead.
AS RUBY SAID, the mission had been to save Apple. And in early 2000, it seemed by just about every measure available, that Steve and the team had accomplished that goal. They had rebuilt and revived the company’s suite of computers. They were starting to provide users with a solid and modern software foundation. Morale was high, and a sense of mission had been restored. Most important, Steve had visibly changed for the better as a leader and as a manager. Over the three and a half years since his return, he had come to recognize that taking this more incremental approach to computer development can result in the kind of equilibrium that allows you to build a business designed to thrive over the long haul.
Or so it seemed. In September 2000, Apple posted a dismal earnings report. Despite all these new products and fresh technology, the company’s sales continued to shrink. The stock price tumbled, falling from $63 in early September to $15 by the end of the year. Meager sales of the Cube were just the most obvious disappointment, but sales were stagnant across the board. It was beginning to look as if Steve had pushed the technology of personal computing just about as far as it could go. He had righted the ship, patched up Amelio’s holes, and gotten everyone rowing in the right direction. Apple was profitable again. But to complete Apple’s turnaround he would have to get back to the business of creating new kinds of products, the kind that puncture the equilibrium of an industry and create new business opportunities. Yet now, at the end of fiscal year 2000, Apple’s quarterly sales were less than when he’d arrived. And most of the gains shareholders had enjoyed since he returned had evaporated. As the headline of one of my Fortune stories put it, he was the graying prince of a shrinking kingdom. Something would have to change.
