Feature The countdown continues as we step through the 10 most important events that have shaped the evolution of the Apple Macintosh over the past 30 years.
Click here for Part 1... or read on.
In this episode: the return of the prodigal son, the attack of the clones, the invasion of Chipzilla, and how an old enemy came to the rescue of an ailing rival...
About 9:30am, Wednesday morning, 6 August 1997 – Microsoft tosses Apple a much-needed $150m bone
Gather ’round, you millennials, and listen to your ol’ Reg hack as he recounts a tale from an age when the world was topsy-turvy, a time when Apple was on the ropes with its share price mired at five bucks and change, and Microsoft’s stock was rocketing upward to its eventual high point of nearly $60 per share in December 1999.
This week, by comparison, Apple’s shares are selling at around $550, down from their peak of just over $700 in September 2012, and Microsoft is going for around thirty-five bucks. Things change.
It was mid-1997. Apple CEO Gil Amelio had just been given his walking papers in what The New York Times termed an “abrupt ouster” and “the latest unsettling development for a company whose recent history has often resembled a corporate soap opera”. Steve Jobs was back in charge and, as reported in BusinessWeek, he was not a happy camper.
“The products SUCK!” he shouted at a group of Apple execs. “There’s no sex in them anymore!”
The Power Macintosh 4400 was not sexy? Steve, Steve, Steve – where’s your sense of geek style?
While you might fault Jobs’ people skills, you can’t argue with his analysis. This was the time of the last gasps of Apple’s all-over-the-map Performa series, the lamentable Power Macintosh 4400 (arguably Apple’s worst), and the embarrassment that was the woefully underpowered Twentieth Anniversary Macintosh, which at announcement in January of that year was said to retail for around $9,000, was released in March for $7,499, and then had its price slashed to $1,995 the following year.
And 1997 was also the year when Michael Dell famously said, when asked what he would do if he ran Apple, “I’d shut it down and give the money back to the shareholders.”
That was the environment surrounding Apple and its Macs when Steve Jobs took at stage for his keynote presentation at Macworld Boston in August 1997. But before we relate what he announced at that event, one last bit of ancient Apple lore: at that time, Microsoft was the sworn enemy of every right-thinking Apple fanboi, and its then-CEO William Henry Gates III was The Great Satan himself.
The news that Jobs brought to the assembled Mac addicts was that Beelzebub was coming to the aid of their revered company with a purchase of $150m in non-voting Apple stock that it would not sell it for at least three years, and – more importantly – promised to release Microsoft Office for the Mac for five years, thus legitimising the Mac as a business machine for half a decade, at minimum.
In addition, Jobs announced that Microsoft and Apple had resolved their long-running patent dispute through a cross-licensing agreement for all existing patents as well as patents that would be filed during the next five years, that Apple would collaborate with Microsoft on Java virtual-machine compatibility, and that Internet Explorer would be the Mac’s default browser – an announcement that elicited far more boos than applause from the assembled faithful.
After the announcements, Bill Gates appeared via satellite feed on a screen behind Jobs, to both applause and more than a smattering of boos. After Gates’ comments, Jobs lectured his followers. “We have to let go of this notion that for Apple to win Microsoft has to lose,” he said. “We have to embrace a notion that for Apple to win, Apple has to do a really good job. And if others are going to help us, that’s great, because we need all the help we can get. And if we screw up and we don’t do a good job, it’s not somebody else’s fault. It’s our fault.”
You know what happened over the next decade or so: Apple didn’t screw up, and the Mac lived on, to be joined by the iPod, iPhone and iPad. At the end of its most recent fiscal year, Apple reported that it had a $146.8bn hoard of cash, cash equivalents and marketable securities – just under one thousand times the amount that Microsoft had invested on that August morning in 1997.
Microsoft, by the way, sold off all of the Apple stock acquired in the deal sometime last decade. Had it taken those Series A non-voting convertible preferred shares it picked up in the $150m investment, and converted them to common stock when that option became available in August 2000 – and held onto them – they would today be worth around $11bn, give or take a few million clams.
As we said, things change.
9:25am Monday, 6 June 2005 – Jobs says of the Mac’s rumored move to Intel processors: ‘It's true’
As we mentioned before, Apple dumped the Motorola 680x0 line of processors beginning in March 1994, and switched to the one successful outgrowth of the AIM alliance, the PowerPC chip. By early this millennium, however, it became clear that as a desktop and laptop processor, the PowerPC was running out of gas.
Speaking at Apple’s Worldwide Developers Conference in June 2005, Steve Jobs explained why another processor switch was needed. Displaying a slide of a Power Mac G5 with the text “3.0 GHz?”, he told the assembled devs, “I stood up here two years in front of you and I promised you this. And we haven’t been able to deliver that to you yet.”
The next slide displayed a PowerBook with the text “G5?”, and Jobs said, “I think a lot of you would like to have a G5 in your PowerBook, and we haven’t been able to deliver that to you yet.”
IBM and Freescale, the Motorola spin-off, hadn’t delivered, focusing instead on parts for enterprise, not client, and on Sony’s PlayStation-centric Cell processor.
Jobs said that the major reasons to switch was the disparity between the future roadmaps of PowerPC and Intel chips’ performance per Watt – a metric that was about to sweep through the industry.
One more slide depicted another metric that thankfully hasn’t caught on: “units of performance”. “When we look at the future roadmaps projected out to mid-2006 and beyond,” Jobs said, “what we see is the PowerPC gives us sort of 15 units of performance per Watt, but the Intel roadmap in the future gives us 70. So this tells us what we have to do.”
And that was to dump the PowerPC and switch to Intel – despite the fact that Apple’s developers had just gone through another wrenching transition: that of moving from Mac OS 9 to Mac OS X, which Jobs acknowledged was an even more comprehensive transition from Apple’s first major switcheroo, from 680x0 to PowerPC.
“This was a brain transplant,” he said of the move to Mac OS X, “and even though these operating systems vary in name only by one, they are worlds apart in their technology.”
But to the assembled developers whose hearts were undoubtedly sinking, thinking of all the work they had ahead of them, Jobs had some good news. “I have something to tell you today,” he said. “Mac OS X has been leading a secret double life for the past five years.”
For those five years, he explained, Apple engineers had been “doing the ‘just in case’ scenario,” compiling each version of Mac OS X to run on Intel processors. “Mac OS X is cross-platform by design,” he said, “right from the very beginning” – which was version 10.0 aka ‘Cheetah’, released on 24 March 24 2001. (We’re not counting the public beta, ‘Kodiak’, release in September 2000.)
Jobs points to where in Apple's headquarters the work to compile Mac OS X for Intel took place
Even with Mac OS X – version 10.4, aka ‘Tiger’, at the time – ready and waiting for the Intel transition, there was still a boatload of work to do on both Apple and developers’ parts to make the switch. Jobs predicted that by WWDC 2006, Apple would have begun shipping Intel-based Macs, and that by WWDC 2007, he thought the transition would be complete.
At that August’s WWDC, Apple marketing honcho Phil Schiller announced the final systems to be Intelified: the new Mac Pro and an updated Xserve. The Mac Pro shipped at announcement, and the Xserve became available that October. The transition had taken just over one year, not two.
There’s one detail from Monday, 6 June 2005 that we’ve never been able to pin down, however. During his presentation, Jobs said that “our rules have been that Mac OS X must be processor independent” before he said that every version of it had been compiled to run on Intel processors.
Being processor-independent, has every version of Mac OS X also been compiled to run on ARM processors? After all, iOS is stripped-down version of Mac OS X, and ARM cores have been at the heart of every iOS device. And, for that matter, has iOS been compiled to run on Intel processors, as well?
Tuesday morning, 2 September 1997 – Jobs drives a stake into the heart of the Mac clone market
The question of whether Apple ex-CEOs Michael Spindler and Gil Amelio nearly destroyed the Mac, and whether Steve Jobs saved it from imminent death, can be answered in one word: clones.
When former sugar-water salesman John Sculley was ousted by Apple’s board of directors in June 1993, Spindler was plucked from his position as president of Apple Europe and installed as CEO. The company that he inherited, however, was hurting – Mac sales were slipping and developers were making like Rattus norvegicus, and abandoning ship.
Spindler decided to take drastic action and launch an effort that some observers had counseled for years: an Apple-sanctioned cloning program, in which Apple would negotiate a license for the Mac ROM to other manufacturers along with a license for System 7, the Mac OS at that time. In addition, clone manufacturers would pay an additional flat fee for each clone system they sold.
On the face of it, the clone program appeared to be a reasonable deal. It opened up a new revenue stream for Apple, and provided the all-important developer community with an expanded market into which to sell their Mac-compatible software and third-party hardware.
Spindler instituted the programme in December 1994, with start-up Power Computing, funded in part by Italian typewriter and computer manufacturer Olivetti, as the first licensee. Power Computing was beaten to market, however, by Radius, a now-defunct company founded by members of the original Macintosh team that made graphics cards, monitors, CPU accelerators and other Mac-compatible kit; Radius released its first clone in March 1995.
Power Computing not only offered systems more powerful than Apple's, its marketing was better, as well
Power Computing shipped its first clones one month later, and the floodgates opened. In May, Pioneer released a clone line in Japan, Mac CPU-accelerator maker DayStar Digital introduced a dual-processor clone in October and a quad-processor clone the following February.
Radius sold its clone division to scanner-maker Umax, Motorola’s StarMax line appeared in September 1996, and Japan’s Akia launched its own clones soon after. In November of that same year, Umax shipped its first clone under the name SuperMac, which it had acquired in the Radius deal. Even storage vendor APS got into the act with a clone line it dubbed M*Power.
However, rather than expand the Mac-compatible market, clones began eating into Apple sales.
Meanwhile, Spindler had been replaced by supposed “turnaround artist” Gil Amelio in February 1996, who was unable to turn around the sinking sales of the Mac line. Apple sold 4.5 million Macs in 1995, a number that slipped to 4 million in 1996. By the end of 1997, that number had sunk to a dismal 2.8 million.
Apple’s losses rapidly turned into gains for the original licensee, feisty Power Computing, which was able to release its clones with more powerful PowerPC chips more quickly than Apple could, and to do so at lower prices. Power Computing machines regularly beat out Apple’s Macs in magazine reviews, which carried substantial market-moving weight in the days before the internet.
If you wanted the latest and greatest Mac-compatible computer, you didn’t buy it from the Mac’s originator, you bought it from Power Computing. To be sure, clonemakers sold far fewer systems than Apple did – The New York Times estimated that of the 2.2 million Mac systems sold in the first three fiscal quarters of 1997, “perhaps 300,000” were clones – but they skimmed the profitable top of the market with their more powerful, more affordable machines.
Amelio didn’t stop the bleeding – but at the urging of Steve Jobs, Apple’s board of directors stopped Amelio. After being stripped of his authority by the board, he resigned, on 9 July 1997.
Amelio had been Apple’s CEO for 17 months, during which he can be credited with making many tough decisions to reverse Apple’s precipitous decline. But his unflagging support for the clone programme may have been his undoing. “No bones about it, I think it would be a big mistake if we abandon the clones,” he told MacAddict after his resignation.