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of a computerwhiz oncetossedout of his own company By CATHY BOOTH TEVE JOBSIS SITTING IN THE
Apple boardroom.Actually, he is slouchedlike a teenager in one of the cushy leatherchairs,his worn jogging shoesresting on the directors'table.The tableis very long, very impressiveand very empty. Just Jobs here,wearingshortsand an impish grin. The old boardof directorsat Apple is history, he says.He's about to leave for Boston,where he'll make that newspublic, alongwith a far more dramatic announcement. Onemorething,he says, feet still propped up on the executive woodwork-the company's headquarters in Cupertino,Calif., is history too. Eight storiesof corporateexcessare about to be abandoned."I hate this building," says Jobs."Thisbuildinghascometo symbolize everything that went wrong with Apple. It's aboutcorporatehubris.Greed."This is not a building that can make "insanely great"computerproducts. The rebel flag is flying over Apple ComputerInc., again,thanksto Jobs.The Silicon Valley visionarywho co-founded Apple in his father's garagein 1976,who launchedthe wildly successful Macintosh only to be booted by the corporatepinheadsin 1985,is backrunninghisfirstlove. No, he is not the chief executiveofficer (cso),nor evenchairmanof the board.But until there'sa new boss,Jobsis firmly at Apple's helm, and take it from us, the companywill never be the same.Take it too from the 1,600 Macintoshbelievers who gave him a standingovation at the Macworld Expo in Bostonlast week, then booed,hissedand finallysatin shockedsilenceas Jobsannouncedthat Apple'ssalvation would be a strategicalliancewith noneotherthan ... Bill Gatesof Microsoft. Understand,the idea of Jobsreturning to Apple is somethingakin to that of Luke Skywalkerreturningto fight what, until last week, cultists regardedas the evil empire. Gates,by comparison,was perceivedas a dweebDarth Vader,the billionairebad guy who usuroedthe idea of the Macintosh's Photographs for TIME by Diana Walker o-
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lobs reviews a tape ol Oracle boss Larry Ellison promoting Apple's new board. Despite running two companies,lobs has changed his life-style to free up more time at home for wife Laurene and their two children-and his computer
friendly point-and-click operating system for his now dominant MicrosoftWindows. Boo,hiss,a strategicallianceindeed.Is Jobscrazy?"Madmanat thewheel,eh?"he said,laughing,ashe walkedoffthe stagein Boston. American businesshas had its share of imaginativeentrepreneurs,malevolent bosses,boardroomplotterswho hatch latenight coups,strategicdecisionmakerswho make disastrousturns and heroic turnaround artistswho restorecorporateglory with breakthroughthinking and messianic zeal. Generally,that would describemore than one person.But Jobsis a one-man miniseriesof capitalismwhoseratings are risingagain.Within hoursof the announcement, Apple stocksoared33Voto $26.31. Sipping a celebratorywater on the plane ride home,Jobspointedout that peoplehad been so shockedthey missedthe big news: Microsoftwould be paying an undisclosed amount to settle claims that it had used seminalApple computerpatents."Three or
28
four weeksago,"saidJobs,"I calledBill and saidMicrosoftandAppleshouldwork more closelytogether,but we havethis issueto resolve,this intellectual-property dispute. Let's resolve it." With Jobs' no-nonsense negotiating,itwas donequicldy,with Gates not only promising to pay off Apple but eveninvesting$150million in nonvoting Applestock.The rebelscannowwithdraw to their original "campus"in Cupertinothe one without the fancy boardroomand live on to fight anotherday.
expensivetoy into a householdappliance. Insteadof writing commandsin computerese. Macintoshowners used a mouseto point and click on easilyidentifiable icons on the screen-a trashcan and a file folder. Jobs also paired the laser printer with the computer,thus sparkingthe desktoppublishing revolution. "We started out to get a computer in the hands of everyday people, and we succeededbeyond our wildest dreams,"laughsJobs. Jobsis intimidatingat first. He has,after all, been portrayedas an abusivemonHE TALE OF STEVEJOBSHAS LONG ster, and countlesscolleaguesattest to his been a Silicon Valley legend. It was arroganceand intolerance.But now, even during the weekof the higheststresshe has Jobs who, as a long-haired and facedin years,he exudeshis other side:the barefoot twentysomething, set in motion the revolution called the Zenlike calm and the impish aura that personalcomputer by making it makehim sodifferentfrom his archfriend I "user friendly" to the masses.Jobsdidn't and arch rival Gates,a man of competitive invent the machine; his partner Steve intensity and analyticalrigor. This JobslitWozniak was the real engineer. But Jobs erallylopesinto the room,and he keepsusunderstoodbefore anyoneelse the key to ing the word golly,So O.K.,golly,it's true transforming the computer from a geek's that the famed"RealityDistortionField"TIME. AUGUST18.1997
Preparationsfor the blockbuster speech take place at an old auditorium called the Castle. As he runs through the lancy audio-video segments, lobs talks turkey with Gates. Outside, aides are giddy about tobst leturning speech
,ii*ffi, that renownedJobsianability to bamboozle and bedazzle-still works, but it's a slower seductionthesedays,not a manic pitch. At 42,he may havemellowed,but asa motivator and marketerhe still hasno equal. The adoptedson of working-classparents,Jobsbecamea millionaire by age25, an Americanicon by age30 and corporate historythe sameyear,all thanls to Apple.It would be easyto read his return-l2 years after he wasbootedby the board-as a moment of sweetrevenge.But for Jobs,who grew up idolizingthe Hewlett-Packardideal of an egalitarian workplace where ideas camebeforehierarchy,returning to Apple is somethingakin to rescuinga son before he loseshimselfto boozeandbad company. There hasbeen a literal deathwatchon Apple in recentweela. It had salesof $9.8billion last year, but revenues have dropped significantlyin 1997.Losseshavemounted-more than $1.5billion over 18months. Jobsprefersto seehopein the 20 million to 25 million userswho remain.He evenhas
a hard time uttering the D word. "Apple hassometremendousassets, but I believe without some attention, the company could,could,could-I'm searchingfor the right word-could, could ... " He pauses and givesin: "die." All lastweek,JobsallowedTtvs to follow him as he negotiatedhis d6tentewith Gatesand prepared for the Boston meeting, then headedbackto Californiato work at what he calls his "preferred squeeze"Pixar Animation Studios,the Jobscompany that createdthe 1995hit movie ToEStory, the first animated feature film made entirely by computer. Pixar represents pure creation,a whole new era of entertainmentthat blendsgoodstorytellingwith computers."It's so fun at Pixar," he says, reveling in his new role as Hollyrvood mogul on the make.Apple, on the other hand, requiresheavylifting. "It's like turning a big tanker. There were a lot of lousy dealsthat we're undoing." So why go back to a companythat has TIME. AUGUSTI8. I997
ejectedcnos like somanybad diskettes?"I wouldn't be honestif some days I didn't questionwhether I madethe right decision in getting involved,"he says."But I believe life is an intelligent thing-that things aren't random." In other words,there'sa reason why his path has crossedApple's again.A chanceto pay penance?Or perhapsto prove he hasgrown up. On Monday, two daysbefore the fateful announcement,Jobshasthe run of Apple headquarters.Most of the executive suitesare alreadyempty, their inhabitants gone to Macworld or just plain gone.Apple's managementranks have been thinning at an alarmingrate.Only Fred Anderson, the chief financial offrcer,is roaming the halls asJobsnegotiateswith Microsoft by phone and worl<son a quickie video of the new Apple board he virtually handpicked-naturally to include his buddy,Oraclechief LawrenceEllison,who considered his own takeoverbid of Apple earlier this year. "We caught Larry Ellison in the
29
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Preparationsfor the blockbuster speech take place at an old auditorium called the Castle. As he runs through the fancy audio-video segments, lobs talks turkey with Gates. Outside, aides are giddy about Jobst leturning speech
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that renownedJobsianabilityto bamboozle and bedazzle-still works, but it's a slower seductionthesedays,not a manic pitch, At 42,he may have mellowed, but as a motivator and marketer he still has no equal. The adoptedson ofworking-classparents,Jobsbecamea millionaire by age25, an Americanicon by age30 and corporate historythe sameyear,all thanksto Apple.It would be easyto read his return-l2 years after he wasbootedby the board-as a moment of sweetrevenge.But for Jobs,who grew up idolizingthe Hewlett-Packardideal of an egalitarianworkplacewhere ideas camebeforehierarchy,returning to Apple is somethingakin to rescuinga son before he loseshimselfto boozeandbad company. There hasbeen a literal deathwatchon Apple in recentweeks.It had salesof $9.8billion last year, but revenueshave dropped significantly in 1997.Losseshave mounted-more than $1.5billion over 18months. Jobsprefersto seehopein the 20 million to 25 million userswho remain.He evenhas
a hard time uttering the D word. "Apple hassometremendousassets, but I believe without some attention, the company could,could,could-I'm searchingfor the right word-could, could ... " He pauses and givesin: "die." All lastweek,JobsallowedTtun to folIow him as he negotiatedhis d6tentewith Gatesand prepared for the Boston meeting, then headedbackto Californiato work at what he callshis "preferred squeeze"Pixar Animation Studios,the Jobscompany that createdthe 1995hit movie Toy Story, the first animated feature film made entirely by computer. Pixar represents pure creation,a whole new era of entertainmentthat blendsgoodstorytellingwith computers,"It's so fun at Pixar," he says, reveling in his new role as Hollywood mogul on the make. Apple, on the other hand,requiresheavylifting, "It's like turning a big tanker. There were a lot of lousy dealsthat we're undoing." Sowhy go back to a companythat has TIME. AUGUST18.1997
ejectedcnos like somanybad diskettes?"I wouldn't be honestif some days I didn't questionwhether I madethe right decision in getting involved,"he says."But I believe life is an intelligent thing-that things aren't random." In other words,there'sa reasonwhy his path has crossedApple's again.A chanceto pay penance?Or perhapsto prove he has grown up. On Monday, two daysbefore the fateful announcement,Jobshasthe run of Apple headquarters.Most of the executive suitesare alreadyempty, their inhabitants gone to Macworld or just plain gone.Apple's managementranks have been thinning at an alarmingrate.Only Fred Anderson, the chief financial officer, is roaming the halls asJobsnegotiateswith Microsoft by phone and works on a quickie video of the new Apple board he virtually handpicked-naturally to includehis buddy, Oraclechief LawrenceEllison.who considered his own takeoverbid ofApple earlier this year. "We caught Larry Ellison in the
29
EUSINESS SanJoseairport last Friday before he left for vacation," saysJobs, chuckling, as he watches raw video footagein the boardroom. "Apple is the only life-stylebrand in the computerindustry," Ellison is saying onscreen."It's the only companypeople feel passionateabout.My company,Oracle, is huge; IBM is huge; Microsoft is huge;but no one hasincredibleemotions with our companies."Jobsis pleased. All day long, the de facto helmsman races in and out, trying out bits of his Wednesdayspeech.He is aware of the naysaying,that Apple, with its single-digit market share,is doomedto fall before the Goliath of Microsoft.At Macworld, he will stressinsteadApple's domination of education and desktoppublishing. He fiddles with a paperclip ashe thinks out loud. "What ifApple didn't exist?Think about it. TIvn wouldn't get publishednext week. Some70Voof the newspapersin the U.S. wouldn't publishtomorrowmorning.Some 60Voof the kids wouldn't havecomputers; 64Voof the teacherswouldn't havecomputers.More than half the Websitescreatedon Macswouldn't exist,"he says."So there's somethingworth savinghere. See?" Painful asit is for a founding father,he keepsup daily with the rumblesaboutApple on the Internet, the world's most extensivegossipmill. The chatter is of prory fights and takeovers,the frustrationsvented by clonemakersand Mac usersalike.He understands;he really does.He gaveup on Apple himselfjust two monthsagoand unIoadedthe 1.5million shareshe got aspart of the $424 million Apple paid him for NeXT SoftwareInc. last December."Yes,I sold the shares,"he says."I pretty much had given up hope that the Apple board wasgoingto do anything.I didn't think the stockwasgoingup." He ruefully notesthat he sold them in June when the price was around$15a share,about$16million less than they'd be worth now. Todayhe holds a symbolicone shareof Apple-and is unapologeticabout not holding more. "If that upsetsemployees,"he says,"I'm perfectly happyto go home to Pixar." Within weeksof his sale.of course.the board oustedcno Gilbert Amelio after 17 monthson thejob. Jobssaysthe boardcame to him and offeredhim both the cro's and chairman'sjob. "I thoughtaboutit," he admits, "but decidedit wasn'twhat I wanted to do with my life." Tahng the chairman's job, in particular, he said would "scare away" any real candidatefor the cuo's job, givenJobs'penchantfor down-your-throat management. Yetit maynot be much better for the new cEo to havehim sitting on the board, especiallythe reconstitutedactivist board of Jobsalliesthat he hopeswill keep Appleon the right path."I've agreedto be 30
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a board member, and that's all I can give. I have another life now." HE STEVEJOBSWHO IS CURRENTLY
running two sophisticated companies lives in a turn-of-the-century English-stylecountry house in Palo Alto with his wife Laurene, 33, their two young children and his l9-year-old daughter Lisa, home from collegefor the summer.The houseis run with a distinct 1960sflavor. Laurenehas planteda gardenof wildflowers,herbsand vegetablesall around. The rooms are sparselydecorated,the only extravagances being Ansel Adamsphotographs.We dine as the Jobsesalwaysdo: both are strict vegans,eatingno meat products.Dinner is pastawith raw tomatoes,fresh raw corn from the garden,steamedcauliflower and a saladof raw shreddedcarrots.While the adults eat, their six-year-oldson picks TIME, AUGUSTI8, 1997
lemonverbenaand otherherbsin the garden for the after-dinner tea. His reward is a tickleand beingtuckedinto bed by Dad. Over dinner, Jobstells how Laurene overloadedhis circuits eight years ago while he was speakingat nearby Stanford University."I couldn't take my eyesoff her," he saysof the brainy blond business schoolgraduate.He "bagged"a business dinner to be with her, he says,and they've beentogethereversince.Conversationis a mix of politics,Laurene'swork settingup a mentor group for a nearbyhigh schooland talesof a presidentialvisit last year when Bill Clintonrangup and invitedhimselfto dinnersohe couldmeetwith SiliconValley "We had to rent a Dumosterto executives. cleanout the housebeforethey came!" saysJobs,whose prenuptial housingstyle was "spare,"if that'sthe term for lacking furniture. The couple giggle over their searchfor cheapwine glassesto servethe
a better place for it." And so that's how Apple and Microsoft, SteveJobs and Bill Gates,finally sealit-on a cell-phonecall. ;*.e*rilii . f+*t*|F
HE DEAL IS VINTAGE JOBS. AMELIO
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President.The menu was,naturally,vegan. TuesdayJobsheadsfor Boston,traveling commercial,albeit first class.Once there,he surveysthe Castle,a puny downtown venue chosenmonths ago for what wasexpectedto be a snoozerofa speechto Mac enthusiastsby Amelio. Jobshas assembled an army of showmento orchestrate his-and Apple's-return to competition. There is theatrical lighting and a concert-qualitysoundsystem.He staresat the megacolumnswith the Apple logo cut into them, grimacesat their "Hitlerish" appearance,but decides it's too late to do anythingaboutthem. Then he setsto work on his slide-showpresentation-run from an IBM ThinkPad. The software,thank heaven,is from his old company,NeXT. Lessthan 12 hours before his big announcement, nobody here knows yet about the bombshellto come.In fact,Jobs is still negotiatingit here at the Castle-on
a cell phone."Hi, Bill," you hearhim sayin the echochamberof the old hall. Then his voice drops, and for nearly an hour he paces the stage, running through lastminute detailswith Gates.All the while, he Ieansover his computer, paces,lies down on the stage,paces,lurks in dark corners, pacesand talks,pacesand talks. This is the fateful call for the boy tirevolution, tansof the personal-computer meantto settlethe war. At one point, talking aboutApple,Jobssays,"There are a lot of good things, happily-and a lot of screwed-upthings."Then,to his crew,he yells, "Have we got satellite contact with the other slde?"Assuredthis hasbeen taken care of, he answers a question from Gatesabout what to wear on the morrow ("I'm just goingto weara white shirt," he assureshim), and he finally endsthe conversationwith a heartfelt"Thank you for your supportof this company.I think the world's TIME, AUGUST18,1997
beganthe processof repairing relations between the two longtime rivals. But once he was out the door at Apple, Jobs contacted Gates to try to get talks started again.Gatesdispatchedhis chieffinancial officer, Gregory Maffei, who met Jobs at his home. Jobs suggestedthey go for a walk. Grabbinga coupleof bottles of mineral water from the fridge, the two took off for a stroll around PaloAlto. Jobswasbarefoot. "It was an interestingscene,"Maffei recalls."It was a pretty radical changefor the relationsbetweenthe two companies." The two walked for nearly an hour, through PaloAlto's green university area, asthey poundedout the detailsofa potential deal.Jobs,Maffei says,was "expansive 'These are things and charming. He said, that we care about and that matter.'And that let us cut down the list. We had spent a lot of time with Amelio,and they had a lot of ideasthat were nonstarters.Jobshad a lot more ability. He didn't ask for 23,000 terms.He looked at the whole picture, figured about what he needed.And we figured he had the credibility to bring the Apple people around and sell the deal." That credibility would be testedasJobs delivered the speechto the faithful. And then he was there, on the giant screen. Gatesappeared,amid boosand hisses,to announcethat Microsoft would invest in and cooperatewith Apple. Jobs is disappointedby the "childish behavior"of those who booed."I'm suresomepeoplewant to cling to old identities. I was a little disappointed at the unprofessionalreaction.On the one hand, people are dying to get the latest releaseof Microsoft Office on their Macs,and on the other hand, they're booing the cno of the companythat puts it out. It seemsreallystupidto me." He adds,"Apple has to move beyond the point of view that for Appleto win, Microsofthasto lose." Until a new cEo is on board, Jobsis up to his trim 89-cm-waistjeansin determining Apple's future. "I'm here almost every day,"he said,sitting in the boardroom last week, "but just for the next few months. I'm really clear on it." His position is fairly critical to the company's success,accordingto Edgar WoolardJr., chairmanof E.I. DuPont and one of only two board memberswho survived the latest assault."It's conceivableApple could turn around without Steve, but the probability goes up significantly with Steve.Steveis noted for his intellect and vision,but he can alsobring a spirit of en-
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thusiasmto usersand employeesalike." He can alsobuy that spirit. To restore morale,Jobs says,hewentto thematwith the old board to lower the price of incentive stockoptions,which had becomevirtually worthlessasthe shareprice sagged.In Silicon Valley,where job opportunitiesare as commonasPorsches, stockoptionsare crucial to retain employees.When the board membersresisted,he pushedfor their resignations.Jobsrepricedthe option at $13.25. Apple employeeshavealreadymade1007o. There is not one area of Apple that doesn'tbearJobs'fingerprints.Takeproduct development."We've reviewed the road mapofnewproductsandaxedmorer thanTIVoofthe projects,keeping the 30Vothat were gems.Pluswe're adding new ones that are a whole new paradigmof lookingat computers,"he says."Theproductteamsat Apple are very excited. There'sso much low-hangingfruit, it's easyto turn around." EXT ON THE
off. Elevenyearsago,he clicked his mouse on the Hollywood icon and bought Pixar from StarWars director GeorgeLucas.He hasdumped upwardsof $55 million of his own moneyinto the ventureand fairly burbleswith that famedcharismaoverhis new mission:marrying SiliconValleytechnology to Hollyvvood'screativegenius.His studio becamethe first-besides Disney-to hit it big with an animated movie, ToE Siorg, which cleared a respectable$37 million for the fledglingstudio.Jobsowns 60Voof Pixar, which is valued at anywherefrom $700million to $800 million. Just enteringthe door at Pixar'shead-
LIST IS AP-
ple's fuzzy marketing message. (Quick: Can you think of it?) Jobs dismissed Apple's ad agencyand held a "bakeoff' for the account among three firms. The winner was TBWA ChiaVDay,the companythat created Apple's legendary 1984 Super Bowl ad (only to be fired). Jobsis wildly enthusiasticabout the new ad. which features the theme "Think Differently," but when he plays it for his inner team at the quarters in the San FranCastle Tuesday night, the group nixesit asnot readyfor prime time. cisco suburb of Richmond Lookfor it soon.however."There's tells you all you need to a germ of a brilliant idea there," knowaboutthe differencein culturesbetweenPixar and Jobsrhapsodizes. The ironic moment The key,Jobsbelieves,is to take arrives: Apple. Pixar is what Apple Gates, in advantageofthe Apple brand itself. usedtobe:cool.Everybody's full Orwellian "What are the great brands?Levis, office here is the samesize, Coke, Disney, Nike. Most people specter, announces evenJobs'.He'sin shorts;so would put Apple in that category," that Microsoft will is everybodyelse. he says."Youcouldspendbillions of invest $15O million During our visit, Toy dollarsbuilding a brand not asgood in Apple. The Story's Academy AwardasApple.Yet Apple hasn'tbeen do- crowd boos him winning director,JohnLasing anything with this incredible seter, is excited about a asset,What is Apple, after all? Apple is "bug cam" the sizeof a matchbook.It was aboutpeoplewho think'outside the box,' designedon a lark by Pixar engineersto peoplewho want to usecomputersto help photograph real bugs for A Bug's Life, the them changethe world, to help them cre- first in Pixar'sfive-picture deal with Disate things that make a difference, and not ney. The hallwaysare crawling with picjust to get a job done." tures of exotic bugs and plants that will Althoughmany computerwonks still eventuallypopulatethe movie. "It's way think Apple is too tempting for Jobsto re- cool working here," saysLasseter."The sist,the truth is that he'sbeenmuch better atmosphereis fun. We respect creative at building new companiesthan running peopleand makethem feel satisfied." existingones.Pixar,his latestlove,is taking Musins on the differencesbetweenthe
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TIME. AUGUST18.1997
; +â&#x201A;Ź:====*'=:ffi computerbiz and the animationbiz, Jobs notes, "Look, you work on a technical product, and ifyou're really lucky, it ships. If you're really, really lucky, it's a hit and lasts a year. If you're in the pantheon of products it lasts a decade,then it rapidly becomesa sedimentlayer on which the next layer of technologyis built. I don't think you'll be ableto boot up any computer todayin 20 years." On the other hand, animated films havean infinitelife cycle."SnotoWhitehas sold28 million copies,and it's a 60-year-old production,"Jobs pointsout."Peopledon't read Herodotusor Homer to their kids anymore, but everybodywatches movies.Theseare our myths today. Disney puts thosemyths into our culture, and hopefully Pixar will too. At Pixarwe'rejust getting started,and it's very magical. It's like the computerindustrywas in the earlydays." Jobsis working hard to make Pixar a brand name aspowerful as Disney's.Michael Eisner, head of Disney,sayshe doesn'teventhink of the fwo companiesas separate anymore."We are joined at the hip, at the computer and at the soul," he told TIvn. "Pixar'ssuccessis not a fluke. One thing I always think is essentialis enthusiasm, and SteveJobsis massively enthusiastic.Jobs'bravadois his charm. He's a seriousbusinessman. but he's out there with his charisma.It's fun to be with him." Unlike Apple, Pixaris expanding, havinggonefrom 175people to 375 this year alone.The original Richmond studio now has an outpostworking busily on a direct-to-videosequelto Toy Story, andthere'sa mysteriousthird major project in the works too. Jobshasplansfor a new studio,to sprawlon 6 hectaresin industrialEmeryville,nearBerkeley.Interior plans have been carefullydrawn-before the exterior-to ensure a crosspollination of ideas. And of course,he says,all the officeswill be the samesize. For the next few months, however, SteveJobs'mainjob will be Apple.The MicrosoftDeathStarmaybe rotatingin friendly orbit, butJobsmuststill find a new leader for the Mac troops.Then he canresumebeing a Hollywood mogul and a model dad, right? Even after this amazingweek, Jobs insistshe will passthe disketteto a new generationand then standasideto let it run the program.But Appleis hisfirst child,andyou know how hard it is to let the first child go. Watch for the sequelhere. -with rcportin1 hy David5. JacksonlSan FranciscoandValerie Marchant/New York
IFY(lU GAII'T BEAT rEMrrr Will Bill Gates'bailout saveApple-or just strengthenMicrosoftt hand in the Web wars? By M|GI{AEL IGANTZ HEYD BEEN DUELING FOR MORE
than a decade,the binary wonders of the computer age: Steve Jobs,the flower-child dreamer whoseApple Computer brought the world the Mac's cheerful desktop icons, and Bill Gates, the brilliant and ruthless competitor whose Microsoft tamed the world with Windows after sneaking in behind those scary columns of oos code. Their battle for control of the home computer suggested'60s barricades re-erected for the corporate'80s: Yin vs. Yang.Luke vs. Vader. Kennedy vs. Nixon. Jeansvs, Pinstripes.Art vs. Commerce.' And the winner is? We're so conditioned to Hollywood's underdog victories that it cameas a shocklast week for Commerce to whip Art, hands down and forevermore. The end came at the MacWorld Expo in Boston,with what will surely go down as one of our era's iconic images: Gates'tousle-hairedgrin looming from a giant video screenover the tiny figure of Apple "adviser" Jobs, who stood on the podium watching his strange bedfellow confirm Microsoft's decision to bail out the seminal Silicon Valley start-up. The lesson?Art may cast a brighter light in the short term, but Commerce
generally wins big in the final tally. The high-tech world had spentthe pastmonth wonderingwhich Apple-preservingrabbit Jobs would pull from his hat during his MacWorld speech. Now we know: the plan is to backstabApple'sfriends by embracing their mutual enemy in one naked grasp for survival. The era of "competition between Apple and Microsoft is over," Jobs told the stunned conclave, announcing Microsoft's $150 million investment TIME, AUGUST18,T997
and softwarepromises.They could all just get along. Then Gates'smugsmile blossomedon that vast Orwellian screen(a Stalinesque edifice uncannily resembling the one that got shattered in the famousfirst Mac ad in 1984),and the Microsoftleaderregaledthe Apple masseswith his boundless affection for the operatingsystem(OS)whosecommercial viability he had spent much of his adult life systematicallyundermining. "We
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BUSINESS think Apple makesa huge contribution to the computerindustry," Gatesassuredthe room, respectfully observingthe taboo againstspeakingill of the dead-or, ahem, the gravelyailing. Let'sput it this way: you didn't hear the man extolling the wonders of Applea few yearsago,when the Mac still had market relevance.Gatescelebrating Apple today is like the U.S.Departmentof the Interior celebratingthe spottedowl by fencingin its nestinggroundsand trying not to let the lastonesdie. The faithful's reaction to the GatesJobs duet was pretty much what anyone conversantwith the Apple cult would have "Masssuicideplannedtonightin expected. SiliconValley," reada typicalpostingto the newsgroupalt.dastroy.microsoft. And the MacWorldcrowd booedGates'imageeven more than Jobs'turncoat words. But there were cheerstoo. "Everybodywas booing Microsoft,"saysattendeeMark Lilback,24, "and then they were like,'Oh, Bill Gatesis listeningto this,' and they startedto applaud."Who couldblamethem?Theyknew the truth: they were a conqueredkingdom's starving partisans.Booing Gates meant biting the only hand left with the wherewithalto feed them. Wall Street,by contrast,showedlittle concern over Apple's dire predicament, bumping the company'sstock up by more than half in the daysfollowing Jobs'canny capitulation.What changein Apple'scirjustified this startlingre-evalucumstances ation?Besidesbulng stock,Microsoftpropped up the tottering Macintosh platform by pledgingthreeyears'worthof Mac versionsof its office softwareand cooperation uith Apple on upcomingproducts.Apple's
I
richestboon,though,maybe psychological; by promisingto publish Mac softwareinto the next century, Microsoft lets Mac customers and developersalike trust the platform to exist that long. And Apple cultists don't need much encouragementto stay psyched. "Macintosh customers have proved to be incredibly stubborn," says Roger McNamee,co-founderof the hightech investment firm Interval Partners. "and where there are sfubborncustomers, there is hope." Salesof the recently releasedMac OS8, for instance,the first major Mac updatein a decade,havebeenfour times Apple's expectations.And the company can still point to considerableleadsin the educationand graphicsarenas. UT THE WIDE-ANGLE YIEW IS GRIM.
A decadeofbungledopportunities and misguidedinvestmentshas Ieft Apple in an intractablenegative spiral:lower market share meansfewer developers,which meanslesssoftware,which meansfewer customers.which meansstill lower market share.Not pretty.Eventhe belateddecision to licensethe Mac OSto clonemakersonly drainedApple of hardwarerevenue. What now? Microsoft'sbear hug buys Applea few months'breathingroom,andreplacingmostof the company'sreviledboard of directorswith techieslike Oracle'sLarry Ellison and Intuit's Bill Campbellwasa necessary-and possiblyhelpful-housecleaning. Now Jobsmust recruit somedynamic marketing-mindedluminaryaschiefexecutive to get the companymoving forward. Regainingtraction will require what Jobslastweekcalled"a new paradigm."Just
- APRIL1983
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Apple unveils the[aserWriter, for a laser orinter
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what this might consistof, though, is unclear. Build low-costnetwork computers? Split up into hardware and software siblings?Orjust rely on nextyeafs expectedreleaseof the post-Macoperatingsystem, Rhapsody, basedon Jobs'NeXTtechnolory, whichAppleshelledout $424million for last December?True believerscall Rhapsody the greatestOSeverandApple'ssavior(Tim Berners-Leedid inventtheWebon it); skeptics call NeXT a marketplacefailure and an albatrossApple should have left around it's hard-very, SteveJobs'neck.Regardless, very hard-to seeany OS other than Windows-probably the powerful NT versionflourishing under digital network' natural tendencytowardmonopoly. That ]ast word still obsesses the U.S. Justice Department'santitrust warriors, whoseraisond'6tre lies in putting asunder that which the free market hath joined. Industry wagsswiftly dubbed Microsoft's Apple alliance"antitrust insurance,"and with goodreason:spendingmillionsto ensure his rival's very survivalshouldstymie the government'surge to halt Gates'long march toward market dominance. But that'sjust the mostobviousillustration of Gates'unequaledstrategicgenius, His $150million has alsowon him several subtlervictories.Savingthe Mac maintains his $300 million shareof the 20 millionstrongMac-userbasewhile increasingApple'srelianceon Microsoftsoftwareto keep the public hookedon its computers.The deal,saysMike Homer, a Netscapeexecutive vicepresident,"puts the wholeapplication basein Microsoft'shands.And if they controlthat, they controlthe Macintosh." And there's plenty about Macintosh
Apple's of rsonal intheU.S.:grfu share computer sales
Sources: AP:Chronology of Eventsin lheHistoryof Microcomputers, KenPolsson; Datastream; Computer Intelligence
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that'sworth controlling.Gates'richestprize maybeApple'sintellectualproperty,both silicon-andcarbon-based. The graphicdesigners,softwaregurusand other artsytypeswho constitutethe Mac'smost fervent cadres are a disproportionatelyinfluential market niche. Sometwo-thirds of all Websitesare thoughtto havebeencreatedon Macs."It's very athactiveto Microsoft to haveaccessto cutting-edgeMac developers,"saysKurt King, an analystwith SanFrancisco-based MontgomerySecurities,"particularlyin areas like video streaming and other graphics technologiesthat representthe likely future of Internet content."Ditto Apple'stechnology patents,which under the new crosslicensingagreementwill go from causing endlesslitigation.(the Mac faithfirl will surepayment ly considerMicrosoffsundisclosed toApple to settleinfringement claimsde facto proof that Gatesknowshe stoletheir OS) to tecomingweaponsfor Microsoftcoders to wield when the time comes. And the time is now; the turf is the Web; and the enemy is Netscape,whose browser market share still dwarfs Microsoft's.The Apple deal makesMicrosoft's Internet Exolorer the default browser for all future Mics, yet anothercoupfor Gates, who is painfully aware what a threat the Web posesto the OS standardswhoseimplacablerigidity led to Microsoft'srise in the first place.Gatesspent the Web's first two yearspretending it didn't matter and the next two franticallyrefocusinghis company on the Net and snappingup anything that might further that goal(seechart). The direst threat to Windowshegemony may be Java,the
MARCH 1988 ApplesuesMicrosoft for copyrightinfringement
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Bill Gates has spent lhe past few years buying anything that might help his company rule the lnternet WEBTV April '97, $425 million. Puts the Web on home TV screens PROGRESSIVE NETWORKS luly '97, 10% stake. Live audio and video delivered over the Web COMCAST lune'97, $1 billion invested. Speedy Web access via cable lines MSNBC Dec.'95. 24-hour cable/online news venture with itgc Web-mindedprogramminglanguagecreated at Sun Microsystemsin the early'90s. Java'sgreatstrengthis its "portability"; in a Java-centricfuture, developerscould write programsnot for one OSat a time but for the JavaVirtualMachine,the softwarethat could run numerousnext-wavecomputers:PCs, smart cell phones,stripped-downnetwork computersand soon. "What shouldApple do next?"asksSun chief executiveand Java evangelistScottMcNealy."Put I00Voenergybehind Java.Innovate,competeand add value.That'sso obviousto me that I can't pretendthere'sanotherstrategy." McNealywill need all the allieshe can get.Lastweek"sdeal,which commitsApple to developingaJavapladorm with Microsoft JUNE 1993 Michael Spindler is named
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(Appleis alsofree to parbnerelsewhere),was alan attack on the SunL/Netscape/Apple liance that would useJavato fight Microsoft for control of the Web. Gateswantsa proprietary Javapladorm optimized for Windows. This deal moves him closer to that goal while nudging his rivals further from their own. "Netscapecould have shored up the Macintoshsituation,"saysDave Winer, an early Mac developer."Samewith Sun.They could have given Apple $150 million. MiThey just weren'tplayrngstrategically. crosoftwas." Microsoftalwaysis, and that'swhy Microsoft almost alwayswins. Whether Jobs can flourish by bargainingwith the master is very much open to question.Can Apple survive?Sure, and the spotted owl will probablyhang in there too. The Mac remainsthe most usable,intuitive operating systemaround (this writer still loyallytotes his ultralight PowerbookDuo on any trip that'sgoingto strandhim overnightwithin crouchingdistanceof a phonejack), and it will never disappearentirely. As long as there are wild-eyed digital artistsand idealistic undergradswhose Macs mean to them what the Beatles'AbbeyRoad did to their parents,there will be a place-albeit a small one-for the companvfrom Cupertino, Calif. Still, it must be a comedofn for Jobsand his old pals to slip from visionary championsto fringy cultists in a mere decade.Oh, well. As shootingstarsfrom Madonnato Newt Gingrich could tell you, that's the coolestthing about being a cultural icon: by the time the market goes southon you,you'vealreadychangedthe world. -With reportingbyDanielEisenbe6l New York and tanice MaloneylSan Francisco
A U G U S1T9 9 5 Microsoftreleases Windows 95.Onemillion cooiessellin the --------r firstfourdays ,N
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Amelio resigns; J o b si n control
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Microsoft ships Windows 3.0as anincreasing number ofPC clones enter the marketplace
ocroBER1991 Applelaunches the PowerBook, success aninstant
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Appleunveils the handheld Newton, aninstant floo
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Apple unveils thePower Parts shortages Macintosh. ,,, E l? i1 tlfl:i cause $1billion inback orders l]}fii lflr$.{11$i Apple buysJobs' _JANUARY1994 computel company; he Mac returns asanadviser Applefinallypermits
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