It is so hard to remember, given Apple’s string of hits, the resulting ubiquity of its later products, and the dominant role it eventually assumed in our culture, that this rise was entirely unexpected, and a surprise even to the people who engineered it. One little thing led to another. One success, one particular challenge, could spur thoughts about another product, or a different iteration of an existing product, or a whole new channel of revenue. As Steve liked to say, “You can only connect the dots of how things really happened in hindsight.” Eddy Cue remembers a day in late 2003 when he was waiting for a plane and he looked around the airport lounge at the other passengers waiting with him. Perhaps a dozen folks were listening to music on iPods, earbuds in place; a handful of people were working on PowerBooks with the distinctive white apple silhouette glowing from the back of the lid; and only one guy was tapping away at a laptop PC. “Holy shit, I thought,” Cue recalls. “We’re really onto something here. We didn’t really have time to lift our heads up and look around, you know? But there it was. It was cool.”
AS STEVE WAS so fond of saying at the end of his meticulously stage-crafted keynote speeches, there was “one more thing” in 2003. In the late summer, he passed a kidney stone and went to the doctor for an ultrasound follow-up, to ensure that there weren’t more. In forty-nine years, Steve had never had any serious medical conditions, and when a urologist saw a shadow on the ultrasound and called to urge him to come in for a follow-up visit, he ignored her request. To her credit, she harangued him, and, finally, he returned to see her in October for what he figured would be a routine scan. The results were shocking: he had what appeared to be a cancerous tumor on his pancreas, a scary prognosis that often means the victim has just a few months to live. The next day brought news that what Steve actually had was a slower-growing, more treatable condition—something called a pancreatic neuroendocrine tumor. Both he and Laurene heaved a half-sigh of relieve. But the emotional see-saw of the two days had been exhausting. It was only the beginning of a slow-motion process that would ultimately prove to be beyond Steve’s control. And it came at the very moment when his efforts to will his company to success were finally starting to pay off in unimaginable ways.
Chapter 12
Two Decisions
Steve was presiding over a sprawling, growing business that was becoming more demanding by the day. In 2003 and 2004 alone, for example, Apple upgraded its entire product line. The four-quadrant structure still applied to personal computers. Consumers looking for a desktop computer were treated to the transition from the whimsical “sunflower” iMac G4, whose sleek flat-screen monitor swiveled on a post that rose from a bubblelike computer case, to bigger iMac G5s, slablike affairs that packed their entire computing innards behind a flat screen encased by a sleek white plastic frame. The Power Mac G5 was a formidable upgrade of Apple’s tower computer for businesses and power users, and received critical hosannas. Laptop buyers were given the choice of white or matte black plastic iBook G4s or the aluminum PowerBook G4s, which came in three different screen sizes. But between the Internet, home networking, music, and the software applications division, Apple was now churning out much more than just personal computers. New versions of iMovie and FinalCut Pro rolled out, along with a cool new application called GarageBand, which let you record and edit and mix musical compositions on your Mac. Apple also introduced a new version of its OS X operating system called Panther that came loaded with its own browser, Safari. Two new keyboards were introduced, one of them wireless. Apple’s beautiful flat-screen Cinema Display monitors grew bigger and sharper. The company that had pushed harder than any other to make Wi-Fi the standard protocol for networking introduced Airport Extreme, a heavy-duty Wi-Fi server for home users, and Airport Express, which could extend a Wi-Fi network throughout an entire McMansion. For users who wanted to make their online chats visual, the company started selling iSight, a Web camera that perched atop their computer monitor. A line of Web servers called Xserve, aimed at businesses, also got an upgrade. And last, but hardly least, iPod users got two special treats in 2004: the sleek and slender iPod Mini, and an iPod Classic with a color screen that could display photos.
Apple was on a roll. The iPod seemed to have years of growth ahead. The product line was focused, beautifully made, and popular. But, of course, Steve didn’t see this as cause for celebration or rest. He saw it merely as the foundation for his next “dent in the universe.”
Jim Collins, the bestselling author of the management classics Built to Last: Successful Habits of Visionary Companies and Good to Great: Why Some Companies Make the Leap … and Others Don’t, has a wonderful phrase to describe an essential characteristic of great leaders: deep restlessness. Collins applies the phrase to Steve, one of the two great leaders who inspire him the most (the other is Winston Churchill, the great English politician who was prime minister during most of World War II, from 1940 to 1945, and again from 1951 to 1955). Collins believes this restlessness is far more important and powerful than simple ambition or raw intelligence. It is the foundation of resilience, and self-motivation. It is fueled by curiosity, the ache to build something meaningful, and a sense of purpose to make the most of one’s entire life.
Collins and Steve got to know each other when Collins was a young faculty member at Stanford University’s Graduate School of Business from 1988 to 1995. During Collins’s first year teaching entrepreneurship, he asked Steve to conduct a session with his students, and they met for the first time. Even though NeXT was not exactly a rousing success, and Pixar was still finding its way, Steve was charismatic, witty, and gracious. Collins, who remained periodically in touch with Jobs throughout his life, believes those years were the best time to meet Steve. “You would have wanted to meet Winston Churchill in 1935, when he was out of favor and no one was paying attention,” he says. “Churchill had his detractors, which is not an uncommon experience for great men. But in the end you judge them by the big picture, the arc of how everything unfolded.” Churchill, like Jobs, suffered humiliating setbacks early in his career, and persevered through a long, arduous climb back to an even greater prominence.
Steve’s restlessness hadn’t always been an advantage. When he was younger, his attention could flit from one project to another, as happened when the Apple III development effort suddenly seemed mundane after he’d seen the potential of graphical computing at Xerox’s Palo Alto Research Center. Founding NeXT so shortly after leaving Apple under a cloud in 1985 was abrupt, as was his purchase of the computer graphics engineering team that would become Pixar. Back then, his restlessness sometimes seemed like impulsiveness. But he never gave up. He didn’t ever quit on Pixar or NeXT. What gave his particular restlessness real depth, then, was its relentlessness. “The things he was trying to do,” says Collins, “were always hard. Sometimes those things beat him up. But the response to fighting through that suffering can be tremendous personal growth.”
Now, in 2003 and 2004, Steve’s restlessness was pushing him forward again, into the uncertain future, and into a test of just how much he had grown. Steve was asking himself the question he always asked himself—“What comes next?”—but this time the answer was particularly complicated. Apple could build something that evolved out of its traditional foundation in personal computing, perhaps something that yet again transformed the user interface. Perhaps it needed to deliver a computer in a new physical form, something like a tablet. Perhaps it could build on the iPod’s success with another consumer electronics product, perhaps even a cellphone.
The iPod had changed everything for Apple. The iTunes Music Store, especially now that its customers included millions of PC users, was turning out to be a whole new distribution system, with very little friction and far less overhead cost than the old way of stamping out CDs in a factory and then shipping them to retailers. By the end of fiscal 2004—just three years after the initial introduction of iTunes—revenue from products related to iTunes and the iPod would account for 19 percent of Apple’s t
otal sales. Apple sold 4.4 million iPods that year, while Macintosh unit sales slipped by 28 percent, from 4.6 million in 2000 to 3.3 million in 2004. The ultimate proof of the impact of iTunes and the iPod was in the bottom line: In 2004, the company reported net income of $276 million, up from $69 million in 2003.
But the iPod had done more than simply create a huge secondary stream of revenue. It had solidified Apple’s foundation and expanded its potential. Tim Cook now managed an intricate supply chain that fed a global manufacturing network capable of churning out tens of millions of iPods a month. Jony Ive had responded to this higher metabolism and greater manufacturing scale by experimenting with new metals, alloys, durable plastics, and super-hard glass that could be sculpted into devices as small as an iPod Mini and as big as a 32-inch computer screen. The executive team was starting to feel that the company would succeed with whatever it took on. “One of the things I’ve always felt,” Steve told me, “is that if you’re going to be creative, it’s like jumping up in the air; you want to make damn sure the ground is going to be there when you get back.” The ground under Steve had never been this solid. The time was right to jump into something radically new that completely changed the game. Steve just didn’t know which direction to leap. Resolving the dilemma would turn out to be the biggest decision of his professional life.
APPLE DID NOT have a formal research and development unit per se. Steve didn’t like the idea of relegating all forward-looking tinkering to a separate area that somehow wasn’t beholden to the people leading his most important product development efforts. Instead, research projects flowered in pockets all around the company, many of them without Steve’s blessing or even awareness. They’d come to Steve’s attention only if one of his key managers decided that the project or technology showed real potential. In that case, Steve would check it out, and the information he’d glean would go into the learning machine that was his brain. Sometimes that’s where it would sit, and nothing would happen. Sometimes, on the other hand, he’d concoct a way to combine it with something else he’d seen, or perhaps to twist it in a way to benefit an entirely different project altogether. This was one of his great talents, the ability to synthesize separate developments and technologies into something previously unimaginable. It’s a talent that he would call on to decide what came next.
Two projects had been launched with the intention of exploring the possibilities for creating a new kind of cellphone. Steve himself had asked the folks who developed Apple’s Airport Wi-Fi networking product line to do some early research on cellular phone technology. This decision made some on his team just shake their heads—Wi-Fi data-networking technology has very little to do with the cellular radio technology behind wireless phone networks. But there was another, much more immediate project in the works. Beginning in the fall of 2003, several members of Steve’s executive team, including Eddy Cue, the mastermind behind the iTunes Music Store, had been engrossed in finding a way to build iTunes-compatible music players and iTunes Music Store accessibility right into cellphone handsets.
“Everybody carried two devices. A cellphone and an iPod,” Cue recalls, patting both front pockets of his jeans. “We knew you could add iTunes to a phone and it would be almost like an iPod. It was mostly a software problem. We looked around at the industry, and in early 2004 we settled on working with Motorola, which at the time completely dominated the handset business with its RAZR flip phone. Everybody had one.” Motorola had been a key supplier to Apple for decades. Its microprocessors powered all of Apple’s computers up until the mid-1990s, and after that it was part of a consortium with IBM that designed the PowerPC chips that would be CPUs in Macs up until 2006. Motorola promised Apple that it would create a new line of phones, called the ROKR, expressly as a vehicle for iTunes.
The ROKR project was controversial from the start, for one simple reason: most people at Apple didn’t like the idea of collaborating with other companies. The iPod hardware team, especially, led by Tony Fadell, couldn’t stomach the notion of ceding the development of what they had started to call “musicphones” to the traditional handset industry. And the more Motorola showed them of its plans for the ROKR, the more certain they became that licensing their precious iPod and iTunes software had been a mistake. While Motorola had certainly built sleek and beautiful phones in the past, the company seemed hopeless when it came to designing software that could replicate the simplicity of Apple’s iPods. To Apple’s whiz kids, Motorola’s approach seemed all but inept. The Illinois company assigned separate teams of programmers to build different software components, like a directory of contacts, text messaging, and a crude Internet browser that could only display stripped-down mobile versions of websites. Nothing about these features was as intuitive as the iPod screen interface, and trying to combine the efforts of disparate, disjointed teams led to a hopeless muddle. Steve became so exasperated with Motorola’s work that he asked Fadell to develop his own prototypes for an Apple cellphone, the first featuring music and the second focusing on video and photos.
Ironically, two other projects that started out having nothing to do with cellphones would come to have the greatest impact on Steve’s decision about what Apple would pursue next. One of these was called Project Purple. It was a skunkworks effort Steve had ordered up to devise a new approach to what was proving to be an elusive “form factor” for personal computing: an ultralight, portable device that resembled a tablet or a clipboard, with an interactive touch screen. The concept had thwarted Microsoft’s best researchers and engineers for years, but Steve believed that his guys could make headway where others had failed. There simply had to be a more direct and intuitive way for users to interact with a computer than a keyboard and a mouse. Preferably it would be something he could use anywhere, even when sitting on the toilet.
The other effort was something that developed far from Steve’s purview. In 2002, Apple researchers Greg Christie and Bas Ording started looking into a user-interface technology that had been stuck in the mud for years. Christie and Ording decided to reconsider the possibilities of a touch-screen monitor, which allowed people to use a fingertip to activate an icon or button displayed on a video screen. Initially developed by IBM in the 1960s, touch screens had not followed a path anyone would call revolutionary. In 1972, Control Data sold a touch-screen mainframe terminal, called the Plato IV. In 1977, CERN, the European high-energy physics research consortium, built one to control particle accelerators. In the 1980s, Hewlett-Packard became the first big manufacturer to offer a touch-screen monitor as an accessory for some of its early desktop PCs—but most software available at the time couldn’t use it. Rudimentary touch screens would become the interface of choice for ATMs, airline check-in kiosks, and cash registers, but they didn’t seem to hold out much promise for personal computing.
In the early 1990s, a handful of startup entrepreneurs, along with researchers in the R&D labs of several computer makers, hit upon the idea that they might be able to reconfigure touch-screen technology into something they dubbed “pen computing.” Their idea was that users would mimic the actions of a mouse by working directly on the screen of a portable computer with a special stylus. They believed that drawing or writing directly on a screen was so natural and familiar that it would be the best way for people to interact with their computers. This was the nascent technology that John Sculley had counted on to make the Apple Newton MessagePad the next big wave in personal computing when it was introduced in 1993. The Newton failed, of course, partly because its handwriting recognition was embarrassingly inaccurate. Microsoft tried for two decades to make something of pen computing in tablet versions of the PC, but to no avail. The only somewhat successful stab at the genre was Palm’s Pilot personal digital assistant (PDA). But the small device was never intended to be a full-featured computer, and its success was fleeting.
Academics and even some forward-looking digital artists took the touch-screen concept in a different direction. In the early 1980s, they started
experimenting with technology that allowed for the use of more than just one fingertip to manipulate computer images on a screen. These so-called “multi-touch” interfaces were profoundly different. Performed with combinations of fingers or hands, gestures and coordinated motions could control the screen with far more dexterity than a mouse. You could move icons and files around, or enlarge and shrink images on the screen. You had the tactile illusion of physically interacting with the image on the screen. Seeing the potential, researchers at IBM, Microsoft, Bell Labs, and elsewhere experimented with their own multi-touch projects.
Apple’s Greg Christie had been one of the key designers and software engineers of the ill-fated Newton. He had gotten over his romance with pen computing, but he had steadily followed all the multi-touch research efforts in academia and the tech industry. He hoped that partnering with Ording, who had joined Apple in 1998 and who had worked on the iPod’s scroll-wheel user interface as well as on OS X, might lead the way to make multi-touch the distinguishing technology for a serious new computer. They believed it might serve as the basis for a whole new kind of user interface.
Developing a new interface is one of the most deceptively difficult technological challenges in computer science. It isn’t simply a matter of designing some delightful new way to present images of information on a computer. It’s just as much a matter of reckoning with—and not simply discarding—past habits. For instance, the QWERTY keyboard has for years been the universally familiar means of typing and entering information into a computer. QWERTY, which refers to the first six keys on the left side of the third row of a keyboard, was a relic, a keyboard arrangement from the era of manual typewriters that was designed to keep the individual letter-embossing hammers from getting tangled up when the user was typing at high speed.
Becoming Steve Jobs Page 33