More than a decade of research by scientists like Douglas Engelbart at the Stanford Research Institute, by child psychologists, and at Norwegian universities had all, to varying degrees, influenced the work at Xerox. Indeed some of the most important principles had been published in the mid-sixties and had been displayed by SRI as early as 1968 with a demonstration of a system called NLS. Its chief thrust was to find ways to help people with no technical training control computers. In a way it was an academic extension of the general effort of the hobbyists: to make computers personal and then remove, or at least conceal, the mysterious and intimidating elements. Xerox’s prototypes bore the traces of people who believed that computers were an entirely new medium, that they were far more than stolid, passive devices suitable for crunching numbers and editing prose. Some of the PARC researchers possessed the imaginative vision of flexible machines that would eventually combine the sensory charms of color television, stereophonic music, and finger paints. Like others before them, they said their eventual goal was to pop a computer into a case the size of a notebook or build a machine that businessmen could slip into their briefcases but use to communicate with other computers and people anywhere in the world.
In 1973 the PARC researchers built their first machine and called it Alto. Its chief virtues were a visual appeal and far greater flexibility than other computers of the time. It was supposed to simulate the sort of sights that people were already familiar with rather than boggling reels of numbers.
The Alto rested on advances in both software and hardware. Xerox developed a language called Smalltalk, which had similarities to Logo, a language that had been designed to help children program by moving and turning small, familiar objects without having to worry about codes and equations. For charts or memos that were too large to be displayed at one time, the Xerox computer simulated sheets of papers strewn on a desk and, in the jargon of the trade, called them “overlapping windows.”
The clarity of the images was made possible by a process known as bit-mapping. The computer controlled each tiny dot, or pixel, on the screen. Text could be displayed in several type-faces and the computer could generate music. The Alto also used a mouse—originally developed at the Stanford Research Institute in 1964—to sidestep the codes of typewritten commands. By the late seventies, a hundred or so Altos were scattered about the White House and congressional offices as part of a splashy field test.
At first Jobs resisted the entreaties to visit Xerox, leaving others with the impression that nothing any other company was working on could possibly top some of the projects Apple had on the boil. A few of the Apple programmers familiar with the Xerox work kept pressing, and eventually he gave in to this own curiosity. With his impatience for anything but the practical and a willingness to admire anything with superior virtues, Jobs was enchanted by what he saw. He was as impressed as everybody else with the performance of the Alto and after seeing the combined effect of the mouse, the graphics, and the overlapping windows, turned to Bill Atkinson for some expert guidance. “Steve asked how long it would take to get the software up on Lisa and I said, ‘Oh, six months.’”
The visits to Xerox became one of those few, crucial events that helped bring some clarity to the shape of Apple’s computers. For a small company to even contemplate trying to match, let alone better, the Xerox work required something more than substantial confidence. But without a dose of audacity and a bolt of arrogance it would have been easy for Apple to play safe and incur the greater risk of doing nothing. The visits to Xerox also coincided with a hardening of the idea in Cupertino that Lisa would be the spearhead for Apple’s attack on the office market. Businesses, so the argument went, would be able to afford to pay for machines that someday would be cheap enough for the general consumer.
The results of this flurry of activity were seen quickly enough. Within a few weeks Jobs managed to get hold of a mouse while the programmers started to delve into bit-map graphics and worked up some demonstrations of their power. The displays were so impressive that they prompted a palace coup. Most of the engineers turned against the stubborn bent of the chief hardware engineer, who was eventually replaced by the project’s fourth hardware manager. It was also tacit recognition of the triumph of software.
So Apple’s course was set by Xerox. A group of Xerox programmers and scientists eventually left PARC and joined Apple to work on Lisa and had a great influence on how the computer would appear to a user. For the three years following the revelation at Xerox, Apple’s engineers and programmers edged forward. They didn’t contribute any new, sweeping vision but they displayed a determination to improve on the work that had been done elsewhere. There were substantial enhancements in the software, and the grandest part of the enterprise was the way in which it was all squeezed into a desk-top system. They also practiced the message of one of Apple’s earliest advertisements: SIMPLICITY IS THE ULTIMATE SOPHISTICATION and tried to remove any cause of confusion. After weeks of debate, for example, the buttons on the mouse were reduced from three to one. Features that had formed part of the original machine, like the “softkeys,” keyboard buttons that concealed certain functions, also disappeared.
Jobs’s contribution to the Lisa project oscillated between the inspirational and the destructive. One marketing manager recalled, “Pricing after pricing would come back with an absolute five-thousand-dollar minimum price. There were gut-wrenching debates with Jobs. He’d say, ‘If I have to I’ll bring Woz in. Woz could do it for less. If you were good enough you could do it.’” He also managed to undermine morale. According to one observer, “The engineers would say, ‘It doesn’t matter if it’s on time. We know Jobs. He’ll change it anyway.’” But for all the commotion, Jobs also left his aesthetic touch on the computer. He left an overall style and shape and also helped with small details like the rounded edges on pictures of file folders, which he preferred to square corners.
The difference between Xerox and Apple was illustrated at the 1981 National Computer Conference in Houston. There Xerox announced the Xerox 8010 that colloquially was known as the Xerox Star. The computer had not been developed by the PARC group but nevertheless displayed some PARC hallmarks. It relied on a visual simulation of a desk top, a mouse, and bit-map graphics, but the execution was poor and the computer worked properly only when it was linked to a range of ancillary Xerox equipment. The software was excruciatingly slow and the execution of some novel ideas was generally considered rather clumsy.
There was far more patience at Apple. The miserable results of the Apple III served as a constant reminder of the penalties of rushing the development of a computer and releasing something that wasn’t properly tested. There was also less inclination to forecast the imminent demise of the Apple II, which the people in Cupertino started to think possessed some of the durable virtues of products like the Volkswagen Beetle.
If the scope of the work on Lisa was one example of a corporate ambition, so was the development of a disk drive. When Apple decided to start a project to build its own disk drives, there were some perfectly sensible reasons. Sales of Apple II systems rested heavily on disk drives and Apple’s one supplier, Shugart—by coincidence a Xerox subsidiary—was producing devices that in the opinion of some were unreliable. There was a distinct fear that Apple’s growth was being limited by the scarcity of disk drives. Apple found another supplier to provide a second source of drives and then decided to start its own project. The motives were muddled by a desire shared by Scott and Jobs to humiliate Shugart.
Wendell Sander described the scope of the project: “The company didn’t realize it was taking on a project that wasn’t really a computer system. There’s a closer affiliation between disk drives and integrated circuits than there is between disk drives and computers. They didn’t realize it was going to be so big. They didn’t appreciate the difficulty.” Another observer said, “Steve really believed that Apple could build a floppy disk faster, for less money, and with more performance than anybody else with
out having any experience with products like that.” The drive, code-named Twiggy, was originally supposed to be included in the Apple III but development problems soon ruled out that possibility.
The arrogant disregard for convention that proved so powerful when it came to thinking about new computers had less salutary results when it spilled over into the way Apple treated the outside world. It was an excruciating balancing act for Apple’s managers to dally with the impossible inside the company and simultaneously cope with mortals on the outside. They were also confronted with the conflicting need to guard corporate secrets and maintain congenial relationships. Yet at times the corporate arrogance seemed to teeter on the brink of what amounted to a willful effort at self-destruction, and much of the goodwill that had been so carefully and laboriously built up between Apple and outsiders started to evaporate.
“Apple was uniquely aggressive,” said Daniel Fylstra, chairman of Visicorp, once known as Personal Software, “about pursuing its self-interest.” Fylstra had good reason to know, since the Visicalc program was instrumental in helping push Apples into offices. When Visicorp started to mimic Apple by retaining the same law firm, public-relations agency, accountants, and investors the amiable relationship began to sour. It deteriorated further when Visicorp decided to adapt versions of Visicalc for computers made by Apple’s competitors and further still when it tried to increase the price of the program when it was made available for the Apple III. To keep Visicorp in its place, Apple’s programmers were ordered to develop a spread-sheet program. The project kept slipping and was never officially released, but the relationship between the two companies became still sorrier.
The same was true of other software companies. The decision to develop in Cupertino most of the programs for the Apple III antagonized the smaller software companies. Apple wanted to maintain a tighter control over some of the programs—like word-processing and spread-sheet packages—that were becoming as important as the computer. But there was, as the Apple II had demonstrated, so many things that the computer could be used for that Apple had nowhere near enough programmers and nowhere near enough expertise to exploit all the opportunities. When Apple failed to provide the technical information and languages necessary to write programs, more feelings were hurt. Thanks to the premature introduction, the manuals explaining the software weren’t even written. And when Apple then charged hefty admission prices to seminars explaining the innards of the Apple III, things took another turn for the worse. All the problems with the Apple III were certainly aggravated by the small amount of software that was available. When work started on Lisa, a similar attitude prevailed and outside companies weren’t invited to contribute.
A tightening proprietary attitude was also displayed toward Apple engineers who wanted to pursue their own ideas. When Chuck Mauro decided to leave Apple in 1980 to start a company to make a peripheral that would convert the display of the Apple II from forty columns to eighty columns, Jobs wrote him a formal letter and wished him the best. Days later, as the possible consequences of the decision began to sink in, he changed his mind and argued vigorously with Mauro that the board had been developed on Apple’s time and was therefore company property. “He invited me to lunch,” said Mauro, “and as we were walking over to the restaurant he looked at me and said, ‘You know, if we wanted to we could squash you like a bug.’” However, with the legal position murky, Jobs lifted the corporate heel and didn’t provide any further obstruction and Mauro founded his own company.
The same sort of antagonism began to come between Apple and its dealers. To grow quickly Apple relied on a two-step system of distribution. Apple sold products to distributors who in turn resold the machines to dealers. After a time, the distributors weren’t growing as quickly as orders and were restraining Apple’s growth. Most of the distributors were small companies started by inexperienced businessmen who couldn’t raise the local bank manager on the telephone and arrange for an increase in credit. As soon as any distributor showed a sign of weakness, Apple moved. When it became clear, for example, that Byte Industries was having trouble developing a nationwide chain of Byte Shops, Apple stopped supplying them. One Apple manager stated simply, “Byte was floundering around so we cut the strings.” So when in 1980 Apple was large enough and had enough money, it made a perfectly sensible business decision and decided to buy out its distributors and supply dealers directly.
From early days, Apple had cracked down hard on its dealers, and after a while, almost every senior Apple executive managed to upset or ruffle one of them. It was the sort of tussle that often exists between the factory and the field, with the former pushing as hard as it can to boost sales and the latter pulling as hard as possible to extract concessions and incentives. It was a cat-and-mouse game. Jobs, with his graphic sense of reality, explained, “We’ve got each other by the balls.” The head of Computerland, Ed Faber, explained that Apple had, after a time, tried to “control dealers with muscle.” Apple was quick to offer dealers discounts if they bought in quantity. The strategy was calculated to make dealers sell more machines by making sure they always had some in stock and weren’t caught short. Dealers, who didn’t want to bear the costs of financing, complained vigorously. One dealer explained, “There were too many semiconductor industry salesmen and not enough people with retail experience. They more or less said, If you don’t want to do things exactly the way we want to do them, then screw you.’”
The head of Apple’s sales, Gene Carter, countered dealers’ complaints about pressure by issuing the sort of platitudes that might have come from a Detroit automobile executive: “Apple Computer, its distributors and retailers all want to make money and the way to make money is by selling the product.” In the middle of 1982 he elaborated further: “We are the golden egg. Every dealer wants the Apple because it has a high profile. Dealers know if you don’t carry the Apple there must be something wrong with your store.”
In 1982 Apple also stopped supplying mail-order houses, cracked down on bootleggers who sold to nonauthorized dealers, and dumped Computerland which was once the mainstay of their distribution network and had once been such an object of desire that Apple had started some tentative discussions about a merger. Apple was trying to control which Computerland stores carried its products so they wouldn’t interfere with other Apple dealers. At the time Ed Faber said, “We cannot say to people, ‘You’re at the mercy of this manufacturer.’”
The press also started to feel the results of the flush of power. When a trade newspaper, Infoworld, published a copyrighted story that was said to describe Apple’s future product plan, the editor received several telephone calls from Jobs in which he successively argued that publication would severely damage Apple, called the story only partially accurate, denounced the reporter as “a criminal,” offered a “real nifty two-page ad” if the story was held, and offered to pay the costs of stopping the print run. Apple’s attitude toward the press was made clear in a memo that was circulated within the company. After a run of analytical stories that contained whiffs of criticism appeared in the months following Apple’s public offering, a memo was distributed by Fred Hoar, the vice-president of communications. It complained that journalists often took matters out of context by misquoting executives and compressing what they had to say. The memo read in part:
SUBJECT: ADVERSE PUBLICITY
Recently Apple has been the subject of some stories in the press which cannot be considered “puff” pieces . . . i.e., they do a fairly negative job of reportage. . . . It is in the scheme of things that bad news makes better copy than good news, and also that many, if not most, reporters have trouble conveying subtlety and complexity, much less their editors.
If journalists were one focus for contempt, so were Apple’s competitors. One by one other companies had muffed the development and introduction of their personal computers. Large companies like Hewlett-Packard and Xerox had stumbled and belatedly introduced machines that didn’t match the Apple II. Firms with a re
putation among consumers, like Atari and Mattel, had also missed the boat while the minicomputer makers like Data General and Digital Equipment were slow to realize the threat posed by microcomputers that were getting more powerful by the month. And Texas Instruments, the company that had once been the cause of such fear, flubbed its computer strategy so badly that Apple looked better with every passing day. The TI computer showed little attention to cosmetic details, gave low performance for the price, had thin distribution, and was received so poorly that within two years the price dropped from more than $1,000 to $100. So at Apple the arrival of a new competing computer had developed into a ritual. In the months leading up to a major announcement, there was a certain amount of trepidation at Apple. But after the announcements were studied and the UPS delivery trucks pulled up in Cupertino bearing the latest product, the machines inside the Styrofoam cartons were almost always greeted with derisive hoots.
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