Machines that carried the names of Japanese companies were given the same reception as American computers. Some of the statements that emerged from Cupertino sounded ominously like the confident claims which had once risen into the air of Detroit in the mid-sixties. At one time or another the Japanese were not supposed to understand the microcomputer market, had no experience with complicated electronic consumer items, wouldn’t be able to master software, wouldn’t find any room left on dealers’ shelves, and wouldn’t be able to build an image for their brands. “The Japanese,” Jobs liked to say, “have come flopping up on our shores like dead fish.”
This despite the fact that Apple came to depend on a variety of Japanese companies for a steady supply of semiconductors, monitors, printers, and disk drives. And while Japanese manufacturers like Hitachi, Fujitsu, and NEC designed and made almost every part needed in a personal computer, Apple was little more than an assembler of other people’s work. The long-term challenge was stark: Apple had no alternative but to become the lowest-cost producer in the world and simultaneously offer the most value to its customers if it hoped, in the long run, to beat the Japanese. The extent of the Japanese threat was made clear not in the United States but in Japan, where within three years conditions had changed dramatically. In 1979 Apple and Commodore owned 80 percent of the Japanese market; by 1980 this had slumped to 40 percent and the November 1981 issue of the Japan Economic Journal reported: “The three leading American personal computer makers—Apple Computer, Commodore International and Tandy—have witnessed their combined market share in Japan plunge from 80-90 percent in 1979 to less than 20 percent at present.”
There was, however, one competitor that everyone had expected to enter the microcomputer market once it was large enough to matter. That was the company with three of the most imposing initials in American business: IBM. It was easy to dismiss IBM as an old, lumbering, stuffy, East Coast company that could offer its engineers or programmers neither fame nor fortune and insisted that everyone wear white shirts and striped ties. In 1981 when IBM introduced its personal computer, its revenues were ninety times as large as Apple’s. It made satellites, and robots, memory chips and mainframe computers, minicomputers and typewriters, floppy disk drives and word processors. At the Homebrew Club the Juggernaut of Armonk had always been the butt of jokes and engineers like Wozniak had always been more intrigued by the features of machines made by IBM’s competitors.
Though the company had sold calculators, tabulators, cards, and accounting machines in the twenties, it switched direction after World War II when Remington Rand’s UNIVAC machine was close to becoming synonymous with computing. In 1952 when IBM entered the computer business, its total sales were dwarfed by General Electric and RCA and smaller fry like Sperry Rand, Control Data, and Honeywell, all of whom thought they could beat IBM. Some of the computers were superior. But for all-round strength, for profit margins, earnings growth, sales force, reputation for service and reliability, nobody could match IBM. By 1956 IBM owned more than three quarters of the computer market in the United States and one weary competitor exhaled, “It doesn’t do much good to build a better mousetrap if the other guy selling mousetraps has five times as many salesmen.”
A decade later IBM was virtually rebuilt around a family of computers given the number 360. In the late 1960s, after leasing companies sprang up to serve as middlemen between the factory and customers, IBM helped savage them. At the start of the 1970s when the so-called plug-compatible manufacturers started to chip away at the market for peripherals, IBM responded aggressively. In the mid-1970s when other mainframe companies introduced powerful machines, IBM cut prices and changed the price structure of the industry.
There were only two conspicuous exceptions. IBM had failed to match Xerox when it tried to sell copying machines and had also played second fiddle in the minicomputer market which was dominated by companies like DEC, Data General and Hewlett-Packard. It was those two examples, the exceptions to IBM’s general ferocity, that offered hope for personal-computer makers. But the moral was plain: Anytime the managers of IBM felt that other companies were threatening their business they retaliated savagely and with a ruthlessness that was hidden behind a benevolent facade. In every decade of its history, when IBM had been threatened by other companies, it had always eventually competed and it had almost always won. IBM had made an art of defying the past and none of its victims ever accused it of playing fraternal games.
So it was with IBM’s personal computer. It was not novel but it was impressive. The Apple II, even as a four-year-old computer, was more elegant than the IBM machine. The Apple was cleverer, it occupied less space on a desk, was nowhere near as heavy, and didn’t need a fan. Thanks to the passage of the years IBM’s had a better keyboard and more memory. It copied some of the features of the Apple II like expansion slots and graphics.
The most impressive feature of IBM’s introduction was not the computer but the nimble way this enormous company had moved. IBM had established a small group to do in thirteen months what Apple had so conspicuously failed to achieve with the Apple III. IBM relied heavily on outsiders. Outsiders were brought in to help plan the product and outsiders supplied software. Microsoft, the company that had licensed a version of BASIC to Apple for the Apple II, developed IBM’s operating system. Personal Software adapted Visicalc to run on the IBM, and the men from staid America even dealt with a convicted felon in the shape of retired phone phreak John Draper, who converted his Easywriter word processing which he had originally written for the Apple II. Outsiders supplied the microprocessor, which like those in the Apple II and III (despite IBM’s assertions to the contrary) was an eight-bit device. Outsiders supplied the memory chips and printer and disk drive.
IBM, which had always relied on its army of salesmen, also announced that it would sell the personal computer through stores like Computerland and Sears Business Machines stores. The computer base price was between the Apple II and Apple III. As the electronics analyst Ben Rosen remarked, “It seems to be the right system at the right price with the right marketing approach for the right markets.”
Neither precedence nor presence seemed to matter at Apple. The company greeted the arrival of the IBM Personal Computer with a full-page advertisement which reeked of earnest goodwill and, some said, condescension: “Welcome IBM. Seriously. Welcome to the most exciting and important marketplace since the computer revolution began 35 years ago. . . . We look forward to responsible competition in the massive effort to distribute this American technology to the world.” (It was a politer version of an advertisement that the minicomputer company Data General had contemplated running when IBM entered the minicomputer market in 1976. That advertisement—which never saw the light of day—had read: “The bastards say, welcome.”) Some days later Jobs received a letter from IBM chairman John Opel, which thanked him for the greeting and made an oblique reference to the fact that such friendly gestures might cause a cocked eye at federal agencies.
In Cupertino Markkula and Jobs elaborated on their advertisement. Markkula said during the week IBM announced its computer, “We don’t see anything out of the ordinary. There are no major technological breakthroughs and there isn’t any obvious competitive edge that we can see.” Even at the time it was clear that the leaders of Apple were grievously underestimating the power of their new rival. Markkula could barely contain his irritation when asked how Apple planned to respond to IBM. “We’ve been planning and waiting for IBM to get into the marketplace for four years. We’re the guys in the driver’s seat. We’re the guys with one third of a million installed base. We’re the guys with a software library. We’re the guys with distribution. It’s IBM who is reacting and responding to Apple.” He added, “They’ll have to do a lot more reacting and responding. IBM hasn’t the foggiest notion of how to sell to individuals. It took us four years to learn about it. They must learn about distribution structure and independent dealers. You cannot reduce time by throwing money at it. Sh
ort of World War III nothing is going to knock us out of the box.” Jobs had his own, clipped appraisal of the IBM announcement and predicted, “We’re going to outmarket IBM. We’ve got our shit together.”
“Paradise is a cheeseburger,” Jimmy Buffet said.
Like a nervous spinning top Apple’s hot-air balloon bobbed alongside an enormous stage. When its gas-burner flared, the balloon tugged at its moorings and the generous Apple logo, stitched on the side, glowed. The balloon was the most visible sign of Apple Computer in the place where Stephen Wozniak was promoting what he wanted to be the largest rock concert ever held. At the end of the summer of 1982 Wozniak financed a grotesquely magnified version of what could have been an outdoor party at his split-level home. His Labor Day weekend rock concert turned into a Disneyland version of Woodstock and had little to do with either computers or companies. It dealt with the thin look of fame, the tinny sound of legend, and with billboard America.
Wozniak erected his rollicking, collapsible monument in a scrofulous desert bowl at the edge of the largest suburb in the world. Here on the doormat of Devore, a little town that nobody noticed apart from its 372 inhabitants, a colony of nudists and drivers who dropped off the freeway for gas or a hunk of watermelon, Wozniak chose to stage his first three-day rock ‘n’ roll festival.
From the start the concert was a tribute to Wozniak’s generous innocence and his steadfast belief in the pleasures of the more abundant life. He had drifted away from Apple, enrolled again at Berkeley, and remarried. He puttered about the Berkeley campus or his shingled home in the Santa Cruz mountains, with its psuedowooden turrets and glorious view of Monterey Bay, that he shared with his second wife, four llamas, two donkeys, three Siberian huskies, four mutts, an Australian shepherd and a red-tailed hawk. He equipped the house, which his friends took to calling Woz’s Castle, with the amenities of life: a video-game room, wide-screen television, ceiling-high stereo system, and what seemed like an example of every personal computer and peripheral ever made.
Nevertheless, he was bored. The idea for an enormous rock festival offered some distraction. He said that he first thought of it while driving around in his car and listening to a parade of hit records from major rock groups. “I wanted to do something good. I thought, ‘Wouldn’t it be neat if all these groups could be in one place and play together?’” But he also explained this new venture to his family as a moneymaking enterprise and predicted to his sister that the rock festival would turn a $50-million profit. So Wozniak chose to abandon the comfortable certainty of El Camino Real for the reptilian world of Hollywood Boulevard.
Wozniak rented a plush office suite in a glass building in San Jose and recruited an unlikely team. The man he chose to organize the festival offered credentials that included some references to management consultancy and experience of est. Before long they were spitting out press releases announcing the formation of the UNUSON Corporation, an acronym for “Unite Us in Song,” and took to preaching a loosely woven gospel that sounded as if it had been lifted from some freshman papers turned in for Mod Psych 101. They said the purpose of the festival was to “refocus national attention on the power of working together.” For this, they observed, marked the change from the Me decade to the Us decade. They promised a large technology fair that would show how man and machine could work together.
Wozniak took a small office for himself where he installed an Apple II and some game paddles. Every now and again his hired hands appeared and addressed him in the tones of older brothers arranging a birthday treat for the youngest, slightly spoiled member of the family. He invariably nodded or agreed to their requests. As the US Festival organizers started to place orders for equipment, the only numbers they seemed familiar with ended in strings of zeros. The concert soon turned into a sump for—depending on the month and the mood of the speaker—$8 million, $10 million, or $12 million of Wozniak’s Apple fortune.
The people who knew Wozniak treated the US Festival with everything from sadness to alarm. Jobs, who was fond of repeating that it was easier to make a dollar than to give away a dollar, talked about setting up a charitable foundation and did little to conceal his contempt for the enterprise. Jerry Wozniak watched some of his son’s television interviews and said that the figure on the screen struck him as “manic.” Mark Wozniak treated the shenanigans skeptically: “My brother gets attracted to people who play up to him. People are using him. He’ll get screwed over and over. It’s the story of his life. Most of the people he gets involved with wind up screwing him.” Wozniak’s friend Chris Espinosa thought, “As a child and student he was innocent and isolated from the ways of the world. As an adult and millionaire he’s still isolated.”
For months yellow bulldozers and earthmovers scraped and crushed the mesquite near Devore into a gentle hill. A couple of streams were diverted and underground pipes turned part of the desert bowl into green palmetto. Landfill for parking lots was poured onto the laterite riverbed. Nearby canyons were organized into 100,000 campsites. Scores of turquoise-colored portable toilets were trucked in to serve as mobile sewers. Shower trucks, with boiling water and little shelves for the shampoo, were brought in for the press.
Tiger-striped marquees crammed with army cots housed security guards and the concession-stand workers. By the time the festival got under way and thousands of cars and buses began to peel off the specially constructed freeway exits, there was an example of every means of locomotion that had ever been seen on El Camino Real. Apart from automobiles—heavy on the Hondas, Datsuns (the official car of the US Festival), and Toyotas—there were motorcycles, sidecars, two-wheel dirt bikes, three-wheel dirt bikes, Cushman golf carts, flat bed trucks, Winnebagos, six-pak vans, Airstream caravans, bulldozers, backhoes, tractors, forklift trucks, semis and water dumpsters.
From the start Wozniak wanted to make sure that nobody had to wait more than five minutes for food. So the grounds were turned into an outdoor suburban shopping center. Beer gardens were stacked with brown bags of ice and canisters of bottled air. There was an official domestic beer and an official imported beer. Concession stands had munchies: M&M’s, granola bars, trail mix, gum, and smokes. There were watermelons, pineapples, strawberries, nuts, cookies, New York-style pizza, hamburgers, chili dogs, hot dogs, Polish dogs, burritos, tacos, soda, lemonade, 7-Up, Coca-Cola and Pepsi-Cola. “Paradise,” as Jimmy Buffet, one of the performers, observed, “is a cheeseburger.”
The suburban shopping-center pharmacy also moved in. The thousands of concertgoers could buy toothpaste, soap, sunglasses, insect repellent, and sunscreen from the back of rental trucks. It took sunscreen to conjure up the ghost of another decade. For when the rock producer urged the crowd to be generous, he resorted to that deft friendly phrase of the sixties: “If you’ve got some sunscreen, share it with your brother and sister.”
There was also a bumpy pyramid of law and order. Signs at the entrance gates were darn right upright: NO DRUGS, BOTTLES, CANS, WEAPONS OR PETS ALLOWED. NO TENTS, SLEEPING BAGS OR LAWN CHAIRS. ALL PERSONS SUBJECT TO SEARCH. Dozens of men from the San Bernardino County Sheriffs Department (in helicopters and patrol cars and on horseback and motorcycles) kept an eye on things. One of a team of policemen from Southern Pacific explained that he was “here to protect the railroad.” Scores of hastily recruited blue-shirted security guards, the neighborhood vigilante gang, enforced their own amateur brand of justice and guarded the strategic gates in miles of chain-link fences. All the emphasis on security had its drawbacks—a shifting, baffling collection of carefully colored and painfully coded security badges and laminated passes. The passes Wozniak programmed on his computer for his friends weren’t even recognized.
There was more lavish treatment for the rock bands and the press than for the teeming masses. The bands—over twenty by the time all the contracts were signed—had quibbled about terms and demanded extraordinary sums when word trickled out that Wozniak’s pocket was well-nigh bottomless. Most said that it was another date, another gig, anothe
r day, and giggled at the mention of the US decade. Behind the stage the bands stayed in air-conditioned trailers hidden by varnished lattice fences. Their names were carved in Gothic script on wooden nameplates that hung on each door, and their needs were catered to by a squad of runners working out of another trailer marked AMBIENCE CONTROL which was a glorified room service. Outside the trailers, crowds of press agents, managers, business managers, personal managers—every sort of manager—fussed, complained, and argued.
Even the sky was for sale. A makeshift air-traffic-control tower ordered an eclectic collection of aerial objects to fly in counterclockwise circles. Some ultragliders putt-putted like underpowered motor scooters with wings. A couple of parachutists dropped in. At noon on the opening day of the festival five Mosquitoes ripped five white tubular trails across the sky. Little planes coughed and towed banners touting automobile insurance, sweat shirts, and cheap air fares to Honolulu. Below the busy air lanes a sheriff radioed to his pal in a helicopter, “There’s a low-flying fixed wing in the bowl area. Just want to make sure you’re aware of it.” At night the Goodyear blimp, in a mosaic of lights, winked WHAT A BIG TIME, THANKS WOZ. Twenty-four hours a day helicopters officiously ferried the rock stars and their groupies from a soft, steaming patch of blacktop to hotels that lay west of Rancho Cucamonga and Cucamonga.
The technology fair fell victim to the heat and the dust. It was no traveling Homebrew Club or West Coast Computer Faire. Some exhibitors failed to show; others found that their machines weren’t designed to cope with the full might of Southland weather. Many of the visitors seemed to be as interested in the heaving air conditioners that struggled to cool the marquees as in the exhibition. There were some cheap examples of the power of technology, like the banks of telephones and the Walkmans and the women plugging their curling tongs into the electric cables that ran inside some of the theater-sized marquees.
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