Steve Jobs: 1997 – Apple begins to bounce back as its 'special advisor' starts to work his magic

This feature originally appeared in Computing in February 1997

Operation Renaissance, the new advertising campaign for the rebirth of Apple Computers, tells us: "Give your dreams a chance."

At MacWorld, the developers share Steve Jobs' special dream of 100 start-up software firms opening in garages on the back of Apple's new operating system, Rhapsody.

"We've got to get the spark back with the developers," says Jobs, the co-founder of Apple. "They bring us creative insight, market knowledge and entrepreneurial energy."

Jobs has pulled the right strings, stroking and petting the Mac developers and their collective consciousness. His message is simple and populist: If Apple's future were left to the developers, it would exceed everyone's wildest dreams.

For CEO Gil Amelio, dreams could become nightmares - if they aren't already. Dreadful Performa sales in the last quarter led to a $120m loss on revenues which are down by 13 per cent to $2.1bn.

The US market share between fourth quarter 1995 and 1996 plummeted from 13.2 per cent to 7.3 per cent; worldwide share fell from 8.7 per cent to 5.4 per cent.

With results like these, some analysts think the last thing Apple should be doing is spending $400m on acquisitions. Speaking to Reuters, broker John Rossi of Robertson Stephens & Co comments: "This has a lot of PR value, but it looks like the company still has a strategic mess with $400m less."

Personalities are key to Apple's history, particularly that of the unpredictable Steve Jobs. Officially, he holds the position of part-time advisor, but he didn't worry about stirring up a storm at MacWorld.

Despite statements from Amelio and Ellen Hancock, the chief technology officer (CTO), that costs must fall, Jobs is vocal that sacking staff is no answer to Apple's problems.

Apple programmers say it's wonderful to have Jobs back. He's the only one who can motivate the employees. Jeffrey Papows, president of Lotus Development Corporation goes even further and claims: "Every second from Steve is a gift."

This semi-religious attitude is difficult to explain to the non-believers - the potential users that Apple needs in existing and new markets. These markets are enterprise, retail, education and small businesses, according to the new advertising campaign.
The company also promises new consumer systems, complete with the long-neglected Internet, will cost less than $1,000, competing head-on with Pentium PCs.

The "Jobs factor" may simply be a clever PR move for demotivated staff and developers. He says he doesn't want a seat on Apple's board. Given his record at Next, that must be a relief.

Jobs took Next Computers to the verge of ruin. At the peak of the trauma, the company haemorrhaged venture capital and senior staff, shedding two thirds of the workforce. Only the cessation of manufacturing and concentration on NextStep saved the company.

Next squandered hundreds of millions of dollars, and Apple's $400m spending spree means that Jobs and his backers - Ross Perot and Canon - emerge cash-rich from what was seen as a commercial debacle.

Apple's Investment

So, the backers double their investments; Jobs gets $200m, but what about Apple's quid pro quo? Phil Payne, UK managing director of European analysts, Sievers Consulting, believes that: "Jobs doesn't really care any more. He's more interested in Pixar Animation and Hollywood than the IT industry."

Others argue that the personalities are key. They say that the fruity trio of Amelio, Hancock and Jobs is a dream team. Amelio is the businessman with commercial sense gained from years of experience, including presidential and CEO positions at Rockwell Communications and National Semiconductors.

Hancock was tipped as IBM's first female chief, but departed in high dudgeon after 30 years. She found a temporary billet with Amelio at National Semiconductors before joining Apple, the antithesis of IBM.

And, of course, Jobs an unconventional genius and the most precocious of IT's wunderkinder.

Hancock reflects: "I have only seen the nice Steve. I've read about the other, but I think things are going to work out fine. Steve is the visionary. I consider myself a general manager."

Hancock says she's good at seeing projects out the door. More than that, she is a decision-maker. Having operated in IBM during the painful restructuring and following 1992's $5bn loss, Hancock can wield the secateurs and make difficult choices.

With Apple's Copeland operating system no more than a unfinished symphony, she recognises the urgency of burying it and breaking with tradition.

"Contrary to the Apple way, we were not going to be too proud to look outside the company for technology," she explains.

Apple is very different to the company Jobs knew, and it's doubtful he will expend energies rebuilding it in his own image. Assuming that Apple didn't spend $400m just for occasional access to his talent and PR value, what did it get for its money?
It treated itself to a 32bit operating system - albeit one not written for its strategic PowerPC platform.

Amelio and Hancock are taking desperate measures to impose commercial rigour on a company in dire straits.

Far from greater uncertainty, Amelio argues: "The three year strategic plan remains sound and we are continuing to lay the groundwork. We need to reduce Apple's cost infrastructure and achieve break-even results at $8bn (revenue). The Next acquisition will contribute to this cost reduction process."

Hancock is critical about Apple's R&D functions, slating them for developing unviable strategies and products. She doesn't see R&D as sacrosanct, but drastic cuts would be risky at this time.

Betting On The Market

Apple is living dangerously enough. It is gambling that new technologies emerge quickly and successfully; that existing customers won't desert while systems are under development; that the degree of incompatibility is manageable; and that they attract new customers and markets.

Despite Jobs' insistence that the future lies in innovation, Apple's recent filing with the US Securities & Exchange Commission admits it will have "less direct control over some research and development efforts ... The ability to create innovative new products may be reduced".

Microsoft, second only to Apple for its Mac application development, has ramped up the 100-strong Mac division. Is it on the acquisition trail? Analyst Payne thinks not.

"At least, not yet," he says. "Apple's more useful as a competitor. It's cheaper to let it die a slow death. Apple can cut or control around 60 per cent of its cost base within campus. No one would notice for a while."

If Amelio ever feels haunted by the return of King Jobs, there is probably a bigger spectre lurking in his subconscious. It is the image of Bill Gates waiting for Apple to rot in an attempted rebirth.

Amelio can offer no guarantees that Apple's renaissance will be successful, and this is the stuff of CEO nightmares.