Linked by Thom Holwerda on Wed 22nd Feb 2006 22:21 UTC, submitted by anonymous
Apple John Sculley was instrumental in Apple's rise and fall during the late eighties and early nineties. By 1990, Apple was the largest PC manufacturer in the world, but at the same time, the company was hemorrhaging research money. After a power struggle that started almost as soon as Steve Jobs left the company in 1985, he was deposed in favor of his trusted aid, Michael Spindler. Read more.
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Ah, those halcyon years...
by snozzberry on Wed 22nd Feb 2006 23:37 UTC
snozzberry
Member since:
2005-11-14

...of a new Mac model every thirty days, including the Mac television. Knowledge Navigator.

Vision, that man had.

Reply Score: 1

From the article...
by skingers6894 on Thu 23rd Feb 2006 01:09 UTC
skingers6894
Member since:
2005-08-10

"John Sculley's two sole contributions to the Macintosh project were the covert funding Macworld, of a Macintosh-themed magazine from IDG. The other was the Mac's price of $2,495, which he raised from $1,500 to maintain an exorbitant 55% profit margin.

The Macintosh Launch - and Crash

Jobs' luck was about to run out. The Macintosh had an excellent launch - and truly awful sales after that. Jobs predicted that Apple would have sold 2 million Macs by 1985, but the company sold slightly more than 50,000. This was largely due to flawed marketing."

Hmmm, flawed marketing? How about $1000 too expensive! I'm sure at $1500 they might have sold 2 Million of them.

Reply Score: 2

RE: From the article...
by kaiwai on Fri 24th Feb 2006 04:27 UTC in reply to "From the article..."
kaiwai Member since:
2005-07-06

I'm sure at $1500 they might have sold 2 Million of them.

At $1500, that would have put them in Amiga pricing territory - believe me, there would have been many Amiga users like myself heading to the Mac land rather than going Amiga, probably would have been the same for Atari users as well.

Up until the launch of the iMac back in 1997, Macintosh computers were over priced, under performing and the operating system was crappy at best - and there were no alternatives to that one operating system.

Where I think Apple went wrong was 16 years ago when the chose to stop developing A/UX (The Apple UNIX), which had an AT&T System 3 core and a Mac gui; basic evolution of UNIX would have provided Apple with the necessary artilery to combat Microsoft when it released Windows 95; whilst Microsoft would be piddling with a 16/32bit hybrid, Apple could have beaten its chest with a 32bit fully protected memory kernel with all the trimmings.

Reply Score: 1

RE: From the article...
by modmans2ndcoming on Thu 23rd Feb 2006 01:22 UTC
modmans2ndcoming
Member since:
2005-11-09

John Scully was a moron!!!!!

how the heck did he think he was going to sell a computer for $2500?

Reply Score: 0

RE[2]: From the article...
by abraxas on Thu 23rd Feb 2006 01:23 UTC in reply to "RE: From the article..."
abraxas Member since:
2005-07-07

John Scully was a moron!!!!!

How was he a moron? He presided over the company at their peak. He had to be doing something right.

Reply Score: 1

RE[3]: From the article...
by modmans2ndcoming on Thu 23rd Feb 2006 02:08 UTC in reply to "RE[2]: From the article..."
modmans2ndcoming Member since:
2005-11-09

he presided over them during their peak, and then brought them down..... so how is he NOT a moron?

Reply Score: 2

RE[4]: From the article...
by AdamR01 on Thu 23rd Feb 2006 06:23 UTC in reply to "RE[3]: From the article..."
AdamR01 Member since:
2005-09-14

Maybe I'm just misreading because its late, but if anything I would say that Gassée was the biggest moron that caused the most damage.

Reply Score: 1

RE[5]: From the article...
by Luposian on Thu 23rd Feb 2006 09:16 UTC in reply to "RE[4]: From the article..."
Luposian Member since:
2005-07-27

Hey, watch who you call "the biggest moron". If it wasn't for Gassee (who the blazes cares *what* he did (right or wrong) at Apple, it's what he did AFTER Apple, that impresses me), we wouldn't have BeOS, which means we wouldn't have Haiku to follow in the footsteps of BeOS...

And, because of that, I consider him a certified GENIUS! Even if Be, Inc fell flat on it's face (and was leaking money like a sieve, from day one). The OS rocked. The OS lives on... and I am grateful for that.

Reply Score: 1

RE[5]: From the article...
by Ronald Vos on Thu 23rd Feb 2006 15:47 UTC in reply to "RE[4]: From the article..."
Ronald Vos Member since:
2005-07-06

Maybe I'm just misreading because its late, but if anything I would say that Gassée was the biggest moron that caused the most damage.

From reading the article, it would appear that every single major player at Apple has made capital blunders which ultimately prevented Apple from becoming Microsoft.

It's debatable what Apple's ultimate marketshare would've been given their buisness model anyway, however.

Reply Score: 1

RE[6]: From the article...
by kaiwai on Fri 24th Feb 2006 05:04 UTC in reply to "RE[5]: From the article..."
kaiwai Member since:
2005-07-06

From reading the article, it would appear that every single major player at Apple has made capital blunders which ultimately prevented Apple from becoming Microsoft.

It's debatable what Apple's ultimate marketshare would've been given their buisness model anyway, however.


But ultimately, everything stops at the CEO - when someone needs to take the fall for something not going right, they need to be there just as quickly as if they were to be praised for a 'miracle turn around'.

Apples failure came from a lack of direction, their operating system that slid from great, to OK, to long in the tooth to eventually 'pathetic' status - OS 9 shipping that made Windows 9x series look reasonably stable.

The hardware was part of the issue - they spent countless amounts of money on R&D in areas that NEVER yelded any gains in way of intellectual property to use in products and give them a strategic advantage over the competition - all very nice spending billions, but if they can't be justified in terms of eventual products that spin off from the R&D, then the money has been wasted.

Reply Score: 1

RE[4]: From the article...
by abraxas on Thu 23rd Feb 2006 16:22 UTC in reply to "RE[3]: From the article..."
abraxas Member since:
2005-07-07

he presided over them during their peak, and then brought them down..... so how is he NOT a moron?

He was the one who made Apple the largest PC manufacturer in the world. If you really think he was a moron then you must be the biggest moron in the world.

Reply Score: 1

RE[2]: From the article...
by helf on Thu 23rd Feb 2006 04:48 UTC in reply to "RE: From the article..."
helf Member since:
2005-07-06

look at the time frame, 'moron'. That was the normal price for a LOT of computers.

Reply Score: 1

RE[3]: From the article...
by Celerate on Thu 23rd Feb 2006 05:42 UTC in reply to "RE[2]: From the article..."
Celerate Member since:
2005-06-29

Why not go over the numbers.

Gross gains at the 2 500 dollar price with approximate sales figures for that price:
50 000 * 2 500 = 125 000 000
Net gains, given the information that the profit margin was 55%: (approximately 1 375$ per unit net gain)
1 375 * 50 000 = 68 750 000

Gross gain at 1 500 price with approximate projected sales figures had that price been chosen.
2 000 000 * 1 500 = 3 000 000 000
Net gains, with the machines sold at that price: (approx 375$ net gain per unit)
375 * 2 000 000 = 750 000 000

These figures are approximations based on information given in above comments and may vary greatly from reality. However, they do help put things into perspective.

I can see where Scully's choice could have been benificial, and that's if the Macs didn't sell as many units as so many people think it ideally would. After all, it seems to me the larger estimate is a "could have been" based on figues drempt of by Steve Jobs but never proven. Considering this, in order to make at least as much profit at 1 500$ then was made at 2 500$ Apple would have had to sell 183 334 units, or 133 334 more units than they sold at 2 500$. All figures are approximate of course.

PS. If there are any mistakes in my math let me know, I think my calculations are close though. I did round, so don't nit pick over that.

Reply Score: 3

RE[3]: From the article...
by alcibiades on Thu 23rd Feb 2006 13:15 UTC in reply to "RE[2]: From the article..."
alcibiades Member since:
2005-10-12

Surely, they were not morons. The worst you can say about them is, they tried to optimise performance within the business model they had. Now, some of them did better and some worse.

The thing they could none of them manage, and this included Jobs, was to realise, and realise in time, and act on it, the implications for them of the way the market was going. The critical years were early on. If they had decided to open the architecture early enough they would have had a fighting chance against Windows. When they finally did clones it was half hearted and too late. To really do it would have involved remaking the whole company.

If they had decided firmly to do nothing that was incompatible with niche status, they might also have avoided a great deal of pain.

Surely the moral of the whole story is how very difficult it is in business to see the step changes coming in time, and how enormously difficult it is to make any real strategy changes, fundamental changes in how the thing operates, in a big company.

Reply Score: 1

Great article
by abraxas on Thu 23rd Feb 2006 01:22 UTC
abraxas
Member since:
2005-07-07

This is probably one of the best articles I have read on OSNews in a long time. There is a lot of great information in there. It was interesting to read how Apple was mixed up with IBM, Microsoft, Apollo, Compaq, Adobe, Sun, and a few others that I already forgot after reading the article! My knowledge of Apple computer has probably tripled since reading this article. It made me think of the days when I used to toy around on Apple IIEs and the Macintosh.

Reply Score: 1

v in past
by postmodern on Thu 23rd Feb 2006 04:41 UTC
Niches
by alcibiades on Thu 23rd Feb 2006 07:12 UTC
alcibiades
Member since:
2005-10-12

Nice view of the history. But the moral of it all?

It still must surely strike you, what the participants should have realised at the time, somewhere between 1982 and 1985, was their business model was going to make them a permanent niche player with negligible share. The issue still seems in retrospect to be, they were following a niche strategy, while not realising it. Their ambitions, their publicity, their attitudes, to some extent their spending, were those of a major player, but the shipments were always a tiny proportion of the industry.

To me, the apotheosis of this was e-World. How on earth, as Internet was taking off, could you introduce a closed system, and one which would only work with Macs? It was truly living on a different planet. Alas, not planet Earth.

I am still struck, looking at the market share numbers on

http://www.pegasus3d.com/total_share.html

how little impact on the market the Mac made, compared to the rival architecture. In our minds, and in the press it was huge. The reality was different.

Reply Score: 3

Enjoyable.
by Andre Siegel on Thu 23rd Feb 2006 09:37 UTC
Andre Siegel
Member since:
2005-08-12

Fairly interesting article. I definetely enjoyed reading it.

Reply Score: 1

Apple's TWO Biggest Mistakes........
by Pelly on Thu 23rd Feb 2006 15:07 UTC
Pelly
Member since:
2005-07-07

The two, most significant errors that Apple made in the 1980s, per, "Apple; the Inside Story of Intrigue, Egomania and Business Blunders," are:

1. In 1985, while Microsoft was developing Windows, Apple (Scully) had signed an agreement with MS that effectively gave MS permission to copy the Macintosh, "at will." The agreement stated that MS would be allowed to copy the Mac interface, 'in present and future software programs.' This single phrase allowed MS carte blanche to use any visual features from the Macintosh interface in Windows 1.0 and all future versions.

That single phrase actually held up in subsequent court proceedings and was the main point in Apple's defeat in the courts over this issue. Apple had unknowingly given Microsoft the keys to the kingdom.

2. Licensing the Macintosh OS. In June, 1985, Bill Gates wrote a letter to Apple's Scully & Gassee stating the advantages of, "Apple Licensing Mac Technology."

The letter clearly stated that Apple would not only see enormous benefits, but would save countless millions by enjoying the R&D feedback of OEMs they licensed the Mac to! Apple, without an OEM pipeline, had to fund all of the R&D for the Mac OS and hardware.

In the letter was also an incredible offer FROM Gates that Microsoft would provide the assistance & guidance needed for Apple to succeed in the OEM process. MS had been involved with OEMing for a few years at this point and offered to mentor, assist & support Apple as they entered the OEM process.

Why did Bill Gates make this generous offer? Gates saw the opportunity for Apple to become a 'standard,' which didn't exist in the mid-1980s. At the time, MS was also developing software for the Mac. Excel was originally developed for the Mac and later rewritten for Windows (1987).

Apple turned down the offer from Gates and would later regret their decision.

By not licensing the Mac OS, Apple continued to lose market share as the Intel boxes became the standard with the OEMing of MS-DOS and Windows.
==========
If anyone ever gets a chance to obtain a copy of this book, it's a fascinating read!

Reply Score: 2

Good article
by OMRebel on Thu 23rd Feb 2006 16:30 UTC
OMRebel
Member since:
2005-11-14

I've never had a Mac, and probably won't get one anytime soon. But, this was a very good article that gave alot of insight into not just Apple, but into the entire PC industry during that time frame. Good job!

Reply Score: 1

What about QuickTime
by vikramsharma on Thu 23rd Feb 2006 16:34 UTC
vikramsharma
Member since:
2005-07-06

Wasn't QuickTime released when John Scully was the CEO of Apple, so I don't think he got everything wrong what about Newton. John Scully might have got a bit greedy and made some blunders nobody's denying that, he did bring about some good stuff in Apple too.

Reply Score: 1

Interesting
by griffinme on Thu 23rd Feb 2006 16:35 UTC
griffinme
Member since:
2005-11-09

"Sculley didn't even have control over the advertising campaign, the element of the Macintosh that he was most qualified to work on. He hated the 1984 ad (along with the rest of the Apple board) and joked that the twenty page brochure included in Newsweek was actually an Apple magazine with a Newsweek insert. Despite his qualms, the two ads ran and were incredibly successful."

An ad campaign that did its best to alienate corperate customers.

"As a result, with nine models available in 1989, there were no Macs that cost less than $3,000."

Yet they were shocked that sales fell. It is almost a joke. When you own market share and willingly say, "We don't care if we lose it. It isn't worth our time." It is time to re-think what you are doing and ask if you shouldn't be unemployed.

In an interview I saw, Sculley claims the biggest mistake was not jumping to x86 back then.

Reply Score: 1

I'm sure he did good things.
by snozzberry on Thu 23rd Feb 2006 21:33 UTC
snozzberry
Member since:
2005-11-14

Unfortunately, foresight wasn't a strong point with him.

The persistent argument that Macs cost too much is his legacy, not Steve Jobs'. Copland fizzled under him. Hardware vendors lost their shirts making multiple versions of cards to fit the always-changing form factors he approved, and unsurprisingly several abandoned Apple architecture altogether.

Sculley's tenure resembles what's happened to Palm, a company that attempted to imitate Apple with a similar lack of long-term focus.

Again, I think Amelio deserves more credit than Sculley for looking at the product and sales objectively and kicking people until they did the same. For Sculley to blame the platform ("We should have gone to x86 back then") despite the technical inferiority of Intel's chips at the time tells much about his way of looking at challenge.

Reply Score: 1

re: Gassée Moron
by Hae-Yu on Thu 23rd Feb 2006 22:04 UTC
Hae-Yu
Member since:
2006-01-12

Excellent article.

As far as Gassée's character, I would say that's probably accurate.

He may have had success with HP, Apple France, & the Mac II; but after that, his reputation depends solely on those past glories. For 10 years, he had a good run, and the last 20 he's fallen flat.

Under Yocam, his worst impulses (and others') were reigned in. He was excellent as part of THAT team because he had to actually be accountable. For a man with Gassée's insufferable ego, that's an unacceptable situation.

His whole style was to make speeches and let the engineers run amok without any accountability to cost. The engineers approached him with an idea (The Vision), and he threw money at it. He wasn't a visionary. He was a cheerleader.

When Gassée started Be, it was because he once had success in PCs and knew nothing else. "Fine I'll start my own company." Give Sakoman & other engineers credit for the vision. If they had a leader instead of a cheerleader Be might actually have been successful.

Let's look at his last 20 years. Next to Sculley, he is directly responsible for Apple losing to Windows. He's the reason Apples are overpriced as he's the one who insisted on ridiculous profit margins and that mentality has stuck around. Mismanaged Be Inc in the typical "I know nothing about how to run a business" manner that techies did in the 90's. As CEO of PalmSource, Palm is now using Windows and PalmSource is very insecure in its future. His only success was suing MS for having a successful product.

What a brilliant, admirable man. I'm sure Overstock.com really appreciates his business.

Reply Score: 1

Pelly
Member since:
2005-07-07

During the mid-1980s there was also an extreme shift in how Apple dealt with the people they sold computers to.

Under the direction of Steve Wozniak, the entire Apple II line was open and accessible to any & all users.

When Apple released the Macintosh in 1984, the philosophy of Steve Jobs was that the system would be closed and inaccessible to the user. Apple, with the release of the Mac, adopted the closed-system that IBM released their PC with in 1982.

This philosophy prevailed for quite some time, even under Scully. It is believed by many, me included, the extreme philosophical changes between the Apple II & Mac (open vs. closed) was a contributing factor why the Macintosh line never enjoyed the spectacular growth & popularity of the original Apple II line.

Reply Score: 1