Sample text for Apple : the inside story of intrigue, egomania, and business blunders / Jim Carlton.


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Counter Chapter One
In the Beginning


By the afternoon of June 17, 1993, the temperature in the asphalt flatlands that sprawl across California's Silicon Valley had climbed to a sizzling ninety-six degrees. This was nearly twenty degrees higher than normal, since the Valley, near San Francisco, lies on the ocean side of a towering mountain range that holds in moist, cool Pacific air.

Infrequently, a heat wave such as this bakes the entire San Francisco Bay area, when the high-pressure system that is usually parked over the Pacific and is responsible for generating those delicious marine breezes shifts over to nearby Nevada and funnels hot, dry air down that same mountain range in a reverse flow. The effect is known locally as a "Diablo wind," because the range those winds pour down is called the Diablo. "Diablo" is a Spanish word meaning "devil," so these are devil winds and appropriately named because they can spark wicked firestorms that wreak destruction and havoc across the region. That same afternoon, a devil's wind of another sort was whipping through the air-conditioned corridors of the worldwide headquarters of Apple Computer Inc. in the Silicon Valley community of Cupertino. The 1980s had recently drawn to a close, capping a decade of dizzying growth for a company that had rocketed out of a garage to become the symbol of America's economic renaissance, a swashbuckling pioneer at the vanguard of the new Information Age. This shining star was the progeny of Steve Jobs, the long-haired whiz kid who had teamed up with fellow college dropout Steve Wozniak to create the first computer "for the rest of us," taking the power of computing out of the stuffy corporate realm and putting it into the hands of the average person for the first time.

By now, though, Jobs was long gone, having succumbed to a coup that had left his onetime friend and mentor, John Sculley, alone at the helm. And on this day, Sculley felt more alone than ever as he sat in the office of his friend and chief financial officer, Joe Graziano, atop a gleaming four-story building called De Anza 7, wondering aloud why his own board of directors was meeting in secret in a nearby conference room. The 1990s had gotten off to a rocky start. Apple's profits were falling under fierce competition. Its outlandish research projects were not panning out. And the bottom had just fallen out of the current quarter, triggering this special board meeting.

"Joe, what do you think they're doing in there?" Sculley asked Graziano in a voice that betrayed growing unease. This from the chairman and chief executive officer of Apple Computer, a man who had become a global celebrity and confidant to presidents and movie stars. As the most visible spokesman for the world's most exciting industry, his face was on the cover of business magazines and crowds wanting to hear his speeches had to be turned away. At age fifty-three, John Sculley was still a young-thinking man, but the toll of running Apple Computer during a decade of rocketing growth and change was evident. He still retained a sleek, well-proportioned physique from a regimen of jogging for miles each day before dawn, but his hair was grayer and his face was creased with lines. Reclining in the chair in his office, which commanded a view of the coastal Santa Cruz Mountains to the west, Graziano, a tall, dark-complected man who loved to race hot rods in his spare time, looked back at his boss and replied, "There's no way they're going to get rid of you, John. That would be really stupid."

The board's meeting, which had started that morning, had dragged on for excruciatingly long hours. Finally, a board member named A. C. "Mike" Markkula Jr., a chain-smoking millionaire who had cofounded Apple with Jobs and Wozniak by backing them with money, notified a Sculley assistant to send in the CEO. Sculley walked into the conference room, called "Synergy," noticing as he closed the door behind him that nary one of the four directors present would look up to make eye contact. Aides outside strained to hear but could make out only muffled voices from the room. After only a few moments, the door reopened and Sculley shuffled out, white as a sheet. Collapsing into the chair of his own office, which like all others on the executive floor was glass-walled, Sculley broke the news to his staff: after ten years on the job, he had been summarily fired as CEO.

And that was not the only indignity. The board told Sculley he could continue to serve as Apple's chairman, but in a powerless, figurehead role in which he would have to report to, of all people, his former subordinate: Michael Spindler. A German national, Spindler before that board meeting had been Sculley's trusted lieutenant overseeing the grind of Apple's daily operations. At least, Sculley had thought he could trust Spindler, a large, gruff man known for such intensity that he was nicknamed "the Diesel." The Diesel occasionally ran out of gas, folding under apparent stress attacks that left him incapacitated on a couch or under his desk. This was the man that Apple's board named to replace Sculley as CEO, entrusting to his meaty hands the future of Apple Computer It was a crossroads for both Apple and a computer industry that had exploded into the world's foremost catalyst for change.

The events culminating in the ouster of John Sculley involved the kind of boardroom drama and intrigue rarely displayed in a more conventional company. But Apple had never pretended to be like any other company, and in fact it went out of its way to thumb its nose at the conventional way of doing things. This was just another day at the office, another poignant moment in a tumultuous history that had unfolded like the story line of a soap opera. Apple had never been like any other company because its leaders and employees had always believed they were working for a cause, a mission to spread the wonders of computer technology to all the corners of the globe. Apple had in fact done just that, to a degree not even Steve Jobs could have envisioned when he almost single-handedly founded the personal computer industry during America's era of disco and Jimmy Carter.

Two decades later, the world is indeed filled with personal computers that look very much like the ones Jobs helped create at Apple. Someone in San Francisco can sit down at a computer in the comfort of home and trade e-mail or even play video games with, at the same time, complete strangers in, say, Brazil, Afghanistan, and China. Office workers the world over have been liberated from the tyranny of pencils and typewriters. With a keyboard and mouse, they now use their computers to write reports, prepare presentations, access library files--and even goof off now and then with a discreet game of solitaire. And learning the "three Rs" is no longer the drudgery it used to be: children are learning how to read, write, and perform mathematical calculations by playing computer games that teach while offering fun.

The world, in short, is a much smaller and more understandable place because of the computer. It is just too bad that Apple, which started it all, did not change as it was changing the world.


Library of Congress subject headings for this publication: Apple Computer, Inc, Management, Computer industry United States Management Case studies