Apple Computer, Inc.

One Infinite Loop
Cupertino, CA 95014
(408) 996-1010
www.apple.com

Apple Computer, Inc., considered by many to be the most influential computer company in the world, began its operations in a suburban California garage. In 1976, Steve Jobs and Steve Wozniak launched Apple with one product: a small, simple computer called the Apple I. At the time, almost no one had heard of a personal computer, one small enough and easy enough to be used in the home. Computers were mostly large and expensive, and owned only by corporations. Apple changed that, creating the home-computer industry and introducing many of the personal computer features still common today.

From a Club to a Company

Steve Wozniak and Steve Jobs met as teenagers through a mutual friend. They shared an interest in electronics, and by 1975, were involved with the Homebrew Computer Club, where they exchanged ideas with others interested in computers. The club was centered in what is now called Silicon Valley, a part of central California where electronics and aerospace firms sprang up during the 1960s and 1970s. Leading companies in the region included Lockheed, Hewlett-Packard Company (see entry), and Intel. Jobs and Wozniak both worked briefly at HP; Wozniak sometimes took home parts from the company to build his own computer. He was inspired by the Altair, a computer that came as a kit to be assembled at home. Released in 1975, the Altair was targeted at people with technical skills and never succeeded in the marketplace.

By this time, more than a dozen companies were making microprocessors, the electronic "brains" of computers located on small pieces of silicon, called chips. Chip prices began to fall, making it easier for electronics hobbyists to design their own computers. Still, the chips and other parts were not cheap. When Wozniak began building his first computer, he kept it simple to keep the cost low. This simplicity also made the machine more reliable. In February 1976, Wozniak showed his computer to Jobs and other members of their computer club. Realizing that Wozniak had created something new and amazing, Jobs convinced his friend to go into business making and selling the computer. Wozniak later said, as quoted in Infinite Loop, by Michael Malone, "Steve was the one who thought we could make money … Steve was the hustler."

Jobs had just turned twenty-one when he and Wozniak launched the Apple Computer Company. They sold Jobs's used van and Wozniak's expensive HP calculator to raise money. Working out of the garage at Jobs's parents home in Los Altos, they built their first fifty machines for a local electronics store. The company priced the Apple I at $666.66.

The Apple II

During the rest of 1976, Wozniak and Jobs took steps to ensure Apple's success. On the business side, Jobs consulted with Mike Markkula, a former marketing executive at Intel. Markkula helped plan the company's development and arranged for Apple to receive a $250,000 bank loan. Markkula also recruited Mike Scott, another electronics executive, to become the first president of Apple in 1977.

Wozniak soon produced the Apple II, an improved version of his first computer. The Apple II included a case, keyboard, and power supply. It also had a programming language called BASIC built into its memory, so the machine could start working as soon as it was turned on. The Apple II also displayed color images when hooked to a television (separate computer monitors came later). Wozniak designed the Apple II so owners could easily add new components inside the machine.

Apple introduced its new computer at a computer show in May 1977 and received hundreds of orders in just a few days. Within a year, sales of the Apple II hit $1 million. Early in 1978, Apple added an optional floppy disc drive. A disc worked better than cassette tapes for storing information. The disc gave users an easy way to share data with each other, and programmers began writing new software on the discs.

Wozniak kept improving the Apple II, and sales continued to grow. The company targeted schools and professionals as well as homes. Another boost came from VisiCalc, a new software program that ran only on Apple computers. This program was a spreadsheet—it calculated relations between numbers, usually credits and debits of a company. VisiCalc made the personal computer more than a toy—it became a business tool.

The Road to Macintosh

In 1980, Apple released its third computer, at a price of $3,495. Although it had added features, including more memory and better graphics, the Apple III had technical problems and did not sell well. That year, however, Apple saw its fortunes rise when it went public by selling shares in the company on the New York Stock Exchange. The company sold more than four million shares in less than one hour and raised more than $80 million. Wozniak, Jobs, and other executives instantly became millionaires.

By 1983, Mike Markkula was president of Apple, Jobs was chairman, and Scott was vice chairman. Wozniak was still the main technical wizard in a company that now had more than twenty-five hundred employees. The personal computer industry, however, had changed dramatically in just six years. Apple now had to compete with one of the leading technology companies in the world, IBM, which had started selling personal computers in 1981.

IBM called its computer the PC, for "personal computer." Its basic operating software, or system, was built by the Microsoft Corporation (see entry), a company founded by Paul Allen and Bill Gates (see entry). This software was not compatible with Apple's operating system. Consumers could not use Microsoft-based software on an Apple; Apple users could not run their software on a PC. The PC also used a different processor than Apple's machines, one made by Intel. Apple built its computers around Motorola processors. Eventually, other companies sold computers similar to the IBM model, and the name "PC" was used for all the Microsoft-based machines.

Apple confronted the competition in 1983 by hiring a new president, John Sculley. Jobs hoped Sculley's marketing skills would boost sales. The company also released new machines, the Apple IIe and the Lisa. Selling at almost $10,000, Lisa had two new features: a mouse and a graphical user interface (GUI). The GUI used images to represent software programs. Instead of typing in commands to open a program, users moved the mouse to point at and click on an icon, or picture, that represented the program. These new features made the Lisa easier to use than any other personal computer. The new technology was too expensive for most consumers, however, and the Lisa was a failure.

Apple had more success with its next new machine, the Macintosh, or "Mac." It featured a mouse and GUI, like the Lisa, as well as a smaller disc drive that worked faster than the old floppy discs. The Macintosh also cost much less than the Lisa.

Apple sold versions of the II for two more years, but the Mac and its later models became the company's major product. The improved Macs ran faster and had more memory than the original, and Apple and other companies designed software that took advantage of the Mac's power and ease of use. By 1988, the company had sold more than one million Macs. While achieving that success, however, Jobs had difficult relations with the board of directors, and he was forced out of the company in 1985. Wozniak left the same year.

Ups and Downs

Under Sculley, Apple found a new market with the introduction of desktop publishing. New software made it easy

to use a Mac to design newsletters, magazines, and other printed materials. Macs became the preferred computers of artists, designers, and many writers. Apple also continued to release new products, such as laser printers and a portable (laptop) computer. In 1989, company sales were more than $5 billion. But during the next decade, even as Apple introduced new features to the Mac, it lost ground to PCs. Microsoft had created an operating system, called Windows, which imitated the GUI of the Mac. Consumers could buy PCs much cheaper than Macs, and often with faster processing speeds and more memory.

Although it faced stiff competition, Apple and the Mac developed a core of devoted customers. In 1994, on the tenth anniversary of the Mac, the vice president of a consulting firm told Computer Dealer News, "You talk to people who use Macs and it is astounding the level of personal commitment these people have to the way Apple does things." That loyalty helped Apple remain an important force in the personal computer industry, even at times when sales or profits fell.

During the 1990s, Apple made a number of changes among its top executives. Sculley was replaced by Michael Spindler in 1993, and Gilbert Amelio took over as CEO in 1996. During those years, Apple made news by striking a deal with IBM and Motorola to make a new class of processors. It also waged a long court battle with Microsoft, accusing the software company of stealing patented ideas to build the Windows operating system. Apple finally settled that lawsuit 1997, after it made even bigger news by bringing Steve Jobs back to the company.

The Return of Jobs

At the time, Apple was losing hundreds of millions of dollars, and Jobs promised many changes. He told Time in August 1997, "There were a lot of lousy deals that we're undoing." In one new deal, Jobs made an arrangement with Microsoft, promising to put certain Microsoft software on new Macs in return for a $150 million investment. Long-time Apple fans were appalled; to them, Microsoft chairman Bill Gates was the enemy in a "war" between Macs and PCs. Jobs told Time that people had to move beyond the idea "that for Apple to win, Microsoft has to lose."

Under Jobs, Apple regained some popularity in 1998 with its iMac—the "i" stood for Internet. The new computer featured a monitor and central processing unit (CPU) sharing a rounded plastic case that came in several colors. The colorful devices appealed to customers who wanted a stylish product as well as a good computer. The iMac gave Apple its first profitable year since 1995. Next came a laptop version, the iBook, which proved to be another success. Not all the new Apple products, however, were hits. The PowerMac G4 Cube, released in 2000, packed a lot of processing power into a gleaming cube. But with no monitor included and a high price, the Cube did not sell well.

Entering the twenty-first century, Jobs saw that people were using personal computers in different ways. Through the Internet they could record music, and digital cameras let people take photos and record movies, then store them on a computer. In 2002, Apple released a new iMac that included software to manage the creation and storage of all kinds of digital content. Apple had already introduced the iPod, a small machine that records 100 hours of songs in the MP3 format. In November 2001, Jobs told Fortune, "This is the twenty-first-century Walkman."