John Sculley and Steve Jobs

John Sculley and Steve Jobs

Despite the astonishing figures of sold Macintosh computers and a boost in sales to more than $1.5 billion in 1984 (up 55% from 1983),) Apple soon fell into its most severe crisis, which would only be overcome by Sculley's hard measures and led to the fir ing of its visionary Steve Jobs.

John Sculley had been vice-president at PepsiCo where he had successfully made Pepsi the number one brand in the Cola Wars. Actually, there was no reason for him, one of America's top managers with a secure and highly paid position at PepsiCo, to join a bu nch of young computer nerds at the West coast. The reason why he finally agreed yet is Steve Jobs who impressed him by his visionary ideas and asked him a question to which he did have no answer: "Do you want to spend the rest of your life selling sugared water or do you want a chance to change the world?") This question told him that his "entire life was at a critical crossroads.")

Sculley and Jobs became close friends. They could "complete each other's sentences" because they "were on the same wavelength.") The "dynamic duo", as they were called in an issue of Business Week in October 1983, was esteemed highly in the press and cont ributed significantly to Apple's good reputation in the public at the time.

The downfall came soon, however, when their largely overestimated expectations of the Macintosh sales could not be met. In their euphoria about the revolutionary Mac, they thought they would ship 80,000 units by the end of 1984, and had produced them in ad vance. When the reality brought "merely" 20,000 with a falling tendency, the crisis was evident. Reasons for that decline were that the Macintosh was not as "perfect" as expected - with its 128 KByte RAM (they were then mounted to 512 KB) it was not powerf ul enough, and there were hardly any software applications available yet. Moreover, at the 1985 annual meeting, Jobs and Sculley neglected the fact that 70 percent of the company's sales were still due to the Apple II, whereas the Macintosh accounted for o nly 30 percent. Many sophisticated Apple II designers were annoyed and left the company.

Steve Jobs became more and more angry and aggressive because of the continuing drop in Macintosh sales (merely 2,500 units in March 1985).) He blamed everyone for it, except for himself. Steve just did not see that the "problem was with him.") In the end , he blamed even Sculley for the crisis and wanted to lead the company himself. But this seemed impossible to everyone else: "Steve was a big thinker, an inspirational motivator, but not a day-to-day manager. What was sad was that he could not see it.")

When Sculley was informed that Jobs intended to remove him insidiously from the company, he was quite concerned, but then decided to choose the company's welfare over his friendship to its visionary co-founder. Supported by Markkula and the other members o f the board, in May 1985, he dismissed Steve from his positions as the vice-president and as the leader of the Macintosh division; Jobs did not have any managerial power anymore.

Steve Jobs was quite depressed and made trips to Europe and the Soviet Union. Finally, he decided to leave Apple in December 1985, and sold all his Apple shares. He took along some of the best employees to start his new venture - NeXT. He intended to desig n a workstation for the university sector. In February 1987, billionaire Ross Perot invested $20 million for 16 percent of NeXT. The new computer was introduced to the public in October 1988, priced at $6,000.

At Apple, John Sculley took several measures to save the company, which had become chaotic. In the course of a major reorganization he dismissed 1,200 employees (20% of the total workforce) and put the broken parts of the company together to form one unifi ed Apple. His restructuring saved a lot of costs and consolidated the company.

1986 was Apple's worst year with a decline in net sales from $1.92 (1985) to $1.90 billion. Gradually, Sculley could persuade software companies, which had turned away from Apple, to write applications for the Macintosh.

Apple found its new market in desktop publishing (DTP), for which the Macintosh was predestined. By the time, the Macintosh became a serious tool for the business market and its sales increased again.

Until today, Apple has grown steadily and now reaches net sales of more than $7 billion. Although the Macintosh lost the battle against Big Blue, today it is a successful product and was sold over 2.5 million times worldwide in 1992. Apple remains the seco nd-biggest personal computer manufacturer after IBM and has released innovative products such as QuickTime, an easy to use multimedia software combining sound, video and animation. Its latest development is Newton, a personal digital assistant (PDA), which serves as an electronic notepad and "integrates advanced hand-writing recognition, communication and data-management technologies.")

Martin Groeger
Last modified: Mon Jul 8 05:46:22 PDT