This week we return to the story of Apple, and how they nearly lost everything in the developing cut-throat personal computer market.

The last article left off with a visit to Xerox at Palo Alto.   Xerox has a research and development centre called Xerox PARC where they experimented with new technologies.   Steve Jobs had arranged for Apple engineers to be given three days of access to experience what the Xerox engineers were developing.   Here they were blown away by the Xerox Alto, a development machine that hadn’t yet been sold to the public.   Previously, computers only had text interfaces which made them quite limited.   The Alto had a new graphical interface that was controlled by a new device called a mouse.   By using the mouse, you could move elements around on the screen which opened up a whole new world of opportunities.  Jobs was quoted as saying it was “like a veil being lifted from my eyes. I could see what the future of computing was destined to be.”

The Apple engineers immediately started work on two new projects – Lisa and the Macintosh.   Lisa was supposed to stand for the Local Integrated System Architecture; however, it was really named after Jobs’ daughter Lisa.

The Lisa was more advanced than the Macintosh – it had a higher resolution screen and more memory which meant it was more suitable for the graphical interface that they’d seen at Xerox.   Jobs favoured the Lisa over the Macintosh, but the two teams worked in parallel to develop the next big hit.   His favoritism for the Lisa led to him bypassing management and breaking the rules, which eventually resulted in arguments between himself and then elected CEO Mark Markkula.  Markkula was the third Apple employee and had invested $250,000 of his own money which meant he had the last say.   Jobs was forced to leave the Lisa team and focus on getting the Macintosh to market.   However, the Lisa launched successfully in 1983 and the Macintosh followed a year later in its shadow.

The Lisa was an expensive machine though, and the Macintosh became more popular due to its lower price point.   Over time, several iterations of both machines were released, but in the end, the Macintosh won out and is still around today.

When it became time for Markkula to retire, Jobs enticed John Sculley to leave Pepsi and become the new CEO of Apple.  He’s famously quoted as wining him over by asking him “Do you want to sell sugared water for the rest of your life? Or do you want to come with me and change the world?”

Sculley was quoted as saying “I was taken by this young, impetuous genius and thought it would be fun to get to know him a little better.”

All went well initially and the two worked well together.   Unfortunately, they had different views on management and Sculley soon came to blows with Jobs with how he treated other employees.

During a planned trip when Sculley was going to be out of the country, Jobs lead a mutiny and tried to turn lead team members against him.   One of them alerted Sculley to the attack though and he cancelled his trip to fight the battle.   The next morning Sculley met with the board and asked them to choose between them.   They sided with Sculley and Jobs was devastated.   He was forced in to the position of Apple Chairman, which might sound good, but it isolated him from the day to day operations of the company.

A few months later Jobs resigned and started a new company called “NeXT”.   He took with him a few key Apple employees and together they started work on high end computers designed for academic research instead of home/business use.

In the meantime, Apple chased profit margins.  They increased the price, knowing they’d sell fewer machines, but each with more profit.  At the same time, Microsoft was perfecting Windows which until now was inferior to the Mac’s graphical operating system.   Apple tried different directions – using IBM’s PowerPC processor but it wasn’t enough as their market share dwindled.

By 1996 Apple needed an operating system that could rival Windows.  Its share price was at a 12-year low, so they needed to do something quick.   Instead of developing their own which would take years, they looked into buying in an existing solution.

The solution was Job’s company NeXT.   He convinced the board at Apple to take him back on, but this time as CEO of the company.   Now, given full control over direction he began restructuring the business and its product lines.   In the next article you’ll find out about this turning point and how he turned Apple around into one of the world’s leading technology companies.