Pre-foundation 's "
blue box" at the
Computer History Museum Steve Jobs and
Steve Wozniak, referred to collectively as "the two Steves", first met in mid-1971, when their mutual friend
Bill Fernandez introduced then 21-year-old Wozniak to 16-year-old Jobs. Their first business partnership began in the fall of that year when Wozniak, a self-educated electronics engineer, read an article in
Esquire magazine that described a device that could place free long-distance phone calls by emitting specific tone chirps. Wozniak started to build his original “
blue boxes”, which he tested by calling the
Vatican City pretending to be
Henry Kissinger wanting to speak to the pope. Jobs managed to sell some two hundred blue boxes for $150 each, and split the profit with Wozniak. Jobs later told his biographer that if it hadn't been for Wozniak's blue boxes, "there wouldn't have been an Apple." By 1972, Jobs had withdrawn from
Reed College and Wozniak from
UC Berkeley. Wozniak designed a video terminal that he could use to log on to the minicomputers at Call Computer. Alex Kamradt commissioned the design and sold a small number of them through his firm. Aside from their interest in up-to-date technology, the impetus for the two Steves seems to have had another source. In his essay
From Satori to Silicon Valley (published 1986), cultural historian
Theodore Roszak made the point that Apple Computer emerged from within the West Coast
counterculture and the need to produce print-outs, letter labels, and databases. Roszak offers a bit of background on the development of the two Steves' prototype models. In 1975, the two Steves started attending meetings of the
Homebrew Computer Club. New microcomputers such as the
Altair 8800 and the
IMSAI 8080 inspired Wozniak to build a microprocessor into his video terminal circuit to make a complete computer. At the time the only
microcomputer CPUs generally available were the $179
Intel 8080 (), and the $170
Motorola 6800 (). Wozniak preferred the 6800, but both were out of his price range. So he watched, and learned, and designed computers on paper, waiting for the day he could afford a CPU. When
MOS Technology released its $20 ()
6502 chip in 1976, Wozniak wrote a version of
BASIC for it, then began to design a computer for it to run on. The 6502 was designed by the same people who designed the 6800, as many in Silicon Valley left employers to form their own companies. Wozniak's earlier 6800 paper-computer needed only minor changes to run on the new chip. By March 1, 1976, Wozniak completed the machine and took it to a
Homebrew Computer Club meeting to show it off. When Jobs saw Wozniak's computer, which later became the
Apple I, he was immediately interested in its commercial potential. Initially, Wozniak intended to share schematics of the machine for free, but Jobs insisted that they should instead build and sell bare
printed circuit boards for the computer. Wozniak originally offered the design to
Hewlett-Packard (HP), where he worked at the time, but was denied by the company on five occasions. Jobs eventually convinced Wozniak to go into business together and start a new company of their own. In order to raise the money they needed to produce the first batch of printed circuit boards, Jobs sold his
Volkswagen Type 2 minibus for $1,500, and Wozniak his
HP-65 programmable calculator for $500.
Apple I and company formation ' parents' home on Crist Drive in
Los Altos, California, where Apple started its operation. Initial work took place in his bedroom and later moved to the home's garage. The company was registered as a California
business partnership. Wayne, who worked at
Atari, Inc. as a chief draftsman, became a co-founder in return for a 10% stake. The two Steves made a last trip to the Homebrew Computer Club and demonstrated the
Apple I (AKA: The Apple Computer).
Paul Terrell, who operated the computer store chain
Byte Shop, was impressed, and gave the two Steves his card, asking them to keep in touch. The next day, Jobs visited Terrell at the
Mountain View Byte Shop store, and tried to sell him the bare circuit boards for the Apple I. Terrell said he was only interested in purchasing the machine fully assembled, and that he would order 50 assembled computers and pay US$500 each on delivery (). Jobs took the purchase order from the Byte Shop to national electronic parts distributor Cramer Electronics, and ordered the components needed. When asked by the credit manager how he would pay for the parts, Jobs replied, "I have this purchase order from the Byte Shop chain of computer stores for 50 of my computers and the payment terms are
COD. If you give me the parts on net 30-day terms I can build and deliver the computers in that time frame, collect my money from Terrell at the Byte Shop and pay you." To verify the purchase order, the credit manager called Paul Terrell, who assured him if the computers showed up, Jobs would have more than enough money for the parts order. The two Steves and their small crew spent day and night building and testing the computers, and delivered to Terrell on time. Terrell was surprised to receive a batch of assembled circuit boards, as he had expected complete computers with a case, monitor and keyboard. Nonetheless, he kept his word and paid the two Steves the money promised. The Apple I went on sale in July 1976 as an assembled circuit board with a retail price of $666.66. Wozniak later said he had had no idea about the relation between the number and the
mark of the beast, and that he came up with the price because he liked repeating digits. About 200 units of the Apple I were eventually sold. The Apple I computer had some notable features, including the use of a
TV display, whereas many machines had no display at all. This was not like the displays of later machines; the text was displayed at 60 characters per second – still faster than the teleprinters of contemporary machines of that era. The machine had
bootstrap code on
ROM, making it easier to start up. At the insistence of Paul Terrell, Wozniak designed a cassette interface for loading and saving programs, at the then-rapid pace of 1200 bit/s. The simple machine was a masterpiece of design using far fewer parts than anything in its class, and earned Wozniak his reputation as a designer. Jobs looked for investments to expand the business, but banks were reluctant to lend him money; the idea of a computer for ordinary people seemed absurd at the time. In August 1976, Jobs approached his former boss at Atari,
Nolan Bushnell, who recommended that he meet with
Don Valentine, the founder of
Sequoia Capital. Valentine was not interested in funding Apple, but in turn introduced Jobs to
Mike Markkula, a millionaire who had worked under him at
Fairchild Semiconductor. Markkula saw great potential in the two Steves, and became an
angel investor of their company. He invested $92,000 in Apple out of his own property while securing a $250,000 () line of credit from Bank of America. In return, Markkula received a one-third stake in Apple. Apple Computer, Inc. was incorporated on January 3, 1977. The new corporation bought out the partnership the two Steves had formed nine months earlier. In February 1977, Markkula recruited
Michael Scott from
National Semiconductor to serve as the first president and CEO of Apple Computer, as the two Steves were both insufficiently experienced and he was not interested in taking that position himself. That same month, Wozniak resigned from his job at
Hewlett-Packard to work full-time for Apple.
Apple II Almost as soon as Apple had started selling its first computers, Wozniak moved on from the Apple I and began designing a greatly improved computer: the
Apple II. Wozniak completed a working prototype of the new machine by August 1976. The two Steves presented the Apple II computer to the public at the first
West Coast Computer Faire on April 16 and 17, 1977. In the May 1977 issue of
Byte, Wozniak said of the Apple II design, "To me, a personal computer should be small, reliable, convenient to use, and inexpensive." The Apple II went on sale on June 10, 1977, with a retail price of $1,298. The computer's main internal difference from its predecessor was a completely redesigned TV interface, which held the display in memory. Now not only useful for simple text display, the Apple II included graphics and, eventually, color. During the development of the Apple II, Jobs pressed for a well-designed plastic case and built-in keyboard, with the idea that the machine should be fully packaged and ready to run out of the box. This was almost the case for the Apple I computers, but one still needed to plug various parts together and type in the code to run BASIC. Jobs wanted the Apple II case to be "simple and elegant", and hired an industrial designer named
Jerry Manock to produce such a case design. Apple employee #5
Rod Holt developed the
switching power supply. While early Apple II models use ordinary cassette tapes as storage devices, they were superseded in 1978 by the introduction of a -inch
floppy disk drive and interface called the
Disk II. The Disk II system was designed by Wozniak and released with a retail price of $495. In 1979, the Apple II was chosen to be the desktop platform for what became the first
killer application of the business world:
VisiCalc, a
spreadsheet. So important that the Apple II became what
John Markoff described as a "VisiCalc accessory", the application unexpectedly created a business market for the computer; Wozniak later said that small businesses bought 90% of Apple IIs, not the hobbyists he and Jobs had expected. It gave home users an additional reason to buy Apples: Compatibility with the office. Before VisiCalc, Apple had been a distant third place competitor to
Commodore and
Tandy. The Apple II was one of the three "
1977 Trinity" computers generally credited with creating the
home computer market (the other two being the
Commodore PET and the Tandy Corporation
TRS-80). A number of different models of the Apple II were built thereafter, including the
Apple IIe and
Apple IIGS, which continued in public use for nearly two decades. The
Apple II series went on to sell about six million units in total before it was discontinued in 1993.
Apple III with
Apple Monitor III While the Apple II was already established as a successful business-ready platform because of VisiCalc, Apple management was not content. The Apple III was designed to take on the business environment in an attempt to compete with
IBM in the business and corporate computing market. The development of the Apple III started in late 1978 under the guidance of Wendell Sander, and was subsequently developed by a committee headed by Jobs. The Apple III was first announced on May 19, 1980, with a retail price ranging from $4,340 to $7,800, and released in November 1980. The Apple III was a conservative design for the era, however Jobs wanted the heat generated by the electronics to be dissipated through the
chassis of the machine rather than by the more usual cooling fan. The case was not sufficient to cool the components and the Apple III was prone to overheating, causing the
integrated circuit chips to disconnect from the motherboard. Customers who contacted Apple customer service were told to raise their computers into the air, and then let go to cause the integrated circuits to fall back into place. Thousands of Apple III computers were recalled. A new model was introduced in 1983 to try to rectify the problems, but the damage was already done.
Apple IPO In the July 1980 issue of
Kilobaud Microcomputing, publisher
Wayne Green stated that "the best consumer ads I've seen have been those by Apple. They are attention-getting, and they must be prompting sale." In August, the
Financial Times reported that On December 12, 1980, Apple went public on the
NASDAQ stock exchange with the ticker symbol "AAPL", selling 4.6 million shares at $22 per share ($.10 per share when adjusting for
stock splits ), generating over $100 million, which was more capital than any IPO since
Ford Motor Company in 1956. Several venture capitalists cashed out, reaping billions in long-term capital gains. By the end of the day, the stock rose to $29 per share and 300 millionaires were created, including the two Steves. Around this time Wozniak offered $10 million of his own stock to early Apple employees, something Jobs refused to do. The results of the vote were surprising: a young programmer,
Randy Wigginton, received enough votes to be added to Apple's board of directors, through the use of
cumulative voting by a few major shareholders.
Competition from the IBM PC By August 1981 Apple was among the three largest microcomputer companies, perhaps having replaced Radio Shack as the leader; revenue in the first half of the year had already exceeded 1980's $118 million, and
InfoWorld reported that lack of production capacity was constraining growth. Because of VisiCalc, businesses purchased 90% of Apple II computers; large customers especially preferred Apple.
IBM entered the personal computer market that month with the
IBM PC in part because it did not want products without IBM logos on customers' desks, but Apple had many advantages. While IBM began with one microcomputer, little available hardware or software, and a couple of hundred dealers, Apple had five times as many dealers in the US and an established international distribution network. The Apple II had an
installed base of more than 250,000 customers, and hundreds of independent developers offered software and peripherals; at least ten databases and ten word processors were available, while the PC had no databases and one word processor. The company's customers gained a reputation for devotion and loyalty.
BYTE in 1984 stated that The magazine noted that the loyalty was not entirely positive for Apple; customers were willing to overlook real flaws in its products, even while holding the company to a higher standard than for competitors. The Apple III was an example of its autocratic reputation among dealers that one described as "Apple arrogance". After examining a PC and finding it unimpressive, Apple confidently purchased a full-page advertisement in
The Wall Street Journal with the headline "Welcome, IBM. Seriously". The company prioritized the III for three years, spending what Wozniak estimated as $100 million on marketing and R&D while not improving the Apple II to compete with the PC, as doing so could hurt III sales. Microsoft head
Bill Gates was at Apple headquarters the day of IBM's announcement and later said "They didn't seem to care. It took them a full year to realize what had happened". The PC almost completely ended sales of the III, the company's most comparable product. The II still sold well, with Apple being the leading computer manufacturer in the United States where units were sold between 1978 and 1982. But by 1983, the PC surpassed the Apple II as the best-selling personal computer. IBM recruited the best Apple dealers while avoiding the discount
grey market they disliked. The head of a retail chain said "It appears that IBM had a better understanding of why the Apple II was successful than had Apple".
Gene Amdahl predicted that Apple would be another of the many "brash young companies" that IBM had defeated. By 1984 the press called the two companies archrivals, but IBM had $4 billion in annual PC revenue, more than twice that of Apple and as much as the sales of it and the next three companies combined. A
Fortune survey found that 56% of American companies with personal computers used IBM PCs, compared to 16% for Apple. Small businesses, schools, and some homes became the II's primary market.
Xerox PARC and the Lisa In 1979, in return for the right to purchase $1 million worth of Apple’s pre-IPO stock,
Xerox granted Apple access to its
Palo Alto Research Center (PARC). Jobs, along with his Apple colleagues, visited PARC twice in November and December of 1979, and he was greatly impressed by the advanced
graphical user interface (GUI) of the
Xerox Alto computer. After the visits to PARC, Jobs decided to implement a GUI like the one he had seen there in the
Apple Lisa, a business-oriented computer that had been under development at Apple since July 1979. Jobs took the lead of the Lisa project from early 1980, but the development of the Lisa was disrupted due to his excessive technical demands. In September 1980, Jobs was removed from the Lisa project. The first iteration of Apple's
WIMP interface was a floppy disk where files could be spatially moved around. After months of usability testing, Apple designed the Lisa interface of windows and icons. Finally released in January 1983, the Lisa featured many innovative functions such as a GUI and a
mouse, but its extremely high price of US$9,995 () and the lack of software compatibility drove business users away, resulting in sluggish sales. More than $150 million was reportedly spent on the development of the Lisa, but only about 10,000 units were sold, resulting in significant losses for Apple.
Macintosh and the "1984" commercial The Macintosh project was started in September 1979 by
Jeff Raskin, an early Apple employee and a computer scientist. The
Macintosh, named after Raskin’s favorite
type of apple, was originally conceived as a low-cost
portable computer. The project entered a new phase when Steve Jobs, having been removed from the Lisa project, joined the team in January 1981. Jobs soon took over the project from Raskin to redefine the Macintosh as a high-performance desktop machine similar to the Lisa, featuring a
mouse-driven
graphical user interface and powered by the
Motorola 68000 microprocessor. Wozniak, who led the initial design and development with Raskin was on leave during this time due to an airplane crash, making it easier for Jobs to seize control of the program. By 1984 computer dealers saw Apple as the only clear alternative to IBM's influence; some even promoted its products to reduce dependence on the PC. Its debut was announced by a single national broadcast of a US$1.5 million television commercial, "
1984" (). Directed by
Ridley Scott and aired during the third quarter of
Super Bowl XVIII on January 22, 1984, it is considered a "watershed event" and a "masterpiece." The commercial alludes to
George Orwell's novel
Nineteen Eighty-Four which describes a
dystopian future of enforced conformity. In the commercial a heroine represents the coming of the Macintosh to save humanity, and ends with the words: "On January 24th, Apple Computer will introduce Macintosh. And you'll see why 1984 won't be like 1984.” On January 24, 1984, the Macintosh went on sale with a retail price of $2,495. It came bundled with two applications designed to show off its interface:
MacWrite and
MacPaint. On the same day, an emotional Jobs introduced the computer to a wildly enthusiastic audience at Apple's annual shareholders meeting held in the Flint Auditorium; Macintosh engineer
Andy Hertzfeld described the scene as "pandemonium". The Macintosh was widely acclaimed by the media with strong initial sales supporting it. However, the slow processing speed and limited software led to a rapid sales decline in the second half of 1984. The Macintosh was too radical for some, who labeled it a mere "toy". Because the machine was entirely designed around the GUI, existing text-mode and
command-driven applications had to be redesigned and the programming code rewritten; this was a challenging undertaking that many
software developers shied away from, and resulted in an initial lack of software for the new system. In April 1984
Microsoft's
Multiplan migrated over from
MS-DOS, followed by
Microsoft Word in January 1985; in return for Microsoft's commitment to Macintosh, Apple agreed to not provide
software development kits and prototype computers to companies with applications competing with Microsoft's. In 1985,
Lotus Development introduced
Lotus Jazz after the success of
Lotus 1-2-3 for the IBM PC, although it was largely a flop. Apple introduced
Macintosh Office the same year with the
lemmings ad, infamous for insulting potential customers. It was not successful. Apple also ran a "Test Drive a Macintosh" promotion, in which potential buyers with a credit card could take home a Macintosh for 24 hours and return it to a dealer afterwards. While 200,000 people participated, dealers disliked the promotion, the supply of computers was insufficient for demand, and many were returned in such a bad shape that they could no longer be sold. This marketing campaign caused CEO
John Sculley to raise the price from US$1,995 () to US$2,495 ().
Jobs and Wozniak leave Apple By early 1985, the Macintosh's failure to defeat the IBM PC triggered a power struggle between Jobs and CEO
John Sculley, who had been hired two years earlier by Jobs using the famous line, "Do you want to sell sugar water for the rest of your life or come with me and change the world?" Sculley and Jobs' visions for the company greatly differed. The former favored
open architecture computers like the Apple II, sold to education, small business, and home markets less vulnerable to IBM. Jobs wanted the company to focus on the
closed architecture Macintosh as a business alternative to the IBM PC. President and CEO Sculley had little control over chairman of the Board Jobs' Macintosh division; it and the Apple II division operated like separate companies, duplicating services. Although its products provided 85% of Apple's sales in early 1985, the company's January 1985
annual meeting did not mention the Apple II division or employees. This frustrated Wozniak, who left active employment at Apple in the spring of that year to pursue other ventures, stating that the company had "been going in the wrong direction for the last five years" and sold most of his stock. Despite these grievances, Wozniak left the company amicably and continued to represent Apple at events or in interviews, Wozniak also remained an Apple shareholder following his departure. Wozniak's first venture after leaving Apple was founding
CL 9 in 1985 and creating the first programmable
universal remote control two years later, called the "CORE", stating that "I never felt like I was turning my back on my own company [Apple]." He told Apple's director of engineering
Wayne Rosing about his decision to step away from the company, but not his longtime business partner and friend Steve Jobs. Wozniak guessed that Jobs first heard the news from an article in
The Wall Street Journal where he mentioned that he wasn't leaving because he was disgruntled with Apple, but that he was excited to build a new remote control. The article nevertheless included some of Wozniak's criticisms of Apple, and Wozniak later said "it was an accident, but it's been picked up by every book and every bit of history [since]." In a show of defiance at being set aside by Apple Computer, Jobs sold all but one of his 6.5 million shares in the company for $70 million. Jobs then acquired the
visual effects house,
Pixar for $5M (). NeXT Inc. built computers with futuristic designs and the UNIX-derived
NEXTSTEP operating system. NeXTSTEP eventually developed into Mac OS X. While not a commercial success, due in part to its high price, the NeXT computer introduced important concepts to the history of the personal computer, including serving as the initial platform for
Tim Berners-Lee as he was developing the
World Wide Web. Sculley reorganized the company, unifying sales and marketing in one division and product operations and development in another. Despite initial marketing difficulties, the Macintosh brand was eventually a success for Apple, due to its introduction of
desktop publishing (and later
computer animation) through Apple's partnership with
Adobe Systems. This partnership bore both the
LaserWriter printer, one of the first commercially successful laser printers (containing a built-in interpreter for Adobe's
PostScript page description language), and
Aldus PageMaker, the first commercially successful desktop publishing software. The Macintosh became the default platform for many arts industries including cinema, music, advertising, and publishing. ==1985–1997: Sculley, Spindler, Amelio==