When Apple Hit Bottom

[Christiern]

Having remained faithful to Apple since acquiring my first Apple ][ in 1980, I remember well when my PC friends walked around with triumphant pronouncements of the company's demise. Well, scrape the egg off these faces and you can give the population of a small country free breakfast.--CA

When Apple Hit Bottom

A

s you probably know, Apple's been in the news quite a bit lately. (That's "lately," as in, "pretty much every other month for the last five years.")

Nowadays, Apple is a media darling. The critics like the company's direction, and so does Wall Street.

But it wasn't always so. This summer marked the tenth anniversary of Apple's lowest point--a time in 1996 when the company's profits and products were hitting bottom. (Steve Jobs's return to the company he founded was still a year away.)

Not only was Apple NOT a media darling, it was the dog the media loved to kick. The analysts and columnists were amazingly confident that Apple would not live out the year, let alone the decade.

With a little help from the Lexis-Nexis database of all articles from all major publications, it's my pleasure to present, for your nostalgia pleasure, some of their predictions from ten years ago:

• Fortune, 2/19/1996: "By the time you read this story, the quirky cult company...will end its wild ride as an independent enterprise."
  
  
• Time Magazine, 2/5/96: "One day Apple was a major technology company with assets to make any self respecting techno-conglomerate salivate. The next day Apple was a chaotic mess without a strategic vision and certainly no future."
  
  
• BusinessWeek, 10/16/95: "Having underforecast demand, the company has a $1 billion-plus order backlog....The only alternative: to merge with a company with the marketing and financial clout to help Apple survive the switch to a software-based company. The most likely candidate, many think, is IBM Corp."
  
  
• A Forrester Research analyst, 1/25/96 (quoted in, of all places, The New York Times): "Whether they stand alone or are acquired, Apple as we know it is cooked. It's so classic. It's so sad."
  
  
• Nathan Myhrvold (Microsoft's chief technology officer, 6/97: "The NeXT purchase is too little too late. Apple is already dead."
  
  
• Wired, "101 Ways to Save Apple," 6/97: "1. Admit it. You're out of the hardware game."
  
  
• BusinessWeek, 2/5/96: "There was so much magic in Apple Computer in the early '80s that it is hard to believe that it may fade away. Apple went from hip to has-been in just 19 years."
  
  
• Fortune, 2/19/1996: "Apple's erratic performance has given it the reputation on Wall Street of a stock a long-term investor would probably avoid."
  
  
• The Economist, 2/23/95: "Apple could hang on for years, gamely trying to slow the decline, but few expect it to make such a mistake. Instead it seems to have two options. The first is to break itself up, selling the hardware side. The second is to sell the company outright."
  
  
• The Financial Times, 7/11/97: "Apple no longer plays a leading role in the $200 billion personal computer industry. 'The idea that they're going to go back to the past to hit a big home run...is delusional,' says Dave Winer, a software developer."
  

Now, obviously, all of these commentators were wildly, hilariously, embarrassingly wrong. (Unless, of course, the iPod is in fact a mass delusion.)

This is why, when anyone asks me what the future of technology holds, or what kids will be bringing to school in 2016, I politely decline to answer.

In the end, this story really isn't about Apple--or any one company; they all have ups and downs. This story is about the journalists and commentators. It's one thing to report what's happening to a flailing company, and quite another to announce what's *going* to happen. In the technology business, that's a fool's game.

[Stefan Wood]

They do that with politics as well.

[Jim Alfredson]

So what? I just built a PC yesterday that smokes any dual-processor G5 out there for the total cost of $600!

I respect Apple, but their stuff is just too expensive. iPods included.

[Man with the Golden Arm]

they have these guys to thank!

[Big Al]

Hey, as long as Bill Gates is using them as his personal R&D lab, they're never going out of business.

These kind of arguments always remind me of that scene from Pirates of the Silicon Valley, where Steve Jobs tells Bill Gates, "Yeah, well, we're better than you," to which Bill Gates replies, "So what?"

[7/4]

they have these guys to thank!

Ipod too.

[jazzbo]

I don't know who to thank, Woody, Buzz, whoever, I"m just very happy with the iMac, iBook, MacBook and iPod in my household. . . . I only wish I didn't have to use a PC at work! Decidedly inferior as far as "feel" and dependability.

[(BB)]

My new MacBook Pro 2.0 GHz Intel Core Duo with 15.4" display will be arriving in the mail today.

[J Larsen]

So what? I just built a PC yesterday that smokes any dual-processor G5 out there for the total cost of $600!

I respect Apple, but their stuff is just too expensive. iPods included.

They're not using G5 chips in anything anymore, are they?

[medjuck]

I've found the "experts" in the press on stocks and technology to be about as knowledgeable as those writing about politics. Someone should do a similar column with all the press predictions made about the invasion of Iraq -- from both the left and the right.

[Jim Alfredson]

So what? I just built a PC yesterday that smokes any dual-processor G5 out there for the total cost of $600!

I respect Apple, but their stuff is just too expensive. iPods included.

They're not using G5 chips in anything anymore, are they?

Nope. But try to find a used G5 for anything near $600.

The new Core Duo's are supposed to be nice, but again... $$$$. I was playing back 16 tracks of 24 bit audio with heavy plug-ins on over half the tracks last night and my new machine was barely working. I think my CPU usage was at about 20%.

[Claude]

Apple would have died if they hadn't revolutionized their product range by offering the iMac, a very stylish "living room friendly" but affordable computer, while most PCs were just dull grey boxes. It was the new looks and market positioning that boosted Apple sales. On technical advantages alone (hardware and software) Apple could not have justified the price premium.

In the mid 90's Apple computers were a must for professionals in the graphic manipulation and desktop publishing field, but the PC and Windows (NT4) were catching up very quickly. Today Apple has a strong base in the consumer market, which it would not have been possible to have without the new looks of the Apple product range.

Look at the difference:

Power Macintosh 5500 and 9600 (both from 1997)

the IMac (1998)

Edited September 22, 2006 by Claude

[Christiern]

Looks are not everything, Clause. I agree that Apple's stylish design was very important, much as B&O's designs are and have been for decades. That said, a pretty face is less attractive if it does not come with a brain. Apple and B&O also have that in common, both companies backed up their good looks with technical innovation--their products are, simply put, superior. Other companies recognize this, which is why they emulate.

A few years back, I saw a t-shirt with the message: Windows 98 = Mac 89

It was funny, but very true.

[(BB)]

Got the new MacBook fired up. now it is software time.

[Claude]

Looks are not everything, Clause. I agree that Apple's stylish design was very important, much as B&O's designs are and have been for decades. That said, a pretty face is less attractive if it does not come with a brain. Apple and B&O also have that in common, both companies backed up their good looks with technical innovation--their products are, simply put, superior. Other companies recognize this, which is why they emulate.

A few years back, I saw a t-shirt with the message: Windows 98 = Mac 89

It was funny, but very true.

I agree that the looks are not the main advantage of the Mac, but the superior usability that the Macs always had was not enough in the mid-90's to compete with cheap Wintel machines on the mass market. It's the new lifestyle aspect that saved Apple.

Before the iMac, the Mac was the preferred computer of professionals and geeks, but the new design also made it popular among people who normally wouldn't care about technical differences between computers, and for whom the design was the decisive purchasing factor. As far as hardware was concerned, the first iMac was a low end machine and much more expensive than a PC with comparable hardware features.

Edited September 22, 2006 by Claude

[Epithet]

http://en.wikipedia.org/wiki/Mac_OS_memory_management