Apple

Apple Inc.
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Corporations That Changed the World
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Apple Inc.
Jason D. O’Grady
Corporations That Changed the World
GREENWOOD PRESS
Westport, Connecticut • London
Library of Congress Cataloging-in-Publication Data
O’Grady, Jason D.
Apple Inc. / Jason D. O’Grady.
p. cm. — (Corporations that changed the world, ISSN 1939–2486)
Includes bibliographical references and index.
ISBN 978 – 0 – 313 – 36244 – 6 (alk. paper)
1. Apple Computer, Inc. 2. Computer industry—United States. I. Title.
HD9696.2.U64O676 2009
338.4'70040973— dc22 2008038757
British Library Cataloguing in Publication Data is available.
Copyright © 2009 by Jason D. O’Grady
All rights reserved. No portion of this book may be
reproduced, by any process or technique, without the
express written consent of the publisher.
Library of Congress Catalog Card Number: 2008038757
ISBN: 978 – 0 –313 –36244 – 6
ISSN: 1939–2486
First published in 2009
Greenwood Press, 88 Post Road West, Westport, CT 06881
An imprint of Greenwood Publishing Group, Inc.
www.greenwood.com
Printed in the United States of America
The paper used in this book complies with the

Permanent Paper Standard issued by the National
Information Standards Organization (Z39.48–1984).
10 9 8 7 6 5 4 3 2 1
This book is dedicated to my wife Elizabeth, my daughter Ginger,
and my family for their unwavering support.
This page intentionally left blank
Contents
Preface ix
Introduction xi
Chapter 1 Origins and History 1
Chapter 2 Founders and Key Players 17
Chapter 3 Historical Context 33
Chapter 4 Strategies and Innovations 42
Chapter 5 Impact on Society 67
Chapter 6 Technology Timeline 69
Chapter 7 Macworld Expo 143
Chapter 8 Apple Leadership 146
Chapter 9 Competition 153
Chapter 10 Finances 159
Chapter 11 Future Prospects 163
Glossary 167
Notes 171
Bibliography 177
Index 179
Preface
Few companies can claim the successes that Apple Inc. can, from
practically inventing the personal computer to creating an entirely
new market for portable media players to re-inventing how we pur-
chase and enjoy music. A case can be made that Apple took personal
electronics to an entirely new level, surpassing even Sony, largely
considered to be the original pioneer of consumer electronics. Apple
is the little company that could. Starting out as the minority player in
an industry crowded with larger and better-capitalized competitors,
Apple turned the industry on its ear.
Two guys named Steve, working in a garage in 1976, created a
prototype computer designed to be different in a way no one thought
possible: It would be easy to use. Those two Steves not only succeeded
with that product, but they also broke ground in the business world
in a new and different way: They proved you could not only have fun
at work, but that pursuing a capitalist dream could be hip.
Starting with the Macintosh—a niche machine at best—the com-
pany slowly built upon its successes; from the iMac to the iPod to the
iPhone, there’s no denying the impact of the Cupertino company on
the computer industry and the larger consumer electronic world as a
whole. Apple began by revolutionizing once-complex machines into
easy-to-use “personal” computers by pioneering technologies like the
Graphical User Interface (GUI) and the mouse and taking them into
the mainstream. The Apple II put the concept of personal computers
into the consciousness of the average consumer. Computers were no
longer relegated to scientists and PhDs; they had become accessible
to the average consumer.
The second coming began with the return of Steve Jobs to Apple
in 1997. Jobs ushered in the next generation of Apple with the iPod
media player and then the iPhone—two devices so revolutionary
that Apple dropped the “Computer” from its name, changing the
official corporate name to Apple Inc. Apple metamorphosed from a
x Preface
little company that made computers to a company that made a difference.

Critics have written Apple off time and again, yet it rises from the ashes
to astound its detractors and delight its customers. That’s not luck or hap-
penstance—it’s vision, dedication, and persistence.
In addition to pioneering in computer technology, Apple single-hand-
edly changed the way we consume music. The company’s svelte media
player (the iPod) has sold more than 160 million units1 and a music service
(iTunes) has sold more than 5 billion songs2 and both continue to climb.
iPod and iTunes work so seamlessly together that it’s hard to imagine
how we used to listen to music before them. Almost no one could have
predicted that Apple would have revolutionized music, consumer elec-
tronics, and culture in the way that it did. The Macintosh and its succes-
sors captured the hearts and minds of computer users so deeply that being
a “Mac person” makes you a member of a special club.
How did the company do it? Let’s find out.
ACKNOWLEDGMENTS
Steve Wozniak, Owen Linzmayer, Leander Khaney, John Greenleigh,
Dan Farber
Ian Page (Mac Tracker), Glen Sanford (Apple-History.com)
Mack and Manco’s pizza and Toll House chocolate chips during those
late nights, Pandora.com and its dub reggae station for providing
the soundtrack.
Introduction
Apple Inc. is one of the most influential companies in technology today,

but it wasn’t always that way. What started out as a one-off hobby ma-
chine that a talented electronics wiz built for himself (and to show off to
friends) became the core of one of the largest and most successful com-
puter companies of all time. Apple turned the hobbyist’s tool of choice—
the computer—into an essential life tool that we can’t live without today.
When the computer became personal and within the reach of the
average consumer, worlds collided. What was originally intended as a
high-tech device reserved for scientists, mathematicians, and intellectu-
als suddenly became the domain of an average person with an average
salary. Suddenly, computing power that was previously reserved for elite
members of the aerospace and defense industry was within the reach of
you and me. Processing power never before imaginable was now not only
within reach but fit neatly on the top of a desk.
But what could you do with a tool like that? When Steve Wozniak
and Steve Jobs created the Apple I, there was no software available for
it. Everything had to be hand coded into the machine. Later the Apple II
ushered in the era of the cassette drive for saving and loading programs,
which opened all kinds of doors. What they built was more than simply
a tool; it was a platform for others to build upon. Soon hundreds of pro-
grams followed. Apple had started a cottage industry in software to go
along with its amazing personal computer.
Fast forward a few years and computers are starting to crop up every-
where. A market for software applications thrives, as do sales of ancillary
equipment like peripherals, upgrades, and accessories. All the while a
community of like-minded individuals congregate to discuss their suc-
cesses, exploits, failures, and questions. People are attracted to more than
just technology; they enjoy the social and community aspects that are as-
sociated with it. Being close to a particular technology, like computers,
puts you in contact with others that share your interests. This type of com-
munity fosters learning and intellectual discussion and slowly develops
into a unique culture unto itself.
xii Introduction
Apple had an amazing impact on technology, society, and the world.

And it continues to innovate to this day. Using the personal computer as
a foundation, Apple has turned technology into an essential tool of our
daily lives. Today computers provide information, communication, and
entertainment in ways that we never could have imagined back in 1976.
Thanks to the Internet and the graphical user interface, a person with a
computer today has access to more information at his or her fingertips
than rulers of the land had only a century ago.
Now information is getting faster and the devices are getting smaller.
It once took a large bulky computer and a slow dial-up modem to access
the Internet. Now it can be called up with a few taps and pinches of a fin-
ger on a touch screen that fits into your pants pocket.
Apple is a revolutionary company in many ways. This book will ex-
amine several ways that Apple changed the world:
1. Inventing the personal computer (PC)—Apple started the per-

sonal computer revolution with the Apple II in the 1970s and
made computers even more easy to use in the 1980s with the
Macintosh.
2. Making the computer easy to use—Innovations such as the
mouse, the GUI, trackpad, and click wheel gave us easy, intui-
tive ways to access our digital content.
3. Developing software that was extremely user-friendly—Apple
created a low barrier to entry by creating software that is usable
and intuitive so users can begin without reading the manual.
A consistent and predictable user interface across applications,
interoperability, and a built-in help system make us productive
right out of the box.
4. Making the Internet easy—The iMac and iBook allowed custom-
ers to get online within 15 minutes of opening the box and set a
new standard for Internet access that is still the envy of the indus-
try. Apple then made it equally easy to post movies and photo
galleries on the Web. AirPort wireless access cut the cords.
5. Introducing digital media management—iTunes, iPhoto, and
iMovie spearheaded the digital media revolution and made it
easy to manage all of our digital content.
6. Introducing digital media playback—iPod, iTunes, and iPhone
set the standard for listening to music, watching television and
movies, and making phone calls too.
7. Saving digital media commerce—Apple single-handedly res-
cued the music industry from the perils of peer-to-peer file-
sharing networks. Digital entertainment that was headed for
certain death thanks to pirates thrives today on iTunes.
8. Helping advance computer technology—Apple popularized
technology, like FireWire for high-speed data access and Wi-Fi for
Introduction xiii
wireless Internet access, making data move faster and without the
clutter of wires.
9. Making communication easier—iPhone revolutionized mobile
phones and iChat AV made it easy to videoconference with
family and colleagues across the globe.
In the first chapter we’ll take a fun and historical look at how Apple
came to be and delve into the background of one of the world’s most in-
teresting companies.
Chapter One
Origins and History
There’s a certain romance about the history of Apple; people often refer to
it as being founded in a garage and while it sounds great—everyone loves
the story of the underdog making it—it’s not entirely true. The two Steves
started out building Apple computers in Steve Jobs’s parents’ living room
and they later moved their production operation into the garage when
they ran out of room.
HP’s Garage Roots

Apple wasn’t the only company to have roots in a garage. Hewlett-
Packard founders William R. Hewlett and David Packard got their
start by developing an audio oscillator in a garage at 367 Addison
Avenue in Palo Alto—not far from where Steve Jobs grew up in Los
Altos. The HP Garage was registered as California Historical Land-
mark #976 on August 13, 1987.a
a
California Office of Historic Preservation (OHP), “Birthplace of Silicon Valley, Histor-
ical Landmark #976,” http://ohp.parks.ca.gov/listed_resources/default.asp?num=976.
Apple began in the Santa Clara Valley vicinity of California—known

for its fruit orchards—when Stephen Gary Wozniak (Woz) was introduced
to Steven Paul Jobs by Woz’s neighbor Bill Fernandez. Woz and Fernandez
built their first computer out of parts that were discarded by local compa-
nies for cosmetic reasons. They called it the “cream soda computer” after
the beverage they loved to drink while building computers in the Fernan-
dez family garage.
The problem with computers of the time was that components were
prohibitively expensive. Woz was relegated to designing computers on
paper where he focused on trying to minimize the amount of components
required—which would keep the electronics as clean as possible. In June
1971, after withdrawing from college, the 16-year-old Jobs was introduced
2 Apple Inc.
to 21-year-old Wozniak by Fernandez. Jobs eventually convinced Woz-

niak to mass produce and sell his computer design. The synergy between
the two was undeniable. Woz was the engineer and Jobs was a marketing
maven; between them they had the skills to build and promote computers
in a way that no one had discovered yet.
When Jobs needed computer parts for a class project, he looked up
Bill Hewlett (of Hewlett-Packard fame) in the telephone book and called
him at home. Hewlett gave Jobs the parts that he needed and, because
he showed such initiative, a summer job at HP assembling frequency
counters.
In the fall of 1971 Woz returned to academics, enrolling at the Uni-
versity of California at Berkeley, and got into business with Jobs shortly
thereafter. Wozniak was skeptical at first but was later convinced by Jobs
to do it because, regardless of what happened, they could tell their grand-
children that they started their own company.
Wozniak built “blue boxes” (see the sidebar) from instructions his
mom showed him in a 1971 issue of Esquire. Jobs purchased the parts and
sold the devices in the dorms for $150 each under the alias Oaf Tobark
and split the profit with Woz (a.k.a. Berkeley Blue), whose main job was
building the devices.1
Anatomy of a Blue Box

A blue box is an early phone-hacking tool that emulated phone com-
pany tones and signals. By placing the speaker of the blue plastic box
(hence the name) up to a standard telephone receiver, the owner
could essentially route his or her own calls, circumventing the phone
company’s billing system. At the time, long-distance calling could
be very expensive, and it was very desirable to be able to make free
calls—especially for someone with family and loved ones on the
other side of the country.
APPLE I
In 1975, Wozniak attended meetings of the Homebrew Computer
Club, an early computer enthusiast group that met in Silicon Valley. Sev-
eral famous Silicon Valley pioneers (both ethical and unethical) had been
members of Homebrew at some point or another. It was a perfect venue to
both hone their technical chops and demonstrate their technical prowess.
One of Wozniak’s first major projects was the Computer Conver-
sor. A friend that ran a computer time-sharing company, Alex Kamradt,
solicited Woz’s help in developing a video-teletype machine that could
be used with his firm’s minicomputers. But a teletype was only the
beginning; Woz was motivated by a new generation of microcomput-
ers like the Altair 8800 and he got the idea to incorporate a dedicated
Origins and History 3
microprocessor into his lowly teletype and turn it into a fully functional
computer.
Central Processing Units (CPUs) like the Intel 8080 ($179) and the
Motorola 6800 ($170) were out of his price range, so Woz instead designed
computers on paper while waiting for prices to drop. Wozniak was work-
ing for Hewlett-Packard (whose bread and butter were calculators) and
tinkering with computers like the Altair at night. “All the little computer
kits that were being touted to hobbyists in 1975 were square or rectangular
boxes with non-understandable switches on them,” claimed Wozniak.2
After Woz discovered that microprocessor and memory prices had
fallen dramatically, he realized that he could purchase everything he
needed to build a computer with one month’s salary from HP. In 1976
MOS Technology released the 6502 processor for only $20 and Woz
adapted his 6800 paper designs to run on it. Wozniak completed the
Apple I, and took it to a Homebrew meeting to show it off. Jobs was in
attendance and immediately saw the potential of producing and selling
the computer to hobbyists.
The Apple I was notable because it used a standard television as the
monitor, whereas many computers at the time had no display at all. Al-
though it was faster than teletypes of the day, the Apple I was no speed
demon. It was, however, pioneering in terms of design. Woz was a master
at minimizing the amount of chips that his designs required. This reduced
both price and complexity—making his machines easier to debug if some-
thing went wrong. It was Woz’s chip reduction strategy that endeared him
to fellow engineers at Homebrew. This was the feature for which his peers
respected him the most.
One nice feature was that the Apple I had all of the boot code on a
Read Only Memory (ROM) chip, which allowed it to boot up relatively
fast. At the urging of Paul Terrell, owner of the Byte Shop in Mountain
View, Woz included the ability to load and save programs to a cassette
drive, which used standard audiocassettes.
After seeing the design of the Apple I in action, Terrell immediately
gave Jobs an order for 50 units (at $666.66 each). Jobs took his first pur-
chase order to Cramer Electronics, in an attempt to leverage it for the parts
he and Woz needed to actually build the first batch of computers. When
the massive parts distributor balked at Jobs’s lack of credit, he flashed the
purchase order from the Byte Shop for 50 computers and showed that the
payment terms were COD.
Jobs requested net 30 day terms so that he could deliver the comput-
ers to the Byte Shop and pay Cramer Electronics on time. Once the credit
manager verified the Jobs purchase order, he extended credit terms. Jobs,
Wozniak, and a small crew worked day and night to deliver the original
50 Apple I kits. Jobs and Wozniak’s friend, Ronald Wayne, helped to build
the machines in Jobs’s living room. The group borrowed, scrounged, and
even sold prize items (like Woz’s calculator and Jobs’s VW bus) to pay for
4 Apple Inc.
the parts needed to assemble the Apple I kits. Jobs secured the parts while
Wozniak and Wayne, who bought into the company, built the first batch
of 200 Apple Is.
The Name Apple Computer

There has been a lot of speculation over the years about the name
Apple Computer and its origins. Many speculate that it was homage
to Apple Records, The Beatles music label, as both Jobs and Wozniak
were big fans of the Fab Four. Others believe that Apple was chosen
because it would fall before Atari in the phone book—Atari was a
major Silicon Valley company at the time.
Steve Jobs decided on Apple Computer in 1976 because he had
grown fond of visiting a small apple farm owned by his friends. Jobs
would spend time helping out at the farm, and he told Woz about his
idea to use Apple as the name. The pragmatic Woz immediately rec-
ognized the conflict in using a name so similar to The Beatles’ record
label, but they couldn’t think of anything that was better so they ran
with it.
The machine that started it all—The Apple I motherboard. Image © John Greenleigh,
www.flipsidestudios.com.
Apple went through several phases in its ascent to tech glory and had
its share of bumps along the way. After the Apple I was complete, Woz
already had something better in mind. Like most good engineers, he was
always thinking about ways to make his designs better. He wanted to op-
timize them, use fewer chips and less expensive materials, make them
faster, more powerful, and colorful. Since Apple was just a couple of en-
trepreneurial guys that didn’t have the luxury of a large staff or an R&D
(Research and Development) budget, they had to persevere and struggle
to keep it alive, but they had fun doing it.
APPLE II
Wozniak used proceeds from sales of the Apple I to start construction
of its successor, the improved and enhanced Apple II. The Apple II fea-
tured a much better television interface that allowed it to display graphics,
and eventually color. Jobs insisted that the Apple II have an improved case
and built-in keyboard so that the new machine would be instantly usable,
unlike the Apple I models that required assembly.
All the improvements Woz wanted in the Apple II were starting to add
up, and Jobs knew that he needed to secure outside funding if the Apple II
was going to become a reality. Daunted by the task of raising money for
the Apple II, Wayne, who had a previous failed venture, dropped out of
the company and sold his stake back to Jobs and Wozniak. Jobs ran into
many roadblocks in his attempts to raise capital for the project. Banks
At the forefront of the personal computer revolution—The Apple IIe. Image © John
Greenleigh, www.flipsidestudios.com.
6 Apple Inc.
were reluctant to lend the pair money because they had doubts about the
marketability of a computer for the average user.
A major breakthrough occurred when Jobs met Armas Clifford “Mike”
Markkula Jr., who agreed to co-sign for a bank loan for $250,000. Hav-
ing secured seed money from Jobs’s angel investor, the three had enough
working capital to produce the Apple II and formed Apple Computer on
April 1, 1976.
Read more about Mike Markkula in Chapter 2, “Founders and

Key Players.”
The trio used their bank loan to manufacture an entirely new Apple II
case, designed by Jerry Manock, and the complete Apple II debuted on
April 16, 1977. The machine was a smash hit, and the Apple II eventually
took credit for what we now know as the personal computer. The Apple II
was wildly popular, selling millions of units and spawning a number of
successors, including the Apple IIe and IIGS.
APPLE COMPUTER INC.

Apple was incorporated January 3, 1977, and had its Initial Public Of-
fering (IPO) on December 12, 1980. The stock opened at $22 per share on
December 12, 1980, and closed at $29. More than 40 employees who left
Apple on December 11 as working stiffs came back to work the next day as
millionaires. The Apple IPO raised more money than any IPO since Ford
in 1956. The first Apple shareholder meeting was held at the Flint Center,
in January 1981.
APPLE III
Competition from long-established computer makers like Commo-
dore and IBM began to pick up in the early 1980s because they saw the
Apple II and VisiCalc’s spreadsheet software as a threat to their lucrative
business computer market. Apple decided that the next Apple computer,
the Apple III, would be designed for business users and would challenge
the mighty Big Blue, IBM.
Launched in May 1980, the Apple III ended up being a commercial
failure for several reasons. For starters, at $4,340 to $7,800, it was far too
expensive compared to competitors and its software catalog was limited.
Although designed to be compatible with the Apple II, this feature was
intentionally hobbled.
The real time clock chip in the Apple III, manufactured by National
Semiconductor, was prone to failure after long periods of use. Since Apple
was soldering the chips directly onto the motherboards, they were impos-
sible to replace, requiring soldering or a complete board replacement. To
make matters worse, Jobs wanted the Apple III to be designed without
a cooling fan (or vents) so that it would operate silently. He thought that
the case could be engineered so that the electronics would cool by convec-
tion and that heat would dissipate through the chassis. This turned out to
be incorrect and the chassis wasn’t able to adequately cool the system, and
the Apple III became prone to overheating and crashing. When it would
overheat, some of the Integrated Circuits (ICs) would become discon-
nected from the motherboard.
Almost all the original Apple III computers were recalled, and Apple
had to replace as many as 14,000 of the first Apple IIIs for free. They were
replaced with brand-new machines with twice as much memory (256KB
RAM, or Random Access Memory) and new circuit boards that fixed most
of the problems. Apple released the Apple III Plus, which sold for $2,995
in December 1983. The revised model fixed most of the hardware prob-
lems and included 256KB RAM, video interlacing, an Apple IIe keyboard,
and a built-in clock, but the damage was already done.
One year after the Apple III, almost as if it smelled blood in the water,
IBM unveiled its Personal Computer (or PC for short), which featured
a newer 16-bit design that opened up the market to a wide range of in-
expensive IBM clones. After the Apple III became known for poor reli-
ability, business users fled for the comfort and familiarity of IBM. Apple
discontinued the Apple III in September 1985 after selling only 65,000
systems. Steve Wozniak said that the Apple III failed because Apple’s
marketing department designed it, unlike Apple’s previous engineering-
driven projects.3
LISA
While one team was busy building and selling the Apple III, another,
separate group was designing Apple’s next computer, which would mark
a departure from Apple’s original text-based computers. This new com-
puter would truly revolutionize computing and popularize terms like
mouse, icon, and desktop.
After a tour of the Xerox PARC (Palo Alto Research Center) labora-
tories in December 1979 and a demonstration of its Alto computer, Steve
Jobs decided that the Graphical User Interface (GUI) was the future of
computing. Apple traded $1 million in pre-IPO Apple stock for three days
at PARC to study its machines. Apple engineers came away from the expe-
rience with the foundation of their first computer based on a GUI, called
Lisa. According to legend, the project was named Lisa after Jobs’s first
daughter, but Apple claims that the name is an acronym for Locally Inte-
grated Software Architecture. Lisa was launched in 1983 at the sky-high
price of $9,995, which is what most likely doomed it to failure. Success
notwithstanding, Lisa was a forbearer to a much more successful Apple
project—Macintosh.
8 Apple Inc.
The precursor to the Macintosh—The Lisa. Image © John Greenleigh, www.flipside

studios.com.
MACINTOSH
Jobs was diplomatically removed from the Lisa project to prevent a
replay of the Apple III fiasco and instead focused his attention on Apple’s
next computer, the Macintosh. Jef Raskin came up with the idea for the
Macintosh in early 1979 and formed a small team in September to make
it a reality. His concept was to produce an easy-to-use, low-cost computer
that included everything an end-user could want in a complete package.
In September 1979, Raskin got a green light from Apple for his Macin-
tosh project, and began to assemble his team. Bill Atkinson from Apple’s
Lisa team recommended Burrell Smith. Raskin assembled his hardware
and software team that included Atkinson, Smith, Chris Espinosa, Joanna
Hoffman, George Crow, Jerry Manock, Susan Kare, Andy Hertzfeld, Dan-
iel Kottke, Bud Tribble, and Brian Howard.
The first Macintosh—The Mac 128k. Image © John Greenleigh, www.flipside

studios.com.
Read more about Jef Raskin and the rest of the Macintosh team in
Chapter 2, “Founders and Key Players.”
The first Macintosh board was designed with a 5MHz Motorola 6809E
microprocessor and 64KB RAM. Bud Tribble suggested that they use the
Motorola 68000 processor from Lisa in the Mac, and by December 1980
Smith had succeeded in implementing the 68000 and even increased its
speed from 5 to 8MHz. The new board was able to support a larger 384 ×
256 pixel display and reduced production costs.
When the Macintosh was in the early development stage, a slightly
miffed Jobs adopted the project and was determined to make it better
than Lisa. Raskin led the Mac team until leaving after a personality con-
flict with Jobs in January 1981, ultimately leaving Apple in February 1982.
According to Andy Hertzfeld, “Jef did not want to incorporate what be-
came the two most definitive aspects of Macintosh technology—the Mo-
torola 68000 microprocessor and the mouse pointing device. Jef preferred
the 6809, a cheaper but weaker processor which only had 16 bits of ad-
dress space and would have been obsolete in just a year or two, since it
couldn’t address more than 64Kbytes. He was dead set against the mouse
as well, preferring dedicated meta-keys to do the pointing. He became
10 Apple Inc.
increasingly alienated from the team, eventually leaving entirely in the

summer of 1981.”4
How the Mac Was Almost a Bicycle

The name Macintosh was originally selected because it was Jef Raskin’s
favorite type of apple, but the Mac almost wasn’t an Apple at all.
When Raskin took a leave of absence in February 1981, Steve Jobs
and Rod Holt made the decision to change Apple to something else.
They felt that the name Macintosh was just a code name and that a
name change was in order to reflect the change in regime.
Holt decided on Bicycle as the new name that would replace
Raskin’s Macintosh for the duration of the project and presented it to
his design team. When they balked, Holt insisted that all references to
Macintosh be changed to Bicycle, telling them that it shouldn’t really
matter “since it was only a code name.”a
The Bicycle name originated from an ad that Apple had placed
in Scientific American magazine. The ad featured quotes from Steve
Jobs about computers, including one about how personal comput-
ers were “bicycles for the mind.” The logic was that humans could
run as fast as other species, but a human—on a bicycle—could beat
them all.
Rod’s edict was never obeyed. Somehow, Macintosh just seemed
right.
a
Andy Hertzfeld, “The Father of the Macintosh,” http://www.folklore.org/Story
View.py?project=Macintosh&story=Bicycle.txt.
Macintosh shipped on January 24, 1984, and was revolutionary be-

cause of its innovative mouse input device and easy-to-use graphical user
interface (GUI). The Mac design was unique because it shipped with a
9-inch, 512 × 342 pixel monochrome monitor and 128KB of RAM—better
specs than the original designs. Although the memory was soldered to the
logic board, it could be upgraded to 512KB with a steady hand by solder-
ing in new, higher-capacity chips—a popular upgrade that many people
had done to their machines.
Jobs led the Mac team until a battle erupted between him and
new Apple CEO, John Sculley, in 1985. The Apple board took Sculley’s
side in the dispute, and Jobs was removed from most decision-making
processes—a move that didn’t sit well with Jobs, who later resigned.
After leaving Apple, Jobs founded NeXT, a company that built futur-
istic computers based on the NEXTSTEP operating system. NeXT com-
puters didn’t sell well due, in part, to their high cost. In 1986, during his
departure from Apple, Jobs purchased the computer-graphics division
of LucasFilm from George Lucas, who was in the midst of a divorce, for
$10 million, and renamed the company Pixar. Jobs returned in 1997 after
Apple bought NeXT in December 1996 for $429 million.
Apple went through several phases after the successful launch of the
Macintosh and in the absence of Jobs.
1985–1997: THE SCULLEY, SPINDLER, AMELIO ERA

While Apple marketed the Macintosh to college teachers, graphic de-
signers, and professionals, the inexpensive and expandable Apple II tar-
geted home users and public schools.
Apple released a compact and less expandable version of the Apple II
called the IIc in April 1984. In September 1986, Apple released the fifth
and most powerful Apple II, the Apple IIGS, featuring a 16-bit architec-
ture, mouse-driven operating system, amazing color graphics, and top-
shelf sound capabilities that surpassed those of most other computers,
including the black-and-white Macintosh. The “GS” in the name stood for
Graphics and Sound.
When Steve Jobs left Apple after a dispute with new CEO John Scul-
ley, a new era of management was upon Apple. Sculley, a former vice
president of PepsiCo, was selected to be CEO of Apple on April 8, 1983,
with a mission of applying his marketing skills to the personal computer
market, especially the Macintosh. Sales of the Lisa tanked, and although
the Macintosh was a bona fide success, it couldn’t beat the IBM PC. IBM
was selling more units, thanks to a competing GUI in Microsoft Windows
3.0. The Amiga and Atari ST platforms were also formidable competitors
during this period.
For more on Apple’s competitors, see Chapter 9, “Competition.”
Part of Sculley’s strategy was to push the Mac by releasing dozens of

major models with hundreds of configurations. Sculley raised the initial
price of the Macintosh and used the additional money to increase profits
and spend more on advertising.5 Apple responded to competition from
the IBM PC with the Performa, Centris, and Quadra product lines, but
they were marketed poorly. Apple’s dizzying array of configurations and
model numbers didn’t fit with Apple’s reputation for simplicity, and sales
suffered. Sculley was removed by Apple’s board, and Michael Spindler
was named President and CEO in 1993.
Spindler surprised everyone in 1994 when Apple announced that
it was switching to new PowerPC chips from longtime rival IBM. The
new PowerPC processors required a partial rewrite of the Mac operat-
ing system so that older programs could still run in emulation on the
new machines. Although Spindler presided over several successful proj-
ects, like the introduction of the PowerPC, he was also responsible for
his share of failures, including the Newton and the Copland operating
12 Apple Inc.
systems. Spindler was replaced by Gil Amelio as Apple CEO on Febru-

ary 2, 1996.
Gil Amelio, a veteran of National Semiconductor, identified several
reasons why Apple was failing, which included a lack of cash, a lack of
quality hardware and software, a lack of focus, and an out-of-control cul-
ture. Amelio laid off one-third the Apple staff, discontinued the Copland
OS, and shipped Mac OS 8. Amelio eventually negotiated the purchase
of Steve Jobs’s new company NeXT Inc. for $427 million, which he later
admitted was too much. NeXT Inc.’s NEXTSTEP operating system would
become the foundation for Mac OS X, which became a runaway suc-
cess. Despite Amelio’s initiatives, Apple sales continued to tank and the
company lacked direction. Amelio said:
Apple is a boat. There’s a hole in the boat, and it’s taking on

water. But there’s also a treasure on board. And the problem is,
everyone on board is rowing in different directions, so the boat is
just standing still. My job is to get everyone rowing in the same
direction so we can save the treasure.6
Apple’s stock price was the lowest it had been in 12 years under Ame-
lio, and market share continued to plummet due to quality problems and
confusion about the product line. After a $740 million loss in the second
quarter of 1997, Amelio was removed as Apple CEO by its board of direc-
tors. Jobs returned to Apple in December 1997 as part of the acquisition
of NeXT Inc. and later became the interim CEO.
For more on Apple’s CEOs over the years, see Chapter 8, “Apple
Leadership.”
1998–2001: RECOVERY, RENAISSANCE, AND RESURGENCE

Recovery
When Steve Jobs returned in 1997, he had his work cut out for him.
Jobs inherited a company at its bottom, its stock and market share were
at historical lows, quality was dismal, and the company lacked direction.
Jobs took the reins as interim CEO and began Apple’s recovery phase,
raising needed money and restructuring the company’s product line.
His first effort to right the ship was to repair the massive hole in its
hull that was leaking money. In 1997 Jobs announced a $150 million invest-
ment from Microsoft in exchange for the company agreeing to continue to
develop and release its popular Microsoft Office for Mac suite. The deal
provided much-needed cash and the commitment that Office would con-
tinue to be developed, a vote of confidence in the platform and critical
assurance needed for businesses to continue buying Macs.
Jobs then discontinued licensing the Apple ROMs and Mac OS to the
clone makers, who he described as “leeches.” Rather than growing Apple
market share, as originally planned, cloners instead took Mac sales away
from Apple. Next, Jobs created the machine that would save Apple, the
iMac. iMac was an all-in-one computer with a handle, similar to the origi-
nal “toaster” Mac he designed, except that it now came in a curvy trans-
lucent blue case.
Apple started a marketing campaign around the new iMac design
called “No Beige,” aiming to distance its design from every other beige
box computer of the time. The iMac was more than a savior for Apple; it
also invigorated the entire computer industry with its bright, eye-catching
design. Soon everything from Windows PCs to household items like irons
were being redesigned in transparent color schemes that emulated the
iMac’s design. Then just when everyone caught up, Apple released the
iMac in five new colors. They looked like Lifesavers candies, which Jobs
referred to as “lickable,” and consumers ate them up.
The iMac was nothing short of a runaway success, selling more than
one million of the colorful all-in-one Macs per year. But the iMac was
more than simply another computer, it was a symbol of Apple’s return to
viability and a turning point for computer design as a whole. Arguably
the most influential person in the early stage of the Apple renaissance
was Jonathan Ive, the principal designer of the iMac, iPod, iBook, and
iPhone.
Renaissance
During the renaissance, Apple also pioneered in the area of wireless
networking technology, which would become a pervasive technology in
just a few short years. In 1991 Apple unveiled the iBook, its first consumer
notebook computer and also the first Mac to support wireless network-
ing and Internet access. The renaissance continued as Apple reinvented
its professional desktop computer line with the Power Mac G4, which
shipped with a fast Motorola PowerPC processor that utilized a new 128-
bit floating point instruction set called “AltiVec.”
Resurgence
Apple’s resurgence began in 2001 with Apple’s launch of three key
strategies:
1. Mac OS X—Apple’s first multi-threaded, protected memory op-

erating system,
2. Apple retail stores—which were a huge gamble at the time, and
3. iPod—the diminutive music player that literally changed the
music business.
Apple released its first truly modern operating system in 2001 as a

result of its purchase of NeXT. Mac OS X was built on NEXTSTEP and the
14 Apple Inc.
FreeBSD kernel and was the perfect synthesis of stability, reliability, and
security—three things that the Mac OS lacked. The OS X (pronounced OS
Ten) featured a completely overhauled user interface, a Classic environ-
ment that allowed customers to run their legacy Mac OS 9 applications.
Apple’s launch of a line of retail stores in 2001 was met with great
skepticism but turned out to be one of the crowning achievements of the
resurgence. Gateway Country Stores had cropped up in suburban areas
across the United States but were faltering and retail, in general, was a
gamble. When Gateway announced the closure of all its stores in April
2004, Apple had opened 53 stores. Apple reinvented the retail store from
the ground up by hiring the best. It built a prototype store in a warehouse
near the Apple campus to test the concept and arranged it around inter-
ests: photos, videos, music, and kids. In it Apple borrowed a concept from
the Four Seasons Hotel: the concierge desk. The Apple Store’s “Genius
Bar” was born.
Apple’s gamble has made it one of the most successful retailers
in America. Apple opened its 200th retail store in October 2007. The Fifth
Avenue location in New York City attracts 50,000 customers per week and
Apple Store sales are tops in the industry, averaging $4,032 per square foot.
In 2004, Apple reached $1 billion in annual retail sales, faster than any U.S.
retailer. What’s more, sales recently topped $1 billion per quarter.7
The third prong of Apple’s resurgence occurred in 2001 when the
iPod revolutionized the world of music playback and, arguably, the
music industry as a whole. Music is widely regarded as the universal
language of mankind and its appeal and romance are undeniable. iPod
provided a compact and convenient way to carry thousands of songs in
your pocket. More important, Apple made vast amounts of music eas-
ily accessible via an innovative scroll well and hierarchical menu sys-
tem. Just about anyone, young or old, could take an iPod and figure out
how to use it without ever touching the manual—a testimony to its un-
matched simplicity.
After Napster and other peer-to-peer file-sharing services had deci-
mated the prerecorded music business from 1999–2001, iPod arrived just
in time to give people an easy way to enjoy their massive digital music
libraries. It was a perfect storm for iPod, and it easily became the most sig-
nificant consumer product of 2001, maybe even the decade. After Apple’s
huge hit with the iMac in 1997, the iPod was a home run. Lightning had
struck twice at Apple.
2002–PRESENT: THE NEW APPLE

After 12 devastating years in his absence, Steve Jobs returned to
Apple in 1997 and not only resuscitated the company he co-founded but
completely re-engineered everything about it. After things stabilized, he
pulled off one of the biggest turnarounds in business history with the
introduction of iMac, iPod, Mac OS X, and a chain of retail stores. With a

new wind in its sails, Apple was determined not to rest on its laurels. In
addition to keeping flagship products current and fashionable, Cupertino
continued to innovate, pushing the stock price higher and higher.
After simplifying its hardware strategy to two major markets (con-
sumer and professional) and two product lines (notebook and desktop),
Apple was ready to branch out. In 2002, it released the Xserve, its first
serious attempt at a server. Then in 2005 it announced the Mac mini, the
smallest and least expensive Mac ever. In 2007, the company launched the
Apple TV set-top box and the revolutionary iPhone. In 2008, it released
the thinnest notebook in the world, the MacBook Air. And after ship-
ping millions of Macs with G3, G4, and G5 chips from IBM and Motorola,
Apple announced a switch to Intel processors in 2005 and completed the
changeover by 2006.
Apple marketed the Mac as the hub of the digital lifestyle and de-
signed it to manage the flood of electronic gadgets and gizmos that were
coming to the market. The original iMac was promoted as a digital hub
and Apple expanded the concept with the iPod, iTunes Store, and Apple
TV, and tied it together with Mac OS X and the iLife suite of software.
Apple’s brilliant jigsaw puzzle pieces were falling right into place.
Building on the success of iTunes and iPhoto, Apple bundled them
with iMovie, iDVD, iWeb, and GarageBand and packaged it as “iLife.”
iLife came bundled with every new Mac and was critically acclaimed as
a major benefit of buying a Mac. While Windows PCs came loaded with
useless trial software, bloating the hard drive, Macs came with useful and
powerful production and entertainment software that worked out of the
box. In 2005 Apple released iWork, an office suite that included a word
processor (Pages), spreadsheet (Numbers), and presentation software
(Keynote). That was the perfect complement to iLife. iWork provided a
simple and inexpensive ($79) office suite that was compatible with Micro-
soft Office.
In 2003, Apple launched the iTunes Store, the first true alternative to
downloading music illegally from file-sharing networks. The iTunes Store
offered digital music downloads for sale for 99 cents each and full albums
for $9.99 each. Apple’s foray into digital music downloads was nothing
short of a revolution. For the first time, consumers had the option to pur-
chase a single track instead of having to buy an entire album. Consumers
embraced the concept with open arms and made Apple the number one
music retailer, online or offline.
Apple expanded the offerings, once mostly limited to music, at the
iTunes Store to many other categories of entertainment. Apple branched
out into selling music videos, audiobooks, concert tickets, television shows
(October 2005), iPod games and feature-length movies (September 2006),
university lectures (May 2007), ringtones (September 2007), movie rentals
(January 2008), and iPhone software (June 2008).
16 Apple Inc.
Thanks to the success of the Apple Store, Apple has conquered U.S. re-
tail. It expanded the concept internationally, opening more than 30 stores
in the UK, Japan, Canada, Italy, and Australia. Domestically, Apple opened
several mini stores that were about half the size of a regular store, carrying
only the most popular items. The new, smaller store concept allowed the
company to go into smaller markets that might not support a larger retail
presence.
For more on the individual products Apple released, see Chapter 6,
“Technology Timeline.”
Chapter Two
Founders and Key Players
STEVE JOBS
Innovation distinguishes between a leader and a follower.
—Steve Jobs
Very little can be said about Apple Inc. without mentioning its enigmatic
leader and co-founder. Several words are frequently used to describe Steve
Jobs, including visionary, iconic, charismatic, quirky, individualistic, dif-
ferent, and evangelic bad boy.
Jobs’s story is truly one of rags to riches. Born an orphan, he pioneered
the personal computer when he was 21, made his first million by age 23,
had a net worth of $10 million by 24, and by age 25 was worth more than
$100 million. Today Apple’s co-founder is worth approximately $5.7 bil-
lion. Not bad for someone who takes home a token salary of $1 per year
from his job at Apple.1
Jobs is the perfect front man. He’s a charismatic leader who motivates
the people around him to do their best, if not better. He has a unique vi-
sion that’s inspired by excellence, beauty, and brilliant design. Jobs is
a textbook visionary. He has an uncanny vision of the future and the
ability to translate dreams into products—and profits. He has a unique
combination of high-level thinking and down-in-the-trenches practical-
ity that can be both inspiring and exhausting. He’s known for his tireless
work ethic as much as his insufferable tirades. Jobs has no patience for
mediocrity.
He can’t entirely take credit for designing Apple’s early success,
though. That distinction belongs to Mike Markkula, who provided Apple
with critical early funding. Nor is Jobs the creator or engineer behind the
company’s machines. That job was handled by Steve Wozniak, then by a
team of excellent contributors drawn to Cupertino by Apple’s compelling
products and intangible sense of hipness.
Steven Paul Jobs was born on February 24, 1955, in San Francisco,
California, and grew up surrounded by apricot farms, which eventually
18 Apple Inc.
came to be known as “Silicon Valley.” According to Jobs’s commencement

address at Stanford University in June 2005,2 his biological mother, an
unmarried grad student, gave him up for adoption at birth with demands
that his new parents be college graduates. After a lawyer and his wife
backed out, he was eventually adopted by Paul and Clara Jobs of Moun-
tain View, California. Neither had a college degree.
According to Jobs:
My parents, who were on a waiting list, got a call in the middle of

the night asking: “We have an unexpected baby boy; do you want
him?” They said: “Of course.” My biological mother later found
out that my mother had never graduated from college and that
my father had never graduated from high school. She refused to
sign the final adoption papers. She only relented a few months
later when my parents promised that I would someday go to
college.3
His biological parents studied at the University of Wisconsin in Mad-

ison and went to California to surreptitiously have the baby. Not even
the family knew. They later married and had a daughter, novelist Mona
Simpson.
The Jobs family soon found out that young Steve was a handful as a
child—he was bright and somewhat hyperkinetic. He had a tendency to
wake up at four in the morning, prompting his parents to buy him a rock-
ing horse and a record player to keep him occupied in the early morning
hours. His parents had to bring him to the hospital on several occasions
during his childhood. Once to have his stomach pumped after he swal-
lowed a bottle of ant poison, and another time after suffering burns on his
hands after inserting a bobby pin into an electrical outlet.
One’s physical environment has an undeniable influence on one’s up-
bringing and values and Steve was no exception. The Jobs family home in
Mountain View, California, was located in what would become the heart
of the Silicon Valley, and it wasn’t far from the epicenter of the beatnik
rebellion and hub of hippie culture in San Francisco, all of which rubbed
off on Steve.
Silicon Valley Is Born

In 1956 the Nobel Peace Prize for Physics was awarded to the in-
ventors of the transistor, which made the large, hot, vacuum tube
obsolete. Transistors relied on the property of silicon to conduct
electrical current in one direction, and as they got more complex,
they were dubbed “semiconductors.” One of the Nobel Laureates,
William Shockley, set up his semiconductor company in an area
north of San Jose along the peninsula, which became known as
Founders and Key Players 19
“Silicon Valley.” In the 1950s, the brightest electrical engineers from

around the country flocked to the area to pursue their passion.
San Francisco’s North Beach community, just 40 miles to the north
of the Jobs residence, became the hub of the beatnik rebellion against
postwar conformity. The movement developed around beat poets like
Allen Ginsberg and author Jack Kerouac who experimented with drugs
and alternative lifestyles. Beatniks laid the foundation for what would
become the hippie era and the “Summer of Love” 10 years later.
After the Russians launched their first unmanned satellite, Sput-
nik I, in October 1957, America’s sense of technological superiority
was bruised and the resulting competitiveness with Russia drove a
technology revolution in the United States. The federal government
began offering grants for science and educational curriculums and
schools rededicated themselves to the sciences. The Silicon Valley
was the beneficiary of much of the country’s newfound attention to
technology.
Steve’s adoptive father was a certified car buff. Paul Jobs loved to re-
store cars and kept an immaculate work area. His garage was spotless,
his overalls pressed, and his toolbox perfectly organized. The senior Jobs
meticulously documented his car restorations in a scrapbook and hung a
framed picture of his latest project proudly on the living room wall.
Paul was an excellent negotiator and a shrewd businessman. He had
a cunning knack of getting the lowest prices for car parts at the junkyard
and had a keen ability to sell his fixer-uppers for top dollar. Although
Steve enjoyed the negotiation and the business side of his dad’s hobby,
he didn’t gravitate to the nuts and bolts aspect of it. Paul Jobs tried to get
young Steve interested in helping him work on cars. “I figured I could
get him nailed down with a little mechanical ability,” he recalled, “but he
really wasn’t interested in getting his hands dirty. He never really cared
much for mechanical things.” Then he made a prescient statement about
his son, “Steve was more interested in wondering about the people who
owned the cars.”4
Starting at age 10, Steve became fascinated by technology and the
seemingly limitless possibilities of electronic gadgets. His neighborhood
was a beehive of entrepreneurial electronic and computer engineers from
companies like Hewlett-Packard that were more comfortable with a sol-
dering iron than a baseball bat. Steve befriended a neighbor that worked
at HP named Larry Lange. Lange brought home a carbon microphone one
day and showed it to Steve in his garage. Steve’s interest was piqued and
he came back each day to hang out in Lange’s garage and ask the HP en-
gineer countless questions.
Hewlett-Packard was founded in a Palo Alto garage not far from
Lange’s house when Bill Hewlett and David Packard toiled over their
20 Apple Inc.
workbench to build control devices for animation cameras. Their first cus-
tomer was Walt Disney, and they went on to build a company that had
an engineering philosophy of doing things right, regardless of cost. They
also believed in keeping their employees happy by allowing them to work
flexible hours in beautiful campuses that inspired creativity. HP fostered a
loyalty in its employees that was widely respected.
Lange encouraged the energetic Jobs to join the Hewlett-Packard
Explorer Club, a group for aspiring engineers that met on Tuesday eve-
nings in the company cafeteria. Company engineers would come to
demonstrate the company’s latest products. Steve was fascinated by the
club and the technology at HP and approached it with intensity. Com-
pany employees, recognizing his high level of interest, would give him
special tours of different labs and it was at HP where Steve saw his first
computer.
Somewhat of a loner, Steve was bored by school and was an under-
achiever. He didn’t deal well with authority and refused to do things that
he thought were a waste of time. In the fourth grade, a teacher had to bribe
him into learning. One teacher offered him cash to finish a workbook,
which rekindled a passion in him to learn.5 Motivated, Steve learned more
in that year than any other. His teachers, recognizing his talent, recom-
mended he skip two years of school and go directly to junior high. His
parents objected but later agreed to allow him to skip one year.
Steve’s next stop was Crittenden Middle School in Mountain View
where he started in fifth grade. The combination of the switch to a new
school and being lumped into the general population didn’t sit well with
Steve. He belonged in an advanced or gifted class, but there was no such
thing in his school district and Steve was miserable. Crittenden was a
rough school with kids from the poorest neighborhoods; it was a melting
pot of ethnicities and the police were often called in to break up fights.
Steve’s brilliance was overshadowed by chaos and commotion. In 1967
Steve told his parents that he refused to return to Crittenden for the sev-
enth grade and sensing his frustration, the family moved to Los Altos, a
few miles south.
Cupertino, Los Altos, and Sunnyvale were all part of the same school
district, which was head and shoulders above Mountain View’s. Steve still
had trouble making friends, though, because he skipped a grade, he was
younger than everyone in his class. But he was now in a gifted program,
which his previous schools didn’t have. Steve was bright, but quiet and
withdrawn. He didn’t quite fit in because he didn’t like team sports like
the other kids. Bill Fernandez, also an outsider at Cupertino Junior High,
befriended Steve because the two could relate. Like many people in Sili-
con Valley, Fernandez had a garage stocked with electronics and Steve
loved to stop by on his way home from school to tinker.
Fernandez introduced Jobs to the eldest son of the family living across
the street from him, a family that Jobs knew from the Mountain View
Dolphins Swim Club, the Wozniaks. Bucking the trend, the Fernandezes
didn’t work in the electronics industry, so Bill got his education in the
subject from his neighbor, Jerry Wozniak. Although Jerry’s son Steve was
five years older than Bill, the two would share their passion for electronics
and had built a number of science fair projects together.
Steve Wozniak, or “Woz” as he was known, had a reputation that pre-
ceded him. He had a well-earned reputation as a brilliant designer of elec-
tronics, having won electronic fair contests for his early computer designs.
Woz was more than an electronics geek, though; he had a tremendous
sense of humor and was known for his pranks and playful sensibilities.
He conjured up elaborate practical jokes and his combination of intellect
and humor drew Jobs to him. However, Woz was almost five years Jobs’s
senior, and there was a bit of a generation gap between the two.
Woz, at 18, had designed a computer on paper, was well read, and
spent weekends in the Stanford Linear Accelerator library brushing up on
his skills. Jobs and Fernandez, on the other hand, at 13, were still kids that
liked to tinker a little but seemed juvenile around the more mature Woz.
Although they badly wanted to hang out with the neighborhood electron-
ics genius, it took a few years for them to click.
Jobs continued to attend meetings of the Hewlett-Packard Explorer
Club and decided to build a frequency counter. One day when in need of
some parts for his project, he called Bill Hewlett, co-founder of Hewlett-
Packard, by looking him up in the Palo Alto white pages. After about a
20-minute chat, Steve had his parts, and Hewlett was so impressed by the
15-year-old’s bravado, he offered him a summer job assembling frequency
counters at HP. Steve never did finish his own counter, but that didn’t
matter because he was in heaven working at HP.
Jobs entered Homestead High School in Cupertino in 1968. At the ad-
vice of Woz, Jobs and Fernandez enrolled in John McCollum’s Electronics
1 class and earned the badge of “Wireheads,” popular slang for electron-
ics club members. The class was beneficial for Jobs, who only had a basic
understanding of electronics. McCollum’s class mixed theory with an
emphasis on practical applications and he was a stickler for detail and obe-
dience. While Woz thrived in the class four years prior, McCollum’s teach-
ing style and rigid class structure didn’t fit with Jobs’s personality and he
quickly lost interest. McCollum recalled Jobs as competent but “somewhat
of a loner. He always had a different way of looking at things.”6
In his sophomore year, Jobs got weekend work at Haltek, an electron-
ics shop in Mountain View with a block-long warehouse crammed with
obsolete electronic components. It was not unlike the junkyards that his
dad used to forage for auto parts. Haltek was a paradise for wireheads,
because although obsolete or rejected, most of the parts they carried were
perfectly functional and many were brand-new. The place was a major
source for parts for every tinkerer and electronics junkie in the area and
Jobs picked up a valuable skill in pricing parts.
22 Apple Inc.
When Woz went on to study at Berkeley in 1971, Jobs would visit him
several times a week. He liked hanging out with slightly older crowd (like
Woz) and was tiring of the wirehead crowd at school. At the same time,
he wasn’t quite a hippy either; he was too intellectual to get wasted all the
time. He still enjoyed the hippy ethos, though, and, like most students at
the time, read Shakespeare, Dylan Thomas, and Herman Melville.7
When Jobs was a senior at Homestead, he began taking freshman En-
glish classes at Stanford and further drifted from electronics to English.
Woz’s mother gave him an article from the October 1971 issue of Esquire
called “Secrets of the Little Blue Box” and he shared it with Jobs. The ar-
ticle detailed the exploits of phone “phreaks” that had engineered a way
to make free phone calls on the AT&T long distance phone network. The
pair was enthralled with the article and identified with the shadowy fig-
ures in it. Motivated, they built their own digital “Blue Box” under the
aliases Berkeley Blue (Woz) and Oaf Tobark (Jobs).
Wozniak and Jobs got to meet the famous phone phreaker Cap’n
Crunch, who got his name when he discovered that a plastic whistle found
in certain Cap’n Crunch cereal boxes emitted a perfect 2600Hz tone that
could be used to bypass the phone company billing system and make free
Steve Jobs (left) scrutinizes a “blue box” that Steve Wozniak (right) built after reading
about it in an issue of Esquire magazine. 1975. Margaret Wozniak.
long distance calls. After selling Blue Boxes in the dorms to make money,
the pair soon called off the venture after someone explained the possi-
ble legal consequences. It was a fun way to learn about technology and
how things worked, but neither wanted to go to jail for their hobby. Woz
brought out a boyish curiosity and mischievous side of Jobs, and together
they found clever and creative ways to have fun through pranks.
After graduating from Homestead High, Jobs didn’t want to attend
Stanford or Berkeley because they were too close to home. He wanted to
go farther away and escape from the grips of his parents. He decided on
a private liberal arts school in Portland, Oregon, called Reed College. His
parents didn’t approve because it was expensive and far away. As with
most things, they eventually relented and Jobs got his way. After attend-
ing Reed for only one semester, Jobs dropped out in December 1972. But
instead of going back home, he hung around Reed, living in abandoned
dorm rooms for a year while he took up the study of philosophy and for-
eign cultures.
Jobs met Dan Kottke at Reed, a wild-haired freak at the time, like him.
Kottke saw that Jobs was an outsider and could relate with him. The two
immediately bonded. Jobs lived in Kottke’s room for a while, and they
read books on Eastern mysticism and discovered Buddhism together.
After returning to his parent’s house in California in 1974 the real-
ity of earning a living and minding his finances hit him. Although Jobs
still maintained strong spiritual beliefs and often traveled to his friend’s
farm, he needed a job. His passion for technology led Jobs to Atari, the
leading manufacturer of video games at the time. While working nights
at Atari, Jobs met Ronald Wayne, a technician who used to fix slot ma-
chines in Las Vegas, and the two bonded.
When he had saved enough money, Jobs and his partner in spiritual
discovery, Kottke, traveled to India in the search of enlightenment. After
experiencing the extreme poverty and illness of India, the pair returned
home unsatisfied and unfulfilled and returned to their jobs at Atari in the
fall of 1974. After returning to Atari, Jobs renewed his friendship with
Wozniak, who was working at HP’s calculator division, and the duo at-
tended meetings of the Homebrew Computer Club. During this phase
Jobs rediscovered Zen Buddhism, which seemed to provide him some
answers.
In 1975, Jobs was 20 and working at Atari, living at his parent’s house,
and making regular trips to the Los Altos Zen Center and the All-One
farm in Oregon with his hippie friends from Reed. Jobs was also showing
a growing interest in Woz’s new computer design.
Woz was starting to become a respected member of the Homebrew
Computer Club, whose popularity was rapidly increasing. Its members
consisted mostly of hobbyists and engineers who came to show off their
latest achievements and share tips and information about computer kits,
programming, and computer design. Jobs’s skill in computer design was
24 Apple Inc.
limited, but he keenly realized that Woz’s current project was an amazing
feat of engineering. Jobs became increasingly involved and after a few
months, he convinced Woz that they should join forces to build and sell
his computer to other hobbyists.
While Woz really just wanted to build a computer for himself (and
for bragging rights at Homebrew), Jobs understood that there were hun-
dreds of hobbyists that were desperate to buy such a machine so that they
could use it for programming. Jobs co-founded Apple Computer Inc. in
1976 when he was 21 years old with Steve Wozniak, 26, and together they
pioneered the personal computer and made a permanent and indelible
mark on the computer industry.
“Basically, Steve Wozniak and I invented the Apple because we
wanted a personal computer. Not only couldn’t we afford the computers
that were on the market, those computers were impractical for us to use.
We needed a Volkswagen.”8
For more on Steve Jobs’s history at Apple Computer, see Chap-

ter 1, “Origins and History.”
As described earlier, Jobs founded Apple with Woz and Mike Mark-
kula and lasted until he lost an internal power struggle with new Apple
CEO John Sculley in 1985. The Apple board took Sculley’s side in the argu-
ment and demoted Jobs who later resigned. He returned to Apple in 1997.
Besides starting NeXT, Jobs also purchased the visual effects house
Pixar during his hiatus from Apple. In addition to his duties at Apple, Jobs
remains the CEO of Pixar Animation Studios, which has become the lead-
ing animated movie studio. Pixar won 20 Academy Awards and has taken
in more than $3 billion in box-office receipts. Pixar has earned the distinc-
tion of creating some of the most critically acclaimed animated movies of
all time, including Toy Story, A Bug’s Life, Toy Story 2, Monsters, Inc., Finding
Nemo, The Incredibles, Cars, and Ratatouille. In 2006, Pixar merged with the
Walt Disney Company and gave Jobs a seat on the Disney board of direc-
tors, where he is the largest single shareholder.
Jobs is a long-time Buddhist and vegetarian9 and lives in Palo Alto,
California, with his wife, Laurene Powell, and three children. He also has
a daughter, Lisa, from a previous relationship.
Accolades
Jobs’s accomplishments in the technology industry have earned him
numerous awards and accolades.
1985: The National Medal of Technology from President Ronald Reagan.

1987: The Jefferson Award for Public Service.
2004: One of Inc. magazine’s America’s Most Fascinating Entrepreneurs.10
2007: Fortune magazine’s Most Powerful Businessman.11

2007: California Governor Arnold Schwarzenegger and First Lady Maria Shriver
inducted Jobs into the California Hall of Fame, located at the California Museum
for History, Women and the Arts.12
STEVE WOZNIAK
Stephen Gary Wozniak was born August 11, 1950, in San José, Cali-
fornia, and is better known by the shortened version of his surname, Woz.
Often described as amiable, affable, soft-hearted, and sometimes even
naïve, Woz is perfectly happy in his role as an all-around good egg. Woz-
niak is the son of an engineer at Lockheed and a prolific tinkerer. From
an early age he was interested in electronics. Woz is a lifelong computer
engineer, tinkerer, prankster, and technology buff.
Woz’s passion for electronics began in the fourth grade when his dad
helped him with some science fair projects. With an early disposition for
electronics, Woz earned his Ham radio license in the sixth grade. By the
time he entered college, Woz was already building computers. He attended
Homewood High School in Cupertino where he showed a lot of interest
in an electronics course taught by John McCollum. In 1968 he took electri-
cal engineering courses at the University of Colorado at Boulder. Then, in
1969 he left Boulder to take courses at DeAnza College in Cupertino.
His most notable accomplishments are his creation of the first “per-
sonal” computers in the 1970s—the Apple I and II. He designed them par-
tially for the intellectual challenge and partially to impress his friends at
the Homebrew Computer Club, a group of electronics enthusiasts based
in Palo Alto, California.
Says Cringely in Accidental Empires, “Steve Wozniak deserved to be
considered Apple’s number 1 employee. From a technical standpoint,
Woz literally was Apple Computer.”13
Woz had a vision how his first computer would work as early as 1977.
His design of the Apple II became the genesis of the personal computer
revolution and even Woz would probably admit that he underestimated
the power of his design. Each time we reach into our pocket for our tiny
handheld computers and smartphones, we owe a debt of gratitude to Woz.
Without Woz’s keen interest in computers, and his genius for board design,
the world would probably be a different place today. He’s largely respon-
sible for the world of information that we now have at our fingertips.
In his 2006 autobiography, iWoz, he writes that he became friends with
Steve Jobs, four and a half years his junior, in 1970 when Jobs had a sum-
mer job at the same business where Wozniak was working on a mainframe
computer.
For more on more on how Jobs and Woz met, see the “Steve Jobs”
biography.
26 Apple Inc.
Steve Wozniak with a framed Apple I wearing his “Apple” sunglasses. Margaret
Wozniak.
Woz enrolled in the University of California, Berkeley in 1971, but

withdrew by 1975 to co-found Apple Computer Inc. He would later return
to Berkeley (under the alias Rocky Raccoon Clark) to finish his Bachelor of
Science degree in Electrical Engineering and Computer Sciences (EECS),
which he received on May 17, 1986.
Woz co-founded Apple on April 1, 1976, and took the title of Vice Pres-
ident of Research and Development at Apple. The two Steves couldn’t be
more different. While Jobs was a marketing whiz and a good front man,
Woz designed the hardware and the software for the Apple II. While he
didn’t work directly on the Macintosh project, his engineering prowess,
integrity, and sense of humor are legendary and considered to be inspira-
tional to many of the Macintosh team.
Woz left Apple in 1981 after crashing his plane into a 12-foot em-
bankment in February shortly after taking off from Santa Cruz Sky Park.
An investigation by the National Transportation Safety Bureau (NTSB)
showed that Woz wasn’t rated for the airplane he was piloting and didn’t
have the necessary “high performance” certification on his license. After
the accident, he suffered amnesia and had no recollection of the accident.
He also did not remember his hospital stays or the things he did after he
was released: he followed his previous routine (except for flying), but
could not recall what had happened.14
Woz returned to Apple in 1983, but he was very specific that he wanted
only to be an engineer and that he didn’t want to be in management. He
left his full-time position at Apple on February 6, 1987, but still remains
an employee and a shareholder. He stays on the rolls at Apple Inc., saying
“I have never left the company. I keep a tiny residual salary to this day be-
cause that’s where my loyalty should be forever. I want to be an employee
on the company database.”15 He also still maintains communication with
Steve Jobs.
Steve Wozniak arrives at Macworld Expo 2008 on his

Segway. Jason D. O’Grady.
28 Apple Inc.
Known as somewhat of a nomad, Woz has started several business

ventures over the years, including Cloud Nine in 1985, where he created
the first universal remote control. One of his other endeavors is the cre-
atively named Wheels of Zeus (W.O.Z.), which has a mission to create
digital technology “to help people find things.” His nomadic tendencies
carry over to his personal life, he’s been in and out of several colleges and
loves to travel in his spare time.
After his departure from Apple, Woz continued to donate financial
and support resources for technical curriculum at local schools, reaffirm-
ing his philosophy of educating our youth. “Making significant invest-
ments of both his time and resources in education, Wozniak ‘adopted’ the
Los Gatos School District, providing students and teachers with hands-on
teaching and donations of state-of-the-art technology equipment. Woz-
niak founded the Electronic Frontier Foundation, and was the founding
sponsor of the Tech Museum, Silicon Valley Ballet and Children’s Discov-
ery Museum of San Jose.”16
Wozniak lives in Los Gatos, California, with his wife and family.
Woz and His Segway

One of Woz’s favorite toys is his Segway, a unique two-wheeled,
electric vehicle invented by Dean Kamen in December 2001. It’s his
vehicle of choice when he attends Macworld Expo in San Francisco,
and he even founded a Polo Segway team. Woz usually travels ev-
erywhere with his Segway; he built a special trailer to carry it on the
back of his car. Woz owns a bunch of Segways and is getting licensed
to be a Segway trainer.
In a SegwayToday.Net podcasta Woz gives insight into how he
integrates the Segway Personal Transporter into his everyday life.
“Whether he’s exploring an unfamiliar town, gliding into Los Gatos
for a bite to eat, or enjoying a game of Segway Polo, ‘Woz’ explains in
detail why he’s always got his trusty Segway under his feet.”
a
Segway Today Podcast, http://www.segwaytoday.net/SegwayToday/Podcast/
Entries/2007/8/27_Segway_Today_episode_3.html.
MIKE MARKKULA
A. C. “Mike” Markkula was one of the linchpins of the early Apple
because he provided essential business expertise and, more important, he
co-signed for a critical $250,000 bank loan during the formation of Apple
in 1977. Markkula was given a one-third share of Apple in return for se-
curing the financing.
Markkula, an electrical engineer, also had marketing skills. He
started at Fairchild Semiconductor, a Silicon Valley chipmaker famous
for spawning several large and successful companies like Intel Corpo-
ration and Advanced Micro Devices (AMD). Markkula later worked at
Intel, where he made an excellent return on his stock options after the
company’s IPO.
Markkula recruited Michael “Scotty” Scott to be Apple’s first CEO be-
cause both Steve Jobs and Steve Wozniak weren’t sufficiently experienced
for the job. Markkula replaced Scott in 1981 to become Apple’s second
CEO. Steve Wozniak credits Markkula as a major reason for Apple’s suc-
cess. Markkula was succeeded by John Sculley as CEO of Apple in 1983.
KEY CONTRIBUTORS
What’s the difference between Apple and the Cub Scouts? The Cub Scouts have
adult supervision.
—Guy Kawasaki, quoted in Apple, 1998
While the founders are inextricably associated with the success of

Apple, the company was famous for its team philosophy in which many
people contributed to the overall success of a project. With the exception
of top management, Apple was very horizontal in its hierarchy. Software
and hardware engineers worked together with interface designers, mar-
keting, and documentation personnel to build a complete product. The
following are some of Apple’s key contributors over the years.
Jef Raskin
Jef Raskin was a professor of computer science and music at the Uni-
versity of California at San Diego who was hired in January 1978 as Apple
employee #31. Raskin was originally hired to write the Apple Basic user
manual with Brian Howard. Apple liked the Basic manual so much that
it hired Raskin and Howard to be founders of its internal publications
group.17
Raskin recommended that Jobs and Markkula acquire VisiCalc and
when they declined, Raskin took a leave of absence from Apple to write
the tutorial section of the VisiCalc manual. After returning to Apple,
Raskin started the Macintosh team at the beginning of 1979. He settled
on the name Macintosh as a tribute to the many varieties of apples found
in New York state. As soon as Steve Jobs saw the Mac, he immediately
adopted it as his own. Raskin led the Mac team until he left after a per-
sonality conflict with Jobs in January 1981, ultimately leaving Apple in
February 1982.
Bill Atkinson
Bill Atkinson studied under Jef Raskin at the University of California
at San Diego and started at Apple in 1978. Atkinson wrote the LisaGraf
30 Apple Inc.
primatives software (which Raskin renamed QuickDraw) that allowed the

Lisa and Mac to draw graphics on screen. He also wrote one of the original
Macintosh applications that was included with every machine shipped—
MacPaint. One of his final contributions to the Macintosh was writing Hy-
perCard in 1987, a simple, yet powerful programming environment that,
despite being discontinued in 1998, is still in use today.
Burrell Smith
Burrell Smith got his start at Apple in 1979 as a service technician.
Bill Atkinson, while working on the Lisa team, noticed that Smith was
doing good work in the Apple II maintenance department and introduced
Smith to Raskin. After Smith built a Mac prototype from a gutted Apple
II and a television, Raskin hired him as the second member of the Macin-
tosh team.
Smith designed five different Mac digital boards during the course of
the project and also designed the digital board for the LaserWriter and a
low-cost version of the Apple II that eventually became the Apple IIe. He
left Apple in February 1985 to co-found Radius in 1986.
Chris Espinosa
Perhaps one of Apple’s youngest employees, Chris Espinosa started at
Apple at age 14 in 1976. Officially he was Apple employee number eight.
He began writing BASIC programs in Steve Jobs’s garage and has worked
at Apple his whole life with the exception of a short hiatus to attend the
University of California at Berkeley. Jobs convinced Espinosa to drop out
of Berkeley in 1981 to work for Apple’s publications department. Although
Espinosa didn’t participate in the Apple IPO, Steve Wozniak offered up
to 2,000 pre-IPO shares and an advantageous price to certain employees
(like Espinosa) he thought were undervalued. The plan became known as
the “WozPlan.” Espinosa worked at a variety of positions at Apple over
the years, including as an AppleScript engineer and in developer support.
Joanna Hoffman
Joannna Hoffman started at Apple in 1980 in the Mac marketing de-
partment when it was still in the embryonic stages. She went on to draft
the Macintosh Interface Guidelines and later moved on to lead the interna-
tional Macintosh marketing team. After leaving Apple, Hoffman eventu-
ally became vice president of marketing of General Magic, a company co-
founded by Apple alums Bill Atkinson and Andy Hertzfeld.
Jerrold C. “Jerry” Manock

Jerry Manock graduated from Stanford University and was hand-
picked by Jef Raskin to be on the original Macintosh design team. Manock
worked as an industrial designer at Apple from 1977 to 1984. He is most

famous for designing the Apple II, III, and Macintosh enclosures. Manock
is considered by many to be the father of Apple’s Industrial Design Group.
Manock is president and principal designer of Manock Comprehensive
Design Inc. in Burlington, Vermont.
Susan Kare
Susan Kare started at Apple in January 1983 as a graphic designer.
She’s best known for designing most of the Mac icons and fonts and much
of Apple’s original marketing materials. Kare left Apple in the fall of 1985
and followed Steve Jobs to NeXT. According to the Museum of Modern
Art in New York, Susan Kare is “a pioneering and influential computer
iconographer. Since 1983, Kare has designed thousands of icons for the
world’s leading software companies.”18 After leaving NeXT, Kare de-
signed the buttons, icons and many of the screen images for Windows 3.0,
founded a digital design practice in San Francisco, and is currently cre-
ative director of the Internet appliance company Chumby.
Andy Hertzfeld
Andy Hertzfeld started at Apple in August 1979 on the Apple II proj-
ect, then moved over to the Mac team in February 1981. Hertzfeld was con-
sidered a software wizard and was the primary developer of the Macintosh
system software. He developed the User Interface toolbox and the Mac’s
innovative desk accessories. After leaving Apple in 1986, Hertzfeld co-
founded Mac monitor maker Radius, then he moved on to General Magic
in 1990 and Eazel in 1999. He also founded the Folklore Web site, which is
packed with information about Apple’s early days (http://folklore.org/).
Daniel Kottke
Born in Bronxville, New York, Dan Kottke bears the distinction of
being the first official employee of Apple. Kottke was responsible for as-
sembling and testing the original Apple I with Steve Wozniak in Steve
Jobs’s garage in 1976. Kottke was close friends with Jobs when they at-
tended Reed College in Oregon, and the pair backpacked across India to-
gether.
Kottke was responsible for testing the original Apple II logic boards,
and he helped construct the prototypes for the Apple III and the Macin-
tosh. As one of the original members of the Mac team, Kottke’s signature
permanently adorns the inside of the case of the original Mac 128k.
Brian Howard
Brian Howard started at Apple in January 1978 and was a close friend
of Mac team leader Jef Raskin. Howard began writing documentation for
32 Apple Inc.
the Macintosh, then graduated to become Burrell Smith’s assistant. He’s

most famous for co-designing some of the most beloved Macs created,
including the popular Mac IIci.
Steve Capps
Steve Capps learned about the Graphical User Interface (GUI) at
Xerox in Rochester, New York, and started at Apple in September 1981 on
the Lisa team. Capps moved over to the Macintosh team in January 1983,
working on the Finder with Bruce Horn and writing text editing routines
that became part of the Mac’s ROMs. Capps left Apple in 1985 but came
back in 1987 and developed the first Newton Message Pad prototype for
Apple CEO John Sculley.
Bruce Horn
Bruce Horn was a veteran of the Xerox Palo Alto Research Center
(PARC), developer of the first Graphical User Interface (GUI). He started
at PARC at age 14 and joined Apple in January 1982 as a developer of the
Macintosh system software. Horn was responsible for the Resource Man-
ager, Dialing Manager, and the Finder. He left Apple in 1984 and received
his Ph.D. in Computer Science from Carnegie Mellon in 1999.
Chapter Three
Historical Context
There are occasionally short windows in time when incredibly important things
get invented that shape the live of humans for hundreds of years. These events are
impossible to anticipate, and the inventors, the participants, are often working not
for reasons of money, but for personal satisfaction of making something great.
—Steve Wozniak, Revolutionary, from the foreword
to Revolution in the Valley, 2004
Apple will be remembered as the creator of the personal computer and

much more. Once relegated to a niche, hobbyist computer manufacturer,
Apple has matured into a media powerhouse with its long tentacles in
every aspect of the business. Apple plays a major role in the consumption
(iPod and Mac) and distribution (iTunes Store) of music, once thought
to be the exclusive domain of giant record labels. Having expanded into
television and movies, Apple shows no sign of slowing down.
The company’s endeavors into portable media players have allowed
it to take risks and successfully expand the business into set-top boxes
and mobile phones, also previously thought to be outside the scope of a
so-called traditional computer manufacturer. Apple Inc. is anything but
traditional, though. Apple has expanded its expertise across multiple
disciplines and into ones where virtually no one could have predicted it
would go.
If Apple continues cutting a swath of innovation through Silicon Val-
ley, it’s difficult to predict what market it will conquer next. One thing’s
for sure, though—no one can write Apple’s epitaph just yet.
APPLE INC.
Apple, as a company, made a huge mark on history. Growing from
two employees to a staff of more than 20,000 across the globe, Apple had
worldwide sales of more than $24 billion and earned $3.5 billion in profit
in fiscal 2007. Apple has no debt and more than $15 billion in cash.
34 Apple Inc.
But what makes Apple’s feat even more impressive is that it should,
by all accounts, have gone bankrupt sometime in 1995 or 1996. It was
hemorrhaging money and market share and lacked leadership. Apple
took a turn for the worse in the early 1990s when quality slipped and
it flooded the market with a confusing array of Macintosh models. The
problem was exacerbated by licensing the Apple ROMs to third-party
cloners that were supposed to build market share but instead stole sales
from Apple.
Apple was on its deathbed in 1997 when Steve Jobs returned, after
Apple purchased NeXT. Jobs came back and quickly turned the com-
pany around by eliminating unprofitable products, tearing up the agree-
ments with the cloners, and whittling down Apple’s product offerings to
two markets (professional and consumer) with only two models in each
(a desktop and a notebook). Jobs surrounded himself with brilliance and
hired only the best and brightest to take the company to a new level.
Since then, Apple’s has been a storybook tale of one of the greatest busi-
ness turnarounds in the history of business, for which it will always be
remembered.
Some of Apple’s recent financial milestones include:
• Apple entered the Fortune 500 at number 414 and in 2008 ranked
at number 103 on the list.
• Apple is number 8 on Fortune’s list of the 20 most profitable tech
companies, passing longtime rival Dell, who is number 10.1
• Ranked as the “Top Brand Worldwide,” Apple was first in almost
all the positive questions, including “What brand can you not
live without?” and “What brand, if sent back 100 years, would
have the biggest impact on the course of history?”2
• Apple leads Fortune’s Most Admired Companies List, ahead of
Google (#4) and Microsoft (#16). Apple also topped the Global
Top 20 list, which included companies from other countries.3
• Apple is the top retailer in the United States in terms of sales per
square foot.4
CORPORATE CULTURE
Apple’s corporate culture will be remembered as bucking the trend
of the formal, stoic, businessman in a blue suit with a briefcase. Apple
changed the traditional organizational hierarchy from tall to very flat.
Apple allowed casual dress when other large companies had an official
business dress code that resembled parochial school uniforms. Steve Jobs
has been known to walk around the Apple campus barefoot in cutoff
shorts and a black shirt. According to Scott Lewis at answers.com, “By
the time of the famous ‘1984’ TV ad, this trait had become a key way the
company attempts to differentiate itself from its competitors.”5
Historical Context 35
It wasn’t until many years later that many businesses adopted a “ca-
sual Friday” dress code that tried to emulate the dress that companies like
Apple had pioneered—for one day of the week. Many companies have
since abolished casual Friday and returned back to a policy requiring for-
mal business attire.
COMPUTERS
There’s no denying the impact that Apple created with its computers.
The Apple I and II were the first real “personal” computers and estab-
lished new markets for computers in the home and at school, previously
the realm of large corporations, scientists, and academia. The personal
computer spread like wildfire and was eventually distributed by hundreds
of manufacturers across the globe. The PC became such an integral part of
the home that many today would find it difficult to live without one.
The U.S. Census Bureau’s Current Population Survey6 says that only
8.2% of U.S. homes had a computer in 1984. That number has climbed to
more than 60% in 2003, thanks in large part to the work of Apple, which
played a huge role in popularizing the personal computer and making it
what it is today. Apple’s mark on computer technology will be with us for
a long time.
1984 8.2% 7.00M households

1989 15% 13.7M households
MEDIA PLAYERS
When Apple released the first iPod in 2001, it was met with a luke-
warm reception, mostly due to the high price tag: $400 was considered by
many to be too expensive for a consumer-oriented music player. Although
it was the first time you could put your entire music collection in your
pocket, other larger, hard-drive–based music players were already on the
market. In retrospect, since Apple has sold more than 150 million iPods
in less than seven years, it’s pretty obvious that it found the recipe for
digital music and MP3 players—the company can’t seem to make them
fast enough.
The iPod’s stratospheric growth can only be compared to the Sony
Walkman. The Walkman sold 50 million units in its first 10 years and took
16 years to sell 150 million units. Apple’s iPod sold 150 million units in
36 Apple Inc.
just over six years, more than twice the growth of the Walkman.7 Sony has
sold more than 350 million units worldwide since it created the Walkman
in 1979, so it still maintains a unit lead over the iPod, but it also had a
22-year head start.8
Sony’s Walkman sold 13.5 million units per year and the iPod is cur-
rently averaging more than 24 million units per year and shows no sign
of reaching its peak. By comparison, the venerable fax machine peaked at
3.6 million units sold per year in 1997and slowed down to 1.5 million per
year in 2004.9 The iPod’s share of the MP3 player market as of January
2008 was 72% (of unit sales) and 84% (in dollars).10
The iPod has already made its mark on history and will undoubtedly
be remembered as one of the most commercially successful electronics
devices in history. If it continues at its current pace, iPod could surpass
the Walkman’s 350 million sales in its first 10 years—something that took
Sony 25 years to do.
For more on iPod unit sales, see Chapter 10, “Finances.”
TELEVISION, MOVIES, SET-TOP BOXES

When you think of Apple, you don’t usually think of television, or
even your living room, but Apple is working hard to change that. Apple
released the Macintosh TV in October 1993, which was its first attempt
at computer-television integration. It shared the appearance of the Mac
LC 500 series, but in black, but it never took off. In 1995 Apple’s Pippin
was another attempt at developing a multimedia platform. Pippin was de-
signed to be an interactive, multimedia CD appliance first and a gaming
platform second. Pippin suffered the same fate as the Mac TV after failing
to get any traction in the market.
After several failed attempts at a TV-connected Mac, Apple dove into
the living room with both feet in 2007 with the announcement of the Apple
TV, a new $299 set-top appliance with a 40GB hard drive. Apple TV was
designed to play iTunes content (music, television shows, movies, etc.)
from any computer (Mac or Windows) connected to the local network. It
could be connected to any Enhanced Definition (ED) or High Definition
(HD) television but not to a Standard Definition (SD) set still popular in
millions of living rooms. The Apple TV could be connected to any wide-
screen TV with either HDMI or component video, supported both analog
and digital audio via RCA and optical S/PDIF outputs, and supported
resolutions from 480p to 720p.
Apple TV was Apple’s first serious attempt at conquering the living
room, and even it turned out to be somewhat of a dud. In 2008, the com-
pany announced a significant software update for the AppleTV called Take 2
that featured a new interface and was able to download TV shows and
other digital content directly to the device.
At the All Things D conference on May 30, 2007, Steve Jobs called
Apple TV a hobby, saying, “The reason I call it a hobby is a lot of people
have tried and failed to make it a business. It’s a business that’s hundreds
of thousands of units per year but it hasn’t crested to be millions of units
per year, but I think if we improve things we can crack that.”
With 95% of households already getting television content from either
cable or satellite providers,11 the home television market is going to be
tough for Apple to penetrate. The historical context of the Apple set-top
box still remains to be seen, but given Apple’s storied success with the
iPod, iPhone, and iTunes, it’s dangerous to underestimate the company.
The iPod created an entirely new platform to enjoy videos, television
programs, and movies. Once thought to have too small a screen to watch
The device that changed the music world—The original

iPod, circa 2001. Image © John Greenleigh, www.flipside
studios.com.
38 Apple Inc.
video of any length, the iPod changed that perception completely in 2005
with its fifth-generation version with a larger, 2.5-inch screen. People
quickly adapted to putting video on their iPods and watching it on the
go. The ability to watch video caught on so quickly that Apple changed
the design of the iPod nano in 2007 to include a wider 2-inch color screen.
Apple had created an entirely new category of television!
Prior to iTunes, the concept of selling individual television shows
seemed impossible. After all, who would pay for something that they
could watch for free on their television at home? But Apple did just that,
expanding its iTunes Store to many other categories of entertainment.
After its initial success selling digital music, Apple branched out into sell-
ing television shows (October 2005), feature-length movies (September
2006), and even movie rentals ( January 2008).
The iPod and iTunes took the concept of time-shifting, popularized by
Digital Video Recorders (DVRs), to the next level. Instead of just being able
to watch a television program at a different time (time-shifting), consumers
could now watch it away from home—a concept called place-shifting. The
iPod forever decentralized the enjoyment of television and movies.
In January 2007, when Apple announced iPhone, and the iPod touch
in September, it further expanded the concept of place-shifting television
and movies, thanks to the new devices’ larger, 3.5-inch screens. People
who previously resisted watching video content on the iPod because of its
small screen were becoming more receptive to watching it on the iPhone
and iPod touch. Adding to the video Apple, the iPhone and iPod touch
can be rotated to watch television and movies in a wide-screen format
similar to the theater and High Definition (HD) screens.
Apple has earned a place in the history of television and movies for
changing the world’s perception about how and where video content can
be consumed and how it is purchased.
Apple’s first real set-top box—The Apple TV. Image ©

John Greenleigh, www.flipsidestudios.com.
MOBILE PHONES
According to the CTIA wireless association, an amazing 250 million
Americans own mobile phones, or 82.4% of the U.S. population.12 When
Steve Jobs announced iPhone in January 2007, he set a goal of selling
10 million handsets by the end of 2008. With more than one billion mo-
bile phones sold per year, selling 10 million would only give Apple a 1%
market share. “Exactly what we’re trying to do, 1% market share in 2008,
10 million units and we’ll go from there,” Jobs said. To keep that in per-
spective, industry leader Nokia sold 435 million mobile phones in 2007
and would sell more than Apple’s annual iPhone sales target in a little
more than 8 days.
The mobile phone market is massive. In 2007, worldwide mobile phone
shipments crossed 1.15 billion units, a 16% overall growth over 2006. Five
manufacturers account for 80% of mobile phones sold.13
Following is the 2007 mobile phone handset market share:
1. Nokia 38%
2. Motorola 14%
3. Samsung 13%
4. Sony Ericsson 9%
5. LG Electronics 7%
6. Other 19%
Apple is a minor player in the worldwide mobile phone market, and

it’s a massive market to enter, but Apple’s just getting started and taking
things slow. Steve Jobs is happy to eke out a 1% market share and grow
from there. Apple may not make a dent in the historical context of mobile
phones in unit sales, but in terms of excitement and buzz, you’d be hard
pressed to find another item in the history of consumer electronics that
was talked about more than Apple’s iPhone.
SUBCULTURE
Are they customers or fans? Apple has one of the most fiercely loyal,
dedicated, and faithful customer bases in the world. Apple fans border on
rabid and are well known for their fanatical dedication to the platform.
The Mac is more than a computer, and Apple is more than a company to
them. Apple is more of a philosophy than a computer brand. Apple has
inspired a community of like-minded individuals, who share their pas-
sion for the things that they do with their computers—art, science, and
entertainment—as well as their passion for the computers themselves.
Apple’s annual Macworld Expo conference kicks off with a keynote
presentation by Steve Jobs that’s more similar to a rock concert than a
40 Apple Inc.
technology presentation. Tickets are coveted and difficult to get. They’re

only given in advance to people that purchase the most expensive all-
inclusive conference passes, and even the media list is closely scrutinized.
Apple doesn’t offer media credentials to many controversial, smaller inde-
pendent journalists (often called bloggers) and has denied access to those
that published rumors about unannounced Apple products.
What Is a Blog?
A blog (short for web + log) is a Web site written and edited by an
enthusiast on a particular topic. Blogs, usually serial publications with
the newest entry displayed at the top of the page, don’t usually pub-
lish at a set interval but tend to publish randomly (at the whim of the
writer), ranging from daily to monthly. Since the term blog was popu-
larized in the late 1990s, the concept has been embraced by small
and large corporations, nonprofits, and news-gathering organizations.
Many organizations maintain a less formal, employee-driven blog as
an adjunct to their official Web sites.
A blogger is a person who writes blogs. The word was initially used
in the name of a Web site, launched in 1999 from Pyra Labs, called
Blogger.com. This Web site provides the tools for creating blogs.
There’s a small portion of seats in the keynote hall reserved for people
with any type of conference badge and people line up in the street to claim
those seats, beginning the night before in order to ensure that they get a
seat. After the VIPs and invited guests are seated, when the doors finally
open, there’s usually a rush to the seats that borders on a stampede. At-
tendees want to get as close to their messiah as possible. Once seated,
savvy keynote veterans check the bottom of their seats because at Mac-
world keynote in July 2000 Jobs gave away a newly announced Apple
optical mouse by taping a coupon under every chair in the hall.
The only other business event that compares to a Macworld Expo
keynote address is the annual pilgrimage of 15,000 faithful each year to
Omaha, Nebraska, to attend the annual shareholder meeting of Berkshire
Hathaway, which has been called “Woodstock for Capitalists.”14
Read more about Macworld Expo in Chapter 7, “Macworld

Expo.”
Apple’s fans are an enthusiastic bunch and take their love of the com-
puters and Apple to an entirely new level. They’re known to wait in line
for hours or days for a new product or store opening. They’ve camped out
to wait for new Mac OS releases in the early years at Midnight Madness
sales. They’ve waited in line to be the first to attend a new Apple retail
store opening (but to give them credit, the free T-shirts are highly prized).
They also lined up, some as early as 24 hours before, to be the first to pur-
chase Apple’s iPhone when it was released in June 2007.
Apple fans have a reputation for never parting with a retired Mac.
Working Macs always get handed down to family or friends, for which
the giver automatically becomes obligated to provide free, unlimited,
lifetime, technical support via some weird, unwritten rule. Less useful or
hardware-challenged Macs are stored on shelves, in basements, attics, or
garages. Some people have extensive Mac museums that they proudly
maintain. Bragging rights are bestowed on curators of working Macs that
are especially old or rare.
Mac heads discovered that old all-in-one Macs make great fish tanks.
According to Leander Kahney’s Cult of Mac, Jay Leno, Timothy Leary,
Abbie Hoffman, and Steve Jobs reportedly have Mac aquariums.15 Ac-
cording to legend, veteran Mac columnist Andy Inhatko started the trend
in 1992 in a Q&A column when he recommended that the best way to up-
grade a 512K Mac was to turn it into an aquarium. You’ve got to be careful
what you say to a Mac fan.
The Apple logo is a very popular brand and loyalists find creative
ways to display it. T-shirts are the most common, and there is a verita-
ble plethora of T-shirts (both official and unofficial) that pay homage to
Apple. Walking around Macworld Expo is probably the best way to see
them. Like Macs themselves, kudos and high fives are awards to those
that own vintage or particularly witty Apple T-shirts. Haircuts are also a
popular way to profess your love for Apple. Leander Kahney’s Cult of Mac
and Cult of iPod both feature stunning examples of Apple coifs on their
covers. Tattoos are the most permanent way to show your true devotion,
and Mac fans find unique designs and places for their Apple ink, which
are copiously documented online.
Chapter Four
Strategies and Innovations
Apple has earned a strong reputation for beauty, simplicity, and quality
over the years, all part of its mission. From award-winning design to me-
ticulously crafted hardware, Apple focuses on the entire user experience
and is rewarded with strong sales and fierce loyalty as a result.
Apple is famously quiet and secretive about its future plans, espe-
cially when it comes to new products. Staff members are instructed to
respond with one simple question when queried about anything unre-
leased, “Apple doesn’t comment on unannounced product.” It’s a famil-
iar refrain to members of the media covering Apple—so common, in fact,
that many journalists will print it without even bothering to call Apple for
comment.
Surprisingly, Apple enjoys much commercial success with little, if
any, focus group testing, barely any beta testing, and a public relations
department that’s wound tighter than a drum. The element of surprise is
Apple’s primary strategy. Apple keeps mum because it builds suspense
and because there’s big money at stake. A new Apple product announce-
ment generates millions of dollars in free publicity on the Internet and in
the mainstream media, and the bigger the surprise, the great the amount
of free coverage.
It’s all part of Apple’s carefully planned strategy to win attention, cus-
tomers, and ultimately, money. There are a number of other strategies that
Apple employs, and each has helped it create essential “disruptions” that
changed business forever.
STRATEGIES
Apple’s strategy is a simple: mediocrity is the enemy of excellence.
Apple successes aren’t just luck or good fortune. While those cer-
tainly play a part, Apple has spent the last decade perfecting an intricate
strategy that yields a seamless mix of hardware, software, and services.
Apple products achieve a goal of being easy-to-use and powerful. They’re
Strategies and Innovations 43
unobtrusive and inviting and encourage users to be creative without get-

ting in the way.
Apple’s underlying philosophy is to design products that are easy-to-
use and beautifully designed. Simplicity is the mantra. For years Apple’s
calling card has been that it “just works.” In addition, most of Apple’s
products are intuitively designed so that you don’t need to read a user
manual to figure them out. If you ask most Mac users if they read manu-
als, you’ll hear a resounding “no.” Many Mac users claim to have never
read an Apple manual.
Unfortunately, the simplicity part got away from Apple in the early
1990s. Without Steve Jobs’s eagle eye watching over the coop, Apple re-
leased too many confusing and similar products in an attempt to battle the
IBM PC, and it scared customers away. When Jobs came back in 1997, his
strategy was to simply clean house. He accomplished this by:
1. Eliminating all unprofitable products. Jobs immediately killed

the clones, which were cannibalizing Apple sales, and the New-
ton, which was a $500 million money pit.
2. Simplifying the Mac models. Apple went from dozens of com-
puter models to four. Jobs distilled all Macs down to just four
models that neatly fit into his two-by-two “product matrix.”
3. Beefing up existing product lines and making them the best they
could be. Jobs would upgrade or “speed-bump” best-selling
products every 9 to 12 months with compelling new features
that users wanted.
4. Only entering established markets that had profit potential.
Apple would sit on the sidelines and let other companies pour
R&D money into new markets and products, then study what
they did wrong and release its own version with all the good
parts and none of the bad.
Other Apple strategies that contribute to the bottom line include:
1. Beautiful design. Attractive products sell more than unattractive

ones. Apple goes to great lengths to make its products visu-
ally appealing. Steve Jobs personally recruited visionary indus-
trial designer Jonathan Ive for his beautiful, yet simple designs.
Apple’s iMac, iPod, and iPhone are universally recognized for
their beautiful design and enjoy amazing sales as a result. Apple
takes design to a new level and every part of the experience is
carefully designed, including the box, the packaging, and the
accessories and cables. Before a user ever opens the box, every
part of the experience is carefully choreographed in Cupertino.
2. User interface. In addition to its beautiful hardware design,
Apple exercises tight control over its software look and feel.
44 Apple Inc.
Apple publishes user-interface guidelines that software devel-

opers must follow, and the result is a consistent and predictable
experience for users. A good user interface is transparent and
doesn’t get in the way. Apple wrote the book on excellent user
interfaces.
3. Low-entry points. After years of selling products that were expen-
sive, Apple began offering inexpensive products that got people
in the door, like the $49 iPod shuffle and the $499 Mac mini, then
enticing them to upgrade later on. Apple did similar things with
the iMac with great results.
4. Complete solutions. All new Macs ship with iLife, a powerful and
full-featured software suite. Right out of the box, a Mac user can
be productive without buying any additional software. Apple
software is designed to be interoperable and compatible so that
it works with other Apple software. Also, Apple makes the hard-
ware and the software, so if you have a problem, there’s only one
company to ask and no finger pointing by vendors trying to pass
your problems off onto someone else.
5. Proprietary formats. Many commercial music tracks purchased on
iTunes are encrypted with FairPlay DRM, which enables them
to be played only on Apple products. Once customers have an
investment in music from Apple, it’s not in their best interest to
switch to another platform, lest they want to lose access to their
purchased tracks. This type of consumer lock-in creates repeat
customers.
6. Support. Apple consistently gets high customer satisfaction rat-
ing for technical support, recently winning top honors in Con-
sumer Reports annual survey by double digits over its closest
rival.1 Part of this is because Apple is responsible for the entire
experience, from the hardware to the software to the service.
This allows it to maintain tight control over quality and ensure
that everything will work together.
7. Branding. From Apple’s famous “1984” television commercial, to
“Think Different,” to “I’m a Mac,” Apple has a great market-
ing sense. Its campaigns are insightful, funny, and interesting.
People like Apple’s ads so much that they analyze them, buy the
posters, and post their television commercials on their Web sites
for others to watch. What could be better than people watching
your commercials repeatedly, without having to buy airtime?
Apple is the envy of every corporation when it comes to free
publicity.
8. Buzz. Apple’s employees and public relations department are
notoriously tight-lipped, which created a cottage industry of
independent journalists that follow the company’s every move
looking for any hint about new products. The term blogger was
practically invented for the hordes of enthusiasts that write

about Apple’s every whim. Apple enjoys millions of dollars per
year in free publicity from the buzz generated by its followers.
Another winning Apple strategy, Apple’s retail stores, is also an

innovation. They are covered in Chapter 1, “Origins and History,”
and in the next section.
INNOVATIONS
Apple is an innovation specialist. From the Apple I and II to the mouse,
GUI, and LaserWriter, Apple has a pedigree of developing new technolo-
gies and adapting existing technologies for the masses. Let’s explore some
of Apple’s biggest innovations.
The LaserWriter—1985
In late 1985 Apple released the Macintosh Office, featuring the Laser-
Writer and the AppleTalk networking technology in an attempt to make
the Mac more attractive to small businesses. Pamela Pfiffner tells this story
best in The Birth of Desktop Publishing from 2004:2
In the summer of 1984, Jobs called Seybold. “Steve wanted to see

me urgently,” he recalls. “He said they had a deal with Adobe,
they were signing a deal with Linotype, they had real fonts.
I went to Cupertino and walked into this tiny room, and there
stood Jobs and [Adobe cofounder John] Warnock with a Mac and
a LaserWriter. He showed me what they were up to. I turned to
Steve and said, ‘You’ve just turned publishing on its head. This
is the watershed event.’ When I turned to John, he had this look
on his face. He was just so happy. I could tell he was thinking,
‘This made the company. This is my validation.’ It was a magic
moment.”
The LaserWriter debuted to great fanfare at Apple’s annual
stockholder meeting on January 23, 1985. The LaserWriter cost
$6,995—steep by today’s standards, yet astoundingly cheap
compared with the IBM and Xerox laser printers of the day,
which cost three to ten times that. Plus, the LaserWriter had
Adobe’s special ingredient: PostScript. Almost immediately,
analysts commented on the LaserWriter’s output, praising its
“near-typeset quality.”
Apple’s LaserWriter combined with Adobe’s PostScript was a bona

fide revolution for the printing and publishing world. When you add Al-
dus’s PageMaker software to the mix, end users finally had real publishing
46 Apple Inc.
tools available to them on an end-user budget. For the first time, a pro-
fessional publishing workflow could be assembled for much less than
$20,000 and could fit on top of a desk. The LaserWriter ushered in an era
of Desktop Publishing (DTP) that suddenly made millions of people into
home print shops.
While Guttenberg would have undoubtedly been proud, the DTP
revolution also created legions of bad typography and design. The appeal
of an unlimited palette of fonts and styles was irresistible to many aspir-
ing layout artists, with some using almost all of them on a single page.
Regardless, the three As (Apple, Aldus, and Adobe) changed the publish-
ing world forever and the benefits from their contributions to the field are
being reaped by everyone who prints a page today.
PowerBook 100—1991
In 1991 Apple released its first serious notebook computer, the Power-
Book 100. It weighed only 5.1 pounds and sold for $2,500 and was es-
sentially the same as the Mac Portable except that it weighed about
10 pounds less. The PB100 was designed by Sony and shipped with 2MB
RAM (expandable to 8MB) and a 20–40MB hard drive. A floppy drive was
only available as an external option.
Two other PowerBooks were launched simultaneously with the
PB100. The PowerBook 140 and the 170 were based on PowerBook 100
but with a simpler design, and both were designed entirely by Apple.
The PowerBook 100 wasn’t extremely innovative by itself, but it opened
the door for an entire line of PowerBooks that came in all shapes and
sizes. PowerBooks went on to become the notebook of choice for writers,
artists, and businesspeople of all types. The spirit of the PowerBook lives
on in Apple’s MacBook series of Intel notebooks.
Hey, it wasn’t the Mac Portable!
QuickTime—1991
QuickTime was the beginning of video playback on computers and
has become a standard feature on computers, Personal Digital Assistants
(PDAs), and smart phones. Apple released QuickTime 1.0 in December
1991 for System Software 6. Bruce Leak, its lead developer, first showed
the technology at Apple’s Worldwide Developer Conference in 1991. Mi-
crosoft’s Video for Windows followed shortly after in November 1992.
The First PDA—1993

The Newton MessagePad, announced in August 1993, was a com-
pletely new product for Apple and represented a brave step into the
unfamiliar territory of PDAs. The name for the MessagePad is an allu-
sion to Isaac Newton’s famous apple, which is also part of the first Apple
The Sony-designed PowerBook 100. Image © John Greenleigh, www.flipside

studios.com.
corporate logo. Although Apple’s official name for the device was Mes-
sagePad (Newton was actually the name for the operating system it used),
people began referring to the device and its software as the Newton.
Diminutive, handheld computers are somewhat taken for granted
today—most of their functions are built into many mobile phones—but
at the time, this was a bold move for Apple. It took a lateral step outside its
traditional comfort area, desktop and notebook computers, and attempted
to shrink their computer technology into something that would fit into the
palm of your hand.
It wasn’t a complete stretch, though. Apple had a pedigree of building
user-friendly computers, so it was logical that it would eventually build a
handheld computer. The problem is that small computers bring big chal-
lenges in the areas of miniaturization and battery life, areas where Apple
didn’t have any experience.
48 Apple Inc.
The dawning of the PDA: Apple’s Newton Message-

Pad 2000. Image © John Greenleigh, www.flipside
studios.com.
The market for PDAs was in its infancy in 1993, and although the
Newton wasn’t a commercial success, it paved the way for a flood of
handheld devices that followed, including the Palm Pilot and Pocket PC.
The Newton MessagePad came with a software bundle that included
an address book, calendar, notepad, and the ability to fax and e-mail
when connected to a standard telephone line. The most innovative fea-
ture, however, was its pen-based interface and handwriting recognition
software.
The driving force behind the Newton MessagePad was Apple

CEO John Sculley. Read more about John Sculley in Chapter 8,
“Apple Leadership.”
The Newton MessagePad featured an innovative handwriting rec-

ognition system that adapted to the user and could be trained to under-
stand an individual’s handwriting style. The handwriting recognition,
while its most technologically advanced feature, was also its most ma-
ligned. It was difficult to learn (especially for beginners) and would often
suggest hilarious, but incorrect, phrases as the user wrote. The Newton’s
misrecognitions became the butt of many jokes in the national media. Not
exactly the kind of attention that Apple was hoping for.
Newton shipped with a 20 MHz ARM 610 processor and retailed for
$699. Its successor, the MessagePad 100, was released in March 1994. The
Newton received a badly needed ROM upgrade with many bug fixes in
October 1993, but it wasn’t enough to keep the project alive. Apple discon-
tinued the Newton in 1997 when Steve Jobs returned, much to the objec-
tion of fans worldwide.
Newton Still Popular Today

Apple’s Newton MessagePad was definitely ahead of its time. Long
before the advent of the Palm Pilot, Newton introduced the world
to several advanced technologies, including the touch-screen display,
handwriting recognition, the PCMCIA (a.k.a. PC Card) slot, and the
stylus. While they sound pedestrian today, these were ultramodern
features in 1993.
Despite having been discontinued in 1998, the Newton Message-
Pad is still in use today by enthusiasts. When a technology has been
discontinued for more than a decade, it’s usually long forgotten. Not
so with the Newton MessagePad. The handheld computer released by
Apple in 1993 invented the PDA category and is the great-grandfather
of the iPhone, but it’s far from forgotten. People still actively keep
them running, and some use them on a daily basis. There are numer-
ous working Newtons for sale on auction sites like eBay, but most
people tend to hold onto them.
Newton was so popular that an active enthusiast community still
gathers to discuss the device of yore and to trade tips on upgrading
and keeping the machines running. There are currently more than
20 active Newton user groups. Paul Filmer maintains a list of their
meetings, which he hosts on a—what else?—Newton OS Web Server.
There are also hundreds of actively maintained shrines, newsgroups,
mailing lists, and technical support information on the Internet.a
a
“The Newton Community on the Internet,” http://www.chuma.org/newton/faq/
newton-faq-community.html, accessed June 2, 2008.
The Trackpad—1994
Introduced in May 1994, the PowerBook 520 was the world’s first note-
book to ship with a trackpad—Apple’s term for a touchpad surface used to
position a cursor on the screen. Beginning in 1994, the trackpad replaced
the popular trackball found on all previous PowerBooks. Since then, the
trackpad has become a staple on all PowerBooks and MacBooks and has
even been adopted by many Windows notebooks and some keyboards.
50 Apple Inc.
While Apple didn’t invent the touchpad (early Apollo desktop com-
puters were one of the first to use them), it deserves credit for being the
first to implement it in a notebook computer. This was a stroke of brilliance
because the low, flat devices allowed Apple’s notebooks to become thin-
ner and not have to waste valuable space (and weight) with a large spheri-
cal ball that was previously used to control the cursor on the screen.
Apple’s modern notebooks feature updated trackpads that can detect
more than one finger at a time, enabling a whole new range of features,
including the ability to scroll without using a button and a double-finger
tap that brings up a contextual menu. Apple’s trackpad technology trick-
led down to other products over the years and is now found in the Apple
iPod in the form of its touch-sensitive click wheel.
The World’s Fastest Notebook Computer—1997

The combination of the new PowerPC 750 (or G3) processor from Mo-
torola/IBM and 512KB of cache made the PowerBook G3 the fastest note-
book in the world at the time. In benchmark testing, the PBG3 performed
near the Power Mac 9600/300, which was unheard of for a notebook. Apple
promoted this new speed demon heavily in its marketing materials.
The Apple (Online) Store—1997

Apple opened its Web-based retail store (at http://store.apple.com)
in November 1997 with the help of NeXT’s WebObjects technology. The
Apple online store allowed customers to purchase most of Apple’s hard-
ware and software and gave people from even the remotest areas of the
country access to Apple goods from the comfort of their home. Ironically,
WebObjects was also being used by Dell for its online store at the time.
When Apple purchased NeXT, Dell didn’t want to be associated with the
same technology that a competitor was using. According to legend, Mi-
crosoft dispatched teams of engineers to migrate Dell off WebObjects and
onto Microsoft technology at its own expense because it wanted to show
off the Dell e-commerce site as part of its portfolio.
iMac: Dumping the Floppy—1998

After returning to an Apple Computer that was mismanaged and in
dire financial straights, Steve Jobs took the reigns and quickly got the com-
pany back on track again. Shortly after his return in 1997, he made one
of the largest bets in his career and developed an entirely new computer.
This new Mac would not only change the complexion of Apple, but also
the entire computer industry as a whole.
On August 15, 1998, Apple introduced the iMac, and by the end of
the month, it had 150,000 pre-orders for the new machine. The new and
colorful $1,300 Mac was a totally redesigned machine “for the rest of us.”
Designed with the everyday user in mind, it was simple to set up. iMac
allowed users to get onto the Internet within minutes of opening the box.
The all-in-one design included a built-in monitor and even a handle—
a throwback to the “toaster” design of the original 128k through Classic
Macs. The Macintosh design team responsible for iMac was led by Jona-
than Ive, a design wunderkind from the UK handpicked by Steve Jobs.
For more on Jonathan Ive, please refer to Chapter 8, “Apple Lead-

ership.”
Instead of coming in a traditional beige or platinum enclosure, iMac

was built from Bondi blue (a reference to the color of the water at Syd-
ney’s Bondi Beach) and translucent grey plastics, allowing users to see in-
side their computer for the first time. This was nothing short of a design
coup, and it caught every other computer maker flat-footed. Initially, some
mocked iMac’s colorful plastics, but after it posted impressive sales num-
bers, Windows PC manufacturers frantically revamped their computers to
have more colorful designs in hopes of emulating Apple’s success. For the
first time ever, PCs were trying to emulate the Mac’s design. When the iMac
was introduced in five colors in 1999, peripheral makers and competitors
again scrambled to match Apple’s color scheme. It seemed that, with every
advance made by the iMac, competitors were at least a step behind.
For more on Apple’s competitors, please refer to Chapter 9,

“Competition.”
The machine that saved Apple—Say hello to the iMac. Image

© John Greenleigh, www.flipsidestudios.com.
52 Apple Inc.
From a design perspective, iMac was nothing short of a revolution,

but inside it was only evolutionary. For the most part, the hardware was
pedestrian; iMac came with a fast G3 processor (introduced the year be-
fore) and normal amounts of RAM and hard drive. Apple made a major
bet with the hardware and did something unthinkable—it dropped the
floppy drive from the new computer. The iMac was the first machine in
more than 15 years not to ship with a floppy drive. Apple was betting that
the antiquated floppy’s days were numbered and figured that most soft-
ware came on CD-ROMs anyway, so it effectively hastened the floppy’s
demise. The removal of the floppy drive was controversial at the time but
was later adopted by every major PC manufacturer.
FireWire—1999
FireWire (also known as IEEE 1394 and Sony’s i.Link) was developed
between the late 1980s and 1995 by Apple, Digital Equipment Corpora-
tion (DEC), IBM, INMOS/SGS Thomson, Sony, and Texas Instruments
as a replacement for the aging Small Computer Systems Interface (SCSI).
FireWire was designed as a high-speed interface for audio and video
peripherals and is commonly used for connecting external hard drives
and DV (digital video) cameras. It is preferred over USB because it has
a greater effective speed and power distribution capabilities. FireWire
features high sustained data transfer rates that are required by users mov-
ing a large volume of data.
The blue and white Power Mac G3 was the first pro Mac to get
FireWire (January 1999), and the iMac DV was the first consumer Mac to
get FireWire in April 1999. In 2001, the standard iMac got FireWire, finally
bringing in the entire Mac family. The Power Mac G4 and the PowerBook
G4 17-inch introduced in January 2003 were the first Macs to include the
faster, FireWire 800 port. FireWire 400 is capable of data transfer at up to
400 Mbps, while FireWire 800 can transfer data between devices at up
to 800 Mbps.
AirPort Wireless Networking—1999

AirPort is Apple’s brand name for wireless networking technology
based on the IEEE 802.11b standard. Easily the most anticipated aspect
of Apple’s new iBook consumer notebook computer was its newfangled
AirPort slot. That slot accepted a $99 card (about the size of a PC Card)
that enabled the new notebook to be connected to a network and the
Internet wirelessly using industry standard protocols. Up to 10 iBooks
could connect to a wireless access point (which Apple called a base sta-
tion). The companion base station could be connected to an existing Eth-
ernet network or dial-up Internet connection and share that connection to
all the wireless clients.
AirPort was announced on July 21, 1999, with the iBook at Macworld
Expo New York. Steve Jobs held up the iBook as he surfed the Web, and
the audience realized there were no wires connecting it and erupted into
thunderous applause. Initially, AirPort was offered as a $99 expansion
card for the iBook with a companion base station that acted as the central
access point that the AirPort clients connected to.
The original AirPort cards and base stations were based on the 802.11b
standard and allowed transfer rates up to 11 Mbps. AirPort quickly gained
in popularity and was routinely used to share Internet connections be-
tween multiple computers in a home, office, or classroom. Needless to
say, the technology took off and is in use in many homes, offices, and
classrooms as well as any place frequented by travelers (airports, hotels)
and students (coffee shops, bookstores, and libraries).
AirPort Extreme
AirPort Extreme was announced at Macworld Expo in San Francisco
in 2003. The next generation wireless networking technology (now called
Wi-Fi) was based on the new IEEE 802.11g standard and was capable of
speeds up to 54Mbps. AirPort Extreme supports the 802.11a, b, g, and
draft-n protocols, making it compatible with previous generation 802.11b
devices. The Power Mac G4 was the first Mac to include support for Air-
Port Extreme.
AirPort Extreme Base Station

The AirPort Extreme Base Station comes with three Local Area Net-
work (LAN) ports and, unlike the previous base stations that looked like
a melted Hershey Kiss, featured a more flat and square form factor. In
addition to the faster speed and new design, the AirPort Extreme had an
AirPort Disk feature that allowed a USB hard drive to be connected to the
base station that would be available wirelessly to anyone (with the right
credentials) who connected to it. On August 7, 2007, Apple added Gigabit
Ethernet to the AirPort Extreme, bringing it in line with most other Apple
products.
Time Capsule
Time Capsule was introduced at Macworld Expo on January 15,
2008, and is essentially an AirPort Extreme Base Station with a 500GB or
1TB hard drive in it. The device is a wireless Network Attached Storage
(NAS) that can be used as a backup device with Apple’s Time Machine
backup software (introduced in Mac OS X 10.5 Leopard).
The Apple Retail Store—2001

Apple’s launch of a line of retail stores was met with great skepti-
cism. Gateway Country Stores had cropped up in suburban areas across
54 Apple Inc.
the United States but were faltering, and retail, in general, was a gamble.
In April 2004, Gateway announced the closure of all its stores.
Apple reinvented the retail store from the ground up. Jobs started by
hiring the best in retail, including Mickey Drexler, a veteran of The Gap,
and Ron Johnson, merchandising chief at Target and a specialist in afford-
able design. Apple rented a warehouse to build a prototype store. The first
prototype store was designed around product categories, which was not
how people shopped. So Apple rearranged it so that it was based more
around interests rather than simply products.
After some internal testing, 16 of 18 people said that their best ser-
vice experience was at a hotel. The Genius Bar was born from attempts to
emulate the helpful and practical advice dispensed by the concierge desk
at a hotel.
The first Apple Stores opened in May 2001, in Tyson’s Corner, Vir-
ginia, and in Glendale, California. Apple opened its 200th store a little
more than six years later in Gilbert, Arizona. The Fifth Avenue location in
New York City alone attracts more than 50,000 customers per week.
iTunes—January 2001
iTunes was launched at Macworld Expo 2001 in San Francisco as
a way to play back MP3 and digital music files stored on a Mac. More
important, it provided an easy way to organize large libraries of digital
music. In October, iTunes became the conduit for moving music to and
from the iPod digital media player. iTunes is constantly being improved
and today is closely linked to Apple iTunes store, launched April 28, 2003.
The software and store combination is capable of managing (and later,
purchasing) music, podcasts, audiobooks, iPod games, music videos, tele-
vision shows, feature-length films, ringtones, movie rentals, and iPhone
software.
iTunes began life as a media player called SoundJam MP written by
Jeff Robbin and Bill Kincaid3 and released by Casady & Greene in 1999.
SoundJam was acquired by Apple in 2000 and was released as iTunes 1.0
at Macworld Expo on January 9, 2001. Although there were other MP3
players available for Windows (notably WinAmp) and other Mac pro-
grams in development (like Panic’s Audion4), SoundJam MP was first
out of the gate and it forever changed the way we consume music, and
later, videos and television.
iTunes innovated because it allowed users to easily organize large
music collections via a series of fields, called metadata or ID3 tags. Meta-
data embedded in each music file provided the perfect structure to orga-
nize, find, mix, and play back music, and iTunes made this easy. iTunes
allowed users to create an unlimited number of playlists, and each could
contain the music organized by genre, artist, or just about anything. It also
features a powerful search capability that could locate tracks quickly, even
in large libraries.
Shuffle
One of iTunes’ most powerful features was borrowed from the CD
player: shuffle play. Shuffle or random music playback took on an entirely
new meaning with the advent of digital music, especially with large li-
braries. Instead of shuffling maybe 16 tracks on a CD, iTunes could shuf-
fle hundreds or thousands of songs. All of a sudden artists and genres
were being randomized and played back in ways never before dreamed
of. Probably the greatest part of the shuffle feature was the ability to dis-
cover music that was either forgotten or never heard. Apple capitalized on
shuffle play and later released iPods without screens that were designed
to play back music in shuffle mode.
Windows Support
The only thing that was holding iPod back from exploding was its
exclusivity to the Macintosh platform. After iPod sales began to acceler-
ate, demand for the product by Windows users also increased. Apple was
deluged by requests for a Windows version of iTunes but is believed to
have deferred as long as possible in an attempt to encourage people to
switch platforms. Apple maintains that developing the Windows version
was complicated and took longer than anticipated.
On October 16, 2003, Apple released iTunes 4.1 with support for the
first time for Microsoft’s Windows, and the floodgates flew open. It didn’t
happen immediately, but within a year, iPod sales more than doubled,
then grew exponentially from there. iPod sales skyrocketed as the device
was now available to the roughly 90% of computer users that use Win-
dows PCs.
Releasing iTunes for Windows might have been one of the smart-
est decisions that Apple ever made. Not only did it open up a market of
literally billions of potential iPod customers, but the little music player
became a sort of Trojan horse. Windows users bought the unassuming
device and brought it into their homes, and after becoming enamored
with the iPod, Windows PC users became curious and more interested in
Apple. After all, if it made a music player this good, maybe its computers
were worth a look.
iPod—October 2001
Without question, the most significant product of 2001, and maybe the
decade, was a little white handheld device that could play MP3 audio files
through a pair of headphones, called iPod. Announced October 23, 2001,
the white plastic and chrome device had a unique wheel interface that you
turned to navigate a simple series of hierarchical menus to select the song,
album, or artist that you wanted to listen to. “To have your whole CD
library with you at all times is a quantum leap when it comes to music,”
said Steve Jobs. “You can fit your whole music library in your pocket.”5
56 Apple Inc.
In mid-October 2001, Apple sent invitations to the media to attend an

event at its corporate headquarters in Cupertino, which promised “the
unveiling of a breakthrough digital device.” Short on details, the invite
also mentioned the date and time, October 23, 2001, at 10:00 a.m., but it
was a little teaser at the end that sent the Apple faithful into a frenzy. The
end of the invite simply said, “Hint: it’s not a Mac.”
The mainstream media, Mac bloggers, and the rumor mill went into
overdrive in an attempt to decrypt Apple’s secret message. Many guessed
(successfully) that it would be a portable music player because iTunes and
MP3 files had become especially popular. And on October 23 about 200
members of the press, invited guests, and VIPs attended the Jobs presenta-
tion at Apple. Jobs has a reputation as a good presenter, and for good rea-
son. He has the ability to capture the attention of his audience and build
the suspense to the inevitable crescendo of the main announcement that
he makes.
He began his presentation by reiterating his digital hub strategy, which
he debuted at Macworld Expo in January 2001. The concept was that the
Mac would “become the digital hub of our emerging digital lifestyle, add-
ing tremendous value to our other digital devices.”6 Jobs noted that Apple
made software that worked with a lot of different digital devices, but as of
then, no device had been made to work specifically with its software.
“The field we chose is music,” Jobs said. “Why music? Well, we love
music, and it’s always good to do something you love.” Jobs went on to
explain that music is part of everyone’s life. “It’s a large target market,” he
said. “It knows no boundaries. And there is no market leader. No one had
really found the recipe yet for digital music. And not only will we find the
recipe; we think Apple is a great brand for this.”7
After a brief discussion of the competitive landscape, mentioning no
names, Jobs revealed his white, hard-drive–based music player, named
iPod, saying, “I think this blows them away.” Jobs went on to extol the
virtues of his latest creation like a proud father beaming over his son’s
straight-A report card.
The iPod was innovative for four key reasons:
1. Size. Its tiny footprint and thin profile made it ultra-portable and
easily “pocketable.”
2. Capacity. Its spacious (for the time) 5GB hard drive could hold
1,000 songs, which was more than most people could listen to.
3. Speed. The iPod’s exclusive FireWire port made music transfer
from your computer to the device fast; a CD can be downloaded
to the iPod in 5 to 10 seconds.
4. Ease of use. The iPod interface is simple and intuitive; most
people can pick one up and master the basics of navigation and
playback within a few minutes.
In retrospect, after Apple sold 100 million iPods in the first six years,
it’s pretty obvious that it found the recipe for digital music, and it can’t
seem to make the stuff fast enough. But at the time, not everyone was con-
vinced. Initial reaction to the iPod was divided: there were the expected
cheers for its “impressive” compact design, but negativism prevailed. The
consensus was tepid and bordered on angry at times, mostly due to the
high price tag: $400 was considered by many to be too much to charge for
a music player. MacSlash said in its review, “The iPod sells for an abso-
lutely hideously outrageous $399 and will be available to the two people
that buy them on November 10.”8
Why was Apple releasing a product that played music? Shouldn’t it
have been designing a new computer? Not many people would have wa-
gered that the little music player would not only reinvent Apple, but also
consumer electronics, mobile phones, music, and almost the entire enter-
tainment industry too. But it did, and it shows no sign of letting up.
For more on how iPod impacted popular culture, see Chapter 5,

“Impact on Society.”
Technical Specs
The original iPod was Apple’s first foray into digital music. The unit
was about the size of a deck of cards and came equipped with a 5GB
hard drive, headphone jack, and a FireWire port—the first and only music
player at the time with this feature. FireWire was an important feature as
it greatly increased the speed at which you could move large amounts of
music to and from the device. Other Windows-based music players had
USB 1.1 connections, which transferred data at a maximum rate of 1 MB
per second, which was painfully slow.
The 5GB iPod was capable of holding 1,000 songs in MP3 format
ripped at a bit rate of 160kbps. The iPod supported MP3, WAV, and AIFF
formats and had a 20-minute buffer that was marketed as “skip protec-
tion” but is also a way to conserve battery life, as the hard drive could spin
down after it loaded 20 minutes of music into the buffer.
Hard Drive versus Flash

Although other hard-drive–based music players existed, Apple’s
was different because it used a 1.8-inch hard drive mechanism, making
it much smaller and more portable than the competition. In fact, iPod
was able to compete with flash-based MP3, which had a fraction of the
capacity. The most popular flash-based player at the time, the Diamond
Rio PMP300, held 32MB of music or roughly 12 songs and sold for $250
(which works out to about $21 per song). The iPod 5GB, on the other
hand, held 1,000 songs and sold for $400 or 40 cents a song.
58 Apple Inc.
Competition
iPod wasn’t the first digital music player on the market, but it was the
first one that got it right. The first digital music player was the Compaq
Personal Jukebox (or PJB) released in October 1999 with a 6.5GB hard
drive and a nonbacklit screen. Its biggest problem was its size. Because it
was based on a 2.5-inch (notebook) hard drive, it was substantially larger
than the iPod, measuring 5.9 × 3.15 × 1.0 inches and weighing 10.7 ounces.
The iPod, on the other hand, measured 4.02 × 2.43 × 0.78 inches, weighing
just 6.5 ounces.
Archos Technology from France made the Jukebox 6000, which also
preceded the iPod and was relatively popular. In addition to playing MP3
audio files, it could also record audio directly to MP3 from a line-in source
with the provided cables. It shipped with a 6GB, 2.5-inch hard drive and
suffered from the same size and portability problems as the PJB.
Creative’s Nomad Jukebox was another of the first crop of portable
music players. It had already been through several revisions before the
iPod was announced and was selling a 20GB player that had four times
the capacity of the iPod and also sold for $399.
The Perfect Storm
The timing of the iPod’s arrival couldn’t have been better. It was an-
nounced just after a literal tidal wave of free music had been downloaded
from file-sharing networks such as Napster and Audio Galaxy. Nap-
ster thrived from July 1999 through July 2001 with a peak of more than
26 million users, mostly college students, and ushered in a generation of
people that thought that music was free. As a result of free file-sharing
software, free music, and cheap hard drives, people amassed huge librar-
ies of digital music. For the most part, that music was relegated to your
hard drive, and you had to be in front of your computer to enjoy it. The
iPod changed all that. Now you could literally carry your music library
in your pocket.
The Switch to USB
The first iPod to support Microsoft’s Windows operating system
was the second-generation model released on July 17, 2002. It required a
FireWire connection, which was uncommon on PCs, and MusicMatch soft-
ware, which was inferior to iTunes, effectively stifling sales. Apple turned
a major corner on October 16, 2003, when it released iTunes 4.1, which
supported Windows. Suddenly, the software was available to a massive,
new market that was largely untapped.
A similar turnaround took place when Apple added USB support to
the third-generation iPod on April 28, 2003. Now most Windows users
could connect the iPod to their machine without having to buy a separate
FireWire card. It took about a year after Windows was fully supported, but
iPod sales took off.
Apple supported both FireWire and USB via a proprietary; 30-pin

dock connector through the third- and fourth-generation iPods, then did
the unthinkable. It dropped support for FireWire syncing (you could still
charge an iPod with FireWire) on the fifth-generation iPod on October 26,
2004, in favor of USB 2.0. Many were surprised that Apple removed
FireWire, a technology it invented, from the iPod, but the move speaks
volumes about the amount of clout Windows users bring to the table. It
was probably too expensive for Apple to continue to support both types
of connections when USB 2.0 was just as fast and all Macs came with
USB ports.
The switch to USB had a dramatic effect on sales. Prior to the switch
from FireWire, Apple had sold 1 million iPods. But within the next six
months, Apple had sold another million iPods, and nearly 3 million
more were sold within a year. In the next 18 months, 9 million more were
sold.
The Halo Effect

The iPod gave many Windows PC users their first exposure to an
Apple product, and many eventually switched to the Mac platform as a
result of their experience with the iPod. This is known as the halo effect be-
cause the iPod casts a large halo around it, making other Apple products
shine brighter than they normally would.
The unique troika of hardware (iPod), software (iTunes), and service
(iTunes Store) puts Apple in the position of being able to control the com-
plete user experience from beginning to end. It also allows Apple to profit
from all aspects of the system. On one hand, it allows the company to
maintain a high level of quality because it can guarantee interoperability
among all three components; on the other, it can be viewed as monopolis-
tic because Apple has control of all aspects of the system and such a domi-
nant share of the market that it can control prices, standards, and choices
available to the consumer.
iPod must be doing something right; as of this writing, it commands
a 70% share of the market (in units) and 84% market share in volume of
sales.9
For more on the cultural impact of the iPod, see Chapter 5,

Death of the CRT Monitor—2002

Apple began its transition to flat-panel monitors in 2000 when it re-
placed all its CRT-based monitors with new, flat-panel designs. The new
iMacs were the culmination of Apple’s strategy. When he announced the
new iMac in his keynote address at Macworld Expo in 2002, Steve Jobs
told attendees “the CRT is officially dead.”
60 Apple Inc.
Like dropping the floppy disc in 1998, a move later adopted by all PC
manufacturers, Apple was the first of the majors to drop CRTs in favor
of flat-panel monitors. Apple claimed the move was mostly for envi-
ronmental reasons (they don’t have arsenic in the glass), but flat-panel
monitors cost less to ship, have better aesthetics, and higher profit mar-
gins. Other PC manufacturers quickly jumped on the flat-screen moni-
tor bandwagon, and old-style CRT monitors are quickly fading from the
technology landscape.
World’s First 17-inch Notebook and Backlit

Keyboard—January 2003
At Macworld Expo 2003 in San Francisco, Apple announced the new
PowerBook G4 with a massive 1440 × 900, 16:10 aspect ratio, 17-inch
screen, making it the world’s first 17-inch notebook.10 The PowerBook G4
17-inch was the most full-featured Apple notebook computer ever and
includes several Apple firsts in addition to the huge screen.
The PBG4 17-inch also included the world’s first fiber-optic backlit
keyboard and ambient light sensors that can automatically adjust screen
brightness and keyboard backlighting. In dark rooms the PowerBook G4
17-inch can be set to automatically illuminate the backlit keyboard and
lower the brightness of the screen. The backlit keyboard is a boon for non-
touch typists that use their PowerBook in dark places, like on an evening
flight, in a dark coffee shop, or even at home on the couch. When the room
gets brighter, the ambient light sensor can also brighten the screen and
turn off the keyboard backlighting.
This integrated keyboard and screen lighting system represented a
first and was so well received that it eventually trickled down to every
machine in the MacBook lineup.
iTunes Store—April 2003

The iTunes Music Store (later shortened to just “iTunes Store” when
Apple branched out of just music) is an online digital media store that
Apple launched on April 28, 2003, in conjunction with iTunes version 4. It
can be accessed from a computer and from portable media players such as
the iPhone and iPod touch over a wireless Internet connection.
The iTunes Store offers digital music downloads for sale for 99 cents
each and full albums for $9.99 each. Music purchased from the store is
protected by Apple’s FairPlay Digital Rights Management (DRM) soft-
ware and can be played on up to five computers simultaneously and an
unlimited number of iPods. A playlist containing a protected audio track
can be burned to CD up to 7 times (down from 10 times).
Apple contended that the FairPlay DRM encryption scheme was nec-
essary to protect artists, but most believe that DRM was required by the
record labels to get them to agree to put their artists’ content for sale on
the iTunes Store.
Steve Jobs on DRM

On February 6, 2007, Steve Jobs, CEO of Apple Inc., published an
open letter titled “Thoughts on Music”a on the Apple Web site. It
urged record labels to offer their artists’ music without the shackles
of DRM. Jobs said that Apple doesn’t like to use DRM on the iTunes
Store but is forced to by the record labels. Jobs also points out that
DRM isn’t perfect and that it’s easily defeatable. He also said that
DRM only hurts people using music legally and that its restrictions
encourage users to obtain unrestricted music illegally. Finally, Jobs
noted that most music sold today does not come with DRM (referring
to CDs). Jobs’s missive was met with praise by the consumers who
dislike DRM and was criticized by labels.
a
Steve Jobs, “Thoughts on Music,” Apple.com, February 6, 2007, http://www.
apple.com/hotnews/thoughtsonmusic/.
The iTunes Store was the first true alternative to downloading music
illegally from file-sharing networks, offering more than 200,000 songs for
sale from all five of the major record labels, including BMG, EMI, Sony
Music Entertainment, Universal, and Warner. The iTunes Store allowed
users to listen to free 30-second previews of any song, which can then be
purchased with a click. At launch, the iTunes Store even offered several
free music videos, which was a hint of things to come in the future.
Apple’s newest foray into music was a bona fide revolution, giving
consumers the options to purchase a single digital track instead of having
to buy an entire album. Consumers embraced the concept with open arms,
but record labels were threatened because it challenged their decades-old
business model of selling $16 to $20 CDs, which was very profitable.
The iTunes Store was a bold move for Apple, considering that people
had become accustomed to downloading music freely with file-shar-
ing software. Apple invested a lot of money and resources developing
the iTunes Store and subsequently proved the viability of online music
sales.
Several high-profile artists resisted selling their music on iTunes, in-
cluding AC/DC, the Beatles, Radiohead, Led Zeppelin, Metallica, Frank
Zappa, Garth Brooks, Kid Rock, and the Red Hot Chili Peppers. Many
have since conceded and agreed to sell some or all of their music through
the iTunes Store. Bob Dylan jumped online with both feet, and in addi-
tion to selling music, used iTunes to presell concert tickets. There are still
some major holdouts, like the Beatles and AC/DC. Some bands, such
62 Apple Inc.
as AC/DC, have released music on other, more flexible sites, but not
iTunes.
Originally, the iTunes Store was restricted to customers living in the
United States. In 2004, Apple launched the iTunes Music Store in much of
Europe, including Austria, Belgium, Finland, France, Germany, Greece,
Italy, Luxembourg, the Netherlands, Portugal, Spain, and the United
Kingdom. It was rolled out in Canada at the end of 2004, well after the
European rollout. Global launches continue throughout the next several
years, catapulting the iTunes Store to being the most widely used, legal
music service in the world.
Apple continually expands the offerings, once mostly limited to music,
in the iTunes Store to many other categories of entertainment, as noted in
Chapter 1. Since arriving on the market, the iTunes Store has achieved
some impressive milestones,11 including:
• Selling 70 million songs in its first year.

• Selling one million music videos in its first 20 days.
• One billion songs downloaded in one year (2006).
• 88% market share of legal music downloads in the United
States (2006).
• The most popular destination in the world to download movies
(2007) with more than two million movies sold.
• Five billion songs sold to date (2008).
• Renting and selling more than 50,000 movies per day (2008).
Thanks to the iTunes Store, Apple is now the top music retailer in the
United States,12 online or offline. As of June 2008, the store has sold five
billion songs,13 accounting for more than 70% of worldwide online digital
music sales.14
The World’s Fastest Personal Computer—June 2003

Apple announced the Power Mac G5 on June 23, 2003, a fifth-
generation PowerPC processor (dubbed the G5), wrapped in an industrial-
looking aluminum enclosure. Apple and IBM worked closely to develop
the 64-bit, PowerPC 970 processor, which was the first 64-bit consumer-
level desktop computer ever sold and the world’s fastest personal
computer.15
The Power Mac G5 included several new features, including an 8X
AGP slot, PCI-X slots, a Serial-ATA (SATA) bus, and up to 8GB of RAM.
The front-side bus was ratcheted up to half of the processor speed—up to
1.0GHz—a sixfold improvement over the older Power Mac G4.
The Power Mac G5 was crowned the world’s fastest personal com-
puter according to SPEC CPU 2000 benchmarks that compared the per-
formance of a series of professional software applications against a 3GHz
Pentium 4 and a 3.06GHz Dual Xeon system.
Airport Express: 802.11g and AirTunes—June 2004

On June 7, 2004, Steve Jobs announced AirPort Express, which was
the world’s first portable 802.11g base station for Mac and PC users. The
compact AirPort base station weighs just 6.7 ounces and supports Air-
Tunes for $129.
The AirPort Express, just a little larger than a PowerBook or MacBook
AC adapter, was snapped up by two groups of customers. The first was
travelers who liked the convenience of having Wi-Fi wireless access but
didn’t like to bring along the larger, original AirPort base station. The
second was people that liked to play their iTunes music through their
home stereo speakers but don’t like to have to plug into their computer
each time.
The AirPort Express is an innovative product, because it’s compact
and packs four impressive features:
1. AirTunes allows iTunes music to be played to a remote set of

speakers wirelessly. Instead of listening to your iTunes music
through a pair of tiny notebook computer speakers, for example,
you can jam out to your music on your home stereo—without
plugging in a cable. Originally AirTunes only supported stream-
ing music to one APX, as it was known, but later released an
update that enabled streaming to multiple Expresses. You could
have one in every room of your house, and they became very
useful when entertaining. Apple probably could have sold an
AirTunes Express–only device for $129.
2. The AirPort Express can also act as a stand-alone AirPort base
station. Toss it into your bag when traveling, and if your hotel
room only has Ethernet access (and a one-foot cable), plug in the
AirPort Express for instant wireless access.
3. It can extend the reach of a current AirPort network. If your main
AirPort base station is on one side of your house and the signal
is weak on the other, you can plug in an AirPort Express to ex-
tend the signal to reach farther. Using the Wireless Distribution
System (WDS) feature, you can use up to five base stations as a
unified network that shares one Internet connection.
4. The APX inherited the USB printing features of the larger Air-
Port Extreme base station, making it great for connecting a USB
printer to a wireless network without having to move it.
Apple pioneered wireless networking technology with easy-to-use

and inexpensive offerings, and later, a truly portable solution that worked
with 802.11b and 802.11g wireless devices.
In January 2007, Apple dropped the price of the AirPort Express from
$129 to $99, and on March 17, 2008, it updated it to include 802.11n with
greater speed and longer range than the model it replaced.
64 Apple Inc.
Intel Migration—June 2005

Apple’s switch to Intel processors was more of a strategy than an in-
novation, but either way, it was one of Apple’s most significant moves. For
the first time, Apple would be using the same chips as its Windows-based
competitors, eliminating delays in getting chips from smaller suppliers
and putting it on a level playing field, chip for chip, with the competition.
At Apple’s Worldwide Developer Conference (WWDC) in 2005, Steve
Jobs announced that Apple was switching to Intel as its primary chip sup-
plier, confirming rumors that Apple had been secretly testing versions of
Mac OS X for Intel processors for at least five years. Jobs estimated the
transition to Intel would last until the end of 2007.
The partnership with Intel allowed Apple to take advantage of all the
latest Intel chip designs, be on par with Windows-based computers, and
not have to rely on receiving processors in a timely manner from smaller
chip fabricators like IBM and Motorola. Apple began producing Intel-
based Macs in 2006 and completed the transition to Intel by the end of the
year, a year ahead of schedule.
iPhone—January 2007
At Macworld Expo in January 2007, Apple announced one of its most
significant products since the iPod and arguably since the Mac and the
original Apple I: iPhone. During his keynote address, Steve Jobs told
attendees that Apple was announcing three revolutionary products: a
widescreen iPod with touch controls, a revolutionary mobile phone, and
a breakthrough Internet communicator. Then, interrupting the cheers, he
said that all three were actually one product: iPhone. The caption on his
slide read: “Apple reinvents the phone.”
The original iPhone was offered exclusively with AT&T and was lim-
ited to EDGE-based network access, rather than the faster 3G wireless
networking standard. The lack of the 3G was a large omission for some
users that already had the feature on their current mobile phone. The
slow data access was (somewhat) offset by iPhone’s integrated 802.11g
Wi-Fi, which provided fast Internet access over the semi-ubiquitous tech-
nology.
iPhone couldn’t run third-party applications out of the box, as Apple re-
stricted iPhone to Web-based applications, but creative developers quickly
circumvented Apple’s roadblocks, and within a few months, third-party
applications were available. Because AT&T was SIM-locked to the AT&T
network, developers also found a way to circumvent that and “unlock”
the iPhone to run on any network that supported GSM phones. iPhone
quickly became one of the hottest unlocked phones on the international
black market.
In its first quarter of sales, Apple Chief Operating Officer Tim Cook
speculated that approximately 250,000 of the 1.4 million iPhones sold have
been unlocked.16 Apple CFO Peter Oppenheimer reported that Apple sold
about four million iPhones during the last quarter of 2007, noting that the
number of activated phones in the United States was far below Apple’s
sales figures.17
Apple TV—January 2007

At Macworld Expo 2007 in San Francisco, Apple announced the Apple
TV, a new $299 40GB set-top appliance. Apple TV was designed to play
iTunes content (music, television shows, movies, etc.) from any computer
(Mac or Windows) connected to the local network. It could be connected
to any Enhanced Definition (ED) or High Definition (HD) television but
not to a Standard Definition (SD) set still popular in millions of living
rooms. The Apple TV could be connected to any widescreen TV with ei-
ther HDMI or component video, supported both analog and digital audio
via RCA and optical S/PDIF outputs, and supported resolutions from
480p to 720p.
At Macworld Expo 2008, Apple announced a significant software up-
date for the Apple TV called Apple TV Take 2 and lowered the price of
the hardware from $299 to $229. The update featured a new interface and
was able to download TV shows and other digital content directly to the
device.
The Take 2 is what the original Apple TV should have been. Rather
than forcing the device to be tethered to an iTunes computer, the update
gave Apple TV the ability finally to purchase and rent movies in High
Definition (HD) and purchase television programs and music directly
over the Internet—without a computer. The software update also allowed
Apple TV to download podcasts, some in HD, and stream photos from
.Mac and Flickr.
Apple moves into the living room with the Apple TV.
Image © John Greenleigh, www.flipsidestudios.com.
66 Apple Inc.
MacBook Air—2008
On January 15, 2008, Apple announced MacBook Air, the company’s
first-ever subnotebook and the world’s thinnest notebook. MacBook Air
measured 0.16 inches at its thinnest and 0.76 inches at its thickest point.
It shipped with either a 1.6 or 1.8GHz Intel Core 2 Duo processor, 2GB
RAM, 80GB 1.8-inch hard drive or optional 64GB Solid State Drive (SSD),
13.3-inch LED-backlit screen, 802.11n Wi-Fi technology, Bluetooth 2.1, a
full-size (and backlit) keyboard, iSight camera, and large trackpad with
support for multitouch gestures like pinch, rotate, and swipe—an Ap-
ple first.
The MacBook Air was a revolutionary product for Apple, both be-
cause of its tiny size and full-feature set, but also because it was an entirely
new category of notebook, a subnotebook that Apple had never created
before. The Air wasn’t a consumer notebook because of its $1,800 starting
price, and it wasn’t a professional notebook by Apple’s definition either,
because it lacked many of the ports, notably FireWire, and the replaceable
battery that pros demanded. It was in a category all to itself.
Chapter Five
Impact on Society
Apple is unique because not only did it pioneer in technology, but it also
made a huge impact on society while doing so. Beginning with the success
of the Apple II, which was quickly emulated by a host of larger PC manu-
facturers, to the radical design and transparent blue color of the original
iMac, which filtered down to everything from irons to staplers, Apple has
made its presence felt across products, genres, and generations. Apple’s
leading edge in design has seeped into almost every facet of modern life,
all part of a carefully planned strategy to get you comfortable with using
more, different, and better Apple stuff.
Apple has had a huge impact on society, particularly popular culture.
Let’s take a look at just one example.
IPOD AS A FASHION ACCESSORY

When the original iPod was launched in 2001, it was viewed as some-
what of a status symbol. The initial high price and larger capacity made it
a premium item that was the must have gadget of athletes, celebrities, and
rock stars. Although the iPods were mostly concealed in a pocket when
in use, Apple executed a stroke of marketing brilliance by making the in-
cluded ear buds white when everyone else’s in the industry were black.
Apple had created a subtle but certain visual cue that someone had an
iPod—even when the device itself was hidden from view. Apple’s white
iPod ear buds became as iconic as the iPod itself and came to identify its
owner as a hip technophile. Unfortunately, the ear buds also told thieves
that the wearer most likely had a multihundred-dollar gadget in his or
her pocket or purse, and some areas of the world (notably New York City
and London) experienced an increase in iCrimes related to the device. To
combat the problem, some iPod owners found that the easiest thing to do
was to switch to black headphones.
On January 6, 2004, at Macworld Expo in San Francisco, Apple an-
nounced the 4GB iPod mini, which was the size of a business card and
came in five colors for $249. The iPod mini was Apple’s first departure
68 Apple Inc.
from the size and shape of the original iPod, which was about the size of
a deck of cards.
The iPod mini was an immediate hit because its price was a lower
barrier to entry and more affordable to students and parents. Its five color
choices gave customers a choice other than white for the first time. The
pink iPod mini was purchased in droves by girls, teens, and grown women
alike and was frequently sold out (although available for a premium on
online auction sites) during peak holiday seasons.
Just when iPod had started to saturate its key demographic, early
adopters and teens, Apple convinced us of two things: (1) we needed to
upgrade to a bigger, better model, and that (2) it was acceptable to own
multiple iPods. Apple keeps a rigorous upgrade cycle for iPods, never
letting the one you currently own get too old that it can’t be easily sold or
given to a family member or friend. And if your current model is just fine
and functioning, well, wouldn’t a model in a different color or a smaller
size be the perfect complement to your other iPod? It may sound strange
but this became the norm. People were beginning to purchase multiple
copies of Apple’s products. It was a marketing dream come true.
Announced at Macworld Expo 2005 in San Francisco, the iPod shuffle
was Apple’s first foray into the flash-based digital music player market.
Apple dropped the display from the tiny iPod, stating that a screen that
small wasn’t practical. In a departure from its traditional marketing, Apple
promoted the shuffle as more of a fashion accessory, like jewelry. The iPod
shuffle’s ability to clip onto clothing was heavily marketed as a fashion
item, featuring print ads and posters that showed the shuffle attached to
hip clothing—not as a music player.
Dropping Computer from the Name

At Macworld Expo 2007 in San Francisco, Steve Jobs announced that
Apple Computer Inc. had officially dropped Computer from its corpo-
rate name, switching to just Apple Inc., reflecting the company’s meta-
morphosis into a consumer electronics company.
Changing its corporate name was the handwriting on the wall
that big changes were afoot in Cupertino. Whether it was entirely
expected or not is up for debate, but the reality is that by 2007, iPod
represented half of Apple’s sales and that Apple’s reach had extended
much further than just the computers. Apple had become a music
provider and a consumer electronics company, seemingly overnight,
and suddenly Apple Computer no longer fit.
Apple had begun influencing culture outside of the computer, and
technology like iPod, iTunes, and iPhone had become pervasive in its
own right, warranting a full-scale corporate shift.
Chapter Six
Technology Timeline
Now let’s get down and dirty in the trenches. How did Apple change the
world? Here, in detail, is how.
1976—APPLE I
On April Fool’s Day (April 1) 1976, Jobs and Wozniak released the
Apple I personal computer kit and simultaneously launched Apple Com-
puter Inc. The Apple I came with video support, 8KB RAM, keyboard, and
was contained on a single circuit board—but it had to be assembled. In
order to keep prices low, Woz decided to use the $25 6502 processor from
Rockwell and MOS Technologies and dynamic RAM.
The first Apple I was mounted on a piece of plywood when it was pre-
sented to great response at the Homebrew Computer Club in Palo Alto,
California. The Byte Shop, a local computer dealer, immediate placed an
order for 100 units at $666.66 each. A total of 200 units were sold in the
duo’s first 10 months of business.
1977—APPLE COMPUTER INC.

Apple Computer Inc. was incorporated and the company released
the immensely popular Apple II. The public debut of the successor to the
Apple I occurred at the first West Coast Computer Faire in San Francisco.
The Apple II was offered at $1,298 and was also based on the 6502 proces-
sor, but it had color graphics (a first for a personal computer) and an au-
diocassette drive that could be used for storage. Originally shipping with
4KB of RAM, the Apple II was shortly upgraded to 48KB RAM and the
cassette was replaced with a 5.25-inch floppy drive.
In 1977 a competing personal computer was released by Commodore
called PET (for Personal Electronic Transactor). It was designed by Chuck
Peddle and also ran on the 6502 processor, like the Apple II. The Com-
70 Apple Inc.
modore PET shipped with 4KB of RAM, monochrome graphics, and a

cassette drive for only $795—half the price of the Apple II. In addition to
costing less, the PET shipped with a version of Microsoft BASIC, which
was later licensed to Apple and included as Apple BASIC.
Commodore, Radio Shack, and Apple

Steve Jobs and Steve Wozniak gave a demonstration of an Apple I pro-
totype to some employees of Commodore. They were so impressed
that they wanted to acquire Apple outright, but Jobs didn’t want to
sell. Wanting to enter the personal computer space, Commodore in-
stead acquired MOS Technology and developed the PET—short for
Personal Electronic Transactor.
The personal computer market was really beginning to pick up
steam in 1977 when Radio Shack announced the Tandy TRS-80,
which was built around the Zilog Z80 processor and shipped with
4KB RAM and 4KB ROM with BASIC. Like the Apple II and the PET,
it used a cassette drive for storage. The TRS-80 was wildly popular,
and the advent of the floppy disk drive kicked off a wave of software
development for the new generation of personal computer because
the floppy made software distribution easier.
1978—LISA PLANNING
In 1978, Apple began designing the computer that would succeed the
Apple II and III personal computers. The new project was given the code
name Lisa, which officially stood for Local Integrated Software Architec-
ture. Unofficially, the name Lisa was believed to have been chosen after the
name of Steve Jobs’s daughter.
Jobs was completely engrossed by his project and took it on as a per-
sonal mission, adding many features and missing many deadlines. Jobs
was eventually kicked off the Lisa project by Mike Markkula and despite
the delays, the Lisa eventually shipped in January 1983.
1979—SPREADSHEETS AND WORD PROCESSORS

The year 1979 was a significant one in computer history because
Dan Bricklin and Bob Frankston released a version of VisiCalc—the first
computer spreadsheet program—for the Apple II. After BASIC and sev-
eral games, VisiCalc brought computer software to an entirely new level,
revolutionizing the financial industry. Previously, bankers and analysts
did spreadsheets by hand, which left much room for error and required
a recalculation of almost everything when a single number changed
in a single cell. VisiCalc, for the first time, allowed users to change a
value in a cell and the entire sheet would automatically recalculate.
Technology Timeline 71
Early Programming
I spent a lot of time on my parents’ TRS-80 as a youth, but there
wasn’t a lot of software initially available, especially for a 10-year-
old. I had to type the programs into the computer myself. Line by
line. There were plenty of books available that had code for com-
puter programs in them, but it was a painstaking and arduous task
to type them in. I remember deciding to enter my own program
into the TRS-80 one Saturday afternoon and flipping through a pro-
gram book for something that piqued my interest. After looking for
a while, I settled on a program called One Arm Bandit because it
sounded fun to play with a slot machine on the computer. After
typing the program character by character for several hours, I was
ready to run it.
Not so fast, young Jedi! There were errors in my program. I had
to go back through it and correct my code line by line to find the
typos. After about an hour of debugging, I was really ready to run it.
I was disappointed to discover that, after typing the Pull command,
the TRS-80 simply displayed a single line that read “Cherry / Apple /
Bell”—in text on the screen. Here I was expecting the glitz of spin-
ning wheels like the slot machines I’d seen on television, only to be
presented with a text-based slot machine. I was crushed. But not
crushed enough to erase; I methodically saved it to cassette tape just
in case I wanted to play it again. Which never happened.
“VisiCalc took 20 hours of work per week for some people and turned
it out in 15 minutes and let them become much more creative,” said Dan
Bricklin.1
In the fall of 1979, VisiCalc for the Apple II was released and quickly
became a best seller. In October, versions of VisiCalc were available for the
Commodore PET, Tandy TRS-80, and Atari 800 and was selling briskly at
$100 per copy.
VisiCalc was eventually sold to Lotus Development Corporation,
where it was renamed Lotus 1-2-3 in 1983. Bricklin and Frankston never
fully benefited from their ingenious software application because the Su-
preme Court didn’t allow software to be patented until 1981.
The first word processor was WordStar by Micropro International,
but it wasn’t available for Apple computers. The first word processor for
Apple was Apple Write I.
1983—LISA
The Lisa was called “The personal computer that works the way you
do” in Apple marketing materials. Lisa was Steve Jobs’s baby. He managed
72 Apple Inc.
every aspect of the project and added feature after feature at the conse-
quence of forever slipping deadlines. Apple president Mark Markkula
ended up removing Jobs from the project, and Lisa eventually shipped in
January 1983.
Like the Apple I and II, Lisa was packed with industry firsts,
including:
• A mouse
• A Graphical User Interface (GUI)
• Drop-down menus
• Windows
• Multitasking
• A hierarchical file system
• Copy and paste
• Icons
• Folders
But those firsts came at a price—$9,999, to be exact.

By most accounts, Lisa was a failure, selling only 10,000 units. It re-
portedly cost Apple more than $150 million to develop Lisa ($100 million
in software, $50 million in hardware), and it only brought in $100 million in
sales for a net $50-million loss.
1984—LISA 2, MACINTOSH
In 1984 the original Lisa got a makeover with a single 3.5-inch floppy
drive replacing the original’s two 5.25-inch floppies, and the price was cut
in half to $4,999. More important, however, Apple launched the original
Macintosh in 1984 with 128KB RAM, a 400KB 3.5-inch floppy disk drive,
and a What You See Is What You Get (WYSIWYG) monochrome moni-
tor. Apple released a unique television commercial during the 1984 Super
Bowl to announce the launch of the Mac featuring an Orwellian future
world. The television commercial went on to win awards and is talked
about to this day.
Apple’s 1984 Commercial

Apple announced the Macintosh to the world with a television com-
mercial (“1984”) that was directed by Ridley Scott, an alumnus of
such films as Alien, Blade Runner, and Gladiator. The commercial,
written by Apple’s advertising agency Chiat /Day, aired on January 22,
1984, during Super Bowl XVIII between the Washington Redskins and
the Los Angeles Raiders. The ad featured a female character (played
by Anya Major) wearing a white tank top, red shorts, and running
shoes, running through an eerie, dark, futuristic world and throwing a
sledgehammer at a huge TV image of Big Brother. The Big Brother char-

acter was giving orders to rows of people that looked like prisoners—
a veiled reference to IBM. The commercial ended with a message
read by Edward Grover: “On January 24, Apple Computer will intro-
duce Macintosh. And you’ll see why 1984 won’t be like 1984.”
In September 1984, Apple released the Macintosh 512KB, which was

a significant upgrade. The “Fat Mac” got its nickname from the additional
RAM under the hood (512KB vs. 128KB) and also supported an optional ex-
ternal 3.5-inch disk drive—a boon at the time because it didn’t come with a
hard drive. It was called the “Big Mac” by early adopters, but Apple could
never use that term for fear of a trademark suit from McDonald’s. Many
considered the Mac 512 to be what the original Mac should have been.
1985—MAC XL, LASERWRITER

In 1985 the Lisa 2 was changed to the “Macintosh XL” and came with
new MacWorks XL system software. The main feature of the new Lisa
software was that it could run programs written for the Macintosh operat-
ing system. Steve Jobs predicted that Apple would sell two million Macs
in 1985, but the company only reached 500,000. It didn’t break the two
million mark until 1988. It took seven years for the Macintosh to reach five
million in sales.
Another landmark in 1985 was Jobs’s resignation from Apple after a
bitter battle with then CEO John Sculley. Jobs went on to found the aptly
named “NeXT,” which also designed computers.
In March 1985, Apple released the LaserWriter, a laser printer with se-
rial and LocalTalk connections built on a Motorola 68000 processor capa-
ble of printing at 300 dots per inch (dpi) at eight pages per minute (ppm.)
The LaserWriter included an Adobe PostScript interpreter, allowing it to
Graphical User Interface

PARC—a.k.a. Palo Alto Research Center (formerly Xerox PARC)—
developed what is widely considered to be the first Graphical User
Interface (GUI), consisting of various widgets that, when activated
either by mouse click or a keystroke, performed a given task. Com-
mands were executed by clicking on various items such as icons and
buttons. Files and data were organized and manipulated using meta-
phors like windows, folders, and menus that were instantly familiar.
Most important, the PARC GUI added a new device to complement
the keyboard—the mouse.
74 Apple Inc.
print razor-sharp text and graphics, forever changing both the computer
and printing industries.
The LaserWriter was one of the first laser printers that was affordable
enough for the average consumer, and when combined with a Macintosh
running Aldus’ PageMaker software, enabled a level of Desktop Publish-
ing (DTP) never before possible on the consumer level. Millions of Laser-
Writers were sold over the years, and some credit the device with saving
the Macintosh platform and Apple as a company.
Hands-on with Lisa

I remember using the original Lisa at a family friend’s house in Lawn-
dale, California. He was the manager of New Product Development at
CCH Computax Inc. in Redondo Beach, and was evaluating the new
Apple computer (Lisa) as a possible platform for his clients. Computax
purchased three of them as an R&D project. They were leading edge at
that point, and Computax had to stay ahead of its competitor, Fastax.
At the time, accountants did not have the ability to do any of their
income tax work on computers in their office. Income tax processing
was either all manual, or they filled out forms and sent them to the
big service bureaus. Computax had deployed the ability to enter data
remotely on an IBM PC and transmit the data to its processing center.
The next thing it was doing was starting to offer the ability for account-
ing firms to print their own tax returns on “in office” laser printers from
Xerox (HP LaserJets were not out yet). Calculations were still done on
IBM mainframe computers. Computax pursued Apple as an alterna-
tive to the IBM PC, and possibly to hold the tax calculation engine.
The manager’s son and I played with Lisa Paint for hours and
found the fact that you could “paint” on the screen with a mouse
nothing short of pure magic. He even had a printer attached so that
we could see our creations on the printed page, which was also quite
impressive. I remember creating “Do Not Enter” and “Toll Required”
signs for our bedroom doors and thinking that it was the world’s cool-
est thing. That and the checkerboard slip-on vans that I purchased at
a local skate shop, that is.
What Happened to NeXT?

NeXT Software Inc. (previously NeXT Computer Inc.) was founded in
1985 by Steve Jobs after he resigned from Apple following a dispute
with John Sculley. NeXT manufactured high-end computers that tar-
geted the higher education and business markets. NeXT announced
the first NeXT Computer in 1988, side by side with the NEXTSTEP
operating system.
In April 1993, NeXT Inc. changed its name to NeXT Computer
Inc. when the last original member resigned. Later in 1993, NeXT
stopped selling hardware completely to focus on selling its OPEN-

STEP operating system and the new Web application framework
called WebObjects. On December 20, 1996, Apple purchased NeXT
for $429 million and parts of the NeXT operating system were used
as the foundation for Mac OS X, Apple’s first truly modern operating
system. Mac OS X was released in March 2001, sporting the new
Aqua user interface.
Apple developed many successive models of the LaserWriter with im-

proved speed, networking, and color. Other laser printer manufacturers
also licensed Adobe’s PostScript technology for inclusion into their own
laser printers. Apple eventually discontinued the LaserWriter product line
after the LaserWriter 8500 as part of a refocusing on core, profitable prod-
ucts when Steve Jobs returned to Apple in 1997.
1986—MAC PLUS
Announced in January 1986, the Mac Plus has the distinction of hav-
ing the longest lifespan of any Mac model (1,719 days). And for good rea-
son. The Mac Plus was the answer to the complaints that the original Mac
wasn’t expandable. It had double the ROM of the Mac 512KB (128KB vs.
64KB) and featured 1MB of RAM standard that was expandable to 4MB.
The Plus was the first Mac to include a Small Computer System Inter-
face (SCSI) port, which allowed an optional external SCSI hard drive to
be attached—among other peripherals. It was the first Mac to ship in the
platinum case, previous Macs were beige in color. The Mac Plus sold for
$2,600 and was sold in educational settings as the Mac ED.
In April 1986, Apple released the Mac 512Ke, which was identical to
the Mac 512, except it added an 800KB floppy drive (as opposed to the
original 400KB floppy) and a 128KB ROM for $1,999.
1987—MAC II, SE
The first 32-bit Mac, the Mac II, was released in March 1987 and was
huge departure from the previous all-in-one-form-factor. The Mac II was
based on the new 68020 and included six NuBus slots, allowing expansion
cards to be connected to the Mac for the first time. But what really set the
Mac II apart was being the first Mac to support color graphics. An expan-
sion card capable of displaying 16.7 million colors and a color monitor
took the Mac to new heights. Color came at a price, though, the Mac II sold
for $3,898 for the stripped box—video card and monitor cost extra. The
deluxe configuration included 1MB of RAM, a single 800KB floppy drive
and one 40MB internal SCSI hard disk drive and sold for $5,498.
The Mac SE was a new twist on the old all-in-one Mac design and
was a significant improvement over the Mac Plus. The Mac SE (System
76 Apple Inc.
Expansion), like the Mac, was designed to address the Mac’s lack of
expansion. It came with an internal Processor Direct Slot (PDS) that ac-
commodated third-party cards and an internal bay that could be used for
either a second floppy drive or internal hard drive.
The Mac SE introduced the new Apple Desktop Bus (ADB) connector
to the Macs. The ADB replaced the previous keyboard and mouse ports
and supported up to 16 daisy-chained input devices at one time. The
bare bones Mac SE configuration cost $2,898 and came with dual floppy
drives.
1988—MAC IIX, SYSTEM 6

The Mac IIx was introduced in September 1988 and was similar to the
Mac II, except that it came with a faster 68030 processor and 68882 FPU
(both firsts) and sold for $7,769.
In April 1987, Apple released Macintosh System Software version 6.0
(a.k.a. System 6), which required a 68000 processor or later and at least
1MB of RAM. It featured an improved MultiFinder, which allowed for
cooperative multitasking. An Apple-developed program called Macro-
Maker was introduced with System 6.2 The program let users record a set
of computer instructions called macros. MacroMaker was designed to look
and act like a tape recorder.3
System 6 shipped with an application called Font/DA Mover that al-
lowed users to manage fonts and Desk Accessories (DAs). Font/DA Mover
was also used to install fonts for use in software such as Apple’s word
processing application MacWrite. System 6 was included on all Macs ship-
ping after April 1987, and a boxed version of the operating system could
be purchased for $49.
1989—MAC SE/30, IICX, SE FDHD,

IICI, PORTABLE
The year 1989 was a busy one for Apple, it released five Macs, includ-
ing a watershed event—the release of the first portable Macintosh, if you
can call it that.
In January 1989, Apple released the Mac SE/30 ($4,369), which was
the guts of a Mac IIx stuffed into the much smaller Mac SE enclosure. An
internal 40 or 80GB hard drive replaced the second floppy drive in the
SE/30, making it a very popular Mac.
In March 1989, Apple released the Mac IIcx, which was essentially
a IIx in a smaller case and with three fewer NuBus slots. The IIcx sold
for $5,369.
In August 1989, Apple announced the Mac SE FDHD (Floppy Disk
High Density), another version of the venerable Mac SE chassis. This
time the SE was equipped with the newer, 1.4MB “high density” floppy
drive and a 40GB internal hard drive standard. A version of the SE FDHD
with a 20GB hard drive was sold in Europe as the Mac SE 1/20 for the
same price.
In September Apple released the Mac IIci ($6,700), and it was one of
Apple’s most-loved Macs. The IIci was a faster version of the IIcx that had
built-in support for a color monitor and 32-bit clean ROMs.
The Mac Portable was also announced in September 1989 and was
Apple’s first attempt at a portable Macintosh. Some people consider Ap-
ple’s original all-in-one designs (the Mac 128KB, 512KB, Mac Plus, and SE)
to be portable because they were compact and included a built-in handle.
The Mac Portable was nicknamed the Mac luggable because of its large size
(4 × 15 × 14 inches) and weight (15.8 pounds). The upside was that it had a
lot of stuff in it for a portable computer, not many portables could support
two Super Drives and a 3.5-inch half-height drive. The Mac Portable was
a commercial flop because it was enormous, heavy, slow, and the active
matrix screen wasn’t (initially) backlit, making it useless in an unlit room
at night. The $6,500 price tag helped cement the Mac Portable as one of
Apple’s biggest flops of all time.
1990—MAC IIFX, CLASSIC, IISI, LC

In October 1990, Apple announced a whopping six Macs: three desk-
top machines and three true portables.
The Mac IIfx was released in March 1990 and was the fastest Mac ever.
The IIfx came in the same case as the Mac II and could support two Super
Drives and an internal SCSI hard disk. It was declared “Wicked Fast” by
the media and enjoyed a speed boost thanks to a couple of custom, Apple-
designed Application Specific Integrated Circuits (ASICs). It sold for $9,870
and went as high as $12,000, depending on the configuration. The Mac IIfx
also bears the distinction of being the most expensive Mac ever sold.
Apple focused on the low end of the market with its October 1990
introduction of three new Macs: the Classic, LC, and the IIsi.
Unfortunately, another firm (Modular Computer Systems Inc.), al-
ready owned the computer industry trademark rights to the word Classic.
The company had been manufacturing the ModComp Classic since 1978.
But that didn’t stop Apple, it wanted to use the name and eventually ne-
gotiated a $1 million deal with ModComp to license the word for a period
of five years. Apple last used the name on the Color Classic II (introduced
October 1993) and didn’t renew the agreement when it expired.
The Mac Classic ($1,500) shipped in a newly designed case with
a larger 512KB bootable ROM, users could boot from ROM by holding
down Command-Option-X-O at the beginning of the startup sequence.
The Classic also included the 1.4MB “SuperDrive” floppy drive and was
more or less a reissue of the Mac Plus. Many users complained that it
was slow.
78 Apple Inc.
The Mac LC (which stood for “Low Cost”) was released in October
1990 for $2,400 and featured a 16MHz 68020 in a new smaller case. The LC
came with a microphone (a Mac first) and a Processor Direct Slot (PDS).
The LC was discontinued in December 1992.
The Mac IIsi was introduced at $3,800 and featured a streamlined case
used only for this model and a built-in microphone. It was originally de-
signed for a 25MHz 68030 processor, but was dumbed down to 20MHz so
that it wouldn’t compete with the IIci.
1991—MAC PORTABLE, POWERBOOKS,

AND QUADRAS
Hardware
The year 1991 was filled with hardware and software announcements
from Apple. In February 1991, Apple released a backlit version of the Mac
Portable, which, although a boon at the time, was considered a feature
that should have been included in the original model announced in 1990.
The Mac Classic II was largely considered to be everything the origi-
nal Classic should have been. It had a restyled case, 16MHz, 68030 pro-
cessor, and a built-in microphone. The Classic II sold for $1,900 and was
discontinued in September 1993. It was sold as the Performa 200 with a
2400/9600 baud fax/modem and extra software in September 1992. The
Performa 200 was discontinued in April 1993.
The Quadra 700 was the first in a new family of Macs to ship in a
tower case, which was really just a IIcx case turned on its side. The Quadra
700 cost a whopping $6,000 and included a 25MHz 68040 processor and
was the first Mac to include an FPU (Floating Point Unit). The Quadra
900 ($7,200) was a more expandable version of the Quadra 700. It featured
five NuBus slots and had room for three half-height internal bays over the
Quadra 700’s one.
After learning its lesson from the Mac Portable, Apple also in 1991
released the first truly portable Mac and gave the product line its own
name—PowerBook. For help with the PowerBook design, Apple enlisted
the aid of Sony.
The PowerBook 100 cost $2,500 and weighed only 5.1 pounds. Sony
essentially miniaturized the Mac Portable when it designed the Power-
Book 100, keeping the same processor (MC68000) and clock speed as its
much larger and heavier cousin. It shipped with 2MB RAM (expandable
to 8MB) and a 20–40MB hard drive. A floppy drive was only available as
an external option. Even though it was relatively slow and had a fuzzy,
passive-matrix screen and no floppy drive, the PowerBook 100 was well
received—mostly because of the history of the Mac Portable.
Two other PowerBooks were launched simultaneously with the PB100.
The PowerBook 140 and the 170 were designed entirely by Apple. The
Origin of the Term PowerBook

The venerable PowerBook has been with us since 1991, when Apple
released the PowerBook 100 (with the help of Sony) and Xerox PARC
veteran and longtime Apple Fellow Alan Kay, who coined the term.
Apple trademarked PowerBook shortly thereafter, further solidifying
the term in the modern technical vernacular.a
The PowerBook’s introduction saw many innovative designs that
soon became the standard for future notebook computer design. In-
novations in design included ergonomic improvements like placing
a wrist rest in front of the keyboard, which also allowed room for
a trackball for navigation. A few years later, PowerBook introduced
the first 256 color displays, trackpads, and the first built-in Ethernet
networking port.
Apple launched its consumer notebook in 1999 and called it the
iBook to differentiate it from its more expensive brother, the Power-
Book.
a
Jason O’Grady, “It’s Been 15 Years: Time to Dump the Term ‘PowerBook,’ ”
O’Grady’s PowerPage, June 29, 2005, http://www.powerpage.org/2005/07/its_been_
15_yea.html.
PowerBook 140 was the mid-range of the three PowerBooks, featuring a

16MHz 68030 processor and an internal floppy drive—a feature missing
from the popular PowerBook 100. The PB140 shipped with a passive-ma-
trix screen for $2,000. It was discontinued in August 1992 when the Power-
Book 145 replaced it.
The PowerBook 170 was the top-of-the line model at $4,600 and fea-
tured a 25MHz Motorola 68030 processor with FPU, a 10-inch active ma-
trix display (a first, and much brighter than passive matrix), a slot for an
optional internal modem, and up to 8MB of RAM. The PowerBook 180
replaced it in 1992.
Software
On May 13, 1991, Apple released System 7 (code-named Big Bang and
mostly referred to as Mac OS 7), which was the primary Macintosh operat-
ing system until Mac OS 8 was released in 1997. System 7 included such
advanced features as cooperative multitasking, virtual memory, file shar-
ing, QuickTime, QuickDraw 3D, and an improved user interface.
Other
IBM, Motorola, and Apple formed an alliance aimed at challenging
the PC platform dominated by Intel hardware running Microsoft’s
80 Apple Inc.
Windows operating system. The new platform was based on IBM’s

POWER1 CPU, which had a server chip (POWER1) and a desktop chip
(PowerPC). IBM was to develop the chips and Motorola was to produce
them. Apple’s role was to port the Macintosh operating system to run on
the new platform.
1992—PERFORMAS AND
POWERBOOK DUO
The next year, 1992, continued the trend of more hardware releases
from 1991 with four new desktop Macs and six new portables. On the desk-
top front, Apple released the LC II, Quadra 950, Performa 200/400/600,
Iivi, and the IIvx. On the PowerBook front, Apple released the PowerBook
145, 160, 180 Duo 210, 230, and the DuoDock and MiniDock.
Released in March 1992, the Mac LC II came in the same pizza box
case as the original LC but marked the last of the Mac II series. The
case’s form-factor lived on for many years. The LC II sold for $1,240,
making it one of the most inexpensive Macs ever. Apple upgraded the
processor to a 16MHz 68030 but kept the same 16-bit data path, when
the 68030 was capable of 32-bit processing, making it only marginally
faster. The LC II was discontinued in March 1993, when the LC III
replaced it.
Apple’s Shortest-lived Mac

The Mac IIvx was designed as a proof-of-concept project to test how
Apple could include an internal CD-ROM drive in a Mac. Then John
Sculley goofed and went off script at Macworld Expo in Tokyo, tell-
ing the audience that Apple would soon ship a Mac with a built-in
CD-ROM drive—much to the surprise of his development team in
Cupertino.
In their haste to deliver on Sculley’s promise, the team had to
build the IIvx with a lot of compromises in very little time. The in-
cluded 32MHz processor was dumbed down due to its slow 16MHz
bus and the serial port was half-baked, causing problems with many
peripherals that connected to it. To make matters worse, a much more
powerful Mac, the Centris 610, was released a scant four months
later, relegating the IIvx to the trash heap.
Since then, people who buy an expensive Mac, which quickly be-
comes obsolete, are said to be “IIvx’ed.” Interestingly, the IIvx was
also the first Mac to have a metal case.a
a
Brian Kendig, “Mac IIvx,” Apple-History.com, October 28, 2001, http://www.apple-
history.com/?page=gallery&model=IIvx&performa=off&sort=date&order=ASC.
The Quadra 950 (May 1992) was a speed-bump of the Quadra 900
jumping from 25 to a 33MHz 68040 processor and selling for $7,200.
The Mac IIvx had a 32MHz 68030 processor, 68882 FPU, and was
designed for the mid-range market. Priced at $2,950, the IIvx was the
first Mac to accommodate an internal CD-ROM drive. However, it
was hobbled by a paltry 16MHz bus, which slowed it to the speed of a
25MHz IIci.
The Mac IIvi was the same as the IIvx, but with a slower 16MHz 68030
processor (instead of 32MHz), and no Floating Point Unit (FPU). It cost
less than the pricier IIvx but was also discontinued after just four months
on the market.
Apple’s Performa Series

The Performa series was Apple’s line of consumer Macs from 1992
through 1997. Performas were renamed Macs (Quadra, Centris, LC,
and Power Mac) that were sold in computer stores. The series begun
with the Performa 200 (a renamed Macintosh Classic II) in 1992. Al-
most every version of Mac LC was also sold as a Performa at some
point or another, as was Power Macintosh 6100.
Performas came with a customized version of the Mac System soft-
ware, denoted by a P in the version number (i.e., System 7.1P5).
Performas were sold in bundles, which usually included a monitor,
external modem, and third-party software. The software bundles
were pre-installed and included titles like American Heritage Dic-
tionary, America Online, At Ease, ClarisWorks, Datebook Pro, Mavis
Beacon Teaches Typing, Quicken, Touchbase, and several games.
While Apple’s desktop line was getting more complex, arguably clut-
tered, its portable computers were hitting their stride. After the Mac Porta-
ble debacle, Apple had been lauded for newer, smaller form-factors of the
PowerBook 100, 140, and 170. Apple built upon its successes with more
notebook computers based on the same design.
In August 1992, Apple released the PowerBook 145 that was a speed-
bumped version of the PowerBook 140 that sold for $2,150. The Power-
Book 160 had the distinction of being the first portable Mac that could
drive an external monitor in 8-bit color. Introduced in October 1992, the
160 sold for $2,480.
In September 1992, the Mac LC II was bundled with several different
hard drives and software, and re-released as the Performa 400, 405, 410,
and 430.
In October 1992, the PowerBook 180 became the new top-of-the-line
Mac portable, replacing the 170. The PowerBook 180 sported the same
external monitor capacity as the less-expensive 160, but had a faster bus
82 Apple Inc.
speed (33 vs. 25MHz) and had an FPU. The 180 sold for $4,110 and was
discontinued in May 1994.
The PowerBook Duo ushered in a new era of portable computers for
Apple. Apple was embarrassed by its first foray into portable comput-
ers with the Mac Portable but made up for it with the successes in the
PowerBook 100 line. But Apple wanted more. It wanted to build a por-
table computer that was truly on par with its desktop computers—a true
no-compromises portable.
Apple achieved this goal with the Macintosh Duo series. The Duo
did away with the usual complement of ports found on portable com-
puters in exchange for a universal docking connector (a 152-pin Proces-
sor Direct Slot), allowing it to be connected to a larger docking station
when at home. This allowed the PowerBook Duo to drop weight and
size over the previous PowerBook 100 series, to the delight of travelers
everywhere.
The PowerBook Duo 210 and 230 weighed in at 4.2 pounds, which was
less than the 160 and 180, which weighed 6.8 pounds. But their sleek form-
factor didn’t come without a penalty. In exchange for the extra weight sav-
ings and smaller footprint, the PowerBook Duo dropped the floppy drive
and most of the ports found on the full-size PowerBooks.
The Duo 210 shipped with a 25MHz 68030 processor, passive-matrix
screen, 4 to 32MB of RAM, and an internal hard drive. The Duo series was
famous for its docking connector that could connect to a docking station
with additional RAM, VRAM, and a hard drive. The Duo 210 sold for
$2,250. The Duo 230 was the same as the 210 except that it shipped with a
faster 33MHz 68030 processor and was priced at $2,610.
The DuoDock was an ingenious development from Apple—it looked
like a desktop computer but it had a large flap at the front that allowed you
to insert a closed PowerBook Duo computer. Once installed, the DuoDock
turned a Duo into the full-scale desktop computer with all the ports and
connectors you could expect. It even had an extra hard drive bay for more
storage, and if you added more video RAM (VRAM), it could drive an
external color monitor.
1993—CENTRIS, QUADRA,
SERVERS, NEWTON
In 1991, Apple began a ramp of its hardware offerings that was hard to
stop. In 1991, Apple released seven new computers; in 1992, that grew to
15 models; and in 1993, an unprecedented 39 models were released. Apple
was like a train running off its tracks, releasing new computer models
every two to three months, often only changing a single digit in its model
number.
The harried pace of new hardware resulted in a glut of new Macs flood-
ing the marketplace. While the initial amount of choices was impressive,
it eventually led to customer confusion over which model to buy. When

consumers are confused, they often don’t buy, so the trend that began in
1991 wasn’t a good one for the company.
In February 1993, Apple released seven new models: the Centris
610 and 650, Color Classic, LC III, Performa 250, PowerBook 165c, and
Quadra 800.
The Centris 610 was the first mid-range Mac to ship with a Motorola
68040 processor, but it was a stripped-down version of the chip (68LC040)
that lacked an FPU running at 20MHz. The Centris 610 was the first Mac
to be housed in a low-profile case that was also called a “pizza box” be-
cause of its low, flat shape. The Centris 650 was a faster and more expand-
able version of the Centris 610 that came in the taller, narrower case of the
Mac IIvx and was powered by a 25MHz 68040 processor. The Centris 650
sold for $2,700.
The Color Classic was the same as the Classic II but with a color screen,
larger ROM, and a new case. The Color Classic was actually an LC II in a
different form-factor; they shared many things, including a 16-bit data bus
and a 10MB maximum RAM. The Color Classic differed in that it had a
68882 math coprocessor and a special daughterboard that could be removed
for easy upgrading. The Color Classic sold for $1,390.
The Mac LC III sold for $750 and included a redesigned Processor
Direct Slot (PDS) and was also sold as the Performa 450.The Quadra 800
was as powerful as the Quadra 950 from the year before but cost about
half as much. It was powered by a 33MHz 68040 processor and sold for
$4,700. The PowerBook 165c was the first color PowerBook ever and sold
for $3,400.
In March 1993, Apple released its first “server” computers—the Apple
Workgroup Server (AWS, sometimes abbreviated WGS). The Workgroup
Server 80 was actually a Quadra 800 with some included server software.
Likewise, the Workgroup Server 95 was just a rebadged Quadra 950, but
What Is A/UX?
A/UX (short for Apple Unix) was an operating system based on UNIX
System V Release 2.2 and first released in 1988. It was adopted by
Apple in 1993 with its Workgroup Server 95 and required a 68k-
based Macintosh.
A/UX put a friendly user interface with Mac-like windows and
menus on top of its complex UNIX underpinnings. A custom-
ized Finder was included that looked similar to System 7 but was
designed to work with the UNIX kernel. A/UX also offered a com-
mand line interface to UNIX, something never before available on
a Macintosh.
84 Apple Inc.
unlike the AWS 80, shipped with a special version of the Unix operating
system called A/UX (a combination of Apple and UniX). The AWS 95 also
featured a Digital Audio Tape (DAT) for backups and a Processor Direct
Slot (PDS) card containing a fast SCSI connection and a 256KB level 2 CPU
cache.
The LC 520, released in June 1993, was Apple’s attempt to create a
viable all-in-one computer design. At $2,000, it was a popular choice for
a home computer. It was also released as the Performa 520. Also in June,
Apple released the PowerBook 145B (which was exactly the same as the
145, but featured a lower price and two additional megabytes of RAM sol-
dered to the motherboard) and the PowerBook 180c, which included the
first active-matrix 256 color screen from Apple and sold for $4,160.
In July 1993, Apple introduced its first low-cost Audio/Video (AV)
capable Macs, the Centris 660av ($2,300) and the Quadra 840av ($3,550).
The 660av shipped in a Centris 610-style case with a 25MHz 68040 proces-
sor and a 55MHz AT&T 3210 Digital Signal Processor (DSP). It also came
with s-video and composite video-in and out. The 660av was one of the
first Macs to include a new type of serial port called a Geoport that could
be used as a modem with the proper adapter.
The Quadra 840av was the first 68040 Mac to top 33MHz and the fast-
est Mac ever, utilizing a 40MHz 68040 processor. It came in a Quadra 800-
style case and included AV features similar to the less expensive 660av. The
difference was that the 840av came with a faster, 66MHz AT&T 3210 DSP.
Also in July 1993, Apple introduced the Workgroup Server 60 based
on the Centris 610 motherboard. The AWS 60, as it was called, was speed-
bumped to 25MHz in October 1993.
In August 1993, Apple announced the PowerBook 165 that replaced
the 160. The 165 was a grayscale version of 165c that lacked an FPU and
sold for $1,500.
In October 1993, Apple announced more computers than in any pre-
vious year—19. Eight of them were Performas. The Color Classic II was
released only in Japan and doubled the processor speed to 33MHz and in-
creased the data path to 32-bit over the Color Classic. It also added stereo
output and was released in the United States as the Performa 275.
The LC 475 was the first Motorola 68040-based LC and was officially
sold as Quadra 605 and was also known as Performa 475 and 476. The
LC III+ added a 33 MHz 68030 processor and was also sold as the Per-
forma 460, 466, and 467.
The limited edition Mac TV was one of the few Macs that shipped in
a black case. It was essentially a black LC 520 with a cable-ready TV tuner
card and a CD-ROM drive. Only 10,000 Mac TVs were made, but its TV-
tuner card has become a popular option on many LCs and Performas.
In 1993, Apple expanded its popular PowerBook Duo line with the
Duo 250 ($2,500) and 270c ($3,100). The Duo 250 was the same as the Duo
230 except that it had a 4-bit active-matrix screen. The 270c included an
active-matrix 640 × 480 pixel 256-color screen, and the improved battery
could run for two hours on a charge. The 270c would also support 16-bit
video if you changed the screen resolution to 640 × 400 under Options in
the Monitors control panel.
The Quadra 605 was the most affordable Quadra ever at $900. It came
with a 25MHz 68LC040 processor in a small, new case. The Quadra 610
($2,520) and 650 ($2,700) were upgraded models of the Centrises of the
same model number. The Quadra 650 replaced the Centris 610, adding a
25MHz 68040 processor while the price remained at $2,520. The Quadra
650 replaced the Centris 650, adding a faster 33MHz 68040 processor and
sold for $2,700.
Other
In August 1993, Apple released its first completely new product in a
long time—the Newton MessagePad. It was a completely new product
line and was a risky move because Apple didn’t have any experience in
the area and other competitors in the market were already creating prod-
ucts that it would have to compete against.
The Newton Message Pad (or NMP) was a Personal Digital Assis-
tant (PDA), which, while relatively commonplace today, represented
advanced technology in 1993. The Newton MessagePad was a small
handheld device with a touch screen and a number of built-in organi-
zational applications such as an address book, calendar, notepad, and
some unique communications programs that allowed the tiny device to
fax and e-mail.
The original Newton ($699) came with a 20MHz ARM 610 processor
and ran on AAA batteries. In October 1993, it received a ROM upgrade to
version 1.10, which fixed a number of outstanding bugs.
1994—43 MACS AND NEWTON

Hardware
In 1994, Apple continued on its tear of hardware releases with 43
new computer models, besting the previous year’s record of 39 in 1993.
There was a problem, though, because Apple was diluting the pool of
Mac choices that were on the market and further confusing customers.
The company probably didn’t realize it at the time, but looking back, the
flurry of hardware released from 1993 through 1997 hurt Apple as a com-
pany.
Note: For the duration of this chapter, I’ll focus on the significant hard-
ware announcements and less on the speed-bump machines that simply
added more CPU, hard drive, and/or RAM. Since the Performa line is
just a rebadged Mac, I’ll also skip it for the duration of the book—some-
thing Apple should have also done at the time.
86 Apple Inc.
The Mac LC series was gaining in popularity in 1994 because of its low
cost, and Apple continued the line with its release of the LC 550 ($1,200)
that replaced the LC 520 and was identical except that it had a 33MHz
68030 processor. The LC 575 ($1,700) added a 33MHz 68LC040 proces-
sor and was the first Mac to contain a specialized communication slot
(which Apple shortened to “comm slot”) that could accept a number of
network and modem cards specially designed for it.
The Apple Communication Slot was an internal expansion data inter-
face that was used to add communication expansion cards like network
adapters and modems to Macs and Power Macs of the day. There was one
major problem with it, though, when a card was installed, it disabled the
modem serial port on the back of the computer.
In February 1994, Apple released the Quadra 610 DOS Compatible,
which was basically a Quadra 610 with an additional 486SX processor (a
modified Intel 486DX microprocessor with its floating-point unit discon-
nected) running at 25MHz on a Processor Direct Slot (PDS) card. This ma-
chine marked the first time Apple shipped a Mac with an Intel chip inside.
Granted, it wasn’t the primary CPU like the ones that Apple ships today,
but it was an Intel chip nonetheless.
Apple introduced the “DOS compatible” Mac as an experiment and
to see if there was sufficient demand. As it turned out, users that needed
DOS capability in addition to the Mac quickly purchased the limited edi-
tion run of 25,000 units.
On the high end of the product line, Apple introduced a completely
new line of Macs called “Power Macs.” The name comes from an entirely
new chip called the PowerPC, which was better and faster than the Mo-
torola chips it replaced.
On March 14, 1994, Apple released its first Power Macintosh desktop
computers (the 6100, 7100, and 8100), which were the first to ship with the
new PowerPC processor from the AIM alliance (Apple, IBM, Motorola).
PowerPC is a Reduced Instruction Set Computing (RISC) microprocessor
architecture originally intended for personal computers.
The Power Macintosh 6100, 7100, and 8100 shipped in speeds from
60 to 110MHz. They replaced Apple’s Quadra series of personal comput-
ers and were housed in similar enclosures. The Power Mac went on to
become Apple’s top-of-the-line hardware offering for 12 years with four
major generations of PowerPC chips. In August 2006, the Power Mac
was retired at Apple’s Worldwide Developers Conference (WWDC) by
Steve Jobs and Phil Schiller in anticipation of the new Mac daddy, the
Mac Pro.
On the portable front, Apple introduced a new line of PowerBooks
in May 1994. The PowerBook 520 ($2,270) and 540 ($3,160) were the first
to ship with the Motorola 68040 processor—previous models had a 68030
chip. But miniaturization came at a price. Apple’s notebook computers
couldn’t accept its latest and greatest CPUs like the PowerPC; the new
chips were simply too large, too hot, and required too much power.
Portable users were seemingly relegated to using the previous generation
CPU while the desktop kids had all the fun.
The PowerBook 520 had a major notebook innovation—a trackpad re-
placed the trackball found in older PowerBooks. The 520 also came with a
built-in microphone, stereo speakers, and a passive-matrix 4-bit grayscale
screen.
See “The Trackpad—1994” in Chapter 4.
Meanwhile, the PowerBook Duo line of notebooks continued to gain

steam and in May the company released two updated Duos. The Duo 280
($2,600) added a 68040 processor and the Duo 280c ($3,750) added a 16-bit
active-matrix color screen. Apple also released two new DuoDocks; the
DuoDock Plus added an AAUI Ethernet port and doubled the VRAM to
1MB. The DuoDock II added a 68882 FPU.
In June 1994, Apple ended its successful Quadra line with the Quadra
630 ($1,200), which came in a new case design. The 630 was the first Mac to
ship with an IDE hard drive (previous models were SCSI) and an optional
CD-ROM drive. It was later released as the LC 630 and under nine differ-
ent Performa model names, depending on the configuration.
In July 1994, Apple released its most inexpensive PowerBook ever,
the PowerBook 150 ($1,300). Although inexpensive, the PB150 was replete
with tradeoffs. Its low price came at the expense of a nice screen (the in-
cluded passive-matrix screen was dim and blurry) and an Apple Desktop
Bus (ADB) port for plugging in external mice and keyboards.
With all the hardware coming out of Cupertino in the mid-1990s, it
was difficult to tell one model from the next. Apple did something smart
on its Mac line to alleviate the problem, which was to put a slash into the
model number between the first part (the case design) and the second
part (the clock speed.) For example, the Power Macintosh 6100/60 was
the low, flat case running at 60MHz. This gave consumers (and sup-
port personnel at Apple) a much easier way to distinguish between the
models.
Says Apple Confidential, “Apple shipped over one million Power Macs
and PowerPC upgrades by the end of 1994, three months before the com-
pany’s one-year goal.”4
Enter the Clones

In the summer of 1994, Apple began licensing the Mac operating sys-
tem to third-party hardware manufacturers in an attempt to gain market
share. The program involved licensing the Macintosh ROMs and system
software to companies agreeing to pay a royalty for each clone Mac
that they sold. From 1995 to mid-1997, you could purchase a PowerPC-
based computer that ran the Mac OS from one of several manufacturers,
88 Apple Inc.
including Power Computing, Motorola, Radius, APS Technologies, Day-

star Digital, and UMAX.
Although clones ran the Macintosh operating system and Macintosh
applications, that’s where the similarities ended. The clone hardware
wasn’t anywhere near as aesthetically pleasing and more closely resem-
bled the generic Windows PC towers of the day. Beige clone towers were
off-putting for consumers that were used to Apple’s traditional high level
of attention to detail but were more economical than comparable Apple
products and made sense for users that just stuck them under a desk and
customers that had to justify their computer budgets against less expen-
sive PCs.
When Steve Jobs returned to Apple in 1997, he backed out of contracts
with the Mac OS licensees and hastily released Mac OS 8, as cloners’ li-
censes were limited to using Apple System 7 software. Apple later pur-
chased Power Computing’s Mac clone business for $100 million, marking
an end to the clone market.
Software
In June 1994, Apple released System 7.5, which, despite its incre-
mental version number, was a major update to System 7. System 7.5 was
code-named Capone as a reference to the gangster who put fear in Chicago
(Chicago was the code name for Microsoft’s Windows 95) as a subtle jab at
Microsoft. System 7.5 had several new features, including Apple Guide,
Stickies, WindowShade, Control Strip, Extensions Manager, PowerTalk,
Launcher, a hierarchal Apple menu, systemwide drag and drop, a script-
able Finder, QuickDraw GX, and OpenDoc.
Other
In March 1994, Apple released the Newton MessagePad 100 and
dropped the price from $699 to $499. The NMP, as it was known, included
a new version of the Newton operating system with improved handwrit-
ing recognition and several bug fixes. The MessagePad 110 was released at
the same time as the 100 for slightly more ($599) and included more RAM
(1MB vs. 640KB).
For more on the Newton MessagePad, see Chapter 4, “Strategies

and Innovations.”
1995—54 NEW MACS

Hardware
In 1995, Apple continued its ambitious hardware release schedule
with 54 new models, besting its previous high by more than 10. Apple
released speed-bumps to the Power Mac 6100, 7100, and 8100 lines, then
replaced them with a raft of new Power Mac models (5200, 6200, 7200,
7500, 8500, and 9500). More low cost (LCs) also came out, including the
580 and 630, and Workgroup Servers (6150, 8150, 9150).
More new PowerBooks hit the street, including the PB550c (a black
model only released in Japan), the PB190 (the last 680X0 machine Apple
ever built), and the 190c (a color version), but the news of the year was the
introduction of the first PowerPC PowerBook, the PB5300.
The PowerBook 5300, introduced in August 1995, was highly an-
ticipated because of the perceived performance jump over the previous
680X0 machines and was coveted by most Mac users. Ultimately, the 5300
failed to meet expectations and turned out to be a major disappointment
for most customers.
It wasn’t without its firsts, though. The PB5300 featured a sleep-
swappable bay, allowing users to switch out modules while the machine
was sleeping—as opposed to having to shut it down. Popular expansion
bay modules included Zip, magneto-optical, and traditional hard drives.
Another innovation was the internal expansion slot that allowed the
installation of third-party expansion cards. An infrared port was added
for wireless networking, and two PC card slots were included. As with
previous PowerBooks, SCSI, serial, and ABD ports came standard.
A total of four PB5300 models were released. The PB5300/100
($2,300) had a 100MHz processor, 8MB RAM, and a 500MB hard drive;
the PB5300c/100 ($3,900) included an active-matrix color screen. A fully
loaded PB5300ce/117, which had a higher resolution screen (800 × 600 vs.
640 × 480) with 32MB RAM and a 1.1GB hard drive, sold for a whop-
ping $6,800. The more economical 5300cs, with a dimmer dual-scan color
screen, sold for $2,900.
Apple had quality assurance problems with the PowerBook 5300-
series and many of them were dead on arrival (DOA). Hardly the image
you want to present to a customer that just spent upward of $7,000 on a
computer. In addition, cracked cases were reported, and overheating bat-
teries led to product recalls.
Many users complained about poor performance due to its lack of a
Level 2 cache, and the lack of a CD-ROM drive was a sticking point for
many. To make matters worse, two early, unreleased PowerBook 5300s
caught fire when the Sony Lithium Ion batteries overheated. Apple re-
called all PB5300s (only about 100 at the time) and replaced their batteries
with Nickel Metal Hydride (NiMH) batteries that provided only about
70% of the run time of Lithium.
It was around this time in the mid-1990s that Apple had developed
a reputation for shipping poor quality products—a reputation that took
years to repair.
In January 1995, Apple released the Newton MessagePad 120, which
sold for $599 and was largely the same as the 100, except that it could be
purchased with either 1MB or 2MB of RAM. In November, Apple released
90 Apple Inc.
Newton OS 2.0, which had dramatically better handwriting recognition,

improved backup capabilities, and a better user interface.
1996—STEMMING THE TIDE

Hardware
In 1996, the amount of computers released by Apple finally hit a pla-
teau. Although Apple still released a large number of new computers (51),
this marked the first time since the ramp up during the early 1990s that the
number had declined year over year. It had only declined by three, but it
was a decline nonetheless.
With the transition to PowerPC chips complete, Apple continued
to churn out new Macs in the Power Mac (5200, 5400, 6300, 6400, 7200,
7600, 8200, 8500, 9500), Workgroup Server (7200, 8500), and PowerBook
(1400) lines.
Innovation in the 1996 hardware included the first PowerPC tower
with a CPU on a daughter card for easy upgrades (the Power Mac 9500)
and the PowerBook 1400’s internal CD-ROM drive, swappable bays, and
unique “BookCovers” that allowed users to customize the look of the lid
of the machine by sliding graphical inserts under a clear top panel.
The Network Server 500 and 700 were totally new products for Apple
and the first Macintoshes in company history that didn’t run the Macin-
tosh OS. Instead they ran AIX (an IBM version of UNIX) in an attempt to
enter the high-end server market. Ultimately, the Network Server didn’t
sell well—probably because AIX training or a network administrator were
required to run them—and they were discontinued.
A Glut of Performas
The Performas were rebadged Macintoshes that were sold in com-
puter stores, major electronics chains, and via television commercials, bro-
chures, and paper ads from 1992 to 1997. Performas were sold configured
with a monitor, modem, and a pre-installed software bundle that included
programs like ClarisWorks, America Online, and some educational titles.
Although Performas were selling well, somewhere along the line
Apple went off the tracks. In 1992, Apple released four Performa models
and in 1996 it released 22. That in and of itself wouldn’t be a problem if
it weren’t for the other 29 Apple computers released that year. Apple had
released a total of 51 machines in 1996.
The problem was that there were too many computers that were
similar to one another, and their vague numerical names didn’t help the
situation much either. After all, who could tell me the difference between
a Performa 6116CD and a 6117CD? The consumer was just as confused,
making it difficult for people selling Macs to easily explain the differences
to consumers. The last thing that you want to do when selling a user-
friendly computer is to confuse the customer.
Apple’s 20th Anniversary

On April 1, 1996, Apple celebrated its 20th anniversary, and in June
1997, announced, appropriately enough, a Twentieth Anniversary Macin-
tosh (or TAM for short) to mark the occasion.
Pippin
On December 13, 1994, Apple announced Pippin, a home multimedia
system for gaming, learning, and surfing the Internet. (It shipped in Japan
in 1995.) Pippin looked like a gaming console with a slide-out optical
drive and connectors for two controllers that are common on many gam-
ing consoles available today. Pippin was based on a 66MHz PowerPC 603
processor with a 4x CD-ROM drive, 14.4KB modem, and a video output
port for connecting it to a television. Pippin ran a stripped-down version
of the System 7.5.2 operating system and was designed primarily to play
multimedia CD-ROMs, notably games, although it was also capable of
networking via its built-in modem.
Apple didn’t plan to market or distribute Pippin directly. Instead
it wanted to license the technology to third parties. Bandai, the world’s
third-largest producer of toys, was looking at entering the console video
game market, and chose the Pippin as its platform.
By the time Pippin was released (1995 in Japan, 1996 in the United States),
the market was already crowded with major players in the console gaming
market: Sega Saturn, Sony PlayStation, and soon Nintendo 64. Pippin had
little software and was considered too expensive at $599 when compared to
the competition—even though it was also a cheap computer system.
Software
On December 20, 1996, Apple purchased Steve Jobs’s company, NeXT,
and its NEXTSTEP operating system. NeXT beat out Be Inc.’s BeOS in its
battle to be acquired by Apple.
NeXT versus Be Inc.

The Be Operating System (BeOS) was designed for AT&T hardware
but was modified to run on Be’s PowerPC-based processors. It was
later modified to run on Apple hardware in hopes that Apple would
purchase (or license) BeOS to be the next-generation Mac operating
system.
Apple CEO Gil Amelio was keen on buying Be Inc., but ground
to a halt when Be CEO Jean-Louis Gassée demanded $400 million.
Apple’s highest offer was $125 million. Apple’s board eventually de-
cided NEXTSTEP was a better fit and agreed to purchase NeXT in
1996 for $427 million.
92 Apple Inc.
Apple’s acquisition of NeXT brought company co-founder Steve Jobs

back into the fold after a much-publicized battle with then-CEO John Scul-
ley in 1985. The UNIX-based NEXTSTEP operating system would go on to
become the foundation of the Mac OS X operating system.
1997—THE RETURN OF JOBS

In June 1997, Apple CEO Gil Amelio announced a $740 million loss in
the second quarter. On July 9, 1997, Amelio was removed as Apple CEO by
its board of directors after company stock (AAPL on the NASDAQ) hit a 12-
year low, and the company suffered massive financial losses on his watch.
The biggest news of 1997 was Steve Jobs’s triumphant return to Apple
after Apple purchased NeXT on December 20, 1996, for $427 million. Jobs
officially became the interim CEO (or “iCEO”) on September 16, 1997, and
began a much-needed restructuring of the company’s product line.
For more on Apple’s upper management, see Chapter 8, “Apple

Leadership.”
A Deal with the Devil

In 1997, Apple did something few people would have predicted—it
entered a partnership with Microsoft. Almost since the beginning of the
Mac, there has been a friendly (and sometimes not) rivalry between Mac
and Windows users. Macs have always been in the minority and that re-
flects in Mac users’ underdog mentality. Many Mac users perceive Mi-
crosoft as the evil Big Brother that dominates computer technology. Mac
users also tend to be quite vocal about their choice of the Mac platform
and their sense of its superiority. So you can image the shock in the audi-
ence at Macworld Expo 1997 when Steve Jobs announced the partnership
with Microsoft during his keynote address.
When Microsoft CEO Bill Gates appeared via satellite on the 50-foot-
tall screen on the stage, a silence fell over the crowd. Several people in the
audience thought that it was all an elaborate ruse. Then came the boos and
hisses. Gates spoke only briefly, touching on Microsoft’s software plans
for the Mac and Apple’s return to financial prosperity.
The deal involved a five-year commitment by Microsoft to continue
to deliver its popular Office productivity package on the Macintosh plat-
form as well as a $150-million investment in Apple. Jobs also announced
that Internet Explorer, Microsoft’s Web browser, would be included as the
default browser on all Macintoshes shipped.
Sensing the audience’s change in attitude and obvious disdain for
Microsoft, Jobs said:
If we want to move forward and see Apple healthy and prosper-

ing again, we have to let go of a few things here. We have to let go
of this notion that for Apple to win, Microsoft has to lose. We have
to embrace a notion that for Apple to win, Apple has to do a really
good job. And if others are going to help us that’s great, because
we need all the help we can get, and if we screw up and we don’t
do a good job, it’s not somebody else’s fault, it’s our fault. So I
think that is a very important perspective. If we want Microsoft
Office on the Mac, we better treat the company that puts it out
with a little bit of gratitude; we like their software.
So, the era of setting this up as a competition between Apple
and Microsoft is over as far as I’m concerned. This is about getting
Apple healthy, this is about Apple being able to make incredibly
great contributions to the industry and to get healthy and prosper
again.5
Hardware
Now in its second year of PowerPC chips, Apple continued to release
new Mac models at a breakneck pace. A total of 44 new Macs were re-
leased, including mostly routine updates to the Power Mac (4400, 5500,
6500, 6600, 7200, 7300, 7600, 8600, 9600), PowerBook (1400, 2400, 3400),
and Workgroup Server (7200, 8500) lines.
In April 1997, Motorola introduced the PowerPC 603e (sometimes
called PowerPC 603ev), running at 300MHz and the first mainstream
desktop processor to reach that benchmark. The new chip addressed per-
formance issues in the PPC 603 it replaced and enhanced its Level 1 cache,
improving performance. The faster clock speed was achieved by shrinking
the fabrication process to 0.35 µm. In addition to being found in machines
from Apple, the PowerPC 603 was also used by Be Inc. in the Be Box and
in the ThinkPad 800 series notebook computers.
Power Macintosh
Another significant hardware milestone was reached in September
1997 when Motorola introduced the PowerPC 750 (a.k.a. G3) processor.
The PPC750 was the first PowerPC processor with a high-speed, “back-
side” cache that could interact with the processor at much faster speeds
than a standard L2 cache, which was bottlenecked at the motherboard.
In November, Apple released a new desktop and mini-tower Macs
based around the new G3 chip—both called the Power Macintosh G3.
The new desktop Macs were based on a motherboard design running at
66MHz. The desktop case was a new design that featured either a 233 or
266MHz chip, 16-bit audio in and out, and an internal Zip drive. The G3
mini-tower came in 266MHz and added s-video in and out and 4MB of
VRAM (expandable to 6MB).
In November 10, 1997, Apple released the first PowerBook to use the
PowerPC 750 (or G3) processor—the PowerBook G3/250. The PowerBook
94 Apple Inc.
G3 utilized the same case as the PowerBook 3400, but inside it had a 750
processor running at 250MHz with a 512KB backside cache. The combina-
tion of the new chip and high-speed cache made the PowerBook G3 the
fastest notebook in the world. In benchmark testing the PBG3 performed
near the Power Mac 9600/300, which was unheard of for a notebook. Apple
promoted this new speed demon heavily in its marketing materials.
See other Apple milestones in Chapter 4, “Strategies and Innova-
tions.”
The Twentieth Anniversary Mac

In June 1997, Apple announced, appropriately enough, the Twenti-
eth Anniversary Macintosh (or TAM) to mark the occasion. The system
looked incredibly modern and had a tiny footprint thanks to a flat-screen
monitor that was only found in notebooks at the time. The TAM also had
a keyboard with a built-in trackpad. A custom sound system with external
subwoofer manufactured for Apple by Bose and a unique bronze/brown
color scheme completed the package.
While designed to look like a futuristic, concept computer, the TAM
was built using parts from other shipping Macs. The 12-inch active-matrix
screen, graphics card, and trackpad were borrowed from the PB 3400 while
the TAM motherboard was borrowed from the Power Mac 5500. The TAM
had a built-in TV/FM tuner and had cable TV connections and Picture In
Picture (PIP) controls on the front of the display. The TAM was the first
Mac to have an external power supply, eliminating many of the heat and
space problems that other desktop computers had.
Only 12,000 TAMs were built, and they originally sold for $10,000.
Included in the astronomical price was a concierge service with personal-
ized delivery and setup, but that had to be scrapped when sales didn’t pan
out. Apple soon lowered the price, and TAMs could be purchased for as
little as $1,999 in March 1998.
Newton and eMate

Apple continued updating its Newton MessagePad handheld com-
puter, and in November 1997, released the NMP 2100 ($999), which in-
creased the NMP 2000s RAM to 8MB with everything else being the same.
Apple also released a new Newton in a notebook computer form-factor
and called it the eMate 300.
The eMate 300 was introduced in March 1997 in an attempt to target
the educational market. The eMate was essentially a repackaged Newton
with a clamshell design and a keyboard—although a stylus could still be
used. The design was unique in that it was the first use of translucent
colored plastics later found in the Bondi blue iMac. A similar clamshell de-
sign was reused later in the original, first-generation iBooks, announced
in July 1999.
The eMate 300 sold for $799 and came equipped with a 25MHz ARM
710a processor, 3MB RAM, a PCMCIA slot (later called “PC Card”), a
Newton Inter Connect port, and Newton OS 2.1. It shipped with a similar
backlit-grayscale screen to the NMP 2000 but in a landscape orientation.
Software
In January 1997, Apple released Mac OS 7.6, the last major update of
Mac OS 7, which included an overhauled Extensions Manager, more Pow-
erPC code for Power Macs, and more Internet tools.
Mac OS 8
On July 26, 1997, Apple released Mac OS 8, which was a major update
to the operating system as indicated by the whole number change from 7
to 8. Minor releases were usually categorized in tenths (7.6) or hundredths
(7.6.1), depending on the number of features that were added.
Mac OS 8 was the first major update to the Mac OS since System 7 was
released six years prior. Mac OS 8 included many technologies that were
destined for Apple’s ill-fated Copland operating system. OS 8 was very
commercially successful, selling more than 1.2 million copies in the first
two weeks.6
Mac OS 8 included a new three-dimensional Platinum interface that
was visually appealing and a native PowerPC multithreaded Finder.
Apple also made major improvements to virtual memory, AppleScript,
and shortened boot times. A new online Help system was added to sup-
plement the existing Balloon Help and Apple Guide. The additional Help,
accessed from the Info Center, was based on HTML and had the ability to
link to pages on the Internet.
Other
When Apple announced the Power Macintosh G3 on November 10,
1997, it also made another significant announcement: the Apple Online
Store. Both become instant hits. Apple’s online store was built using
NeXT’s WebObjects Web application technology, which ironically also
powered Dell’s online store. When NeXT was purchased by Apple, Dell
scrambled to rebuild its store using tools from Microsoft. Steve Jobs de-
clared the new online store a success after receiving more than $12 million
in orders in its first month of operation.
See other Apple milestones in Chapter 4, “Strategies and Innova-
tions.”
1998—APPLE’S RENAISSANCE
Hardware
The period between 1998 and 2001 is considered by many to be Ap-
ple’s Renaissance because of the release of several new and innovative
96 Apple Inc.
Macs, including the iMac, iBook, and Power Mac G4 and also because it
marked the company’s return to profitability.
Read more about Apple finances in Chapter 10, “Finances.”
In Steve Jobs’s absence the company lost its focus, it was building too
many products and not focusing on ones that were bringing in the most
money. When Jobs returned, he killed the clones, dropped unprofitable
products (like Newton), and winnowed Apple’s product line down from
dozens of SKUs to a simple quadrant of four major market segments.
Along one axis were the segments, “consumer” and “professional,” and
along the other axis were the models, “portable” and “desktop.”
The new simplicity made development and marketing much easier
and also made it easier for customers to chose and purchase a Mac—which
they did in droves.
PowerBook G3 Series
In May 1998, Apple introduced an updated PowerBook G3 in an all-
new enclosure, which was an improvement over the previous PBG3’s in-
herited 3400 enclosure. The new PowerBook G3 Series was given the extra
moniker because it represented a new line of portable Macs, instead of
just a single model. The PowerBook G3 Series was the first Configure-To-
Order (CTO) portable, allowing buyers to configure virtually every as-
pect of the machine to fit their needs and budget, and prices ranged from
$3,000 to $7,000 fully loaded.
Available options included a 233, 250, or 292MHz G3 processor and
12-inch passive-matrix, 13.3-inch or 14.1-inch Thin Film Transistor (TFT)
active-matrix screen. Two RAM slots accepted industry-standard memory,
like that used on the IBM ThinkPads. The PBG3 Series also included a rede-
signed keyboard with a new Function key that simulated the numeric key-
pad found on the full-size 105-key keyboard—without the extra space.
The new PBG3 Series came with two Card Bus compliant PC-card
slots (formerly PCMCIA), a PowerBook first. The larger screen models
(13.3- and 14.1-inch) also included an s-video out port. Another innova-
tive first on the G3 Series was its two drive bays, which could accommo-
date an extra battery or a wide array of expansion modules, like floppy
and Zip drives. The right drive bay was large enough to accommodate
larger 5.25-inch mechanisms, including optical drives.
In September 1998, Apple made some critical changes to the Power-
Book G3 line. Feature-wise the new Rev. 2 PowerBooks, as they became
known, were merely incremental and somewhat expected: 233, 266, and
300MHz chips and a Level 2 cache. However, the more important change
was the standardization on a single logic board and 14.1-inch screen
for all PowerBooks. The new single design allowed Apple to stream-
line production and eliminate a major bottleneck that was plaguing the
company all summer. Although mostly standardized, Apple kept a 12.1-

inch model on the price list as a more economical alternative at $2,299.
Flat-screen Monitor
Although most Macs (other than the iMac) were still beige, Apple
took another bold step in 1998, releasing its second flat-screen monitor.
The first was released in 1984 for the Apple IIc and had no backlighting.
Apple released the 15-inch Apple Studio Display on March 17, 1998,
with a resolution of 1024 × 768. It was the second Apple product to fea-
ture translucent plastics (the first was the eMate) and was announced two
months before the iMac. Code-named Manta, the 15-inch panel was a hint of
things to come with the iMac. The Apple Studio display came wrapped in
a beautifully designed, transparent Azul blue bezel and adjustable stand. It
came with DA-15, s-video, composite video, ADB, and audio connectors.
In January 1999, the color of the plastics was changed to a lighter blue
with white accents to complement the new Power Mac G3s, and the con-
nector was changed to VGA. The original Azul model is still considered a
collector’s item to many Mac fans.
iMac
After fielding a successful string of computers that utilized the Pow-
erPC chips, Jobs took those chips and made a big bet on an entirely new
Mac—one that fit squarely in the consumer desktop quadrant. On August
15, 1998, Apple introduced the iMac and by the end of the month, it had
150,000 pre-orders for the new machine. The iMac went on to become the
fastest-selling computer in history.7
The $1,300 iMac was a totally redesigned, all-in-one computer “for the
rest of us.” Designed with the everyday user in mind, it was simple to set
up and allowed users to get onto the Internet within minutes of opening
the box. Apple touted this feature in new television commercials.
More revolutionary was its radical industrial design. Instead of the tra-
ditional beige and platinum boxes coming out of most computer manufac-
turers (including Apple), iMac was built from Bondi blue and translucent
grey plastics, allowing users to see inside of their computer. Jobs had made
the computer beautiful, separating it from everything else on the market,
and turned the entire computer industry on its ear. Everything that came
before it immediately looked dated at best, or mostly, just downright ugly.
For more on the iMac refer to Chapter 4, “Strategies and Innova-
tions.”
USB Keyboard and Mouse
Two other significant products were released with the iMac in 1998, the
USB keyboard and mouse. The Apple USB Mouse (part number M4848)
shipped in the iMac box and was included with all desktop Macs for the
98 Apple Inc.
next two years. The “hockey puck” mouse got its name from its perfectly
round shape. It was universally panned because the round shape and re-
cessed mouse button made it difficult to tell which way was up without
looking. Its small size gave some users hand cramps after extended use.
Some called the round mouse one of Apple’s worst mistakes.8 The switch
from Apple Desktop Bus (ADB) to the new, tiny round USB mouse was
evolutionary, but many thought that the round design was form over
function. So much so that a third-party company (Griffin Technology) re-
leased the iMate ADB to USB adapter that allowed iMac users to connect
their old, familiar ADB mouse to the iMac. Another popular product was
iCatch, a semitransparent shell that clipped onto the round mouse, mak-
ing more elliptical in shape like the previous (ADB) mouse.
The original Apple USB keyboard (part number M2452) wasn’t as
universally criticized as its companion mouse. The iMac’s USB keyboard
became the new standard for all Macintosh models for the next two years.
Like the iMac and USB mouse, its design was a radical departure from the
keyboard it replaced. The square lines and solid colors of the past were re-
placed with Bondi blue translucent plastics and two notches along the top
that supported connecting two other USB peripherals. The USB keyboard
also came with a built-in stand and later came in a darker gray to comple-
ment the Power Mac line.
Death of the Newton

On February 27, 1998, Apple discontinued the Newton project due to
the high losses. Apple reportedly spent more than $500 million on New-
ton, and it wasn’t even close to turning a profit. One of Steve Jobs’s goals
when he returned to Apple was to bring the company back to profitability,
and to achieve this goal, he eliminated products that weren’t contribut-
ing to the bottom line—and Newton was one of them. Dropping Newton
also fit with Jobs’s mission of simplifying Apple’s product line, which had
grown wildly out of control in the early to mid-1990s.
Software
Mac OS 8.1, released on January 19, 1998, was the last version of the
Mac OS to support 68KB processors. On October 17, 1998, Apple released
Mac OS 8.5, which was the first Mac operating system designed to run ex-
clusively on the PowerPC processor. Mac OS 8.5 greatly improved system
performance because of the increased amount of PowerPC code.
New features in 8.5 included a search utility called Sherlock that
searched both the Mac’s hard drives and the Internet. Sherlock allows
plug-ins to be installed that allowed users to search the contents of specific
Web sites. Systemwide font anti-aliasing was also introduced, making
type much easier to read on-screen, as were 32-bit icons. An applica-
tion palette also appeared in Mac OS 8.5 as an answer to the Windows
95 taskbar. An application menu could be resized or torn off into a palette

of buttons.
1999—COLORS OF THE RAINBOW

Rainbow-colored iMacs
In January 1999, Apple extended its iMac line and released revised
models—in five new colors: Blueberry, Strawberry, Lime, Tangerine, and
Grape. During his keynote address, Steve Jobs called the new colors “lick-
able” and consumers proceeded to eat them up. The new iMacs were sim-
ply a speed-bump of the original Bondi blue iMac minus the “mezzanine”
slot and IRDA port. The Rev. C iMac, as it was known, sold for $1,199.
For the first time, Apple offered the same machine in different colors. The
problem with this strategy is that it caused inventory problems because
resellers had to forecast their buyers’ color preferences and subsequently
keep much more than their normal amount of inventory in stock. Popular
iMac colors, like purple, sold out quickly while there was a glut of less-
popular colors, like Orange.
In April 1999, Apple released the Rev. D iMac, increasing the proces-
sor to 333MHz. A more significant change came in October when Apple in-
troduced the iMac with a slot-loading optical drive, a first in a Mac. The
slot-loading iMac was an extension of the success that Apple built with the
Rev. D machine, adding a faster processor (350MHz), more RAM (64GB),
better graphics (ATI Rage, 128MB), and an improved speaker system.
Even with the improvements, the iMac SL was $200 less expensive than
the previous model and at only $999 represented the cheapest Macintosh
in many years.
The iMac DV (Digital Video) was the top-of-the-line machine in the
iMac family. In addition to everything found in the iMac SL, the DV added
a DVD-ROM drive, larger hard drive, two FireWire ports (a first on the
consumer machine), and a VGA output for attaching a second monitor. In
another first, the iMac DV was cooled by convection and didn’t include
an internal fan, making it the quietest Mac since the 512KB. The iMac DV
came in five candy colors with 64GB RAM, and 10GB ATA hard drive for
$1,299. A Special Edition (the iMac DV SE) was available in graphite, like
the Power Mac G4, and came equipped with 128MB RAM and a 13GB
hard drive for $1,499.
Blue and White Power Mac G3

Also in January, Apple released an entirely new desktop minitower
enclosure that built on the design cues of the iMac. The new blue and
white Power Mac G3 shared the same name as the previous tower, but
that’s about it. Designed in the same flavor as the iMac, the new B&W
G3 featured a transparent blue-and-white enclosure that drew gasps from
100 Apple Inc.
the audience at Macworld Expo when it was unveiled. The design was
stunning, but it was more than just eye candy. The new case, code-named
El-Capitan, featured an innovative, hinged door that swung open, making
it easy to add cards and upgrade the memory. It was also the first Mac to
support FireWire, and the first professional Mac to come with USB.
For more on FireWire, see Chapter 4, “Strategies and Innova-

tions.”
The blue and white Power Mac G3 didn’t come with standard serial
ports, floppy drive, or SCSI—Apple went with Ultra ATA instead. The
new Power Mac G3 started at $1,599 and went up to $5,000 fully loaded.
In April 1999, it was speed-bumped to 450MHz.
PowerBook G3
In May 1999, Apple released a new PowerBook G3 with a bronze key-
board that was smaller and lighter than its predecessor. The new Bronze
(as it became to be known) was a dramatic 20% thinner and nearly two
pounds lighter and boasted significantly longer battery life than the previ-
ous model. However, some sacrifices had to be made to achieve the new
form-factor. The largest sacrifice was a drop from two to one PC-card slot,
which hardly made a difference to most users who gladly gave up the extra
slot in exchange for the new model’s lighter weight and svelte profile.
iBook
In a year of blockbuster product announcements, probably the largest
was the announcement of an entirely new class of portable Mac, a con-
sumer portable. Previously, Apple’s notebook computer strategy targeted
mostly the high end with machines that started at more than $2,000 and
went as high as $7,000 fully configured. This price point left a lot of po-
tential consumers (mostly students and teachers) out in the cold. Their
budget simply could not afford to spend $3,000 on a notebook computer,
and Apple was missing out on a major segment of the market.
Sensing this, Apple on July 21, 1999, introduced the iBook at the Mac-
world Expo in New York. Priced at $1,599, iBook cost almost $1,000 less
than Apple’s least-expensive professional PowerBook and was a boon for
students and teachers. iBook targeted the same consumer market as the
iMac and completed the simplified 2-by-2 product matrix (consumer, pro-
fessional and desktop, portable) that Steve Jobs introduced a year earlier.
The iBook’s specifications were similar to those of the iMac, offering
the same essential lineup of ports, including USB and modem. In order to
bring the price down, the design team dropped FireWire, PC slots, Infra-
red, and video-out and audio-in ports. FireWire became one of the defin-
ing distinctions between the consumer and professional portable lines.
The iBook included several firsts for Apple, including Accelerated

Graphics Port (AGP)-based graphics, Unified Motherboard Architec-
ture (UMA) that standardized components across motherboards, and a
handle—something rarely found in a notebook computer.
Probably the most earth-shattering iBook feature was AirPort, a wire-
less networking standard that allowed it to surf the Internet and transfer
files without connecting a single cable. AirPort wireless networking al-
lowed up to 10 iBooks to access one wireless access point (which Apple
called a base station). The companion base station could connect to an exist-
ing Ethernet network or dial-up Internet connection and share that con-
nection to all the wireless clients. The iBook came with an AirPort antenna
built into the monitor bezel and a PC-card sized slot. The $99 AirPort card
had to be purchased separately, and it quickly became one of Apple’s most
popular options.
For more on AirPort, see Chapter 4, “Strategies and Innovations.”
Announced in July, the iBook did not ship until late September, just
in time for the back-to-school rush. And sell it did. By August, Apple took
more than 140,000 pre-orders for iBooks.
Power Mac G4
On August 31, 1999, Steve Jobs introduced the first “desktop super-
computer,” the Power Macintosh G4, at the Seybold conference in San
Francisco. The Motorola MPC 7400 chip was a fourth-generation PowerPC
chip, hence the G4 moniker. Jobs called it a supercomputer because the G4
processor running at 500MHz was able to perform more than 1 billion in-
structions per second (a gigaflop). It was even classified as a weapon by the
U.S. government, adding to the hype and mystique of the new machine.
The new G4 processor architecture allowed for multiprocessor con-
figurations, and a Power Mac G4 running at 500MHz was up to three
times faster than a Pentium III PC running at 600MHz. The G4 AGP also
introduced a new professional color scheme that replaced the G3’s blue
and white with graphite (dark grey) and white. The new enclosure also
featured a polished, almost mirror-like, finish where the previous G3 had
more of a matte finish.
Much of the G4’s performance came from a new set of instructions,
which were executed by a new unit on the chip. Motorola referred to this
new unit as the AltiVec unit, which Apple branded as the Velocity Engine.
Regardless of what you called it, the new chip dramatically increased the
speed of most processor-intensive tasks.
The Power Mac G4 shipped in two models. The Power Mac G4 with
PCI graphics was based on the same motherboard as the blue and white
G3 tower (minus the ADB port). The only difference was the addition of
the Motorola MPC 7400, or G4, processor.
102 Apple Inc.
The Power Mac G4 with Accelerated Graphics Port (AGP) graphics

(code-named Sawtooth) was based on the Unified Motherboard Architec-
ture (UMA) that debuted in the iBook. The G4 AGP was built around an
entirely new motherboard designed specifically for the G4 chip.
The Power Mac G4 (AGP) introduced a number of performance im-
provements, including AGP-based graphics, AirPort, faster memory,
DVD-ROM or RAM, internal FireWire port, two separate USB buses, 2x
(133MHz) AGP slot, and up to 1.5GB of RAM. The Power Mac G4 AGP
started at $2,499 for the 450MHz model and $3,499 for the 500MHz con-
figuration; both included internal Zip drives.
Supply chain problems plagued initial shipments of the Power Mac
G4 that were blamed on Motorola. There was also a yield problem with
the initial run of G4 chips that prevented them from achieving the 500MHz
speed that Apple advertised. As a result, clock speeds were lowered in
October to meet the new 450MHz ceiling that the chip was capable of.
The 450MHz model was lowered to 400MHz, and the 500MHz model was
lowered to 450MHz, although the price remained the same.
Mac OS 8.6
Mac OS 8.6 was released May 10, 1999, and was largely a maintenance
release. Mac OS 8.6 added support for preemptive multitasking, but there
was no process separation so the feature was mostly lost. Regardless, this
free update for owners of Mac OS 8.5 and 8.5.1 was considered to be much
faster and more stable than Mac OS 8.5. In fact, many considered 8.6 to be
the most stable Classic OS ever released by Apple.
Mac OS 9
The most significant software release in 1999 was Mac OS 9. Released
on October 23, 1999, Mac OS 9 (code-named Sonata) was the last version
of the Classic Macintosh Operating System. OS 9 was marketed with 50
new features, including 128-bit encryption, automated software updates,
support for multiple users, integrated support for Apple’s iTools Internet
applications (now known as .Mac), improved Open Transport network-
ing, and Sherlock 2.
Sherlock 2 was a huge upgrade to Apple’s search software (with a nod
to Sherlock Holmes) and was considered the most important new feature
in Mac OS 9. The new version improved over the original by adding sup-
port for searching numerous online resources. Sherlock 2 came installed
with numerous channels and had a QuickTime-like metallic appearance.
2000—THE G4 CUBE
Apple starts off each year with a bang at its annual Macworld Expo
conference and trade show in San Francisco, and 2000 was no exception.
Interim CEO Steve Jobs announced that he has accepted the job as the
permanent CEO of Apple, dropping the interim from his title. Instead of
focusing on major hardware announcements at Expo, the highlight of the
2000 show was a preview of the revolutionary new Mac OS X and its Aqua
user interface. Apple announced new hardware, the Power Mac G4 cube
at WWDC 2000.
For more on Macworld Expo, see the chapter Apple Conferences.
Hardware
Most of the hardware announced in 2000 was simply speed-bumps
of existing Apple products that included faster processors, more memory,
and larger hard drive. The iBook added FireWire, making the port stan-
dard on all Macs; the iMac got lower prices and new colors; the Power
Mac G4 got Gigabit Ethernet (1000BaseT) and dual processors; the Power-
Book got FireWire and the Unified Motherboard Architecture (UMA); and
the Macintosh Server got AGP graphics and Gigabit Ethernet.
Apple started to turn more attention to its monitors in 2000 and began
focusing on the transition to LCD, flat-panel designs. The previous Studio
Display CRT monitors were replaced with the Studio Display LCDs in 15-
and 17-inch sizes. The new monitors shipped with an innovative, hybrid
Apple Display Connector (ADC), which carried data, USB, and power in a
single cable. The new LCD monitors were thin and curvaceous and came
wrapped in a beautiful clear acrylic bezel.
A couple of new accessories also hit the scene in 2000. The Apple Pro
Keyboard and Mouse replaced their USB equivalents and, while still USB,
feature dramatic new styling in glossy black and clear acrylics. Apple’s
new Pro Mouse featured an optical mechanism and made Apple the first
company to ship an optical mouse with all its systems. The Apple Pro
Mouse featured a unique mechanism that allowed three click force set-
tings for the required pressure to click the mouse.
Power Mac G4 Cube

Probably the most exciting hardware announcement of 2000 was the
Power Mac G4 Cube in July at Apple’s Worldwide Developers Conference
(WWDC). The Cube (as it came to be known) shipped in an entirely new
form-factor that was like nothing Apple had ever produced before. The
new computer, packing the powerful G4 chip, came in a tiny eight-inch
cubed Lucite and grey box. Technically, it wasn’t really a cube because
it was slightly taller than eight inches, but that’s for effect. The extra two
inches or so give it the effect that the inner case, which is a cube, is sus-
pended in the air.
The G4 Cube wasn’t a Power Mac and it wasn’t an iMac either, it
was somehow both of them combined. Targeted at the business market,
104 Apple Inc.
the Cube was positioned between the iMac and the Power Mac G4. It
was designed for people that didn’t have the budget for a Power Mac
G4 and wanted more choice in monitors than the one that was built into
the iMac.
In addition to being a thing of beauty, the G4 Cube was also an en-
gineering marvel that packed a punch into a tiny footprint. While it
didn’t have the expandability of its larger brother, the Power Mac, the G4
Cube still managed to have three RAM slots, AirPort, two USB and two
FireWire ports. Graphics were handled by a short 2x AGP card because the
Cube didn’t have room for a full-size AGP card. The Cube also featured a
completely unconventional vertical, slot-loading DVD-ROM mechanism
the ejected the discs up, like toast coming out of a toaster.
Apple Senior Vice President of Design, Jonathan Ive, won several in-
ternational awards for the design of the Cube, and it was featured in many
design magazines for breaking the mold of computer design. The Cube
and its peripherals were shown in the Museum of Modern Art9 and in
the Digital Design Museum. Its ultra-contemporary design won it starring
roles on several popular television shows, including “The Drew Carey
Show,” “Absolutely Fabulous,” “The Real World: Chicago,” “Curb Your
Enthusiasm,” and “24.”
For more on Jonathan Ive, see Chapter 8, “Apple Leadership.”
The base 450MHz model with 20GB hard drive, 64GB of RAM sold
for $1,799 while the zippier 500MHz configuration with 30GB and 128MB
sold for $2,199. Like the iMac DV, the Cube cooled itself via convection
and thus didn’t need a fan. As a result, it ran very quietly to the delight
of owners that liked to display it on top of (as opposed to underneath)
their desk.
Despite its good looks, the Cube had its detractors. It was criticized
for lacking standard audio and input ports; instead of putting these stan-
dard ports on the case, Apple included an external USB amplifier with
Harman Kardon speakers. While the amplifier had an audio output, the
only way to get audio into the Cube was through a USB connection—a
little ahead of its time.
Early runs of the Cube had “mold lines,” “knit lines,” “scratches,” or
“hairline cracks” around the screw holes on the top and near the drive slot
on the front and top. The marks were quite controversial at the time and
were called different things by different people. The marks turned out to
be the result of the production process and were only cosmetic.
Positioning the Cube in the market was also a source of trouble for
Apple. The Cube didn’t fit into Steve Jobs’s tidy two-by-two matrix. It
was certainly on the desktop axis, but it was neither a consumer nor a
professional machine. Price was an issue, at $1,799, it cost $200 more
than a comparable Power Mac. The price premium took a toll on sales
and relegated the Cube into the category of niche/art machines that were
mostly purchased by high-end customers looking for more of a showpiece

than a computer.
Mac OS X
The most significant Apple development in 2000 was Steve Jobs’s pub-
lic demonstration of Mac OS X (pronounced Mac OS Ten) at Macworld Expo
in San Francisco. The new operating system strategy was a bold step into
the future that was accelerated by Apple’s acquisition of NeXT in 1996.
Copland
Copland was supposed to be Apple’s next-generation operating sys-
tem and the successor to Apple’s Classic operating systems (up to
and including Mac OS 9). System 7.5 was code-named Mozart and
the next-generation OS got its name from composer Aaron Copland.
The Classic Mac OS was growing increasingly unstable and suffering
from crashes that would bring down the entire machine due to a lack
of protected memory. Copland was designed to address these flaws
with features like protected memory and multitasking. The Copland
project began in 1994 and was abandoned in August 1996 in favor
of buying NeXT’s NEXTSTEP operating system, which eventually be-
came Mac OS X.
OS X was a completely new type of operating system with a totally

different architecture than anything Apple had shipped in the past. At its
heart is BSD UNIX with complete access to system-level functions via the
command line, a feature never before available to Mac users. Apple re-
leased the core of the operating system as free and open source software
called Darwin.
Mac OS X included several features designed to make it more sta-
ble and crash-resistant. Protected memory and pre-emptive multitask-
ing allow the operating system to run several applications in parallel, in
their own memory. If one application crashes, it doesn’t crash the other,
or worse, crash the whole operating system. Apple included a new set
Taligent
Taligent came from a combination of the words Talent and Intelli-
gent. It was the name of a modern object-oriented operating system
project within Apple Computer during the 1990s that was being de-
veloped to replace the Classic Mac OS. Taligent was later spun-off
into a joint venture with IBM as a defensive move to compete with
Microsoft’s Cairo and NeXT’s NEXTSTEP operating systems. Taligent
was dissolved in the late 1990s.
106 Apple Inc.
of programming tools for developers, most notably an Integrated Devel-

opment Environment (IDE) called Xcode, which provided compilers that
support several modern programming languages.
On January 6, 2000, Steve Jobs demonstrated Mac OS X’s most visible
feature during his keynote address at Macworld Expo in San Francisco,
the Aqua user interface. Aqua was a definite crowd-pleaser; its rounded
curves, anti-aliased edges, drop shadows, and transparency brought a new
dimension to the OS that the Mac user had never seen before, and it was
greeted with loud cheers of enthusiasm during Jobs’s keynote address.
Because Mac OS X inherited Application Programming Interfaces
(APIs) from NEXTSTEP (known as Cocoa), it wasn’t backward compatible
with previous versions of the Mac OS. Apple built a Classic Environment,
the Carbon Application Programming Interface (API), to accommodate
programs written for the older versions of the Mac OS. This allowed pro-
grams written with Carbon to run natively on both operating systems,
easing the transition to OS X for both users and developers.
A public beta or “preview” version of OS X was released on Septem-
ber 13, 2000, in order to get feedback from users. The public beta was
based on Developer Preview 4 (DP4) and sold for $29.95 with a T-shirt.
It was very buggy and not recommended for production systems, but it
gave the masses their first hands-on experience with the new operating
system. In it the familiar Apple logo was moved to the middle of the menu
bar, but after a public outcry, the Apple logo was moved back to its tra-
ditional location on the left side of the menu bar. The public beta expired
and stopped working in Spring 2001.
Other
Apple.com was registered on February 19, 1987, making it the 64th-
oldest registered.com domain name. In early 2000, the Apple’s Web site
was completely redesigned, featuring a new tabbed interface with tabs for
Apple’s online store; iReview, dedicated to reviews of online content; and
iTools, which included free Internet services like Web space, iCards, free
online greeting cards, QuickTime, and Support.
In 2000, Apple released the last version of its AppleWorks office soft-
ware suite. AppleWorks 6 was ported to the Carbon API to work on Mac
OS X and replaced the communications feature with a dedicated presenta-
tion application.
2001—THE ITUNES AND IPOD REVOLUTION

Hardware
Apple continued its trend of speed-bumping and improving its exist-
ing product line with faster processors, more memory, and larger hard
drives. A new trend that Apple started to practice in 2001 was to release
an updated model for the same price as the model it replaced. It was a
win/win for Apple and its customers because the customer got something
better and faster than the previous model for the same price as before
and Apple didn’t have to cut prices. It was like a price cut, only better
for Apple.
The flipside of this strategy is that there was some speculation that
Apple was practicing “planned obsolescence,” or releasing products at in-
tentionally lower speeds and capacities to “leave room” for the inevitable
upgrade that was coming in 9 to 12 months.
New Desktop Designs

In 2001, the iMac got FireWire, finally bringing it to the entire Mac
family; better graphics; and a dramatic change from the previous solid
colors to outrageous patterns right out of the 1970s. Rather than being
painted on, the new patterns were molded into the iMac case using a spe-
cial technique that reportedly took Apple 18 months to perfect.
Apple replaced the rather pedestrian (in comparison) transparent Sage
and Ruby color for Blue Dalmatian, which could best be described as a
powder blue pattern with white polka dots or ovals and “Flower Power,”
which was a collage of pastel daisies on a white background. Reaction
to the new iMac patterns seemed to be divided down party lines with
Mac users generally in favor and traditional PC-types crying in agony. PC
World magazine dubbed the Flower Power iMac one of the ugliest prod-
ucts in tech history.10 In July 2001, Apple changed the iMacs back to more
traditional graphite and snow color schemes.
On April 18, 2001, Apple announced that it has shipped its five mil-
lionth iMac, making it the most successful personal computer ever.
The PowerMac G4 got a built-in amplifier designed to power new
USB speakers and the line did away with multiprocessor configurations
so that Apple could ship sufficient quantities of machines. The most in-
novative part of the Power Mac line was a new, optional “SuperDrive,”
which could read and write DVDs and CDs; previous “Combo drives”
could read and write CDs but only read DVDs. Apple shipped easy-to-use
DVD authoring software, iDVD, alongside the new drives and sold a pro-
fessional version called DVD Studio Pro. In July 2001, Apple slightly mod-
ified the Power Mac G4 enclosure (code-named Quicksilver) to be more
streamlined and rounded but the color scheme was largely the same.
New Notebook Designs

The major hardware changes in 2001 were mostly to the notebook com-
puters. Apple introduced an entirely new iBook design at a press event in
May 2001 that brought the consumer notebook more in line with the design
of the professional PowerBook. The new iBook was much smaller; its de-
sign more traditional and squared off. Apple traded the radical colors for
108 Apple Inc.
pure white. The new iBook Dual USB included a faster G3 processor, 12-
inch screen, two USB ports, more RAM, VGA output, and was the first Mac
to include a Combo optical drive in the high-end model that could read
and write CDs and read DVDs. In October 2001, the iBook got a speed-
bump in CPU and bus speed; RAM and hard drives were also increased.
Simplicity and the Move to White

The year 2001 was the year that Apple dropped some of its more
garish color schemes, like Flower Power iMac and the nearly fluo-
rescent key lime green iBook for more traditional models in graphite
(dark grey and white). It also dropped the radical, curvy design of the
original iBook for a more conservative rectangular shape.
The PowerBook G4 also got a new design in January 2001 that was just
as dramatic as the iBook’s. The professional Apple notebook went from a
dark gray plastic enclosure to a titanium case that was only one-inch thick
when closed—0.7 inches thinner than the PowerBook G3 it replaced. The
new, thinner design did away with the removable optical drive because
The PowerBook G4 Titanium. Image © John Greenleigh, www.flipsidestudios.com.

of space constraints, but consumers were more than willing to make the
trade-off.
The new PowerBook Titanium also got a low-power G4 chip (the PPC
7410) and a wide-aspect 15.2-inch screen, running at 1152 × 768 resolu-
tion, which made the case wider but less deep. Prices for the new TiBook
ranged from $2,599 to $3,499 and a speed-bump in October added Gigabit
Ethernet, better graphics, L2 cache, and a $400 to $500 price drop.
iTunes
iTunes was introduced at Macworld Expo 2001 in San Francisco. The
software was designed for playing and organizing digital music files and
in October became the conduit for moving music to and from the iPod
digital media player.
iTunes began life as a media player called SoundJam MP written by
Jeff Robbin and Bill Kincaid11 and released by Casady & Greene in 1999.
SoundJam was acquired by Apple in 2000 and was given a new user inter-
face and the ability to burn CDs. Apple removed the ability to record and
dropped support for skins and released the resulting application as iTunes
1.0 at Macworld Expo on January 9, 2001.
Although there were other MP3 players available for Windows (no-
tably WinAmp) and other Mac programs in development (like Audion12),
SoundJam MP was the first out of the gate and forever changed the way
we consume music and later videos, television, and music.
For more on the iTunes, see Chapter 4, “Strategies and Innova-

tions.”
iPod
Without question, the most significant product release of 2001, and
maybe the decade, was a little white handheld device that could play MP3
audio files through a pair of headphones. The white plastic and chrome
device had a unique wheel interface that you turned to navigate a simple
series of hierarchical menus to select the song, album, or artist that you
wanted to listen to.
Why was Apple releasing a product that played music? Shouldn’t it
have been designing a new computer? Not many people would have wa-
gered that the little music player would not only reinvent Apple, but also
consumer electronics, mobile phones, music, and almost the entire enter-
tainment industry too. But it did.
The original iPod was announced on October 23, 2001, and was Ap-
ple’s first foray into digital music. The unit was about the size of a deck of
cards and came equipped with a 5GB hard drive and a FireWire port—a
first on a portable music player. The iPod was based on the Portal Player
PP5002 system-on-a-chip, consisting of two embedded ARM7TDMI chips.
It also had 32MB of RAM, which was mostly for “skip protection.”
110 Apple Inc.
Although other hard drive–based music players existed, Apple’s was

different because it used a 1.8-inch hard drive mechanism, making it much
smaller and more portable than the competition. In fact, iPod was able to
compete with flash-based MP3 players that had a fraction of the capac-
ity. The most popular flash-based player at the time, the Diamond Rio
PMP300, held 32MB of music or roughly 12 songs and sold for $250 (about
$21 per song). The iPod 5GB, on the other hand, held 1,000 songs and sold
for $400 or 40 cents per song.
The Diamond Rio PMP300

The Rio PMP300 by Diamond Multimedia was actually the second
portable consumer MP3 digital audio player shipping in 1998. The
first MP3 player was the Eiger Labs MPMan F10, which was available
during the summer of 1998.
In March 2002, Apple added a 10GB iPod to its lineup that was priced
at $499. And in July 2002, Apple replaced the mechanical scroll wheel with
a solid-state touch wheel, which was based on the trackpad technology
found in its iBook and PowerBook notebook computers.
For more on the trackpad, see “The Trackpad—1994” in Chapter 4.
Apple’s iPod numbers continue to impress: more than 15 hardware

designs, 20 capacities, 20 colors, 70% market share (in units), 84% market
share (in dollar volume), and more than 150 million iPods sold (as of this
writing). iPod shows no signs of letting up.
For more on the iPod, see Chapter 4, “Strategies and Innova-

tions.”
Mac OS 9
Apple continued to revise Mac OS 9 in 2001 but it was only to fix bugs.
The majority of Apple’s operating system team had moved over to work
on Mac OS X. Updates to Mac OS 9 included the following: 9.0.4 included
fixes for USB and FireWire; 9.1 added CD burning support in the Finder
and added a new Window menu in the Finder; 9.2 (July) increased perfor-
mance noticeably but required at least a G3 processor; 9.2.1 (August); and
9.2.2 (December).
Mac OS X
After several years of development and a successful public beta pe-
riod, Mac OS X was released on March 24, 2001. Mac OS X was a revo-
lutionary upgrade where all previous operating system upgrades had
been evolutionary. OS X combined the stability, reliability, and security

of a UNIX operating system with the ease of use that Mac users were ac-
customed to. To top it all off, Apple included a beautifully designed, and
completely overhauled, user interface called Aqua.
Aqua had many significant new features, including systemwide anti-
aliasing of widgets; text graphics and windows; drop-shadows transpar-
ency in some windows and menus, which added depth; ColorSync color
matching built into the core of the operating system; a Dock that was a
launcher for applications and document shortcuts; OpenGL hardware
accelerated drawing (later called Quartz Extreme); PDF support for both
opening and saving documents; and a set of Human Interface Guidelines,
which gave applications a consistent user interface and keyboard short-
cuts.
Mac OS X version 10.0 (code-named Cheetah) was publicly released on
March 24, 2001, but was considered slow, buggy (kernel panics were fre-
quent), and missing many features found in OS 9, like DVD playback. The
release was a silent release and didn’t have a big splash; instead Apple
wanted to have a major release for Mac OS 10.1, which was more stable, at
Macworld Expo in New York.
Mac OS X version 10.1 (code-named Puma) was publicly released on
September 25, 2001, and was a free upgrade for owners of 10.0. Mac OS
10.1 included better performance and added features like DVD playback.
Apple’s OS X Cats
Apple liked to code-name its Mac OS X releases after cats.
Mac OS X, version 10.0, was code-named Cheetah, 10.1 was
Puma, 10.2 was Jaguar, 10.3 was Panther, 10.4 was Tiger, 10.5 was
Leopard, and 10.6 was Snow Leopard. Apple has also registered trade-
mark #78271630 for Cougar and #78271639 for Lynx, presumably
for future versions of the OS.
Users discovered that Apple’s free 10.1 upgrade CDs could be con-
verted to full install CDs by removing a specific file. Apple later closed
that loophole. Apple began selling a boxed version of Mac OS X in retail
packaging to Mac OS 9 users for $129.
Retail
Apple developed a retail store chain in an effort to increase its market
share. On May 19, 2001, Apple opened its first dedicated retail stores in
Tyson’s Corner, Virginia (near Washington, D.C.) and Glendale, California
(near Los Angeles), offering hardware and software products for Macin-
tosh, personal one-on-one support staffed by Apple “Geniuses,” demon-
strations, and training. All of Apple’s hardware products are on display
112 Apple Inc.
for customers to try. By the end of 2001, Apple opened another 27 stores
across the United States.
For more on Apple’s retail store chain, see Chapter 4, “Strategies
and Innovations.”
2002—XSERVE AND EMAC

Notebook Hardware
In 2002, Apple continued to build upon the success of its hardware
line and released both speed-bumps (evolutionary increases in CPU, GPU,
RAM, and hard drive) and entirely new hardware designs (iMac, eMac,
and Xserve).
In the evolutionary category, Apple released speed-bumps of most of
its hardware over the course of the year, usually around its major confer-
ences, Macworld Expo and WWDC. Both the consumer and professional
notebooks were enhanced. In January 2002, Apple released an iBook with
a 14.1-inch screen, complementing the original 12-inch model and giving
people needing a larger screen an alternative to the more expensive Pow-
erBook. The 14-inch iBook came with 600MHz, 256MB RAM, 20GB hard
drive, and a CD-R/DVD-ROM Combo drive for $1,799.
Apple also repriced the 12-inch iBook; the CD-ROM model moved to
$1,199, the CD-RW model was dropped, the DVD-ROM model (available
only as a Built to Order option) was now $1,299, and the Combo Drive
model was dropped to $1,499. In addition, iBooks also got faster CPUs,
more VRAM, and various changes in price and configuration.
The professional-level PowerBook G4 got a speed-bump as well in
2002 but also an architectural change. The new PBG4 announced in April
got a DVI port (replacing the VGA out on the previous model), which
could be adapted to both VGA and ADC, and an audio input port, which
was eliminated in the original PowerBook G4. In addition, Apple added a
higher-resolution screen (1280 × 854), faster CPUs, faster graphics, better
optical drive, and larger hard drives. The PowerBook G4 (DVI) came in
two configurations, 667MHz for $2,499 and 800MHz model for $3,199.
In November, the PBG4 made a large psychological jump to a 1GHz
CPU and added a slot-loading SuperDrive that could read and write both
CDs and DVDs—both firsts for Apple. The 1.0 GHz model, with 512MB
of RAM, 60GB hard drive, SuperDrive, and built-in AirPort cost $2,999,
making it one of the most inexpensive PowerBooks ever.
Desktop Hardware
Xserve
On May 6, 2002, Apple announced a new server called Xserve at the
WWDC. This marked the first time the company announced a hardware
product at the conference, which typically focuses on software.
Xserve was Apple’s first machine specifically designed to be rack-

mounted. Xserve is just 1U (1.75-inches) or one rack unit thick. One rack
unit is commonly designated as 1U. The size of a piece of rack-mounted
equipment is usually described as a number in U. Most server racks have
42 U of height. Xserve was designed to consume as little vertical space as
possible to reduce costs for customers paying to co-locate the machine at
a hosting facility, which often charges by the rack unit.
Xserve represented a significant push into the server market after
Apple failed to penetrate it with its Network Servers (in February 1996) and
achieved only limited success with its Workgroup and Macintosh Server
lines (which were the desktop Macs with a different software bundle).
Because it was engineered from the ground up to be a server, Xserve
included several server-oriented innovations, including multicolored
LEDs that showed hard drive access, processor load, and Ethernet status;
and four unique front-loading drive bays that could be accessed while
it was mounted in a server rack. The drive bays are hot pluggable with
each running on its own UltraATA-100 bus. Xserve could originally be
configured with up to 480GB of storage with four 120GB drives; today that
number is much higher, limited only by drive capacity.
The original Xserve also included Double Data Rate (DDR) RAM, two
full-length PCI card slots, and a PCI/4x AGP slot that was usually filled
with graphics or Gigabit Ethernet cards. Xserve shipped with a second
Gigabit Ethernet (multiple Ethernet ports were useful on servers), three
FireWire ports, two USB ports, a serial port, and a tray-load 24x CD-ROM
drive. Today’s Xserves are still popular, shipping with faster system and
memory buses and memory, multiple-core processors, and a hardware
RAID option.
The original Xserve was available in two configurations, a 1.0GHz
that sold for $2,999, and a high-end model with dual 1.0GHz processors
that sold for $3,999. Both included Mac OS X Server 10.2 Jaguar.
Power Mac
After just receiving a slightly updated skin in July 2001, the Power
Mac G4 was modified in August 2002 to include a 1GHz processor and
a Level 3 cache (on the middle and high-end models and several new
graphics card options). In August 2002, the Power Mac G4’s enclosure
was (again) slightly modified with mirrored doors over the optical drives.
The motherboard was enhanced to include several features from the new
Xserve rack-mount server. The bus speed was raised to 166MHz, a Double
Data Rate (DDR) SDRAM memory bus was included, and dual processors
and enhanced graphics cards were added across the line.
The “mirrored drive doors” (a.k.a. MDD) Power Mac G4 had the un-
fortunate distinction of being one of the loudest Power Macs ever and
earned the nickname G4 Windtunnel. Apple later offered a fan and power
114 Apple Inc.
supply replacement to address the problem. In July 2003, when Apple

announced the Power Mac G5, the Power Mac G4 (MDD) was reissued as
the last Mac OS 9 bootable Power Mac.
iMac
In 2002, the iMac continued to be a big seller for Apple—the machine
that arrived in May 1998 was truly Apple’s computer for the new mil-
lennium. Building on its previous successes, Apple announced the first
totally redesigned iMac at Macworld Expo on January 7, 2002. The new
design included a 15-inch flat-panel monitor attached to the articulating
chrome arm reminiscent of the popular Luxo desk lamps. Not coinciden-
tally, the flat-panel iMac looked a lot like the iconic “Luxo the Lamp” char-
acter from the first Pixar Animation Studios film and corporate logo—a
company that Steve Jobs also heads.
The new flat-panel iMac was the first to ship with a G4 processor and
the CD-RW/DVD-R SuperDrive. It also featured an elegant domed case
that allowed users to position the new flat screen in multiple locations
and move it easily, thanks to the new “desk lamp” design. Apple started
the transition to flat-panel monitors in 2000, and the new iMacs were the
culmination of Apple’s strategy. When he announced the new iMac in his
keynote address, Steve Jobs told attendees “the CRT is officially dead.”
For more on flat-panel monitors, see Chapter 4, “Strategies and

Innovations.”
The flat-panel iMac shipped in three configurations, mostly differen-

tiated by their optical drive, which Apple marketed as “Good,” “Better,”
and “Best.” The low-end model with a 700MHz G4 processor and CD-RW
drive sold for $1,299, the middle or “Better” model came with the same
processor and a Combo Drive for $1,499, and the top-of-the-line “Best”
model had a 800MHz chip and SuperDrive for $1,799.
The middle and high-end model included Apple Pro Speakers and all
iMac configurations included Apple’s new white version of the Pro Key-
board and Mouse that it released with the G4 Cube in 2000. Introduced on
July 17, 2002, the 17-inch iMac was identical to the 15-inch flat-panel iMac
but with a larger, 1440 × 900 resolution monitor and was priced at $1,999.
For more on iMac, see Chapter 4, “Strategies and Innovations.”
iPod
In March 2002, Apple speed-bumped the iPod to 10GB, doubling its
capacity to accommodate larger music libraries for $499. In July 2002, Apple
replaced the iPod’s mechanical scroll wheel with a solid-state, touch-
sensitive pad in the same shape. The new touch pad–based wheel bor-
rowed Apple’s popular trackpad technology introduced in the PowerBook.
Also in July 2002, Apple increased iPod’s capacity to 20GB ($499) and low-
ered the prices of the 10GB ($399) and 5GB ($299) models. The 5GB model
retained the original, moving scroll wheel.
eMac
In April 2002, Apple announced the eMac, which was short for “ed-
ucation Mac.” eMac combined a 17-inch monitor and G4-based Mac in
a design reminiscent of the first-generation, frost white iMac. eMac was
designed to be less expensive (due to its CRT monitor) to compete with
low-cost PCs in the competitive educational market. Originally sold only
to schools, eMac was later mass-marketed to consumers to fill the gap
between the discontinued $799 CRT iMac and the more expensive $1,499
flat-panel iMac. The public eMac came in two configurations, a 700MHz
G4, which sold for $1,099, and an 800MHz G4 that sold for $1,499.
Apple Cinema HD Display

In March 2002, Apple replaced the 22-inch monitor with a slightly
larger 23-inch Apple Cinema HD Display. The new 23-inch Cinema HD
Display complemented its 17- and 22-inch (non-HD) models with a native
resolution of 1920 × 1200 and supported full 1080p resolution, hence the
HD moniker.
Software
At Macworld Expo 2002 in New York, the free service launched in
2000 as iTools was relaunched as a subscription-based service called .Mac
with dedicated technical support and several new or upgraded tools to
subscribers, including a personal Web hosting service (HomePage), an on-
line disk storage service (iDisk), an e-mail service with @mac.com e-mail
addresses, a personal back-up service (Backup) that allowed users to ar-
chive data to their iDisk, CD, or DVD, and an online greeting card service
(iCards).
The move from free to paid was very controversial as many people
thought that Apple would continue to provide these services for free.
Apple said that the move was necessary to offset the massive costs asso-
ciated with iDisk and e-mail storage space and increasing support needs.
Apple also announced a digital photo management application called
iPhoto that built on the success and ease of use of iTunes. iPhoto would
later go on to become a key component of Apple’s iLife software suite.
Mac OS 10.2
On August 23, 2002, Apple released Mac OS X version 10.2 Jaguar, which
was the third major release of the Mac operating system and the first to use
its code name as part of its branding. Apple included a Jaguar print desktop
116 Apple Inc.
picture as part of the software and a large spotted X on the Jaguar-themed

box. Because of an agreement with the car manufacturer Jaguar, Mac OS
10.2 was never officially referred to as Jaguar in the United Kingdom.
The newest version of the Apple operating system included more
than 150 new features, according to Apple, including iChat, Address
Book, Bluetooth support, Bonjour (formerly Rendezvous), Common
UNIX Printing System (or CUPS), a revamped Finder, Mail, QuickTime
6, Quartz Extreme, Sherlock 3, Universal Access, Inkwell, support for Mi-
crosoft Windows networks, a journaled file system (which logs changes
to a journal before committing them to the main file system), and overall
speed increases.
The famous “Happy Mac” logo was dropped from Mac OS X 10.2 and
replaced with a large grey Apple logo. Jaguar was sold for $129, or $199
for a “family pack,” a new option from Apple that allowed the software
to be installed on up to five computers in one household. OS X wasn’t
serialized or copy protected so the family pack option was offered on the
honor system.
Retail
In 2002, Apple expanded its operations by opening 24 new stores for
a total of 51, including flagship stores in New York’s Soho district and in
Los Angeles.
2003—IBOOK G4 AND ALUMINUM POWERBOOKS

Hardware
Apple continued its tradition of updating most of its hardware with
speed-bumps every 9 to 12 months, with some exceptions, and new de-
signs replacing old ones every two to four years.
iMac
In 2003, Apple enhanced the iMacG4 and simplified the product line
down to two models—15- and 17-inch. The 17-inch included several new
features to the motherboard, including internal Bluetooth, AirPort Ex-
treme, and Double Data Rate (DDR) RAM. The 15-inch model sold for
$1,299 and the 17-inch with SuperDrive sold for $1,799. In September,
the 15-inch model was speed-bumped to bring it in line with the 17-inch
model and a new model with a 20-inch screen was added in November.
Power Mac G4
The Power Mac G4 was speed-bumped in January 2003 with a FireWire
800 port, built-in Bluetooth, and support for the new AirPort Extreme
wireless networking system. The new Power Mac G4 was the fastest and
least expensive line of Power Macs Apple had ever introduced, with the
1.0GHz model selling for $1,499.
In 2003, the PowerMac G4 with mirror drive doors was re-released
as the last OS 9 bootable Power Mac. This was necessary to accommo-
date Mac users that still needed OS 9 to run production applications that
hadn’t yet been ported to run natively in Mac OS X, like Quark XPress.
Power Mac G5
In June 2003, Apple announced the Power Mac G5, a fifth-generation
PowerPC processor (dubbed the G5) wrapped in an industrial-looking
aluminum enclosure. Apple and IBM worked closely to develop the 64-bit,
PowerPC 970 processor, which was the first 64-bit consumer-level desktop
computer ever sold and the world’s fastest personal computer at the time.
The Power Mac G5 included several enhancements, including PCI-X
slots, an 8x AGP slot, Serial-ATA (SATA) bus, and up to 8GB of RAM. The
front-side bus speed was increased to half of the processor speed—up to
1GHz—a six-fold improvement over the Power Mac G4.
The PowerPC G5 was a much higher-power and higher-temperature
chip than its predecessors, though. A lot of engineering resources went
into the cooling system inside the Power Mac G5, which required nine
computer-controlled fans. It came in three configurations: the 1.6GHz
model sold for $1,999, the 1.8GHz sold for $2,399, and the dual 2.0GHz
model sold for $2,999. In November, Apple dropped the price of the
1.6GHz model to $1,799 and replaced the single 1.8GHz model with a dual
1.8GHz model for $2,499.
Xserve
In February 2003, Apple speed-bumped the Xserve with a faster
(1.33GHz) single or dual G4 processor, faster memory bus, and a slot-
loading optical drive. Apple also introduced the Xserve RAID, a 3U (rack
unit) storage system that could accommodate 14 hard drives, each on its
own ATA-100 bus. At just over $4 per gigabyte, Apple’s new RAID was a
fraction of the cost of competing RAIDs from Dell, HP, or Sun. In March,
Apple released the Xserve Cluster Node, which was designed to act as a
cluster in a node of Xserves. It shipped without an optical drive or graph-
ics card and only supported a single ATA hard drive.
iBook G3 and G4
In April 2003, the 12- and 14-inch iBook G3s were speed-bumped by
100MHz to 800 and 900MHz. In October, Apple released the iBook G4,
completing the transition from G3 to G4 throughout the product line. The
iBook G4 also inherited a slot-loading optical drive, better graphics, USB
2.0, AirPort Extreme, Bluetooth support, and faster system and memory
buses.
118 Apple Inc.
PowerBook G4 Aluminum
On January 7, 2003, at Macworld Expo in San Francisco, new Power-
Book G4s were announced that came packaged in a new, sleek 1-inch thick
aluminum case. Two new screen sizes were offered (12- and 17-inch), ex-
panding the professional notebook line to 12-, 15-, and 17-inch models.
The new PBG4 12-inch was similar to the iBook, except that it was
housed in aluminum, smaller, and weighed just 4.6 pounds. The new PBG4
featured an updated motherboard design, which included Double Data
Rate (DDR) RAM, internal Bluetooth, AirPort Extreme, NVIDIA graphics,
and a mini-VGA port (borrowed from the iBook). In September, the Power-
Book G4 12-inch was speed-bumped to include mini-DVI, and USB 2.0.
The new PBG4 17-inch shipped with a massive 1440 × 900, 16:10 aspect
ratio screen—the largest screen of any notebook computer on the market
and the world’s first 17-inch notebook.13 The PowerBook G4 17-inch was
the most full-featured Apple notebook computer ever and included sev-
eral firsts. It included the world’s first fiber-optic backlit keyboard and
ambient light sensors that can automatically control the brightness of
the keyboard and the screen. It was also the first PowerBook to include
FireWire 800, PC2700 Double Data Rate (DDR) RAM, and one of the first
Macs to include internal Bluetooth and AirPort Extreme.
For more on the ambient light sensor, see Chapter 4, “Strategies

and Innovations.”
The titanium PowerBook G4 design, now two years old, was having
trouble with paint flaking off and was generally starting to feel old, es-
pecially when compared to the spiffy, new aluminum PowerBooks. After
the aluminum PowerBooks were announced in January, titanium Power-
Book sales ground to a halt, as people anticipated the aluminum 15-inch,
and nine months felt like an eternity. On September 16, 2003, at the Apple
Expo in Paris, the day finally came. Apple announced one of the most-
anticipated computers in years, the 15-inch aluminum PowerBook G4.
The PowerBook G4 15-inch aluminum was brought up to feature par-
ity with its 17-inch sibling, including USB 2.0, AirPort Extreme, internal
Bluetooth, FireWire 800, faster system and memory buses, and a faster
optical drive.
iPod
At a special Apple Event on April 28, 2003, Apple announced an up-
dated third-generation iPod that included a new all-touch interface. The
new iPod had rounded edges and moved the four buttons that were pre-
viously located around the scroll wheel to the top of the scroll wheel. The
new buttons were backlit and solid-state. The new iPod was thinner and
lighter than previous models at only 0.73 inches deep and weighed just
0.39 pounds.
The previous iPod’s FireWire port was replaced with a proprietary,

30-pin “dock connector” and cables for either FireWire or USB computers.
The new dock connector enabled a whole new world of accessory options
for the iPod and, while inconvenient for Mac users, made the iPod much
more Windows PC-friendly.
Apple dropped support for the Windows MusicMatch software on Oc-
tober 16, 2003, in favor of the newly released iTunes 4.1 for Windows, a free
download from Apple.com that was included with Windows-formatted
iPods. Windows PC users no longer had any barriers to buying iPods, and
sales soon skyrocketed.
Apple also added several software enhancements to the new iPods,
including on-the-go playlists and voice notes, which weren’t available on
older models.
iTunes Music Store

At that same event, Steve Jobs announced a new iTunes 4 feature, an
integrated music store, called the iTunes Music Store (later shortened to
just “iTunes Store”) where 200,000 songs are available for purchase for
99 cents each and full albums for $9.99 each. The store can be accessed
from iTunes from a computer and from portable media players such as the
iPhone and iPod touch over a wireless Internet connection.
The iTunes Store was the first true alternative to downloading music
illegally from file-sharing networks, offering a large catalog of songs for
sale from all five of the major record labels including, BMG, EMI, Sony
Music Entertainment, Universal, and Warner.
Apple continually expands the offerings, once mostly limited to music,
in the iTunes Store to many other categories of entertainment. Thanks to
the iTunes Store, Apple is now the top music retailer in the United States,14
online or offline. As of January 2008, the store has sold 4 billion songs,
accounting for more than 70% of worldwide online digital music sales.
For more on iTunes Music Store, see Chapter 4, “Strategies and
Innovations.”
iSight Camera
At WWDC on June 23, 2003, Apple released iSight, a $149 Webcam
especially designed for the use with iChat AV and iMovie. iSight was very
elegantly designed and featured a maximum resolution of 640 × 480 pixels
(24-bit) at 30 fps, built-in microphone, FireWire connection, and a series of
mount kits for attaching it to the open lid of a PowerBook, iMac, or to any
monitor.
Mac OS 10.3
Continuing the theme of marketing new operating systems by their
cat code names, Mac OS X v10.3 Panther was released on October 24, 2003.
120 Apple Inc.
Panther required a G3, G4, or G5 processor and 128MB of RAM and

wouldn’t run on Apple’s beige PowerMac G3s or on Wallstreet (Power-
Book G3s). Apple included several new features in Panther, including a
brushed-metal interface, real-time search engine, and customizable side-
bar in the Finder, Fast User Switching, Exposé, TextEdit compatibility
with Microsoft Word (.doc) documents, updated Xcode developer tools,
enhanced Preview with PDF rendering, and updates to QuickTime.
Apple also included six totally new software applications in Panther:
CoreAudio, Font Book, FileVault, iChat AV, X11, and a new Web browser,
called Safari, that was developed to replace Internet Explorer when the
contract between Apple and Microsoft ended.
Retail
In 2003, Apple expanded its retail operations by opening 22 new
stores for a total of 73. New international Apple retail stores were opened
in Japan, the United Kingdom, Canada, Italy, and Australia.
2004—MAC’S 20TH ANNIVERSARY

The year 2004 marks the 20th anniversary of the Macintosh and in
memory of the event, Steve Jobs began his keynote speech by running the
famous “1984” television commercial.
Hardware
speed-bumps every 9 to 12 months, with some exceptions, and new de-
signs replacing old every two to four years,
iMac
On August 31, 2004, at Apple Expo in Paris, Apple announced a com-
pletely redesigned iMac G5. The pivoting swivel arm and domed base
from the Luxo iMac G4 was replaced with a sleek design that concealed
the computer behind its flat-screen monitor. The iMac wasn’t much larger
than Apple’s Cinema Display flat-screen monitors; with the case extend-
ing a few inches below the bottom of the monitor and only two inches
deep, it could easily be mistaken for a monitor. Optical discs are fed, slot-
loading into a slot on the right side of the bezel. The Apple design team
led by Jonathan Ive had released another design masterpiece.
While not quite as dramatic as previous iMac designs, the new all-in-one
Mac embodied one of Ive’s principal design philosophies—minimalism.
When combined with a wireless AirPort network and a Bluetooth wire-
less keyboard and mouse, the iMac G5 had just one cable protruding from
the rear for power, and even that was subtle. Reaction to the iMac G5 was
mixed; although it was more powerful, critics clearly missed the design
aesthetic of the articulating arm.
The iMac G5 also included a faster memory bus, better graphics,
larger hard drives, and a new audio port that did double duty as an opti-
cal digital audio output. The iMac G5 was initially available with 1.6GHz
or 1.8GHz, 17- or 20-inch monitor, with prices from $1,299 to $1,899.
eMac
In April 2004, Apple speed-bumped the eMac to a 1.25GHz G4 proces-
sor, USB 2.0, increased base RAM, faster memory, faster ATA bus, faster
optical drive, and a faster graphics chip. The low-end model continued to
sell for $799 and the high-end for $999.
Power Mac G5
On June 9, 2004, Apple quietly released revised PowerMac G5s in dual
processor 2.5GHz configurations. Because of the volume of heat generated
by IBM’s PowerPC 950FX processor, the high-end Power Mac G5 featured
a liquid cooling system. Faster graphics cards and optical drives were
added to all models. In October, Apple released a new 1.8GHz configura-
tion with slower front-side PCI buses based upon the iMac G5.
Xserve
On January 6, 2004, at Macworld Expo in San Francisco, Apple intro-
duced the Xserve G5, the most powerful Xserve yet, delivering more than 30
gigaflops of processing power per system—about 60% more than the Pow-
erPC G4-based Xserve. The Xserve G5 featured the same PowerPC G5, 64-
bit processor used in Virginia Tech’s cluster of Power Mac G5s, which was
recognized at the time as being the world’s third-fastest supercomputer.15
Apple also used the event to announce its new Xserve RAID storage
system, a 3U high-availability, rack storage system that delivered multiple
terabytes (TB) of storage capacity, via 14 hot-swappable Ultra-ATA hard-
drive bays. The most significant part of the new RAID was its aggressive
price of just over $3 per gigabyte. With the new Xserve RAID, Apple an-
nounced support for Windows and Linux and industry support from 11
companies including Microsoft, VERITAS, Red Hat, Brocade, and QLogic.
eMac
On April 13, 2004, Apple released a speed-bumped eMac with a
1.25GHz G4 processor, faster system bus, faster ATA bus, faster memory,
faster optical drives, faster graphics and, well, faster USB 2.0.
iBook
In April 2004, Apple speed-bumped the iBook G4 line, adding faster 1.0
and 1.2GHz processors, larger L2 cache, more on-board RAM, and a faster
122 Apple Inc.
combo drive. In October 2004, Apple speed-bumped the iBook G4 again to

include faster 1.2 and 1.33GHz processors, and the high-end model got a
slot-loading SuperDrive and the low-end model got a price cut to $999.
PowerBook G4 Family
In April 2004, Apple speed-bumped the PowerBook G4 family—the
name sometimes used for the unified aluminum PowerBook product line
that was initially released on a staggered schedule. Now all three Power-
Book G4 sizes (12-, 15-, and 17-inch) were updated at the same time. This
round of revisions added faster graphics, faster optical drives, and AirPort
Extreme standard.
iPod Mini
nounced the 4GB iPod mini, which was the size of a business card and
came in five colors (silver, gold, pink, blue, or green) and sold for $249.
The iPod mini was Apple’s first departure from the size and shape of the
original iPod, which was about the size of a deck of cards. In addition to
the new form-factor, the iPod mini introduced a new “Click Wheel,” which
grafted the four hardware control buttons for play/pause, menu, skip for-
ward, and skip backward onto the scroll wheel. This new input method
would be carried through every iPod design until the iPod touch.
The iPod was miniaturized because Apple switched from its usual
1.8-inch hard drive to a smaller 0.8-inch hard drive. At its heart was a
Hitachi (formerly IBM) MicroDrive Compact Flash (CF) card/hard drive
that was typically used by professional digital photographers in high-end
digital cameras. In fact, stand-alone 4GB MicroDrives were selling for
around $500 at the time, and photographers were known to buy the iPod
mini (at only $249) just to harvest the MicroDrive inside. The trade-off in
size also meant a trade-off in capacity, and the iPod mini was limited to
only 4GB of storage.
The iPod mini was an immediate hit because its price was a lower
barrier to entry and more affordable to students and parents. Its five
color choices gave customers a choice other than white for the first time.
The pink iPod mini was purchased in droves by girls, teens, and grown
women alike and was frequently sold out but available for a premium on
online auction sites during peak holiday seasons.
For more on the iPod as a fashion statement, see Chapter 5, “Im-
pact on Society.”
Fourth-generation iPod
On July 19, 2004, Steve Jobs introduced the fourth-generation iPod
that was thinner, lighter, and less expensive. The new iPod came in 20GB
($299) and 40GB ($399) capacities and featured the iPod mini’s Click
Wheel. Improved battery life was achieved when Apple switched to the
PortalPlayer PP5020 system-on-a-chip from the power-hungry PP5002
used in previous iPods.
iPod Photo and U2 Special Edition

On October 26, 2004, Apple announced the iPod photo, which was the
first iPod with a color screen. It also featured new software that allowed it
to synchronize and display photos from a computer. iPod photo held up
to 25,000 digital photos alongside a music library and let users play back
photo slideshows with music on the iPod itself. A new TV-out port added
to the iPod dock allowed slideshows to be played on big-screen televi-
sions and projectors.
Apple also released its first “special edition” iPod in 2004 to celebrate
the band U2. The U2 iPod ($349) was mostly the same as the fourth-
generation iPod released in July, except that it was black with a red click
wheel (the colors of U2’s How to Dismantle an Atomic Bomb album) and had
the band’s autographs engraved on the rear. It also included a gift certifi-
cate for $50 off the price of The Complete U2, a special Digital Box Set from
iTunes, featuring more than 400 U2 tracks. The Complete U2 was available
on iTunes in October for $149.
AirPort Express
On June 7, 2004, at D: All Things D conference in San Diego, Steve
Jobs announced AirPort Express, a supercompact AirPort base station
with support for AirTunes that initially sold for $129. The AirPort Express,
just a little larger than a PowerBook AC adapter, was snapped up by two
groups of customers. The first was travelers who liked the convenience
of having Wi-Fi wireless access but didn’t like to pack the larger, original
AirPort base station. The second was people that liked to play their iTunes
music on their home stereo speakers but didn’t like to have to plug into
their computer each time. AirTunes required version iTunes 4.6.
For more on AirPort Express and AirTunes, see Chapter 4, “Strate-

gies and Innovations.”
Monitors
On June 28, 2004, Apple released completely redesigned Apple Cin-
ema Display monitors clad in aluminum to match the Power Mac G5
tower. The new monitors are available in 20-, 23-, and 30-inch sizes and
feature a DVI connection, making them compatible with Windows PCs.
The new flagship in the series, a massive 30-inch model, boasts a native
resolution of up to 2560 × 1600 but requires a special graphics card with a
dual-link DVI port to drive it. The 30-inch monitor sold for a whopping
$3,299 initially, plus $599 for the graphics card, much more than most
124 Apple Inc.
people’s entire computer setup. The price of the 30-inch Cinema Display
was later reduced to $1,799 to be more competitive.
Software
A new consumer audio application called GarageBand was announced
during Steve Jobs’s keynote address at Macworld Expo in San Francisco
on January 6, 2004; John Mayer assisted with its demonstration. Jobs also
announced iLife ’04 ($49), with new versions of iPhoto, iMovie, iDVD, and
the new GarageBand application.
Retail
Apple opened 29 stores in 2004 for a total of 101, including flagship
stores in San Francisco, London, and Osaka, Japan.
iTunes
On July 12, 2004, Apple announced that more than 100 million songs
were downloaded from the iTunes Music Store, making it by far the most
successful legal music download service.
For more on iTunes, see Chapter 4, “Strategies and Innovations.”
2005—MAC MINI AND THE SWITCH TO INTEL

Hardware
speed-bumps every 9 to 12 months with some exceptions and new designs
replacing old every two to four years,
Mac Mini
nounced the most affordable and most compact Mac ever—the Mac mini.
Starting at just $499 with a 1.25GHz PowerPC G4 processor, the Mac mini
(with a nod to the iPod with the same name) had a very low barrier to
entry to the Mac platform.
The Mac mini is quite small for a desktop computer, measuring only
6.5 inches wide, 6.5 inches long, and 2 inches tall. It weighs 2.9 pounds
and comes with an external power supply that is almost half the size of
the computer.
The Mac mini was an excellent low-cost machine, but also a perfect
alternative for Windows users that wanted to switch to the Mac platform.
The Mac mini came without a monitor or accessories and could easily be
plugged in place of a PC it was replacing. Apple promoted the Mac mini
as the perfect Mac for anyone looking to get started with Mac OS X and
iLife ’05, Apple’s software suite for managing digital photo, music, editing
movies, and creating music.
In July 2005, Apple doubled the standard RAM (to 512MB) across the
Mac mini line and added a SuperDrive to the high-end model. In late Sep-
tember, Apple silently updated the Mac mini with faster 1.33 or 1.5GHz
processors, faster SuperDrive, faster hard drives, Bluetooth 2.0+EDR, and
better graphics.
iMac G5
In May 2005, Apple speed-bumped iMac G5, making AirPort Extreme,
Bluetooth, and 512MB of RAM (the minimum required for Mac OS X 10.4
Tiger) standard on all models. In October 2005, Apple added an integrated
iSight camera to the iMac G5, making it the first Mac with a built-in cam-
era. In addition, Apple made the case lighter and slimmer and included a
faster processor, graphics processor, bus, and memory.
The new iMac G5 revision also included a remote control and Apple’s
new Front Row software, which allowed the computer to function as a
home media center. The iMac G5 also got a price drop to $1,299 (17-inch)
and $1,699 (20-inch).
eMac
In April 2005, Apple speed-bumped the eMac with a 1.42GHz G4 pro-
cessor, increasing the base RAM, adding a faster dual-layer SuperDrive on
the high-end model, and including larger hard drives and faster graphics
hips.
Power Mac G5
On April 27, 2005, the Power Mac G5 got a speed-bump in all the usual
areas: processor, RAM, hard drive, and better graphics processor, which
added support for driving Apple’s new 30-inch Cinema HD Display.
On October 12, 2005, Apple bumped the Power Mac G5 to include
dual-core PowerPC G5 processors, the last professional Mac desktop to
use PowerPC processors. It also included faster bus and memory speeds,
larger hard drives on the low- and middle-end models, better graphics
cards, and PCI Express expansion slots. It was available in three configu-
rations: the 2.0GHz model was $1,999, the 2.3GHz model was $2,499, and
the 2 × 2.5 GHz model, with four processor cores, was $3,299.
Xserve
On January 4, 2005, Apple speed-bumped the Xserve to dual 2.3GHz
PowerPC G5 processors with more than 35 gigaflops of processing power
and up to 9.2GBps of bandwidth per processor and up to three 400GB
drives for a total of 1.2TB of hot-plug storage. Xserve G5 configurations
start at $2,999.
126 Apple Inc.
iBook G4
In July 2005, Apple speed-bumped the iBook G4, making AirPort Ex-
treme, Bluetooth, and 512MB of RAM (the minimum required to run Mac
OS X 10.4 Tiger) standard on all models. Apple also simplified the product
line from three configurations to two.
PowerBook G4
On January 31, 2005, Apple speed-bumped the PowerBook G4 to 1.5
and 1.67GHz processors, adding faster hard drives and a faster 8x Super-
Drive. On October 19, 2005, they were bumped with higher-resolution dis-
plays, up to one hour more battery life on the 15- and 17-inch models, and
SuperDrives in all models. The 15- and 17-inch configurations got updated
8x SuperDrives with double-layer support (DVD+R DL/DVD±RW/CD-
RW). Double-layer recordable discs are a derivative of DVD-R that can
store up to 8.5GB of data.
iPod
In 2005, Apple unleashed a torrent of new iPods reminiscent of the ramp-
up of new Mac releases from 1991–1995. The iPod was beginning a stage of
rapid growth and Apple was determined to capitalize on it and maintain its
market lead in both digital music hardware and software sales.
iPod Shuffle
At Macworld Expo in San Francisco on January 11, 2005, Apple did a
complete about-face and announced its first flash-based iPod—the iPod
shuffle. After publicly belittling flash-based players as “throw away” de-
vices, due to their limited capacity, Apple was now ready to turn its sights
on the low end of the music player market—the only music player market
it had yet to conquer.
The shuffle looked unlike any other iPod before it. It was the first to
do away with the expensive display, hence the name shuffle, which Apple
marketed as a new way to listen to your music collection. It dispensed
with the usual dock connector in exchange for a male USB connector (that
allowed it to double as a flash drive), and dropped the click wheel for
regular buttons.
The 512MB shuffle sold for $99 and a 1GB model sold for $149. In
June 2005, the 1GB model was dropped to $129, and in February 2006, the
prices were cut to $69 and $99.
For more on the iPod as a fashion statement, see Chapter 5,
iPod Mini
Released more than a year after the original iPod mini, the second-
generation iPod mini was announced on February 22, 2005, with modest
changes. The new mini came in a larger 6GB ($249) capacity while the
original 4GB ($199) model was retained with a price drop. It came in
four brighter colors (the less popular gold was dropped), had longer bat-
tery life, and the lettering on the click wheel was changed to match the
body color.
iPod Color
While Apple was busy announcing the iPod shuffle and revving the
mini, it didn’t neglect the original iPod. On June 28, 2005, Apple merged
the iPod and the iPod photo into one unified product line simply called
the iPod. The new full-sized iPod was upgraded with a color screen and in-
cluded all the functionality of the iPod photo. Due to its lack of physi-
cal changes, other than the color screen, people still called this iPod the
fourth-generation model. Apple dropped the 30 and 40GB configurations
and offered only a 20GB ($299) and 60GB ($399) option.
iPod Nano
On September 7, 2005, Apple did the unthinkable and dropped its
most popular iPod line, the iPod mini, and replaced it with a totally new
design. The brand-new iPod nano was available in black or white and
used flash memory. It came in three capacities, 2 ($199) and 4GB ($249)
capacities (with a 1GB to follow later) and had a small color screen for
picture viewing.
The move from iPod mini to nano was risky because Apple was
discontinuing a product that consumers loved and replacing it with
something untested that cost more. Many believe that the move to a flash-
based iPod was necessary because Apple couldn’t get reliable quantities
of the more expensive Compact Flash (CF) MicroDrives that were in the
iPod mini.
The iTunes Phone

On September 7, 2005, Apple and Motorola released the ROKR E1, the
first mobile phone to use iTunes. However, the announcement was buried
in the iPod nano announcement and given less attention in the press con-
ference than the nano. Jobs was reported to be unhappy with the ROKR
and felt that it had too many compromises. ROKR could only hold up to
100 songs, which in the era of the iPod, was perceived as too little, and
it wasn’t designed by the Apple design team, regarded as one of the top
technology designers in the world.
iPod Fifth Generation

And if that weren’t enough iPods, on October 12, 2005, Apple released
an entirely new fifth-generation iPod with a larger 2.5-inch, 320 × 240,
128 Apple Inc.
16-bit color screen that could display album artwork, photos, and play
music videos, video Podcasts, movies, and television shows. The iPod
video (as it was known) could play MPEG-4 and H.264 videos in resolu-
tions up to 480 × 480 pixels on an external TV via an A/V cable acces-
sory that plugs into the headphone mini jack. Videos purchased from the
iTunes Store were limited to 320 × 240 resolution.
Mighty Mouse
After years of criticism for not having a multiple button mouse, Apple
answered with the ultimate reply: a no-button mouse. While not com-
pletely buttonless, the Mighty Mouse has no visible buttons. The $49 Mighty
Mouse actually comes with four independently programmable buttons: a
left button, a right button, a clickable scroll ball, and side squeeze buttons
hidden under its touch-sensitive top shell. An innovative Scroll Ball lets
users scroll in any direction, even diagonally.
Mighty Mouse is the first multibutton mouse Apple has ever sold
since beginning with the Lisa more than 22 years earlier. The single-
button mouse has been a point of contention between Apple and its users
for decades. Apple thought that one mouse button was adequate and
simpler to use, but as Windows and other operating systems standard-
ized on two-button mice, it became a criticism of Apple. When Apple
added contextual pop-up menus, which reveal a list of options depend-
ing on what is clicked on, to OS 8 in July 1997, the single mouse criticism
came to a head.
The problem was that invoking the new contextual menu feature
required the user to hold down the Control key on the keyboard while
clicking. This was perceived as slower than potentially clicking on a sec-
ond mouse button. Later, Apple made contextual menus accessible by
having users click and hold the mouse button, somewhat diffusing the
debate.
The Mighty Mouse is still controversial today. Despite answering its
critics with not two, but four, buttons, the Mighty Mouse’s design caused
complaints. The Mighty Mouse can sense both right and left clicks, but it’s
impossible to press both buttons simultaneously. Moreover, right clicks
cannot be made while the user’s finger is on the left touch sensor.16 An-
other frequent complaint is that the Scroll Ball is too small or that it gets
clogged too easily with dirt and isn’t removable.
Apple uses the name Mighty Mouse under license from CBS Opera-
tions, owner of the 1940s cartoon character. In May 2008, Apple and CBS
were named in a trademark infringement suit brought by Man & Ma-
chines over the use of the name Mighty Mouse. The company claims that it
began selling waterproof and chemical-resistant computer mice under the
Mighty Mouse brand name in 2004—a year before Apple announced its
mouse under the same name.
On October 12, 2005, Apple began shipping Mighty Mouse as the de-
fault offering with every iMac, then on October 19, 2005, Apple included a
Mighty Mouse with every PowerMac G5.
Mac OS 10.4—Tiger
Apple “unleashed” Mac OS 10.4 Tiger, the fifth major update to the
desktop and server operating system, on April 29, 2005, with more than
200 new features. New features in Tiger included Automator, Core Image,
Core Video, Dashboard, QuickTime 7, Safari 2, Smart Folders, Spotlight,
and VoiceOver.
Mac OS X version 10.4 was available in separate PowerPC and Intel
editions; there was no universal version of the operating system. Apple
shipped the PowerPC version with PowerPC-based Macs and the Intel
version with Intel Macs. The boxed retail version of Tiger sold in stores
was the PowerPC version. Mac OS 10.4 Tiger also dropped support for
older Macs that did not have a FireWire port and required a PowerPC G3,
G4, or G5 with a minimum 333MHz processor.
The iPhone and Apple TV use a modified version of Tiger with differ-
ent user interfaces and a custom set of applications.
Six weeks after its official release, Apple had delivered 2 million cop-
ies of Tiger, representing 16% of all Mac OS X users. Apple claimed that
Tiger was the most successful Apple OS release in the company’s history.
At the Worldwide Developers Conference on June 11, 2007, Apple CEO
Steve Jobs announced that out of the 22 million Mac OS X users, more than
67% were using Tiger.17
Intel Migration
In his keynote address at Apple’s WWDC on June 6, 2005, Steve Jobs
officially announced that after years of producing machines based on the
PowerPC processor from Motorola and IBM, Apple would begin a com-
panywide shift to Intel-based Macs beginning in 2006.18 Jobs admitted to
secretly building versions of Mac OS X for both PowerPC and Intel proces-
sors over the past five years.19 Rumors had long circulated that Apple was
testing a version of Mac OS X for Intel x86 processors because of its roots
in NeXT’s OPENSTEP, which was available for many platforms. Jobs pub-
licly stated that the transition to Intel processors would not be completed
until the end of 2007.
For more on the migration to Intel processors, see Chapter 4,

“Strategies and Innovations.”
Retail
Apple opened 34 stores in 2005 for a total of 135 and dramatically
increased its international presence with one store in Canada, three in the
United Kingdom, and four in Japan.
130 Apple Inc.
2006—INTEL TRANSITION COMPLETE

Hardware
The year 2006 was a major year for Apple hardware; it was the first year
that Macs began shipping with Intel CPUs, after Apple had announced a
switch to Intel six months prior at WWDC. The partnership with Intel al-
lowed Apple to take advantage of all the latest Intel chip designs and be
on par with Windows-based computers.
iMac Core Duo

On January 10, 2006, at Macworld Expo in San Francisco, Steve Jobs
announced new iMacs and MacBook Pros running on the new Intel Core
Duo processor. Intel’s Core Duo processor had two processor cores on a
single chip, making it up to twice as fast as its predecessor when running
Intel-compiled code according to tests run by Apple using SPEC. The new
iMac would be the first Macintosh to use an Intel CPU but retained the
same white polycarbonate case design, features, and price as the iMac G5
it replaced.
The iMac Core Duo featured a faster bus, faster memory, better graph-
ics, and a mini-DVI port, which allowed monitor spanning for the first time
on a consumer Mac. It came in two configurations: the 17-inch 1.83GHz
cost $1,299, and the 20-inch 2.0GHz cost $1,699.
In July 2006, Apple released a special $899 iMac Core Duo configura-
tion for the education market as a replacement for the eMac. To keep costs
down, the teacher’s iMac didn’t include on-board Bluetooth and shared a
lot of the components of the Mac mini, including its less-expensive Intel
GMA950 graphics chipset and a smaller 80GB hard drive.
On September 6, 2006, Apple speed-bumped the previous Intel iMacs
to a Core 2 Duo chip with lower prices. Apple also added a new 24-inch
configuration with a resolution of 1920 × 1200 (WUXGA), making it the
first iMac to be able to display 1080 HD content in its full resolution.
The new iMac, although in the same enclosure, could be removed from
its stand and mounted on a wall (for example) because it shipped with
a VESA Flat Display Mounting Interface. All the new Core 2 Duo iMacs
included an integrated iSight camera and an 802.11n draft wireless card
(except the 17-inch 1.83GHz model)—a first on the Mac.
MacBook Pro Core Duo

When it introduced the first Intel-based notebook computer, Apple
also decided to change its name. The new MacBook Pro was a departure
from the venerable PowerBook brand, which started in 1991, and reflected
a change in corporate branding at Apple to include the word Mac in its
product names. Although it had a new name, the MacBook Pro shipped
in the same aluminum enclosure that debuted with the PowerBook G4 in
January 2003. The new notebook naming convention left customers to

speculate that the iBook replacement would be called MacBook, and they
were right. Initially customers found the term awkward but eventually
adapted to it.
The MacBook Pro debuted on January 10, 2006, at Macworld Expo
in San Francisco, replacing the PowerBook G4 as Apple’s professional
notebook computer. The new MacBook Pro 15-inch shipped with a 1.67
or 1.83GHz Intel Core Duo processor and featured Apple’s new MagSafe
magnetic power connector, which was designed to easily break away if
the cord was accidentally tripped over while charging.
Reflecting an Apple trend toward cameras, the new MacBook Pro also
included a built-in iSight video camera for video conferencing and the
Apple Remote and Front Row media center software. The 17-inch Mac-
Book Pro followed in April 24, 2006, with a 2.16GHz Intel Core Duo pro-
cessor and all the new features found in the 15-inch model. Much to the
dismay of commuters everywhere, the popular 12-inch PowerBook didn’t
make the transition to the MacBook Pro and was dropped completely.
MacBook Core Duo

The MacBook was the successor to the iBook, inheriting the Apple
consumer notebook market. Announced on May 15, 2006, it also got a
name change to reflect Apple’s desire to use Mac in the name, but unlike
the professional MacBook Pro, the MacBook was less expensive and came
with a slower, built-in video, which paled in comparison to the MacBook
Pro’s dedicated video processor. The MacBook replaced the existing 12-
and 14-inch iBooks, completing the transition of Apple’s notebook com-
puters to Intel processors.
The MacBook shipped in a totally redesigned polycarbonate case and
was available in either white or black (for a $200 premium) built around
a 13.3-inch “glossy” LCD panel. The MacBook included many of the
enhancements from the MacBook Pro: a dual core Intel Core Duo pro-
cessor, faster bus speed, faster and larger Serial-ATA (SATS) hard drive,
integrated iSight camera, MagSafe power adaptor, and a bundled remote
control with Apple’s Front Row software.
MacBook also featured some new design elements not previously
found on Apple’s consumer notebooks: optical audio in/out, a DVI port
capable of monitor-spanning, and gigabit Ethernet. Two features unique
to the MacBook were a magnetic latching system with no moving parts,
and a redesigned recessed keyboard.
Mac Mini
The Mac mini was speed-bumped to Intel processors in February 2006,
the low-end got a 1.5 Core Solo processor ($599) and the high-end ($799)
got a 1.66GHz Core Duo processor. In September, the Mac mini received
132 Apple Inc.
a silent speed-bump, this time to include Intel Core 2 Duo processors in

both models, 1.66GHz on the low-end and 1.83GHz on the high-end. Both
got larger hard drives and 1GB of standard RAM. Prices and other speci-
fications were unchanged.
Mac Pro
The last Mac to receive the Intel treatment was Apple’s desktop tower.
To reflect the switch from PowerPC chips to Intel and to continue the re-
branding strategy started with the MacBook Pro, the new tower was called
the Mac Pro. Again, like the MacBook Pro before it, initial reaction to the
name change was tepid, but not entirely unexpected.
The Mac Pro was significant because it was the last machine to transi-
tion to Intel processors. At its announcement on August 7, 2006, at WWDC,
Steve Jobs proclaimed, “Apple has successfully completed the transition
to using Intel processors in just seven months—210 days to be exact.”
Xserve
The Intel version of the Xserve was announced in August 2006 but
didn’t ship until November and was the first new Xserve in more than
two years, replacing the Xserve G5. The new Xserve shipped with two
dual-core Intel Xeon 5100 processors. Unlike previous Xserves, it shipped
in a single configuration with a base price of $2,999. Configure-to-Order
(CTO) options included an 8x double-layer SuperDrive, up to 2.2TB of
storage via three hot-swappable bays, 32GB of RAM via eight slots, a Fibre
Channel PCI Express, Dual-Channel Ultra 320 SCSI PCI-X cards, and an
Xserve RAID card.
iPod
Apple had a lot on its plate in 2006; in addition to completing the tran-
sition to Intel processors, it also released a whopping six new iPods.
iPod Fifth Generation and U2 Special Edition

On June 6, 2006, Apple reintroduced the iPod U2 Special Edition at
$329. The new version had the same features as the 30GB fifth-generation
iPod, except that it had a black metal back. The new U2 iPod included
an iTunes Store coupon that could be redeemed for a 30-minute U2 video.
In September 2006, Apple dropped the price of the U2 Special Edition to
$279 and upgraded the 60GB iPod to 80GB.
iPod Nano (Second Generation)

Announced in September 2006, the second-generation iPod nano
was a throwback to the iPod mini it replaced. It was redesigned in an
extruded aluminum tube and was available in five colors, like the iPod
mini. Aside from the redesigned case and increased 8GB capacity, the sec-
ond-generation iPod nano was similar to the previous iPod nano. It came
in three models: 2GB ($149) was available in silver; 4GB ($199) was avail-
able in silver, blue, green, or pink; and a high-end 8GB ($249) model was
available in black.
iPod Shuffle (Second Generation)

Also announced in September 2006, the second-generation iPod shuf-
fle was even smaller than the original iPod shuffle. A 1GB configuration
was sold in silver for $79. The new shuffle included an integrated clip
and required a special, smaller dock to connect rather than Apple’s usual
30-pin dock connector. The new iPod shuffle was heavily marketed as a
fashion accessory, especially in later models.
Mighty Mouse
On July 25, 2006, Apple released a wireless Mighty Mouse with laser
tracking (as opposed to optical in the wired version) that uses Bluetooth
2.0 for $69. The updated version held two AA batteries but only required
one to operate. On August 7, 2007, Apple made a subtle change to the
Mighty Mouse, changing the side buttons to white.
Mac OS 10.4.4 for Intel

On January 10, 2006, Apple released the Mac OS 10.4.4 update to Tiger
to work with the first Intel-based Macs. This special build of Tiger was de-
signed to run on Intel and PowerPC machines, except that the Intel release
dropped support for the Classic environment. Mac OS 10.4.4 was built
separately for the two different processors. The PowerPC and Intel ver-
sions of 10.4.4 shipped as two separate installers, and you couldn’t install
the PowerPC version of the OS onto an Intel-based Mac.
Retail
Apple opened 35 stores in 2006 for a total of 170 and again increased
its international presence with three new stores in Canada, two in the
United Kingdom, and one in Japan.
2007—IPHONE, APPLE TV, ALL NEW IPODS

introduced the revolutionary iPhone; revealed the Apple TV, which
was originally called by its code name iTV; and announced that Apple
Computer Inc. had officially dropped Computer from its corporate name,
switching to just Apple Inc., reflecting the company’s ongoing expansion
134 Apple Inc.
into the consumer electronics market in addition to its traditional focus on

personal computers.
For more on iPhone and Apple TV, see Chapter 4, “Strategies and
Innovations.”
Hardware
After completing its ambitious transition to Intel processors in all
Macs in 2006, Apple continued its tradition of updating most of its hard-
ware with speed-bumps every 9 to 12 months with some exceptions and
new designs replacing old every two to four years.
Apple TV
nounced the Apple TV, a new $299 40GB set-top appliance that was first
announced at a special press event in San Francisco on September 12, 2006.
Apple TV was designed to play iTunes content (music, television shows,
movies, etc.) from any computer (Mac or Windows) connected to the local
network and could be connected to any widescreen TV with either HDMI
or component video.
Released two months later, the Apple TV was Apple’s first official
foray into the set-top market (although prototypes of a never-released
PPC 603-based set-top box from the late 1990s surface from time to time).
Apple TV can be a media playback device or a digital media receiver. It
runs a closed, custom build of Mac OS 10.4.7 that allows it to stream audio
and video from any iTunes-equipped computer on the local network. It
uses a Front Row–style software application to play iTunes content from
any computer in a household. The first Apple TV could also play movie
trailers from the Apple Web site and select YouTube videos that were reen-
coded in h.264 format. The 40GB model sold for $299 and a second version
with a larger 160GB hard disk started shipping on May 31, 2007.
While definitely a revolutionary device for Apple, critics had three
issues with the Apple TV:
1. Apple TV can only stream content that’s in your iTunes library
and photos from iPhoto. This means that other content (including
DVDs, DiVX, .AVI, .WMV, etc.) will not be able to be streamed to
Apple TV—unless you convert them to something that plays in
iTunes first. This was a deal-breaker for many people. Also, users
of Apple’s professional photo application Aperture weren’t able
to sync their libraries to Apple TV.
2. Apple TV only connects to TVs that have either HDMI (digital)
or component video (analog) inputs. Component video inputs
are (R)ed (G)reen and (B)lue and are not to be confused with
the yellow RCA cable, which is composite video (also known as
S-video). RGB was never popular in North America for consumer
electronics, as S-video was considered good enough. This effec-

tively limits the Apple TV to consumers that own a relatively
modern TV set.
3. Apple TV requires a widescreen set. According to Apple’s system
requirements, you need: enhanced-definition or high-definition
widescreen TVs capable of 1080i 60/50Hz, 720p 60/50Hz, 576p
50Hz (PAL format), or 480p 60Hz. While many people are up-
grading to widescreen sets, a large percentage of the TV-owning
public didn’t own either an Enhanced Definition (ED) or High
Definition (HD) set, excluding them from using Apple TV.20
iPhone
At Macworld Expo in January 2007, Apple announced one of its most
significant products since the iPod and arguably since the Mac and the
original Apple I: iPhone. During his keynote address, Steve Jobs told at-
tendees that Apple was announcing three revolutionary products. Then,
interrupting the cheers, he said that all three were actually one product:
iPhone. The caption on his slide read: “Apple reinvents the phone.”
iPhone was Apple’s first mobile phone and marked its entry into an
entirely new market. Its design was simple and very much in the Jona-
than Ive ethos. It was entirely flat, all screen, and only had one button
on the front. Unlike smart phones and PDAs before it, iPhone didn’t re-
quire a stylus. “Who wants a stylus?” Jobs asked the crowd facetiously.
His reasoning was that the best pointing device in the world is already
attached to your hand—your finger. Jobs went on to compare the iPhone’s
touch screen to other revolutionary interfaces, including the iPod and
the mouse.
iPhone is controlled using a variety of one- and two-finger gestures
(called Multi-Touch) and includes a custom version of Apple’s Safari Web
browser that allows full browsing of any Web page. The iPod functional-
ity was enhanced to take advantage of the 3.5-inch screen and featured
CoverFlow, which was borrowed from iTunes. iPhone also featured dedi-
cated YouTube and Google Maps applications and an iChat-like SMS text-
messaging interface (although iChat itself was missing). iPhone also came
with the standard suite of smart phone applications such as a calendar
and address book that automatically synced with their desktop equiva-
lents through iTunes. iPhone shipped on June 29, 2007, and was sold in
two configurations: a 4GB model sold for $499, and an 8GB model for
$599. In September 2007, Apple dropped the price of the 8GB iPhone from
$599 to $399 and later issued a $100 credit for the Apple store to people
who purchased the original iPhone.
On June 11, 2007, at the WWDC, Apple announced that iPhone would
support third-party applications via the mobile Safari Web browser on
the device. This was viewed by many as a compromise and was clearly
announced as a result of criticism that iPhone couldn’t run third-party
136 Apple Inc.
software. As of June 2008, the iPhone has access to hundreds of applica-

tions via the App Store.
For more on iPhone, see Chapter 4, “Strategies and Innovations.”
iPod
On September 5, 2007, at an event called “The Beat Goes On,” Apple
revamped the entire iPod lineup with three new form-factors.
iPod Touch
Building on the success of the iPhone, the iPod touch was essentially
an iPhone without the phone. People had been clamoring for a touch
screen iPod even before the iPhone was announced, but many didn’t want
a mobile phone because (1) they were locked in a contract with an existing
carrier, or (2) they didn’t want, couldn’t afford, or were too young to buy
a mobile phone. The iPhone touch addressed this market perfectly.
The iPod touch inherited the Multi-Touch screen, graphical user in-
terface, and Cover Flow from the iPhone and shipped with 8, 16, or 32GB
of flash memory. The touch was the first iPod that had wireless access to
the iTunes Store, providing the ability to purchase music “Over the Air”
(OTA) from a Wi-Fi connection. As of June 2008, the iPod touch also has
access to the App Store.21
iPod Nano Third Generation

Apple updated the nano again with its third major redesign on Sep-
tember 5, 2007. The third-generation nano featured a 2-inch QVGA (320 ×
240) screen and a shorter, wider, heavier design and new colors. The iPod
nano 3G included a revamped user interface with more graphics through-
out, Cover Flow, video playback, and support for iPod Games. The nano
What Is Product Red?

Product Red is a charitable initiative begun by U2’s frontman Bono
and Bobby Shriver of DATA (Debt, AIDS, Trade in Africa), to raise
money for the Global Fund to Fight AIDS, Tuberculosis and Malaria.
Bobby Shriver is the CEO and Bono is the public spokesperson for
the Product Red brand. Participating companies create products with
the Product Red logo and/or color (like the iPod nano and shuffle)
and return a percentage of the profit to the Global Fund. In addition
to Apple, the Product Red brand is licensed to American Express,
Converse, Motorola, The Gap, Emporio Armani, Hallmark, Microsoft,
and Dell.
was announced in a 4GB version for $149 in silver, and an 8GB version for
$199 in silver, turquoise, mint green, black, and Product Red. The battery
lasts for approximately 24 hours on audio playback and approximately
five hours on video playback.
iPod Classic
At the same event on September 5, 2007, Apple retired the iconic, orig-
inal white iPod design and launched its replacement, the sixth-generation
iPod classic in 80 and 160GB sizes. The iPod classic is the only iPod to re-
tain the original iPod’s 1.8-inch internal hard drive, as all the other models
became flash-based. The classic did away with the old iPod’s polycarbon-
ate front in favor of an aluminum skin that came in silver or black, a mate-
rial now present on almost all of Apple’s products.
The iPod classic featured improved battery life with up to 40 hours of
music playback and up to 7 hours of video playback. The new iPod also
featured an overhauled interface incorporating more graphics, especially
on the right half of the screen and Cover Flow.
Mac Mini
The Mac mini was speed-bumped in August 2007 to include the Intel
Core 2 Duo processor, larger hard drives, and 1GB of standard RAM.
Prices and other specifications remained the same.
iMac
On August 7, 2007, the iMac got a redesign that was a clear reference
to the iPhone, inheriting the aluminum skin first donned by the MacBook
Pro notebook and the Mac Pro tower. Apple touted the switch to alumi-
num design materials as being ecologically friendly because aluminum
and glass are “highly recyclable.” The new iMac shipped in 20- and 24-
inch configurations with 2.0 to 2.8GHz Core 2 Duo processors from $1,199
to $2,299. Under the hood, though, the new iMac was really just a speed-
bump of the previous model.
Aluminum Keyboard
The new iMac included a new, ultrathin, anodized aluminum key-
board (which sells separately for $49), measuring just 0.33 inches at its
front edge. The new keyboard includes special function keys for one-touch
control of Mac features like iTunes playback and volume, Dashboard and
Spaces. Some of the differences between the new keyboard and the one it
replaces include:
• Volume controls were moved from above the numeric keypad to

the F10, F11, and F12 keys.
• The Eject key is now directly above the delete key (like it is on
the MacBook).
138 Apple Inc.
• The Help key has been replaced by a Function ( fn) key.

• The Apple logo has been replaced by the word Command—a
boon for support techs everywhere.
• New playback keys (back, play/pause, forward) have been
added to F7, F8, and F9.
• Bright and Dim keys have been added to F1 and F2 (like the
MacBook).
• Expose (F3) and Dashboard (F4) keys have been added.
A wireless, $79 Bluetooth version of the thin keyboard was also re-
leased that lacks a built-in numerical keypad and the additional function
keys available in the wider USB version.
Mac Pro
In April 2007, Apple speed-bumped the Mac Pro with a pair of 3GHz
quad-core Intel Xeon 5100 “Woodcrest” processors, less than a month after
a Web site error leaked the new configuration. The basic Mac Pro costs
$2,200 but if you upgrade to two quad-core chips, the price almost dou-
bles to $3,997; adding 16GB RAM increases the price to $4,499.
MacBook
In May 2007, Apple speed-bumped the MacBook to faster 2.0 and
2.16GHz Intel Core 2 Duo processors, AirPort 802.11n, 1GB RAM standard,
and larger hard drives. In November, the MacBook was revved again to
2.0 or 2.2GHz Intel Santa Rosa processor, a faster 800MHz system bus,
4GB maximum RAM, and a better Intel GMA X3100 graphics processor.
MacBook Pro
In June 2007, Apple released speed-bumped 15- and 17-inch MacBook
Pros with 2.2 and 2.5GHz Intel Core 2 Duo Santa Rosa processors, NVIDIA
GeForce 8600M GT graphics, and LED backlit screens. The new backlit
LED screens were touted as more power efficient and environmentally
friendly because they were mercury-free.
AirPort Extreme
The AirPort Extreme was updated on January 9, 2007, and changed
from a tented-dome form-factor to more of a square, flat box like the Mac
mini and Apple TV. The new AirPort Extreme supported 802.11a/b/g and
draft-n protocols and added two LAN ports for a total of three. A new fea-
ture called AirPort Disk (also called Network Attached Storage or NAS)
enabled owners to connect a USB hard drive to the AirPort Extreme that
then could be mounted and used wireless when connected to that base
station. As with previous AirPort base stations, users can also connect a
USB printer. On August 7, 2007, the AirPort Extreme began shipping with
gigabit (1000BaseT) Ethernet ports. One of the few complaints about the
AirPort Extreme is its lack of an external antenna port.
Mac OS 10.5
Mac OS 10.5 Leopard was released on October 26, 2007, and promoted
as “the largest update of Mac OS X” with more than 300 new features.22
Leopard supports both PowerPC- and Intel x86-based Macintosh comput-
ers, but support for the G3 processor was dropped. A single DVD installer
can be used on all supported Macs. New features include improvements
in Mail, iChat, the Finder, Time Machine, Spaces, Boot Camp, 64-bit, new
security features, and an updated user interface.
Mac OS 10.5 was released later than originally announced by Apple’s
CEO Steve Jobs. In June 2005, Jobs stated that Apple intended to release
Leopard at the end of 2006 or early 2007.23 A year later, Leopard’s launch
date was moved back to “Spring 2007.”24 Then on April 12, 2007, Apple
stated that its release would be delayed until October 2007 because of the
development of the iPhone.25
Retail
Apple opened its 200th store on October 26, 2007, in Gilbert, Arizona,
a little more than six years after opening its first store. Apple opened 33
stores in 2007 for a total of 203, including flagship stores in New York and
Glasgow. In 2007, Apple also opened its first store in Italy in Rome.
2008—MACBOOK AIR
introduced the MacBook Air as the world’s thinnest notebook computer,
Time Capsule for use with the Time Machine backup software in Mac OS
10.5 Leopard, a software update for the iPod touch, iTunes Movie Rentals,
Apple TV Take 2 software, and that the iPhone/iPod touch SDK would be
launching in late February.
MacBook Air
On January 15, 2008, Apple announced MacBook Air, the company’s
first-ever subnotebook and the world’s thinnest notebook. MacBook Air
measures 0.16 inches at its thinnest point and 0.76 inches at its thickest. It
ships with either a 1.6 or 1.8GHz Intel Core 2 Duo processor, 2GB RAM,
80GB 1.8-inch hard drive or optional 64GB Solid State Drive (SSD), 13.3-
inch LED-backlit screen, 802.11n Wi-Fi technology, Bluetooth 2.1, full-size
and backlit keyboard, built-in iSight camera, and a large trackpad with
multi-touch gesture support, allowing users to pinch, rotate, and swipe.
140 Apple Inc.
The MacBook Air was a revolutionary product for Apple, both be-
cause of its tiny size and full-feature set, but also because it was an entirely
new category of notebook, a subnotebook that Apple had never created
before. The MacBook Air was in a category all to itself.
The MacBook Air had to make several compromises to achieve its
record-breaking size, however. It didn’t ship with an optical drive, although
an external USB SuperDrive was offered for $99. The Air only shipped with
a tiny subset of ports on a traditional notebook and didn’t have FireWire. It
also was Apple’s first notebook to ship with a fixed battery, meaning that it
couldn’t be removed and replaced on a long flight, for example.
Either way, the MacBook Air was one of Apple’s most coveted yet
most controversial products of all time.
For more on MacBook Air, see Chapter 4, “Strategies and Inno-

vations.”
Time Capsule
On January 15, 2008, Apple introduced Time Capsule, a backup ap-
pliance resembling the AirPort Extreme 802.11n that automatically backs
up Leopard Macs on the local network. Backups are performed by Time
Machine, which is included in Mac OS 10.5 Leopard.
Time Capsule combines an AirPort Extreme 802.11n base station with
a server grade 500GB or 1TB hard drive. In addition to being used as a
Time Machine repository, Time Capsule can operate as Network Attached
Storage (NAS) that can be used by Macs on the local network with the
proper privileges. Time Capsule comes in two models: a 500GB model for
$299 and a 1TB model for $499.
Apple TV Take 2 and Movie Rentals

At Macworld Expo 2008, Apple announced a significant software up-
date for the Apple TV called Apple TV Take 2 and lowered the price of the
hardware from $299 to $229.
At the All Things D conference on May 30, 2007, Steve Jobs called
Apple TV a hobby, saying, “The reason I call it a hobby is a lot of people
have tried and failed to make it a business. It’s a business that’s hundreds
of thousands of units per year but it hasn’t crested to be millions of units
per year, but I think if we improve things we can crack that.”26
With the Take 2 software update, Apple released what probably
should have been the feature set in the original Apple TV release. Rather
than forcing the device to be tethered to an iTunes computer, the update
gave Apple TV the ability—finally—to purchase and rent movies in High
Definition (HD) and purchase television programs and music directly
over the Internet.
Movie rentals were another first for Apple. The software update al-
lowed users to browse, preview, and rent movies directly from Apple
TV; it even included a recommendation system in rentals, like that found

in Netflix. Apple partnered with all the major movie studios, including
Touchstone, Miramax, Metro, Lions Gate, New Line, Fox, WB, Disney,
Paramount, Universal, Sony/BMG. Apple offered 1,000 movie titles for
rent by the end of February with more than 100 in High Definition (HD)
and 5.1 Dolby Digital surround sound. DVD-quality iTunes movie rentals
cost $2.99 for library titles and $3.99 for new releases. High Definition ver-
sions cost one dollar more.
Once a movie is rented, it starts downloading from the iTunes Store di-
rectly to Apple TV, and users with a fast Internet connection can start view-
ing the movie almost immediately—HD movies take significantly longer to
download. Customers have up to 30 days to start watching their rental, and
once a movie has been started, they have 24 hours to finish it. A movie can
be watched multiple times in the 24-hour period after it has been started.
One unique feature is that purchases (not rentals) downloaded to
Apple TV are automatically synced back to iTunes on the user’s computer
where they can be watched and synced to all modern iPods or iPhone.
Apple TV Take 2 had access to more than 600 television shows, 125,000
audio and video podcasts, 50 million YouTube video streams, 6 million
songs, and 10,000 music videos at launch. Apple continues to add new
content to the iTunes service on a regular basis.
Mac Pro
On January 8, 2008, at Macworld Expo in San Francisco, Apple speed-
bumped the Xserve to 3.2GHz, 8-core Intel Xeon processors. The new Mac
Pro combines two Intel 45 nanometer Quad-Core Xeon processors run-
ning up to 3.2GHz, new graphics, and up to 4TB of internal storage. The
low-end 8-core configuration starts at $2,799.
iPhone
On March 6, 2008, Apple announced iPhone 2.0 software beta and ven-
ture capital firm Kleiner Perkins Caufield & Byers launched a $100 million
fund for iPhone application developers, appropriately called iFund.
On June 9, 2008, at the WWDC in San Francisco, Steve Jobs announced
the second-generation iPhone with 3G networking and iPhone software 2.0.
The new 3G iPhone utilizes AT&T’s HSDPA/HSUPA high-speed data net-
work that is up to four times faster than the previous EDGE network.
Jobs also announced new features in the iPhone 3G, including real
GPS functionality and the iTunes App Store, which offers software appli-
cations that can be purchased or downloaded Over the Air (OTA).
iPod Touch and Nano

On January 15, 2008, Apple announced a $20 software update for the
iPod touch that includes Mail, Maps, Stocks, Notes, and Weather. iPod
142 Apple Inc.
touches shipped after this date include the new applications for free. On
January 22, 2008, Apple released a pink version of the 8GB iPod nano.
iPod Shuffle Second Generation

On February 19, 2008, Apple announced a price drop on the iPod
shuffle to $49 and introduced a new 2GB model for $69.
Mac OS 10.5.3
On May 28, 2008, Apple released 10.5.3, a maintenance release to its
Leopard operating system that was widely anticipated by users due to a
number of problems, mostly with audio applications and hardware, that
users experienced with 10.5.2.
Retail
As of this writing, Apple opened eight new retail stores in 2008 for
a total of 211, and there were at least 28 more that are confirmed (and as
many as 37 more unconfirmed) to be opened by 2011.
Chapter Seven
Macworld Expo
Each January, Mac faithful gather at the Apple lovefest known as Mac-
world Expo. It’s the place where new products are announced, not only
by Apple, but also by every accessory, peripheral, and related product
manufacturer. Many companies attend Macworld Expo hoping that
some of the extra limelight generated by Apple will spill over onto their
products. Even manufacturers that don’t exhibit at the Big Dance (as it
is sometimes called) will release new products during Macworld Expo
in order to capitalize on the attention generated by whatever Apple is
doing.
The event is huge for Apple’s employees, partners, and customers
because it’s the culmination of a 12-month, highly secretive, product de-
velopment cycle since the last Expo. Employees can finally breathe a
sigh of relief after shipping their product; many take extended vacations
as soon as the show is over. Partners are also sworn to secrecy on most
Apple products, so they’re also elated to both ship and finally be able
to talk about their new offerings. Customers get the most worked up
because, unlike employees or partners, they have no idea what to expect
and have to rely on rumors and speculation about what is going to be
announced.
Apple customers and fans flock to the event in San Francisco from
all over the globe. Hotel rooms close to the Moscone Center are sold out
months in advance. User groups and clubs use the week of the event to
hold their own gatherings, and larger vendors throw lavish parties. There’s
an entire party and event circuit, large and small, that begins the minute
the show floor closes and proceeds into the wee hours of the morning.
The party circuit has grown so large that it even has its own unofficial on-
line guide that’s a bible of most attendees. People have proposed and been
married at Macworld Expo.
For more on Apple’s fans, see the “Culture” section in Chapter 3,

“Historical Context.”
144 Apple Inc.
THE KEYNOTE ADDRESS

Apple’s annual Macworld Expo conference kicks off with a keynote
presentation by Steve Jobs that’s more like a rock concert than a technol-
ogy presentation. Tickets to the “Stevenote” are coveted and difficult to
get. They’re only given in advance to people that purchase the most ex-
pensive all-inclusive conference passes, and even the media list is closely
scrutinized.
Depending on the year and the amount of preshow speculation, the
energy level in the building is palpable. Electricity fills the air, fueled by
suspense that’s built up over the past year and the murmur of attend-
ees wondering what new products will come out of the event. Jobs plays
prekeynote music at intolerably high levels from his personal playlist of
favorites, including the Beatles, Dylan, and the Grateful Dead, which fur-
ther builds anticipation.
JOBS THE SHOWMAN

When he eventually takes the stage, Jobs is greeted enthusiastically by
the adoring crowd. Jobs typically wears his iconic uniform for Macworld:
a black mock turtleneck and faded jeans, a dress code that he’s only devi-
ated from a couple of times. At Macworld Expo Tokyo in 2001, Jobs dis-
pensed with his trademark jeans and black turtleneck for a business suit.
The media buzzed. Why the departure? Did he have a big meeting that
day? An interview? Jobs’s change of clothes made more of an impression
than the Dalmatian blue and flower power iMacs he introduced. At Mac-
world Expo Tokyo 2000, Jobs wore bright green Prada shoes that probably
got more attention themselves than other CEOs’ entire presentations.
Even the jaded members of the media who’ve been to all of Jobs’s key-
notes can’t help but get swept up in the excitement. Jobs uses a methodical
approach in his keynote presentations, beginning with a relatively benign
recap of the past year that includes sales figures, milestones, and high-
lights. Then come the product announcements. Jobs likes to start small
and work his way up to the big stuff. He’ll usually begin with software,
then speed-bumps to existing models, and finally, anything that’s brand
new or earth-shattering.
The entire time Jobs peppers his presentation with product demon-
strations by top Apple executives. He also brings up the top brass from
companies making significant announcements at the show and gives
them a few minutes to speak. They usually speak in glowing terms about
Apple and its new products while Jobs gets to rest his voice for a few min-
utes. Jobs plays his latest television commercials for the audience, which,
in addition to giving him a break, provide valuable focus group testing.
Imagine, for a second, a keynote address—with commercials. No other
company could pull that off.
Macworld Expo 145
As he works his way through the winding, but carefully choreo-

graphed, keynote, he builds anticipation to a final and dramatic crescendo.
At a concert, it would be the encore. After the bulk of the presentation,
when it appears that he’s finished, Jobs is famous for turning to the crowd
to tell them that he has “One more thing.” That one thing is usually the
most exciting announcement of the entire keynote address.
Chapter Eight
Apple Leadership
There have been only six CEOs at the helm of Apple, and each left his own
unique mark on the company—for better or for worse. Following are the
CEOs and some of their notable accomplishments.
CEOS
1. 1977–1981: Michael “Scotty” Scott
2. 1981–1983: A. C. “Mike” Markkula
3. 1983–1993: John Sculley
4. 1993–1996: Michael Spindler
5. 1996–1997: Gil Amelio
6. 1997–present: Steve Jobs (interim CEO 1997–2000)
ORIGINAL LEADERS
Apple was founded on April 1, 1976, by Steve Jobs, Steve Wozniak,
and Ronald Wayne to sell the Apple I personal computer kit. The kits were
built in the living room of Jobs’s parents’ home. Apple Computer Inc. was
incorporated January 3, 1977, by Jobs and Wozniak. Wayne sold his share
of the company back to Jobs and Wozniak.
An internal power struggle between Steve Jobs and new Apple CEO
John Sculley developed in 1985. The Apple board sided with Sculley, and
Jobs was removed from managerial duties. Jobs later resigned and went
on to found NeXT Inc. He also purchased the visual effects house, Pixar.
For more on the History of Apple, see Chapter 1, “Origins and

History.”
MICHAEL “SCOTTY” SCOTT

Michael “Scotty” Scott was Apple’s first CEO and served from Febru-
ary 1977 to March 1981. A veteran of National Semiconductor, Scott was
Apple Leadership 147
asked by Mike Markkula to become CEO because both Steve Jobs and
Steve Wozniak weren’t sufficiently experienced for the job. Scott was fa-
mous for his “no typewriters at Apple” mantra.
In 1979 and 1980, the Macintosh project consisted of four people and
wasn’t considered important within Apple. It was almost cancelled a cou-
ple of times. When Apple had another major reorganization in the fall of
1980, it was terminated again, but project leader Jef Raskin pleaded with
Scott and Markkula for more time, and was granted a three-month stay of
execution.1
On February 25, 1981, Scott fired 40 Apple employees, including half
of the Apple II team, and later assembled the remaining employees to ex-
plain the firings by saying, “I used to say that when being CEO at Apple
wasn’t fun anymore, I’d quit. But now I’ve changed my mind—when it
isn’t fun any more, I’ll fire people until it’s fun again.”2 Afterward Scott
became vice chairman and Mike Markkula replaced him.
A. C. “MIKE” MARKKULA
Armas Clifford “Mike” Markkula provided essential business exper-
tise and co-signed for a much-needed $250,000 bank loan during the
formation of Apple in 1977, for which he was given a one-third share of
the company. Markkula brought in Apple’s first CEO, Michael Scott, and
replaced him in 1981 to become Apple’s second CEO. Steve Wozniak gives
Markkula a majority of the credit for Apple’s success, even though he was
replaced by John Sculley in 1983.
Jean-Louis Gassée
Jean-Louis Gassée worked for Hewlett-Packard before becoming
head of Apple France. Apple CEO John Sculley appointed Gassée to
be head of Macintosh development—Steve Jobs’s old position. Gas-
sée was an executive at Apple from 1981 to 1990 and introduced
several Mac products in the late 1980s, including the Mac Portable
and the Mac IIfx.
He’s known for his sense of humor and unique sense of style.
Gassée wore tailored suits when necessary, but preferred wearing a
black leather jacket and a diamond-stud earring. Gassée later went
on to found Be Inc., creators of the BeOS computer operating sys-
tem. After leaving Be, he became Chairman of PalmSource Inc. in
November 2004.
JOHN SCULLEY
The departure of Steve Jobs from Apple after a dispute with new
CEO John Sculley ushered in a new era of management at Apple. Apple
148 Apple Inc.
was no longer under the control of its original founders, and professional
management was recruited to take Apple to the next level. Unfortunately,
things don’t always turn out as planned.
John Sculley was named PepsiCo’s youngest president in 1977 and
was hand-recruited by Jobs to become CEO of Apple on April 8, 1983.
Sculley was the third and longest-serving CEO of Apple. Sculley’s mission
was to apply his marketing skills from Pepsi, a major consumer brand, to
the personal computer market, especially the Macintosh.
Sculley raised the initial price of the Macintosh to $2,495 from the
originally planned $1,995, using the extra money for better profits and
more advertising.3 Apple responded to the IBM PC with the Performa,
Centris, and Quadra product lines, but they were marketed poorly. Part of
Sculley’s strategy was to release dozens of major models with hundreds
of configurations. Apple released too many Macs that were too similar
with a dizzying array of confusing model numbers, which didn’t fit with
Apple’s reputation for simplicity.
During the Sculley years, Microsoft threatened to discontinue the
popular Mac version of the Microsoft Office suite if Apple didn’t license
parts of the Macintosh graphical user interface to Microsoft. Sculley reluc-
tantly agreed, forever changing the course of computer history.
Sculley was the driving force behind Apple’s Newton MessagePad
project. Newton wasn’t originally intended to be a Personal Digital Assis-
tant (PDA), though. It was designed to suit architects. The Newton project
missed deadlines, and there was a fear that it would cannibalize Macin-
tosh sales. Newton was reincarnated as a PDA, a term coined by Apple’s
Sculley4 relatively late in the development cycle. Newton was repackaged
as a device that would complement the Mac instead of competing with it.
After costing the company more than $500 million in R&D, the Newton
was eventually cancelled.
Sculley was removed by Apple’s board in 1993. His tenure is regarded
by many as unsuccessful, beginning the company’s decline that was only
reversed by Jobs when he returned to the company many years later.
MICHAEL SPINDLER
In June 1993, Michael Spindler replaced John Sculley as the fourth
CEO of Apple, although Sculley remained on board for a while as chair-
man. Spindler was originally president of Apple Europe and came to
Apple when it had a 10% market share of the global computer market,
second only to the world’s largest computer maker, IBM. Apple sold
4.7 million Macs that year, a company record, and Spindler presided over
the introduction and rollout of the Power PC processor.
During the Spindler era, the Mac operating system and ROM were
licensed to third-party manufacturers Power Computing, Motorola, Ra-
dius, APS Technologies, DayStar Digital, and UMAX for the first time in
Apple history. The problem is that cloning strategy didn’t work. Instead of
expanding Apple’s market share as planned, it stagnated and clone sales
slowly chipped away at Apple’s bottom line.
Spindler presided over several failed initiatives, including Newton
and Copland. He also entertained takeover discussions by IBM, Sun Mi-
crosystems, and Philips, which never came to fruition. In the first quarter
of 1996, Apple reported a loss of $69 million and laid off 1,300 staff. On
February 2, 1996, Apple’s board fired Spindler and appointed Gil Amelio
as the new CEO.
GIL AMELIO
Gilbert F. Amelio, a veteran of National Semiconductor and widely
regarded turnaround artist, was named the fifth CEO of Apple in Febru-
ary 1996. During his short, 18-month tenure, Amelio identified several
reasons why he thought that Apple was doing poorly, including poor
cash flow, hardware, software, corporate culture, and a general lack of
focus. In an attempt to turn Apple around, Amelio laid off a third the
Apple staff, canceled a number of money-losing projects, discontin-
ued the Copland operating system, and expedited the development of
Mac OS 8.
Amelio was also responsible for negotiating with Steve Jobs’s new
company NeXT and eventually negotiated its purchase. Price aside, NeXT
Inc.’s NEXTSTEP operating system would eventually become the foun-
dation for Mac OS X, which became a runaway success and a key to Ap-
ple’s recovery, renaissance, and resurgence. The meeting with NeXT was
a fluke, though. Amelio was in discussions with former Apple executive
Jean Louis Gassée to purchase BeOS when a NeXT salesman called Apple
out of the blue suggesting that it look at NeXT.
Despite his minor successes, Apple’s stock hit a 12-year low under
Amelio’s watch and market share continued to plummet due to qual-
ity problems and confusion about the product line. During this period,
Amelio was criticized for his $7 million benefits package. He lavishly re-
decorated the executive suite, had $26 million in stock, and negotiated a
severance package worth about $7 million.
In the second quarter of 1997, Amelio announced a $740 million loss
and on July 9, 1997, he was removed as CEO by the Apple board after the
company suffered crippling financial losses while he was at the helm.
STEVE JOBS
After Gil Amelio negotiated the purchase of NeXT on December 20,
1996, Steve Jobs returned to Apple as a “special advisor” to Amelio to aid
in the transition. It was the first time Jobs had been back to the Apple cam-
pus in nearly 11 years. Jobs was reluctant to come back to Apple; he had
150 Apple Inc.
turned the page on Apple in his mind. He was CEO of Pixar now and was
enjoying the success of its first film, Toy Story.
Jobs was leery of returning to the fast-paced computer industry where
computers were obsolete before they were released. He had gotten used to
the slower pace of the movie business, telling Time:
I don’t think that you’ll be able to boot up any computer today

in 20 years. [But] Snow White has sold 28 million copies, and it’s
a 60-year-old production. People don’t read Herodotus or Homer
to their kids any more, but everybody watches movies. These are
our myths today. Disney puts those myths into our culture, and
hopefully Pixar will, too.5
Jobs was so skeptical of Apple, in fact, that he wanted his compensa-

tion for the Pixar deal in cash—which was declined by Amelio. Still, Jobs
immediately sold Apple the $1.5 million in stock he got from the Pixar
deal at bargain-basement prices, retaining just one share. After firing
Amelio, the Apple board asked Jobs to be CEO, but he would only agree
to be “interim CEO” for a period of six months, while he helped seek a
permanent CEO.
During this time, Jobs began a much-needed restructuring of the com-
pany. The first thing he did was to replace most of the Apple board with
his friends, including Larry Ellison of Oracle and a series of his captains
from NeXT: David Manovich (sales), Jon Rubinstein (hardware), and Ava-
dis “Avie” Tevanian (software). Jobs only kept one original board member,
Fred Anderson, the CFO who’d recently been hired by Amelio.
Jobs then cut a deal with Microsoft whereby Apple would drop its
user interface copyright infringement lawsuit against Microsoft and make
Internet Explorer the default Web browser in exchange for Microsoft’s
commitment to continue to develop Office for the Mac for a period of five
years and an investment of $150 million in Apple. Jobs also hired TBWA/
Chiat/Day as Apple’s advertising agency of record and effectively termi-
nated Apple’s agreements with the Apple clone makers.
Jobs proceeded to cancel hundreds of software and hardware prod-
ucts, including printers, monitors, and the beloved Newton. The most
important change Jobs made was to simplify Apple’s product line down
from dozens of SKUs to a simple quadrant of four major market segments.
The new simplicity made development and marketing much easier and
also made it easier for customers to chose and purchase a Mac.
RECENT LEADERSHIP
Several of Apple’s current executives have made an impact on Apple
as a company such that their whims create trends, style, and have the abil-
ity to chart the course of society. Probably, none has changed the world
more than Jonathan Ive.
Jonathan Ive
One of the most influential people in the recovery, renaissance, and re-
surgence periods of Apple is Jonathan Ive. The man credited as the principal
designer of the iMac, iPod, and iPhone is internationally renowned, yet he
remains humble, modest, and private. When asked to autograph his book
Apple Design at a signing in Japan, he wouldn’t sign his name “because it was
a team effort” and instead autographed the book “Apple Design Team.”
The London-born designer has been referred to as Apple’s forgotten
savior,6 but Apple prefers to call him Senior Vice President of Industrial
Design.7
Ive was raised in East London by his father, a silversmith, and studied
industrial design at Newcastle Polytechnic in 1985, where he received a
Bachelor of Arts and an honorary doctorate degree. He graduated with
honors, having created a pebble-shaped concept for a product to replace
cash and credit cards as his final-year project.
At London design agency Tangerine, Ive created products ranging
from combs to power tools to televisions and ceramics. One of the agency’s
largest clients was a bathroom and plumbing company called Ideal Stan-
dard for whom Ive designed toilets—with inspiration from marine biology
books.
Ive moved to the United States in 1992 to pursue his career at Apple.
While at Apple, he designed computers with a goal to complete the user
experience. His primary design principles are ease and simplicity, which
are a perfect fit for Apple. “People talk about how design is important but
that’s such a partial truth. It’s good design that is important.”8
He ascended to Senior Vice President of Industrial Design in 1997,
when Steve Jobs returned to Apple, and reports directly to Jobs. Ive and
his team are responsible for the design of the iPod, iMac, and iPhone—
three of the most influential products in computers, technology, and argu-
ably, popular culture.
Ive has been recognized with numerous design awards, including
being named Designer of the Year by the Design Museum London in 2003
and given the title Royal Designer for Industry by the Royal Society of
Arts. Apple products have become celebrated design icons featured in
the permanent collections of museums worldwide, including MOMA in
New York and the Pompidou in Paris.
Apple’s leadership at publication time consisted of the following:
Current Executives: 2008

• Steve Jobs, CEO and Co-founder, Apple Inc.
• Timothy D. Cook, Chief Operating Officer
152 Apple Inc.
• Daniel Cooperman, Senior Vice President, General Counsel and

Secretary
• Tony Fadell, Senior Vice President, iPod Division
• Jonathan Ive, Senior Vice President, Industrial Design
• Ron Johnson, Senior Vice President, Retail Division
• Peter Oppenheimer, Chief Financial Officer
• Philip W. Schiller, Senior Vice President, Worldwide Product
Marketing
• Bertrand Serlet, Senior Vice President, Software Engineering
• Sina Tamaddon, Senior Vice President, Applications Division
Current Board of Directors: 2008

• William V. Campbell, Chairman, Intuit Inc.
• Millard S. Drexler, Chairman and CEO, J. Crew
• Albert Gore, Jr., Former Vice President of the United States
• Steve Jobs, CEO and Co-founder, Apple Inc.
• Andrea Jung, Chairman and CEO, Avon Products Inc.
• Arthur D. Levinson, Ph.D., Chairman and CEO, Genentech Inc.
• Dr. Eric Schmidt, CEO, Google
• Jerome B. York, Chief Executive Officer, Harwinton Capital
Corporation
Chapter Nine
Competition
Critics have written Apple off time and again, yet it rose from the ashes to
astound the critics and delight its customers. That’s not luck or happen-
stance—it’s vision, dedication, and persistence. Everyone loves an under-
dog and Apple is a classic example, but now that Apple’s the lead dog in
several markets, will customers treat it differently? Will the competition?
In the late 1980s, Apple’s chief competition was the Amiga and Atari
ST platforms. But by the 1990s, clones of the IBM PC had become more
popular than all three, thanks to Windows 3.0, a competing graphical user
interface to the Mac OS.
Apple’s response to the PC tidal wave was to flood the market with
new Mac models, including Quadra, Centris, and Performa. The problem
was that there were too many choices and confusing model names and
numbers (Performa 6117CD, anyone?). Even employees couldn’t differ-
entiate between them, and they were all very close in specifications, often
only deviating by a few megs here or there. The litany of confusing prod-
ucts names, numbers, and specs was a lethal combination that frightened
customers away.
Apple’s retail sales partners, like Sears and CompUSA, became its
worst enemies. They were often incapable of demonstrating or even dis-
playing Macs that they had in stock. Pricing only made matters worse.
Stripped, bare bones PCs looked cheap on the price tag, but by the time you
added basic features that the Macs came with, standard, they cost more.
Still the perception was that the Mac cost more, so people bought PCs.
In 1994, Apple surprised its loyal flock by doing a deal with its long-
time competitor IBM. Apple joined the AIM (Apple, Motorola, IBM) alli-
ance to create a new hardware platform, known as PReP, short for PowerPC
Reference Platform. The goal was to use IBM and Motorola hardware
and Apple software to dominate the Windows-powered PC market. The
Power Mac line, which utilized IBM’s PowerPC processor, was the first
step to this end in 1994. While it was good for users because it meant faster
Macs, Power PC didn’t even put a dent into Windows PC sales. In fact, PC
sales increased.
154 Apple Inc.
Apple eventually ceded the low end of the market to the IBM clones,
realizing that it was a race for the bottom, and not a market that Apple
wanted to be in. Jobs smartly decided to let the commodity PC vendors
like Dell, HP, and Compaq duke it out for the low-margin, cheapest ma-
chines while Apple would focus on higher-margin luxury machines tar-
geting artists and professionals.
INTEL
When you can’t beat ’em, join ’em. What was left to do? Dump IBM
and Motorola and switch to Intel chips. The old expression, “keep your
friends close and your enemies closer,” may have factored into Apple’s
thinking. IBM and Motorola were small players in the mass-market chip
game and subject to delivery problems, which made Macs ship late as a re-
sult. Plus, there was a 3.0GHz ceiling that the AIM troika was having trou-
ble breaking, which bugged Jobs to no end. To make matters worse, it was
becoming increasingly clear that neither IBM nor Motorola was capable
of delivering a G5 chip that was small and cool enough for use in Apple’s
PowerBook. The desktop chip required nine fans to cool in the Power Mac
G5 and that just wasn’t possible in a notebook, so Jobs dumped IBM and
Motorola for Intel.
In June 2005, Jobs announced that Apple was switching to Intel as its
primary chip supplier. Apple began producing Intel-based Macs in 2006
and completed the transition to Intel by the end of the year—a year ahead
of schedule.
It was another astonishing turn for Apple. First it jumped into IBM,
its archrival in the 1990s, now it was going to use Intel chips? Blasphemy.
What next? Would Apple cut a deal with Microsoft and take cash to drop
its lawsuit? Jobs did that too.
Once Apple switched to Intel and got on par with the competition, the
landscape suddenly changed. Now that Apple was using Intel chips, had
a native operating system, and was even capable of virtualizing Windows
at full speed (thanks to tools like Boot Camp, Parallels, and VMWare), the
playing field was truly leveled. In fact, Macs could run Windows faster
than some PCs could. Now Apple was able to compete with just about any
computer on the market.
COMPUTER COMPETITORS
Apple’s biggest competitors on computer hardware are all the big
guys: Dell, Compaq, and HP. The switch to Intel forced Apple to be more
competitive on price and when it did, sales climbed. For the first time,
Windows users were defecting to the Mac platform en masse. Apple had
built a compelling computer platform that was fast, stable, and gorgeous,
and customers ate it up. On the software side, Apple’s chief competitor is
Competition 155
still Microsoft. With Apple slowly chipping away at Microsoft’s golden

goose—Windows—Microsoft was forced to make its latest operating sys-
tem, Vista, more visually appealing and easier to use with the myriad of
electronic gadgets that people were buying. Competition has arguable
been good for both camps.
RISE OF THE CLONES?

An entirely new class of competitor emerged when Apple switched to
the Intel platform in 2006: clones. Almost 10 years after Steve Jobs ripped
up Apple’s contracts with cloners, they had returned. This time was differ-
ent. The clones of 2006 were unauthorized by Apple. Creative PC builders
were able to build a Mac clone from off-the-shelf PC parts and a creative
installation of Mac OS X. Dubbed Hackintosh, these Frankenmacs were
being built almost as soon as OS X was available for Intel chips. One dar-
ing vendor, Psystar, tempted fate in early 2008 and even began shipping
a low-cost Mac clone, with Mac OS 10.5 Leopard pre-installed. Apple was
tolerating the practice as of this writing, but the conventional wisdom is
that Apple won’t allow the company to pre-install Mac OS on the new
generation of clones for very long.
SOFTWARE COMPETITORS
In addition to the perennial competition from Windows on the desk-
top level, there’s also the free alternative—Linux. Low-cost computers can
be assembled that run a totally free collection of software. Everything from
the operating system (Linux) to the office suite (Open Office) to photo ed-
iting software (GIMP) can be downloaded totally free and installed on a
moderately powerful computer that costs between $200 and $300. While
not necessarily a direct competitor to Apple, Linux is the only other oper-
ating system that has a fan base almost as passionate as Mac users. Intel
Macs can also boot Linux, in addition to Windows and other OSes, giving
Mac users more platform choices than ever. But as long as you buy the
hardware from Apple, Cupertino doesn’t mind which OS you run on it.
MEDIA PLAYER COMPETITORS

The advent of the iPod in 2001 put Apple in competition with an en-
tirely new raft of companies. Sony’s venerable Walkman lost several years
of competition when it got mired in its proprietary DRM system called
ATRAC. Unlike Apple, though, its early music players couldn’t play MP3
files, dooming them to certain failure.
In an attempt to capitalize on the success of the portable media player
market, Dell jumped into the fray with a hard drive player call the DJ. Micro-
soft, never being one to sit on the sidelines, released an iPod-like device
156 Apple Inc.
called Zune. SanDisk also makes a whole line of players, as do Samsung,

Archos, Creative Labs, e.Digital, Philips, and RCA. Each has its own slightly
different take on the concept, but they all pretty much do the same thing.
Apple got off to such an early and strong start with iPod that it still
dominates the field. The top five MP3 players as of February 2008 were
Apple with 72.3%, SanDisk with 9.7%, Creative Labs with 2.7%, Samsung
with 2.5%, and Microsoft with 4%.1
MEDIA CENTER, MOVIE RENTAL,

SET-TOP BOX COMPETITORS
When Apple launched the Apple TV set-top box in January 2007, it
jumped into yet another mature market with companies that have been
doing it for a lot longer. Apple’s 40GB set-top appliance originally sold
for $299 but was later dropped to $229 and allowed users to stream digi-
tal content from a Mac OS X or Windows computer running iTunes to a
widescreen television. A later software update allowed Apple TV to pur-
chase and rent movies in High Definition (HD) and purchase television
programs and music directly to the device without requiring a computer.
Comparisons between Apple TV and Microsoft’s Xbox 360 game
console were inevitable because the 360 has media center capabilities via
Vista’s Windows Media Extender that allows it to work with the Xbox 360.
Microsoft has been at it longer than Apple and is sometimes given an edge
over Apple; the reviews seem to be pretty evenly split.
In addition to the classic Apple versus Microsoft comparisons, there
are also a number of other devices competing for attention in the set-top
box category.
Netflix launched a set-top box with Rokuand, a $99 unlimited movie
streaming service that’s a formidable competitor to Apple. Netflix has the
advantage of having a billing relationship with more than seven million
subscribers who already rent their movies, which is tough to compete
with. Its top-tier Web site and best-of-breed recommendation engine gives
it a running start against all the other guys.
With digital television and movies being the next big prize in the digi-
tal revolution, Apple has more competitors in this field than any other.
Content boxes are available from MovieBeam, Akimbo, and Myka. Digital
media adapters from Netgear, D-Link, Buffalo, and Mvix. iPod docks are
available from DLO, Griffin, and Keyspan. Convergent boxes from Pio-
neer, HP, TiVO, and PC services like MovieLink, Vongo, Orb, and Joost are
also in the mix.
And don’t forget that broadcast television networks like ABC and
NBC are getting into the game, and traditional cable and telephone pro-
viders like Comcast, DirectTV, and Verizon are all placing big bets on time-
shifting with DVRs and are keeping their eye on the emerging stream
video market too.
Competition 157
If that wasn’t enough, Apple also competes on a nontangible level

as well. Apple has become a lifestyle brand that’s much more than just
hardware, software, and services. Apple is now a fashion accessory (iPod
shuffle), clothing brand (its various iPod cases and MacBook bags), and a
destination (Apple online and retail stores) that must compete for custom-
ers’ most precious resource of all, their time.
Famous Flops
Apple III—Launched in May 1980, the Apple III ended up being
a commercial failure for several reasons. For starters, at $4,340 to
$7,800, it was far too expensive compared to competitors and its
software catalog was limited. To make matters worse, Jobs wanted
the Apple III to be designed without a cooling fan (or vents) so that it
would operate silently. This turned out to be incorrect and the chassis
wasn’t able to adequately cool the system, and the Apple III became
prone to overheating and crashing. Almost all the original Apple III
computers were recalled and Apple had to replace as many as 14,000
of the first Apple IIIs for free.
Lisa—On January 19, 1983, Apple released the Lisa as one of the
first commercial personal computers to have a Graphical User Inter-
face (GUI) and a mouse. Although Lisa had advanced features like
protected memory, cooperative multitasking, and a hard disk, it also
came with an astronomical price tag of $9,995.
Taligent—This next-generation Apple operating system was sup-
posed to replace the Mac OS. Taligent was developed in 1988 with
IBM to compete with offerings from Microsoft and NeXT, but it never
took off. By 1998 Taligent was dissolved.
Macintosh Portable—The Mac Portable was also announced in
September 1989 and was Apple’s first attempt at a portable Macin-
tosh. The Mac Portable was nicknamed the “Mac luggable” because
of its large size and weight. It became a commercial flop because it
was enormous, heavy, slow, and the active matrix screen wasn’t (ini-
tially) backlit. The $6,500 price tag helped cement the Mac Portable
as one of Apple’s biggest flops of all time.
Apple Newton—The Newton MessagePad was announced in Au-
gust 1993 and was a completely new product for Apple and repre-
sented a brave step into the unfamiliar territory of Personal Digital As-
sistants (PDAs). The handwriting recognition was difficult to learn and
would often suggest hilarious, but incorrect, phrases. The Newton’s
misrecognitions became the butt of many jokes in the national media.
After it soaked up $500 million in R&D money, Apple discontinued
the Newton in 1997 when Steve Jobs returned to Apple.
Macintosh TV—The limited edition Mac TV was announced in
1993 and was one of the few Macs that shipped in a black case. Only
158 Apple Inc.
10,000 Mac TVs were made, and it ultimately flopped because of

poor graphic performance and because it couldn’t display a TV feed
in a desktop window. Oops.
eWorld—Introduced in 1994, eWorld was a joint effort of Apple
and America Online that was designed as an easy-to-use online ser-
vice that included applications for e-mail, news, shopping, and a bul-
letin board system. In 1996 eWorld was shut down after subscriptions
failed to materialize as expected.
Pippin—In 1995, Apple’s Pippin was another attempt at develop-
ing a multimedia platform. Powered by a 66MHz PowerPC 603e pro-
cessor. Pippin suffered the same fate at the Mac TV and was silently
killed after selling only 42,000 units.
Cyberdog—Introduced in February 1996, Apple’s first attempt at
a Web browser was anything but successful. Cyberdog included a
browser, e-mail, news reader, and address book and was supposed to
compete with Microsoft’s Internet Explorer and Netscape Navigator.
It was soon dropped in favor of Internet Explorer in May 1997.
Twentieth Anniversary Macintosh—In June 1997, Apple an-
nounced, appropriately enough, the Twentieth Anniversary Macin-
tosh (or TAM for short) to mark the occasion. The system looked
incredibly modern and had a tiny footprint thanks to a flat-screen
monitor that was only found in notebooks at the time. Included in the
astronomical price was a concierge service with personalized delivery
and setup, but it had to be scrapped when sales didn’t pan out.
Motorola ROKR—On September 7, 2005, Apple and Motorola
released the ROKR E1, the first mobile phone to use iTunes. However,
the announcement was buried in the iPod nano announcement and
given less attention in the press conference than the nano. ROKR
could only hold up to 100 songs, which in the era of the iPod, was
perceived as too little, and it wasn’t designed by the Apple design
team, which was regarded as one of the top technology design groups
in the world.
Chapter Ten
Finances
Apple was incorporated in California on January 3, 1977. Apple went

public on December 12, 1980, and its Initial Public Offering (IPO) share
price was $22.50. On a split-adjusted basis, Apple’s Initial Public Offering
stock price was $2.75. The Apple IPO generated more money than any
IPO since Ford Motor Company in 1956 and created about 300 instant
millionaires.
Apple doesn’t pay its stockholders a dividend; it last paid dividends
from June 1987 to December 1995. Apple had three 2-for-1 stock splits
on June 15, 1987, June 20, 2000, and February 28, 2005. Apple’s stock is
traded under ticker symbol AAPL on the NASDAQ stock exchange. (On
the Frankfurt Stock Exchange, Apple trades under the symbol APCD.)1
Over the course of five years, from January 2002 to January 2007,
Apple’s stock price ranged from $10.39 to $97.10 with a five-year average
of $39.88. In 2006 (from January 2006 to January 2007), Apple’s stock aver-
aged $71.34.2
As of June 2008, APPL shares hit a 52-week high of $202.96 on Decem-
ber 27, 2007, and a 52-week low of $111.62 on August 16, 2007.
The returns for AAPL stock are:
• 1 Year + 58.92%
• 3 Year + 365.36%
• 5 Year + 2003.06%
Not bad. Even better would be purchasing Apple stock in February

1997, just before Jobs came back to Apple, when it was trading below $4 a
share (split-adjusted). An investment of just $1,000 then would be worth
$38,900 now.3
The bulls think that Apple stock still has a lot of growth potential.
Piper Jaffray analyst Gene Munster predicts that the stock will hit $250
per share while Carl Howe of Blackfriars Communications, who follows
Apple carefully (and owns Apple stock), predicts Apple shares will hit
$300 in 2009.4
160 Apple Inc.
Table 10.1
Apple Financial Data
Net Sales Net Profits Revenue Return
Period (M) Revenue (M) Growth on Sales
FY 1981 335 unknown — —
FY 1982 583 61 74% 10%
FY 1983 983 77 69% 8%
FY 1984 1.516 64 54% 4%
FY 1985 1.918 61 27% 3%
FY 1986 1.902 154 –1% 8%
FY 1987 2.661 218 40% 8%
FY 1988 4.071 400 53% 10%
FY 1989 5.284 454 30% 9%
FY 1990 5.558 475 5% 9%
FY 1991 7.977 310 44% 4%
FY 1992 7.087 530 –11% 7%
FY 1993 6.309 87 –11% 1%
FY 1994 9.189 310 46% 3%
FY 1995 11.602 424 20% 4%
FY 1996 9.833 –816 –11% –8%
FY 1997 7.081 –1.045 –28% –15%
FY 1998 5.941 309 –16% 5%
FY 1999 6.134 601 3% 10%
FY 2000 7.983 786 30% 10%
FY 2001 5.363 –25 –33% 0%
FY 2002 5.742 65 –2% 1%
FY 2003 6.207 57 18% 1%
FY 2004 8.279 266 33% 3%
FY 2005 13.931 1.328 68% 10%
FY 2006 19.315 1.989 39% 10%
FY 2007 24.006 3.496 24% 15%
Q1 2008 9.608 1.581 35% 16%
Q1 2008 7.512 1.045 43% 14%

Finances 161
One thing’s for sure, Apple has consistently enriched shareholders

since 2002. From a loss of $37 million in 2001, Apple has increased its rev-
enues to $1.989 billion and its Earnings Per Share (EPS) from negative $.04
to a positive $2.27.
Apple uses a fiscal calendar so that year-end accounting work doesn’t
coincide with periods of traditionally high retail activity like the holiday
shopping rush. Apple’s fiscal year 2008 is as follows:
• First Quarter: October 1, 2007–December 31, 2007

• Second Quarter: January 1, 2008–March 31, 2008
• Third Quarter: April 1, 2008–June 30, 2008
• Fourth Quarter: July 1, 2008–September 30, 2008
Table 10.1 shows historical Apple financial data (all figures are in U.S.
dollars).5
The following are some financial highlights (and lowlights) from
Apple over the years. All years are fiscal years.
1997 In June, Apple CEO Gil Amelio announced a $740 million loss in
the second quarter. By year’s end, Apple turned a profit for the first
year after losses through 1995 and 1996.6 On August 6, Steve Jobs
announced an alliance between Apple and Microsoft including a
$150 million investment in Apple. In exchange, Apple includes Mi-
crosoft’s Internet Explorer Web browser as the default Web browser
on every Mac shipped.
1998 On January 7, Apple officially returned to profitability with Steve
Jobs’s announcement of a $47 million profit in the first quarter. The
turnaround was complete. In July, Apple announced its third prof-
itable quarter ($101 million) in a row.
2000 On April 19, Apple announced a $233 million profit in its third
quarter. On September 29, Apple corrected its predicted earnings
for the fourth quarter. The number was revised from $165 million
down to $110 million, causing Apple stock to free fall from $53.50 to
$29.13 (a 45% drop) overnight. On December 5, Apple announced
an estimated loss of $259 million for the first quarter of 2001 ending
on December 30, 2000. This was the first quarterly loss for Apple in
three years.
2001 On April 18, Apple announced a quarterly profit of $43 million,
with Mac OS X responsible for $19 million in sales. For the fiscal
year ending September 9, Apple had $5.4 billion in revenue, a gross
profit of $1,235 million, and a negative operating income of $344
million. It incurred a loss of $52 million before tax and after tax it
was $37 million.7
162 Apple Inc.
2002 On January 16, Apple reported a profit of $38 million for the first
quarter of 2002, shipping 746,000 Macs. On October 16, Apple
announced a loss of $45 million in the fourth quarter of 2002, mainly
because of low sales of the Power Mac and PowerBook line. For the
year Apple had revenues of $5.7 billion, gross profit of $1.6 billion.
Apple’s income after tax for the fiscal year was $65 million.8
2003 In 2003, Apple’s stock began an unprecedented climb. Between
early 2003 and January 2006, the price of a share of Apple stock
increased more than tenfold, from around $6 per share (split-
adjusted) to more than $80 per share. For fiscal 2003, Apple increased
its total revenue to $6.2 billion with a net profit of $57 million.
2004 Fiscal 2004 saw a considerable rise in operating expenses and rev-
enues. Net income came in at $266 million—a whopping increase
of 286% over 2003. In fiscal 2005 and 2006, Apple also experienced
a tremendous rise in revenue.
2005 In Fiscal 2005, Apple reported net sales of $13.9 billion and $1.3 bil-
lion in net profits, breaking the one billion dollar profit mark for the
first time. This was an astonishing increase in net profit of 399%.
2006 On January 13, Apple’s market capitalization surpassed Dell’s for
the first time. Nearly 10 years prior, in 1997, Michael Dell, Dell’s
CEO, said that if he ran Apple, he would “shut it down and give the
money back to the shareholders.”9 For Fiscal 2006, Apple reported
net sales of $19.3 billion (a 39% increase) and a net profit of $2 bil-
lion, an increase of almost 50%.10
2007 During the third quarter of 2007, Apple grabbed 8.1% of U.S. mar-
ket share, compared with just 6.2% during the year-earlier period.11
For Fiscal 2007, Apple reported net sales of $24 billion (a 24% in-
crease) and a net profit of $3.5 billion, an increase of almost 76%.
2008 In the first quarter of 2008, Apple posted revenue of $9.6 billion and
a net quarterly profit of $1.6 billion. Gross margin was 34.7%, up
from 31.2% in the year-ago quarter. International sales accounted
for 45% of the quarter’s revenue.
In the first quarter of 2008, Apple sold more than 2.3 million Macs—a
growth rate that was more than 2.5 times that of the overall PC market,
according to research firm IDC. Apple grabbed 6% of the U.S. personal
computer market in the first quarter, according to IDC, up from 4.9% the
year before.12 Macs continue to gain market share against PCs, accounting
for 6.5% of unit shipments in the first quarter compared with 5.2% in the
year-earlier period, according to Worthen.13
In the second quarter of 2008, Apple posted revenue of $7.5 billion
and a net quarterly profit of $1.1 billion. Gross margin was 32.9%, down
from 35.1% in the year-ago quarter. International sales accounted for 44%
of the quarter’s revenue.
Chapter Eleven
Future Prospects
When you look at the history of Apple, it’s pretty clear the company is
on a major upswing. Revenue and profit are booming and so is the stock
price, thanks to a strong product mix, excellent customer support, and an
extremely loyal customer base. Apple has also made great progress with
switchers, people that have switched from a Windows PC to a Mac, thanks
in large part to the iPod’s halo effect. Windows users start with an iPod,
then switch to a Mac when they’re due for a new machine.
In less than a decade, Apple has reinvented itself, removing the Com-
puter from its name to be simply Apple Inc. This move speaks volumes
about where Apple is headed. In January 2007, iPod sales made up almost
half of Apple’s quarterly revenue ($3.4 billion) and when you add items
like iTunes, iPhone, and Apple TV to the bottom line, Apple is definitely
making more money from things other than traditional computers. Hence
the name change.
In 2001, Steve Jobs positioned the Mac as the digital hub to which
you could connect your camera, music player, phone, etc. Today, Apple
doesn’t just want to be the hub—it wants to be the spokes and wheel too.
Products like iPod and the iTunes Store allowed Apple to branch out into
the uncharted waters of the music business, and it quickly became the
captain of the high seas. Now Apple’s doing the same thing with televi-
sion and movies. Apple’s got its sights set on the rest of the entertainment
business, like it did with music, but it’s going to take its time.
Apple’s new modus operandi these days is to let other, well-funded
companies take the first shot at a product, spend a lot of money, and make
a lot of mistakes. Then once they’ve taken their licks, Apple enters the
market with a product that works and looks better and reaps the rewards.
It’s not going to be easy, though; the iPod was a lot about having the right
timing. Apple released the iPod in 2001 right after the halcyon days of
Napster, when just about everyone was downloading music for free. As
a result, people had accumulated massive libraries of digital music and
needed something to play it on.
164 Apple Inc.
The music business got a lesson in digital technology at the hands

of Apple and probably realizes in retrospect that it should have built it
sooner, but it didn’t and now it’s forced to deal with the market leader—
Apple. The movie studios and television networks won’t go down as easy.
They’ve been watching the iTunes era unfold with the intensity of some-
one whose livelihood depends on it, because it does.
As bandwidth increases, television and movies were the next logical
target of file-sharing networks and the studios and networks are loath to
get Napstered. By the same token, they’re not about to let Apple call the
shots in their business. Naturally, because of its huge market share, the
television networks and movie studios want to distribute their content on
iTunes, but they want to do it on their terms.
NBC is a perfect example of this. In August 2007, Apple announced
that it wouldn’t offer new fall seasons or shows from NBC on iTunes. Apple
said it refused to agree to a cost hike NBC requested. NBC contended that
it wanted a variety of pricing options but that Apple refused. NBC instead
focused on its own digital streaming site, Hulu, and announced a deal
with Microsoft to bring its television content to the Zune Marketplace. But
NBC’s posturing wasn’t a total snub of Apple. In May 2008, the network
began offering full episodes of two popular shows, 30 Rock and The Office,
to iPhone and iPod touch users to watch online for free.
The media center is the next frontier for Apple and digital content.
Apple dipped its toe into the market with the Apple TV in January 2007,
but it was an admittedly weak attempt. Apple fixed that with Apple TV
Take 2 a year later, which featured a new interface, the ability to down-
load TV shows, music, podcasts, and rent or download directly to the de-
vice. There are already many players in the crowded media center market
and Apple will have to fight some established behemoths if it’s going to
establish a beachhead.
Apple’s advantage is its commanding market leadership with iTunes
and iPod. It can be expected to carefully observe the other players in the
market, then slowly move in with an improved version, and its iPod army
in tow.
Apple probably won’t ever dominate the business computer market
and it’s probably fine with that. Although every company wants more
sales, businesses are very price sensitive and Apple’s perfectly happy to
cede that market to low-cost Windows PCs. Apple would rather focus on
its strengths and sell higher-end (and higher-margin) Macs to college stu-
dents, creatives, and professionals.
“Apple’s market share is bigger than BMW’s or Mercedes’s or
Porsche’s in the automotive market. What’s wrong with being BMW or
Mercedes?”1
With Apple’s legendary secrecy in mind, it’s difficult to predict any-
thing from Cupertino with any accuracy. However, based on its success
with iMac, iPod, iTunes, and iPhone, you can deduce that Apple will
Future Prospects 165
continue to grow and extend its products, as it continues to enhance and

add digital content to its repertoire.
Apple’s patent applications provide a veritable treasure trove of po-
tential ideas that Apple is considering, including enhanced online shop-
ping, Mac tablets, speech-recognition, handwriting-recognition, gaming
consoles, digital video recorders, remote controls, docking stations, solar
panels, and just about every kind of software that you can imagine.
Suffice it to say that Apple will continue to expand its number of
spokes that are attached to the digital hub. It’ll probably continue to build
the rest of the wheel and eventually the whole “bicycle”—now there’s
an idea!
Glossary
AIX: Acronym for Advanced Interactive eXecutive. AIX was an IBM flavor of
UNIX that Apple shipped with the Network Server 500 and 700 in February
1996. The Network Servers weren’t commercially successful and were discon-
tinued in April 1997.
APX: Acronym for Airport Extreme. A family of Apple products based on the
IEEE 802.11g wireless communication specification.
A/UX: Acronym for Apple Unix (pronounced ox). A/UX was Apple’s version of
UNIX from 1988 to 1995, which was designed to run on the Mac II, Quadra,
and Centris machines. A/UX was the first Mac system that allowed its users to
access the command line interface.
BASIC: Acronym for Beginner’s All-purpose Symbolic Instruction Code. BASIC
was a simple programming language developed by John Kemeney and Thomas
Kurtz in the mid-1960s at Dartmouth College.
BIT: Acronym for Binary digit. The smallest piece of data that a computer can
recognize. A bit holds one of two values: 0 or 1.
Blue Box: An early phone-hacking tool that emulated phone company tones and
signals that could be used to circumvent the phone company’s billing system
to make free telephone calls.
BPS: Acronym for Bits Per Second. A measurement of how fast the smallest piece
of data that a computer can recognize (a 0 or 1) can be sent through a channel
in one second.
BYTE: A string of 8 bits that represents a single character.
Cache: (pronounced cash). An area of high-speed memory, usually located close
to the CPU, where data is copied when retrieved from RAM.
Combo Drive: An Apple DVD-ROM drive that supports writing to CD-R and
CD-RW media and reading DVDs.
Cover Flow: A graphical user interface developed by Apple for visually browsing
a digital music library by its cover art. Designed to simulate the experience of
“flipping” through a stack of CDs or records.
CPU: Acronym for Central Processing Unit. The main part of a computer (a micro-
processor or “chip”) dedicated to executing instructions.
168 Glossary
CRT: Acronym for Cathode Ray Tube. A common type of computer display or
monitor, sometimes called a “picture tube.”
DRM: Acronym for Digital Rights Management. An umbrella term for technol-
ogy that is used to protect digital content and its copyright holders. Apple uses
FairPlay DRM to protect tracks purchased from the iTunes Store.
DTP: Acronym for Desktop Publishing. The production on print collateral materi-
als, brochures, flyers, and newsletters, on a desktop computer. Typically com-
bined with a laser printer for proofs and final output.
DVD: Acronym for Digital Video Disk (also known as Digital Versatile Disk). An
optical storage medium with 4.7GB, enough to hold a full-length movie.
DVR: Acronym for Digital Video Recorder (also known as Personal Video Re-
corder). A DVR or PVR records broadcast television content on a hard disk for
playback at a later date.
Emulator: Software that allows one computer to act as another computer.
FireWire: A high-speed serial bus system developed between the late 1980s and
1995 by Apple, Digital Equipment Corporation (DEC), IBM, INMOS/SGS
Thomson, Sony, and Texas Instruments as a replacement for the aging Small
Computer Systems Interface (SCSI). FireWire is also known as IEEE 1394 and
Sony’s i.Link.
Flash Drive: A compact solid-state storage device that uses NAND flash memory
rather than conventional spinning platters to store data.
Form-Factor: The shape and industrial design of a piece of computer hardware.
Also used for peripherals.
FPU: Acronym for Floating Point Unit. A separate processor (or integral part of
newer processors) designed to handle floating point calculations.
GUI: Acronym for Graphical User Interface. A front end to a computer invented
at Xerox PARC during the 1970s, consisting of various widgets (windows, but-
tons, and icons) that perform a given task when activated either by mouse click
or keystroke.
High Definition: Any video resolution over 1280 × 720 pixels. Almost exclusively
utilizing a 16:9 aspect ratio.
Kernel: The central part of an operating system that manages resource allocation
and hardware.
LAN: Acronym for Local Area Network. A means of connecting two or more
machines in close proximity to each other.
Microprocessor: A complex integrated circuit usually manufactured from silicon
that acts as the central processing unit of the computer. See CPU.
NAS: Acronym for Network Attached Storage. A disk or series of disks attached
directly to a network rather than to a server on the network.
NeXTSTEP: An object-oriented, multitasking operating system developed by
NeXT and launched on September 18, 1989.
OS: Acronym for Operating System. A software application that is loaded into mem-
ory by a boot program and manages all of the other software on a computer.
Glossary 169
PASCAL: A computer programming language developed in 1970 by Niklaus

Wirth based on Algorithmic Language (AL GOL). PASCAL got its name from
the seventeenth-century mathematician Blaise Pascal who was responsible for
building one of the first mechanical adding machines.
PDA: Acronym for Personal Digital Assistant. A handheld device used to store
contacts and calendars. Newer models include Internet access.
Product Red: Product Red is a for-profit brand, which is licensed to partner compa-
nies such as Apple Inc., American Express, Converse, Motorola, The Gap, Em-
porio Armani, Hallmark, Microsoft, and Dell. Each partner company creates a
product with the Product Red logo and/or color and returns a percentage of the
profit to the Global Fund to Fight AIDS, Tuberculosis and Malaria.
RAID: Acronym for Redundant Array of Inexpensive Disks. A data storage tech-
nique that enables increased reliability and storage by using multiple hard
drives.
R&D: Acronym for Research and Development. Activities undertaken while de-
signing new and evolving existing products and services.
RAM: Acronym for Random-Access Memory. Memory that can be used by pro-
grams being processed to store data.
To RIP: Ripping (also referred to as digital audio extraction) refers to copying
audio or video from one media form, such as CD or DVD, to a hard disk.
RISC: Acronym for Reduced Instruction Set Computer. A CPU design that in-
creases arithmetic speed by decreasing the number of instructions and found in
the PowerPC chip used by the Apple.
ROM: Acronym for Read Only Memory. A storage media that can be read but
not written to.
Set-Top Box: A piece of computer hardware that connects to a TV to receive
and play back digital audio and video content.
Speed-bump: An incremental upgrade to a piece of hardware. Typically some
combination of upgraded CPU, graphics processor, optical drive, RAM, and
hard drive.
SuperDrive: An Apple term used to refer to a high-density floppy drive and a
combined CD/DVD reader and writer.
UNIX: An operating system co-created by AT&T researchers Dennis Ritchie and
Ken Thompson known for its relative hardware independence.
USB: Acronym for Universal Serial Bus. A hardware interface that connects
computers and peripherals.
Video Interlacing: A technique of improving the quality of a video signal, primar-
ily on CRT devices, that divides each video frame into two fields to conserve
bandwidth.
Notes
PREFACE
1. Apple Press Release, “Apple Introduces New iPod nano,” September 9,
2008, http://www.apple.com/pr/library/2008/09/09nano.html.
2. Apple Press Release, “iTunes Store Tops Over Five Billion Songs Sold,”
June 19, 2008, http://www.apple.com/pr/library/2008/06/19itunes.html.
CHAPTER 1
1. Apple Confidential 2.0, p. 1, http://www.metromac.org/newsletter/ex
press/march04/eden_bkrev.html, accessed April 21, 2008.
2. Mary Bellis, “Inventors of the Modern Computer, The First Hobby and
Home Computers: Apple I, Apple II, Commodore PET, and TRS-80,” http:/-240/
inventors.about.com/library/weekly/aa121598.htm, accessed April 22, 2008.
3. S. G. Wozniak, with G. Smith, iWoz: From Computer Geek to Cult Icon:
How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing
It (New York: W. W. Norton, 2006).
4. Andy Hertzfeld, “The Father of the Macintosh,” Folklore.org, http://www.
folklore.org/StoryView.py?story=The_Father_of_The_Macintosh.txt, accessed
April 24, 2008.
5. Andy Hertzfeld, “Price Fight,” Folklore.org, October 1983, http://folklore.
org/StoryView.py?project=Macintosh&story=Price_Fight.txt&sortOrder=Sort%2
0by%20Date&detail=medium&search=John%20Sculley.
6. Brent Schlender, “Something’s Rotting in Cupertino,” Fortune, March 3, 1997,
http://money.cnn.com/magazines/fortune/fortune_archive/1997/03/03/222710/
index.htm.
7. Jerry Useem, “Apple: America’s Best Retailer,” Fortune, March 8, 2007, http://
money.cnn.com/magazines/fortune/fortune_archive/2007/03/19/8402321/
index.htm.
CHAPTER 2
1. “The World’s Billionaires List 2008,” Forbes, March 14, 2008, http://www.
forbes.com/lists/2008/10/billionaires08_Steven-Jobs_HEDB.html.
172 Notes
2. Steve Jobs, “Stanford University Commencement Address 2005,” http://

news-service.stanford.edu/news/2005/june15/jobs-061505.html.
3. Jobs, “Stanford University Commencement Address 2005.”
4. Michael Moritz, The Little Kingdom: The Private Story of Apple Computer (New
York: William Morrow, 1984), p. 38.
5. David Sheff, “Playboy Interview: Steven Jobs,” Playboy, February 1985, p. 176.
6. Owen W. Linzmayer, Apple Confidential 2.0: The Definitive History of the
World’s Most Colorful Company (San Francisco: No Starch Press, 2004).
7. Sheff, “Playboy Interview,” p. 176.
8. Steve Jobs: The Journey Is the Reward. Jeffrey S. Young. Excerpt, http://
www.jsyoung.com/jobs_journey_excerpt.htm.
9. Chris Foresman, “Steve Jobs’s Cancer Went Unannounced for Nine Months,”
March 6, 2008, http://arstechnica.com/journals/apple.ars/2008/03/06/steve-
jobss-cancer-went-unannounced-for-nine-months.
10. “America’s 25 Most Fascinating Entrepreneurs,” Inc., April 1, 2004, http://
www.inc.com/magazine/20040401/25jobs.html.
11. “Apple’s Jobs Is Most Powerful Businessman,” Fortune, November 27, 2007.
12. California Museum, “Jobs Inducted into California Hall of Fame,” http://
www.californiamuseum.org/Exhibits/Hall-of-Fame/inductees.html, accessed
April 26, 2008.
13. R. Cringely, Accidental Empires (New York: Penguin, 1996).
14. S. G. Wozniak, with G. Smith, iWoz: From Computer Geek to Cult Icon:
How I Invented the Personal Computer, Co-Founded Apple, and Had Fun Doing It
(New York: W. W. Norton, 2006).
15. Linzmayer, Apple Confidential 2.0, p. 33.
16. “Short Bio for Steve Wozniak,” http://www.woz.org/wozscape/wozbio.html,
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17. Andy Hertzfeld, “The Father of the Macintosh,” Folklore.org, http://www.
folklore.org/StoryView.py?story=The_Father_of_The_Macintosh.txt, accessed
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CHAPTER 3
1. “20 Most Profitable Tech Companies, 2008,” Fortune, http://money.cnn.
com/galleries/2008/fortune/0804/gallery.tech_profits.fortune/8.html, accessed
May 3, 2008.
2. Adam C. Engst, “Apple Ranked Top Brand Worldwide,” TidBITS, March 31,
2008, http://db.tidbits.com/article/9538.
3. Adam C. Engst, “Apple Tops Fortune’s Most Admired Companies List,” Tid-
BITS, March 5, 2008, http://db.tidbits.com/article/9488.
4. Jerry Useem, “Apple: America’s Best Retailer,” Fortune, March 8, 2007, http://
money.cnn.com/magazines/fortune/fortune_archive/2007/03/19/8402321/
index.htm.
5. Alan Deutschman, “The Second Coming of Steve Jobs,” http://archive.
salon.com/tech/books/2000/10/11/jobs_excerpt/.
6. U.S. Census Bureau, “Computer Use and Ownership, Current Population
Survey (CPS) Reports,” http://www.census.gov/population/www/socdemo/
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Notes 173
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net/Fun/SH/1-18/h4.html, accessed May 7, 2008.
8. Kenji Hall, “Can Sony’s New Walkman Run?,” BusinessWeek, September 9,
2005, http://www.businessweek.com/technology/content/sep2005/tc2005099_
6365_tc119.htm.
9. Robert Johnson, “The Fax Machine: Technology That Refuses to Die,” New
York Times, March 27, 2005, http://www.nytimes.com/2005/03/27/business/
yourmoney/27fax.html.
10. Philip Elmer-DeWitt, “How to Grow the iPod as the MP3 Player Market
Shrinks,” Fortune: Apple 2.0, January 29, 2008, http://apple20.blogs.fortune.cnn.
com/2008/01/29/beyond-the-incredible-shrinking-ipod-market/.
11. Jupiter Research, “US Cable and Satellite Households, 2006,” http://www.
boston.com/news/local/massachusetts/articles/2006/10/17/US_cable_and_
satellite_households/, accessed May 9, 2008.
12. Tim Stevens, “82% of Americans Own Cell Phones,” Switched, November 14,
2007, http://www.switched.com/2007/11/14/82-of-americans-own-cell-phones/.
13. “Gartner Says Worldwide Mobile Phone Sales Increased 16 Per Cent in
2007,” February 27, 2008, http://www.gartner.com/it/page.jsp?id=612207.
14. “The Big Picture: Woodstock for Capitalists,” Sydney Morning Herald, March
12, 2005, http://www.sharkisland.com.au/Woodstock/reviews.htm.
15. Leander Kahney, The Cult of Mac (San Francisco: No Starch Press), p. 2004.
CHAPTER 4
1. Jason D. O’Grady, “Apple Leads in Support—by Double Digits,” Consumer
Reports, May 6, 2008, http://blogs.zdnet.com/Apple/?p=1689.
2. Pamela Pfiffner, “The Birth of Desktop Publishing,” Macworld, 2004, http://
www.macworld.com/article/29180/2004/02/themacturns20.html, accessed May 14,
2008.
3. Bill Kincaid, “The True Story of SoundJam,” Panic, http://www.panic.com/
extras/audionstory/popup-sjstory.html, accessed May 14, 2008.
4. Cabel Sasser, “The True Story of Audion,” Panic, http://www.panic.com/
extras/audionstory/, accessed May 16, 2008.
5. “The iPod Has Landed,” Macworld, October 2, 2001, http://www.macworld.
com/article/7931/2001/10/ipod.html.
6. Steve Jobs, “Macworld Expo 2001 Keynote Address,” January 9, 2001,
http://www.stefanoparis.com/apple/macworld2001/macworld2001.html.
7. Leander Khaney, Cult of iPod (San Francisco: No Starch Press, 2005), p. 10.
8. Acaben, “Apple Introduces iPod, iTunes2,” MacSlash, October 23, 2001,
http://macslash.org/article.pl?sid=01/10/23/1732227&mode=thread.
9. Philip Elmer-DeWitt, “How to Grow the iPod as the MP3 Player Market
Shrinks,” Fortune: Apple 2.0, January 29, 2008, http://apple20.blogs.fortune.cnn.
com/2008/01/29/beyond-the-incredible-shrinking-ipod-market/.
10. Apple Press Release, “Apple Unveils World’s First 17-inch Notebook,” Jan-
uary 7, 2003, http://www.apple.com/pr/library/2003/jan/07pbg4_17.html.
11. Mark Harris, “iTunes Store History—The History of the iTunes Store,”
About.com, http://mp3.about.com/od/history/p/iTunes_History.htm, accessed
May 17, 2008.
12. “iTunes Store Top Music Retailer in the USA,” Apple Inc., April 3, 2008.
174 Notes
13. Apple Press Release, “iTunes Store Tops over Five Billion Songs Sold,”
June 19, 2008, http://www.apple.com/pr/library/2008/06/19itunes.html, accessed
May 22, 2008.
14. “Digital Developments Could Be Tipping Point for MP3,” Reuters.com,
http://www.reuters.com/article/musicNews/idUSN0132743320071203?page
Number=3&virtualBrandChannel=0.
15. Apple Press Release, “Apple Unleashes the World’s Fastest Personal
Computer—the Power Mac G5,” June 23, 2003, http://www.apple.com/pr/
library/2003/jun/23pmg5.html.
16. “Number of Unlocked iPhones Reaches 250,000,” Mobilewhack, Octo-
ber 30, 2007, http://www.mobilewhack.com/number-of-unlocked-iphones-reaches-
250000/.
17. Rex Crum, “Apple CFO Upbeat about Unlocked iPhone’s Impact,” Market-
Watch, March 5, 2008, http://www.marketwatch.com/news/story/apple-cfo-up
beat-about-unlocked/story.aspx.
CHAPTER 6
1. Mary Bellis, “The First Spreadsheet—VisiCalc—Dan Bricklin and Bob
Frankston,” http://inventors.about.com/library/weekly/aa010199.htm, accessed
June 2, 2008.
2. Jim Forbes, “Apple to Enhance System Software, Desktop Database,” PC
Week, April 12, 1988.
3. David Beaver, “Some Simpler Solutions to Making Macros (MacroMaker
and AutoMac III Macro Recorders for the Macintosh),” MacWEEK, July 19, 1988.
4. Owen W. Linzmayer, Apple Confidential 2.0: The Definitive History of the
World’s Most Colorful Company (San Francisco: No Starch Press, 2004), p. 132.
5. Steve Jobs, “Macworld Expo 1997 Keynote Address: The Microsoft Deal.”
6. Apple Press Release, “Apple Sells 1.2 Million Copies of Mac OS 8; Best Soft-
ware Product Sales Ever in First Two Weeks of Availability,” http://www.apple.
com/ca/press/1997/08/MacOS8Sales.html, accessed June 16, 2008.
7. “Definition of: Apple,” PC Magazine Encyclopedia, http://www.pcmag.
com/encyclopedia_term/0,2542,t=Apple&i=37872,00.asp, accessed June 17, 2008.
8. Bryan Gardiner, “Learning from Failure: Apple’s Most Notorious Flops,”
Wired.com, January 24, 2008, http://www.wired.com/gadgets/mac/multime
dia/2008/01/gallery_apple_flops?slide=7&slideView=2.
9. Leander Kahney, “Apple Cube: Alive and Selling,” Wired.com, http://www.
wired.com/gadgets/mac/news/2003/07/59764, accessed June 17, 2008.
10. “The Ugliest Products in Tech History,” PC World, http://tech.msn.com/
products/slideshow.aspx?cp-documentid=5551551&imageindex=7, accessed
June 18, 2008.
11. Bill Kincaid, “The True Story of SoundJam,” Panic, http://www.panic.com/
extras/audionstory/popup-sjstory.html, accessed June 19, 2008.
12. Cabel Sasser, “The True Story of Audion,” Panic, http://www.panic.com/
extras/audionstory/, accessed June 20, 2008.
13. Apple Press Release, “Apple Unveils World’s First 17-inch Notebook,”
January 7, 2003, http://www.apple.com/pr/library/2003/jan/07pbg4_17.html,
accessed June 20, 2008.
14. “iTunes Store Top Music Retailer in the USA,” Apple Inc., April 3, 2008,
http://www.apple.com/pr/library/2008/04/03itunes.html.
Notes 175
15. “Virginia Polytechnic Institute and State University: Cost-conscious Su-

percomputing,” Apple.com Science Profile, http://www.apple.com/science/pro
files/vatech/, accessed June 20, 2008.
16. Jacqui Cheng and Clint Ecker, “Dissecting Mighty Mouse,” Ars Technica,
August 3, 2005, http://arstechnica.com/articles/paedia/hardware/dissect.ars.
17. “WWDC 2007 Keynote,” Apple Inc., June 11, 2007, http://events.apple.com.
edgesuite.net/d7625zs/event/.
18. Apple Press Release, “Apple to Use Intel Microprocessors Beginning in
2006,” June 6, 2005, http://www.apple.com/pr/library/2005/jun/06intel.html.
19. John Markoff and Steve Lohr, “Apple Plans to Switch from I.B.M. to Intel
Chips,” New York Times, June 6, 2005, http://nytimes.com/2005/06/06/technol
ogy/06apple.html (accessed May 4, 2006).
20. Jason D. O’Grady, “Theories on Apple TV,” The Apple Core, February 19,
2007, http://blogs.zdnet.com/Apple/?p=440.
21. Pau Miller, “Apple Announces App Store for iPhone, iPod touch,” Engad-
get, March 6, 2008, http://www.engadget.com/2008/03/06/apple-announces-
app-store-for-iphone-ipod-touch/.
22. Apple Press Release, “Apple to Ship Mac OS X Leopard on October 26,”
October 16, 2007, http://www.apple.com/pr/library/2007/10/16leopard.html.
23. “Apple’s Intel Switch: Jobs’ Keynote Transcript,” Cnet, June 15, 2005,
http://www.news.com/Apples-Intel-switch-Jobs-keynote-transcript—page-
2/2100–1047_3–5748045–2.html?tag=st.num.
24. Ryan Block, “Live from WWDC 2006: Steve Jobs’ Keynote,” Engadget,
August 7, 2006, http://www.engadget.com/2006/08/07/live-from-wwdc-2006-
steve-jobs-keynote/.
25. “Apple Statement,” Press release, Yahoo! Finance, April 12, 2007, http://biz.
yahoo.com/prnews/070412/sfth056.html?.v=87.
26. Ryan Block, “Steve Jobs Live from D 2007,” Engadget, May 30, 2007, http://
www.engadget.com/2007/05/30/steve-jobs-live-from-d-2007/.
CHAPTER 8
1. Andy Hertzfeld, “Macintosh Stories: Good Earth,” Folklore.org, October
1980, http://folklore.org/StoryView.py?project=Macintosh&story=Good_Earth.txt
&sortOrder=Sort%20by%20Date&detail=medium&search=Mike%20Scott.
2. Andy Hertzfeld, “Macintosh Stories: Black Wednesday,” Folklore.org, Feb-
ruary 1981, http://folklore.org/StoryView.py?project=Macintosh&story=Black_
Wednesday.txt&sortOrder=Sort%20by%20Date&detail=medium&search=black%
20wednesday.
3. Andy Hertzfeld, “Price Fight,” Folklore.org, October 1983, http://folklore.
org/StoryView.py?project=Macintosh&story=Price_Fight.txt&sortOrder=Sort%2
0by%20Date&detail=medium&search=John%20Sculley.
4. “Technology Milestone: Apple Newton 1993,” Ciber, http://www.ciber.
com/ciber/30years/more.cfm?dataid=174&id=90, accessed July 16, 2008.
5. Cathy Booth, “Steve Jobs: Restart Apple,” Time, August 18, 1997, http://
www.time.com/time/magazine/article/0,9171,986849,00.html.
6. “Jonathan Ive, Apple’s Forgotten Saviour,” Cube, May 19, 2007, http://
cube1986.blogspot.com/2007/05/jonathon-ive-apples-forgotten-saviour.html.
7. Apple Public Relations, “Biography—Jonathan Ive,” http://www.apple.
com/pr/bios/ive.html, accessed July 18, 2008.
176 Notes
8. “Chingford Boy Is Mr Ive-Pod,” Sun, January 11, 2007, http://www.thesun.

co.uk/sol/homepage/news/article7632.ece.
CHAPTER 9
1. Eliot Van Buskirk, “Zune Eats Creative’s Meager Lunch, Grabbing 4 Per-
cent of MP3 Player Market,” Wired, May 12, 2008, http://blog.wired.com/music/
2008/05/ipod-loses-mark.html.
CHAPTER 10
1. Leander Kahney, “Apple Stock Crash Means It’s Time to Go Long on AAPL,”
Wired, November 13, 2007, http://www.wired.com/gadgets/mac/commentary/
cultofmac/2007/11/cultofmac_1114.
2. Bhaskar Chitraju, “Apple Financial Analysis,” January 18, 2007, http://
blogs.indews.com/financial_analysis/apple_financial_analysis.php.
3. Kahney, “Apple Stock Crash.”
4. Connie Guglielmo, “Apple iPhone Fees Prompt Analysts to Revalue Earn-
ings,” Bloomberg, November 8, 2007, http://www.bloomberg.com/apps/news?pi
d=20601109&sid=aTTQICamfprA&refer=home.
5. “Apple Investor Relations Page,” http://www.apple.com/investor/, accessed
July 20, 2008.
6. Thomas Hormby, “NeXT, OpenStep, and the Triumphant Return of
Steve Jobs,” Low End Mac, November 15, 2005, http://lowendmac.com/or
chard/05/1115.html.
7. Chitraju, “Apple Financial Analysis.”
8. Chitraju, “Apple Financial Analysis.”
9. Jal Singh, “Dell: Apple Should Close Shop,” CNET News, October 6, 1997,
http://www.news.com/Dell-Apple-should-close-shop/2100–1001_3–203937.
html (accessed March 2, 2007).
10. Jeff Gamet, “Apple Passes Dell’s Market Cap,” MacObserver, January 16,
2006, http://www.macobserver.com/stockwatch/2006/01/16.1.shtml.
11. Brian Caulfield, “Leopard on the Prowl,” Forbes, October 26, 2007,
http://www.forbes.com/technology/2007/10/26/ipod-apple-jobs-tech-cx_bc_
1026leopard.html.
12. Brian Caulfield, “Meet the Mac-Clone Mystery Man,” Forbes, April 18, 2008,
http://www.forbes.com/technology/2008/04/18/apple-mac-psystar-tech-cx_
bc_0418macman.html.
13. Ben Worthen, “PayPal Bans Browsers; Mac Love; Cell Phone Bans,” Wall
Street Journal, April 18, 2008, http://blogs.wsj.com/biztech/2008/04/18/paypal-
bans-browsers-mac-love-cell-phone-bans/.
CHAPTER 11
1. Jason Snell, “Steve Jobs on the Mac’s 20th Anniversary,” Macworld, Febru-
ary 2, 2004, http://www.macworld.com/article/29181/2004/02/themacturns20
jobs.html.
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Index
Adobe, 45, 46, 73, 75 Atari, 4, 11, 23, 71, 153

AGP Graphics, 103 Atkinson, Bill, 8, 29, 30
AirPort, 53, 63, 64, 101, 102, 104, 112, Audion, 54, 109
116, 117, 118, 120, 122, 123, 125, 126, Automator, 129
138, 139, 140 A/UX, 83, 84
AirPort Express, 63, 64, 123 Azul, 97
AirPort Extreme, 53, 54, 116, 117, 118,
122, 125, 126, 138, 139, 140 Bandai, 91
AirTunes, 63, 123 Bandwidth, 125, 164
All-in-one, 13, 41, 51, 75, 77, 84, 97, 120 Beige, 13, 75, 88, 97, 120
Altair, 2, 3 Berkeley, 2, 22, 23, 26, 30
Altivec, 13, 101 Bicycle, 10, 165
Amelio, Gil, 12, 91, 92, 146, 149, 161 Blog, 40, 44, 56
Amiga, 11, 153 Blue and White, 53, 99, 100, 101
Anderson, Fred, 150 Bluetooth, 66, 116, 117, 118, 120, 125,
Aperture, 134 126, 130, 133, 138, 139
Apple Cinema Display, 123 Bondi, 51, 94, 97, 98, 99
Apple I, 1, 2– 4, 25, 31, 35, 45, 69–70, Bonjour, 116
72, 135, 146 Boot Camp, 139, 154
Apple II, 5– 6, 11, 25, 26, 30, 31, 67, 69, Bricklin, 70, 71
70, 71 Bronze, 94, 100
Apple IIGS, 11 Browser, 92, 120, 135, 150, 158, 161
Apple III, 6– 7, 8, 31, 157 Buddhism, 23
Apple Studio Display, 97 Budget, 5, 46, 88, 96, 100, 104
AppleScript, 30, 95 Buffer, 57
AppleTalk, 45 Bundle, 15, 48, 81, 90, 113, 131
Apple TV, 15, 36, 37, 39, 65, 66, 129, Burn, 18, 61, 109, 110
133, 134, 135, 138, 139, 140, 141, Bus, 76, 78, 80, 81, 83, 87, 96, 98, 108,
156, 163, 164 121, 125, 127, 130, 131, 138,
AppleWorks, 106 Button, 31, 50, 73, 98, 99, 118, 122, 126,
App Store, 136, 141 128, 133, 135
Aqua, 41, 75, 103, 106, 111 Byte, 3, 9, 69, 84, 117, 121
Architecture, 7, 11, 70, 86, 101, 102,
103, 105 Cable, 37, 43, 58, 63, 84, 94, 101, 103,
AT&T, 22, 65, 84, 91, 141 119, 120, 128, 134, 156
180 BookTitle
Index
Cache, 50, 84, 89, 93, 94, 96, 109, 113, Code, 3, 10, 34, 35, 71, 95, 97, 99, 130
121 College, 1, 11, 18, 23, 25, 28, 31, 59,
Calculator, 3, 23 164
Calendar, 48, 85, 135, 161 Colors, 5, 11, 13, 38, 51, 67, 69, 75, 77,
California, 1, 2, 17, 23, 24, 25, 26, 28, 81, 84, 85, 89, 94, 98, 99–103, 107,
29, 30, 54, 69, 74, 111, 159 110, 122, 123, 127, 132, 136
Camera, 20, 52, 66, 119, 122, 125, 130, Colorsync, 111
131, 139, 163 Combo, 107, 108, 112, 114, 122
Campbell, William, 152 Comcast, 156
Campus, 14, 20, 34, 149 Commodity, 154
Capital, 5, 6, 140 Commodore, 6, 69, 70, 71
Capps, Steve, 32 Communicator, 64
Carbon, 19, 106, 130, 131, 137 Compaq, 58, 154
Carl, 159 Competition, 6, 11, 52, 58, 64, 91, 93,
Carnegie, 32 110, 153 –57
Cars, 19, 24 Competitor, 6, 11, 34, 50, 51, 64, 74, 85,
Cassette, 3, 69, 70, 71 153 –57
Cat, 111, 119 Complaint, 75, 128, 139
CD, 36, 55, 56, 60, 61, 107, 108, 109, Component, 1, 21, 36, 60, 65, 101, 115,
110, 111, 112, 115 130, 134
CD-R, 112 CompUSA, 153
CD-ROM, 52, 80, 81, 84, 87, 89, 90, 112, Concept, 8, 14, 15, 16, 38, 40, 56, 61, 80,
113 94, 151, 156
CD-RW, 114, 126 Conference, 37, 39, 40, 46, 64, 86, 101,
CEO, 10, 11, 12, 24, 29, 32, 48, 61, 102, 103, 112, 123, 127, 129, 140,
73, 91, 92, 103, 129, 136, 139, 144, 144, 158
146, 147, 148, 149, 150, 151, 152, Confidential, 87
161, 162 Console, 91, 156, 165
CFO, 65, 150 Content, 36, 37, 38, 61, 65, 98, 106, 128,
Chairman, 147, 148, 152 130, 134, 141, 156, 164, 165
Channel, 102, 132 Contract, 88, 120, 136, 155
Cheetah, 111 Convention, 104, 131, 155
Chiat, 72, 150 Cook, Tim, 65
Chicago, 88, 104 Copland, 11, 12, 95, 105, 149
Chip, 3, 5, 6, 10, 11, 15, 28, 64, 80, 83, Coreaudio, 120
86, 87, 90, 93, 94, 96, 97, 101, 102, Cougar, 111
103, 109, 114, 117, 121, 123, 130, 132, Cover Flow, 135, 136 –37
138, 154, 155 CTIA, 39
Cinema Display, 120, 123, 124 Cube, 102, 103, 104, 114
Circuit, 7, 69, 77, 143 Cupertino, 15, 17, 20, 21, 25, 43, 45, 56,
Clamshell, 94 68, 80, 87, 155, 164
Claris, 81, 90 Cyberdog, 158
Clarisworks, 81, 90
Classroom, 53 Darwin, 105
Clone, 7, 12, 13, 34, 43, 87, 88, 96, 149, Daystar, 88, 148
150, 153, 154, 155 Dell, 34, 50, 95, 117, 136, 152, 154,
Cloud, 28 155, 162
Cluster, 117, 121 Desktop, 7, 13, 15, 34, 45, 46, 47, 50,
Cocoa, 106 63, 74, 76, 77, 80, 81, 82, 86, 87, 93,
ChapterTitle
Index 181
94, 96, 97, 98, 99, 100, 101, 104, 107, Firewire 800, 52, 116, 118
112, 113, 115, 117, 124, 125, 129, 132, Flash, 3, 57, 68, 110, 122, 126, 127, 136,
135, 154, 155, 158 137
Digital Audio, 36, 65, 84, 110, 121 Flickr, 66
Disney, 20, 24, 141, 150 Founder, 1, 17–32, 45, 92, 148,
DIVX, 134 151, 152
DRN, 44, 61, 155 Frankenmac, 155
Duo, 23, 66, 69, 80, 82, 84, 87, 130–32, Frankfurt, 159
137, 138 FreeBSD, 14
DVD, 15, 99, 102, 104, 107, 108, 111,
112, 114, 115, 124, 126, 134, 139, Garageband, 15, 124
141 Gateway, 14, 53, 54
DVD Studio Pro, 107 Genentech, 152
DVI, 112, 118, 123, 130, 131 Genius, 14, 21, 25, 54, 111
DVR, 38, 156 Gesture, 66, 135, 139
Dylan, Bob, 62 G5, 15, 62, 114, 117, 121, 123, 125, 129,
130, 132, 154
eBay, 49 G4, 13, 15, 52, 53, 60, 62, 96, 99, 101–7,
E-commerce, 50 108, 109, 112, 113, 114, 115, 116, 117,
El-Capitan, 100 118, 120, 121, 122, 124, 125, 126,
Ellison, Larry, 150 129, 130, 131
eMac, 112, 115, 121, 125, 130 Gigabit, 53, 103, 109, 113, 131
E-mail, 48, 85, 115, 158 Gigabyte, 117, 121
Environment, 14, 18, 30, 60, 106, 133, Gigaflop, 101, 121, 125
138 Glasgow, 139
Espinosa, Chris, 8, 30 Glendale, 54, 111
Ethernet, 53, 54, 64, 79, 87, 101, 103, Google, 34, 135, 152
109, 113, 131, 139 GPS, 141
Europe, 62, 77, 148 Greece, 62
eWorld, 158 G3, 15, 50, 52, 53, 93–97, 99, 100, 101,
Expo, 39–41, 53, 54, 56, 59, 60, 64, 65, 108, 110, 117, 120, 129, 139
67, 68, 80, 92, 100, 102, 103, 105,
106, 109, 111, 112, 114, 115, 118, 120, Hackintosh, 155
121, 122, 124, 126, 130, 131, 133, HD, 1, 20, 26, 36, 38, 65, 66, 76, 77,
134, 135, 138, 139, 140, 141, 143, 115, 125, 130, 134, 135, 140, 141,
144, 145 156
Extensions Manager, 88, 95 HDMI, 36, 65, 134
Hertzfeld, Andy, 8, 9, 10, 30, 31
Fairplay, 45, 60 Hewlett-Packard, 1, 2, 3, 19–20
Fadell, Tony, 152 Hoffman, Joanna, 8, 30
Fernandez, Bill, 1, 2, 20, 21 Homebrew, 2, 3, 23, 24, 25, 69
FileVault, 120 Horn, Bruce, 32
Finder, 32, 76, 83, 88, 95, 110, 116, Howard, Brian, 8, 29, 31
120, 139 HP. See Hewlett-Packard
Finland, 62 Hypercard, 30
Firewire, 57, 58–59, 66, 99, 100, 102,
103, 104, 107, 109, 110, 113, 116, 118, IBM, 6, 7, 11, 15, 43, 45, 50, 52, 62, 64,
119, 129, 140 73, 79, 80, 86, 90, 96, 105, 117, 121,
Firewire 400, 53 122, 129, 148, 149, 153, 154
182 BookTitle
Index
iBook, 13, 52–53, 79, 94, 96, 100, 101, iWork, 15

102, 103, 107, 108, 109, 110, 112, 116, iWoz, 25
117, 118, 121, 122, 126, 131
iChat, 116, 119, 120, 135, 139 Jaguar, 111, 113, 115, 116
iDisk, 115 Japan, 16, 84, 89, 91, 120, 124, 129,
iDVD, 15, 107, 124 133, 151
IEEE, 52, 53 Jobs, Steve, 1, 4, 7, 10, 11, 12, 14, 17, 22,
iFund, 141 24, 25, 27, 29, 30, 31, 34, 37, 39, 41,
iLife, 15, 44, 115, 124, 125 43, 49, 50, 51, 52, 53, 56, 60, 61, 63,
iMac, 13, 14, 15, 43, 44, 50–53, 60, 67, 64, 68, 70, 71, 73, 74, 75, 86, 88, 91,
94, 96, 97, 98, 99, 100, 103, 104, 107, 92, 95, 96, 98, 99, 100, 101, 103, 104,
108, 112, 114, 115, 116, 119, 120, 121, 105, 106, 114, 119, 120, 122, 123, 124,
125, 129, 130, 137, 144, 151, 164 129, 130, 132, 133, 135, 139, 140,
iMac DV, 52, 99, 104 141, 144, 146, 147, 149, 151, 152,
iMac G5, 120, 121, 125, 130 155, 157, 161, 163
iMate, 98 Joost, 156
iMovie, 15, 119, 124
Inhatko, Andy, 41 Kahney, Leander, 41
Inkwell, 116 Kare, Susan, 8, 31
Intel, 3, 15, 29, 46, 64, 66, 79, 86, 105, Kawasaki, Guy, 29
124, 129, 130, 131, 132, 133, 134, Keyboard, 5, 7, 49, 60, 61, 66, 69, 73,
137, 138, 139, 141, 154, 155 76, 79, 87, 94, 96, 97, 98, 100, 103,
Internet, 13, 31, 42, 49, 51, 53, 60, 63, 111, 114, 118, 120, 128, 131, 137,
65, 91, 92, 95, 97, 98, 101, 102, 106, 138, 139
119, 120, 140, 141, 150, 158, 161 Keynote, 15, 39, 40, 60, 64, 92, 99, 106,
Intuit, 152 114, 120, 124, 129, 135, 144, 145
iPhone, 13, 15, 37, 38, 39, 41, 43, 49, 54, Keyspan, 156
60, 64, 65, 119, 129, 133, 134, 135, Kleiner, 141
136, 137, 139, 141, 151, 163, 164 Kottke, Daniel, 8, 31
iPhoto, 15, 115, 124, 134
iPod, 13, 14, 15, 33, 35, 36, 37, 38, 41, Laserwriter, 30, 45, 46, 73, 74, 75
43, 44, 50, 55, 56, 57, 58, 59, 60, 61, Lawsuit, 150, 154
64, 67, 68, 106, 109, 110, 114, 115, LCD, 103, 131
118, 119, 122, 123, 124, 126, 127, 128, Leopard, 54, 54, 111, 111, 139, 139, 140,
132, 133, 135, 136, 137, 139, 141, 140, 142, 142, 155, 155
142, 151, 152, 155, 156, 157, 158, Linux, 121, 155
163, 164 LocalTalk, 73
iSight, 66, 119, 125, 130, 131, 139 Lockheed, 25
Italy, 16, 62, 120, 139 Logic, 10, 18, 19, 31, 47, 48, 96, 112,
iTunes, 15, 33, 36, 37, 38, 44, 54, 55, 56, 121, 137, 164
59, 61, 62, 63, 65, 68, 106, 109, 115, London, 67, 124, 151
119, 123, 124, 127, 128, 132, 134, Los Gatos, 28
135, 136, 137, 139, 140, 141, 156, Lucasfilm, 10
158, 163, 164 Luxo, 114, 120
iTunes Store, 15, 33, 38, 55, 59, 61, 62, Lynx, 111
119, 128, 132, 136, 141, 163
Ive, Jonathan, 13, 43, 51, 104, 120, 135, MacBook, 15, 46, 49, 61, 63, 66, 130,
151, 152 131, 132, 137, 138, 139, 140, 157
iWeb, 15 MacBook Air, 15, 66, 139, 140
ChapterTitle
Index 183
MacBook Pro, 130, 131, 132, 137, 138 MP3, 35, 36, 54, 55, 56, 58, 109, 110,
Macintosh Classic, 81 155, 156
Macintosh 512, 73 Multiprocessor, 101, 107
Macintosh SE, 103, 113 Multitasking, 72, 76, 79, 102, 105, 157
Macintosh TV, 36, 157 Multithreaded, 95
Mac mini, 15, 44, 124, 125, 130, 131, Multi-Touch, 135, 136, 139
137, 138
Mac OS, 12, 13, 14, 15, 40, 54, 64, 75, Nano, 38, 127, 132, 133, 136, 141,
79, 87, 88, 92, 95, 98, 102, 103, 105, 142, 158
106, 110, 111, 113, 114, 115, 116, 117, Nemo, 24
119, 124, 125, 126, 129, 133, 134, Netflix, 141, 156
139, 140, 142, 149, 153, 155, 156, 157 Netgear, 156
Mac OS 7, 79, 95 Netscape, 158
Mac OS 8, 12, 79, 88, 95, 98, 102, 149 Newton, 11, 32, 43, 46, 47, 48, 49, 82,
Mac OS X, 161 85, 88, 89, 90, 94, 95, 96, 98, 148,
Macpaint, 30 149, 150, 157
Mac Pro, 86, 137, 138, 141 NeXT, 10–11, 12, 13, 24, 31, 34, 50, 73,
Macro, 76 74–75, 91–92, 95, 105, 146, 149, 150,
MacWorks, 73 157
Macworld, 27, 28, 39, 40, 41, 53, 54, Nintendo, 91
55, 56, 60, 64, 65, 67, 68, 80, 92, 100, Nokia, 39
102, 103, 105, 106, 109, 111, 112, 114, Nomad, 28, 58
115, 118, 121, 122, 124, 126, 130, 131, Notebook, 13, 15, 34, 46, 47, 49, 50, 52,
133, 134, 135, 139, 140, 141, 143, 58, 60, 63, 66, 79, 81, 86, 87, 93, 94,
144, 145 100, 101, 107, 108, 110, 112, 118, 130,
MacWrite, 76 131, 137, 139, 140, 154, 158
Magsafe, 131 Numbers, 11, 15, 51, 110, 148, 153
Manock, Jerry, 6, 8, 30 NVIDIA, 118, 138
Markkula, Mike, 6, 17, 24, 28, 70, 147
Megabyte, 84 Omaha, 40
Microphone, 19, 78, 87, 119 OpenDoc, 88
Microsoft, 11, 12, 15, 34, 46, 50, 55, 58, OpenGL, 111
70, 79, 88, 92, 93, 95, 105, 116, 120, Openstep, 75, 129
121, 136, 148, 150, 154, 155, 156, Oppenheimer, Peter, 65, 152
157, 158, 161, 164 Oracle, 150
Minitower, 99 Oregon, 23, 31
Modem, 78, 79, 81, 84, 86, 90, 91, 100
Monitor, 3, 10, 31, 51, 60, 72, 75, 77, 81, PageMaker, 45, 74
82, 85, 90, 94, 97, 99, 101, 103, 104, Pages, 15, 21, 73, 95
114, 115, 119, 120, 121, 123, 124, 130, Palm, 47, 48, 49, 147
131, 150, 158 Palmsource, 147
Moscone Center, 143 Panic, 55, 111
Motorola, 3, 9, 13, 15, 39, 50, 64, 73, 79, Panther, 111, 119, 120
80, 83, 84, 86, 88, 93, 101, 102, 127, Parallels, 154
129, 136, 148, 153, 154, 158 Paris, 36, 107, 118, 120, 131, 151, 156
Mouse, 7, 9, 10, 11, 40, 45, 72, 73, 74, Patent, 71, 165
76, 97, 98, 103, 114, 120, 128, 129, PCI, 63, 101, 113, 117, 121, 125, 132
133, 135, 157 PCMCIA, 49, 95, 96
MPEG, 128 PDA, 36, 46, 48, 49, 85, 148, 157
184 BookTitle
Index
Pepsi, 11, 148 Safari, 120, 129, 135

Phreak, 22 Samsung, 39, 156
Pippin, 36, 91, 158 Sandisk, 156
Pixar, 11, 24, 114, 146, 150 San Francisco, 17, 18, 19, 28, 31, 53, 54,
Podcast, 28, 54, 65, 128, 141, 164 60, 65, 67, 68, 69, 101, 102, 105, 106,
Portugal, 62 109, 118, 121, 122, 124, 126, 130,
Power Mac, 13, 50, 52, 53, 63, 81, 86, 131, 133, 134, 139, 141, 143
87, 88, 89, 90, 93, 94, 95, 96, 97, 98, Santa Clara, 1
99, 100, 101, 102, 103, 104, 107, 113, Schiller, Phil, 86
114, 116, 117, 121, 123, 125, 153, Schmidt, Eric, 152
154, 162 Scott, Michael, 147
Power Macintosh G4, 101 SCSI, 52, 75, 77, 84, 87, 89, 100, 132
Power Macintosh G3, 93, 95 Sculley, John, 10, 11, 24, 29, 32, 48, 73,
Power Macintosh 6100, 81, 86, 87 74, 80, 92, 146, 147, 148
Powerbook, 46, 47, 49, 50, 52, 60, 63, SDK, 139
78, 79, 80, 81, 82, 83, 84, 86, 87, 89, Security, 14, 111, 139
90, 93, 94, 96, 100, 107, 108, 109, Segway, 27, 28
110, 112, 114, 116, 118, 119, 122, 123, Seybold, 45, 101
126, 130, 131, 154, 162 Shake, 22
PowerPage, 79 Sherlock, 98, 102, 116
PowerPC, 11, 13, 50, 62, 80, 86, 87, 89, Shuffle, 44, 55, 68, 126, 127, 133, 136,
90, 91, 93, 95, 97, 98, 101, 117, 121, 142, 157
124, 125, 129, 132, 133, 139, 153, 158 Smith, Burrell, 8, 30, 32
PPC, 93, 109, 134 Sony, 35, 36, 39, 46, 47, 52, 61, 78, 79,
Prada, 144 89, 91, 119, 141, 155
Prank, 21, 23, 25 Sony Ericsson, 39
PREP, 153 Soundjam, 55, 109
Psystar, 155 Spaces, 137, 139
Puma, 111 Specialist, 45, 54
Speed-bump, 43, 81, 85, 88, 99, 100,
Quadra, 11, 78, 80, 81, 82, 83, 84, 85, 103, 106, 109, 112, 114, 116, 117, 118,
86, 87, 96, 97, 148, 150, 153 120, 121, 122, 124, 125, 126, 130,
Quark, 117 131, 132, 134, 137, 138, 144
Quartz, 111, 116 Spindler, Michael, 11, 146, 148
Quickdraw, 30, 79, 88 Spotlight, 129
QuickTime, 46, 79, 102, 106, 116, Spreadsheet, 6, 15, 70
120, 129 Stanford, 18, 21, 22, 23, 30
Sunnyvale, 20
Radius, 30, 31, 88, 148 SuperDrive, 77, 107, 112, 114, 116, 122,
Raskin, Jef, 8, 9, 10, 29, 30, 31, 147 125, 126, 132, 140
Ratatouille, 24
Renaissance, 12, 13, 95, 149, 151 Taligent, 105, 157
Rendezvous, 116 TAM. See Twentieth Anniversary
Retail, 13, 14, 15, 16, 34, 40, 45, 49, 50, Mac
53–54, 62, 111, 112, 116, 119, 120, Television, 3, 5, 15, 30, 33, 36, 37, 38,
124, 129, 133, 139, 142, 152, 153, 44, 54, 65, 71, 72, 90, 91, 97, 104,
157, 161 109, 120, 123, 128, 134, 140, 141,
Rubinstein, Jon, 150 144, 151, 156, 163, 164
ChapterTitle
Index 185
Terabyte, 121 Vermont, 31

Texas Instruments, 52 VGA, 97, 99, 108, 112, 118, 136
Think Different, 44 Video, 2, 7, 14, 15, 23, 36, 37, 38, 46,
Thinkpad, 93, 96 52, 54, 61, 62, 65, 69, 75, 82, 84, 85,
TiBook, 109 91, 93, 96, 97, 99, 100, 109, 128, 129,
Tiger, 111, 125, 126, 129, 133 131, 132, 134, 135, 136, 137, 141,
Time Capsule, 53, 139, 140 156, 165
Time Machine, 53, 139, 140 VisiCalc, 6, 29, 70, 71
Titanium, 108, 109, 118 Vista, 155, 156
TiVO, 156 VMWare, 154
Toaster, 13, 51, 104
Tobark, Oaf, 2, 22 Walkman, 35, 36, 155
Tokyo, 80, 144 WebObjects, 50, 75, 95
Trackpad, 49, 50, 66, 79, 87, 94, 110, Widescreen, 36, 64, 65, 134, 135, 156
114, 139 Widget, 73, 111
Tribble, Bud, 8, 9 Wi-Fi, 53, 63, 64, 66, 123, 136, 139
TV, 15, 34, 36, 65, 84, 94, 123, 128, 134, Windows, 11, 13, 15, 31, 33, 36, 46, 49,
135, 138, 139, 140, 141, 158 51, 55, 57, 58, 59, 64, 65, 72, 73, 80,
Twentieth Anniversary Mac, 40, 68, 83, 88, 92, 98, 109, 111, 116, 119, 121,
91, 94, 152, 158 123, 124, 128, 130, 134, 153, 154,
2600Hz, 22 155, 156, 163, 164
Wozniak, Steve, 7, 17, 21, 22, 24, 25, 26,
United Kingdom, 16, 35, 52, 58, 149, 27, 29, 30, 31, 33, 70, 146, 147
154 WWDC, 64, 86, 103, 112, 119, 129, 130,
Umax, 88, 148 132, 135, 141
Unix, 83, 84, 90, 92, 105, 111, 116
USB, 52, 54, 58, 59, 64, 97, 98, 100, 102, Xbox, 156
103, 104, 107, 108, 110, 113, 117, 118, Xcode, 106, 120
119, 121, 126, 138, 139, 140 Xeon, 63, 132, 138, 141
Xerox, 7, 32, 45, 73, 74, 79
Velocity Engine, 101 Xserve, 15, 112, 113, 117, 121, 125,
Verizon, 156 132, 141
About the Author
JASON D. O’GRADY has written for many Macintosh trade magazines,

including MacWorld, MacWEEK, and MacPower ( Japan). He has also
been interviewed on ABC, NPR, NBC, and BBC radio, and featured in
the New York Times, Wall Stree Journal, and USA Today. O’Grady runs
O’Grady’s PowerPage.org, a Web site devoted to mobile applications
related to Apple products.

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Apple Inc.

Corporations That Changed the World

The paper used in this book complies with the

little company that made computers to a company that made a difference.

Apple Inc. is one of the most influential companies in technology today,

Apple had an amazing impact on technology, society, and the world.

1. Inventing the personal computer (PC)—Apple started the per-

Origins and History

HP’s Garage Roots

Apple began in the Santa Clara Valley vicinity of California—known

to 21-year-old Wozniak by Fernandez. Jobs eventually convinced Woz-

Anatomy of a Blue Box

The Name Apple Computer

Read more about Mike Markkula in Chapter 2, “Founders and

APPLE COMPUTER INC.

The precursor to the Macintosh—The Lisa. Image © John Greenleigh, www.flipside

The first Macintosh—The Mac 128k. Image © John Greenleigh, www.flipside

increasingly alienated from the team, eventually leaving entirely in the

How the Mac Was Almost a Bicycle

Macintosh shipped on January 24, 1984, and was revolutionary be-

1985–1997: THE SCULLEY, SPINDLER, AMELIO ERA

For more on Apple’s competitors, see Chapter 9, “Competition.”

Part of Sculley’s strategy was to push the Mac by releasing dozens of

systems. Spindler was replaced by Gil Amelio as Apple CEO on Febru-

Apple is a boat. There’s a hole in the boat, and it’s taking on

1998–2001: RECOVERY, RENAISSANCE, AND RESURGENCE

1. Mac OS X—Apple’s first multi-threaded, protected memory op-

Apple released its first truly modern operating system in 2001 as a

2002–PRESENT: THE NEW APPLE

introduction of iMac, iPod, Mac OS X, and a chain of retail stores. With a

Founders and Key Players

came to be known as “Silicon Valley.” According to Jobs’s commencement

My parents, who were on a waiting list, got a call in the middle of

His biological parents studied at the University of Wisconsin in Mad-

Silicon Valley Is Born

“Silicon Valley.” In the 1950s, the brightest electrical engineers from

For more on Steve Jobs’s history at Apple Computer, see Chap-

1985: The National Medal of Technology from President Ronald Reagan.

2007: Fortune magazine’s Most Powerful Businessman.11

Woz enrolled in the University of California, Berkeley in 1971, but

Steve Wozniak arrives at Macworld Expo 2008 on his

Known as somewhat of a nomad, Woz has started several business

Woz and His Segway

While the founders are inextricably associated with the success of

primatives software (which Raskin renamed QuickDraw) that allowed the

Jerrold C. “Jerry” Manock

worked as an industrial designer at Apple from 1977 to 1984. He is most

the Macintosh, then graduated to become Burrell Smith’s assistant. He’s

Apple will be remembered as the creator of the personal computer and

1984 8.2% 7.00M households

For more on iPod unit sales, see Chapter 10, “Finances.”

TELEVISION, MOVIES, SET-TOP BOXES

The device that changed the music world—The original

Apple’s first real set-top box—The Apple TV. Image ©

Apple is a minor player in the worldwide mobile phone market, and

technology presentation. Tickets are coveted and difficult to get. They’re

Read more about Macworld Expo in Chapter 7, “Macworld

Strategies and Innovations

unobtrusive and inviting and encourage users to be creative without get-

1. Eliminating all unprofitable products. Jobs immediately killed