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• John Sculley (7)
Steve Jobs: (66)
We feel betrayed by the unexpectedly high price
Date: October 1983
Author: Andy Hertzfeld
The Macintosh was originally intended to be a very low cost, high volume personal computer. We wanted to keep the price as low as possible, so the Mac would be affordable to ordinary individuals, and Apple could sell them by the millions. The initial target price was $500, less than half the price of an Apple II at the time, but it quickly rose to $1000 after the design team added up the cost of various components.
In early 1981, after switching from the 6809 to the more expensive 68000 microprocessor and doubling our RAM size to 128K bytes, we realized that we'd have to raise the retail price to $1500 in order for Apple to make its standard profit margin. $1500 was approximately the original price of the Apple II, and it seemed like that was about as high as you could go while still being affordable to individuals. We worked hard to keep the price from rising further, and were able to hold it at $1500 for most of the time the product was under development.
Pricing a brand new computer is tricky, because costs are highly dependent on volume: the more units of a component that you were willing to order, the lower the price per unit. But how can you predict how well a new type of computer will sell? It's literally a confidence game, and we had no shortage of that. Steve Jobs knew that we were going to sell Macintoshes by the millions, and he was good at convincing our suppliers to share some of the risk with us via lower initial prices, to be rewarded as volumes soared in the years ahead. For example, Steve was able to get Motorola to commit to a price of $9.00 for the 68000 microprocessor, less than a quarter of what they were currently quoting at the time.
By the summer of 1983, it was becoming clear that the disk division's Twiggy floppy disk drive wasn't going to make it, and if we weren't careful, it could drag down the Macintosh with it. We had to scurry , but we were able to replace Twiggy with the Sony 3.5 inch drive without slipping the schedule, which was better in every way except one: it cost us an extra $50 or so. When combined with a few other recent splurges, it pushed us over the top, so we grudgingly accepted that the Macintosh would have to debut for $1995.
Meanwhile, Apple hired a new CEO, John Sculley, in April 1983. John was the former CEO of Pepsi, and a world-class marketing whiz, having invented the concept of the "Pepsi Generation" and other successful promotions. He was hired by Apple mainly to apply his marketing skills to the personal computer market, and the Macintosh in particular. But big time marketing costs big time money.
In October 1983, as plans for the Macintosh launch were being finalized, and we were frantically trying to finish the software, Steve Jobs strode into the software area one evening, looking angry. "You're not going to like this," he told us, "but Sculley is insisting that we charge $2495 for the Mac instead of $1995, and use the extra money for a bigger marketing budget. He figures that the early adopters will buy it no matter what the price. He also wants more of a cushion to protect Apple II sales. But don't worry, I'm not going to let him get away with it!"
The design team was horrified. One of the main reasons that we were so passionate about the Macintosh was that we thought we were working on something that we would use ourselves, along with our friends and relatives. It was crucial that it be affordable to ordinary people. $2500 felt like a betrayal of everything that we were trying to accomplish. We worked very hard to keep the price down in every aspect of the design, and now it was being artificially inflated for reasons that didn't make sense to us. But we thought that Steve would prevail, and be able to convince John that we'd do better at the lower price.
But finally, much to our surprise and dismay, after a week or so of wrangling, Steve was the one who gave in, and the Mac was priced at $2495 at launch. Even though it sold quickly at first, soon sales bogged down, partially due to the lack of available software, but also because of the price. Even after sales picked up in 1986, with the Mac Plus and the proliferation of desktop publishing, Apple continued to overcharge for the Macintosh, preferring huge profit margins to growing their market share, which eventually led to big problems when it caught up with them in the nineties.
Burrell modifies his sweatshirt
Date: October 1983
Author: Andy Hertzfeld
Most of the Macintosh software team members were between twenty and thirty years old, and with few family obligations to distract us, we were used to working long hours. We were passionate about the project and willing to more or less subordinate the rest of our lives to it, at least for a while. As pressure mounted to finish the software in time to meet our January 1984 deadline, we began to work longer and longer hours. By the fall of 1983, it wasn't unusual to find most of the software team in their cubicles on any given evening, week day or not, still tapping away at their keyboards at 11pm or even later.
The rest of the Macintosh team, which had now swelled to almost a hundred people, nearing the limit that Steve Jobs swore we would never exceed, tended to work more traditional hours, but as our deadline loomed, many of them began to stay late as well to help us test the software during evening testing marathons. Food was brought in as a majority of the team stayed late to help put the software through its paces, competing to see who could find the most bugs, of which there were still plenty, even as the weeks wore on.
Debi Coleman's finance team decided to commemorate the effort that the entire team was putting forth in the traditional Silicon Valley manner: they made a T-Shirt. Actually, to make it a little more special, they chose a high quality, gray hooded sweatshirt. Steve Jobs had recently bragged to the press that the Macintosh team was working "90 hours a week". They decided that the tag line for the sweatshirt should be "90 Hours A Week And Loving It", in honor of Steve's exaggerated assertion.
The sweatshirt featured the name Macintosh in red letters, purposefully misspelled as "Mackintosh", as it had been in a recent article, with a black squiggle crossing out the errant 'k'. The "90 Hours" tag line was emblazoned in black across the back. They were produced in time for the next testing marathon, as a reward for participating. The software team wasn't all that pleased, since we felt that we really were working that hard, but most of the other sweatshirt recipients weren't even coming close. But it was a pretty nice sweatshirt, so lots of the engineers started wearing them frequently, including Burrell Smith.
When Burrell finally quit Apple in February 1985, he continued to wear the sweatshirt almost every day, but, as soon as he returned home following his resignation, he took some masking tape and made a big 'X' across the leading '9' character, virtually obliterating it from view. He proudly displayed the updated motto, reflecting exactly how he felt. It now read "0 Hours A Week And Loving It".
Steve confronts Bill Gates about copying the Mac
Date: November 1983
Author: Andy Hertzfeld
Topics: 3rd party developers,Microsoft,Personality
When Steve Jobs recruited Microsoft to be the first third party applications software developer for the Macintosh, he was already concerned that they might try to copy our ideas into a PC-based user interface. As a condition of getting an early start at Macintosh development, Steve made Microsoft promise not to ship any software that used a mouse until at least one year after the first shipment of the Macintosh.
Microsoft's main systems programmer assigned to the Mac project was Neil Konzen, a brilliant young Apple II hacker who grew up in their backyard in the suburbs of Seattle. Neil started working at Microsoft while he was still a high school student, and single-handedly implemented the system software for their hit Z80 card that allowed the Apple II to run CP/M software.
Neil loved Apple, so it was natural for Microsoft to assign him to their new, top-secret Macintosh project. He was responsible for integrating Microsoft's byte-code based interpreted environment (which actually was a copy of a system used at Xerox that favored memory efficiency over execution speed, which was appropriate for the Mac's limited memory) with the rapidly evolving Macintosh OS, so he quickly became Microsoft's expert in the technical details of the Mac system.
By the middle of 1983, Microsoft was far enough along to show us working prototypes of their spreadsheet and business graphics programs, Multiplan and Chart (they were also working on a word processor, but they neglected to mention that, since it would compete with MacWrite). I would usually talk with Neil on the phone a couple of times a week. He would sometimes request a feature that I would implement for him, or perhaps complain about the way something was done. But most of the time I would answer his various questions about the intricacies of the still evolving API.
I gradually began to notice that Neil would often ask questions about implementation details that he didn't really need to know about. In particular, he was really curious about how regions were represented and implemented, and would often detail his theories about them to me, hoping for confirmation.
Aside from intellectual curiosity, there was no reason to care about the system internals unless you were trying to implement your own version of it. I told Steve that I suspected that Microsoft was going to clone the Mac, but he wasn't that worried because he didn't think they were capable of doing a decent implementation, even with the Mac as an example.
In November 1983, we heard that Microsoft made a surprising announcement at Comdex, the industry's premier trade show, held twice a year in Las Vegas. Microsoft announced a new, mouse-based system graphical user interface environment called Windows, competing directly with an earlier environment announced by Personal Software called "Vision". They also announced a mouse-based option for Microsoft Word. When Steve Jobs found out about Windows, he went ballistic.
"Get Gates down here immediately", he fumed to Mike Boich, Mac's original evangelist who was in charge of our relationships with third party developers. "He needs to explain this, and it better be good. I want him in this room by tomorrow afternoon, or else!"
And, to my surprise, I was invited to a meeting in that conference room the next afternoon, where Bill Gates had somehow manifested, alone, surrounded by ten Apple employees. I think Steve wanted me there because I had evidence of Neil asking about the internals, but that never came up, so I was just a fascinated observer as Steve started yelling at Bill, asking him why he violated their agreement.
"You're ripping us off!", Steve shouted, raising his voice even higher. "I trusted you, and now you're stealing from us!"
But Bill Gates just stood there coolly, looking Steve directly in the eye, before starting to speak in his squeaky voice.
"Well, Steve, I think there's more than one way of looking at it. I think it's more like we both had this rich neighbor named Xerox and I broke into his house to steal the TV set and found out that you had already stolen it."
Unfortunately, it turned out that while the agreement that Microsoft signed in 1981 stipulated that they not ship mouse-based software until a year after the Mac introduction, that ended up being defined in the contract as September 1983, since in late 1981 we thought that the Mac would ship in the fall of 1982, and we foolishly didn't let the ship date float in the contract. So Microsoft was within their rights to announce Windows when they did. Apple still needed Microsoft's apps for the Macintosh, so Steve really couldn't cut them off.
Microsoft didn't manage to ship a version of Windows until almost two years later, releasing Windows 1.0 in the fall of 1985. It was pretty crude, just as Steve had predicted, with little of the Mac's thoughtful elegance. It didn't even have overlapping windows, preferring a simpler technique called "tiling". When its utter rejection became apparent a few months later, Bill Gates fired the implementation team and started a new version from scratch, led by none other than Neil Konzen.
Neil's version of Windows, released a couple of years later, was good enough that Apple filed a monumental copyright lawsuit against Microsoft in 1988, but they eventually lost on a technicality (the judge ruled that Apple inadvertently gave Microsoft a perpetual license to the Mac user interface in November 1985).
We present a Mac to Mick Jagger
Date: January 1984
Author: Andy Hertzfeld
Topics: Marketing,Celebrities,The Launch
The last couple of weeks before the Macintosh unveiling on January 24th were extremely hectic. The software still wasn't finished, and it wasn't clear if there was enough time left to get it into adequate shape. Meanwhile, the Apple PR machine was revved up to full speed, so there were also plenty of unusual diversions, like being interviewed and photographed for the national press.
The absolute deadline for finishing the software was when the factory opened at 6am Monday morning, on January 16th, eight days before the introduction. When I came into work on Friday, January 13th, I knew that I would probably stay there all weekend, along with the rest of the team, working as hard as possible to shake out the remaining bugs before Monday. Steve Jobs, Mike Murray, Bob Belleville and others were in New York city doing a press tour, so I thought we would be relatively free of distractions, and would be able to focus on bug fixing.
I came into work later than usual, around noon, since I had been at Apple until 3am the previous evening, and I wanted to get one decent night's sleep before the final push. As I went to sit down, I noticed that a handwritten note had been placed on my chair. It was from our software librarian, Patti King, who had taken a message from Steve Jobs' secretary, Lynn Takahashi.
"Andy - Steve J. called - we can deliver a Mac to Mick Jagger tomorrow. You can fly out to meet them by tomorrow noon and bring lots of neat software. If you can come, make arrangements for the trip through Lynn. Steve will call back in a couple of hours, also, he'll be at the Carlyle Hotel tomorrow."
Wow! A chance to meet Mick Jagger was a once in a lifetime opportunity. But we still had three more days before the deadline, and I would be absent for at least 30 hours if I tried to go to New York, plus I would be relatively useless when I returned from all the flying. I called back Lynn to tell her to tell Steve that I couldn't make it. But I was curious to find out about Mick's reaction.
I found out from Bill Atkinson when he returned from the East Coast on Sunday afternoon, and I got more details from Steve and Mike Murray a bit later. Steve had apparently gone to a party on Thursday evening, where he was introduced to Andy Warhol. Andy got really excited about the Macintosh when Steve demoed it to him. "You must show it to Mick,", he proclaimed, and arranged for Steve and the Apple crew to go to Mick Jagger's townhouse on Saturday afternoon to present him with a Macintosh.
Steve Jobs, Mike Murray and Bill Atkinson got out of the cab in front of Mick's two-story brownstone townhouse, hauling along a Macintosh in its canvas carrying case. They knocked on the door at the address they were given, but there was no response for several minutes. Finally, the door was opened by two huge guys who were obviously bodyguards, who didn't seem all that impressed to be talking to the co-founder of Apple Computer and his entourage.
The Apple folk were led upstairs into an elegantly furnished room to wait for Mick. Bill set up the Mac and launched MacPaint, and started to fool around with it. Then, abruptly, Mick Jagger strode into the room, dressed casually in a T-shirt and blue jeans.
Mick was polite, but he didn't seem to have heard of Apple Computer, Steve Jobs or the Macintosh. Steve tried to strike up a conversation, but he wasn't very successful. Steve told me that Mick couldn't seem to put together a coherent sentence. "His speech was slurred and very slow", Steve described it later, "in fact I think he was on drugs. Either that or he's brain-damaged." After a few minutes, it was clear that Mick had absolutely no interest whatsoever in Apple or the Macintosh, and an awkward silence ensued.
Fortunately, Mick's twelve year old daughter Jade had followed Mick into the room, and her eyes lit up when she saw MacPaint. Bill began to teach her how to use it, and pretty soon she was happily mousing away, fascinated by what she could do with MacPaint. Even though Mick drifted off to another room, the Apple contingent stayed with Jade for another half hour or so, showing off the Macintosh and answering her questions, and ended up leaving the machine with her, since she couldn't seem to part with it.
We need a demo for the intro
Date: January 1984
Author: Andy Hertzfeld
Topics: Marketing,The Launch,Software Design
It took a monumental effort, fueled by inordinate amounts of chocolate covered espresso beans , to finally finish the first release of the Macintosh software in time for the introduction. We finished with literally no time to spare, shipping the "golden master" of the "Write/Paint" disk to the factory at 6am on Monday morning January 16th, a week before the introduction. By that point, most of the software team hadn't slept for days, so we all went home to collapse.
I thought I would need to sleep for at least 24 hours, but I woke up after 6 hours with a desire to go back to Apple to see if the release held up, and to see how everyone else was feeling. By 5pm, most of the software team had dragged themselves back for the same reason, and we were lounging around in a tired daze, happy that we finally shipped, but still not quite believing it, when Steve Jobs strode into the software area.
"Hey, pick yourselves up off the floor, you're not done yet!"
Uh-oh, I thought, someone must have found a show-stopper in the release and we're going to have to track it down. But that's not what he meant.
"We need a demo for the intro! The Mac deserves to have a great demo for its first public showing. I want the Mac to play the theme from "Chariots of Fire" while it's showing a slide show of the apps. Plus lots of other cool stuff, whatever you can come up with. And it needs to be done by the weekend, to be ready for the rehearsals."
We moaned and groaned about being tired, but as we talked we realized that it would be fun to cook up something impressive. We were too tired to think about it right away, but when we came back the next day, a plan started to emerge.
Capps had an idea to use a gigantic font to scroll "Macintosh" across the screen, one letter at a time, to start the demo, so he worked on that, as well as the slideshow. Bruce Horn wanted to do a starry night with twinkling stars, and a skywriter writing "Macintosh" in cursive across the night sky. Susan worked on an intro graphic of the Mac sitting in its canvas carrying bag, and well as some of the other graphics for the slideshow part. I integrated all the pieces and also signed up for the "Chariots of Fire" music part, since no one else wanted to do that.
It's hard to write a music editor/player in two days, but I managed to put something together that could actually play the "Chariots of Fire" theme, but it didn't sound very good, since it used simple sine waves without any envelope shaping. Steve immediately rejected it as lousy, which it was, and opted for using a CD of the "Chariots of Fire" theme to play in the background instead.
Meanwhile, as we were working on the demo, Mike Boich came by with Mark Barton, a third party developer who we seeded with an early Mac, because he had written an impressive program for the Apple II called S.A.M. (the Software Automatic Mouth). SAM was a speech generator, which converted text to speech, with a distinctive, winning personality. I had helped Mark with sound driver issues as he developed it, and now it finally made it to fruition. SAM sounded even better on the Mac, because we had 8 bits per sample and a higher sampling rate.
When Steve heard SAM talk, he immediately decreed that we had to incorporate SAM in the intro demo. "I want the Macintosh to be the first computer to introduce itself!", he insisted. He told Mike Boich to quickly cut a deal with Mark so Apple could bundle the speech generator (rechristened Macintalk) and use it in the intro.
Since my music generator fell through, I got to do the speech part, using Mark Barton's libraries. I knew that I wasn't clever enough to be the Mac's speechwriter. I think Susan had the idea of asking Steve Hayden, Chiat-Day's head writer, to do it. Steve was the guy who conceived the 1984 commercial and was as clever as they come. He was excited about helping out and got it done overnight.
Once we integrated all the pieces together, the demo didn't come close to be able to run on a standard Macintosh. Fortunately, we had a prototype of a 512K Mac in the lab, so we decided to cheat a little (there were only two in existence at the time) and use that for the demo, which made things fit.
The demo starts out with Susan's graphic of the Mac hidden in its carrying bag, on a curtained stage, displayed while the program prepared Capp's big letters. Suddenly, the music swells (from a CD, not generated by the Mac) and Capp's big letters scroll nimbly across the screen, spelling out "Macintosh". Then we transition to Bruce's skywriter, and then to various screen shots of applications, including third party applications like Microsoft's Multiplan and Chart. Finally, the music stops, the screen goes blank, and waits for Steve to press the mouse button. When he does, the Mac starts to speak, in strange but somehow endearing tones: