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The Second Half Life of Steve Jobs
Week of 3 August 2006
Steve Jobs once said the X window system sucked and would be gone in half a year. He was half right.
- Dennis M Ritchie
Steve Jobs once said NeXT Computer would be the last company to pull off a hardware lock-in or the first to fail at it. He was completely right.
Steve Jobs once said OS X would have a life span of ten years. He was completely right.
Steve Jobs is in a predicament. Most likely he doesn't even know how bad things are. He deliberately surrounds himself with sycophantic yes-sayers who even dress the same as him, cut their hair the same as him, and wear the same two day beard as him. This from the company who dared customers to 'think different'.
But he's in a predicament all right. Ten years ago this coming January he came back to Apple Computer for the second half of his life. You're already naked, Steve Jobs told the graduating class at Stanford, and no one's ever been as naked as he is right now.
A lot of things happened in the years Steve Jobs was gone from Apple Computer - after the first half of his life there. That time he didn't quite last as long as he has this time. The Macintosh came out in 1984 and Steve Jobs proclaimed it 'a dent in the universe' but no one on the board of directors could figure out what he was talking about and so they fired him. And he went off to found NeXT Computer.
Where despite himself he gradually succeeded. Obstinately insisting on the same hardware lock-in as Apple had always practiced, he predicted his new company would either be the last to succeed with such a scheme or the first to fail at it. And as things turned out, he was right: NeXT failed at it.
Against his own better judgement, Jobs turned the company around, renamed it NeXT Software, and produced the OpenStep specification, getting the revamped NeXTSTEP to run on Sun Microsystem's Solaris, Microsoft's Windows NT, Hewlett-Packard's HP-UX, and on diverse CPU architectures such as Intel x86, PowerPC, SPARC, and Motorola.
And NeXT unbelievably enough started making money.
Back in Cupertino Apple were rethinking things too. Their awaited Copland operating system would also be 'platform free' and run on most anybody's hardware. Gradually things stagnated at Apple, and the Apple board called in renowned corporate doctor Gil Amelio, fresh off successes with AT&T and National Semiconductor, to set things right again.
Amelio got quality control back on track. Things had devolved so much that long time Apple customers - schools in the immediate area that had used Macintoshes since Day One - had stopped buying. The 'MacOS' was a spaghetti mess and the Apple hardware was poorer. Amelio ridded the company of the execs responsible for this and won back formerly satisfied customers.
The Copland project was also a real mess, and after having an external consultant review the project and having heard it was unrecoverable, Amelio scrapped it and immediately began looking for an operating system to buy. He consulted with NeXT, with Microsoft, with Sun, and with Be. In the end he chose NeXT.
All the NeXT employees moved cross-California in the beginning of 1997 - even Steve Jobs. But Steve Jobs was not reinstated as a honcho at the company he cofounded: he was listed only as a 'consultant'. This didn't please him greatly and he often talked with Amelio about it. Steve Jobs wanted a seat on the Apple board. It was his company, he told Amelio. Amelio, aware of how the Apple board regarded Jobs, told him it wasn't the best time to bring the matter up.
Apple paid $429 million for NeXT, mostly in Apple stock. Steve Jobs was the major shareholder with always more than half the stock. After relinquishing control of Apple down to about a third and then getting booted out of his own company, Jobs said he would never again let his share of a company he ran fall to 50% or lower. And with NeXT he didn't: as soon as someone would invest more in NeXT, Steve Jobs would too. So that he always kept majority control.
Steve Jobs was paid over $200 million for Apple's acquisition of NeXT. He was also instructed to hold onto that stock so as to not undermine Wall Street's confidence in the merger.
But things started turning around real fast for the previously bankruptcy threatened Apple. They had new blood with the NeXT engineers, they had a space age operating system, and they were set to unleash the world's best computer hardware that would run anyone's operating system and the world's best operating system that would run on anyone's hardware. It was a no-brainer and Amelio had done it again.
Apple had recovered without the leadership of Steve Jobs. They needed his company NeXT to do it, but after that they didn't want a lot to do with him. The bottom line still wasn't all that rosy, but Jobs could see where it was headed. Releases on both the hardware and software side in 1997, preempting Microsoft who planned to startle the world with Windows 98 the year after. Microsoft had quite the grip on the personal computing market, but it was a grip that could be loosened. And Apple were poised to loosen it.
There is no question that had Apple pushed their rebranded NeXTSTEP and their new line of hardware out the door a year before Microsoft released Windows 98 that the world of computing would look a lot different - and a lot better - today. Windows was, is, and will remain insecure - the worms of the new Millennium would prove it for once and for all. NeXTSTEP's FreeBSD on the other hand was a bona fide multiuser operating system with none of the weaknesses of Windows. NeXTSTEP also had a flash and a user friendliness that Microsoft will never be able to approach with Windows. It would have been a walkover. Certain bastions of Windows users would initially have remained, but not for long. The lingua franca of personal computing today would have been NeXTSTEP - not Windows.
Gil Amelio had done it. He became a legend at AT&T, he became a bigger legend at National Semiconductor, and now he had done it again at Apple Computer. He'd done it without Steve Jobs. Steve Jobs, the cofounder of Apple Computer. Steve Jobs, the cofounder who was determined to get back in at the helm no matter what it cost him or his former company.
Steve Jobs dumped his stock. When he'd left Apple in the mid-1980s, he sold all but one share. He got ownership back when Apple bought his NeXTSTEP. He held over $200 million in July 1997. He dumped it - all of it. In one fell swoop. It caused panic on Wall Street and in the Apple boardroom exactly as he'd expected.
The Apple board weren't happy about what Steve Jobs had done. Everything rided on investor confidence in the new merger. Seeing the former principal owner of NeXT getting rid of all his stock in Apple totally undermined the Cupertino company. The Apple board summoned Steve Jobs.
Steve Jobs walked into that meeting with the angry Apple board and somehow walked out with Gil Amelio's job in his pocket. He knew that if he had waited any longer to dump his stock the effect wouldn't have been as great. If Apple had already begun to show good results because of the merger, that stock sale would have been ignored. But Steve Jobs saw the company was back on track again. He had to act fast - and he did. And when he predictably was summoned to explain his behaviour to the Apple board, he was all ready.
Steve Jobs didn't even wait for the word to come down before marching into Gil Amelio's life long secretary's office and kicking her out. She hadn't even been informed of the change and Steve Jobs didn't wait for her to get news of it either - he just kicked her the heck out of there.
And then he took care of his old enemy Mike Markkula. Mike was still on the Apple board, being one of the first investors twenty years earlier. Mike had gone against Steve and supported John Sculley in the shoot-out in the mid-1980s that resulted in Jobs' dismissal. Steve Jobs never buries the hatchet: one of the first items on his order of business was to kick former buddy Mike off the Apple board.
Jobs had evidently explained to the unwitting Apple board that their plan to resuscitate Apple was all wrong. Apple would not succeed as a premier player in both the hardware and software markets, Steve Jobs would have told them. Apple have always been a hardware lock-in company. It is only through hardware lock-in that Apple have a chance to make a comeback. Continue down the current path and they would face dissolution. (And thank goodness that platform independent Copland never made it out the door.) Change tack now with Steve Jobs back at the helm and they have a chance.
Steve Jobs got his chance. He was instated as temporary CEO with a salary of $1 per annum. He's since been awarded hundreds of millions in stock options of course and today is a billionaire. And he set about proving he was the right admiral by making a number of attention-getting changes.
There was the deal with Bill Gates; there was the introduction of the iMac; and so forth. All of this could very well have happened with the old plan too - but Jobs' timing is if nothing impeccable. The only thing he got wrong was the hardware lock-in, and that would take ten years to become apparent to everyone.
Instead of releasing a media sensation of an operating system in 1997, Jobs had the company wait a full five years. They bound their system to their hardware and vice versa. They rewired a bunch of 'beige box' (MacOS) stuff into the system that had no place being there. 'These are our traditional customers', Jobs told the board of Apple's ever dwindling demographic. Where once Apple had enjoyed comfortable double digit market shares in several countries and in the educational sector, they were now scraping for medium range single digit demographics - and still Steve Jobs kept the company on track to design their products for this group alone. A lot of people who thought the age of NeXTSTEP had finally arrived were fooled.
While the ever confused Apple engineers and the increasingly impatient NeXT engineers struggled with the impossible task of force-fitting a square peg in a neat round hole, Microsoft took over. They released Windows 98, and then shortly afterward Windows 98 SE ('second edition') generally considered to be much better than even Windows 95. Microsoft's market advantage was consolidated and secured.
At the same time they gained even more market share - primarily in the business sector - with their Windows NT 4.0 initially released in the spring of 1996. And by 2001, with the first full release of Apple's new operating system still a year off, Microsoft had also released Windows 2000 (to supersede Windows NT 4.0) and Windows XP (to in turn supersede Windows 2000) as well as the last of the 9x line, Windows Me.
Referring to the awaited release of Windows Vista in late 2006, Microsoft CEO Steve Ballmer promised Microsoft customers they'd never again have to wait so long for an operating system upgrade. But this incomprehensibly long five years is exactly what Apple customers waited - until 24 August 2002 when OS X 'Jaguar' was released.
The date wasn't an accident: the original Macintosh had been released on a 24th and because of that Microsoft had picked 24 August 1995 to release Windows 95. Now Apple were getting back at Microsoft by picking the exact same month and day.
Jaguar was well received. It was both 'beige box' and NeXT technology in the same system, with enough 'NeXT' to mollify the NeXT programmers and administrators, and it was simultaneously close enough to the old 'MacOS' in look and feel so as to not make the 'fanboy constituency' whine and stamp too much.
Or so it looked. Once Apple were back on their feet again all the rats started coming out of the woodwork. 'Why are things like this today - I want them the good old way' was an often heard whine. That there was no longer a 'MacOS' and that the new operating system was bought in from another company made no impression. Things had to be the good old way.
A lot of these 'good old things' in the 'good old way' were directly dangerous or at least unfeasible in the new protected memory connected world. Again, this did not matter: the fanboys didn't understand what was going and just whined all the more.
Seeing as Apple were no longer following any industry standards and seeing as they officially were only interested in this increasingly thin demographic, this did not present much of an issue. Apple engineers simply started yanking at the wiring of NeXTSTEP and replacing it with new wiring of their own, more in line with their old 'MacOS' kind of thinking.
Already a year later things were getting out of control. The fanboys welcomed the upgrade, called 'Panther', while other system purists began to raise their eyebrows. The system was getting increasingly chaotic under the bonnet and moving inexorably further away from its FreeBSD and 'open source' base. The worn out Apple claim that OS X was 'based on the rock solid foundation of Unix' was becoming a dissonant hypocrisy. And while Steve Jobs tried to impress the media with sales of this upgrade reaching fifteen million units, others were reminded this constituted less than 2% of the entire worldwide computer market - hardly something to write home about.
2003 also saw the first exploits against the system. Other proofs of concept had been out for some time, but now with the infamous Opener worm people were really getting hit. Following a traditional policy of utter secrecy and denial, Jobs had Apple ignore the whole event - and wait another year and a half to silently patch the hole.
It was the summer of 2004 when Avie Tevanian, head of software at Apple and formerly head of software at NeXT, announced to the world that Apple's operating system upgrades wouldn't be coming as fast as they had in the past. Apple fanboys would have to wait until 29 April 2005 for the next release. OS X 'Tiger', released on that date, pushed things even farther back than before. Early users described the release as 'a bunch of loose wires' and 'back to where we started from'. Apple had redesigned the underbody, the so-called kernel programming interface, breaking third party software left and right.
Worse still, age old code for graphics rendering that had always worked right for twenty years suddenly started to foul up. Users saw 'remnants' on their screens: when removing a paragraph of text, they'd see the paragraph below appear twice; when they dragged the thumb on a scroll bar, only half would follow - the other half would stay behind. And so forth.
Apple had tried to hype their new 'Spotlight' search technology but users increasingly found it a kludge and turned it off. Apple also tried to eclipse Konfabulator with their 'Dashboard widgets' but the creators of Konfabulator simply ported their code to Windows and sold their company to Yahoo who immediately made the thousands of Konfabulator widgets free and available on both OS X and Windows. Apple had a user base of somewhere in the neighbourhood of fifteen million; Yahoo had several hundred million. Again Apple were beat.
And then of course there was the much hyped move away from the 'BMW' of CPUs, the PowerPC. Apple were one of the first personal computer manufacturers (after Digital Equipment Corporation) to release a fully 64-bit machine. Using their four corner strategy, Apple made two desktop computers available with the impressive PPC 970, one for the business market (the Power Mac) and one for the home market (the iMac).
Meanwhile IBM, now alone in PowerPC production after Motorola jumped ship, were being courted by Microsoft and Sony for their games consoles. Both these companies saw the advantage of the PowerPC architecture and both decided to purchase the CPUs from IBM. Confronted with a choice of either working on the games console market - where they could count on several hundred million units sold - or with Apple where they could at best sell perhaps five million units, IBM didn't require a long time to figure out their best strategy. IBM dumped long time partner Apple.
Faced with a future without a hardware supplier, Steve Jobs had to move fast. He picked Intel, the company Apple had always loved to ridicule, and their 'x86' CPUs, the processors Apple fanboys had always loved to laugh at. Steve Jobs had been telling everyone for years how superior the PowerPC was and how inferior the Intel x86 was, and suddenly here were Apple planning to have those self same Intel x86 processors under the bonnet. And once this about face was announced, Steve Jobs started to move even faster.
Hardware production, traditionally bound to Taiwan, would be moved to China, a supplier increasingly interesting for US based OEMs. The problem was China had nowhere near the experience Taiwan had. They didn't have the expertise of places like Singapore or even Korea. They were China - and they had a long way to go.
Steve Jobs rushed the new Intel based computers out the door. Designs were not correctly vetted; Apple wasted no time on product testing or quality control - they just rushed the sorry things out.
And Apple - and Steve Jobs - are paying for those mistakes today.
A lot has happened since Steve Jobs came back to Apple for his second half life. Linus Torvalds got Linux off the ground. Mark Shuttleworth returned from outer space to found and fund the Ubuntu projects and deliver CDs to people's homes free of even shipping and handling. The entire open source movement started to really come into its own.
And the embarrassments of the Opener worm and later the Oompa Loompa worm of 2006 demonstrated to everyone not only that Apple lacked the chops to deal with security issues but also that their model of 'closed source' simply wasn't going to make it.
Apple plan to preempt or at least compete with Microsoft later this autumn. Their new release of OS X is due out before the holiday season. Because of the iPod they are expecting increased sales and students returning to schools soon are more than ever interested in having a computer that looks as cool as the iPod.
But what awaits them?
The current line of Intel based Apple computers are the worst embarrassment in the company's history. The message boards are all lit up with thousand of reports of just how bad these computers are. They whine, they ooze, they moo, they smolder and stink, they even melt, they damage other peripheral hardware, they smear, they flake, they shut down at random with no forewarning - the list is endless. People following these developments are understandably scared of purchasing an Apple computer ever again.
And if that doesn't make matters bad enough, Apple's traditional policy of utter secrecy and denial puts the final spikes in the coffin. After over half a year of the media drowning the web in reports of this misery, Apple are still not to the point where they're doing anything about their dissatisfied customers. As one person put it, Apple should recall every last unit - and refund everyone's money.
The Intel based Apple computers are a disaster: even the 'Core Duo' processor Intel rushed out the door for Apple suffers from irrecoverable design flaws. The machines themselves are manufactured in China where no one has yet been able to translate the word 'quality' and where 'substandard components' is the rule of the day. The Apple computers coming off the assembly lines there are no longer the acclaimed 'BMWs' Apple were once renowned for; Apple computers today are not only far more expensive but also decidedly of a lower quality than any other computer on the market. Steve Jobs cannot hope to increase or even hold onto his market share with such abysmal hardware - and already he's down under 2% again.
But were Apple to still be on track as back in 1997 and earlier, this wouldn't be as much of an issue. If things screwed up in their manufacturing plants, they'd still have their operating system to sell. But Steve Jobs has insisted on a hardware lock-in all along, and today with no hardware to sell he's not going to find it easy to move his once space age operating system either.
They're all jumping ship. The NeXT engineers and execs who'd been with Steve Jobs for twenty years at both companies have finally had it with his self-destructive reality distortion field and insistence on sycophantic yes-sayers in the company who dared customers to 'think different'. Jon Rubinstein, legendary head of NeXT and Apple hardware, and Avie Tevanian, legendary head of NeXT and Apple sofware, quit on the same day.
And starting dumping their stock soon afterward.
In fact most higher-up Apple execs have been dumping stock for some time. Steve Jobs was once reprimanded for dumping stock; today no one pays it any attention; but it's happening all the same, all the time.
The second half life of Steve Jobs is soon over.