Inside Steve's Brain (5 page)

Sony can’t release a product—any product—without multiple models at launch. This is usually perceived as good for customers. Conventional wisdom holds that more choice is always a good thing. But each variation costs the company time, energy, and resources. While a giant like Sony might have the means, Apple needed to focus and limit the number of variations it released just to get anything out the door.

Of course, with the iPod, Apple now has a Sony-like lineup of products. There are more than half a dozen different models, from the bare-bones Shuffle to the high-end video iPod and the iPhone, priced at every $50 price point between $100 and $350. But to get there took Apple several years—not all at launch.

At a personal level, Jobs focuses on his areas of expertise and delegates all else. At Apple, he is very hands-on in areas he knows well: developing new products, overseeing marketing, and giving keynote speeches. At Pixar, Jobs was just the opposite. He delegated the moviemaking process to his capable lieutenants. Jobs’s main role at Pixar was cutting deals with Hollywood, a skill at which he excels. Let’s break down these areas this way.

What Jobs is good at:

What Jobs is NOT good at:

Apple’s labs are littered with prototype products that never made it out the door. The product Jobs is most proud of not doing is a PDA, a personal digital assistant, the successor to the Newton he discontinued in 1998. Jobs has admitted he’s done a lot of
thinking
about a PDA, but by the time Apple was ready—in the early 2000s—he’d decided the PDA’s time had already passed. PDAs were fast being superseded by cell phones with address books and calendar functions. “We got enormous pressure to do a PDA and we looked at it and we said, ‘Wait a minute, 90 percent of the people that use these things just want to get information out of them, they don’t necessarily want to put information into them on a regular basis and cellphones are going to do that,’ ” Jobs told the
Wall Street Journal
.
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He was right: witness the iPhone. (And the Palm, which hasn’t adapted well, is now on the ropes.)

There have also been calls for Apple to sell to big business, the so-called enterprise market. Jobs has resisted because selling to companies—no matter how big the potential market—is outside of Apple’s focus. Since Jobs’s return, Apple has focused on consumers. “The roots of Apple were to build computers for people, not for corporations,” Jobs has said. “The world doesn’t need another Dell or Compaq.”
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There are much greater profits to be made selling a $3,000 machine than a $500 machine, even if you sell fewer of them. By aiming at the middle and high end of the market, Apple enjoys some of the best profit margins in the business: about 25 percent. Dell’s profit margins are only about 6.5 percent, while Hewlett-Packard’s are even lower, about 5 percent.

In the summer of 2007, Dell was the biggest PC manufacturer in the world, with a whopping 30 percent share of the U.S. market. Apple trailed third, with a much smaller 6.3 percent market share.
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But in the third quarter of 2007, Apple reported a record profit of $818 million, while Dell, which sells more than
five times
as many machines, earned only $2.8 million in profit. Yes, a big chunk of Apple’s profit came from the sale of iPods, and Dell was going through a restructuring, but Apple clearly makes much more money on the sale of a $3,500 high-end MacBook Pro laptop (as much as $875) than Dell makes on a $500 system (about $25). This is why Dell bought Alienware, a boutique gaming machine manufacturer, in 2006.

It’s been clear for years that Apple doesn’t compete in the same market as PC companies, but for many years its health as a business was measured by the number of machines it sold, not the value of those machines. Success in the PC market has traditionally been measured by quantity, not quality. Pundits and industry-watch Gartner Inc. made repeated calls for Apple to exit the hardware business because its market share in the 2000s slipped into low single digits. But Apple goes after the most profitable segment of the market, not the most number of machines, although this is starting to change.

Lessons from Steve

“We made the buttons on the screen look so good you’ll want to lick them.”

Before Jobs returned to Apple, the company had spent several years fruitlessly trying to develop a modern version of the Macintosh operating system. Since its debut in 1984, the old Mac OS had turned into a bloated, unstable patchwork of code. It had become a nightmare to maintain and upgrade. For users, it meant constant crashes, freezes, and restarts—and lots of lost data, frustration, and rage.

Because large portions of the Mac OS were still based on creaky old code, Apple decided that it had to start from scratch. In 1994, programmers began a ground-up rewrite of the operating system, code-named Copland, after the famous American composer. But after a couple of years of effort, it became apparent the project was a gargantuan effort and would never be finished. The Apple executive team at the time decided it would be easier (and wiser) to purchase a next-generation operating system from another company rather than develop one itself. The search eventually led to the purchase of Steve Jobs’s NeXT.

Apple was interested in NeXTstep, a surprisingly advanced and sophisticated operating system that Jobs had developed during his wilderness years away from Apple. NeXTstep had everything the old Mac OS lacked. It was fast, stable, and almost crash-proof. It had modern networking features— essential in the Internet age—and a modular architecture that was easily modified and upgraded. It also came with a collection of great programming tools, which made it very easy for software developers to write programs for it. Programming tools are a huge competitive advantage in the tech industry. Computer platforms are doomed unless they can attract talented programmers to create applications for them, just like game consoles are doomed unless they can attract great games. From the Mac to the Palm Pilot and the Xbox, the success of a platform is primarily determined by the software that can run on it. In some cases this is the so-called killer app—an essential piece of software that guarantees the success of the platform, like Office on Windows, or the game Halo on the Xbox.

After buying NeXT, Apple had to figure out how to turn NeXTSTEP into a Macintosh operating system. At first, the job looked so big that Apple’s programmers decided they should take the old interface in Mac OS 8 and try to graft it on top of the NeXTSTEP codebase. According to Cordell Ratzlaff, the manager who was charged with overseeing the job, the interface graft didn’t look like it would present much of a challenge. “We assigned one designer to OS X,” he recalled. “His job was pretty boring: make the new stuff look like the old stuff.”

But Ratzlaff thought it was a shame to put an ugly façade on such an elegant system, and he soon had designers creating mockups of new interface designs. Ratzlaff told me that the mockups were designed to show off many of the advanced technologies under NeXTstep’s hood—especially its powerful graphics and animation capabilities.
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Ratzlaff, a soft-spoken creative director for Frog Design, a storied and internationally famous design company, worked at Apple for nine years. Starting as a designer, he rose through the ranks to lead the human interface group for Mac OS. In this role, Ratzlaff was in charge of the look and feel of Apple’s operating systems from Mac OS 8 through the first release of OS X.

Interfaces these days are colorful and dynamic, but in the late 1990s, both Apple’s and Microsoft’s operating systems were plain and gray, with boxy windows, sharp corners, and lots of bevels. Then Apple came out with the tear-shaped iMac, a computer with a transparent plastic shell and curvy organic lines. It was a big inspiration to Ratzlaff and his colleagues. They soon had mockups of colorful, airy interfaces with see-through menus, soft edges, and round, organic buttons.

Ratzlaff’s boss, Bertrand Serlet, now Apple’s senior vice president of software engineering, admired the mockups but he made it clear there was neither the time nor resources to implement them. OS X’s lone designer continued to graft the old Mac interface onto NeXTstep.

After several months of work, Apple held an off-site for all the engineering groups working on OS X to gather a status report. Ratzlaff was asked to show his mockups, mostly just for kicks. His talk would be some light relief at the end of a long, hard week. He was scheduled as the last speaker on the last day. But he secretly hoped there’d be support for the new designs and they’d be implemented, although he didn’t rate his chances. As the two-day event wore on, it became clearer and clearer what an enormous project OS X was. Everyone was wondering how it was ever going to get done. “And then here at the end, here’s me saying, ‘Oh, and here’s a new user interface. It’s translucent, there’s real-time animation, and a full alpha channel,’ ” Ratzlaff recalled. “There was literally laughter in the room because there was no way we were going to redo the user interface. I was pretty depressed afterwards.”

Two weeks later Ratzlaff got a call from Steve Jobs’s assistant. Jobs hadn’t seen the mockups at the off-site—he hadn’t attended—but now he wanted a peek. At the time, Jobs was still conducting his survey of all the product groups. Ratzlaff and his designers were sitting in a conference room waiting for Jobs, when he walked in and immediately called them “a bunch of amateurs.”

“You’re the guys who designed Mac OS, right?” he asked them. They sheepishly nodded yes. “Well, you’re a bunch of idiots.”

Jobs rattled off all the things he hated about the old Mac interface, which was just about everything. One of the things he hated most were all the different mechanisms for opening windows and folders. There were at least eight different ways of accessing folders—from dropdown menus to pop-up menus, the DragStrip, the Launcher, and the Finder. “The trouble was, you had too many windows,” said Ratzlaff. “Steve wanted to simplify window management.” Because Ratzlaff was the one primarily responsible for these features, he started to get nervous about his job, but after twenty minutes of withering criticism, Ratzlaff realized his position was probably safe. “I figure he’s not going to fire us, because that would’ve happened already,” Ratzlaff said.

Jobs, Ratzlaff, and the designers settled into an in-depth discussion of the old Mac interface and how it might be overhauled. Ratzlaff’s team showed Jobs their mockups and the meeting wrapped up well. “Prototype these things and show them to me,” Jobs instructed them.