Return to the Little Kingdom (34 page)

 

Some of Apple’s success could be put down to the advertising campaigns that were paid for by other companies. After Commodore and Radio Shack introduced their computers, they wasted no time before taking out large newspaper advertisements. At the beginning of 1978, a memo sent to Apple by the Regis McKenna Agency candidly noted that “Commodore and Tandy . . . have popularized the personal computer.” But few of Apple’s competitors proved to be particularly competent and none of their machines reflected the delicate balance of expertise and exuberance that was being knit together in Cupertino—even though almost every company that, at one time or another, announced or was rumored to be on the verge of announcing a computer was larger, richer, and stronger than Apple. Radio Shack, with its thousands of stores and a twenty-five-million-name mailing list, was supposed to have an edge in distribution. But Radio Shack’s TRS-80 black-and-white computer was tarnished by a low-quality image and proved difficult to expand. This allowed Apple’s adverts to play on the Apple II’s expandable nature. Commodore’s PET had a pleasant name, but the company was dogged by a lack of funds, management by fiat, a keyboard that looked like an upgraded calculator, and a case made in a Canadian metal-bending factory because the company chose not to pay for plastic cases. It was also black and white, which compared unfavorably with Apple’s color. Atari and Mattel, with their stronger names in consumer electronics, were slow to produce a computer, and when they finally did, their machines were inferior to the Apple II. Smaller companies like Ohio Scientific and Cromemco, despite having reliable computers, had not sought venture funding. Kentucky Fried Computers was too whimsical a name for a computer company, but by the time it was changed to Northstar Computers, much of the damage had already been done. Meanwhile, MITS—the number-one name in microcomputing—was swallowed by Pertec, a large Chatsworth, California, company that made peripherals and minicomputers.

But looming behind the small fry was the massive specter of Texas Instruments. And in 1978 and 1979, it was Texas Instruments that inspired knee-knocking fear. The company was 327 million times the size of Apple, made its own semiconductors, had gained experience selling consumer products with a line of calculators that had severely damaged other competitors, and along the way, had gained a reputation for remorselessly pursuing profit. In his newsletter Ben Rosen warned that Texas Instruments had a corporate commitment to personal computers and “when TI has a corporate commitment—watch out.”

While the prospect (more than the eventual appearance) of a Texas Instruments computer stirred up fear in Cupertino, Apple was quietly working with the press. Regis McKenna recalled, “We thought the way to beat TI was with the press. TI had always had an adversarial relationship with the press and Apple had a chance to develop a friendly relationship. The press was the equalizer.” McKenna understood how to handle the press better than any of the senior managers at Apple did. Scott grumbled that he had never been quoted properly; Markkula was not always easy to understand and was likely to rile reporters by presenting them with Apple button-pins or informing them that the story they were about to write would be very important for the company or insisting that buyers would be able to learn how to use the Apple II within half an hour. Jobs, meanwhile, carried away with his own enthusiasm, was always liable to blurt out every secret detail of Apple’s plans. Yet Apple was also something of a dream for a public-relations man. It was a cheerful story that, once told, was difficult to forget and revolved around the sort of distinctive personalities that, at least for journalists, always help give companies a clear image.

McKenna was far more patient and didn’t expect an interview or telephone call to generate a story immediately. He told his clients that they had to build long-term relationships with the press, preached the virtues of patience, and took a more dispassionate view of the stories that eventually appeared. While Apple started to get occasional coverage in trade magazines like
Interface Age,
it took several years to crack the skepticism and suspicion at better-known magazines where the name of the McKenna Agency wasn’t even recognized. The account executives at the McKenna Agency spent several years wooing the press, answering reporters’ calls, providing background material, arranging photo sessions that never ran, answering questions that never appeared in print, and checking facts. He also coached his clients—trying to anticipate the questions that would be asked, or rehearsing lines that they wanted to etch on an editor’s mind.

McKenna arranged for several busy two- and three-day trips to New York with Apple and endured plenty of snubs and disappointments. He, Markkula, and Jobs visited what they called the “verticals”—magazines that appealed to a narrow audience—and “horizontals”—magazines that had a general readership. They carted an Apple about New York, plodding from magazine to magazine, waiting in lobbies, lugging the computer up elevators, snatching quick breakfasts with journalists from one magazine before dashing off to keep morning and lunch appointments. It was exhausting, tiresome, repetitive work that didn’t lead to many immediate payoffs.

Apple’s early, favorable press coverage had more to do with the inescapable elegance of the computer than with any minutely planned public-relations campaign. There was no stronger advertisement than satisfied owners and quietly, almost imperceptibly, whispers and rumors about the performance of the Apple II began to spread. Daniel Fylstra, the head of what was then Personal Software, a small software company in Boston, talked to other hobbyists and was surprised at what he found. “I began to find people who bought Apple computers and the things actually worked. They worked right out of the box!” Some squibs about the Apple started to appear. In January 1978
Penthouse
magazine, in a review of personal computers, noted, “The Apple II is, in many people’s opinion, the Cadillac of home computers.”

Three months later, in the first major review of the Apple II, Carl Helmers, writing in the computer magazine
Byte,
called it “one of the best examples of the concept of the complete ‘appliance’ computer.” That amounted to a bold endorsement in a magazine that treated the arrival of other computers with a certain amount of circumspection.
Byte’s
review of the Commodore PET, which appeared in the same issue, concluded: “The Pet is far from the only alternative in the marketplace today. But it is a strong contender.” The reviewer also made the ominous observation: “For several weeks I was unable to get anyone at Commodore on the phone and was left to fend for myself.”
Byte
greeted Radio Shack’s TRS 80 with what sounded like a familiar refrain: “The TRS 80 is not the only alternative for the aspiring personal computer user but it is a strong contender.”

The importance of blue-chip financial backers and the way in which business journalists often look to canny investors for guidance only became apparent when stories started to appear in general-interest magazines. About the time the Apple II disk drive was introduced, the syndicated financial columnist Dan Dorfman paid a call in Cupertino. His glowing account in
Esquire,
beneath the headline MOVE OVER, HORATIO ALGER, included this assessment: “Apple has some mighty impressive believers. . . . One is Venrock Associates, the venture capital arm of the Rockefeller brothers; another is Arthur Rock, one of the country’s premier venture capitalists.”

While Apple, two years after it was founded, made the cover of
Inc,
a magazine specializing in the coverage of small businesses, cracking the skepticism at the major magazines proved a much tougher proposition. Apple was more than three years old before it made the pages of
Time
. Even then, under the headline SHINY APPLE, the firm was given only one column.

 

If McKenna was helpful with the mechanical aspects of dealing with the press, Apple’s own managers looked after other parts of the company’s image. The general look of the company was tied up with the owner’s instruction manual. Scott was more eager to ship computers than to fuss over the graphic design of a manual and felt that all the company needed to distribute was data sheets. Jobs thought otherwise. Jef Raskin, who managed the production of Apple’s first comprehensive manual, said, “Jobs wanted good manuals and he fought very hard for them.” When the manual eventually appeared in August 1979, it set a standard that competitors like Commodore, Radio Shack, and Atari publicly admitted they would have to match.

It was Markkula who guided the formation of alliances that Apple used to great purpose. The company allied with larger companies to give a durable sheen to its image. It joined with ITT, for example, to distribute computers in Europe (though the relationship eventually foundered) and with Chicago’s Bell & Howell, which had a strong reputation among teachers, to help place Apples in schools. “Markkula was the driving force who made these things happen,” Trip Hawkins, an Apple marketing manager, recalled.

Markkula was receptive to approaches made in 1977 by Andre Sousan, the Commodore official who had once wanted to buy Apple. Sousan recalled: “I said to the two Steves and Markkula, ‘Listen! You’re not going to make it on the scale you want to make it if you don’t go immediately to Europe. I’ll set up the operations as if they are a part of Apple and I’ll write up a formula which will allow you to buy it out.’” Apple, stretched to the limits, agreed and Sousan became a member of the Executive Staff.

In March 1978 Markkula called Dow Jones’s Princeton, New Jersey, offices, spoke to Technical Director Carl Valenti, and asked for an appointment. Valenti recalled: “I told him I had a space on my calendar for nine the next morning. He said, ‘Fine.’ I didn’t realize he was calling from Cupertino. So next morning in walks Mike Markkula with bloodshot eyes, having come on the red-eye.” Markkula showed Valenti how he had programmed an Apple II to fish stocks off the Dow Jones News Retrieval Service and the pair agreed, on a handshake, that the two companies would jointly develop software programs. “The other companies,” Valenti observed, “came in and tried to tie us up ten ways to Sunday. Apple didn’t do that.”

Closer to home Apple was one of the first microcomputer companies to recognize the importance of users groups. When the company drew up plans to organize its first international users group, a memo stated: “A major element in our strategy would be to draw heavily upon outside resources in planning and executing this meeting.” It continued: “There is no one who sells as well as a committed, involved user who cares about his vendor and his product.” In San Francisco a group was formed to help solve a practical problem. As one of its founders, Bruce Tognazzini, explained, “We couldn’t figure out how to work the damn computer.” These groups, which gradually started in dozens of cities along with local and regional chapters and their own publications, not only helped spread the word and promote software development but also served as a way of keeping track of owners, maintaining a pool of guinea pigs for testing new products and providing bodies to recruit.

Markkula recognized better than any of his colleagues the way in which appearances could affect business. When, in 1979, Apple rented a large booth at the National Computer Conference in New York, it was calculated to impress the financial analysts who, sooner or later, would make judgments about what Apple was worth as a public company. Occasionally Markkula’s taste for splash got the better of him and a foray into the sponsorship of automobile races where Apple spent more than one hundred thousand dollars backing a Southern California team was a flop. “It was the worst thing we ever did,” said Jobs. Scott’s far simpler and cheaper idea of a balloon decorated with the Apple logo, inspired by some beer commercials, was far more successful. The moral seemed obvious: Relatively small expenditures could bring a disproportionate amount of publicity.

As happened with minicomputers, outsiders developed dozens of uses for the Apple II which had not even been contemplated in Cupertino. Little companies started to make attachments that plugged into the machine. The printed circuit boards that slid into the expansion slots of the computer would turn it into a clock or a calendar or allow letters to run across eighty columns rather than forty. Rows of extra memory chips were designed to boost the Apple’s memory; other cards allowed the computer to connect with a telephone. One of the most popular cards, Microsoft’s Softcard, allowed the Apple to run programs originally written for computers built around Intel microprocessors that used the CP/M operating system. There were light-pens and graphic tablets, calculator keypads, fans to cool the machine and small devices that protected it from surges in energy.

Apple recognized that software would help expand the market for its computer and gave large discounts to programmers who promised to write programs. Time and again programmers discovered ways to stretch the limits of the computer. Apple was receptive to programmers, particularly since most of the programs that were demonstrated did not always work properly. And Apple was also seen by some programmers operating off a shoestring as a large company that could bankroll their diversions. When programs were completed and Apple chose to buy them, Jobs frequently did seat-of-the-pants calculations and arrived at a price by counting the lines of code. Exchanging software or copying some interesting new program became the most important part of many Apple user-group meetings. In 1979 when Fred Gibbons, who had started Software Publishing Corporation, needed an Apple, he picked it up at Jobs’s home. Others relied on their own steam. Phone phreak John Draper developed a word-processing program, Easywriter, for the Apple and then hawked it to San Francisco Bay Area computer stores.