On this day in economic and business history…
The story of Jobs’ ouster is closely tied to the success of the ambitious Macintosh, which Jobs had poured his energies into after his previous project, the Lisa, failed to attract much interest. Gizmodo covers the events leading up to the Mac’s launch, as well as its fallout:
With his Macintosh team, Jobs set out to create a machine that would be a triumph not only for the company, but for himself, too. He instilled in his team a sense of creativity and rebellion — it’s said that he hung a pirate flag in their office (which was in a separate building from the rest of the company) and explained that it was better to be a pirate than to join the Navy. He grew increasingly antagonistic toward Apple Inc. (NASDAQ:AAPL)’s other groups, contributing to the fissure that would eventually lead to him leaving the company.
The famous 1984 Super Bowl commercial whipped up much anticipation for the Mac, and while it was generally well-received, sales quickly cooled. Jobs began openly clashing with John Sculley, the CEO Jobs himself had lured away from Pepsi just a few years earlier, and in May Sculley stripped Jobs of his managerial duties, giving him a position as Chairman. Jobs spent four months trying to figure out his next move, and on September 16, 1985, he resigned from Apple Inc. (NASDAQ:AAPL) Computer.
Sculley claimed much later that his relationship with Jobs only began to break down once the flaws in their business began to show as a result of weak Mac sales. Jobs had actually pushed for Macs to be sold at a lower price point, which would undoubtedly have goosed sales of the costly machine, but the pressures of reporting quarterly earnings to shareholders kept Sculley focused on the Apple II, which was still not selling in enough volume to justify a Mac price cut. This goes a long way toward explaining Jobs’ later contempt for the demands of Apple Inc. (NASDAQ:AAPL)’s shareholders. Sculley also told Newsweek many years later that “it probably would never have broken down between Steve and me if we had figured out different roles… Maybe he should have been the CEO and I should have been the president.”
The inter-Jobs era at Apple Inc. (NASDAQ:AAPL) was a decidedly mixed bag. The Mac eventually supplanted the Apple II as the company’s flagship machine, but it never came close to reclaiming a leading position in the Microsoft Corporation (NASDAQ:MSFT)-led PC industry. Apple did help push laptops forward with its PowerBook lineup, but Sculley’s effort to produce the first true tablet became a financial disaster.
Sculley left the company in 1993, and Apple’s shares began to slide around the same time. Investors who’d bought into Apple on the day of Jobs’ resignation had seen gains as great as 800% by the early ’90s. However, most of those gains evaporated after 1993 as the company’s profitability became increasingly uncertain. By 1996, as revenue took a nosedive and Apple swung to a loss for the first time as a public company, it became apparent that CEO Michael Spindler’s strategy was failing. Microsoft Corporation (NASDAQ:MSFT) had only recently launched Windows 95, but the new operating system was already taking the world by storm. A major misstep might have ended Apple entirely.