The Turnaround

Microsoft launches Windows 95. The Empire State Building is lit up in Microsoft's colors. The Rolling Stones' 'Start Me Up' plays in every TV spot. The PC market shifts to Microsoft almost overnight. Apple's market share, once in double digits, slides toward the low single digits. Inside Cupertino, the company is selling dozens of overlapping Mac models (Performa, Quadra, LC, Centris) with no plan for a modern operating system to run them on.

Wall Street is asking the same question. By now everyone sees the same problems: too many product lines, a clone licensing program eating into margins, and no modern operating system in sight.

Copland had been in development since 1994, meant to bring protected memory and preemptive multitasking to the Mac for the first time. After three years of delays and ballooning complexity, Apple's engineers concede they can't ship it. The cancellation leaves Apple with no future OS - and forces it to look outside the company.

Apple offers around $125M to acquire Be Inc. and its BeOS. Be's CEO, former Apple executive Jean-Louis Gassée, holds out for roughly twice that. The talks collapse. Apple turns to NeXT, and back to the man who founded Apple in the first place.

$429M in cash and stock. NeXT's software will become the foundation of Mac OS X - and of every Apple operating system after it. Twelve years after being forced out, Steve Jobs rejoins the company he co-founded.

Part-time. No operating role, no title, no direct reports. Only access.

Avie Tevanian becomes head of software engineering. Jon Rubinstein becomes head of hardware engineering. Bertrand Serlet, Scott Forstall, and others from NeXT step into senior Apple roles.

Under Amelio, Apple makes the largest layoff in its history. Whole product teams, redundant management layers, and middle-tier engineering groups are eliminated in a single day.

It's the largest quarterly loss in Apple's history. By the time the numbers are public, the board's confidence in Amelio is gone.

At WWDC 1997, a developer challenges Jobs publicly about Apple's strategy. Jobs pauses, then answers: 'You've got to start with the customer experience and work backwards to the technology. Not the other way around.'

In a regulatory filing, Apple acknowledges the risk: if it can't integrate NeXT or retain its people, the value of the acquisition disappears.

In nine months, $460M in cash and short-term investments evaporates. At the current rate, Apple has less than two years of cash left.

Jobs sells nearly all of the 1.5 million Apple shares he received from the NeXT deal - at roughly $13 per share, close to the stock's bottom. The sale is widely read as a vote of no confidence.

Over the long Independence Day weekend, Jobs works the phones, calling directors one by one. Ed Woolard, the lead independent director, sides with him. By Monday the board has decided. By Wednesday it's public. Jobs has effectively taken over - without yet taking the title.

Amelio's tenure ends after seventeen months. Apple announces a search for a new CEO. Jobs takes on an expanded advisory role - de facto running the company, still without the title.

Jobs walks Apple's design studio and meets Jony Ive - Apple's head of industrial design at 30, dispirited and thinking about leaving. They click. On a whiteboard, Jobs draws a 2x2 grid: consumer and pro, desktop and portable. Apple will make four products. Everything else is a candidate for elimination.

Apple's clone licensing program had let companies like Power Computing sell Mac clones, eating into Apple's hardware margins. The clone contracts only covered 'System 7.' By naming the next OS release Mac OS 8 instead of 7.7, Apple argues the contracts no longer apply - giving it a legal path out of the clone era and back to controlling who can ship the Mac OS.

Only Mike Markkula and Ed Woolard remain. Joining them are Steve Jobs, Larry Ellison of Oracle, Bill Campbell of Intuit, Jerry York from Chrysler, and Gareth Chang from Hughes Electronics.

At Macworld Boston, Jobs announces a deal with Microsoft. Office and Internet Explorer will ship on Mac for the next five years. Apple bundles IE as the default browser. Patents are cross-licensed. Microsoft buys $150M in non-voting Apple stock. Apple's long-running lawsuit against Microsoft ends with the deal.

When Bill Gates appears via satellite on the giant screen behind him, the audience boos. Jobs pushes back: 'We have to let go of the notion that for Apple to win, Microsoft has to lose.'

It's a long, personal email. Jobs lays out the changes already made - new board, Microsoft deal, new advertising agency - and announces the operational reset coming this week.

Existing employee options are repriced to current market value. A large new grant is added on top. After the reset, Apple employees collectively hold more than 20 million options. If the stock recovers, every employee profits.

Apple's many separate severance plans collapse into one. Executives no longer have richer terms than anyone else. The same plan applies whether you're a vice president or a customer service rep.

Effective immediately. Jobs calls the sabbatical program expensive and out of step with how fast the industry now moves. Sabbaticals already booked will still happen. New ones won't.

Apple consolidates from six locations (excluding Infinite Loop) down to three. Jobs wants more chance encounters and faster decisions. He believes great products come from people running into each other in hallways, not from email.

Apple buys Power Computing - the largest Mac clone maker - for around $100M and takes over its customers. The Mac OS license is not renewed for the remaining clone makers. Within months the clone market is gone.

The board names Jobs interim CEO and continues searching for a permanent one. He keeps the 'interim' title for more than two years.

Jobs gathers Apple employees and presents the Think Different campaign before it runs publicly. Marketing isn't a layer on top of the product, he says - it's a way of declaring who Apple is and what it values. The campaign honors people who think different. The Apple products are absent from the ads.

The ads feature Einstein, Gandhi, Picasso, Edison, Muhammad Ali, and Hitchcock - none of them computers. The campaign wins an Emmy for Outstanding Commercial.

Asked at a tech conference what he would do if he were running Apple, Michael Dell answers: 'I'd shut it down and give the money back to the shareholders.' Jobs takes the quote personally and keeps it within reach for years.

At an event in Cupertino, Jobs introduces the new PowerPC G3 Macs and announces two operational shifts: a direct-to-consumer online store and build-to-order manufacturing. Both ideas come straight from Dell - the same Dell whose CEO had said a month earlier that Apple should be shut down.

Printers (StyleWriter, ImageWriter), scanners, QuickTake cameras, the Pippin game console, OpenDoc, Cyberdog, eWorld, the Apple Network Server line, Performa and LC variants, A/UX, and dozens of Mac SKUs - all cut. Apple's engineering and marketing now focus on a small set of products it can make insanely great.

Apple offers employees a deal: hand in your old underwater options and receive a smaller number of new ones, priced at today's market value. By December the stock has recovered enough that the new options have real value. Most accept.

Apple's first profitable quarter in over a year. The company is not yet healthy, but it is no longer bleeding.

Jobs ends the Newton division and all future Newton-based products, including the MessagePad. A small group of devoted Newton users protests outside Apple's Cupertino headquarters with signs. Jobs presses ahead.

Tim Cook leaves Compaq to join as SVP of Worldwide Operations. He met Jobs once and accepted within minutes. He'll reduce suppliers, cut inventory, and speed up execution.

Bondi Blue, translucent, all-in-one. No floppy drive. USB instead of the proprietary ports the Mac had used for years. Priced at $1,299. The 'i' stands for internet.

At Macworld New York, Jobs pulls up Apple's 2x2 product grid. Three quadrants are filled. The consumer-desktop quadrant is empty. The iMac fills it.

On August 15, demand is heavy enough that retailers run out of stock on the first day. People line up.

About a third of the 278,000 buyers have never owned a Mac before. For the first time in years, Apple is winning new customers.

Apple closes its fiscal year with a $309M profit. The year before, the company lost over $1 billion.

Jobs emails employees with November market data. Apple's retail and mail-order share has doubled, from around 5% in August to roughly 10% by November.

Apple's holiday-quarter profit is more than three times what it earned a year before.

Two days - lower than Dell, the company whose CEO had said Apple should be shut down.

Three years ago, BusinessWeek put Apple on its cover and asked whether the company could be saved. By December 1998, the question is closed.

Steve Jobs returned to a company that was bleeding cash, drowning in products, and running out of time. Two years later, the iMac was the best-selling computer in the country, and Apple was profitable again.

In roughly eighteen months Apple replaced its board, reset its incentives, killed most of its product line, brought in Tim Cook to run operations, and shipped the iMac - a product people actually wanted.