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Product Line Review
One of Jobs’s great strengths was knowing how to focus. “Deciding what
not
to do is as important
as deciding what to do,” he said. “That’s true for companies, and it’s true for products.”
He went to work applying this principle as soon as he returned to Apple. One day he was
walking the halls and ran into a young Wharton School graduate who had been Amelio’s assistant
and who said he was wrapping up his work. “Well, good, because I need someone to do grunt
work,” Jobs told him. His new role was to take notes as Jobs met with the dozens of product teams
at Apple, asked them to explain what they were doing, and forced them to justify going ahead with
their products or projects.
He also enlisted a friend, Phil Schiller, who had worked at Apple but was then at the graphics
software company Macromedia. “Steve would summon the teams into the boardroom, which seats
twenty, and they would come with thirty people and try to show PowerPoints, which Steve didn’t
want to see,” Schiller recalled. One of the first things Jobs did during the product review process
was ban PowerPoints. “I hate the way people use slide presentations instead of thinking,” Jobs
later recalled. “People would confront a problem by creating a presentation. I wanted them to
engage, to hash things out at the table, rather than show a bunch of slides. People who know what
they’re talking about don’t need PowerPoint.”
The product review revealed how unfocused Apple had become. The company was churning
out multiple versions of each product because of bureaucratic momentum and to satisfy the whims
of retailers. “It was insanity,” Schiller recalled. “Tons of products, most of them crap, done by
deluded teams.” Apple had a dozen versions of the Macintosh, each with a different confusing
number, ranging from 1400 to 9600. “I had people explaining this to me for three weeks,” Jobs
said. “I couldn’t figure it out.” He finally began asking simple questions, like, “Which ones do I
tell my friends to buy?”
When he couldn’t get simple answers, he began slashing away at models and products. Soon he
had cut 70% of them. “You are bright people,” he told one group. “You shouldn’t be wasting your
time on such crappy products.” Many of the engineers were infuriated at his slash-and-burn
tactics, which resulted in massive layoffs. But Jobs later claimed that the good engineers,
including some whose projects were killed, were appreciative. He told one staff meeting in
September 1997, “I came out of the meeting with people who had just gotten their products
canceled and they were three feet off the ground with excitement because they finally understood
where in the heck we were going.”
After a few weeks Jobs finally had enough. “Stop!” he shouted at one big product strategy
session. “This is crazy.” He grabbed a magic marker, padded to a whiteboard, and drew a
horizontal and vertical line to make a four-squared chart. “Here’s what we need,” he continued.
Atop the two columns he wrote “Consumer” and “Pro”; he labeled the two rows “Desktop” and
“Portable.” Their job, he said, was to make four great products, one for each quadrant. “The room
was in dumb silence,” Schiller recalled.
There was also a stunned silence when Jobs presented the plan to the September meeting of the
Apple board. “Gil had been urging us to approve more and more products every meeting,”
Woolard recalled. “He kept saying we need more products. Steve came in and said we needed
fewer. He drew a matrix with four quadrants and said that this was where we should focus.” At
first the board pushed back. It was a risk, Jobs was told. “I can make it work,” he replied. The
board never voted on the new strategy. Jobs was in charge, and he forged ahead.
The result was that the Apple engineers and managers suddenly became sharply focused on just
four areas. For the professional desktop quadrant, they would work on making the Power
Macintosh G3. For the professional portable, there would be the PowerBook G3. For the
consumer desktop, work would begin on what became the iMac. And for the consumer portable,
they would focus on what would become the iBook. The “i,” Jobs later explained, was to
emphasize that the devices would be seamlessly integrated with the Internet.
Apple’s sharper focus meant getting the company out of other businesses, such as printers and
servers. In 1997 Apple was selling StyleWriter color printers that were basically a version of the
Hewlett-Packard DeskJet. HP made most of its money by selling the ink cartridges. “I don’t
understand,” Jobs said at the product review meeting. “You’re going to ship a million and not
make money on these? This is nuts.” He left the room and called the head of HP. Let’s tear up our
arrangement, Jobs proposed, and we will get out of the printer business and just let you do it. Then
he came back to the boardroom and announced the decision. “Steve looked at the situation and
instantly knew we needed to get outside of the box,” Schiller recalled.
The most visible decision he made was to kill, once and for all, the Newton, the personal digital
assistant with the almost-good handwriting-recognition system. Jobs hated it because it was
Sculley’s pet project, because it didn’t work perfectly, and because he had an aversion to stylus
devices. He had tried to get Amelio to kill it early in 1997 and succeeded only in convincing him
to try to spin off the division. By late 1997, when Jobs did his product reviews, it was still around.
He later described his thinking:
If Apple had been in a less precarious situation, I would have drilled down myself to figure out how to
make it work. I didn’t trust the people running it. My gut was that there was some really good
technology, but it was fucked up by mismanagement. By shutting it down, I freed up some good
engineers who could work on new mobile devices. And eventually we got it right when we moved on to
iPhones and the iPad.
This ability to focus saved Apple. In his first year back, Jobs laid off more than three thousand
people, which salvaged the company’s balance sheet. For the fiscal year that ended when Jobs
became interim CEO in September 1997, Apple lost $1.04 billion. “We were less than ninety days
from being insolvent,” he recalled. At the January 1998 San Francisco Macworld, Jobs took the
stage where Amelio had bombed a year earlier. He sported a full beard and a leather jacket as he
touted the new product strategy. And for the first time he ended the presentation with a phrase that
he would make his signature coda: “Oh, and one more thing . . .” This time the “one more thing”
was “Think Profit.” When he said those words, the crowd erupted in applause. After two years of
staggering losses, Apple had enjoyed a profitable quarter, making $45 million. For the full fiscal
year of 1998, it would turn in a $309 million profit. Jobs was back, and so was Apple.
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