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Steve Jobs: Apple Almost Went Bankrupt Because It Failed to Innovate

In 1996, just before Steve Jobs returned to Apple and made it the business-school case-study success story it is today, the biggest thing in Jobs' life was Pixar, which had recently launched Toy Story. He also had NeXT, which wasn't the world-changing computer company Jobs wished it would be.

Jobs appeared on PBS' Wall $treet Week program with Louis Rukeyser who first asked him about Pixar and then asked Jobs what went wrong at Apple.
Oh gosh. You know I haven't been there in a long time. My perception may not be complete. But from the way I see it, Apple was a company that was based on innovation. When I left Apple ten years ago, we were ten years ahead of anybody else. It took Microsoft ten years to copy Windows.

The problem was that Apple stood still. Even though it invested cumulatively billions in R&D, the output has not been there. People have caught up with it, and its differentiation has eroded, in particular with respect to Microsoft.

And so the way out for Apple -- and I think Apple still has a future; there are some awfully good people there and there is tremendous brand loyalty to that company -- I think the way out is not to slash and burn, it's to innovate. That's how Apple got to its glory, and that's how Apple could return to it.

In the interview, Steve Jobs, always the marketer, talks up Pixar's Toy Story CD-ROMs as "dynamite" and says they will "set a new benchmark" for what CD-ROMs could be.

Jobs' performance speaks for itself. Disney bought Pixar for $7.4 billion in stock, which made Jobs the largest shareholder in Disney and gave him a spot on the Disney board.

Apple is now the most valuable company in the world, and its stock price just today hit an all-time high of $411.50, valuing the company at more than $380 billion.

Top Rated Comments

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39 months ago
@ 1:37

"Differentiation has eroded."

This is such an important concept.
Rating: 13 Votes
39 months ago
All I can say is God bless that man.
Rating: 12 Votes
39 months ago
Amazing guy..
Rating: 10 Votes
39 months ago
Wow. It's amazing how prophetic that was. In 1996, Steve Jobs was basically saying that Apple COULD still be saved if they would only innovate. He was iCEO the next year, and released the iMac the year after that. Then the iPod. Then the iPhone. Then the iPad. And, of course, Mac OS X, iTunes, iLife, iWork, the Apple Retail Stores, and now iCloud. The man THRIVES on innovation. He is the Thomas Edison of the modern age. He recognizes what the people want, and figures out a way to produce it.

Who is John Galt? Answer: He's Steve Jobs.
Rating: 8 Votes
39 months ago
I'm not in the path to become a CEO, nor do I ever hope to be one, however, I am film director and I take a lot of inspiration from Steve's philosophies on creative project management.

The problem with leadership is that we need leaders, and the best leaders are visionaries, but most leaders do not have clear vision. I see it all the time in the film world, where all of us thrive off of the creative vision of directors and producers above us, but so often they lack in vision and inspiration that what comes out is not innovation, is not creative storytelling, but a copy of something else.

"Put a ding in the universe." -SJ
Rating: 6 Votes
38 months ago

1)0 Business business wanted (or even today) Macs...wicked expensive (comparatively), 0 business app support, and 0 business class Tech Support

That's called.... stupid businesses, not an Apple problem. I was an IT consultant during Apple's worst years, and my Mac based clients got far more out of their computer systems than did the PC folks. Yes, they did cost more, but compared to HR, they are cheap either way. A computer is a tool, used by a human... a more productive tool equals a more productive person. The computer pays for itself in a few weeks. There were also plenty of business apps. My customers weren't left wanting for sure. Yes, on the high end, they didn't have the service arrangements like HP or others had (where an HP tech shows up and swaps out servers, etc.) but most companies don't really need that.

2)Macs stayed expensive while Wintels got cheaper and cheaper and cheaper as each year went on. Cheaper may not essentially mean better, but when you're talking 1/2 or 1/3 the price, people vote with their wallets...especially if 90% of the rest of the world is choosing Wintel.

First, you don't get a comparable computer for 1/2 or 1/3 the price... apples to oranges (no pun intended). If you take specs into consideration and care at all about quality (so you don't have to buy another one in 1/2 to 1/3 the time), Macs have typically been 10% to 50% more depending on the model. The only time you get into the range you're talking about is if you take the top 'Pro' models and load them up with Apple options (which the magazines often did to ensure the price advantage of the Wintel hardware).

It's also irrelevant if 90% of the world is using X, so long as the remaining 10% is enough market share to drive the software development needed. Apple has always had enough market share for that. There were a few years in Apple's darkest time when some of the software devs began to jump ship. If that had continued, it could have become a problem. It never did.

3)Apple proprietary methodology (works great for consumers) keeps business-class apps, hardware, support, and services away...thus again businesses wouldn't buy Macs. I am referring to the Mac OS, its licensing, the fact that you must run it on Apple hardware, etc.

Yea, it kept some stupid developers away. They were mostly speciality apps that weren't needed unless one was in some very specific discipline. For those cases, just use a Wintel box. I had a few Mac clients in areas like CAD that had a few Wintel boxes for that when they needed AutoCAD or stuff like that (even though there were better CAD apps available on the Mac at the time... like Ashlar's products.)

Having to run Mac OS on Apple hardware was never a problem, but a blessing. The WORST move Apple ever made was when they started to license it to the clones. That was one of the idiotic things the 'experts' were all recommending at the time. It was one of the things that might have done Apple in eventually.

4)As my wife puts it: "Macs are fine...but Apple only wants to sell you Apple."

I hate to insult your wife, but huh? I'm not seeing the point or the problem.

5)Apple was a computer company...they "innovated" by becoming a consumer electronics company (iPod is what saved Apple). Innovating (by changing to a different company) helped...but that's like saying Nike all of a sudden barely sells sneakers and "innovated" by selling prescription glasses. Until 1999, Apple sold computers, printers, mice, monitors, and a handful of applications. From 1999 till present, Apple concentrates on iPods, iPhones, iTunes music purchases, newly-added iPads, and the revenue from AppStore sales. Macs are being purchased at "historic" levels, but Macs are clearly not Apple's direction (as of 2010/2011) and still sit at about 9% adoption rate for consumers worldwide...I think Apple has a big identity crisis with the Mac...and has had this crisis since 1999.

Umm... that's because Jobs understands how these trends work. For example, Windows didn't get in the server room by being good. It got into the server room by making it into enough homes and CEO and IT people's personal computers. The true IT folks hated Windows initially for anything but the desktop (and most thought it silly there as well, but the users wanted it).

Companies and IT (especially big ones) are usually pretty dumb in their technology choices. They copy other big companies in hopes of not getting blamed for picking the wrong thing. If you can point to some other company using product X, you can save your butt. It is the innovative companies who implemented Apple products because they didn't have to cover their butts by using the 'norm'. Consider the widespread use of Lotus Notes in big companies (I rest my case!).

By getting Apple into the hands of the average consumer, even the most die-hard Apple haters eventually had to start recognizing that the iPod and then iPhone were pretty good products. If they were so good, maybe Macs deserved another look as well. With the move to OSX, it also gave people an excuse to take another look as Apple was now more 'pro' with the Unix underpinnings.

Today, since you can run Unix, OSX, Windows, etc. on a Mac, and the hardware is so good, there is hardly any good reason not to use a Mac. In my last IT role (in a Fortune 100), all the top execs used Apple laptops loaded with Windows. The only division of the company that was growing through the rough years after 2001 was using Macs for the whole development team and most of the IT team.

The reason Apple isn't more widely used in business is largely because of close-minded IT and tech folks. Pretty simple really.
Rating: 5 Votes
39 months ago

Having said that, I must also say that the interviewer's diction is absolutely terrible for a TV show...what a train wreck.

I enjoyed him throwing around the term "computer nerds" a few times. Old geezer :p
Rating: 5 Votes
38 months ago

He will probably die from Pancreatic cancer in the not too distant future, at still a relatively young age. Money, success and fame aren't everything.

I remember, I used to talk to friends in college about this very question: If given the chance, would you have traded your life for John Lennon's? If you were John Lennon, you'd get to be the lead singer of The Beatles, have zillions of dollars, have a crazy rock and roll lifestyle complete with all of the sex, drugs and fame, but you'd have to be dead at 40. On the other hand, as yourself, you may live to be in your 80s, get to see your kids and grandchildren grow up, and lead a fruitful life, but probably not a very exciting or significant one (and by significant, I mean in terms of world John Lennon or Steve Jobs, I do not mean significant to those close to you).

As my username implies, I am now a doctor -- primary care doctor, to be more precise. And I will tell you, there is something to seeing some of these older patients who have 6 children, 15 grandchildren and 12 great grandchildren. They are patriarchs and matriarchs in their families, and those families are all that matter to most of them when they're older. On the other hand, they have a lot of ailments, they're in and out of hospitals frequently, and most of them say the "golden years" is a myth and I should enjoy my life while I'm young.

The bottom line is that while most of us strive to live longer and healthier lives, NONE of us succeed indefinitely in doing that. We all die, just some sooner than others. So, what makes for a blessed life? I believe it's reaching congruence between what our goals are and what we actually achieve. If my goal is to live to be the patriarch at the Thanksgiving table when I'm 85, then I wouldn't consider Steve Jobs' life a blessing. But, if his goal was to "change the world," than I think Steve Jobs has been blessed.

Think about his quotes in the past. "Do you want to sell sugar water the rest of your life or do you want to change the world?" Or, think about Apple's marketing and advertising, like the "Think Different" campaign. Or, just think about what he says in the interview in the top of this thread. He considers INNOVATION a blessing, and while I'm sure he'd give almost anything to cure his cancer right now, I don't think he has regrets about the way his life has turned out, unlike MANY people I know and see every day.
Rating: 5 Votes
39 months ago
The more I learn about Steve, the more I admire him. Such a brilliant guy.
Rating: 5 Votes
39 months ago

OK, let me ask you right here, right now. I Googled but I couldn't find nothing.

Does anyone know THE REAL reason why Steve Jobs wore the same clothes after 1997?

That's when he started on his $1 annual salary.
Rating: 5 Votes

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