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INNOVATION ECONOMY

In Boston, the keynote to Apple’s turnaround

By Scott Kirsner
Globe Correspondent / August 28, 2011

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To appreciate the scope of what Steve Jobs accomplished during his second stint as Apple’s chief executive, you have to rewind the tape - or rather, spin back the iPod’s wheel - to an August morning in Boston 14 years ago.

More than 1,500 of the Apple faithful filled the Park Plaza Castle to hear Jobs deliver his first MacWorld Expo keynote since returning to the company the year before. I was in the front of the hall, covering the event for Wired magazine’s website. It felt like a conclave of Shakers, devout but dwindling.

“I came today to give you a status report on what’s going on, and to try to fill you in on some of the steps we’re taking to get Apple healthy again,’’ Jobs began.

It was a resonant, return-of-the-prodigal-son moment. But it wasn’t at all clear that Jobs could save the company he cofounded. Apple had brought him back to the fold after a 12-year absence by purchasing his failed start-up, NeXT Inc. Just a month before MacWorld came to town, Apple’s board had sacked the chief executive who had made that decision.

Jobs had not yet assumed the position of Apple’s interim chief executive; he introduced himself that day as chairman and CEO of Pixar.

There was very little good news for Jobs to report. The company had been within three months of running out of cash and declaring bankruptcy. Sales had dropped precipitously.

Things were so bleak that when Michael Dell, founder of rival computer maker Dell Inc., was asked what he would do if he ran Apple, he said that he would “shut it down and give the money back to the shareholders.’’ There were about 8,000 fewer people attending the MacWorld trade show that year.

When Jobs told the crowd that Microsoft was making a $150 million investment in Apple - money that would help sustain the company - the audience booed. They kept booing as Bill Gates’s face appeared on a huge screen, looming above Jobs, to assure everyone that Microsoft would continue producing Office software for Macs. Jobs chastised the audience: “If others are going to help us, that’s great, because we need all the help we can get.’’

The audience was full of Apple retailers, software developers, and clone-makers: Apple had allowed companies like Power Computing and Motorola to crank out generic-looking computers that ran its Macintosh operating system. Jobs would eventually put an end to those clones, which cannibalized Apple’s own sales without doing much to spread the gospel of Mac. But on that morning, he said nothing much about the future, outlining a bland strategy of getting Apple focused on markets where it was strongest: creative agencies and schools.

Did Jobs want to run Apple? According to the book “The Second Coming of Steve Jobs,’’ he “thrust himself into the power vacuum and quickly took control’’ after the company’s prior chief executive, Gil Amelio, was ousted. But Harvard Business School professor David Yoffie, who has written extensively about Apple, tells a different story. “I heard from insiders at the time that Steve was ambivalent,’’ Yoffie says, “but to my knowledge, the board wanted him.’’

At the time of the Boston keynote, Michael Oh was a 24-year-old who ran Tech Superpowers, an Apple retailer and service provider on Newbury Street. “We were ready for someone to take the helm and make change, so we could follow - anyone with a good plan,’’ he said. “Then came Jobs, and he was, for lack of a better term, the messiah for the Macintosh platform.’’

Jobs was named interim CEO of Apple in September 1997. The following year, he introduced the first major product of his second term in office: the candy-colored iMac, which packed the workings of the computer into a Jetsons-style TV unit. (The “i’’ stood for Internet, and the company had designed a radically simple, two-step process to connect to the network.) It was the start of a Barnum-esque parade of products, including the iPod music player, iTunes online media store, iPhone, iPad tablet computer, and the ultra-thin MacBook Air.

In 2001, the first Apple Stores opened in Virginia and California; there are now 333 around the world, and consumers regularly line up outside for the privilege of being the first to own a new Apple product.

Jobs became the undisputed heavyweight champ of new product introduction, forbidding leaks in advance of announcements and getting the attention of the world’s media focused on him. Apple lovers practically salivated when, at the end of a Jobs keynote, he would pause and say, “One more thing,’’ always saving the biggest news for last. (In Boston, there had been no “one more thing.’’)

In 1997, Apple was begging Microsoft and others to keep writing software for the Macintosh. Today, the iPhone and iPad are the dominant mobile devices, as far as software developers are concerned. There are at least 425,000 apps available through the iTunes Store, and whenever a developer decides to charge for an app, Apple pockets one-third of the price.

The 1997 MacWorld keynote was the last time, as far as I know, that Jobs gave a public speech in Boston. The trade show moved to New York the following year - closer to creative industries like advertising and design, and better for generating media coverage.

Much has been written about the culture of innovation, sly industry disruption, and savvy marketing that Jobs fostered at Apple over the past 14 years. For a brief moment earlier this month, Apple was the most valuable company in the world, measured by market capitalization.

Back in 1997, in the Park Plaza Castle, even the truest of true believers could not have imagined such a renaissance. It was one of those moments that many of us have faced, when you are handed a horrible situation and expected to work miracles. Few of us will do as well as Jobs did.

Scott Kirsner can be reached at kirsner@pobox.com. Follow him on Twitter @ScottKirsner.