Apple. Pixar. iPod.
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In 1984, Apple Computers released the Macintosh. It was Steve Job’s dream to create the perfect business computer. Unfortunately, this wasn’t it. The closed box design eliminated the possibility of any expansion slots and the limited memory made it impractical. The business world rejected it.
To make things worse, the Macintosh team discovered that the Lisa team (another Apple flop) was paid much more than they were. The team turned their back on Jobs. Sales of a previous model, the Apple II kept the company afloat.
The company’s board took the Macintosh division away from Jobs and gave total management responsibility to John Sculley, an exec from Pepsi. Jobs Hired Sculley since he wasn't allowed to run Apple. In 1985 at age 30, Jobs resigned from Apple Computers.
Determined to develop the next great hardware product, Steve Jobs started NeXT Computer. Although they made many product announcements, they had problems getting the computers to market.
IBM approached Jobs about licensing his operating system; but talks dragged on and on. In part, this was his fault. By doing so, he missed the opportunity to beat Windows. His products never found a market, but they had great industrial design.
Next stop…..Pixar. George Lucas was in need of cash to settle his divorce. He wanted to sell his CGI unit named Pixar for $30 million. After visiting the group Steve Jobs saw enormous potential. He wasn’t swimming in cash either and decided to wait the price out.
George Lucas came down down. In 1986, Jobs bought Pixar for $10 million.
At the beginning of this new venture, Pixar lost money. During this time Apple Computers needed a new operating system. Steve Jobs had the solution for his old company. NeXTSTEP. Apple Purchased NeXT for $378 million and 1.5 million shares of stock. Jobs soon regained control of Apple and became interim CEO.
Pixar also released the movie Toy Story to great reviews and excellent returns. In 1995 Pixar went public and Steve Jobs became a billionaire. That was the beginning of a string of successful hits.
During his rebirth at Apple, Jobs developed the popular iMac. Other successful products soon followed. He continued his work with Pixar. The studio had so much cash at this point it could self-finance its own films.
The biggest success came in October 2001. Its name was iPod.
In 2002, Jobs convinced five large music labels to join forces and sell their music online. This was the genesis of iTunes. Customers legally downloaded over one million songs in the first week. Instead of having to buy the whole CD package, they picked only the songs they liked.
Apple had changed the music business.
Steve Jobs wanted a better Mac-compatible device for playing music. The exiting products were lousy. Engineer Anthony Michael Fadell was hired to develop a great device that could fit in your pocket.
Hence the iPod.
The secret of the iPod was that it was cool. Sony developed the Walkman years earlier. What happened to that? Jobs not only wanted a device that sounded good…..but looked cool. White ear buds, Apple logo, small sleek design, small window that feeds information about all the songs you’re playing, even a U2 branded iPod………now that was cool.
Some people are even judged by what songs are on their playlist. Lord forbid you should be caught jamming out to "We Built This City on Rock & Roll" by Starship.
At first, iPod worked only with Macs. Jobs didn’t want to create a Windows compatible unit. In 2002, that all changed. Jobs developed iPod for Windows. After a few compatibility issues, the iPod now works well.
Apple employees are the first to admit how difficult it is to work for Steve Jobs. But they also acknowledge the company would’ve never developed such innovative and forward-thinking products without his aggressiveness.
Steve Jobs never got involved in making cheap products so as to win a price war. That keeps you in a low margin commodity business. Jobs kept focused on building innovative products that were great.
Since 2001, almost 1 billion iPod units have been sold. That’s a lot of recurring revenue. And I imagine not much cost of goods sold goes into downloading a tune.
And of course, last but not least...there's this little thing called the iPhone whych has sold 6 million units since it's release. Let me say one thing about the iPhone: That is one ingenious piece of technology; and I’m serious.
Sometimes you never know where that next company changing product is going to come from. Microsoft has been asking that since the Internet Explorer.
Who would’ve thought a small music player would be responsible for this:
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