By Ina Fried
Staff Writer, CNET News.com
March 28, 2006 4:00 AM PT
In the 1970s, Steve Jobs and Steve Wozniak were going door-to-door at the UC Berkeley dorms selling "blue boxes"--electronic devices that tricked the telephone network into allowing free long-distance phone calls.
Luckily for the technology world, the duo cleaned up its act and started making computers.
Now, 30 years after its founding, Apple Computer has grown from a tiny start-up to a household name and cultural icon known as much for its iPod digital music players as its computers.
"The technology industry is fundamentally about change and no company can survive for long without reinventing itself," said Rick Rashid, head of Microsoft Research and developer of the Mach kernel, which serves as the open-source core of Mac OS X. "Companies that can survive for 30 years are the exception rather than the rule, and something to celebrate."
Apple has a brand name as recognizable as Coca-Cola and Federal Express and last year had a record $13.93 billion in annual sales and a $1.34 billion net profit.
Given the company's current success, it's easy to forget how it fell from the top of the tech heap in the 1990s and scuffled along as Microsoft grew into the largest software company in the world and PC makers such as Compaq Computer and IBM came to dominate the industry Jobs and Wozniak helped create.
But glossing over those years would make it difficult to describe just how remarkable Apple's current renaissance is. While Compaq now only exists as a brand name sold by Hewlett-Packard, and IBM no longer makes PCs, Apple is enjoying perhaps its finest hour. The iPod is a pop-culture phenomenon. And, incredible to some, Apple is having an easier time updating its flagship Macintosh operating system than Microsoft is having with Windows.
Some say there are no second acts in business, but Jobs & Co. are making mincemeat of that old chestnut.
Apple didn't invent the computer. But with the Apple II, which went on sale in April 1977, the company introduced a machine people actually wanted to use.
Even as the Apple II was still a star, Apple was hard at work on a pair of follow-ups, the business-oriented Lisa and its consumer sibling, the Macintosh. A team that included Bud Tribble, Andy Hertzfeld, Bill Atkinson and Jef Raskin was laboring away in a separate building at Apple headquarters, working on the project that would change the company.
"Who cares about the Apple II?" Steve Jobs asked Hertzfeld in February 1981, when he moved the young engineer from the Apple II group to the Mac unit. Jobs didn't even let Hertzfeld save the work he was doing on a new operating system. "The Macintosh is the future of Apple, and you're going to start on it now," Jobs said, according to "Revolution in the Valley: The Insanely Great Story of How the Mac Was Made," Hertzfeld's book on the Mac's early days.
With the Mac, Apple took innovations that had been lying around--the mouse, a graphical interface and the laser printer--and used them as a way to bring publishing to the masses.
The quirky Mac, with its small, 9-inch black-and-white screen and 3.5-inch floppy disks, quickly developed a legion of rabid enthusiasts, a phenomenon that came to be known as the "Cult of Mac."
"It was initially a conscious marketing strategy," said Leander Kahney, who authors Wired News' "Cult of Mac" column and has written a book of the same name. "There they were, going up against IBM. To differentiate it, they always portrayed the Mac as countercultural, the alternative to big companies and big government."
Of course, Apple enthusiasts don't pay heed to such talk of a marketing angle. "To them it's a rational choice," Kahney said. "It's just the best computer around."
Despite the hordes of Mac fans, the company that gave birth to the machine has largely been a loner.
Apple, at least under Jobs, has toiled away at products in secret, handling the hardware and software itself and unveiling its work only when ready--then returning to its secluded confines.
Over the years, the company has dabbled in licensing its operating system, but it's always decided to go it alone.
The company has struck many notable partnerships over the years, but most have fallen short of the original expectations. Apple's early decision to license its OS to Power Computing and Umax, as well as its chip alliance with IBM and more recent alliances with Hewlett-Packard and Motorola, all have soured in the end.
For all the praise Apple has enjoyed in recent years, the company barely survived its midlife crisis.
In the mid-1990s, Apple was losing hundreds of millions of dollars and had already replaced embattled CEO Michael Spindler in order to right the troubled ship.
'Audacious, daring, artistic'
The company looked many places for salvation. Apple almost bought Jean-Louis Gasse's Be, but Gasse wanted more than Apple would pay.
In the end, the company decided to acquire Jobs' Next Computer. He initially rejoined the company only as an adviser, but he quickly found himself back at the reins--first on a temporary basis, then as permanent CEO.
The move was fortuitous for both Apple and Jobs. Encores are rare in technology, and Jobs got a chance at redemption after being pushed out of the company in 1985 by John Sculley, the Pepsi executive Jobs helped recruit.
While others have handled many of the technical tasks throughout Apple's history, Hertzfeld said Jobs deserves much of the credit he gets.
"I think Apple would be more of an ordinary company without him--it would be much less audacious, daring and artistic," Hertzfeld said.
Time line: Three decades of Apple innovation The products, people and events that shaped the Mac maker.
Gallery 1: Early fonts, graphics Historic Polaroids chart evolution of the user interface.
Gallery 2: Radical shift Soft-key based UI becomes mouse/windows-based.
Gallery 3: Lisa desktop Creating double-click, menu bars and more.
Gallery 4: Sketching out the Mac Before MacPaint there was LisaGraf.
Postcards from the faithful What Apple products mean to CNET News.com readers.
Cult of Mac Apple devotees have a style all their own.
Do you use a Mac? How about an iPod?
Wozniak on early Apples Company co-founder talks about building computers with cheap parts.
'It was like working at Disneyland' Former Apple evangelist Guy Kawasaki on the company's early days.
Sizzle may be subjective, but Apple's definitely got it, says CNET News.com's Charles Cooper.
Editors: Leslie Katz, Scott Ard
Copy editors: Edward Moyer, Jennifer Guevin
Production: Bernie McGinn, Andrew Lottmann
Design: Michelle White, Ellen Ng