JIM LEHRER: Finally tonight we focus on an apple — Apple, the computer, not the fruit. The once high-flying computer industry is having its troubles. IBM just quit making its PC Jr. home computer; Wang Laboratories is closing its factories for two weeks and cutting executive salaries; and Apple, the most high-flying of them all, closed three of its plants for a week and a fourth does the same Monday. Correspondent Elizabeth Brackett reports.
ELIZABETH BRACKETT: Apple co-founder Stephen Jobs has a favorite story about Apple’s impact on the country. He told it this year at the annual shareholders’ meeting.
STEPHEN JOBS, Apple Computers: I received a letter from a six-and-a-half-year-old boy a few months ago which to me completely sums up what we’ve accomplished in the last few years. And it reads: “Dear Mr. Jobs: I was doing a crossword puzzle and a clue was ‘as American as apple blank.’ I thought the answer was computer, but my Mom said it was pie.”
ELIZABETH BRACKETT: Apple’s success has been built on the Apple II, the easy-to-use computer that took over the home market. But millions of dollars have been lost in the home market over the last several years, and now Apple President John Sculley says that home market no longer exists.
JOHN SCULLEY, Apple Computers: I believe there is no such thing as a home computer market. All the sales that we have for computers that end up in the home are there for two reasons; either because of education — people want the same computer at home that their kids are using in school, and Apple has the strongest position in education, or for business reasons. They’re either running a small business in their home or they want to be able to bring work home from the office and continue working on it at home.
ELIZABETH BRACKETT: Instead, Sculley and Jobs say Apple’s future is with personal computers for the business market. To do that, Apple must attack a formidable competitor, IBM.
Last year Apple launched its attack against IBM in the business world with the introduction, amidst great hoopla of this, the Macintosh computer. This year Apple’s big new product is this, a $50 cable and a box that links one Macintosh with another.
So on the darkened stage at the annual shareholders’ meeting Apple introduced the new cable with as much hype as possible, turning the connecting cable, named AppleTalk, into a glittering, fluorescent extension cord.
STEPHEN JOBS: Stringing together a modest-sized AppleTalk network is much easier, for example, than connecting a VCR to your TV set. If our vision and concepts are right, today will be the beginning of an alternative to IBM’s vision of the office, an alternative that starts with people rather than mainframes. Thank you very much.
ELIZABETH BRACKETT: But to break into that business market, Apple must convince people like Cynthia Apalakis to give up a long-standing relationship with IBM. Apalakis is a data processing supervisor for Safeway Food Stores in the San Francisco area. Ninety percent of Safeway’s operations are handled by computers. Apalakis is not sure the Macintosh could handle the job.
Would you consider a Macintosh in the future from Apple?
CYNTHIA APALAKIS, Safeway Stores, Inc.: Would I consider one? Maybe if they changed their looks a little bit and it looked a little more like a real computer should. I don’t know how a real computer should look, but they just don’t look real to me. They look like toys.
JOHN SCULLEY: The fact is that our products are not toys and anyone who is knowledgeable about these, industry consultants, users, realize that our products are far more sophisticated in technology than anything that is available from any other competitor. And so the best way of convincing people that our products are sophisticated and not toys is to let them get their hands on them.
ELIZABETH BRACKETT: Philip Gordon supervises the buying of computers for the big Crocker National Bank in California. He has had lots of opportunity to get his hands on a Macintosh.
PHILIP GORDON, Crocker National Bank: I certainly want one. I haven’t come across anybody in the IBM-PC world, for instance, who isn’t fascinated by the Macintosh and who doesn’t necessarily want to have one. But I have to be convinced that it is — I won’t go so far as to say a toy. I have to be convinced that it is a useful business device.
ELIZABETH BRACKETT: The problem, says Gordon, is that Apple is not yet viewed as the kind of organization that sells to the corporate community.
PHILIP GORDON: They don’t have an awful lot of experience in dealing with the necessities of a corporate environment, and that is something that’s not easy to come by, necessarily. We have a lot of people who already have that experience. So it’s going to be hard to give consideration to a company that really is a newcomer, in essence, to the corporate environment.
ELIZABETH BRACKETT: Not only is Apple a newcomer to the business world, it still suffers from what some business people see as a rather flaky, laid-back California image. Stephen Jobs’ sometimes prickly attitude with both the business establishment and the press doesn’t help. Jobs likes to deal with both on his own terms and on his own time.
STEPHEN JOBS: Can you guys catch me later?
ELIZABETH BRACKETT: Still, it is Jobs that provides the main inspiration and philosophical direction for Apple. Jobs, who insists the creative energy at Apple is as high now as it was back in the days of the garage.
STEPHEN JOBS: What Apple is, is it’s an environment where we can attract the best and the brightest people to come together and sort of have a common vision about how we can change the world, and it’s very rare that we can actually put something back into the world.
ELIZABETH BRACKETT: But nationwide sales of the Macintosh and the Apple II have been slow since the first of the year. Despite a small upturn in February, many dealers are stuck with big inventories both in the warehouse and on their shelves. And that’s not all. The company has been hit with a wave of top-level resignations. Co-founder Steven Wozniak, the electronic genius who put the first Apple together in his garage, quit last month. Wozniak says the company is putting too much emphasis on the Macintosh computer at the expense of the computer that built the company, the Apple II.
STEVEN WOZNIAK, Apple Computers: I would generally complain about how much the Apple II was not getting anywhere near the attention, particularly designing future versions of the Apple II that it should have over the years, and I think it’s harmed Apple tremendously.
ELIZABETH BRACKETT: Wozniak pocketed $70 million from his sale of his Apple stock. He will start over with a five-person company and a new product. But he says he would have stayed at Apple if the company had kept its old commitment to individual entrepreneurship.
STEVEN WOZNIAK: If there was some project that I could really just work on a lot independently and be assured that it was just going to go very quickly through a lot of the red tape, cut the red tape, yes, but once I’ve got to fit myself into using all the design systems at Apple and the procedures and approvals from certain committees and this and that, it’s too large. It’s really the dollars that drive it.
ELIZABETH BRACKETT: Apple says Wozniak’s departure will have little effect on the day-to-day operation of the company, but industry analysts are nervous about Apple’s prospects as they go after IBM in the business market with the Macintosh. Several analysts have cut their projections for second-quarter Apple profits by as much as 10 cents, and Apple stock continues to be volatile. Industry analyst Ulric Weil says Apple has also been hurt by a lack of software for the Macintosh; though the new business programs and new products have been developed, many have not yet made it to the marketplace.
ULRIC WEIL, industry analyst: Very quickly the word gets around there isn’t enough software to get true productivity out of Macintosh, particularly in an office environment. Within 90 days we will know whether Macintosh has a real good chance to crack the office — the office world, and we will also get a better handle on whether home computer demand will resurface in the Apple II arena.
ELIZABETH BRACKETT: So these are the critical days for Apple?
ULRIC WEIL: Yes.
ELIZABETH BRACKETT: Most in the business community are pulling for Apple. Most do not want to see the innovation and creativity that Apple brings to the computer market lost. But pulling for Apple and buying an Apple product are not necessarily one in the same, and Apple is girding itself for a tough fight to stay healthy.