ADVENT OF THE MACINTOSH
Apple shipped its blockbuster Macintosh machine in 1984, after first advertising it on television during the Super Bowl. Initial versions of the Macintosh retailed for $2,495, while the more powerful Macintosh 512KB was priced at $3,195. That year, the firm established the Apple University Consortium, which included 24 major colleges and universities that collectively agreed to use the Macintosh for educational programs and to spend $61 million over a three-year period. Other product releases included 300-and 1200-baud modems, the Scribe printer, and the Apple IIc. Shortly after roughly 2,000 dealers ordered 52,000 Apple II machines at a conference titled "Apple II Forever," Apple stopped making the Apple III machine due to continued engineering glitches. By the year's end, more than 400,000 Apple IIc machines had been sold.
The LaserWriter printer—priced at roughly $7,000—made its debut in 1985, as did the AppleTalk Personal Network. Northern Telecom and Apple began working together to connect Macintosh computers via telephone lines. An inventory glut prompted the firm to shut down manufacturing plants for one week. The firm also permanently closed three of its six plants and laid off 20 percent of its work force, or roughly 1,200 employees. As a result, Apple posted its first-ever quarterly loss, and Jobs resigned to start a new computer venture. The AppleLink telecommunications network went online that year, connecting Apple employees, dealers, and suppliers to Apple information libraries, as well as to each other via e-mail. Apple also created the Education Advisory Council, allowing leaders in education to take part in the development of Apple's school programs and related products.
By 1986, more than 200,000 AppleTalk local area computer networks were in place. Internationally, Apple had extended its reach to 80 countries. Earnings rebounded, growing 151 percent to reach a record high. The following year, new product releases included desktop communications products, such as the AppleTalk PC Card and the AppleShare file server, as well as an updated version of Apple IIe and the next generation of Macintosh PCs. Apple also founded Claris, an independent software manufacturer.
The late 1980s were marked by a series of strategic alliances with other leading technology firms. For example, Digital Equipment Corp. and Apple began working together to integrate Macintosh personal computers and AppleTalk networks with VAX systems. In 1988, Apple shipped a Unix-based version of Macintosh II. Apple and Quantum Computer Services created AppleLink-Personal Edition, an online communication and information service designed specifically for Apple II computer owners. The firm also worked with Texas Instruments to integrate Macintosh II with Texas Instruments' Explorer Lisp coprocessor board. The joint venture with Texas Instrument proved to be one of Apple's largest value-added reseller agreements for the Macintosh line. That year, Apple filed suit against Microsoft Corp. for allegedly using the "look and feel" of the Macintosh operating system as the basis for its increasingly popular Windows platform. Apple's lawyers requested that Microsoft either pay royalties or simply stop selling Windows. Net income exceeded $400 million on revenues of roughly $4 billion.
In 1989, Apple released several new networking and communication products designed to enhance the communication capabilities of Apple machines. For example, the IIGS System Software 5.0 was the first 16-bit operating system for an Apple PC that operated over the AppleTalk network system. Sales climbed to $5.28 billion. In response to intense competition, Apple reduced its prices in 1990 and introduced a series of low-cost Macintosh PCs. The following year, it shipped several low-cost printers. Apple also asked the Federal Communications Commission (FCC) to allow computers to send and receive information over radio waves. The FCC granted permission for this type of electronic communication, and the decision fostered the development of a new class of data communications known as Data Personal Communications Services.
In 1991, in an effort to steal market share back from Microsoft, IBM and Apple forged an alliance to develop a new operating system that would make computers easier to use and also increase compatibility between IBM and Apple machines. By then, roughly 90 percent of worldwide PCs used Microsoft's Windows platform, and Apple had broadened its litigation against Microsoft. However, a judge ruled in favor of Microsoft in 1992 after deciding that the appearance of the Macintosh operating system was not protected by Apple's copyrights. Apple appealed the decision, but the Supreme Court refused to hear Apple's case.
In 1993, Apple ranked as the world's second-largest PC maker, behind Microsoft. Sales exceeded $7 million, and employees totaled roughly 15,000. The following year, the firm unveiled its PowerPC microprocessor. In the mid-1990s, sales began to slow and inventory mounted, prompting Apple to cut its prices by up to 25 percent. As Microsoft continued to gain market share, many firms stopped developing new software for the Macintosh. Units shipped fell from 4.6 million in 1995 to 3.7 million in 1996 as market share decreased to 5.2 percent, compared to 10 percent in the late 1980s. Management shakeups also plagued the firm. Market share tumbled to 3.2 percent in 1997, and Apple posted a $1.1 billion loss. The firm then purchased NeXT Software Inc. from original Apple founder Steve Jobs, who agreed to serve as an advisor to Apple. Shortly thereafter, Jobs was reinstated as Apple's CEO.
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