Steven Jobs - Retooling Apple, 2001 And Beyond

In January 2001 Apple announced its first quarterly loss since Jobs returned to the company. For the quarter ending December 30, 2000, Apple reported a $247 million loss from operations, due largely to the poor performance of the G4 Cube. It was the end of a disappointing year for Apple. Critics noted that Apple had anticipated strong demand for video, building DVD drives into its computers and installing its critically acclaimed video editing software. Instead, 2000 was the year in which consumers, downloading digital music files and burning their own audio CDs, wanted more audio from their computers. Apple failed to anticipate that demand and, in fact, none of its computers came with installed read/write CD drives.

Apple computers were also equipped with slower processors than Intel-powered PCs. At the end of 2000 the fastest processor in an Apple computer was the 500-megahertz G4 chip in Macs for the professional market. By contrast, Intel-based chips were up to 1.5 gigahertz, three times the size of Apple's largest processor.

To retool the company and focus on innovation, Jobs directed several initiatives at Apple in the first half of 2001. He announced plans to open up to 25 retail stores by the end of the year, starting with outlets in Glendale, California, and Tysons Corner, Virginia. To lead Apple's retail team, Jobs recruited former Target Corp. merchandising executive Ron Johnson, who designed a 4,500-foot open space divided into subsections that focused more on what people do with their computers than the computers themselves. Apple expected the stores to become profitable by fiscal 2002.

Apple also introduced version 10.1 of its OS X operating system and updated versions of the iBook notebook computer and the Titanium PowerBook G4. Strong sales of the PowerBook in 2000 helped offset the Cube's poor sales. The new G4 PowerBook would come with a choice of three processors: a 733 MHz, 867 MHz, or a high-end version with dual 800 MHz processors.

Jobs was also determined to recapture lost market share in the education market, where Apple held more than 50 percent of the market in 1997. Through its low-priced PC program, Dell Computer Corp. had captured 34.3 percent of the U.S. education market, compared to Apple's 19 percent, by 2001.

Judging by a 25 percent increase in attendance at the mid-2001 Macworld Expo, consumer interest remained strong in Apple's innovative products. A major concern among consumers and professionals who managed networks of Macintosh computers for businesses and educational institutions was a lack of new software for Apple's new Unix-based OS X operating system. To address those concerns, Jobs displayed demo products from 10 software makers, including Adobe and Microsoft, that would be available later in the year for OS X, at the 2001 Macworld Expo.

Jobs, known as a charismatic leader and adept marketer, appeared committed to transforming Apple into a high-performance company. Even though Apple only had a 5 or 6 percent share of the personal computer market, Jobs told Business Week, "We only have to convince another 6 percent of PC buyers to buy from us and we can double the size of our company. That's exciting."