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By Root 556 0

had muffed the development and introduction of their personal computers. Large companies like Hewlett-Packard and Xerox had stumbled and belatedly introduced machines that didn’t match the Apple II. Firms with a reputation among consumers, like Atari and Mattel, had also missed the boat while the minicomputer makers like Data General and Digital Equipment were slow to realize the threat posed by microcomputers that were getting more powerful by the month. And Texas Instruments, the company that had once been the cause of such fear, flubbed its computer strategy so badly that Apple looked better with every passing day. The TI computer showed little attention to cosmetic details, gave low performance for the price, had thin distribution, and was received so poorly that within two years the price dropped from more than $1,000 to $100. So at Apple the arrival of a new competing computer had developed into a ritual. In the months leading up to a major announcement, there was a certain amount of trepidation at Apple. But after the announcements were studied and the UPS delivery trucks pulled up in Cupertino bearing the latest product, the machines inside the Styrofoam cartons were almost always greeted with derisive hoots.

Machines that carried the names of Japanese companies were given the same reception as American computers. Some of the statements that emerged from Cupertino sounded ominously like the confident claims which had once risen into the air of Detroit in the mid-sixties. At one time or another the Japanese were not supposed to understand the microcomputer market, had no experience with complicated electronic consumer items, wouldn’t be able to master software, wouldn’t find any room left on dealers’ shelves, and wouldn’t be able to build an image for their brands. “The Japanese,” Jobs liked to say, “have come flopping up on our shores like dead fish.”

This despite the fact that Apple came to depend on a variety of Japanese companies for a steady supply of semiconductors, monitors, printers, and disk drives. And while Japanese manufacturers like Hitachi, Fujitsu, and NEC designed and made almost every part needed in a personal computer, Apple was little more than an assembler of other people’s work. The long-term challenge was stark: Apple had no alternative but to become the lowest-cost producer in the world and simultaneously offer the most value to its customers if it hoped, in the long run, to beat the Japanese. The extent of the Japanese threat was made clear not in the United States but in Japan, where within three years conditions had changed dramatically. In 1979 Apple and Commodore owned 80 percent of the Japanese market; by 1980 this had slumped to 40 percent and the November 1981 issue of the Japan Economic Journal reported: “The three leading American personal computer makers—Apple Computer, Commodore International and Tandy—have witnessed their combined market share in Japan plunge from 80-90 percent in 1979 to less than 20 percent at present.”

There was, however, one competitor that everyone had expected to enter the microcomputer market once it was large enough to matter. That was the company with three of the most imposing initials in American business: IBM. It was easy to dismiss IBM as an old, lumbering, stuffy, East Coast company that could offer its engineers or programmers neither fame nor fortune and insisted that everyone wear white shirts and striped ties. In 1981 when IBM introduced its personal computer, its revenues were ninety times as large as Apple’s. It made satellites, and robots, memory chips and mainframe computers, minicomputers and typewriters, floppy disk drives and word processors. At the Homebrew Club the Juggernaut of Armonk had always been the butt of jokes and engineers like Wozniak had always been more intrigued by the features of machines made by IBM’s competitors.

Though the company had sold calculators, tabulators, cards, and accounting machines in the twenties, it switched direction after World War II when Remington Rand’s UNIVAC machine was close to becoming