The Second Coming of Steve Jobs - Alan Deutschman [52]
IBM’s chief executive said that he wanted to license Next’s software. Steve’s lieutenants talked at length with IBM’s executives despite Steve’s persistent objections and reservations about the deal. “He couldn’t figure out why IBM wanted to do this,” recalls one of the Next negotiators. “He thought that there had to be some ulterior motive.”
Steve Jobs and IBM were the oddest of bedfellows. It wasn’t just the vicious attack ads that Apple had aired on television during the 1984 and 1985 Super Bowls, portraying IBM as an Orwellian Big Brother and its followers as mindless lemmings. Steve had clashed with IBM executives ever since he was twenty-one and Apple was operating out of his parents’ garage. Steve and his close friend Elizabeth Holmes would go to her parents’ house to listen to Benny Goodman albums and other swing-era big band recordings that were collected by her father, who was a market analyst for IBM in San Jose. He was also a programmer, and he would dial in to an IBM mainframe from a computer terminal in the house. He had an IBM Selectric typewriter hooked up to it for the printouts, since there was no screen. Elizabeth remembers how Steve and her father would “lock horns over whether the computer would be for Everyman.” Steve argued that computers would become smaller and friendlier and then become wildly popular. And of course he was proved right.
Now, a dozen years later, the head of IBM was turning to Steve for help. Steve couldn’t trust him, but he took advantage of the opportunity for one-upmanship. IBM sent its envoys to California with a contract that ran well over one hundred pages. Steve shook their hands, glanced at the sheaf of papers, and dropped it in the trash. One hundred pages! Yet another sign that IBM was ridiculously bureaucratic and outmoded! Steve wanted a concise contract: five pages, ten at most. He exulted in the role of the little fish telling off the whale. And how he was going to make them pay! Steve negotiated for IBM to pay $60 million. It was an extremely high price. Steve was trying to gouge them, and he got away with it. “IBM got boned on that one,” recalls Paul Vais, the Next marketing manager. The $60 million was just to license the first version of the Next software. If they wanted the improved version the following year, they’d have to pay more. They would have to come back to the table and worry whether Steve was going to throw their contract into the trash.
Even for the hefty $60 million, Steve wouldn’t give an exclusive deal to IBM. He remained free to license NextStep to any or all of the makers of IBM clones. And they came to him. Compaq and Dell, two of the biggest cloners, said they would pay mightily to put NextStep on their machines. One of the PC companies even offered $50 million as an initial payment. But there was a catch: the cloners wanted Next to stop making its own hardware. If they were going into a partnership with Steve Jobs, they didn’t want to have to compete with him. (Of course, no one realized that the Next Cube was hardly selling.)
The overtures from Compaq and Dell set off intense debates at Next. The software chief, Bud Tribble, was a strong advocate of dumping the hardware and recasting Next as a powerful software company, the new Microsoft. But the transformation was opposed by seven of the ten executives who reported directly to Steve. It appears all seven were driven by simple self-interest: they were the people in charge of hardware design and manufacturing and sales, and their jobs would be diminished or become obsolete under the new scheme.
The decision fell to Steve, and he was still enamored with hardware. He loved designing and making machines. Rather than abandoning the hardware business, he decided . . . to build yet another computer! That’s how he would try to save the company.
IBM paid the $60 million but then abandoned