August 30, 1990: A 112-page confidential Apple memo lays out what the company must do to make the Macintosh division a marketplace contender.
The internal memo comes from Dan Eilers, Apple’s vice president of strategy and corporate development. He boldly says Apple must consider four strategies: licensing Mac OS, licensing both the Mac’s operating system and hardware, creating a spinoff brand for the Macintosh, or starting a totally new company to combat the growing threat of Microsoft’s Windows.
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Apple’s secret plan to save the Mac
Eiler’s memo came just six years after Apple shipped the first Mac, and it illustrated the intensifying competition in the personal computing arena at the time. The detailed document serves as a reminder of how fast the computing landscape was changing — particularly as Bill Gates’ Windows operating system gained steam.
Eiler referred to the scenarios outlined in his memo as a “discontinuous jump” that would shake up the way Apple operated.
Ultimately, the company tentatively followed two of Eilers’ plans, although neither one panned out as he hoped. The “Macrosoft” project (this name would, unsurprisingly, have never been used publicly) was to port the Mac operating system to an Intel processor. This became Apple’s “Star Trek” project, which went ahead a couple of years later in 1992.
As Owen Linzmayer notes in his excellent (although now more than a decade out-of-date) book, Apple Confidential, Microsoft co-founder Gates quipped at the time that this was like putting “lipstick on a chicken.”
Run Mac OS on an Intel processor, or license it to third parties
Apple promised its engineers bonuses of between $16,000 and $25,000 if they could get Mac OS running on an Intel processor. They did, although Apple’s executives decided to put the project on ice. They worried it would hurt Apple’s hardware business. (Apple did, of course, switch to Intel chips years later. However, the tech landscape had greatly shifted by then.)
A similar thing happened with the plan to license Mac OS. At the time Eilers sent his memo, Apple’s Chief Operating Officer Michael Spindler argued to CEO John Sculley that it was “too late to license” Mac OS.
“It doesn’t matter anymore,” Spindler said. “The opportunity is past.”
That also wound up happening several years later, under CEO Gil Amelio, although this time the “clone Macs” actually shipped. This turned out to be a disaster for Apple. The clones cannibalized Mac hardware sales for a paltry license fee rather than growing Apple’s user base. Clone Macs became one of the first things Steve Jobs axed when he returned to Apple in 1997.
An important Apple memo
Still, Eilers’ memo remains an important part of Apple history, because it’s a reminder of what seemed to be common sense at the time. Having seen the vastly inferior Windows leapfrog the Mac due to its inclusion on PCs by various manufacturers, there weren’t too many Apple fans in 1990 who would argue that licensing Mac OS was a poor business move.
Had Eilers’ plan (any of them) been followed with vigor at the time he sent his August 30, 1990, memo, we could be looking at a very different tech industry today.
Do you remember the arguments about licensing Mac OS in the 1990s? Leave your thoughts and comments below.
Also on this day in Apple history
August 30, 2010: Just two years after its launch, the iOS App Store passed a key milestone: one-quarter of a million apps for sale.
At the time, the App Store represented a relatively small slice of Apple’s business. App Store sales by mid-2010 totaled $1.43 billion, but Cupertino’s gross profit was “just” $189 million after taking operating costs into consideration. (Apple skimmed 30% off the top of all app sales back then.)
The 250,000 app milestone came a year after Apple launched its successful marketing slogan, “There’s an app for that,” and demonstrated the wildfire success of the App Store. Not bad for a service that Apple CEO Steve Jobs adamantly opposed just a few years earlier because he feared third-party apps would junk up his precious iPhone.