The deal costs Apple $429 million, a massive price to pay for the failing NeXT which has already seen its hardware division crash and burn.
The price is worth it when you consider what Apple gets as part of the deal, however: the return of Steve Jobs.
Return of the king
Steve Jobs didn’t just come as part of the NeXT package; he was a major part of the deal. “I’m not just buying software, I’m buying Steve,” Apple CEO Gil Amelio said at the time. As part of the deal, Jobs got 1.5 million Apple shares.
Jobs wasn’t initially intended to be Apple’s new CEO. Bizarrely, Amelio appears to have thought that Jobs could be contained as a creative force to be wheeled out when Apple needed him, while Amelio would continue running the company. Less than a year later, Amelio was gone and Steve Jobs was CEO.
Interestingly, one of the holdups in the Apple/NeXT deal was that Jobs didn’t want to commit to working at Apple for a set period of time. The argument came down to his leadership of Pixar, the company which had turned Steve Jobs into a billionaire just one year earlier.
This crucial part of the deal meant delaying an announcement that most reporters knew was coming. In the end, as everyone knows, Jobs wound up working at Apple until the very end of his life. However, he managed to win the argument with Amelio by agreeing only to be an “informal adviser” at Apple, with no contract.
In retrospect, of course, Jobs’ return to Apple was the start of one of the greatest third act comebacks in business history. At the time, it was anything but guaranteed. Apple was hemorrhaging money and the company was headed for bankruptcy.
From 1992, when Apple stock was worth $60 a share, at the time of Jobs’ return it had fallen to $17. To highlight just how poorly this reflected on Apple, bear in mind that it was the era of the tech bubble, when companies were seeing their share prices double or triple — often without any justification to be found in earnings reports.
Jobs had faith that he could undo some of the terrible decisions Apple had made (such as the horrendous “clone Mac” deal), but to the outside world he was also a visionary who had failed with NeXT — and, had Toy Story not transformed Pixar’s fortunes, could have failed with that company as well.
Still, any reason to be cheerful about Apple was good in 1996 — and the nostalgic return of its exiled founder was good enough.
The NeXT step
The other thing to say about the NeXT deal is that it wasn’t only Steve that Apple got. Yes, that was what drove up the price of the company at the time, but Apple also acqui-hired some impressive employees who became crucial to the company over the coming years.
The one still at Apple today (although he left for a ten year period of his own from 1999-2009) is Craig Federighi, currently Apple’s senior vice president of Software Engineering.
Significantly, Apple also got NeXT’s NeXTSTEP operating system, then called OpenStep — as NeXT had ceased making its own hardware and, with it, the need for a proprietary OS.
This was another chief driver in the deal, since Apple was desperate for a new operating system after the failure of its Copland project, a supposedly next-gen OS which never got any further out the door at 1 Infinite Loop than a beta version released to around 50 Mac developers one year earlier.
OpenStep was an object-oriented, multitasking operating system based on UNIX, which later became the basis for OS X and, subsequently, macOS. The importance of this part of the deal was not evident until a few years later, when Apple first released its new operating system as Mac OS X Server 1.0 in 1999, and then the consumer version, Mac OS X, in 2001.
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