One of the first things Steve Jobs did on his return to Apple was kill the Newton, the brick-sized messagepad that some blame for dragging the company towards bankruptcy. But John Sculley argues that the Newton actually prevented Apple from going out of business.
The Newton was a terrific idea, but it was too far ahead of its time. The Newton actually saved Apple from going bankrupt. Most people don’t realize in order to build Newton, we had to build a new generation microprocessor. We joined together with Olivetti and a man named Herman Hauser, who had started Acorn computer over in the U.K. out of Cambridge university. And Herman designed the ARM processor, and Apple and Olivetti funded it. Apple and Olivetti owned 47 percent of the company and Herman owned the rest. It was designed around Newton, around a world where small miniaturized devices with lots of graphics, intensive subroutines and all of that sort of stuff… when Apple got into desperate financial situation, it sold its interest in ARM for $800 million. If it had kept it, the company went on to become an $8 or $10 billion company. It’s worth a lot more today. That’s what gave Apple the cash to stay alive.
So while Newton failed as a product, and probably burnt through $100 million, it more than made it up with the ARM processor… It’s in all the products today, including Apple’s products like the iPod and iPhone. It’s the Intel of its day.