Today in Apple history: Computer retail giant closure hits NeXT hard

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NeXT Cube
The NeXT Computer was great. It also didn't sell.
Photo: Rama & Musée Bolo/Wikipedia CC

May 14: Today in Apple history: Businessland closes, hits NeXt hard May 14, 1992: Steve Jobs’ company NeXT runs into trouble as it loses a crucial deal with Businessland after the giant computer retailer closes its stores.

It comes at a time when NeXT’s luck is going from bad to worse. This is one of the lowest points in Jobs’ career — before everything starts to turn around again.

Businessland was once America’s largest computer retailer, aimed at the business market. Founded in 1982, by the late 1980s it had expanded to more than 100 dedicated outlets nationwide. In 1988, its sales passed $1 billion a year.

The disastrous Businessland-NeXT deal

In 1989, Businessland signed a deal with NeXT. With the company’s pricey computers not selling to the education market as planned, Jobs thought they could do better in corporations. The deal gave Businessland the rights to sell 100,000 NeXT computers over the next three years. Each of these machines would retail for $9,995.

When the deal was struck, Businessland founder David Norman predicted that sales of the NeXT Computer would soon surpass sales of Compaq computers. On the day the deal between NeXT and Businessland was struck, Jobs invited the senior executives from Businessland to his house for dinner. Clinking glasses with Norman, Jobs toasted, “Let’s go kick the shit out of some people.”

But that didn’t happen. While impressive, NeXT Computers simply proved too expensive. By the end of the decade, Businessland had sold just 360 units. Even worse, Businessland spent $10,000 for every NeXT Computer sold, due to forced investment in a dedicated sales and marketing team. At a meeting with Businessland’s regional vice presidents, Jobs pounded his fists on the table and screamed, “If you can’t do better than that, you shouldn’t be in sales at all.”

Businessland closes and things look bad for NeXT

In May 1992, Businessland shuttered its stores. The closure ended the deal with Jobs.

At the time, things couldn’t have looked much worse. Investor Ross Perot soon resigned from the NeXT board, saying that investing in the company was the “biggest mistake I made.” Meanwhile, directors fled the company like rats leaving a sinking ship. And Jobs’ personal fortunes — wrapped up in the failing NeXT and his other company, Pixar — continued to decline.

By early the following year, NeXT quit making hardware altogether and laid off many employees. Jobs, it seemed, was just about done.

Only he wasn’t. Two years later, Pixar released its first feature-length movie, Toy Story. Its post-release IPO turned Jobs into a billionaire. He then sold NeXT’s object-oriented operating system to Apple, rejoining the company as part of the deal. Five years after the Businessland collapse, Jobs was back to running Apple.

Pretty amazing how things can change, right?