By Marianne Schultz
The Computer History Museum of Mountain View, California has put on display a pair documents from Apple's early years, outlining the company's strategic planning, optimism, and doubts as it embarked on a mission to forever change the world with its line of Macintosh computers.
The first is a Preliminary Confidential Offering Memorandum from 1977, donated by one of Apple’s initial investors, Mike Markkula, while the second is a Macintosh Business Plan from 1981, donated by Dan Kottke, the company's first employee.
The Preliminary Confidential Offering Memorandum outlines the offering of up to 150,000 shares of common stock, supported by an evaluation of the market and competitors in relation to Apple’s products and strategy. This was the first offering of shares for the fledgling company following its founding by Steve Jobs and Steve Wozniak. Among the risk factors listed at the start of the document are an acknowledgement of the company’s newness without an established history on which forecasts could be based, as well as a management team that was "young and relatively inexperienced in the high volume consumer electronics business."
The memo goes on to describe the primary target market – the Personal Computer Market. With a home computer, the average consumer could reap such benefits as "personal pleasure and enjoyment," "elimination of wasted paper, energy and storage space," and an "improved standard of living." However, developing this market was seen as a significant challenge, requiring at least two hours of discussion to "convince 'Joe Average' that he needs a computer." Apple planned to rely on mass media outlets to reach out to consumers to provide this education.
The documents outline current and planned products in detail, showing the existing Apple II computer with a manufacturing cost between $300 and $400, with key features such as dual-mode color graphics and fan-less cooling, putting it an estimated 12 months ahead of competing products. The Apple IIA, with manufacturing costs between $225 and $300, would yield a gross profit of up to $700 with a planned retail price of $995. Several peripheral releases planned through 1978 are also itemized, including items like a Telephone Interface Board and a Voice Recognition System.
In targeting the Personal Computer Market, Apple expected its primary competition to come from Commodore Business Machines and Tandy Corporation, but expressed optimism in relation to Apple products with more expandability and better-trained service staff. In relation to the Tandy TRS 80 machine, the competitor analysis goes so far as to state that the Apple IIA will "definitely outsell the TRS 80 'hands down' regardless of the large number of potential retail locations in the Radio Shack chain." Texas Instruments and Atari are mentioned as upcoming competitors with the ability to obtain substantial shares of the market.
The memo also reveals philosophies that appear to exist at Apple to this day. Described in the Appendix, the Apple Software Bank – a repository of software created both by users and Apple – was created to "increase the usefulness and enjoyment of the Apple II system" and "with the user in mind." In describing the distribution strategy, the desire to "insure that each customer establishes a positive on-going relationship with the local Apple dealer" is expressed as a key approach.
The 1981 Business Plan document provides detailed information on Apple’s product line at the time, lining up each in a price Band among competitor products and touting that "the advantage of a product line is that each individual product does not have to do everything." Each product is also targeted at specific market segments, such as managers, secretaries, and home businesses, and related software for each is also considered.
New products, peripherals, and software, including the 300 baud Mac Phone and Mac Writer application, are mapped out through the second quarter of 1983, and projected total headcount in the Macintosh Organization at the end of 1981 is 63 employees, up from 16 at the time the business plan was written.
A list of open issues at the end of the document, however, reveals significant concerns, showing that the Macintosh manufacturer had not yet been selected and a question on the reasonableness of the planned schedule. The plan closes with an almost-whimsical image of a man seated at a table with an apple on the plate before him and the pronouncement "We will announce no Apple before its time" -- a a parody off an Orson Welles commercial from the early 80’s.
Wednesday, June 3, 2009
Tuesday, June 2, 2009
Early Apple documents show growing pains
by New Mexico Business Weekly
While Apple Inc. CEO Steve Jobs may rule the roost today, having created must-have popular devices like the iPod and iPhone, 32 years ago he was “young and relatively in-experienced in the high volume consumer electronics business.”
The Computer History Museum in Mountain View has posted copies of two early Apple Computer Inc. documents — the first business plan for the Macintosh computer and Apple’s first IPO plan — which give insight into Apple’s early days.
In a statement that may make a modern reader chuckle, the 1977 IPO plan says, “Apple Computers’ Management team is young and relatively in-experienced in the high volume consumer electronics business.”
The Macintosh business plan, dated 12 July 1981 and set in antique Mac fonts that look primitive to a modern eye, contains the exhortation “and today is the first day of the rest of your life…”
It compares the performance of the $1,500 Mac (“64 to 128 k” memory) to other Apple computers like the $2,500 Apple II (“32 to 64 k”) and the $5,000 Lisa (“256 to 1000 k” and weighing “45 + lbs”).
“Observe that everyone is introducing products in Band 3,” the document states — “Band 3” being the niche occupied by the Apple II. “I currently know of no products being developed by competition for Band 2 (unfortunately this doesn’t mean there arn’t [sic] any!)” Band 2 is the niche Apple envisioned the Mac occupying.
Apple’s early strategy was to encourage businesses to move up market to the expensive Lisa and Apple III computers, costing between $3,000 and $5,000, while popular users would move down to the cheap Mac, “leaving Band 3 manufacturers out in the cold!!”
Apple (NASDAQ: AAPL) sized up potential markets for the new computer, particularly in education. “As Word Processors are replacing typewriters in the real world, students need to learn word processing, not just typing. MAC will help the student of the 80’s learn the tools of the 80’s.”
Planners guessed at about 19,000 high schools that might buy Macs and up to 11.2 million college students to whom they could pitch the computer.
“MAC also provides Entertainment and Education for every member of the family,” the plan says.
The plan estimates costs for making the Mac at $395. After distribution costs, Apple hoped to clear a 33 percent operating profit from each $995 computer, rising to a 55 percent operating profit from a fancier $1,495 computer.
About 63 people were working on the Mac project in December 1981, according to the plan.
And the plan gives insight into “open issues” that troubled the planners:
“Europe has not been given much consideration yet.”
“Who will manufacture Macintosh? Should we, should PCS, Singapore, Alps?”
“Is our schedule realistic?”
The preliminary plan for Apple’s initial public offering also shows much about the early nature of the business.
“Apple Computer Inc. is a new company which has not established a long history of operation,” the document says. “Apple has experienced extreme difficulty in obtaining its custom injected molded cases … Apple management expects that rapid growth and potential market fluctuations may present severe cash flow management difficulties.”
The IPO plan lists key company executives, including:
“S.P. Jobs, V.P. Operations, Attended Stanford and Reed College, Engineer - Atari - 2 Yrs”
“S.G. Wozniak, V.P. Engineering, Attended University of Colorado and University of California at Berkley [sic], Engr. Tennant - 1 Yr., Engr. Electroglass - 1 Yr., Engr. - Hewlett-Packard - 3 Yrs.”
“These two documents provide a rare glimpse into Apple’s history as a company,” said Computer Museum CEO and President John Hollar.
Steven E.F. Brown of the San Francisco Business Times, an affiliated publication, compiled this report.
While Apple Inc. CEO Steve Jobs may rule the roost today, having created must-have popular devices like the iPod and iPhone, 32 years ago he was “young and relatively in-experienced in the high volume consumer electronics business.”
The Computer History Museum in Mountain View has posted copies of two early Apple Computer Inc. documents — the first business plan for the Macintosh computer and Apple’s first IPO plan — which give insight into Apple’s early days.
In a statement that may make a modern reader chuckle, the 1977 IPO plan says, “Apple Computers’ Management team is young and relatively in-experienced in the high volume consumer electronics business.”
The Macintosh business plan, dated 12 July 1981 and set in antique Mac fonts that look primitive to a modern eye, contains the exhortation “and today is the first day of the rest of your life…”
It compares the performance of the $1,500 Mac (“64 to 128 k” memory) to other Apple computers like the $2,500 Apple II (“32 to 64 k”) and the $5,000 Lisa (“256 to 1000 k” and weighing “45 + lbs”).
“Observe that everyone is introducing products in Band 3,” the document states — “Band 3” being the niche occupied by the Apple II. “I currently know of no products being developed by competition for Band 2 (unfortunately this doesn’t mean there arn’t [sic] any!)” Band 2 is the niche Apple envisioned the Mac occupying.
Apple’s early strategy was to encourage businesses to move up market to the expensive Lisa and Apple III computers, costing between $3,000 and $5,000, while popular users would move down to the cheap Mac, “leaving Band 3 manufacturers out in the cold!!”
Apple (NASDAQ: AAPL) sized up potential markets for the new computer, particularly in education. “As Word Processors are replacing typewriters in the real world, students need to learn word processing, not just typing. MAC will help the student of the 80’s learn the tools of the 80’s.”
Planners guessed at about 19,000 high schools that might buy Macs and up to 11.2 million college students to whom they could pitch the computer.
“MAC also provides Entertainment and Education for every member of the family,” the plan says.
The plan estimates costs for making the Mac at $395. After distribution costs, Apple hoped to clear a 33 percent operating profit from each $995 computer, rising to a 55 percent operating profit from a fancier $1,495 computer.
About 63 people were working on the Mac project in December 1981, according to the plan.
And the plan gives insight into “open issues” that troubled the planners:
“Europe has not been given much consideration yet.”
“Who will manufacture Macintosh? Should we, should PCS, Singapore, Alps?”
“Is our schedule realistic?”
The preliminary plan for Apple’s initial public offering also shows much about the early nature of the business.
“Apple Computer Inc. is a new company which has not established a long history of operation,” the document says. “Apple has experienced extreme difficulty in obtaining its custom injected molded cases … Apple management expects that rapid growth and potential market fluctuations may present severe cash flow management difficulties.”
The IPO plan lists key company executives, including:
“S.P. Jobs, V.P. Operations, Attended Stanford and Reed College, Engineer - Atari - 2 Yrs”
“S.G. Wozniak, V.P. Engineering, Attended University of Colorado and University of California at Berkley [sic], Engr. Tennant - 1 Yr., Engr. Electroglass - 1 Yr., Engr. - Hewlett-Packard - 3 Yrs.”
“These two documents provide a rare glimpse into Apple’s history as a company,” said Computer Museum CEO and President John Hollar.
Steven E.F. Brown of the San Francisco Business Times, an affiliated publication, compiled this report.
Early Apple documents posted to Computer History Museum site
By Jacqui Cheng
Are you a history buff and a computer nerd? If so, the Computer History Museum in Mountain View has some Apple documents from as far back as 1977 that give some insight into Apple's beginnings.
A couple of documents giving insight into Apple's early days are making the rounds today thanks to The Computer History Museum (CHM) in Mountain View, California. Apple's Preliminary Macintosh Business Plan and Preliminary Confidential Offering Memorandum have both been posted to the museum's website, donated by Dan Kottke and Mike Markkula.
According to the CHM, the Preliminary Macintosh Business Plan was released internally in 1982 (but is dated 1981) while the Preliminary Confidential Offering Memorandum (the company's originally IPO plan) was issued around 1977. The documents themselves are pretty standard, though Apple-watchers will undoubtedly find tidbits of amusement in statements like "Apple Computers' Management team is young and relatively in-experienced in the high volume consumer electronics business."
The company also compares the performance of the original Mac to the Apple II and the Lisa, and in the IPO document, details the education and experience of Apple's key executives. The two donors, Kottke and Markkula, are part of Apple history themselves—Kottke assembled the original Apple I while Markkula was the original investor in Apple, dumping $250,000 into the company in its very early days. If you're a computer history nut, the documents are worth a look, so head over and check them out.
Are you a history buff and a computer nerd? If so, the Computer History Museum in Mountain View has some Apple documents from as far back as 1977 that give some insight into Apple's beginnings.
A couple of documents giving insight into Apple's early days are making the rounds today thanks to The Computer History Museum (CHM) in Mountain View, California. Apple's Preliminary Macintosh Business Plan and Preliminary Confidential Offering Memorandum have both been posted to the museum's website, donated by Dan Kottke and Mike Markkula.
According to the CHM, the Preliminary Macintosh Business Plan was released internally in 1982 (but is dated 1981) while the Preliminary Confidential Offering Memorandum (the company's originally IPO plan) was issued around 1977. The documents themselves are pretty standard, though Apple-watchers will undoubtedly find tidbits of amusement in statements like "Apple Computers' Management team is young and relatively in-experienced in the high volume consumer electronics business."
The company also compares the performance of the original Mac to the Apple II and the Lisa, and in the IPO document, details the education and experience of Apple's key executives. The two donors, Kottke and Markkula, are part of Apple history themselves—Kottke assembled the original Apple I while Markkula was the original investor in Apple, dumping $250,000 into the company in its very early days. If you're a computer history nut, the documents are worth a look, so head over and check them out.
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