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.