Apple Sprouts Macintosh in Bid to Survive Industry Race

By Michael Schrage
The Washington Post

January 23, 1984

CUPERTINO, Calif. -- Bidding to remain competitive with IBM, Apple Computer Inc. is unveiling its new Macintosh personal computer -- the most important new product in Apple's history and, says the company, the foundation for its future as a force in the computer industry.

"We have 100 days to make it an industry standard," said Apple Chairman Steven P. Jobs.

To that end, Apple has aggressively worked with software companies to write programs for the machine; given special training and sales incentives to its retailers; selectively leaked information to the trade and popular press, and launched a $30 million-plus, futuristic advertising campaign intended to position the $2,495 Macintosh as "the computer for the rest of us."

Moving aggressively, Apple has already announced that it has secured over $50 million worth of Macintosh orders from leading colleges and universities around the country. It has even set up a special consortium to promote its new technology in academe.

"We want to recreate the Apple II phenomenon," said Jobs, referring to the company's extremely popular personal computer that has been Apple's main source of sales and profits for the past seven years.

Industry analysts contend that developing that kind of phenomenon is critical if Apple hopes to remain a viable competitor in a fast-paced personal computer industry now dominated by IBM.

But Macintosh is just part of an expanded family of compatible products called the Apple 32 Supermicro System. Products in the family incorporate the Lisa technology, and all run Macintosh software.

The new family includes its Lisa 2 series models, which are expanded versions of the basic Lisa computer that range in price from $3,495 to $5,495. Lisa 2 represents Apple's efforts to present an integrated product line rather than disparate strategies supporting individual machines. Macintosh and its new family will be formally introduced at tomorrow's shareholders meeting here.

"Macintosh is absolutely vital to Apple's success as a company," says Ulric Weil, a research analyst at Morgan, Stanley Inc.

Since IBM entered the personal computer market in 1981, Apple's share of the industry it helped create has been eroding steadily. Macintosh, which represents a unique melding of both hardware and software technologies, is positioned squarely against the IBM PC and represents a different approach to personal computing.

"IBM is in a unique position," says Apple President John Sculley. "We have to earn what we get; we don't have the privilege of introducing pedestrian products. We want to be the innovators in this technology.

"If any machine has the chance to challenge the IBM PC and set another standard, this is it," says Andrew Fleugelman, editor of PC World and MacWorld, two magazines that cover the IBM PC and the Macintosh. "It represents a different style of computing; it appeals to the intuitive side of you."

The Macintosh is essentially a sophisticated repackaging of Apple's Lisa technology. Apple introduced its Lisa computer last year amid great fanfare and great hopes that it would become both an important personal computer for the office and an important source of profits for the company.

Lisa's technological prowess won rave reviews from the technical community. Based primarily on research done at the Xerox Palo Alto Research Center in the mid-'70s, Lisa offered a radically different way for users to relate to the machine.

Where conventional computers emphasized words and numbers, Lisa's high resolution screen displays "icons," or pictures representing various functions such as "file" or "discard." And instead of typing in commands on the keyboard to tell the computer what to do, Lisa relies on an interface called a "mouse." Basically, a mouse is a handheld device that controls the movement of the cursor on the screen. As the mouse moves, so does the cursor. The mouse enables the user to point to the desired function displayed on the screen. This symbolic approach to the personal computer is intended to bypass the reams of documentation and instructional manuals required for learning how to use most personal computers and personal computer programs.

Lisa could also display several "windows" of information on its screen and, using the mouse, an individual could move from window to window to edit documents or splice them together in different forms.

However, for reasons ranging from a stiff $10,000 price tag, a lack of adequate software support and a marketing approach oriented more to the Fortune 500 crowd than to the average consumer, sales of the original Lisa fizzled.

"Apple is much better at marketing to people than to companies," says Esther Dyson, editor of Release 1.0, a personal computer industry newsletter.

"With Macintosh, Apple is rectifying most of the mistakes it made with Lisa," says Morgan, Stanley's Wile, pointing to the $2,495 price tag and the fact that software support for the Macintosh will be available almost immediately.

The Macintosh itself weighs less than 20 pounds and consists of a detachable keyboard, a mouse and a nine-inch black and white high resolution screen. It is intended to be small enough not to require a desk of its own.

The machine comes with 128,000 characters of computer memory and a built-in disc drive that can store roughly 400,000 characters of information. Unlike the conventional 5 1/4-inch floppy discs, Macintosh discs will be 3 1/2-inches in diameter and encased in hard plastic.

Macintosh relies on a Motorola 68000 microprocessor to provide the computational power for the machine. This microprocessor can manipulate or process a computer word that is 32 bits long as compared to most personal computers that are capable of processing only 16-bit words. This enables the Macintosh to process larger amounts of information much more quickly than most existing personal computers.

Like Lisa, Macintosh can display several windows simultaneously and allow a flow of information between disparate programs. For example, a picture drawn in one window could be inserted in a memo being drafted in another. In other words, virtually all programs written for the Macintosh will be able to "talk" with one another.

This type of software integration is currently seen as highly desirable in the personal computer field. Several companies are now marketing "windows" programs and integrated software packages that blend several different functions, such as word processing and data-base management.

Unlike the IBM PC's operating system, the Macintosh runs on a proprietary operating system designed to discourage imitators. However, Apple is very encouraging to companies that want to write applications based on the Macintosh operating system.

During its 100-day introductory period, the computer will come with two programs: a word-processing program called MacWrite, and MacPaint, a computer graphics package that exploits the high-resolution quality of the display. In addition to letting users draw a variety of pictures and images by simply moving the mouse, the user can even design their own typefaces for memos and documents. A dot matrix printer to capture screen images on hard copy will be available during the introductory period for an additional $500.

"I like its packaging; I like its mouse-based environment; I like its performance, and I'm comfortable with its price," says Fred Gibbons, president of Software Publishing, one of the third-party software companies developing programs for the Macintosh. "The user is dealing with pictures on the screen rather than characters of text. The user walking up to his machine would perceive a difference and that's positive.

"On the negative side, maybe Macintosh will appeal only to the 'Corvette' kind of owner -- it has all the sex and pizzaz but has transportation limitation." One of those limitations, say observers, is the memory. To truly exploit the potential of windows and multiple documents and programs, the machine simply needs more memory to store what's going on.

Another concern is whether the third-party software companies will rush to support Macintosh. Although Apple says more than 100 software companies have had Macintoshes for development purposes for nearly a year, Apple is expecting somewhere between "35 and 50" third party programs to be available during Macintosh's first 100 days. Some retailers doubt whether that is an adequate show of support. Several software companies are privately taking a "wait and see" attitude based on the belief that the IBM PC merits the bulk of their programming resources.

Indeed, the major criticism of the Macintosh is that it is not currently IBM compatible. That criticism reflects IBM domination of the office computer environment and underlines how difficult it will be for Macintosh to establish a unique identity and a separate standard. Apple says that it will introduce software that makes the Macintosh IBM compatible "shortly."

Moreover, the overwhelming majority of programs being written for Macintosh are simply conversions of existing IBM PC programs rather than software that takes special advantage of the machine's unique capabilities.

The critical difference between Macintosh and other personal computers may simply be a matter of the user's style.

"If you talk about computing per dollar," says Software Publishing's Gibbons, "it's just as efficient to buy a product like the Apple II -- but you're really buying it for different reasons. You're buying it because it's a computer you may feel more comfortable using."

"I think the user interface they've developed really provides a significant advantage," said MacWorld's Fluegelman. "You find yourself instinctively doing the right thing as you are learning how to use a software package."

"If we sell 250,000 this calendar year, then we will be very successful financially," says Apple President Sculley. "Market position is more important to me than market share. We're going to aim where everybody else wants to be or must be to remain important in this market."

However, that is what Apple maintained a year ago when it introduced its Lisa. There are skeptics who do not believe that Apple can break through into significant sales with its Macintosh, even with reduced prices and the software support. But there is little dispute that the technology represents an important step in the evolution of personal computers into an office appliance.

Whether Apple will be the leader of that new generation of computing is uncertain. Thus, Macintosh is the company's biggest gamble.

"I think that the Macintosh represents the supreme marketing challenge," says one insider close to Apple. "They really have to consumer-market high technology. I don't know if they're crisply positioned enough to do it."

GRAPHICS/One: Macintosh weighs under 20 pounds, has detachable keyboard and mouse, on right.