Apple Computer President May Be Losing His Shine

By Evelyn Richards
The Washington Post

Palo Alto, Calif. -- January 31 1990 -- In the summer of 1985, Apple Computer Inc.'s days as Wall Street's darling looked to be numbered. Co-founder Steven P. Jobs had just been stripped of his power, sales were tumbling and more than 1,000 people had lost their jobs.

President John Sculley proved then that he could function under pressure and in the process repolished Apple's image. Now, he's being called on to do it again as Apple faces a new series of crises, from slumping profits to a management shake-up that has left the company's top marketing post vacant.

But not everyone's convinced he can do it again.

``John's invincibility is being questioned,'' said a former Apple executive. Said another executive who works closely with the company: ``Eventually the buck has to stop at Sculley.''

No one is suggesting that Sculley's time has come, but many close to the company say the recent problems and instabilities are raising questions about how well Sculley can manage.

To be sure, Apple has prospered since Sculley was lured away from PepsiCo in 1983, growing from $1 billion in sales then to $5 billion. But much of that success has come from enhancing the Macintosh computer that had been created under the strong hand of Jobs. And under Sculley, the company has seemed always to be in the midst of chaotic reorganization. As marketing strategies have flip-flopped from a focus on consumers to small businesses to schools to large corporations at least five top sales and marketing executives have quit in as many years.

The latest departure, announced Monday, that of Allan Loren, who had been president of domestic sales for only 17 months, comes at a time when many in the computer industry are criticizing Sculley for abandoning the evangelical mission espoused by Jobs to provide computers for everyone.

While Loren helped bring corporate customers into the Apple fold, the company's focus on pushing business-oriented desktop computers and a new high-priced portable Macintosh came at the expense of sales in the under-$1,500 range. The weakness at the low end contributed to Apple's disappointing revenue gain of only 6 percent in the usually strong Christmas quarter and is leaving the firm vulnerable to inroads by rival International Business Machines Corp. into the key school market.

Meanwhile, even Apple's high-end sales could be threatened by an upcoming software product from Microsoft, called Windows 3.0, which is destined to give IBM PCs the same intuitive ease-of-use now reserved for the Macintosh. ``I'm still excited about Apple, but in late 1990 the effect of Windows 3.0 is going to play a major role,'' said Yogen Dalal, vice president of product development for Claris, a software company owned by Apple.

But while product and marketing strategies need Sculley's attention, so does Apple's internal house, once again thrown into flux by the long-rumored resignation of Loren and the absence of a replacement. Adding to the uneasiness among employees is how the company will go about making layoffs, announced earlier this month in light of dropping profits.

What all this tumult will result in is, almost certainly, an earnest re-examination of the vaunted Apple ``culture,'' a murky concept that has to do with ``empowering individuals.'' It happens whenever there is unrest at the company: the almost religious-like Apple community of workers, suppliers, dealers and customers begin anew to probe the culture. Is it alive? Should it be changed? If so, how? How can a multinational corporation keep its organic, garage-shop roots?

And above all, should Apple try to appear organized and big-businesslike, or should it reveal to outsiders the often-chaotic, fire-drill atmosphere on the inside, where more business is conducted at beer busts than conference tables?

One thing that is clear this time around, many people say, is that Loren's abrasive, no-nonsense style didn't mesh with Apple's low-key orientation. Even an assistant assigned to ``Apple-ize'' him didn't do the trick. ``Loren's leaving is indicative that Apple is going back to some cultural roots,'' said Tim Bajarin, an analyst and sometimes-Apple-consultant with Creative Strategies International.

Another sign that the company hasn't lost its spunk was a recent television ad that touted a trial offer for Macintoshes, boasting that no other PC maker has let buyers take home models for free. The reason, it said, was ``because they are wimps.''

In fact, Sculley may have signaled a shift back to Apple's spiritual roots yesterday by appointing a 10-year company veteran, Michael Spindler, to be chief operating officer. Spindler, a German national credited with Apple's considerable success in Europe, will also be taking over the manufacturing responsibilities now held by flamboyant French-born Jean-Louis Gassee.

Nevertheless, the Spindler appointment represents another switch in Sculley's organization chart. This week's changes are at least the fourth major executive-suite realignment since 1985 and are a return to a structure in place as recently as August 1988. At that time, Sculley abandoned the post of chief operating officer and removed from the job Delbert Yocam, another 10-year employee who left the firm two months ago.

All this flux at the top diverts Sculley's attention from longer-range issues and causes confusion among the sales and marketing forces, said newsletter publisher Richard Shaffer. ``I'd rather John spend not so much time playing around with organizational charts,'' he said.