Apple is undoubtedly one of the world’s largest companies, if not the largest. At the end of the day, it’s responsible for one of the most sought-after technological products: the iPhone. The company’s achievements are undeniably impressive, but many people are unaware that part of its essence traces back to NeXT, a much smaller company also founded by Steve Jobs in the late 1980s.
The inception of NeXT was the result of a series of unexpected events that shook Jobs. By 1980, Apple had evolved from a garage-based operation in Los Altos, California, into an actual tech company that boasted an extraordinary average annual growth rate of 533%. At that point, Apple began searching for a new CEO.
A Big Change at Apple
In 1983, Mike Markkula, who was Apple’s first major investor, no longer wanted to serve as the company’s CEO. Despite his strong personality, Jobs recognized that he wasn’t ready to take the reins, so he and Markkula began looking for a replacement from outside the company. They needed someone who could drive product sales rather than a purely technological leader.
As such, Jobs and Markkula turned to Gerry Roche, a well-known executive headhunter. Roche quickly recommended John Sculley, the then-president of PepsiCo. Sculley was famous for the “Pepsi Challenge” marketing campaign, which allowed the company to compete against Coca-Cola and gain market share. However, after a series of meetings, Sculley remained unconvinced about leaving his position to join Apple.
Sculley believed he could provide Jobs with advice on running the company from an outsider’s perspective, positioning himself as a friend rather than a potential CEO. Unaccustomed to rejection, Jobs played one last card to persuade him. He famously asked Sculley, “Do you want to sell sugar water for the rest of your life, or do you want to come with me and change the world?”
The question left Sculley with no choice but to accept the offer.
The Fall of Apple
Initially, Jobs and Sculley appeared to have a thriving relationship. However, over time, tensions and disagreements began to emerge. In the mid-1980s, Sculley grew dissatisfied with Jobs’ leadership. With the backing of the company’s board of directors, Sculley devised a plan to sideline the man who had co-founded Apple less than a decade earlier.
Not long before that, Jobs attended a meeting in Palo Alto organized by the president of Stanford University. During the meeting, he spoke with Nobel Prize-winning biochemist Paul Berg, who shared insights about advances in genetics and recombinant DNA. When Jobs asked him why he didn’t conduct computer simulations, Berg explained that the necessary machines were prohibitively expensive.
According to Steve Jobs, the authorized biography by Walter Isaacson, this conversation stayed with the Apple co-founder. Jobs had previously attempted to create a powerful computer–a workstation he intended to call Big Mac–but that project faltered along with his diminishing influence at Apple. As a result, Jobs began considering the possibility of founding a new computer company.
The Birth of NeXT
There was no time to waste. In September 1985, Jobs informed Apple’s board of directors about his plans to establish his own company, NeXT, and that he would be taking some employees with him. He assured them that NeXT’s products wouldn’t conflict with Apple’s vision, focusing instead on workstations designed for educational use rather than general consumers.
However, these moves came at a cost. Shortly after, Jobs resigned from Apple, a company that had stripped him of the power he once held. If that weren’t enough, Apple sued the fledgling NeXT for “nefarious schemes” aimed at exploiting the co-founders’ insider information. “It is hard to think that a $2 billion company with 4,300-plus people couldn’t compete with six people in blue jeans,” Jobs said about the lawsuit, which was eventually settled.
Jobs invested $12 million of his personal funds in launching NeXT, fully believing in the project. He implemented a different philosophy to Apple’s, offering only two salary levels. Those who joined before 1986 made $75,000 per year, while new hires received $50,000. This meant that some employees earned more than certain executives. Additionally, the company referred to its workforce as “members” of the team rather than employees.
A NeXT Cube.
NeXT’s first product was the NeXT Computer, a workstation computer introduced in 1988. It featured a Motorola 68030 CPU capable of 25 MHz speeds and came standard with 8 MB of RAM. It could be upgraded to 64 MB, which was impressive for the time. The computer was also equipped with a 256 MB magneto-optical drive disk, with 330 MB and 660 MB options available.
Interestingly, the NeXT Computer didn’t come with a color screen. Instead, it included the NeXT MegaPixel Display, a 17-inch monochrome CRT monitor. The true innovation of this computer lay in its operating system, NeXTSTEP, which supported multitasking and was built on the Mach kernel and UNIX-derived BSD. The price was notably steep at $6,500, equivalent to about $16,300 today. This made the NeXT Computer a significant investment that only large organizations could justify.
A NeXTstation.
Sales of the NeXT Computer were modest. As a result, Jobs struck a deal in 1989 with Businessland, a distributor for Compaq, to market NeXT computers internationally. By 1990, NeXT introduced its second generation of workstations: the NeXTcube and the NeXTstation. These models featured upgrades, including color screens, processors exceeding 30 MHz, CD-ROM drives, and the capability to expand RAM memory up to 128 MB.
Change in the Business Model and Apple’s Acquisition
Despite NeXT’s efforts to boost sales, the numbers remained below expectations. In an unexpected move, Jobs decided to shift away from the hardware business to focus exclusively on software. He even allowed other manufacturers to install the advanced NeXTSTEP operating system. One notable partner was Canon, which invested $100 million in NeXT on the condition that it would use the OS on its own workstations.
The NeXTSTEP operating system.
Following this transition, NeXT was rebranded as NeXT Software and laid off over half of its workforce. The company’s emphasis shifted to developing the object-oriented OpenStep Enterprise API and the WebObjects application server. While the OpenStep API offered a NeXTSTEP-like environment for other systems, like Windows, WebObjects allowed web applications to run on various types of computers.
Apple was facing difficulties at the time. According to Isaacson, Jobs still hoped to return to the company he co-founded, but in a dignified way. During a vacation in Hawaii, his friend Larry Ellison, the then-CEO of Oracle, proposed helping Jobs raise $3 billion to buy Apple. “I will buy Apple, you will get 25% of it right away for being CEO, and we can restore it to its past glory,” Ellison suggested in an attempt to convince him.
However, Jobs believed he wasn’t the type of person to engage in aggressive tactics. Gil Amelio, a research engineer at the company, had become the CEO in 1996. At that time, Apple’s market share had plummeted from 16% in the late 1980s to just 4%.
Apple was also facing a significant issue with its computer operating system, which had aged rapidly. Against this backdrop, the company began exploring various options. Although an ongoing project called Copland was advanced, it wasn’t seen as a viable solution since it wouldn’t be ready for the launch of the next generation of products. Apple urgently needed an operating system with memory protection, network communications, and an object-oriented application layer.
The company considered using Sun’s Solaris operating system and even Microsoft’s Windows NT. Then-CEO Bill Gates was enthusiastic about the idea. In a 2007 All Things Digital interview, he mentioned that he even started negotiating personally with Amelio. Although the best possible option for Apple was to reach an agreement with NeXT to use its operating system, Amelio had a strained relationship with Jobs and lacked the courage to contact him.
Despite their previous conflicts, Apple began to receive signs that NeXT might be open to negotiations. The discussions started at the middle management level and eventually led to Jobs’ return to Cupertino after 11 years. In 1997, Apple acquired NeXT for $429 million and 1.5 million shares. The deal also stipulated that part of NeXT’s operating system would be used to develop a new version of OS called Mac OS X.
As part of the deal, Jobs returned to Apple, first as an outside consultant, then as interim CEO, and finally as permanent CEO in 2000. He held this position until his resignation on Aug. 24, 2011, just before his death on Oct. 5. During his tenure, Jobs implemented significant changes within the company, such as reorganizing its product line and investing in the development of a new OS version.
While NeXT could be seen as a commercial failure, having sold only 50,000 workstations, its talent and essence were instrumental in saving Apple. NeXTSTEP technology became the foundation of Mac OS X. In addition, many features of the graphical interface, including the Dock, the Services menu, and the Finder’s Column view, originated from the NeXT OS.
The first web server: a NeXTcube used by Tim Berners-Lee.
Notably, before Apple purchased NeXT, computer scientist Tim Berners-Lee, known as the “father of the World Wide Web,” used a NeXT workstation to develop the first web browser and web server. Video game studio id Software also utilized these machines to create the iconic Doom video game series. Additionally, many of them became workstations for intelligence agencies such as the CIA and the NRO.
Image | MIKI Yoshihito
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