I think this acquisition may go down in history as one of the most successful ever, delivering shareholders a return of over 82,200% (the Nasdaq returns have only been about 1,100% in the same timeframe). According to Google Finance, Apple was trading at $0.21 in December, 1996 (price adjusted to reflect subsequent splits). Today they're trading at $172.99.
It's very rare that you see acquisitions work out like this. Apple traded away about 13% of their 1996 market cap to buy NeXT, and then allowed NeXT's leadership to take over and run the place. Most M&A stories like this usually result in massive underperformance for shareholders. Instead, Steve Jobs turned NeXTSTEP into OS X and iOS, driving an incredible turnaround.
People like to point out that this merger was different because of Steve Jobs and his history with Apple, but I don't think that's so obvious. Neither Apple nor NeXT were strong companies at the time, and Apple's culture had drifted considerably since Jobs was fired in 1985.
For anyone who has been involved in a big acquisition integration, it can be like pulling teeth to get a buyer to properly adopt the target's technology. There are always barriers from the junior engineer all the way to the CEO. While it certainly helped that Jobs was the original founder, even that was no guarantee of success. Jobs had learned a lot running NeXT and Pixar, but that was not obvious at the time. I imagine there was a lot of internal resistance within Apple.
This acquisition probably would have failed miserably anywhere else, and yet Jobs and Apple made it one of the best ever.
This wasn’t a merger it was a reverse takeover. Jobs basically got rid of a large amount of unprofitable projects and merge NextStep with a Mac UX and make a compelling computer to use it with.
The result was what Apple needed to compete. A modern OS made of with a modern UI with XNU that had memory protection that can compete with Windows. Also a transition VM for older software.The iMac broke away and showed that computers could look cool.
The iPod showed Apple could make compelling Consumer electronics
XNU got adopted with the iPhone iPad and with what they learned with the iPod.
And moving Apple to Intel and then to Apple Silicon was similar to going from MacOS 9 to 10.
Not many companies can claim so many innovative devices and most get 2 or 3.
> The iPod showed Apple could make compelling Consumer electronics XNU
I don't know if the iPod used XNU. Using the same kernel as OSX in mobile was first adopted with iPhone by the Scott Forstall team in lieu of a custom mobile OS approach by the Tony Fadell team.
I think people forget that the iMac really didn’t save Apple in the long term; the iPod did. Money and production knowledge from the iPod enabled the first iPhone. And the iPod was not based on NeXT-derived technology. (Until the iPod Touch, after the iPhone).
The iMac and the product matrix it introduced definitely saved Apple. The iPod exploded their revenue but the Mac righted the ship and enabled the iPod's development.
Before Jobs came back Apple's product strategy was a shitshow. They were selling the same machine under different names in different markets, selling 68k machines years past their "fresh by" dates, had a just plain confusing naming scheme for products, and were keeping money losing divisions open.
Cutting things like the Newton and printers and simplifying the Mac product lines was a huge improvement. The iMac replaced a dozen different confusingly named Performas and PowerMacs all in the same category. The G3 PowerMac replaced all the other higher tier machines. The PowerBook was also rolled into a single model with different upgrade options. Once the iBook was released the 2x2 product matrix was straightforward and sane.
The iMac was the most visible part of that process but the other hardware lines were consolidated at the same time and in the same way. Had that all not happened the iPod couldn't have existed. Even the iPod wasn't a runaway success until the third generation that supported USB 2.0. The first two generations were FireWire only and even when Windows support was added still required a FireWire card in a PC which basically only came in Sonys (4-pin FireWire branded i.Link to avoid the license fee). The third generation supporting USB really opened the iPod market to Windows users. The iPod was already making money by then but the explosion of sales starting with the third edition turned it into a money printer.
Sorry that's a typo the iPod ran on an internally devised software and a mobile CPU but the real thing they were targeting is a large amount of storage.
In my opinion it wasn't NeXT tech that saved Apple. It was just shifts in market trends and a move towards lifestyle branding over the grey-box commodity stuff they were doing. The first successful product after the return of Jobs was the iMac, which used zero NeXT expertise and ran Mac OS 8 or 9.
Jobs' "innovation" in this era was to slash slash slash Apple down to the bone and implement a Dell-like just in time delivery model.
Apple was still in some trouble, market wise for at least 5-6 years after Jobs returned. They also didn't ship the NeXTstep based OSX until 2000/2001. My wife worked in marketing there from 2003-2010 and we saw it first hand. In the end what transformed Apple from a marginal company 'in trouble' was the iPod.
Apple stopped being a computer company and became a consumer electronics lifestyle brand. Their actual computers are still fairly marginal in the market and last I looked not a major profit centre. They make their real money on iPhones and paraphernalia.
Insofar as NeXT's tech has helped Apple it's just that they've had a portable operating system that they could move between ISAs and form factors. That isn't unique to NeXT/OpenStep, it could have come from somewhere else, including BeOS.
> Insofar as NeXT's tech has helped Apple it's just that they've had a portable operating system that they could move between ISAs and form factors. That isn't unique to NeXT/OpenStep
NeXTStep was not just a portable operating system.
The Smalltalk-based runtime environment, that programming API was far more effective than anything Apple had at the time. And the WinTel PC still had some work of its own, before Microsoft client-server corporate apps could deliver.
The other big thing that NeXT brought back to Apple was a culture of very effective, small engineering teams. Clearly there are limits to that, but this management style was well-placed to make virtue of necessity, desperation.
None of the Cocoa / NS API stuff you're talking about here had much impact on Apple's tech stack as actually deployed in the field until at least 2005 or so. The iMac was successful with a modernized legacy Mac OS on it, and the first iPods shipped with their own embedded OS, not iOS as we know it.
Apple survived by becoming leaner and more lifestyle focused. Maybe your last point applies, and maybe Jobs learned this management lesson and others through his startup time at NeXT, I dunno.
But more than anything I think Apple's revival came through dramatically shrinking product lines, cutting fat, and focusing on just in time production. Unfortunately in the process a lot of interesting tech was also thrown away (Newton!)
You're absolutely right about the focus, the narrowing of product lines and a return to consumer products, giving Apple a path to the iPod and financial success. Apple needed a story, a reason to exist, and then needed to bring that story to their chosen market. Apple could not afford to cover every bet, to run the table. The Sculley strategy had failed.
And none of that shift was technology. NeXT vs BeOS would not have made a difference on the relevant time scale.
But we love to nerd out of the tech, and Be had some wonderful stuff. Love their filesystem, their interrupt handling, dang the PowerPC could destroy Intel in context-switch latency speed... What an awesome Jeff Goldblum ad campaign that would have been!
Pour one out for BeOS. And Dylan. And Newton soup... But as I consider tech details, again most of the good ideas did not die. ARM handheld hardware, dynamic but typed TypeScript, tuple-space data message passing noSQL soup. After a while, you see the bits and get that familiar feeling.
And about that portability...
While NeXT had just released their NextStep for the Intel PC, it was more precise to say that it worked on a very specific Dell PC or Canon workstation configuration. I was able to get it up and running on a home-built 486, but I needed help from some friends at NeXT to make that happen. A late-night personal plugfest was clearly not a realistic option for corporate IT or for mass-market consumers.
Whereas Windows NT 3.1 installed out of the box.
NeXT also ported to the HP PA-RISC platform, that grew out of their relationship with NeXT NetObjects (or whatever their object-based RPC architecture was called) on HP Enterprise servers. But I've never met anyone who actually ran NextStep on an HP Gecko.
There was certainly much lamentation at the time that Apple didn’t purchase BeOS.
I’m also reminded of Sun’s near-acquisition of Apple (apparently multiple times), which McNealy(?) later acknowledged would never have worked out so well.
Jobs gets a lot of grief here and elsewhere for his personal failings and management style, but this was an epochal moment in the computer business. I remember roughly at the same time dreading what seemed like the inevitable Windows victory over all of personal computing.
BeOS would have been a disaster. Jobs gave Ive a chance to design an iconic iMac, which handily restored Apple's credibility and also helped get some money rolling in. And then the iPod, iPhone, iPad and the rest.
I can't imagine BeOS going in the same direction. Macs would have been increasingly PC-like - but with a much nicer OS, and maybe brightly coloured plastic [1] instead of beige - and someone else would have eaten mobile.
I suspect BeOS Macs would have ended up more like the Amiga - an item of nostalgia. Apple would likely have been sold off within a couple of years.
As told in the Walter Isaacson book about Jobs, Larry Ellison wanted to buy a controlling interest (or all of it) in Apple and install Jobs back as CEO around the time Jobs was attempting to accomplish the same end goal by acquisition. Jobs was responsible for preventing Ellison from using that tactic, on the argued basis of claiming the moral high ground.
Those were the halcyon days for software engineering. Programmers called the shots because the "users" were them. An engineer knew what features to add because it is what they wanted. Upper management could let the cowboys run a little loose because shipping software was like printing money.
These days the stakes are much too high and the customer is everyone. I see this causing management to be hamstrung by accountability. To help accountability, more and more process is layered on, loose cannons weeded out....
> It's very rare that you see acquisitions work out like this
The acquisition was a normal acquisition.
What made it special was the DOJ stepping in to destroy Microsoft because Bill Gates was essentially too rich and his riches were so talked about that people in DC wanted to show him who's the alpha.
Apple would have gone to zero without Microsoft essentially saving it from bankruptcy, and it would be irrelevant had the DOJ not attacked Microsoft with such vigor.
> DOJ stepping in to destroy Microsoft because Bill Gates was essentially too rich..
That is revisionist. Microsoft got a slap on the wrist. I don't think this gave Apple any tangible benefit. Microsoft's investment was also insignificant. The only thing that really mattered was Microsoft's commitment to continue delivering MS Office for Mac OS. That was a big deal. MS got benefit from Explorer on Mac and for the continued "competition" from Apple to reduce antitrust accusations.
Spot on. Apple got desperately needed money from the Microsoft investment and more importantly it was a sign that the platform wasn’t “dead“. As Apple had been shrinking big developers had been abandoning the platform. If Microsoft were to stop making office for it it may have killed it.
That investment and commitment helped Apple keep going long enough to get out of the bind it was in.
Microsoft gave small users everywhere a free license to use the best GUI OS in the world. Not to mention the browser and the productivity tools
It has always been a free software , unless you are really dedicated and want to pay for it.
It was a really elegant solution, the degree to which you paid for Microsoft products ranged based on each individual user willingness to "look around" for free pirated copies.
And over at Redmond they'd take notice and push the bill onto paying customers such as the Fortune 500 (Exxon, BP, JPMorgan)
If there is one company that the public should love is Microsoft.
> If there is one company that the public should love is Microsoft
Microsoft was a monopolistic and mediocre behemoth in the 90s. We’re lucky computing survived its grip. Mostly due to the open web, which is sadly under severe attack.
> Microsoft gave small users everywhere a free license to use the best GUI OS in the world. Not to mention the browser and the productivity tools
> It has always been a free software , unless you are really dedicated and want to pay for it.
The only way I can see for this claim to have any connection to reality is if you are talking about piracy. Yes, Microsoft kind of turned a blind eye to pirates if they stayed small-scale enough. Yes, it was still illegal, and you were still (at least theoretically) running the risk of legal trouble.
If you weren't talking about piracy, then you are simply wrong. Microsoft was never free. (You may have been paying it bundled into the price of a new computer, but it wasn't free.) This goes all the way back to the beginning - see Bill Gates' letter to the hobbyists who were taking a "free license" to MicroSoft BASIC back in the 1970s.
> ... because Bill Gates was essentially too rich and his riches were so talked about that people in DC wanted to show him who's the alpha.
That's totally not how that happened. Microsoft was doing things that were legitimately anti-competitive, and legitimately against the law. That got proven, and Microsoft's best option was to take the consent decree rather than flat-out lose and let the DOJ have a free hand to write the rules going forward.
So the fact that I can steal a Samsung TV from Best Buy means that Samsung TVs are free and therefore it’s impossible for them to be committing antitrust violations against Sony and Visio?
Yes. As part of the deal Apple was required to include Internet Explorer on Macs (for some amount of time). IE 5 and 5.5 on the Mac were actually very good browsers.
But Apple was not prohibited from including other browsers as well. For example, years later, Safari.
In any event it was state intervention. When that happens the victory/defeat of a company becomes political , not technical or due to financial or business acumen.
The worst thing is that the majority of the American population would have not found themselves competing against Bill Gates for anything, except those in DC who had him as their #1 enemy in order to win their size measuring contest.
Matter of fact the small individual consumer and small businesses were getting away robbing Microsoft blind as they didn't do anything to stop piracy.
Microsoft would just treat it as free marketing or just pass those losses onto big paying customers such as the Fortune 500 companies, thus compensating for piracy losses at the base of the pyramid.
After DOJ intervention nowadays we have Apple shipping a 1700$ phone which is completely closed off and out of the box is impossible to charge while listening to music at the same time. Irony if you think about how passionate Jobs was about music
> In any event it was state intervention. When that happens the victory/defeat of a company becomes political , not technical or due to financial or business acumen.
Microsoft didn't win on technical merit, they were winning because they were aggressively anti-competitive.
Give away your product for free. Now it’s practically impossible for your competitors to sell enough to keep going when there’s a free product out there.
Anti trust laws were made to protect consumers, not paper-millionaires shareholders of other compenies.
There wasn't an organic hatred against Microsoft, people were teaching courses on how to create a startup aimed at getting acquired by them and retire early.
It was a DC play from people who knew nothing about software but were jelous of what they were reading on Fortune and Forbes.
> Anti trust laws were made to protect consumers, not paper-millionaires shareholders of other compenies.
And consumers were harmed by one company controlling 97% of the desktop market, when its would-have-been competitors had better product but couldn't compete because it cheated.
> And consumers were harmed by one company controlling 97% of the desktop market
When the 97% is potentially all free, then I don't where's the monopoly, unless you also include in the definition of monopoly having a special place in people's hearts after you gave them such gift.
People made a choice to pay for convenience, but if you looked around you'd find ways to get Microsoft products for free.
But it’s NOT free. You keep repeating that, but I’m not sure why.
Are you saying that because people didn’t have to buy Windows for their computers since it was included?
They paid in directly. You’d buy your computer for $2000 and Microsoft would get $350 (or whatever). Because of the price Microsoft charged, the price of your computer with artificially high. Because of Microsoft agreements with computer makers, you couldn’t choose NOT to buy Windows. So you had to pay the money. Since you had to buy Windows, there was no price competition.
Even after the antitrust settlement this was still a problem. Remember when netbooks were the fad? Well it’s really hard to sell a $500 laptop that’s good if you’re required to pay Microsoft $250 for Windows. That’s why we actually saw ones that shipped with Lenox. In competition, Microsoft released a cut down version of Windows that was limited that they charged less for.
What do you know, competition worked. That couldn’t happen before the settlement.
By choking out your competitors, since the true cost isn't free. For instance, demanding that OEMs only ship Windows, thus cornering the market, while still charging them (what, you really thought MS was giving their OS away for free, just because the OEM didn't show you the line item?).
> After DOJ intervention nowadays we have Apple shipping a 1700$ phone which is completely closed off and out of the box is impossible to charge while listening to music at the same time.
Even the base model iPhone SE ($399) has an external speaker, bluetooth, and airplay, all of which are capable of playing music while charging at the same time.
What a strange complaint to make, and it’s even stranger to tie it to your even stranger take on the DOJ and Microsoft.
> What a strange complaint to make, and it’s even stranger to tie it to your even stranger take on the DOJ and Microsoft.
Had the DOJ not attacked Microsoft we'd have a better, more open phone which would also come out of the box with the ability to play music while charging.
iPhones made in 2012 were only barely better than Pocket PCs made in 2005
Had the DOJ not attacked Microsoft, we would have had a more open future? That's... let's just call that a minority opinion, unsupported by the available evidence.
I used it. Everything from the original version that came on little tiny palmtops (Windows CE) to the near final version on things like the compact iPaq.
As a geek I found it interesting, but realistically it sucked.
It was eventually available on some of the early smart phones. It had its chance. It failed. Microsoft kept reinventing it trying to fix it, and it never worked. People preferred the “inferior“ PalmOS.
There’s a reason the iPhone came in and ate everyone’s lunch.
Microsoft had a chance. They were competing. They made changes. They rewrote the UI numerous times. They lost. BAD.
The idea that the Pocket PC was better than the iPhone is demonstrably, by sales, wrong.
The idea that the Pocket PC failed somehow because of the Microsoft antitrust settlement with the government… I don’t understand that one.
> That you continue to repeat this, despite it being clearly disproven above, is telling.
Where are the airpods? Not even the last model, even 2017 Airpods.. you know just to provide some aftercare to the customer after screwing them so badly
“Better” is definitely relative to your needs. For most consumers, iPhones in 2007 were easier to use, with a responsive touch interface and (for the time) huge screen.
What exactly are you talking about? My iPhone 13 is simultaneously charging and playing music right this second - while writing this post. Do at least try to keep things rooted in fact, despite your emotions.
I think there's a point there about what comes in the box. If this is your first iPhone, your first Bluetooth-capable device, yes, you're stuck with awkward compromises without spending more money.
Still, for most people it's not their first such device, so they already typically have their own infrastructure of chargers and BT headsets etc.
Apple has certainly slimmed down what comes with an iPhone, but from the cheapest single port iPhone to the most expensive, they all can charge and play music at the same time without spending or acquiring anything else.
It's very rare that you see acquisitions work out like this. Apple traded away about 13% of their 1996 market cap to buy NeXT, and then allowed NeXT's leadership to take over and run the place. Most M&A stories like this usually result in massive underperformance for shareholders. Instead, Steve Jobs turned NeXTSTEP into OS X and iOS, driving an incredible turnaround.
People like to point out that this merger was different because of Steve Jobs and his history with Apple, but I don't think that's so obvious. Neither Apple nor NeXT were strong companies at the time, and Apple's culture had drifted considerably since Jobs was fired in 1985.
For anyone who has been involved in a big acquisition integration, it can be like pulling teeth to get a buyer to properly adopt the target's technology. There are always barriers from the junior engineer all the way to the CEO. While it certainly helped that Jobs was the original founder, even that was no guarantee of success. Jobs had learned a lot running NeXT and Pixar, but that was not obvious at the time. I imagine there was a lot of internal resistance within Apple.
This acquisition probably would have failed miserably anywhere else, and yet Jobs and Apple made it one of the best ever.