John Sculley’s Bad Apples
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Apple (NASDAQ: AAPL) is synonymous with successful product innovation on a global scale, a success which traces its humble beginnings back to Steve Job’s garage. But there was a time, a decade actually, when the company produced a steady stream of losers that put it on a downward spiral. It’s a tale of how quickly a company can implode when the wrong captain pilots the ship.
Without a doubt, the hiring of John Sculley as CEO and president on April 8, 1983 was Apple’s longest and costliest blunder to date. By 1985 he had forced Steve Jobs out only to find himself, after overseeing years of diminishing sales and profit margins and a declining stock price, out of a job in 1993. During his tenure, Mr. Sculley proved two things: that whatever magic he had he left behind at Pepsi and karma always triumphs in the end.
With Steve Jobs out and John Sculley in, Apple’s newest CEO was looking for something to kick start the company. The Newton was a stylus-controlled PDA designed to replace the Mac, but the project was surrounded with bad omens from the start. Handwriting recognition software problems delayed shipment of the Newton for a year. When it was finally released, sales were poor from the start for several reasons: the Newton came with a fat $699 price tag, the handwriting recognition software still had bugs, the processor was a stingy and slow 20MHz, and the Newton wolfed down AA battery power like Pringles. Apple scrapped this Edsel five years later in 1997, and wisely continued developing the Mac.
This was one of the first digital cameras marketed for consumers and although the idea was right, the product wasn’t. It was introduced in 1993, and the camera’s hefty $600 price tag wasn’t the only problem as QuickTake lacked both removable storage and focus controls. Despite the colorful Apple logo on the camera’s front, QuickTake was canceled a scant three years later.
The what? The Pippin was Apple’s bid to get a cut of a videogame market dominated by
Nintendo 64, Sony PlayStation (NYSE: SNE) and Sega. Originally conceived as both a multimedia and video games center in 1996 and working in conjunction with toy-maker Bandai, the Pippin was doomed from the start. The product’s strange name resulted in branding confusion and a lack of software saw the Pippin quickly fizzle out and fade into obscurity. But Sony got it right and Play Station remains one of the most popular gaming systems on the market some fifteen years later.
Failure to License the Mac OS
Again under John Sculley’s leadership, Apple made its most embarrassing mistake by failing to license their Mac operating system. Bill Gates, realizing Apple’s GUI interface was the wave of the future, legally developed it for Microsoft (NASDAQ: MSFT) and the rest is Windows history.
Fortunately this story does have a happy ending. After John Sculley’s 1996 departure, Steve Jobs returned that same year and became CEO in 1997. Under his guidance, the company regained its focus, learned from its past mistakes and started repolishing Apple’s tarnished image. The Apple story remains a textbook case of how a company’s fate can hinge on whether the wrong or right man (or woman) is at the helm.
Fool blogger Karen Rogers does not own shares in any of the companies mentioned in this entry. The Motley Fool owns shares of Apple and Microsoft and is short Sony (ADR) and has the following options: long JAN 2013 $22.00 calls on Sony (ADR). Motley Fool newsletter services recommend Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.