Apple Turns 20, Faces Challenges -- But It Will Always Have Place In Pc History

SAN JOSE - Happy birthday, Apple.

The company that started the personal-computer revolution, transforming arcane and forbidding technology into a common, easy-to-use tool, turns 20 tomorrow.

Apple Computer Inc. faces a rough road as it begins its third decade. Its problems, largely of its own making, have continually prompted concern about its future. But no one questions the company's accomplishments.

"They have an undisputed position in history for really defining what the personal computer is," said Pieter Hartsook, publisher of The Hartsook Letter, which focuses on Apple and its products.

"I think without Apple we wouldn't have a personal-computer industry as we know it today," he said.

The Cupertino, Calif., company - started April 1, 1976 - is much more than its artful integration of hardware and software. Few corporations have had such an influence on their industry and the public.

The company's distinctive, rainbow-striped Apple logo is recognized all over the world. People still remember the 1984 "Big Brother" commercial introducing the Macintosh. While few can name the founder of IBM, many can identify Steve Jobs and Steve Wozniak, whose founding of Apple has the quality of legend.

"Apple is a grand capitalist experiment. It started with two guys in a garage. Their idea was initially rejected . . . Despite that they went on and built this $(11) billion company," said Guy Kawasaki, a longtime Apple marketer.

"People can relate to Apple - in the sense of trying to do things a better way, trying to take on the status quo, being the underdog - even being a little messed up at any given point," he said. "You have to love Apple, warts and all."

Core people

Apple isn't celebrating its birthday until next year, the 20th anniversary of its incorporation. But it was on April Fool's Day in 1976 that Jobs, then 21, and Wozniak, then 26, formed a partnership to sell the Apple I, scarcely more than circuits on a board, lacking a keyboard and even a case.

The common myth is that Jobs and Wozniak - like the founders of Hewlett-Packard - started Apple in a garage. But both acknowledge they actually worked out of their apartments.

At the time they founded Apple, computing meant using a "dumb" terminal linked to a mainframe - or putting together a primitive machine from a kit. Wozniak designed Apple I for himself and other enthusiasts; Jobs saw it as a commercial product.

Hewlett-Packard Co., where Wozniak worked, and Atari Corp., Jobs' employer, weren't interested in making or financing the computer. But A.C. "Mike" Markkula, a retired semiconductor executive, came up with cash and a business plan.

In 1977, Apple Computer produced the Apple II, the first commercially successful personal computer. Apple's sales skyrocketed, hitting $1 billion in 1982.

Apple made computing history again in early 1984, when it introduced the Mac, which featured a "graphical user interface," allowing users to click on symbols and options in menus rather than typing complex commands. The Mac set an industry standard with superior ease of use and such features as sound and video.

The company says - and industry analysts agree - that much of the history of the personal-computer industry since then has been competitors' attempts to catch up. It was only with Microsoft Corp.'s Windows 95 that the industry-dominating PCs using Intel Corp. chips approached the Mac's user-friendliness.

"If you take a hard look at Microsoft's strategy over the past 10 years, much of what they did is they went to school on Apple," said Tim Bajarin, president of Creative Strategies Research International in San Jose.

Losing ground

Despite its groundbreaking Macintosh and the computer's almost cult-like following, Apple in recent years has lost ground.

"Frankly, it's been hubris," said Mark Hall, editor in chief of MacWEEK. That, he and other industry observers believe, caused Apple to make its greatest mistake.

Apple, feeling secure in its superior technology, only in late 1994 agreed to let other companies clone the Macintosh - and charged more for it than rivals did for IBM-type PCs.

"The irony is the company that designed technology to make it accessible to the masses priced it to make it accessible only for the elites for so many years," Hall said.

A low point came earlier this year, when Apple reported a $69 million loss for the October-December quarter and saw its market share continue to erode. The company warned it would also have steep losses in the first quarter - and said recently that the shortfall would come to $700 million because of inventory write-downs and restructuring charges.

A continual subject of takeover speculation, Apple reportedly was in merger talks with Sun Microsystems earlier this year.

But new CEO Gilbert Amelio, who succeeded Michael Spindler in February, indicated Apple intends to remain independent. It plans to let more companies clone the Mac and focus on such key markets as home, education and desktop publishing.

Looking ahead

While announcing the huge first-quarter loss, Amelio said he still considers Apple's problems to be fixable.

Apple's strong points continue to be its superior technology and its people, said James Buckley, president of Apple Americas, the company's North American division.

"The people here have incredible energy, incredible intelligence," he said. "They are incredibly motivated to help us succeed."

Hartsook believes the fact that Apple's survival ranks with its technological achievements, considering the size of the opposition. He hopes Apple diversifies and puts its consumer-friendly technology into a wide range of products, from office machines to consumer electronics.

Apple is looking to expand its presence as computer technology moves beyond the desktop box, Buckley said. One of its most promising products is Pippin, which hooks up to a television, plays games and surfs the Internet. It is expected on the U.S. market by mid-year.

"I think we will continue as a company that will change the way people live, learn, work, communicate and play," Buckley said.