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The Shootout

As Apple's graphics market expanded, so did the array of products - and the prices. It was becoming more difficult to sell such expensive computers.

CEO John Sculley was determined to maximize profits by infiltrating the corporate market, which was probably the only profitable market for such expensive workstations. The IBM PC and inexpensive PC clones were dominant, Apple would have to compete on their turf.

I remember attending a strategy meeting with an Apple engineering executive, who described their new principle of "predictive reaction." It would take two years to produce new computers, so these computers had to be designed to compete with products other companies would release in two years. They had to make a guess as to which of their competitors' products might still be in development, and react to what they would release in the future.

Apple was chasing ghosts, competing with machines that might never exist. Or worse, it was competing with designs from companies that would soon drop out of the PC market, like AST, NEC, and WYSE. And Apple had some serious competition: with Windows, Bill Gates was gunning for the Mac market.

All this should have worried me, but it didn't. Our corporate customers were buying millions of dollars of Macs. Our largest client was Disney - it was very secretive about its purchases, and required us to sign nondisclosure agreements (NDAs), for fear that it would be known they were one of Apple's largest customers. Disney disliked the expense of the new Macs, and was always pressuring us for equivalent PC products at a lower cost. I finally got tired of this battle, so I decided to do a "shootout."

I arranged two roughly equivalent computers, a Mac II and a Compaq 386 with Windows 2.0. and delivered them to the Disney Imagineering studios for a feature-by-feature comparison. But I made a fatal mistake. I demonstrated both machines completely stock, except I added Adobe Type Manager to the Compaq, so it could display WYSIWYG fonts.

In front of a crowd of about a hundred of Disney's top designers and computer people, I showed how the same functions worked on both Windows 2.0 and a Mac. The Mac clearly had the advantage. All the applications worked together seamlessly. On Windows, what you saw was not quite what you got on the printer, and none of the apps worked together without complex workarounds.

After exhaustively demonstrating the Mac's superior qualities, I was stunned by the conclusion of the Disney VP. He said, "wow, thanks for showing us the PC can do everything the Mac can do!" I had inadvertently disrupted a multimillion dollar Mac account.

But Apple wasn't doing much better at demonstrating its own advantages. Its marketing was losing focus. Apple was coasting off the strength of its previous successes, charging high prices for a premium product, confident that nobody could catch it. And customers were defecting.

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Next page: The Apple Advantage

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