In 1996, the headlines asked starkly: 'Can Apple be saved?' In 2000, the answer is clearly 'yes.' Measured by profits (up 72 percent over the prior year), unit sales growth (2.5 times the industry average), or stock price (10 times higher than the '96 low), the company has obviously weathered its mid-'90s crisis.

How'd they do it? The company focused on its core constituencies--home users, educators, and 'creative' customers--and designed features in hardware and software that met their needs and desires. Certainly the company's candy-colored computers and ungrammatical ads ('Think different') appealed to a new generation of computer users, but esthetics and marketing can't sustain corporate growth if the product doesn't meet expectations. The secret, says Philip Schiller, Apple's vice president of worldwide product marketing, is that 'we've worked hard to make it easy.'

The company's re-focusing roughly coincided with the return in 1997 of Apple co-founder Steve Jobs as CEO. At that time, the foundering company had some 17 different hardware platforms, each with numerous derivative products. Today, Apple has a single platform with four lines: Power Mac, PowerBook, iMac, and iBook. Not only did this move consolidate thinly spread engineering talent at Apple, it simplified product choices for consumers.

On the software side, one of Jobs' first announcements once he took charge was an agreement with one-time adversary Microsoft to provide applications and even Windows emulation for the Macintosh platform. The move greatly alleviated anxiety among existing and potential customers over being left behind in the applications revolution.

Since then, the company has continued to refine its product lines and add features such as desktop movies that PC manufacturers hadn't considered, or hadn't considered important. Today, Apple customers know that they're not sacrificing anything by their purchase. With the simplified Apple line, Schiller says, 'People can really understand what the products are and what they're for.' And that has made all the difference.

Return to roots

When Jobs and partner Steve Wozniak founded Apple on April Fools Day, 1976, their idea was to take computers away from specialists and make them available to everyone. Their early success, especially with the Apple II in 1977, came from making useful, unintimidating machines. The introduction of the Macintosh in 1984, with its easy-to-understand graphical user interface, solidified Apple's reputation for user friendliness. It also spawned a generation of Mac devotees, especially among students and artists.

But Apple got blindsided in the late '80s by the IBM PC/Windows standard, adopted overwhelmingly by business users concerned about reliability and compatibility with customers' and colleagues' machines. The attempt to keep pace with that juggernaut led Apple astray, resulting in the plethora of also-ran machines it had on hand by 1996.

If Apple was to survive, it had to change tactics. Perhaps a return to its roots was in order.

According to Apple's Schiller, the company reassessed its market. 'If you look at what's happened for years in the personal computer marketplace, it really stagnated in terms of what the personal computer is and what it does,' he says. 'The core components kept getting faster and cheaper--and that's great, we're getting more value--but the actual design of the products and how they fit into our lives didn't get any better.'

One obvious difference between Apple and its competitors stood out. Says Schiller, 'There are few companies that make as much of the pieces of the product for the customer as Apple [does] and can affect as much of the computer experience as we can.'

With the Microsoft agreement in hand, Apple could begin to concentrate on making its products as attractive esthetically and functionally as possible.

Computer as tool, and décor

For better or worse, computers have become appliances, essential tools in most American homes and many foreign homes as well. If refrigerators and TV sets are built to complement a home's décor, why not the computer as well? The iMac, introduced in 1998, was, for its time, a thoroughly modern, competent home computer. It featured a 233-MHz PowerPC G3 processor, 32 Mbytes of RAM, a 4-Gbyte hard disk, a 24X CD-ROM, a 15-inch monitor, and a 66-MHz system bus. It also gave customers a choice of several translucent cabinet colors, from red though purple. The funky, integrated system was an instant hit among experienced users and, significantly, among computer neophytes as well; Apple says that in the US, roughly 30 percent of iMac buyers are brand-new customers, people who've never bought a computer before.

The Power Mac G4, introduced in 1999, also features a slinky, unconventional design. It boasts a 400-MHz PowerPC G4 processor, 64 Mbytes of RAM, a CD-ROM drive, and a 10-Gbyte hard disk. In an age of gigahertz PCs, the Power Mac's speed might not seem all that impressive. But here Apple's years in the wilderness proved fruitful. The separate evolution followed by the IBM/Motorola G4 processor design gives it advantages over the all-things-to-all-people Intel/AMD processors. One particular innovation, a vector-processing unit Apple calls its Velocity Engine.

In real-world applications, independent tests show that the G4 processor is able to outperform Wintel devices running at twice its clock speed. 'Our creative customer [is] getting the performance of our G4 chip that makes Photoshop really scream as much as possible to help them get their job done,' Schiller says. 'Those are the kinds of things they really want us to deliver, the things that matter to them in their daily life.'

Other examples of Apple's commitment to what might be called the livability quotient of its products include unequalled battery life (up to 10 hours) in its PowerBook laptops and the simple plug-and-play peripheral addition that Apple pioneered. Its AirPort networking system caries 11-Mbit/sec wireless data streams between a base unit and a laptop or desktop Mac up to 150 feet away.

With the growth in the importance of personal computing, the pressure on non-professionals to join in before they, or their children, get left behind grows daily. Apple's attention to lowering computer user's anxiety has paid dividends in the US and elsewhere--one-fifth of its customers are Windows refugees and over half the company's sales now come from abroad.

Apple and the e-future

Apple's research shows that the primary driver for new, first-time computer buyers is Web access. Although Apple's edge in ease-of-use is a powerful magnet to those customers, the company has taken further steps to increase its Net friendliness. All Macs now include iTools, a software suite with email, KidSafe supervisory tools, HomePage website developer, and iDisk--access to 20 Mbytes of storage on the company's server.

The company is also promoting the Internet for new applications, most prominently digital video. Here, Apple's early adoption of the IEEE 1394 digital serial bus standard, dubbed FireWire, gives it an advantage. FireWire permits connection and hot-swapping of as many as 63 peripheral devices transmitting at up to 400 Mbits/sec. Originally intended to simplify the addition of printers and scanners, FireWire's high data rate easily accommodates the requirements of streaming video and downloads from digital cameras.

With software like Final Cut, users can record, edit, play, and then transmit digital movies from their desktop or laptop over the Internet. For home users sending vacation shots to grandparents or serious filmmakers looking to circumvent the traditional Hollywood power structure, desktop video represents a potential 'killer app' for Apple's new machines.

The company is, understandably, very excited about this new capability--it represents a return to Apple's tradition of innovation. And innovation is the sign of a company that's not just surviving, but thriving.

Apple's latest operating system, Mac OS X (ten), should debut early next year. Although the company assures customers that it will be compatible with current OS 9 applications, OS X marks a bold departure from Apple's previous approaches to operating-system software.

The core of the Mac OS X is called Darwin. Named for its evolutionary connotations, Darwin is an open-source project, following the open-source initiative guidelines, à la Linux (see www.publicsource.apple.com/apsl/). The open-source model of development provides Apple with engineering leverage to compete with larger players in the operating system market. According to Philip Schiller, Apple's vice president of worldwide product marketing, '[The open-source model] helps us to enlist the assistance of tens of thousands of developers in making the best piece of code that we can.'

Many people believe that it was Apple's long adherence to proprietary development that led to its marginalization in the market, so its embracing of the open-source route might seem surprising. Not so, says Schiller.

'We have a couple of open-source projects of our own,' he says. 'It also allows some of our biggest customers--particularly in the University marketplace--to actually get inside the operating system, learn how it works, [and] extend it with features they'd like to add--and those get rolled back into Darwin.' Schiller also cites open-source projects around the Apache Web server product as well as BSD and Unix that will be part of Mac OS X

Asked if OS X represents a complete turn-around in Apple's approach to software development, Schiller replies cautiously: 'There are products where a community model works very well.' For example, he says, the QuickTime streaming server has been open-sourced and has thousands of developers helping to bring it to other platforms that Apple doesn't have the resources to serve. 'It helps to expand the product to all our customers and bring it further than we can alone,' he says. But he adds, 'There are certain products that you want to keep to yourself and make revenue on.'

Still, at Apple's Worldwide Developer's Conference in May, the company unveiled beta versions of the new operating system and dropped something of a bombshell. CEO Steve Jobs announced that Apple was cutting the price of the WebObjects Web-application server development software from $50,000 to just $699, putting the product in reach of a much larger audience. One can only wonder what other changes are in store as Apple moves with renewed confidence into the future.