Kahng said. “Total destruction. Closed is the kiss of death.”

Jobs disagreed. He telephoned Ed Woolard to say he was getting Apple out of the licensing business. The board acquiesced, and in September he reached a deal to pay Power Computing $100 million to relinquish its license and give Apple access to its database of customers. He soon terminated the licenses of the other cloners as well. “It was the dumbest thing in the world to let companies making crappier hardware use our operating system and cut into our sales,” he later said.

Product Line Review

One of Jobs’s great strengths was knowing how to focus. “Deciding what not to do is as important as deciding what to do,” he said. “That’s true for companies, and it’s true for products.”

He went to work applying this principle as soon as

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he returned to Apple. One day he was walking the halls and ran into a young Wharton School graduate who had been Amelio’s assistant and who said he was wrapping up his work. “Well, good, because I need someone to do grunt work,” Jobs told him. His new role was to take notes as Jobs met with the dozens of product teams at Apple, asked them to explain what they were doing, and forced them to justify going ahead with their products or projects.

He also enlisted a friend, Phil Schiller, who had worked at Apple but was then at the graphics software company Macromedia. “Steve would summon the teams into the boardroom, which seats twenty, and they would come with thirty people and try to show PowerPoints, which Steve didn’t want to see,” Schiller recalled. One of the first things Jobs did during the product review process was ban PowerPoints. “I hate the way people use slide presentations instead of thinking,” Jobs later recalled. “People would confront a problem by creating a presentation. I wanted them to engage, to hash things out at the table, rather than show a bunch of slides. People who know what they’re talking about don’t need PowerPoint.”

The product review revealed how unfocused Apple had become. The company was churning out multiple versions of each product because of bureaucratic momentum and to satisfy the whims of retailers. “It was insanity,” Schiller recalled. “Tons of products, most of them crap, done by deluded teams.”

Apple had a dozen versions of the Macintosh, each with a different confusing number, ranging from 1400 to 9600. “I had people explaining this to me for three weeks,” Jobs said. “I couldn’t figure it out.” He finally began asking simple questions, like, “Which ones do I tell my friends to buy?”

When he couldn’t get simple answers, he began

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slashing away at models and products. Soon he had cut 70% of them. “You are bright people,” he told one group. “You shouldn’t be wasting your time on such crappy products.” Many of the engineers were infuriated at his slash-and-burn tactics, which resulted in massive layoffs. But Jobs later claimed that the good engineers, including some whose projects were killed, were appreciative. He told one staff meeting in September 1997, “I came out of the meeting with people who had just gotten their products canceled and they were three feet off the ground with excitement because they finally understood where in the heck we were going.”

After a few weeks Jobs finally had enough. “Stop!”

he shouted at one big product strategy session. “This is crazy.” He grabbed a magic marker, padded to a whiteboard, and drew a horizontal and vertical line to make a four-squared chart. “Here’s what we need,” he continued. Atop the two columns he wrote “Consumer”

and “Pro”; he labeled the two rows “Desktop” and

“Portable.” Their job, he said, was to make four great products, one for each quadrant. “The room was in dumb silence,” Schiller recalled.

There was also a stunned silence when Jobs presented the plan to the September meeting of the Apple board. “Gil had been urging us to approve more and more products every meeting,” Woolard recalled.

“He kept saying we need more products. Steve came in and said we needed fewer. He drew a matrix with four quadrants and said that this was where we should focus.” At first the board pushed back. It was a risk, Jobs was told. “I can make it work,” he replied. The board never voted on the new strategy. Jobs was in charge, and he forged ahead.

The result was that the Apple engineers and managers suddenly became sharply focused on just four areas. For the professional desktop quadrant, they

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would work on making the Power Macintosh G3. For the professional portable, there would be the PowerBook G3. For the consumer desktop, work would begin on what became the iMac. And for the consumer portable, they would focus on what would become the iBook. The

“i,” Jobs later explained, was to emphasize that the devices would be seamlessly integrated with the Internet.

Apple’s sharper focus meant getting the company out of other businesses, such as printers and servers. In 1997 Apple was selling StyleWriter color printers that were basically a version of the Hewlett-Packard DeskJet. HP made most of its money by selling the ink cartridges. “I don’t understand,” Jobs said at the product review meeting. “You’re going to ship a million and not make money on these? This is nuts.” He left the room and called the head of HP. Let’s tear up our arrangement, Jobs proposed, and we will get out of the printer business and just let you do it. Then he came back to the boardroom and announced the decision.

“Steve looked at the situation and instantly knew we needed to get outside of the box,” Schiller recalled.

The most visible decision he made was to kill, once and for all, the Newton, the personal digital assistant with the almost-good handwriting-recognition system. Jobs hated it because it was Sculley’s pet project, because it didn’t work perfectly, and because he had an aversion to stylus devices. He had tried to get Amelio to kill it early in 1997 and succeeded only in convincing him to try to spin off the division. By late 1997, when Jobs did his product reviews, it was still around. He later described his thinking: If Apple had been in a less precarious situation, I would have drilled down myself to figure out how to make it work. I didn’t trust the people running it. My gut was that there was some really good technology, but it

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was fucked up by mismanagement. By shutting it down, I freed up some good engineers who could work on new mobile devices. And eventually we got it right when we moved on to iPhones and the iPad.

This ability to focus saved Apple. In his first year back, Jobs laid off more than three thousand people, which salvaged the company’s balance sheet. For the fiscal year that ended when Jobs became interim CEO

in September 1997, Apple lost $1.04 billion. “We were less than ninety days from being insolvent,” he recalled.

At the January 1998 San Francisco Macworld, Jobs took the stage where Amelio had bombed a year earlier. He sported a full beard and a leather jacket as he touted the new product strategy. And for the first time he ended the presentation with a phrase that he would make his signature coda: “Oh, and one more thing . . .”

This time the “one more thing” was “Think Profit.” When he said those words, the crowd erupted in applause.

After two years of staggering losses, Apple had enjoyed a profitable quarter, making $45 million. For the full fiscal year of 1998, it would turn in a $309 million profit.

Jobs was back, and so was Apple.

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CHAPTER TWENTY-SIX

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DESIGN PRINCIPLES

The Studio of Jobs and Ive

With Jony Ive and the sunflower iMac, 2002

Jony Ive

When Jobs gathered his top management for a pep talk just after he became iCEO in September 1997, sitting in the audience was a sensitive and passionate thirty-year-old Brit who was head of the company’s design team. Jonathan Ive, known to all as Jony, was planning to quit. He was sick of the company’s focus on profit maximization rather than product design. Jobs’s talk led him to reconsider. “I remember very clearly Steve announcing that our goal is not just to make money but to make great products,” Ive recalled. “The decisions you make based on that philosophy are fundamentally different from the ones we had been making at Apple.” Ive and Jobs would soon forge a bond that would lead to the greatest industrial design collaboration of their era.

Ive grew up in Chingford, a town on the northeast edge of London. His father was a silversmith who taught at the local college. “He’s a fantastic craftsman,”

Ive recalled. “His Christmas gift to me would be one day of his time in his college workshop, during the Christmas break when no one else was there, helping me make whatever I dreamed up.” The only condition was that Jony had to draw by hand what they planned to make. “I always understood the beauty of things made by hand. I came to realize that what was really important was the care that was put into it. What I really

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despise is when I sense some carelessness in a product.”

Ive enrolled in Newcastle Polytechnic and spent his spare time and summers working at a design consultancy. One of his creations was a pen with a little ball on top that was fun to fiddle with. It helped give the owner a playful emotional connection to the pen. For his thesis he designed a microphone and earpiece—in purest white plastic—to communicate with hearing-impaired kids. His flat was filled with foam models he had made to help him perfect the design. He also designed an ATM machine and a curved phone, both of which won awards from the Royal Society of Arts.

Unlike some designers, he didn’t just make beautiful sketches; he also focused on how the engineering and inner components would work. He had an epiphany in college when he was able to design on a Macintosh. “I discovered the Mac and felt I had a connection with the people who were making this product,” he recalled. “I suddenly understood what a company was, or was supposed to be.”

After graduation Ive helped to build a design firm in London, Tangerine, which got a consulting contract with Apple. In 1992 he moved to Cupertino to take a job in the Apple design department. He became the head of the department in 1996, the year before Jobs returned, but wasn’t happy. Amelio had little appreciation for design. “There wasn’t that feeling of putting care into a product, because we were trying to maximize the money we made,” Ive said. “All they wanted from us designers was a model of what something was supposed to look like on the outside, and then engineers would make it as cheap as possible. I was about to quit.”

When Jobs took over and gave his pep talk, Ive decided to stick around. But Jobs at first looked around