Steve Jobs

Jobs did not come into the office regularly, but he was on the phone to Amelio often. Once he had succeeded in making sure that Tevanian, Rubinstein, and others he trusted were given top positions, he turned his focus onto the sprawling product line. One of his pet peeves was Newton, the handheld personal digital assistant that boasted handwriting recognition capability. It was not quite as bad as the jokes and Doonesbury comic strip made it seem, but Jobs hated it. He disdained the idea of having a stylus or pen for writing on a screen. “God gave us ten styluses,” he would say, waving his fingers. “Let’s not invent another.” In addition, he viewed Newton as John Sculley’s one major innovation, his pet project. That alone doomed it in Jobs’s eyes.

“You ought to kill Newton,” he told Amelio one day by phone.

It was a suggestion out of the blue, and Amelio pushed back. “What do you mean, kill it?” he said. “Steve, do you have any idea how expensive that would be?”

“Shut it down, write it off, get rid of it,” said Jobs. “It doesn’t matter what it costs. People will cheer you if you got rid of it.”

“I’ve looked into Newton and it’s going to be a moneymaker,” Amelio declared. “I don’t support getting rid of it.” By May, however, he announced plans to spin off the Newton division, the beginning of its yearlong stutter-step march to the grave.

Tevanian and Rubinstein would come by Jobs’s house to keep him informed, and soon much of Silicon Valley knew that Jobs was quietly wresting power from Amelio. It was not so much a Machiavellian power play as it was Jobs being Jobs. Wanting control was ingrained in his nature. Louise Kehoe, the Financial Times reporter who had foreseen this when she questioned Jobs and Amelio at the December announcement, was the first with the story. “Mr. Jobs has become the power behind the throne,” she reported at the end of February. “He is said to be directing decisions on which parts of Apple’s operations should be cut. Mr. Jobs has urged a number of former Apple colleagues to return to the company, hinting strongly that he plans to take charge, they said. According to one of Mr. Jobs’ confidantes, he has decided that Mr. Amelio and his appointees are unlikely to succeed in reviving Apple, and he is intent upon replacing them to ensure the survival of ‘his company.’”

That month Amelio had to face the annual stockholders meeting and explain why the results for the final quarter of 1996 showed a 30% plummet in sales from the year before. Shareholders lined up at the microphones to vent their anger. Amelio was clueless about how poorly he handled the meeting. “The presentation was regarded as one of the best I had ever given,” he later wrote. But Ed Woolard, the former CEO of DuPont who was now the chair of the Apple board (Markkula had been demoted to vice chair), was appalled. “This is a disaster,” his wife whispered to him in the midst of the session. Woolard agreed. “Gil came dressed real cool, but he looked and sounded silly,” he recalled. “He couldn’t answer the questions, didn’t know what he was talking about, and didn’t inspire any confidence.”

Woolard picked up the phone and called Jobs, whom he’d never met. The pretext was to invite him to Delaware to speak to DuPont executives. Jobs declined, but as Woolard recalled, “the request was a ruse in order to talk to him about Gil.” He steered the phone call in that direction and asked Jobs point-blank what his impression of Amelio was. Woolard remembers Jobs being somewhat circumspect, saying that Amelio was not in the right job. Jobs recalled being more blunt:

I thought to myself, I either tell him the truth, that Gil is a bozo, or I lie by omission. He’s on the board of Apple, I have a duty to tell him what I think; on the other hand, if I tell him, he will tell Gil, in which case Gil will never listen to me again, and he’ll fuck the people I brought into Apple. All of this took place in my head in less than thirty seconds. I finally decided that I owed this guy the truth. I cared deeply about Apple. So I just let him have it. I said this guy is the worst CEO I’ve ever seen, I think if you needed a license to be a CEO he wouldn’t get one. When I hung up the phone, I thought, I probably just did a really stupid thing.

That spring Larry Ellison saw Amelio at a party and introduced him to the technology journalist Gina Smith, who asked how Apple was doing. “You know, Gina, Apple is like a ship,” Amelio answered. “That ship is loaded with treasure, but there’s a hole in the ship. And my job is to get everyone to row in the same direction.” Smith looked perplexed and asked, “Yeah, but what about the hole?” From then on, Ellison and Jobs joked about the parable of the ship. “When Larry relayed this story to me, we were in this sushi place, and I literally fell off my chair laughing,” Jobs recalled. “He was just such a buffoon, and he took himself so seriously. He insisted that everyone call him Dr. Amelio. That’s always a warning sign.”

Brent Schlender, Fortune’s well-sourced technology reporter, knew Jobs and was familiar with his thinking, and in March he came out with a story detailing the mess. “Apple Computer, Silicon Valley’s paragon of dysfunctional management and fumbled techno-dreams, is back in crisis mode, scrambling lugubriously in slow motion to deal with imploding sales, a floundering technology strategy, and a hemorrhaging brand name,” he wrote. “To the Machiavellian eye, it looks as if Jobs, despite the lure of Hollywood—lately he has been overseeing Pixar, maker of Toy Story and other computer-animated films—might be scheming to take over Apple.”

Once again Ellison publicly floated the idea of doing a hostile takeover and installing his “best friend” Jobs as CEO. “Steve’s the only one who can save Apple,” he told reporters. “I’m ready to help him the minute he says the word.” Like the third time the boy cried wolf, Ellison’s latest takeover musings didn’t get much notice, so later in the month he told Dan Gillmore of the San Jose Mercury News that he was forming an investor group to raise $1 billion to buy a majority stake in Apple. (The company’s market value was about $2.3 billion.) The day the story came out, Apple stock shot up 11% in heavy trading. To add to the frivolity, Ellison set up an email address, [email protected]

/* */, asking the general public to vote on whether he should go ahead with it.

Jobs was somewhat amused by Ellison’s self-appointed role. “Larry brings this up now and then,” he told a reporter. “I try to explain my role at Apple is to be an advisor.” Amelio, however, was livid. He called Ellison to dress him down, but Ellison wouldn’t take the call. So Amelio called Jobs, whose response was equivocal but also partly genuine. “I really don’t understand what is going on,” he told Amelio. “I think all this is crazy.” Then he added a reassurance that was not at all genuine: “You and I have a good relationship.” Jobs could have ended the speculation by releasing a statement rejecting Ellison’s idea, but much to Amelio’s annoyance, he didn’t. He remained aloof, which served both his interests and his nature.