The vertiginous flip-flop is both extraordinary and absurd. After all, how can a CEO of Sculley’s stature really go so quickly from champ to chump? The answer, partly, is Apple’s own precipitous slide. Last week the company posted a stomach-churning $188 million third-quarter loss. Earnings for the year are expected to be down sharply, and stock prices have tanked, off more than half since January. The company plans to lay off 16 percent of its 15,000 employees. Now comes news that sales of Apple’s vaunted PowerBook, the hot laptop, and its mainline Macintosh have softened. Who’s being blamed? Fairly or not, John Sculley.
A certain poetic justice colors this saga. Sculley finds himself in the situation he encountered a decade ago after coming to Apple from PepsiCo. The company was in trouble, fumbling for direction. He had to cut costs and jobs. Among those ousted: Steven jobs, the founder who had become too visionary. Sculley succeeded brilliantly. Apple grew tenfold to become a thriving $7 billion corporation. But now roles are reversed. John Sculley has become Steve Jobs; this time, he could get the chop.
Up and down the Valley, you hear a common refrain. Apple faltered, critics say, because Sculley “took his eye off the ball.” He spent more time in Washington than in Cupertino. He was too much of a “hands-off manager,” a New Age visionary who let Apple’s day-to-day business “go to bell.” It seemed almost predestined, last month, when Sculley resigned as chief executive officer and turned management over to a handpicked successor, German-born efficiency demon Michael Spindler–a.k.a. “the Diesel.” Officially, Apple billed the move as a natural division of labor, proposed by Sculley. Spindler would run the business, cut costs and restore profits; Sculley would focus on the future of electronics and Apple’s place in it. Unofficially, insiders say, Sculley was pushed aside by a board unhappy with his performance.
Sculley offers a somewhat different take. He long ago groomed Spindler for the job, he says. But in contrast to earlier comments, he now concedes he was “surprised” by the board’s decision. “I wish the timing could have been different,” he recently told NEWSWEEK. “I would have preferred to hand it over when things were going more smoothly.” Things may get worse. Word within Apple is that the new management wants a clean break–and that Sculley might soon be invited to bow out entirely.
Did Sculley really muck up so badly? After all, he can’t be blamed for the price wars that have sapped profits across the industry. (Last week Apple cut prices up to 34 percent on a range of products, the third big discount this year.) On the other hand, Apple lost its competitive edge on Sculley’s watch. For years Macintosh computers sold at a hefty premium, thanks to their unrivaled graphics and “user friendliness.” Now, Microsoft’s hugely successful and near-Mac-friendly operating system, Windows, has eaten away much of that advantage. That would not have happened had Sculley not opted to preserve Mac’s “proprietary” architecture, spooking buyers who have grown accustomed to buying software compatible with a variety of systems. So why dish Sculley now? After all, just two months ago Wall Street mavens were touting Apple’s stock. By some accounts, the board wants to reassure–or perhaps appease–investors after last quarter’s fiasco. “Apple needs a fall guy,” says Marc Canter, an Apple consultant in San Francisco. By sidelining Sculley, it sends a message: “Look! We’re a whole new management team. We’ve realized our mistakes. We’re lean. We’re mean. We’ll come back!”
Ironically, Apple’s future hinges on some of those “mistakes.” A slew of new products of which Sculley is chief architect comes on market over the next few years. Among them: a highly secret, new operating system dubbed “Pink,” a joint Apple–IBM venture reputed to be a quantum leap ahead of Windows and Big Blue’s highly regarded OS/2 operating system. “It will blow people away,” said Sculley during a vacation in Maine. “It’s absolutely revolutionary and closer to development” than Apple’s rivals might wish to think. There’s also the new PowerPC, a low-cost microprocessor that will dramatically boost the Mac’s speed and versatility. Most ambitious is a new generation of wireless computers-cum-communicators, or “personal digital assistants.” Sculley coined the name and concept and believes that “PDAs” will transform the we live and work, as much did the computer itself. Apple’s first foray into the technology, Newton, comes out in early August. The powerful handheld communicator takes memos and sends faxes or E-mail, from wherever the user happens to be, at a stroke of an electronic “pen.” Sculley calls it the first of a new wave of “convergence technology”–equal parts computer, telephone and digital office. And all pocket-size.
Will the new products restore Sculley’s and Apple’s–lost luster? “If done right, they will be as big as the Mac,” predicts Richard Shaffer of Technologic Partners. But that could be a big “if” At a recent electronics conference in Beverly Hills, a technician sneak-previewing Newton to an audience of black-shirted Hollywooders came close to meltdown. Newton had trouble recognizing his handwriting. Worse, it kept fritzing out, mid-demo. “It’s been doing that all day,” he hissed to his boss. Glitches aside, the thornier question is whether the market is ready for Sculley’s visions. “The future is now,” he says. But even Sculley concedes that Newton is only a beginning.
Even if the new products succeed, Sculley probably won’t be around to savor the victory. For the record, he says he’s committed to Apple. But friends hint differently. “He’s been talking of leaving for a long time,” says Donald Kendall, Sculley’s former father-in-law and onetime boss at PepsiCo. Sculley dislikes the sniping; he wants new challenges, talks about starting an interactive-media venture on the East Coast. “So many offers are coming his way,” says Kendall. “Sooner or later a light bulb will go off.” So, then, will Sculley–with or without a push from Apple.
