How Sun Bought Apple Computer (Almost)

Hugh Pickens writes "There was a time in the 1990s when Sun, at its wealthiest, was poised to buy Apple when it was at the lowest point in its storied history and now eWeek reports on how the deal for Sun to buy Apple fell through. 'Back in late 1995 early '96, when we were at our peak, we were literally hours away from buying Apple for about $5 to $6 a share,' says former Sun CEO Ed Zander. 'I don't know what we were going to do with it, but we were going to buy it.' Sun co-founder Scott McNealy adds that there was an investment banker on the Apple side who basically blocked it. 'He put so many terms into the deal that we couldn't afford to go do it.' Would there be iPhones, iPads and iPods on the market today if Sun Microsystems had been able to close a deal to buy out Apple in the mid-1990s? No, says McNealy. 'If we had bought Apple, there wouldn't have been iPods or iPads ... I'd have screwed that up.'"

Comments

He'd have screwed it up.

[Chas]

Well at least he's being honest about it.

Re:He'd have screwed it up.

[Megane]

Actually, anyone who was Not Steve would have screwed it up. What Woz had in technical savvy, Jobs had in product savvy. Apple would have been long gone if NeXT hadn't bought them for negative 400 million dollars.

Re:He'd have screwed it up.

[flaming error]

> whether a world without iPads or iPods would be any different.
I never would have succeeded as a supplier of feminine hygiene products if it weren't for pad casting.

Re:He'd have screwed it up.

[Penguinisto]

Judging by what actually happened, the answer would be "yes", but the outcome would have differed, and taken far longer to realize overall. After all, there have been tablets for 10 years now, and portable mp3 players out long before the iPod.

I think that, while many like to deride Apple for many reasons, there is one thing that, at least IMHO, commands respect: Apple has a knack for producing products that folks like to use, in forms that make it drop-easy to do so... and in turn they do revolutionize the industry in question, forcing competitors to adopt, adapt, or perish.

Take the iPad... Microsoft and OEMs have had tablets out since 2001-2002 or so. OTOH, those products, well... sucked. They were expensive for what they did, the functionality was crap, the battery drained almost as fast as the laptops did, and the UI was ill-fitted for the job. Then the iPad comes along - a bit limited in flexibility, but almost perfect for the form-factor and what folks expected of it. Battery life is insanely long. The UI is almost perfect for fingers (stylus? who needs that?) And everything about it just seems to 'click' with the non-techie public.

Almost immediately, and like *every other Apple product*, competitors (including Microsoft) begin aping the thing... and in a repeatable progression: First we see a ton of vaporware and 'concept' demos, then massive promises (most of which fall short), then out comes the blatant (and undeniably crap) imitators, and finally, a long time later, some competitors begin trickling in with a few halfway decent competitors... af first falling well short of the mark, in spite of being somewhat decent products in their own right. Eventually the competition becomes almost as capable, perhaps surpassing the Apple product - but by then Apple has the market pretty much sewn up - if not in marketshare, then in profit share. The iPod was like this. Even the iPhone is like this.

I think OTOH that Sun would have dickered around, then come out with a few enterprise-oriented versions, then let them each die, while more consumer-oriented competitors would have picked up the torch and limped along.

I do have to give props to Apple for one thing - without them, most consumer-oriented tech would have likely progressed a whole lot slower than it has. I also think that a lot of corollary bits (e.g. digital music licensing, apps, mobile smartphones, etc) would have been slowed down, if not stalled completely. I say this because Microsoft would have just sat around for the most part, and Linux would have had a much harder time getting anywhere (esp. w/o Google jump-starting things). I mean, sure, there are things that have moved along and disrupted tech nicely w/o Apple, but when you examine them (netbooks for instance), they're not much more than incremental iterations of existing products... not complete disruptors.

Re:He'd have screwed it up.

[iluvcapra]

NeXT wasn't a "popular" computing company, it built high-end workstations and an object-oriented OS for the scientific and government markets, actually a lot like Sun. NeXT actually did pretty well at this, which is why NeXT was able to buy Apple -- they'd have you believe it was the other way around, but don't be fooled. NeXT, unlike Sun, actually had an exit strategy for the dot-com bust, and exercised it before the music stopped playing.

Re:He'd have screwed it up.

[betterunixthanunix]

http://www.digibarn.com/collections/systems/gridpad/index.html

That was ready for use in 1989. Not "still in the development phase" the way the Newton was.

Re:He'd have screwed it up.

[monoqlith]

It's more like the epicenter for pedantry.

Re:He'd have screwed it up.

[Solandri]

Take the iPad... Microsoft and OEMs have had tablets out since 2001-2002 or so. OTOH, those products, well... sucked. They were expensive for what they did, the functionality was crap, the battery drained almost as fast as the laptops did, and the UI was ill-fitted for the job. Then the iPad comes along - a bit limited in flexibility, but almost perfect for the form-factor and what folks expected of it. Battery life is insanely long. The UI is almost perfect for fingers (stylus? who needs that?) And everything about it just seems to 'click' with the non-techie public.

Microsoft and Intel saw tablets as a way to expand sales of x86 processors and Windows OSes. Consequently, they encouraged tablet makers to produce what were basically oversized laptops with high-end x86 processors and Windows. Because the laptops had to be oversized (to accommodate the swivel display and digitizer), the only really viable laptop platform was the ultralight category, which drove prices even higher. All this might have made sense in the early 2000s when laptops were less capable, but by 2005 it should've been obvious to them that there wasn't really a tablet market at above-premium-laptop price and performance levels. That if there was a market for this, it was at a level below laptops. But then they wouldn't get to sell their x86 processors and copies of Windows, so they kept plugging the supra-laptop tablet. They weren't letting the market decide what the devices should be like, they were dictating to the market what it should like. This never works.

Many people, including myself, saw tablets as being viable at a lower price point and reduced functionality. But the Wintel duopoly kept steering any lower-functionality device upward towards x86 and Windows. Take netbooks as an example. First the derided the concept. Then when they saw the things were actually selling enough to threaten their other sales, they gussied up the Atom processor and extended the life of Windows XP to compete. If you look today, about the only distinguishing factor between netbooks and notebooks is whether they use an Atom processor or a Core processor. The category has pretty much been successfully integrated into the x68/Windows sales structure.

The tablet market, without a well-established OS to drive smaller, lighter, cheaper tablets, stagnated. That's why Apple, not beholden to Microsoft nor Intel and no stranger to rolling its own OS, was able to do what other manufacturers couldn't. Apple succeeded with the iPad not so much because it was innovative, but because Intel and Microsoft had steered companies away from that market sector for so long that it opened up a huge opportunity for anyone capable and willing to put together the hardware and OS for it. If you want to give Apple props for innovation in this category, it should be for making the Newton, not the iPad. The iPad just happened to fill a hole Intel and Microsoft created, a hole that likely would have been filled a lot sooner if those two weren't so intent on protecting their x86 and Windows sales.

The iPad is still not right IMHO. Apple's sales are in the millions. I see tablets as a replacement for the clipboard - the pen and paper used in businesses everywhere. All those forms people fill out only for someone to type it into a computer later? Tablet. All those notes people take on paper only to type it into a computer later? Tablet. That sheaf of papers you carry around work? Tablet. Those reference books on your bookshelf at work? Tablet. Think of the tablet-like device UPS custom-made for its delivery people. Make a 7"-12" tablet priced at about $250, able to last an 8 hr workday on a single charge, able to run proprietary in-house apps (i.e. not locked to an app store), capable of real I/O (e.g. printing, able to accommodate things like a barcode scanner), and I predict sales in the tens if not hundreds of millions.

Re:He'd have screwed it up.

[netsharc]

I agree with the first half of your post, but "before the web, the computers were not that useful to many people"? For FSM's sake...

The web arrived in people's consciousness in about 1995. At that time computers have been around 30-40-odd years, desktop computers maybe 15. And you really saying corporations didn't use IBM XTs in the 80's as productivity-improving tools?

Fucking kids... Heck, I remember banks getting worried about the Michelangelo virus, and that was 1992!

Re:He'd have screwed it up.

[kwolf22]

What Apple has done with iOS based devices has little to do with the actual hardware - it's all about the "walled garden". While I agree that Apple innovations with these products shouldn't be ignored, the real success that Apple has seen is due to the fact that no other hardware manufacturer has been as successful at making entire product ecosystems. That's what Apple's all about these days: Don't just sell an mp3 player, but sell the player, the software for the home computer *and* the music! Oh, and make everything works together seamlessly and don't be afraid to think outside the box when it comes to providing the highest quality user interface possible. This has been so successful with the iPod/Pad/Phone, they're even doing it with Macs now. In fact, I wouldn't be surprised if the rumors of a gaming app store for the Apple TV turn out to be true.

The "walled garden" concept is what has led Apple to dominate in most (if not all) of the areas of consumer electronics that they've chosen to compete in. I'd guess that's also the reason that they seem to be pulling out of other, more traditional markets.

Re:He'd have screwed it up.

[RogerWilco]

I think the really important thing that Apple does differently, is put the user in the center.

A lot of companies either try to open up new markets for existing products, have some new cool hardware they try to sell, or mainly cater to the OEMs and large business needs.

Apple specifically seems to start with the question of what does the user want?

Sometimes this means they end up with something that is very expensive, as usually the user wants a lot.

But the key point is that they start with a desire, and then try and find the technology and software to fill that desire. And they try not to compromise along the way because something "can't be done" or is "to expensive".

And they must have some very good industrial designers and user interface experts, usually things that tech oriented companies lack.

This coupled with Steve Jobs' taste and minimalist approach is what leads to the unique Apple style of products and why the users they design for buy their products, if they can afford them.

What does amaze me, is how they are sometimes so much ahead of the competition, both in thinking and in execution. I still remember when they made the new iMac and only supported USB and everyone laughed at them for not supporting PS/2, RS232, Centronics, floppies, Zipdrives and all the other ports and peripherals that we use to have. In retrospect the message was "Steve is back, the future is simple and minimalist and user centric". Even more then ten years later their competition seems to have a hard time adapting. Over the past decade they have been such a game changer, not just the major stories like the iPod, iPhone, iTunes and iPad, but also in a lot of smaller things, though the innovation in OSX, multi-touch, magnetic power cord connection, and early adoption of technologies like USB, DVI, displayport, LCDs for desktops. I'm struggling to come up with innovations from most of their competitors. What has MS done in the last 10 years? Google has done some real innovation on search, maps, google earth. TomTom, Wikipedia, Amazon, the various social media, those have been game changers. But a lot of the existing tech companies have only been regurgitating the same old stuff in slightly new looks. Anybody knows any other big innovations that have happened since the last years of the nineties?

Re:He'd have screwed it up.

[node 3]

The WWW was created on NeXT hardware.

citation needed

Learn to google. This isn't some well-guarded secret.

keywords: tim berners-lee cern html next

On the other hand ...

[damn_registrars]

It could have resulted in Apple retaining unique hardware, rather than moving to Intel CPUs. Of course, whether that would be for the better or the worse is an open question.

In other news...

[CriminalNerd]

In other news, a few years ago, Microsoft was poised to buy Yahoo!'s search engine but didn't. Would there be Yahoo! Search, Yahoo! Bing, and Yahoo! Mail if Microsoft had been able to close a deal to buy out Yahoo! in the mid-2000s? No, says Balmer. "If we had bought Yahoo!, there wouldn't have been Yahoo! Search or Yahoo! Bing ... I'd have screwed that up."

We'll have more on that story and other past attempted company takeover news at '11.

and nothing of value...

[Mr. Slippery]

No, says McNealy. 'If we had bought Apple, there wouldn't have been iPods or iPads ... I'd have screwed that up.'"

And nothing of value would have been lost. Perhaps, even, actual useful computing devices would have been developed, instead of shiny geegaws. Perhaps the Apple of Woz would have won out over the Apple of Jobs.

Re:and nothing of value...

[betterunixthanunix]

How about the days when people did not have to worry about breaking the law just to the software they wanted to run on the computers they legally purchased?

Re:and nothing of value...

[XxtraLarGe]

How about the days when people did not have to worry about breaking the law just to the software they wanted to run on the computers they legally purchased?

I think you a word.

Re:and nothing of value...

[hedwards]

I had one of these bad boys years before the iPod first appeared. Rio PMP300 And my PMP500 was really a great player. Even at the time that Apple first released their players, Creative amongst others had already created their Nomad line.

It might be that we wouldn't have players like the iPod without Apple, but let's be honest, the iPods were never the best players out, the sound quality wasn't ever as good as the competition and the feature list somewhat anemic compared to other lines of players.

That was the first time, there were more

[catmistake]

Happened at least three times

Total Perspective Vortex

[Matey-O]

I love the trolls' complete and total lack of objectivity. Hundreds of millions of iDevices sold, arguably the first economically successful tablet, a company that could turn on a dime and recreate their hardware jumping from PPC to Intel, and OS 9 to OS X in a seamless fashion, and gain enough financial success to ecplipse Microsoft...and yet 'nothing of value is lost'.

Here's a hint for the younguns: There's room for more than one successful company in the world, and one being successful doesn't mean no others will be. If you don't like 'em, don't buy 'em...but to ignore their success is foolhardy. It's what makes people like Nokia lose their position in the economy.

Re:McNeally would not have screwed up everything

[Penguinisto]

Apple expertise combined with Sun's might have resulted in a new, easier-to-use class of workstations.

...which would have done bupkis for the consumer side, and would have cost a mint.

I think that was the whole genius of how Apple did it - they have an almost slavish devotion to how the consumer uses their products, and pretty much gave up on the business/enterprise side of things, outside of a few feints and probes here and there (e.g. XServe). They found a whole side of computing and electronics that most OEMs only half-assed paid attention to, and leveraged it to rather enormous success.

Re:"there wouldn't have been iPods or iPads"

[Penguinisto]

It would have been there, but it would have been a whole lot slower. Way slower, IMHO.

Imagine something like the iPod coming out just this year, instead of 10 years ago. Imagine the RIAA going even more apeshit (yeah, I know) and keeping the music biz locked down to where digital music was either illegal, or locked down under so much DRM that it would have been nearly impossible to use. Imagine smartphones still being over-priced and slow piles of crap, with the useful models being hella expensive, and apps being distributed (if at all) under carrier lockdown. Imagine still having to use tablets with a stylus, crap specs, crappier battery life, and all of them still running Windows.

I know full well that others would have filled the void, certainly. Problem is, they would have been very slow about it, and innovation would come in fits and starts, with Microsoft running the show (that, or doing its best to ruin the show if it couldn't get a piece of the action - see also netbooks when those all first came out running Linux - notice how all the sudden Microsoft got all wonky with the licensing all the sudden, sometimes threatening vendors outright?).

Re:"there wouldn't have been iPods or iPads"

[betterunixthanunix]

Imagine portable digital music players coming out this year? As opposed to when the first MP3 player came out?

http://www.google.com/patents?vid=4667088

Or maybe you meant something more like this:

http://www.techpin.com/the-first-mp3-player/

Oh yeah, we really needed Apple to get portable music.

Let's get real here. Apple's strength is not in creating new technologies, but in making new technologies look pretty and in marketing those technologies. If Apple had not stepped in with the iPod, we would probably have seen a market with a lot of competing companies, making uglier products.

Innovation is a continuous process, with or without Apple. Where is Apple's research division? How does it compare with universities, or MSR, or IBM research? I do not remember Apple building a computer system that could play Jeopardy (yes, that technology will be relevant to consumers in the future, whether or not Apple decides to exploit it).

Re:McNeally would not have screwed up everything

[IntlHarvester]

I think you have to look at the situation during the timeframe this merger was being discussed. At the time, Apple was almost entirely dependent on creative workstations and high-end desktop PCs. The few consumer devices they produced had bombed, and there was almost no indication that Apple could be successful as a consumer electronics brand other than their high name recognition.

Re:"there wouldn't have been iPods or iPads"

[iluvcapra]

Imagine portable digital music players coming out this year?

He didn't say "portable music player," he said "the iPod." iPods are, granted, a kind of portable music player, but they are also different from all other portable music players in that it's an actual mass consumer product instead of some hobbyist thing. Without iPod's we'd still have portable music players, but they'd all play ATRACS off of Memory Sticks...

The combined company

[christurkel]

could have been called Snapple.

Ahem...

[Anonymous Coward]

You must be new here. Welcome to Slashdot, the internet's center for pedantry.

Internet is a proper noun.

(See what I did there?)

Re:"there wouldn't have been iPods or iPads"

[narratorDan]

I don't think the argument about who invented the portable(personal) digital media player is relevant to the question of why Apple (who was several years late) dominates the market. The next tech company that correctly answers that question will dominate the rest of the market and challenge Apple.

In an analogy: Ford did not invent the automobile, nor did he invent assembly line production, and his first product was limited in capability and appearance but the price was such that almost anyone could buy it.

Eh, not really

[DesScorp]

""NeXT wasn't a "popular" computing company, it built high-end workstations and an object-oriented OS for the scientific and government markets, actually a lot like Sun. NeXT actually did pretty well at this"

Did pretty well? Not exactly. People loved the OS. The hardware, with that expensive-yet-trouble-prone combo optical drive... eh, not so much. Even if the hardware was beloved, there simply wasn't enough of a market in terms of total sales to support what NeXT was spending. They burned through cash at a mind-boggling rate. Jobs spent much of his fortune from Apple on NeXT, and didn't have much to show for it near the end. Eventually the company downsized radically, becoming essentially a small software tools shop, selling off their expensive-yet-stylish factory facilities. There have been entire chapters written about how Jobs was at his most obsessive over things like how the furniture looked at the factory during the period. NeXT, where Jobs was totally in charge of a company for the first time, was essentially a learning experience in how NOT to run a company for him. Considering what was invested and lost in it, NeXT was considered to mostly be a failure. This is why there was such a loud "WTF?" when the public found out just how much Apple paid for NeXT. Buying NeXT? Sure. Buying NeXT for $400 million? At the time it looked insane. People generally thought "Wow, Jobs sure conned them, didn't he?".You're right in that NeXT had an "exit strategy"; having Jobs talk (sucker?) a bigger company into buying them

I use OS X and love it, so you can argue that buying NeXT was great because it gave Apple a foundation for a post-Classic operating system, but let's be honest here. Apple wasn't buying NeXT or an operating system or software tools. In retrospect, Apple was buying Steve Jobs. And it was the best investment they ever made.

Re:"there wouldn't have been iPods or iPads"

[painandgreed]

... in making new technologies look pretty...

If by "look pretty" you mean "functionally usable", then yes. Before iTunes would take multiple apps to rip, organize, and play your mp3s. Even then you'd still probably be moving them all about manually file by file. Before the iPhone, phones could view webpages and probably better in bullet points, but were practically useless. You could get more information out of 5 minutes on the iPhone's safari and an hour on most phone browsers. Even what you probably mean in the physical appearance of the products, that's called industrial design. It's what makes things like the Mac Book Pro lighter, smaller, and more efficient than other laptops with similar bullet point specs. It's because too many people seem to think that good design is just making things pretty and use the term marketing as a synonym of advertising is why Apple is that the top and the rest are just copying.