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Sculley meets users - Extolls Apple's idea to "change world"



Author: Applelink
Date: May 1989
Keywords: John Sculley interview
Text: Ellen Leanse -- Good morning. We are welcoming John Sculley to start off our (1989 User Group) council, and I think it is really an honor to have with us someone who would want to start his work week by coming here together with a group of users and asking their feedback on a number of issues. About four days ago I got a call from the Apple PR group asking if it were possible for user groups to receive live satellite downloads from John Sculley's keynote speech at Macworld. They said that it was John Sculley's idea; he wanted to get the message out to user groups. I think that is very impressive, and I think that shows how seriously John Sculley feels about our customers and User Groups. While we weren't able to accomplish it this time, it's certainly something we'd like to see happen in the future. I am very pleased to turn over the microphone to John Sculley and to you. John has some ideas that he would very much like to share with you that will kick off our conference, and then he will be willing to take your questions. John Sculley -- Thank you. I'm delighted to be here with you. It is really one of the things I enjoy most because I look at user groups as Apple's lifeblood out in the world experiencing our products. If you think about what Apple's vision is, which is to do nothing less than change the world and to do that one person at a time, and to accomplish that by fundamentally changing the way people work, and think, and communicate, and learn; nothing is more important than the using experience. We have decided that the using experience is at the epicenter of everything that Apple wants be respected for. This gives some context in which to look at why the user group network is so very important. It is very difficult as our products become more complex, and we get a wider range of products in our line, to be able to get all the information out to our end users, those who are going to be using our products, so they can enjoy the most our products have to offer, unless there are some support lines out there. Some of those support lines Apple can supply, some can be supplied by third party groups like our resellers, but I think that there is nothing like having a user relationship, because this is really an industry of relationships. A relationship with the people who are actually enjoying what they are doing with the product. Not just trying to sell the product, but actually enjoying using the product. And that is one of the reasons why I believe that Apple is as successful as it is. I think it is very appropriate to thank the User Group Advisory Council, and ask that you take that thanks out to all the groups that you represent. I want everyone that is involved with an Apple User Group to know that I think what you do is very important. And I want to personally extend my thanks and say that Apple in the future will be as dependent on what you will do as what you have done so far. Let me give you a perspective of what I think is going on in the personal computer industry, and particularly what I see happening at Apple. First of all, the personal computer industry has been, and will continue to go through tremendous change. There is not going to be any slow-down in technology for as far as we can predict in the future. The number of new ways that technology can be used is only going to increase, I believe. So it means that for the user out there, who is trying to make decisions as to what products to buy (whether it is peripheral products or to upgrade his CPUs, or software products), trying to determine how the products will fit in with their computers and other vender products, the questions will only be more difficult to answer. It means that we have to have a way of getting that information out. When Apple was founded back in 1977, the dealer network was created. This network was made up largely of people who knew something about computers. They were selling to people who knew something about computers. Today our the large majority of our products are going to people who are interested in what computers can do for them, but they may not be computer experts. They may not have any interest in becoming computer experts. Yet, the products are becoming more sophisticated and going through this rapid change. I hope to see some new networks that will be created over the next several years. For example, I would love to see a network of consultants emerge in the industry. People who can charge a fee for service, who can go out and work with users. Some could be corporate users, some could be educational users, some may be individual users, but the point is to have an infrastructure out there where entrepreneurs, many of whom will come out of user groups, will decide they want to make Apple something more than just something they do in there free time. They want to make Apple something they do as a vocation, and we try to build a company which is dependent upon third-party relationships. I would like to see a network of consultants. Apple could help train these consultants, help provide materials so that they can be informed about our products, and so they can decide which areas they can go out and specialize in. We might end up with several thousand consultants across the United States. As an industry I would like to see this go across Canada, Europe and other parts of the world. I would also love to see a network of training experts. People who can go out and train. They may in some cases be similar to consultants, they may in some cases be slightly different. For example, the consultants might actually work with integrating systems together. How you put together several kinds of systems, how you put Apple IIgs in a mixed environment, how you connect peripherals, or how you mix IBM- compatible computers with Apple computers; or they might help the customer or client learn to use a particular application. The training person would actually go in and do the training work. They wouldn't be installing the equipment; they would be teaching people how to use products that were coming from Apple or third-parties. They would recognize that the people they were training might not know much about computers. This year we will ship a lot of Macintoshes to people who have never used a Macintosh before. We'll ship a lot Apple IIs this year and many of them will go to people that have never used a computer before. So it's very important to have resources like user groups, consultants, and training people, that can amplify the efforts that resellers do. The other point I'd like to make before we get into question is the impact of change on Apple itself. Not only is technology changing, but Apple, the company, is changing. We are a growth corporation, and we want to continue to be a growth corporation.This doesn't mean that we must necessarily get larger. I didn't join Apple Computer because I waited to run a large company. Just the contrary. I had been running a large company, and it's a lot more fun to run something small that is growing very rapidly. And we do face challenges. Our investors and stockholders value Apple as a growth corporation, and we are in an industry that is growing very rapidly. Additionally, we have chosen to go with proprietary technology which means that we must inspire developers to want to develop on our platform, to use our tools to create their solutions. They will only do that if they can see an opportunity to make money.They will only do that if they see Apple at least holding its market share if not gaining market share.The industry is growing rapidly, that means Apple must grow rapidly, or we become a less important factor and we risk losing some of those important relationships. What that means is by the early 1990s that Apple will be a $10 billion company. If we decide to continue being a growth corporation, that means that sometime around the turn of the century that we will be a $30 billion company. As Apple grows, we cannot continue to do things the way we have done them in the past. That means that our organization is going though considerable change, just as our product line is going through changes, and just as the infrastructure of third-party relationships continues to develop. Coping with change at all levels makes running a company like Apple challenging. When you take an enterprise like Apple, and look for role models on how you manage growth in a multi-billion dollar company, there are no role models. There are only two corporations of our size that have been created in the past 15 years. One of those is Apple computer and the other is Federal Express. We discovered that we must have to learn from ourselves. We also know that if we stop taking high risks, we will cease to be an innovative company. By taking high risks, we are bound to make mistakes from time to time. Learning from mistakes, I've found, is a much better way of learning, than to learn from one's successes. When you are successful, it's often easy to misunderstand why you are successful. As a result, you become complacent when you should paying attention to the dynamics of your enterprise. Over the last year or so we've been going through some major changes within Apple. This has come at a time when Apple is healthy, and it has surprised some people. Corporations usually go through reorganizations when they are having trouble,rather than when they are doing well. We chose to do it while we were doing well, knowing that we had a little bit of flexibility to make mistakes. By the way, we will probably make some more mistakes in the future. It's in the nature of what we are trying to do. So, we hear from other people that it's confusing, that relationships developed with Apple employees change quickly. They're absolutely right, but the alternative is to slow Apple Computer, to become a corporation that couldn't afford the research and development because it is not growing fast enough. You see, Apple isn't in this business only to make money; it is in it to change the world. Once you accept that as our reason for existing, then you also understand that we cannot change the world by standing still. We change it by sticking our neck out. One of the big problems I have is becoming isolated, losing touch with everything that is going on. So, while I can talk to you about the macro vision, you can talk to me about what is actually happening, about the actual experiences of people who are using our products and services. There is nothing more valuable for me than to get that input first hand. I want to thank you for the time you invest. You take a lot of time out of your personal lives, and it means a lot to Apple and it means a lot to John Sculley. Why don't we open it up for questions? Council Member -- I represent both a Macintosh and an Apple II User Group. When the Lisa and the Macintosh came out, we saw a lot of the technical people who were working on Apple II, developers and the more knowledgeable people, migrate immediately over to the Macintosh. Over the five-year period since the Mac has come out, we've seen more and more of the intermediate level people moving from the Apple II over to the Macintosh. We've seen from Apple that they are committed to the Apple II line. Our question is, how can you continue support for this line when so many of the developers, and even some of the retailers, are moving to the Macintosh? New or repeat customers are beginning to question whether to go with the Apple II. John Sculley -- I think that is a very good question, and one which we think about it a lot. It would be a mistake to hold down the growth of any product just because there is a company policy. We have to let the Macintosh grow as fast as it is capable of growing, and we have to let the Apple II grow as fast as it is capable of growing. What we have seen, particularly over the last year, is that there are a lot of Apple II enthusiasts out there who do not want to see the Apple II go away. We had about 10,000 people in Boston last spring at AppleFest. We had about twice that number in San Francisco this past fall. It is an Apple II event. I talked to a lot of those people and their message to me was not to abandon the Apple II. The Macintosh has more advanced technology in many ways, but there are lots of users out there who like what the Apple II does. The difficult path is finding a way that third-parties can support the Apple II and make money in the process. The introduction of the GS/OS operating system is helping a lot because it has many of the characteristics of the Macintosh operating system. It's got very sophisticated stereo sound, very high quality graphics, color, and yet it has the compatibility with the Apple II software we've had in the past. My sense is that that is going to be important. Moving the Apple II over to the 3.5-inch media was a very controversial decision. Many people were worried what that would do with so much of the media on the 5.25 inch format. But we had to make the transition because we knew that developers would not be willing to write more sophisticated software unless we gave them media with larger capacity. I think these kinds of decisions have been important ones. I'd like to hear from the Advisory Council about your ideas about how we can keep the Apple II going. Recognize that the momentum in the industry is towards 32-bit processors. Keep in mind that the Apple II was a general purpose computer four or five years ago, so it was inevitable that at some time it was going to bump up against the Macintosh or the IBM PC. Remember that if someone is not going to buy an Apple II, I'd rather have them buy a Macintosh than an IBM PC compatible. Council Member -- Macintosh has had several new models introduced for it within a year, but there have been no introductions for the IIGS. That raises the question in our mind: Is there development going on? Sculley -- The GS/OS operating system that was introduced last fall is quite a technical achievement. Our hope is to have another GS product sometime in the future. It will have the 3.5-inch media and extension of the function of GS/OS. These are the kinds of directions we are taking without getting into anything specific about products. Council Member -- I have a question regarding end user support. I work for a large corporation, and our concerns focus on the level of support that Apple can offer those users. Other vendors come in and literally hold our hands throughout the buying cycle, and provide on-site servicing. We don't quite get that yet from Apple. Are you addressing those needs? Sculley -- Look at other corporations in the computer industry that are larger than Apple, such as Hewlett-Packard and Digital, and look at them when they were our size. They had about 65,000 people, and we have about 11,000 people. We have purposely built Apple into an organization that can focus on the things that we do best, like create the technology platform. We rely on third parties to carry out the relationship with the end user. That means that we have to get better and better and building at relationships for and with end users. Sometimes the third parties are very good and have been able to grow and change with the industry that has grown in complexity, and sometimes they have not been that good. I believe this been one of the most difficult issues for Apple to deal with over the past year. We've got to find ways to raise the level of expectation with third parties, to discourage the people who want to be box movers and encourage the people who want to provide end-user support. Resellers have asked us not to expand our own direct sales force. We're happy to comply as long as resellers understand that Apple expects more from them, and that our customer are expecting more from all of us. Customer satisfaction is a very important goal for Apple's future. I believe that it will take several years for Apple to be regarded as a user-friendly company, rather than as the maker of user-friendly products. On the other hand I feel that we are doing as well as anyone else. Doing as well as anyone else is not good enough; we must be the best, and we must work very, very hard at it. Some of the ideas I mentioned before, such as the training and consulting network, and increased direct contact between Apple executives and User Groups, are important. We've expanded our User Group Connection team, under Ellen Leanse's direction. We are trying to expand in areas that we feel will be meaningful to our customers. Council Member -- Over the last year "the volume buyer" has become a new buzz word. When the Macintosh came out, it attracted a lot of individual users. Now the Macintosh is moving more and more into business and is being accepted by corporations. This is terrific for current Macintosh users, but many members on this council represent User Groups comprised of individual users or those in small businesses. Outside of the many evangelists here who are pleased that they bought Macintosh, it is getting harder to explain and to justify to people that the Mac is the machine to buy, especially when other technologies are developing more rapidly. Windows and the Presentation Manager may be really clunky, but you can get 80 percent of the power for half the price. The price is one issue; technology is another issue. What new technologies is Apple exploring? And can we influence new users who don't have and allegiance to Apple or to the products that your early customers had. Sculley -- The best way to respond to those people is to explain that once they have purchased a computer system, that they need to get the return on their investment. If they are business people, that could mean higher productivity. Or it could mean enjoyment level to an individual users. If the "using experience" is not really great, then the customer doesn't get a return on investment. It's not just technical features that make a computer successful, it's the experience of driving one. Perhaps there is no better way of proving this than to go to an Apple User Group meeting and set up a competitor's machine -- take the most competitive machine, like a IBM PC compatible with a 386 processor, put more memory on, put a VGA card on it, whatever you think is necessary. Then sit someone down and have them drive it for 45 minutes. Then take any of the Macintosh family products and let them drive that for 45 minutes. I think the customer will understand why, according to surveys, the average IBM compatible user uses their computers about a half-hour a day and has less than two applications total. The average Macintosh owner has almost six applications and they spend two and a half to three hours a day on their computers. Why are they doing that? I believe that is the best context for judging a computer, to judge it from the vantage point of experience. As the world of technology becomes more complex, Apple is trying to keep things simpler. Thus we focus on a lot of things that are in our control. These are our strings so the pieces fit together well.


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