Steve Jobs - once more at the core of Apple's success

By CHARLES ARTHUR

"No, I think the question is - why don't the other computer makers inspire the same sort of excitement?" said Steve Jobs.

It was a classic reply from the man who has mirrored the roller-coaster of Silicon Valley over the past 30 years: deny the validity of the original question - asking why Apple Computer, the company he co-founded, seems to generate a religious fervour among its customers (one could almost say "followers") - and then supply one of your own that makes rivals seem drab and dull.

"Our competitors try to do it cheaper; our strategy is to innovate," said Mr Jobs, 48, in Paris last week for an international show.

"That has worked really well for us. There has been a huge downturn in the PC market, and you know what? Dell and Apple are the only companies making money selling PCs. Every other company is losing money at it - Gateway, HP, Sony, whoever.

"HP lost, what, US$150 million ($250 million) on PC sales last quarter? Dell does it by being cheapest. We do it by being innovative."

True, Apple isn't wildly profitable; its third-quarter results saw profits of just US$19 million on revenues of US$1.54 billion.

For the year ending September 2002 it squeaked in with US$65 million profit on revenues of US$5.74 billion.

Dell, in its most recent quarter, made US$621 million on sales of US$9.78 billion.

But Mr Jobs has a knack for getting Apple into the spotlight; and most people can name more of its products than Dell's.

In 1984 there was the Macintosh, which brought "windows" to personal computers; in 1998, the iMac, whose simple lines inspired consumers to buy it by the millions; in October 2001, the iPod digital music player, which is heading for sales of 1.5 million and now leads the field, by volume and value of sales; and last April the online iTunes Music Store, where you can buy individual tracks for 99 cents each.

So far, it has sold 10 million songs, a huge number given that it's only available to a minority of Apple users in the US.

The promise of a version for Microsoft's Windows by the end of the year means a potential market at least 20 times bigger at a stroke.

And the innovation isn't limited only to computers.

Mr Jobs is also chief executive of Pixar, the computer animation company that he funded from its genesis as a cast-off by Star Wars director George Lucas, and has turned into a force rivalling Disney, with its two Toy Story films and this summer's American children's hit, Finding Nemo.

Interestingly, while it was Apple that made him a multi-millionaire, it was Pixar that made him a billionaire when it floated in 1996.

But Mr Jobs's heart is still in the hardware, in Apple.

He's proud of the company he made and then remade, and of its place not just in history but in the modern world.

"I think the music companies are thrilled with the iTunes Music Store.

When history looks back the iTunes Music Store will gain recognition for being an incredible landmark in the music industry because it was the first time that online music could be sold really legally in a pay-per-download model, so good and easily and fun and fast and reliable."He isn't scared of rivals either.

"It isn't easy to do the Store, you know. It looks easy - but isn't. We have to write software for the users' machines, because a web browser isn't enough. And it has to be able to do a lot of transactions. We already have an online store that does between $1bn and $2bn annually. We also need to be able to pump a lot of bits over the Net.

"And we have iPod, which is the No 1 player in terms of both volume and value sales. We are the only company that does all this. No other company does the player and [software] jukebox. Does it?" he taunts.

"We are the only company that has all this under one roof. The others are trying, and finding it's harder than they thought."

He also says that they have been working towards the whole idea, from online store to player, for more than three years.

In fact you can detect his glee at his rivals' predicament. While the rest of the PC world has moved to a situation in which many suppliers are fighting to make hardware for a single operating system, Microsoft Windows - and thus inevitably struggling for profit - Apple has remained aloof, and almost accidentally made a virtue out of what was regarded as vice just a few years ago: being vertically integrated.

It's an issue he returns to repeatedly.

"Other computer makers provide one part of the solution; we're the last company providing everything. With the other guys, whenever something doesn't work they all point fingers at each other - it's the software, it's the hardware, it's the network. With us, we make the whole widget."

That phrase - being "the last company" to do something - is a new one from Mr Jobs, but with his sensitive cultural antennae, he may be picking up on unease among Americans about outsourcing and its effect on people's lives and work, and finding a way to enunciate how his company is different.

Apple's machines may be made in the Far East and Ireland, but the brains are all in the US.

Apple's powerful branding might all look like smoke and mirrors. But that would be to overlook the fact that Mr Jobs has engineered a textbook example of the successful corporate turnaround.

Having co-founded Apple in 1976, and then been ousted in 1985, he returned in 1997 by persuading it to buy his unsuccessful Next computer company - to acquire its forward-looking operating system Nextstep, and Jobs himself. Apple was at that time a basket case, losing US$736 million in one quarter.

Mr Jobs executed a perfect boardroom coup and then ravaged the headcount and revamped the culture, using his unique mixture of withering scorn and carefully judged flattery to remove dead wood and energise those remaining.

Within six months it was profitable - and that was before the unveiling of the iMac, which wowed consumers and reinstalled Apple in the design firmament.

He also carried out a second cultural revolution: Apple's new operating system, OSX (operating system 10), is based on Nextstep, itself is a form of Unix, which runs most of the internet.

That is garnering renewed interest from the scientific and business community; Virginia University is building a supercomputer using 1,100 of Apple's newest 64-bit machines to make one of the world's fastest supercomputers.

That could never have happened before OSX and Jobs. The fact that Apple beat Dell to the contract will make the win all the sweeter.

At 48, after nearly 30 years in the high-intensity high-tech business where change is the only constant, are there any signs that he is mellowing, or slowing? Ask his executives and they look incredulous.

"Not at all," says Jon Rubenstein, Apple's head of hardware who has worked with Mr Jobs over the past decade.

What drives him? With money to burn, three children, and a famously ascetic lifestyle - vegetarian, art-loving, minimalist - it's clear that he still relishes every advance that technology brings to life.

People like to work for him, finding that although he drives them to distraction with his absurd demands - he once spent an afternoon pondering which shade of black was right for a computer - they enjoy the results.

"I kind of feel the same way about Steve as I feel about chocolate," said Heidi Roizen, a software entrepreneur who has known him for decades.

"It's bad for me but I really like it! I love being around Steve because he's the centre of the universe - only it's his universe."

- INDEPENDENT