Реферат: История развития компьютеров (Silicon Valley, its history the best companies)




byConstantine Nikitin


Silicon Valley — what is that?.. 3

Stanford University. 3

Hewlett Packard — the garage myth. 5

HP: Foundation andfirst years. 5

The rise of HP up tothe present 6

The HP Way — anexample of corporate culture for a whole industry. 7

HP today. 7

The rise of SiliconValley. 10

Invention of thetransistor 10

ShockleySemiconductor 11

Importance ofmilitary funding. 12

Intel Corp. 13

Foundation in 1968. 13

First products — Moore's Law… 13

«Ted»Hoff's first microprocessor 14

Cooperation with IBMin the 1980s. 15

Intel today. 16

The emergence of thePC industry. 17

Altair — the firstPC… 18

The first computershops. 19

Homebrew Computer Club. 19

The Apple Story. 19

«Woz» andJobs — the two «Steves». 19

The first Apple. 20

Building up thecompany. 21

Apple II — startingthe personal computer boom… 22

Turbulences in theearly 1980s. 23

The Lisa project 23

The Macintoshrevolution. 24

John Sculley andSteve Jobs. 25

Apple today. 27

/>/>Silicon Valley — what is that?

This question may have occurred to many people's minds whenthey came across the term Silicon Valley. What hides behind it is mostlyunknown to them, although the revolutionary inventions and developments, whichhave been made in this «Valley», affect everyone's daily life, and it is hardto imagine our modern civilization without them. Silicon Valley is theheartland of the microelectronics industry that is based on semiconductors.

Geographically, it is the northern part of the Santa ClaraCounty, an area stretching from the south end of the San Francisco Bay Area toSan Jose, limited by the Santa Cruz Mountains in the west and the northern partof the Diablo Range in the east. It covers a thirty- by ten-mile stripextending from Menlo Park and Palo Alto, through Los Altos, Mountain View,Sunnyvale, Cupertino and Santa Clara, down to San Jose.)

The name Silicon Valley was coined in 1971 by Don C.Hoefler, editor of the Microelectronics News, when he used this term in hismagazine as the title for a series of articles about the semiconductor industryin Santa Clara County. «Silicon» was chosen because it is thematerial from which semiconductor chips are made, which is «thefundamental product of the local high-technology industries.»)

Silicon Valley saw the «development of the integratedcircuit, the microprocessor, the personal computer and the video game»)and has spawned a lot of high-tech products such as pocket calculators,cordless telephones, lasers or digital watches.

Looking at our high-tech society in which the PC has becomeindispensable — both in business and at home, replacing the good old typewriterby word processing — the crucial role of Silicon Valley as the birthplace ofthe microelectronics and then the PC revolution becomes even more evident.

Silicon Valley is also seen as a place where manyentrepreneurs backed by venture capital have made the American Dream come trueas «Overnight Millionaires.»

This makes Silicon Valley a philosophy saying thateverything which seems impossible is feasible and that improvements in oursociety can take place daily, as Thomas McEnery, the mayor of San Jose, thecapital of the Santa Clara County, puts it.)

Thomas Mahon calls it the «economic and culturalfrontier where successful entrepreneurship and venture capitalism, innovativework rules and open management styles provide the background» for theperhaps «most profound [...] inquiry ever into the nature o fintelligence» which might, together with «bioengineering and'artificially intelligent' software, [...] affect our very evolution.»)

On the following pages I would like to convey the image ofSilicon Valley as the nucleus of modern computing, presenting the mostimportant events, which comprise the developments of the three major companiesHewlett-Packard, Intel and Apple.

/>/>Stanford University

The story of the Silicon Valley starts with StanfordUniversity in Palo Alto, which has been of fundamental importance in the riseof the electronics industry in Santa Clara County.

In the 19th century, Spanish settlers, who have been the firstwhite visitors to California, founded civilian communities and gave themSpanish names such as San Francisco, Santa Clara or San Jose. They liked theMediterranean climate in the Santa Clara Valley, which was very hospitable.This area came to be used by farmers and ranchers cultivating orchards, for itprovided «some of the world's finest farming soil.»)

In 1887, Leland Stanford, a wealthy railroad magnate whoowned a large part of the Pacific Railroad, decided to dedicate a university tohis son's memory who had died due to a severe disease shortly before heintended to go to a university.

Leland Stanford and his wife built Leland Stanford Jr.University on 8,800 acres of farmland in Palo Alto and also donated 20 milliondollars to it. The university opened in 1891 and «would in time become oneof the world's great academic institutions.»)

In 1912, Lee De Forest, who had invented the first vacuumtube, the three-electrode audion, discovered the amplifying effect of hisaudion while working in a Federal Telegraph laboratory in Palo Alto. This wasthe beginning of the Electronics Age, and «amateur radio became anobsession») at Stanford University.

Frederick Terman, who was the progenitor of the initialSilicon Valley boom, changed the state of this university fundamentally. Todayhe is also known as the «godfather of Silicon Valley.»)Terman was born in 1900, and as the son of a Stanford professor (who developedthe Stanford-Binet IQ tests) he had grown up on the campus. After hisgraduation from Stanford University he decided to go East to the MassachusettsInstitute of Technology (MIT), which was the leading university in technologythen. He studied under Vannevar Bush, who was one of America's leadingscientists, and was offered a teaching position at MIT after receiving hisdoctorate in 1924.

He returned to Palo Alto to visit his family before heintended to start at MIT, but he was caught by a severe case of tuberculosis,which forced him to spend one year in bed. This made him finally to decide tostay in Palo Alto and teach at Stanford University because of the betterclimate in California.)

Terman became head of the department of engineering by 1937and established a stronger cooperation between Stanford and the surroundingelectronics industry to stop the brain drain caused by many students who wentto the East after graduation, as they did not find a job in California then.)

The Varian brothers are an example of such cooperationbetween university and industry. After graduation they founded a company upon aproduct they had developed at the Stanford laboratories. Their company, VarianAssociates, was settled 25 miles from the university and specialized on radartechnology.

After World War II, the Stanford Research Institute (SRI)was founded. Its aim was to provide the industry with more skilled students andto increase the number of companies in Santa Clara County.

Terman wanted companies to settle next to the university.In 1951, he founded the first high-technology industrial park, the StanfordResearch Park, «where business, academic and government interests couldcome together in a synergistic vision of the future.») Portionsof this land would be leased to companies, because the «original Stanfordfamily land gift forbade the sale of any of its 8,800 acres.»)These companies were offered close contacts to the SRI and could lease land for99 years at a fixed price, which they had to pay in advance. The first firm tosettle in this park was Varian Associates leasing land for $4,000 an acre,which was a good deal as there was no inflation clause in the agreement makingthis site today worth several hundred thousand dollars.

More and more firms — among them Hewlett-Packard as one ofthe first residents — settled their Research and Development (R&D)departments in this park, and they were to become the «core of the earlyexplosive growth of Silicon Valley.») Today, there are m orethan 90 firms employing over 25,000 people.

During the Korean War the US government placed Stanfordwith a great deal of their projects, which made more, and more electronicscompanies (among them IBM and Lockheed) open R&D departments in Santa ClaraCounty.

Due to his prepaid leasing program Terman received morethan $18 million and, moreover, many companies endowed the university withgifts, which Terman used to hire qualified professors from all over the USA.Thus, he had created a mechanism which increased the settlement of theelectronics industry.

The successful Stanford Research Park has served as aworldwide model for a lot of other high-technology parks.)

/>/>Hewlett Packard — the garage myth

Hewlett-Packard was one of the first companies to befounded in the Silicon Valley and has today become the largest one to be seatedthere. Its story is typical for this Valley and has had a great impact on manyfirms founded later on.

/>/>HP: Foundation and first years

Bill Hewlett and David Packard met at Stanford Universityin 1934. Bill Hewlett was the «son of the dean of the Stanford MedicalSchool, while Dave Packard had come to Stanford from Pueblo, Colorado,»)and was an enthusiastic radio ham.

They both were very interested in electronic engineeringand spent a lot of their free time experimenting in Terman's lab who supportedthem. After graduation in 1934, Packard went to Schenectady, New York, where heworked for General Electric (GE), while Hewlett went on studying at the MIT. In1938, Terman called them back to Stanford where they would earn electricalengineering degrees after their fifth year of study.

During this year they decided to work on a projectprofessor Terman had suggested to them in his course at university: In thegarage next to their rented apartment in Palo Alto they developed a variablefrequency oscillator, which was much better than existing products but costonly a «fraction of the existing price ($55 instead of $500).»)Terman was very convinced by this product, so he encouraged them to try to sellit. He himself loaned them $538 for the production and arranged an additionalloan from a bank in Palo Alto.

The new firm Hewlett-Packard (HP) was founded in 1939, andits first big sale were eight audio oscillators to Walt Disney Studios, whichused them for the soundtrack of «Fantasia.»)

From now on, they concentrated on highly qualified productsand innovative electronic instruments for engineers and scientists. This mainproduct line has been kept till today.

By 1942, five years after its foundation, HP already had 60employees and reached annual sales of about $1 million. So it became necessaryto construct the first HP-owned building in Palo Alto. The two Stanfordgraduates had successfully built up their own company which had been foundedupon an idea during their studies and was to rise from a«garage-headquartered firm») to a leading company in theworld. This phenomenon was typical for Silicon Valley and would be imitated bymany following companies such as Apple.

/>/>The rise of HP up to the present

During World War II the demand for electronic productsbrought HP many orders, and the company could grow constantly in the subsequentyears. HP continued to invent new devices such as the high-speed frequencycounter in 1951, which greatly reduced the time required (from 10 minutes toone or two seconds only) to accurately measure high frequencies. Radio stationsused it, for example.

The net revenue went up to $5.5 million in 1951 and the HPworkforce was at 215 employees. So, in 1957, the stocks were offered to thepublic for the first time. The additional capital due to the stock offering wasinvested to acquire other companies and t o expand globally such as into theEuropean market. As a consequence, in 1959, the first manufacturing plantoutside Palo Alto was built in Böblingen, West Germany.

HP entered the Fortune magazine's list of the top 500 U.S.companies in 1962, and established the HP Laboratories in 1966, which were the«company's central research facility») and became one ofthe world's leading electronic research centers.

In the 1970s, the company's product line was shifted from«electronic instruments to include computers»), and theworld's first scientific hand-held calculator (HP-35) was developed in 1972,making the «engineer's slide rule obsolete.»)

In the 1980s, HP introduced its LaserJet printer (1985),which became the company's successful single product ever, and moved into thetop 50 on Fortune 500 listing with net revenues of more than $10 billion(1988).)

Today, HP has total orders of $16.7 billion and employsmore than 92,000 people in the whole world.) Annually, The companyspends over 10 percent of its net revenues in R&D. These investments arefundamental to keep up with the «state-of-the-art» technology, whichuses the most modern inventions. New products have always played a key role inHP's growth, therefore more than half of 1992's orders were for productsintroduced in the past two years.) HP's more than 18,000 productsinclude «computers and peripheral products, test and measurementinstruments and computerized test systems, networking products, electroniccomponents, hand-held calculators, medical electronic equipment, andinstruments and systems for chemical analysis.»)

Bill Hewlett and Dave Packard today rank with America'srichest men ($1.7 and $0.85 billion) and are widely respected, especially inSilicon Valley where they are viewed as the two «most successfulentrepreneurs in America.») They have spent millions of t heirprofits for social welfare and have established the Hewlett-Foundation.)

Hewlett and Packard have set a pattern of an outstandingcompany against which every new high-technology firm «must bemeasured.»)

/>/>The HP Way — an example of corporateculture for a whole industry

From the beginning the two founders have developed amanagement style, which had never occurred in a large company before. Theycoined a new type of corporate culture, which was to be called «the HPway.»

HP always renounced the «hire and fire»mentality, which meant to employ many workers for a single big order and todismiss them afterwards. Instead, the company offered its employees«almost perfect job security.») Even in 1974, when theU.S. economy was in a profound crisis and many people were unemployed, HPavoided layoffs by a four-day workweek, which was a unique measure in corporateAmerica.

The two founders trusted in the «individual's ownmotivation to work») and treated their employees as familymembers; hence the custom to call each other by the first name — even the twochiefs were only known as Bill and Dave.

The HP workers were participated in the company with stockoptions and were even paid additional premiums when HP was successful — todayknown as profit sharing. These measures served to identify the employees withtheir work and to encourage them.

Moreover, the HP way included extensive employment benefitssuch as scholarships for the employee's children.

At the end of the 1950s Bill and Dave decided to write downthe company's objectives, which were to serve as guidelines for «alldecision-making by HP people,») since the company had grownever larger. With some changes, those objectives are still valid today. Theycover as follows: «Profit, Customers, Fields of Interest, Growth, OurPeople, Management, and Citizenship.») And these objectives areto be achieved through teamwork.

HP's strategies nowadays comprise mainly the«Management by Objectives», «Management by Wanderingaround» meaning informal communication within the company, and «TotalQuality Control» which aims at producing highly qualified products.)

The HP way is seen as model for corporate culture in manycountries.

The roots of many subsequent companies are located in HP,e.g. Steve Wozniak, who worked at HP and later co-founded Apple. This has ledto the establishment of a new corporate culture in Silicon Valley and manyfirms have tried to imitate the HP way and ad opted measures such as stockoptions, innovative work rules, teamwork, and profit sharing.

HP today.

Business Summary PALO ALTO, Calif.,Nov. 13, 2000 — Hewlett-Packard Company (NYSE: HWP) today reported 17% revenuegrowth (20% excluding currency effects) in its fourth fiscal quarter ended Oct.31, 2000. Excluding extraordinary other income and restructuring expenses,diluted earnings per share (EPS) was up 14% from the year-ago quarter.

During the quarter, HP completed its previously announced2-for-1 split of its common stock in the form of a stock dividend. Share andper-share amounts have been adjusted to reflect this split.

Net revenue was $13.3 billion, compared with $11.4 billionin last year's fourth quarter. EPS for the quarter was 41 cents on a dilutedbasis,(1) excluding investment and divestiture gains and losses, the effects ofstock appreciation rights and balance sheet translation, and restructuringexpenses. Including these items, diluted EPS on a reported basis was 45 centsper share on approximately 2.05 billion shares of common stock and equivalentsoutstanding. This compares with diluted EPS of 36 cents in the same period lastyear(2).

«We are pleased that revenue growth is accelerating,but very disappointed that we missed our EPS growth target this quarter due tothe confluence of a number of issues that we now understand and are urgentlyaddressing. I accept full responsibility for the shortfall,» said CarlyFiorina, HP chairman, president and chief executive officer.

«Issues that reduced profitability included marginpressures, adverse currency effects, higher-than-expected expenses, andbusiness mix. The good news is that our business is healthy, demand is strong,and we are making good progress against our strategic objectives as we continuethe hard work of reinventing hp. We are determined to succeed and are notbacking away from our growth targets,» Fiorina said.

HP also announced it has terminated discussions withPricewaterhouseCoopers (PwC) regarding the potential acquisition of itsconsulting business.

Fiorina said, «We are disappointed that we have notbeen able to reach a mutually acceptable agreement to acquire PwC's consultingbusiness. This is a high-quality operation, and we believe the strategic logicunderlying this acquisition is compelling. However, given the current marketenvironment, we are no longer confident that we can satisfy our value creationand employee retention objectives — and I am unwilling to subject the HPorganization to the continuing distraction of pursuing this acquisition anyfurther. We remain committed to aggressively growing our consultingcapabilities, organically and possibly by acquisition, and are open to otherbusiness arrangements to achieve our goals.»

Business Summary

Net revenue in the United States was $6.0 billion, anincrease of 13% from the year-ago quarter. Revenue from outside the U.S. rose20% (26% in local currency) to $7.3 billion. In Europe, revenue was $4.5billion, an increase of 15% (27% in local currency). In Asia Pacific, revenuewas $1.9 billion, an increase of 36% (34% in local currency). In Latin America,revenue increased 11% to $0.6 billion.

Imaging and Printing Systems

The imaging and printing systems segment — laser andinkjet printing, and imaging devices and associated supplies — grew 6% inrevenue year over year (9% in local currency) against a very strong quarterlast year. Internet printing and a migration to color are driving strategy andgrowth. Strong sales of supplies, scanners, all-in-one (AiO) products, andconsumer imaging devices, as well as overall strength in Europe and Asia,partially offset softness in the U.S. business printing market and continuingprice erosion in inkjet printers.

Nearly 12 million printing and scanning devices wereshipped during the quarter. HP's color LaserJet market share continues to growand new products began shipping in October. Imaging revenues grew 31% over theyear-ago period, driven by strong performances in all product lines: AiOs up31%, scanners up 12% and digital cameras and printers up 137%. AiO units wereup 53% and PhotoSmart printer units were up 208%. Supplies revenues grew 15%against a strong quarter last year.

Operating margin was 13.4%, up from 13.2% last year.

Computing Systems

The computing systems segment — a broad range of Internetinfrastructure systems and solutions for businesses and consumers, includingworkstations, desktops, notebooks, mobile devices, UNIX(R) and PC servers,storage and software solutions — grew 29% in revenue year over year (32% inlocal currency) with strong performances across all product categories.

UNIX server revenues rose 23% year over year, with ordersup 43%, driven by excellent performance in low- and mid-range servers.Superdome, HP's new high-end server introduced this quarter, is achievingstronger-than-expected market acceptance, and volume shipments remain onschedule for January. NetServer revenues were up 20%. Enterprise storagerevenues were up 40% with the HP Surestore E Disk Array XP512, HP's flagshipenterprise storage product, up 90% in revenues with strong backlog. Softwarerevenues (excluding VeriFone) were up 18%, but down sequentially with strongorder backlog at the end of the quarter. OpenView revenues were up 29% withorders up 60%. PC revenues were up 40%, with home PC revenues up 62%, notebooksup 164%, workstations up 11%, and commercial desktops up 8%.

Operating margin was 3.7%, up from 3.2% last year, but downsequentially from 7.3% in the third quarter primarily due to margin pressures,higher expenses and mix changes.

IT Services

The IT services segment — hardware and software services,along with mission-critical, outsourcing, consulting and customer financingservices — grew 15% in revenue year over year (18% in local currency). HP'sconsulting business achieved in 46% revenue growth, with substantial new hiresbroadening and deepening the organization's capabilities.

Operating margin was 7.4%, essentially flat with 7.5% lastyear.

Costs and Expenses

Cost of goods sold this quarter was 72.5% of net revenue,up from 71.3% in the year-ago period. Expenses grew 15%. After adjusting forcurrency, expense growth was 17%. Operating expenses, as reported, were 20.3%of net revenue. This compares with 20.7% in the comparable period last year.

Asset Management

Return on assets for the quarter was 10.5% compared with9.8% in the comparable quarter last year. Inventory was 11.7% of revenuecompared with 11.5% in last year's fourth fiscal quarter. Trade receivableswere 13.1% of revenue compared with 14.1% in the prior year period. Netproperty, plant and equipment was 9.2% of revenue compared with 10.2% in theyear-ago quarter.

Full-year Review

Net revenue increased 15% to $48.8 billion. Net revenue inthe United States rose 14% to $21.6 billion, while revenue from outside theUnited States increased 16% to $27.2 billion.

Net earnings from continuing operations were $3.6 billion,an increase of 15%, compared with $3.1 billion in fiscal 1999. Net earnings pershare were $1.73 on a diluted basis, up 16% from $1.49 last year.

Outlook for FY 2001

For the 2001 fiscal year ending Oct. 31, 2001, HP expectsto achieve revenue growth in the range of 15 to 17%, compared to 15% in FY2000. Gross margin percentage in FY 2001 is expected to be in the range of 27.5to 28.5%, compared to 28.5% in FY 2000, with improvements beginning in the 2ndquarter. Total operating expenses in FY 2001 are expected to be approximately10 to 12% above FY 2000. Tax rate is expected to remain constant atapproximately 23%.

The forward-looking statements in this Outlook are based oncurrent expectations and are subject to risks, uncertainties and assumptionsdescribed under the sub-heading «Forward-Looking Statements.» Actualresults may differ materially from the expectations expressed above. Thesestatements do not include the potential impact of any mergers, acquisitions orother business combinations that may be completed after Oct. 31, 2000.

HP will be discussing its fourth quarter results and its2001 outlook on a conference call today, beginning at 6 a.m. (PST). A liveWebcast of the conference call will be available athttp://www.hp.com/hpinfo/investor/quarters/2000/q4webcast.html. A replay of theWebcast will be available at the same Web site shortly after the call and willremain available through 4:30 p.m. PST on Nov. 22, 2000.

/>/>The rise of Silicon Valley

Hewlett-Packard was Silicon Valley's first large firm anddue to its success one of the area's most admired electronics firms.

While HP was important for the initial growth of the areaand at first was based on electronic devices, the actual Silicon Valley feverwas launched in the mid-1950s with Shockley and Fairchild, and othersemiconductor firms, and went on to the microelectronics revolution and thedevelopment of the first PCs in the mid-1970s, continuing till today.

/>/>Invention of the transistor

One major event was crucial for this whole development. Itwas the invention of the transistor that revolutionized the world of electronics.

By the 1940s, the switching units in computers weremechanical relays, which were then replaced by vacuum tubes. But these vacuumtubes soon turned out to have some critical disadvantages, which impeded thefurther progress in computing technology. In contrast, transistors were muchbetter. They could perform everything the vacuum tubes did, but «requiredmuch less current, did not generate as much heat, and were much smaller»)than vacuum tubes.

The use of vacuum tubes, which could not be made as smallas transistors, had meant that the computers were very large and drew a lot ofpower. For example the famous American ENIAC, built in 1946 and consisting ofmore than 18,000 vacuum tubes, had a total weight of 30 tons, filled a wholeroom of 500 square meters and consumed 150 KW per hour. The breathtakingdevelopment in computers can be seen, when comparing the ENIAC with today'slaptops which are portable with about 5 kg, are battery driven and run some100,000 times faster.)

This development was launched by the transistor (short for«transfer resistance») invention in 1947 by William Shockley and hiscolleagues John Bardeen and Walter Brattain. This «major invention of thecentury») was made at the Bell Labs in Murray Hill, New Jersey,which are the «R&D arm of the American Telephone and Telegraph Company(AT&T).») And in 1956, the three scientists received theNobel Prize in Physics for their invention that had «more significancethan the mere obsolescence of another bit of technology.»)

The transistor is a «switch — or, more precisely, anelectronic „gate,“ opening and closing to allow the passage ofcurrent.») Transistors are solid-state and are based onsemiconductors such as silicon. The crystals of these elements show properties,which are between those of conductors and insulators, so they are calledsemiconductors. The peculiarity of semiconductor crystals is that they can bemade «to act as a conductor for electrical current passing through it inone direction») only, by adding impurities or «doping»them — for instance, «adding small amounts of boron of phosphorus.»)

/>/>Shockley Semiconductor

In 1955, William Shockley, co-inventor of the transistor,decided to start his own company, Shockley Semiconductor, to build transistors,after leaving the Bell Labs. The new firm was seated in Palo Alto in SantaClara County, California, where he had grown up. Shockley man aged to hireeight of the best scientists from the East Coast, who were attracted by hisscientific reputation. These talented young men — «the cream ofelectronics research» — represented the «greatest collection ofelectronics genius ever assembled». Their names were: Julius Blank, VictorGrinich, Eugene Kleiner, Jean Hoerni, Jay Last, Gordon Moore, Robert Noyce andSheldon Roberts.)

But however brilliant Shockley was, who was called a«marvelous intuitive problem solver» and a «tremendous generatorof ideas» by Robert Noyce, it soon turned out that he was «hard ashell to work with», as his style was «oppressive» and he«didn't have trust and faith in other individuals.»)

When Shockley refused the suggestions of his eightengineers who wanted to concentrate on silicon transistors, while their bosspursued research on four-layer diodes, they decided to quit and start their ownfirm in 1957.

Within several months Shockley had to shut down his firm,since he had lost his engineers, whom he called traitors and they are now knownas «the Traitorous Eight».

Although Shockley was not very successful with his firm inPalo Alto, he «deserves credit for starting the entrepreneurialchain-reaction that launched the semiconductor industry in SiliconValley,») since he had brought together excellent scientiststhere like Robert Noyce without whom there might never have been a SiliconValley on the San Francisco Peninsula at all. Or as M. Malone calls it,«Shockley put the last stone in place in the construction of SiliconValley.»)

The father of one of those young men who left Shockley hadcontacts to a New York investment firm, which sent a young executive namedArthur Rock to secure financing for their new enterprise. Rock asked a lot ofcompanies, if they were interested in backing this project, but has not beensuccessful so far. The concept of investing money in new technology ventureswas largely unknown then, and indeed the term «venture capital»itself wouldn't be coined until 1965") — by Arthur Rock, whoshould become Silicon Valley's first and most famous venture capitalist lateron.

Finally, due to Rock's efforts, the «TraitorousEight» managed to obtain financial support from industrialist ShermanFairchild to start Fairchild Semiconductor in 1957.

Fairchild Semiconductor was developed by Shockley's firm,and as the «still existing granddaddy of them all») hasitself spawned scores of other companies in Silicon Valley: Most semiconductorfirms' roots can be traced back to Fairchild. The most famous ones of them areNational Semiconductor, Intel, Advanced Micro Devices (AMD); and manywell-known Valley leaders have worked at Fairchild, e.g. Charlie Sporck(National Semiconductor), Jerry Sanders (AMD's founder), Jean Hoerni, and lastbut not least Robert Noyce, who is considered the «Mayor of SiliconValley») due to his overwhelming success.

Robert Noyce was born in southwestern Iowa in 1927. Hisfather was a preacher in the Congregational Church and thus was«perpetually on the move to new congregations, his family in tow.»)When the Noyces decided to stay at the college town of Grinnell, Iowa, for alonger period of time after many years of moving, this place meant stability inyoung Bob's life and thus would become his first and only real home, which hewould later regard as important for his eventual success.

After high school, Robert studied at Grinnell College. Hisphysics professor had been in contact with John Bardeen (one of the threeinventors of the transistor) and obtained two of the first transistors in 1948,which he presented his students, including Bob Noyce. This aroused youngRobert's interest in semiconductors and transistors, which made him try tolearn everything he could get about this fascinating field of solid-statephysics.

Having graduated from Grinnell College he continued hisstudies at «the premier school of science on the East Coast, MIT,»)where he met famous scientists like Shockley. He received his doctorate, anddecided to work at Philco until 1955, when he was invited by William Shockleyto join a new firm named «Shockley Semiconductor» in Santa ClaraCounty — together with seven other splendid scientists.

When the so-called «Shockley Eight» started a newventure with Fairchild Semiconductor, Robert Noyce began «his owntransformation from engineer to business manager:») He waschosen to lead the new company as he seemed the best to do this job.

Fairchild Semiconductor focused on building a marketablesilicon transistor applying a new manufacturing process called«mesa». Despite being the smallest company in electronics businessthen, it attracted public attention, particularly in 1958, when «BigBlue» — as dominant IBM is nicknamed — ordered the «first-ever mesasilicon transistors») for memory drivers in its computers.

This order contributed to the early success of FairchildSemiconductor, and indicated the beginning of a long relationship between IBMand Silicon Valley.

/>/>Importance of military funding

Before switching over to the events at Intel, the aspect ofmilitary funding is to be dealt with, since it has played an important role inthe early days of Silicon Valley.

During World War II, after the Japanese attack at PearlHarbor in 1942, a great deal of the U.S. military forces and of the militaryproduction was moved to California. Within a few years, California — formerlyan agricultural state — became a booming industrial state and the military centerof the USA.)

After the war, in the time of the Cold War and the armsrace, the Korean conflict, the «missile gap» and the space program,the Pentagon kept ordering high-technology products from the armament factoriesin California. Many companies established R&D departments and productionfacilities in Santa Clara County near Stanford University, which provided themwith bright engineers and scientists, and were largely supported by thePentagon's demand for electronic high-tech products.

Examples for such firms are FMC, GTE, Varian Associates,Westinghouse, and finally Lockheed, which opened its R&D department in theStanford Research Park in 1956, and started Lockheed Missiles and Space Company(LMSC) in Sunnyvale. Lockheed's move to Northern California was crucial for thedevelopments in Santa Clara County; today the company is Silicon Valley'slargest employer with more than 24,000 people.)

Military funding for high-tech products was responsible forthe early growth of Silicon Valley in the 1950s and 1960s. The U.S. Departmentof Defense was the biggest buyer of these products, e.g. its purchasesrepresented about 70 percent of the total production of ICs in 1965.)

While this share in chip demands has dropped to 8 percenttoday, the Pentagon remains the biggest supporter of new technologies andaccounts for most of the purchases of the latest developments.

/>/>Intel Corp.

After the transistor and the integrated circuit, theinvention of the microprocessor in the early 1970s represents the next steptowards the modern way of computing, providing the basis for the subsequentpersonal computer revolution.

It was at Intel where the first microprocessor was designed- representing the key to modern personal computers. With its logic and memorychips, the company provides the basic components for microcomputers. Intel isregarded as Silicon Valley's flagship and its most successful semiconductorcompany, owing its worldwide leading role to a perpetually high spending onresearch and development (R&D).

/>/>Foundation in 1968

It all started in 1968, when Bob Noyce resigned as head ofFairchild Semiconductor taking along Gordon Moore and Andy Grove, to embark ona new venture. They had decided to leave the company, because they wanted«to regain the satisfaction of research and development in a small,growing company,») since Fairchild had become big with lots ofbureaucracy work to be done. Gordon Moore had belonged to the famous ShockleyEight and was in charge of the R&D team at Fairchild. Andy Grove, a youngHungarian émigré, who had earned a doctorate in chemicalengineering at U.C. Berkeley, had joined Fairchild in the early 1960s.

Intel (short for Integrated Electronics), a typicalFairchild spin-off, was financially backed by venture capital from Arthur Rock,who had been in contact with Noyce since 1957. The company was founded upon theidea of integrating many transistors on a chip of silicon, after Noyce haddeveloped a new photochemical process. The three engineers initially focused onbuilding the first semiconductor chips used for computer memory, which shouldreplace the dominant memory storage technology at the time, called«magnetic core». Intel's task was to drive down the cost per bit byincreasing the capacity of memory chips dramatically.

/>/>First products — Moore's Law

Within a year, Intel developed its first product — the 3101Schottky bipolar 64-bit static random access memory (SRAM), which was followedsoon after by the 1101. This chip (1101) was a 256-bit SRAM and had beendeveloped on Intel's new «silicon gate metal -oxide semiconductor (MOS)process,» which should become the «industry's process technology ofchoice.») With the first two products, the young companystarted with 12 employees and net revenues of $2,672 in 1968, had alreadygained the technological lead in the field of memory chips.

Intel's first really successful product was the 1103dynamic random access memory (DRAM), which was manufactured in the MOS process.Introduced in 1970, this chip was the «first merchant market LSI (large-scaleintegrated) DRAM,» and received broad acceptance because it was superiorto magnetic core memories. So, by the end of 1971, the 1103 became «theworld's largest-selling semiconductor device» and provided the capital forIntel's early growth.)

Until today, semiconductors have «adhered to Moore'sLaw,» which has been framed by the «cofounder of Fairchild andIntel» when the first commercial DRAMs appeared in the early 1970s. Thislaw predicts that the price per bit (the smallest unit of memory) drops by 30percent every year. It implies that you will receive 30 percent more power(speed/capacity) at the same price, or that the «price of a certain poweris 30 percent less.»)

Moore's Law applies to both memory chips andmicroprocessors, and shows the unprecedented rapid progress inmicroelectronics. This «astonishing ratio» has never occurred in«the history of manufacturing» before. Applied to automobiles, itmeans that «a Cadillac would have a top speed of 500 miles per hour, gettwo hundred miles to a gallon of gas and cost less than a dollar» — almostincredible.)

1971 was a crucial year at Intel. The company's revenuessurpassed operating expenses for the first time, and the company went public,raising $6.8 million.

Moreover, the company introduced a new memory chip — thefirst erasable, programmable read only memory (EPROM). Invented by Intel's DovFrohman, the new memory could store data permanently like already existingROMs, but besides could be erased simply by a beam of ultraviolet light and beused again. The EPROM was initially viewed as a «prototyping device»for R&D. The invention of the microprocessor in the same year, however,showed the real significance of the EPROM, which could be used by originalequipment manufacturer (OEM) customers (they build the end-products) to storemicroprocessor programs in a «flexible and low-cost way.» The«unexpected synergy» between the EPROM and the microprocessorresulted in a growing market for both chips and contributed a great deal toIntel's early success.)

/>/>«Ted» Hoff's firstmicroprocessor

The invention of the microprocessor marked a turning pointin Intel's history. This development «changed not only the future of thecompany, but much of the industrial world.»)

The story to this technological breakthrough began in 1969,when a Japanese calculator manufacturer called Busicomp asked Intel to design aset of chips for a family of programmable calculators. Marcian «Ted»Hoff, a young and «very bright ex-Stanford research associate») whohad joined Intel as employee number 12, was charged with this project. However,he did not like the Japanese design calling for 12 custom chips — each of themwas assigned a distinct task. Hoff thought designing so many different chip swould make the calculators as expensive as minicomputers such as DEC's PDP-8,although they could merely be used for calculation. His idea was to develop afour-chip set with a general-purpose logic device as its center, which could beprogrammed by inst ructions stored on a semiconductor memory chip. This was thetheory behind the first microprocessor.

With the help of new employee Stan Mazor, Hoff perfectedthe design of what would be the 4004 arithmetic chip. After Busicomp hadaccepted Hoff's chip set, Frederico Faggin, one of the best chip designexperts, who had been hired recently, began transforming the design intosilicon. The 4004 microprocessor, a 4-bit chip (processes 4 bits — a string offour ones or zeroes — of information at a time), contained 2300 MOStransistors, and was as powerful as the legendary first electronic computer,ENIAC.

Soon after the first 4004s had been delivered to Busicomp,Intel realized the market potential of the chip, and successfully renegotiatedwith the Japanese to regain the exclusive rights, which had been sold toBusicomp.

In November 1971, Intel introduced the 4004 to the publicin an Electronic News ad. It announced not just a new product, but «a newera of integrated electronics [...], a micro programmable computer on achip.») The microprocessor is — as Gordon Moore call s it — «one of the most revolutionary products in the history of mankind,»)and ranks as one of 12 milestones of American technology in a survey of U.S.News and World Report in 1982. This chip is the actual computer itself: It isthe central processing u nit (CPU) — the computer's brains. The microprocessormade possible the microcomputer, which is «as big as it is only toaccommodate us.» For «we'd have a hard time getting information intoor out of a microprocessor without a keyboard, a printer and a terminal,»as Th.Mahon puts it.)

However significant Hoff's invention, nevertheless, it washardly noticed in the public until early 1973. The microprocessor had its owninstruction set and was to be programmed in order to execute specific tasks. SoTed Hoff had to inform the public and t he engineers about the capabilities ofthe new device and how to program it.

/>/>Cooperation with IBM in the 1980s

Intel's measures in the late 1970s as a reaction toincreasing competition from other chip manufacturers paid off greatly andresulted in a remarkable technological lead against its competitors. The mostsignificant consequence, which was a landmark in the company's development, wasIBM's decision to rely on the Intel 8088 microprocessor for its PCs in 1980.

IBM (short for International Business Machines) has beenthe world's leading company in the big mainframe computers since the 1950s. Dueto its dominance, it was often compared with a giant and referred to as«Big Blue.» Surprisingly, it was not before 198 1 (the PC revolutionhad already been on for a few years) that IBM introduced its own PersonalComputer.

Because of IBM's dominance and worldwide reputation, itsPCs soon became industry standard and penetrated the office market: otherestablished computer companies followed and introduced their own PCs — theso-called «clones» — which were compatible to IBM' s models. Tomaintain compatibility, all these manufacturers were forced to rely on Intel'smicroprocessors, which thus were bootstrapped to industry standard, too.

As well as for Intel, the CPU manufacturer, IBM's decisionhas been crucial for a company in the software field: Microsoft's (Redmond,Washington) MS-DOS was chosen as the IBM PC's operating system and became industrystandard. It is essential to every IBM compatible PC. Microsoft, a smallcompany in 1980, grew explosively, and is today's superior software giant.

At the beginning of the 1980s, IBM was concerned aboutIntel's ability to keep investing in R&D and therefore decided to supportIntel by buying $250 million (=12%) of the company's stock. This endorsedIntel's position, and, in 1987, IBM sold the last of its shares in a strongIntel.


Annual report 2000

Today, Intel supplies the computing andcommunications industries with chips, boards and systems building blocks thatare the «ingredients» of computers, servers, and networking andcommunications products. Industry members to create advanced computing andcommunications systems use these products. Intel's mission is to be thepreeminent building block supplier to the worldwide Internet economy.

Intel® Architecture platform products/>Microprocessors, also called centralprocessing units (CPUs) or chips, are frequently described as the«brains» of a computer, because they control the central processingof data in personal computers (PCs), servers, workstations and other computers.Intel offers microprocessors optimized for each segment of the computingmarket:

Intel® Pentium®III Xeon™ processors for mid-range to high-end serversand workstations

Intel® Pentium®4 and Pentium® III processors for entry-level servers andworkstations and performance desktop PCs

Intel® Celeron™processors for value PC systems

Mobile Pentium®III processors for performance in mobile PC systems

Chipsets perform essential logic functions surrounding the CPU incomputers, and support and extend the graphics, video and other capabilities ofmany Intel processor-based systems.

Motherboardscombine Intel microprocessors and chipsets to form the basic subsystem of a PCor server.

e-Businesssolutions enable services and channel programs to accelerate integration anddeployment of Intel Architecture-based systems and products.

/>Wireless communications and computing products/>These products are component-level hardware and softwarefocusing on digital cellular communications and other applications needing bothlow-power processing and high performance. These products are used in mobilephones, handheld devices, two-way pagers and many other products. For thesemarkets, Intel offers Intel® Flash memory, application processors based on theIntel® StrongARM processor core, and base band chipsets for cellular phones andother wireless devices.

Networking and communications products/>Communications building blocks for next-generation networksand Internet data centers are offered at various levels of integration. Theseproducts are used in communications servers, network appliances and computertelephony integration equipment.

Component-levelbuilding blocks include communications silicon such as network processors andother board-level components, software and embedded control chips. Theseproducts are integrated in communications hardware such as hubs, routers,switches and servers for local and wide area networking applications. Embeddedcontrol chips are also used in laser printers, imaging, automotive systems andother applications.

New business products/> These products and services include e-Commerce data center servicesas well as connected peripherals.


Intel's majorcustomers include:

Original equipment manufacturers/> (OEMs) of computer systems, cellular phone and handheld computingdevices, telecommunications and networking communications equipment, andperipherals.

Users of PC and network communications products/> including individuals, large and small businesses, and Internetservice providers—who buy Intel's PC enhancements, business communicationsproducts and networking products through reseller, retail, e-Business and OEMchannels.

Other manufacturers/> including makers of a wide range of industrial and communicationsequipment.

/>/>The emergence of the PC industry

Until the early 1970s, computers were huge machines — fromthe largest ones, the supercomputers, to mainframes and minicomputers — andwere mainly used for scientific research in universities and in militaryinstitutions, and for business calculations in major companies. Surprisingly,when the first microprocessors appeared, none of the established companies suchas IBM, DEC or HP had the idea to build small, personal computers. They justdid not see any market for them and could not imagine what those machinesshould be needed for. None of these large companies anticipated thepossibilities of PCs, which are today used in almost every office, in the home,in the school, on airplanes, etc. and can act as typewriters, calculators,accounting systems, telecommunications instruments, libraries, tutors, toys andmany the like.

So, it was the hobbyists, single electronics wizards wholiked tinkering with electronic devices that constructed their own computers asthe first PCs. These «computer nuts» ignited the «fire in thevalley;») they launched the personal computer revolution inSilicon Valley «out of their own fascination with the technology. Thepersonal computer arose from a spirit of sharing „hard-won technicalinformation“ with other computer freaks who developed their devices forthe fun of tinkering around in this fascinating field of electronics. Some ofthese frequently young hobbyists found themselves almost overnight asmillionaires, after they had sold their devices in a newly founded firm.

Before dealing with the story of Apple, which is typical ofSilicon Valley and responsible for the breakthrough of the personal computer,some information about the first PC and the emergence of the PC industry shallbe given.

/>/>Altair — the first PC

Altair is often regarded as the first personal computer,although it was one of those switches and lights computers — programming isdone by arranging a set of switches in a special order, and the results appearas different combinations of lights. In other words, such a machine is agenuine computer, but absolutely useless, as Steve Wozniak, one of the PC pioneers,put it.)

After the first microprocessors had come onto the market,Ed Roberts, an engineer at MITS, a small calculator company in Texas, decidedto build a kit computer, which he intended to sell to hobbyists. He choseIntel's 8080 as the CPU for his computer, since this chip was the most advancedand powerful at the time. As Roberts wanted to sell his computer for less than$500 and the official price for the 8080 was already at $360, he contactedIntel and could finally receive the chip for only $75 apiece.

By the end of 1974, Roberts finished his computer, whichwas named Altair. When the Altair was introduced on the cover of the January1975 issue of Popular Electronics as the first personal computer, which wouldgo for $397 only, the market response was in credible. The low price was theactual sensation, because it was largely known that the price for the Intel8080 CPU powering the Altair was already at $360. So many hobbyists, engineersand programmers who had keenly waited for their own personal computer, whichthey could experiment on at home, welcomed the new product and ordered»their" Altair on the spot.

Roberts had never expected such a great response and hissmall firm was flooded by those immediate orders (more than 4000). He boostedup the production, but still could not meet the huge demand. The Altair was asuccess at first, and Roberts sold many of them.

However, he had increased production at the expense ofquality and further refinement of his computer, so the Altair brought along alot of trouble and was finally supplanted by other computers, which weresuperior.

Nevertheless, the Altair as the first successfulmicrocomputer, contributed a lot to the PC revolution, since it encouragedother people to build personal computers (e.g. IMSAI, Apple).

/>/>The first computer shops

During this time, the mid-1970s, the first computer shopscame into existence. Pioneering in this field was Paul Terrell who came to theidea of running such a shop, after the Altair had been put onto the market. Hisfirst Byte Shop opened in Mountain View (located in the heart of SiliconValley) by the end of 1975.

Initially, Terrell sold the Altair and accessory productssuch as additional memory boards and other devices, which came onto the market.With the arising microcomputer industry, he could offer his customers — mainlyhobbyists and engineers — more and more products, and his shop became asuccess. Other Byte Shops were opened and Terrell's computer shop chainexpanded beyond the Silicon Valley. The computer shops provided its customerswith a variety of devices around the computer and also with service and help.

The Altair was shipped as a kit computer and was to beassembled first, and then it was still not difficult to work with it. Thehobbyists helped each other with advice. It was this spirit of sharingsolutions and the common interest in microcomputers that led to the foundationof the first computer club.

/>/>Homebrew Computer Club

The legendary Homebrew Computer Club was the first of itskind, and provided an early impetus for the development of the microcomputerindustry in Silicon Valley. Its first meeting in March 1975 was held in one ofits members' garage in Menlo Park in Santa Clara County. The Homebrew memberswere engineers and computer enthusiasts who discussed about the Altair andother technical topics. The club attracted many hobbyists and was attended bynearly 750 people one year after its foundation. The Homebrew Computer Club hadits own philosophy. People meet, because they were interested in computers andliked tinkering with them, but not for commercial reasons — at least in itsearly times. Its members «exchanged information about all aspects of microcomputing technology») and talked about devices they haddesigned. From its ranks came the founders of many microcomputer companies — for example Bob Marsh, Adam Osborne, or Steve Jobs and Steven Wozniak — thefamous Apple founders.

The Homebrew Computer Club is the place where the roots ofmany Silicon Valley microcomputer companies are located. It has «spawned arevolution in micro processing») and represents an«important step in the development of a multi-billion dollar industry.

/>/>The Apple Story

Apple provides one of Silicon Valley's most famous stories.It shows features that are typical for most start-up firms in the valley,however, it is unique and its early success and its contribution to thepersonal computer are unmatched.

/>/>»Woz" and Jobs — the two«Steves»

Apple's history starts with the story of two young andexceptional people who began building a computer in their garage and«launched the microcomputer revolution,») changing ourdaily life in many respects.

The Apple story is the story of the two «Steves».Stephen G. Wozniak was a typical Silicon Valley child. Born in 1950, he hadgrown up with the electronics industry in Silicon Valley, and had beenintrigued by electronics from the start, since his father w as an electronicsengineer. Wozniak, known to his friends as «Woz», was bright and wasan electronics genius. At the age of 13, he won the highest award at a localscience fair for his addition-subtraction machine. His electronics teacher atHomestead High School recognized Woz's outstanding talent and arranged a jobfor him at a local company, where Steve could work with computers once a week.It was there that Wozniak saw the capabilities of a computer (it was the DECPDP-8 minicomputer) and studying the manual, it became his dream to have acomputer of his own one-day. He designed computers on paper. Many other studentswho grew up in Silicon Valley shared this dream.

In 1971, Wozniak built his first computer with hishigh-school friend Bill Fernandez. This computer (they called it Cream SodaComputer) was developed in his friend's garage and had «switches and lightsjust as the Altair would have more than three years later.»)

Bill introduced Woz to a friend of his named Steven P.Jobs. Jobs was born in 1955, and his foster parents were — unlike most otherpeople in Silicon Valley — blue-collar workers. However, growing up in anenvironment full of electronics, Steve came in con tact with this fascinatingtechnology and was caught by it.

Jobs was a loner and his character can be described asbrash, very ambitious and unshakably self-confident. With his directness andhis persistency he persuaded most people. He had the ability to convey hisnotions and vision to other people quite well. An d he was not afraid to talkto famous people and did never stop talking to them until they gave in and didwhat he wanted. His traits could already be observed in his adolescence, forinstance when he — at the age of thirteen — called famous Bill Hewlett,president of HP, and asked him for spare parts he needed for his frequencycounter.

Although Steve Jobs was five years younger than Wozniak,«the two got along at once.» Apart from their common fascination withelectronics, they «shared a certain intensity.» Whereas Woz wasintense in digging «deeper into an intellectual problem than anyone else,»Jobs's intensity was in ambition. Moreover, both were genuine pranksters, andoften they fooled others with their technical knowledge.)

When they heard of «phone-phreaking» — makingfree long-distance telephone calls with a device called «blue box» — the two started their first business venture, building those blue boxes.

In 1972, Steve Jobs went to Reed College in Oregon;however, there he became more interested in Eastern religions, dropped out ayear later and returned to Silicon Valley, where he took a job with Atari (ayoung video game company) until he had saved enough money to go on a trip toIndia for some months. Then he went back to California and to his work atAtari.

After attending three different colleges, Wozniak had begunwork for Hewlett-Packard in summer 1973. When Atari planned to develop a newgame called «Breakout,» Jobs boasted he could design it in only fourdays — quicker and better than anyone else. Jobs t old his friend Woz about it,and the two designed the game in record time, working four nights and days, andwere paid the promised $700 for it. This experience showed them that they couldwork together on a tough project and succeed.

/>/>The first Apple

When the Homebrew Computer Club came into existence,Wozniak began attending its meetings. As he later would recall, Homebrew was arevelation for him and changed his life. He met people who «shared hislove for computers») and learned from them as well a s heencouraged them with his technical expertise. Others brought along theirAltairs, which Wozniak was interested in but could not afford. He realized thiscomputer resembled the Cream Soda Computer he had built some time ago.

Soon after, Chuck Peddle at MOS Tech released his new 6502microprocessor chip for only $20, which was a sensation compared to the usualprice of $400 for those chips then. Suddenly, Woz saw his chance and decided towrite the first BASIC for it, which was the most spread programming language.After finishing with the BASIC, he made a computer for it to run on. The otherhobbyists at Homebrew were impressed by Wozniak's kit, which actually was aboard with chips and interfaces for a keyboard and a video monitor.

Steve Jobs saw the opportunity of this machine, which theynamed Apple, and finally persuaded Wozniak to start a company in April 1976.The two raised the money for the prototype model with a printed circuit boardby selling Jobs' VW microbus and Wozniak's HP calculators. With the Apple I,Steve Wozniak had designed a «technological wonder») andmade his dream of owning a computer come true. His friend Steve Jobs played therole of a salesman and his ambitious promotion made the Apple I «a star inthe tight world of computer freaks.»)

The breakthrough for the two Steves came in July, when PaulTerrell ordered 50 Apples for his Byte Shop, however on condition the computerswere fully assembled in a case and equipped with a cassette interface to enableexternal data storage.

Jobs could «obtain net 30 days credit»)for the parts they needed for their computer. Working hard in Jobs parents'garage, they managed to construct the 50 Apples within those 30 days.

The Apple I was continuously refined by Wozniak, and itssales made the young company known, partly because the company's name appearedon top of computer lists, which were published by electronics magazines inalphabetical order.

/>/>Building up the company

While the first Apple was being sold, Steve Wozniak hadalready begun work on another computer, the Apple II. This machine would haveseveral special features which had not appeared in any microcomputer before andwould make it «the milestone product that would usher in the age of thepersonal computer.»)

Jobs and Wozniak sensed the market potential their newcomputer would have, but realized they did not have the necessary capital forconstructing the machines. So they tried to sell their computer to severalestablished companies such as Atari, HP and MOS Tech, which, however, rejected.Looking out for some venture capital to produce the new computers bythemselves, Steve Jobs met with Mike Markkula, who had been a marketing managerat Fairchild and Intel.

Markkula was at the age of 38, but had already retired,since he had made a fortune of many million dollars by his stock option atIntel. He visited Jobs's garage and became interested in their project.Markkula, the former marketing wizard at Intel, thought it «made sense toprovide computing power to individuals in the home and workplace» andoffered to help them «draw up a business plan.») Finally,he decided to join the two Steves. He offered $250,000 of his own money and hismarketing expertise for on e third of the company, which was incorporated asApple Computer in January 1977. Markkula's decision marked the turning point inApple's history; he took care of the business side and arranged all the thingsnecessary to create a successful company. Markkula's know-how was crucial forApple, since Woz and Jobs did not have any business expertise. This knowledgeis very important for new firms. A lot of other start-ups in Silicon Valleyfailed as their founders were only engineers, who lost control over theirenterprises when they could not meet the skyrocketing demand for theirproducts.

In 1977, Markkula hired Mike Scott, who had worked forproduct marketing at Fairchild, as the company's president, because he feltApple needed an experienced person to run the company.

Jobs, who wanted only the best for his company, alsopersuaded Regis McKenna, who ran the biggest and most influential agency inSilicon Valley, to do public relations and advertising for Apple. McKenna, whoworked for successful Intel and many other companies, brought Apple legitimacyand, among other things, designed the famous Apple logo. Another importantcontribution was the fact that he made Apple the first company to advertisepersonal computers in consumer magazines to «get national attention»and " popularize this idea of low-cost computers.")

Steve Jobs's persistency had persuaded Wozniak, theelectronics genius who designed the machine, McKenna, and Markkula, thebusiness expert. Jobs himself was the driving force that brought the keycomponents together to build up a successful company.

/>/>Apple II — starting the personal computerboom

In April 1977, the Apple II was introduced to the public atthe West coast Computer Faire (market), where Apple had rented the largestbooth just opposite the entrance. Wozniak's «technological wonder»)was a great success and the first orders were already made. The Apple II wasthe «first true personal computer.») It was the firstmicrocomputer able to generate color graphics and the first with BASIC in ROMand included a keyboard, power supply and an attractive lightweight and beigeplastic case, which would become standard for subsequent PCs. The Apple II wasmore sophisticated than any microcomputer before, and represented a machine,which could be worked with effectively. Steve Wozniak had put all his«engineering savvy») into it, and had created a computerhe would like to own.

The Apple II was given a rapturous welcome in the public.In 1977, the company sold more than 4,000 computers, which were priced at$1,300, and grew rapidly.

Programs and data for the Apple II were stored on cassettetapes. But this common way of storage turned out to be quite unreliable andawkward. Mike Markkula saw the future in floppy disks, which had been developedby IBM in the early 1970s, and asked Wozniak to design a disk drive for theApple II. Woz took the challenge and finished in record time (only one month).His final design was brilliant: he developed a new technique(«self-sync») and created the fastest minifloppy disk drive. It wasshipped in June 1978 and proved vital for Apple's further growth. It madepossible the development of serious software such as word processors and data basepackages,") which increased the practical use of the computerdecisively.

In 1979, Daniel Fylstra, a programmer from Boston, releasedVisiCalc for the Apple II. This spreadsheet was a novelty in computer software.It relieved business calculations considerably and could be used to dofinancial forecasting. It was the first application that made personalcomputers a practical tool for people who do not know how to write their ownprograms. VisiCalc was very successful and contributed to the skyrocketingsales of the Apple II.

The same year, marketing wizard Mike Markkula made anotherimportant decision for Apple future growth. His idea was to create a new marketin the field of education and schools. The Apple Education Foundation wasestablished, which granted complete Apple systems equipped with learningsoftware to schools. This market should account for a major part of thecompany's sales in the subsequent years, since Apple II soon became the mostpopular machine for students.

/>/>Turbulences in the early 1980s

The successful stock sale provided Apple with an«extravagant amount of capital ($1 billion),» which could be spent ondeveloping the «company's next computer generation.») Thistime, however, was quite turbulent for Apple and was marked by crises and innerpower struggles.

Designing on Apple III began in 1978. This computer was tobe the successor to Wozniak's Apple II, and was finally introduced to thepublic in 1981. But it was not successful — a «disaster» or«fiasco,») since it had too many faults and did not workproperly. Nevertheless, the company was without any financial troubles, sincesales of the Apple II continued to increase rapidly.

Concurrently, Steve Jobs became the company's visionary andthought about the next computer generation. Such a visionary is a «personwho has both the vision and the willingness to put everything on the line,including his career, to further that vision. Jobs became a perfect visionaryand convinced everyone around him with his vision.

In 1979, he and some other Apple employees visited theXerox PARC (Palo Alto Research Center), which was known for its advancedresearch in computing. What they saw was revolutionary and had never appearedon any personal computer before. The „environment of the screen wasgraphically based“ with icons (representing files or programs), with amouse for pointing and moving at them, windows and pull-down menus. Thus, theuser could „interact easily with the computer [...] without ever typing asingle letter.

Jobs was quite impressed and wanted to transfer thisconcept on a new PC called Lisa, which was intended for the business world.Steve, however, came up with ever-new ideas for the designers of this project.He “created chaos because he would get an idea, start a project, thenchange his mind two or three times, until people were doing a kind of randomwalk, continually scrapping and starting over.»)

Markkula and Scott were concerned about the furtherprogress of Lisa. So, in the course of a reorganization of the company, theydecided to put John Couch, a former software designer at HP, in a charge of theLisa project. Jobs was made chairman of the boa rd to represent Apple in thepublic. However, Steve was shocked that he was taken the chance to fulfill hisvision, and relations between him and Scott deteriorated.

In February 1981, Wozniak, the technological brains behindthe Apple I and II, crashed his four-seated airplane. He hit his head badly andsuffered from a case of temporary amnesia. For some time, he retired from thecompany and he finished his undergraduate degree at U.C. Berkeley.

The company had grown rapidly to 2,000 employees, and someof them had joined Apple in the hope of a safe job. Setting an example,president Mike Scott laid off 42 people on a day which came to be called«Black Wednesday». Apple was shocked since some of t hose peopleseemed to have been chosen arbitrarily. Scott's management style became moreand more disliked, and finally Mike Markkula decided to fire Scott and tookover his position until a new president was found.

/>/>The Lisa project

Meanwhile, Steve Jobs had discovered his new project. Soonhe had taken control of the Macintosh project, which had been started by JeffRaskin in 1979 to design a small and handy personal computer. Steve dedicatedall his power to the Macintosh, which was to be a smaller and cheaper Lisa andwas to revolutionize the way of computing.

The company was now separated into three divisions, AppleII, Lisa and Macintosh, which began competing against each other — particularlybetween the latter two.

Lisa was developed by a number of experienced engineers andprogrammers who had been recruited from HP, DEC and Xerox. This project was«the most professional operation ever mounted at Apple»)and was in contrast to Steve's bunch of young hackers at Macintosh.

When Lisa was introduced to the public in August 1983, itwas «ahead of its time:») Lisa was easy to use because ofthe mouse, graphical interface and windows, and had additional features such asmultitasking. Though is was first welcomed by the press as revolutionary, Lisafailed. One problem was Steve's «lack of self-discipline:»)When introducing Lisa he talked about «his» Macintosh which wouldcome out soon and with features like Lisa but cost only a fraction ($2,000instead of $10,000 for Lisa). The other strategic mistake was the announcementthat the two computers were not compatible. So it is no wonder many peoplewaited until the Macintosh would come.

Finally, Lisa, which was intended for the business marketat its price of $10,000, lacked the ability to communicate with other computers- a fact which was decisive for this market.

In the meantime, IBM had entered the personal computermarket with its first IBM PC in 1981, and already dominated a large part of it.Its first PC «wasn't an earth-shattering machine technically»)and was much harder to use than the forthcoming Apple machines. But the factthat it was built by IBM was enough to make it successful, and many softwarecompanies wrote applications for it. Apple had bravely run a full-page adsaying «Welcome IBM, Seriously», but it soon seemed to have lost thebattle. Nevertheless, IBM's entry brought Apple a lot of publicity as the onlyreal competition to Big Blue.

Thus, Lisa was not very successful and the second failureafter the Apple III. Still, Apple's sales increased — only because of thesuccessful Apple II. But the company needed a successor, and all its hopes werenow placed in the Macintosh.

/>/>The Macintosh revolution

The Macintosh was to fulfill Steve Jobs' vision of«computer to the people». He created a personal computer, which waseasy to use and at a low cost. Steve thought of a tool for all people tobroaden their mind — a revolution towards the modern way of computing.

His Macintosh team was made up of teenagers and self-taughthackers — «idiot savants, passionate plodders and inspired amateurs»- who «loved to cut code.») They followed his vision andpassionately designed this outstanding computer. Jobs continuously drove histeam to ever-greater feats. He «kept thinking up crazier things, or moreaggressive goals if they were doing good, or if they were achieving their goalshe wanted them to do more. He couldn't just stop, he had to push you to theedge.») Steve «gave impossible tasks, never acknowledgingthat they were impossible,») he «doesn't have anyboundaries, [...] because he has always been able to do anything hewanted» due to «his early success.») As aconsequence, people usually worked 80 hours a week or more for their project.

Steve's most brilliant hackers were Andy Hertzfeld, BillAtkinson and Burrell Smith. The Macintosh was equipped with Motorola's 68000CPU, a 3.5-inch floppy disk drive, a detachable keyboard, and the amount ofspace it took up from the desk should not be larger then a telephone book (thismeant a revolution in size). The computer was meant to be an open system, andsoftware applications were to be programmed by other companies, the work ofwhich was supported by a standard modular toolbox. This box made sure that allapplications were easy to use and appeared in a standardized way. As well asother fundamental software the standard toolbox was available from thecomputer's ROM (Read Only Memory).

Influenced by robotics assembly lines in Japan, Stevedecided to «build the most advanced assembly plant in the world»)for the production of the Macintosh. It was fully automated and the laborcomponent accounted for only one percent of the total cost.

Simultaneously to feverish efforts to finish the Macintosh,Apple succeeded in finding a new president. Thanks to Steve's visionary powersof persuasion, John Sculley, top manager at PepsiCo, finally agreed to joinApple in April 1983.

The introduction of the Macintosh, which was Steve'srevolutionary machine to change the world, was dated to January 1984 and was tobe accompanied by a massive ad campaign in the media. Chiat/Day agency wasasked to create a commercial referring to the fact that 1984 was the year ofOrwell's famous novel. They produced the sixty-second ad, which was reallyexceptional, and proposed running it only once — during the Super Bowl, themost watched television event of the year.

It would be a million dollar minute, which was to capturepublic attention. Macintosh was presented as a milestone product that wouldrevolutionize the way of computing, breaking IBM's, the «BigBrother's» dominance and conformity it was about to establish by its IBMPCs.

When the commercial was broadcast, it reached 46.4 percentof America's households. People were stunned about this outrageous ad, whichwas «unlike anything they had seen before.») Suddenly,millions of people knew something called Macintosh. The «commercialsparked widespread controversy»), and won the highestadvertising awards (more than 30).

The Macintosh (priced at $2,495) was a success from thestart. Steve Jobs, the visionary, compared it to Graham Bell's invention of thetelephone a hundred years ago. It was the «most approachable»)and sophisticated personal computer of the time, which ushered in a new era ofeasy computing with a graphical interface and mouse. This feature would betaken over by many software companies in the subsequent years, particularly bybig Microsoft, which developed Windows. This graphical user interface, which has been established as the industry standard today, is quite similar toMacintosh’s and makes possible the easy use of IBM PCs.

In the first 100 days, an industry record of more than70,000 Macintosh computers were shipped — a number that went up to the total of250,000 sold units by the end of the year.

/>/>John Sculley and Steve Jobs

Despite the astonishing figures of sold Macintosh computersand a boost in sales to more than $1.5 billion in 1984 (up 55% from 1983),)Apple soon fell into its most severe crisis, which would only be overcome bySculley's hard measures and led to the firing of its visionary Steve Jobs.

John Sculley had been vice-president at PepsiCo where hehad successfully made Pepsi the number one brand in the Cola Wars. Actually, therewas no reason for him, one of America's top managers with a secure and highlypaid position at PepsiCo, to join a bunch of young computer nerds at the Westcoast. The reason why he finally agreed yet is Steve Jobs who impressed him byhis visionary ideas and asked him a question to which he did have no answer:«Do you want to spend the rest of your life selling sugared water or doyou want a chance to change the world?») This question told himthat his «entire life was at a critical crossroads.»)

Sculley and Jobs became close friends. They could«complete each other's sentences» because they «were on the samewavelength.») The «dynamic duo», as they were calledin an issue of Business Week in October 1983, was esteemed highly in the pressand contributed significantly to Apple's good reputation in the public at thetime.

The downfall came soon, however, when their largelyoverestimated expectations of the Macintosh sales could not be met. In theireuphoria about the revolutionary Mac, they thought they would ship 80,000 unitsby the end of 1984, and had produced them in advance. When the reality brought«merely» 20,000 with a falling tendency, the crisis was evident.Reasons for that decline were that the Macintosh was not as «perfect»as expected — with its 128 KByte RAM (they were then mounted to 512 KB) it wasnot powerful enough, and there were hardly any software applications availableyet. Moreover, at the 1985 annual meeting, Jobs and Sculley neglected the factthat 70 percent of the company's sales were still due to the Apple II, whereasthe Macintosh accounted for only 30 percent. Many sophisticated Apple IIdesigners were annoyed and left the company.

Steve Jobs became more and more angry and aggressivebecause of the continuing drop in Macintosh sales (merely 2,500 units in March1985).) He blamed everyone for it, except for himself. Steve justdid not see that the «problem was with him.») In the end,he blamed even Sculley for the crisis and wanted to lead the company himself.But this seemed impossible to everyone else: «Steve was a big thinker, aninspirational motivator, but not a day-to-day manager. What was sad was that hecould not see it.»)

When Sculley was informed that Jobs intended to remove himinsidiously from the company, he was quite concerned, but then decided tochoose the company's welfare over his friendship to its visionary co-founder.Supported by Markkula and the other members of the board, in May 1985, hedismissed Steve from his positions as the vice-president and as the leader ofthe Macintosh division; Jobs did not have any managerial power anymore.

Steve Jobs was quite depressed and made trips to Europe andthe Soviet Union. Finally, he decided to leave Apple in December 1985, and soldall his Apple shares. He took along some of the best employees to start his newventure — NeXT. He intended to design a workstation for the university sector.In February 1987, billionaire Ross Perot invested $20 million for 16 percent ofNeXT. The new computer was introduced to the public in October 1988, priced at$6,000.

At Apple, John Sculley took several measures to save thecompany, which had become chaotic. In the course of a major reorganization hedismissed 1,200 employees (20% of the total workforce) and put the broken partsof the company together to form one unified Apple. His restructuring saved alot of costs and consolidated the company.

1986 was Apple's worst year with a decline in net salesfrom $1.92 (1985) to $1.90 billion. Gradually, Sculley could persuade softwarecompanies, which had turned away from Apple, to write applications for theMacintosh.

Apple found its new market in desktop publishing (DTP), forwhich the Macintosh was predestined. By the time, the Macintosh became aserious tool for the business market and its sales increased again.

Until today, Apple has grown steadily and now reaches netsales of more than $7 billion. Although the Macintosh lost the battle againstBig Blue, today it is a successful product and was sold over 2.5 million timesworldwide in 1992. Apple remains the second-biggest personal computermanufacturer after IBM and has released innovative products such as QuickTime,an easy to use multimedia software combining sound, video and animation. Itslatest development is Newton, a personal digital assistant (PDA), which servesas an electronic notepad and «integrates advanced hand-writingrecognition, communication and data-management technologies.»)

Apple today.

CUPERTINO, California—December 5, 2000—Apple® todayannounced that it has experienced significantly slower than expected salesduring October and November, which will result in revenues and earnings for itsquarter ending December 30, 2000 being substantially below expectations.

The company expects to report revenue of about $1 billionand a net loss, excluding investment gains, of between $225 and $250 million.

The $600 million revenue shortfall from previousexpectations is due to lower than expected channel sell-through across allgeographies and unplanned sales promotions and pricing actions. The net loss isthe result of the revenue shortfall and cancellation charges related todecreases in forecasted component purchases for current products.

“The swift industry-wide decline in PC sales will result inApple’s first non-profitable quarter in three years,” said Apple’s CEO SteveJobs. “We’re not happy about it, and plan to return to sustained profitabilitynext quarter. We are committed to reducing our channel inventories to normallevels by the end of this quarter, and remain very excited about the newproducts and programs Apple will be rolling out in 2001.”

“In light of the lower results anticipated for the Decemberquarter, we now expect revenues for fiscal 2001 to be in the $6 to $6.5 billionrange,” said Apple’s CFO Fred Anderson.

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