TSP1 — Apple Kills The Clones

Aakash Ahuja
2 min readApr 12, 2022

The summers were about to end in 1997. So were the contracts that Apple had with many small computer makers to license its MacOS software.

Apple’s problems

Yes. There was a time when Gil Amelio, then CEO of Apple (Steve Jobs was ousted from the company he created), decided that the way to regain losing market share was to allow computer makers to license MacOS software for their hardware and sell cheaper computers.

Microsoft was making a killing with the same strategy so why not. Only it didn’t work for Apple. It made matters worse because unlike Windows, Mac was designed to work very closely with the specific hardware.

The company also had entered into other businesses like palmtops, printers, servers etc. Nothing helped. People left. Revenues dwindled. For the first time, Apple declared a quarterly loss and the stock price plummeted.

As Walter Isaacson, Jobs’ official biographer called it — The company was at the edge of its grave.

It was then that Jobs was called back to act as an ‘advisor to the CEO.’ But he was going to call the shots. And Amelio needed just that.

What Changes Jobs Made to Bring Apple Back

He proclaimed, “The products don’t have any sex in them anymore.” He realized that the company was doing too many things, all of them were average and had no chance of beating the competition. In the process, it was losing money, people, and market share.

The killing began.

All vendor licenses but one were canceled. Apple happily paid penalties for that. The largest clone vendor, Power Electronics, was bought in an all-share deal allowing Apple to retain the technical and marketing staff.

Jobs went on to kill all other products the company was into, except the computers.

Lastly, he gathered his team, drew a 4 quadrant on a whiteboard, and he wrote in quadrants — Consumer / Desktop / Enterprise / Laptop. He said to his team, “Give me a great product in each of these segments.”

Just 4 great products, in segments that mattered.

The clones were killed, the money drain was stopped, good people were finally happy to be working on meaningful projects again, the stock price was back up and the company had cash. With a passionate, super-focused leader like Jobs, what could stop them from dominating the world?

The Strategy Project, by

Aakash Ahuja

www.itmtb.com | www.prospareto.com

References:

Steve Jobs, By Walter Isaacson

https://adamnash.blog/2008/04/16/reminder-why-apple-killed-clones-in-1997/

https://www.wired.com/1997/09/apple-kills-clone-market/

https://www.youtube.com/watch?v=YYLuoahTP_s

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