Macintosh

In 1984, Apple launched the Macintosh, the first personal computer to be sold without aprogramming language at all.^[36] Its debut was signified by "1984", a $1.5 million television commercial directed by Ridley Scott that aired during the third quarter of Super Bowl XVIII on January 22, 1984.^[37] The commercial is now hailed as a watershed event for Apple's success^[38]and a "masterpiece".^[39][40]

The Macintosh initially sold well, but follow-up sales were not strong^[41] due to its high price and limited range of software titles. The machine's fortunes changed with the introduction of theLaserWriter, the first PostScript laser printer to be sold at a reasonable price, and PageMaker, an early desktop publishing package. It has been suggested that the combination of these three products were responsible for the creation of the desktop publishing market.^[42] The Macintosh was particularly powerful in the desktop publishing market due to its advanced graphics capabilities, which had necessarily been built in to create the intuitive Macintosh GUI.

In 1985, a power struggle developed between Jobs and CEO John Sculley, who had been hired two years earlier.^[43] The Apple board of directors instructed Sculley to "contain" Jobs and limit his ability to launch expensive forays into untested products. Rather than submit to Sculley's direction, Jobs attempted to oust him from his leadership role at Apple. Sculley found out that Jobs had been attempting to organize a coup and called a board meeting at which Apple's board of directors sided with Sculley and removed Jobs from his managerial duties.^[41] Jobs resigned from Apple and founded NeXT Inc. the same year.^[44]

After Jobs' departure, the Macintosh product line underwent a steady change of focus to higher price points, the so-called "high-right policy" named for the position on a chart of price vs. profits. Jobs had argued the company should produce products aimed at the consumer market and aimed for a $1000 price for the Macintosh, which they were unable to meet. Newer models selling at higher price points offered higher profit margin, and appeared to have no effect on total sales as power users snapped up every increase in power. Although some worried about pricing themselves out of the market, the high-right policy was in full force by the mid-1980s, notably due to Jean-Louis Gassée's mantra of "fifty-five or die", referring to the 55% profit margins of the Macintosh II.^[45]

This policy began to backfire in the last years of the decade as new desktop publishing programs appeared on PC clones that offered some or much of the same functionality of the Macintosh but at far lower price points. The company lost its monopoly in this market, and had already estranged many of its original consumer customer base who could no longer afford their high priced products. The Christmas season of 1989 was the first in the company's history that saw declining sales, and led to a 20% drop in Apple's stock price.^[46] Gassée's objections were overruled, and he was forced from the company in 1990. Later that year, Apple introduced three lower cost models, the Macintosh Classic,Macintosh LC and Macintosh IIsi, all of which saw significant sales due to pent up demand.

In 1991 Apple introduced the PowerBook, replacing the "luggable" Macintosh Portable with a design that set the current shape for almost all modern laptops. The same year, Apple introduced System 7, a major upgrade to the operating system which added color to the interface and introduced new networking capabilities. It remained the architectural basis for Mac OS until 2001. The success of the PowerBook and other products brought increasing revenue.^[43] For some time, Apple was doing incredibly well, introducing fresh new products and generating increasing profits in the process. The magazine MacAddict named the period between 1989 and 1991 as the "first golden age" of the Macintosh.^{[citation needed]}

Apple believed the Apple II series was too expensive to produce and took away sales from the low-end Macintosh.^[47] In 1990, Apple released the Macintosh LC, which featured a single expansion slot for the Apple IIe Card to help migrate Apple II users to the Macintosh platform;^[47] the Apple IIe was discontinued in 1993.

The success of Apple's lower-cost consumer models, especially the LC, also led to cannibalization of their higher priced machines. To address this, management introduced several new brands, selling largely identical machines at different price points aimed at different markets. These were the high-end Quadras, the mid-range Centris line, and the ill-fated Performa series. This led to significant market confusion, as customers did not understand the difference between models.^[48]

Apple also experimented with a number of other unsuccessful consumer targeted products during the 1990s, including digital cameras, portable CD audio players, speakers,video consoles, the eWorld online service, and TV appliances. Enormous resources were also invested in the problem-plagued Newton division based on John Sculley's unrealistic market forecasts.^{[citation needed]} Ultimately, none of these products helped and Apple's market share and stock prices continued to slide.

Through this period, Microsoft continued to gain market share with Windows by focusing on delivering software to cheap commodity personal computers, while Apple was delivering a richly engineered but expensive experience.^[49] Apple relied on high profit margins and never developed a clear response; instead, they sued Microsoft for using a GUI similar to the Apple Lisa in Apple Computer, Inc. v. Microsoft Corp..^[50] The lawsuit dragged on for years before it was finally dismissed. At this time, a series of major product flops and missed deadlines sullied Apple's reputation, and Sculley was replaced as CEO by Michael Spindler.