APPLE'S CEO TAKES THE SWEET WITH THE SOUR Once criticized from within and without, Sculleyhopes to defy the naysayers again with Newton


San Jose, Calif. -- In 1983, in a story now firmly embedded in the folklore of Silicon Valley, Apple Computer's intense young boss, Steve Jobs, persuaded an unassuming, middle-aged soft drink executive from New York City to become chief executive of the young company by issuing a challenge: "Do you want to spend the rest of your life selling sugared water, or do you want a chance to change the world?"

Now, nine years after leaving Pepsi-Cola and seven years after ousting Mr. Jobs from the company he co-founded, Apple's chairman and chief executive officer, John Sculley, stands poised to meet that challenge. After building a $6.6 billion company on the strength of Mr. Jobs' Macintosh computer, Mr. Sculley now hopes to make Apple truly his own by introducing a dramatically new kind of computing device, one that could transform the company, reinvigorate the computer industry and -- perhaps -- launch the 1990s equivalent of the personal computer revolution.

Mr. Sculley, 53, recently unveiled a diminutive box code-named Newton. It is the first example of an "information appliance" -- a pocket-size portable computing device that millions of people could use for work, entertainment, personal organization, education and communicating with people around the world.

Although its success is far from guaranteed, Newton represents the first glimpse of technology's future. Many people now credit Mr. Sculley with shaping that future, although he came to Apple as a savvy marketer and business organizer who was never expected to inherit Mr. Jobs' role as the guardian of Apple's technical vision.

"When he took that job he was widely criticized within Apple and widely laughed at without," said Richard Shaffer, a New York industry analyst and newsletter publisher. "But Apple is making the right moves, ones that will become apparent over the next year."

Mr. Sculley named himself chief technical officer in 1990 and placed himself in charge of the company's most advanced research projects. Analysts say that Mr. Sculley has demonstrated an unexpected comprehension of computer technology and understands what consumers will want to do with it. That, they say, may be the key to Apple's survival: As growth slows and profit margins contract in the personal computer business, Mr. Sculley's vision of the future could make Apple the leader in a new, and potentially far more lucrative, market -- what Mr. Sculley himself calls "the mother of all industries."

It is a risky vision.

Apple plans to finish the decade as a remarkably different company than the one Mr. Sculley forced Mr. Jobs to leave in 1985. It is staking much of its future on an untested hope for Newton and similar devices, which Mr. Sculley calls personal digital assistants.

The seeds of this change were planted 20 years ago by another visionary, Apple Fellow Alan Kay, while Mr. Sculley was still a self-described "obsessive misfit" cola marketer. Insiders say that Mr. Sculley often embraces as his own the ideas of many of the top Apple engineers and programmers who have his ear, leading some observers to say that Mr. Sculley shouldn't get credit for divining the future of the industry.

"You don't have to be a rocket scientist to see these trends," said Pieter Hartsook, a Macintosh newsletter publisher in Alameda, Calif. "I wouldn't say Sculley is a visionary. He's very good at seeing where the market is going and what the company needs to do to be in the right place at the right time with the products it needs."

But most outsiders who know Mr. Sculley say that he has gone from technology observer to technology student -- he once had a technical assistant called "Tutor to the President" -- to futurist. Along the way, in 1987, he outlined a 21st century portable personal computer called the Knowledge Navigator that provided its owner with a wealth of information access and communications controlled by speech and touch. Newton is the first tangible evidence that Mr. Sculley and Apple are on the road to creating it.

Indeed, some analysts credit Mr. Sculley with not only setting Apple's direction for the next decade, but with being one of the chief architects of the computer industry's future. "Sculley," said Dataquest analyst Doug Kass, "is the leading visionary in the computer industry today."

"When I took on the job [of chief technical officer] a lot of people didn't think it was a good idea," Mr. Sculley said in an interview at his modest Cupertino, Calif., office. "When I first wrote about the Knowledge Navigator five years ago, people thought it was either marketing hype or a kooky idea."

A scant six months ago, many Apple employees still felt that way, and would rather have hurled rocks at Mr. Sculley than praise.

Last year, Apple abandoned its traditional strategy of selling products at margins fat even for the lucrative computer industry, concentrating instead on gaining market share with inexpensive models. But slimmer margins coupled with the recession meant a painful reorganization of Apple last summer that led to 1,000 layoffs last year, with the threat of hundreds more, and the cancellation of some pet projects. Pay levels, once in the top 10 percent of the computer industry, were cut back to the top quartile, and middle managers cut little perks such as free pinball machines and soft drinks.

Most galling of all to many staffers was the startling alliance Mr. Sculley masterminded last year between Apple and IBM Corp., a deal that involved sharing jealously guarded Apple technology with a company many employees regarded as the enemy. To top it off, they knew that Mr. Sculley was getting ready to publicly discuss the company's commitment to PDAs. Mr. Sculley, with a reputation inside Apple for constantly changing direction -- some call his management style "strategy du jour" -- believed his latest obsession would take the spotlight off the Macintosh at a crucial time.

Today, though, many employees have reconsidered their opinions of Mr. Sculley. He's turned them around in part by steadily plugging away at his vision of computing devices of the next century.

Under Mr. Sculley, top technicians are developing software that can recognize human speech; control the computer with a flick of an electronic pen or understand letters printed with it; and manipulate three-dimensional images and video clips.

"Sculley is starting to turn us into the Apple Computer company, not the Macintosh company," said Chris Espinosa, a 15-year Apple veteran. "We're getting back to where we were in 1980 and 1981, when we had one line of business doing very well and we knew would continue, but also knowing that it couldn't keep us going and competitive forever. We know there is other technology it's necessary to exploit for the corporation to carry on into the late 1990s."

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