Was the Macintosh a failure? I’d call it a late bloomer more than I’d call it a failure. But in the mid 1980s, industry analysts were calling it a failure. Here’s why, and how it survived.
Analysts in the mid 1980s considered the Macintosh a failure because its sales were disappointing. It took the platform several years to come into its own, and of course, no one would call it a failure today. It was the machine that was supposed to usher in the future, and it took a while for that future to arrive.
It took the Macintosh about three years to sell a million units. In the 1980s, sales were much slower than today, but those weren’t good numbers even in the 1980s. Commodore sold half a million units of its Plus/4 computer in about a year and a half, and everyone called that a disaster. And by modern Apple standards, it was a pathetic showing. Today, it seems like Apple can sell a million units just to people standing in line the night before it releases a new product.
The Mac’s troubles led to Apple famously firing Steve Jobs, sending him into a decade-long exile before returning to Apple and turning it into what it is today.
So what happened?
In 1984, everyone thought the 32-bit era was right around the corner. The problem was, it was too expensive. The first Mac cost $2,495, which was over $6,000 in today’s dollars. For that money, you got an 8 MHz CPU, 128 kilobytes of RAM, one floppy disk drive, a 9-inch black and white display, a keyboard and a mouse.
The previous generation was much more affordable. You could get a nice 8-bit setup for around $1,000. And the same year Apple released the Mac, Tandy released the Tandy 1000, which gave IBM compatibility with color and sound, for around $1,500. And the prices on those machines dropped rapidly.
Sure, the mouse and the GUI was cool, but being able to play King’s Quest on a color 13-inch screen was cool too. And being able to run Lotus 1-2-3 was practical. If you had the money for a Macintosh, it made more sense to buy a more practical machine and spend the difference on software. And let’s face it, in the mid 1980s, pretty much any computer was a wonder, if you were interested in computers.
The first Mac was like a Model T. It came in a fixed configuration and you’d better like it. And even though it was an advanced computer for its day, it felt underpowered. Its 8 MHz CPU ran the operating system adequately, but it didn’t feel fast. Its 128 KB of RAM was much more suitable for an 8-bit computer.
And it wasn’t upgradeable. Well, it turned out it was, but it was designed to be difficult to upgrade. The world wasn’t ready for un-upgradeable machines. People wanted to add more memory when memory got cheaper, and a hard drive.
It was cool to mess around with in the store, but that was a lot of money for a severely underpowered machine. That’s why it took three years to achieve about 1% market penetration. The Mac was the machine that everyone talked about, but precious few people bought.
Apple quickly figured out it needed 512K of RAM to function, so they added memory and called it the Macintosh Plus. And it still didn’t sell, because it was still too expensive and not upgradeable.
It didn’t help that within a year of the Mac’s release, Atari and Commodore released their own 68000-based machines with a mouse and GUI. Both were cheaper, had color and sound, and sold fairly well, at least at first.
This is why early Macs are prized collectibles today. Everyone liked the idea of them, but they were too expensive, and their limitations made them impractical.
Coming into its own
Of course, today, calling the Mac a failure is a good way to get people to scoff at you. Aldus released Pagemaker in 1985, which in combination with Apple’s Laserwriter laser printer gave the Mac its killer app. For the first time, you could do professional-quality typesetting with equipment that fit on a desk. A usable setup cost $12,000, but that was less than conventional typesetting equipment cost. And it was much faster and easier.
Apple had financial trouble in the 1980s, but sold enough Apple IIs at a high enough profit margin that they were able to ride it out. They released numerous other machines to fit various price points, most of which added expandability so the machine wouldn’t go obsolete a year after you bought it. By 1991, they were selling 2 million units a year, and Commodore and Atari fell away as competitiors in the early 90s. Sometime around 1995, the Macintosh reached the critical 16% market penetration necessary to ensure long-term market acceptance. Within a couple of years Apple was in trouble again, but they had just enough installed base to survive while the newly reacquired Steve Jobs figured out how to position the company to succeed, such as adopting an infinite game strategy.
It also helped that Microsoft needed Apple in order to avoid being a monopoly.