“I didn’t get any sleep last night,” Jobs replied.“Why? What’s the problem?”

“I was thinking about all the things that need to be done and about the deal

we’re making, and it’s all running together for me. I’m really tired now

and not thinking clearly. I just don’t want to be asked any more questions.”


Amelio said that wasn’t possible. He needed to say something.

Finally Jobs answered, “Look, if you have to tell them something, just say

advisor to the chairman.” And that is what Amelio did.


The announcement was made that evening—December 20, 1996—in front of 250

cheering employees at Apple headquarters. Amelio did as Jobs had requested and

described his new role as merely that of a part-time advisor. Instead of appearing


from the wings of the stage, Jobs walked in from the rear of the auditorium and

ambled down the aisle. Amelio had told the gathering that Jobs would be too tired

to say anything, but by then he had been energized by the applause. “I’m very excited,”

Jobs said. “I’m looking forward to get to reknow some old colleagues.” Louise Kehoe


of the Financial Times came up to the stage afterward and asked Jobs, sounding almost

accusatory, whether he was going to end up taking over Apple. “Oh no, Louise,” he said.

“There are a lot of other things going on in my life now. I have a family. I am involved

at Pixar. My time is limited, but I hope I can share some ideas.”


The next day Jobs drove to Pixar. He had fallen increasingly in love with the place, and

he wanted to let the crew there know he was still going to be president and deeply

involved. But the Pixar people were happy to see him go back to Apple part-time; a


little less of Jobs’s focus would be a good thing. He was useful when there were big

negotiations, but he could be dangerous when he had too much time on his hands.

When he arrived at Pixar that day, he went to Lasseter’s office and explained that


even just being an advisor at Apple would take up a lot of his time. He said he wanted

Lasseter’s blessing. “I keep thinking about all the time away from my family this will

cause, and the time away from the other family at Pixar,” Jobs said. “But the only reason


I want to do it is

that the world will

be a better place

with Apple in it.”


Years later, when I raised it with him, Gates did not recall being that upset.

The purchase of NeXT, he argued, did not really give Apple a new operating

system. “Amelio paid a lot for NeXT, and let’s be frank, the NeXT OS was never


really used.” Instead the purchase ended up bringing in Avie Tevanian, who

could help the existing Apple operating system evolve so that it eventually

incorporated the kernel of the NeXT technology. Gates knew that the deal was


destined to bring Jobs back to power. “But that was a twist of fate,” he said.

“What they ended up buying was a guy who most people would not have

predicted would be a great CEO, because he didn’t have much experience at it,


but he was a brilliant guy with great design taste and great engineering taste.

He suppressed his craziness enough to get himself appointed interim CEO.”


Despite what both Ellison and Gates believed, Jobs had deeply conflicted feelings

about whether he wanted to return to an active role at Apple, at least while Amelio

was there. A few days before the NeXT purchase was due to be announced, Amelio


asked Jobs to rejoin Apple full-time and take charge of operating system

development. Jobs, however, kept deflecting Amelio’s request.


Finally, on the day that he was scheduled to make the big announcement, Amelio

called Jobs in. He needed an answer. “Steve, do you just want to take your money

and leave?” Amelio asked. “It’s okay if that’s what you want.” Jobs did not answer;


he just stared. “Do you want to be on the payroll? An advisor?” Again Jobs stayed

silent. Amelio went out and grabbed Jobs’s lawyer, Larry Sonsini, and asked what

he thought Jobs wanted. “Beats me,” Sonsini said. So Amelio went back

behind closed doors with Jobs and gave it one more try.


“Steve, what’s on your mind?

What are you feeling?

Please, I need

a decision now.”


One sticking point was that Jobs wanted his payout to be in cash. Amelio

insisted that he needed to “have skin in the game” and take the payout in

stock that he would agree to hold for at least a year. Jobs resisted. Finally,


they compromised: Jobs would take $120 million in cash and $37 million

in stock, and he pledged to hold the stock for at least six months.

As usual Jobs wanted to have some of their conversation while taking a walk.


While they ambled around Palo Alto, he made a pitch to be put on Apple’s board.

Amelio tried to deflect it, saying there was too much history to do something like

that too quickly. “Gil, that really hurts,” Jobs said. “This was my company. I’ve been


left out since that horrible day with Sculley.” Amelio said he understood, but he was

not sure what the board would want. When he was about to begin his negotiations

with Jobs, he had made a mental note to “move ahead with logic as my drill sergeant”


and “sidestep the charisma.” But during the walk he, like so many others, was caught

in Jobs’s force field. “I was hooked in by Steve’s energy and enthusiasm,” he recalled.

After circling the long blocks a couple of times, they returned to the house just as Laurene


and the kids were arriving home. They all celebrated the easy negotiations, then Amelio

rode off in his Mercedes. “He made me feel like a lifelong friend,” Amelio recalled. Jobs

indeed had a way of doing that. Later, after Jobs had engineered his ouster, Amelio would


look back on Jobs’s friendliness that day and note wistfully, “As I would painfully discover,

it was merely one facet of an extremely complex personality.”

After informing Gassée that Apple was buying NeXT, Amelio had what turned out to be an


even more uncomfortable task: telling Bill Gates. “He went into orbit,” Amelio recalled. Gates

found it ridiculous, but perhaps not surprising, that Jobs had pulled off this coup. “Do you

really think Steve Jobs has anything there?” Gates asked Amelio. “I know his technology,


it’s nothing but a warmed-over UNIX, and you’ll never be able to make it work on your

machines.” Gates, like Jobs, had a way of working himself up, and he did so now: “Don’t


you understand that Steve doesn’t know anything about technology? He’s just a super

salesman. I can’t believe you’re making such a stupid decision. . . . He doesn’t know

anything about engineering, and 99% of what he says and


thinks is wrong.

What the hell

are you buying

that garbage for?”


Gassée came in afterward, but he acted as if he had the deal in his hand.

He provided no new presentation. He simply said that the Apple team knew

the capabilities of the Be OS and asked if they had any further questions.


It was a short session. While Gassée was presenting, Jobs and Tevanian

walked the streets of Palo Alto. After a while they bumped into one of the

Apple executives who had been at the meetings.

“You’re going to win this,” he told them.


Tevanian later said that this was no surprise: “We had better technology, we

had a solution that was complete, and we had Steve.” Amelio knew that

bringing Jobs back into the fold would be a double-edged sword, but the

same was true of bringing Gassée back. Larry Tesler, one of the Macintosh


veterans from the old days, recommended to Amelio that he choose NeXT,

but added, “Whatever company you choose, you’ll get someone

who will take your job away, Steve or Jean-Louis.”


Amelio opted for Jobs. He called Jobs to say that he planned to propose to the

Apple board that he be authorized to negotiate a purchase of NeXT. Would he

like to be at the meeting? Jobs said he would. When he walked in, there was


an emotional moment when he saw Mike Markkula. They had not spoken since

Markkula, once his mentor and father figure, had sided with Sculley there

back in 1985. Jobs walked over and shook his hand.


Jobs invited Amelio to come to his house in Palo Alto so they could negotiate

in a friendly setting. When Amelio arrived in his classic 1973 Mercedes, Jobs

was impressed; he liked the car. In the kitchen, which had finally been renovated,

Jobs put a kettle on for tea, and then they sat at the wooden table in front of


the open-hearth pizza oven. The financial part of the negotiations went smoothly;

Jobs was eager not to make Gassée’s mistake of overreaching. He suggested that

Apple pay $12 a share for NeXT. That would amount to about $500 million.


Amelio said that was too high. He countered with $10 a share, or just over $400

million. Unlike Be, NeXT had an actual product, real revenues, and a great team, but


Jobs was nevertheless

pleasantly surprised at

that counteroffer. He

accepted immediately.


A few weeks later Jobs and his family went to Hawaii for Christmas vacation.

Larry Ellison was also there, as he had been the year before. “You know, Larry,

I think I’ve found a way for me to get back into Apple and get control of it


without you having to buy it,” Jobs said as they walked along the shore. Ellison

recalled, “He explained his strategy, which was getting Apple to buy NeXT, then

he would go on the board and be one step away from being CEO.” Ellison thought


that Jobs was missing a key point. “But Steve, there’s one thing I don’t understand,”

he said. “If we don’t buy the company, how can we make any money?” It was a

reminder of how different their desires were. Jobs put his hand on Ellison’s left


shoulder, pulled him so close that their noses almost touched, and said,

“Larry, this is why it’s really important that I’m your friend.

You don’t need any more money.”


Ellison recalled that his own answer was almost a whine: “Well, I may not need

the money, but why should some fund manager at Fidelity get the money?

Why should someone else get it? Why shouldn’t it be us?”


“I think if I went back to Apple, and I didn’t own any of Apple, and you didn’t

own any of Apple, I’d have the moral high ground,” Jobs replied.

“Steve, that’s really expensive real estate, this moral high ground,” said Ellison.


“Look, Steve, you’re my best friend, and Apple is your company. I’ll do whatever

you want.” Although Jobs later said that he was not plotting to take over Apple

at the time, Ellison thought it was inevitable. “Anyone who spent more than a

half hour with Amelio would realize that he couldn’t do


anything but self-destruct,” he later said.

The big bakeoff between NeXT and Be was held at the Garden Court Hotel in Palo

Alto on December 10, in front of Amelio, Hancock, and six other Apple executives.

NeXT went first, with Avie Tevanian demonstrating the software while Jobs displayed


his hypnotizing salesmanship. They showed how the software could play four video

clips on the screen at once, create multimedia, and link to the Internet. “Steve’s sales

pitch on the NeXT operating system was dazzling,” according to

Amelio. “He praised the virtues and


strengths as though

he were describing

a performance of

Olivier as Macbeth.”


By Thanksgiving of 1996 the two companies had begun midlevel talks,

and Jobs picked up the phone to call Amelio directly. “I’m on my way to

Japan, but I’ll be back in a week and I’d like to see you as soon as I return,”


he said. “Don’t make any decision until we can get together.” Amelio,

despite his earlier experience with Jobs, was thrilled to hear from him and

entranced by the possibility of working with him. “For me, the phone call


with Steve was like inhaling the flavors of a great bottle of vintage wine,”

he recalled. He gave his assurance he would make no deal with

Be or anyone else before they got together.


For Jobs, the contest against Be was both professional and personal.

NeXT was failing, and the prospect of being bought by Apple was a

tantalizing lifeline. In addition, Jobs held grudges, sometimes passionately,


and Gassée was near the top of his list, despite the fact that they had seemed

to reconcile when Jobs was at NeXT. “Gassée is one of the few people in my life

I would say is truly horrible,” Jobs later insisted, unfairly. “He knifed me in the


back in 1985.” Sculley, to his credit, had at least been

gentlemanly enough to knife Jobs in the front.

On December 2, 1996, Steve Jobs set foot on Apple’s Cupertino campus for


the first time since his ouster eleven years earlier. In the executive conference

room, he met Amelio and Hancock to make the pitch for NeXT. Once again

he was scribbling on the whiteboard there, this time giving his lecture about


the four waves of computer systems that had culminated, at least in his telling,

with the launch of NeXT. He was at his most seductive, despite the fact that he

was speaking to two people he didn’t respect. He was particularly adroit at


feigning modesty. “It’s probably a totally crazy idea,” he said, but if they found

it appealing, “I’ll structure any kind of deal you want—license the software, sell


you the company, whatever.” He was, in fact, eager to sell everything, and he

pushed that approach. “When you take a close look, you’ll decide you want

more than my software,” he told


them. “You’ll want

to buy the whole

company and

take all the people.”


Apple’s chief technology officer, Ellen Hancock, argued for going with Sun’s

UNIX-based Solaris operating system, even though it did not yet have a friendly

user interface. Amelio began to favor using, of all things, Microsoft’s Windows


NT, which he felt could be rejiggered on the surface to look and feel just like a

Mac while being compatible with the wide range of software available to

Windows users. Bill Gates, eager to make a deal, began personally calling Amelio.


There was, of course, one other option. Two years earlier Macworld magazine

columnist (and former Apple software evangelist) Guy Kawasaki had published a

parody press release joking that Apple was buying NeXT and making Jobs its CEO.


In the spoof Mike Markkula asked Jobs, “Do you want to spend the rest of your life

selling UNIX with a sugarcoating, or change the world?” Jobs responded, “Because I’m

now a father, I needed a steadier source of income.” The release noted that “because


of his experience at Next, he is expected to bring a newfound sense of humility back to

Apple.” It also quoted Bill Gates as saying there would now be more innovations from

Jobs that Microsoft could copy. Everything in the press release was meant as a joke,


of course. But reality has an odd habit of catching up with satire.

Slouching toward Cupertino

“Does anyone know Steve well enough to call him on this?” Amelio asked his staff.


Because his encounter with Jobs two years earlier had ended badly, Amelio didn’t want

to make the call himself. But as it turned out, he didn’t need to. Apple was already


getting incoming pings from NeXT. A midlevel product marketer at NeXT, Garrett Rice,

had simply picked up the phone and, without consulting Jobs, called Ellen Hancock to

see if she might be


interested in taking a

look at its software.

She sent someone

to meet with him.


It had taken Microsoft a few years to replicate Macintosh’s graphical user interface,

but by 1990 it had come out with Windows 3.0, which began the company’s march

to dominance in the desktop market. Windows 95, which was released in 1995,


became the most successful operating system ever, and Macintosh sales began

to collapse. “Microsoft simply ripped off what other people did,” Jobs later said.

“Apple deserved it. After I left, it didn’t invent anything new. The


Mac hardly improved. It was a sitting duck for Microsoft.”

His frustration with Apple was evident when he gave a talk to a Stanford Business

School club at the home of a student, who asked him to sign a Macintosh keyboard.


Jobs agreed to do so if he could remove the keys that had been added to the

Mac after he left. He pulled out his car keys and pried off the four arrow cursor keys,

which he had once banned, as well as the top row of F1, F2, F3 . . . function keys.


“I’m changing the world one keyboard at a time,” he deadpanned.

Then he signed the mutilated keyboard.

During his 1995 Christmas vacation in Kona Village, Hawaii, Jobs went walking along


the beach with his friend Larry Ellison, the irrepressible Oracle chairman. They discussed

making a takeover bid for Apple and restoring Jobs as its head. Ellison said he could

line up $3 billion in financing: “I will buy Apple, you will get 25% of it right away for


being CEO, and we can restore it to its past glory.” But Jobs demurred. “I decided

I’m not a hostile-takeover kind of guy,” he explained. “If they had asked

me to come back, it might have been different.”


By 1996 Apple’s share of the market had fallen to 4% from a high of 16% in the late

1980s. Michael Spindler, the German-born chief of Apple’s European operations who

had replaced Sculley as CEO in 1993, tried to sell the company to Sun, IBM, and


Hewlett-Packard. That failed, and he was ousted in February 1996 and replaced by

Gil Amelio, a research engineer who was CEO of National Semiconductor. During his

first year the company lost $1 billion, and the stock price,

which had been $70 in 1991, fell to


$14, even as the tech

bubble was pushing

other stocks into

the stratosphere.


After a few minutes of pleasantries—far more than Jobs usually engaged

in—he abruptly announced the reason for his visit. He wanted Amelio to

help him return to Apple as the CEO. “There’s only one person who can rally


the Apple troops,” Jobs said, “only one person who can straighten out the

company.” The Macintosh era had passed, Jobs argued, and it was now time for

Apple to create something new that was just as innovative.


“If the Mac is dead, what’s going to replace it?” Amelio asked. Jobs’s reply didn’t

impress him. “Steve didn’t seem to have a clear answer,” Amelio later said.

“He seemed to have a set of one-liners.” Amelio felt he was witnessing Jobs’s


reality distortion field and was proud to be immune to it. He shooed

Jobs unceremoniously out of his office.

By the summer of 1996 Amelio realized that he had a serious problem. Apple was


pinning its hopes on creating a new operating system, called Copland, but Amelio

had discovered soon after becoming CEO that it was a bloated piece of vaporware

that would not solve Apple’s needs for better networking and memory protection,


nor would it be ready to ship as scheduled in 1997. He publicly promised that

he would quickly find an alternative. His problem was that he didn’t have one.

So Apple needed a partner, one that could make a stable operating system,


preferably one that was UNIX-like and had an object-oriented application layer.

There was one company that could obviously supply such software—

NeXT—but it would take a while for Apple to focus on it.


Apple first homed in on a company that had been started by Jean-Louis Gassée, called

Be. Gassée began negotiating the sale of Be to Apple, but in August 1996 he overplayed

his hand at a meeting with Amelio in Hawaii. He said he wanted to bring his fifty-person


team to Apple, and he asked for 15% of the company, worth about $500 million. Amelio

was stunned. Apple calculated that Be was worth about $50 million. After a few offers and

counteroffers, Gassée refused to budge from demanding at least $275 million. He thought that

Apple had no alternatives. It got back to Amelio that Gassée said, “I’ve got them


by the balls, and

I’m going to squeeze

until it hurts.” This did

not please Amelio.


He was also gloomy in an interview with Tony Perkins and the editors of Red

Herring. First, he displayed the “Bad Steve” side of his personality. Soon after

Perkins and his colleagues arrived, Jobs slipped out the back door “for a walk,”


and he didn’t return for forty-five minutes. When the magazine’s photographer

began taking pictures, he snapped at her sarcastically and made her stop. Perkins

later noted, “Manipulation, selfishness, or downright rudeness, we couldn’t figure


out the motivation behind his madness.” When he finally settled down for the

interview, he said that even the advent of the web would do little to stop

Microsoft’s domination. “Windows has won,” he said. “It beat the Mac, unfortunately,

it beat UNIX, it beat OS/2. An inferior product won.”


Apple Falling

For a few years after Jobs was ousted, Apple was able to coast comfortably with a

high profit margin based on its temporary dominance in desktop publishing. Feeling

like a genius back in 1987, John Sculley had made a series of proclamations that


nowadays sound embarrassing. Jobs wanted Apple “to become a wonderful consumer

products company,” Sculley wrote. “This was a lunatic plan. . . . Apple would never

be a consumer products company. . . . We couldn’t bend reality to all our dreams


of changing the world. . . . High tech could not be designed and sold as a consumer product.”

Jobs was appalled, and he became angry and contemptuous as Sculley presided

over a steady decline in market share for Apple in the early 1990s. “Sculley destroyed


Apple by bringing in corrupt people and corrupt values,” Jobs later lamented. “They

cared about making money—for themselves mainly, and also for Apple—rather than


making great products.” He felt that Sculley’s drive for profits came at the expense of

gaining market share. “Macintosh lost to Microsoft because Sculley insisted on milking

all the profits he could get rather than improving the product and


making it affordable.”

As a result, the

profits eventually