1996: Stock Exchange or Apple?
In a previous post we've already seen how important NeXT technology and people (nextonians) contributed to the success of the iPhone launched ten years ago. NeXT as recalled Scott Forstall, the nextonian head of the team that developed iOS. In an amusing meeting celebrating the tenth anniversary of the iPhone held at the Computer History Museum in Mountain View, Forstall recounted how the company founded by Jobs after his ousting from Apple in 1986 had "amazing technology, but no clients". Despite this worrying state of affairs, which today would not be so at all? - ?On the contrary…, in 1992 the young Forstall chose to work at NeXT rather than Microsoft, where he had completed an internship, to the great disappointment of the then head of human resources of the Seattle giant, who did not fail to let him know his extreme irritation.
On the matter of clients, however, Jobs does not seem to share Forstall's position. In a lengthy 1995 interview, just on the eve of Apple's acquisition of NeXT (not yet on the horizon), he still spoke of his venture as something that would soon become a unicorn, to use an expression that didn't exist then. That is, a company with a capitalization of a few billion. That it was not a fantasy or a distortion of reality, which was a specialty of Jobs' menu, is proved by the recent discovery of a remarkable lost document (November 1996 S-1 SEC statement) donated by Avie Tevanian, Jobs' right-hand man to NeXT, at the Mountain View Museum.
This document, a 108-page prospectus that was never forwarded to the SEC (our Consob), shows that NeXT was preparing to go public with a public offering of 5 million shares of common stock, estimating to raise $72 million from the market. The document, signed by Goldman Sachs and Merryl Linch, as members of the placement consortium, was signed, among others, by Steve Jobs and Larry Ellison, the head of Oracle and great mentor of Jobs, who at the bottom of the document is qualified as "director ”.
From NeXT computers to NeXT software
By late 1992 had NeXT abandoned proprietary hardware to focus solely on software and development of NeXTstep the operating system? – and its accessories – was ported to workstations with Intel Pentium, Sun Spark and HP PA-RISC processors. In addition, its object-oriented development environment "OpenStep environment" was separated from NeXTstep to run on Windows NT, Sun and the HP version of the Unix OS. NeXT had gone so far as to license the source code of Openspep to its historic competitor, Sun Microsystem led by the pugnacious Scott McNealy, one of the best golfers in Corporate America.
The company, whose new name was now "NeXT Software, Inc.", had also operated a radical market repositioning, focusing on the "enterprise" segment and large organizations. His clients included AT&T Wireless, Merrill Lynch, the US Postal Service, Fannie Mae, the US Navy, and other Fortune 500 companies. NeXT had very advanced technology, called "Enterprise Objects Framework" (EOF), to manage the large information systems of a corporation. This technology made it possible to easily develop desktop applications within a client-server network architecture.
According to the S-1 filing, NeXT had continued to lose money for three consecutive years (from 1991 to 1993, accumulating losses of $260 million), mainly due to costs associated with closing the hardware business. In 1994, however, it had made a profit of 1 million dollars. It was still a modest performance to justify a takeover bid.
The centrality of the web and… “the i”
However, 1995 was a turning point in the history of technology. With the stellar quotation of Netscape, the web had truly become mainstream and presented itself as the new wave of ICT. And NeXT had a ready-made solution, WebObjects (released March 1966), for dynamically managing web pages and content. A pioneering technology that could power e-commerce and transform the web from an information exchange environment into a business-oriented one. In 1995, for example, Jeff Bezos opened the Amazon online bookstore destined to become what we know. The following year, Dell would use WebObject to build its own online store within months. Apple itself nearly a decade later would turn to WebObject to build iTunes.
Probably Jobs was convinced that NeXT could become a dot.com and present itself, with its technology, as the protagonist of this new wave. If he could convince the market of the goodness of this transition, he could find the resources to pay off the debt and repay the historical shareholders, such as Ross Perot and Canon.
Jobs' perception of the centrality of the web was very strong. Not by chance he will become, by his choice, the iCEO of Apple, to then use the prefix “i” for anything that will come out of the Cupertino laboratories (iMac, iPod, iTunes, iPhone, iPad…). In his lost 1995 interview with Channel 4's Bob Cringley, he talks about the web like this:
“I believe the web will profoundly transform our society… Soon billions of dollars worth of goods and services will be sold via the web. Think of it this way: It's a totally direct-to-customer distribution channel. Or think about the fact that on the web, the smallest company will have the same visibility as the largest. So he thinks that in about ten years the web will be the most influential technology. That will make the history of computer science. The social turning point of the computer. I think it will be a huge thing and breathe new life into the personal computer. It will be a huge thing, yes… And then it cannot be controlled by Microsoft”.
Words from 1995
In the same interview Jobs also talks about NeXT. Below we report the complete transcription, unpublished in Italian (there are some abbreviated transcriptions), performed by Ilaria Amurri. We recall that Jobs, just forty years old, was on the eve of a great turning point in his career, his return to Apple, which was agonizing on the threshold of insolvency. However, this turning point, at the time of the interview, was not even in sight. Talks of a possible sale of NeXT to Apple only began in December 1995, as Forstall recalls in the meeting we mentioned above.
NeXT's mistake (which wasn't a mistake after all...)
It's complicated to talk about NeXT. We basically wanted to keep doing what we were doing at Apple. Keep innovating. It seemed to us that it didn't happen anymore at Apple and we made a mistake, which was to try to follow the same formula we used at Apple, which is to produce the whole system, hardware and software together. The market was changing, the industry was changing, its size was changing. Deep down we knew that we would be the last company that could make it or the first that could not make it. We were at the forefront and thought we'd be the last to make it. We were wrong, we were the first to not make it. I think we can say that we have put an end to the experiences that have really tried to do it [and it's not really like that, because the iPhone is the most successful experience of a totally integrated system between hardware and software, something that everyone envies Apple ]. And we certainly made our fair share of mistakes, but ultimately I think we should have taken a little longer to realize that the world was changing and we should have moved on to become a software company from the start.
Yet the NeXT machine was outstanding. It was the best computer in the world. Believe it or not, today they are selling it on the used market, in some cases at a higher price than we originally sold it for. They're even hard to find, even today, and we haven't produced any more in the last two and a half years. First, it was completely “plug-and-play”. Excluding the Macintosh, this feature is hard to come by. It is an extremely powerful computer, much more than the Macintosh. You could say it combined the power of workstations with the plug-and-play of the Mac, which is very nice. Second, the computer had that particular attention to detail that you don't find today.
I'm not just talking about aesthetics, but in a certain sense on an operational level, from simple to complex things. Simple things like turning it on and off, a basic thing, but as you know one of the main reasons people lose information inside computers is that people turn them off at the wrong time and when you are multitasking this can have quite serious consequences. We were the first to do this and we are among the only ones who do. When you press a button and tell the computer to shut down, it figures out what it needs to do to shut down properly, and eventually shuts down.
Certainly NeXT was the first computer with high sound quality when playing CDs. Now almost everyone does it, but it took them a long time. He was ahead of his time, maybe too ahead.
The diversity of NeXTSTEP
This is the real pearl of our work. I'll tell you an interesting story. When I was at Apple some friends said to me “should you really go to Xerox PARC – ?that is, the Palo Alto Research Center, PARC? – and see what they are doing”. They usually don't let many people in, but I managed to get inside and see what they were doing. I saw one of the first computers, called the Alto, which was a phenomenal computer. They actually showed me three things, which they had been working on in 1976 and which I saw in 1979 and which we only managed to recreate a few years ago with NeXT.
I didn't fully see all three at the time. I only saw the first one, which was so incredible to me that it filled me up, blinded me, preventing me from seeing the other two. It took me years and years to recreate them, rediscover them and re-incorporate them into the model. But they were far ahead in thinking. They hadn't reached perfection, the stuff they were making wasn't perfect, but what was there was the seed idea of all three. And those three things were graphical user interface, object oriented programming and network connection.
Let me explain. The Alto had the world's first graphical user interface. It had windows. It had a rudimentary menu. It had panels and other rudimentary stuff. It didn't work perfectly, but basically everything was there. He had the items. They were using Smalltalk, which wasn't the first object oriented language in the world, Simula was the first, but Smalltalk was officially the first object-oriented language. Third, the network connection. They invented Ethernet, as you know, and they had about 200 Altos with servers attached to a local area network that they were sending email and everything. All this in 1979.
I was literally blown away by the potential of the graphical user interface I had seen, which I didn't even assimilate or stop to fully inquire about the other two things. With NeXTSTEP we managed to recreate a part of this, incorporating the first truly commercial object-oriented system ever created and pushing the clock to be the most connected system in the world. I think that the world has made a lot of progress regarding the connection, but has not yet fully understood the potential of objects, as NeXTSTEP did instead. Some very large companies started buying it and now it is the most popular object oriented system in the world as objects are starting to go mainstream. So last year the company made its first profit in its nine years of existence and sold $50 million worth of software. I think we're going to have significant growth this year, and it's pretty clear that NeXT can become a few billion dollar software company in the next three to four years and be the largest company that offers stuff, until Microsoft hits the market, probably with a patched product.
Object-oriented software
In the future there will be only object-oriented software. When I went to Xerox in 1979, it was kind of an apocalyptic moment. I remember within ten minutes I saw the graphical user interface and I convinced myself that one day all computers would be like this. He was so obvious to see. He didn't need great intelligence. It was so clear.
The moment you understand the objects, everything repeats itself the same way. One day all software will be written in object-oriented languages. You can argue about how long it will take, who will be the winners and losers, but I don't think a rational person would question its importance. And in fact, all of the iPhone software is written in an object-oriented language. Jobs was right.
