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Guillotine Gill got gilled
Wow! What's up with THAT!

By:David K. Every
©Copyright 1999

Here is what I understand happened from piecing many different parts of a puzzle together. Now remember, this is rumor, speculation, innuendo, factoids, mixed with wild-assed-guessing -- oh, and my opinions. Take it accordingly.

A.C. "Mike" Markkula has been the puppet-master of Apple since the beginning of time (for Apple). He was an original investor (THE original investor) and has been in control of the board of directors. He is the one that has been controlling things, and as such has been responsible for much of the bad things that happened at Apple -- but he is also the one that is quick to sacrifice the heads of others (presidents or CEO's) as figureheads, and is quick to point the finger somewhere else. What we just saw at Apple was a big power-play, and another figurehead met the guillotine.

This is known as a sacrificial lamb. If the company had been pleased with Gill Amelio, or his results, then Amelio would still be there. Gil was going to leave next year anyway (3 year plan). In fact, one can speculate that the reason that Ellen Hancock was still around, despite her demotion, was because she was next in line. The Iron Lady was likely Gil's hand-picked successor for Apple, and moving her down and "out of the way" was because she had called Steve Jobs on his bullshit (something he can be full of), and Steve hates that! Since Steve had a purpose as figurehead, she was put on ice, but was going to return. When Gill got the axe, there was no reason for Ellen to stay (her days were numbered anyway). This is a shame because I think Ellen is likely more competent a manager than Steve by 100-fold, and Apple needs people that can see-through Steve's bullshit. But, Gil seems to have misjudged either Steve's influence or Markkula's ability to stab you in the back. (This could not have happened without Markkula's approval).

Gil Amelio came in to turn the company around. To cut what needed to be cut (and a lot needed to be cut), to get the financial house in order, to start bashing down the walls between the little fiefdoms.

Corporate cultures often have lots of little kingdoms fighting each other -- and Apple has plenty. (Almost as bad as IBM). Before Amelio, the President or CEO would set up a plan, then say jump -- and everyone would say, "Sure, we're jumping," then they would all do exactly what they wanted to do (which might be sit, stand, or walk the dog, but almost never jump). Gil fired everyone that wouldn't jump when told, and a few extras just to remind people to pay attention when he said so. Others left in a fit of indignation at being told what to do from above (imagine!). While not the perfect solution, Gil's way certainly was a lot better than the alternative (letting them run rampant like terrible two-year-olds). The results were that many of the walls were broken down, and many things changed. Although new walls ang fiefdoms went up (especially around the NeXT folks), things have gotten much better at Apple.

Remember --

  • Sculley had some charisma, little vision (very little), a personality, but never got control.
  • Spindler had no vision, no personality, no charisma, and never got control.
  • Gil had a no vision (other than getting things under control), little personality, no charisma, but he got SOME control -- and did more than any other CEO before him to break down the fiefdoms and make Apple act like grown-ups and clean their rooms. Which many managers, marketeers, and engineers did not like.

Apple didn't need vision (yet) -- they needed to clean house, and Gil was doing that. Gil was hired to clean house. Apple needed to change the Corporate Culture, and Gil did that -- some don't like how, but he did it. Apple needed to get the checkbook in order and make the tough cuts -- Gil did that (but pissed people off). There was no way for Apple (Gil) to make the cuts it needed, and avoid pissing people off. Apple needed to set a short and long term direction for the company. With the help of Ellen Hancock, Gil did that (MacOS and Rhapsody respectively). While no saint, and possessing the charisma and speaking presence of a tenured professor, he was doing well. I think was doing what needed to be done.


Remember where Apple was a year and a half ago? They were ready to lose money hand over fist, roll over and die. (Well, not quite that bad, but close.) Apple had horrible QA on its products. They PowerBook 5300's were finally shipping, but were unreliable and had started with a battery problem; System 7.5 wasn't very stable; Copland was an utter fiasco and had no focus; the company was hemorrhaging money and had no direction or goals to shoot for. (Copland was as ethereal as fog!)

A little over a year later, Apple now has their best Hardware product lines in YEARS (maybe ever)! QA has stabilized System7 (7.6 is cool). Trevanian is coming out with Mac OS 8 (at the presses as we speak), which is cool, stable, and sexy. And, it is going to have a whizzy roll-out for once! Rhapsody Developer-Release is almost here and so far the direction is GREAT! Not everything is perfect, but it is a HELL of a lot better than last year!

Most of this can be attributed to what Gil has done. You may not like him. He may have cut your pet project. But, things are better, and much of this IS because of him.

So why the axe?

First off, Wall Street types and board members seem to be a bunch of short-term thinkers who don't know dick about computers or technology. They don't care about the future beyond the quarterly report. They are a bunch of miopic idiots (in this country). Remember when 60 minutes compared a renowned Wall Street analyst to a chimpanzee? The chimpanzee WON, repeatedly, by picking stocks at random. And the analysts are probably sharper than the board members or most investors. It's all about image,bullshit, and politics.

Rumor is that Apple wasn't able to produce enough machines this quarter (8600's and 9600's especially) and Apple is going to lose money this quarter (big shocker). In the $70+ million range.... not that bad. But with the Mac OS 8 roll-out and new hardware, next quarter was the biggie (and the return to profitability). Who cares about next quarter and the long term stability of the company (they say) -- THIS quarter sucks, how can we make it better? What can we offer to the gods of Wall Street to fix Everything? A sacrifice!

The easiest way to achieve profitability next quarter (and to convince everyone that things have changed) is to offer a sacrificial lamb! Fire the CEO, everyone pile on the debt (and then some) for this quarter, write down $400 million -- then things are hunky-dory for next quarter. Guess who got voted to be the sacrificial lamb?!?!?

There is more. There are rumors of in-fighting between Markkula and Gil. Markkula can't seem to keep his senile mind made up for over a year -- and Gil got on his bad side with actually trying to run things his way. The Golden-Child returned and made nice (because of Gil I might ad), and Markkula and Jobs played nice. Jobs is a schmoozer and a great figurehead, things that Gil is not. So Markkula is the one that got rid of Gil (probably at Jobs' request). The rumors go further with Gil having ousted BDDO as a power-play (Markkula's wife is a big wig with that company, and it was a warning shot that didn't hit), and Markkula may have been the one that sold the 1.5 million shares (not Jobs) as a counter-play (some sort of threat to walk away?). Either way it seems that Gil lost.

I am saddened. Not because I like everything Gil did -- but because this is all just bullshit, image-making, smoke and mirrors -- and firing a guy for doing EXACTLY what he was hired to do. Of course that is what Wall Street demands so may be necessary. I am just ashamed that it IS necessary. Can't we behave like grown-ups?!?! I won't shed a tear for Gil, as he is likely walking away with a Golden Parachute that will make the landing very soft indeed [$10 Million severance, and other goodies I'm sure]. Gil did bring some of this on himself -- being unable to speak in public well, not sounding enthusiastic enough (or sure), trying to be conservative in an industry that wants hype and sensationalism. Living like a king (with a jet); making a few enemies as well. So there is no saint going to the slaughter, but I still don't think he got what he deserved. I don't think he will get the credit for putting Apple back on track, which he has done. More importantly, I'm concerned that whoever they put in will change things, AGAIN, just when things are settling down, AGAIN! Apple can't seem to keep its eye on the ball -- and that annoys me. It has the right goal. Stop screwing with the target and let someone follow through!!!

Jobs is in a new figurehead position. Good and bad! Jobs is a great speaker and a "Rock-Star". Someone sexy with an image. He is also a dick! He pisses people off, talks like a 14 year old (who hasn't taken his Ritalin), and sees everything as black and white. He has vision but an abrasive personality. He has focus but absolutely no diplomacy, tact, or ability to be pragmatic. Most of all he has vision, and his visions are often good --- but about 10 years ahead of the industry, and he won't accept that reality. He has no ability (willingness) to realize that NeXT was the right idea for 1997 -- but that the industry was not ready for it in 1987! He also can't stand working with anyone else competing with his vision. He will spend effort being petty and squashing them -- rather than focusing on his own product's success. His (and Ellison's) ideals about eMail, NC's and Networking are not bad (for some people) -- for 2007 (when we have the infrastructure to support it).... but not for 1997! Yet there is a good chance he will try to kill everything that competes with his vision, even if it is paying the bills. He got lucky with NeXT: that Apple was smart enough to see the value, and inept enough not to have pulled it off for themselves (with Taligent, MacApp, Bedrock, or OpenDoc). He takes credit for good things he has not done, and accepts no blame for bad things he has. He is a narcissistic person that can focus on himself -- but is not so good at thinking about what the customer wants. Fortunately the customers often want something close to what he wants, and so can (have to) adapt to him. He helped make the first Mac great, and he made the WORST decisions for that same Mac -- that kept it from being greater! I am very concerned about him and Apple.

I hope that Apple has the wisdom to keep Steve Jobs as a figurehead and visionary -- but not to give him any reigns of REAL power. Unfortunately, I think Gil's execution may be proof that Steve has more control than I want him to have -- and Apple's in for a bumpy ride!

Parting Shots

With the loss expected for this quarter, and the burnt sacrifice, there is a good chance that Apple's stock price will spike down. (I am not an analyst -- just expressing my best guess). If it does spike down, then they are very ripe for a take-over. Remember, Apple's stock price is almost at its book value as it is! Plus, not ALL others are completely stupid -- it only takes one very wealthy investor (or guy with the right connections) to realize Apple's value and see that it is are turning around, and to go for it.

Apple is already very ripe. If Apple goes down, there is a VERY strong chance that there will be a feeding frenzy and multiple companies going after Apple. Sun, Ellison, IBM and Motorola, Sony, and others, all could go for the fruit. Apple has a pretty big poison pill (money in the bank to make it harder to take over, and they can start printing lots more shares as well) -- and Apple probably ALREADY has allies set up to help them. So if the stock price goes down, I expect to see it shoot up as multiple companies start buying large blocks, and Apple tries to defend itself. It may get VERY interesting after the 16th (Quarterly Report time).

Acquisition could help Apple or destroy everything I love, depending. A run to take over Apple could help or hurt as well. Remember you don't make runs on companies that don't have value -- the press spins everything and it could detroy consumer confidence for the rest of this year. This is the first time that I have really been biting my nails about what's going to happen. If Apple can hold out a few more quarters, it will have turned the corner. But THIS is the critical corner (quarter).

7/10/97 -- Written by David K. Every edited by Joseph Bruni

More on the story -- TRULY AWESOME COLLECTION of all the other articles.

Created: 09/11/97
Updated: 11/09/02

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