This article is part of a CNET special report on the 30th anniversary of the Macintosh, looking at the beginnings of Apple's landmark machine and its impact over the last three decades.
Two days after an advertising tease that captured the attention of nearly 100 million people during Super Bowl XVIII, Steve Jobs pulled the Macintosh out of a bag, inserted a disk into the machine and stood by as it talked.
Hello, I'm Macintosh. It sure is great to get out of that bag. As unaccustomed as I am to public speaking, I'd like to share with you a maxim I thought of the first time I met an IBM mainframe: Never trust a computer you can't lift. Obviously, I can talk, but right now I'd like to sit back and listen. So, it is with considerable pride that I introduce a man who's been like a father to me ...Steve Jobs.
Watching from the wings, an exhausted and exhilarated Mike Murray exhaled with relief as the charismatic Jobs took the fledgling Macintosh through its paces without a crash. As Apple's head of marketing for the new machine, the 28-year-old Murray had spent nearly two years preparing for this moment.
Joining the Macintosh team
Murray's journey to Apple began during his studies for an MBA at Stanford in 1980. Situated in the heart of Silicon Valley, Stanford's MBA program hosted brown-bag lunches where business executives came to talk about their companies and recruit talent.
"I attended many of these, always sitting in the back row, reading my Stanford Daily newspaper," Murray said. "I found that none of these firms held any interest to me. I felt that I may have made a big mistake getting my MBA at an expensive school like Stanford. Then in the spring of 1980, the lunch was sponsored by Apple Computer. I had never heard of them, even though I had received my BS in engineering from Stanford in 1979. A fellow who looked like a student, wearing jeans, a button-down shirt, a suit vest and a down-filled outer vest came into the room. Instead of sitting with the students, he walked down to the front of the room -- these were small amphitheater rooms -- and sat on top of a table, folded his legs and said, 'Hi, I'm Steve Jobs.' I immediately put my paper down and started listening to this guy."
Murray decided on the spot that he had to work for Jobs. He ended up joining Apple temporarily as a summer intern in a newly-formed market research department. After earning his MBA in June 1981, he wanted to work for Jobs, but took a better-paying job at Hewlett Packard to support his growing family. Nine months later Jobs came calling.
Murray joined the Mac team in March 1982. After the group's interim director quit, Jobs made him the acting marketing director until 'they could find someone good.' They never did.
All Murray and Jobs' band of Macintosh missionaries needed to do within 18 months was devise and implement a product introduction plan that would create the impression that the Macintosh was the next big thing and, by comparison, make the IBM PC look like yesterday's boring and overly complicated computer. In other words, perform a miracle.
"No one had ever approached the introduction of a new computer in this way," Murray said in an interview with CNET. "It was innovative thinking for this industry. I utilized political consultants Scott Miller and Pat Caddell to help create the equivalent of a campaign. These consultants had just completed working on a national presidential campaign where their candidate had to get at least 50.1 percent of the vote or else go home. Given the incredible brand strength of IBM, this kind of novel thinking was exactly what we needed."
The plan to take on IBM
The product introduction plan from October 1983 laid out the challenges IBM presented for Apple:
IBM will be using its successful corporate positioning approach known as FUD to thwart Apple success in the worldwide business marketplace. FUD stands for Fear, Uncertainty, and Doubt. These are real, competitive forces that can have greater influence on the purchasing decision than product characteristics. Yet when weighing the competitive strengths of Apple and IBM we win in one key category: PRODUCT SUPERIORITY. It is our preemptive Lisa Technology at a recognizable price/performance advantage that will allow us to successfully compete with IBM for the next 18-24 months.
The Lisa Technology -- the graphical user interface, mouse and bit-mapped display that was first introduced on Apple's $10,000 Lisa computer and core to the $2,495 Macintosh -- was the future direction of personal computing. "By virtue of the large amount of software written for them, the Apple II and the IBM PC became the personal-computer industry's first two standards. We expect Macintosh to become the third industry standard," Jobs said at the time.
The marketing team identified six key groups who needed to be convinced that the Macintosh was the future of computing: customers, Apple's sales force, dealers, third-party developers, industry analysts, and the press.
Working with the public relations firm Regis McKenna, the press and industry analysts were given sneak peeks and access to key players on the Macintosh team, which resulted in dozens of mostly fawning articles in the leading magazines of the day. But it was the "1984" TV commercial airing during the Super Bowl XVIII that captured the attention of every one of those target groups. Still, the big question remained unanswered: Would the Macintosh live up to the hype.
The Super Bowl ad, evangelism and Macworld
The "1984" commercial kicked off what would be a $15 million, 100-day Macintosh launch campaign. It cost about $750,000 to produce and was directed by Ridley Scott in London. What few knew at the time is that the now-legendary TV ad nearly didn't run. Apple's outside board of directors thought it was appalling, and wanted the advertising agency to sell off the time it had bought up. But a 60-second spot was spared. To say that was a stroke of good fortune is more than mild understatement.
"The real goal of the 1984 TV commercial was twofold," Murray said. "First, to enter the word 'Macintosh' into the American lexicon, and secondly to create news -- not public relations. We succeeded beyond all expectations with both. Regarding the latter goal, the commercial, which only showed once on TV as a commercial, was shown in its entirety on the national TV news of ABC, NBC and CBS. This was news! And we received front page coverage in the New York Times, Wall Street Journal, Fortune, Business Week, Forbes, Time and Newsweek."
It was also shown on about 50 local TV stations, and garnered an estimated $5 million in free publicity following the Super Bowl airing.
The Super Bowl ad was just one part of the marketing blitz. Without third-party software applications the Macintosh would sink into oblivion. Murray created the role of "software evangelist," first hiring Mike Boich and later Guy Kawasaki to convince major independent software developers to create apps that would ship in time for the Macintosh launch.
By October 1983, only 20 third-party developers were actively working on Macintosh products for launch, but dozens more would sign up in the coming months. The 128K Macintosh, however, proved to be underpowered for the kinds of sophisticated business applications that Apple sought.
"The 128K memory limitation helps explain why some people started later but finished sooner. They didn't bother contending with that incredibly difficult configuration," Boich explained. The 512K Macintosh, which was released September 10, 1984 and priced at $3,195, helped Apple turn the corner in getting a good base of applications.
Competing with IBM also meant having a magazine dedicated to everything Macintosh available for subscription and on newsstands and in computer stores at launch. Jobs and Murray tapped David Bunnell and Andrew Fluegelman of PC World Communications to produce a high-quality monthly magazine, Macworld (this author was a member of the founding team). Apple included a trial subscription card to the magazine within the owner's manual, and the first 600,000 Macintosh owners to return the subscription card received the three-issue trial subscription, in addition to the premier issue, courtesy of Apple.
The Macintosh as a business machine
Apple expected businesses -- large, medium and small -- to comprise 65 percent of Macintosh sales in the first fiscal year. College users and a small portion of "knowledge workers" at home would make up the remainder of sales. According to the marketing plan, the "Macintosh is an advanced personal productivity tool for knowledge workers. The product is not a 'home computer' nor a K-12 'education computer' nor a large-scale fully networked office automation machine."
The target audience included financial analysts, sales managers, accountants, insurance and real estate agents, stockbrokers, social scientists, lawyers, personnel managers, administrators, planners, and exclude, for example, all secretaries, typists, clerical workers and retail sales workers.
Now the marketing challenge was getting people to try the Macintosh. They believed that once people got their hands on a Macintosh they wouldn't let it go. The "Test Drive a Mac" promotion, which began in November 1984, allowed consumers to check out a Macintosh by taking one home for a night. It included a leather driving glove for the mouse.
"We knew we had to get trial, because no one else had a mouse and it was strange and different to many people," Murray said. An estimated 200,000 people participated in the Test Drive program, but it was a headache for dealers and too many people returned the loaners worse for the wear after the 24-hour period.
Jobs also focused his attention on the "unboxing" experience. "We spent a significant amount of time making sure the out-of-the box user experience was smooth, simple and unique. We were selling based on ease of use and trying to appeal to a wide audience. It was a big priority for Steve," said Barbara Koalkin Barza, who was the product marketing manager at the time.
An Apple University Consortium was conceived to seed the Macintosh in colleges around the country. By launch, 24 higher education institutions were signed up to buy Macintoshes. Each member was expected to purchase more than $2 million of Apple products, mainly Macintoshes at discounted prices, over the next three years for use by students and faculty. Apple expected to unload 50,000 Macintoshes to the schools in the first year.
In an effort to motivate the sales team in the fall of 1984, Apple produced a World War II documentary-style video titled "1944," featuring Jobs playing President Franklin Delano Roosevelt leading the battle against the enemy, IBM. It was a more explicit follow up to the "1984" commercial. A general tells his troops: "Remember, the enemy is big, but we are smart. They are the elephant. We are the mouse."
The IBM PC focus group
Steve Jobs famously didn't base product designs on focus group data, but shortly after the Macintosh launch Murray organized a focus group in New York to test out his assumptions regarding the target market, asking ten office workers familiar with the IBM PC how they viewed the Macintosh.
"My team and I were hidden behind a large two-way mirror. The focus group facilitator had the room of experienced IBM PC users try a Mac for the first time. The users were ecstatic. They acted like children, full of wonder and joy," he said. "Behind the mirror we were giving each other high fives. We knew it was just a matter of months before the Mac would outsell the IBM PC."
As a wrap-up, Murray had the facilitator ask a few more questions:
"Which computer do you prefer? They all enthusiastically shouted 'Mac!'"
"Which computer would you recommend to your friends and co-workers? 'Mac!'"
"Which is easier to use in a business context? 'Mac!'"
The final question rendered an unexpected answer. "If you were in charge of purchasing computers for your firm, which computer would you purchase? The tone immediately changed and every single person, without batting an eye, said, 'the IBM PC,'" Murray said.
At that point, the halo effect from the Macintosh introduction evaporated. "We were stunned," Murray said. "But more than that we knew that our task had suddenly become a hundred times more difficult than we ever imagined. Even though we had an incredibly innovative computer that appealed to the masses, IBM owned business."
Apple's bet that they could convince businesses to join the the Macintosh revolution was getting off to a rough start. "We knew we would sell tons of Macs to early enthusiasts, but this market is too small to create the required revenue to keep Apple afloat and establish a dominant industry standard. And, truth be told, the first version of the Mac was very limited in storage, connectivity, functionality, etc.," Murray said.
Jobs had been against adding features that would appeal to business users, such as a hard drive, more memory, cursor keys and color display, that would increase the price and complexity of the machine. At $2,495, the 128K Macintosh was already $500 more than what Jobs, Murray and others on the team had thought in the summer of 1983 would be the final price.
As it turned out, Apple was sending confusing messages, marketing the Macintosh as a business computer and at the same time advertising it as a computer you should take home and play with. The 128K Macintosh was initially perceived as more of a toy than as a serious computer for business.
For fourth quarter of 1984, the Apple II contributed about $500 million in revenue and the Macintosh only $200 million, and the channel was stuffed with inventory. In addition, production at the Macintosh factory was hampered by faulty parts, including video displays.
In January 1985, the Macintosh Office was announced in an effort to lure businesses. It featured AppleTalk local area networking, a file server, and a networked LaserWriter Postscript printer. But the file server never shipped. IBM was eating Apple's lunch and Apple's management team was in turmoil.
Murray left Apple in the summer of 1985, after a reorganization that purged Steve Jobs from the company. In 1989, Murray joined Microsoft, rising to vice president of human relations and administration during his decade at the company. He then co-founded Unitus Labs, a non-profit focused on reducing global poverty.
"I look back at this experience with great happiness and awe," Murray said. "I was so lucky to be part of this team and to work directly for Steve. At times, many times, he was maddening. But I learned so much -- more than you can imagine. It was a privilege and helped me "think big" throughout my life. For the last 30 years I have tried to work on projects and problems that impact the entire world -- because I know it can be done."