Hey guys, it’s Greg with Apple Explained
and today we’re going to cover the history of NeXT, the computer company Steve Jobs founded
after being force out of Apple. This topic was the third place winner of last weeks voting
poll and if you didn’t get to vote, make sure you’re subscribed, that way the voting
polls will show up right in your mobile activity feed and you can let me know which video you’d
like to see next. Now if you watched my previous video on How
Apple and Microsoft Became Rivals, You probably remember that Steve Jobs was fired by Apple’s
former CEO John Sculley and board of directors in 1985. And that is where our story begins.
Steve told the board he was going to start a new computer company consisting of himself
and seven handpicked employees from SuperMicro, the division Steve lead inside Apple responsible
for the Macintosh and Lisa systems. While still leading SuperMicro, Steve received a
pitch from Paul Berg, a biochemistry professor at Stanford University. Berg wanted a 3M workstation
for higher education use with a megabyte of RAM, a megaFLOP of performance, and a display
with a resolution of 1200 by 900, or one megapixel. One megabyte of RAM, a megaFLOP chip, and
a megapixel display, hence the name 3M. But due to internal turmoil between Steve and
the board, he felt it wasn’t smart to ask for tons of money in R&D and marketing to
develop this machine. However, when you have your own company, you don’t need approval
from anyone to develop a product. So Jobs decided that the 3M computer was going to
be NeXT’s first product. Now before we get into the computer itself,
let’s talk a little bit about NeXT as a company, because it operated in a pretty unconventional
way at the time. Steve built a corporate culture totally unlike the one he built at Apple.
Instead of hiring employees to work at a company, he invited members to join his community.
Every member had one of two comfortable salary options offered by the company. And the salary
you received depended on when you started working for Jobs. If you worked for Steve
before 1986, you were paid 75 thousand dollars a year, but if you began working for him after
1986, you were paid 50 thousand. Now this roughly converts to 150 thousand and 100 thousand
dollars today. And I should also mention that checks were sent out to team members one month
in advanced, which was definitely not standard business practice. So not only did NeXT members
receive a comfortable salary, but they also enjoyed a pretty generous benefits package.
Because in addition to married couples, healthcare coverage was also offered to unmarried couples,
and same sex couples. But unfortunately the latter option was ultimately removed due to
limitations from the health care provider. So it’s clear that Jobs took care of his
team members, but in return, he needed them to put their best work into the products they
were creating. And the 3M machine, officially named the NeXT Computer, was their first product.
The release date was delayed several months past the initial estimate, and when it was
ready to ship, it was only distributed in limited quantities to the higher education
market. It ran a beta version of NeXTstep 1.0 as its operating system and featured 8MB
of RAM which could be expanded up to 64MB, 16 times more than what the Macintosh SE of
the time could support. And reception to the NeXT Computer was favorable, with BYTE Magazine
saying it is worth every penny of its $6,500 market price. Now later in 1989, NeXT accepted
two business deals that would really help them out financially. The first deal they
struck was with Canon, the camera company. Canon invested a whopping 100 million dollars
in NeXT, which gave them a 16% stake in the company. And you might be wondering why a
camera company would invest so heavily in a computer company, but back in the 90s, Canon
was gearing up to launch their own line of workstations, called object.station, and Canon
wanted NeXT to provide the operating system for it, which cemented NeXT’s focus on software.
The second deal was with Businessland, a popular computer reseller. Businessland had been sustaining
itself off selling Compaq computers, which was actually the third most popular computer
brand in the US back in the 90s. And Businessland turned a huge profit from this business model.
Because in 1989 alone, they sold almost 1.2 billion dollars worth of product. But Compaq
and Businessland had a dispute over sales strategies that led to Compaq ending it’s
six-year relationship with the reseller. Costing Businessland nearly 22 million dollars in
lost revenue the following year. So the company began searching for other computer brands
to partner with, which led them straight to NeXT, although they would’ve been better
off reselling Apple computers. So Businessland ended up becoming a distributer for the NeXT
Computer, even though it contradicted NeXT’s business plan to sell exclusively to the education
market. And the reason for this was likely to try and surpass major PC manufacturers
in sales by the end of 1990. But at the price point of $9,999, or about $20,000 today, the
NeXT computer was simply too expensive to achieve big sales numbers from average consumers. Now not long after the NeXT computer hit the
retail market, it was actually discontinued to prevent it from competing against two new
workstations NeXT was bringing to market. And those two machines were the NeXTcube and
the NeXTstation. Both of them were more powerful than the previous NeXT Computer, and the NeXTstation
was half the cost, with the least expensive model priced at $4,995 and the most expensive
model coming in at $7,995. It ran at 25MHz thanks to the Motorola 68040 processor, absolutely
smoking the Macintosh Classic of the early 90s. And over the following three years, NeXT
would continue to sell different models of the NeXTstation, each model learning from
and improving upon its predecessor. In 1992, NeXT had sold 140 million dollars worth of
product, which seems like a really big number, but when you look at the sales by number of
units, they had only sold 20,000. And that number was dwarfed by mega manufacturers like
Compaq and Packard Bell. By the time the NeXTstation was discontinued in 1993, the latest model
was sporting a 33 MHz CPU and 12-bit color support. Around this time, NeXT began offering
color printers and the standardization of CD ROM drives were introduced as floppies
were being phased out across the industry. The company would continue to offer motherboards
and computer enclosures for a couple years after, but their low hardware sales forced
NeXT to rethink their position in the tech industry. And they eventually realized their
software and operating system assets were much more profitable than their hardware,
so they pivoted to being a full blown software company, with their main product being the
NeXTstep operating system. Due to this shift, NeXT Computers was renamed to NeXT Software,
and about 3/5 of the company was laid off. This move turned out to be incredibly advantageous
to the company. Now around this time many companies began
providing their employees with computer workstations, but every company wanted their own customized
software to better fit their needs. NeXT responded by releasing the OpenStep Enterprise API and
the WebObjects web app platform, each one addressing different needs. For financial
companies, OpenStep was fantastic because it ran on Windows systems, and WebObjects
was popular after Apple acquired NeXT and dramatically lowered the 50,000 dollar price
tag. Companies loved the platform because it was a web-based product which meant you
could have the same experience on a high end machine as a low end one. Companies like Dell,
Disney, MCI, and the BBC all used WebObjects at some point in time. You might even interact
with a WebObjects app on a daily basis, since both apple.com and the iTunes store continue
run on the platform today. Now I mentioned NeXT being acquired by Apple,
and I want to talk about that in more detail since this acquisition was a defining moment
in not only in the history of NeXT, but the career of Steve Jobs. So in 1996, Apple had
released several updates to the classic Mac operating system, which was quickly aging
due to the OS’s dated roots. Apple had tried to remedy this with a concept operating system
codenamed Copland or by licensing BeOS, a sketchy MacOS knockoff developed by now defunct
Be Inc. But neither of these options turned out to be viable for Apple, so they were left
with one option: Acquiring NeXT and using their NeXTstep operating system as the foundation
for the next version of MacOS. When the deal was finalized in early 1997, Steve Jobs was
brought back to Apple, the company he was fired from about ten years earlier. He initially
served as a consultant and made dramatic changes. Executing one of the greatest company turnarounds
in history. This unbelievable achievement earned him the position of interim CEO until
2000 when he announced that he would serve as Apple’s CEO once again. The same year,
Steve announced the public beta of Mac OS X, which was the result of the NeXT acquisition.
It was built on the Darwin core with graphic and media rendering engines, and finished
off with a shiny Aqua user interface. All of these features were based on the NeXTstep
operating system and there’s actually a lot of similarities between the two. For example,
the dock was featured in NeXTstep back in the early 90s. As well as the ability to move
a window around with its contents following along in real time. Even the file viewer and
browser in NeXTstep is like a flattened, desaturated version of the Finder that shipped in early
versions of Mac OS X. So NeXT may have been a short lived company,
but had Jobs not have founded it, we probably wouldn’t have Apple today. Which means we
wouldn’t have the iPhone, iPad or any of the products Jobs pioneered that saved Apple
from bankruptcy. So although most people will never know what NeXT was, it’s brief existence
altered the future of technology for the better. So that is the history of NeXT and if you
want to vote for the next video topic, don’t forget to subscribe. Thanks for watching,
and I’ll see you next time.
