On February 27, 1998, Apple announced it would stop developing the Newton, its handheld computer, along with the MessagePad 2100 and the eMate 300 built on it. “To realize our ambitious plans,” said Steve Jobs, Apple’s interim chief executive, “we must focus all of our efforts in one direction.”
Apple needed the direction. In the fiscal year that ended in September 1997, it lost $1.045 billion, after losing $816 million the year before. Sales had fallen from $9.8 billion in 1996 to $7.1 billion. The company had been cutting jobs since 1996, and its annual report warned that simplifying its product line would leave it depending “on fewer products.”
In January 1998 Apple reported a quarterly profit of $47 million, its first in a while. Jobs used the announcement to say what mattered: “Returning Apple to sustainable profitability is the Company’s number one objective for fiscal 1998.”
Over the year, the company narrowed almost everything. According to its next annual report, it went “from approximately 15 separate individual products to three main product families.” Spending on research and development fell 38 percent, from $485 million to $303 million, and the report describes “the cancellation of many research and development projects.” The workforce fell from 8,437 regular employees to 6,658. By May, the Mac press was describing the hardware plan as four slots: a desktop and a portable, each for consumers and for professionals. The iMac filled one of them.
Apple made money in every quarter of fiscal 1998, $309 million for the year. Its annual report credited several things, including a restructuring begun in 1996 and better inventory management, alongside the simpler product line. Sales kept falling, to $5.9 billion.
Ten years later, Fortune asked Jobs about focus. “People think focus means saying yes to the thing you’ve got to focus on,” he said. “But that’s not what it means at all. It means saying no to the hundred other good ideas that there are.” The clearest example, he said, was a handheld: Apple had been “pressured for years to do a PDA” and decided not to. “If we had gotten into it, we wouldn’t have had the resources to do the iPod.”