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
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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.