Apple, 1997: Ninety Days from Bankruptcy

In 1997 Apple was about ninety days from insolvency. It had lost roughly $1.9 billion over two years, its market share had fallen below 4%, and it was selling more than a dozen overlapping Macintosh models under confusing names like the Performa 5400. Retailers could not tell customers which machine to buy. The board had cycled through CEOs, and Michael Dell publicly suggested Apple should shut down and return cash to shareholders.

Three broad paths were open. First, keep the broad line and compete on price against Windows PCs — defending share but deepening losses. Second, sell the company or license the Mac OS widely and become a software house. Third, radically narrow the product line, raise cash, and rebuild around a few excellent products even at the cost of short-term revenue.

Returning as de facto leader, Steve Jobs chose focus. He killed printers, the Newton PDA, and most of the Mac line, collapsing the roadmap onto a two-by-two grid: consumer vs. pro, desktop vs. portable — four products. He accepted a $150 million investment from Microsoft and a commitment to keep Office on the Mac, ending a ruinous lawsuit and buying credibility. He rebuilt the board and cut the dealer network.

Apple returned to profit within a year. The 1998 iMac — one of the four grid products — sold roughly 800,000 units in its first months and re-established the brand. Focus, cash, and a clear line-up set the stage for the iPod (2001), the iTunes Store, and the iPhone (2007). By 2018 Apple was the first US company worth a trillion dollars.

1. In a crisis, subtraction beats addition: a smaller line you can explain in one sentence outperforms a broad line no one understands. 2. A well-chosen enemy's investment can be a lifeline — Microsoft's cash and Office commitment mattered more than pride. 3. Focus is a financing strategy, not just a product strategy: fewer products freed the cash and attention that funded the next decade.