The Rise and Fall of Apple’s Gil Amelio

Gil Amelio was unlike any Apple CEO since the days of Mike Scott, a former Fairchild executive. Amelio was from National Semiconductor, an outside company where he made a name for himself as a turnaround artist.

On the Firing Line: My 500 Days at Apple, Gil AmelioAs CEO of National Semiconductor, he transformed the company from an unreliable third tier chip producer into a respected front runner in the industry. Before he entered management, he was a successful researcher with a PhD. Along with a coworker, he invented the CCD, the basis of all scanners, camcorders, and digital cameras.

In 1994, National Semiconductor was a huge supplier to Apple, so Amelio was not surprised to be approached by the headhunting firm, Heidrich & Struggles, to join the Apple board of directors. In earlier days, such an appointment would have scandalized the industry as a major conflict of interest, but during the tech boom it was common practice for major suppliers to help oversee the companies they supplied.

Spindler’s Last Gasp

After several months of uncertainty, Amelio was formally invited to join the board of directors by Apple cofounder Mike Markkula. He gladly accepted. His first board meeting took place in New York at a swank nineteenth-century club.

A shadow of things to come appeared shortly after Amelio took his place on the board of directors. Steve Jobs left a cryptic voicemail: “I want to come over and see you.” Amelio reasoned that he owed it to the cofounder of the company he now helped oversee to indulge this request, so he scheduled a meeting.

After a brief period of small talk, Jobs launched into a monologue on how only he could rally the troops at Apple and save the company from acquisition. Amelio was fascinated and pressed him to elaborate on his plans for the company, but he received only sweeping statements with few details.

The meeting concluded, and Amelio refused to lend Jobs his support. He had no idea that in a little more than five hundred days, Jobs would wrest control of Apple from him in a dramatic coup.

Unfazed by his meeting with Jobs, Amelio finished his day and returned to his Palo Alto home, where he shared the bizarre incident with his wife, Charlene.

Amelio was shocked by the lack of control Apple’s board exercised over the company. The board of directors was hardly fulfilling its role, in his eyes. The body rarely questioned the CEO, Michael Spindler, and did little research to discover the underlying problems at Apple.

Spindler’s Demise

Instead, senior executives would paint glowing pictures of blooming sales figures and successful product launches at every board meeting, despite the fact that Spindler’s strategy of flooding the market with cheap Macs was clearly hurting Apple’s bottom line, and, more importantly, alienating important Apple resellers.

As a result of Spindler’s policies, cheap Macs were being displayed just like their still cheaper PC counterparts, hiding the most distinguishing feature of the Mac OS, its ease of use.

Amelio’s second board meeting opened with Spindler announcing, “We’re not making it, the company has to be sold.”

Apple had flirted with several buyouts in its past. Only a few years before, at the end of John Sculley‘s tenure at Apple, a proposed deal with IBM got as far as both companies drafting press releases announcing the deal, but it fell through at the last minute.

Now Apple was looking for a new buyer. Jim Carlton of the Wall Street Journal reported that Gateway 2000 and Sun Microsystems were being considered, but no decision had been made.

Disaster struck Apple during the new fiscal year, which began October 1st. Spindler had been telling the board emphatically that Apple would make around $150 million in profits, but because of his strategy of flooding the market with cheap Macs, Apple would take a staggering loss of over $69 million.

Spindler lashed out at his subordinate, Jim Buckley, the head of Apple Americas, for cutting prices and profit margins too deeply, but it did little good. Even worse, Spindler revealed that Apple had over $1 billion in unsold merchandise in the channel, which was basically worthless and would have the be written off.

Apple had $6 billion in sales, so a full one-sixth of its sales would be canceled by this surplus. The number was staggering, and that was the last straw for the board.

Amelio’s Ascent

Spindler broached the news to the board at their December 1st meeting, and it was not taken well. Still, no one demanded Spindler’s head, nor did they relieve the man blamed for the disaster, Jim Buckley.

Instead, the search for a buyer became even more frenetic. The company’s CFO, Joe Graziano, told the board about ongoing negotiations he had with Sun and then dropped a bombshell: Sun was willing to buy Apple for $23 a share, $8 less than its trading price. The rest of the board was still interested, but the price immediately set off alarms for Amelio, who was certain that such a price would never be accepted by Apple’s shareholders.

Besides that, a simple buyout would not fix any of Apple’s problems – especially if Apple went to Sun, which had no experience in the personal computer market.

Amelio verbally lashed Graziano and the other board members for even considering such a lopsided deal. He woke the group from its apathy, and it became clear that Spindler’s days at the top of Apple were numbered.

After the meeting, Peter Crisp pulled Amelio aside. Crisp was one of Apple’s original shareholders. His Rockefeller-funded VC firm, Venrock, had been Apple’s second outside investor, putting $250,000 into the company. Now one of the most respected board members made a proposal that Amelio could not refuse. Crisp wanted Amelio to become the next CEO of Apple, replacing the flagging Spindler.

Amelio did not give Crisp a definite answer, though he assured Crisp that he would consider the offer. Two days later, Amelio embarked on an eight day tour of the People’s Republic of China as CEO of National Semiconductor. During his trip, the Wall Street Journal published speculation that he would accept the CEO position upon his arrival.

When Amelio returned, he told Crisp that he would consider a switch, but only if it was worth his time. Eventually he was guaranteed a $200,000 raise, stock options, and one million shares outright, though not before the deal was leaked to the media.

Michael Spindler

Michael Spindler

There was only one problem now: Michael Spindler was still on the job.

A board meeting was called for January 31 in New York, ostensibly to make a final decision on Sun. Apparently oblivious to the fate he was facing, Spindler brought his wife and planned to sightsee with her before the meeting.

Mike Markkula, the chairman, asked Spindler to resign and then allowed him to address the board. Spindler’s statements centered solely on the merger talks, encouraging the board to accept any terms that Sun offered.

The board refused, and Amelio returned to California with Markkula on his personal jet.

A Company in Chaos

Though no contract had been written, Amelio showed up for work the next day. After a fifteen minute search for a parking spot, Amelio entered the headquarters building on Apple’s campus, City Center 3.

Spindler was in the middle of his last meeting, informing his staffers of his fate. For the moment, most of Amelio’s future staff, including the influential administrative assistant, David Seda (who was rumored to issue important commands under the name of Spindler), were occupied helping Spindler clean out his office.

Apple headquartersThe first day of his 500 day tenure at Apple was spent just getting used to the layout of the building and organizational charts. His Macintosh from National Semiconductor was moved to his office, an obsolete Power Macintosh 8100/110, and hooked to the network.

His first command to his staff was to create a detailed white paper on a new strategy for Apple, one that did not include flooding the market with cheap, unsellable Macs. Unfamiliar with his staff, Amelio snubbed the executive probably best equipped to create such a document and instead hired an outside consultant he knew from his days at Rockwell, Mike Townsend.

The white paper’s conclusion was an about-face from Spindler’s era. Apple would create products with a big profit margin, excellent reliability, and attractive designs. To execute the plan, Apple would have to build up cash reserves, which were rapidly being depleted as Apple lost more and more money.

The paper also suggested selling convertible debentures (a type of bond) for around $500 million. To help the plan along, Amelio hired Fred Anderson as the new CFO to replace Graziano.

Mike Townsend was not the only outsider he brought from National Semiconductor; Ellen Hancock came, too. Hancock had made a name for herself as a senior IBM executive. Amelio met her when National was working on a modem design under contract with IBM.

The original team of executives botched the project and left the company, and IBM refused to pay National’s $5 million cancellation fee. Hancock was brought in to salvage the partnership and succeeded in getting National its promised $5 million. Hancock left IBM for National and, after Amelio left, she jumped ship to Apple, where she became the company’s new CTO.

Early meetings with the top Apple executives shocked Amelio. He had notified them of the meeting weeks in advance, but they hadn’t prepared presentations on their divisions. What little they did say was very positive – and not in sync with a company losing millions of dollars every quarter.

This cemented Amelio’s perception of the company. The Sun acquisition could not be successful if the deep problems in the Apple culture and business plan were not solved. And if Apple couldn’t solve them, no outside party could either.

Amelio broke off negotiations with Sun and put his new strategy to work.

A New Deal for Apple

Amelio started working with Fred Anderson on preparing Apple’s debenture sale. They were working an impossible schedule. Mike Townsend predicted that Apple would be insolvent by April. That left only two months for the sale.

Typically, a company’s senior executive would travel around the country making presentations to possible buyers for about three weeks and then set a deadline for buying about a month after the last presentation. Not only did Amelio not have that kind of time (if Townsend’s predictions were true), he would not be able to leave the company for that long right after he joined it.

Lew Coleman, a consultant at Apple’s financial firm, Goldman Sachs, suggested that Apple sell debentures in less than a day through a conference call shortly after the markets closed on the East Coast. Such a sale was totally unprecedented; no company in America had ever done it, but Coleman was confident.

Amelio took it to the board, where he met opposition. The board stalled the plan for weeks, until late March. Luckily for Amelio and Apple, sales had picked up, so by the time the call was made on June 3, 1995, the company was still solvent, although barely.

The conference call began at 4:00 p.m. For hours, Amelio made a presentation on Apple’s future strategy, and Fred Anderson talked about Apple’s financial status and goals.

After a sleepless night, the Goldman Sachs people closed the deal at 10:00 a.m. Apple had sold $661 million in debentures, insuring financial solvency until at least 1997.

Quality Control Problems

Even as its short term financial future was secured, Apple was turning out a lot of flawed products. Not only did they have quality issues (almost 10% of all products were repaired or replaced under warranty), but there were major design flaws. The two best known examples are the Performa 6400 and PowerBook 5300.

The 6400 was supposed to be the hub of a family. The computer was powerful, had a large bundle of software, and even had a built-in subwoofer. On top of that, it was packaged in a minitower, Apple’s first consumer desktop in that configuration.

It was built to sell, but there was a major downside. Users could not use an external modem and printer at the same time – there was only one serial port. Such an oversight was baffling to Amelio, but it had not even occurred to the engineers or marketers who created the machine’s specifications.

PowerBook 5300Quality control was a more sinister problem. Just as Amelio signed on as CEO, Apple was readying a major marketing campaign for the PowerBook 5300 launch. The head of marketing, Satjiv Cahill (who would later take over Palm’s marketing effort) had engineered a campaign around the enormously successful Mission Impossible movie starring Tom Cruise. In the movie, the protagonists all used PowerBook 5300s while the villains used IBM ThinkPads.

Amelio was elated about the campaign and hoped the 5300 would cement Apple’s reputation for fast, expensive, quality computers.

It didn’t. Days before the ship date, notebooks began to explode in the Singapore factory. Amelio hoped that it was only a Singapore issue and shut down the plant, but the same thing started happening at all of Apple’s PowerBook plants. Production was halted, and the 1,000 PowerBook 5300s that had been shipped out were recalled.

A faulty lithium-ion battery from Sony was at fault, but the fiasco tarnished Apple’s image.

A retooled PowerBook was shipped a few weeks later with a different battery, but several notebooks out of every batch failed, so yields were low. The line was chronically sold out, making the expensive marketing campaign almost worthless.

PowerBook 1400csDisheartened, Amelio began reviewing every product under development at Apple. He found a few gems (like the PowerBook 1400 and Power Mac 9600), but most were superfluous and had little hope of ever being released.

The most glaring example was the PowerBook Mercury. Designed for mobile salespeople, the notebook had a detachable display that could be propped on an easel for presentations or held in a hand to read a spec sheet or other document.

The product was cool, but there was a flaw. The logic card, power supply, and battery were all housed in the display, making it almost impossible to use Mercury as a notebook – the computer would dive backwards.

Amelio canceled the project immediately.


The biggest project at Apple was Copland (see Apple’s Copland Project: An OS for the Common Man). Copland was going to be a highly evolved version of the Mac OS that would be more reliable and much faster, unlike System 7, which performed much worse on PowerPC hardware than IBM’s AIX and OS/2 operating systems.

Copland would not be a total rewrite of the existing Mac OS, so existing applications would not have to be rewritten.

Despite the seemingly narrow focus on the project, it was in deep trouble. Originally slated for release during 1995 – to counter Microsoft’s Windows 95 launch – it was already a year behind, and it was not close to being completed.

Amelio was convinced that even with 500 staffers, the Copland project would never be completed, so he began his search for a new operating system.

The first step was to create a stopgap release of the Mac OS, mainly to satisfy contractual obligations with the clone makers. Nobody was working on creating an update to the Mac OS. The entire division was devoted to Copland, so Amelio created a new group devoted to creating System 8, headed by Steven Glass.

Mac OS 8

Mac OS 8 would include some elements from Copland that were nearly complete, like its themes, Finder, and platinum appearance. Because of the new OS release, Apple was able to renegotiate its contracts with the clone makers, which were encroaching on Apple’s market share instead of bringing new customers to the platform.

In order to counter Power Computing‘s attack on the high-end market with its Power Tower line, Apple created a sliding scale of fees. Now low-end clones cost much less in licensing fees than high-end computers.

Power protested, but there was little they could do.

The Need for a New OS

Amelio’s first two ideas for solving the long term operating system problem involved licensing established workstation-class operating systems from outside company.

The first option he considered was Windows NT. Microsoft already had Windows NT running on PowerPC workstations, so Apple engineers would only have to create a Mac-like interface for the operating system. Not only would it cement Apple’s relationship with Microsoft, but it would validate the Macintosh in the eyes of many business users. If Microsoft endorsed the Mac, surely they could give it a try.

The idea even got as far as Amelio personally calling Bill Gates, who was immediately enamored with the idea. He promised to put hundreds of Microsoft developers on the project and even to port QuickDraw to Windows NT, a task made easier by an earlier project at Apple called Star Trek, which involved ports of QuickDraw and QuickTime to Intel x86 hardware.

There were two big problems. The first was pure public relations: The Mac community was virulently anti-Microsoft, and so was Apple. Secondly, it would take a major rewrite to get Windows NT running on Apple hardware because of the way it stores information in memory.

The other operating system Amelio considered was Solaris. Solaris was based jointly on AT&T Unix and BSD. It was totally multitasking and had protected memory. The downside was the graphics system. It would require total rewrite to get QuickDraw running, and Sun was too small to devote the same resources to the project that Microsoft could.

The existing GUI for Solaris was totally un-Mac-like. The Common Desktop Environment (CDE) was based on X11 and Motif, and it was very ugly. Written in the early nineties when 3D widgets were in vogue (a trend started by NeXTstep), everything looked like it had been chiseled out of granite.

Amelio was convinced that Solaris was unworkable, but Hancock was not so sure. She pressed him to go with Solaris, but he refused.

Plan A Instead of Plan Be

Jean Louis GasséeFate intervened in the person of Jean-Louis Gassée (see How Jean Louis Gassée Changed the Mac’s Direction). Formerly a senior executive at Apple who oversaw the Macintosh after Jobs left, Gassée quit shortly before John Sculley became CEO and took several Apple engineers with him to found Be Inc.

In seven years, Be had no commercial products, but it did have the very respected BeOS, which was still in development. Gassée still had many supporters inside Apple, and when he heard about Apple’s operating system search, he called Amelio and made the proposal.

Amelio had heard about Gassée and was hesitant to do business with him, but he allowed Gassée to make a pitch.

Gassée brought a former Apple engineer, Steve Sakoman (the creator of the Newton project) and a Power Tower Mac clone running BeOS. Amelio was stunned at the speed of BeOS and pleased with the fact that it already ran on Mac hardware.

Still, Gassée was off-putting. When asked for a price for the company, Gassée responded he did not care about money and would let his board set a fair price. Amelio expected around $50 million based on the value of the company, but the board submitted a price in excess of $300 million.

The deal was off, though not before somebody leaked the story to the press.

Gil Amelio's keynote addressDespite the failure of the Be proposal, Apple was the subject of many turnaround stories sparked by their successful debenture sale and strong PowerBook 1400 sales. They all reached their apex on August 7, when Amelio was set to deliver the keynote speech at Macworld Boston, his first such show in the US.

The speech was incredibly successful. Over 19,000 watched it live (either in the hall or through closed circuit television), and many others read the beaming accounts in national newspapers like the Wall Street Journal and USA Today.

Amelio expressed his confidence in the company and made two announcements. The first was a 20% price cut on the entire Performa line, putting the low-end Performa 5300 at US$1,499 and the high-end Performa 6500 Avid Edition at $2,499.

The second was an announcement of a $25 million profit for the quarter.


NeXT heard about Apple’s operating system search from sources at Apple still loyal to Jobs, and also that the Be deal had fallen through.

During the Macworld conference, a NeXT marketing manager started talking to Hancock about NeXT and Steve Jobs. They scheduled a conference call on November 26 to discuss NeXTstep and Apple.

All of this happened without Steve Jobs’ knowledge. Once he found out, he was thrilled and announced that he had been thinking of Apple as well.

NeXT and Apple started having meetings every day, discussing the technical issues of NeXTstep replacing the Mac OS. Meanwhile, Apple started interviewing hundreds of former NeXT developers, customers, and employees to make sure that NeXT was not a lemon or a fraud. All the checks came back okay, and high level executives began discussing licensing NeXTstep.


The press had yet to learn of the Be deal falling through or negotiations with NeXT, and Apple was riding on a tide of good publicity. So was Amelio, until the end of 1996 when a scandal would destroy whatever goodwill he had at Apple or in the industry.

Amelio had long been an avid amateur pilot, and he owned his own private jet that Apple used. Instead of allowing the struggling Apple to use the jet free of charge, Amelio created an independent company, Aero, to manage it and charge Apple for any fuel and maintenance the plane might need during company flights.

The press got ahold of the information and made a huge story of it. Apple was leasing its CEO’s jet for $1,695 an hour, totaling to more than $100,000 a year. Add to that the $5 million loan Apple had made to Amelio when he signed on, and it appeared that Amelio was extorting money from the beleaguered company.

He had never tried to mislead anyone about the deals, but they tarnished his reputation.

A somewhat more humble Gil Amelio scheduled a meeting with Steve Jobs and Jean Louis Gassée on 1996.12.10. Both men would present their solution, and Amelio and his senior executives would make a final decision that day.

Steve Jobs was dazzling. He gave examples of how NeXTstep’s advanced features would be used by Mac users and even had Avi Tevanian with him to talk about the technical aspects of bringing NeXTstep to the Mac.

Gassée’s presentation was hardly a presentation. He thought he already had the deal tied up, so he told Amelio and his team nothing new, pointing out that their engineers had already talked. Amelio was incensed and emphatically sided with NeXT.

At the next board meeting (only days after the shootout), Amelio proposed the NeXT acquisition, and Jobs made a demo of NeXTstep. For the first time in more than 15 years, Jobs and Mike Markkula (who had played a pivotal role in ousting Jobs in 1985) shook hands.

The board was worried about the price of NeXT but gave Amelio authorization to press on with the acquisition. Amelio and Jobs arranged a private meeting to be held at Jobs home.

Jobs’ Return

Jobs had several concerns about the acquisition. The first was his role at the company. He wanted to have some role in the new Apple, and Amelio decided that he would head up the new operating system division. Second, he was skeptical that his other big backers, Ross Perot and Canon, would be willing to sell NeXT to Apple at market price, especially when they had sunk so much money into the money losing company.

The final price was $10 a share – $400 million overall. Amelio defended the seemingly inflated number because not only was Apple buying a complete operating system, but it got Steve Jobs, 300 talented employees, and $50 million a year in revenues from WebObjects and OpenStep.

The large investors would be compensated totally in cash rather than Apple stock. Amelio, however, demanded that Jobs take Apple stock as a vote of confidence in Apple. Amelio managed to talk Jobs into taking 1.5 million shares (which he promised to hold for at least six months) and $120 million in cash.

Jobs would have his revenge on Amelio shortly.

Convincing the board of the deal (and the seemingly inflated price) was difficult, but Amelio pointed out that Apple had no operating system strategy and NeXT was the best option so far. Reluctantly, the board voted to buy NeXT and use NeXTstep as the basis for the next version of the Mac OS.

It would be weeks until the acquisition formally took place, on December 20.

Shortly before the announcement was to be made to the media, Jobs threw Amelio a curve ball. He refused to be the head of engineering. Panicked, Amelio suggested that he be an advisor to the chairman (Mike Markkula), and Jobs agreed.

With this seemingly minor detailed cleared up, Amelio stood before the media and said that Apple had gone with “Plan A instead of Plan Be” (Amelio 201).

Disaster Strikes in San Francisco

The looming Christmas season and following months were disastrous for Amelio.

Macworld San Francisco was coming up, and Apple would unveil its new operating system strategy along with a slew of software demos from third parties.

There would be two celebrity appearances as well: Muhammad Ali would show off his new website for Parkinson’s Disease, and Jeff Goldblum, the star of Independence Day (a movie that inspired a series of Apple ads for the PowerBook 5300 and 1400) would talk about movie production.

There were bad omens from the beginning. Instead of having a speech laid out word for word, Amelio would speak from a detailed outline. According to Amelio, his writer (whose identity has yet to be revealed) was behind schedule and making excuses. Revisions continued to be made up until show time.

To make matters worse, the TelePrompTer malfunctioned, garbling most of the text that had been loaded on it.

The other presenters did not fare so well either. Nobody had told them where they would enter the stage or how to stand so the cameras could pick them up.

Steve Jobs, Gil Amelio, and Steve WozniakBecause of the malfunctioning TelePrompTer, Amelio had to ad lib the order of appearances and ended up inadvertently snubbing Muhammad Ali. What was scheduled to last for 1-1/2 hours droned on to three full hours, ruining the finale of Steve Wozniak appearing with Steve Jobs.

Macworld San Francisco was a disaster, and Amelio was in the middle of it. The press had a field day with his poor performance, spawning a new term in Apple parlance, a droneathon. Amelio was embarrassed by his performance and took the blame for it. Only later was it revealed that he was largely a victim of the mistakes of others.


The shareholder’s meeting was coming up on February 6, and it wasn’t going to be pretty. The profitable quarter of early fall turned out to be a red herring. The last quarter of 1996 was a disaster. Apple had not lost as much money in a single quarter in its history. Amelio had guaranteed profits just months earlier, at the beginning of his 500 days, yet Apple was still hemorrhaging money.

To keep investor’s minds off the loss, Amelio made sure that every speaker was totally prepared for the presentation, and as a show of good will he had his executives forgo their performance bonuses, which could amount to as much as their ordinary salaries. Amelio brought in an outside adviser, Harold Burson, to help craft the speeches and lessen the impact of the poor results.

The meeting went off without a hitch. Everybody stayed on message, and the event even ended five minutes early. The audience was patient as the executives explained Apple’s long term operating system strategy and details of the NeXT acquisition.

Finally, it came time to vote on Amelio’s contract (a one million share stock options, one million shares outright, and a reduced $600,000 salary), and the investors approved it by a 90% majority. It was a vote of confidence in the flagging CEO.

Mac Linux

It was at this time that Apple assigned its first full time staffers to work on an experimental operating system for Apple, Mk Linux. Conceived as an exercise in microkernel programming and an olive branch to the open source community, Mk Linux was a version of the Linux kernel that ran on top of the Mach microkernel.

In theory, any operating system could be run that way relatively easily. In fact, OS/2 for PowerPC ran the OS/2 kernel on top of a microkernel. Such a project was stunning to the community. Richard Stallman said it “is a pleasant surprise to see Apple support the creation of a free operating system.”


After the meeting, a major reorganization was needed. Amelio figured that he had to cut away $250 million in costs each quarter to get the company back in the black. That required not only cutting employees, but cutting unprofitable projects and consolidating the company’s structure. The product based structure was abandoned, and a simplified structure that separated the company based on task was implemented, eliminating duplicate projects.

Amelio also took this opportunity to cut away some of the executives who had proven themselves ineffective or incompetent. Even Cahill was not spared. Perhaps the most important cut was Marco Landi, the head of Apple Americas, the sales division of the company. He had authorized the price slashing and was also incredibly abrasive, yelling at subordinates and bypassing the hierarchy.

Overall, 3,000 people lost their jobs, making it almost 6,000 Apple employees who were laid off or quit in little more than a year.


While Amelio eroded his support inside and outside the company through reorganizations and clumsy mistakes, Jobs was positioning NeXT engineers throughout the company. Ellen Hancock had long been a target for Jobs, and she was eventually replaced by Avie Tevanian, one of the creators of the Mach microkernel that was the basis of Mk Linux and NeXTstep.

Jon Rubenstein, another NeXT veteran, was picked to run the hardware division.

Two bizarre incidents took place during April, and they all pointed to Jobs. The first was an attempted hostile takeover of Apple by Larry Ellison on behalf of Steve Jobs. Ellison, the CEO of Oracle, had started promoting the idea of “network computing”, essentially glorified dumb terminals. He hoped that Apple would start manufacturing NCs (as they were called) and prod along the revolution.

It turned out that he could not get enough like-minded investors to jump on board and stopped his efforts.

Three days after the Amelios and Jobses enjoyed a vegetarian dinner at Gaylords, Amelio received a rude awakening in the form of a notice from the SEC that a stockholder had sold 1.5 million shares of Apple stock.

The Second Coming of Steve Jobs

Amelio immediately suspected that Jobs had unloaded the stock he got from the NeXT deal, but Jobs flatly denied it. Amelio pressed him and got a sheepish admission and a pseudo-apology.

The man Amelio brought in to save Apple had stabbed him in the back by indicating he had no confidence in Apple’s future under Amelio.

After Jobs’ vote of no confidence, Bill Gates stonewalled Amelio. Amelio was looking for a way to convince Gates to develop Office (a product generating $300 million a year for Microsoft from the Mac alone) for Rhapsody, Apple’s NeXTstep-based operating system. Gates flat out refused, even after Amelio offered to bundle Internet Explorer with all Macs.

To Amelio’s dismay, Gates agreed to a much less favorable offer from Jobs a little less than four months later.

On day 499 of Amelio’s tenure at Apple, he received some bad news. Board member Ed Woolard called Amelio during his July 4th family reunion to break the news. Amelio had been terminated, and Fred Anderson would run the company until a suitable replacement could be found.

Amelio was stunned into silence. His next and last day at Apple, day 500, was spent packing his belongings and saying good-bye to his executives.

The article was first published on 2005.12.21.


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