Apple in mid-1993 was reeling. Amidst declining Mac sales, Microsoft had gained a stranglehold over the PC industry. Worse, the previous year Apple had spent $600 million on research and development, on products such as laser printers, powered speakers, color monitors, and the Newton MessagePad system—the first device to be branded a "personal digital assistant," or PDA. But little return had yet come from it—or indeed looked likely to come from it.
The Newton's unreliable handwriting recognition was quickly becoming the butt of jokes. Adding to the turmoil, engineering and marketing teams were readying for a radical transition from the Motorola 68k (also known as the 680×0) family of microprocessors that had powered the Mac since 1984 to the PowerPC, a new, more powerful computer architecture that was jointly developed by Apple, Motorola, and IBM. Macs with 68k processors wouldn't be able to run software built for PowerPC. Similarly, software built for 68k Macs would need to be updated to take advantage of the superior PowerPC.
It was in this environment that COO Michael Spindler—a German engineer and strategist who'd climbed through the ranks of Apple in Europe to the very top layer of executive management—was elevated to CEO. (The previous CEO, John Sculley, was asked to resign.) Spindler spearheaded a radical and cost-heavy reorganisation of the company, which harmed morale and increased the chaos, and he developed a reputation for having horrendous people skills. He'd hold meetings in which he'd ramble incoherently, scribble illegible notes on a whiteboard, then leave before anybody could ask a question, and his office was usually closed.
Under Spindler's rule Apple became increasingly dysfunctional. The company lost focus and direction. One year the board decided to drop Mac prices to raise market share, the next they backflipped and chased profits. Innovation all but disappeared from their product line, and now they embraced an idea long abhorred internally: sanctioning Mac clones.
The Mac had reached 12 percent share of the personal computer market in 1993, only to immediately begin its decline as the PC, which was outselling the Mac ten-to-one, ticked over 90 percent the following year. Apple's board and senior executives theorised that allowing other companies to manufacture Macintosh hardware would somehow reverse this trend—that Apple could beat Microsoft at the licensing game and overturn their massive market share deficit.
Apple had licensed the Mac system before, but only for specialised uses in new markets—things that didn't compete with Apple's Mac sales. Eric Sirkin, director of Macintosh OEM products in the New Media Division, had brokered deals for Mac OS to be used in embedded systems—computers with dedicated, specific functions. (OEM, or original equipment manufacturer, is when a product is licensed to be resold as a part or subsystem in another company's product.) But when the clone program started, he wasn't interested. He doubted the value of other companies selling consumer Macs, so he stayed clear. Soon after, through indirect channels, Sirkin got wind of an approach by a large Japanese toy company called Bandai to make a Mac- based games console. It was in the territory of the newly formed Personal Interactive Electronics (PIE) division, run by former Philips Electronics vice-president Gaston Bastiaens. "They weren't able to capitalise on the opportunity," Sirkin recalls, which frustrated some of the people in the PIE group.
Sirkin was already managing a project (the FireWire communications interface) that involved regular travel to Japan, so he was happy to look into it. His PIE group colleagues connected him with Bandai, and off he went to Japan discuss their idea.
Founded in 1950 by the son of a rice merchant, Bandai had grown into one of the largest toy manufacturers in the world. It had made popular toy cars in the 1960s and 1970s, and by the 1990s was the toy licensee for most of the popular Japanese children's manga and anime—including Ultraman, Super Robot, Gundam, Dragon Ball, and Digimon. The company had been making waves in the American market as the maker of the action figure toys for the hit new children's superhero TV show Mighty Morphin Power Rangers, which was based on a Japanese show called Super Sentai. In 1994, Bandai would generate $330 million in revenue from sales of Power Rangers merchandise in the US alone.
CEO Makoto Yamashina, the son of the founder, wanted Bandai to be more than an action-figure toy company, however. He saw their future as a global entertainment company like Disney or Nintendo. He had pushed for years for Bandai to produce its own animated films and television serials and to delve deeper into home electronics. In the process, he drastically diversified their product line. They made sweets, bathroom products, clothing, videos, dolls, robots, action figures, and video games. The older Yamashina once publicly lamented his son's business strategy of bringing out ten toys in the hope that three would become hits.
But Bandai had grown considerably in both stature and revenue since Yamashina had taken over in 1987. Now he had an idea that would allow the company to take on the giants of home entertainment. Bandai's idea centred around the CD-ROM, which was surging in popularity as CD drives dropped in price. Myst, a video game, was often the first thing people bought. And many of Bandai's licenses, including Dragon Ball Z, Power Rangers, and Sailor Moon, were perfect for the games market. Bandai saw an opportunity to leverage these properties and the CD format together, and to thereby conquer the living room. They admired Apple and the Mac, so they hoped to partner with the Cupertino company in developing and releasing a game console and multimedia machine. Better yet, if the system could be a low-cost, more specialise Mac then they could avoid the problem facing the similar 3DO system—which had limited software available.
It was complicated
It fell to Eric Sirkin to explain that Apple, in its present state, would likely not be willing, or able, to launch it as an Apple-branded product. "My charter was to create opportunities for the Macintosh outside of its core market," he says. A stripped-down Mac packaged as a living room multimedia system could fit the charter, but only on the proviso that it was neither built nor sold by Apple. Sirkin explained that what Apple could do was lead the engineering and design of the product and then charge a per-system licence fee to Bandai. The manufacturing, marketing, and branding woul all be Bandai's responsibility.
They liked that idea. So we went through a series of meetings, going back and forth, and started involving Satjiv [Chahil], my boss, who also raised it to the attention of Ian Diery [head of Apple's personal computer division], so we had all the visibility in what we were doing. It was seen as an activity not costing the company a lot of money and possibly having an opportunity to reposition the technology of the company in another market.
Apple and Bandai soon entered into an agreement. Sirkin returned to Cupertino and put a team of engineers onto the project to help him design the device internals. They codenamed the project Pippin, after the type of apple, because the name was already registered by Apple and it hadn't been used yet.
The core technology would come from the Macintosh—specifically the new PowerPC line. To keep costs down, they opted for the low-end PowerPC 603 rather than the more powerful but much more expensive 604 processor. The Pippin, then, would be a low-cost Macintosh designed for the living room. A clone by a different name, for a different purpose.
Immediately, things got complicated. Sirkin and his team were instructed by Apple management to make the system un-Mac-like. Pippin could not be allowed to cannibalise desktop Mac sales. It had to be so limited that people couldn't possibly use it as a primary personal computer.
This distancing from the Mac affected the Pippin in a number of ways. First, Apple deemed it important that the device be both manufactured and branded as a Bandai product. "The Bandai people would have loved to have Apple just go off and make it," recalls Richard Sprague, who acted as intermediary and interpreter between Apple and Bandai. "But they felt like manufacturing was the price that they had to pay to get an Apple-compatible media device."
Apple's business people believed that the real money in the computer business came from software. "The problem with software is that people copy it," they'd argue, "so we're going to put the best copy protection on it that humankind has ever known. We're going to make this thing so locked down that it'll be impossible for them to play anything other than the stuff we put out." This, Sprague says, led to some ill-advised mathematics that spurred ill-advised policies:
It would have been nice to have a $200 machine where you take a copy of Myst off the shelf that works on a PC, it works on a Mac, and just pop it into the Pippin and have it play. That would be kind of cool. But no, we had to make it so that the Myst developers would make a special version of their disc just for us. It was a whole bunch of things just like that that were about ensuring that nobody would ever mistake it for a Macintosh.
Sprague had been hired by Apple in 1991 to help recruit Japanese software companies to write software for the Mac. "In those days Apple was really growing quickly in Japan," he recalls. "From every perspective it looked like the Japanese were going to dominate the world in all kinds of things. So it was kind of a hot, special place to be." Sprague was also a fluent Japanese speaker, so he often had to play the role of interpreter for visiting Apple executives. One day he got dragged along to a "super top-secret meeting" between New Media Division head Satjiv Chahil and Bandai's top executives, including company president Makoto Yamashina.
"Somewhere in the middle of the meeting it turned out that Bandai was really mad at Apple," Sprague recalls. "[Yamashina] was like in his most polite but kind of mean Japanese talking about how Apple had screwed him over—how they had signed this agreement months ago and now Apple hasn't done a single thing." Apple was supposed to have put a full-time employee in Japan to work with Bandai.
Satjiv, without batting an eye, he says, "Well we did hire a full-time person. That's why I brought Richard Sprague." He told me to translate that. I'm like "Satjiv, I've already got a job. It's not this. I was just dragged along because you asked me." He goes, "Just play along. Just tell him this. I'll make it up later." A lot of Pippin was run exactly that way. Just kinda making things up as we go.
Apple's increasing managerial dysfunction took a more immediate toll on the Pippin project. "We went through all kinds of struggles in the engineering team," Sirkin recalls. At one point four key software engineers went on strike. "They said they couldn't deliver the product on the schedule committed and they'd decided they didn't want to work on it anymore after working on it for like six months," Sirkin continues. "I ended up having to fire them." In their place he assigned a group of other software engineers from his group who were willing to work overtime to get the project back on schedule.
Listing image by Wikimedia, taken by Evan Amos