128k Mac - What were apple thinking!

there were no bigger ram modules availble at a reasonable price at the time

why do you think the moment that the ram prices dropped apple released the 512k mac the same year ?

the mac developers had to perform miracles to get a full working gui in 128 k and miracles they did perform

i am not at al enamoured by classic mac os but it is amazing what they managed to do with just 128 k at the time

there were no bigger ram modules availble at a reasonable price at the time why do you think the moment that the ram prices dropped apple released the 512k mac the same year ?

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You forgot greed. Apple typically enjoyed a 4x markup. Divide by 4 and you'll see Apple only paid about $600 per unit to make. Had they not been so greedy, they might well have put 256K or even 512K in there understanding it would be better in the long run. But despite what Jobs said about starting a revolution, his real motivation has always been making as much money as possible for as little investment as possible and making the consumer think they've just gotten a deal. There are well known stories about how he exploited Woz (i.e. working the man to death saying he would split $700 when in reality Jobs was being paid $3,000), so there is no reason to think anything has changed.

But there really is more to it than that. Apple already had designed the 128K board to be a 512K board. All they needed to do was socket the RAM and add a multiplexer socket. Then any dealer could add the additional RAM if a customer could afford it, costing Apple very little in terms of manufacturing. Much is made of Job's insistence that the Mac was a closed box and he didn't want anybody inside them, even technicians – if people wanted an upgrade they would have to buy a new box. Well that's just dumb. Why then did it take Apple 8 months to introduce the 512K? They weren't just waiting for a RAM price drop, since the thing already existed and people were screaming for it at any price.

I think we all tend to forget about the Lisa when we start debating Apple's missteps with the Macintosh in those days. But in January 1984 they had a $7,000 albatross hanging around their neck. Nobody was buying it. When the Mac was introduced, they dropped the price on the Lisa and offered technology the Mac didn't have and Job's said he didn't want. If you wanted more RAM, you HAD to buy a Lisa. I'm sure Apple thought the success of the Mac was going to help save Lisa. But it was immediately evident, people wanted the Mac not the Lisa. So MacWorks showed up in April to help turn it into a Mac and Apple bit the bullet in September releasing the more affordable 512K which really nailed the lid on Lisa's coffin, even though Lisa benefited by the price drop in RAM as well. Once repositioned in January 1985 as a much cheaper, optional 1MB MacXL with a hard drive, Lisa finally began to sell well. Perhaps too well, because now the Mac wasn't, so they simply "forgot" to re-order parts and that was the end of Lisa.

That, I think is the true story of Apple's original 128K.

As for software, there was tons of it! Just looking at the software offerings from a late 1984 Mac Buyer's Guide, I would say 90% of it was 128K compatible and there's almost 50 pages worth. It just isn't easy to find today.

But then again, this was just a rhetorical question, wasn't it.

Indeed, old-fashioned greed is the primary reason that so little RAM was put into the machine. First, Jobs' minimalism drove the team toward 128K, and then Sculley's pencil-pushing decreed a $2500+ retail price. The engineering team wanted to include, at the very least, an easy way to increase RAM to 512K, but Jobs refused. When the team tried to hide expansion capabilities in the guise of a bus-connected "diagnostic port," Jobs saw through the ruse and shut that down.

Even at 1984 prices, 512K of RAM would've been entirely within reason, and still would have allowed Apple to enjoy handsome margins.

Apple could have released the 512k instead of the 128K - they had 512k macines in Feb of 1984 (I met a developer who had been seeded one). The cost would have pushed the retail price over $3,000. Instead of the RAM they bundled the ImageWriter printer with it. $2500 plus $250 tax made the purchase $2750 - I bougt mine from GlenElllen Computer in IL.

The developement team did make the 128K board upgradeable by putting decode logic traces on the 128K mb. I know 'cause I cut the 128k chips off my June 1984 128k mb and did my own 512k upgrade. Yes it was a PITA to clean out all those holes and solder sockets onto the mb but it was doeable. [] ]'> I still have the coumputer but it sports a 6MB MacRescue board now.

I've thought about retuning it to it's orginal configuration but since I had to turn in the 64K roms when I did the 800k drive upgrade I just bought a virgin 128K a few years ago instead.

Apple could have released the 512k instead of the 128K - they had 512k macines in Feb of 1984 (I met a developer who had been seeded one). The cost would have pushed the retail price over $3,000.

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Again, only because of greed. They wanted margins that were well above industry norms. Sculley's calibration was that $2500 was about the upper limit on retail price, so their margin targets forced the use of smaller amounts of RAM. Without changing the retail price target, 512K would still have allowed Apple to enjoy extremely generous margins.

Oh -- and the upgrade-via-traces method? That was not on the original rev of logic boards. The original 128K boards had no means of upgrading without fairly major surgery.

Oh -- and the upgrade-via-traces method? That was not on the original rev of logic boards. The original 128K boards had no means of upgrading without fairly major surgery.

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I don't have the date of mfg of my 128k board or revision but I do not recall there being any difference as it relates to upgrability of the 128k boards. For the decode logic I used a Bit9 card from Ken Wilhelm; AFAICR it worked with all versions of the 128k mb. When I said traces I was refering to the decode logic for the extra RAM.

I used the Jan 1985 Dr. Dobb's Journal article "Fatten Your Mac" by Thomas Lafleur and Susan Raab to do my upgrade. As I'm deployed in Iraq I can't look at my copy and Google didn't find a copy. Perhaps someone can check the article to see if there were any issues with upgrading different versions of the 128k motherboard. I just don't recall that there were any. Maybe since my 128K was purchased in June of 1984 it was a later version motherboard and I didn't have any issues upgrading it. Hell, it was 22 1/2 years ago that I clipped the chips off of the motherboard!

The very first revs of the boards indeed had no provision for an extra address decoder chip (I know this because I performed upgrades for several of my friends in school). Upgrading those required adding an ugly little kludge board to accommodate the extra chip. Mounting it in a reliable way that still left adequate clearance for the logic board to slide into the chassis was a bit of a mechanical engineering challenge. Thankfully, Apple revved the boards very soon afterwards with space for a decoder chip. On those, the upgrade was much simpler (and looked nicer). Then you were ready to swap out the RAM chips themselves.

Oh -- and the upgrade-via-traces method? That was not on the original rev of logic boards. The original 128K boards had no means of upgrading without fairly major surgery.

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Tom, I have often wondered about what prompted the redesign of the 128K to the hybrid 512K (which is what I assume you are referencing) and the only answer I could come up with was the hybrid is nicer looking, which Jobs would have demanded.

The reality is, the 128K board is actually a 512K board designed to handle the extra RAM from the beginning. I have one of the early 128ks with what I call the "Larry Pina method" upgrade and it has a fairly elegant implementation of the mini-mux board at location E3 (someday I will post pics). In fact, if the pins were a little shorter or they didn't put the IC in a socket, it would not be any higher than the socketed ROM chips. It actually looks so good that if I didn't know it wasn't supposed to be there, I would think it was OEM. That said, Apple themselves must have implemented the exact same kludge in order for Jobs to do the Macintosh intro demo in January '84. FYI, the upgraded looks nicer on that hybrid board, but for my money involves a lot more work.

My point is that greed combined with the threat of competition against the Lisa which had been reduced to 512K in its stock configuration, prevented Apple from configuring the board properly for a 512K implementation from the beginning. Even so, that Mux board could have been popped into the Mac as soon as at it became clear from the first review, everyone wanted more RAM and eventually, crafty reverse-engineers or leaks from Apple allowed the public to take matters into their own hands. So Apple ended up losing anyway. As Aoresteen correctly points out, the very first boards had a way to implement 512K RAM (however inelegantly), Apple just chose not to and we can only speculate at the reasons why they waited as long as they did.

The real question is what did it cost them to make a can of Pepsi before Sculley left?

Well, I think there's some confusion about definitions. That the 128's logic board had a way to implement 512K RAM is certainly true, but that's a statement about the determination and ingenuity of hackers, not the foresight of Apple. With only a little hyperbole, an equivalent statement would be "the 128 had a way to implement overclocking." All that is true, but it is true despite Apple's intent, not because of it. That's the distinction I am making.

Aoresteen's comments indicate that he hasn't seen the original version of the 128 logic board. There were at least two that I'm aware of, with the original lacking a space for the decoder chip, and a later one with. Neither was ever intended to be upgraded. The later version was in anticipation of shipping a 512K Mac. Both 128K versions had soldered-in DRAMs as a consequence, requiring nontrivial surgery to perform the upgrade.

And we actually don't have to speculate about why things were done this way. It is a matter of historical record that Jobs viewed the Mac as a closed system. Part of this was in reaction to the messiness of the Apple II's open architecture. The other was Jobs' wish to move computing from the world of geeks to "ordinary folk." As a result, the compact Macs would not allow even RAM upgrades until the Plus, and would not accept expansion cards until the SE (and then, only in limited form), after Jobs had left.

Well, I think there's some confusion about definitions. That the 128's logic board had a way to implement 512K RAM is certainly true, but that's a statement about the determination and ingenuity of hackers, not the foresight of Apple. ... All that is true, but it is true despite Apple's intent, not because of it. That's the distinction I am making.
Aoresteen's comments indicate that he hasn't seen the original version of the 128 logic board. There were at least two that I'm aware of, with the original lacking a space for the decoder chip, and a later one with. Neither was ever intended to be upgraded. The later version was in anticipation of shipping a 512K Mac.

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Tom, you never cease to expand my thinking on the original Macintosh. Just when I think I understand what was going on in those days, you come along and smash it all to hell. LOL

Just so we are all thinking along the same lines, these are the two boards I am referring to:

1) the original 128K board http://www.digibarn.com/collections/parts/mac-prototype-boards/1983-medium.jpg

2) the 128K/512K hybrid board http://picasaweb.google.com/radius226/CompactMacintoshDisassembly/photo#5126677476008105266

(2 alt – not as good:
)

These are the only two 128K boards I know of. The one of mine I mention has been upgraded to 512K by means of the addition of a mux board is the 1st one. The mux board is installed at location E3 which as pictured seems to be an intentionally empty location on the logicboard (especially when compared to the rest of it) with conspicuously empty pads. The later board (#2) had an empty spot at G13, which in this picture shows it filled with the mux chip making this the 512K (the 128K would have a nice clean spacious spot in which to insert the chip).

Based on articles like this and others from Folklore: http://www.folklore.org/StoryView.py?project=Macintosh&story=Macintosh_Prototypes.txt&topic=Prototypes&sortOrder=Sort%20by%20Date&detail=medium

I have always thought that the 128K board was always intended to be upgraded to 512K and that the connection point at E3 was how Apple originally intended it to happen, but Jobs blocked it. I made a huge leap in logic assuming that the secret to upgrade it leaked out or was discovered.

You seem to be indicating that Apple never intended that empty spot at E3 to ever be used for RAM expansion, but it was just happenstance that the necessary traces happened to converge there allowing a mux board to be inserted and expand the RAM. Indeed a "hack", not something the engineers even knew was there, much less designed? I KNOW Apple never intended these boards to ever be upgraded, my question is whether the engineers intended that original design (#1) to be used for a commercial 512K board and were shot down, or if it was just a fluke?

In the latter case, this Folklore article http://www.folklore.org/StoryView.py?project=Macintosh&story=Intro_Demo.txt&topic=The%20Launch&sortOrder=Sort%20by%20Date&detail=medium

suggests that Apple had back in "the lab" a 512K logicboard that would have resembled logicboard #2 pictured above and the one they later put into production. I had always assumed that the 512K board they used for the shareholders meeting was modified exactly like the one I have, i.e. an original 128K with a mux board at E3 which generally resembles this one:

http://68kmla.org/forums/viewtopic.php?t=4298

Though as I have said, mine looks like OEM Apple. I will take some pictures soon to complete this discussion.

Assuming we are talking about the same boards, then I can see Jobs gloating about the correctness of his vision while the Mac was selling gangbusters until June of '84. Even though from the first reviews in January, everyone realized it needed more RAM, something his engineers had been insisting since 82, it wouldn't have been until the sales dropped dramatically that Jobs would have lost his ability to cling to his 128K ideals and acquiesce to the demands to release a 512K model. It is unimaginable to me that Apple would have really let him get away with that line of thinking, particularly when they stood to make substantially more money from releasing a more powerful version. Jobs is on record saying he didn't want the 128K to be expandable, but also that if people wanted more RAM they could buy and upgrade instead. So he wasn't against the upgrade. That's why I can only surmise the Lisa played some part in the timing of the decision as to when to release the 512K upgrade. It could be too that Jobs was hoping the RAM prices would drop so that he could simply offer the 512K Mac upgrade and just discontinue the 128K Mac, for the same price. After all, "Macintosh" is so much more elegant a name than adding on all those pesky model numbers.

Is it true that Jobs used to use a Fat Mac before they were available during his presentations?

Is it true that Jobs used to use a Fat Mac before they were available during his presentations?

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yes. the folklore article goes into detail about it.

Lots of good stuff here! A worth while project would be to identify (with photos) the evelution & versions of the 128k motherboard. Once we have that established we could then discuss what drove the engineering changes.

Then when we speak about "Revison 2 motherboard" eveyone know exactly what we are talking about.

My Bit9 card is installed at E3 as Mac128 showed. The E3 area is what I was refering to when I mentioned "traces" on the motherboard.

Due to the net nanny here I could not load the 2nd motherboard picture that Mac128 posted.

It would be interesting if there was an early 128k mb that did not have the pads & traces at E3. I've looked at 5 or 6 128k motherboards (not a big sample by any means) and everyone of them have the E3 traces present.

It would be nice to have the serial numbers of the computers that the 128k motherborads came out of so we could establish the aproximate timeline for the various 128k motherboards.

Tom, you never cease to expand my thinking on the original Macintosh. Just when I think I understand what was going on in those days, you come along and smash it all to hell. LOL

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I think your understanding is quite deep and solid. It may very well be that we are actually talking about the same thing(s), but just interpreting/labeling them differently. The debate between Jobs and his team about the size of the RAM complement certainly resulted in the spinning of several versions of the logic board. It would not be a stretch to imagine that the 128K logic board that ultimately shipped could have resulted from stripping the decoder chip out of a 512K prototype, leaving a nice space for a hacker to re-introduce the decoder chip. But a comparison of the original 128K board and the hybrid 128/512 board shows a more extensive rearrangement (thanks for linking to those two pics -- my memory is not very trustworthy; you can see that the boards differ somewhat more than one would expect if the only operation they performed was chip removal). That doesn't preclude your theory, of course, but it is clear that the engineers took extra steps to distance this board from a 512K-capable one. Undoubtedly, Jobs played a role here!

As to whether frustrated Apple engineers leaked information about how to perform the upgrade, I have no idea. I can say, though, that the mod is fairly trivial, and would not have required any detailed knowledge of the Mac architecture to devise (particularly in that era of simple page-mode DRAMs). Doing so was undoubtedly made even more trivial by BMUG's successful effort at generating a logic board schematic by the end of 1984 (!), and circulating it widely.

It would be interesting if there was an early 128k mb that did not have the pads & traces at E3. ...

It would be nice to have the serial numbers of the computers that the 128k motherborads came out of so we could establish the aproximate timeline for the various 128k motherboards.

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I have a very early 128K board from a March '84 Mac. It has the traces. Given that the final Digibarn production model shows the traces, it is unlikely there was a version in-between, particularly because the P/Ns are the same. AFAIK, the next revision occurred with the introduction of the 512K, based on various unchanged boards I've seen from 128Ks between March and September '84. The board in the 512K, of which I have one from November '84, is identical to my 512Ke Mac from November '86.

So there were only two boards most likely.

In any event, that's what http://www.mac128.com/m0001 is for: research. When you get home, make sure to register yours.

This thread is awesome. I was never aware of some of the history of the 128k and 512k boards. Or the fact that Jobs was against an upgrade. Greed certainly does make sense in terms of how pricing was determined.

Now I have to go read more of those older articles. I always thought that I had a good understanding of Mac history and hardware, but along comes this thread colors me corrected.

Given your interest in the early Macs, there are a couple of books that you might enjoy. One is Levy's "Insanely Great." Reading about the final push to release the system disks to production had me feeling exhausted in sympathy. And of course, there's Andy Hertzfeld's book (based on the stories he accumulated at folklore.org). If you haven't read Levy's book, or looked at Hertzfeld's site, have a gander. I'm sure you'll enjoy them greatly!

I have to agree, this is one of the most interesting threads I have read on the 128/512.

When I get home I will have to add some of my systems to Mac128's Database... )

Just to add some extra info into the mix, it wasn't Steve Jobs who originally wanted the Mac to be a sealed unit. Jef Raskin (original Mac project head before being ousted by the black-turtle-necked one) originally called for a self-contained box which users wouldn't be able to open up, expand or upgrade (his philosophy being that it (the machine) should do everything that was asked of it). Whether Stevie J wanted to go down this path for philosophical or financial reasons though is another question...just not one that's very hard to answer

Mr. Coffee, The M0001 Registry is certainly not MY database, it belongs to the entire Mac community, I simply am the guardian for it at the moment. It will definitely pass into good hands at some point.

TheNeil, here is the actual document you reference from the horse's mouth: http://library.stanford.edu/mac/primary/docs/bom/anthrophilic.html

The link is accessible from Folklore articles, as well, but always best to have it on hand. One thing to point out, Raksin wanted these things to simplify computers for the masses. However, this article is of interest: http://library.stanford.edu/mac/primary/docs/bom/memory.html

because he specifically address the criteria for RAM. Raksin, knew there had to be "sufficient" RAM to make a closed model a success. Jobs didn't seem to get that. When Raksin urged a single RAM configuration, it was for ease of use. I'm sure he never considered in order to meet a price point the RAM would be the first thing to go.

Indeed, Raskin almost certainly would have argued for some combination of a lower price and more RAM. Even Jobs was advocating a sub-$2000 price, but Sculley juiced that up by 25% at the last minute (because he thought the market would bear it).

Thanks for linking to those docs, Mac128!

Having 128K of RAM was a resonable amount of memory for a charater based computer. Z80 and 6502 computers had 64K limits (most had ways to bank switch in 16K or 8K blocks) so having 128K of linear memory on a 68000 seemed good.

I was using a Sinclair ZX81 that I had expaneded to 64K (16k ROM and 48k of user memory). I was running my business with it with an application I had wrritten in BASIC (invoicing and inventory control). I even had a floppy drive (160K) cobbled up to the ZX81. But I was running out of memory.

I bought the 128k Mac with the intent of porting my application to it. I bought Microsoft Basic for the Mac and went to work.

Big problem!!!! On a 128K Mac with MS Basic interperter loaded there was only about 30K of user memory left! 8-o My ZX81 had more user memory (48K) than the 128K Mac did! That's when I decided to do my own upgrade to 512K. MacWrite & MS Plan all worked well on the 128K but my custom application didn't.

It was a big deal NOT to ship a home computer with BASIC at the time. I have always thought that the real reason that Jobs didn't include BASIC with the 128K Mac was when they realized that the 128K MAC running a BASIC interperter would have less memory than a Trash 80 or a Commodore 64 that they would get trashed in the press for it. The party line was that the Mac would not be programed by a user.

I did dump MS Basic and went to ZBasic for the Mac (and FutureBasic) as it was a compiler and worked well.

Scarily the Mac was originally intended to be a sub $500 machine. Given what Apple were asking of it in 1984 (both in terms of technology and mark up) it's hardly any wonder that its price shot up five fold. Thing is though, even at a quarter of the price of the Lisa, it was still stupid money and out of the grasp of most users so, while sales were often seen as being better than the Lisa, it wasn't the immediate 'smash hit' that many people believe it to be (the oft quoted 'more Macs sold in 100 days than Lisas sold in total' is true but the Mac sales took a while to gain momentum). Indeed sales were slow when it was first launched and it was often the case that customers would arrive at a showroom to look at a Mac and end up walking out with a Lisa.

Definitely agree that Raskin's push for a 'sealed unit' had more to do with keeping things simple for the user rather than jacked up prices. Sadly though, that's not how business works.

BTW great links Mac128

I used the Jan 1985 Dr. Dobb's Journal article "Fatten Your Mac" by Thomas Lafleur and Susan Raab to do my upgrade. As I'm deployed in Iraq I can't look at my copy...

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Phil B. recently alerted me to the following info, that really captured my attention:

Fastime MacSCSIThe September 1985 issue of Doctor Dobb's Journal published an article by John Bass describing a SCSI interface board for the 128 and 512K Macs. The article included schematics for a basic board and sample driver code.

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Suffice it to say, I've been searching everywhere in vain to secure that 9/85 issue of Dr. Dobb's Journal. And when I happened to see Aoresteen's post today, I was reinvigorated. If you have the 1/85 issue, would you also happen to have the 9/85 issue as well? If so, is there any way you could scan some relevant articles?

This is one of those times I wish I were back in the states, where I could visit a local library and review some of these old publications. But alas, there's nothing like that here in Japan.

If any of you reading this ever visit your local library in the states, I would certainly appreciate it if you could lookup the Dr. Dobbs issue I mention in my previous post above (containing an article about a homebrew SCSI Interface for pre-Plus Macs) and make a photocopy (and scan). I would do it myself, but I live in Japan without access to an English library. I tried Access My Library this evening, but it didn't find that article.

Thanks.

Don't forget that the industry was beginning it's departure from the 8 bit era and 128k was still a common memory configuration. With a 16 bit processor, though, it is very limiting. They also had to get the Mac on it's feet as soon as possible because Lisa clearly wasn't going where Apple wanted it to and the IIe was losing it's edge to the PC. Delaying the launch until memory prices came down might have been the death of the Mac and Apple.

Delaying the launch until memory prices came down might have been the death of the Mac and Apple.

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You are assuming that they had to choose between delaying launch to enable more memory, and launching quickly with 128K. There was a third option: Launch on time with more memory, and accept lower margins. As discussed earlier in this thread, they would not have lost money by any stretch of the imagination. They would have made handsome margins, in fact, but Sculley wanted more than handsome.

And the Mac team knew full well that 128K was inadequate for their GUI-based machine.

Delaying the launch until memory prices came down might have been the death of the Mac and Apple.

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You are assuming that they had to choose between delaying launch to enable more memory, and launching quickly with 128K. There was a third option: Launch on time with more memory, and accept lower margins. As discussed earlier in this thread, they would not have lost money by any stretch of the imagination. They would have made handsome margins, in fact, but Sculley wanted more than handsome.

And the Mac team knew full well that 128K was inadequate for their GUI-based machine.

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Sculley already overruled Jobs on the pricing of the Mac, tacking on something like $500 more than was originally planned, but for Apple to launch the Mac with a lower margin might not have worked because like I said, Lisa and the IIe were largely being superseded by PC's. Apple needed a machine with a high margin to pay the bills or they wouldn't have survived.

Needless to say, high margins per se do not necessarily translate to large profits. It's not at all a solid argument that (over)pricing the Mac was essential to saving Apple from declining income. It's really a question of market elasticity. If a drop in price (or larger memory, say) increases your market disproportionately, then profits may actually increase. So, the real question is whether Sculley's pricing by fiat was self-defeating. The rapid flattening of Mac sales suggests that it was. A strong case can be (and has been) made that introducing the Mac with 512K without a price increase would have enabled developers to offer compelling applications sooner, and thus make the Mac a truly useful computer, rather than having it be the lovely toy that the 128K essentially was.

Needless to say, high margins per se do not necessarily translate to large profits. It's not at all a solid argument that (over)pricing the Mac was essential to saving Apple from declining income. It's really a question of market elasticity. If a drop in price (or larger memory, say) increases your market disproportionately, then profits may actually increase. So, the real question is whether Sculley's pricing by fiat was self-defeating. The rapid flattening of Mac sales suggests that it was. A strong case can be (and has been) made that introducing the Mac with 512K without a price increase would have enabled developers to offer compelling applications sooner, and thus make the Mac a truly useful computer, rather than having it be the lovely toy that the 128K essentially was.

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So you think Apple could have released a 512k Mac for $1995 or even $2495 in 1984? I don't think that would have been possible. 256k maybe, but not 512k.

According to the folklore, the jump from $500 to $1995 was pretty much because of RAM prices, the decision to go with the 68000 instead of the 6809, the Sony FDD that cost more than the Twiggy, and so on. That $500 target started before the Mac was nothing more than an idea, and the requirements grew pretty quickly.

Supposedly Scully raised it another $500 to $2495 to pay for extra marketing, and Jobs eventually backed down.

So it doesn't sound like $1995 would have been possible for anything more than 128K.

In engineering, 500 is one of those special round numbers. It rarely emerges from a mathematical calculation, and so one might suspect it was just made up. Well, there's no need to speculate. Apple enjoyed industry-record margins of ~60% on the 128K Mac at its introduction. That's a fat margin, thanks to Sculley's $500 brainstorm. And those margins only increased over time.

Spot prices for 64kbit DRAMs at the end of 1983/beginning of 1984 were between $2 and $4, depending on volume and negotiating power (by 1985, 64kbit DRAMs were selling for one-tenth that, as the Japanese came on strong). Even if you pessimistically assume Apple could do no better than to pay at the higher end of that range, we're looking at about $60-$65 of memory for the 128K Mac. So, there's no rigorous justification for the statement that Apple couldn't have afforded to sell the Mac for less. It would have been trivial for Apple to lower the price to improve market share. Alternatively, they could've kept the price high, but offer more RAM, enabling apps writers to provide compelling programs to entice users to the new platform. To do so with the 64k generation would have been cumbersome, but eminently possible, and would have added only $100-$200 in cost above that for the 128K model (again, depending on what assumptions you make about Apple's ability to negotiate).

It's hard not to conclude that the pricing was at best a weak function of hardware cost, and that ordinary greed was a more operative factor. I'm hardly against capitalism, but I am for an accurate telling of historical events.

the IIe was losing it's edge to the PC.

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The Apple II was a cash cow that carried Apple, and the Mac, into the 90s. The Mac did not become truly successful until the SE & Mac II were introduced in 1987.

I don't think anybody here advocated delaying a launch until RAM prices dropped. That would be foolish. Bill Gates would have released Windows 1.0 and no one would have anything else to compare it to and Apple really would have been dead, lawsuit or no. The argument as Tom Lee so astutely puts it is that Apple was and is a greedy company that was making far more than they actually needed to. They had more money than they knew what to do with at the time and would have done far better with the Mac had they sold it for less and targeted a wider audience. It did incredibly well for being as underpowered as it was thanks to Sculley's marketing campaign. But once the initial fascination wore off on the early adopters of this revolutionary technology, the bread and butter consumers avoided it thanks to the high price and poor reviews it was receiving. If it weren't for Apple's wise decision to get as many software developers on board from the launch, they might well have dried up and blown away by August '84. Between the huge selection of software and growing enthusiasm for the platform, they made it. Apple's investment in education really turned the tide, which ultimately saved them as students quickly embraced the Mac and bought them for themselves as soon as they had jobs. But, they failed to learn their lessons from Lisa, which was no matter how revolutionary if people can't justify the cost they will make due with something else. Yes RAM was expensive, yes it was hard to come by, but in the end, that isn't what kept the price artificially high for the underpowered 128K.

the IIe was losing it's edge to the PC.

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The Apple II was a cash cow that carried Apple, and the Mac, into the 90s. The Mac did not become truly successful until the SE & Mac II were introduced in 1987.

I don't think anybody here advocated delaying a launch until RAM prices dropped. That would be foolish. Bill Gates would have released Windows 1.0 and no one would have anything else to compare it to and Apple really would have been dead, lawsuit or no. The argument as Tom Lee so astutely puts it is that Apple was and is a greedy company that was making far more than they actually needed to. They had more money than they knew what to do with at the time and would have done far better with the Mac had they sold it for less and targeted a wider audience. It did incredibly well for being as underpowered as it was thanks to Sculley's marketing campaign. But once the initial fascination wore off on the early adopters of this revolutionary technology, the bread and butter consumers avoided it thanks to the high price and poor reviews it was receiving. If it weren't for Apple's wise decision to get as many software developers on board from the launch, they might well have dried up and blown away by August '84. Between the huge selection of software and growing enthusiasm for the platform, they made it. Apple's investment in education really turned the tide, which ultimately saved them as students quickly embraced the Mac and bought them for themselves as soon as they had jobs. But, they failed to learn their lessons from Lisa, which was no matter how revolutionary if people can't justify the cost they will make due with something else. Yes RAM was expensive, yes it was hard to come by, but in the end, that isn't what kept the price artificially high for the underpowered 128K.

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And it was only in education where the IIe was carrying it's weight. The IBM PC had pretty much pushed the Apple II's out of offices and competition from other makers of 8 bit computers like Atari and Commodore were taking the home users. The IIe had become a niche machine and the writing was on the wall for it. Jobs knew they wouldn't be able to depend on the IIe forever with PC's proliferating. Eventually the IIe's would have been pushed out of the schools which was why he got so into the Macintosh project. Mac was going to be the future of Apple when the IIe stopped selling. If the Mac failed, it would have been the end for Apple because the successors of the IIe (the IIGS, IIc and IIc+) all failed to achieve the same popularity.

Those early Macs had to have high prices to pay for the development costs as well as the advertising and promotion. If they had gone with Jobs pricing or upped the specification without a price increase, Mac would have dragged Apple down and might not have survived to 1987 when things started looking up to the point where Apple could think about dumping the Apple II and going exclusively Mac. Mac had to start recovering it's costs or the technology might have died before it achieved wide acceptance. Apple would be defunct and Macintosh would be nothing more than a blip on the timeline of computer history.

Those early Macs had to have high prices to pay for the development costs as well as the advertising and promotion. If they had gone with Jobs pricing or upped the specification without a price increase, Mac would have dragged Apple down and might not have survived to 1987 ...

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There's no argument that Apple needed to earn money from the Mac. However, you continue to make the assumption that high prices implies high profits. That could be true, but it is not necessarily true. By extension of your logic, Sculley should not have stopped at a $500 increase.

The flattening of Mac sales after the initial rush of purchases by early adopters ultimately led to Jobs' exile and ouster. It is not at all obvious that this flattening was inevitable. Indeed, in examining the conventional explanations for why sales saturated (e.g., high price for little capability), one can construct a coherent argument that the wound was self-inflicted (and therefore preventable).

Those early Macs had to have high prices to pay for the development costs as well as the advertising and promotion. If they had gone with Jobs pricing or upped the specification without a price increase, Mac would have dragged Apple down and might not have survived to 1987 when things started looking up to the point where Apple could think about dumping the Apple II and going exclusively Mac. Mac had to start recovering it's costs or the technology might have died before it achieved wide acceptance. Apple would be defunct and Macintosh would be nothing more than a blip on the timeline of computer history.

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Wow. I would really like to see some citations for this hypothesis. I've read almost every book about Apple there is and none of them painted this picture. Yet all of them make pointed reference to Apple's greed. Also, more sales balance out lower prices. It's basic economics. Period. The Mac did not have to be high priced to support Apple's R&D. It just needed to sell well, as I said before they had lots of money in the bank at that time. The fact it did both for the first 4 months is irrelevant. It certainly didn't help them survive the fall that resulted in Jobs dismissal. They were essentially hoist by their own petard.

I also question the validity of your statement that the Apple II was strictly a niche computer for education only. Hard to imagine releasing the IIc after the Mac, releasing the IIGS at ALL, updating the IIe in 1987, and redesigning the IIc Plus in 88, much less continuing most of the product line into 94 ONLY to support a niche and education market when the Macintosh had almost taken over completely by 1987.

I also question the validity of your statement that the Apple II was strictly a niche computer for education only. Hard to imagine releasing the IIc after the Mac, releasing the IIGS at ALL....

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The apple II was very useful for the (chemical) industry

It was easy to made custom cards (and the necessary software) to connect weighing units, things they couldn't do with the early macs

a part of my apple collection,some IIgs including the custom cards are acquired when the IIgs wheren't used any more .... in 2003

the metal inside is corroded but they are running smootly

Supposedly Scully raised it another $500 to $2495 to pay for extra marketing...

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Sculley tacked on that extra $500/Mac to pay for the famous 1984 TV commercial. Even though the Apple II cash cow brought Apple enough funds to pay for the 1984 CM, Sculley most likely viewed the Mac product line as separate and therefore wanted the Mac line to pay for itself at some point, rather than cannibalize profits from a separate product. (The Apple II and Mac teams were NOT one in the same, nor did they collaborate so much -- watch Pirates of Silicon Valley for a glimpse of the internal strife generated by Jobs himself.)

Those early Macs had to have high prices to pay for the development costs as well as the advertising and promotion. If they had gone with Jobs pricing or upped the specification without a price increase, Mac would have dragged Apple down and might not have survived to 1987 when things started looking up to the point where Apple could think about dumping the Apple II and going exclusively Mac. Mac had to start recovering it's costs or the technology might have died before it achieved wide acceptance. Apple would be defunct and Macintosh would be nothing more than a blip on the timeline of computer history.

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Wow. I would really like to see some citations for this hypothesis. I've read almost every book about Apple there is and none of them painted this picture. Yet all of them make pointed reference to Apple's greed. Also, more sales balance out lower prices. It's basic economics. Period. The Mac did not have to be high priced to support Apple's R&D. It just needed to sell well, as I said before they had lots of money in the bank at that time. The fact it did both for the first 4 months is irrelevant. It certainly didn't help them survive the fall that resulted in Jobs dismissal. They were essentially hoist by their own petard.

I also question the validity of your statement that the Apple II was strictly a niche computer for education only. Hard to imagine releasing the IIc after the Mac, releasing the IIGS at ALL, updating the IIe in 1987, and redesigning the IIc Plus in 88, much less continuing most of the product line into 94 ONLY to support a niche and education market when the Macintosh had almost taken over completely by 1987.

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So you honestly believe that if Apple sold the Mac for $1995 with 512k that they would have survived if sales of the Apple IIe started to slow down at that point? The IIe was only a year old in 1984. Nobody knew then it would run until 1993 especially since it was obvious that 16 bit systems would become the norm within a few years. Lisa was slow selling, the Apple /// flopped, the Commodore 64 dominated home users, PC's were taking over the business environment, Mac was a huge risk. Apple's future was uncertain and they could ill afford for the Mac to fail before it paid for itself. Sculley did what he had to do to mitigate the risk by raising the price, aggressively promoting the Mac and selling it with a low specification.

Sculley tacked on that extra $500/Mac to pay for the famous 1984 TV commercial.

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That's of course one of the official justifications for doing it. However, very little written about this actually draws this conclusion from analysis of the numbers, no more than those same sources suggest Sculley does. In fact they make it appear as though Sculley arbitrarily pulled that number out of a hat. There is any number of ways to justify a price point, it doesn't necessarily make it good business.

If they had gone with Jobs pricing ... Sculley already overruled Jobs on the pricing of the Mac

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Also another point of clarification. Quadraman implies that Jobs somehow was a champion of lower price for the Mac. The reality is from everything I read, if Jobs smelled profit, he found a way to maximize it. In fact he is allegedly the one who jumped in and began driving the price up. Sculley didn't know what the hell he was doing having only sold softdrinks, but one thing he and Jobs seemed to have in common was greed. Perhaps that is why they got along so well. Under Jobs supervision, the Mac price gradually creeped up to the dismay of the entire Mac team who bought into Jobs propaganda that they were building a computer for the rest of us. According to all reports he lost very little sleep in breaking the news to them that the Mac was going to sell for $2500. This is the same guy who insisted they build their own hard drives and floppy drives so they didn't have to pay anybody else and could reek all of the profits – again, decisions that nearly wrecked the company. Remember Jobs is the guy who took a job and offered to split the fee with Woz who ended up staying up all night, doing all the work. Steve told Woz it was something like $100, when in reality it was like $2,000. In fact Apple is founded on the Apple I which was used inexpensive parts he could, thanks to Woz, assemble in his garage and sell for a huge markup. And he's still doing it today. But it's a different world today, there's a disposable income market and lots of middle-class millionaires now who value style and will pay handsomely for it when combined with innovation. The same was not entirely true in 1984 as the computer wasn't really understood my most and definitely not a necessity.

Bottom line: Charging a premium for an under-powered appliance of any kind, no matter how stylish, especially when the choice for most is not must-have but an extravagance, is ultimately a bad business move. Only arrogance and greed can explain it away. IMHO.

So you honestly believe that if Apple sold the Mac for $1995 with 512k that they would have survived ...

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I'm not sure why you persist on raising this straw man from the dead. No one but you has suggested this combination. So, just to bury that straw man once and for all, the two alternatives that actually were discussed by others were:

1) Introduce the 128K Mac at less than 2495.

2) Sell a 512K Mac at about 2495.

And from the actual financial data I've offered, the overall answer is yes, not only would Apple have survived, they most likely would have thrived. Selling as in option 2) above would not have forced a per-unit loss (indeed, the margins would have remained healthy), but would have increased sales volume, and with it, increased market share. Needless to say, that would not have been a bad thing.

Again, it is improper to equate high per-unit margins with high company profits.

So you honestly believe that if Apple sold the Mac for $1995 with 512k that they would have survived ...

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I'm not sure why you persist on raising this straw man from the dead. No one but you has suggested this combination. So, just to bury that straw man once and for all, the two alternatives that actually were discussed by others were:

1) Introduce the 128K Mac at less than 2495.

2) Sell a 512K Mac at about 2495.

And from the actual financial data I've offered, the overall answer is yes, not only would Apple have survived, they most likely would have thrived. Selling as in option 2) above would not have forced a per-unit loss (indeed, the margins would have remained healthy), but would have increased sales volume, and with it, increased market share. Needless to say, that would not have been a bad thing.

Again, it is improper to equate high per-unit margins with high company profits.

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It is not improper at all. Anyone knows that when you have a high profit margin you don't have to sell as many units to recoup your costs. Do you really think Sculley was so stupid that he didn't know this? No, you're right. Sculley managed to become chairman of Pepsi and Apple based on his stupidity. If they had sold the Mac using your examples of 512k for $2495 or 128k for $1995 it would have taken more units to cover their investment. Units they may not have sold at all if the Mac failed. Also, the loweer profit margin would have meant no 1984 Super Bowl spot, no Steve Jobs promotional extravaganzas or any of the other clever Chiat Day advertising that got people to buy Macs. So now you have a situation where Lisa is dead, the IIe is an 8 bit computer in an emerging 16 bit world and no 16 bit machine either on shelves or in development so now what do you do? It took 5 years to develop the Mac from concept to production. Can Apple afford to wait until 1989 to produce another 16 bit machine? Microsoft will have Windows 3.x out by then and Intel will have introduced the 486 chip. 1989 is too late to be playing around with 68000's with small memory configurations.

Now you're just degenerating into silliness.

Now you're just degenerating into silliness.

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No, I am not. I am looking at the situation from all possible angles, which you have failed to do and which would be required of the CEO of a large corporation. Do you think you are so much better than Sculley that you know your way would have worked for certain? What is the name of the last multinational corporation you were CEO of? Feel free to post your resume showing how you are better qualified to make those sorts of decisions than he was. Please, do.

As my last post on this thread, I'll point out several flaws implicit in your attempted argument-by-résumé. First, had I argued that, in Sculley's shoes, I would have made a different decision, you might have a point. However, that's not at all what I have said. It is precisely with the benefit of hindsight that we can see that Sculley's pricing strategy was indeed self-defeating. Support for that statement may be found in the historical data of saturating sales for the Mac.

As for failing to consider the situation from all points of view, I leave it to others to judge which of us has offered data in support of a position, and which of us has not.

Three main reasons the price of the Mac went from $500 to $2500:

(1) Raskin underestimated the cost of the basic concept he had; a more realistic price would have been $1,000 to $1,500 instead of $500.

(2) Raskin's concept initially didn't include a bitmapped GUI; adding this on increased needed resources and therefore cost, leading to a computer that would have cost about $1,500-2,000.

(3) Apple's gargantuan ad budget for the new machine added a full $500 onto the price of each unit, bringing it up to $2,500.

So I would say that a Macintosh built under Raskin's leadership would have cost about $1,500, give or take.

But - with all due respect to Mr. Raskin and the revolutionary ideas he had - I very much doubt the Mac would have caught on with customers, or inspired the industry, had it come to market as he intended - see for example the Canon Cat, which was much closer to what Raskin had in mind for the Mac.

Finally, the thing that really saved the Mac's bacon was the advent of the Laserwriter, Postscript, and Pagemaker. That, combined with the release of the Mac 512k, made the platform viable for getting real work done in a number of graphics, ad, and publishing-related fields.

Best,

Matt

Ok, I lied. One more post.

Yes, the standard histories cite, inter alia, the ad campaign's expense as the reason for Sculley's adding $500 to the Mac's price. But the numbers are curiously inconsistent with that standard recounting.

The print ads + the Superbowl spot cost around $3M (source: Wikipedia). If the $500 story is to be believed, then Apple expected to sell fewer than 10,000 Macs in 1984. However, Jobs had already cranked out several times that number, from a gigantic factory in Fremont capable of manufacturing 1,000,000 units a year. They actually managed to sell 250,000 Macs that first year.

The arbitrariness of the $500 figure, the inconsistency of the official recountings with the actual data, and knowledge of the personalities in charge, all point to an alternative hypothesis for the introductory price.

Three main reasons the price of the Mac went from $500 to $2500... Raskin...

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The "$500" SRP was a dream price rather than something rooted in reality. For Raskin was never in control at Apple, even in his own little section. The very fact that Jobs took over the Mac project is evidence of that. Had Jobs not been at Apple while Raskin was overseeing the project, $500 may well have been a goal set by the company and the Mac may have been something very different (e.g., the Canon CAT) than what we saw debut in 1984.

I read some Apple history book or other back around '93. It was written by one of the well known columnists, such as Pogue or Kawasaki. It's probably in a box in the attic somewhere.

In that book it said that the Mac team believed they were working on a computer which would cost about $500 to make and that they would sell for $1000. $500 was the production cost target.

I do not believe that it was ever their intent to build a computer that would sell for $500.

IIRC, the book implied that they got very close to the $500 production cost, but (again, IIRC) then the book states that Jobs hiked the selling price up to $2000 without telling/consulting the Mac team and many of them were quite disillusioned when they became aware of this. Then I guess Scully added the extra $500 on top of that.

Quote from the bottom of page 97 in Apple Confidential 2.0, by Owen W. Linzmayer:

Until the last moment before introduction, Apple executives argued over the Mac's price. Jobs had hoped that the Mac could sell for $1,495. As it turned out, the Mac cost $500 to build (83 percent materials, 16 percent overhead, 1 percent labor), and with Apple's standard markup, the price should have been $1,995. But president John Sculley had ordered an aggressive $15 million, 100-day advertising blitz, which kicked off with the 1984 commercial during Super Bowl XVIII. To pay for this campaign, Sculley tacked on a hefty premium, and the list price for the original Mac was set to $2,495.

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Also be sure to see the table on page 90 of Apple Confidential 2.0, which shows a target price point of $500 was set several times during the Mac's development, varying by spec (May 1970, September 1979 and October 1979). Target prices set from 1980 and later were $1,000 and higher.

Quote from the bottom of page 325 in The Little Kingdom, by Michael Moritz:

Mac's introduction also revealed Apple's embrace for the sort of advertising budgets familiar to breweries and soft-drink makers. Apple budgeted $15 million for the first hundred days of the Macintosh's formal existence. The scope of the effort became clear the week before the computer was announced -- with a teaser commercial that looked like a rock video. Devised by Chiat-Day (which had survived Apple's management shakeup) and produced by the director of the futuristic films Blade Runner and Alien, the lavish sixty-second commercial cost $400,000 and had an Orwellian theme.

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Quote from the bottom of page 181 in Revolution in the Valley, by Andy Hertzfeld:

Macintosh marketing manager Mike Murray and Steve Jobs loved it [1984], but they needed to get new CEO John Sculley's approval for such a large expenditure. Sculley was a bit apprehensive (after all, the commercial hardly mentioned the Macintosh), but he gave his OK for an unprecedented production budget of over $750,000 to make the one-minute commercial.

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