By Daniel Eran Dilger

Published: 05:33 PM EST (02:33 PM PST)

Fifteen years ago, Apple announced plans to acquire NeXT Software, a move that would ultimately bring Steve Jobs back to the company he cofounded twenty years earlier.

In the decade and a half since the acquisition of NeXT, Apple was completely reinvented as a company, gaining new technology and direction from NeXT while being entirely rethought by a new management team led by Jobs, including many executives and engineers from NeXT.

NeXT before Apple

Prior to Apple acquiring the company, NeXT Software had spent three tumultuous years trying to figure out how to sell its advanced operating system technology after abruptly jumping out of the hardware business in 1993 -- after five years of failing to find a significant market for NeXT Computers in the late 80s and early 90s.

In its three year stint as a software company, NeXT announced plans to partner with Sun (and later HP) to create OpenStep, an open specification based on its NeXTSTEP operating and development environment, capable of running on top of other operating systems from Sun's own Solaris to Microsoft's Windows NT. Both partners ultimately backed out; Sun to focus on Java and HP to join Apple and IBM on Taligent, a project to essentially duplicate NeXT's technology.



NeXT had also developed WebObjects as a way to use NeXTSTEP's object oriented development tools to build dynamic web applications. Jobs began to view WebObjects as the company's primary asset, particularly in a market increasingly dominated by Microsoft, where there was no effective way to sell an alternative third party operating system.

Apple before NeXT

By 1996, Apple had ended up the only significant computing platform to survive the rise of Windows, kept afloat by sales of its Macintosh hardware as other alternative OS licensees, from IBMs' OS/2 to Sun Solaris to the BeOS to NeXTSTEP, floundered without a critical mass of buyers and developers in a PC market captive to Microsoft's exclusive licensing agreements.

While still in business, Apple was in rough shape, with its own efforts to modernize its classic Macintosh system software failing and time running out to maintain relevance in the computing industry. Apple had partnered with IBM (and later HP) to develop a NeXTSTEP-like system called Taligent, and had attempted to deliver its own Copland operating system, but neither effort materialized into a salable product.

Apple had started talks with Be Inc, hoping that the company's experimental operating system could breathe new life into its Macintosh line. While the BeOS could already run on Mac hardware, it was far from being ready to sell as a replacement to the existing Mac OS, and lacked core features such as a printing architecture.

After examining NeXT, Apple's then chief executive Gil Amelio, who had been brought in to turn the failing company around, realized that acquiring NeXT would not only give Apple a finished, proven desktop OS to replace the rapidly aging classic Mac OS, but also powerful the WebObjects, related development tools and a legitimate enterprise business.

Mac users were less familiar with NeXT than Be, given BeOS's consumer/hobbyist focus and the fact that NeXT had been contractually prevented from entering the consumer market by Apple after Jobs left in 1985 to start NeXT with a variety of Apple engineering talent. Amelio was confident, however, that Apple could simply ship new Macs running NeXTSTEP within the next year, a strategy branded "Rhapsody."

Apple + NeXT

On December 20, 1996, Apple announced to the surprise of many that it would buy NeXT for $429 million in cash, along with 1.5 million shares going to Jobs, who would act as an ongoing consultant after the sale. NeXT's website described the acquisition as a "merger."



Virtually no one in the Microsoft-dominated personal computing industry saw Apple as a relevant player even after its acquisition of NeXT. While Apple quickly rolled out a public strategy for making its new NeXTStep operating system the new Mac OS and converting the OpenStep environment into a Yellow Box layer that could enable apps written for it to work seamlessly across Macs, Windows and enterprise Unix distributions, rather than being taken seriously Apple was shunned even by NeXT's existing customers.

Dell, a very visible client of WebObjects in its online store, abandoned its business relationship with NeXT and created a new online store with Microsoft. Sun and HP had also abandoned their OpenStep partnerships with NeXT, and few viewed Apple's backing of NeXT technology as commercially sustainable.

Apple began shifting its own goalposts as its Mac customers balked at adopting a more serious and complex Unix-based operating system. Even worse, Apple's principle Mac developers, including Adobe, Macromedia and Microsoft, indicated little interest in writing for Yellow Box, insisting instead that Apple merge the classic Mac OS and NeXT technologies to produce something modern that could still run their existing code with minimal changes.

What appeared to be a perfect merger between ideal partners began to look more like a mess. Apple was stuck in Mac OS licensing agreements with hardware makers that compelled the company to essentially give away its OS while also squandering its ability to sell its own hardware at a profit, as cloners were taking away its high end sales rather than expanding the Mac market as intended.

Apple was also straddled with retail distribution that simply sat its computers next to cheaper PCs without effectively demonstrating any differences between them. The company therefore had no obviously competitive products, no way to sell them, and no way to keep developers supporting its status quo or its intended future. Things looked pretty bleak for the Macintosh.

Apple's only other significant product was the Newton MessagePad, a tablet computer that was getting bypassed in the market by the much cheaper, simpler Palm Pilot while demanding a significant portion of Apple's attention and efforts.

On page 2 of 3: Jobs turns Apple Around, Apple goes open