Apple 2

The Early Days of Apple Computer

We were just beginning to realize that the computer store might be a success beyond our dreams and that the little space in Polk's Hobby Store might not be enough, when I received a phone call.

It was a very fast-talking young man who told me, "I'm Steve Jobs." He said that he had been sent by Paul Terrell and John French, who had both bought his great single board computer and become dealers. Paul had bought 50 of them! This was the greatest thing since sliced bread, and he had to send me one.

"Sure, send it," I said. After all, Paul and John were friends and I would go with their choice. Whamo! Next day Fedex delivered a package C.O.D. $500.

I was a little taken aback, but I paid the charge and gave the package to Dave, one of my techs.

"Here. Look at this, and let me know what you think," I told him.

"What is it?" he answered.

"A computer, the Apple 1."

"Whaddya mean a computer? All in that little box? Common!"

He took the box and disappeared. Later, he took some money from the cash register and went to Radio Shack. When he came back, he fiddled with some wires and a video monitor, and called me over to see what he had done. A Radio Shack transformer was wired to a plug that went into the wall. The other side had wires into the page-sized PC board. A black square appeared on the video screen.

"See! It works," Dave told me.

"What does it do?" I asked.

"Nothing, needs a keyboard. I'll get one," Dave told me.

Dave came back with one of our SWTPC keyboards and wired it in after studying the schematic.

"Don't work," he told me. "Better call 'em."

So I called the number listed in the paperwork and asked for Steve.

"Which one?" the young man at the other end asked.

"The fast talker," I told him.

"Oh, Steve Jobs. Wait a minute." Steve came on the line, and I told him the keyboard didn't work.

"What kind of keyboard did you use? South West? Nah, they won't work. I'll send a good one and some software tomorrow."

"Wait." I told him I didn't need it Fedex next day_I could wait. Too late, he was gone.

Next day, another C.O.D. for $60 arrived, and a little plug-in circuit board with two chips on it arrived, and a cassette. Fedex collect. Again I called California for Steve.

"Got the keyboard? Good one! I'm going to buy a lot and we will get them cheaper. The little board, oh yes, that's the cassette interface, only two chips, Woz invented it, runs at 1200 baud. Great, you'll love it. the software is the "Game of Life."

All of this in one breath! I hung up.

Dave figured everything out and hooked it all up. It worked just as Steve said it would. The cassette interface was terrific. All the other ones we had ran at 300 baud and had a full board of chips and parts. This interface ran four times as fast and always got a good load. That alone was unusual. The Game of Life was very complex software for that time. It put figures representing cells on the screen. They lived, died, or reproduced, depending on their proximity to other cells, generation after generation. I was impressed. I called Steve and told him.

"Wait, Woz is working on BASIC. We should have it shortly," he said.

I also found out that Woz was his partner, Steve Wozniak, and he was the inventor.

Now it just so happened the New York Chapter of the Association For Computer Machinery (ACM) was holding a dinner meeting, and our store, together with other metropolitan area computer dealers, had been invited to show our equipment. This was a first experience for these big computer people who had little contact with microcomputers. I knew other dealers were planning to bring large, complete computer systems. With the arrival of the Apple 1, I changed my ideas. I asked one of the hangers-on at my store to take the Apple, and mount it, the keyboard, and power transformer into a large attaché case. He did a great job, and I had a portable microcomputer. My wife and I went to the dinner, and all we took was the case, a 9-inch video monitor, and the cassette recorder. We seated ourselves next to the wall, where there were electrical plugs, and I quietly connected everything and loaded The Game of Life. The monitor faced the podium where the chairman was conducting the meeting.

He could not help but notice it. He stopped in his introductions and said, "What in the world is on that tube?"

I answered, "It's the Game of Life running on my computer."

"What computer? I don't see any computer. What are you talking about?" the chairman answered. Now he was really upset!

I got up and said, "My computer is in that case, and I am sorry, but I have it running just for practice. I did not think it would disrupt things here."

"You are telling me that there is a computer in that little case? What kind?" he sputtered.

"It's the Apple," I replied.

"Apple? Never heard of it. Well, turn it off now!"

After the formal part of the meeting, all the computer dealers set up their equipment to demonstrate their products.

I waited until last and got up and said, "I thank all my fellow dealers for showing off their systems because we at Computer Mart sell exactly the same products. However, I have here the future of personal computing. It is called the Apple Computer, and it requires no expensive terminal and no big box of electronics. It's all here in this little attaché case, and I invite you to see and use it."

It was the Apple that caused the greatest excitement of the evening. However, they all asked me to call them when BASIC was available and when the little computer could be expanded. I called Steve Jobs the next day and told him what had happened. He was even more excited than usual and told me Woz was working hard on BASIC, a typical Steve Jobs half-truth.

A week later, I went to a Processor Technology dealer's meeting at Emeryville , California . There were several telephone messages from Steve Jobs to me during the meeting. When I could break away, I called Steve at the number he left. He begged me to come down to Los Gatos to visit him that day. Not having any idea how far it was from Emeryville, I agreed and set off in my rented car. I arrived at the address, which turned out to be his sister's house, and Steve was there with Dan Kottke and another friend. He told me he had great plans, and Apple was going to be a big company. He asked me to invest $10,000, and said he would give me 10% of Apple Computer for my investment.

Looking at this long-haired hippie and his friends, I thought, "You would be the last person in the world I would trust with my ten grand!"

What I said was, "Steve, all my money is invested in my store, but I will help you. I have a double booth at the big computer show in Atlantic City , New Jersey this August. If you come to the show, I will give you free booth space and publicize the Apple computer."

He was somewhat disappointed at my turn-down but quick to take advantage of my offer. Booth space was expensive, and the show was a sell out. "I don't know if we can raise the fare to get to the show, but if we can I'll take you up on your offer. Woz has just finished the Apple II prototype, and he is bringing it over to show you."

When Wozniak came over I was a little more impressed with him than Jobs. He brought a computer board with jumper wires all over and parts hanging off all over the board. This was to be the Apple II! After Woz hooked his haywire rig up to the living room TV, he turned it on, and there on the screen I saw a crude Breakout game in full color! Now I was really amazed. This was much better than the crude color graphics from the Cromemco Dazzler.

After a few minutes Woz turned it off and said, "I am still working on it; everything heats up after a while!"

"How do you like that?" said Jobs, smiling. "We're going to dump the Apple I and only work on the Apple II."

"Steve," I said, "if you do that you will never sell another computer. You promised BASIC for the Apple I, and most dealers haven't sold the boards they bought from you. If you come out with an improved Model II they will be stuck. Put it on the back burner until you deliver on your promises."

I suppose I wasn't much encouragement for the young businessman because I told him things he didn't want to hear, but a week later he called me in New York .

"We have the tickets, and we are coming to the Atlantic City Show. Woz almost has BASIC finished_we will bring it with us. Get me a room at the Hotel."

I called the Shoreham and was told there were no more rooms. So I doubled up two of my people and gave the room to the Apple characters.

On August 26, 1976 , we all went to Atlantic City , New Jersey and the old Shoreham Hotel for what was to be the first national computer show, and the most important. We had our booth set up with our Apple I housed in a case with a monitor inside and the keyboard in front. It was a one-piece masterpiece made by a friend of mine, Mitch Bogdanowitz, who was a great model maker. We called the new desk top computer Eve, because she ate the Apple! Of course we also showed an Imsai, and we expected to receive our first SOL at the show. Half of the booth we saved for the two Steves and their Apple Computers. They showed up later in the day. Steve Jobs and Dan Kottke came into the booth and started to set up signs.

"Woz is in the room finishing BASIC. He's using the hotel T.V." said Jobs.

At this point my mother-in-law came over to Steve. She looked him up and down and said, "Young man, your backside is sticking out of holes in those jeans! You are NOT going to be in my booth like that. Take 'em off and I'll sew them up, now!"

Steve Jobs was more than a little surprised_I don't think anyone had ever spoken to him like that! However, you didn't fool around with Elizabeth Olivet, who was a very formidable Italian grandmother. Steve went behind a curtain, took off his pants, and handed them to her. She took out the sewing kit from her commodious bag and mended the worn jeans until they met her standards of modesty.

All Jobs said was, "Thanks, I think we better get back to the room to see how Woz is doing."

The next day, on August 28th, the show opened. Steve Jobs had several Apple I computers running_the new Apple Basic, and he had one encased in a wooden cabinet that he was really proud of. Their exhibit attracted a lot of attention, as well it should. In this show full of 8080 computers with large cabinets, flashing lights, and colorful switches, the Apple was the lone 6502-based machine. It was a single board, yet it had its own video display and ran full BASIC. In addition it could load from a cassette faster than any other machine there. Nobody who walked anywhere near the booth failed to be buttonholed by Steve Jobs, who told them in no uncertain terms what a great thing the Apple was. He even got press coverage_ no mean feat in a show where the new SOL computer was introduced, where the Altair B dominated the largest booth, and where TDL showed the very first Z-80 CPU for the S-100 bus.

We did not get the new SOL during the show, but one was given to us at the end. When the show closed, the partners went back to California somewhat disappointed because, in spite of all the attention , they had not sold one Apple 1. Neither had I, although I had taken orders for several SOLs and a couple of Imsai systems.

The return from Atlantic City was a great letdown for the partners. Wozniak felt that he should be only working on the color version and that Jobs was keeping him from it. In fact, Woz tried to sell the idea to Processor Technology, maker of the popular SOL computers. They relied on the advice of Lee Felsenstien, who didn't think much of Apple, and turned Woz down. Then Commodore came to Jobs as a result of the Atlantic City Show and wanted to buy the company as an easy entry into the microcomputer business. Jobs asked for $100,000 and fairly big salaries for the partners. Commodore thought the asking price was ridiculous from two young men working out of a garage, and luckily for Apple the deal fell through. They were just about at the end of their resources. The dealers had not re-ordered because the Apple 1 simply did not sell. I had to make mine down below cost to get rid of them.

At this point Jobs decided that they needed help with marketing, advertising, and public relations. Asking around Silicon Valley , he was give the name of Regis McKenna as a top practitioner of these arcane arts. Steve contacted Mc Kenna for an appointment but was shunted to an employee whose job was to screen out people who might waste the company's time. Job's appearance seemed to put him in that category, but when he started to talk he was able to convince the interviewer to pass him along to Regis McKenna himself. Again, in spite of a less than qualified endorsement from Paul Terrell, McKenna saw something in the two partners and their product. He decided to take on Apple as a client.

Because he realized that the first thing Apple needed was more money, he introduced Jobs to Don Valentine, a venture capitalist. Valentine liked the idea but did not invest in Apple himself because he felt it did not offer a big enough market for him. He introduced the partners to Mike Makulla, a man who had made a fortune by investing in the Intel company, and retired at 30. Makulla saw a future in microcomputers and decided to make Apple his venture into the business. He invested money, borrowed more from a bank, and with the two partners formed Apple Computer Company.

Wozniack was a hold out for the longest time because he wanted to keep his job with Hewlett Packard and moonlight with Apple as he had been doing up to that time, but Makulla wanted a 100% commitment from both partners as a condition for his investment. The company was incorporated in January 1977 and bought out the partnership completely. Markulla brought in Michael Scott as President because he felt that neither of the partners had the skills to run a corporation, and he himself did not want to become too deeply involved. Nevertheless, he was the engine that turned a garage workshop company into a major computer corporation.

I spent the year after the Atlantic City show selling SOL computers, SWTPC computers, and developing a dealership in Alpha Micro Time Sharing computers. However, when Apple II's started to arrive they slowly built into our major line, displacing the SOL and SWTPC 6800's. The Apple II changed the entire business. No longer did solder wielding techies hang out at our store_the Apples came completely built and ready to run. The Apple disk system was priced within everyone's price range, and soon there was a lot of very useful software for it, lead by Visicalc, the most important program. Businessmen would come into the store to buy "A Visicalc Machine" and that's all they used it for. In the Apple II users, we saw a different type of enthusiast. The Apple users did not mix very well with the S-100 users, just as there is a division between the Mac users and the MS-DOS users today. In New York City, The Big Apple Club was formed just for Apple owners and met at our store. The Apple users were much more oriented toward software and graphic applications. They were more interested in what a computer did then how it did it.

Being the major Apple dealer in New York brought us a lot of business and growth, but then trouble struck The Computer Mart of New York. I had signed a very large purchase order with Apple, and I distributed the extra computers to several other Computer Mart stores, with whom I was loosely allied. We all got a good volume price from Apple, who only had to deal with me instead of five other stores. I marked the machines up 5%, for my trouble and expenses in distributing them.

This worked well for all until Apple decided to open a distribution center in Boston under control of my old competitor and friend, Dick Brown. My contract was canceled, and I was told to buy through Dick Brown. This would work no hardship on me, but my fellow Computer Mart owners in Boston, Vermont, and New Hampshire were in direct competition with Dick Brown's Computer Store, and they did not trust him to deal fairly with them. This was particularly important because there was an acute shortage of Apple disk drives, and people would buy only if they could get a disk drive. Instead of signing with Brown immediately, I tried to reach Steve Jobs to make some other arrangement to get our computers. Not only did he refuse to talk to me, but all my computer shipments were stopped.

Finally I decided my friends would have to shift for themselves, and I signed with Brown. It took some time for me to get my orders back into the pipeline, and I lost a lot of sales to other dealers in the New York area. This loss of business, coupled with the closing of Processor Technology, finally did in my business in 1979, and I left the retail computer store.

People who have read my articles often ask me if I regret refusing Steve Jobs the $10,000 investment for 10% of Apple, which is now a multi-billion dollar business.

I always answer, "No, I did not lie to Steve Jobs. Every cent I had was invested in my own store. I tried to help him in every way I could, but when I needed him he turned his back on me."

I did not see Steve Jobs for a few years after the store closed, but I heard plenty about him. Then one day my wife Dede and I were crossing Central Park West after a walk in the park. As we emerged near the Tavern On The Green we saw a party of young men and women heading for the Tavern.

All of a sudden my wife stopped and exclaimed, "My God! Steve Jobs in a three-piece suit!"

He looked at her and smiled, the very picture of sartorial perfection. "Hello, Dede, you sure know how to humble a fellow."

There was never anything humble about Steve Jobs.



Heath the King of Kits

For many years, the Heath Company, of Benton Harbor , Michigan , sold kits for radio and audio test equipment and all kinds of electronic devices. Their expertise in this field was completely unchallenged. The thousands of catalogs they sent out brought electronics into every remote part of the United States . Heathkit designs were made simple and broken down into small steps so that failure was almost impossible as long as the builder followed the instruction book step-by-step to completion. They also had some retail stores in major markets where builders could get help with their projects. However, when the microcomputer revolution started in 1975, Heath was very slow to join in. They were selling microprocessor training kits when the new computer companies were selling computers.

The computer companies did not bother to write detailed instruction books and test them for accuracy. Their instructions would read, "Solder in all the resistors after checking the schematic for the correct values. Next, solder in all the capacitors." or "Be careful not to make solder bridges."

The first time I assembled an Imsai kit, I used the photograph in the advertisement to find out how the chassis went together. They never gave us a mechanical drawing of the assembly with the first ten kits I sold.

I remember listening to one of my salesman asking the customer, "You sure you know how to solder this? It sure isn't a Heathkit!"

When Heath finally came up with kits worthy to be called Heathkit, they were strange machines compared with the industry standards. They did not use any of the standard programs and were a breed unto themselves.

The H8 was the first 8080 computer made by Heath. It had a sloping front panel mounting a 9-digit keypad which could be used to program it in machine language. However, it used octal notation rather than the Hex notation which was used on the S-100 machines. It was a bus machine with a unique 50-pin bus. Expansion cards and peripherals were available for the machine, including the memory and speech cards, the H7 floppy disk assembly, and the H10 paper tape reader/punch. The H8 needed at least 16K of memory for nominal operation and 48K if a floppy disk was to be used. The maximum memory capacity was 64K. The H8 had no internal video but was designed to be used with a terminal such as the H9 Video Terminal which had a 12" CRT.

Heath started with their own operating system, HDOS for disk operation, but added CP/M capability to give their users the ability to use all the software coming on the market for what was becoming the industry standard.

The basic H8 kit sold for only $350, but there was almost nothing you could do with the basic kit. You had to add memory boards and I/O boards and a terminal and disk system to really use the H8.

The Heath Company made a deal with Digital Equipment Corporation to incorporate the DEC LSI-11 CPU into a machine called the H11 which can be thought of as the first 16-bit micro. The resulting computer was supposed to be able to run PDP-11 software, but it was extremely limited because of its puny memory. The H11 was a disappointing effort for the customers, who thought they were getting a cheap DEC PDP-11.

The Heath Company started to fall on bad times at the start of the 1980s. The chip revolution had changed the entire electronics business, and people no longer built electronic kits because entire portions of the equipment were built into a single chip. The flood of imports had lowered the prices of radio, audio, video, and test equipment to levels where the kits cost more than completed units. However, Heath still had its value as a maker of educational and training equipment and texts. The company was bought out by Zenith Radio Corporation, who brought out completely new lines of computers.

The Heath/Zenith H-89 was the first of these machines and by far the most popular of the brand. It was sold as the Z-89 in its factory-built version, or H-89 as a Heathkit. The Z/H-89 was a desktop-integrated computer with a full keyboard and a 12" non-glare CRT. Next to the CRT was a single 5 1/4" floppy disk drive. The double-density version of the disk controller could store 160K, and there was also a optional external floppy disk and a hard disk option which could store 11 Mbytes. The standard unit came with 48K of RAM, and it could be expanded to 64K. An unusual feature of the H-89 was the fact that it used two Z-80 CPU chips. One ran the computer while the other ran the video terminal functions.

The H/Z-89 was able to run the standard CP/M operating system and all the software available under that system. It quickly achieved a reputation as a solid workhorse of a computer, and had a large and loyal user community.

The H-89 kit was either $1,895 for a white CRT, or $1,995 for a green CRT. Assembled units were $2,895 for either a built-in disk drive, or a double-density controller for a double-density drive and a hard disk. The factory-built version was $3895.

The engineers at Zenith had an answer to the IBM PC, which was quickly obsoleting the Z-80 computers. It was their Z-100 Series which was also sold as a kit under the Heathkit "H" designation. The series consisted of the Z120 which was an all-in-one business computer with a 12" CRT. The Z-110 was a "flat-top" computer designed with high resolution graphics to mount an RGB color monitor.

The Z-100 series had two microprocessors. One was an 8088 designed to run under MS-DOS and the same 16-bit software as the IBM PC. The other CPU was an 8-bit 8085 which could run CP/M and all the thousands of programs available under that system. All the Heath computers had used their own bus system, but the S-100 departed from that and used a standard S-100 bus! Floppy disk storage was 320K per disk, and a 5MByte hard disk was available.

The Z-100 started out like a house-on-fire; it was an excellent computer, and it had the best color graphics of any machine on the market in those days. The problem was in the incompatible MS-DOS software. The special versions for the Z-100 were not kept current and the S-100 Bus made it incompatible with developments in expansion boards by third parties.

The Z-100 was replaced by MS-DOS-compatible machines from Zenith.

Zenith itself was bought out by Bull Group of France, who closed down the Heath



The largest incubator of microcomputer people was the Homebrew Computer Club, an organization that grew out of Bob Albrecht's People's Computer Company and Community Computer Center run by Fred Moore in Menlo Park , California . He had the idea that it would be a good idea for computer enthusiasts to get together to exchange news and ideas, and so, using the mail lists of PCC, he put out a call for such a meeting. The first was held in March of 1975, in a garage belonging to Gordon French. This evolved into the Homebrew Computer Club, which grew rapidly until several hundred people were attending meetings, and even spawned a San Francisco branch which actually met in Berkeley .

George Morrow, a graduate student in mathematics, became interested in microcomputers and with two friends, Chuck Grant and Mark Greenberg, formed a sort of company to make boards for the Altair. However, Morrow had his own ideas of what he wanted to do, and the group split. Morrow went on his own way, and Grant and Goldberg formed Kentucky Fried Computers, which became North Star Computers.

The first project George Morrow built was a combination 8080 CPU board and front panel board for either the Altair or Imsai. This board had a keypad on it, and it was used for programming the computer in place of the switches and lights used by both the Altair and the Imsai. To me this seemed like a good idea. The hardest thing to build, in both machines, was the front panel board. Morrow's board eliminated this problem. I sent for one and took it home to build. Upon completion, I found that the board would not work, so I sent it back to Morrow and forgot it for a while. One day the board came home with a note from George.

"Stan," he wrote. "Whoever built this board, never let him solder anything, ever! This is the worst soldering job I have ever seen."

When I told him I was the solder butcher, he laughed and said he meant it.

For years after, George teased me about my soldering. He never let me forget it.

The CPU board was a good idea but was not a success because George had it programming in octal notation while the rest of the 8080 world was using Hex notation. Besides, the hobbyists liked to program by flipping switches.

George's next project was the design of a 16-bit computer using the PACE chip made by National Semiconductor. With his friends, Goldberg and Grant, they would design the machine, and Bill Godbout would market it.

Although Godbout advertised the machine, it was never completed, and the partners split. George next designed a low-cost 4K memory board which was made and sold by Bill Goudbout. Priced at the low price of $189, the board sold very well, and for the first time George Morrow was earning real money from his designs. After a while, George left Godbout's distribution and started his own company, called Morrow's Micro Stuff, to sell his boards. It was a time of rapid expansion in the fledging microcomputer industry. The demand for cheap memory boards was almost impossible to fill. Most of the people buying computer kits did not realize that they would need much larger amounts of memory until after they had built the computer. Then they looked for the most inexpensive way to fill this need. Small companies like Morrows Micro Stuff moved in and sold most of the memory boards.

In 1977, George and Howard Fulmer joined forces to produce a complete computer. This was called the Equinox-100, and although it was well built and came in a very attractive cabinet, it was an 8080 machine at a time that the world was turning to the Z-80 processor. The company was short lived, and George turned to the production of floppy disk systems.

Morrow's new products, called "Thinker Toys" or "Discus," were low-cost 8-inch floppy disk sub-systems, consisting of a controller card, cables, and the disk drive, mounted in a cabinet with a power supply. The system came with CP/M and CBASIC at no extra cost, and for the first time, a S-100 computer owner could be running on a disk for under $1,000. The Morrow systems were a great success.

George again turned to the manufacture of complete computer systems with a line of complete computer systems sold as a package with a video terminal. His company, Morrow's Micro Decisions, made the Z-80 computer with 64K of RAM and either one or two floppy disks. The video terminal was made by a terminal manufacturer. The system was sold with CP/M, two versions of BASIC, and an applications package including WordStar, a spreadsheet, and a financial analysis package. The system also included a shell program, which made it easy to use CP/M. The entire package sold for $1,500 to $2,300, depending how many drives were included.

The Micro Decision system proved to be quite popular for a short time. The IBM PC was turning people toward 16-bit MS-DOS machines.

George Morrow was not one to give up easily. He designed a MS-DOS portable computer called The Pivot. This was different from the bulky "luggables" like the Compaq and IBM Portable that were appearing at that time. The Pivot looked like a small portable radio with a keyboard that folded into the package.

At this time, the Internal Revenue Service had a requirement for thousands of portable computers, and George Morrow's Pivot was the closest to their specifications. The Zenith Corporation was after this contract, and to get it they licensed George Morrow's design for the Pivot. Zenith gave George a choice of how they would pay for the license. Either Morrow could get a lump sum payment for a non-exclusive license, or an exclusive license with a smaller payment and a royalty on every unit sold. George took the larger lump sum payment because he wanted to bid on the IRS contract himself.

Zenith won the contract and made so many portables they were able to undersell Morrow in all markets. Shortly after this, Morrow Micro Decisions closed its doors.