Many thanks to the wonderful Silvio DaSilva for putting this chart together; I think it explains a lot of what happened with Apple (NASDAQ:AAPL) over the years.
During Steve Jobs’s first stint at Apple, before he was fired in 1985, he was making consumer products which were far out of the reach of most consumers. The Apple II cost $1,298 in 1977, and that was the bare-bones version with 4K of RAM; if you wanted a more powerful version with a whopping 48K of RAM, that would cost you $2,638. Or $9,862 in today’s dollars.
The Macintosh, when it came out in 1984, was even more expensive. $2,495 was a lot of money, back then. (And never mind the LaserWriter: that had a list price of $6,995.)
When Jobs was fired, then, Apple was trying to sell consumer products to people who simply couldn’t afford them.
But when Jobs returned, in 1996, it was a different story. His first big product launch, the iMac, was priced at $1,300 — or just about $1,800 in today’s dollars. Not cheap, but at least somewhere in the ballpark of mass-market. Today, the entry-level MacBook Air — arguably the most gorgeous computer Apple has ever produced — is $999, just 55% of the real price of 1998′s iMac. And you can get a Mac Mini for $600.
And the non-Macintosh products are cheaper still. Here’s what you see when you visit the Apple Store online today:
This is a range of hugely powerful computers — the iPad 2 has the same computing power as a 1980s Cray supercomputer — at prices which are accessible to hundreds of millions of people around the world. The iPhone 4S — the first computer in the world to be able to have some approximation of a natural-language conversation — starts at just $199. And the iPhone I’m using right now is being given away for free. (With a two-year contract, but still.)
Jobs, of course, can’t take credit for the fact that technology becomes steadily cheaper over time. In fact, his technology has always sold at a premium; given the choice between making the entry-level Apple computer cheaper and making it better, Jobs always chose the latter option.
But Jobs can take credit for always being a step or two ahead of the technology curve, for seeing where the technology puck was going, and skating to that point before anybody else. Both in terms of what was possible, and in terms of what wasn’t needed any more. He saw, when he returned to Apple in 1996, that technology had improved to the point at which he could basically put his NeXT workstation ($6,500 in 1990, or $11,267 in 2011 dollars) on the desks of millions of people in the US and around the world. There was a basic level of quality he had to have, in any computer. And by the time that he launched OS X in 2001, he had built a company capable of delivering that quality at a price accessible to the broad non-geek middle classes.
The rest is history.
Update: I forgot the Lisa! $10,000 in 1983. That’s $22,745 in today’s dollars.