Continuation of Call-A.P.P.L.E.’s transcription of Steve Wozniak’s speech to the Apple World convention in 1986. The previous segment (Part 1) described his early interest in computers involvement in the first computer user group, the Homebrew Computer Club. This part discusses the development of the Apple-1 and II, and the formation of Apple Computer. This article from the Oct 1986 issue contained part two of two parts, and is reproduced here with permission of Apple Pugetsound Program Library Exchange.
(Call-A.P.P.L.E., Oct 1986, pp. 22-27)
transcribed by Jack Connick
In January of this year, representatives of user groups around the world gathered at the Apple World Conference in San Francisco. Last month, we published Part I of Steve Wozniak’s speech to that audience, where he discussed his early interest in electonics and computers, and his first experience with user groups. In this concluding part, Woz describes how his fascination with the 6502 microprocessor led to the genesis of Apple Computer.
The 6502 microprocessor was kind of interesting, because the 8080 is the big one – it sells for 400 bucks. A lot of us would think. “If I could wait for a year, I could save up 400 bucks”. And that’s the typical scene.
But the 6502 microprocessor was introduced by a company called MOS Technology, located out in Philadelphia somewhere. They had a unique product introduction – they were going to sell it at the WESCON Component Show in San Francisco for $20 over the counter.
Over-the-counter meant quite a bit in 1975 because you could walk into surplus stores, if you were into electronics, and you could buy a certain transistor or a certain chip over the counter. But no surplus stores sold microprocessors. These were way off in the future and way too expensive – nobody would want one.
So to even buy an 8080 microprocessor for yourself, you sort of had to find out how to act like a company, and set up an account at a local distributor. The questions were kind of strange and they didn’t seem to fit, when all you wanted to do was to pull 400 bucks out of your pocket and buy it.
So the 6502 was going to be sold over the counter. Quite a few of my friends (from Hewlett-Packard and from the club) and I went down and we bought our 6502′s. It was a very, very important day and, coming back on BART, we looked over the instruction set of the microprocessor and asked “Well it doesn’t have increment like the 6800 but it has this other addressing mode.” So it was kind of a wash as to whether it was really the finest processor of all time. But we accepted this, too.
That evening we had a Home Brew Computer Club meeting, and the big talk was that the 6502 had been introduced and quite a few of us could hold it in the air. We actually had one. Oddly enough, at that computer club meeting, another very major event happened. A company called Sphere, that had one of the first microcomputers, had come out to the WESCON Show and they dropped by the Home Brew Computer Club to give a presentation.
And they did a little presentation their Sphere computer; but then they brought out another mini-computer that had nothing to do with any product of theirs – they were just showing off that they happened to have it in their possession, as far as I could tell. It had a color TV monitor that scanned a picture of a clock turning around from red to blue to green-you watched it unfold. To some of us from the computer world, color graphics was maybe logical; but to myself and a lot of the others, we never imagined that you could generate color right out of a computer. It was a mini-computer, a big system, but it was amazing, so amazing to watch it, that we were silent for a minute, watching it going around. So, it was to be appreciated.
I sat down, I had my processor now that I had bought my 6502, and all my life I had wanted to leam how to write computer languages – write FORTRAN compilers. I had read a couple of books but never taken a class on it. But I thought I could do it because I had tried so many times in my math classes. I would be caught by my professor because I wasn’t paying attention – but I was writing my BASIC and my FORTRAN compilers.
I had never programmed in BASIC, but Microsoft came out with their BASIC and I looked around at a few user groups. There were a few newsletters and magazines, and they were full of BASIC games. It was real obvious that there was no way in the world that any other program was going to be the one. From the start it was real obvious, and it came right out of the club view. So I decided that I BASIC is the right language, it is the accepted one, it’s the one that has all this right software that’s all so good and fun. So I sat down, I learned BASIC, but I pulled out HP manuals. If any of you remember Integer BASIC, which I wrote, it had the HP style of strings, which was all I knew.
I wrote this BASIC processor, and wrote a little ALGOL simulator and got it simulated. It looked like it would work, bur I had forgotten to build the machine. I had no assembler, that was another thing. To use an assembler, they figured that somebody was going to buy this processor to use for a company, and their company can pay a few thousand dollars in time-sharing charges to use an assembler that was available in time-share. I didn’t have any money like that, so a friend taught me that you just sort of look at each instruction, you write your instructions on the right side of the page, you write the addresses over on the left side, and you then look up the hex data for each instruction – you could assemble it yourself. So I would just sit there and assemble it myself. That BASIC, which we shipped with the first Apple II’s, was never assembled – ever. There was one handwritten copy, all handwritten, hand-assembled. So we were in an era that we could not afford tools. A lot of the decisions that were made in designing both the Apple-1 and II were based around having no money.
Design of Apple-1
Anyway, BASIC was sort of written and I had to build a computer. Well, I already had a video terminal, so I just built a small version of the micro-processor and some memory and just sort of attached them. The dynamic RAMs were very important. The first dynamic RAMs were coming out. It was the first time ever that a RAM memory held a promise of being lower in cost than core memory, which had preceded it. Before these dynamic RAMs, there were 1K static RAMs; but they were so expensive that 4K dynamic RAMs held the cost breakthrough.
The hobbyist style is to design whatever is real simple and available at your local surplus stores. So all the other computers were designed around this very awkward RAM that required a lot of chips to add up to 4K. And I sat down and I said, “Well heck, you want this minimum board space, usually minimum chip number, but minimum board space”. I found these dynamic RAMs, so I just designed around them. That was to become the standard that was going to eventually lead Apple, maybe 3 years later, to its real big success – heading for the right RAM.
With the Apple-1, since BASIC was already written, 3 minutes after the hardware was done, the code was up and running. Well, not quite 3 minutes. There was no way to load this code that was handwritten – 2K that was all written in hexadecimal. You had to sit down and type in hexadecimal (it really took more like 20 minutes to get it in), and thcn it was up and running.
Apple Computer’s Start
I got it up and was demonstrating BASIC down at the club, and Steve [Jobs] came around and said. “Let’s start a company and sell blank PC boards” – PC boards with no chips on them, just labelling. All the people at the club knew where to buy chips. He said, “Let’s go to the club and we’ll sell them. It’ll cost us $20 to make each board, and we’ll sell them for S40. The people will go down to their local surplus stores and buy the chips, or they’ll get them from their company and plug in all the chips. It might cost us a thousand dollar investment to pay a friend to lay out a PC board. but we’ll get it back – if we sell maybe 50 boards, we’ll roughly break even.”
And I knew the people at the club, he didn’t, and I didn’t think we’d sell 50. I thought we were going to lose our money. And he said, “Well, we might lose our money, but for once in our lives we can say we had a company.” You can make a catch on that now, you could never pass that up. If you had to make the decision based on, “Will you make money?”, the answer would be “no”. But on the basis that we chose, the answer was “yes”.
So we formed a little company. We each owned 45% of the partnershp, and a friend of ours owned l0% because we both trusted him to resolve any disputes. He thought we were going nowhere and that we were both going to owe a bunch of money eventually – and he was the only one who had money. I didn’t own my car, Steve had no money – he was going to be the one they would get it from. So he sold his 10% of the Apple partnership back to us for $800… that’s true!
The Apple-1 computer had one key element that was really sort of new. The computers up to that time had a front panel where you could toggle these switches and put stuff into memory. With the Apple-1 computer, I took an approach more like the calculators. When you took a Hewlett-Packard calculator and turned it on, there was a little microprocessor in there, and it had a little ROM program that looked at a key. Whenever a key was pressed, it figured out which one, made a decision, and put the right thing up in the display. The idea was that the ROM to get you started was already built-in.
So I decided that this was the right approach for our computer, since keyboards were common now. They were $50-$60, and boy, I could afford that. So the key was to have a little ROM program – let’s call it a monitor program as I didn’t know any name for it – that will look at the keyboard when you power-up. So you could type all of your input on the keyboard and skip the switches. I had built the switch-and-light computer a few years before, and I knew the next step.
256K PROMS were not available yet, since you could not buy 256 bytes then. We had some 256 x 4′s, so I took two of these chips and I had 256 bytes. We had them in our lab at HP, so I used a couple of them. But it was very expensive, so the Apple I’s monitor was very tiny. It could not do very much at all, other than to talk a little hexadecimal.
The official introduction of the board was to hold it up at the Home Brew Computer Club, and tell everybody what goes on it, and how much you buy it for, and this and that.
In the meantime, I had proposed initially to Hewlett-Packard that they do the Apple-1 computer. They could build a computer that they could sell complete in a plastic case with 4K of RAM for $400, and it would use your home TV. It had to use your home TV – my thinking was that nobody could afford a monitor. Nobody could afford anything; they could afford a few hundred bucks and that’s the most.
Hewlett-Packard turned it down for a variety of reasons. What was really odd was that the lab manager came back to me for months, saying he hadn’t been able to sleep ever since he heard that presentation, because everyone could recognize the intrigue with this kind of product: a small, low-cost computer – not five thousand dollars, not ten, but a few hundred dollars – that could actually run a few BASIC programs. Everyone could recognize the intrigue, but everyone could find the reason that a company like HP could not make it.
Around those days, the club was a real big deal. Like I mentioned, a lot of the companies – Cromemco Processor Technology and others – started out at the Home Brew Computer Club in this area. IMSAI came out with the IMSAI computer, which was the big replacement for the big-selling Altair computer. They did their first demo, before it was even available, at our club. It was that big a deal.
Design of Apple II
I started working on enhancing the Apple-1 – I designed it from day one. When I had been in Atari’s labs doing the Breakout game, I had tried a simple trick to generate color, because Atari was doing their first color games at around that time. I had tried out a simple trick to generate color, and it had worked in that lab. I designed the Apple-1 based around the crystal frequency that would adapt itself to color; it would run color properly. In trying to add a few chips to the Apple-1 to put color on to it, everything sort of started combining and got smaller and smaller and smaller. And what we wound up with was the Apple II, which had half as many chips, and easily twice the functionality.
A lot of the features of the Apple II went in because I had designed Breakout for Atari. I had designed it in hardware. I wanted to write it in software now. So that was the reason that color was added in first – so that games could be programmed. I sat down one night and tried to put it into BASIC. Fortunately I had written the BASIC myself, so I just burned some new ROM’s with line drawing commands, color changing commands and various BASIC commands that would plot in color. I got this ball bouncing around, and I said, “Well it needs sound”, and I had to add a speaker to the Apple II. It wasn’t planned, it was just accidental.
Just like you do one demo at the club, obviously you need paddles, so I had to scratch my head and design a simple minimum-chip paddle circuit, and put on some paddles. So a lot of these features that really made the Apple II stand out in its day came from a game, and the fun features that were built in were only to do one pet project, which was to program a BASIC version of Breakout and show it off at the club.
I put in a few tricks like – if you hit control-Q or something, it went into an automatic play mode where the paddle always jiggled a little bit, but it lined up and always hit the ball. So one time, I was down at the club and I got John Draper, Captain Crunch, playing with it and he’s sitting there trying the paddle out and I put it into its funny mode and he played the whole game and won. He didn’t know it was phony.
The Apple II came along very nicely. The 4K RAMs, which we had chosen on the Apple I, had stepped up to the 16K dynamic RAMs. We hadn’t made much money on the Apple I’s – we had sold a couple of hundred and might have made a few thousand dollars – but we had gotten our name known. In those days when 20 microcomputers came out, Apple was always at the top of the list, in alphabetical order.
The Apple II was developed a few months after we started shipping Apple I’s. It was demonstrated to a couple of editors, who were told not to publish, and a couple of store-owners that we were selling Apple I’s to, just to show them what was coming. It had color, even a few months after the Apple I.
We went out to our first show ever. This was the first time Steve or I had been out of California, except for my year at Colorado. We went to Atlantic City for PC ’76 to show off the Apple I, basically. But late one night, when all the competitors had gone, we sneaked down to where there was an Advent projection monitor. We had never seen a projection TV before and we wanted to try the Apple II on it. So we got the Advent technician to hook it up, and we played it. It was there playing Breakout – it was drawing colored spirals and doing all my demos. The guy had every low cost computer spread around him, and he said, “That’s it, that’s the one I want!”, out of all these others. As it wound up, he got serial number one. Of course, he ended up trading our President for a copy of StarWars on videotape for it.
I went down to Hughes Aircraft once and talked to a bunch of engineers, and showed them the Apple I. I talked to groups – this was the early days of user groups – but I was used to mine.
Back at my Home Brew Club, I had gotten into a mode with a little crowd around me every two weeks, trying to figure what was the latest little thing I had written – what was the latest routine. I had published a few of them in our newsletter and local magazines. They always hung around me and they were into the 6502′s. The bulk of the audience (we were up to 500 members now) was into ComputerNews, and 8080 was the world. Nobody knew why I sat in the very last row of the auditorium. Very few people knew, except the ones round me. There was one plug in the wall there, and I would plug in my computer and be typing away in hex throughout the whole meeting.
Anyway, I went down to Hughes Aircraft, and talked to a group of maybe 20 engineers or so. The trouble was, I realized, I had forgotten the transformers to run the Apple I. So I called Steve on the phone and said, “Man, I can’t show them the Apple I. Can I show them the Apple II?”. He said okay, so I went out and I gave them a complete presentation of the Apple II.
They were shocked. It was like the first time, and was a little rough, but I walked home with checks for $300 each, for a product that wasn’t going to be out for at least six months. And, if you think about it in a framework where there were no home computers, this was to buy PC boards. We had not planned to make a completely built product in a plastic case yet. So they were going to buy PC boards, something that was six months off. It was that good, both technologically and feature-wise.
Steve was selling Apple I’s at computer stores and figured out that you could probably sell a thousand Apple II’s a month. Maybe we could really hit the big time.
Commodore’s interest in Apple
Commodore was going to do their home computer at this time, and Chuck Peddle came to our garage, and looked at what we had. We went into Commodore and showed them what it was and Steve was thinking they might offer us a few hundred thousand dollars for it. And man, that would be everything in the world. Originally, we were going to just offer PC boards for $40 each – until Steve got a $50,000 order, which shocked us. Well, Commodore decided to develop their own, and they would not buy ours. So they skipped the Apple II.
Early company finances
Steve figured we could sell a thousand Apple II’s a month. But, how do you build a thousand computers when they cost $250 each. You need $250,000, up front. There’s no way around it. So we started looking around for venture capital, md some venture capitalists would come to the garage and they would ask questions like: “What do you think the size of the market is?”.
And we were so naive, my answer was, “A million”.
They would say, “Why a million?”.
And I said, “There’s a million ham radio operators, and computers are bigger than ham radio now.” But that wasn’t the sort of reasoning that really leads up to market estimates.
Eventually we started talking to Mike Markkula. Originally, he was just going to help us write a business plan to get money from Ven Rock, because a guy at Ven Rock used to work for him. But Mike saw what we had, and realized that maybe there was a home computer revolution about to happen. The first analysts started predicting a multi-billion market in a tew years.
When something grows like that out of nothing, you get in and do a good job of your company – Marketing, Operations, Support, Engineering, and everything – so you can grow as fast as the market. Just get in there and get a good share of it.
So he felt that this was a ripe opportunity for a company to grow into a $500 million company in a few years. He decided he would join us; he would loan us $250,000. This is not the normal way to get money. In the nornal way, you have a business plan and go through that rigamarole, and endure months and months of questioning, and really establish your case – have them believe in it and want to be in that market anyway.
No, Mike just saw what we had, he had the perception. He would just write out a quarter of a million dollar check. He also wanted to own a percentage of the company; Steve and I would each own 26%, and Mike would own 20%.
“Work only at Apple”
Then, he wanted us to work only for Apple. I had done so much – I had written a cassette interface for the Apple-1 and II, I had added all these features for the Apple II, I had written the BASIC, I wrote the monitor ROM’s – and I’d been doing this all at night, because I’m working at Hewlett-Packard. Why couidn’t I stay there? I had a secure income. Mike said, “No, it has got to be 100% for Apple”, and gave me an ultimatum date – 3 days later.
I thought about it, and thought about it, and I finally made up my mind, and told him no. And with he, and I, and Steve, it was a real tense situation. Steve got a little frenzied, and he got my parents, and he got all my relatives – he always has a way to get what he wants – to call me, and talk me out of it. My friend, Alan Baum from Hewlett-Packard, called me. He was the only one at all to help out with the Apple II design. He helped with some of the ways the busses were configured and with some of the monitor software. I wanted to save chips, and Alan convinced me that the technique I had chosen would work. Also he helped out with some of the software and monitor ROM. Alan told me, “You can be an engineer and start this company, or you can be a manager and get rich. Or, you can be engineer, and start this company, and just stay an engineer, and get rich.” And that clicked.
I realized I didn’t want to run some big company and be some big financial businessman, be a politician of sorts. So this sounded pretty good; I could just design computers forever. I was just starting the company to make money off it.
We hired our first ad agency, got a local one called Regis McKenna. They tried to tell us that we couldn’t have the name Apple – it didn’t suggest megabytes, it doesn’t suggest all this number crunching, and data organization – and that we’d have to change the name. So Steve and I had to resist on that.
We went ahead on the Apple II and got a plastic case done for it. One of my friends from HP referred Steve to someone, and we got 3 drawings and chose the one for the Apple II. The unofficial introduction for it was the Home Brew Computer Club, holding it up in the air, telling what was on it and what it was all about. I’m sure they were quite a bit surprised. Our Official introduction was at the first West Coast Computer Faire, so things took off right away. We sold as rnany as we could make. Level after level after level, it was quite a long time before we built up an inventory of finished goods at all. And then we came out with the floppy disk, and we were immensely successful.
The Apple II had an advantage over its competition in the early days. The personal computers, not the hobbyist computers, pretty much included Apple, Commodore, and Radio Shack. The Commodore and the Radio Shack where small 4K-8K machines, perfect for the day. They didn’t have graphics. They didn’t have color, they didn’t have sound, they didn’t have paddles – everyone knew that the Apple was far superior. But the big problem was they didn’t have memory expandability; they were stuck at 4K or 8K.
What happened was that the first programs were IK, then they were 2K, then they got up to 4K. Then somehow VisiCalc had to come out somewhere. The only personal computer that could run VisiCalc was the Apple II, which had up to 48K built in. So, pretty much, the other computers had to go back to the drawing boards and design higher memory versions. They hadn’t built in the expandability necessary.
Apple II to II Plus conversion
Around this time, when we introduced the floppy disk, we brought out the Apple II+. And in moving from the II to the II+, the major change was a floating-point BASIC, instead of an integer-based BASIC. When we made this change, everyone in the company had an Apple. We loved them and would stay up nights leaming to program. Mike Markkula even wrote BASIC programs that we actually shipped to teach kids how to program color – Color Math, if anyone remembers. Everyone did it, even Rod Holt would run his spiral programs, and he wasn’t a computer person. So when we came out with the II+, we came out with a board that you could plug into your II that would turn it into a II+. And we came out with a board that would turn your II+ into a II. In other words, we treated the world as though we were owners of the prior product when we upgraded. It got lost for a few years, but I think the recent Mac+ upgrade is very reminiscent of those times. We are all owners of the current Macs, including the company fortunately, and they make sure that upgrades are available, double-sided drives, etc.
Okay, I’m going to cut it a little short here. You’ve kind of got a sense of how important this club was to me. Every two weeks, it was the rnost important thing in my life. I respected it so much that, after a while, I started getting requests to come to various clubs and tell about what Apple is doing. I started going to a few of them and discovered things like: if you bring someone along to give away a word processor free, someone will jump up from the audience who’s trying to sell one and he’s very upset. I probably went to a couple of hundred meetings, I started accepting every invitation, because I felt like it was giving back to where it came from. I paid my own expense – Apple didn’t even pay my air fare. It became good to meet the people – to talk to them and know their problems, to know which pieces of hardware and software they were having problems with. At the same time, I was inside of Apple and no one really knew these things. They didn’t know which piece of software or hardware you could buy, they didn’t know what was really going on. So there was a lack of contact, and it was not obvious to the user groups, but it was shocking. I’m not going to go into it, but it was shocking.
Apple and User Groups
Jean-Louis Gassee [in 1986 was Apple's Vice President for Product Development] comes from a different framework. I got to meet him. I actually made an address to the flrst meeting of the French Computer Club – I’m member number 000. He’s a member of 3 computer clubs. I’m a member of 20. It turns out that he inspired a lot of third party companies to start up and develop products over there. I went over there late in a year that was just sort of dead, and you could only expect the Apple Computer, Inc. boards to work well with the Apple operating systems. And over there in France, they had 3 different things on one board and all sorts of things that we used to do here. He just sort of inspired that – trying to get the user group motivation going and all that. I became very close to him, very supportive of him, and I’m glad he’s where he is now.
Views on software piracy
Anyway, piracy in clubs has gotten to be a big issue. Who wouldn’t say that there isn’t piracy in clubs? Okay, piracy, sure, clubs have always been a place where software is collected and traded, a meeting place for people who had software that you didn’t have in your collection. The funny thing is that people bought a personal computer, not so much to show how they totally saved $1000 in personal productivity, but to show an incredible collection of software. Once you get a collection to a certain point, you don’t stop collecting. You have to continue the collection, or it loses its value.
My viewpoint on piracy is that it’s sort of like going 60 miles an hour. I do not believe that it costs software publishers one cent. It could be negative or positive. I think it’s pretty close, in the sense that there’s a certain amount of dollars that a community has to spend on software. Because there are huge collections possible, the total number of dollars is much larger. There are larger amounts of dollars spent on software. It might have been on blank floppy disks, but the total is larger. You can believe what you want to believe, but it’s hard to say that anyone with $20 a month in allowance money is going to buy $150 pieces of software. They might have copied it, but they did not steal $150, because they could not have afforded to buy it. The resources weren’t there. Just a viewpoint of mine. Ham radio operators have licenses – maybe computer owners should, too. There, that’s about the second time in three years I’ve made a plug for that.
I’m really appreciative of the recent user group turn-around that I’ve seen inside of Apple. I’m really appreciative that we have an evangelist. I’m kind of sorry that I haven’t been involved with it, I’ve been kind of away from it for awhile. But there was a challenge given today to the user groups – I heard it – which was that you user groups frequently want to change things in Apple, something that’s being done. You want changes? It tums out that a lot of management, decision-making, and communications are going to be handled by Apple Link. I’ll be darned if somebody in a club doesn’t figure out how to crack Apple Link – you’ll probably get what you want. That’s the Apple ’86 challenge…Thanks very much, good night.