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The company was now large enough to spin off self contained product development groups. Steve took control of the group producing the Apple III and tried to design the external appearance and performance targets for the machine. His abrasive style of working rubbed most people up the wrong way and the project was doomed from the start. He believed he had a magic touch and this combined with his arrogance and ignorance made it impossible for the project to succeed. Steve was removed from the project.
He searched for something else to champion. He was convinced that computers should be personal and there was a stage beyond the Apple II or III - he started the Lisa project without much idea of how to achieve his goals.
To cut a long story short the solution came in the form of a visit to the Xerox labs where he and the Lisa team saw the prototype Xerox Star complete with windows, icons and a mouse. The Apple team and Steve immediately understood what they were looking at and knew that it was the future of computing. The trick would be to do it cheap. Unfortunately the Lisa project was turning out to be a repeat of the Apple III and gain Steve was removed from control.
The Xerox star
The next stage was almost an orchestrated repeat of the development of the Apple II. Steve gathered around himself a team of talented people who were also able to work for him. They were the pirates and Apple was the Navy. They designed what at first looked like a low cost version of the Lisa but in fact it was another machine altogether. Based on the 68000 it had a single printed circuit board and Steve insisted that it should occupy no more desk space than a telephone directory. He also coupled the development with Postscript and the laser printer.
When the Mac was introduced the Lisa was destroyed as a credible machine. It wasn't compatible with the Mac and it was more expensive. Now Apple had two failures to their credit - the Apple III and Lisa - and the Mac wasn't the immediate hit that Steve Jobs claimed it would be. In a series of top management rows, meetings plots and counter plots eventually Steve Jobs resigned Apple. His style of management, personality and design just couldn't coexist with a traditional company structure.
The first Mac
The Jobs story wasn't over. After leaving Apple in 1985 he founded NExT to design a machine specifically aimed at science and education and in a twist of fate NeXT was bought by Apple in 1997 and he was once again the CEO of the company.
For the story of what happened next see Icon Steve Jobs: The Greatest Second Act in the History of Business, 2005 and for a more up-to-date account see Steve Jobs by Walter Isaacson.