Why Did Steve Jobs Cut Apple to Four Computers?

David Senra, reading Leander Kahney, says Steve Jobs cut Apple to four computers because Apple could not be a profitable $12 billion company or a profitable $10 billion company, but it could be a profitable $6 billion company.

Jobs drew annual revenue on a whiteboard, a drop from $12 billion a year to $10 billion and then $7 billion, then erased the board and drew a two-by-two grid. Across the top he wrote consumer and professional. Down the side he wrote portable and desktop. Apple would sell only four machines: two notebooks and two desktops, two aimed at professionals and two aimed at consumers. The cut doomed dozens of software projects and eliminated almost every product from the hardware lineup. Over the next 18 months, more than 4,200 full-time staff were laid off. By 1998, Apple had shrunk to only 6,000 people, half the company in 1995, and the balance sheet was brought under control.

Jobs kept Apple out of a price race with makers of generic personal computers. A BMW might get you there the same way as a Chevy that costs half the price, but buyers will pay for the better ride. A $3,000 machine could bring much bigger profits than a $500 machine, even with fewer sales. Fewer products meant less inventory. Jobs saved Apple over $300 million in inventory in one year and avoided warehouses full of unsold machines.