1997–2007: Restructuring and return to profitability
The NeXT acquisition was completed on February 7, 1997. Jobs quickly became frustrated with the leadership of Amelio and Apple's board. In June 1997, he anonymously sold his 1.5 million shares, sending the company's stock price lower and contributing to pressure on Amelio, whom the board ousted the following month. Jobs became Apple's de facto leader and was formally appointed interim CEO on September 16.
In August 1997, Jobs secured a $150 million investment from Microsoft and a commitment to continue developing software for the Mac platform, an agreement widely viewed as beneficial to both companies following Microsoft's antitrust settlement with the U.S. Department of Justice. Jobs ended the Macintosh clone licensing program, and in September 1997, acquired the largest clone manufacturer, Power Computing. In November 1997, the online Apple Store launched and adopted a build-to-order manufacturing model similar to that used by Dell. By the end of 1997, Jobs had returned Apple to profitability, reporting a profit of $309 million.
Jobs streamlined Apple's product lineup, eliminating roughly 70 percent of existing models and introducing a simplified 'four-quadrant' product strategy consisting of one desktop and one laptop computer each for consumer and professional markets. The restructuring eliminated approximately 3,000 jobs.
The first all-new product introduced under this strategy was the iMac, unveiled on May 6, 1998. Designed by Jony Ive, the all-in-one computer featured a distinctive translucent design enclosure, emphasized Internet connectivity (the "i" in iMac), adopted modern technologies such as USB, and omitted legacy technologies like the floppy disk drive. It sold approximately 800,000 units within its first five months on the market.
Apple completed the transition to the four-quadrant lineup on July 21, 1999, with the introduction of the consumer-oriented iBook laptop. It joined the iMac and updated G3-powered versions of the professional Power Macintosh desktop and PowerBook laptop, completing the simplified product matrix. Jobs said the smaller product lineup allowed Apple to focus more on quality and innovation.
During this period, Apple also focused on building an ecosystem around digital media, similar to its earlier efforts in desktop publishing, through a series of acquisitions and product launches. Apple acquired Macromedia's Key Grip digital video editing project, which became Final Cut Pro in April 1999. The technology also contributed to the development of iMovie, Apple's consumer video-editing application, released in October 1999. In April 2000, Apple acquired German company Astarte, whose DVDirector DVD authoring software was repackaged as DVD Studio Pro for professionals and adapted into iDVD for consumers. Later that year, Apple acquired SoundJam MP from Casady & Greene and relaunched it as iTunes, adding a simplified interface and CD-burning capabilities.
In 2001, Apple made three announcements that would shape its future direction. On March 24, Apple released Mac OS X, its next-generation operating system after years of failed attempts to modernize the classic Mac OS. Based on NeXTSTEP, Mac OS X combined a stable, reliable, and secure Unix foundation with a redesigned GUI. In May, Apple opened its first two Apple Store retail locations in McLean, Virginia, and Glendale, California, providing controlled spaces to showcase its products and services. Despite skepticism that it would be able to compete as a retailer, the stores succeeded, and Apple expanded to more than 500 locations worldwide. On November 10, Apple released the iPod, its first major consumer product outside the computer market in years. The portable digital audio player became a major success, selling more than 100 million units within six years.
In 2002, Apple acquired Nothing Real for its digital compositing application Shake, and Emagic, developer of the music production software Logic. The acquisition made Apple the first computer manufacturer to own a music software company and was followed by the development of the consumer-oriented GarageBand application. In 2002, Apple also introduced iPhoto, completing the iLife software suite.
In 2003, Apple launched the iTunes Store, allowing customers to purchase and download music for 99¢ per song. The service quickly became the leading online music retailer, reaching more than 5 billion downloads by June 2008 and becoming the world's largest music retailer two years later. The iTunes Store helped transform the music industry by shifting consumers from unauthorized file-sharing services such as Napster toward paid digital distribution.
In January 2005, Apple introduced the Mac Mini, a low-cost computer intended to attract Windows users. It was priced starting at US$499 (equivalent to $800 in 2025) with users expected to re-use their existing display, keyboard, and mouse.
At the Worldwide Developers Conference on June 6, 2005, Jobs announced that Apple would transition the Mac from PowerPC to Intel processors over the following two years. The first Intel-based Macs, the MacBook Pro and iMac, were introduced on January 10, 2006, using Intel's Core Duo processors. Apple completed the transition on August 7, 2006, approximately one year ahead of its announced schedule. During the transition, the Power Mac, iBook, and PowerBook brands were retired and replaced by the Mac Pro, MacBook, and MacBook Pro. Apple also introduced Boot Camp in 2006, allowing users to install Windows on Intel-based Macs alongside Mac OS X.
Between 2003 and 2006, the price of Apple's stock increased more than tenfold, from around $6 per share (split-adjusted) to over $80. When Apple surpassed Dell's market cap in January 2006, Jobs sent an email to Apple employees saying Michael Dell should eat his words, referencing his 1997 remark that, if he ran Apple, he would "shut it down and give the money back to the shareholders".
