Apple scrapped 200,000 computers. The money was the smaller reason.

The cable cost less than 30 cents.

It ran inside the Apple III's keyboard, and the way Jay Elliot tells it, when it rubbed the wrong way it could give the person typing a shock. Every unit was recalled. That was it, in his words. Done deal.

What was left was a warehouse. About 200,000 of them, with price tags from $4,300 to $7,800.

Somewhere in your line there's probably a product that isn't losing money. It isn't winning either. It gets a line in every sales call, a slice of every support shift, a slot in every roadmap conversation, and it hasn't had a real new customer in a year. On the P&L it's a rounding error. Everywhere else it's a tax.

Do the arithmetic

The Apple III was Apple's follow-up to the Apple II, and in The Steve Jobs Way Jay calls its recall the company's first major failure: every one of the new $7,800 machines, "due to a problem with a faulty cable that cost less than thirty cents."

In Leading Apple with Steve Jobs he picks the story up at the warehouse. As part of the Task Force's work, Steve told him to get rid of the entire inventory. "The 'entire inventory' consisted of 200,000 units of the Apple III, with price tags that ranged from $4,300 to $7,800," he writes. Then 3 words: "Do the arithmetic."

I'll do it once, at the bottom of the range. 200,000 machines at $4,300 is $860 million of computers at the sticker. Nobody was going to get sticker for a recalled machine, so treat that as the size of what was sitting in the warehouse, not what Apple could have recovered. The decision, Jay says, "created quite a stir in Apple and in the press." Jay was the one who eventually had to get rid of them.

A distraction from the Macintosh

The number isn't the part that matters.

Jay's sentence about why has 2 halves. The Apple IIIs "weren't selling," and they "were only serving as a distraction from the Macintosh."

Read those as 2 separate facts, because they are. "Not selling" is a revenue fact, and a revenue fact can always be argued with. Discount them. Find a market overseas. Sell them to schools. "A distraction" is an attention fact, and it can't be argued with, because attention is the one thing the product that's alive can't get more of. Every meeting the dead product sat in was a meeting the Macintosh didn't have. Every sales conversation that spent 10 minutes on what to do about the Apple III was 10 minutes the Mac didn't get.

Jay's own book, It's the Product, Stupid, has a line about why the Mac team got a building of its own, and it's the same principle. Without it, "the business that paid the bills would have set the schedule and the priorities for the business that was supposed to replace it, without anyone ever deciding that it should." Nobody decides to let the dead product run the company. It happens by default, 1 meeting at a time, for as long as the product's allowed to stay.

The exorcist

Before his team moved into that building, Jay writes in The Steve Jobs Way, Steve told him he wanted to bring in an exorcist to get rid of the demons in the structure. He was absolutely serious. As far as Steve was concerned, the group that had been there before had left bad vibes behind. Jay talked him out of it, mostly out of fear of what the rest of Apple would do with the story if it got out. The building got rebuilt around an atrium instead, with a piano in it and Steve's old BMW motorcycle on display.

Make fun of the exorcist if you want. I think Steve had the instinct right and the method wrong. You don't move the new product into the dead product's building without clearing it out.

What Jay doesn't claim

The 200,000 and the price range are Jay's figures. The recall cause as he tells it is the cable; other accounts of the Apple III's troubles emphasize other faults, and I'm giving you his. Nothing here is a claim about what Apple recovered on the inventory. The exorcist is from The Steve Jobs Way; the rebuild is Jay's account.

The turn

The write-off is the small cost of a dead product. The big cost is the attention it keeps taking from the one that's alive.

Jay could have written "they weren't selling" and stopped. The half of the sentence that matters is "a distraction." That's the cost that never appears on a P&L and appears in every meeting: the feature you keep deferring on the product that works, the onboarding you keep meaning to fix, the sales call that spends its best 10 minutes on the thing nobody's going to buy.

Day 4 of the free course is about cutting the right thing: 2 Macintosh cuts that looked identical on a spec sheet and weren't. Start the 5-day course →

Run it on your product

1. For each item on your page, 1 line of arithmetic that isn't revenue. Support tickets a month. Sales calls it comes up in. Roadmap items it owns. Meetings it's been in this quarter.
2. Next to it, the revenue share. The product with 4% of the revenue and 30% of the meetings is your Apple III.
3. Write what the product that's alive would get if that attention came back. Be specific: which feature, which fix, how many hours.
4. Decide: fix, cut, reposition, test, or stop. Write it down before you leave the room.

What this doesn't do: it prices the drag. It doesn't tell you whether the product that's alive is actually right. That's what the 4 questions are for.