Steve Jobs' Magic Kingdom

By Peter Burrows and Ronald Grover

updated 4:42 p.m. ET Jan. 29, 2006

Early on a July workday in 1997, Jim McCluney, then head of Apple's worldwide operations got the call. McCluney was summoned with other top brass of the beleaguered company to Apple Computer Inc.'s boardroom on its Cupertino (Calif.) campus. Embattled Chief Executive Gil Amelio wasted no time. With an air of barely concealed relief, he said: "Well, I'm sad to report that it's time for me to move on. Take care," McCluney recalls. And he left.

A few minutes later, in walked Steve Jobs. The co-founder of the once proud company had been fired by Apple 12 years before. He had returned seven months earlier as a consultant, when Amelio acquired his NeXT Software Inc. And now Jobs was back in charge. Wearing shorts, sneakers, and a few days' growth of beard, he sat down in a swivel chair and spun slowly, says McCluney, now president of storage provider Emulex Corp. "O.K., tell me what's wrong with this place," Jobs said. After some mumbled replies, he jumped in: "It's the products! So what's wrong with the products?" Again, executives began offering some answers. Jobs cut them off. "The products SUCK!" he roared. "There's no sex in them anymore!"

The one-time enfant terrible of the technology world has calmed down considerably en route to becoming a 50-year-old billionaire. But what hasn't changed is his passion for doing, and saying, just about anything to help create the kinds of products that consumers love. In the nine years since Jobs returned to Apple, his unique modus operandi has sparked broad changes in the world of music, movies, and technology.

Now Jobs is stepping into the Magic Kingdom. On Jan. 24, Walt Disney Co. agreed to pay $7.4 billion in stock to acquire Pixar Animation Studios, where Jobs is chairman, CEO, and 50.6 percent owner. As part of the deal, Jobs will become the largest shareholder at Disney and take a seat on the entertainment giant's board. His top creative executive at Pixar, John A. Lasseter, will oversee the movies at both Pixar's and Disney's animation studios. Pixar's president, Edwin Catmull, will run the business side for the two studios.

The alliance between Jobs and Disney is full of promise. If he can bring to Disney the same kind of industry-shaking, boundary-busting energy that has lifted Apple and Pixar sky-high, he could help the staid company become the leading laboratory for media convergence. It's not hard to imagine a day when you could fire up your Apple TV and watch Net-only spin-offs of popular TV shows from Disney's ABC Inc. Or use your Apple iPhone to watch Los Angeles Lakers superstar Kobe Bryant's video blog, delivered via Disney's ESPN Inc. "We've been talking about a lot of things," says Jobs. "It's going to be a pretty exciting world looking ahead over the next five years."

One reason for the rich possibilities is that Disney CEO Robert A. Iger is a kindred spirit. The 54-year-old Iger, who succeeded longtime Disney chief Michael D. Eisner on Oct. 1, is a self-avowed early adopter who listens to a 120-channel Sirius satellite radio in his car. He travels with a pair of iPods, bopping along to the new nano during his 5 a.m. workouts. Jobs seems to know it: Iger says the first call that he got in March when he was named to the top job came from the Apple CEO. "He wished me well and hoped we could work together soon," recalled Iger in an interview two months ago.

Lightning fast is more like it. Two weeks after Iger took office, the Disney CEO was on stage at a San Jose movie theater with Jobs as the two men introduced Apple's new video iPod and the availability of such ABC shows as "Lost" and "Desperate Housewives." The deal came together on Internet time, in just three days. Iger wanted to show that Disney can be a nimble company, willing to embrace the latest digital technologies to deliver its content. "I think we impressed [Jobs and other Apple execs] with how quickly we could make a decision," said Iger in the earlier interview.

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