Steve Jobs' Magic Kingdom

Vindication
Yet the alliance has plenty of risks, too. Jobs will have to navigate a minefield of conflicts as he runs Apple and sits on Disney's board. He'll also have to demonstrate he can take on the unfamiliar role of supporting player. The same perfectionism that allows him to help create great products has made it difficult for him to stand by if someone is going in what he considers the wrong direction. When he returned to Apple as part of the NeXT acquisition, he insisted he didn't want Amelio's job, and then quickly took charge. Already, there's speculation in Silicon Valley that Disney's chief could get "Amelioed."

Iger isn't in the most secure spot. He has revamped Disney's management style and has improved some operations. Still, the company's stock is at about the same level it was a decade ago. And Iger has only been CEO a few months, so he's on new footing with Disney's directors. One management expert calls the Jobs move "courageous" but says "Iger just put a gun to his head," predicting that Jobs' influence in the boardroom would be so pervasive that Iger could be gone within a year.

Particularly ticklish will be Disney's animation business. While Iger has stressed that it's crucial to the company's future, Jobs may have closer ties, since his two lieutenants will be running the show. Even during the conference call announcing the Disney-Pixar deal, there were hints of differences. One analyst asked whether Lasseter would have authority to decide whether Pixar movies such as "Toy Story" will be made into Broadway plays. Jobs began by acknowledging that Lasseter works for Iger, then added, "[Lasseter] has always had strong feelings about the exploitation of stories and characters." So if Lasseter and Iger disagree, who would Jobs back?

Jobs declined to be interviewed for this article. But some executives who know him well insist that Iger has nothing to fear. "People are misreading Steve Jobs," says Edgar S. Woolard Jr., the former chairman of Apple and former chairman and CEO of chemical giant DuPont. "If he has a good relationship with you, there is nobody better in the world to work with. Iger made a very wise move, and two years from now everyone will be saying that."

Jobs certainly has much to offer. The past few years have been a thorough vindication of his ideas and leadership. Just a decade ago he was considered a temperamental micromanager whose insistence on total control and stylish innovation had doomed his company to irrelevance. While Apple tried to develop both the hardware and software for its computers, Microsoft, Intel, and a flock of PC makers slashed the onetime industry leader to bits by separating the two. Asked in late 1997 what Jobs should do as head of Apple, Dell Inc.'s then-CEO Michael S. Dell said at an investor conference: "I'd shut it down and give the money back to the shareholders."

Fighting words that Dell may regret today. Apple shares have soared from $7 a share three years ago to $74, and the company's market cap of $62 billion is just shy of Dell's. Why? Jobs has applied his old strategy to the new digital world. With absolute control, breakout innovation, and stellar marketing, he has created products that consumers lust after. The smooth melding of Apple's iPod with the iTunes software has helped make it an icon of the Digital Age. Rivals from Microsoft to Dell to Sony Corp. have been left in the dust. "He has set the basic model for any digital business from now on," says Toshiba Corp. CEO Atsutoshi Nishida. Microsoft is even considering making its own digital music player, since providing its software to Dell and other hardware developers has failed to slow Apple.

Jobs' success at Pixar is no less remarkable. He bought the business from director George Lucas 20 years ago for $10 million. Catmull and Lasseter believed they could use computer animation to create full-length movies, even though many in Hollywood and at Disney thought computers could never deliver the nuance and emotion of hand-drawn animation. Jobs bought into the vision. The result: Pixar has knocked out six blockbusters, from "Toy Story" in 1995 to "Finding Nemo" and "The Incredibles" in recent years. "The great thing about Steve is that he knows that great business comes from great product," says Peter Schneider, the former chairman of Disney's studio. "First you have to get the product right, whether it's the iPod or an animated movie."

Of course the trick isn't in wanting to make great products. It's being able to do it. So what is Jobs' secret? There are many, but it starts with focus and a near-religious faith in his strategy. For years, Jobs plugged away at Apple with his more proprietary approach, not worrying much about Wall Street's complaints. In fact, one of his first moves was to take an ax to Apple's product line, lopping off dozens of products to focus on just four. "Our jaws dropped when we heard that one," recalls former Apple chairman Woolard. Time and again since, Apple has eschewed calls to boost market share by making lower-end products or expanding into adjacent markets where the company wouldn't be the leader. "I'm as proud of what we don't do as I am of what we do," Jobs often says.

It's all based on a fundamental belief that a killer product will bring killer profits. That's certainly the case at Pixar. While analysts have often urged the company to crank up its movie machine and pump out more releases, the company is only now reaching the point that it can make one a year. And at least until the Disney deal was struck, the plan was to stay there for good. The reason: Pixar's executives focus on making sure there are no "B teams," that every movie gets the best efforts of Pixar's brainy staff of animators, storytellers, and technologists.

Indeed, Jobs says with pride that Pixar has made the tough call to stop production at some point on every one of its movies to fix a problem with a storyline or character. "Quality is more important than quantity, and in the end, it's a better financial decision anyway," Jobs told BusinessWeek last year. "One home run is much better than two doubles," he said, explaining that then there's only one marketing and production budget rather than two.

The fixation on quality over quantity refers to personnel as much as production. Ever since the days when he marveled at Stephen G. Wozniak's engineering skill while building the first Apple computer, Jobs believed that a small team of top talent can run circles around far larger but less talented groups. He spends a lot of energy working the phones, trying to recruit people he has heard are the best at a certain job.

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