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Steve Jobs and Steve Wozniak first met in mid-1971, when their mutual friend, Bill Fernandez, introduced then 21-year-old Wozniak to 16-year-old Jobs. Their first business partnership began later that year when Wozniak, a self-educated electronics engineer, started to build his original “blue boxes” that enabled one to make long-distance phone calls at no cost. Jobs managed to sell some two hundred blue boxes for $150 each, and split the profit with Wozniak. Jobs later told his biographer that if it hadn't been for Wozniak's blue boxes, "there wouldn't have been an Apple."
In 1975, the two Steves started attending meetings of the Homebrew Computer Club. New microcomputers such as the Altair 8800 and the IMSAI inspired Wozniak to build a microprocessor into his video terminal and have a complete computer. At the time the only microcomputer CPUs generally available were the $179 Intel 8080 (equivalent to $850 in 2019), and the $170 Motorola 6800 (equivalent to $808 in 2019). Wozniak preferred the 6800, but both were out of his price range. So he watched, and learned, and designed computers on paper, waiting for the day he could afford a CPU.
When MOS Technology released its $20 (equivalent to $90 in 2019) 6502 chip in 1976, Wozniak wrote a version of BASIC for it, then began to design a computer for it to run on. The 6502 was designed by the same people who designed the 6800, as many in Silicon Valley left employers to form their own companies. Wozniak's earlier 6800 paper-computer needed only minor changes to run on the new chip.
By March 1, 1976, Wozniak completed the machine and took it to a Homebrew Computer Club meeting to show it off. When Jobs saw Wozniak's computer, which would later become known as the Apple I, he was immediately interested in its commercial potential. Initially, Wozniak intended to share schematics of the machine for free, but Jobs insisted that they should instead build and sell bare printed circuit boards for the computer. Wozniak also originally offered the design to Hewlett-Packard (HP), where he worked at the time, but was denied by the company on five occasions. Jobs eventually convinced Wozniak to go into business together and start a new company of their own. In order to raise the money they needed to produce the first batch of printed circuit boards, Jobs sold his Volkswagen Type 2 minibus for a few hundred dollars, and Wozniak sold his HP-65 programmable calculator for $500.
On April 1, 1976, Apple Computer Company was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne. The company was registered as a California business partnership. Wayne, who worked at Atari as a chief draftsman, agreed to become a co-founder of the company in return for a 10% stake. However, Wayne was somewhat gun-shy due to the failure of his own venture four years earlier. On April 12, less than two weeks after the company's formation, Wayne left Apple, selling his 10% share back to the two Steves for only $800 and leaving them as the active primary co-founders.
According to Wozniak, Jobs proposed the name “Apple Computer” when he had just come back from Robert Friedland’s All-One Farm in Oregon.
Soon after the company was formed, the two Steves made one last trip to the Homebrew Computer Club and demonstrated the finished version of the Apple I. Paul Terrell, who operated a computer store chain named the Byte Shop, was in attendance, and became impressed with the machine. He handed the two Steves his card, and told them to "keep in touch." The following day, Jobs dropped in on Terrell at the Byte Shop store in Mountain View, and tried to sell him the bare circuit boards for the Apple I. Terrell told Jobs that he was interested in purchasing the machine, but only if it came fully assembled, saying he would order 50 assembled computers and pay US$500 each on delivery (equivalent to $2,200 in 2019). Jobs then took the purchase order that he had been given from the Byte Shop to Cramer Electronics, a national electronic parts distributor, and ordered the components he needed to assemble the Apple I. The local credit manager asked Jobs how he was going to pay for the parts and he replied, "I have this purchase order from the Byte Shop chain of computer stores for 50 of my computers and the payment terms are COD. If you give me the parts on net 30-day terms I can build and deliver the computers in that time frame, collect my money from Terrell at the Byte Shop and pay you."
The credit manager called Paul Terrell, who was attending an IEEE computer conference at Asilomar in Pacific Grove and verified the validity of the purchase order.
Amazed at the tenacity of Jobs, Terrell assured the credit manager if the computers showed up in his stores, Jobs would be paid and would have more than enough money to pay for the parts order. The two Steves and their small crew spent day and night building and testing the computers, and delivered to Terrell on time to pay his suppliers. Terrell was surprised when Jobs delivered him a batch of assembled circuit boards, as he had expected complete computers with a case, monitor and keyboard. Nonetheless, Terrell kept his word and paid the two Steves the money he had promised them.
The Apple I went on sale in July 1976 as an assembled circuit board with a retail price of $666.66. Wozniak later said he had no idea about the relation between the number and the mark of the beast, and that he came up with the price because he liked "repeating digits". Eventually, about 200 units of the Apple I were sold.
Encouraged by the success of the Apple I, Jobs started looking for investments to further expand the business, but banks were reluctant to lend him money; the idea of a computer for ordinary people seemed absurd at the time. In August 1976, Jobs approached his former boss at Atari, Nolan Bushnell, who recommended that he meet with Don Valentine, the founder of Sequoia Capital. Valentine was not interested in funding Apple, but in turn introduced Jobs to Mike Markkula, a millionaire who had worked under him at Fairchild Semiconductor. Markkula, unlike Valentine, saw great potential in the two Steves, and decided to become an angel investor of their company. He invested $92,000 in Apple out of his own property while securing a $250,000 (equivalent to $1,120,000 in 2019) line of credit from Bank of America. In return for his investment, Markkula received a one-third stake in Apple. With the help of Markkula, Apple Computer, Inc. was incorporated on January 3, 1977. The new corporation bought out the old partnership the two Steves formed nine months earlier.
In February 1977, Markkula recruited Michael Scott from National Semiconductor to serve as the first president and CEO of Apple Computer, as Jobs and Wozniak were both insufficiently experienced and he was not interested in taking that position himself. That same month, Wozniak resigned from his job at Hewlett-Packard to work full-time for Apple.
Almost as soon as Apple had started selling its first computers, Wozniak moved on from the Apple I and began designing a greatly improved computer: the Apple II. Wozniak completed a working prototype of the new machine by August 1976. The two Steves presented the Apple II computer to the public at the first West Coast Computer Faire on April 16 and 17, 1977. On the first day of the exhibition, Jobs introduced the Apple II to a Japanese chemist named Toshio Mizushima, who became the first authorized Apple dealer in Japan. In the May 1977 issue of Byte, Wozniak said of the Apple II design, "To me, a personal computer should be small, reliable, convenient to use, and inexpensive."
The Apple II went on sale on June 10, 1977, with a retail price of $1,298. The computer's main internal difference from its predecessor was a completely redesigned TV interface, which held the display in memory. Now not only useful for simple text display, the Apple II included graphics and, eventually, color. During the development of the Apple II, Jobs pressed for a well-designed plastic case and built-in keyboard, with the idea that the machine should be fully packaged and ready to run out of the box. This was almost the case for the Apple I computers, but one still needed to plug various parts together and type in the code to run BASIC. Jobs wanted the Apple II case to be "simple and elegant", and hired an industrial designer named Jerry Manock to produce such a case design. Apple employee Rod Holt developed the switching power supply.
