Apple’s Third Product: Why Did the Apple III Flop? The History Behind Apple's Big Failure

The Apple III, introduced in 1980, was designed as the successor to the incredibly successful Apple II, but it failed to replicate the latter's achievements. Despite initially being billed as a high-performance business machine and capable of running Apple II software, the Apple III quickly became known as a failure both commercially and technically. By the time Apple discontinued the line in 1984, after the release of Apple Lisa in 1983 and around the time the Macintosh line released that same year, only 120,000 units had been sold—70,000 of which were the original Apple III, while the remainder were the upgraded Apple III Plus.

The Ambitious Design That Overreached

One of the most intriguing aspects of the Apple III’s development was how ambitious it was for its time. It featured some key innovations:

1. Twice the speed of the Apple II
2. 128KB of RAM
3. Built-in floppy drive (Shugart 143k, 5.25-inch)
4. Apple II emulation
5. 4 internal expansion slots, compatible with Apple II cards

However, this ambition turned into a liability as the engineering team was pushed beyond its limits by upper management and marketing demands. Reports suggest that certain design criteria, such as making the system fanless and squeezing a large number of integrated circuits into a fixed case size, led to serious issues with overheating and component failure.

Steve Jobs was quoted describing the Apple III's development as an "infinite, incalculable" expense, reflecting the enormous resources dedicated to a project that eventually proved disastrous.

Design Flaws and Hardware Issues

The Apple III was plagued by design flaws from the start, which greatly damaged its reputation. The key problems included:

• Chips dislodging from their sockets
• Overheating, which led to failures in real-time clocks and memory
• Melting components, including floppy disks

The chips coming loose from their sockets is particularly notorious. While many speculated this was due to thermal cycling, analysis suggests it was more likely caused by a faulty automated assembly process that failed to properly seat the chips.

Overheating was another critical issue. The fanless design meant that heat would build up inside the system, causing melting chips and floppy disks. Engineers were forced to advise users to lift and drop the machine from a height of six inches to reseat the chips.

Real-Time Clock and Memory Board Issues

The real-time clock was notoriously unreliable, with many units failing due to poor design implementation. The clock was placed far from its oscillator, which was positioned between two busy bus devices. This led to erratic performance, with some machines acting more like random number generators than accurate clocks.

Additionally, memory board problems plagued early versions of the machine. Corrosion of the pins connecting the memory board to the main board was accelerated by the high temperatures within the case, causing frequent failures.

The Final Nail: Bad Press and Marketing Missteps

The combination of these design flaws and poor marketing choices sealed the Apple III’s fate. The initial batch of systems was riddled with defects, leading to bad press that the company was unable to overcome, even after releasing the Apple III Plus, which resolved many of the hardware issues. By then, the damage had been done, and the product had earned a poor reputation, making it unsellable.

As one engineer put it: “Maybe marketing should stay in marketing”. This internal conflict between marketing and engineering pushed the machine to market before it was ready, leading to widespread disappointment from both customers and developers.

Legacy and Lessons Learned

In hindsight, the Apple III served as a learning experience for the company. Apple’s inability to coordinate between departments and their decision to rush to market due to perceived threats to the Apple II’s dominance were key takeaways from this failure. The subsequent release of the Apple IIgs in 1986—featuring similar capabilities for running Apple II software—marked a return to stability.

The Apple III’s failure also cemented the company's understanding of how important the user experience was to its success. By mid-1985, the Apple III had been quietly phased out, a casualty of rushed design and misplaced priorities. However, the lessons learned from its downfall helped guide future successes like the Macintosh.

Key Takeaways from the Apple III Debacle:

1. Overambitious Design: A fanless system with too many chips in too small a case led to serious thermal issues.
2. Poor Assembly Process: An automatic assembly system led to chips coming loose, exacerbating the machine’s hardware issues.
3. Marketing-Driven Release: The decision to release the machine too early led to bad press and tarnished its reputation.
4. Lessons Learned: Apple’s first major product failure taught the company the importance of balancing innovation with practicality.

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