The two concerns quickly came together in H.R. 5573, a bill introduced by Stark in February 1982. The basic notion of the legislation, soon dubbed the "Apple Bill," was to provide a tax incentive large enough to make it possible for Apple to donate a computer to virtually every elementary and secondary school in the country. The bill would have boosted the charitable deduction allowance to 30% from 10% of normal taxable income for a given year, allowing a deduction of up to 200% of basis (the actual cost of manufacturing). Apple, which pays a corporate tax rate of 46%, estimated that, under provisions of such a bill, it would recover all but 8% of its costs of the donated equipment.
Drafted by Apple's director of taxes, attorney Michael Rashkin, and soft-pedaled on Capitol Hill by Jobs, the bill encountered a surprisingly warm reception. Although the American Electronics Association and the National Education Association -- consulted after the fact -- gave it "no chance," particularly in light of budgetary concerns (the bill would have cost an estimated $300 million in lost revenues), they miscalculated the depth of Congress' passion for high-technology projects. "We were caught unawares," says Lynn Smith, manager of the government relations program of the Computer and Business Equipment Manufacturers Association; while Ken Hagerty, vice-president of government operations at the American Electronics Association, jokes, "This city is filled with people who had egg on their face because of that bill . . . being pushed by these amateurs."
H.R. 5573 was commonly and somewhat mistakenly considered a "one-company" bill: It reflected Apple Computer's needs and desires, as well as its corporate style and strengths, but would, in fact, have facilitated donations by a number of manufacturers. It had little outside support. The electronics and educational lobbies, feeling left out and miscalculating the bill's chances, stuck to the sidelines, while other manufacturers, caught even more off guard and alarmed by the Apple bill, prayed for its demise (only Hewlett-Packard, used to playing the giveaway game, publicly supported it). Tandy, less than eager to revise its marketing program to Apple's specifications, strongly opposed the legislation.
"It was an excellent marketing strategy on the part of Apple," grumbles Tandy's Kuhnreich, "but look at the major players -- IBM, Apple, Tandy. All three of us pull down 40% pretax on equity . . . a 20% pretax net profit on sales. You don't give these people a 200% write-off, for God's sake!" Tandy kept tabs on the bill and watched, in amazement, as it came out of House and Senate committees and was heralded, in the House, with a 323-62 vote. The adjournment of the 97th Congress was apparently all that kept the bill from passage. "Even people in Congress were surprised by the reception," remarks one legislative aide.
Jobs, who had stolen into Washington, slipped as quietly back to California, where, with the help of State Assemblyman Chuck Imbrecht, a statewide version of the Apple bill was enacted. Since then, Apple has discreetly put together a giveaway program entitled "Kids Can't Wait." Beginning last May, Apple mailed advisories to 11,000 school superintendents, administrators, and principals in California announcing its offer to their schools -- an Apple IIe computer with CRT monitor, one disk drive with controller cards, Logo software, an educational program, manuals, and a software coupon book -- a package that would retail for $2,400. A school simply sends a teacher to an Apple dealer to be trained, then returns a dealer-signed certificate to Apple, which ships a system within 30 days. The company, which scheduled deliveries over the summer, was forced to increase its production runs to meet the need.
"We won't deny for a moment that this program is good for Apple," admits David Beaver, Jobs's assistant, while emphasizing that the company's principal motive is "philanthropic" -- the desire to make sure that American children are computer literate. "We want to do a good thing for the kids," he says, "but a lot of people don't believe it." Among them is San Francisco State's Peck, who regards the program as a "kind of giant scam . . . for Apple's sales aggrandizement."
Tandy, for its part, has adopted a higher profile with its "freebie" computer courses. Putting its own Washington counsel to work, it first obtained the assistance of the White House Office of Private Sector Initiatives and then the endorsement of the Department of Education; in March, Secretary T.H. Bell applauded Tandy's offer to train every teacher in the country, observing, offhandedly, that he hoped the corporation "made a lot of money out of it." A short while later, Tandy mailed out 103,455 packages to school districts, touting its "America's Educational Challenge" program, with a second, more elaborate pack, including slides and filmstrips, available on request. Last year, without fanfare, Tandy put 125,000 teachers through its 10-hour courses; this year, it expects to do considerably better. Tandy also has authored its own version of an Apple bill, introduced by Rep. Jim Wright (D-Tex.).
Hewlett-Packard, which has a long history of major donations to colleges and universities, and IBM are also receiving tax credits for their California largess, but have adopted different approaches. HP's $51,000 classroom packages include 10 HP-86 personal computers, 10 monitors, 10 printers, two graphics plotters, two graphics software packages, and other software, in addition to a liaison to each school to ensure the program's success. IBM has donated similar packages to 12 colleges, where teachers from 85 secondary schools will receive two-to-three weeks of computer training before receiving PC classrooms of their own (secondary schools, colleges, and universities in New York and Florida also will get free IBM PCs, bringing the total donation to 1,500 systems). Commodore Business Machines Inc. has thus far adopted a wait-and-see attitude to giveaways, as have Atari and Texas Instruments Inc. (Some analysts sense that the latter two, having failed to achieve a significant share, are backing away from the educational market.)
Meanwhile, the six pieces of legislation -- including the Stark and Wright bills, as well as bills introduced by Senators John C. Danforth (R-Mo.) and Lloyd Bentsen (D-Tex.) and by Rep. Brian J. Donnelly (D-Mass.) -- are working their way through Congress. They differ in particulars, betraying the strengths and weaknesses of the authors. Apple is quick to point out that the Wright bill, supported by Tandy, includes standards for a disk drive with a minimum storage capacity of 184 kilobytes (the Tandy standard, but not Apple's), and requires training by "employees" of the donor (Tandy operates 400 training centers, but Apple relies on its dealers to provide orientation).
