Things were no better three months later when Slade and Gates prepared to demonstrate Excel to Steve, Sculley, and the other Apple brass. “We start showing them Excel, but we can’t show much, because the demo is barely working. After thirty seconds Steve totally loses interest. If the demo’s not working, he’s not interested. Sculley gets it, though, and we talk about how to position it as better than what’s on a PC. But Jobs is out of there, he’s moved to the other side of the table. And he and Bill and Andy Hertzfeld just get into this raging battle about BASIC [the popular programming language]. No one can control Jobs. I mean, I come from a pretty dysfunctional family and I’m thinking, This is the most unbelievable shit fight. But finally, finally, Steve leaves, and the meeting gets better.” Years later, after Steve’s death, Gates told me, “Steve’s a tough character, but he didn’t direct his anger at me all too often.” (Like many of the people we interviewed, Gates slipped into the present tense when talking about Steve, as if he were still alive.) When I asked him if there was anything Steve was terrible at, he laughed: “Sitting in meetings where he wasn’t the person presenting, and the subject was something mundane. Steve was hopeless at that.”

MAC SALES FELL off a cliff in the second half of 1984. The Apple II still accounted for 70 percent of the company’s revenues. IBM’s PC was gaining market share. And the New Year provided no relief. Sales were so far off target that it began to look like the Macintosh might prove to be just as much of a failure as the Apple III and the Lisa. The board of directors, which had been led to believe that the Mac was both the replacement to the Apple II and an IBM-killer, was beginning to see that neither its CEO nor the head of its most important product division had a clear plan forward. As the pressure grew on Steve and Sculley, the two spent less time together, less time finishing each other’s sentences and singing each other’s praises. And that spelled trouble for Steve.

In March 1985, Sculley decided that Steve would have to step down as head of the Mac product division. Steve tried to dissuade him for several weeks, with both flattery and scorn, the tools he’d used to great, if isolating, effect on those who had worked for him. But Sculley persisted and brought the matter to the board on April 11. The board sided unanimously with Sculley, even though it included Markkula, Rock, and others who had invested so much in Steve over time. For someone who had given his all to the company he had founded, who was known entirely for what he had accomplished at Apple, the prospect of such a demotion was devastating.

After a few weeks, Steve decided that he wouldn’t accept the demotion. Instead, he tried to get Sculley fired. He told his closest confidants that he intended to dethrone the CEO over Memorial Day weekend, when Sculley was supposed to be in Beijing signing an accord to allow Apple to sell its computers in China. Steve was so certain of the rightness of his position—and so naïve—that he even laid out his plans to Jean-Louis Gassée, the company’s director of European operations, who was in Cupertino only because Sculley planned to bring him in to replace Steve. “I made my choice,” Gassée says now. “At that point I’d rather work with Sculley than work with Steve, who was absolutely out of control.” Gassée informed Sculley of the plan, telling him, “If you go to China, you’re dead.” Sculley canceled his trip to China and confronted Steve directly at the next day’s executive committee meeting. He asked the company’s top management either to support him or to support Steve. One by one, around the conference table, everyone explained why they would support Sculley. Steve watched as the support he’d counted on, which he’d always expected would be there at the end, vanished. Afterward, still in shock, he called his co-conspirators and a couple of friends to tell them he’d lost the battle. “I counted wrong,” he told Larry Brilliant that afternoon, recounting, through tears, how the team turned against him, one by one. The board, which Sculley then contacted by phone over the weekend, went against Steve as well. By Tuesday, Steve knew he was finished at Apple. On the following Friday, May 31, he sat in the back of the Apple auditorium and watched as Sculley announced a reorganization that promoted Gassée and left Steve with nothing more than a nonexecutive role as chairman, with no one reporting to him. It was Steve’s second demotion, and this time there’d be no recovery. “Steve always had an animal inside him,” says Gassée, “and in the early eighties that animal threw him to the ground. Boom!”

STEVE’S EXILE WAS complete and designed to humiliate. He was given an office in another building, far from Sculley, Gassée, and the other executives who were now without question running Apple. He was sent to Russia to promote the Apple II, of all things, and to Italy, France, and Sweden, ostensibly on company business. Back in California, he visited the Graphics Group, made up of leading-edge computer graphics technicians who were working for film director George Lucas of Star Wars fame, and began to think that the possibilities for computing with high-end, 3-D graphic images were limitless. So he suggested that the Apple board might want to consider buying the group from Lucasfilm. “These guys were way ahead of us on graphics, way ahead,” Steve later told me. “They were way, way ahead of anybody. I just knew in my bones that this was going to be very important.” But the board wasn’t paying much attention to Steve anymore, and they passed on acquiring what would eventually become known as Pixar. Indeed, Steve, the cofounder of Apple, wasn’t even consulted on most meaningful decisions anymore.

Sculley made clear that he would take the company in a more “market-driven” direction. Apple would now respond to the demands of its customers, instead of dictating to the market, as Steve had tried to do. Product decisions would be led by the sales and marketing teams, not the engineers. It was a rational decision by a CEO trying to sharpen an organization that had flailed every time it tried to establish some consistency. But it wouldn’t re-create the Apple dream that had drawn so many employees to Cupertino, especially the veterans who had experienced the thrilling and terrifying highs and lows of the Mac development. One employee told Fortune, “They’ve cut the heart out of Apple and substituted an artificial one. We’ll just have to see how long it pumps.” Susan Barnes was one of those who felt the company was becoming mundane, losing its edge. “We were going the wrong way,” remembers Barnes. “Apple was reorganizing, and you had to go down seven levels of management to find an engineer. That’s a really dangerous place for a technology company to be.”

Steve started to think about life without Apple. He spent more time with his daughter Lisa, beginning the process of figuring out how she could fit into his life in a more meaningful way. He gardened, organically, in a plot in the yard of his big house in Woodside. He mused about running for public office. He even applied to fly as a civilian on the space shuttle. For a while he behaved more like a retiree than one of the world’s most highly driven thirty-year-olds. “One day he called me,” Barnes recalls, “and said, ‘We’re supposed to have dinner next week, but I’m going to Europe. I may stay there for twelve months.’ And I said, ‘Thank you, great, but I’m having a bad day at work and don’t really need to hear about you in Paris and Italy.’ ”

He went to Europe on company business, but he made time to visit museums and enjoy the life of a tourist. He spent a lot of time alone, or with his girlfriend. “Apple had been formed when he was twenty-one,” says Barnes, “so he never really had any time off to think about what he really wanted to do with his life.” It seemed as if this was a time to reflect, to take to heart the hard lessons learned at Apple. It could have been a time to think about what had gone wrong, to understand his own contributions to the quandary that he and the company were in. In some meaningful way, Steve and his followers were right: Steve was the heart of Apple, and without him the company was headed straight for mediocrity. How had he let things get so out of hand?