What were the critical decisions Steve Jobs made that turned Apple around?

#1 decision: To create the iPod, which led them on the path away from just being a computer company. With the iPod which led them to iTunes, the iPhone and iPad, they morphed into a digital lifestyle company with the ability to have a much broader influence then they ever would have had just with iMac, MacBooks, etc.

I'd say two things that go hand in hand.

1) Keeping a limited product line. Giving consumers limited choices, takes computer purchase decision out realm of considered purchase and into the realm of simple transaction.

2) Building the Apple stores. Buying a computer at Best Buy is a daunting task. Too much choice and the always feels like the Geek Squad is trying to rip you off. At the Apple store, the Geniuses come across as being there to help. These stores are now the highest grossing retail stores in the US.

You hit it on the head, Michael.

Steve Jobs moved Apple from being an also ran in the enterprise market, with its long sales cycles and cost-consciousness to the consumer/entertainment market where status is more valuable than cost, and the purchasing cycles are more frequent.

Now, his high-status electronics company happens to sell computers, as opposed to a computer company that happens to sell electronics.

Without this singular change, he could have gone down as a stubborn proponent of closed systems that could get the critical marketshare needed for long-term success...

-ASB:http://XeeMe.com/AndrewBaker

#2 decision: Going BSD-based with Apple's OS. The stability that this gave the operating system was the launching point for one of Apple's most successful ad campaigns ("Hello, I'm a Mac.").

These are "nice to have" occurrences, but for my money, it was hiring Tim Cook away from Compaq:

"In 1997, Apple was turning inventory just ten (10) times a year. Steve Jobs hires Tim Cook away from another company (with a nice sign-on bonus) and they end 1998 at 180 turns!" —APICS magazine article [paraphrased]

Ideas without execution are worse than not having ideas. Now you know why Cook is CEO. Not to replace Jobs, but to continue to keep the cash flowing in.

Exactly. It is "products" that drive the market. The right products are easy to sell, the wrong products are hard to sell.

There were several decisions that turned Apple around, and I think that changine any one of them could have either greatly slowed Apple's recovery or stopped it all together. Killing the clones and simplifying the product line were crucial early decisions, even if they seem obvious. Making the agreement with Microsoft was another. Microsoft had it's own reasons, but for Jobs continuing to have Office for Mac plus the positive effect on investors generated by Microsoft's show of confidence investing $150 million was invaluable.

The iPod was the big turning point - and not hard for Jobs to get behind, I think. It is a piece in the "Mac as the center of your digital life" strategy, and I think that strategy predates Jobs return to Apple. He may have been surprised at the degree of the iPod's success, but only at the degree, not at the success.

I would not have thought of hiring Tim Cook, but that was an important decision. How important is shown by the fact that he is Steve's successor. That he's not Steve's replacement is a good point. Calling him that minimizes Steve's genius and Tim's talent.

Many good reasons listed here, but the biggest is something we aren't supposed to say. Steve had vision and passion in an industry remarkably free of either. He wanted, demanded and got excellence both from himself and others. He never settled for 'good enough'. But all of that is generalities. So, to summarize the specific steps he made:

When he came onboard he took control, and was the final arbeiter in all decisions. He went through the product line and technology initiatives, ruthlessly pruning those that were either unproductive or unsupportable. This allowed the company to focus on what was possible AND profitable.
He made peace with Microsoft, who has always been the biggest Apple developer. This agreement continued Microsoft Office, considered critical for ANY device to be successful (until now). The $170m was chump change to balance the books on cross licensing; it impressed the analysts who ignored the $2B Apple had in the bank at the time but was otherwise irrelevant.
Folding NeXT into the Mac. This was the reason he came back to Apple; the decision was less his than the board - the smartest single decision they ever made. Steve just convinced them it was the right thing to do.
The insistence that the iMac be beautiful, elegant, and simple. Losing the floppy and gaining USB was part of that, the color and unusual shape caught the eye and made a statement. "Hey, look at me!", but in a way that worked in the home and office. No more boring beige!
The iPod, naturally. But this went with the already existent iTunes and was really a bigger part of the vision that MEDIA was the future of home computing. Eventually bundled with photo, video, DVD and music creation the iPod without iTunes and iLife would be little more than an expensive MP3 player.Together they bring power to consume and create media that normal people never had before.
The Apple store. Dell convinced EVERYONE that online was the way to sell computers. It took Jobs and Apple to convince people that physical stores still have a place. Stealth marketing disguised as a computer store the Apple stores were a response to dead sales in the big stores, where potential Apple customers were steered straight to the PC aisle. Simple and elegant customers could browse all day, play with the hardware - and get classes on all things Apple. No pressure, helpful, friendly salespeople are clearly taught that the products will sell themselves if given a chance.
The iPad. How many of you know the pad came first, but was too hard to do 10 years ago? Steve was willing to wait until what he wanted was possible. In the meantime he laid the groundwork - with the iPod touch and video, the iTunes store, Applications, then the iPhone. By building in stages, using each component to enhance the next Apple was able to achieve profitability at each stage AND enhance customer value at the same time. So now we have a light tablet that has connectivity, applications, is elegant, durable, lasts all day AND is easy to use. That Microsoft tried (and failed) for 12 years with tablets, that EVERYONE wrote off the rumors of a tablet that left the competition flat footed while consumers adopted them as fast as they could be made points out the genius of Jobs. There's no other way to put it, he pulled a dead tech company out of the mud and created something great - insanely great.