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ATPM 3.03
March 1997



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Marching Forward

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One year ago, many pundits said it couldn't be done. Six months ago, Apple Computer showed that world that it would be done. Three months ago, the naysayers were again claiming it couldn't happen. In February and March, Apple Computer took more decisive steps toward becoming a more agile and focused company. Today, Apple is marching forward to recapture its former glory and reestablish itself as one of the world's most innovative and admired companies. Nobody said it would be easy. It may take some time. But make no mistake - Apple Computer has not only survived, it will soon begin to thrive.

Last year at this time, Dr. Gilbert Amelio was assembling a new management team to lead Apple Computer into the next millennium. He was charged with the task of reshaping not just a multi-billion dollar corporation, but a real American franchise. Beset with problems that were significant in scope and broad in impact, the new management team began to redesign Apple's organizational structure and reallocate its resources. It was a difficult year for the company, its employees and many of its loyal customers. It seemed that everywhere you went people were talking about Apple's problems. Some people erroneously thought the company would not survive or make the necessary changes.

But a funny thing happened on the way to the computer industry's future - too many people had witnessed the past. They knew the important role that Apple Computer had played in launching the personal computer industry. Apple's market share in key areas, such as Web authoring, could not be denied. Too many people relied on Apple technology. They refused to listen to the pundits and so-called "experts" because they knew what worked. They continued to buy Apple's products and developers continued to create Mac-compatible applications. Who are the people making these decisions? They are the people in businesses and organizations around the world that are put in charge of getting things done. They continued to choose Macintosh. Why? Because they know what works. They know what works in design, education and science. These are the dreamers, the thinkers, the innovators. These are the people that comprise the Macintosh market.

In a recent report cited by the Wall Street Journal, sales of Macintosh compatible computers to businesses has risen significantly since November. By one account, there has been more than a 40% increase from November to January in the Mac-compatible market share among business-oriented personal computer buyers.

Bolstering the Mac-compatible position in the business market are the new machines recently released by Apple. The Power Book 3400 (pictured at the top of this article) is the world's fastest laptop computer. There is also the new series of Power Macintosh computers, including the 9600, which runs as fast as 233 MHz.

Recent surveys indicate that the Mac OS has over 50% of the market for Web authoring and CD-ROM content creation. Apple's new line of computers are ideally suited for the demands of power users, such as high-end designers and Web authors who work with graphics, digital movies and sound.

In addition to offering new products, Apple continues to revise its own management and structure. In order to become more efficient and nimble, additional corporate changes are necessary. On Friday, March 14th, Dr. Amelio announced a broad-based restructuring program to better focus the company's resources on its core markets: design, science and education. That announcement included the following:

The development of a successful Macintosh clone market is changing the way Apple will do business. There had been much speculation in the media about Apple's commitment to licensing the Mac OS (Apple's licensing agreements with clone makers such as Power Computing and UMax are for System 7.x only).

As mentioned above, Apple announced that "Tempo," which is scheduled for release this summer, will be considered Mac OS 8. The significance of this statement is that Apple and its clone makers will be renegotiating their existing OS licensing agreements. It does not mean that Apple has ceased its interest in licensing the Macintosh operating system. It simply means that the licensing agreements will be renegotiated sooner rather than later.

Over the past year, Apple has seen a growth in the overall Mac OS market. The decline in its own sales can be directly attributed to the success of the Macintosh clone makers. Apple can take advantage of the clone makers' success by reducing the number of models it produces, focusing its marketing on high-end users and focusing hardware development on better-equipped, higher margin products.

Clone makers have become a significant factor in Apple's rebirth. By competing for buyers in markets where Apple has had difficulty, clone makers allow Apple to reduce the number of models it manufactures (and its costs) because it no longer needs to "carry" the entire Mac OS market. As Apple reduces its presence in a particular market, clone makers can compete more with Wintel machines than with Apple's products. As a result, Apple may choose to raise the licensing fee paid by the clone makers on each unit sold when the licensing agreements are renegotiated. We will be hearing more on this issue in the weeks to come.

In addition to the company's decision to further reduce its work force and focus its efforts on core markets, Apple has chosen to reduce or eliminate future funding for several projects or technologies under development. Among these are:

The reason for these changes is simple. Where appropriate, Apple will be adopting industry-established technology standards. This will reduce staffing needs and allow the company to better allocate its research and development resources. The Newton technology, in this writer's view, has significant consumer potential. In the coming months, we will see how Apple intends to develop the market for Newton-related products, which includes the new eMate.

In recent weeks, Apple has stated that it will continue developing the WebObjects software it received in the NeXT Software acquisition. Apple will soon release a new version of WebObjects - effective software tools that help people set-up and manage sophisticated Web sites. Ironic as it sounds, the company is developing versions of the software to run on Mac OS computers.

The WebObjects product line is very popular in the enterprise or business markets. The acquisition of NeXT Software has provided Apple Computer with an opportunity that otherwise may have taken awhile to develop. By continuing development of WebObjects and releasing a Mac OS version, Apple may further increase its market share among business-oriented computer customers.

With the release of a new line of Power Macintosh computers, definite release dates for upgrades to the Mac OS and further reductions in the company's costs, Apple Computer is marching forward. Make no mistake - Apple Computer is here to stay.

[apple graphic] © 1997 H.M. Fog, H.M. Fog is a west coast computer consultant who sometimes writes articles for ATPM.

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