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ATPM 3.09
September 1997




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Apples, Kids, & Attitude

by Robert Paul Leitao,

Wait and See…

In August, Steve Jobs stepped onto the stage at MacWorld Expo and declared an end to the Apple-Microsoft feud. After signing a few agreements, Apple will be collecting royalty checks from Microsoft for its use of Apple technology. Microsoft's highly publicized stock investment in Apple helped create a burst of enthusiasm for Apple and its products. This coincided with the back-to-school buying season and the release of Mac OS 8.

I'm glad the feud with Microsoft is officially over. For the past several years Apple Computer has been the "incredible shrinking computer company." There has been much debate about why the Macintosh market is shrinking, but I think much of it stems from misinformed reporting about Apple's plight and a general misunderstanding about the Microsoft-Apple OS rivalry. If every story printed about Apple were true, the company would represent the most successful business failure ever (at the time of this writing, the company has more than $1 billion in cash). In my view, Apple's resources are best used developing new products and technologies, not paying legal bills. The company needs to use its assets to improve products and increase sales. The Microsoft deal will allow to Apple to allocate its resources more effectively and better focus its efforts.

There are millions of Mac advocates. Each of us has personal reasons why we prefer to use a Mac and the Mac OS. I believe the creators of the Mac OS were motivated in part by respect for their fellow human beings and an appreciation for each individual's inherent strengths, weaknesses, talents and skills. The Mac OS has provided a better opportunity for human expression. The Macintosh opened the world of computing to millions of non-computer users. It was a breakthrough product for its time.

In keeping with the tradition of innovation and ease-of-use, Mac OS 8 is a nice progression from System 7.x. I'm looking forward to Allegro, the next major upgrade to the Mac OS. Allegro will further enhance functionality. The more I use Mac OS 8 and read about Allegro, the more enthusiastic I become about the Mac OS and its future.

The official end of the Apple-Microsoft feud will have direct and indirect effects. One is that the licensing payments from Microsoft will improve Apple's financials. This has received far less attention than the $150 million investment by Microsoft in its former arch-rival. Many press reports have referred to Microsoft's investment as a "bail out," which indicates a lack of understanding of Apple's circumstances, its balance sheet, and its product strategy.

Apple doesn't need the $150 million as much as it need positive press. Microsoft's investment has helped to significantly raise the value of Apple's stock. In my view, this is because the public perception of Apple Computer's financial standing increased dramatically when the deal was announced. Ironically, because of the increase in Apple's share price, Microsoft's investment in Apple has also increased significantly in value.

Another benefit to the official end of the Apple-Microsoft feud is a more realistic discussion of Apple's position in the personal computer industry. Microsoft Windows, in all its variations, is the predominant operation system today. It is unlikely that the Mac OS or a combination of the Mac OS and Apple's Rhapsody will supplant Windows in today's personal computers. It's my view that Apple can dramatically increase its sales and market position but only if a new personal computing paradigm or model is established.

Over the past several weeks, Apple Computer acquired the core assets of clone maker Power Computing and much of the Apple-IBM-Motorola partnership was unraveled. These events will reshape the manner in which Apple approaches the marketplace. Apple has chosen to virtually eliminate the Macintosh clone market (at least temporarily) and the Power Computing deal will help Apple develop a direct sales approach in key markets.

There has been much talk about Apple's plans to produce network computers (NCs). Apple's decision to "unspin-off" its Newton unit has only added to the NC speculation. Last year's acquisition of NeXT and the company's continuing development of the Rhapsody OS fits quite snugly with the development of network computers. Apple may have more than just a dual OS strategy. It may also be developing a dual computer strategy (network and non-network computers). Can you imagine Apple Computer providing products that allow users a choice between computing options based upon their personal computer needs? Better yet, can you imagine Apple Computer providing virtually seamless integration of diverse products (desktop computers, Message Pads and eMate-like units) to allow users access to a myriad of products, services and technologies? The possibilities are endless.

Apple Computer has seen significant change since Steve Jobs' return first as an advisor and now as interim CEO and the company's guiding force. However, the company is less forthcoming about its plans than about its changes. During the next several months, change will continue at Apple Computer and in its approach to the personal computer market. For me, it's a matter of wait and see...

I think the array of new products being developed by Apple will be impressive. I also think there is tremendous opportunity for Apple to design unique solutions to corporate and personal computing needs. Apple may embrace different microprocessors (RISC and non-RISC) for use in its different products. In the end, Apple will remain unique, but perhaps in ways few of us expected.

I'm glad the Apple-Microsoft feud is officially over because I think a new revolution is about to begin. What do you do if you don't like the rules of the game? If you're Steve Jobs and Apple, you change the game. Like I said, "For me, it's a game of wait and see." I hope you wait with me. Things are about to change in ways few of us might have imagined!

"Apples, Kids and Attitude[TM]" is © 1997 Robert Paul Leitao, <>. Blue Apple

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