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ATPM 3.09
September 1997




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Segments: Slices From the Macintosh Life

by Guest Column by Victor W.T. Wong,

The Apple Tree

In the Beginning
In the beginning, some believed that there existed a garden of Eden. Within this garden, there was a an Apple tree. This was no ordinary tree however, for this was the wellspring from which all knowledge originated. We all know what happens next.

It is extraordinary that this same story is more important today than ever, and that the players are Apple Computer and humanity. Apple Computer when it was first conceived by Steve Jobs and Wozniak was inspirational. A gift from the gods passed to the common man through two prophets. Because of their teachings and superior intellect, it grew into what we know as the Macintosh computer platform. Apple Computer and the Macintosh have been the bright beacon when there was no light, increased our capacity to grow in technology and even enriched the lives of millions or even billions of people by allowing us to do things that we could not do before. It has inspired an entire generation of children to become more than they were ever expected to be. The question now is can we live without it?

The Macintosh operating system is the core of the technology that is in jeopardy right now. It has, at times, had great potential and could have been the most used operating system today. However, shortsightedness and pride prevented it to grow. As we all know, Apple has long since kept its technology "in-house" and under total control. This brings about both good and bad situations. The good thing is that the products were well thought out, well designed ones that were in many cases 100% compatible from day one. This is a far cry from the "Wintel" world where the term "plug and play" is often times slanted to "plug and pray". Maybe it is because of this singular dedication to total control that has enabled Apple to consistently develop the best technologies. However, we live in an imperfect world where economics and other factors spin the globe, not wishes and dreams.

The First Apple Clone
Enter MicroSoft Corporation and Bill Gates. When you think of the first Apple clone, you would think that it would be PowerComputing, DayStar, Radius or Motorola. However the first true Apple clone was Windows by Microsoft. We all know the story of Bill Gates dropping out of Harvard to write DOS (at least some of it) for IBM and eventually growing Microsoft into the huge conglomerate that it is today. Therefore, we can assume that Bill Gates is of a high intellect and makes good, if not great, decisions. Windows was perhaps his best decision to date. Gates saw the potential of the Macintosh OS and knew that it was the way to go. After all, there was only DOS before and he knew about it more than anyone else. What Gates knew was that numbers mattered. If he had the advantage in numbers, then everything else would follow. If he had both numbers and technology on his side, then he would be king. He knew that the Macintosh OS was the technology, but it did not have the numbers. So he cloned the Macintosh OS to the best of his ability, and put it on top of DOS. He was 100% correct to assume that since it was much simpler to use and would have a tie to the past via DOS, that everyone using DOS would eventually switch to it. This was a stroke of genius.

How can you best achieve both technology and numbers in such a complicated world? Apple tried and
was not able to succeed to the degree of MicroSoft. The answers lies in fundamental economics. It is simply a matter of supply & demand and the allocation of limited resources. Given a set amount of resources, whether it be monetary or human resources, one must efficiently allocate those resources to achieve gains. Let's say that both companies had about the same amount of resources to start with. Apple chose to not only use those resources to develop the operating system, but also the hardware. In addition, resources had to be used for marketing and the operation of the business. Microsoft on the other hand, did not invest in the hardware. It knew that there was already a thriving market for hardware that could be used with Windows and it was not economically feasible to compete with it. After all, why would you enter a market where you have to fight for an advantage and can be easily beaten by smaller and more efficient companies? There are many casualties from price wars in the "PC" hardware market, why be one of them when you can have someone else fight your war for you? Therefore, Microsoft was already ahead of the game before it was out of the gate by concentrating solely on the operating system. Since the ground work of the operating system was already laid out by Apple, Microsoft had only to make it work on "PC's" and had the best blue print possible to do so. With the reduction in cost, the more efficient allocation of its resources and a thriving and extremely competitive hardware market funded by others, MicroSoft had the inside track.

You Will Be assimilated...Resistance Is Futile
Because we live in a social world and communication is key, the computer has found a special place in our everyday lives. To communicate, there has to be an understanding. There has to be a common ground or reference point. Gates knew this and went to implement it. Through the control of the operating system and the application software that it used, he has in fact united the world as one under Windows. Sure there are pockets of resistance such as Apple, Sun Micro Systems and Silicon Graphics, but none as successful as MicroSoft. Apple should take a page from MicroSoft in turn and see that this was done by software, not hardware. Sometimes you are so close that you miss the point. Apple was standing on it.

The Rebellion...May the Force Be with You
This brings us back to Apple. In many cases, the best technology does not become the most popular. Take for example Beta versus VHS. Beta was vastly superior at first over VHS, but lost because Sony refused to license it to anyone else. If you are going to fight a war, get help wherever you can. To fight Microsoft and Windows, Apple needed help. It finally realized that it did not have enough resources or management skills to develop the best operating system and hardware at the same time. Therefore, it allowed for the cloning of Macintosh systems. It finally admitted that it needed help. Some of the biggest and brightest companies came forth to stand by Apple's side. Motorola and IBM alone had the weight to tip the scale back to Apple. Spirits were high and the future seemed so bright that we all had to shield our eyes from the light. However, the intent was not implemented correctly and we are now losing the battle.

The main problem was a commitment to the cause. Apple should have taken a lesson from the Vietnam war. If you are not committed to a campaign such as this with full dedication and a well thought out plan, you will lose. Apple chose to stay in the hardware business and "ride the fence". It armed its allies with inferior technology and expected them to win the war for them. This cannot and did not happen. For example, when Radius first started shipping its Mac Clones, it used Apple 8100 series motherboards from Apple. In every instance, a true to Apple specification motherboard could be accelerated by "clock-chipping" by at least 15%. However, the ones given to Radius could not be accelerated at all. Eventually most of the original Radius computers failed or had serious problems. Another example that hit closer to home is the Tanzania motherboard offered to Motorola and PowerTools. The board was designed with only a 40Mhz system bus therefore crippling the potential performance of the processor. This was dramatically illustrated when the new infiniti T2 systems equipped with a 50Mhz systems bus from PowerTools and the 5000 series computers from Motorola were release using a PPC 604e/200Mhz processor which out performed the Apple 9600/233
equipped also with a 50Mhz bus using a PPC 604e/233Mhz processor. Having one hand tied behind our their backs, the clone vendors went off to war.

What should have Apple done? They should have made a total dedication to be a software only company. They should have reduced their operating cost by shutting down some of their hardware manufacturing plants and had a plan in hand to shut down the rest. They should have charged significantly more for the licensing of the software and the hardware technologies. They should have given the best hardware designs to the cloners. Apple would have been profitable. The reason that I can state this is because of Claris. Claris is a wholly owned software subsidiary of Apple and is wildly profitable. The loses that Apple incurred during the forth quarter of 1995 and 1996 were due largely to its mis-identification of market demands. Apple made the wrong guess that the consumer wanted low-end systems when in fact they wanted high performance systems. This lead to over production of unwanted goods and sever shortages of what was demanded. This is simple economics.

Given all this, Apple is not to blame for its current actions. Even though Apple was not 100% committed to the war, they were heading in the right direction. It is understandable that the total commitment to become a software only company was very frightening for Apple. Therefore, it chose a more reserved route. The main goal was to win back some of the users from Windows. This was the idea from day one, and indeed it seemed for a while that it was working. Yes, Apple loss market share for hardware sales to the cloners, but the over all MacOS sales were up in late 1996. What may have caused Apple to react in the way that they are now may be attributed to the cloners themselves.

Cain and Able...Enter the Cloners
As a child grows, it needs the help of its mother and eventually gains enough strength to walk by itself and hopefully become something great in the future. Apple did try to provide this to the cloners, but one proved to be the bad apple in the bunch. It is expected for a child to compare itself to its parents and even to think that it is better. However, there is and should always be a underlying respect that the child has for its parents. One cloner failed to see this.

All cloners are guilty of displaying performance specifications that are faster and better than Apple. This is good, this means progress. Never before have we seen such a rapid advancement of technology in such a short time. The computational power of the Macintosh computer system recently doubled overnight! This is astounding! In addition, we have a parity in price to the "Wintel" machines that we have never seen before. Given these facts, the cloners have done great things and are now armed and ready to take on the battle. The child can now walk on its own. However, one clone vendor to remain unnamed, grew too fast and became too proud. This cloner was the shinning star. It was the leader for all the cloners, but it got too big too fast. It chose to openly attack Apple's image and products in a way that was not only damaging to Apple, but to the entire market. Remember the old saying "never bite the hand that feeds you" or better yet "don't defecate in your own bed" (G-rated, edited form), well that still holds true today. Don't get me wrong, this cloner did more than its fair share of promoting for the MacOS against the "Wintel" world, but half way through it turned on Apple also. It has been said by more than one person at Apple that this cloner had to go not for the loss in market share, which by the way was recently regained in a large part by Apple, but more so because of the "constant slandering of Apple's image and products". Given this situation, can you blame Apple for its decision to possibly buy back the license from this cloner and end the licensing of the MacOS? It seems that Cain may have once again killed his brother.

The Knight in Shinning Armor... Sir William of Microsoft
In recent news, Apple has joined forces with Microsoft. When this was announced at MacWorld Expo Boston, people were shocked. With the live broadcast on the large display looming over the stage, it was
reminiscent of the original commercial where Apple portrayed the people staring at a large screen while "big brother" spoke to them. Isn't it ironic that they knew what was to happen but still could not prevent it? In all fairness, I believe that the assistance from Gates to Apple is a good thing. This is not because Apple needed the money (150 Million usd). Apple is still somewhat cash rich in the bank and is not facing any cash flow problems. It has more to do with the weight that Microsoft can lend to Apple and how in supporting Apple, MicroSoft can change the perception of the MacOS. When MicroSoft openly stated that it will continue to support the MacOS, it showed the other software developers that there may still be profits to be made in this platform. This will help convince those developers that may have had second thought about developing for the MacOS to continue to do so. In a sense MicroSoft legitimized the MacOS platform for Jobs in the eyes of the public. This was a very important strategic move by Jobs and one that Gil Amelio could not pull off. An operating system can only survive if people use it and people will only use it if there is compatible software available for it. Amelio knew this, and tried desperately to make sure that the software developers were committed to the platform. He even made many public pleas to them for support. However, it took Jobs to close the deal. Jobs once again saved the MacOS or rather got a stay of execution for the time being. If we take all emotions away dealing with Gates as being the anti-Christ to some Mac enthusiasts, what he really has done is to save the MacOS. For this we should at least be thankful.

No Pain No Gain
It is wonderful to see Microsoft and Apple as one big family, but for every action there is an equal and opposite reaction. Microsoft has as much, if not more to gain than Apple. Why does Gates want to help Apple? Is he an angel disguised as the devil? No, Gates cannot afford for Apple to go out of business. If Apple was really in serious trouble, Gates would probably write a check out of his own checking account, give it to a stranger and have them buy Apple. The reason is that if Apple goes under, then there would be an even more valid reason for MicroSoft to be considered a monopoly. Right now, he can still say that there is the MacOS to compete with. For this reason alone, the 150 million was very well spent.

But this is not all that he got for the money. He got perhaps the deal of the century. Ever since Windows, Gates had to copy the MacOS. Now, he has direct access to the programmers and the code. He has the best of the best in his control. At times, Gates has even openly expressed that the MacOS is better in some functions than Windows. Now he can have the real thing, not some copy of it and the best thing is that he has it with the blessing of Jobs.

All For One and One For All
So what now? How is this good or bad for you and me? Well, imagine the following: Apple releases a few more MacOS or even and MicroSoft releases Windows 98. No big deal, they were planning on it any way, but what if they worked together for a universal computer language? It can happen, and it should. The universal OS would be this: MicroSoft support, funding and distribution as the foundation; a UNIX (or NEXT) core technology for the OS; and true MacOS interface with the enduser. This means a solidly supported operating systems with the power of UNIX and the ease of operation found in the MacOS. This operating system can't lose and the odd thing is that Rhapsody or the eventual release of Rhapsody can become this. This may indeed be something in the back of the minds of Jobs and Gates. It makes sense and is the best possible solution for all.

The Long Arm Of The Law
All this is good and well, but what about anti-trust laws. Isn't this going to be a monopoly? In the literal sense it will not, because it can be arranged in a way that both Apple and MicroSoft co-developed and own the operating system. If this does not fly with the government, then it can be a standard and they can license it to everyone else. Either way, the result is the same. Everything in this world and
perhaps in the universe is cyclical. This means that things are in an eternal and continual cycle. When all this first started, there were many companies that competed with MicroSoft. However, MicroSoft has proven to be the best. Some may say by using unfair tactics, but remember "all's fair in love and war". We should all think of the good thing that this has brought about along with the bad. MicroSoft has the unique advantage to do something great, to set the standard for different types of technology that will allow the human race to communicate more efficiently and accurately. Remember over 90% of the world now uses DOS or some form of Windows. This kind of cooperation could not even have been achieved by the United Nations. It sometimes takes someone greater than the normal man to make the large strokes on the canvas of life to incur rapid and advancing changes. MicroSoft and Apple now have the chance. As for the anti-trust laws, to hell with them for now. Eventually MicroSoft will get big and slow, and smaller and more efficient companies will cut pieces out of it, and the cycle will start again. This may all seem cruel, and the conquered people of a war are never the happy ones, but think of the advances we gained from the Roman empire. This is just how things are and how they will always be.

One Nation Under God With Liberty and Justice For All
So what if all this happens, what about the MacOS cloners? Where do they fit in? Well, this is a very hot topic right now, but in the long run, it does not matter. Apple is in a paradox at this moment. How can they maintain operations while making the necessary changes. They cannot afford to lose any revenues, even though a particular revenue stream may not be profitable. They need the cash flow to sustain their current operations. In assuming this, Apple cannot lose the revenue from the sale of its hardware division. It has to maintain any advantage there that it can, especially during the last quarter of this year where traditionally the highest sales occur. This may be the reason why it has taken this strong stance against the cloners that we have seen. If Apple indeed is planing to become a software only company, it cannot just stop selling machines because the cloners will not be able to produce enough machines to supply the demand. This in turn will cause people to turn away from the platform. In addition, Apple could not shut down its factories fast enough and would have to eat into its cash reserves just to stay alive. It seems that Apple is storing away food and supplies for the long winter ahead.

What will the cloners do? They will continue to produce clones under the current contract that allows them the ship MacOS 7.6. They will have to pay a much higher price for MacOS if Apple allows them to, and all this won't matter in about 8 months. I say this because after 8 months Rhapsody will be out and it will run on both PowerPC and "Intel" machines. At that time, Apple may become mostly a software company and will not be able to regulate or "certify" the "Intel" machines. Apple will allow IBM and Motorola to ship CHRP machines so that there will not be any legal issues dealing with Apple not finishing CHRP as promised. However, CHRP will not be anything special. The advantage of the higher system bus speeds already exist on the "Wintel" side and the open design only means that Apple does not have to pay for hardware development anymore. This may make Apple sound like a monster, but it is only trying to change and survive in this crazy world. After all, Apple first started with the idea of bringing computing to the masses in a easy to use package. It is still trying to do so, but got lost along the way. In the end, it may finally succeed in its intent, but arriving from a different path than the one it started from. As for the cloners, they will be there today and in the future. They may not be the same, but they will be there. Not because Apple needs them now, but that Apple will need them in the near future. Since having taken a bite from the Apple of knowledge, there's no going back for any of us now.

Blue Apple"The Apple Tree" is © 1997 by Victor W.T. Wong. Mr. Wong is CEO of PowerTools.

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