RE: APPLE PRESS CONFERENCE
RE: APPLE PRESS CONFERENCE
Sent: 12/23/96; 6:06:22 PM
From: david@coursey.com (David Coursey)
Coursey's Instant Analysis Apple's 12/23 Teleconference
Here's the *proposed* Bill Gates quote that would tank the Apple/NeXT deal:
"Microsoft is committed to developing for the Macintosh and will continue to support System 7. At the same time, developing an applications suite is a tremendous commitment. We won't be able to make a decision about building Microsoft Office for the new OS until we see how development goes, what market acceptance will be, and what development effort will be required on our part."
Remembering that almost every Mac has a copy of Microsoft Office on it, keeping Redmond happy is an issue of considerable importance for Apple. So far, all Apple has said is they hope Microsoft will come along to the new OS, but given Microsoft's flagging commitment to keeping Mac Office up-to-date it's unclear whether they won't use the new OS as a premise for stopping future development. Time the announcement just so and Microsoft could ensure that there won't be a native productivity suite for the new OS for a year or more after its release. Claris doesn't seem up to the task of building something really Office-competitive.
Anyway, the Apple teleconference has just ended and, as promised, here are my thoughts:
1. Since Gil wasn't on the call (nor was Steve) none of this is set in stone. Ellen's credibility was placed on the line, however, and I'd give her high marks for straight talk and repeatedly warning that the "really compatible" version of the new OS won't appear until sometime in 1998. This was new -- most people thought the first release of the OS would be backward compatible. The NeXT people tried to water Ellen down a bit, talking about limited compatibility in the initial release, but Ms. Hancock stood her ground and I'm taking her at her word.
A related issue: Gee, Apple is in this mess because four years of OS development had to be abandoned. NeXT took the better part of a decade to find a $50 million-a-year niche and they are just now breaking even. Given this situation: Why should we believe the new OS will ship anywhere near the scheduled date?
2. Since Ellen dropped off the call the moment I was introduced to ask a question -- I'm not claiming a connection -- we have NeXTs word that they can produce a new OS that will run on both PowerPCs and Intel chips but nothing from Apple. Ellen spoke of the new OS running on PowerPC, but was never specifically asked whether Apple wants an OS that runs on multiple processor architectures. It amazes me that backward compatibility was stressed by the questioners who didn't seem very interested as to whether market forces might be allowed, even encouraged, to kill the Mac as we know it today.
My bet: If Apple hardware sales stall -- as could be expected while the company again starts swaying in the breeze -- there might be little reason NOT to simultaneously release PowerPC and Intel versions of the new OS. If anything, the new OS ought to be easier to develop for Intel than PowerPC. And if Apple is really serious about making a renewed play for Corporate America, then an Intel version is a must. And this, of course, would give Microsoft all the reason necessary to declare war on Apple, thus giving it even more reason not to build a new version of Office.
4. What's this "We're a dual operating system company" routine? Sure, the next two releases of Mac OS (January and July, 1997) are pretty well locked-and-loaded. But after that? It's clear Apple can't discontinue System 7 the way Microsoft jumped ship on Windows 3.X, but that isn't saying System 7 has a future either.
5. A wise friend warned me recently of the dangers of forcing your customers to reconsider their decision to purchase your products. My friend, who has experience with such matters, says the best you can do is hope to hold on, you certainly won't gain customers, and will be lucky not to lose a bunch.
Nevertheless -- in the true spirit of Adam Observe -- Apple has created a "Year of Living Dangerously" for its customers as they guess what's really going on. This creates a significant likelihood that customers will put off their purchase decisions as long a possible, hoping for some clarity to emerge before buying a machine which might soon be obsolete.
6. Speaking of backward compatibility: It will stop with the current models or something which ships in the future. Forget PowerPC 601s running the new OS. I can't tell you why it will work this way but it always seems to.
7. As for new applications, Apple is counting on the people who love NeXT (275 worldwide customers to be exact) to drive development for the new OS? Probably not, but as long as the Internet boom continues there won't be a world of talent out there. What would you bet your future on? A new OS from Apple and NeXT or building for the 'net?
Now....My top 5 unanswered questions for Apple (developed because Jodi Mardesich at the Merc News asked):
1. Will the new OS run on Intel machines? If so, when? If not, why are you disappointing the NeXT engineers so?
2. Every time you mention Steve Jobs his role seems to have diminished. Is it true his door card will only let him stay on campus 10 hours a week?
3. What about Unix? Is this a server OS you're building or a client OS? Or both?
4. When do you tell the customers you're not interested in them anymore?
5. How do you battle Microsoft head-on in the enterprise?
PR and marketing issues abound. Apple should really make a big deal about the new OS, but doing so hurts current products (see Revenue, below). Apple clearly doesn't have even many of the answers today. My guess it will be mid-year before I will have real demonstrations to add credibility to its story. That is a long time.
Revenue: It seems like everything that builds credibility for the new OS will hurt current revenue. The best way to protect current revenue will be to dance around sticky questions. Dancing, however, means the new "corporate computing" Apple may not have the credibility it needs to build a new business.
This just in: Microsoft says they haven't spoken to Apple since the deal was announced, a reliable source just reported.
BOTTOM LINE: A gutsy move on Apple's part -- though such moves often results in guts being spread around the room. As desperation plays go, this is a pretty good one. Gil and the gang deserve credit for out-of-the-box thinking. Ellen gets kudos for skipping protocol and answering when the NeXT engineers came calling. Still, this looks like Apple will be tossing most of its old business (low margin) in the hope of becoming an enterprise player (high margin). It is probably true that Windows will do a fine job in the consumer space, but Apple will need lots of value-added to get into the enterprise space. That means going head-to-head with Microsoft. And, yes, I believe Apple will move out of the PowerPC and onto Intel.
Now, how much of this the company will really admit to is questionable. But it is the strategy most in line with what Gil and Ellen have said Apple must do to survive. The next 18 months will certainly be interesting.
Again...Happy Holidays! coursey.com subscribers will receive a short Issue 7 this week (I hope) which will include these e-mail dispatches.
David
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David Coursey, Editor and Publisher coursey.com -- electronic industry newsletter http://www.coursey.com
Contributing Editor/Columnist: Computerworld, Inter@ctive Week, Upside
Executive Producer: Internet Showcase, April 27-30, 1997, San Diego http://www.coursey.com/showcasefaq.htm
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