DaveNet: Saturday, February 8, 1997; by Dave Winer.

Can Apple Implement?

By Amy Wohl, amy@home.cynet.net.

We've been very harsh on Apple's descent into confusion and the mess it's left its customers and developers in. That's not because we hate Apple or Macintosh. To the contrary, it's because we recognize their value and hate to see Apple fritter away an important part of our computing heritage.

Luckily, things are looking up. Amelio's appearance at MacWorld was as confused as Apple's statements about its plans. We were there, shaking our heads -- and watching the audience, who had come for enlightenment leave with bread and circuses, but little real wisdom about What To Do.

But in the wake of MacWorld, much has become clearer. There is a roadmap for the operating system. It isn't necessarily the one I -- or many Mac users -- would have selected, but it could work. And there is a reorganization, streamlining Apple behind its acquisition of NeXT, its plans for incorporating the new technology, and its need to seek a new and more profitable business model.

We remain concerned about Apple's ability to implement, about the customer reaction, and about developer loyalty and enthusiasm, but we are more optimistic than in our last issue that Apple could make this work.

Here's the plan:

Apple is going to continue to create enhancement releases of the current 7.x Macintosh operating system. One was announced at MacWorld and another will occur in mid-97. This operating system will continue to be supported "for as long as customers need it," but will never have the Copland-level enhancements originally planned. In other words, you can have a better System 7, but this is a dead end. In fact, Apple is advising developers not to develop new software for this platform.

At the same time, Apple has completed the NeXT acquisition and has decided to use the Mach kernel (the same one used by NeXT) as the basis for the Rhapsody operating system. Rhapsody will be available in late 97 or early 98. (The office Apple version opts for the later date, but NeXT sources claim it could be delivered earlier.) Rhapsody will have a Macintosh-style interface, be able to run existing Macintosh applications.

Apple has reorganized the company, both to redirect its efforts to specific product areas and to streamline its operations. Being more efficient is clearly a factor.

Steve Jobs has officially become an advisor to Gil Amelio and a member of the Executive Committee (as has the other Apple founding partner, Steve Wozniak). Jobs says he's currently spending one-half day a week at Apple and doesn't see that changing.

R&D functions have been split, with Ellen Hancock, brought in by Amelio to run R&D, focusing on the research part.

The development portion has been split into software and hardware. Getting the MacOS and the NeXT OS together rests on the shoulders of former NeXT employee Avie Tevanian, while hardware will be headed up by former NeXT (and FirePower Systems) employee John Rubinstein.

Apple marketing has also been unified into a single organization and Guerrino de Luca, formerly head of Claris, has been moved over to head it up. Sales will be headed by Marco Landi. NeXT Marketing and Sales will report to the appropriate organizations and Claris will report to Landi.

The rest of this job requires refocusing both the product line and the markets it's intended for. The latest press releases have emphasized Apple's traditional markets: education, business, publishing, consumer and have avoided the "enterprise" word bandied about at the time of the NeXT acquisition. We'd suggest that's a good idea. Certainly, NeXT has customers in some very large enterprises, but as a niche player. Apple has had little success in being perceived as an enterprise vendor (and less over time) and currently lacks the resources required to put on a serious enterprise marketing campaign (direct marketing, direct technical consulting for systems design, implementation, and ongoing support, etc.). Of course, Apple will remain in enterprise accounts in its established niches in publishing, multimedia development, and web authoring -- as long as the software keeps coming.

Customers buy computers for only one reason: compelling applications software.

That's one of the tricky parts. Developers are, in some sense, relieved that Apple has finally said what it will do. But many developers are in no rush at all to do anything about it. They sense a slow Apple market in 1997 as Apple tries to get itself reorganized and get the Rhapsody OS ready. Many of them (Dave Winer did an on-line survey) have decided that Windows looks better than ever as a development platform. Even just waiting -- because of the uncertainty, because Microsoft hasn't committed yet, because it costs a lot to buy a NeXT development environment (Apple should fix that fast) -- could hurt Apple substantially; they could find themselves a year from now with a shiny new OS and very little new software to show it off. And contrary to what I think I hear Gil Amelio say at the MacWorld keynote (I keep hoping I got it wrong), customers don't buy hardware because they admire the technology or they like the OS. They buy it for only one reason: compelling applications software.

The other tricky part is the customers. It's always risky to say you're going to do something else and then to say, but that won't happen for quite a while. Customers may decide to wait you out -- and not buy much of anything in the meantime. That can cause a huge whole in the cash flow which is exactly what Apple doesn't need right now. I haven't figured out why Apple doesn't think this isn't going to happen. Whenever someone asks me if they have to go buy an Intel PC to replace their beloved Mac, I tell them, "No, why don't you wait a while." But waiting means not buying much in the meantime. Apple could change this equation by:

Big price differentials, compelling new software available right away, and a guarantee that all the new stuff will run on newly bought machines, that new OS's will be free, and that if it's not delivered on time the customer can have a rebate or even a refund. I'm not counting on that -- although I think it would work. The downside risk is just too high to seem acceptable to a company in Apple's shoes.

As Dave Winer pointed out last week, Apple stock has sunk so low (it was in the $15-16 range), that it could be bought for $100 million more than its cash assets, considerably below its total asset value. This could enable my favorite fantasy: someone who loves the Mac and sees it as a valuable franchise that suffers from a management who does not understand how to focus it in today's marketplace, could come along and snap it up. We have some prime candidates (of course!). We don't know that any of these folks are lining up to make a deal, but dream along with me for just a minute . . .

Be could change history by buying Apple and substituting its OS for NeXT's and it would then have a manufacturing and distribution channel for its hardware platform. All it would need would be money.

Power Computing could buy Apple and take over the franchise. We suspect Power isn't sure that a NeXT OS is exactly what it signed up for. It's already looking at the Be OS as a real possibility, especially now that Be has gotten a prototype of Mac applications running on top of Be, something that Apple won't have with NeXT until 1998.

A company that lusts for power in an important Apple market -- say education -- could buy the franchise and try to run it or convert it.

Ah, well. These are fantasies. They are unlikely to happen, because investors are waiting to see what Apple does next (no pun intended) before they decide to dive in

There's one other saving grace. Apple has a great new product that you probably haven't seen and may, unless things work out better than I hope, may never get a chance to buy. Scream and demand a better deal. This beauty is a Newton OS product called the e-Mate 300. It was designed for kids in the K-12 market and it's a clamshell design lightweight laptop that sells for less than $800. For a little more you will be able to add a modem and surf the net. It runs on ordinary AA batteries (for 24 hours) and is rugged enough to survive a 6-foot drop. Since Newton's are compatible with both Macs and PC's, so is the e-Mate. Everyone I know who's seen it wants one as a low-cost, very easy to carry and use out-of-the-office, take home and on the road machine. Apple keeps saying, but we designed it for kids.

Apple's e-Mate 300 is about having the right form factor and price point. Never mind, Apple. What you're looking at here is a business opportunity. This is not about Newton at all. (It doesn't really care about handwriting recognition, although it does both regular Newton recognition and Graffiti, but uses a combination of a stylus instead of a mouse plus a nearly full-sized keyboard.) It's about having a machine in the right form factor and price point and this is the first one to meet that mark. If you don't capitalize on your good fortune quickly, count on the Windows CE market to figure it out.

I look at the e-Mate and see all the things that were always right about Apple: ease of use, innovation, the ability to build products in concert with customer needs -- and all the things that are bad: an utter inability to see that this product is for a much broader market and that the timing demands going for that market, or loosing it to those mainstream vendors you're always trying to become. That's why I can still imagine Apple succeeding in spite of itself -- the e-Mate didn't happen 10 or 15 years ago -- it's just happening now and why I insist that Apple clean up its act and bring its different and valuable view of computing to the market.