Is this really the end of the line for the company with the mythic two-guys-in-a-garage origin? Not yet. Despite its black Christmas, Apple did manage to sell more than a million high-octane Power-Macs in the quarter. (The loss came because they were mainly low-price, low-profit Performa models.) It rakes in $11 billion of revenue a year. The Mac operating system is still superior to Windows 95. And though you wouldn’t know it from the wolf convention, Apple has some flashy new technology in the wings that could fuel a comeback. Still, last week’s response to Apple’s woes by its board- laying off 1,300 and launching yet another of the endless reorganizations the company has endured-was so pitiful that I feel compelled to offer advice to an old friend:
His nickname is The Diesel: it should be The Train Wreck. From the moment CEO Michael Spindler assumed leadership and proudly announced that vision wasn’t his thing, it was clear that he was a perverse choice to lead a company perpetually lodged on the hip leading edge. Vision is the sort of quality that leads one to observe a looming avalanche called the Internet (the global computer network that’s changing everything), and position the company to ski above it. Instead, Apple launched its dismal proprietary eWorld system, while upstart Netscape took Apple’s place as King of the Valley. Spindler, a nuts-and-bolts guy, didn’t even shine in his specialty; Apple under him has been plagued by undersupplies of key products, late software and, last fall, lap-tops prone to spontaneous combustion.
After the purge the new pooh-bah should tread carefully. Everybody is now saying that Apple can’t compete in the low end of the market. But without a computer under $2,000, Apple’s strength in the home market goes sayonara. Even if it means short-term losses, Apple should keep producing these models in addition to ample numbers of machines for Apple’s other key markets–graphics, publishing, education and multimedia. And Apple should be careful not to lay off any wizards who may one day produce the firm’s next triumph. Trying too hard to avoid this year’s inevitable losses would gut the company’s future.
Long-term, Apple needs to ease out of manufacturing and focus on software. When it finally decided to license its operating system in 1994, it promised that a million clones would be sold by now. But the effort was halfhearted. Apple has to swallow hard and welcome all comers. The job should get easier with the implementation of a new hardware standard that would allow IBM computers to run Apple software. Then, with proof of a growing installed base of customers, Apple could dust off its old evangelism skills and persuade some software developers to produce their next killer app for the Mac.
Because it makes the most popular Macintosh applications, Microsoft reaps more profits from a new Mac than does Apple. Bill Gates insists that he never shortchanges his Mac customers, but when Microsoft Word’s version 6 for the Mac first came out, it ran at glacial speeds–forcing millions of users into the word-processing cold. Microsoft did a fix, but the point should have been made to Apple–it’s absolutely intolerable to have a blood competitor wielding this power.
It’s scandalous that Apple hasn’t figured out how to piggyback growth with the Internet boom. Still, nearly a quarter of all Internet servers (computers storing content accessible to the Internet) are Macintoshes, largely because multimedia developers love the technology. Apple should go head to head with the Netscapes and Suns to create a flashy new product that uses all its wonderful software skills: a high-power, relatively low-cost, feature-stuffed Internet server so easy to hook up and use that raw novices can have dazzling Web sites (storefronts or publishing outlets on the Net) going almost instantly. These could be particularly popular in the red-hot “Intranet” market, where servers using Internet-style mail and publishing functions are used in private networks within companies. Apple should also work harder to release Cyberdog, its innovative tiber-Web browser, which supposedly works wonderfully with an exciting modular form of software technology called OpenDoc.
If Apple manages to get this stuff out and market it well, it still has a chance to be a prime player on the Net–thus assuring itself of profitable quarters in Christmases Future. Then will come another danger for Apple lovers: a solid turnaround would boost the company’s attractiveness to the suitors who now reject it. My advice: don’t sell. What would Apple be if it were no longer… Apple?
