Steve Jobs

Newsreal: Muddling through

Steve Jobs' latest spin on the "new" Apple might keep the troops in line, but can the company ever really advance again?

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Seeking to “remake” itself (again), Apple Computer on Monday announced a new line of desktop and portable computers, which are, for the moment, the fastest in the industry. Apple also opened an “online store,” where buyers could configure their own computer and order it over the World Wide Web. Interim CEO Steve Jobs, in his customary ringmaster manner, provided an inspirational speech, swearing that from now on, Apple would be “second in operations and logistics and buying experience to nobody.” After some initial excitement, Apple stock closed lower than when the day started.

So, does Apple have a prayer? Salon talked with Jim Carlton, a technology writer for the Wall Street Journal and author of “Apple: The Inside Story of Intrigue, Egomania and Business Blunders” (Times).

Jobs’ presentation Monday was awaited with much anticipation, but analysts are already saying that it’s not enough to get Apple out of the woods.

It was Jobs trying to put a positive spin on what he’s done since rejoining Apple. This was Jobs the salesman, and it’s the only thing he could have done. Jobs doesn’t have a lot to work with because the company has been so gutted since (former CEO Gil) Amelio left last July. At this point, Apple’s best asset is Jobs’ name and charisma. At least he can bring out a crowd.

The new product and marketing announcements — the G3 machines, selling over the Web, building to order. Will any of this help Apple’s market share, which has fallen to a little over 3 percent?

It will fortify the installed base, but I don’t think it’s enough to spark new growth. For most people, there’s still not a compelling reason to buy a Mac on the desktop. The NC (Network Computer) could do this when it comes out, by differentiating Apple from other computer manufacturers. At this point, Apple’s strategy is to concentrate on their stronghold markets and try to hold on to them.

That was one of the expected announcements that did not get made — a network computer built by Apple and Oracle. There have even been rumors of a possible merger with Oracle. Is this the kind of move necessary to make Apple a player again?

I believe that’s the ultimate. Apple has been trying to find a partner for the last five years, in Sun and IBM for example. Apple needs a partner to help leverage its brand name into other markets. Right now, there are too many forces arrayed against Apple — Microsoft and Compaq and Dell and Gateway — all selling software or hardware and all doing R&D.

But isn’t Apple just too weak now? If they are down to 3.3 percent of market share, you have to wonder how long they can sustain any kind of company at all.

Apple’s saving grace is its customer base. It has a fanatical, loyal following, even now. Without these customers, Apple would have been sunk a long time ago. Each and every Mac Plus customer should get a bronze medal of valor for sticking with the company.

The central point in your book is that this could have all been different had Apple licensed its operating system years ago. You actually detail a memo Bill Gates wrote to former CEO John Sculley about licensing the Mac in 1985.

The memo was actually written by Jeff Raikes, a former engineer at Apple who became a whiz-kid product manager at Microsoft. Gates massaged it, put in his two cents and sent it on. You read the memo and you come away thinking that these guys were Mac zealots in the beginning; they claimed they were as passionate about the Mac as anybody.

Do you think the failure to license the Mac in the ’80s doomed the company?

Strategically, that was their biggest mistake. However, and Gates has said this, Apple would still have a lot more market share had it just executed on basic business. I think that is what has killed them more than anything.

For example?

For example, Mac OS development work has been sputtering since the late ’80s. First there was “Pink” — you remember what a debacle that was — which became Taligent, and then there was Copland, all disasters. All the while, Gates is putting out a pretty crappy version of an operating system. Then it gets a little less crappy. Then, finally, it is marketable as Windows 3.1. Apple, in all its arrogance, is saying, “It’s not nearly as good as the Mac, it doesn’t have this, or that,” while waiting for its next OS to be “perfect” before launching it. Gates has always had this philosophy — and he’s been proved right — of “let’s put it out, and we’ll get it right the next time.”

Everyone has their own choice of goat at Apple — Sculley, Michael Spindler, Amelio. Who do you think is most to blame for Apple’s demise?

You know who I blame? The board of directors. A lot of people like to blame Sculley, but he was not directly to blame because he was a powerless CEO. It really is the board’s fault for not finding the right person to run the company. They were a bunch of venture capitalists who put short-term profit over setting the company up long-term, strategically.

At the news conference, Jobs was particularly upset at Dell’s chief, Michael Dell, for saying he would shut Apple down and “give the money back to shareholders.”

I don’t count Apple out. You don’t kill a multimillion-dollar company overnight. Look at Wang: It’s still floating, if barely. The key problem for Apple is growth. They’ve gone, just in the last two years, from 7.8 percent market share to 3.3 percent; revenues are dropping 30 percent each quarter. No. 1, they have to stabilize, which I think they’ll probably do in another couple of quarters. But while Apple still has this fanatical following, without growth it’s not going to be that sexy and exciting to the software development side of an industry that’s growing by 20 percent a year. So, the key issue is, will Apple just stay in its niche, and just keep nourishing it, or can it come up with something new that will bring in new customers?

Can it?

That’s the part I really question.

Some would argue that no one, not just Apple, has a chance these days against Microsoft.

I told the story of Apple in this book, but in a way it’s the story of Microsoft, too. Do you remember the Goofus and Gallant story? It’s like Apple is Goofus and Gates is Gallant. Apple did everything wrong, Gates did almost everything right. Gates is a very vicious competitor and will give you no quarter. But the guy is very smart and sees every opportunity.

Including how to behave like a monopoly?

Gates has always argued, “Fight me in the marketplace, not in court. Let the customer decide.” I think all these antitrust accusations are largely irrelevant in this industry because it is moving so fast. Today’s monopoly can be obsolete tomorrow. Take Nintendo. In the 1980s, Nintendo owned 94 percent of the world’s videogame market. Then Sega comes along with a new player, and suddenly Nintendo’s lead is cut in half. Then Sega gets knocked off by Sony. Who is to say that Netscape and Sun won’t come up with a joint operating system to compete against Microsoft?

SALON Daily Clicks: Newsreal

One industry sage thought he was joking when he suggested Microsoft buy into Apple. Boy, was he surprised.

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“Here’s the most intriguing thought of all,” wrote Al Perlman in a column headlined “A Simple Idea to Save the Apple Line” in the July 21 issue of the trade magazine Inter@ctive Week. “The one company that could best ensure the continuation of the Apple line is — ta da — Microsoft.” Perlman, the publisher of the weekly, went on to suggest that Microsoft buy out Apple “and set up the Apple operating system as a boutique-like alternative for specific types of customers.”

Ha, ha, very funny, responded the kinder readers. Other responses from Mac zealots ran along more murderous lines. Well — ta da, not to mention the gasps and boos of the Apple faithful at Macworld Expo in Boston — Microsoft and Apple went quite far in that direction with the shock announcement Wednesday that Microsoft was investing $150 million in the ailing computer company. Microsoft also promised to continue producing software for the Macintosh operating system for the next several years.

What did Perlman know that the rest of the world didn’t even suspect? Salon spoke to Perlman on his car phone soon after the announcement was made.

How serious were you when you suggested Microsoft buy into Apple?

It started out relatively tongue-in-cheek, but as I was writing it I thought, “Well, maybe this isn’t completely far-fetched. So maybe I’ll just put it out there and see what people think” There was no omniscience on my part. I certainly didn’t know anything, that’s for sure.

And the reaction …

It was staggering. My e-mail box was absolutely flooded. We’ve never gotten that kind of reaction from anything we’ve ever written in Inter@ctive Week. About 10 percent thought it was actually a reasonable idea. About 90 percent thought it was lunacy. But about 90 percent took it seriously, which really surprised me. I never in my heart believed this was real, if you know what I mean.

Apple stock jumped about 35 percent after today’s announcement. I must ask you this: Did you happen to buy any Apple stock in the past couple of weeks?

No, but I wish I did.

How did you feel when you heard Steve Jobs’ announcement?

I was shocked, especially having written the column and gotten all these letters and knowing how volatile an issue it is among the Apple community.

Now that it’s more than just a joke, do you still think it’s a good idea?

Overall, yes, for Apple and its customer base. This is sort of what I was getting at when I wrote the column in the first place — having Microsoft as an ally and a partner was the safest way to secure the future of the Apple line. I’m sure there are going to be a lot of Apple customers who are going to be very upset because it’s selling your soul to the devil. But if their stock price jumped 35 percent, then obviously the financial community thinks it’s a good thing as well. As an Apple customer, I’m pleased. As an Apple shareholder I’d be real pleased — but I’m not (laughs).

When Bill Gates’ face loomed on the video screen at Macworld Expo, there was a chorus of boos. Could this move backfire? Could Mac loyalists say, I’ve had it with Mac once and for all?

Yeah, but what are their choices? Their only other choice is to go to Microsoft. If you’re a Mac loyalist and this is repugnant to you, think of the alternatives. I think they’re equally, if not more repugnant.

Some people think this is the beginning of the complete absorption of Apple into Microsoft. Is that likely?

Personally, I don’t think so. And that’s why I thought, when people read my column, they wouldn’t have taken it 100 percent seriously. One, the Justice Department would not allow it, and, two, I don’t think Microsoft would want that kind of scrutiny from the Justice Department because it would really force the Justice Department to examine Microsoft’s role in the whole operating systems market.

What does Bill Gates want from Apple then?

He already owns the market, so having something out there that is an alternative is not the worst thing in the world for him. It keeps the illusion of competition, I guess. It also supports the part of the development community that’s working on the Mac platform. And Bill Gates is very concerned about the development community.

Why?

Because the future of his company is based on the development community. He doesn’t develop every piece of software out there, as much as he might like to. So the health and vibrancy of the development community is critical to the future of Microsoft, which is why Microsoft spends so much time and attention on courting the development community.

And he also got Apple to make Gates’ Internet Explorer the default Web browser on the Mac, which can’t make Netscape too happy.

Right. It’s not like Bill Gates is doing this out of the goodness of his heart. Or his affection for Apple.
Aug. 7, 1997

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Andrew Ross is Salon's executive vice president.

Page 14 of 14 in Steve Jobs