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Apple in 1998: Retreat or Focus?

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Is Apple continuing to retreat after 1997's losses or starting to recover from those dark days? Apple has made a number of moves in the last few weeks which raise that question, and as with everything that happens at Apple, the answers aren't clear. Let's look at some recent events.

Restructuring Claris -- At the end of January, Apple announced that Claris would restructure to focus exclusively on FileMaker Pro, the company's award-winning database. Other programs that Claris markets - including ClarisWorks, Emailer, ClarisDraw, ClarisImpact, and Claris Organizer - move back to Apple, with a single exception, Home Page, which is now considered part of FileMaker.

<http://www.filemaker.com/>

We'd been hearing rumblings of Claris dropping Organizer and Emailer for several months, and to be honest, we haven't even heard anyone mention ClarisDraw or ClarisImpact in several years (ClarisDraw was last mentioned in TidBITS in November of 1995 and ClarisImpact hasn't appeared since March of 1994). The rumor behind Claris Organizer's woes was that the product wasn't selling all that well, so Claris decided to drop it, only to find out too late that the problem was primarily the expensive $70 price point.

Similarly, we've heard numerous rumors about how the forthcoming 2.0v3 upgrade to Emailer was to be the last one because the program, though popular and offering unique features, was Macintosh-only and wasn't selling well. Those rumors came before the transfer of Emailer to Apple, so there's no telling what will happen now, though several possibilities have been proposed. First, Emailer could be worked into the Mac OS, much as PowerTalk provided email services in the Mac OS back in System 7.1 Pro. Frankly, that seems unlikely given what happened to Cyberdog, which Apple had talked about as being part of the Mac OS. A second rumor would have Apple merging Emailer and Organizer into a single integrated program to compete with Microsoft Outlook, which integrates email and scheduling functionality under Windows. Given the current close relationship between Apple and Microsoft and the release of Microsoft's Outlook Express email client, this option also seems unlikely. Finally, the most likely option would have Emailer go into maintenance mode at its current release - at best Apple might make the latest version of the program free at some point, though that too might anger Microsoft, Netscape, and Qualcomm, not to mention other email companies.

With ClarisWorks, Apple has been quite specific about how it will continue to maintain and develop the program. This emphasis is no doubt due to the fact that ClarisWorks is popular in education, and education and publishing are now Apple's two primary markets. It remains to be seen if Apple will maintain the Windows version of ClarisWorks.

In the end, the restructuring probably makes decent business sense. FileMaker, and increasingly the Windows version of FileMaker, was where Claris was making the bulk of its money - about $73 million in 1997. By eliminating the smaller products that may not have been making much money, and laying off 300 employees (some 40 to 50 percent of the Claris work force), the newly created FileMaker, Inc. can go forward with renewed focus. In some circles, it also might not hurt to move away from the Claris brand name, which is indelibly linked with Apple and may not help efforts to market Windows software.

There had been talk of Apple looking to sell Claris, and the restructuring may in fact be a way of gussying up the FileMaker portion of the company to make it more attractive as an acquisition target. Although it wouldn't seem to make sense to me to sell off a profitable subsidiary, perhaps this is another instance of Apple's new mantra, "Focus, focus, focus." The entire restructuring could be explained by Steve Jobs having decided that Apple shouldn't be producing general business application software and that the company must focus on building Macs.

Pulling out of Retail Superstores -- The next major event that can be interpreted as either good or bad news for Apple is the pullout from major retail stores, including Best Buy, Circuit City, Computer City, Office Max, and Sears. Apple's propaganda spun the event to claim that the goal was to focus on the "store within a store" concept that Apple and CompUSA say is currently being quite successful. CompUSA claims that the percentage of Mac sales to total computer sales has increased from 3 percent to 14 percent since the "store within a store" concept was initiated.

<http://product.info.apple.com/pr/press.releases /1998/q2/ 980202.pr.rel.compusa.html>

It seems a little odd that Apple would pull Macs out of these other stores, no matter how well CompUSA was doing, but there's more to the story than that. Reportedly, Best Buy and Sears had dropped Macs from their stores the previous week, and the other major retailers weren't happy with how well Macs were selling either. In short, the ill-feelings were probably mutual.

Why could CompUSA report such an increase in sales, if Macs were selling poorly at these other stores? We've all heard stories over the years of indifferent or even hostile support from staff in these and other major retail stores - we've even published a few in TidBITS. Poor presentation, technical support, and Mac-ignorant sales staffs in these outlets no doubt account for part of the sales discrepancy, as could Apple's historically lackadaisical attitude toward consumer retail outlets. How many times have you gone into one of these stores and seen Macs without monitors, keyboards, or mice - or Macs that weren't plugged in? How many times have you been steered toward the PC clone of the month if you expressed interest in a Mac? I've seen it all too often, and we've heard from someone who ran a successful Mac department at an east coast Sears, where he was given (grudging) permission to do it right. He kept a number of well-maintained Macs on display, stocked cables and peripheral items, answered customer questions, spoke to local user groups, and the end result was that he sold a fair number of Macs.

<http://db.tidbits.com/article/00727>

Granted, many computer stores don't treat their PCs much better, but in a world where the Mac is the main alternative to some sort of PC, it requires a bit more selling. Despite valiant efforts on the part of at least some of Apple's sales reps, Apple never managed to get the right people selling Macs. I've said this before and I'll undoubtedly say it again, but Apple has never taken advantage of the incredible customer loyalty it has built up over the years.

Despite the spin of "focusing" on CompUSA, I don't see this pullout as a significant problem. Sure, it will be harder to find Macs in big retail stores, but since those stores weren't selling many Macs anyway, there's little liability now. More important is the fact that this pullout may direct more attention to the individual Apple dealers and other businesses that sell Macs in more than 3,500 locations around the U.S. Those businesses tend to be staffed by the people who care, and customers who go there will hopefully get the treatment they deserve. It would be nice to see Apple acknowledge these dealers, perhaps by emphasizing that the staffs are generally more knowledgeable and resourceful than the bigger computer store chains.

The major concern with this move is not the present, but the future. What happens down the road if Apple recovers from the last few years of diminishing sales and market share? Will it be possible to wiggle back into the good graces of retailers? Or will it even matter, due to changes in the way people will buy computers in the future?

Imaging Technologies Gone Dark -- A little-reported victim of Apple's new emphasis on focus has been the imaging department that produced printers and digital cameras. According to sources, that department wasn't particularly profitable, and Steve Jobs felt that Apple wasn't adding any value to the products, so he swung the axe. Peripheral companies like Hewlett-Packard, Epson, and others are expected to start producing more Macintosh-compatible hardware, since competing with Apple had reduced incentive in the past. Since Hewlett-Packard was producing the engines for the Apple-labeled printers, there were also contractual issues with Apple that prevented Hewlett-Packard from selling certain Mac-compatible printers.

As I understand it, the printer story for Apple in the future will be as follows. Other than high-end color laser printers, Apple will cease to make and sell Apple-branded printers or digital cameras. However, PostScript laser printers from other companies will continue to work with Apple's LaserWriter driver. For the most part, the specific hardware is immaterial - the driver is the important factor, and Apple's LaserWriter driver works well. Low-cost inkjet printers are trickier because the drivers for them must be coded individually, though PowerPrint from Infowave (formerly GDT Softworks) does make most PC printers accessible to the Mac. We hope that Apple will provide either code or development assistance to the printer companies producing these low-cost inkjets.

<http://www.infowave.net/printing_solutions/html /products.html>

Apple will reportedly put some of these third-party printers on the price list for educational institutions, so schools will still be able to order both Macs and printers with a single purchase order.

OpenDoc & Cyberdog -- Remember OpenDoc and its loyal Internet retriever Cyberdog? Respectively, they were Apple's component technology (where functionality could be provided by small, inter-operable parts) and perhaps the best example of what OpenDoc could do. In the great retrenching of 1997, Apple put both into "maintenance mode," which seems to mean that minor fixes will be made but otherwise the technology is dead.

Some OpenDoc developers didn't feel that OpenDoc deserved to die (wonder why?) and one of them, Hutchings Software, negotiated a "stewardship agreement" for the OpenDoc Development Framework whereby Hutchings Software would continue to move the software forward in exchange for Apple agreeing that it would continue to make OpenDoc available. Hutchings Software did this with the expectation that Apple would be willing to license OpenDoc and Cyberdog and would keep them as part of the Blue Box within Rhapsody indefinitely. A number of Apple employees who believed in the technology also worked extra hours to make this happen. However, the Apple vice president who made that promise has since left Apple. Steven Roussey of Kantara Development had been working on a stewardship agreement for Cyberdog since April of 1997, but was told recently by a different Apple vice president that Apple management isn't interested in licensing OpenDoc, Cyberdog, or related technologies.

Why Apple would care about this remains unknown, and the only argument we can think of is that licensing can be expensive, what with staff time, legal expenses, and whatnot. Perhaps this refusal to license OpenDoc and Cyberdog after previously agreeing to it is another example of Apple focusing on what's important, but it essentially seals the fate of OpenDoc after Kantara Development, Hutchings Software, and others have worked so hard to ensure that OpenDoc didn't fade away. Events like these bring into question whether or not Apple has turned over a new leaf.

New Ads -- By now, you've probably heard descriptions of Apple's new television ad, which features a snail hauling a Pentium II chip and compares that to a screaming fast Power Mac G3. Overall, reaction seems to be positive from the Macintosh community, but hey, we already know this stuff. The question I have is what do non-Mac users think about the ad? To rephrase the question, what do people who don't currently use the Mac want in a computer? Do they believe that speed is of the utmost importance? Let's face it: these are not people who have the technical background to judge CPU speed anyway - just look at the misinformed comments you see about clock speed in non-computer publications, somehow assuming that you can compare two different chips by clock speed alone. (That simply isn't true: clock speed comparisons are only relevant within the same chip model.) These quibbles aside, it's good to see Apple doing real comparison ads for a change.

Retreat or Focus? In the end, we come back to the question - is Apple focusing its business or retreating? At the moment, I give the nod to focusing, since morale within the company has seemed relatively high and the first quarter profit of $47 million (slightly higher than the estimated profit of $45 million we reported back in TidBITS-412) was encouraging. A profit in the next quarter would be even more encouraging, since it would show that the $47 million profit wasn't a fluke or accounting trick, a possibility that Apple has hotly denied.

<http://db.tidbits.com/article/04625>

That said, Apple must continue to move forward in significant ways. You can only focus for so long before everyone outside of the target audience has forgotten you exist. For instance, with the release of sub-$1,000 computers in the PC world, many fear that Apple will be left even further behind in the consumer market. Similarly, there's a tremendous range of laptop computers available in the PC world at a time when Apple continues to focus its PowerBook line to a small group of models.

Rhapsody is yet another story. Although development is moving along, Apple continues to groom Rhapsody as a server operating system. With Apple's servers having been focused out of existence throughout 1997 - including Apple's high-end Network Server systems - it seems difficult to believe network administrators will flock back to Apple for a server operating system, no matter how neat.

Perhaps that's my overall concern - Apple has kicked a lot of people out while putting its house in order; will enough users want to come back to check out the results of the remodelling?

 

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