All that’s about to change. Revolutionaries nowadays are about as popular as Fidel Castro, and Apple has fashioned a credo more suited to the times: “Fit in.” Determined to boost its too-slender share of the exploding market for home and business computers, the digital venues of tomorrow, top management is ready to commit what would once have been corporate apostasy. That’s to license Apple’s coveted operating system (the digital codes that tell your computer what to do) in hopes of creating a burgeoning new market of Mac “clones.” It’s a high-stakes gamble. If Apple moves too quickly, or chooses the wrong partners, it could cannibalize sales of its own hardware and software. If it moves too slowly, it will miss tremendous opportunities. But the alternative – not licensing its technology – is even riskier. “It’s license or die,” says Pieter Hartsook, whose newsletter is a bible of the Macintosh industry. Apple has been searching for suitable partners for nearly nine months. If it doesn’t clinch some deals, Hartsook warns, the company could become “another Commodore,” the big computer maker of the ’80s that recently slid, almost unnoticed, into bankruptcy.
Such fears are probably exaggerated, at least for now. After all, as Apple executive vice president Ian Diery puts it, an $8 billion company doesn’t just “fade away.” Last month the company stunned Wall Street with markedly improved third-quarter earnings, despite a bruising PC price war. Chief executive Michael Spindler has sharply cut operating costs; sales were up 15 percent to $2.15 billion. Apple’s stock hovers around $35, up from last year’s low of $22, though far less than the high of $65. The success of its new Power Macs has overshadowed the debacle that was Newton, Apple’s ridiculed “personal digital assistant.” Its venerable PowerBook dominates the fast-growing laptop market.
The bad news is that Apple is still beleaguered. Compaq Computer, the Texas behemoth that launched the PC wars two years ago, reportedly plans more cuts this autumn – possibly as steep as 20 percent. Apple will have to follow, jeopardizing recent financial gains. Archrival Microsoft poses a bigger threat. Early next year it will release Chicago, a.k.a. Windows 4.0, a new operating system that is purportedly as user-friendly as the Mac. Independent software developers have been writing increasingly for Windows, meanwhile, while competitors like IBM and Compaq are for the first time edging into Apple’s traditional markets. Case in point: the nation’s schools, where Apple’s bright logo and compel-ling children’s software have long made Mac the computer of choice. To withstand these shocks, Apple needs more sales, more market share. “If we had licensed ear-lier,” says Diery regretfully, “we would be the Microsoft of today.”
How to catch up? Apple doesn’t plan to pull “an IBM” and license to all and sundry, explains one senior executive. Instead, it will selectively seek “complementary” partners who can bolster Apple’s existing markets and help open others, without spawning direct competitors. Apple isn’t naming names – “There are more than six, less than 12,” says chief financial officer Joseph Graziano – but rumors abound. Apple is going gangbusters in Japan, for instance. During the last few years, it has gone from nothing to 18 percent of the market. To maintain this momentum, and crack Japan’s promising education market (largely closed to foreign companies), Apple may ally with NEC or Fujitsu. In Europe, reports Mark Macgillivray, a Silicon Valley consultant, Apple has been negotiating with Vobis, Germany’s largest PC manufacturer, and Ing. C. Olivet-ti, which is strong in Italy and Latin America. Potential American partners include Motorola (a leader in wireless communications, the trend of the future, and a major government suppplier) as well as IBM. Both have already worked with Apple to develop the PowerPC, a new, ultrafast microprocessor the company hopes will keep the Mac alive.
Some of these partnerships will be sealed by the year-end, insiders say. If all goes well, they believe, Apple could double its share of the computer market – currently 15 percent in the United States, 10 percent worldwide. Outsiders tend to be skeptical. “I wonder if it isn’t too little too late,” says Bill Krause, president of Storm Technology, an Apple supplier. Even if the company were to move now, he notes, it would be at least a year before the first clones rolled off assembly lines – a long time in the electronics industry. On the other hand, Apple makes standout products, and lots of companies would love to have its technology. “Apple isn’t out of the woods,” says Robert Corpuz, an analyst at Dataquest. But if the licensing drive gains steam, it could be. It just won’t be the same old Apple.
