AppleCORE: An Update And An Uproar

An Update And An Uproar

I received an interesting e-mail from Bill Stewart-Cole, an independent computer consultant, who responded to last week’s edition of AppleCORE, entitled "Keep Your Chin Up." I’m sharing some of his comments with you, not just in the interest of fair and accurate reporting, but also because they shed light on a very important, contentious issue that is the crux of a battle being waged in two board rooms — one in Cupertino, CA, and the other in Round Rock, TX.

In last week’s column, I stated that Apple, as a $10+ billion a year company, wasn’t going to die anytime soon. Stewart-Cole replied: "What I could find in the MaKiDo pages you referenced, is the inaccurate claim that Apple is a ‘$10 billion a year’ company, which I guess is a reference to their peak revenues, seen in 1995. Note that Amelio was aiming at a $8 billion-in-revenue break-even mark, and while he made it there, Apple is now about a $7 billion a year company. Their cash and cash equivalent position is also somewhat down from the peak at the start of the year around $2 billion, and is now about $1.2 billion. Still quite respectable and more than most companies, but not as amazing as the earlier ($10 billion a year) number. In simple terms, they spent a lot of cash firing people and buying NeXT."

Stewart-Cole also said, in response to my assertion that Mac sales were up to 5.1 million in 1996, that clones were a major factor in last year’s sales, but that "unfortunately for Apple, their own sales have been dropping in dollar volume since the $11 billion high in 1995." He adds, "What matters for Apple as a company is NOT the number of Mac OS machines sold, but the number of dollars Apple clears from each of those sales."

A fact which Apple, caught up in its discussion/fracas with Power Computing, knows all too well. License discussions between the two computer makers came to a slow boil last week, with rumors running the gamut from Apple buying back Power’s Mac OS license, to an even merger between the two companies, and even to Power taking over Apple’s hardware business. In the midst of the rumors last week, Power Chief Operating Officer and President Joel Kocher, along with four other vital, influential members of Power’s management team, tendered their resignations, signaling obvious disagreement with Power’s remaining powers-that-be (including CEO Stephen Kahng’s) concerning the company’s future strategy.

What might that strategy be, if Power’s Mac OS license is taken back? A turn to the exclusive manufacture of Wintel boxes, or a simple shutdown? More importantly, why would Apple want Power’s license back in the first place? Too much competition? Apple needs that kind of competition right now. Apple needs to sign off on the CHRP standard, and let its licensees build those machines as soon as possible. Apple needs clone manufacturers, period, or else we can kiss our beloved Mac industry goodbye (whether Apple is, or is not, in the black from now on).

Bill Stewart-Cole shared one parting thought in his letter. "(Apple) has shown a nagging tendency to screw up basics, like building the boxes people really want instead of boxes no one wants, which is a bit scary," he wrote. "Today, the sales they miss because they produce the wrong machines are lost for good because people can just get a clone instead."

At least we hope so, right?