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A dreamer wants the computer world to go Apple way
CUPERTINO. (Calif) May 26: Apple Computer Inc has embarked on a single-minded strategy: growth, says AP.
No longer content to be a niche player — a maker of cuddly personal computers favoured by school children and graphic artists — Apple wants to take on the world of corporate computing. That Cssion led lo a startling al nee last year with former enemy IBM.
Apple also turned its pricing policy upside down to gain market share. Under its low-price plan It sells Its entry-level Machlntosh PC for under 1.000 dollar for the first time. The move, combined with selling Macintoshes in mass-merchandise stores such as Sears, pumped up sales sharply.
But the vision of John Scul-ley, Apple's chairman and chief executive, Is even broader. Apple. he says, will be a leader in what many experts see as the coming convergence of computers. consumer electronics, communications and media.
Sculley plans to unveil the
first in a line of "personal digital assistants" to help bring that vision about.
Code-named Newton, the videocassette-sized device is like a souped-up address list, appointment book, Nintendo Game Boy and fax machine in one Industry sources say. It Is controlled by writing on its screen instead of typing on a keyboard, and it allows users to store addresses and appointments and to send and receive memos by fax
Industry analysts who have been treated to private screenings say they arc Impressed by the gadget, ex pccted lo cost under 1.000 dollar. But ft won't be available until early next year, when It starts rolling off assembly lines at Sharp Electronics. Apple's Japanese partner In the venture.
Meanwhile. Apple plans to produce other offerings to ex pand Its market Among them will be Macintoshes with built in compact disc players — not to play Bruce Springsteen albums (though they 11 probably do that), but to play
"multimedia" software thal mixes text, sound and Images.
The new products will follow the successful launch last October of three portable Macintoshes called Power Books. Though Apple was late to the laptop market, the models have won critical praise and major sales.
This new momentum is a sharp turnaround for Apple. Sculley said It stems from his realization about two years ago that Che personal computer pioneer was in trouble.
"Apple had its back against the wall." Sculley recalled in a recent Interview at Apples Cupertino headquarters. "I had to lake a lot of responsibility for why we were there".
Apple co-founders Steve Jobs and Steve Wozniak gave the world Its first mass-market personal computer tn 1977, I he Apple 11. In 1984, Apple again made history with the Macintosh, the first truly user-friendly PC.
But a few years later Apple fell into a funk. Its pace of in novation slowed and competition Increased as Microsoft
Corp released its Windows software. Windows gives IBM-type PCs an casy-to-usc graphical operating system that mimics the Macintosh — for much less money. (Apple sued Microsoft for allegedly copying the Mac. bud has apparently lost.)
About the same time, the industry entered a sharp downturn, slowing sales and leading to price cuts.
Sculley, a former president of food Industry giant PepsiCo who joined Apple in 1983. said Apple needed a new direction.
The first move was to lower prices, allowing Apple to better compete with "clones" of IBM-compatible PCs.
Although that strategy drove Macintosh sales up 60 per cent in Apple's last fiscal year. It hurt Its profit margin. The company no longer could afford all its employees and lush buildings.
Sculley took the painful step of laying off 1,500 workers last year, cutting salaries — including his own — and consolidating some facilities.
' The move prompted some
Apple employees to form picket lines outside the company. while a 224-millton dollar accounting charge against earnings to pay for severance pay and other restructuring costs pushed Apples profit down even further.
Apple earned a disappointing 310 million dollar tn its fiscal 1991, which ended Sept 27. compared with 475 million dollar the year before. But revenue climbed 14 per cent to 6.31 billion dollar.
Sculley said the cost-cutting put Apple ahead of other computer makers, such as International Business Machines Corp and Digital Equipment Corp, that arc still going through painful downsizings.
Apple's profit has rebounded in the past two quarters, along with employee morale.
"We have never turned out more products, we have never had more innovation," Sculley said
Sculley also made another bold move: He named himself Apple's chief technology officer. The step by the former
soft-drink executive, who had scant technical expertise, raised eyebrows throughout the industry.
What I wanted to do was to dramatically improve the conversion rate of technologies into products he explained. Tt used to be wc had plenty of time to develop a product. It could lake 20 years. In the 1990s. if you don t get your technology in your products quickly and get your products out, then you lose the advan tage of investment."
Apple has cut product-development time to less than a year Its target is six months.
Most amazing of all the changes 1s Apple s alliance with IBM. a company 1t used to make fun of for its sluggish, bureaucratic ways
Under the pact, announced last July. Apple will use a speedy IBM microprocessor chip in future Macintoshes. The two companies will collaborate on the next generation of software, called object oriented, that promises to make tt easier to write new programmes.
IBM and Apple also are developing multimedia software and technologies, and finding ways to more easily connect their products.
"Wc were the first company lo ever get behind the Chinese wall and look inside IBM,” Sculley said. What Apple found was impressive technology, he said
Apple also brought its longtime chip collaborator. Motorola Inc. into the alliance.
Though Apple is giving up some Independence, ft gained a deep-pockets partner tn IBM that can help Apple commer cialize software Innovations it had under way. Sculley said
We could spend hundreds of millions of dollar on it an then not have anyone adopt it." he said — a risk Apple couldn't afford.
But equally significant is the clout Apple gained when it calls on IBM customers. Many shunned Apple as a lightweight that made novelty products. ' Now all of a sudden we were being given and IBM stamp of approval." he said.