If I ran Apple Computer

By Richard Morochove

First published July 18, 1997

Poor Apple Computer. Even if you've never used a Macintosh, you've got to feel a twinge of sorrow when you learn of each new problem at Apple.

What's wrong with Apple? Is it fixable? What would I do if I were in charge of Apple Computer?

In order to solve the problems at Apple Computer, you need to understand the roots of its current malaise.

The recent resignation of CEO Gilbert Amelio is just the latest in a long string of setbacks for the beleaguered computer maker.

Apple wasn't always the computer industry's problem child. The company was first to popularize personal computers with the Apple II in 1978. It revolutionized computing with the graphical user interface and mouse, first in 1983's Lisa and then the popular Macintosh, introduced in 1984.

Yet in the nineties Apple has floundered, losing money and market share. The Mac OS, responsible for the company's success, now seems stuck in the past. Upgrades to the Mac OS were late and when they arrived proved miniscule, mere variations on the basic design.

Meanwhile, Microsoft kept improving its competing Windows system. Apple once held a five-year lead on Microsoft but has now fallen behind in many aspects.

In retrospect, Apple's fortunes soured when co-founder Steve Jobs left the company, after losing a boardroom battle for control to then-CEO John Sculley.

I've heard many stories about Jobs. He's cantankerous. He's a poor administrator. He's not a team player. However, the man understands and has a vision of technology. He inspires.

When Jobs left, Apple lost its soul.

Where does Apple go from here? While I'm happy Jobs is back and involved with the company, I don't think he's the right man to lead it. I've heard he doesn't want that responsibility. I don't blame him. It would require guts to tear down and then restructure what you helped build.

Jobs can help set the vision for the company. He should become chairman of Apple. I'd like to see Jobs out talking to people, encouraging employees, boosting dealer morale and speaking out to Macintosh users, renewing their excitement and love for the Mac.

Apple continues to lose money, so costs must be reduced if the company is to survive.

Former CEO Amelio implemented cutbacks at Apple by trimming a little bit everywhere. Superficially this seems fair, spreading the suffering around. But it inflicted a thousand little cuts all over the corporation. It hurt the strongest areas of the company as well as the laggards.

Amelio's layoffs led to ridiculous scenarios. Apple Canada now has no president, no one person in charge of running the business in this country.

I believe Apple needs to concentrate on its core. Non-essential businesses must be completely amputated, sold off or shut down. This will free up resources that can beef-up the remaining business.

At the top of my hit list is Pippin. Apple never did release this cross between a gaming machine and low-end home computer in North America. The Bandai Co., of Power Rangers and Tamagotchi fame, introduced Pippin in Japan. Sales there have been unspectacular. I'd sell the Pippin group to Bandai, if they want it, or liquidate it if they don't.

Another business on my sell list is Newton. Apple has already shunted Newton developers into a little company of their own. The latest Newton incarnation, the MessagePad 2000, uses a much faster StrongArm processor and has begun to fulfill the over-hyped promises of earlier models. But buyers overwhelmingly prefer smaller, less expensive handheld devices, such as 3Com's Palm Pilot.

Apple doesn't have the resources to support continued development of the Newton operating system and at the same time implement the much-needed improvements to the Mac OS. I'd sell off Newton, possibly to Motorola or Oracle, to free up cash and remove this drain on management's time.

While these are the easy hits, other Apple businesses require close examination. Apple now considers publishing and multimedia development, home computing and education as key markets. One of these may have to go.

Mac clone manufacturers such as Power Computing have made inroads into Apple's educational sales by making less expensive, more up to date models. Perhaps these clone makers can better service the education market.

Unbelievably, Apple has made life difficult for Power Computing. In a recent filing to the U.S. Securities Exchange Commission, Power disclosed that Apple held up technical certification of its new models for non-technical reasons. Apple wanted to win concessions, such as higher royalties. Apple was also upset at Power's success in the education market.

This highlights a conflict in Apple's business. The Mac OS developers want other computer makers to license their software to build Mac clones. The Mac hardware people fear the competition from the more efficient clone makers, such as profitable Power Computing.

I'd reorganize the company into separate software and hardware divisions, each with independent management. Apple's hardware group would make whatever it wanted, even if it meant selling a Windows PC. AppleSoft would concentrate on developing the best, most up-to-date user interface. Then it would be free to license the new Mac OS to any computer maker.

The old Apple tree is rotten. Splitting Apple into hardware and software halves would be painful, but it would let new seedlings take root and rejuvenate the Apple legacy. CW