Let’s get this straight right away: Apple Computer did the wrong thing. On December 20, Apple announced that it would spend $400 million to purchase Steve Jobs’s company, Next Software.
What happened next?
Behold! The dangers of emotional prognostication by the high and mighty on their lofty thrones.
Most of the commentary I’ve seen about this decision is off the mark, especially the talk about Jobs coming back to save Apple. That is sheer nonsense. He won’t be anywhere near the company.
Steve Jobs came to Apple with his NeXT buddies, disrupted Apple’s path, and marched the company out of the past to the future.
You can’t justify it. Apple did precisely the wrong thing. Now the only future for the company is to get smaller and smaller until there’s nothing left.
Yet, nearly 13 years later, Apple has never been in a better position. Record revenue and profits. Record unit sales for Mac, iPod, and iPhone.
In fact, the only sensible conversation to have about Apple is the one in which you argue about how long it will take to die.
The death knell has been sounded again and again since the early 1990s, yet Apple has more customers than ever, and mindshare that belies market share. Do you smell a Steward Alsop rat in his quotes?
(Before I go on, you should know that my venture capital partnership, New Enterprise Associates, has a big stake in Be, a computer company that Apple recently considered buying. Instead, Apple bought Next. NEA would have made many millions of dollars if Apple had purchased Be. Jilted by Apple, Be is now considered a company with a less-than-certain future. NEA owned nothing of Next.)
Frankly, that’s an admirable disclosure, and it explains much of Alsop’s perspective. He points out the superior benefits of NeXT’s NextStep operating system over Mac OS, then concludes:
For years, pundits have sat around and talked about why Apple needs a new operating system. Next’s technology won’t solve that problem.
Back in late 1996 Apple bet the farm on a future version of NextStep in Mac OS X. How did that bet turn out, Mr. Alsop?
Next reportedly brings in annual revenues of over $50 million, mostly from corporate clients attracted by a few things that NextStep does really well. But these are not capabilities that make a big difference to Apple’s customers. Apple sells to a totally different market segment—end users, in schools, businesses, and homes. It is very, very difficult to see how Apple will translate the value of Next’s software into something meaningful to its own customers.
Yet, Apple turned the technology into a platform of the future. Mac OS X is now at version 10.6.2—six major iterations which power record unit sales of Macs, and over 80-million iPhones and iPods.
Anybody who knows Apple Computer knows that the company bought the wrong part of Next.
Alsop dissects the purchase and segregates software from Steve Jobs, and asserts that Apple needs less of the former, and more of a visionary leader.
So Apple doesn’t need more software. What Apple needs is a visionary who understands how to make really great software and who can provide the leadership to make that happen. The best candidate might have been Steve Jobs, since he was the guy who browbeat the original Mac team into doing something truly important and historic back in 1984. But Jobs has spent most of the time since December 20 making it clear that he will not actually do anything for Apple once Apple’s purchase of Next is complete.
In retrospect, Stewart Alsop’s perspective was obviously influenced by the notorious Reality Distortion Field.
If not NeXT and Steve Jobs?
What should Apple have done? The essential problem that Apple has never been able to solve is how to transform promise into reality. It never needed more rocket science. What it needed were the basic skills of running a business—like, say, making a decision to do something, and then actually getting everybody in the company to work toward that goal.
Apple passed on the Be operating system, BeOS and chose NeXT instead. Why?
But, according to some news reports, part of the reason Apple resisted paying $200 million to acquire Be was that Amelio and his team were offended by Be CEO Jean-Louis Gassee, who asked for control over the development of Apple’s system software. Isn’t it ironic that even Apple’s newest leader resisted the very thing that Apple needs most: a visionary with total control over technology development, someone who could direct Apple to a product it could sell to more people, not fewer?
Alsop’s crystal ball cleared for a brief moment, providing readers back in 1997 with a fore gleam of the future. Then, as with so many who predict what will happen with Apple, the crystal ball clouded and became disfunctional.
It takes a long time to kill an $11-billion-a-year company. Apple’s already down to around $8 billion a year. I give it another three years, until the millennium, to fall the rest of the way to the ground.
Today, with Steve Jobs still running the show, Apple’s revenue and profits are at record levels, now approaching $40-billion.
It must be difficult for the high and mighty to see what is really going on down here on earth.
(via Daring Fireball)