News & Views

There are some very interesting things going on in regard to Apple Computer these days and I'm sure Steve Jobs is sleeping very soundly at night.

Back in 1976 when the two Steves, both in their twenties, founded Apple Computer in Steve Jobs parents' garage, things could only get better and so they did. The following year saw the introduction of the Apple II computer and this very quickly became a runaway success. This computer effectively launched the company into the big league and Steve Jobs found the situation very demanding. The growing company decided to seek professional assistance so they hired John Sculley who had made a name for himself at Pepsi. Steve Jobs is reputed to have challenged John with, "Do you want to just sell sugared water for the rest of your life, or do you want to change the world?". How prophetic this would become.

At first, things seem to have gone along well and development of the Macintosh was initiated but somewhere along the way once the honeymoon was over, relations soured between the two obviously strong willed characters and in the end it was Steve Jobs who went off with his head between his legs. During an address at Stanford University in 2005, in relation to his dumping from Apple, Steve stated to graduating students;

"What had been the focus of my entire adult life was gone, and it was devastating. I really didn't know what to do for a few months. I felt that I had let the previous generation of entrepreneurs down - that I had dropped the baton as it was being passed to me.

I met with David Packard and Bob Noyce and tried to apologize for screwing up so badly. I was a very public failure, and I even thought about running away from the valley. But something slowly began to dawn on me, I still loved what I did. The turn of events at Apple had not changed that one bit. I had been rejected, but I was still in love. And so I decided to start over.

I didn't see it then, but it turned out that getting fired from Apple was the best thing that could have ever happened to me. The heaviness of being successful was replaced by the lightness of being a beginner again, less sure about everything. It freed me to enter one of the most creative periods of my life."

The full text of this absorbing address can be found at <http://news-service.stanford.edu/news/2005/june15/jobs-061505.html>.

He then went on to start NeXT Computers and with his talent for coming up with something different, he produced a computer that was ahead of its time however it failed to make much of a dent in the market place. He must have had a great deal of renewed energy around this time as he also went on to co-found Pixar, which subsequently became the best computer animated movie studio the world has seen.

NeXT initially produced both the hardware and software, much as Apple does today. However the hardware side of the business proved to be unprofitable and so in 1993, the hardware side of the business ceased and the focus became the NeXTSTEP and later OPENSTEP operating systems. These operating systems were based on the tried and true UNIX and as such garnered the interest of Apple Computer, once it had decided that its attempt of creating a replacement operating system for the Macintosh, was leading nowhere.

In the February of 1997, Gil Amelio who was CEO of Apple at the time, announced the acquisition of NeXT Computers and along with the package came Steve Jobs as a consultant. The consultant period did not last long and soon Steve was back at the reins as the interim CEO (iCEO). One of his first moves was the cessation of licensing of the Macintosh operating System to outside hardware manufacturers. This was soon followed by the introduction of the innovative iMac range of coloured all in one computers (see <http://en.wikipedia.org/wiki/Apple_Computer>).

Jonathan Ives, the brit who did much of the design work on the original iMac, went on to design the now ubiquitous iPod. Once again, and many years since the first time, Steve has presided over a runaway success.

Now what has all of this to do with the interesting things going on at Apple you may well ask?

Well the Apple share price is still generally on the way up and sales of both Macintosh computers and iPods are rising as can be evidenced by Geff Garnet's recent report in the MacObserver <http://www.macobserver.com/stockwatch/2006/07/20.1.shtml>. Meanwhile many other computer manufacturers are experiencing their share prices declining and are starting to see Apple as a threat, despite the comment by Michael Dell to his shareholders at a recent shareholders meeting <http://www.macobserver.com/article/2006/07/24.9.shtml>. Clearly, if Dell did not see Apple as any competition, then there would be no need to clarify this position.

This is all in the period of a maturing computer marketplace where the growth of sales in computers is levelling off, a good indication that the market for computers has reached or is near reaching its peak. If we look at similar situations in other consumer products, such as with television sets, where in the growing market there were many manufacturers producing sets, once the peak was reached there came about a period of consolidation. At this stage in the product life cycle, many of the smaller manufacturers either went out of business or were gobbled up by the bigger ones.

Where's all this going to lead to in respect of Apple Computer in this consolidation stage of the computer life cycle. With Steve Job's foray into the digital animation business in his founding of Pixar, he probably unwittingly assisted Apple Computer more than he could have dreamed. There is a convergence well underway at the moment between entertainment and computing and nowhere is this more apparent than with Apple's iTunes online music store and its move into the marketing of music, television programs and movies, all being playable on computing devices.

Not only is Apple pre-eminent in the distribution of digital entertainment content, but is also becoming pre-eminent in assisting with its creation. The acquiring of Final Cut from Macromedia and DVDirector from Astarte in the late 1990's and Apple's introduction of iMovie and iDVD for consumers and Final Cut Pro and DVD Studio Pro for professionals following these acquisitions, has gone a long way to making the Macintosh computer an essential home and business tool.

The longer term viability of computer manufacturing is becoming more and more bound up with digital entertainment and those companies that embrace this successfully, are more likely to survive the inevitable consolidation that is now beginning to bear down on them.

Things are indeed interesting as regards Apple Computer Inc.