Apple Computer—the worm turns

Press, 22 April 1986, Page 27

Apple Computer—the worm turns

From the “Economist,” London Apple Computer is regaining some of its shine. Less than a year ago, the firm’s president, Mr John Sculley, rudely ejected Apple’s cofounder, Mr Steven Jobs, and announced Apple's first quarterly loss. Now, the company says that — thanks to second quarter earnings which were three times higher than expected — it will earn more than SUSBO million (SNZI4S million) in the first half of its 1986 financial year, nearly one-third more than it did in the whole of 1985. Apple’s good results have not come easily. In

1985 Mr Sculley laid off a quarter of the workforce and recorganised the company from top to bottom. No longer do the makers of each Apple product run as semi-auto-nomous companies. Marketing, research and development, manufacturing and finance have been centralised and focused on Apple’s three main markets — education, consumer and business.

Apple’s "mellow’’ management style will stay (although the new vicepresident for product development, Mr Jean-Louis Gassee, flouts Californian tradition by wearing his blue jeans carefully pressed). But Mr Sculley has shifted Apple’s

strategy. Instead of trying to fight IBM head-on in personal-computer markets, Apple will try to outwit and outflank the giant. Mr Sculley reckons that Apple has two potential advantages over IBM — superior graphics and an easy-to-understand interface for neophyte computer users. For now, those are sufficient to allow Apple to do well in market niches which IBM cannot reach, like educational computing and desk-top publishing. But the real prize is the business market, where Apple has so far flopped. Apple hopes to use IBM’s success in automating offices to get a foot in corporate doors. So far,

Mr Sculley argues, office automation has been driven by "spreadsheet jockeys” and others who use computers to manipulate information. He expects the boom in such information providers to create demand for computers among information users — people who just want to use their machines to read and organise the information created by others.' It is here that Mr Sculley believes Apple can shine.

To create the products Apple needs to succeed in new markets, Mr Sculley wants to double research and development expenditure in 1986 from 1985’s $U572.5 million (SNZI32 million). He also promises

that in the next 12 months he will introduce more new products than the company has created in its lifetime. One probable announcement is IBM-compatible communications equipment — which is essential to Apple’s strategy to sell to information users. Another is a range of Macsiblings. One addition to the family will probably be an “open” Mac, which can be customised for new market niches by the addition of boards made by third-party suppliers. To make these products a success, Apple needs allies. So it is busily trying to win back the confidence of entrepreneurs aiming to build add-on products for Apple machines, or to build Apple products into their own systems. Apple’s yet-to-be announced high-end computer will be sold to firms who will build it into their own computeraided design systems.