Kemble, Hi! More news, but pertaining to Apple, not IBM, this time. Different puzzle. Apple has a different vision and gameplan than Dell. Did you read Michael's interview with the Austin American Statesman? Michael is is still focused on PC's. Steve Jobs is moving in a different direction. Leigh
aolpf.marketwatch.com
"Computer hardware companies face a dubious future in an age where PC penetration is slowing, and where handheld devices are starting to render desktop boxes obsolete."
On becoming your enemy
Apple redefines itself as Microsoft
By Rebecca Lynn Eisenberg, CBS MarketWatch
Last Update: 5:53 PM ET Jan 7, 2000 Letters to the Editor
Commentary
SAN FRANCISCO (CBS.MW) -- This year's Macworld conference was decidedly upbeat, with Steve Jobs finally accepting his role as the company's permanent CEO and announcing that the company will "re-engineer" itself (yes, again).
Apple gets to do what Microsoft wanted to do but could not: control the entire user experience from one end to the other, and dictate the terms that its customer base will have little choice but to follow.
Ironically, this re-engineering reveals an unlikely source of inspiration: Apple's former foe, now role model, Microsoft (msft).
The re-engineering was long overdue. Despite Apple's (aapl) re-emergence into profitability that Steve Jobs brought when he returned, Apple's core business had pretty much stayed the same -- it has long remained a computer hardware company.
Computer hardware companies face a dubious future in an age where PC penetration is slowing, and where handheld devices are starting to render desktop boxes obsolete.
Now Apple is defining itself as an entirely different type of company: an end-to-end provider of Internet access, content and technology -- an MSN-like business that Microsoft never finished.
All MSN's components are there
Apple's Internet strategy contains all of MSN's essential components: technology, content, and an ISP to connect the two. Just like Microsoft built MSN to connect PC users to Internet servers running Windows NT, Apple built its own portal site and ISP to connect Mac customers to Apple.com -- a site, according to Jobs, that is visited by almost 10 million Web surfers a week.
For the ISP part of the equation, Apple decided to buy rather than build, and accordingly made a $200 million investment in Earthlink (elnk) for Apple-branded Internet access service. For the portal, Apple built a site that offers special features and content available only to customers who access the site from a Mac (running Apple's latest operating system).
This model was precisely what Microsoft had in mind when it launched MSN Internet service to connect Windows users to NT servers. It is also what Microsoft had in mind when the company started to embed Internet applications into its operating system -- a move that was cut short after embedding Internet Explorer when the Justice Department brought suit. Non-monopoly freedom.
Apple, however, unlike Microsoft, does not own a monopoly so it can do what it pleases with its 10-percent (or so) consumer market share.
That means that Apple gets to do what Microsoft wanted to do but could not: control the entire user experience from one end to the other, and dictate the terms that its customer base will have little choice but to follow.
From the look of things so far, Apple's initial terms fall squarely within traditional Microsoft strategy. Apple is finally beginning to imbed more applications into its operating system, including a Web search engine (Sherlock II), a streaming media player (QuickTime player) and, in OS X, an e-mail application as well. And it has also tweaked its user interface to be a tad more "Windows-user-friendly."
Specifically, Apple's forthcoming operating system, OS X, borrows generously from Windows 98, incorporating its task bar, maximize buttons and other features that Macs generally lack. To Mac users, these functions might be revolutionary; to Windows users, they're old hat.
Web portal puzzle piece
For the Web portal piece of the strategy, Apple introduced Mac.com -- a vertical portal for Mac customers. Mac.com provides Mac-enhanced versions of all the most popular portal services, including free e-mail, home pages, greeting cards and a Web directory.
Most of these services are provided only to Mac customers, as are a host of utilities found less commonly at portals, such as 20 megabytes of Internet-based storage space and built-in parental controls for children online.
Plus, Apple, like Microsoft, was sure to make commerce a big component of the content and technology. By registering with Apple, Mac users will be able to buy and download fonts and other software, and eventually, I imagine, buy anything they want online through Mac.com.
The best change of all
The most important Microsoft-like change that Apple made is also commerce-related: like Microsoft, Apple is finally making money.
Although we won't know for sure until Apple's conference call in a couple weeks, all signs point to a great quarter for Apple. According to Jobs, Apple sold 1.35 million Mac computers in the fourth quarter of 1999.
Add to that the one million copies of MacOS 9 Apple sold in the past 60 days for $100 each, plus sales of its $1000 high-end digital film editing software, Final Cut Pro, and its business database, FileMaker, and the figures add up fast. Software, after all, is a very lucrative business. Just ask Microsoft.
The only company that Apple perhaps benefited from more than Microsoft is Akamai (akam), which Apple partnered with to provide streaming media content. Having invested $12.5 million last spring, Apple's stake in the newly public company is now worth more than $1 billion.
To Microsoft, of course, a billion dollars is petty change. Someday, perhaps, it will be for Apple Computer as well.
Rebecca Lynn Eisenberg of San Francisco writes her column on Internet issues for CBS MarketWatch.
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