Jobs stars in the latest episode of Apple's soap opera

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The Independent Online
It has one of the most valuable brands on the planet, but so legion have been the bunglings at Apple that, by rights, it should have imploded years ago. Now it is back in the hands of the personal computing guru who helped to found it 20 years ago, Steve Jobs. Can he save this once- sizzling company from oblivion? David Usborne in Cupertino, California, assesses the prospects. At One Infinite Loop, the optimistically addressed campus that is the headquarters of Apple Computer in Cupertino, there are few visible signs of crisis. The cappuccino counter at reception is buzzing and, at 10am, the outdoors basketball courts are all taken with guys shooting hoops. The sun shines, the corporate flags flutter and the atmosphere seems to say don't worry, be happy.

At the executive suite, an inner sanctum used for visiting VIPs (and foreign journalists), the message is the same. The decor is "way cool" - a favourite phrase in Silicon Valley - and, outside the meeting rooms, small booths show six of the best of the Apple product line. Switched on and ready to go, they offer a glimpse of the company's recent past and, perhaps, of its future.

There is, for example, the e-mate, a mini-portable derived from the Newton hand-held computer with a funky green plastic, scallop-shell design. Further down the line sits the Twentieth Anniversary Edition. It is the ultimate in sleek chic with Bose sound, leather trim on the keyboard and a state-of-the-art flat screen.

Both computers should be instant stand-outs in the computer market, one very cheap the other super-expensive. Probably, however, you are familiar with neither of them. Apple unveiled the Twentieth Anniversary last January, but was only able to begin shipping it in July. The e-mate, which seems so user-friendly and attractive, is, for now, sold only to schools. Why?

Books will be written, are being written, about how Apple, blessed with one of the planet's greatest brand names, has managed to bungle things so unutterably - the muddles over clone-licensing, the marketing mis-steps, its awful distribution arrangements (Apple's inventory turnaround isfive months, compared to an average of 20 days for Dell Computer), the serial hirings and firings of CEOs, its patent disputes with Microsoft and so on and so on. There have been few other soap operas in the business world to beat it.

Now a new, blockbuster episode is in the making, with its opening in December last year when the then CEO, Gil Amelio, bought NeXT Computer from Steve Jobs, the Apple co-founder, and brought him back into the fold as an adviser. In the months since, Amelio has been dumped and Jobs, in what has amounted to a reverse takeover par excellence, has assumed control. He is serving as interim CEO with the declared intention of stepping aside as soon as a permanent replacement is found.

How this episode will end is nothing short of tantalising. Is Jobs serious about finding a new CEO or will he find his new role as saviour of Apple too much fun? For the moment he insists he is ready to step down from the board if that's what it takes to hire a new CEO. What is certain is that, in the meantime, Jobs is making a fundamental impression.

At the Seybold convention in San Francisco last week, a gathering of software developers in graphics and desk-top publishing, he offered a reassuring pep talk, ticking off the obvious problems at Apple and explaining what had been done so far to correct them.

For example, he engineered a shocking board shake-up, replacing all but one of the members and bringing in such dynamic figures as Larry Ellison, the head of Oracle. He made peace with Microsoft with a pact that commits Bill Gates to making a symbolic $150m investment in Apple and, most importantly, to continue making software for Apple's Macintosh platform for at least five years.

He killed off most of Apple's licensing agreements with companies making Apple knock-offs, notably Power Computing, arguing that their activities, instead of expanding the Apple Mac market, were cannibalising Apple's own already shrinking market share.

War has also been declared on Apple's retail and distribution woes. The company is painfully aware of the frustrations suffered by the faithful when they go to the shops. New models will be shipped more quickly and retailers will be urged to do a better job of displaying Mac software products. It is not that the Mac-dedicated or cross-platform software, from games to office applications, does not exist, the company said, but that the retailers do not properly display it.

"Retailers are offering lip service to selling Apple products when, in fact, they are putting them in a corner of the store where no one can find them," said Avie Tevanian, senior vice-president for software. "If they don't listen to what we are telling them, then we will simply stop shipping to them."

Last week, Jobs made as plain as possible a message Apple has been trying to get out for months: that it is not about to abandon its Macintosh operating system, still beloved by more than 20 million disciples world-wide, which was updated with the MAC OS 8 version in July. It is a measure of how far off-track Apple wandered that only two years ago the number of people assigned to improving the Mac system numbered just five. Today, Mac has hundreds once more dedicated to upgrading it.

All of this is being met with eager, even emotional, relief by the wide Apple constituency, from customers to its shareholders and the software developers writing for Mac. There is even recognition that the truce with Microsoft, however counter-instinctive it may feel, was a necessary evil. Everyone understands the significance of Microsoft continuing to make a Mac version of its Office suite, for instance, which is already the highest-selling software for the Mac platform. No one is prepared to declare the crisis over for a company that has lost $2bn in two years and is unlikely to report a quarterly profit before next year.

"Talk is cheap," said John Willzak, the CEO of MetaCreations, which develops graphic and photographic software for both Mac and Windows. "I still need to know who is going to be running the company in the future and who will be giving it the vision. And I want to know what the products are going to be and when they are coming. Apple has to find its niche."

Daniel Kunstler, an analyst at JP Morgan in San Francisco, is also reserving judgement. He is uncertain, for instance, how Apple is going to tackle its distribution dilemmas: "It's really bad and they are going to have to re-engineer it from scratch."

Like many, Kunstler admits to being concerned about the suspension of the cloning licenses. "This is troubling, because if you go back over the history, what you find is the stubbornness of Apple in refusing to relinquish proprietory usage on the MAC OS and the contribution that made to the company's decline. Now they have stopped it again."

Above all else, however, everyone is waiting to see Apple's new product catalogue. The "product road map", as executives call it, should be laid out perhaps as early as January. Until then, all the details are a secret. Some hints are available, however. Jobs said that, of the products already on line, he has identified 70 per cent that have doubtful futures and 30 per cent that are the "gems" worth supporting. Apple wants to offer products that are more affordable. Thus, we are likely to see e-mate, or a version of it, sold to a wider market.

"Clearly, we have been seeing Apple products drifting upwards [in price terms] and I think that we need to correct that," concedes Jon Rubinstein, Apple's new senior vice- president for hardware engineering. "We need to drive the costs down."

One widely anticipated initiative is the entry by Apple into the nascent market for network computers, stripped-down, low-cost PCs that do not have their own hard drives but derive their content from a network or external server. Rubinstein suggests the company could do for NCs what it did for PCs 15 years ago - make them into a tool that any non-expert can master.

What Apple is not about to do, contrary to some recent rumours, is pull out of the hardware business and concentrate only on the Macintosh system and its still-to-come office software platform, roughly equivalent to Microsoft's NT platform, known as Rhapsody.

"That is absolutely not true. If it is, nobody in the company has told me," said Rubinstein. And while an effort may be made to re-enter the low end of the market, neither are the more expensive Apples, whether it is machines for publishers (including, by the way, this newspaper) or the luxury Twentieth Anniversary toy about to disappear.

One person with more than a passing interest in how this story ends is Amelio himself. Spied on the floor of the Seybold convention (while Jobs was giving the keynote speech, Amelio was across the road participating in a thinly attended panel on photo-graphics) the ousted Apple chief had this simple advice. "Apple has to decide on a plan and it has to be a plan it believes in. There can be no more getting together every Monday morning and coming up with something new. You can't do that any more."

Can it make it? Shrugging, Amelio replied: "Let's wait a few months. I'm as curious as everyone else."

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