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Steve Jobs stands by Apple decision to ditch cloners

Steve Jobs, the interim chief executive officer at Apple Computer, yesterday staunchly defended his controversial decision to break relations with clone makers of the Macintosh line saying that, had they been allowed to endure, the licensing agreements would have sent Apple `down the shitter'. David Usborne reports from San Francisco.

Mr Jobs, who has said he will only hold the tiller at Apple until a permanent CEO can be recruited later this year, offered an upbeat assessment of the struggling company's future to an automatically sympathetic audience of desk top publishers at the Seybold Convention in San Francisco.

Dressed casually and drinking from bottled water, Mr Jobs showcased Apple's new advertising campaign, featuring icons of innovation ranging from Ghandi to Richard Branson, and promised a new array of products without offering specific details on any of them. Saying that he had identified about 30 per cent of Apple products as "gems" worth pursuing, he said: "The products we have coming are going to be a lot, lot better.

He pledged, however, to remain committed to the existing MAC OS operating system and said the company was re-focusing its commitment on two areas where its market share remains at least relatively strong: publishing and design and education.

Mr Jobs also repeated his commitment to the new alliance formed earlier in the summer with Bill Gates of Microsoft, who had previously represented "Beelzebub" to most Mac enthusiasts. "I decided that basically we had to normalise relations with Microsoft," he insisted. The audience listened politely, not repeating the boos and cat-calls that met the announcement when it was made at MacWorld in August. Under the deal, Microsoft invested $150 million in Apple, and Apple promised to include the Microsoft browser as the default browser on its platform.

Implicitly recognising the criticism that showered on him from many quarters after his decision last month to terminate licensing with Apple's three main clone licensees - Power Computing, which he bought, IBM and Motorola - Mr Jobs said he found a "really dangerous situation" on effectively taking control of the company from Gil Amelio who was fired by the board in July.

Because the cost to Apple per licensed unit was running to hundreds of dollars, he said, the company was essentially subsidising each clone Macintosh that went on the market. "I told them that we were going to go broke and that if we went down the shitter then the whole Macintosh ecoystem would go down the shitter".

Efforts made by Apple to negotiate new terms for the licenses to eliminate the effective subsidisation met a brick wall, Jobs said, adding that he was "not happy" that at the terminations. But he added defiantly: "Our pricing has got to make the ecosystem prosper and make sure Apple returns to health and we did what we had to do".

Even among the most diehard of Mac enthusiasts - many of them among the 3,000-audience yesterday - there is still the sober understanding that the once-mighty Apple still has an uphill struggle to regain its footing. The company has lost some $2bn over two years and has since its world market share drop to almost insignfiicant levels beneath 3 per cent.

Brought on to the stage to offer support for Jobs and the new board team he also unveiled in the summer, were several CEO's of some of Apples' most important software providers. Among them John Warnock, CEO of Adobe, declared: "They're getting back to basics and they're looking at customers agin. That is very, very refreshing." One of the main criticisms aimed at Mr Amelio was that he had no feel for customers or for the selling of Apple's image.

It is in an effort to repair that that Jobs a week ago introduced a new advertising campaign for Apple in the US, with 60-second television commercials that bear the new slogan, "Think Different" and feature characters such as Einstein, Picasso and, indeed, Mr Branson.