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The Back Page
by Bryan Chaffin

Heading into MacWorld, Apple Is Healthier Than Any Other Time In History
July 16th, 1999

It's always fun to write a column heading into MacWorld right after Apple has announced its 7th consecutive profitable quarter. Actually this is my first time to do so, but it is certainly turning into a fun affair.

There is a big difference between today and the last time Apple was a profitable company. In fact, look at Apple's biggest year ever, 1995. Apple had net sales of more than US$11 billion, their record to date. That's a lot of money by any standard--outside of Bill Gate's petty cash fund--and the company profited US$464 million. It looks good on paper, but the company was rotting from within.

Let’s Review: Michael Spindler was in way over his head as CEO, the product line was remarkably confusing, prices were high and quality poor, the overall strategy of the company was AWOL, the OS strategy was awash with repeated failures, and the company spirit and culture was rotten to the core and heading downhill fast.

1995 was not made in a single year however. Apple's mistakes had been building for a long time, probably since the company opened its doors. Decisions like sacrificing marketshare at the altar of gross margins and high prices as well as the refusal to license the MacOS* had been made years before. Straying from the ideal of making Insanely Great products was happening in 1985 as Steve Jobs was carefully not letting the door hit him in the ass on his way out. For instance, the entire Performa line, or worse yet (no comma) the LC line, was conceived long before 1995. The company's use of proprietary technologies like ADB** and component technologies that had tied them to higher costs for many years was long a standard at Apple, as was its parent attitude of NIH (Not Invented Here). In short, Apple had been falling apart for many long years while on the surface it looked like the company had never been better.

Apple management and the Mac-using public was largely ignorant of these facts at the time. Like I said, on paper everything seemed peachy and hindsight always provides such clarity of vision to critics such as myself. Besides, there was plenty going on that was pleasing to behold. The PowerPC had been rolled out with an amazingly successful 68k emulation conversion to assure backward compatibility, and there were always those record sales to crow about. In fact, sales had been growing for years. As with most crises, the problems did not become clear until it was too late.

Today we have a different story. Apple is healthy in appearance and in fact. There is a topnotch management team in place, the products are largely kicking butt, and the OS strategy is solid and on schedule for the first time in many years. The company is also profitable and has already earned more profits in the first three quarters of fiscal 1999 than it did in all of that record 1995 with less than half the sales. Most importantly, Apple has a direction it has lacked since, well, since Steve Jobs was busily flying a pirate flag above his de facto headquarters and setting the Mac team against the Apple ][ team (that wasn't just in the Pirates movie you know). When we think of Apple today, most of us feel as if the company has a clue. What a change that represents.

As an example of how well Apple is doing compared to even a few months ago, let alone a few years ago, Wall Street analysts are currently quibbling about a US$40 million shortfall in expected net sales. Net sales, not profits, are making them tense. Until recently, it was a different situation entirely. At that, Wall Street was usually worried about Apple simply being able to pay next month's light bill, not fretting over a mere US$40 million sales shortfall.

Apple's stock price also reflects this new found health. Apple is trading in ranges unseen in more than six years. Once again, the difference between now and then is that Apple is worth more than what it is trading. Although we didn't know it at the time, Apple was worth far less than what it was going for back then.

So, as we head into what is sure to be a memorable MacWorld, perhaps the most memorable MacWorld since Bill Gates bestowed his angelic gaze from on high, Apple is strong like it has never been before.

This will be a new era for Apple. Being able to move forward from a position of strength instead of fighting a rear-guard action to stave off death is a powerful weapon. Think about it: Apple will be not be racing pell-mell to develop a viable product line and prove that it can function. With much of that pressure gone, Apple can concentrate on executing and refining its game plan. That's an environment the company has not known in years.

It's a new era for Apple and I believe that we will all be looking back at this MacWorld as that turning point. Surely the return of Steve Jobs was a major turn, but today's situation is yet another change, and I think history will make even more of this one than it does of the earlier.

* Debatable by some as to whether that has ever been a good concept for Apple, but since I am doing the writing, I decree that it would have been an excellent move in the late 80's.

** I am a fan of ADB and often gloated about its superiority to Wintel serial technologies to PC loving associates for years. I mention it in this scenario as an example of something that seemed good but actually hurt Apple's long term prospects.

Your comments and hate mail can be sent to backpage@macobserver.com.


began using Apple computers in 1983 in a high school BASIC programming class. He started using Macs in 1990 when the Kinko's guy taught him how to use Aldus PageMaker, finally buying a Power Computing Power 100 in 1995. Today, Bryan is the Editor of The Mac Observer, and has contributed to the print versions of MacAddict and MacFormat (UK).

You can send your comments directly to him, or you can also post your comments below.

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