It's shed early sheen; will core strength prevail? Apple has lost a bit of its byte
IMAGE 1: A row of zombies listens dutifully to Big Brother -- until a bright blond Yuppie with a sledgehammer suddenly shatters their Orwellian world. Image 2: A line of hopeless conformists plunges off a cliff -- until one finally wises up and steps back from the brink.
Those two Apple Computer ads distilled everything that was cocky and iconoclastic about the young firm that pioneered the personal computer industry and still holds the lion's share of home and school computer markets.
The ads were a heavy sell aimed at engendering this message among business people: Don't automatically buy a personal computer from Big Brother, Big Blue. The Macintosh is for the secret iconoclast in you.
Today, Apple is no longer so cocky. It's maturing. It's even conforming -- at least to the kind of corporate controls that many American corporations have had to adopt: layoffs, product discontinuations, plant closings, falling profits.
Apple is no longer the darling of Wall Street, either. The company predicts that third-quarter profit will fall dramatically. Apple stock has plummeted from a high of $62 a share in 1983 to $16 or $18 today, and many brokers expect it to go even lower.
There have been rumors that Apple will merge or be snapped up by a larger company; so far these have been discounted, mainly because of the big stake held by chairman Stephen P. Jobs. But the company itself says it is seeking ``strategic alliances'' with major corporations such as Wang, General Electric, and AT&T.
What has happened to the once high-flying company known for creative, young workers knocking themselves out to produce state-of-the-art computers?
Specialists say Apple is simply growing older. And the conformists in the office market -- whether they are hopeless or just plain cautious -- are not yet adopting the Apple philosophy in great numbers. The business-computer market is still dominated by Big Blue, IBM.
Nevertheless, market researchers contend that rumors of instability at the Cupertino, Calif., firm are greatly exaggerated. Yes, Apple is retrenching. Cost controls are going in. Some key employees have left, some research is being scrapped. But this, analysts say, was inevitable for a company that has grown in seven years to $1.5 billion in annual sales and must today concentrate on doing what it does best.
All this is happening as the computer industry at large experiences difficulties. Wang, Digital Equipment, Data General, Hewlett-Packard, have been hit with lower profits, too; even IBM's micros -- outside the best-selling PC -- have felt it. Optimistic projections of ever-increasing demand for personal computers have not come to pass.
That makes it even tougher for Apple and forces it to work its strengths -- home and school sales of the Apple II series -- while aiming for new niche markets.
But Apple is not just a standard corporate story. In many ways, the company has come to symbolize the nonconformist business approach. You can be funky, creative, and successful. Pin stripes and wing tips are not the only way. Apple has captured the imagination of a whole generation of young entrepreneurs and computer whizzes.
Apple's famous advertising campaigns -- especially the visually stunning ``1984'' ad -- projected the company as a feisty young David fighting the Goliaths of the computer industry. Youth, brashness, and astounding success are its hallmarks. Thus it is somewhat sobering to hear Apple spokeswoman Ren'ee Rodrigue today describe Apple: ``We're a very stable, very conservatively managed and run company.''
In the past, that description would have been the antithesis of Apple's corporate culture. Marketing the `MacOffice'
With its ubiquitous Apple II personal computer, Apple still has a dominant hold on the home and school markets, although Commodores and Ataris are nipping at its heels. But if there is to be any growth in unit sales, it will have to come from the office market, according to company insiders and industry analysts.
In January Apple initiated its ``MacOffice'' strategy, marketing networks of easy-to-use Macintosh personal computers, with their graphic and word capabilities, and a sophisticated printer called the Laserwriter.
The idea is that businesses can buy these rather expensive pieces of equipment in bulk quantities much more easily than consumers can. Small firms and independent creative groups within big companies might be encouraged to break with the ``buy IBM'' reflex and use Macintoshes.
But the Macintosh has been bedeviled by delays in software -- especially the spreadsheet applications prized by businesses. Only last week did Lotus begin shipping its ``Jazz'' spreadsheet software; Microsoft's ``Excel'' program is due out in September. ``Crunch'' from Paladin will be released shortly.
Without such software, a personal computer is an expensive plaything in the office. And without sorely missing hardware, the MacOffice is of limited appeal.
The Mac and its printers -- Imagewriter and Laserwriter -- work well. But since personal computers have small memories, a central file-server is usually necessary -- as is an internal hard disk to drive more-complex programs. So far, to get these you have to buy from several sources.
Apple's relations with retailers, moreover, have been strained, and service after the sale has been a problem. To remedy this, Apple last week appointed Jean-Louis Gass'ee, formerly general manager of Apple France, as its new director of marketing for the Macintosh. The firm also reorganized its 60-member national sales staff.
The exact size of the office market for the Macintosh is anyone's guess. A survey last month by Dun & Bradstreet noted that IBM is far and away the brand of choice in the office market. Of the 3,700 respondents to the D&B survey, Apple was the choice of only 27 percent of those who would be buying their first personal computers and 8.1 percent of those already using the machines.
Timothy Williams, a senior analyst at Future Computing, a Richardson, Texas, market research firm, says Apple is attempting to secure ``showcase'' accounts among Fortune 500 companies, hoping that will influence smaller firms.
Apple's office strategy is only a few months old. Mr. Williams thinks it will be the end of the year before all the equipment and software essential to office applications is on the market. And it will be 1986 before researchers can measure Apple's success.
The company's own goal, he says, is to be ``visible but not dominant'' in the office world. Corporate culture matures
Along with repositioning, Apple has terminated its Macintosh XL and the closed plants that produced parts for it.
Spokeswoman Rodrigue points out that the XL was really just a repackaged version of the Apple Lisa personal computer, which had been experiencing sluggish sales. The company tied it in with the Macintosh line and promoted it, mostly to use up Lisa parts in the Apple inventory.
With repackaging, sales picked up, doing so well that Apple was faced with having to produce more parts to meet demand. Since the point was to use up inventory anyway, Ms. Rodrigue says, XL was canceled earlier than planned.
Similarly, dismissals at the San Jose, Calif., plant were part of a decision to buy -- not build -- a 20-megabyte hard-disk drive for the Macintosh.
``This kind of thing doesn't look good,'' concedes Molly Upton of International Data Corporation. ``But from a business point of view, Apple's actions make good down-home business sense.'' She says that Apple is now perceived as having ``lost some of its polish,'' but argues that it is ``trading image for profits.''
Michael D. Millikin, who follows personal computers for the Boston-based Seybold Report on Professional Computers, is less sure that Apple has a clear strategy: ``They know what they want to do, but they have a hard time doing it.''
He sees the repackaging of the XL and its abrupt discontinuation as having sent the wrong signals to potential customers -- particularly buyers for management information systems in Fortune 500 companies. With the XL gone, Apple, for now at least, is ``effectively left with an architecture without a hard disk.''
Mr. Millikin believes Apple's ``window of opportunity'' is narrowing. He notes that Digital Equipment has introduced an interface unit that allows an IBM PC to usurp Macintosh's easy-to-use graphics. And the Laserwriter, he thinks, will soon have competitors.
``The company's maturing a little,'' Millikin says. ``But that doesn't necessarily mean it won't be innovative'' in the future.
Ms. Upton agrees: ``Apple has a lot of bright people who never worked in a financially constrained atmosphere before. The question is how do you put in financial controls and still let them think they're in it for the gusto.''
The company still has a significant research-and-development budget, indicating, Upton says, that ``they're not going to forsake their heritage.''