Apple Decides to Sell Software Technology: Too Little, Too Late?
IN what could be a case of too little, too late, Apple Computer Inc. yesterday outlined plans to license its technology to other manufacturers.
Analysts say that the Cupertino, Calif., company should have moved years ago to get other computermakers to run their machines on its software. By licensing its easy-to-use software platform, it could have gone head-to-head with Microsoft Corporation of Redmond, Wash.
Now Microsoft, which has dominated the software industry even though analysts view its Windows product as inferior to Apple's Macintosh, is preparing a slam dunk - a new version of Windows that is expected to close the performance gap with Apple.
That leaves Apple and rival International Business Machines Corporation (IBM), of Armonk, N.Y., scrambling to remain strong players in the market for the most basic computer software - the operating environments in which other programs run.
With perhaps eight months left before Microsoft releases its new platform, Apple is finally pushing for broad distribution of Macintosh. Or is it?
Where Microsoft, with its software-only mission, sells to any and all hardware makers, Apple, as a maker of hardware, appears to be taking a much more selective approach.
In a press conference on Friday, Apple vice president Don Strickland said the company is looking for licensing partners who will use Apple's software, and its related hardware designs, in market niches that Apple does not currently serve. The company hopes that the strategy will add about 3 percentage points to its overall 11 percent market share in personal computers.
But Mr. Strickland said Apple is not aiming to puts its software on PCs that run on chips made by Intel Corporation of Santa Clara, Calif. Intel chips and clones of them account for almost 90 percent of the PCs sold today.
Instead, Apple and IBM are peddling a new chip architecture called PowerPC that they say is more powerful than Intel's.
The problem, says Dwight Davis of Windows Watcher, a newsletter about Microsoft, is that people ``buy more on the basis of software now than hardware.'' A little more power with an Apple or IBM system won't be enough to draw customers, he says.
That's been IBM's challenge for years.
IBM has a very good operating system of its own called OS/2, but it has failed to garner more than about 8 percent of the market. Its downfall so far: Applications developers, who write software products that run on top of the operating systems, go where the volume is. That means first to Windows, then to Macintosh, then to OS/2, analysts say.
Apple is trying to avoid a similar fate by licensing ``Mac OS'' (Macintosh operating system).
According to some news reports, Apple's initial licensees are mostly located outside the United States. Strickland said: ``There will be recognized names [based] in the US,'' but, so far, no licensees have publicly announced intentions. They are not expected to ship products with the Mac OS until the second half of 1995.
IBM, meanwhile, plans to heavily market a new version of OS/2 that it will release next month. The pitch: Why wait for the new Windows when OS/2 already can do the same things?
Microsoft is counting on consumers to wait for Windows 95, code-named ``Chicago.'' It offers capabilities that make it easier to hook up add-on hardware without needing to enter a lot of arcane computer commands.
Company vice president Paul Maritz says Microsoft expects to sell 20 million to 30 million copies next year, including a large number of upgrades to some 60 million current Windows users.
Karl Wong, a software analyst with Dataquest market-research firm in San Jose, Calif., calls that prediction ``wildly optimistic,'' but he agrees that Microsoft holds the high ground.
But Bill Bluestein, an analyst with Forrester Research in Cambridge, Mass., says: ``Everyone will do it just to see what it is like,'' and because Microsoft will keep the cost low.