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ADVICE TO APPLE VARIES, CONFLICTS\Customer loyalty to Mac at issue.

Byline: Evan Ramstad Associated Press

It's time for Apple Computer Inc. to get radical.

Whether or not it is bought by Sun Microsystems Inc. or another company, industry observers said Friday that hard decisions lie ahead for Apple's managers if they want the company to grow as fast as the rest of the personal computer industry.

Outsiders' ideas for Apple vary depending on their perceptions of its biggest strength.

Those who emphasize its simple-to-use software say Apple or its acquirer should forgo manufacturing and let others make Macintosh machines. But those who emphasize the huge number of fiercely loyal Mac customers believe it should keep the focus on hardware.

But others, like Rajendra Sisodia, an associate professor of marketing at George Mason University in Fairfax, Va., believe that, besides producing its own Macintosh machines, Apple should start building the same kind of personal computers that all its competitors do. Those are the so-called "IBM-compatible" design of Intel Corp. microprocessors and Microsoft Corp. Windows operating software.

The idea goes completely against Apple's historic strategy and he said it's not likely to happen.

Sisodia notes that the "can't-beat-'em-so-join-'em" approach worked very well for Sony in videotape recorders.

When consumers a decade ago overwhelmingly bought VHS videotape recorders instead of Sony's Beta, the company started making VHS for the masses and Beta for those who wanted it, particularly broadcasters. The company is now the leading seller of hi-fi VHS VCRs to consumers.

Apple could do the same thing in computers, Sisodia said, building on its well-recognized brand name and distribution structure. And the move might cause existing PC vendors, such as Compaq and Dell, to start building Macintosh systems to stay even with Apple's product offerings.

"A lot of this is in the execution," Sisodia said. "If this is executed well, I think they could be very successful. It could also be botched very badly and end up hurting the Mac side."

A main risk for Apple with such a strategy is angering Mac customers. Many of them speak passionately about the machine and might view Apple as a traitor for adding the other design to its product line.

In addition, the costs for two kinds of manufacturing and other operational duplications may be too great.

And Apple has never demonstrated the business acumen that characterizes the most successful IBM clonemakers, said Aaron Goldberg, analyst at Computer Intelligence InfoCorp, a technology market research firm.

"The vendors who are winning there are not so much technology whizzes but people who run damn good companies," Goldberg said. "They run lean and efficient and they're hard chargers. With the exception of about five or six people, Apple hasn't got anybody like that."

Nonetheless, Apple later this year will become less of an island in the PC business.

The company will start to build systems that can run Apple software or IBM-compatible software from the same microprocessor. The company previously has responded to customer desires to run non-Apple software by providing machines that had costly extra circuitry and chips.

But IBM and Apple reached agreement several months ago on common computer design that uses the PowerPC chip, which they co-designed with Motorola Inc. Apple's machine will have its Macintosh operating software to run its base functions and IBM's will have its OS-2 software and probably Microsoft's Windows NT.

But the companies haven't said whether they will cross over - IBM making machines that use the Mac operating software and Apple making ones based on OS-2, Windows NT or something else."Until the products are ready for the market, we cannot say," Apple spokeswoman Laurence Clavere said.

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Photo A shopper tries a new Apple model at ComputerWare in Sunnyvale. The manager said the stores thrive despite Apple's problems. Associated Press
COPYRIGHT 1996 Daily News
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Copyright 1996, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:BUSINESS
Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:Jan 29, 1996
Words:624
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