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Apple Considering a Break-Up?
Posted by
pudge
on Tue May 13, 2003 06:41 AM
from the yawn dept.
from the yawn dept.
rlthomps-1 writes "Despite Apple's recent sucesses with the iTunes music store and the latest round of PowerBooks, TheDeal.com has an analysis of the options that Apple investors might force the company to take, including a breakup into separate hardware and software companies, a merger with both Universal and Pixar, or a leveraged buyout by private investors. Their analysis points to Palm as a case study for a successful breakup of a company that made both operating systems and hardware in a competitive market. Could separate Apple hardware and software companies revitalize the brand and challenge Microsoft's monopoly?" He forgot to call Apple "beleaguered;" however, he did say their decades-old position is "untenable."
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Give the journos a break.. (Score:4, Insightful)
It's obviously a slow news day and they needed to re-cycle something to fill in the blank space.
Whether that blank space was on the page or between their ears is of course a completely separate question...
Re:Give the journos a break.. (Score:3, Funny)
Damn, looks like the Journo concerned is a moderator on slashdot!
Re:Give the journos a break.. (Score:2)
Although rumors about Apple are interesting sometimes, we should not validate them by giving them "primetime posting" on Slashdot. I await the day when I can see an Apple Keynote or an
And in other news... (Score:5, Funny)
Nothing new here (Score:5, Interesting)
Some points:
There is still no sign that non-tech people using PCs will switch to an Apple-built OS, especially not in the numbers that would justify the port.* (Note that PC users currently aren't switching to other OSes in big numbers. Remember how Sun was considering cancelling Solaris for Intel?)
The jury is still out on Palm Source. It is far too early to consider it a success.
There is no sign that Apple shareholders are particularly discontented.
*Yes, we all know that the port exists. The problem is the cost of maintaing the port as a consumer product (esp. all those drivers).
Re:Nothing new here (Score:3, Interesting)
True, except
Note that PC users currently aren't switching to other OSes in big numbers. Remember how Sun was considering cancelling Solaris for Intel?
Apple is a consumer product, unlike Solaris, and I can think of one OS that technical PC users are switching to...
Re:Nothing new here (Score:5, Insightful)
Parent
Re:Nothing new here (Score:3, Insightful)
Quite to the contrary, there is ample evidence that Apple shareholders are positively thrilled. I've made a tidy sum in the past month with my modest number of shares, and there are lots of folks out there who hold way more shares than I have.
Re:Nothing new here (Score:3, Interesting)
No, there isn't.
I've made a tidy sum in the past month with my modest number of shares, and there are lots of folks out there who hold way more shares than I have.
You made most of that is less than a month- just a few weeks when Apple's price went from $13.8x to $18 due to the music service buzz. Let's compare that to the last few years [yahoo.com]...
If you just made a tidy sum, you just bought recently... And you a
if only... (Score:2, Funny)
Awaits "flamebait" mod or the ever passive aggressive "offtopic" or "overrated."
Uh, really? (Score:5, Funny)
Oh yes, very realistic. An Apple with i386 hardware running windows. Yes, I can definitely see how beneficial and appealing that would be.
Sheesh...
Re:Uh, really? (Score:4, Insightful)
s a stand-alone company, Apple's hardware unit could offer its users computers equipped with a Microsoft Windows operating system. That move alone, Kastner estimates, would double the company's market share.
And slice their profit margin by 90%, no doubt.
Parent
Re:Uh, really? (Score:2)
Why not? (Score:3, Interesting)
The only one who made out from that mess was Rocket Rick Beluzzo, who got a cushy job at M$ for hatching that brain fart. Although he isn't with MSFT anymore. I could see Steve playing Billy G's lap dog (yeah right).
Yeah, Apple should alienate their user base, force an inferior OS on them, with hardware that will be overpriced because they will feel compelled to use some of their own ASICs to do things more correctly than the PC/AT standard architecture. That will w
Re:Uh, really? (Score:2, Informative)
Re:Uh, really? (Score:2)
Not likely (Score:3, Interesting)
If there is a breakup of some sort it will be awesome though. That virtually guarantees OSX for x86.
IBM went through this, (Score:5, Insightful)
Then Gerstner came in a leveraged IBMs size as a strength, not a weakness.
Although appples software is really quite beautiful I don't think they're going to break up.
Firstly apple tried this (Claris ?) and it didn't work.
Steve jobs seems to be leveraging the HW/SW integration as a strength to make mac systems work as well as they do. I don't think he wants to give this up.
Re:IBM went through this, (Score:5, Insightful)
What has prompted this is that Apple has been trading at cash value for almost a year (about $12/share), meaning investors put nearly zero value on the hardware business (between $1 and $2 for most of 2002 and 2003). If a large investor could buy enough stock, they could replace the board take their proportional share of most of the cash as a distribution to shareholders and sell off the businesses to the public or the heighest bidder. While the company was in a good position for this a month ago, assuming an investor could look out into the future and estimate how profitable the company would be selling Macs with IBM's 970 chips, an investor today would have to believe that the music sales business really is worth what investors have bid the rest of the stock up to (about $4 per share).
Parent
Re:IBM went through this, (Score:3, Interesting)
Exactly. In his keynote speech at Macworld in January, Jobs stated that he wants the Mac to be the digital hub of your home, business or school. He wants the Mac to be the best by having the hardware and software completely integrated. The iLife software package is proof of Apple's commitment to making Macs enjoyable and easy to use for everyone. The ne
if its not broke.. (Score:2, Funny)
Palm as the model? (Score:5, Insightful)
While Palms are still being bought and sold, I wouldn't exactly consider them the best case model for driving business profit.
And that's really besides the point--Apple isn't considering anything. Jobs likes "integration", and it's particularly integration that makes the iTunes Music Store work--if it was a standalone app, not nearly as many people would have bothered. But the fact that it is pre-installed, and works with Apple hardware for playback, is a large part of what's driving the TMS success.
This is just foaming at the mouth by analysts, who must feel more and more like they need to justify their salaries by spouting opinion.
Will this really work? (Score:4, Insightful)
And then there is hardware. The people who like Mac OS wonder that Apple is changing strategy and might dump PowerPC soon. So why not wait and see how this goes.
And then there is Steve Jobs. Do I remain the CEO of the hardware side or the software side. Actually given the changes I have brought in hardware (original iMac, new iMac, iBook, PowerMacs, Powerbooks, and iPod) and in software (OS X, OS X, OS X, and Keynote, and Safari, and iChat, and iCal (oops)), I think splitting the company will ensure that the other side does not have my (Steve's) leadership. Should I do this?
Maybe the solution will be "Apple Group of Companies" - Hardware+Software, Movies, Music and more. And that is probably already there (although Pixar does not truly fall under the Apple Umbrella).
Just some idle musings...
Spoken like a true analyst (Score:5, Insightful)
Analysts are notoriously conservative, and they like what's been proven to work. So by saying
> A separate Apple software unit would be far better able
> to challenge Microsoft Corp.'s Windows operating system
> for market share.
they're forgetting that Microsoft got to their dominant position by illegally abusing their monopoly. And no software company can compete on that level.
He seems to think that shareholders reacted poorly to the rumored purchase of Universal music because they don't want an integrated company. Not necessarily -- shareholders always react negatively to any activity that results in a large outlay of cash, with that deal certainly would have done.
Banking on Palm's success in splitting their company is a silly idea. Palm is quickly on their way to becoming the "Iomega" of PDAs -- fast start, no forward momentum, and eventually moribund.
Apple's success stems from their understanding that a large number of people want to buy a fully-integrated product -- that is, the hardware and software from the same vendor. As Apple's financials show, this business can be very profitable. On the other hand, if they only did software, it's unlikely that they would have as elegant of computer systems. So it doesn't seem like a sure thing for Apple to grow by splitting their business. Instead, they need to aggressively expand their market. They're trying to do this with their Switcher campaign, and according to the figures they released to analysts, they doubled their market share in the consumer space. Perhaps this means their strategy is working.
Re:Spoken like a true analyst (Score:2, Interesting)
Oh, come on. "Microsoft got to be a monopoly by illegally being a monopoly." Huh?
Microsoft got to be the dominant OS provider by giving the market a product they wanted at a price they wanted to pay. That's all there is to it. Whatever happened after they made it to the top of the heap is entirely separate.
I dislike Microsoft as much as anybody... well, okay, that's not true. I dislike Microsoft a lot, b
Postcard from the REAL World (Score:4, Interesting)
If you are really so interested in the REAL world, it's about time that you accept the fact that Microsoft's big break came from striking a particularly favorable deal with some soft-headed IBM execs to sell a product that they bought off another company which in turn blatently stole from a genuine computer visionary. Their success has largely derived from using that break to foist a series of mediocre products on a largely ignorant public until they reached the critical mass necessary to quash nearly all perceived threats.
I hope that Apple continues to thrive. First, because I love an underdog. Second, because, whenever you use one of their products, you can tell that the people who made them really love computers - much like myself. I have never had that experience using anything made by Microsoft.
Parent
Making Apple a comodity player (Score:5, Insightful)
Computer prices are so low because there is no other differentiation besides price. What is the difference between HP, Dell, and Gateway? Price and a logo on a case. Perhaps some 3rd rate software package pre-installed. That's it.
Apple doesn't compete on price because it competes on the experience. It is the ONLY integrated solution out there and the only niche computer player in the world (easy Amiga and Atari fans).
This reporter reminds me of the Iraqi Information Minister.
Not a very insightful article (Score:5, Insightful)
Apple Software would have to compete on x86 hardware for marketshare against Microsoft. I don't think Apple makes any real money on their software: the software gets people to buy their hardware. I think they'd be hard-pressed to compete against MS in this area. Most likely, Apple Software would go the way of Be, Inc.
Apple Hardware would have to go into the x86 PC business and would be competing against Dell and HP/Compaq. Instead of the higher end computers Apple specializes in currently, they'd be forced to compete on that lower end where profits only come through huge sales volumes. Dell would smash them in the hardware market.
No, Apple is a successful niche player because they own the hardware and the software. The seamless integration of the hardware and OS allows the company's products to become "luxury computers". They are a joy to use. Dell makes commodity computers. Apple may have a small marketshare, but so does Jaguar in the car business. Small is fine if your making a profit, something which the current Apple has a good history of doing. Break the company up and I don't see what either piece could do to stay afloat.
Force? (Score:2, Redundant)
Re:Force? (Score:3, Insightful)
Perhaps you didn't hear about the recent vote to require Apple to expense our stock options?
Apple is a publicly-traded company. The shareholders ultimately can hire and fire the board.
-jcr
Wholly Owned Subsidiaries (Score:3, Interesting)
FileMaker - database sw
Emagic - audio production hw & sw
PowerSchool - student information system sw
These subsidiaries are all primarily software companies that were purchased to round out Apple's offerings on their platform. Steve has long touted Apple's strength being it's ability to control and integrate both hardware and software.
I could however see some of the following happen:
? WebObjects sold to FileMaker
? Webobjects becomes it's own company
? Alias/Wavefront acquired as W.O.S.
? AMD($2.6B) acquired by Apple($6.8B)
Re:Wholly Owned Subsidiaries (Score:3, Interesting)
I'm not sure what you base this on, but you wanna hear a funny story? You know where the originally Apple/AMD story came from? It's hilarious.
One of the rumor sites picked up word from inside Apple that the company was working on AMD. Naturally, they ran the story as speculation that Apple was looking at either new CPU's, or new embedded microprocessors, or something like that.
Except it was all a big mixup. Apple wasn't working on AMD, the company. They were working
Re:Wholly Owned Subsidiaries (Score:2)
Not gonna do it (Score:2)
BTW Palm is doing great, right? Even though their hardware costs more but performs lower than Pocket PCs, and Sony makes the only good Palm devices, and people
Split Apple? (Score:4, Funny)
So we split Apple into an OS company and a hardware company. Would the OS side be called NeXT and the hardware side be called LaST?
More crack-addled analysis... (Score:5, Insightful)
"See this iPod? Isn't it cool? Don't you want one? Well, you can, but only if you have a Mac..."
It's the same with the iLife apps, and initially with the music store. If you want get the benefits, then you have to buy a Mac. Not coincidentally, Macs have gross margins far higher than comparable commoditized PC's. Duh.
What analysts in general just seem to Not Get At All is that Apple plays a different game from the other PC makers. All other PC makers let Microsoft tell them what to make and sell. They add Intel's latest tech, package, and market. There's virtually no engineering difference between a white box, a Dell, and an IBM. were Apple to split off a hardware company to market Wintel boxes, they'd be generic boxes with nice industrial design, but nothing to differentiate them from Dell. Given that Dell is cheaper, Apple'd be roadkill in a hurry.
And the newly split-off Apple software company? Yeah, they'd get loads of OEM software contracts. I'm sure they'd ship on every Dell within months. Just like it worked out for Be.
In other words, it'd go over like a fart in church. A complete disaster. Short-term, it might bump up the share prices, but within a couple of years you're looking at the death of Apple. They can't go head-to-head with Microsoft, because Microsoft could crush them in a heartbeat. Apple has 4.5 billion in cash? Microsoft generates that kind of profit every quarter. It's no contest.
The only way Apple can thrive is to continue selling computers that are different, and therefore not commoditized. Sure, they could have gone into licensing 18 years ago. They blew it. Get over it, analysts - that dog don't hunt nowadays. If Apple converts to Intel/AMD, they now compete more directly with Wintel - even if they keep the Mac itself proprietary. That's because the frame of reference is now common. Af Apple sells Wintel boxes, they get crushed by Dell. If Apple sells software for generic Intel, they get crushed by Microsoft. it's not pretty either way.
The best option at this point to end all this speculation is probably taking Apple private, and then just keep making the products they're making - just work towards closing the speed gap (the PPC970 can't come fast enough!) and price the high-end machines a little more competitively. Keep coming out with neat products. In this economy, just treading water is a victory of it's own right now.
Re:More crack-addled analysis... (Score:5, Insightful)
But, what analysts look at (and this is why companies fold all too often) is the fastest way to make a buck. Think of it this way, to an analyst Beer is better than Bourbon. Beer takes 6 weeks to go from raw product to bottle to belly. Bourbon (if it is done right) takes 7 to 25 years to go from raw ingredients to bottle to belly. Now I like beer, but I most definetly appreciate really good bourbon. To an analyst though, bourbon makers should run their business like beer brewers, fast returns. Ever tried home-made moonshine? It may only take 6 to 8 weeks, but the burn on it will take the chrome off a trailer hitch faster than most orally fixated people could dream of doing.
To this ANALyst Apple should quit making a product that works and just make products, never mind if it will kill their company in a couple of years, it would make more money NOW, and a dollar now is worth more than ten tommorrow to these folks. That why they are broke, and need that dollar today.
Man, I need a drink after this.
Parent
For the most part, couldn't this be summed up... (Score:4, Insightful)
I guess there are writers out there who still long for the day when Beleaguered Apple still existed. The article also seems to ignore the fact that Apple is not too interested in market dominance, but I guess they had to find some sort of "issue".
To paraphrase a certain musician, they like being the underdog. It's better than sucking.
Argh! (Score:4, Interesting)
Splitting up Apple MAY be a good idea, but the way they propose and the conclusions that they come to are all stupid. If it's a good idea, it's not a good idea the way THEY'VE laid it out.
For anyone that hasn't read the article yet, don't bother. It's another one of those Apple-is-already-dead-but-they-just-don't-realize
The art of being belaguered (Score:5, Insightful)
Apple went ino that tunnel in December 1995 (...) After 20 years of intense competition, almost every market niche in personal computing was filled. In every direction a giant company, many of them as big as Apple, squatted directly in the company's path. Mass-market a Windows clone and Compaq will crush you. Custom-build budget machines and you ran into Dell and Gateway. Laptops? IBM, Toshiba, NEC, Compaq, Hitachi and Acer had every market segment sewn up. Peripherals? Network computers? Hello Hewlett-Packard.
As we all know, Apple went out of that tunnel ignoring all the advices like "adopt x86", "allow cloning", "reduce your obscene profit margins". Jobs saved Apple selling iMacs and iBooks, computers as applish as can be (way slower than competition, overpriced yet stylish and still best-selling), and by killing the whole Apple clone bussiness (remember StarMax?). I think anyone claiming that by adaptation of x86 Apple would double its profit margins, should immediately start his own PC bussiness. If it's that easy, why don't you do this? Because Dell, Gateway, Compaq etc. would eat you for breakfast? Exactly! So why do you think Apple would fare any better on that market?
The only way... (Score:3, Insightful)
> A separate Apple software unit would be far better able
> to challenge Microsoft Corp.'s Windows operating system
> for market share
Taken out of context, this sentence makes sense. In fact any other random sentence describing how one company can challenge the other's market share would make sense. A small number of these ideas would probably even work.
However, what these "market analysts" for some reason annoying persist in not seeing is that when the context is Microsoft, such ideas, no matter what they are, do not apply because MS is not your 'normal' company but is in fact a steam-roller and the only way of gaining market share from MS is to somehow become a bigger steam-roller.
It's not about innovation, elegant design, usability, bang-for-buck, marketing plans. It's about sheer brute force and huge unstoppable momentum.
It ain't an ideal world and I don't like it (in fact I hate it) but at least I'm aware of it and I get on with it. I just sometimes wonder if I should have become a 'market analyst' and lived in a world of pure bliss with a silly grin on my face...
This Article sponsered by... (Score:3, Interesting)
DELL!
In seriousness, Anyone that believes Apple would perform better as two disconected halfs is a total idiot- and really doesn't deserve to own stock in any company!
Apple has built a whole merchindising scheme based on products integrated with hardware....
Nothing suprises me anymore...
Agreed (Score:3, Informative)
One another note, how are smaller, specialized companies more stable than larger diversified companies. Isn't diversification a basic principle of business? I'd say Apple has that part down pretty well.
You can read an interesting piece from an analyst at the University of Iowa here [216.239.53.104]. (It's the google-ized html of a pdf.) The summary: Apple stock is nice bec
Re:This Article sponsered by... (Score:3, Funny)
I disagree. They deserve to buy a load of shares in Palm [palminfocenter.com], or maybe NTL [silicon.com].
In a further article.. (Score:2)
anyone know where this guy lives? (Score:3, Funny)
Jayson Blair moonlighting at Deal.com? (Score:3, Funny)
Killer idea, but I'm not sure that the economy could handle more explosive growth right now.
porting OSX to WIntel is insane (Score:4, Interesting)
I am convinced that Apple has much larger mindshare than its market share shows. Apple users LIKE to use their Apples, and use them a LOT for a LONG TIME. I would bet the usage per dollar expended on Apple machines is much more favorable than for Wintel boxes.
As a consumer or a developer of applications that depend on good UI design and solid infrastructure (as opposed to cutting-edge performance-critical applications), I am interested in finding systems that work for me for a long time, not in finding systems that compel constant infrastructure hassles, learning and retooling costs, and on-hold music from unhelpful help desks.
THe existing Apple strategy will gain total sales and market share but only slowly. (At some point, it may actually shrink the total market size, as it returns more value to the consumer.) This may be small consolation for investors. The current strategy has a good chance of winning in the long run, but the turnaround will continue to be slow.
Splitting Apple won't help from the financial point of view.
Consider. Why does Apple suddenly have stunningly good software? There are three parts to the answer. 1) capitalizing on excellent pre-existing software (BSD and NextStep) 2) hard work by talented people and 3) a closed, finite set of hardware platforms.
Support random Wintel boxes and away goes your ease of development and low cost/high quality support.
If Apple splits in order to sell OSX to the WIntel platform, the hardware division suffers direct competition from Dell and the software division gets huge support nightmares in exchange for either a tiny market (post-OEM OS installs) or a market that MS has shown no inclination to share (commodity Wintel platform OEM installs).
There's no great market advantage to Aqua screens of death. Though I am sure they would be more attractive and polite, I don't think that's the best way to gain market share.
There are tremendous productivity and reliability advantages to an integrated hardware/software company for commodity machines, and Aplle stands alone in owning this space. Apple has it right and should stay the course.
If the investment community tries to derail this, Apple should indeed go to a privately held company, but held by people who appreciate the amazing work they have recently done and intend to hold to the plan to capture the eventual return. I wonder if ownership by a user consortium might actually work to protect the platform from this muddleheaded strategy.
Re:it appears... (Score:3, Interesting)
You're absolutely correct. If I were going to buy a PDA today, it would be a Palm, hands down. However, their business is doing poorly, and I see no way for them to fix themselves in the long run. That doesn't mean their PDAs aren't good; it's just that they're not positioned to be a strong business in the long term.
An additional problem is where will PDAs be in 3 years? The problem is, when people travel, three common things to carry are:
1.
In summary... (Score:4, Funny)
Wolfrider: "SHUT UP you NAZI!!"
This thread is now over.
http://ars.userfriendly.org/cartoons/?id=200305
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