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Apple Businesses

Apple Considering a Break-Up? 159

Posted by pudge 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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Apple Considering a Break-Up? More

Apple Considering a Break-Up?

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  • Give the journos a break.. (Score:4, Insightful)

    by CountBrass ( 590228 ) on Tuesday May 13, 2003 @06:44AM (#5943531)

    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...

  • And in other news... (Score:5, Funny)

    by Jellybob ( 597204 ) on Tuesday May 13, 2003 @06:50AM (#5943547) Journal
    ... FreeBSD is dead, and MS are going to open the Windows source.

  • Nothing new here (Score:5, Interesting)

    by grouchomarxist ( 127479 ) on Tuesday May 13, 2003 @07:24AM (#5943699)
    There is nothing new in this article that hasn't been said before and argued to death. This will never happen under Jobs' reign, as this is exactly what he reversed after he returned to Apple.

    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).

    • 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:3, Insightful)

      by Anonymous Coward
      There is no sign that Apple shareholders are particularly discontented.

      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.
      • Quite to the contrary, there is ample evidence that Apple shareholders are positively thrilled.

        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
    • The jury is still out on Palm Source. It is far too early to consider it a success.

      Exactly. Of course TheDeal.com thinks it's a success because some investment banker got paid for it. Once the deal is done, from the TheDeal.com reader's POV, who the fuck cares?

    • I'm running Windows/Linux dual-boot and trying to get the Linux desktop to function because I'm not interested in buying another MS OS for reasons everyone here knows.

      If a OS/X port became available for Wintel, I'd switch immediately after seeing some positive reviews. I wouldn't nuke the Linux drive, just the GUI, Linux would still make sense as a server or render farm solution and I'd keep working on learning Linux. Besides, the CLI interface is a lot easier to use (well, if you ditch vi for pico) and wo

  • if only... (Score:2, Funny)

    by TomSawyer ( 100674 )
    If only they'd abandoned the one button mouse sooner.... <weep>

    Awaits "flamebait" mod or the ever passive aggressive "offtopic" or "overrated."

    • Re:if only... (Score:2, Insightful)

      by MikeXpop ( 614167 )
      Actually, Apple ships with a one button mouse so that it helps get the user set up as quickly as possible, no matter if they are left handed or right handed. It also explains why there are two USB hubs on the keyboard, why the pro mouse is symetrical, and why Apple has support for two button mice.
    • It might be a suprise for you then, but OS X Jag supports two-three-etc-button mouse out of the box, it just doesn't come with one...

  • Uh, really? (Score:5, Funny)

    by Noodlenose ( 537591 ) on Tuesday May 13, 2003 @07:36AM (#5943764) Homepage Journal
    As 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.

    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)

      by kalidasa ( 577403 ) on Tuesday May 13, 2003 @07:59AM (#5943899) Journal

      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.

      • Eh? Aren't there much larger margins on software than HW? After it's been developed, it's like 95% margin.
        • Reread above. I'm talking about AppleHardware, not AppleSoftware. As far as AppleSoftware is concerned, it would be prohibitively expensive for them to farm out their OS to commodity hardware makers. Too much R&D of other people's hardware. It's not like the PDA market where there are only a few products, and if anything extened is added to the hardware and doesn't work, the consumer considers that the extended hardware's fault, not the OS.
        • Eh? Aren't there much larger margins on software than HW? After it's been developed, it's like 95% margin.

          Apple has a margin of on average 28%-30+% gross margins on hardware... obviously resellers and VARs don't have anywhere near that, but it's what Apple gets. We won't talk about their RAM where it is more like 400%...

          Assuming 30% on average, for every $3k tower you buy, Apple makes $900. Buy that tower with a $700-$2.5 Apple display, Apple pockets $1.1k-$1650 on the deal... not even withstanding the

    • Re:Uh, really? (Score:1, Funny)

      by torpor ( 458 )
      Well, I dunno. If I could buy a 17" alBook with a 1ghz PC processor in it, you can bet your ass I would!

      Still, if I could buy a 17" alBook with a 1ghz PPC processor in it, you can bet your ass I would as well, heh heh ...

      • Re:Uh, really? (Score:2, Informative)

        by thesatirist ( 532124 )
        Better get going [apple.com]...
      • the PPC based lappys have battery power > any PC except rthe Centrino where it's kinda close.
        • PBooks have 4.5 hours max. Non centrino PC laptops run about 4.

          A Centrino laptop can get up to 8 hours with both batteries installed.

          In your world, 30 minutes = better and 3.5 hours = kinda close...I guess you really are thinking different.

          Or we could look at it another way. You are basically saying "Apple's newest tech laptops are better than the last crop of PC laptops". Please stand by while I compare my new Athlon XP system to a Mac Plus.
          • "with both batteries" doesn't cont.
            I think it's closer to 5.5 for the powerbook and most pcs (at least as full-featured as the powerbook) aren't gonna last any 4 hrs.
            • "with both batteries" doesn't cont. I think it's closer to 5.5 for the powerbook and most pcs (at least as full-featured as the powerbook) aren't gonna last any 4 hrs.

              That's what Apple advertises, but honestly, just read the reviews. I own a dual USB iBook, and a tiBook. Both were rated at ~5hrs (still are), and in actually the tiBook gets about 3 hours (dimmed screen, HD spinning down a lot) and the iBook gets ~3.5 hours (same config... low power mode).

              Admittedly the PC laptops get nowhere near the ra

          • Eh? (Score:2, Insightful)

            by hobbit ( 5915 )

            A PowerBook can get up to a million hours with all two hundred and fifty thousand batteries installed. What's your point?!
            • My point is that the Apple notebooks can only have one battery installed at a time. With these dells its the users options to add a little weight and double the battery life..

    • Why not? (Score:3, Interesting)

      by LenE ( 29922 )
      That strategy worked so well for sgi.

      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

  • Not likely (Score:3, Interesting)

    by Apreche ( 239272 ) on Tuesday May 13, 2003 @07:37AM (#5943769) Homepage Journal
    I don't see this as very likely. OSX is so good because it runs on very specific hardware. Since the hardware is so limited they can optimize a whole lot. The same reason video game consoles have better graphics than the pc even though the hardware is half as fast.

    If there is a breakup of some sort it will be awesome though. That virtually guarantees OSX for x86.

    • Re:Not likely (Score:2, Interesting)

      by drunkenbatman ( 464281 )
      I don't see this as very likely. OSX is so good because it runs on very specific hardware. Since the hardware is so limited they can optimize a whole lot. The same reason video game consoles have better graphics than the pc even though the hardware is half as fast.

      Ooooo that is true in theory, but not in practice as the userbase isn't as limited as it sounds. The fact that they know every model that has shipped does give them an edge in quality assurance, but that really only assumes that they devote t

  • IBM went through this, (Score:5, Insightful)

    by acomj ( 20611 ) on Tuesday May 13, 2003 @07:38AM (#5943773) Homepage
    IBM was all ready to break up into little pieces when they weren't doing well in the 90s.

    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)

      by nelsonal ( 549144 ) on Tuesday May 13, 2003 @09:02AM (#5944336) Journal
      It's usually just speculation until one of the billionares gets involved. What prompts these stories are when companies trade at or near cash value, but have business segments that others believe would be worth more separate. Think of what people would have paid for a piece of the internet explorer company in 1999, given the same advantages that it has, but it had a stock all to itself.
      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).
    • 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.

      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
  • ...dont fix it. or in this case, break it into a million smaller pieces, what will that get you....? just APPLESAUCE!

  • Palm as the model? (Score:5, Insightful)

    by Johnny Mnemonic ( 176043 ) <mdinsmore.gmail@com> on Tuesday May 13, 2003 @07:42AM (#5943791) Homepage Journal

    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)

    by LinuxMacWin ( 79859 ) on Tuesday May 13, 2003 @07:45AM (#5943808)
    So Apple Software sells Mac OS. Apart from a few slashdot moderators (and authors), no one else is interested in intel version. Microsoft FUD: Buy XP it has been tuned over Intel for 20+ years.

    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)

    by sg3000 ( 87992 ) * <sg_public@ma c . c om> on Tuesday May 13, 2003 @08:00AM (#5943901)
    but not someone who can run a multibillion dollar company.

    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)

      by Anonymous Coward
      they're forgetting that Microsoft got to their dominant position by illegally abusing their monopoly.

      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
      • Don't be silly. This is old history. Everybody knows that Microsoft rode the IBM monopoly into power, and stole it from under them by shitcanning OS/2 while developing Windows to run on "IBM Clones" made by Compaq and others.

        Business PC's were and IBM monopoly, and people wanted computers that could run what everybody called "IBM software" at the time. When the IBM ROM chipset was reverse-engineered, the IBM monopoly became the Microsoft monopoly. It had nothing to do with people loving Windows and eve

      • Condemn them for what they did wrong, praise them for what they did right.

        What did they do right?

      • Many years ago, I paid Microsoft for my copy of NeXTSTEP. When trying to buy Intel hardware, I was told that I would get no discount for not having Windows and would have to pay anyway. It was in their contracts after all. Ask any Linux / BSD / BeOS person about the Microsoft Tax.


        This bull that they are successful because of the quality of their product or providing what the consumer wants is just that. IBM stupidly gave them the market and they used illegal means to keep and expand it.

  • Making Apple a comodity player (Score:5, Insightful)

    by amichalo ( 132545 ) on Tuesday May 13, 2003 @08:03AM (#5943915)
    Short and sweet here:
    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)

    by gunnk ( 463227 ) <gunnk@@@mail...fpg...unc...edu> on Tuesday May 13, 2003 @08:03AM (#5943918) Homepage
    The biggest point the author appears to be trying to make is that Apple would do better if it was broken into a Apple Software and Apple Hardware. To me, that just seems crazy.

    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)

    by kalidasa ( 577403 )
    Yeah, right, Apple investors forcing Steve Jobs to do something? Obviously TheDeal.com has never experienced the Reality Distortion Field (TM) full-force.

    • Re: (Score:3, Insightful)

      by account_deleted ( 4530225 )
      Comment removed based on user account deletion
      • By your response, you obviously don't understand what the Realty Distortion Field(tm) is.

        -jt
        • Comment removed based on user account deletion

          • Expensing stock options is financial rigor, and covers the stockholders' own butts. Forcing Jobs to change his entire market strategy, on the other hand . . . . That would basically be questioning Jobs' status as the Almighty Hero of the NeXTized Apple. I doubt there are that many Apple stockholders who are not impressed with Jobs' strategy: after all, for years the pundits have been telling them that Apple is a lost cause (it would be interesting to know the buy/sell recommendation histories of the pund

  • Wholly Owned Subsidiaries (Score:3, Interesting)

    by Johnny Mozzarella ( 655181 ) on Tuesday May 13, 2003 @08:16AM (#5943988)
    Apple currently has several wholly owned subsidiaries such as:
    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)

      by Anonymous Coward
      ? AMD($2.6B) acquired by Apple($6.8B)

      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
      • Actually, that particular mistake was the cause for some inflammation of this particular rumor, but the rumor has been around longer than that.

        Here is a Macrumours article about the amd mixup: here [macrumors.com]

        Note that it is dated November 24, 2002

        And here is another Macrumors article dated April 8 2001 about the same rumor: and here [macrumors.com]

        Just to clarify...otherwise, yeah, it's pretty funny where people get wacky ideas.

        _lpp
        • There is also AirPort base station, which employs an AMD MIPS processor [vonwentzel.net]

          • There is also AirPort base station, which employs an AMD MIPS processor [vonwentzel.net]

            Apple has been using their chips since ~ forever.

            I was assimilated back in '88, and the first time I heard the name AMD was for making the RISC chip that powered the Apple LaserWriter II (also IInt, IIntx). I think it was the 2900 series, or similar. That thing was the most battle-hardened laser printer ever built, and sold like crack, except where crack = $3,495.00. There's still squillions of them running to this v

  • that Apple should model it's business plan after a company that has declining market share and serious cash flow issues. That is Palm. I own and love a Palm, and I still wouldn't buy the stock. A company with a valuation so low that an IPO won't make it in today's marketplace. Apple relinquishing hardware control would be the death knell of the company.

    • Re:it appears... (Score:3, Interesting)

      by sg3000 ( 87992 ) *
      > I own and love a Palm, and I still wouldn't buy the stock.

      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.

      • 1. Mobile phone
        2. PDA
        3. MP3 player

        Replace MP3 player with notebook computer for your average business traveler.

        All I need is notebook and a phone. Notebook has much better contact capabilities than a pda, can play mp3 files (headphones even). If I make a new contact, I am already using the notebook for a presentation of something.

        The problem with pda's is that other terchnologies are making them redundant.

        I am of the old school philosophy that thinks "use the right tool for the job." A pda has neve

  • ...there's been a raging debate [infopop.net] about this very topic going on in the MacAch at Ars the past few days. Whatever's to be said has probably been covered there.
  • Apple should buy Sun.
    • This is an interesting path, although very unlikely as I don't think Apple has enough cash reserves to buy Sun and McNeely's ego. However, purchasing Sun will give Apple a larger foot in the door for the high end server market. And considering Sun's anti-Microsoft attitude, it wouldn't be so bad for them.......hey, maybe just a partnership?
  • People have been talking about Apple breaking into hardware and software divisions since I was knee-high to a Mac Plus. IT AIN'T GONNA HAPPEN. In case nobody has noticed, making the hardware AND the software is probably the most important aspect of Apple's business plan. It's really the only thing that sets them apart, from a business point of view.

    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
    • Oh please. Palms start at $100 - where do PocketPCs start? And the only reason PocketPCs ship with faster processors and more RAM is because the OS is so bloated and wasteful. It's still Windows crammed into pocket computer. MS doesn't get it that we don't want a tiny laptop, we want PDAs. Of course that doesn't stop a lot of people taken in by MSs marketing and fluffy features. "Oooh, it looks just like Windows" - yeah, that's what I want in a PDA. Palm did it right, they designed an OS and interface that

  • Split Apple? (Score:4, Funny)

    by Alomex ( 148003 ) on Tuesday May 13, 2003 @09:19AM (#5944470) Homepage

    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)

    by jht ( 5006 ) on Tuesday May 13, 2003 @09:24AM (#5944517) Homepage Journal
    It's obvious, as least to me. Regardless of whether you love Apple or hate Apple (I'm a fan), Apple survives because of their integrated platform. The reason Apple waited to introduce iPod for Windows wasn't because of an inability to produce - it was because Apple wanted to initially use iPod as a value proposition to sell more Macs:

    "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)

      by lost_n_mad ( 521867 ) on Tuesday May 13, 2003 @10:36AM (#5945210)
      I want to say first, that I agree with what you are saying.
      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.
    • I fully agree. When I first heard about the article, I was too annoyed to read the actual article.(actually, I still haven't; I don't think they deserve more hits) They seem completely ignorant of the background and history of Apple, if they think this just might work. Perhaps they just want to make short term gains on Apple's stock, never mind if the company immediately founders.

      Apple is known for innovation, but splitting the company would lessen its freedom to do so. Running Windows on Macs would pu

  • For the most part, couldn't this be summed up... (Score:4, Insightful)

    by Chroneos ( 545099 ) on Tuesday May 13, 2003 @09:46AM (#5944701) Homepage
    TheDeal 2003 = Apple 1997?

    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)

    by Dixie_Flatline ( 5077 ) <vincent.jan.goh@NoSPam.gmail.com> on Tuesday May 13, 2003 @09:54AM (#5944760) Homepage
    Geez, did reading that article make anyone else's temperature rise? The whole thing is a mishmash of poor conclusions based on shaky assumptions, with a little bit of misinformation thrown in. Apple doesn't have a 'proprietary PPC' microprocessor. Why would people want to buy OSX on their PC? Half the non-computer people I know don't even know what version of WINDOWS they're running. And given that Dell and HP have had such a time trying to offer Linux on their machines without Microsoft breathing down their necks, this author and those analysts think that OSX on Dell is going to fly? What fantasy world do these people live in?

    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- it-yet articles.

  • IANGreenspan, However looking at Apple's stock over a period of 5 years it has fared better than Microsofts.

    For a niche manufacturing company Apple is performing well. And its stock is following market trends almost perfectly.

    http://finance.yahoo.com/q?d=c&c=MSFT&k=c1&t=5y& s= aapl&a=v&p=s&l=on&z=m&q=l&x=on&y=o n

    Any one calling Apple Beleagured is a moron.

  • The art of being belaguered (Score:5, Insightful)

    by Trurl's Machine ( 651488 ) on Tuesday May 13, 2003 @10:27AM (#5945109) Journal
    This story is so old that all it takes is to retype commentary from an old book (in this case, "Infinite Loop" by Michael S. Malone).

    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)

    by Battal Boy ( 544978 ) on Tuesday May 13, 2003 @10:35AM (#5945200) Homepage

    > 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...
    • Microsoft is the big luxury cruise liner that "everyone" wants to be on.

      Apple is the iceberg that they don't see coming. Thats because 90% of it is not visible to them(Open Source Software).

      They won't know what hit them and even after they realize most will say it is safer to stay on board. Some will go down with the ship.

  • This Article sponsered by... (Score:3, Interesting)

    by Sophrosyne ( 630428 ) on Tuesday May 13, 2003 @11:32AM (#5945877) Homepage

    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)

      by Kligson ( 513507 )
      Yeah, one of Apple's selling points is no-brainer compatability with other Apple products. Having seperate companies would have to hurt them there.

      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
    • 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!

      I disagree. They deserve to buy a load of shares in Palm [palminfocenter.com], or maybe NTL [silicon.com].

  • TheDeal.com tells Microsoft they would be better off if they split into seperate hardware, OS and application companies.

  • break up would be bad (Score:1, Insightful)

    by Andwa ( 646386 )
    apple's success is based upon software/hardware integration..dividing these teams under two sets of leadership will dismantle the apple brand by hadicapping the user experience

  • Palm? Successful? (Score:2, Informative)

    by mkelley ( 411060 )

    "Their analysis points to Palm as a case study for a successful breakup of a company"



    It's hard to call the Palm breakup success, as their stock has dropped $50 in the past 52 weeks and is hovering around $10. Where as Apple's stock has only dropped $10 during the same period and is around $15-$17. Apple is in a lot better shape financially than Palm has been in a while.

  • anyone know where this guy lives? (Score:3, Funny)

    by RestiffBard ( 110729 ) on Tuesday May 13, 2003 @04:01PM (#5948939) Homepage
    I swear the only way we'll ever get analysts to shut their friggin pieholes is by firebombing them. This isn't just a "apple is great the way it is, shut up you boob" rant. This is an analysts are making the world ugly rant. People wonder why companies treat them like just another number and not like a person. the reason? analysts make more money if companies focus on pushing product not companies pushing a good experience for the consumer. Apple gives me a good experience. I'd be just fine if they went private and just did what they wanted to.

  • Jayson Blair moonlighting at Deal.com? (Score:3, Funny)

    by Zhe Mappel ( 607548 ) on Tuesday May 13, 2003 @09:12PM (#5951203)
    As 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.
    Su-u-u-ure, why not? If only that OS X thingee could be ripped out in order for Windoze to be ported to the PowerPC platform, then twice as many consumers would want to buy a computer that's twice as slow using an OS that's twice as bad!

    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)

    by uncadonna ( 85026 ) <mtobisNO@SPAMgmail.com> on Wednesday May 14, 2003 @10:53AM (#5955275) Homepage Journal
    Wintel systems dominate the "market", to some extent, not despite the fact that they are dreadful but because of it. People feel compelled to upgrade in the forlorn hope that MS will get it right this time. That means more dollars spent on hardware to support the latest re-bloat of the OS.

    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.

    • Um... There is nothing friendly or nice about a kernel panic on OS X... It's the typical sh*t everything has stopped working, should reboot and delete the core dump file.... And also why would the investment community want to derail a good thing? They wouldn't. Apple has made noone any real money even during the highest boom of tech in the 90s. If you kept all your stock and didn't sell in the 90s, you'd be underwater again.. This for a company that's been public for almost 20 yrs... Come on, think about i
      • Yeh, I've managed a panic once on OSX and it was nasty. The "Aqua screen of death" was just a joke.

        The "investment community" derails good things all the time, if the thing isn't good for the investor. There are other good things in the world, including but not limited to excellent products which come to fruition more slowly than the discount rate would allow. Closely held companies can take the financial hit because they have other interests, while publicly traded companies cannot.

        More to the present p

  • Well, the last thing the world needs is yet another opinion but here goes...

    the problem with analysts is that they see the computer business purely as business--and winning at it.

    Bill Gates thinks winning is getting all the money and having the most people using his product.

    Steve Jobs thinks winning is having the best over-all product that is slick, personal, and easy.

    Quantity vs. Quality.

    They're both winning.

    You can't compare "success" rates if the measureing stick is different for each.
  • It's funny how people seem to think that an Apple hardware company can do nothing but sell PC clones that are more stylish. People... Apple has the iPod, a potential PDA in the making and they have equisite displays... There is a lot more Apple Hardware can make than PC clones... As for the Apple Software Inc., in fact what OS X on Intel would do is kill Linux once and for all for anyone that thinks about running Linux as a consumer OS... As for making inroads to Windows, I seriously doubt it unless it was
  • Currently the stock market values Dell as being worth about 12x what Apple is worth with both having roughly the same amount of cash ($4.5b). Dell sells commodities and thus is able to maintain:

    a) Very high sales numbers
    b) Very low R&D costs

    Apple conversely spends quite a bit on R&D. There is no question that is over the long term Dell can continue to sell commodity hardware at the margins its getting that Dell is the far better company. But how hard would it be to replace Dell?

    All it would

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