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Newer Technologies


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An open letter to Apple's Board of Directors

Robert J Moriarty
September 7th 1997

There are some 20-million or so Mac users or vendors in the Mac ecosystem.
If Apple disappeared from the face of the earth tomorrow, graphics
professionals would still produce ads on old Macs, the little kiddies
would still be planking away on their Apple IIs in school, developers
would be writing code for somebody, and people would be buying and selling
computers - they just wouldn't be computers with colored Apple logos on
the front. And at the end of the day, I doubt it would make an iota of
difference to anyone.

Apple is irrelevant now to the vast majority of those in the Mac
ecosystem. Whatever stupid decisions were made last week, Mac users will
still buy computers and resellers will still sell them. No matter if Apple
makes computers or not. And while Steve Jobs may believe people are lining
up to buy computers from him, I don't see any lines forming. I just hear a
lot of people grumbling about getting screwed.

Steve Jobs has personally driven more Mac users into the Wintel camp in
the past three weeks than all the poor management of Apple Computer
accomplished in the past five years.

Steve Jobs is fundamentally dishonest. Basic honesty is so important a
part of any business deal, that no vendor or developer, indeed, no
computer buyer, will ever again enter into any deal with Apple without
serious consideration as to how Steve could screw him.

Steve Jobs is the Fuehrer or Czar, or whatever you want to call him, of
Apple Computer. He is calling all the shots. He doesn't have the guts to
call himself CEO and his actions over the past six weeks have guaranteed
no one in their right mind would even consider taking over now. He says he
is a board member and just a consultant but if he quacks like a duck and
waddles like a duck and has feathers like a duck, he's a duck. Jobs has
made earthshaking decisions for Apple which could easily be very wrong. He
can do that, he owns one share of stock and has absolutely nothing to
lose.

Let's look at Steve's background as a Computer Fuehrer.

Jobs and Woz met and determined the idea of making personal computers
might make them some money. They got into bed with Mike Markula and
founded Apple. Woz was the brains behind the computer, Markula had the
business sense, Steve Jobs was the shill. The con man who would drag the
marks into the tent. We all run around acting as if Steve Jobs is some
kind of computer genius. Actually he wasn't behind the success of the Mac,
he was the brains behind the Lisa. He hated the Mac and didn't take over
the project until it became obvious to everyone that the Lisa was a lemon
and the Mac a winner.

What did he do after being unceremoniously dumped by John Scully? He
founded Next where once again he could try to foist an over-priced,
under-powered nag onto an unsuspecting public. The Next computer proved to
be as popular as the Lisa and the 9600/350 soon will be. Customers aren't
actually all that dumb.

Was the Power Computing/Apple deal of last Tuesday a good business move?
The answer will surprise you. The Power Computing deal will be the subject
of a Harvard Business School study just as soon as they can type it into a
word processing program. The last time anyone made a deal like this, the
Indians on Manhattan sold the island for some pretty necklaces.

Steve Kahng sold something totally worthless to Apple Computer for $100
million dollars. He took his agreement with Apple, which by definition is
without value, and turned it into money.

From Fred Anderson, CFO of Apple, we learned Apple got a database of
200,000 names of Power Computing buyers for their $100 million. So they
paid $500 apiece to get the names of people who had already made the
decision with their wallets to not buy Apple computers. Fred says Apple
will, "capture a significant amount of sales that they would have gotten,
going forward."

Duh. No kidding?

Think it through for just a few seconds. Let's say 10% of those nice
people get over feeling screwed by Apple and for one reason or another
they just have to have an Apple. So you just added $5000 to the basic cost
of the computer before you start to break even. Actually that doesn't make
sense either, the clone makers were paying Apple for the privilege of
producing machines. You need to add that cost, too. If every single person
determined they just had to have a Mac you have still added 15% to the
cost of production. Can Apple make money by loading every machine with
that sort of overhead? Not in a million years.

That's like the 8-year-old doing the financial planning for a lemonade
stand. If you just sell one glass of lemonade for $1000, you can make your
allowance for a year. Fred, are you kidding or is one of us crazy?

Fred, if you think a database of people who made a decision not to buy
Apple computers is such a red hot deal, I've got a Miami telephone book
with five times as many people in it who don't want Apple computers and
I'll give it you for free. Why not buy Dell's database, or even go for the
whole cookie?; Bill Gates would sell his list of Windows users for a
couple of hundred apiece.

Steve Jobs keeps mumbling about honoring all of Apple's signed licensing
agreements. First of all, his statement isn't true. Apple and the clones
agreed to renegotiate terms to include CHRP and System 8. In any
agreement, intent is an important portion. Each side presumes the other
side will deal in good faith and Apple hasn't.

When you go into Computer City and pick up a copy of OS 8, are you getting
OS 8 in the box?

No.

OS 8 was canceled last year by Ellen Hancock. OS 8 was Copland. Copland
never made it out of #1 Infinite Loop.

You're getting System 7.7 after it was renamed. And only a liar would say,
or a fool would believe, System 7.7 isn't covered under current, signed,
agreements. The clone makers had all the right in the world to distribute
7.7 (aka OS8) systems. Apple and Steve Jobs can whine all they want about
how CHRP isn't covered under signed agreements. The real truth is that
Apple is terrified of actually facing real competition, so Apple tore up
the unsigned agreements and violated the terms of certification in the
existing signed agreements. In bad faith. Now Steve Jobs thinks people
actually want to buy computers from him. I don't think so. You can drop a
cow patty into a box and call it rose buds, but it still smells like cow
plop.

But what about Apple having to subsidize the clones? That sounds like a
real bad deal.

Apple paid the development costs to design motherboards and then let the
clone makers look at the design. The clones made improvements of their own
and sold computers to a willing public who saw either better machines or
better service or lower cost or whatever. Then the clone makers wrote
checks to Apple for from $50 up to a couple of hundred. So Steve Jobs
wants the Mac ecosystem to believe, that by taking money from the clones
for duplicating a design Apple had already paid for, Apple made a bad
deal.

Actually the clone makers added more value to the motherboard designs than
Apple did in the first place. In every situation, the clone motherboards
gave more performance than the original Apple design. While Apple offered
256Kb cache, clone makers gave 512Kb and 1Mb. While Apple offered 50MHz
system bus speeds, Motorola and Power Computing gave 20% faster speeds. If
Apple has any sense, they would have paid the clone makers for their
superior designs rather than whine about how the clones were leeches.

In his own words, leaked somehow to the world, (saying Apple Confidential
Please do not forward) Jobs says, "Our board is convinced that if Apple
continues this practice the company will never return to profitability, no
matter how well Apple performs. . ."

So, if Power Computing made and sold a bunch of the G3 powered Power Tower
Pro 275 computers and wrote Apple a check for millions of dollars, that
would be some kind of bad deal? And if Apple actually ever designed a
computer their customers wanted, and could ship it, Apple would lose? "no
matter how well Apple performs"?

Apple wasn't giving a subsidy to the clones, the clones were giving a
subsidy to Apple. And Apple came out with such brilliant machines as the
8600 which they announced on February 17th and delivered in June. But did
Power Computing cause that? Did Power Computing cause the 62.5% DOA rate
on Apple 15" monitors reported recently on MacInTouch?

Losing money in business is a clue something isn't going right. Apple lost
almost 3/4 of a billion a couple of quarters ago. In most businesses,
managers would take time to reflect and often come to the conclusion maybe
they were perhaps doing things wrong. The time to get arrogant is when
money is flowing in, not when it flows out. Apple wasn't producing
machines that made their customers shell out enough money for them to make
money.

Apple suffers from poor management, over-priced machines and rotten
service. When they stop whining and put their noses to the grindstone,
they may have a chance of survival. But to fix a problem you must first
admit you have a problem and this Apple will not do. Everything wrong is
somebody else's fault.

MacInTouch has some interesting comments on what is really going on, in
the September 5th page. A reader reports Hewlett Packard is going to
cancel support of printers for the Mac ecosystem in response to a demand
from Steve Jobs for lower prices. Hewlett Packard in effect told Steve
Jobs to stuff Apple computers where the sun rarely shines. In one phone
call Steve Jobs just managed to kill the leading supplier of printers for
Macs. Is this a good move on Jobs part? Well, it makes about as much sense
as him marching into the governor's office, pulling a gun and demanding
lower taxes for Apple because they aren't making any money. And the
response would be about as favorable to the Mac ecosystem.

Not to worry. Back at the ranch Steve was in the midst of deep serious
talks with his partners in the AIM Alliance, IBM and Motorola. It seems he
has been deeply concerned with the PPC 750 being much faster than Apple's
latest over priced and underpowered offering to its long patient
customers, the 9600/350. Did he tear up the agreement with Motorola to
certify the StarMax Pro 6000 CHRP machine because it was 25% faster than
anything Apple could deliver? He bought off Steve Kahng in what will go
down as the deal of the century. For Steve Kahng.

Remember MacWorld Boston, just four weeks ago, where Motorola and Power
Computing and Newer Technology all won Best of Show for their brilliant
new systems driven by the fastest CPU around, the G3 or Power PC 750?
Apple told Motorola to forget all about the millions of dollars they spent
for research and development, Apple will not even look at the machine. In
total and absolute violation of every signed agreement in place, now. He
did buy off Power Computing and way down in the small print he mentioned
he didn't want them selling their brilliant and far cheaper machine.
Which, by the way, Apple stockholders just paid all the development costs
for. So two of the three winners of Best of Show will never have a chance
to sell any of the machines.

But that left Newer Technology. Newer won Best of Show at MacWorld Boston
and Apple didn't. Fortunately there aren't any Apple/Newer agreements for
Apple to sign and then tear up. Apple promised users an upgrade path for
their 7500, 8500 and 9500 computers when they were first released, over
two years ago, and has never felt the market was worth developing. So
Newer developed the aftermarket upgrades and presents no threat to Apple
in the slightest. Newer sells products for the 2 million of so PCI Macs
already delivered. But it just happens Newer's MAXpowr PRO and PRO+ are
far faster than the very best that Apple can ship.

Steve Jobs asked both IBM and Motorola to delay sending the PPC 750 and
cache parts to Newer Technology, so Newer wouldn't be able to compete with
Apple. Apple's not making money just because Power Computing makes
computers or something. It's so complicated that only Steve Jobs
understands, I think. Or at least that's what he wants us to believe.

Steve Jobs didn't catch IBM and Motorola at the best of times. Both
companies spent hundreds of millions of dollars in development of the PPC
750 and the ultra high-speed cache necessary to make the CPU perform. And
Apple had just backed out of agreements three years old. IBM told Steve to
stuff his computers and assured Newer they would get all the cache and CPU
chips they need, as did Motorola.

Motorola actually took their frustration with Steve Jobs and his giant ego
one step further. The Chairman of Motorola passed around an internal memo
stating they would cease all development work on the PowerPC and would no
longer ship CPUs to Apple as of sometime next year. So if you want a real
good deal on an overpriced and underpowered machine from Steve Jobs, you
had better sign up now. Apple won't be delivering any PPC powered machines
as of next year. Rumor has it that CEO Chris Galvin of Motorola may have
included some comment about where Apple and Steve Jobs could place their
computers. It had something to do with the sun never shining.

Newer will be delivering their PPC 750 MAXpowr PRO and MAXpowr PRO+ CPU
upgrades just as they have always planned. Somewhere around 3rd week of
September.

If Apple has a stable operating system they call System 8, which is
actually System 7.7, and a CPU three times faster than anything Intel has
to offer and they can't figure out how to make money except by destroying
their natural allies, maybe Steve Jobs needs to rethink his business
model. At the beginning of August of 1997, Apple and the entire Apple
ecosystem was on the verge of the biggest sales jump in computer history.
Steve Jobs changed that model and now Apple computers are going to be hard
to give away. Maybe it would make more sense for Apple to go back to the
table, hat in hand and figure out how everyone can win, not just Steve
Jobs.

The brilliant new computers which you can only buy from Steve Jobs as of
next year will be much cheaper. You can save a lot of money by not
including a CPU. But you won't need a CPU in your new machine since you
won't be able to print on any printer from Hewlett Packard. There won't be
any.

As long as they are lead by Steve Jobs and maintain a longstanding cult of
arrogance, Apple is dead. And it won't make the slightest difference to
anyone in the Mac ecosystem. The Mac ecosystem is a lot more important and
is bigger than the ego of Steve Jobs.

Steve, it is dead easy for you to bet the farm, you haven't got any money
on the table. But the jobs of millions of Mac lovers depend on the board
waking up as soon as possible and dumping you. You're not the solution,
You're the problem.

And please don't whine about how people are undercutting your program by
criticizing you. You screwed up, you didn't tell the truth, and you broke
the faith with millions of us. And if you can't take the heat of
competition, one alternative is to get out of the kitchen.

Here's what the Board of Directors needs to do.

(1) Send Steve Jobs back to Pixar. He's just a consultant with one share
of stock which he only owns for token reasons. You need a leader with
something more than a token investment in the future of the Macintosh
ecosystem. (2) Drop Steve Jobs and Larry Ellison from the board. If they
have some "Insanely Great" idea for network computers, they have the money
to develop the concept themselves. Wish them luck and send them on their
way. Let them find solutions without problems all by themselves. (3) Hire
a CEO and give him responsibility. Try getting someone with a vested
interest in preservation of a thriving Macintosh ecosystem. Try getting
someone with some sense. (4) Sit down with the representatives of the
clone makers and sign an agreement with them in accordance with all the
agreements which were made over the past three years and lately rescinded
by Steve Jobs. (5) Certify and allow sales of the Motorola and Power
Computing machines using the G3 chip in accordance with signed and current
agreements. Do it now. (6) Evaluate Apple and determine why Apple is not
making money. Where you find you have problems, fix them. These may
include poor quality control, a lack of direction, underpowered and
obsolete design. Try talking to your customers to figure out what their
needs include. It's clear you have lost touch with your customer base. (7)
Tell everyone at Apple to lose their attitude of arrogance at least until
Apple begins to make money again. (8) Get down on your hands and knees and
pray for the forgiveness of both your suppliers and your customers.

You don't have to wake up now. If the actions of Hewlett Packard and
Motorola over the past week haven't at least shaken your stupor, you may
want to consider the ramifications of the Chairman of Adobe Systems when
it occurs to him there may be no future in betting on an Apple Computer
headed by Steve Jobs. What happens to the Mac ecosystem if Adobe announces
they will not develop software for Rhapsody? If it hasn't occurred to him
yet, it will soon.

If anyone would like to believe this comes from some disgruntled vendor
with a big ax to grind, you're wrong. We sell CPU upgrades and only CPU
upgrades, and the actions of Steve Jobs probably have increased our market
ten-fold in the past three weeks. We are the only industry in the entire
Mac ecosystem guaranteed to thrive.

The fabulous new machines from Power Computing and Motorola would have
been a welcome and healthy addition to the ecosystem. MacWorld called them
"Best of Show" and they could only expand the Macintosh market. For crying
out loud, how on earth can you lose if you have a stable and powerful
operating system driven by a CPU three times faster than any Intel chip
made? Especially when, in the curtains, you have waiting, a full, native
code operating system, which will take full advantage of the incredible
power of the Power PC CPU.

Easy. All you have to do is destroy the Mac ecosystem and what Steve Jobs
has pulled over the past three weeks isn't suicide, it's pure,
cold-blooded murder.

�
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Any Jew who sees "Schindler's List" and doesn't come away wanting every
Jew in the U.S. to own an assault rifle has something very wrong with him.

   -- Guy Norman LaFrance