Nextstep for Intel. Does Steve Jobs Have a Future in Software?
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NtW llltN l·~tKYtK I UUU • MUNtY·)AYIN" 't"L) rAX I'AtKA"I:l tUMI'AKI:U Nextstep for Intel " Does Steve Jobs have a future in softwa ' MAN IN accept what he is about to say. "I don't think I'd be FI NALL Y. THE MO ST ST UBBORN human if I didn't have regret," says Jobs, referring to the death of his beloved hardware line. "We've THE COMP UTER INDUSTRY HAS LISTENED. pulled the plug." For the last six years, Steven P. Jobs has been But has he pulled it soon enough? The high cost nagged and ridiculed by the industry he helped of manufacturing hardware caused Next to lose, by build. He's been called a one-hit wonder, a fluke, some estimates, $3 million a month for the past two and-perhaps most damaging to his rather large years. It was a company divided into two warring ego-a failure. But Jobs refused to listen. camps-hardware vs. software. Jobs was openly par Once upon a time, Jobs rented out symphony tial to the hardware, to the point of being obsessed halls to show off his company's distinctive black with the notion of building a hardware company to boxes: the infamous Cube, and the Nextstation. The rival Apple Computer Inc., say insiders. Now, the audiences-padded with Next Computer Inc. hemorrhaging of capital that resulted from Jobs' employees-would cheer Mr. Charisma's demon hardware obsession may hurt the company's strations. They would delight in his aw-shucks faux chances of building a future on its Nextstep object boyishness when he'd show off his machines and oriented, UNIX-based, operating system. Nextstep say, "Now here's something that's really cool." At will be released this May in a version that will oper the end, Jobs would soak in the applause and bow ate on Intel 486 chip hardware. his head in appreciation. "Next's technology is really nice," says Dick Now he has bowed his head again, but for anoth Shaffer, president of research firm Technologic er reason. Steve's black boxes-summarily rejected Partners, "but the best technology doesn't always in the marketplace-are dead. And the famous Jobs win: the Mac interface is better than Windows. So designed hardware manufacturing plant in Fremont, what? Microsoft can ship volume. Do people want Calif. (''We intend to build our hardware here," he to give up Windows applications for Nextstep? I once said. "Forever.") is for lease. Many of Next's don't think so." hardware engineers are looking for work. Shaffer says he's not optimistic about Next's Finally, Jobs has swallowed his pride and did what future, but adds that a move to emphasize software everyone has been telling him to do for so long: is an improved strategy. "It's extremely difficult to Make Next a software-only company. be a hardware company," he says, "but, in these ''We have the best software of this decade, but it times, it's very difficult to be a software company." has a ball and chain around it hardware," said Jobs There is a need, however, for Next's object in an interview a few weeks before he announced oriented software. Not the technology per se, but the new strategy to his employees. ''We have great the ability to write custom applications easily. software in a box, but nobody wants the box." Nextstep lets users build applications much faster than it would take to write thousands of lines of Changing Directions code. Next has about 200 shipping software appli We sit in a meeting room at Next's avant-garde cations from 130 independent software vendors inspired headquarters in Redwood City, Calif. There (ISVs), and DOS and Windows 3.1 applications was a time when Jobs, now 37, was considered per using Insignia Solutions Inc.'s SoftPC can run in an haps the most brilliant, precocious, and promising emulation window. But Nextstep isn't aimed at your young man in the computing world. Today he wears average five-and-dime store, it's being marketed to a severe black turtleneck, looks out the window, the Business Week 1000 users who have a five-year and speaks apprehensively, as if he doesn't want to backlog of custom applications to write. N extstep BY GARY ANDREW POOLE AND FRANK HAYES PHOTO GRAPH S BY FR AN KLI N AVERY 40 UNIXWORLD APRIL 1993 promises to let users streamline the software writ ing process to shorten the backlog. This means Next will need to capture market momentum (something that it's never been able to do), get agreements .with PC vendors (another thing it's failed at), and create a software organization by this summer (another difficult task) . If it can trans form itself into a full-fledged software company with good marketing, service, and support, analysts say it could succeed. Window of Opportunity Since founding Next in 1985, Jobs has tried des perately to repeat his Apple success. But the mar ket simply hasn't responded. Next collected only 1.5 percent of the $9 billion spent on workstations in 1992, accorping to research firm Dataquest. So it has only been in Jobs' mind, which critics have referred to as the "reality distortion field," that hardware has been significant to the company's future. Within Next, he considered Nextstep-the company's greatest asset-a second-class priority. If it succeeds, a software focus at Next could pay some handsome financial dividends. As the company ships Nextstep on Intel this spring, it will make Next more available on mainstream equip ment. Before the software-only focus, users were forced to buy proprietary Next hardware, which would have required a high capital expense of about $7,000 for each machine. Starting May 25, customers will be able to buy Nextstep for $995 and put it on their Intel486 PCs (developers will have an Intel package too), without being tied to the Next platform. Although $995 seems like a steep price for PC operating-system software, it will undoubtedly be discounted for larger orders. But can Next become a software company for all people? Jobs says he wants to make his company the Novell Inc. of the 1990s, an organization whose object-oriented software will proliferate in much the same way that Novell's Netware PC local-area network (LAN) software has proliferated, estab lishing a market before Microsoft has a chance to introduce products. Next has a window of opportunity, according to analysts. Neither Microsoft's "Cairo" object oriented operating system, which is considered Next's biggest competitor, nor the product of the UNIXWORLD APRIL 1993 41 IBM-Apple joint effort, but lacked basic user requirements. It's 256- The Money Pit Taligent, will be ready for megabyte optical disk made the machine slower two years. And Jobs has than most workstations and its screen was "My friends say that Next can't die with money to invest and a prod grayscale. The Nextcube was stylish, but that was my ago and Steve's ego in it. At least it uct for which there's virtual largely cosmetic, like the black, cubical magnesium will never fall for lack of money." That's what Ross Perot said In 1987, when he ly unanimous technical cases that raised the Nextcube's manufacturing Invested $20 million in Next. They were approval. But will Next take cost without improving its functionality. the last dollars he sunk into the company. advantage of its edge and The Nextcube was originally intended as a $3,000 become a success in the face workstation for students, but its final $6,500 price of Microsoft's imminent tag put it out of their reach. Next's next target was Jobs starts threat? Jobs looks particu business. In 1989 the company cut an exclusive dis Next with larly pensive when he tribution deal with then-top PC reqriler Businessland $?million. answers saying: "This Inc., whose chairman, David Norman, bragged he transition isn't going to would sell $100 million of Next machines in a sin The initial capital be a bowl of cherries." gle year. But neither Next nor Businessland could runs out, so Not that anything has been manage to create demand among business cus Perot, Impressed in the past eight years. None tomers, and Businessland sold fewer than 1,000 with Jobs' intentions to of the company's many incar Nextcubes. manufacture nations has made any money Next could not establish itself in other sales computers in the or garnered market share. niches either. Desktop-publishing guru Jon athan United States, Next's focus on software Seybold touted the Nextcube early on as the best kicks in means it will need to sign computer available for high-end desktop publish $20million. Once again pressed for cash, original equipment manu ing, but Next could never convince desktop Jobs puts in leader Quark Inc. to port its another $5 million Next convinces facturer (OEM) agreements publishing software IBM to pay a with PC vendors. This is not Xpress program to the Next. Quark cited lack of reported an easy task for the mer demand. $60million in curial Jobs, who's widely Eventually, Next gained visibility in a different exchange for an option to put regarded as an unreasonable niche-as a trading station at Wall Street financial Nextstep on IBM negotiator. Next must estab companies. But even there, Next computers are Japan's workstations. lish a larger direct sales force still clearly outnumbered by Sun Microsystems Inc. Canon Inc.