Apple Responds To Windows CE
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Apple Responds To Windows CE
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(FOOL CONFERENCE CALL SYNOPSIS)* By Debora Tidwell (MF Debit)
Apple Computer, Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: AAPL)") else Response.Write("(NASDAQ: AAPL)") end if %> UNION CITY, Ca., September 19, 1996/FOOLWIRE/ --- Apple Computer's Information Appliance Division held a conference call Monday afternoon in response to Microsoft's announcement in the morning and to discuss Apple's perspective on Microsoft Windows CE.
Apple is tremendously excited about the opportunity that is created in this new market space down underneath the traditional personal computing category which they refer to as "Information Appliances." They believe there is an opportunity here to go back to some of the things that Apple does best -- focus on user-centric design and creating compelling value for customers in devices, services, and content that will revolutionize the way people work, learn, and play.
They have been at work in this product space for some time with their Newton and Pippin technologies and have some exciting plans to move forward in the category which they will be announcing over the next couple of months.
The Microsoft announcement of Windows CE is, according to Apple, clearly a significant development in the evolution of this category. Apple thinks one of the important things it will do is validate the category. They think it is one of a number of announcements and a lot of activity that people are going to see in this space (broadly defined as appliance-type devices beneath the cost and general purpose functionality of traditional PCs) over the next several months.
Apple fully expects that the coverage of all of these announcements and activity will call significant customer attention back to the category and cause customers to look at how they are going to use these devices, how are they going to integrate them into their existing work or study habits, and how are they going to integrate them into their existing information technology environments. Apple welcomes that investigation that customers will be doing.
Apple pointed out that they have been in the handheld device marketplace well over three years now and believe that they, arguably, created the category with the introduction of the Newton MessagePad. They are currently on their fourth generation of hardware in the form of the MessagePad 130 and their second major generation of the Newton Operating System with significant improvements incrementally between that.
There are over 200 applications shipping today on the Newton platform. Over 300 VARs and systems integrators support the platform today. Apple views themselves as a long-time player in this category and in a role of welcoming Microsoft in addition to a number of other players as newcomers to the category and helping to expand it.
Looking at the Microsoft approach embodied in their announcement, Apple's position on it is that they see, overwhelmingly, a technology focus to the Microsoft product -- an approach that basically takes the Windows metaphor for the desktop and attempts to shrink it down and make it fit into a compact, handheld PC form factor. Most of the history, looking at the evolution from one stage of device to the next stage of device as technology is moved closer and closer to the user, indicates that carrying the baggage from one generation to the next is not always the best approach.
In contrast, the approach Apple will take in this category is reflected in the name of their organization -- a much more "appliance" style approach. Apple will take a user-centric design approach, focusing on the needs of individual groups and categories of users; designing devices, services, and content that are dedicated in function and specifically targeted at those groups of users where absolute simplicity of operation is a watchword of everything Apple does. Basically their approach is going to be, together with partners, to craft whole product solutions for specific groups of customers. By taking that approach, they believe that information appliance devices have the potential to revolutionize the way people interact with electronic support -- not just an evolutionary step, but a major progress in the way these devices support customers.
Initially Apple will target several different segments. They believe there is a tremendous opportunity for information appliance devices in education to support the work of students, from K-12 students through higher education students, and faculty. And they believe there is a strong role Apple can play given their historic presence and understanding of the education market in bringing devices to market that are a compelling value for those customers.
The Newton platform is already well-established in the healthcare field. Apple is moving forward with partners to do even more in that area.
In the area of business professionals, they believe there is exciting new technology that is going to enable them to do a much better job of mobile support of business professionals integrating in with their desktops, but also making available the capabilities of the Internet and the World Wide Web, creating a linkage for the business professional no matter where and when they are -- a global information base as well as back to their home.
Apple will target those market categories and customer segments with a set of announcements going forward over time. During this call they wanted to focus the discussion on their overall approach and the contrast between their overall approach and the one that Microsoft announced.
The company was asked if they are announcing any products or vendor relationships or are they just basically telling people that Microsoft announced something today and Apple is going to do it better. Several other people came on the line to ask, in conjunction with that question, what the purpose of this conference call is. The company responded that their feeling was that there would be interest in a reaction in terms of how Apple views this announcement, how Apple's approach to this marketplace is similar to or different from the approach Microsoft is taking. They said that they will have specific product announcements in this category moving forward over the course of the next six weeks, but this is not a specific product announcement.
The company was asked why they think handheld devices are perceived to be making a resurgence. The company responded that they think there are a number of different factors. First of all, the technology has advanced to the point where the performance that's capable of being delivered in a handheld form factor for reasonable power consumption, the quality of the components that go into a handheld device (screen technology, memory, etc.) has advanced to the point where these devices are more practical at attractive price points than they have been in the past. Secondly, Apple sees a broad marketplace interest in technology, interest in more personal applications of technology. That is reflected in consumer interest, in interest from the business community, and interest from the education community. They think there is a very fertile marketplace for handheld, mobile, and basically an "appliance" style approach to the equation. Thirdly, the emergence of networking and the Internet is a major new factor in this category. The underlying assumption that devices are connected and that they provide access to a worldwide information base -- that they can link a person anywhere, anytime back to a personal home base -- has grown phenomenally and has turned customer interest back to the kinds of devices that can support them when they are mobile.
The other part is that a lot of the infrastructure is becoming much more mature now that allows these devices to fulfill their potential. The technology is advancing as far as processor and also the kind of applications people are doing, but also the wireless networks and wired networks and the whole infrastructure that allows people to stay in touch while on the go really improves the capabilities of these devices and makes them much more attractive to people.
The company was asked, given that only 480,000 handhelds were sold worldwide last year compared to 3.6 million notebooks, if they are anticipating that the handheld market is going to increase so much that it is going to take sales away from the notebook market. The company responded that they think it is hard to predict how rapidly the handheld market will emerge and grow, but they expect the kinds of devices Apple will be introducing to be very compelling and therefore will be attractive to customers and result in rapid growth of the market. The notebook products represent a mobile version of desktop technology and are a good fit for a user with work patterns that require that all of the functionality of the desktop be available to them as they travel. That comes at a cost in terms of battery life, size and weight, and complexity of management. That is a good trade-off for somebody who needs a full desktop environment replicated anywhere and anytime.
Apple believes that there are large numbers of other categories of users whose needs when they are mobile are a very small subset of what they do when they are at a desktop environment and, in some cases, the needs are completely different than what they do when they are at their desktop. Mobile devices based on the Newton technology are an excellent fit for those applications and users.
Apple will build a range of appliances and, over time, a very broad range of appliances from Apple and their partners including things that, in form and function, are very dissimilar to the current MessagePad product. Newton is a technology base for building appliance products. It is especially good for mobile appliance products because of the work they have done over the course of the last 3+ years in optimizing for small form factors, for power management and battery life, etc. The category will broaden out considerably beyond handheld personal computers to include a wide variety of appliance devices.
The company was asked how many resellers they have on board with their Information Appliances Division. They answered that there are approximately 1200 resellers that carry the Newton product line today and they range everywhere from computer stores, consumer electronics, office supply, catalogs, to aggregate distributors. And, they also do some VAR and direct sales as well. They have over 300 VARs and systems integrators.
The company was asked about the market for Pippin in terms of how quickly it will develop and how it will impact other markets like Macs and PCs. The company answered that the comments they made about Newton and viewing Newton going forward as more of a technology base rather than a specific product implementation apply equally well to Pippin. What they have is a very rich multimedia hardware/software execution environment that has come out of Apple's work on QuickTime and the QuickTime media layer, out of their work on the PowerPC processor, etc. The specific products that will be coming out this Fall is a multimedia player incarnation of that technology. They think there are a number of other categories of appliance-type products that they can build out of that technology that would be very compelling either from Apple or from partners and licensees. Their approach in the Pippin arena from the beginning has been as a licensing business rather than as a product business. They don't see Pippin-class devices cannibalizing personal computers and Macintosh sales. They tend to be appealing to customers who are looking for a more limited-function device, something at a lower price point, and something that is able to deliver a smaller set of capabilities (for example, multimedia playback and Web browsing) than what you would get with the price tag of a full-function multimedia PC.
The company was asked about the importance of Internet access. They responded that they think the Internet is absolutely critical and important to these type of devices. The technology has exploded over the last couple of years and there are currently several Internet browsers available for the MessagePad 130 from third parties. Apple is working very closely with those third parties to enhance that capability on future platforms they will be coming out with. The Apple devices that will be coming out in the future will have that technology strongly coupled in. They are working with a lot of the browser providers to get their products available on Apple products. * A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. |
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Copyright 1996, The Motley Fool |