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Jobs offers tough love for Apple

Making his entrance to 36 seconds of thunderous applause, an older, wiser Steve Jobs says Apple can still be healthy--if it's realistic.

BOSTON--Making his entrance to 36 seconds of thunderous applause here at Macworld Expo, it was an older, wiser Steve Jobs who said that the fading Apple Computer can still be healthy--as long as it's realistic.

In a tough-love keynote address at the semiannual trade show, the Apple cofounder not only announced a $150 million Microsoft As the Macworld turns investment and alliance, but he also went on to chide the crowd for greeting Microsoft chairman Bill Gates's satellite linkup appearance with raucous boos and Bronx cheers. The speech, a far cry from the reenactment of the famous "1984" commercial the crowd was expecting, was one that only the beloved prodigal son could deliver.

Ousted in a boardroom coup in 1985, the Apple cofounder denounced an elitism he himself instituted in the culture that grew up around Apple and the Macintosh. "If we want to move forward and see Apple healthy and prospering again, we have to let go of a few things," he said. "We have to let go of this notion that for Apple to win, Microsoft has to lose. OK?

"If we screw up and don?t do a good job, it's not somebody else's fault. It's our fault."

With 12 more years' experience under his belt--first starting up Next Software and then the wildly successfuly Pixar animation studio--a more mature Jobs outlined modest expectations for the Macintosh that he had so proudly christened as "insanely great" years earlier.

He said the company will focus on its two strongest markets, education and graphic design, where the Macintosh still has majority market shares. Macs make up about 60 percent of computers used in education and more than 80 percent of those used in graphic design, according to Jobs. Moreover, he said, the two markets are growing at more than 20 percent per year.

To underscore his remarks, Jobs spoke within distance of the old Apple logo garnished with a new sentiment: "Think Different." But whether Apple can actually be different remains to be seen. With the Microsoft deals announced today and a nearly entirely new board, including Jobs himself, Apple is still missing a chairman and CEO. And though Jobs hinted at bold product moves to come, none were announced.

With the input of newly named board member Larry Ellison, Oracle CEO and network computer convert extraordinaire, will Apple turn to the stripped-down NC to revive its sagging fortunes? Will there be a focus on higher-margin server computers, as some have speculated? Or will Apple as we know it become a thing of the past, splitting into two entities focused on hardware and software?

These questions, and many others, were left unanswered by Jobs's hotly anticipated speech.

The most glaring omission from his presentation was talk of Apple's next-generation operating system, code-named Rhapsody, especially given the fact that the new software will be based on products developed at Next, which Apple purchased late last year.

"There was no mention of Rhapsody," noted Dwight Davis, editor of Windows Watcher. "If it is to do all that Apple hopes it can do, it has to win business from Windows NT, and I don't see Microsoft laying still while that happens."

The most significant product-related announcement to come from the morning session was word that Mac Office 98, a new version of Microsoft's business productivity suite, will be available for the Macintosh by the end of this year and will continue to be offered for the next five.

"Why is Microsoft doing this?" Davis asked. "Microsoft certainly sells a lot of Macintosh applications, and makes a better margin on Macintosh applications."

Jobs also apologized to users for poor support and said the company had to shore up its industry relationships with "meaningful" alliances. "Ten to fifteen percent of Mac sales can be traced directly back to Photoshop sales, yet how long has it been since you?ve seen Apple and Adobe comarketing Photoshop?" he asked the audience.

Analysts said the moves to shore up the Apple board and solidify the company's relationship with the Microsoft will merely hold existing customers in place while they await the company's next strategic maneuvers. "Neither of these moves necessarily translates into growth for the platform," Staten said.

But concerns over delays in completing new licensing agreements with Apple clone makers could prove to be another blunder for the struggling firm. "What is missing from the strategy is licensing agreements for the operating system which Jobs did not address at all," Staten continued. "The market is not happy with Apple in its dragging of feet."

Whatever happens, it's clear after today that Jobs is in charge, and he's thinking differently.

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