Next to Stop Producing Computers : Technology: Apple founder Steve Jobs says his company will focus on software.
Steve Jobs’ dogged effort to create another first-rank computer company suffered a jolting setback Tuesday when the legendary Apple Computer co-founder announced that his Next Inc. will stop building computers to focus on its highly regarded software.
Next, based in Redwood City, Calif., said it will lay off 280 of its 530 employees and will put its state-of-the-art factory in Fremont up for sale. Next said it will sell its 50-person hardware design operation to Canon Inc., which owns 18% ownership of Jobs’ firm.
Jobs had initially aimed to make Next’s sleek black computers a high-performance alternative to PCs from Apple and others, especially for university students and professors. The machines had their admirers but proved too expensive for the education market. And business customers preferred inexpensive but powerful workstations from Sun Microsystems and others.
“The world doesn’t want really great hardware--it wants really cheap hardware,” Jobs said in a phone interview. “I can’t really argue with that. I think we made really great hardware. . . . But we never found the right recipe.”
Next will now focus exclusively on software, which the company is rewriting to work on widely available computers that use Intel Corp.’s 486 computer chip. The software, called Nextstep, controls the basic operations of a computer and makes it easy to create customized “applications,” programs that perform specific tasks. Nextstep now works only on Next’s computers.
Jobs acknowledged that quitting the hardware business is a personal disappointment, but in typically ebullient fashion he touted the potential of Next’s software.
“We have something here, but it’s been locked up in the black box,” he said. “If we let it out, it will be out there in much greater numbers.”
Jobs said Nextstep is the only operating system software on the market based on “object-oriented” technology, which allows programmers to easily create chunks of software that can be reused in different programs. A computer programmer at a financial services company, for example, can rapidly create new software to implement the latest trading strategies or financial analysis theories.
Microsoft, with its Cairo project, and Apple and IBM, through their Taligent joint venture, are racing to develop their own object-oriented operating systems. But neither is expected to hit the market until late 1994 or 1995.
Analysts agree that Next has an opportunity to become a significant player in the operating systems arena--if it can quickly complete the job of rewriting Nextstep to run on Intel’s 486 and its successor, the Intel Pentium. Next is already a year behind on the 486 project, which Jobs now says will be completed in May.
“They do have a better operating system alternative than any that exists today,” said Bruce Lupatkin, an analyst at Hambrecht & Quist. But he said it was essential that Nextstep for the Intel chips be completed on time, and that Next elicit support from the personal computer companies that actually build machines based on the 486 and the upcoming Pentium.
Next has changed course several times since its founding in 1985. Jobs, who was ousted from Apple after a bitter power struggle with current Apple Chairman John Sculley, initially targeted the higher education market. In 1990, Jobs repositioned Next as a vendor of easy-to-use workstations, competing head-to-head with Sun Microsystems and others.
Jobs owns 46% of privately held Next, and H. Ross Perot owns 11%. The company reported revenue of $140 million for 1992.
