At a time when high-tech alliances are all the rage, one of the most prominent link-ups--a multimedia venture of Apple Computer and IBM Corp. called Kaleida Labs--has run into trouble.
The two computer powers, both struggling with severe financial problems, have ousted Nat Goldhaber as Kaleida's chief executive in favor of veteran IBM manager Michael Braun. Goldhaber will remain co-chairman of Kaleida, which is developing software that will allow multimedia programs to play on many different computers.
Both executives said the move was the inevitable result of a decision not to sell shares in Kaleida to the public. Goldhaber, an entrepreneur who made a fortune as founder of a networking company called TOPS, said stock ownership for himself and his employees was essential if he was to stay as chief executive, and that would not be possible if it remained a privately held venture of Apple and IBM.
But a number of sources familiar with Kaleida's operations painted a very different picture. Several said the parent companies were unhappy with delays in the Kaleida software, known as Script X, and with the small number of computer and consumer electronics companies that had thus far agreed to use the software on their machines.
"They're very ambitious in what they're trying to do, but they're not making their deadlines, so the relations (with the parents) are going to be strained," said Jonathan Seybold, head of a Malibu-based consulting company.
One industry executive who knows Kaleida well and spoke on the condition that he not be identified, said the company has spent about $20 million in its one year of existence and that Apple and IBM are loath to continue spending money at that rate. He said Kaleida salaries are high and that the company has too many employees for its current stage of development.
Goldhaber angrily denied those allegations. "We are substantially under budget," he said. "We've operated this as leanly and meanly as possible."
He said the company, which employs 109 people, has spent less than $20 million. The Script X software is scheduled to be ready by March.
Many in the industry initially welcomed the Kaleida venture, which promised to solve one of the toughest problems in multimedia: the proliferation of incompatible hardware and software systems. The company hoped to get a broad range of computer and consumer electronics firms to sign on and perhaps even buy equity positions in the venture.
From the outset, few companies were willing to put up money with the software so far from completion, although Kaleida has had some successes. Earlier this year, it announced that Mitsubishi, Hitachi and Creative Technology had agreed to support Script X, in addition to Apple and IBM. Toshiba last year said it was working with Apple on a multimedia machine that would also use the software.
But Kaleida will not say how much money those companies have paid to join what it calls the alliance, or whether or not they have specific plans for Script X products. And neither Apple nor Toshiba will comment on the status of their multimedia machine.
Kaleida also announced earlier this summer that it would work with cable equipment supplier Scientific Atlanta and chip vendor Motorola to build a set-top box for interactive TV systems.
Essentially, the boxes would act as the brains of a sophisticated TV set. Such an effort might compete with other projects under way inside Apple--and that sort of competition might have been another source of dissatisfaction with the course that Goldhaber was steering at Kaleida.
Indeed, the appointment of Braun, a 20-year IBM veteran who most recently served as vice president of Fireworks Partners, IBM's new multimedia unit, could be an indication that the parent companies want to bring Kaleida into the corporate fold.
The freewheeling Goldhaber, who says what he thinks and seems ill suited to a corporate environment, aimed from the outset to operate Kaleida as a genuinely independent company that would eventually go public. In the end, that may not have suited the purposes of his corporate masters.