For Now at Least, Deal With Apple Not Meant to Be

Apple Computer Inc.’s negotiations to buy Be Inc., the innovative computer company started by former Apple research and development chief Jean-Louis Gassee, have stalled, sources said last week.

Ellen Hancock, Apple’s research and development vice president, had hoped to announce the acquisition at a media luncheon being held at this week’s Comdex ’96 computer trade show in Las Vegas.

But a difference over price ended the talks late last week, sources said. After five months of infrequent discussions, Apple offered Gassee less than $100 million for the 5-year-old start-up. Gassee had been seeking a sum several magnitudes higher.

Two years ago, Gassee received a standing ovation when he introduced his Be Box at Agenda, one of the PC industry’s most prestigious gatherings. The machine--a personal computer with several powerful processors and a completely new software operating system--is considered a major advance over current technology, especially in its ability to handle video and sound.

Apple was interested in the Be software, which might have allowed the troubled computer maker to bring long-promised new features to its customers before the release of Microsoft Corp.’s Windows 97. Apple has fallen far behind on Copland--an effort to overhaul the venerable Macintosh operating system--and currently has firm plans only for incremental improvements to the Mac OS.

But incorporating Be’s technology would have created problems too. Be’s software is not compatible with Apple’s and would have required significant work so that older Macintosh software could run on new models running Be. Also, management faced the problems of obtaining support for the acquisition from Apple’s notoriously strong-willed engineers, who were expected to bristle at the prospect of using an outsider’s technology.

While declining to comment on the discussions, Apple continues to publicly praise Be’s technology. Gassee, who was fired by Apple and relished the idea of coming back to the company as a savior, is said to be deeply disappointed with the breakdown of negotiations.