So What if Amelio File Is Closed? Apple Can Reboot

Now that Apple Computer Inc. is running without a leader, should Macintosh fans finally push the panic button?

Not yet. Gilbert Amelio’s departure as chairman and chief executive was expected. He had long ago lost the confidence of Apple’s engineering corps, the Mac industry and Wall Street. Ellen Hancock, his handpicked technologist who’s also leaving, had been hanging on all year only as a face-saving gesture for Amelio, who couldn’t be shown to have picked the wrong person to be Apple’s top geek.

Why did Amelio fail, and what’s the next step for management?

Amelio had four key jobs as chief executive: First, he needed to cut costs by streamlining operations and getting rid of unprofitable divisions. He had to bring discipline to Apple’s disorderly research and development process--so it could bring more real products to market faster. Amelio also had to improve Apple’s ability to estimate and meet consumer demand, and he had to help it make the transition to a new operating system without losing loyal Mac customers.

As a bland, formulaic, bottom-line corporate type, Amelio never fit into Apple’s freewheeling culture. He met resistance at every level, so he couldn’t execute cuts rapidly enough to stem the tide of red ink.

Ironically, the thing Amelio was least equipped to handle--the transition to a new operating system--is the job he managed most effectively. The acquisition of Next Software Inc. and the work toward the Rhapsody OS, combining Next and Apple technologies, will be viewed as his one memorable contribution.

So Amelio’s departure, in the long run, represents a great opportunity to get out

from under another highly paid yet inept CEO. Apple can certainly go up from here.

Now that Steve Jobs and his lieutenants Avie Tevanian and Jon Rubinstein are in effect in command at Apple, what should be their next steps? In the long run, they need to turn their visions into products. But it’s the short run that Mac users should worry about.

“Apple can succeed, but there’s no way they can offer visionary products if they can’t stay in business,” as Pieter Hartsook, a Mac industry analyst, puts it.

As ineffectual as Amelio was, Apple could hardly have found a worse time to boot him, Hartsook points out. The company desperately needs stability for the next year to keep its train on track. Apple is still bleeding money, but it has four key assets that could keep it around as a serious computer maker for many years:

* A great product line with strong offerings due out this summer.

* A viable operating system plan. Mac OS8, the interim upgrade, is about to emerge with key improvements for stability and performance. That won’t convince Windows users that the Mac is superior, but it will keep Mac users and developers interested until Rhapsody comes out next year.

* Compelling speed. The Mac’s up there with personal computers running on Intel chips and Microsoft’s Windows software now, and will feature far faster processors as early as this summer.

* Competitive pricing. With clones around, Mac prices are finally competitive, even if, on average, Macs still cost more than Windows machines.

But any disarray at the top--including a new chief executive who wants to reassess Apple’s strategies--could disrupt the product pipeline. Any delay in delivering new Macs or the Rhapsody OS could definitively eliminate Apple as a meaningful force in the PC industry.

So Apple needs someone who won’t meddle too much at the outset. That will make a tough job to fill even tougher, because to succeed in the long run, Apple’s new CEO has to be the opposite of a caretaker. The company requires a charismatic visionary with the daring and influence to build Macs that are really different--that set new standards for beauty, function and ease of use. To go back to the kind of creativity that produced the Mac in the first place.

Apple can still do it. The PowerBook 3400 and E mate hand-held computer show that at least in the portable realm, it still has the best new ideas. A new CEO will need to realize that innovation is Apple’s strongest competitive asset, that its key quality is quality.

Charles Piller can be reached via e-mail at cpiller@aol.com

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