RE: Cloning Revisited
Response to "The Good, the Bad, and the Ugly!"
By: Bob Moriarty
I believe that people with differing opinions should be able
to express them. Bob and I, have somewhat differing opinions
on the cloning issue (at least in degrees).
Bob wrote an letter about Jobs --
So in the interest of fairness, and
debate -- and to explore all sides of the issue, I want
Bob's side to be heard. I think it makes a good contrast to
my own.~ David K. Every
In your "The Good, the bad and the ugly piece," you
comment on some issues I feel strongly about and I would
like to discuss a couple of them.
Under "The Good" you say -
Apple acquired Power
Computing's assets for a song. For $100 million. Apple got a
company that was selling probably half a $Billion per year.
By my measure, that is a bargain and good for Apple (and
Other than the fact you were totally wrong and are
repeating a quarter truth, I liked the piece.
Power Computing made a great deal. They sold a worthless
piece of paper (the agreement between them and Apple which
Steve Jobs failed to comply with) and a 200,000 name data
base to Apple Computer for $100 million. Apple bought no
plant and equipment, no patents of any value, no future
sales, nothing. Apple didn't buy any assets, period.
Just how much is an agreement with Apple worth? Ask
Motorola, they don't think very much. They have spent
hundreds of millions if not billions of dollars in
development of the
PowerPC chips and Steve Jobs seems hell bent on
the destruction of the Mac ecosystem and the very best
anyone can hope for is that the vaporware up his sleeve is
Motorola may end up with a CPU three times faster than
any Intel chip and no demand, thanks to Steve Jobs.
But what about the right to hire Power Computing key
individuals? If you believe that Power Computing was
stealing customers that really belonged to Apple, you may
well agree the right to hire people from Power Computing is
worth about as much as the 200,000 name database. In that, I
will agree. They are both worthless.
Employees aren't slaves. Neither are customers. Every
company I have ever heard of that got tempted to think of
customers as slaves soon learned otherwise. Good luck in
your marketing efforts to that group, Apple. They have
already voted once to leave your grasp and I have no doubt
they welcome the opportunity to make their feelings clear
once again. And the employees? They also have the right to
say no. And I suspect more than a few key individual whose
"rights" Apple acquired will make their feelings toward
Apple crystal clear.
Apple paid $100 million dollars to avoid being sued by
Power Computing for breech of contract. The rest was smoke
and mirrors. Power Computing kept everything they need to
thrive including their name and today announced a new Wintel
computer. But gained more money than they could expect to
make in the next four years by working. Now, that's a hell
of a deal. For Power Computing.
Customers belong to the company who does the best job of
convincing them to buy the company�s product. Period. If
Apple can't convince people to buy their computers, maybe
Apple needs to make some changes. At Apple.
If they convince people to buy their products, maybe they
will make money. If for whatever reason they cannot, the
laws of economics dictate they go out of business. Steve
Jobs has done a brilliant job of convincing people that for
Apple to win, everyone else, including the customer, has to
lose. Bad idea Steve. This isn't a zero sum game with one
clear winner and one clear loser, this is a negative sum
game where everyone loses.
Steve Jobs has money. He has a company to fall back on.
All he is at Apple is an advisor or something. Steve Jobs
doesn't need Apple. And Apple doesn't need Steve Jobs.
The best quote I have heard came from a major player in
the marketplace who's name I am sworn to secrecy. Hiring
Steve Jobs to run Apple is like paying the babysitter who
burned down your house and stole your car.
Of course, no argument would be complete, without me
trying to get in the last word. So here is my response to
some of Bob's points.
Power Computing made a
great deal. They sold a worthless piece of paper...and a
200,000 name data base to Apple Computer for $100 million.
Apple bought no plant and equipment, no patents of any
value, no future sales, nothing. Apple didn't buy any
Apple bought out a competitor. They eliminated the
competition. I don't like that business model, but it is
If Apple only gets 25% capture rate (and some knowledge,
people and other things that are valuable) then it is a good
deal for Apple too. If Apple can't capture those customers
back, and can't keep the employees, then it was a bad deal
for Apple. We'll have to see. Apple is betting on themselves
-- and that is not unreasonable.
Just how much is an
agreement with Apple worth? Ask Motorola.... Steve Jobs
seems hell bent on the destruction [of Apple]...
I want to get into PPCP and PowerPC chips separately. All
these issues are complex -- and I am trying to keep some
balance about it.
Motorola and IBM have not delivered on their promises
when they first discussed the PowerPC and the CHRP / Prep
- Where is the processor twice the speed of anything
Intel has at the same price? (50% faster - yes, 100%
faster? depends on what you are doing -- and most
achievements have been made recently).
- Where are the IBM labeled Mac Clones?
- Where is IBM's corporate support?
- Where is OS/2?
- Where is WinNT?
- Where are the "PowerPC Inside" ads?
It seems only Apple is held accountable for changes in
Motorola may end up
with a CPU three times faster than any Intel chip and no
4 or 5 million/year is not exactly "no demand" (it is not
exactly the best we would hope for either).
Cloners have had a couple years to grow Apple's market,
and there is no proof they have done ANYTHING but pirate
Apples sales, and help make Apple less financially stable.
For Apple to clone, it has to be valuable to them. They
don't HAVE to clone! So I understand Apple's point on that.
But what about the
right to hire Power Computing key individuals?... the
200,000 name database... they are both worthless...
I disagree. I think that databases have value, and that
people (or opportunities to get them) have value.
There are many people that make their livings offering
They don't add up to $100 Million -- but it does have
Apple is betting that they can make a good enough offer
to keep them.
[The Customers] have
already voted once to leave [Apple's] grasp and I have no
doubt they welcome the opportunity to make their feelings
clear once again.
And the employees? They also have
the right to say no. I suspect more than a few key
individual ...will make their feelings toward Apple crystal
Remember, part of PCC's success is that they can do
direct sales. We know that "cutting out the middleman" can
reduce distribution costs (if done well). PCC did that
because they could. THAT got them many customers.
So (theoretically) Apple can offer the same machines as
they offer now, through direct sales, with a 10% or 15% cost
reduction -- which is not that different from the savings
you could get from PCC. IF all that holds true (and that is
a big *IF*), then Apple stands a chance at capturing
(keeping) many customers. If Apple can't, then I agree -- it
was a stupid purchase. Not because of the intent, or the
deal, but because Apple would be too incompetent to
capitalize on the opportunity.
Basically the same goes for the employees.Many will see
opportunities to do what they do well, and will go for the
opportunity with Apple. Many will opt to not go! Apple
bought an opportunity -- we have to wait to see if they can
capitalize on it. But we shouldn't ignore the value of that
Apple paid $100 million
dollars to avoid being sued by Power Computing for breech of
There certainly is an element of truth to that. So again,
the deal makes sense to Apple. I don't think that was all
there was to the deal -- but that is certainly a valid
I'm no lawyer (as I'm about to prove) -- but if PCC is
selling $400 Million/Year Gross (I don't know their net),
and Apple was able to prevent PCC from selling for a year or
two, and was sued for breech of contract, and our state
allows treble damages, and then there are the legal fees,
and the PR issues of the fight -- Whew, that $100 Million
certainly could be a bargain.
That isn't to say it wasn't stupid to sell a license,
then buy it back for a large fortune. But if you are Apple,
and you do want to stop a competitor, then it certainly
could be a bargain (in the long run).
If [Apple] for whatever
reason cannot [convince people to buy their product], the
laws of economics dictate they go out of business.
Sure. But Apple still does not have to voluntarily clone!
They can still clone and un-clone to their hearts desire. It
may be stupid and annoying, but it is the law of
intellectual property rights.
Steve Jobs has done a
brilliant job of convincing people that for Apple to win,
Everyone else, including the customer, has to lose. Bad idea
Jobs is making it hard to clone, and putting conditions
on it -- But MY IMPRESSION at this time is that
others can clone, with some reigns and control.
UMAX has pretty Open Cloning terms -- they just have to
stay under $2000 price point. That give UMAX quite a bit of
room. And Apple gets some extra revenue and a market cracked
that they aren't good at (and have little interest in).
Soooo, Apple wins, and not EVERYONE else had to lose.
I think Apple will continue to allow companies like
Daystar to make specialty machines, and others to do the
same, or in certain markets. So not everyone has to lose.
Of course PCC did lose -- and maybe Motorola. So Apple is
So we differ in degrees -- you'd call it "murdering
choice," and I'd call it assaulting it.
Steve Jobs has money.
He has a company to fall back on. All he is at Apple is an
advisor or something. Steve Jobs doesn't need Apple. And
Apple doesn't need Steve Jobs.
I can't argue with that.
Steve offers himself as a pitch man, and as a visionary.
He is a very good pitch man. He is a good visionary -- the
problem is that the costs of receiving those services is
giving him lots of control. The costs of that control (and
his other personality "quirks"), and people reactions to it
(and him) could far outweigh the benefits -- but that
is a separate debate, all on its own.
I am still unsure on Jobs. He has good and bad points (my
opinion) -- and I am not privy to his thoughts. My concerns
are that he scares me (and others) for valid reasons. His
actions in the past are reasons to be scared -- his actions
at present are very concerning as well (but COULD be
justified -- IF he is just playing hardball, and
IF all the rumors are wrong... but then again,
IF the moon was made of cheese, and IF pigs
could fly...). That is why he (and Apple) should explain
their long term plans -- which they don't do well.
Jobs has a history with Apple -- and many of the largest
mistakes in Apple's history, are because of him... but so
are some of its largest successes.
I hope that Bob's response, and my
response (to his response), makes you think. You may agree
with one or the other of us, or neither -- but at least you
have been exposed to both views.