Apple Is Expected to Revise Marketing As Company's Overhaul Takes Hold

By Michael W. Miller
The Wall Street Journal

June 24, 1985

Now that Steven P. Jobs, chairman, is out of the day-to-day picture at Apple Computer Inc., the company he co-founded is likely to take some important steps he had discouraged -- steps that would change the way Apple markets its two personal computers.

For its Macintosh computer, Apple has begun strengthening relations with outside companies that make and sell accessories. Some of those companies complain they were disregarded by Mr. Jobs. The new bridge-building effort could make the Macintosh more desirable in offices, where Apple's marketing drive hasn't caught on. Customers say there aren't enough add-on products for the machine.

Only two weeks after Apple announced the corporate overhaul that relegated Mr. Jobs to a new "global" role, General Computer Co., which makes information-storage devices, said it won a long-sought concession from Apple that will make it easier to connect a General hard disk to the Macintosh.

Apple also is expected to start revitalizing its Apple II line, less powerful machines now sold for use in homes and schools. With Apple II sales apparently slumping, many in the industry expect the company to step up efforts to sell the computer to businesses, perhaps offering more powerful versions of it.

John Sculley, Apple president, who orchestrated the company's recent shake-up, is scheduled to discuss the company's future Wednesday at a San Francisco computer forum. It will be Mr. Sculley's first public appearance since the reorganization, which involved dismissing one-fifth of Apple's work force and closing three of its six plants. Meanwhile, Mr. Sculley won't comment on Apple's plans. Mr. Jobs, who is traveling in Europe, also hasn't been available for comment.

But Delbert W. Yocam, Apple's executive vice president for product operations, indicates that the company will change certain peculiar technical features of the Macintosh that hindered other manufacturers in designing accessories for it. "We're going to start looking at things a little differently in the future," he says.

Mr. Yocam also says Apple has a new group that will work with other companies that make accessories marketed by Apple, such as printers and disk drives. The creation of the group, he says, represents "a statement of direction."

If the Macintosh is changed, it is likely to affect hard-disk devices for storing large amounts of information. Hard disks are becoming crucial features of personal computer systems used by businesses.

Unlike International Business Machines Corp. and many other personal computer makers, Cupertino, Calif.-based Apple doesn't sell a hard disk. Outside suppliers do sell such products but customers are hampered by the fact that it is hard to remove the Macintosh's case, making the inside hard to reach. The most efficient hard disks link directly to a computer's inner circuits.

Some suppliers also complain that the Macintosh's innovative built-in software -- which lets a user enter commands by pointing to symbols on the display with a moving arrow -- isn't well-suited for a hard disk.

The Macintosh's unorthodox design is generally attributed to Mr. Jobs, who conceived the product and ran the division that made it before the shake-up. "Jobs's approach was always to take a clean sheet of paper and start from zero," says Michael Joseph, a product manager at Iomega Corp., which makes a storage device for the Macintosh. "The good side is that he made computers that were easier for people to use. The bad side is that they were harder for people like me to build parts for."

By contrast, the availability of a wide range of well-tailored accessories made by IBM and outside companies is one reason for the success in offices of Apple's nemesis -- IBM's family of personal computers.

But now, in an effort to encourage other companies to market more accessories for the Macintosh, Apple is expected to make certain technical changes. "They've indicated to third-party developers that they're going to be improving the operating system," says Mr. Joseph, referring to the computer's built-in software. "Looking down the road I see that my job's going to become a whole lot easier because I'm going to be able to develop products faster and at lower costs."

Another sign of change at Apple is the computer maker's recent treatment of General's HyperDrive hard disk. Most hard disks for the Macintosh are plugged into the back of the computer, but HyperDrive is attached directly to the machine's inner circuits. Closely held General, based in Cambridge, Mass., says that difference makes the product five times faster than conventional rivals.

To connect HyperDrive, a dealer must remove the back of the Macintosh. Until recently, that voided the product's warranty. "Steve Jobs had put down a little dictum that nobody would screw around with the inside of his Macintosh," says Stewart Alsop, publisher of an industry newsletter. "It made it real difficult for third parties to work with the Macintosh."

But this month, General Computer says, Apple agreed to modify its warranty to allow installation of HyperDrive.

Apple itself may be preparing to go so far as to market HyperDrive, an increasingly popular product at the company. Many Apple managers have the hard disk on their desks, and Mr. Sculley reportedly has one at home. One Apple engineer recently told a trade journal that the company plans to market a version of the Macintosh in Japan with a HyperDrive built in. General Computer won't comment. Apple's Mr. Yocam says the company hasn't announced any such plan.

For the Apple II, the company must take action to reverse what analysts say are slumping sales. Future Computing Inc., a market research concern, forecasts that Apple II sales will drop 11% this year to $780 million from $880 million in 1984.

When Mr. Jobs was in charge of the Macintosh division, some managers in the Apple II division complained that their product wasn't getting enough top-level attention. Now that Mr. Yocam, the former head of the Apple II division, is in charge of product development for the entire company, that is expected to change.

Mr. Yocam says 1986 will bring a new version of the Apple II. Two widely expected developments in the next 12 months are a floppy-disk drive with more storage and a faster microprocessor, the chip at the heart of the computer. Western Design Center Inc., the Mesa, Ariz., semiconductor company that designed the Apple II family's current microprocessors, already has sent Apple samples of a new semiconductor with twice the original chip's power.

Both upgrades would give the Apple II the extra power it would need to win more business customers. Mr. Jobs is said to have discouraged selling the computer to businesses for fear that it would interfere with the company's plans for Macintosh.

"Jobs was totally dedicated to pushing the Macintosh against IBM in the business channel," says William H. Bowman, chairman of Spinnaker Software Corp., which designs programs for the Apple II. Mr. Bowman met with Apple managers last week for a briefing on the company's new structure. He says the new organization includes a group responsible for marketing the Apple II to small businesses.

Copyright (c) 1985, Dow Jones & Co., Inc.