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antibogon: Briar Rabbit & The Holy Grail





Deep Thought on Apple
42
Number of people who really, in their heart-of-hearts, thought Apple could be saved, before the Keynote speech at the MacWorld Expo.

42^2
Number of Apple fans at MacWorld Expo Keynote speech.

42^3
Apple fans it takes to fill the Memorial Stadium at the University of Nebraska.

42^4
Number of new UNIX machines that Apple will deliver in the first six months after Rhapsody ships.

42^4 x 2
Total new Apple UNIX machines counting upgrades of previously shipped systems.

42^4 x 6
Current number of Apple users.
(6 colors in Apple logo)

42^5
Roughly the amount of money Microsoft invested in Apple.

42^6
Amount of money Apple blew on failed OS projects before taking my advice and buying NeXT Software.

42^7
Drain on world economy over the next five years that will be directly attributed to the loss of competition in software for general purpose computers, if Apple fails.




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Driving home from work and listening to NPR, I heard a room full of Apple supporters produce an audible collective gasp in response to the satellite appearance at MacWorld Expo of special guest Bill Gates, CEO Microsoft. It was plainly recorded and played back on All Things Considered -- along with the booing that accompanied it. Obviously, in the rush to get to MacWorld Expo, the approximately 42-squared people in attendance left their copies of the Hitchhiker's Guide to the Galaxy behind. For some reason, its cover missive, " Don't Panic! ", also slipped the collective mind.

I hadn't been able to connect to the internet radio-cast of the Keynote (though I did manage to catch some of the Grateful Dead tunes broadcast immediately thereafter). The reaction of the audience came as more of a surprise to me than the announcements in the keynote itself.

The Billion Dollar Red Herring

I was even more amazed at the continued gullibility of the mainstream press concerning these issues. Story after story relayed the presumed interest of Microsoft to continue selling it's popular Office software into the MacOS market. It was everywhere, the news that Microsoft sells "1 Billion Dollars a year" worth of MacOS software.

Less frequently quoted, but considerably more reliable estimates put that figure at closer to $300 million a year, though it may have peaked near a billion dollars a few years back. But let's give them the billion dollars, for the sake of argument.

So why didn't it occur to any of them that if MacOS goes away, those people will be using some other OS? And if Apple goes away, that OS is going to be a Win32 derivative, running on Intel? That means those folks will be buying a billion dollars of software that's already been developed, tested, and paid for by the other 90% of the desktop software buyers. Every dollar worth of software sold to an ex-MacOS user is a dollar of almost pure profit for Microsoft. In contrast, continued development on three platforms (Windows 95, Windows NT, and MacOS) is expensive. Microsoft would like nothing more than to cut MacOS out of that equation and cut that list back to two similar systems. The accepted truth that the quality of the Microsoft ware is lower on MacOS, and shows up in stores later than it's Windows cousin, speaks to a consistent strategy to encourage organizations to switch to wintel systems.

The 150 Million Dollar Red Herring

Most of the coverage, both mainstream and trade press, also played up the stock/cash swap, estimated at $150 million dollars, as an investment to help out the struggling Apple. Well, it was, in a way. Think for a second, however, about that number -- it's too small to be relevant to either Apple or Microsoft. It's roughly the amount of the soda fund at Microsoft.

If a given $7 billion company, say Apple, needed roughly $150 million, so badly that it might not live without it, then $150 million would not be near enough to save the company. Of course, the additional undisclosed sum for settlement of the patent disputes might double this figure, but we're still talking petty cash.

One hundred and fifty million is, however, just big enough to impress people with the seriousness of the press release, and it obviously served that mission well.

The Patented, 5-Year Cross-Licensed Red Herring

There was also a great deal of confusion around exactly what the deal means. Analysis varied widely from Microsoft supporting Rhapsody, to such wild nonsense as Apple giving Microsoft a license to Rhapsody.

The deal actually hinges upon a cross-licensing agreement for all extant patents, and all patents filed for the next five years by either party. Presumably only software patents are covered, but this was not specified. This agreement is not a source code license, and doesn't affect Rhapsody, nor imply anything about it. So what's up here?

It's likely that Apple doesn't need the distraction of the on-going patent disputes with Microsoft, which have dragged on for years. However, the people involved are mostly attorneys at this point, and it's probably only costing a few million dollars a quarter to carry on the dispute. Neither company has clearly enforceable patents that the other must have to survive. If anything, the Apple patents would be worth much, much more to Microsoft (and thus Apple) than $150 million, or even $300 million. So, the cross-licensing, too, seems an unlikely motivator for either company.

The White Elephant

Then there's the agreement to ship Microsoft Internet Explorer as the default web browser on MacOS systems. This might be somewhat important to Microsoft as a way to continue it's erosion of Netscape's dominance in this area. It can't be all that interesting to Apple, which also pledged to continue its support for user choice in browsers -- meaning that a MacOS user can set a preference for a different default browser if they wish. It seems clear that the first act of many new Mac owners will be to use MS Internet Explorer to surf to Netscape and download Navigator.

It's also been speculated that Apple was using this deal as a way to needle Netscape for not pledging Rhapsody support. Not likely. To start with, both Netscape and Apple are aware that another company is hard at work updating an excellent browser for Rhapsody. OmniWeb, like Navigator, is freely licensed for single-user installation. OmniWeb is so well integrated into the OpenStep environment, that it will doubtless become the browser of choice for most Rhapsody users.

Since browsers are basically given away free, and since Netscape has begun un-bundling various features (like email) from the browser, in preparation for turning these into actual revenue-generating software modules, (a novel concept for Netscape) it doesn't seem too likely that Netscape would be greatly upset. Perhaps a little miffed, but they might not even notice, since by far their largest market is on Windows. Apple probably hasn't given the issue any thought, since all the market wants is a decent, free browser. Rhapsody will have the foundation that will enable Apple to develop one in a few weeks, assuming a bomb landed on Omni Development and took out OmniWeb. I've given it more attention here than it's received at either Apple or Netscape.

The Wolf in Sheep's Clothing

Unmentioned throughout this week is the subtle pressure applied steadily by MicroSoft over the last year. Delays and quality of Microsoft products for MacOS, and hints of further delays, have signaled Microsoft's strategic approach to, or rather strategic retreat from MacOS. It's possible that this was an attempt to pressure Apple to settle the patent disputes -- a barrel that Microsoft has held Apple over before. It's also likely that Microsoft was idly hoping to further weaken its already beleaguered rival by casting doubt on the viability of MacOS as a business desktop system.

Microsoft doesn't want to kill Apple outright, though, since an Apple relegated to a slowly shrinking niche market is useful as a Microsoft tool against the Justice Department. If Apple ceased to exist, it would be difficult for even this toothless federal agency to continue to deny the monopolistic nature of Microsoft, and certain of its anti-competitive practices. This consideration may have coaxed Microsoft into this agreement -- with an end to the pesky patent disputes and the chance to take another bite out of Netscape thrown in as sweeteners. But it's not likely to have been the primary driver, since Microsoft has been pretty successful in fending off the Justice Department, even when the anti-competitive practices were more clear-cut.

Since Apple will be dependant on MacOS for at least the next year, the industry confidence in MS-Office for MacOS is much more important to Apple than to Microsoft. Important enough to settle the patent disputes, make Explorer the default browser, and pledge to provide compatibility with Microsoft's Java Virtual Machine, in return for a high-level pledge to continue support for Office on MacOS.

But Microsoft support for MacOS has been pledged before, and those pledges, in the eyes of many MacOS users, were not worth the electrons that ran the teletypes for the press-release. Even worse -- in an age where nothing is certain, you can count on Microsoft to figure out some way to screw even its closes partners. Steve Jobs and Larry Ellison are smart enough to realize that, so they must not be counting on Microsoft delivery on the spirit of the pledge. Sure, they'll live up to the letter, by delivering the "same number" of major releases of Office on MacOS, but it is likely that the traditional pattern of late delivery and higher-than-on-Windows defect rate will hold true.

The Holy Grail

Okay, can you name the single biggest problem at Apple for the last year? Bigger than laptops that catch on fire? Bigger than cancelling an OS? Bigger than ousting a CEO? Bigger than hundreds of millions of dollars in red ink?

Credibility.

Apple has been tagged as following a hopeless dream, chasing the Unicorn of alternative computing. Apple has been tied to the stake by the trade press, because they spent over $5 billion dollars and six years trying to develop a modern OS, meanwhile ignoring their core markets and failing to update the core product -- MacOS. During the lost years, Apple's senior management drank their own kool-aid, and failed to even recognize the damage as marauders plundered their markets.

Apple's final sin was to purchase the industry's black-sheep technology company that blazed the way down the object-oriented, multimedia and interconnected computer world that the industry now lives in. NeXT continually embarrassed the rest of the industry for having workable, shipping, and high-quality answers before most people knew the questions.

Furthermore, even the Apple dedicated trade press has been hostile. It took most of the MacZines months to get over being jilted by the elopement with NeXT, just after they had pronounced BeOS love at first sight. If these people who's very jobs depend on the survival of Apple, can no longer hide their anger, how can Apple get good press anywhere?

Nothing that Apple has said or done to fix this problem over the last six months of radical changes has got them out of the press penalty box. Every bit of good news was intentionally obliterated by "but they already lost to Microsoft, so it doesn't matter." After catching the scent of blood in the water, the financial press, and finally the mainstream press joined in the feeding frenzy. After all, it isn't every day that one gets to report on the implosion of not only a huge business, but also an icon of American-style entrepreneurship.

The Number of The Counting

This new partnership with Microsoft is the only thing that could save Apple from auto da fe. Failure to get out of the penalty box is the only thing that could really kill Apple, no matter how brilliantly they execute on their MacOS, Rhapsody, and other product plans. No matter how much they spend on marketing. No matter if they hire a competent marketing firm, and punt the lameoid looser marketing wannabes. No matter if Steve Jobs came back as CEO. No matter if the PowerPC was five times as fast as the Pentium processor. Apple still would have been killed by the mindshare problem.

Steve Jobs seems to have learned the painful lesson that the best technology can lose to better marketing.

Now, back to the magic number for a second look at $150 million. Steve Jobs also knew that nobody would take this agreement seriously without a sizeable chunk of cash behind it large enough to get attention -- ten million would be scoffed at as a token gesture. The Number had to be large enough to fool the average person into thinking it significant -- so anything near a hundred million would probably do, and of course more is better.

The real question is, how did he convince Microsoft to lay out that much cash? Sure, it's the soda fund to them, but it's still big enough to get the bean-counter's attention. What's in it for Microsoft?

Briar Rabbit & The Trojan Rabbit

To begin negotiations for a Microsoft investment in Apple, Jobs had to tip his hand -- it could not have been hard for Gates to figure out that Jobs was looking for a public relations boost from such a move. Gates must have decided early in negotiations to extract support for the Microsoft vision of Java as his fee for services rendered. Funny thing is, Jobs probably wanted that all along. Briar Rabbit just had to hide that one little secret, and extract as large a chunk of cash as possible from Gates as he was being thrown into the briar patch.

So, into the MacWorld Expo, comes Steve Jobs, the anointed Apple messiah, with a large wooden rabbit in tow -- a peace offering from the enemy, surrounding the castle. Suddenly, out of the trojan rabbit , jumps Bill Gates. He's followed not only by Internet Explorer, but also an MS-compatible Java Virtual Machine, which implies Active-X, thereby striking terror into the hearts of even the koolaid drinkers, who were so stunned they gasped -- most of them -- out loud.

Do you have any idea how hard it is to elicit that response from a group that large? It's really not easy. Last time I got that response from even a small group, I first had to take out my private member and place it on a conference table.

Steve, of course, is also correct, when he says that Microsoft need not lose for Apple to win. Don't panic, however, he's not selling you out. Quite the contrary, in fact. And Rhapsody is not going to be based on Active-X and OLE/COM, nor is it going to be torpedoed and replaced with a resurrected NT/PowerPC. Nor is it going to be "given to Microsoft" nor any of the other wild things that seem easy to believe in the wake of the announced detente.

Check back here later, for the story of certain events that probably helped shape Steve's opinion on this matter, and what I think you can expect to pop out of The Trojan Apple.


Gary Longsine is CEO of illumineX, inc., a consulting firm specializing in Java & WebObjects development, and an irregular columnist for Stepwise. All of his opinions, substantiated and otherwise, are his own, and coincide with the opinions of others merely by coincidence.
© 1996-2003 - Gary W. Longsine. All rights reserved.