Pay no attention to that man behind the curtain!: How making Steve Jobs Apple's interim CEO had to happen
bob@cringely.com
There was a wonderful scene in the pilot episode of "Get Smart," the 1960s situation comedy that spoofed spy movies. Maxwell Smart -- Agent 86 -- was receiving from his boss -- The Chief -- all the tools of modern spymanship, circa 1965. He received the gun, the shoe phone (hilarious back then, but substantially larger than many cellular phones of today), and finally, the cyanide capsule. The capsule, 86 was told, was for use in the event that he was captured by the other side. It would cause death within seconds of being swallowed.
"That's great, Chief," said 86, "but how do I get them to swallow it?"
To understand Steve Jobs, the new interim CEO of Apple, just think of Maxwell Smart.
I had other plans for this week's column. For example, I was going to fall on my sword over the fatal arithmetic error in last week's column. Then Apple announced Jobs' new job and I knew what I had to write. The math apology is still here. But now, it's at the end of the column, rather than at the beginning.
Why did Apple name Steve its interim CEO? Well, the biggest reason is that they didn't have anyone else to announce. The company would much rather have announced the appointment of a non-interim CEO, but so far they haven't been able to find one. The delay in finding a new bigshot is now more than two months, and Apple was beginning to get embarrassed.
Another reason why Steve was appointed interim CEO is because that's the role he has been playing since Gil Amelio was sacked. Steve was making announcements, passing judgments, changing policies, all without much in the way of legal standing. He was a director, but a director who had not attended an Apple board meeting since 1985. There was no resolution giving him the power he was so clearly using. Apple's lawyers had to be panicked, because Steve had no legal basis for doing what he was doing.
So Apple and Steve both accepted a version of reality. Apple accepted that it would be awhile before a real CEO could be hired. Steve accepted that by acting as CEO without being CEO he was putting the whole company at risk for lawsuits by employees and shareholders alike. It was as though Ross Perot had bought one share of General Motors Class E shares, walked into the headquarters of Electronic Data Systems, started giving orders to change personnel policies, AND PEOPLE ACTUALLY FOLLOWED THE ORDERS.
Jobs was a loose cannon at Apple, but now he is at least a legitimate, legal loose cannon, which is why I think the appointment is a good thing. I don't think Apple really had any choice.
However, I doubt that this is Jobs' audition for being the permanent CEO. He probably could have that if he wanted it, making this week's announcement totally stupid. Not even Steve would put the company through this two-step process on a whim. Apple is still seriously looking for a new CEO. Whether they'll find an acceptable candidate is still uncertain.
I did some skulking in Cupertino, and here's what I think is going on. This is all based on what I was able to pull from my few friends who are still at the company, so no wagering.
Remember that Apple has always been a software company that shipped its code in the world's most expensive box -- a Macintosh. Steve Jobs knows this. And he knows that it is in Apple's best interest to somehow reduce the cost of that box. The best way to do this is to drop the hardware altogether, but Steve can't do that outright because he fears it would kill the company. He has to find a way to transition toward making Apple a software company.
So Steve has killed the clonemakers, or has he? Power Computing is absorbed, Motorola is getting out of the Mac business and taking a $95 million charge, while IBM will apparently cut off its Mac production for OEMs. But somehow Umax got a license for MacOS 8.0, as did Powertools. These two companies were able to succeed where IBM and Motorola couldn't simply because they were willing to pay dramatically higher royalties to Apple. It's not that Jobs was adamantly opposed to clones, but that he wanted Apple to make as much profit from each clone as it did from its own production. Raising the royalties made that happen. Umax and Powertools, as low-overhead manufacturers, could make this new pricing work in the short run, while IBM and Motorola couldn't pay the extra royalties and continue to make a profit on the clones.
But didn't Steve risk the whole PowerPC consortium by alienating Motorola and IBM? Well, he didn't make any friends in Schaumberg or Armonk, but Jobs' actions didn't kill the PowerPC, either. Those chips are already set to make major inroads in the microcontroller market, enough alone to justify their continued development. Not that I think Steve would have really cared.
No, Jobs is all about appearing to be decisive and taking a strong position. His position right now is that MacOS 8.0 must be protected at all costs, right up to the time when he'll discard it for Rhapsody without a moment's hesitation.
Rhapsody, Apple's next-generation OS, is the heart of Jobs' long-term strategy for Apple. It wasn't always that way. Rhapsody almost received a castration several times. But now the road seems clear, there will after all be a yellow box version, SM., UNIX, and Rhapsody for Intel. And Apple will be forever changed for it.
Rhapsody will be priced to compete with Microsoft's Windows NT, which means that Apple will make a handy profit even on systems where it doesn't make the hardware. And that's a good thing, since Rhapsody will also run on Intel boxes that Apple will have no way of "certifying," as it certifies (and restricts) the Mac clone market. Apple's Common Hardware Reference Platform will probably be finished-up if only for legal reasons; the technical advantages that CHRP supposedly engendered aren't real, since most of them are already available for less money on the PC platform.
Intel or Intel-like systems are Apple's future and Jobs knows it, but in the meantime, he has both to keep hardware sales going and make it look like Apple's factories aren't really for sale even though they probably are. It's his way of getting a higher price for the factories by creating the appearance of demand.
Or maybe the factories will be dedicated to building network computers. Larry Ellison from Oracle, who is also on Apple's board and is Jobs' best friend, is certainly pushing that idea. Maybe Oracle is arranging manufacturing for some of the NCs it licenses. Could be.
Now about last week's math error. In my column about Worldcom buying CompuServe and giving the retail accounts to America Online, I said that Worldcom wasn't worth as much as MCI or Sprint. This was wrong, as many, many readers proved to me after they swam through corporate finance documents. I have the smartest and hardest-working readers in the world, damn them. My mistake was confusing book value with market capitalization. I won't do that again.
Even worse, I tried to correct the mistake on the day the column first appeared but somehow the correction didn't appear. We'll blame that one on errant e-mail.
So I screwed-up. Sorry about that, Chief.








