The first step in Apple Computer's dramatic restructuring will come next week, when the company announces plans to lay off as many as 5000 employees during the next few months, as well as to abandon some products.
Although Apple will not completely abandon any of the markets it is currently in, many products, including its MessagePad and Performa models, will be eliminated.
The restructuring next week will focus on more tightly integrating Apple's various units. The ultimate goal is to develop a series of highly independent units capable of delivering more narrowly focused technology for multiple platforms.
Although Apple hasn't made any final decisions on how it will ultimately be structured, the company is considering a solution similar to a holding company, where various units would act independently of each other, sources say.
At the same time, Apple will focus on more specialised, higher-margin hardware products, including desktop-publishing systems, portables, and servers.
The exact number of layoffs and identification of Apple's initial core markets will come on March 14, when the company outlines plans to focus on the high-end publishing, education, scientific/engineering, portables, and server markets.
"There' still going to be consumer desktops from Apple; there's going to be a server division, a thin-client division, a consumer-electronics division within Apple's hardware unit," a source says. "But the products they come out with and where they are targeted might change."
Apple's decision to drop out of some markets is a reflection of the growing strength of the company's licensees, which now account for about 9% of Macintosh sales, according to Apple executives. As Apple drops certain market segments, it will encourage clone manufacturers to step in, increasing opportunities for companies such as Umax and Power Computing.
In return for ceding some markets to its licensees, Apple will charge significantly more for the rights to the MacOS, sources said. Apple is expected to as much as double the cost of the MacOS licensing fee for certain market segments, sources added. Currently the per-copy licensing fee for the MacOS is about US$50.
Sources say Apple's ultimate goal is to take better advantage of its technology on multiple platforms.
"The software group would benefit because it would make it easier for them to continue developing something like NextStep for the Intel architecture," one source says. "The hardware group would find it easier to offer a [Windows] NT-based server if they weren't so tightly aligned with the MacOS."
With a low-cost PowerPC design to debut, Apple will de-emphasise its hardware sales, instead focusing more on getting revenues from software, sources say.
If Apple adopts a holding-company approach, it will divide the current company into a handful of separate units with their own profit-and-loss responsibilities and their own schedule for introducing products, sources say.
"Given what they said they would do with Rhapsody, [a holding company] would make sense," says John Dunkle, president of Workgroup Strategic Services. "They have already talked about NT running on their boxes, which makes sense as well."