Thursday, July 14, 2005

Apple and Osborne (not Ozzie)

In CNET this morning a post was added questioning whether Apple and Osborne (the failed computer maker of the 1970-80s) had parallels. I had the unique experience of having dinner with Adam Osborne the founder and idea guy behind the company about a week before it folded. It was an odd dinner. He asked those of us at dinner whether we would be willing to risk our entire net worth with him on a new venture - if we were not willing to do it we were not "risk takers."

Earlier that year Osborne with a lot of flourish had announced a new version of his popular "portable" computer - 26 pounds and a 3X3 screen. Osborne had created a computer with something that people could actually use. For about $1800 you could get this computer and Wordstar (I wrote a dissertation on it), Visicalc, Basic and a database. Disks then were $50 each and were actually floppy (5"). Osborne's economic model was strange - he offered his computer and software for something less than it cost him to produce it. So even without the vaporware announcement the company was in trouble. He also spent cash pretty wildly - so his R&D was out of whack with his cash flow. Once he had hyped the O2 sales in the original machine tanked so cash dried up.

So how could that performance be compared to Job's announcement about moving to Intel be the same? Part of the problem is the Apple can't do it syndrome - there is a segment of the tech community that either does not get it about Apple or does not want to get it. But beyond that normal baloney is there an issue here?

A few weeks ago I wrote that I thought the deal with Intel was a good one. But there are some other reasons why the parallel with Osborne is not real.

#1 - Cash is king - Osborne burned cash, Jobs has sheparded it. Apple has a current ratio that is twice the industry and tons of cash from the sale of Ipods.
#2 - One trick ponys - Osborne had one product and then announced a competing product that was not yet real. With the Intel announcement Jobs announced an enhancement to one of his product lines that is backwardly compatible.
#3 - Integration - one of the interesting things about Apple in the last few years is they really seem to get product integration. An Ipod works with their computers and with all sorts of other products (iSight for example) - movies and photos as Walt Mossberg has suggested are better on Apple. The iLife and iWork products are bridges to link other technologies which are really pretty good.
#4 - Keeping the developers happy - In the announcement there was something called Rosetta which allows translation between PPC and Intel chips. That is critical for support but also to keep the developers in the mix.

With all those and more - all this worrying is silly.