05:24 AM

Silicon Valley's Machiavelli...or praying mantis? You decide....

by Tom Foremski for SiliconValleyWatcher.com

Louise’s guestblog on Steve Job’s return to Apple made me wonder if Gil Amelio knew the likely outcome of bringing back Steve Jobs? Did he stand any chance at all against Jobs, a veteran of many, many, gruesome political battles?

I have an image of a praying mantis Steve Jobs holding a still, rigid Gil Amelio, and calmly and coldly munching him head first. A victim of Silicon Valley's Machiavelli. Or was the acquisition of Next a reverse takeover of sorts, engineered by Jobs but with the cooperation of Gil Amelio, happy to get out of a rapidly failing company?

Jobs’ wasn’t doing that great at the time. Next had been struggling for 11 years and Jobs had been forced to ditch the workstation hardware business and regroup as a software company. It had some good software technology and enterprise software development tools but it was trying to compete in the Fortune 100 enterprise software market. You need to have a ton of money over a long period to market your software in that space. I’d run home too . . .


Gil was a man in trouble too, Apple was sinking fast and it had a dire need for operating system technology.

The development of its next generation Copland operating system had been a disaster and it had to junk the project. Yet it needed a next generation enterprise operating system to execute Gil’s strategy of making a last-ditch stand on Apple’s most profitable market—its corporate market. Next had a fair amount of enterprise software technology so Gil paid $400m in cash and stock to buy the company and the services of Steve Jobs as “advisor.”

Did Amelio buy Jobs or the technology? It’s interesting to note that Jobs was not the first choice. There was another ex-Apple senior executive that Amelio almost brought back to Apple —- one that was almost as charismatic as Jobs. About a year before, Apple had been in talks to acquire Be, a company founded by Jean-Louis Gassee, a former senior VP of Apple.

Gassee once famously said that Apple would not license its “crown jewels” to other computer makers, meaning its proprietary system and hardware technology. (Jobs is now doing exactly the same, refusing to license the iPod technology to others.) Be had great operating system technology that was very well respected within the software development community for its high performance multimedia and multiprocessor capabilities. An operating system far better suited to Apple’s needs than Next’s technology. But an agreement on money could not be reached. Be is now a “not to be” and Gassee is still floating around doing a bit of VC-ing.

You have to hand it to Jobs though, he’s hitting them out of the park -- he’s easily Silicon Valley’s Babe Ruth:

He co-founded Apple, which helped launch the PC industry.

He helped make the Macintosh a success, which popularized picture-based point and click computers, which are now everywhere.

He rescued Apple and refocused it on the less profitable consumer PC market rather than the enterprise market, with a line of bold, colorful home PC designs.

Let’s not forget Pixar, the extremely successful film animation studio. Jobs has led that company through a series of hugely popular animation movies--amazingly without any duds at all. And he took on the might of Disney, dictating new terms that favored Pixar.

And now, it’s the iPod -— the hugely popular handheld computer designed to play music, which is also boosting Apple’s computer and other businesses.

The recent launch of the Mac Mini is also a great move by Jobs and will be a sure-fire hit. This isn't about persuading Windows users to switch to Mac, as the media likes to always portray such things. Its about computer users using both. (My kids have used both systems for years -- the interfaces are very similar. If you can use one you can use the other.)

In regards to Apple today, it’s a great example showing how profitable proprietary technologies can be, if they become the “de facto” standard (look at Intel and Microsoft). Proprietary technologies has always been the way to make serious money in the computer business. There is absolutely NO reason Jobs should license the new iPod “crown jewels” anytime soon. He can milk this one for a good while longer.

The iPod platform can be gradually opened up and licensed to others but I bet Apple won’t give up control over its digital rights management technology. DRM is the lynchpin strategic sweet spot in the consumer entertainment market bar none. Microsoft would love to have that spot in DRM. (The music industry, and Hollywood too--isn’t that stupid to allow that to happen . . . Apple is far less of a potential problem than a giant company with out of control monopolistic behaviors deep within its DNA.)