Businessweek Archives

Ne Xt's Black Box May Be The Next To Go


Top of the News

NeXT'S BLACK BOX MAY BE THE NEXT TO GO

Will the last executive to leave NeXT Computer Inc. please turn out the lights? In the past year, seven of nine vice-presidents at Steven P. Jobs's struggling computer company have been canned or left for greener pastures. The latest: co-founder and hardware chief Richard A. Page, who's scheduled to split Jan. 15, pleading burnout. Why the mass exodus? NeXT isn't on its last legs, but it's clear that Jobs, despite his desire to re-create the success of Apple Computer Inc., isn't going to make lightning strike twice.

Not without some sort of miracle, anyway. With no one besides himself and President Peter van Cuylenberg to run software development, manufacturing, marketing, and sales, Jobs's hands are full. Indeed, NeXT's sleek black cube of a computer, introduced in 1988, never really took off, despite its whizzy graphics and powerful software. The company now has exhausted some $200 million in funding from Jobs, Japan's Canon, IBM, and Ross Perot. And plans for a public stock offering have been pushed up to 1994. Says one former executive: "I can't figure out how they can make it."

That sounds like an exaggeration. NeXT retains most of a $55 million credit line from Canon. Its NextStep software is years ahead of potential rivals, such as Microsoft Corp.'s Cairo and Apple and IBM's Taligent systems. And it will shortly announce that it pulled off a decent, if unspectacular, 1992. Sales were just over $140 million (chart)--up 10% from 1991 and 50% in the U. S., outpacing the workstation market's single-digit growth. In the fourth quarter, the seven-year-old company earned its first-ever operating profit.

HOT SYSTEM. What's more, Jobs, who always seems to have another rabbit in his hat, insists that some big sales are in the works. At least one customer, he says, plans to buy more than 10,000 copies of its software. And negotiations are under way to license NeXT's software to rival workstation maker Hewlett-Packard Co. and perhaps others. "Things are going better than they have in a long time," Jobs proclaims.

But not in hardware, it seems. The performance of NeXT workstations has slipped far behind those of HP, IBM, and Sun Microsystems. And its unit volumes tap only 20% of its manufacturing capacity, prompting rumors that its highly automated Fremont (Calif.) factory soon may be shut down. Jobs denies the rumors, and hints that the company is readying some new, higher-powered machines.

Still, Jobs concedes that NeXT's only hope for long-term survival, let alone stardom, is its software. Many view the NextStep operating system as the most advanced on the market today. Embodying a hot technology called object-oriented programming, it lets customers quickly write new programs and mold existing ones to new uses.

Gregory Anderson, whose Anderson Financial Systems Inc. writes software for NeXT machines, says NextStep lets him deliver new features to harried money-market traders "before they forget they asked for them." Such power has attracted orders for several thousand copies each from McCaw Cellular Communications Inc. and Chrysler Corp. Other customers include Citicorp, WilTel Communications Systems, Bear Stearns, Phibro Energy, and Mobil Oil.

CHIP SHOT. So broadening NextStep's market reach is now Jobs's main goal. He vowed in January to rewrite the software to run on the millions of IBM-compatible PCs powered by Intel Corp.'s 486 microchip. Accommodating the 486 would lure more suppliers of packaged software and attract customers who have been wary of committing to NeXT's proprietary hardware. Unfortunately, NextStep 486 won't ship to customers before June--just when Microsoft and Sun will be pushing their own operating systems for the 486, Windows New Technology and Solaris, respectively.

But Jobs's biggest shortcoming seems to be marketing, not technology. NeXT's sales force is just too small and strapped for cash to reach many prospects. Says Michael Slade, former marketing vice-president who left last October: "My budget in the last quarter wouldn't have bought one ad in BUSINESS WEEK." As a result, says Robert G. Pearson, director of Sun's advanced desktop systems, "they seem to have disappeared in the past year."

Can Steve Jobs, who's known among NeXT enthusiasts as a "hardware junkie," possibly find happiness running NeXT as a maker of software? "I can think of worse fates," he says. And so can customers: "I wouldn't feel sad at all if the hardware went away," says Afderson, for one. Take it as a compliment, Steve: Your software's killin' 'em.Robert D. Hof in San Francisco


American Apparel's Future
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus