[MD1] Apple Details Restructuring Plans
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[MD1] Apple Details Restructuring Plans

Apple Computer Details Restructuring Plans
Company Paves Return Road to Leadership With Focus on Its Distinctive
Product Strengths

CUPERTINO, Calif.--March 14, 1997--Apple Computer, Inc. Chairman and CEO
Gilbert F. Amelio today detailed a restructuring plan that sharpens the
Company's focus on strengths that have been at the heart of its success --
exceptionally easy-to-use personal and mobile computers with unique
multimedia and Internet capabilities.

"The top priorities guiding our reorganization are the rapid delivery of
distinctive products for our loyal business, education, and home
customers, and the development of a robust next-generation operating
system to carry them into the future," Amelio said. "We can best achieve
these goals by streamlining our organization, simplifying our product
lines to deliver fewer but much stronger models, and stopping investments
in activities that are not central to these core businesses."

Apple began the reorganization last month with a new streamlined
organization that focuses research and development efforts on products
that are central to its key businesses, unifies Apple's multiple marketing
groups, aligns the Company's sales teams to its market strengths, and
fully integrates Apple's and NeXT's resources. This simpler organization
has two charters: first, to bring distinctive products to market quickly
and to market them aggressively to customers in Apple's key markets, and
second, to deliver the Company's next-generation operating system,
code-named Rhapsody, while continuing to enhance the Mac OS.

The Company simultaneously accelerated moves to simplify its product line
and deliver fewer, but more competitive models, such as the recently
announced high-end Power Macintosh and Power Book 3400 computers and the
new entry-level products, scheduled to be announced in April.

The Company has also re-evaluated the funding of certain activities and
technologies that are not central to Apple's core business strategy, or
that can be better achieved through industry standards, or that represent
a strong business opportunity for developers.

The resulting restructuring includes the lay-off of approximately 2,700
Apple employees with notifications scheduled to begin later this month,
and an estimated $155 million increase to the Company's restructuring
reserves to be charged to the Company's second fiscal quarter earnings.
The majority of the total restructuring cost is attributable to the
workforce reduction, and the remainder to the cancellation of contracts
and leases and to asset writeoffs.

While re-evaluating the funding of certain activities and technologies,
the Company reiterated its commitment to deliver Rhapsody in 1998, and to
continue to enhance the Mac OS. Technologies that will be maintained as
part of the Mac OS but will receive reduced investments for future
upgrades include Open Doc component software technology, Cyberdog, Open
Transport, Game Sprockets, and Mac OS Development Tools. Some other
technologies that are not part of the Mac OS, such as the speech
technologies, will be maintained without further major upgrades planned.

Other activities and technologies that Apple will not continue to fund
include the Video Conferencing Solution and AIX Server Software. Apple is
also exploring a wide range of options for still other technologies and
activities, including discussions with prospective licensees and business

As part of its renewed focus, the Company also said that it is altering
the delivery schedule for Mac OS releases beyond Mac OS 8, scheduled for
introduction in July 1997. Instead of two full retail releases of Mac OS
in 1998, as previously announced, Apple plans to ship one complete release
in mid-1998 (Allegro), and a full release yearly from then on. Between the
full releases, the latest system improvements will be made readily
available through updates; Apple plans to ship two system updates between
Mac OS 8 and Allegro. The change makes more resources available for work
on the next-generation operating system and directly answers customers'
cost and logistics concerns for frequent major releases.

"With this restructuring, and the painful decisions that have come with
it, we are addressing the problem of resource fragmentation and the
resulting weakness," Amelio continued. "We will limit our focus and put
significant muscle behind targeted efforts in order to successfully
develop and market winning solutions that have made Macintosh customers
some of the most passionate and loyal in the industry. We fully intend to
keep that spirit alive."

Apple Computer, Inc., a recognized innovator in the information industry
and leader in multimedia technologies, creates powerful solutions based on
easy-to-use personal computers, servers, peripherals, software,
information appliances, and Internet technologies. Headquartered in
Cupertino, Calif., Apple develops, manufactures, licenses, and markets
solutions, products, technologies, and services in the areas of business,
education, home use, entertainment, scientific, engineering, and
government for customers in more than 140 countries.

Katie Cotton
Apple Computer, Inc.
(408) 974-7269
email: katiec@apple.com

Russell Brady
Apple Computer, Inc.
(408) 974-6877
email: brady2@apple.com

Investors Relations
Nancy Paxton
Apple Computer, Inc.
(408) 974-5420
email: paxton1@apple.com

Apple Computer Restructuring: the Technology FAQs

What are Apple's product priorities moving forward?

Much of the restructuring in software engineering is targeted to support
Mac OS and Rhapsody development plans. As before, Apple's goal is to
deliver market-leading, Internet-ready operating systems for its customers
and provide industry leadership in multimedia, human interface design,
ease- of-use, and plug and play. On the hardware side, Apple will simplify
its product line. This will allow us to deliver a much stronger product
portfolio that directly addresses Apple customer needs. This process has
already begun with recently announced high-performance Power Macintosh
systems, industry-leading PowerBook products, and the new entry-level
Macintosh products, scheduled to be introduced in April. Apple has decided
it will no longer invest in technology projects that are not related to
its core business, or that are better served by adopting industry
standards, or where third-party developers can provide more compelling

What's up with OpenDoc and Cyberdog?

We are moving more of our resources for component technology toward
Java-based technology, which is becoming the industry standard. OpenDoc
and Cyberdog will ship in Mac OS 8, but we are planning no major updates.
Apple will not port OpenDoc to the OPENSTEP APIs (sometime referred to as
the "Yellow Box") in Rhapsody, and this is a change from our earlier
announcements. The future of CI Labs is being worked out with the other
board members (IBM and Just Systems). Meanwhile, the source code for
OpenDoc remains available through CI Labs.

What's up with Open Transport?

Apple is shifting its networking engineering development efforts to
Rhapsody. Open Transport will be maintained in Mac OS but will not be
ported to OPENSTEP in Rhapsody. OPENSTEP already supports a wide variety
of industry networking protocols through a standard "sockets" interface,
including TCP/IP and IPX. It should also be noted that the previously
announced upgrade to Open Transport (version1.5) has been canceled. Open
Transport will continue to operate in the Blue Box of Rhapsody.

What's up with Games Sprockets?

Apple intends to maintain Game Sprockets API (applications program
interface) in Mac OS, meaning developers can still write to it. Existing
games using these interfaces should continue to work. No upgrades to this
API are planned and we do not plan to port it to the "Yellow Box" in
Rhapsody. It should be noted that applications that support Game Sprockets
in MacOS should run in the Mac OS compatibility area, or the "Blue Box,"
in Rhapsody.

What's up with AIX Servers?

Apple will concentrate on Rhapsody and Mac OS as our server operating
systems in the future. These host important solutions like AppleShare and
WebObjects. Apple continues to work on the next update of AIX
Software--version 4.1.5. After this version, no future upgrades are
planned. It should be noted that server hardware stays as part of the
Apple product line and will continue to be developed.

What's up with QuickDraw GX?

As previously announced Apple is dropping the QuickDraw GX printing
architecture in favor of "classic" printing drivers in Mac OS. GX
developers can still use the advanced text and graphics capabilities of GX
through a shared library mechanism. We are investigating how best to
combine the text and graphics features of GX with Display Postscript to
build the imaging model in Rhapsody.

What's up with video conferencing?

Apple will be discontinuing its video conferencing products and projects
after current commitments are met. video conferencing is an important
solution, and Apple will be investigating various third-party
opportunities for its video conferencing technology.

Is Apple continuing to develop QTML technologies for the Windows platform?

Yes. Apple continues to invest substantial amounts of engineering effort
to maintain and extend Apple leadership in cross-platform and
Internet-centric multimedia.

What is the status of Mac OS Tools?

As developers would expect, Apple has decided to focus engineering
resources on developing a broad portfolio of tools for Rhapsody. Apple's
current Mac OS Tools are stable, reliable products. Additionally, the
market is well served by many excellent third-party products. As such, no
new versions of Mac OS development tools are planned from Apple.

What about Newton?

New Newton products (MessagePad 2000, eMate 300) are now shipping, and the
products have been well-received. Apple is exploring a wide range of
options for future Newton business. We have no specifics regarding those
discussions at this time. The Newton Systems organization remains intact,
reporting to Jim Groff, senior vice president, as part of George Scalise's

What about Pippin?

Apple will continue to work with its current Pippin licensees, but will
not produce an Apple-labeled Pippin product.

What's up with Apple's Imaging products?

Imaging remains absolutely an integral part of Apple's business and a
crucial component in the Company's unique "Plug and Play" solutions.

If a technology is "maintained" in Mac OS, is that another way of saying
it's over?

No. Most of the elements of Mac OS today are maintained in this sense
today--yet customers and developers use them daily. Apple continues to
improve the reliability and performance of the overall system including
technologies that have not seen major updates in years. Furthermore, these
technologies will reside in Rhapsody as part of the Mac OS layer (the
"Blue Box") that will run today's software for years to come on a faster,
more reliable foundation.

Is Apple discontinuing its Performa products?

Are you abandoning the consumer market? Apple remains committed to the
consumer market and plans to announce a new line of entry-level products
aimed at home, small business, and education customers this spring. Apple
does plan to phase out the Performa brand name with the introduction of
these new models, in favor of the Power Macintosh brand. This is part of
our overall product line simplification and will end confusion for
customers trying to decide between Performa products and Power Macintosh
models today, all of which have PowerPC microprocessors.

What's up with the release schedule for Mac OS?

As part of our reduction and simplification process, we are changing the
delivery schedule for future Mac OS releases. Instead of two full retail
releases of Mac OS in 1998 (Allegro and Sonata), Apple plans to ship one
complete release in 1998 (Allegro). It is targeted for mid-1998. To make
the latest system improvements readily available, we plan to ship two
system updates between Mac OS 8 (Tempo) and Allegro instead of one. The
schedule for Mac OS 8 remains unchanged with delivery anticipated in
summer 1997.

Meanwhile Apple plans to ship both the Premier and Unified releases of
Rhapsody in 1998, so the Company plans three major system releases next
year rather than two. While this does contribute to Apple's lower
financial expense goals, it is also a direct response to customer
feedback. Many companies and individuals have expressed concern over the
expense and logistics of upgrading their systems twice a year. With Mac OS
8, Apple will have an excellent foundation for future Mac OS updates and
upgrades so the new schedule is more appropriate.

Apple Computer, Inc., a recognized innovator in the information industry
and leader in multimedia technologies, creates powerful solutions based on
easy-to-use personal computers, servers, peripherals, software, handheld
computers and Internet content. Headquartered in Cupertino,

California, Apple develops, manufactures, licenses and markets solutions,
products, technologies and services for business, education, consumer,
entertainment, scientific and engineering and government customers in more
than 140 countries.

Russell Brady
Apple Computer, Inc.
(408) 974-6877
email: brady2@apple.com

Copyright 1997 Apple Computer, Inc.
Maintained online by the Corporate Websites Team
Updated Friday, March 14, 1997 by webrose


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