Pre-Apple Next Profile in December Red Herring

Rohit Khare (
Wed, 26 Feb 97 13:47:14 -0500


was written before any of this hit, and it focuses just on WebObjects.

"Forrester Research predicts that worldwide [Web] tools revenue will increase
from $15 million in 1995 to more than $1.2 billion in 1999"

selected excerpts below.



As anyone who follows the industry knows, Jobs's career has been one long
roller-coaster ride of triumphs and pitfalls, of lofty achievements and
humiliating disappointments. Next is inextricably attached to the myth of
Jobs; overall that association has benefited Next. Rare is the company--a
decade old and with less than $100 million in annual sales--that can gather so
much attention and inspire such speculation and enmity. But whether this is
testimony to Jobs's charisma and vision or an indictment of his famously
autocratic management style is matter for debate in boardrooms and bars
throughout the Valley.

Perhaps it's the sheer force of Jobs's character, and its duality, that has
left most industry observers squarely on either side of Next. On one flank is
a group that thinks Next has refocused itself with a technology mature and
sound enough to dominate a potentially lucrative market for years to come. On
the other side are those who think Next is--well, doomed.


One of Jobs's consistent strengths is that he's always been involved with
technologically superior products, and WebObjects continues this record.
Unlike so many other technologies springing up around the Internet these days,
WebObjects' base technology is thoroughly established. "Object technology is
mature, and WebObjects is one of the first products of its kind," says Evan
Quinn, an IDC analyst. "Next has about a six-month window to put the hammer
down on some technical issues, and if they can do that, it could become a $50
million to $100 million product."


Three things about visionaries: they're highly charismatic, they need to be
in control, and they hate details. Although the v -word is used with reckless
generosity these days, Jobs is inarguably one of the few who's earned the
moniker. It's a designation he lives and breathes. In interviews he constantly
speaks in superlatives, talking about how various technologies--his--are "the
best in the world" and promising global change at almost every turn. When he
talks about the industry, his focus often is not on 1997 or 1998, but ten
years down the road.

To some extent Jobs has delivered on his grand promises and predictions. At
Apple, he cofounded a company that, for all its woes, still has a fiercely
loyal constituency. At Pixar, he broke ground on a new era of digital
filmmaking. And even though many things about Next are questioned, the
technology, as noted, is respected.


those who have partnered and lost with Next are downright virulent in their
disdain for the company and for the man. "Steve has one goal: he wants to be a
billionaire, and he's pissed that people like Gates are already there," says
Ted Shelton, former president of the now-defunct Information Technology
Solutions (ITS).


BeBox inventor Jean-Louis Gassee (see _"A Soiree with Gassee,"_), who
responded, "For God's sake, don't compare us to Next. We want to be a better
tool for developers. . . . We do not defecate on developers."


Loose Canon

Perhaps the most notable of Next's failed partnerships was with Canon. The
company invested several hundred million dollars in Next, which used some of
its technology to help Canon build its Object Station platform. Suggestive of
how the relationship deteriorated is the difficulty reporters encounter in
getting information about Object Station. Canon officials shut down Object
Station development in 1995, and they no longer publicly acknowledge that the
partnership happened. Repeated attempts to reach Canon for a comment on this
story went unanswered.

But the book isn't closed on the Canon-Next relationship, because Canon will
likely have something quite influential to say about any attempt by Next to
sell or file for an IPO. "Next has already burned through about $500 million
in funding, and Canon has a note on them for about $400 million of it," says
NetGuide's Pollak. "They might sell to someone that would allow Steve and
Canon to save face." ITS's Shelton agrees that the intricate union of Japanese
culture and business would require Canon officials to suffer the sort of
embarrassment the Japanese have historically been loath to subject themselves
to. "If they forgave the note, people inside Canon would have to take a big
political hit for the write-down," he says.

How does this bode for a Next IPO? "Canon is very averse to Next's going
public because it would put a real market number on the note," Shelton says.
"The IPO would need about a $1 billion valuation to be viable." Next officials
reject this outright. "That's completely wrong," says Next chief financial
officer Dominique Trempont. "We have a deal with Canon to convert the small
remaining debt into equity on the day we go public."


In an era when the primary focus is on simplification, Objective C is much
more complicated than other languages. "Anyone could see as far back as 1992
that Objective C wouldn't make it," Shelton says, "and now there's no product
implementation of it other than for NextStep customers."