The Apple Of The Internet's Eye

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January 06, 2000 (3:26 PM EST)

By Will Wade,

SAN FRANCISCO - Apple Computer is about to become morethan just a computer company. In a keynote address at Macworld Expo on Wednesday (Jan. 5), Steve Jobs unveiled a business strategy that recasts Apple as an Internet company.

Jobs also unveiled the new Macintosh operating system and confirmed that he would stay on to run Apple permanently. "I am going to remove the word 'interim' from my job title," he told a cheering crowd of Mac devotees. "From now on my title will be iCEO."

Jobs rejoined the then-struggling Apple in 1997 and is widely credited with pulling the company he founded back from the brink, primarily on the strength of the innovative iMac and iBook lines of desktop and notebook computers.

While the company is again thriving -- its stock price has nearly quadrupled since last spring -- Jobs said he is looking to extend Apple "way beyond the box." Many analysts had expected Jobs to unveil a new line of notebooks to round out Apple's product line, but he instead announced his intention to make Apple "one of the 10 most profitable Internet companies in the next few years."

Jobs unveiled several new features on the Apple website, many of which are already used by a variety of other Internet businesses. These include hosting free e-mail and personal Web pages with the domain name Mac.com; free Internet greeting cards; and content reviews of third-party websites. The combination makes the parent Apple.com site look more like such Internet portals as Yahoo or Excite, and less like the home page of a major computer vendor.

Jobs nonetheless crowed about the recent success of the company's products. "We will announce our earnings in two weeks, and we will definitely have something to celebrate," he said. "We sold 1.35 million Macintosh computers last quarter. That's more than one every six seconds of every minute of every day, and that's more than we've ever sold in a quarter in the history of this company."

Even so, it seems clear that with his new focus on the Internet, Jobs is looking to a future that is less focused on the personal computer.

"I think this is recognizing that the PC industry is becoming mature, and [Jobs] is looking for new ways to add value in order to make the Macintosh a compelling platform," said Mike Feibus, principal analyst at Mercury Research, Scottsdale, Ariz. "Apple wants to be a profitable, growing company and is not the only company in the PC business that is struggling with this problem."

Jobs also devoted a portion of his speech to detailing the newest Mac operating system, OS X, which includes a makeover for the user interface, code-named Aqua. The new software will be on sale as an upgrade this summer and will be bundled into new machines beginning next January. But the technology still seems to have a few bugs to work out. A demonstration of the popular game Quake, running on OS X , crashed during the event.

Besides the website features seen at other portals, Apple has a few more Internet tricks in store. The company will host 20 Mbytes of data storage for every Macintosh user, which will allow people to store and transfer files seamlessly through the Internet, and access the information from any Macintosh. Called an iDisk, the application creates an icon that can be placed on any Macintosh computer's desktop with access to the Apple website, and is password-protected.

Jobs also detailed an approach, called Kidsafe, for restricting access to explicit Internet sites. The current filters, used to bar young users from sites with certain information, can be overly broad and can limit people from accessing some information. Kidsafe instead creates a database of sites that are acceptable for children. Macintosh machines can be configured so the requests of young Internet surfers will be routed first to the Kidsafe database stored on Apple's servers. If the application sees the desired site on the approved list, the browser will then access the Web page. Jobs said there are currently about 50,000 approved sites on file, and another 10,000 are being added every month.

"We think these features are going to be a really, really big deal," he said. "And only Macintosh customers can use them."

A crucial factor in these applications is Apple's status as one of the last remaining vertically integrated computer companies -- the same business model that has made the company the object of criticism.

"It's true that Apple is the last company in our industry that makes the entire system, but that also means we are the last one that can take responsibility for the entire customer experience," said Jobs.

The enabling force behind the new Internet features is that the same operating software is running at both ends of the pipe, he said. "We are going to take advantage -- unfair advantage -- of the fact that we supply the operating system to both the user and the client. We can integrate that together in a way that nobody else can," Jobs said, "and we are the last guys in the industry that can do it."