Next Finding a Place in the Market
REDWOOD CITY, Calif. — It’s taken a few years, but Steve Jobs thinks that he has finally figured out how to define his sleek but slow-selling Next computer: It’s a “professional workstation,” combining the power of machines used by scientists and engineers with the convenience of personal computers.
Conveniently, this niche is small enough for Next to be a major player yet is growing fast enough to be worthwhile. Jobs, the intense, persuasive co-founder of Apple Computer, says Next shipped 8,000 machines in the first quarter--enough to become the No. 2 vendor in the new segment--and will soon hold 50% of a market that’s expected to grow from 100,000 units this year to 300,000 next year.
The figures, released at a press briefing at Next’s headquarters Thursday, are an indication that the latest Next product line--announced last September--is gaining acceptance.
“Eight thousand machines is a very good quarter. It demonstrates that he’s finally got the machine right,” said Richard Shaffer, principal of Technologic Partners in New York.
The original Next machine, unveiled in 1988, was a flop, leading many in the computer industry to question the company’s viability. Some still do not take it seriously. Tom Kucharvy, president of Summit Strategies, a Boston-based market research firm specializing in workstations, says he doesn’t follow Next because it’s not a factor in the market.
Featuring speed, networking and the ability to do several tasks at once, workstations are crucial tools for engineers and scientists but in the past were considered too expensive and too hard to use to be practical as office computers.
But improved software and the emergence of machines priced as low as $5,000 have changed that. Even personal computer companies are groping for ways to counter Sun Microsystems and the other workstation vendors, International Business Machines, Digital Equipment and Hewlett-Packard.
Jobs’ theory about the emergence of the professional workstation market is logical, but he isn’t the only one to think of it. Sun Microsystems, the aggressive leader in the workstation business, considers non-technical users to be its most important growth market. Its sales rate is more than five times Next’s.
Compaq Computer, Microsoft, Digital Equipment and a number of other companies will announce next week the formation of a consortium to develop a standard for a high-powered desktop machine that’s aimed at the same performance-hungry office users.
Jobs, however, says Next machines are the only computers with workstation power that are truly usable by “mere mortals.” Indeed, Next’s software, though based on the Unix operating system that’s used on all workstations, has been praised as an easy-to-use interface that’s especially good for writing custom computer programs.
Yet Next still must overcome lingering doubts about the market’s need for a non-standard computer that has nifty features such as sound, video and an exotic form of electronic mail, but is not optimized for any single purpose.
The company is pushing ahead with a revamped marketing program that relies on specialty computer dealers and value-added resellers that package the machine with custom software. A much-heralded exclusive relationship with Businessland has been abandoned.
Privately held Next does not release financial information, but Jobs said the company will be solidly profitable if it meets its goal of selling 40,000 to 50,000 systems this year. Shaffer guessed that Next’s revenue per machine was around $5,000, which would give the company annual revenue in the $200-million range.
“Is that respectable? Absolutely,” said Shaffer. “Is it enough to satisfy Steve’s ambitions? I don’t think so.”
WORKSTATIONS: THE KEY PLAYERS Quarterly* shipments of UNIX-based workstations Sun Microsystems: 44,000 Hewlett-Packard: 20,000 Digital Equipment: 8,000 IBM: 12,000 Next: 8,000 *Figures for Next are for first quarter, 1991; all others are for fourth quarter, 1990. Source: International Data Corp., Next
