rorden@kolob.UUCP (02/16/87)
I found this article and thought I'd pass it along for
discussion. Some of the obvious questions are:
1. What would constitute the ideal "Scholar's
Workstation?" Is their such a thing?
2. How can Next provide the software base required
to make their product universally acceptable in
the higher-education market?
3. How will they avoid getting held up by Apple,
who clearly has targeted higher-education with
their Macintosh and appears to have some control
over what Next is allowed to produce?
____________________________________________________________
New Allies May Change Computer World
By Mark Potts
The Washington Post
WASHINGTON - Each has a reputation as a visionary and
temperamental entrepeneur. Each has recently found himself
on the outs with a corporate bureaucracy. And now the two
men - H. Ross Perot and Steven Jobs - are joining forces.
Perot has made a $20 million investment in Jobs' new
company, Next Inc., which is developing a powerful small
computer for use by university researchers.
The investment in the Palo Alto, Calif.-based firm has
Silicon Valley buzzing: Why would Perot take such a big
stake in a company that has yet to produce a single product?
"I saw significant technological breakthroughs at Next.
I believe they are going to hit one out of the ballpark,"
said Perot, who founded Electronic Data Systems Corp., sold
it to General Motors Corp. two years ago for $2.5 billion
and then was forced out of GM last year when his criticism
of the automaker rankled GM Chairman Roger Smith.
"I look forward to my affiliation with Next," Perot
said in announcing his investment in the company in January.
"They have some truly revolutionary products under develop-
ment and are focusing on an exciting and important market-
place."
Even before Perot got interested, Jobs' company had
been a topic of great speculation in computer circles.
Few Silicon Valley entrepreneurs have been able to hit
the jackpot twice, and Jobs had a big act to follow.
As co-founder with Steve Wozniak of Apple computer,
Jobs brought the personal computer to the masses with the
Apple II and thought up the Apple Macintosh - only to be
pushed out of Apple in a corporate power play in 1985.
Jobs, 31, sold his Apple stock to raise seed money for
Next, setting up the company in lavish offices in Palo Alto
with a handful of former Apple employees.
His goal: to build sophisticated, but inexpensive,
computers for the higher-education market, giving university
students and researchers easy access to computing power in a
machine that is something between a personal computer and a
large mainframe - at a cost of about $3,000.
"Higher education has never had its Apple II: a ubi-
quitous computing resource that is powerful, reliable and
flexible enough to be used everywhere on campus," Jobs has
said. "Our singular focus at Next is to create a break-
through computing resource for higher education, the first
'scholar's work station.'"
Not much is known about Next's product, which is
scheduled for release later this year, but it is said to be
based on specifications mapped out several years ago by
researchers at Carnegie-Mellon University for a so-called
"3M" machine - one with 1 million bytes of memory, a pro-
cessing speed of 1 million instructions per second and a
high-quality 1 million-pixel display.
Company literature indicates that Next's computer may
try to beat those specifications by a tenfold margin.
One of the few hints about the machine came from a
speech Jobs made in November to an educational-computing
conference. "Next year, we'll unveil a breakthrough com-
puter necessary to run simulated learning environments, a
computer 10 to 20 times more powerful than what we have
today," he said.
Such a computer could have a significant impact on edu-
cation, experts believe, giving college students a new
medium for learning and research.
"We can't give a $5 million genetics lab to every
freshman biochemistry student, but everyone can experiment
with a simulated lab," Jobs said. "This is where we want to
go - so any student can just sit down and mess around with
DNA until 4 in the morning, seeing what's possible and
what's not."
Analysts have identified the market for the machine as
a potential gold mine, with the possibility that the devices
could be modified and sold to the general high-end personal
computer market.
But Jobs is not the only one with the idea. Several
other computer firms - including Sun Microsystems Inc.,
Digital Equipment Corp. and Apple itself - already have
introduced or are developing similar machines for the
university market.
"It is fiercely competitive," said Richard A. Shaffer,
an analyst at Technologic Partners, a New York consulting
firm that publishes a computer industry newsletter.
Not only will Next face direct competition from the Sun
and DEC machines, it also may have to go up against the
powerful new personal computers now hitting the market that
are based on the 80386 processing chip, as well as from new
hopped-up versions of the Macintosh that Jobs himself
created.
Apple could pose a problem for Next in another way:
Under the terms of the settlement of a lawsuit filed against
Jobs by the company after his departure to form Next, Apple
is allowed to review Next products to make sure they don't
infringe on Apple's proprietary information or technology.
Industry analysts suggest that Apple could stall Next's
machine in this manner to gain a competitive edge.
In addition, experts say, Next must convince the
university market that its machine is superior to the com-
petition, and to do this, the company's ability to provide
software for the machine may be as crucial as the machine
itself.
"Not only does Steve have to solve the problem of per-
formance, of getting volume purchasing... he's got to solve
the software problem," Shaffer said. With a "3M" machine,
he added, "there's almost a fourth 'M,' and that's the mil-
lion you have to spend on software... For Steve's product
to be a success, it's got to have a lot of very fancy
software in it, and that's very expensive to develop."
Raymond K. Neff, assistant vice-chancellor of the
University of California at Berkeley, one of the educational
institutions advising Next, said the new machine and its
software must be such an incredible departure from current
standards and methods of studying that students will be wil-
ling to ante up several thousand dollars to buy the computer
and programs to run on it.
"We're going to have to convince the students; we're
going to have to sell them on the vision," Neff said. "And
we're going to have to develop wonderful software, so entic-
ing that it will sell them on the design."
The market is so competitive, and so many questions
remain, that despite Jobs' involvement in the company, Next
reportedly has had trouble attracting the venture capital
needed to fund development of the machine.
Enter Perot. After seeing a documentary on public
television about Jobs in November, Perot contacted Next with
an offer to invest. With $700 million in his pocket after
GM bought out his stake in the auto-maker, he had money to
offer a company such as Next.
Perot's $20 million investment will give him a 16 per-
cent stake in the company. Perot's funding, a Next spokes-
man said, will keep the company going through the shipment
of its first machines.
In addition, Carnegie-Mellon and Stanford University
have made a combined $1.3 million investment, for a 1 per-
cent stake, while Jobs retains 63 percent of the company.
Another 20 percent is owned by its employees.
Based on the investment figures, Jobs is valuing Next
at $126 million, which analysts consider extremely high for
a company that has yet to release a product.
"At a $126 million valuation, that's four times what
the deal was being shopped for to venture capitalists on
both coasts last fall, and they turned him down because they
thought it was too high then," Shaffer said.
--
Randy Rorden, Icon International
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