Conference 7.286::macintosh

Newton unit will separate from Apple's core

By Julie Schmit, USA TODAY

PALO ALTO, Calif. - Apple Computer will spin off its Newton hand-held
computer unit as a wholly owned subsidiary.

An announcement is expected within days, ending months of speculation about
Apple's most controversial product. Apple had explored numerous options for
Newton, including a sale or partnership.

But Apple's woes and the Newton's checkered past resulted in low-ball
discussions, analysts say. Apple also decided that as a separate division
Newton could benefit from renewed focus, more easily attract outside
investors and wouldn't be distracted by Apple's problems.

Apple refused comment.

Newton is the operating system for Apple's MessagePad 2000 and eMate, a
portable device for kids. The first Newton product, introduced in 1993,
flopped because the technology didn't work. The latest, the MessagePad
2000, costs about $1,000, is much improved and is selling well, Apple says.
The $700 eMate is a big hit in the education market. By keeping Newton,
Apple retains control of the eMate, which was one of its biggest
priorities.

Apple had shopped the Newton to Hewlett-Packard, Sun Microsystems, Inventec
of Taiwan and others. Whether anyone made a serious offer is unclear. About
two years ago, Apple valued Newton at about $200 million.

But the Newton's inability to turn a profit and concerns about Apple's
future depressed its value, analysts say. Apple has lost $1.6 billion the
past six quarters and isn't expected to return to profitability until later
this year, if then.

Despite Newton's unprofitable past, the worst might be over. Not only are
current models selling well, but the hand-held market is growing fast. It
grew 29% last year with shipments reaching 1.6 million units, market
researcher Dataquest says. The hottest mover is U.S. Robotics' Pilot, which
has 51% market share. The market is expected to grow 23% this year, faster
than the personal computer market.

Now that Apple has made a decision, analysts speculate MessagePad sales
might surge because buyers had been in a wait-and-see mode.

Some companies that make software for the Newton were hoping for an
outright sale. Apple's problems have hurt Newton sales because buyers are
fearful that Apple won't be around long term. Whether spinning it off
solves that problem remains to be seen. "We spend over half of our time
defending Apple," says Stan George, president of software maker PDA
Solutions.

    re the mention of eMate and the student population.  
    
    Columns I've read in the Wall Street Journal and another major
    newspaper, have expressed very high opinions of the eMate, and also the
    disappointment that is not available to "grownups", i.e. reporters,
    business people, those who do a lot of travelling.  It is said to be
    superior to the bulk and "cumbersome-ness" of a regular lap top.
    
    There must be someone in Apple that hears this lament?  No?  I wouldn't
    mind forking over $700 or $800 for something so fine. 

I think they were expecting grown-ups to buy the ~$1000 Message Pad 2000.
It's supposedly 8X faster than the last Newton (the 130).  For those who
didn't know, it is powered by a StrongArm chip designed by our very own
Digital Semiconductor in Austin and fabbed here at HLO in Hudson, Mass.

So put the StrongARM into an eMate-type package and sell it, already ...

I think the StrongARM is in the eMate.  It runs on 4 AA batteries.

Jim

The StrongARM is in both the eMate and the new Newton.

/john