Newton unit will separate from Apple's core
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
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
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
Now that Apple has made a decision, analysts speculate MessagePad sales
might surge because buyers had been in a wait-and-see
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.
By Julie Schmit, USA TODAY
There is no off position on the genius switch. ...David Letterman
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