Apple gains tech, agency customers in Next deal

With its acquisition of Next Software Inc. Apple Computer Inc. will be gaining more than a source of operating system technology the company also will inherit Next's blooming federal division which has doubled revenue in the past year with a bevy of agency customers.

Apple plans to incorporate the Redwood City Calif. company's object-oriented technology which is now being used by agencies such as NASA and the Navy into its next-generation operating system. Last summer Apple scuttled an internal effort to develop a new operating system. According to Apple officials the $400 million purchase will marry Apple's hardware products and marketing channels with Next's strengths in development software and operating environments. The deal was announced Dec. 20.

Next offers Openstep an object-oriented development tool that allows developers to create applications for a range of hardware platforms including Microsoft Corp.'s Windows NT and various versions of Unix.

Another key to the deal is Next's WebObjects software product line which offers a cross-platform and language-independent environment for deploying interactive scalable server-based World Wide Web applications for both the Internet and the enterprise. WebObjects is designed to work with legacy data stored in mainframe applications and databases to allow organizations to expand the reach of their systems to the Web without having to rewrite data and applications.

Released in the first quarter of 1996 WebObjects generated $15 million in sales in 1996 according to Evan Quinn research director at International Data Corp. Quinn's forecasts show that sales of WebObjects will double in 1997 and become the company's leading product.

Barry Leffew federal government sales director in Next's McLean Va. office said the company's federal revenue doubled in 1996 and its federal sales team has grown from two in 1994 to 14 people at the end of 1996 with another 17 employees in its professional services group.

Next's products are offered through a General Services Administration schedule contract and can also be obtained through the National Institutes of Health's Electronic Computer Store pact.

The Agriculture Department purchased WebObjects in recent months and uses the product to track all communication lines by county. USDA Offices nationwide can request through an on-line database local-area or wide-area network access. NASA meanwhile uses the company's technology to administer its $1.8 billion Scientific and Engineering Workstation Procurement follow-on (SEWP II). NASA used Next software to develop a system that allows government agencies to order workstations and peripherals on-line.

In addition the Navy is using Next software to develop systems to process requisitions supporting a user base of more than 10 000 worldwide. Leffew said the company is now negotiating with the U.S. Postal Service and has other Defense and intelligence customers that he could not name.

Next to Benefit

Leffew said the Apple purchase is a "resounding endorsement of Next technology" that will propel it into the mainstream of the industry by increasing its name recognition and allowing it to gain access to broader channels.

"Given that market recognition...it will greatly enhance our ability to get into the doors at federal agencies " Leffew said. "Many agencies are characterized by a wide variety of hardware or software. WebObjects enables government agencies to have universal Web access to existing systems that up until now were limited to how they could be accessed."

The company's federal sales and support teams will not be affected by the acquisition and the transition will likewise not affect the concern's customers Leffew said.

An Apple spokesman said last week that the company could not provide any further information about the deal before the widely anticipated briefing Jan. 7 at MacWorld on the company's next-generation operating system.

Getting a Jump Start

In a Dec. 20 letter to customers Apple chief executive and chairman Gil Amelio said the acquisition will jump-start the company's software and enterprise business while positioning the company for growth in the "sweet spots" of the industry.

"In this new approach the `Not Invented Here' syndrome has been banished far beyond the horizons of our vision " according to the letter. "Apple will now be open to new technologies and where they're developed doesn't matter."

For Apple IDC's Quinn said the purchase gives it a strong Web development presence which will open new avenues for market penetration for the company.

The marketplace offers few choices for highly scalable intranet application development tools most vendors offer products originally designed for client/server applications that have been tweaked for Web applications he said. Market studies indicate customers prefer products custom-designed for the Web Quinn said.

"Federal government systems tend to be larger than average " he said. "Next has made it [its] business to make WebObjects highly scalable.