February 4, 1997 11:45 AM PST

Apple sticks with Newton for now

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Despite hints from Apple's chairman and CEO that Newton products may be on the auction block, Apple Computer (AAPL) says it intends to ship the MessagePad 2000 and eMate 300 next month.

The MessagePad 2000 is a handheld mobile computer for the business market that features handwriting recognition. Applications ranging from email and Web access to personal productivity are built in. It weighs 1.4 pounds and features the 160-MHz StrongARM processor, which makes it one of the fastest handheld computers on the market.

The eMate 300 is a low-cost mobile computer for educational markets, and features multiplatform desktop and network connectivity. A battery life of up to 28 continuous hours before recharging appeals to students and others who want to work continuously for long periods of time. Both Newton and eMate products use the Newton operating system.

Apple is reportedly considering whether to shed its Newton-related operations. Gil Amelio, Apple's chairman and CEO, said in published reports that he is taking a close look at the Newton technologies but is committed to the eMate for students.

The company made no direct comment on its long-range plans for the Newton division. But the announcement that it will go ahead with shipment of the two latest introductions in the product family effectively diffuses rumors that the company wants to rid itself of the division right away. (See related story)

"The Newton is just what everyone is focused on. I think it's just one of many things under consideration," said Diana Huang, mobile products analyst with International Data Corporation of the rumored cuts. "I wouldn't want to see the technology die, because it's good technology. If they choose not to keep it within Apple anymore, I think they should find someone to continue their developments efforts."

Several Asian firms such as Sharp Electronics would be good prospects to court should Apple indeed want to sell the technology, according to Huang. One reason: The form factor of the MessagePads has only found acceptance in niche vertical markets such as health care in the United States, but in Asian markets, smaller form factors are more popular. Another benefit, she added, is that handwriting recognition is a more desirable feature than keyboards in Asia because many written forms of Asian languages have a tremendous number of characters to reproduce.

One of the reasons for the rampant speculation on the Newton division's fate is that Apple has never turned a profit on the products. The company virtually invented the PDA (personal digital assistant) category, but high expectations for the first products fell short, particularly in terms of the capabilities of the handwriting recognition.

"This form-factor space wasn't positioned correctly at the start. Apple quickly turned around its strategy and focused on vertical markets. It's still trying to appeal to mobile professionals, but I don't think that will fly. It's still too expensive, even though the handwriting recognition is a lot better," Huang said.

She noted it's unlikely that one company will buy all of the technology. It's even possible that some of the companies producing network computers might be interested in the Newton OS, which can "theoretically" support Java, Huang added.

Reuters contributed to this report.

 

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