September 9, 1997 8:00 PM PDT

It's official: Apple keeps Newton

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After much internal confusion, Apple Computer (AAPL) said today that it will not spin off its Newton subsidiary.

Late Tuesday Apple confirmed that the Newton division was being brought back into the corporate fold. "We consider it [the eMate 300] a major strategic opportunity. By committing resources to this product, we give it the best chance to strengthen its current appeal in the education market as well as reach out to a broader audience," said Katie Cotton, a spokesperson for Apple. No further details on plans for the MessagePad 2000 were available.

Only this July, Newton was officially Mac merger spun off as an independent subsidiary with its own management and business plan. Apple has decided to bring the Newton team back into Apple and create a division for the eMate 300, a product based on the Newton operating system, which is sold only to education markets.

Sandy Benett

Just last month, Newton put the finishing touches on its new corporate logo and finished relocating to new corporate offices.

"Newton Inc. is now completely autonomous from Apple. We have our own board of directors, financial model, and business plan focused on the development of products and licensable technologies to meet the computing and communications needs of today's corporate mobile users," said Newton chief operating officer Sandy Benett in a press release dated August 6.

The decision to bring the Newton back under Apple's control is a result of a new emphasis on network computers. NCs are simplified computers that rely on a powerful central computer for accessing applications. Apple is reportedly interested in bringing out NCs using Intel processors in order to fortify the company's presence in the education market.

The confusion in Cupertino has come amidst the reemergence of Steve Jobs as the key decisionmaker at Apple. Scores of decisions made under former CEO Gil Amelio have come under reconsideration recently.

The most recent and dramatic example of a shift in strategies was Apple's decision to buy back Power Computing's Mac OS license. The move curtailed Apple's main competition for sales of Mac systems. Apple said that Mac OS licensees, specifically Power, had not done enough to expand the Mac market and that sales of clone systems were hurting Apple financially.

Previously, Amelio and the clone vendors, including Power Computing, came to agreements on licensing the Mac OS that allowed the companies to license the OS in return for significantly higher fees. It was later decided that the higher fees didn't make up the difference Apple faced in lost sales, though, causing the company to rethink its licensing strategy in August.

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