You say you want a revolution? Well, Apple Computer Inc. has certainly changed the world, not only for business professionals, but for such electronic experimenters as songwriters and musicians. Ironically, that has compounded Apple Computer's current times of trouble--to the tune of some $38 million. That's the amount that the Cupertino (Calif.) company wrote off in the quarter ended June 28 as a reserve for a lawsuit against it by Apple Corps Ltd. In case you haven't dusted off your Beatles records lately, that's the holding company for the rock group's surviving properties. The reserve for the suit, once dismissed by Apple Computer as a nuisance, added to a charge of $186 million for layoffs and relocations. That made Apple Computer lose $53.1 million in the last quarter.
Here's the background: Apple Corps wants to maintain its trademark on the Apple name and logo in the music business. So two years ago, the British company, owned by the surviving Beatles and John Lennon's estate, filed suit in British High Court against its U. S. namesake. Apple Corps claims that Apple Computer is violating a 1981 agreement that bars it from the music business in exchange for permission to use the Apple name.
'THE GREEDLES.' That's no longer possible. Apple Computer's Macintosh is now used by electronic virtuosos from local garage bands to Bon Jovi to help compose, mix, and print musical scores--or even to play their synthesized sounds. David M. Kusek, president of music software company Passport Designs Inc., estimates that market to be at least $100 million annually. Already, companies making musical software and hardware enhancements for the Macintosh say that the suit has caused Apple Computer to slow its own technical advances in this area and to back off on its marketing and advertising support for such products. That has raised the ire of musical technologists against the former rock sensations. "We call them the Greedles," grouses Christian Halaby, president of Opcode Systems Inc., a maker of computer software and hardware for musicians who use the Mac.
But musical computers are important for more than their ability to make composers and musicians happy. All computer companies are spicing up their systems by adding so-called "multimedia" technology, such as animation, video, and, yes, music. If Apple Computer has to avoid making similar moves, it could prove to be technologically crippling. "It just defies comprehension that Apple could allow itself to be repositioned as a unimedia computer," says W. Bing-ham Gordon, senior vice-president atsoftware maker Electronic Arts Inc.
Lawyers say that at first, Apple Computer simply tried to strong-arm the British company into dropping its trademark, simultaneously challenging its validity and offering the company a settlement on the order of $10 million. "Apple Computer misjudged how serious Apple Corps was about its trademark," says Katherine C. Spelman, a partner in the San Francisco law firm of Townsend & Townsend.
Is a settlement imminent? Executives at both Apples decline to comment, but Apple Computer's reserve makes it seem so. Moreover, it's looking more and more as if $38 million will be the price of what seemed like a shrewd business decision. Co-founders Steven P. Jobs and Stephen Wozniak have said they chose the name Apple to get the name in the phone book ahead of rival Atari Corp.