How Jobs May Outfox Gates

Apple's QuickTime audio and video standard has been eclipsed by competitors. But Apple's CEO has crafted a comeback strategy

By Charles Haddad

Ya'll come on in and sit a spell. I've got a fable worthy of Uncle Remus. It begins 10 years ago in the software kitchen of the Br'er Rabbit of computing, Steve Jobs of Apple Computer. Apple's software chefs tossed together sound and video in their digital mixing bowl and came up with a new kind of program. Called QuickTime, it displayed miniature sound movies on any computer. People loved it and soon QuickTime became the standard for multimedia technology on both Macs and PCs.

QuickTime's success caught the eye of the computer industry's Br'er Fox, alias Bill Gates. He looked out from his burrow in Redmond, Wash., and commanded his own chefs "to whip me up a little of that." So they concocted a QuickTime knock-off called Windows Media Player. It wasn't nearly as good as QuickTime, especially at first. But Windows Media player had something its rival couldn't match: access to 90% of all personal computers. Giving away Windows Media Player on nearly every new PC, Gates and his Media Player were soon elbowing aside QuickTime as the standard.

Another Gates victory? Not so fast. While Apple and Microsoft were duking it out, trying to establish each of their respective media players as the standard in the emerging CD-ROM market, a new rival, Rob Glaser, crept up behind them. A former Gates minion, he saw that the Internet, not CDs, would drive the appeal of multimedia. Glaser developed software called RealAudio, and then RealVideo, that let Web surfers listen to music and watch video in real time from the Net.


  Today, Glaser's RealNetworks, with 26 million users, beats out both Microsoft's and Apple's offerings. Apple, which has slipped to No. 3 behind Microsoft, continues to lose ground. In January, the number of QuickTime users fell to 7.29 million, down 8.4% from a year earlier, according to a recent survey by market researcher Jupiter Media Matrix. Windows Media Player had 21.5 million users, according to the same study.

But Apple Chief Executive Officer Steve Jobs won't let the fable end here. He's starting to hack his way out of this brier patch. And, as he did with portable computers and education, Jobs is trying to leap out front again. His plan: to capitalize on the growing use of PCs to edit and store digital video. Neither RealNetworks nor Microsoft are big yet in the emerging PC home-video market.

And once again, QuickTime is playing the starring role for Apple. Jobs has not only recently upgraded the software to version 5 but he's repositioning it. You see, QuickTime is the digital equivalent of a Walkman. The big difference is that it can play more than 50 different types of media, including audio, video, streaming video, and stuff such as Flash animations. What the user sees is a simple metaphor of a small television with control buttons. It's easy to use and easy for Apple to upgrade, adding new types of media as they're developed.


  RealNetworks and Windows Media Player do many of the same things. But where QuickTime excels is in its ability to not only play media but create it. You can capture video or audio tracks, store and catalogue them, and edit them in movies or clips. After that, you can send your work around the world on the Internet or via CD to a friend's computer. Not surprisingly, developers have used QuickTime for years as the engine to create such products as Adobe's Premiere video editing software, the game Myst, and Apple's own iMovie.

All this functionality hasn't stemmed the slide in QuickTime's usage. In part, Apple is to blame for missing the rise of the Internet -­ as Microsoft did initially, too -­ in the mid-1990s. But there also was little Apple could do once Microsoft began free distribution of Windows Media Player. Wisely, Jobs has chosen not to fight a losing battle with Gates. He knows that most new computing devices, such as camcorders, digital cameras, and handheld computers are machines not dominated by Windows, which leaves an opening for Apple.


  Jobs is plunging into it. At the recent National Association of Broadcaster annual convention of the television broadcasting industry, he announced that 75 different models of digital cameras, both still and video, now incorporate QuickTime as the software to capture, transfer, and edit video. Every one of these cameras will sport the aqua blue "Q" logo of QuickTime. Among the manufacturers participating are Kodak, Panasonic, Canon, Sanyo, and Casio. The only notable manufacturer missing is Sony.

Signing up much of the digital-camera market is a coup for Apple. It's the kind of maneuver Gates would have loved to announce himself, with great fanfare, at the convention. Ditto for RealNetworks. Instead, Jobs outfoxed Gates and Glaser. He has discovered a back entrance to potentially tens of millions of PCs running on Windows. If PC users embrace QuickTime, it will become the standard for video editing. And within the next five years, video editing is likely to become as common a use of home computers as writing a school paper.

Yes, Mr. Jobs, you can rightly snap your suspenders in triumph. Br'er Rabbit would be mighty proud of you. Mighty proud.

Haddad, Atlanta-based correspondent for BusinessWeek, is a long-time Apple Computer buff. Follow his weekly Byte of the Apple column, only on BW Online Haddad, Atlanta-based correspondent for BusinessWeek, is a long-time Apple Computer buff. Follow his weekly Byte of the Apple column, only on BW Online

Edited by Thane Peterson

    Before it's here, it's on the Bloomberg Terminal.