Redwood City, CA Ð After seven years of trying to succeed as a workstation manufacturer, NeXT on February 10 began life anew as a system-software supplier.
The decision to restructure, which NeXT CEO Steve Jobs described as "freeing NeXTSTEP from its black box," was a long time in coming, yet it broke with sudden finality. NeXT has said for more than a year that its primary business would be software, but until last month it had planned on a gradual transition that called for continued hardware design, manufacturing, and sales.
Instead, NeXT shut down its factory, prepared to sell its hardware-design center, and laid off more than 200 employees. In addition to the elimination of the hardware functions, deep cuts were also made to sales, marketing, service, and administrative departments. International sales and support were reduced to skeletal operations.
"We had hoped to continue our hardware business, but we came to the conclusion that we did not have the financial and management bandwidth to do that and take advantage of our opportunity in software," Jobs said.
Now NeXT will focus all its resources on establishing NeXT-STEP as a standard operating system in the corporate client-server market. It expects to compete strongly in the emerging market for object-oriented operating systems, where it enjoys a technology lead of several years over future products from Microsoft and Taligent.
Analysts, customers, and developers greeted the news with general approval, though the impacts on every participant in the NeXT market are expected to be profound. NeXT sought to assure customers that installed NeXT-stations and Cubes would not be orphaned. NeXT has said it will provide timely upgrades to NeXT-STEP for Motorola-based workstations and continue to provide repairs and spare-parts support.
Developers have prepared for an expected sales drought until NeXTSTEP for Intel begins to sell in volume. NeXT said that it would ship the Intel product, which will be the company's primary revenue source, on May 25, at a price of $795 for the user version and $1995 for the developer version.
NeXT also said that it is pursuing negotiations to port NeXT- STEP to other hardware platforms, but no new industry partnerships had been announced at press time. Executives said the new NeXT begins life with a healthy cash balance, strong orders for NeXTSTEP for Intel, and a focused strategy for future success.
What lies ahead for the reborn company remains uncertain; what lies behind is the shambles of NeXT's original dream.