What's going on at Apple? Anyone know? As were many of you, I was stunned when Apple's Board of Directors fired their would-be savior Gil Amelio less than half-way into his three year contract last week. I've spent the meantime searching the web for scraps and facts, thrown in my past observations, mulled it over, and here's what I've found along with my two cents...

Apple has one of the most poorly regarded Boards of Directors in the industry. Steve Jobs loves technology, has a huge ego, lots of "vision," thinks he knows what's best for consumers, has a mercurial personality, and knows almost nothing about management. Gil Amelio is well liked, but is more low key and management focused on what he does, and has little charisma to provide the vision a company like Apple needs. Ellen Hancock is highly regarded, both for her management and technology skills, and would be a prime candidate to succeed Amelio, except that there appears to be a problem with Jobs.

Throw into this mix that, except for the "Die Apple" crowd, the industry at large seems to really want Apple to continue in the marketplace, if only to spur Microsoft and the PC clone companies onward toward better technologies. Apple's technology groups are highly regarded, as is well documented by the number of specialists industry competitors have stolen from Apple over the past few years.

My opinion of Dr. Amelio as Apple's CEO has always been a bit lukewarm. But the reality was that Apple needed a CEO with his business skills to force it to refocus on its core businesses if it were going to survive. It's true that Apple lost $1.5 billion during his tenure, but the point is that it lost ONLY $1.5 billion. If it hadn't cut back, refocused, cleaned up its flagging hardware quality problems, and acquired a believable operating system upgrade approach, Apple would likely today be facing the start of its final year of solvency, with no money in the bank, and no way to fix its problems.

Instead, we have an Apple with over $1.0 billion cash still on-hand, a workforce reduced by a third, new computers that don't burst into flame in the lab, and a newly acquired operating system core technology that promises to set the industry standard once again when the MacOS user interface is tightly integrated into it, all running on the industry's most powerful general purpose processors. And, it now appears that the flow of red ink will disappear over the next two quarters, down by 90% over what it was just three months ago.

So, what's going on? Has Jobs' charisma in the company blinded people so much that he's staged a coup? That doesn't seem right. While he was a superstar in driving his Macintosh team into producing a super personal computer 14 years ago, his foibles and marketing missteps became famous in the mid-80s. I doubt that any sane and rational person believes that he could run Apple any better today than he did then. Remember, it was John Scully from Pepsico who he hired to save his company, and Scully did, by staging his own coup and kicking Jobs out.

It seems to me that the problem here is simply the Board of Directors, almost none of whom know anything about the computer industry. After losing $1.5 billion over the past year, facing the wrath of the stockholders looking for no further decline in their stock values, and the need for the CEO to stand up, take the bully pulpit and lead the company into the future (skills which Amelio seems to lack), it simply succumbed to the pressure and reacted prematurely.

Sure, Dr. Amelio needed to go... Next YEAR, when Rhapsody was out, the company was solidly in the black again, and recovery was clearly under way. Changing captains in the heat of battle seems extremely unwise... I surely hope they have a short list of replacement prospects in-hand who are interested, AND have the skills and persona needed. Would YOU want to step into this hornet's nest?

The message this seems to be sending to the legions who know nothing about Apple is that all is over, the rats are abandoning ship, and the Mac is dead, so why buy one for their kids this next school year, or this next Christmas? What do you think that'll do for sales?

Unless there is some open warfare going on in the halls of Apple that's been kept very well under wraps, the truth is that Apple continues to create new standards in user friendly, powerful software and hardware, and will continue on for years to come. And, that the downsizing has just about leveled out with Apple's current incoming cash flow, unless they can think of some new way to scare consumers.

Now, what can we do about replacing the Board of Directors?

- Dave Marsh