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The Northern Spy
April 2004

Apple Buys Leading Toolmaker

Rick Sutcliffe

Apple Computing of Cupertino today signalled a major change in corporate direction with its startling announcement that it will purchase and integrate a major industry toolmaker.

"This is only the beginning of the road, the first in a series of wicked-awesome moves," declared Apple CEO Steve Jobs. "We'll be making more announcements on tool acquisitions in the coming weeks, but we're going to dominate the tool market. Meanwhile we intend to leverage this and other purchases to boost margins and increase our overall market share of the computing market to 10% and beyond."

"We no longer have to go to market to obtain high quality tools for constructing our industry leading computing experience," Jobs continued. "Instead, other manufacturers have to come to us."

Some industry watchers were inclined to agree, noting that by controlling the tools that create the Mac, Apple achieves greater vertical integration, more control over its own supply chain, and ultimately, higher profitability.

Others noted that Apple would now be in a position to quickly manufacture chips on cellulose substrates in large quantities, and speculated that new technological breakthroughs were at the heart of the acquisition.

Asked to give a specific example of how this vertical integration could save money, former "official" Apple Evangelist Guy Kowasaki enthused, "Tools have an unreal markup, 100% at wholesale and another 100% at retail. In fact, the whole field is so perfect for entrepreneurs, I'm funding a couple of startups to bid for tools Apple is willing to spin off to my garage. But I digress. Just think about it. Right now, Apple gets at best a modest discount from retail for quantity. On the other hand, when they own manufacturing on these babies, their costs go down to a quarter, and on top of that they make a tidy profit selling to everyone else. It's a no-brainer!"

Stopped by reporters while entering his famous hot tub-equipped Lincoln Continental en route to a private lunch with George W. Bush, Bill Gates reacted cautiously to the news, in public at least. "We'll have our legal team look at the implications before deciding when to launch our complaint under anti-competition laws," he stated.

However, the Spy learned that later in the day SCO quietly filed a trade mark application on the word "Tool" when used in connection with the construction of a computing system, and also submitted a preliminary court brief for a suit against Apple and others for failing to license the word from them. An SCO spokesperson who declined attribution when called later by the Spy declared, "What if a Microsoft subsidiary did fund this new suit to the tune of $43.5 million? It's utterly immaterial to the merits of our case. We own that word in this industry, and no one is taking our intellectual property rights without paying us a fee."

Several industry names, apparently with advance notice of events, were quick to file opinion pieces decrying SCO's latest move. "The sun will freeze over, and then Oracle become a charitable organization, before I'll give SCO a brass farthing," declared Peter Norton. "What do they know about tools, except when it comes to throwing left-handed monkey wrenches into the system?"

Contacted privately by the Spy for an exclusive interview, Jobs brushed off the new development. "We and our new partners will have little difficulty demonstrating ample prior art and usage," he stated confidently. "We've been around and around on this one, and are sure we'll make a lot of bread together, not to mention chips." Asked about his immediate plans for integration of the acquired company and its many existing facilities with the quite different company he already operates, he offered this roadmap for what will become a new Apple division:

  • the logo will be a skull and crossed hammers flag on a green background,
  • Apple will retain the rotary tools, soldering baths and other small tools used in circuit board creation,
  • they will also retain the kitchen appliance division, ("We make better toasters than anyone in the industry," Jobs stated.)
  • they will sell off table saws, drills, grinders, air compressors, jackhammers, lathes, and other large tools to a separate subsidiary, (We'll still make money, even if they're not our core business," gushed Jobs. ")
  • he offered a promise to double the RPM at which the tools operate by this time next year,
  • using props made from Apple tool byproducts, Pixar will soon release "Woody the Woodpecker and the Sawdust Trail",
  • the name of the acquisition will be changed from "Black and Decker" to "Green and Apple",
  • the merger to be effective 2004 04 01.

--The Northern Spy

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