Friday, January 26, 1996
SUN'S PROPOSED APPLE BUYOUT IS NEXT STEP IN BID FOR INTERNET, OPERATING SYSTEM DOMINANCE
From: PR Newswire
/FROM PR NEWSWIRE SAN FRANCISCO 415-543-7800/ TO BUSINESS EDITOR:
Developer of Java Seeks a Foothold in Home Market; Sees Macintosh as
'$500 PC,' say KPMG Consultants
SAN FRANCISCO, Jan. 26 /PRNewswire/ -- Sun Microsystems'
(Nasdaq: SUNW) reported bid for Apple Computer (Nasdaq: AAPL), now said
to be entering final discussion stages, represents the next major move
in Sun's attempt to dominate the operating system market via Internet
technologies, according to consultants of the KPMG Peat Marwick
Information, Communications and Entertainment (ICE(SM)) practice.
"The low offering price reflects in part the fact that it's
primarily Sun that stands to benefit," says Ed Rodriguez, national
director of the Electronic Devices practice for KPMG ICE. "By
purchasing Apple, Sun gains a substantial foothold in the consumer
market, from which it can attempt to challenge Microsoft for operating
system dominance. Sun has already signaled that it hopes to create a
rival operating system via its Java network computing programming
language, which could serve as a platform for Internet-distributed
applications. It believes Apple can be the vehicle into the home for
such programs. Essentially, Sun hopes that the Macintosh computer will
become a front end for Internet-distributed Java 'applets' -- in effect,
the $500 PC that Larry Ellison of Oracle Systems has predicted will one
day dominate the home computing world."
According to Rodriguez, Sun has been very successful selling
workstations into the corporate business environment but has very little
experience doing business in the consumer arena. "If Java is to
succeed, access to the consumer market is critical. Apple could very
well be Sun's springboard into the consumer world," Rodriguez says.
But a successful purchase of Apple will not make Sun an immediate
threat to Microsoft and Intel, Rodriguez says, explaining that internal
business and integration issues will likely preoccupy Sun executives for
at least a year after the buyout. "It will take 12 months or more for
Sun to articulate a long term business strategy, rationalize the Apple
business components that complement its strategy and seriously execute
against this strategy to take advantage of Apple's customer base," he
says. "First, significant portions of Apple will probably have to be
sold or otherwise disposed of. Sun will also have to contend with
melding the two cultures, and restructuring." It also remains to be
seen whether Sun can successfully manage Apple's business, Rodriguez
Sun is clearly betting that a union with Apple would cement its role as a one-shop Internet powerhouse, says Mary Pat McCarthy, national director of the KPMG ICE Software and Services practice. "The combination of Sun's high-end servers and Java programming coupled with Apple's penchant for user-friendly software and loyal consumer base makes this potential merger extraordinarily appealing."
Rodriguez, McCarthy and other KPMG ICE experts are available to
comment on the proposed Sun purchase of Apple, and on other major
computer-industry developments. Contact Andrea Gregg of KPMG ICE at 415
951-7503, Rosabel Tao of Fleishman-Hillard at 415-356-1013, or Alan
Ampolsk of Fleishman-Hillard at 212-265-9150, ext. 2216.
One of KPMG's five industry-focused lines of business, the
Information, Communications and Entertainment (ICE(SM)) practice
provides assurance and advisory services to clients who produce content,
distribution and delivery systems for the information superhighway.
KPMG is the only assurance and advisory firm to dedicate a full-service
line of business to these industries as a group.
KPMG Peat Marwick LLP is the U.S. practice of KPMG, the Global
Leader among professional services firms. Worldwide, KPMG has more than
6,000 partners as well as 72,000 professionals servicing clients through
1,100 offices in 829 cities in 136 countries. In the U.S., KPMG
partners and professionals deliver a wide range of value-added
consulting, assurance, and tax services in five markets: financial
services; manufacturing, retailing, and distribution; health care and
life sciences; information, communications and entertainment; and public
-0- 1/26/96 /CONTACT: Andrea Gregg of KPMG ICE, 415-951-7503; or Rosabel Tao, 415-356-1013, or Alan G. Ampolsk, 212-265-9150, ext. 2216, both of Fleishman-Hillard Inc./ (SUNW AAPL)
CO: KPMG Peat Marwick LLP; Sun Microsystems Inc.; Apple Computer Inc.
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6199 01/26/96 19:50 EST
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