Apple Computer has announced the formation of an independent subsidiary dedicated to marketing, sales and development of products built on Apple's Newton operating system for personal digital assistants.
The new company, currently carrying the working name Newton Inc, will take on 170 Apple employees and expects to be profitable within its first year following the transaction, Apple executives said. The transition is expected to be completed by June 30.
Working as an independent company, Newton will have more flexibility to seek licensees for the Newton OS.
Apple executives also said an independent unit will be easier to sell to outside investors.
"We believe that in six months from now the company will have the ingredients to get a better valuation for Apple and its shareholders," said Fred Anderson, chief financial officer at Apple, when asked why Apple did not sell the unit to outsiders right now.
"Apple has to narrow its focus and execute well. We believe Newton's future is best served by an independent management," Anderson said.
Since Apple's reorganisation in March following massive losses, the company has been investigating the future of the Newton group.
Side by side
In the long run the new company, which initially will be funded by Apple, will actively seek outside investors or be floated on the stock market, Anderson said. The new company will be led by newly appointed chief operating officer Sandy Benett, who was previously vice-president of the Newton Systems Group and responsible for managing the group for the past two years. Apple is currently searching for a seasoned CEO for the new company.
Newton will be located close to, but not on Apple's campus in Cupertino, California, Benett said.
In the short term, Newton expects to generate most of its revenues from product sales. In the long run most revenues are expected to come from licensing agreements, Benett said.
The new company will focus on developing products as well as licensable technologies initially targeted at the health care, mobile sales professionals and field automation, Benett said.
Newton will provide platform technologies, including the Newton operating system, development tools, APIs, and documentation, but outsource hardware manufacturing to third parties, executives said. Apple will hold on to the eMate mobile computer and continue to sell it into the education market, Anderson said.
Newton will support, sell, and market the current MessagePad 2000 in the retail channel and to the corporate market, Benett said.