August 23, 2002 9:41 AM PDT

Apple to unleash Jaguar OS upgrade

Apple Computer plans a contrarian celebration for the anniversary of the Windows 95 launch, unleashing a new operating system aimed at stealing customers away from Microsoft.
Learn more about Apple's OS efforts.

Saturday, the official release date of Mac OS X 10.2, also is the seventh anniversary of the day that Microsoft presented Windows 95 to the world in the most extravagant product kickoff in computing history. Apple hopes to make a little history of its own with software it sees as capable of wooing Windows users to the Mac.

But that goal may not be an easy one to reach. In too many ways, analysts say, Mac OS X 10.2, also known as Jaguar, plays catch-up with XP, the current version of Windows. Apple also faces challenges from new Microsoft products on the horizon, such as Windows XP Media Center Edition, around which Hewlett-Packard and other PC makers plan to create computer hybrids chock-full of digital and multimedia features.

So eager is Apple that it's jumping the gun on the anniversary date. The company plans to get things started Friday at 10:20 p.m. local time in Apple retail stores and other outlets around the world. Microsoft's midnight launch of Windows 95 drew long lines of buyers waiting outside stores to get one of the first copies of that software.

Mac users are clearly enthusiastic about the latest OS X release.

"I personally can't wait to try the new OS," said Rich Whiffen, a systems architect and Mac user in Arlington, Va. "I, however, will not be in line to buy a copy this weekend. I'm still feeling a bit stung by the price tag. The lack of any upgrade pricing is beyond me."

The suggested retail price for the software is $129 for a single user. A single-residence, five-user package is priced at $199. In an unannounced promotion, Apple will offer Mac OS X 10.2 buyers who pay full price 10 percent off anything else in the store.

Mac OS X 10.2 will play off Apple's recent switchers ad campaign, by including many new features targeted at Windows users. The company also has been exploring other ways of using its retail stores to woo more Windows users to the Mac. It has been conducting exit surveys and considering aggressive sales tactics, such as bringing in PCs for head-to-head comparisons with Macs. Apple estimates that about 40 percent of people shopping in its retail stores are Windows users.

Much of Apple's roaring about Jaguar has echoes of Windows. For example, the company heavily touts improvements to networking with Windows PCs--something that's important to some Mac users.

"I've already ordered a copy from Mac Connection," said Tom Grigsby, a Mac user from Rockville, Md. "Hopefully Apple delivers on its promise of compatibility with Windows networking. The other features sounds OK, but would have not made me an early user."

Analysts expressed skepticism that Apple, with a less than 5 percent market share compared to more than 95 percent for PCs, would make significant inroads at Microsoft's expense.

"It makes sense that Apple would target Windows users," said NPDTechworld analyst Stephen Baker. "But I think the gains, if any, will be negligible. Windows is very entrenched, and there are a lot of hidden costs associated with switching your operating system."

"I just don't see Apple gaining significant share against Windows PCs anytime soon," said ARS analyst Toni Duboise. "For one thing, Macs still cost too much compared to PCs."

Duboise pointed to next week's launch of Gateway's Profile 4, an all-in-one PC built around a flat-panel monitor, which competes directly against Apple's iMac. "Gateway's pricing is aggressive and clearly aimed at Apple," she said.

Going after Windows
Apple's larger problem may be in marketing Mac OS X 10.2 against Windows XP. Many of Jaguar's most touted changes are attempts to match existing Windows XP features, say analysts.

"Apple has no choice but to play catch-up if they want to court Windows users," Duboise said. "In terms of features, they can't afford to leave one stone unturned."

With Jaguar, for example, Apple will introduce iChat, an instant-messaging client compatible with the popular AOL Instant Messaging (AIM) network. But XP already has Windows Messenger, which offers features lacking in iChat such as video conferencing and peer-to-peer networking for online gamers.

Apple also overhauled Mail, adding a sophisticated "Junk Mail" feature that may surpass filters offered with any other e-mail client. But Mail lacks many features that e-mail users working with Windows XP's Outlook Express 6 or competing products have come to expect. Mail, for example, does not track replies the way many competing programs do, nor does it fully support Web-based e-mail formatted using HTML (Hypertext Markup Language).

With Jaguar, Apple also added handwriting recognition with a technology called Inkwell. But Microsoft has offered a similar technology in Office XP for more than a year and will raise it to the operating system level with the Nov. 7 launch of Tablet PC.

Apple even took a swipe at Microsoft's .Net Web services strategy, by renaming its existing iTools services .Mac.

Other Windows XP catch-up features, some of which had been in the older Mac OS 9: printer sharing, Internet firewalls and virtual private networking, among others. Still, Mac OS X 10.2 supports technologies still forthcoming in Windows, such as DVD recording or Bluetooth, among others.

Apple's biggest challenge in the consumer market may be the launch of Windows Media Center PCs, expected before the holidays. Microsoft has added a second digital media interface to Windows XP that users access via remote control. The new interface unlocks access to digital music, photos and movies, DVD movies and TV viewing. The PCs also will include digital video recorders for recording TV shows or pausing live programs.

Windows Media Center PCs "will blur the line between PCs and Macs," Baker said.

"This strikes against the core of (Apple CEO) Steve Jobs' messaging around the digital lifestyle."

Troubled times
Apple's assault on Windows comes as the company's relationship with Microsoft continues to sour. As the largest developer of Mac software, Microsoft's support--for instance, its release of Office v. X for Mac OS X, which interchanges files easily with Office 2000 and XP for Windows--has been crucial for Apple, particularly as the company attempts to make gains in the business market.

"Apple would have a hard time without Mac Office," said Gartner analyst Michael Silver. "Support for Office file formats is crucial, particularly for enterprises."

Earlier this week, Microsoft attempted to downplay reports that the company's Mac commitment was wavering, with the announcement of the first version of MSN for the Mac. But sources close to Microsoft's Macintosh Business Unit (MaBU) say the software giant delayed the announcement from July, the time of Apple's Macworld Expo in New York.

On the eve of the show, MacBU general manager Kevin Browne started a three-month sabbatical.

"Sabbatical at Microsoft means you're not coming back at all, or (are coming back) in some other capacity," said Directions on Microsoft analyst Matt Rosoff.

For its part, Apple may already be looking at alternatives to Office. Sun Microsystems apparently is developing a version of its StarOffice productivity suite for OS X, a project Apple may be assisting with.

 

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