Apple plugs into the world of Windows

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Steve Jobs, the chief executive of Apple Computer, is famous for making biting comments about his rivals. And since the 1980s, no rivals have loomed larger than Microsoft and its founder, Bill Gates.

“The trouble with Microsoft is they have no taste,” said Mr Jobs in a 1996 PBS documentary. “I don’t mean that in a small way, I mean that in a big way.”

In an interview with the New York Times in 1997, Apple’s co-founder quipped: “I wish [Bill Gates] the best, I really do. I just think he and Microsoft are a bit narrow. He’d be a broader guy if he had dropped acid once or gone off to an ashram when he was younger.”

It would be tempting to think that Apple turned a new leaf on Wednesday with its decision to release a piece of software called Boot Camp, which allows its computers to run using Microsoft’s Windows operating system. But those who harbour any illusions of a final detente between Apple and its arch rival would do well to consult Apple’s web site.

“With Boot Camp, the Mac can operate smoothly in both centuries,” reads the jibe on Apple’s Boot Camp download page.“Windows running on a Mac is like Windows running on a PC. That means it’ll be subject to the same attacks that plague the Windows world.”

The rivalry, it seems, is still going strong.

In the 1970s, Apple commanded a powerful share of the budding personal computer market. But in the 1980s, Microsoft’s decision to license its DOS operating system to IBM, and later, to a slew of IBM clones, propelled Microsoft to the top position in the sofware market and left Apple playing second-fiddle.

Today, Apple’s share of the PC market stands at a meagre 2 to 4 per cent. And that is in spite of the brand cachet gained from the wild success of the iPod, the personal music player that led the company to record revenues and profits last year.

Some Macintosh fans insist that Apple’s reluctant embrace of Windows could help close the gap.

Windows users, their reasoning goes, have always harboured a secret attraction to shiny Apple laptops and desktop computers. Now those itching to make the switch can finally do so without giving up the ability to run the occasional Windows-only programme.

“This is HUGE!!” writes one commentator on Think Secret, a website devloted to Apple news. “You can now purchase a Mac for home use, but still boot up to [Windows] XP to do work. The risk associated with switching to Mac was just eliminated.”

Analysts agree that Apple’s move could open the door to new Mac converts. But they caution that Apple may not see the stampede of new users that some boosters expect.

“We would not expect any meaningful impact on Mac sales or earnings in the near or intermediate term,” says Rick Sherlund at Goldman Sachs.

Others are more optimistic. Robert Semple at Credit Suisse First Boston says that Apple may have opened up a back door into the elusive business market - a segment that accounts for a huge portion of overall PC sales.

”Although Apple software is unlikely to ever unseat Microsoft in corporate environments, owing to the significant existing [Windows-Intel] infrastructure, today’s announcement does significantly increase the likelihood of Apple’s hardware penetrating the corporate environment,” he writes. “Corporate PCs represent two-thirds of worldwide PC shipments, which was generally excluded from most discussions of Apple’s total addressable market.”

Van Baker at Gartner says Apple could benefit from delays to the consumer version of Microsoft’s next-generation Vista operating system, now delayed unti the new year. However, he says the company is unlikely to see a big surge in market share.

“This is not Apple’s big push into the enterprise,” he says. “It’s not a big shock for [rival PC makers] because their focus is the Fortune 500.”

A rush of Mac converts would be a welcome development. Apple has come under pressure to maintain sales growth, which has soared thanks to the phenomental success of its iPod personal music player. Shares in Apple have plunged 29 per cent from their January highs, amid concerns that the iPod’s so-called “halo effect” might not be leading to improved market share in the company’s core computer business.

David Bailey at Goldman Sachs points out that Apple’s share of the computer market remained relatively flat last quarter in spite of a 207 per cent increase in iPod sales and a dramatic pickup in customer traffic at Apple’s retail stores.

More than two decades after the Apple-Microsoft rivalry began, Apple’s products are more appealing to the mainstream than ever. But whether that will translate to the kinds of market share gains it needs to maintain its bumper sales growth remains to be seen.

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