[Ti] Wall Street Journal article re: OSX

[NaegeleWDC at aol.com]

Per Frank Wiewandt's request, here it is (sorry about the length; I have no control over that):


March 7, 2003 5:33 p.m. EST
 
Apple's Operating System Wins Over the Techie Crowd

By NICK BAKER 
DOW JONES NEWSWIRES 

NEW YORK -- A promising young computer operating system that's luring some hard-core geeks emanates from a seemingly unlikely source: Apple Computer Inc.

These recent converts to the Macintosh way have set aside their past complaints. Many high-end computer users, including programmers and engineers, never saw much appeal in Apple's glossy, user-friendly system because they felt it was built atop a software foundation that was prone to crash.

Spurred by the big technological jump Apple took by releasing Mac OS X, its latest-generation operating system, in March 2001, they now represent a promising new market. That's good news for the Cupertino, Calif., company, which has seen its share of the ultra-competitive computer market dwindle.

Apple's newfound appeal has helped it weather the economic downturn, helping fill in sales lost to its core audience, creative professionals, including graphic designers, who have been forced to cut back spending.

Bringing more elite computer users into the Mac fold generates more sales -- not only to them, but others because of their influence, said Roger Kay, an analyst with research firm IDC. “These are important users to court,” because they help set trends, he argued.

Count Rob Malda, founder of tech-enthusiast Web site Slashdot (www.slashdot.com1), a gathering point for many computer users who presumably once scoffed at Macs, among new Apple buyers. He purchased a PowerBook, Apple's high-end laptop, for his own use last fall -- something he wouldn't have considered before Mac OS X.

Mr. Malda believes his technically adept colleagues are buying, too. At an open-source software convention Mr. Malda attended last year -- a convergence of the sort of hard-core programmers who never used to give Macs a second glance -- Apple laptops abounded. “It was pretty impressive. There were PowerMacs and iBooks everywhere,” he said. This, he believes, reflects the newfound admiration Apple has because of Mac OS X.

Style And Substance

What's the appeal among the Slashdot and open source crowd? Apple has “given Unix users a better Unix,” said Mr. Malda, referring to Mac OS X. The favorable mention of “Unix” and “Apple” in the same breath is itself a departure. Unix, the venerable operating system that has long run some of the most powerful computer servers, and Apple, the longtime champion of making computers elegantly simple to use, seem to be a clash of ideals.

But Apple melded the Mac's celebrated ease-of-use with the stability and power of Unix in Mac OS X. That opened the door. “They've given us a solid GUI that's easy to use, but they didn't maim what's underneath,” Mr. Malda said. GUI is an industry acronym for graphical user interface, the on-screen system of icons used to control and maneuver through the computer. As for what's underneath, it's a time-tested version of Unix.

Apple has scored political points, too, by tapping into the movement of building open-source software -- programs for which the underlying code that defines it is available to be perused and modified, usually with few or no fetters.

Take, for instance, the Web browser Apple unveiled in January. At its heart, the program, called Safari, is based on software developed by the KDE open-source project. In keeping with the open-source spirit, Apple has given myriad improvements back to KDE. Also in line with the open nature of this development approach, key Safari developer Dave Hyatt keeps a diary detailing project progress on the Internet.

“Every single important trend affecting users in the marketplace has had at its root open source or standards that everyone knows and can support,” said Andy Ihnatko, a longtime Mac author. “Apple was smart enough to plug into that mojo.”

Doing so has helped endear Apple to Mr. Malda and others in the open-source movement.

Sales Slip

During the final three months of 2002, IDC figures sales of Apple computers accounted for only 1.9% of all PCs sold world-wide, said Mr. Kay, who added that this was roughly Apple's poorest performance ever. The near-term high, the analyst added, was 2.8% of world-wide share during the third quarter of 2001, well below the Mac's best showing, 13%, in the early 1990s. Officials at Apple weren't available for comment.

Apple's revenue has slid, also, to $5.74 billion in the 12 months ended Sept. 28 from $7.98 billion during the year ended in September 2000. And on Jan. 15, Apple reported its second consecutive quarterly loss, the first such string since co-founder Steve Jobs regained control of the company in 1997.

Reaching 5% world-wide market share would be ideal, but it isn't an easy task, Mr. Kay said. Courting geeks may not cause a dramatic spike in Mac market share, but small gains may be all Apple needs. “They should resign themselves to being a boutique,” Mr. Kay said, arguing that this isn't necessarily a bad thing. “If your business is five, six, seven billion dollars a year and you've got good margins, why be upset at that?”

The Mac Faithful

With Mac OS X, however, Apple has risked alienating existing Mac users. Some are hesitant to leap from the traditional Mac OS -- even though it wasn't technically robust -- to OS X because they fear that basic system functions behave differently, said Mr. Ihnatko, the Mac author.

“Among the people who rely on me for advice, there are still holdouts,” he said. “They are still timid to upgrade even though I say it's a no brainer.” And when some longtime Mac users do switch, they fixate on “quirks that they've come to exploit” in the old Mac OS that OS X doesn't have, he added. But these reservations don't last long, and they soon love the new system, he said.

Designers, aside from having to cut back costs, have been unwilling to adopt Mac OS X because a version of QuarkXPress, the industry-standard page-layout software, optimized for the new operating system hasn't been released. By most accounts, that program, made by Quark Inc., is the last major piece of legacy Mac software not yet available for Mac OS X. Quark hasn't announced a date for its release, but in February posted a sneak peak on its Web site.

That hasn't been an issue for the programmers and engineers with a Unix background, which may explain why they have been faster to adopt OS X than some experienced Mac users.

Write to Nick Baker at nick.baker at dowjones.com

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Tim Naegele

www.naegele.com

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