RealTime IT News

Apple Wants Bigger Slice of the Pie

SAN FRANCISCO -- Apple Computer Tuesday began its 20th year making Macintosh computers with a renewed quest to find something that has eluded it for years -- market share.

With CEO Steve Jobs orchestrating the event at the annual Macworld Conference and Expo, the Cupertino, Calif.-based company said it is on track to reach 10 million users and 10,000 native applications written on its Mac OS X operating system.

Last year, Jobs promised to attract between 9 million and 10 million users to OS X by the end of 2003. He now has about 40 percent of his Mac installed base using the software.

"We have 9.3 million active users at this point," Jobs said during his keynote to the Macintosh faithful here. "The transition [from Mac OS 9 and earlier versions] is over. Microsoft is copying us again. It feels great."

To keep that competitive edge and attract even more converts, Apple announced product changes to its consumer software lineup (iLife, iTunes, Final Cut Express), server room products (Xserve, Xserve RAID) and its digital music player (iPod). Apple said its software improvements are shipping now. Hardware items will ship in February.

More important, said IDC senior analyst Jean Bozman, the changes represent small, yet noticeable ways that Apple is reaching beyond its base.

"What you are seeing here is Apple's attempts to break its reputation as a small niche desktop player with only a few percent market share," Bozman told internetnews.com. "You can see it in the way that they are promoting their wins with iTunes and iPod. You can see it in the way they are promoting their high performance computing capabilities. You can see it in their cross-OS advancements in their Xserve RAID products."

Server numbers were unavailable at press time. But Jobs was beaming with the news that scientists at Virginia Tech managed to secure the No. 3 spot on the Top 500 list of supercomputers with some 2,200 G5 processors configured in a cluster.

To help cultivate more interest in its server and storage hardware, Apple added a special section at the conference called MacIT targeted for enterprise IT managers. The sessions will offer information on Mac-based servers, services, security, IT management, integration and networking.

One thing that should get the server room set excited is that Apple is now configuring its new Xserve boxes with G5 processors. The new versions ship as a 1U form factor with either single or dual 2.0 GHz G5 processors, up to 750GB of storage and up to 8 GB of DDR SDRAM with ECC. The boxes ship with the latest Panther Server OS and feature dual FireWire 800 ports, one FireWire 400 port, two USB 2.0 ports and an industry-standard DB-9 serial port. The system can expand using the latest 133MHz PCI-X expansion protocol with throughput of 2GBps. Additional cards will provide speeds of 133MHz or 2 short form running at 100MHz.

Industry analyst Rob Enderle thought it interesting to note that while Apple may have sparked the desktop revolution 20 years ago, the company is lacking its own solutions when it comes to servers.

"Apple buys its processors from IBM, and goes to Microsoft for one of its most important applications," Enderle said in his daily briefing. "And the Super Computer they are so proud of is more IBM then Apple. InfiniBand, which makes the Super Computer work, came from a consortium headed by IBM, Dell, HP, Intel and other traditional server manufactures. Not much Apple intellectual property in this solution at all."

In storage, Apple also has managed to ramp up its Xserve RAID boxes to 3U rack-optimized units offering as much as 3.5 Terabytes of online storage, SFP connectors for dual 2Gb Fiber Channel, set slicing for up to 16 per Xserve RAID and on-the-fly RAID expansion. The three newest models are competitively priced (between $5,999 and $10,999) with the highest configuration $8,000 cheaper than a Dell/EMC CX200. Apple even went one step further and certified its RAID boxes with Windows and Linux-based operating systems including Microsoft Windows Server 2003 and Microsoft Windows XP Pro.

"Apple knows that companies are going to have mixed server environments," Bozman said. "This may be their smartest move for increasing their market share."

Enderle said Apple may be in over their heads with storage, however, as Apple's RAID storage device competes with EMC, IBM, and HP.

"They are likely about to find out that storage is a market that is incredibly hard to enter and that doesn't lend itself to Apple's traditional strengths," he said.

Beyond the desktop world, Apple does show some progress, with 31 percent market share of all MP3 players including the sub-$100 models and 55 percent revenue in market share.

Jobs said that the music download service has sold more then 30 million songs through its music store. Apple expects those numbers to rise with a two-month cross-promotion with Pepsi-Cola starting on Super Bowl Sunday.

Also during his keynote, Jobs showed a new gadget, the iPod mini. As previously reported, the $249 device can hold 4 GB of storage (or about 1,000 songs). About the size of a business card, it will come in five different colors and is slated to be available in the U.S. in February. The company also beefed up its standard-sized 10GB iPod to hold 15GB and kept the price tag the same ($299).

Apple is currently in its third-generation of its digital music player. The latest iPods range from a 10GB model for $299 to its 30GB model for $499. And while the iPod has been one of the great success stories for the company in 2003, it is receiving stiffer competition from rivals like Dell and HP.

The company also added a fifth component to its iLife suite -- GarageBand. The application takes some of the best components of its professional Emagic software suite and makes it more novice user-friendly. For a $49 upgrade, the software comes with pre-recorded loops and tracks to make even Jobs a fairly proficient musician. Fortunately, he invited recording star John Mayer to show how the real pros do it.

Perhaps the change that has the best odds of winning converts is the next release of Microsoft Office for the Macintosh. The new version is expected to be available by mid-year and will include new note-taking features and project views, among other enhancements. The announcement is welcome news for Apple because Office compatibility is an important consideration among potential Mac buyers. Microsoft also said it would update Virtual PC, the software that allows Macs to run Windows applications.

Pricing for the new version of Office will remain the same: $399 for the standard version and $499 for a professional version that includes the Virtual PC software.