Innovation program that can run Microsoft software on Macs sends share prices soaring in New York
Apple’s biggest obstacle to selling more computers in a market dominated by PCs may have been overcome with a new piece of software that can run Microsoft’s Windows and the Mac Operating System on the same machine.
Boot Camp, as the experimental “beta” version of the software is called, can be downloaded by anyone with a new Apple computer that has an Intel processor, and that the application will be a feature in Leopard, the company’s next major release of the Mac operating system. Older Macs have IBM processors, which will not work with the new software.
Once installed, Boot Camp enables Mac users, in theory, to choose between running Windows XP or MAC OSX when they switch on their computer. It might not sound like much, but Boot Camp was hailed by Mac aficionados as the greatest advance for Apple since it invented the iPod.
The move marks another shift for Apple to reach a broader group of computer users, the vast majority of whom use the Microsoft operating system.
Though Apple still sees itself as a major rival to Microsoft, it has made concessions to Windows users such as allowing them to use its wildly popular iPod music players and iTunes music store, dubbed the "halo effect" by analysts. But more than 90 per cent of home machines still run on Windows.
The watershed decision could help Apple to dramatically expand its share of the computer market.
Apple’s shares surged as Wall Street bet the move would help Apple grow its current worldwide personal computer market share beyond the current range of 3 percent to 4 percent by attracting more business and home users.
"It makes the Mac the most versatile computer on the market," said Tim Bajarin, a tech industry consultant at Creative Strategies.
Van Baker, analyst at research firm Gartner Inc., said Apple is removing one of the hurdles it faced in its long-standing battle to win over Windows-based converts.
"Consumers who were thinking about Macs but hesitated do not have to worry anymore about not being able to run PC software that did not run on a Mac," Baker said.
Apple shares rose nearly 10 percent on the news, raising its market capitalization to $57.04 billion — an increase of more than $5.1 billion.
New Software
Apple first announced plans to begin using Intel processors in its Mac computers in June and the products began shipping in mid-January, the company said it had no intention of selling or supporting Windows on its machines, though it has done nothing to preclude people from doing it themselves.
The company said the Boot Camp software is a preview version licensed for use on a trial basis.
Apple said that stance remains true, yet the new software will ease Windows installation on Macs. The test software will expire and become unusable after September 2007 but Apple said it will feature Boot Camp in the upcoming Mac OS X version 10.5, code-named "Leopard." Apple said it will preview Leopard in August, but it has not yet disclosed a release date or price.
"Apple has no desire or plan to sell or support Windows, but many customers have expressed their interest to run Windows on Apple’s superior hardware now that we use Intel processors," said Philip Schiller, Apple’s senior vice president of worldwide product marketing.
"We think Boot Camp makes the Mac even more appealing to Windows users considering making the switch."
Some analysts say making its new Intel-based Macs compatible with Microsoft’s software could help Apple expand its single-digit share of the PC market.
Indeed, for months, independent hackers have been diligently working on programs to let users of Intel-based Macs switch between the two competing operating systems.
Others, like Chris Miller, an information technology worker at Johns Hopkins University, have been looking forward to a so-called dual-boot technology so he could play PC games on his Mac.
This is another step in Apple’s efforts to expand its total addressable market to include a more mainstream audience, according to a note written by Goldman Sachs analyst Rick Sherlund, who rates Apple shares "attractive."
Game Changer
The potential for Apple to boost market share through what the company calls "switchers" – people who move from a Windows-based PC to a Mac – has some analysts viewing Apple’s move as one of its most important business steps since the launch of the first iPod in 2001.
A key reason why Apple has not gotten more “switchers” is likely due to a lack of strong Windows compatibility, said Shaw Wu, of American Technology Research. "We believe this is a big deal and potentially could be a significant game changer," while Forrester Research analyst Ted Schadler called the move "smart."
"When they opened the iTunes software for Windows, the market for iPods exploded," Schadler said. And similarly here, they have a great hardware product, but they have been shut off from businesses and consumers who want to run PC programs, and now they have the software that will allow that.
Battle for Market Share
Mac and PC users have engaged in a bitter battle of the nerds since the early 1980s. Dedicated Apple users watched Bill Gates and Microsoft take over the world with Windows, an operating system they considered inferior in every way to the Mac OS. But, not being able to run computer games designed for PCs or specialist software written around the Windows operating system has long been seen as Apple’s biggest stumbling block to attracting new customers in large numbers. The announcement was not seen by most Mac users as capitulation to the Windows behemoth, however, but rather as a carrot with which to attract PC users who like the look of the Apple but are a bit worried about losing all the software they already own.
“I’m really excited about this,” said David Lerner, the owner of New York-based TekServe, the oldest independent Mac shop in the world.
“I do not want to run Windows, OK, but if this pushes people who are already on the fence into making the right decision and buying Apple then I’m all for it.”
Apple may be trying to break down some of the barriers between Windows and Mac systems, but it still does not allow the reverse, keeping its proprietary Mac OS software tethered to its own computers.
Microsoft welcomed the development. "We are pleased that Apple customers are excited about running (Windows), and that Apple is responding to meet the demand," said Kevin Kutz, a director in Microsoft’s Windows Client Group.
Joe Wilcox, analyst at Jupiter Research, said the move could provide an incentive to purchase the Macintosh by allowing users access to a broader variety of Windows software.
"Apple has removed another barrier to switching," he said.
Apple, which currently has less than 5 per cent of the worldwide computer market, said it has no intention to sell or support Windows, but wants to give its customers a choice of which software to use.
Apple has been thinking of new ways to attract PC customers since its inception in 1984. Last year it introduced the Mac Mini, which is a smaller, cheaper and simpler Macintosh computer sold without keyboard, mouse or monitor. The device works with the keyboard and other bits and pieces from a PC.
Apple turned to Intel chips, the same ones used to power most PCs that run Windows, after saying its previous suppliers, IBM Corp. and Motorola Corp. spin-off Freescale Semiconductor Inc., could not meet Apple’s needs for faster, more energy-efficient chips.
But the Intel-based Macs continued to run Apple’s own proprietary operating system.
Because Windows is much more dominant, Mac users do not have access to many software programs written only for Windows. The switch to Intel chips lets users load Windows onto a Mac, without the need for emulation software that slows performance. But until recently, the user needed some technical expertise to pull it off.
Wilcox noted that the cost of Mac is already higher and that users will have to buy the Windows software as well. "Consumers would pay a premium, as much as 200 dollars for Windows XP Home, as installation would require full version, not the upgrade," he said.
"So cost would remain a barrier to switching for some folks. A 1,299-dollar iMac would look more like 1,500 dollars when adding the cost of Windows XP Home."
The Apple innovation was seized on by investors who sent the share price soaring by more than 8 per cent in morning trading on Wall Street. By lunchtime the shares were up $5.15 at $66.52. Microsoft shares were also up slightly, on the prospect that Boot Camp will only result in the sale of yet more copies of Windows.
“I ordered copies of Windows for the first time to sell in our store today,” Mr. Lerner said.
If Apple doubles its share of the market with this product it will only control 8 or 9 per cent, and Microsoft will still control about 90 per cent, Mr. Lerner said. “It will not mean a great deal to Microsoft’s bottom line, but it will mean the world to Apple.”
There may be a dark side to Boot Camp, however, as Apple warns potential users on its own website about the threat of viruses. So far Mac users have been almost immune to the nasty worms and other bugs that wreak havoc on hard drives. “Windows running on a Mac is like Windows running on a PC,” Apple said. “That means it will be subject to the same attacks that plague the Windows world.”
However, users will have to get their own copy of Windows XP — the home edition retails for $199.
The company said a trial version of the software, called Boot Camp, will be available as a free download from http://www.apple.com/macosx/bootcamp/.
Apple did not say if there would be future updates to Boot Camp, or if the software would allow Mac computers to run Vista, Microsoft’s recently delayed upgrade of the Windows operating system that is now set for release to consumers in January 2007.
Is this a breakthrough for Apple or a betrayal of its own operating system?
1. Apple: Has always made hardware and software to work in unison.
Microsoft: Started as a software company but has branched out into games consoles.
2. Apple: Market value: $56 billion
Microsoft: $287 billion.
3. Apple annual sales: $16 billion
Microsoft annual sales: $41 billion
4. Apple top sellers: iPod, iMac, Mac Mini, IBook
Microsoft top sellers: Windows, Office, X-Box
5. Apple: Founder Steve Jobs
Microsoft: founder Bill Gates
6. Steve Jobs Salary: $1 a year
Bill Gates Salary: $1 million a year
7. Apple employees: 14,800
Microsoft employees: 61,000
8. Apple based in Cupertino, California
Microsoft based in Redmond, Washington State
9. Apple founded in 1976
Microsoft founded in 1975
10. Apple catchphrase: “It just works”
Microsoft catchphrase: “Start Me Up”
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