Apple launches latest "i" software

Apple Computer on Tuesday released its latest "i" application, as the company seeks to combat slowing computer sales with an increased emphasis on software and services.

The new calendar application, iCal, and forthcoming synchronization software, iSync, incorporate online components that are part of Apple's accelerating move into Web services. The strategy could be an important revenue generator in a weak PC sales climate. Market researcher IDC on Monday estimated that worldwide PC shipments would grow a paltry 1.1 percent this year.

"Apple, like all PC vendors, has to find additional sources of revenue beyond the traditional hardware base," said IDC analyst Roger Kay. "Extending into services and software is probably more promising than coming out with new versions of hardware."

At Tuesday's Apple Expo in Paris, CEO Steve Jobs released the new software and also announced that starting in January, new Macs will only be able to boot up in Mac OS X.

Apple needs to generate more interest in OS X, its next-generation operating system released in March 2001. Applications such as iCal and iSync could be essential to spurring increased existing customer upgrades to Mac OS X, which some Mac developers claim is going too slowly.

In July, Jobs said that iCal and iSync would ship in September. But during his keynote speech Tuesday in Paris, Jobs revealed that Apple would only release a beta, or testing, version of iSync sometime later this month. Sibling iCal is available for immediate download from Apple's Web site.

Apple Senior Vice President Phil Schiller declined to detail the obstacles that prompted Apple to push back the final release.

"We need to deliver it as a beta," Schiller said in an interview at the Seybold Seminars trade show in San Francisco. Schiller added that the beta version would connect with Palm handhelds, cell phones and the iPod, as Jobs had originally promised the software would do.

iSync will cap Apple's current stable of "i" applications, which are core to the company's strategy of positioning Macs as hubs for connecting to and easily using digital devices, such as cameras, camcorders and personal digital assistants. But that connection strategy requires increased Mac OS X sales to succeed.

The "i" in Web services
New "i" applications iCal and iSync play a dual role for Apple, both in Web services and increasing adoption of Mac OS X. The applications only run on the newest version of the operating system, 10.2, also known as Jaguar. And both products offer additional services only available with Apple's .Mac service.

In July, Apple revamped its existing iTools Web services, renaming it .Mac, which Jobs at the time acknowledged was a stab at Microsoft's .Net. The overhaul eliminated free iTools services and replaced it with more robust options that people must pay for. Existing iTools users have until Sept. 30 to sign up for a special $49 annual fee. The .Mac service otherwise is $99 a year.

"We see value in delivering services," said Joe Hayashi, Apple's applications product marketing director. "Our strategy is to provide a complete solution. We give you a great deal--integrated into the software, in the OS--that provides the great experience, that encompasses things like synchronization, calendar sharing, traditional home-base sharing."

People with .Mac accounts can use iCal to publish their calendars online to share with others. They can either view the calendars directly or subscribe to them, receiving updates via e-mail. To help showcase iCal's capabilities, Apple has posted a number of calendars people can subscribe to, such as No Doubt concert dates, the new season of TV shows or SAT test dates.

Forthcoming iSync also features a Web-based component available to .Mac customers. On the desktop, the software can be used to synchronize contacts and calendars with the iPod digital-audio player, Palm PDAs and some Bluetooth-enabled cell phones, such as Sony Ericsson's T68i. But iSync also can be used to synchronize data between two computers using a .Mac account.

"These services should drive users toward signing up for .Mac accounts, which could have positive revenue implications," Kay said.

Apple also added other Web services components to Mac OS X 10.2, such as Sherlock 3, which offers access to movie times, flight information and even translation services.

Converting the faithful
But to get the most benefit from those services, Apple must first churn up existing customer adoption to Mac OS X.

Tied directly to that strategy is Jobs' announcement Tuesday that new Macs will only be able to boot up into Mac OS X, starting in January. Since May 2001, Mac OS X has been the default operating system on new computers, but people could still boot up into the older Mac OS 9.

Apple will continue to ship OS 9 on new Macs after January, but people will only be able to access it for compatibility purposes. Mac OS X can run older OS 9 programs in "Classic" mode, which does not require rebooting the computer.

The move signifies Apple's continued emphasis on Mac OS X as the company struggles to get existing users to forgo its older OS.

According to Apple, about 3 million Mac users have switched to OS X. But the company anticipates that the number will increase to 5 million, or about 20 percent of all Apple users, by the end of the year. Market researcher Gartner estimates there are nearly 20 million Mac users worldwide.

Apple also must convince additional software developers to create Mac OS X versions of their products. In his speech at Seybold, Schiller made references to a "few stragglers" that have yet to deliver OS X versions. Quark, which makes page-layout software, is one of the holdouts.

"We're working with those companies to get their software on OS X," Schiller said, without mentioning Quark by name.

Apple also hopes that by announcing its intentions now, it can give institutional customers, such as schools, time to prepare for the move.

"We're giving advanced notice," Shiller said.

Relations between Apple and largest Mac developer Microsoft soured over the early part of the year because of the slower-than-expected Mac OS X adoption rate. On the eve of July's Macworld Expo in New York, for example, Kevin Browne, Microsoft's Macintosh Business Unit general manager, took a three-month sabbatical. Browne charged that Apple had not put enough marketing muscle behind Mac OS X by, for example, spending 20 times as much promoting the iPod.

But analysts observed that Apple marketed Mac OS X much the way Microsoft sells Windows. Most people buying upgrades do so immediately after release, which is when both companies heavily promoted their respective 2001 new releases, OS X and Microsoft's Windows XP. After the initial sales rush, people tend to upgrade the operating system when buying a new computer rather than buying a boxed copy at retail.

"Most of the people who are going to buy a new OS do so right away," said NPDTechworld Stephen Baker. "Then you more typically see a pattern of waiting until the next PC purchase to get, say, a new version of Windows."

The August release of Jaguar is seen as key catalyst for increasing adoption. For example, Apple sold 100,000 copies of Jaguar during its first weekend on sale. Jaguar is also the second major update of Mac OS X since the operating system's introduction. By contrast, Microsoft has only released a bug-fix update--on Monday--and doesn't plan a major Windows upgrade until at least late 2004.

In another potentially important factor affecting Mac OS X adoption, Jobs on Tuesday revealed great developer interest in Rendezvous, Apple's new networking technology released with Mac OS X 10.2. Rendezvous eliminates the need to enter in complicated Internet Protocol (IP) addresses or other information to set up devices on a network or to locate people and other resources. In July, Jobs said that Epson, Hewlett-Packard and Lexmark would be incorporating Rendezvous technology in upcoming network printers.

Canon, Philips and Xerox are among the other hardware manufacturers committed to using Rendezvous in upcoming products, Apple said Tuesday. Canon, for example, will incorporate the technology into network scanners. Philips' focus will capitalize on using the technology with existing Apple "i" applications iTunes 3 and iPhoto.

"The music stored in iTunes on your Mac can play through the Philips stereo system in your living room. Or the photos stored in iPhoto can be displayed as a stunning slideshow on your Philips Flat TV," Philips CEO Gerard Kleisterlee said in a statement.

Apple sees Rendezvous as an important technology for making Mac OS X 10.2 as much a communications hub as one for connecting digital devices. The operating system's built-in instant messaging client, iChat, uses Rendezvous to find other people on the network or share files with them. Other developers appear interested in exploiting these capabilities. The World Book 2003 multimedia encyclopedia, for example, will use Rendezvous to let students share research and bookmarks.

News.com's Ian Fried contributed to this report.