Confusion reigns on Apple OS

Bill Gates caused something of a stir this week by saying he's "confused" by Apple's operating system strategy. But he's not the only one.

Just when it appears that Apple Computer (AAPL) has gotten its OS story straight, its executives say something that doesn't seem to fit.

This week's question concerns Apple's upcoming industrial-strength operating system, Rhapsody, and the role of its potential rival, Microsoft's Windows NT. Apple appears to be considering a sleeping-with-the-enemy policy, but when pressed on the question, representatives won't clarify what that would mean for Rhapsody.

"No matter which way I look at it, the NT thing makes no sense," said Stephan Somogyi, who runs technology consultancy Gyroscope.

Due for release in mid-1998, Rhapsody will combine Next and Apple technology. Apple says it will mix the look and feel of the Mac OS System 7 with the security and strength of a "modern," high-end operating system--like Windows NT, for instance. Apple executives have been quoted several times saying that Rhapsody will give Apple an OS for the enterprise, just as NT gives Microsoft an OS for the enterprise.

But Apple CEO Gil Amelio indicated at this week's shareholder meeting that Apple is considering a proposal from Bill Gates to license Windows NT. It's an idea the company has kicked around for a while, even before the Amelio era began last winter, but it raises eyebrows now that the company has paid $400 million for its own enterprise operating system.

Apple officials say forcefully that they have not made up their minds about licensing NT. And Microsoft's decision today to dump NT running on the PowerPC platform may be the end of the story. (See related story)

If the company were to license NT now, it would have to make hardware with either Intel or Digital Equipment's Alpha processors. But Apple insisted today in a press conference that it has no plans to make Intel-based boxes.

Keep in mind here that System 7 compatibility is a PowerPC-only technology. If Apple went with NT now, there would be no way to run any existing Macintosh applications on those boxes.

But doesn't talking about NT at all seem strange when Apple's high-end OS Rhapsody is on the way?

A former Apple exec thinks so. "Either Apple's going to make a play on the Intel side, or somebody's wasting somebody's time," said Isaac Nassi, who was head of Apple's software division. Nassi left the company in November.

Some observers suggest that Apple might want to give customers NT as a short-term solution, one that keeps them running on Apple while waiting for Rhapsody.

"You wouldn't put your servers on a brand-new operating system, but you might be more willing to try it on your clients," said James Staten, industry analyst at Dataquest. "If customers are not ready to put Rhapsody on their servers, they'll go to someone else for their server."

For its part, Apple acknowledges the need to hold onto customers before Rhapsody hits the streets, but won't say for sure that NT is the way to bridge the gap.

"To get to that premier release [in early 1998], there may be some crossover products to get there," said spokesman Russell Brady. "For certain customer segments, it may be an option to go that route. But it has no bearing on Apple's technological future, which is making sure we stick to a Rhapsody plan."

In other words, Apple may sell some customers on NT but then they expect those customers to go along with the Rhapsody plan as soon as Apple is ready.

Could this be what Gates finds confusing? "I am very interested in continuing to work with Apple as we have done through history. But I am confused by the Apple operating system strategy...and have decided not to worry about the future [in this respect]," he told a Reuters reporter in Frankfurt this week.

Apple is trying to make it easier to understand. In today's press conference, the company's newly appointed top OS execs updated reporters with their latest plans and addressed their questions.

For example, new OS chief Avie Tevanian and vice president of software marketing Jim Gable explained Apple's use of the Mach kernel, the variant of Unix on which the NextStep operating system is built.

Rhapsody will be based on Mach 2.5. There is actually a newer version of Mach, Version 3.0, but Apple won't use it at first because it isn't ready yet for a high-volume commercial product. Apple will instead update Mach 2.5 with some Unix utilities, Tevanian said.

Tevanian and Gable also addressed questions about porting Rhapsody to run on Intel-based boxes, a move that Gil Amelio said this week would be foolish not to consider. Like the NT question, such consideration has caused confusion.

First, it's important to understand that one part of Rhapsody--Next's OpenStep API set known as the "yellow box"--already exists and runs on Windows NT, as well as Sun Microsystems' Solaris and Hewlett-Packard's HP-UX. But another part of Rhapsody--the Mac OS System 7 compatibility feature known as the "blue box"--will run only on PowerPC machines, Tevanian said.

So while Rhapsody's blue box won't run on other platforms, Rhapsody's yellow box (and new applications written to the OpenStep APIs) will run on Mac, PC, and Unix machines.

What Tevanian and Gable said today seemed to make sense. But if Apple really wants to impress on customers and investors that it finally has figured out what to do with its operating system, then why do they open cans of worms like licensing NT?