Big beneficiary of Apple success is rival Microsoft

It sells more Mac software than any other company, and the product is better

October 02, 2005|By TERRIL YUE JONES | TERRIL YUE JONES,LOS ANGELES TIMES

REDMOND, Wash. -- As Apple Computer Inc. enjoys rebounding popularity among computer users rejecting the dominance of Microsoft Corp., one of the biggest beneficiaries is - oddly enough - likely to be Microsoft.

That's because outside of Apple itself, Microsoft sells more software for Apple's flagship Macintosh computers than any other company.

With sales of Macintosh machines rising sharply, archrival Microsoft stands to bolster its well-established Office software and other programs for the Mac.

"We're ecumenical people," Microsoft Chairman Bill Gates said. "We have to run everything. Our first graphics interface was on the Macintosh. We've always done well on Macs."

Microsoft executives declined to discuss just how well, and the company does not break Mac sales out in its financial reports. But Microsoft's Mac offerings are routinely credited as being more innovative, elegant and robust than its mainline PC products.

They are designed and written mostly in a warren of offices on Microsoft's sprawling campus here. Apple posters decorate the walls of the Mac Business Unit - a name with none of the evocative verbal polish Apple famously applies to its products.

Not viewed as rival

"We don't see Apple as a rival," said Scott Erickson, director of product management and marketing for the 200-plus-employee Mac unit. "We see it as another vendor."

Not everyone inside Microsoft, a company whose software runs on more than 90 percent of the world's computers, sees it that way.

The competition can be intense. Although Apple and Microsoft were founded within months of each other at the dawn of the PC age, the global share of computers running Apple's Macintosh operating system has been squeezed to only around 2 percent of PCs today, down from a peak of 9.6 percent.

Critics of Microsoft claim the company crushes competitors by copying or buying their innovations and aggressively marketing them under its own brand. Erickson says he gets a kick out of the eyebrows that inevitably raise when he whips out his Apple PowerBook laptop at company meetings.

That's akin to a Ford Motor Co. executive showing up in a Chevrolet for a meeting with the boss.

The two companies perpetuate the rivalry themselves. Apple co-founder Steve Jobs delights in taking pokes at the software behemoth up north of Cupertino, Calif., where Apple is based.

Subject of jokes

At the Consumer Electronics Show in Las Vegas in January, comedian Conan O'Brien joked at a presentation with Gates about going to a bar together: "I got so drunk that I woke up with a hooker; Bill got so drunk he woke up with an Apple computer."

Yet the two companies need each other.

When Apple was financially on the ropes in 1997, Microsoft took a $150 million stake in the company, ensuring that Apple users would be there as Office customers, and that the software giant would continue to provide products for Mac loyalists.

As companies, government agencies and universities became more dependent on sharing information over internal networks and the Internet, the importance of communicating across computing platforms grew, and the ability to load MS Word or Excel spreadsheet files from a Windows to a Mac machine and vice versa became crucial.

"It's a way for Microsoft to exercise some control over the market," says Charles Smulders, an analyst with technology market researcher Gartner Inc. Supporting Apple users, he says, also helps Microsoft soften hostility toward its perceived monopoly in operating system software.

Because it serves a different universe of PCs than those that run Windows, the Mac Business Unit isn't tied to releases of Office for Windows and operates on its own schedule. That means that Office 2004, which is for Macs, has features not available in Office 2003, the latest edition available for Windows PCs.

Usage growing

And Office for Mac usage is growing, says Microsoft's Erickson, who uses Windows on a Toshiba laptop and the Mac OS on an Apple PowerBook in his tidy corner office. "We've sold more copies of Office 2004 in the first three months than we did in the first six months of the last launch of Office for Mac," he said.

The autonomy of this relatively small division allows Microsoft programmers to cut loose and design the best software they can without having to conform to the parent company's restraints.

`Strategy tax'

"It shows what Office could really be if it weren't for the `strategy tax' - that every software product has to play into the overall Windows strategy," says Greg DeMichillie, lead analyst with independent researcher Directions on Microsoft. "Most of the new features of Office 2003 were about connecting to Windows servers, not making Word a better word processing program."

Continuing to write code for Mac users is one way to diversify. In recent months Microsoft has intensified its efforts to strengthen its presence in gaming, music downloading, software for small businesses, online advertising, and Internet and PC search functions.

"Microsoft isn't just a Windows company anymore," says Mark Stahlman, technology strategist with the brokerage Caris & Co.

Terril Yue Jones writes for the Los Angeles Times

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