Sorry, Steve. You Still Need Bill


By Alex Salkever The Macheads gathered en masse the week of July 15 in New York City to peruse the latest offerings from Apple's enigmatic and charismatic CEO Steve Jobs. The biggest noise, however, didn't come from a new device or from Apple's new 17-inch flat-panel screen for the iMac. Rather, what stole the show was the verbal shadow-boxing between Apple and Microsoft.

At issue: Sales of Microsoft's Office v. X suite aren't nearly living up to expectations. At the same time, Apple has begun running a snippy ad campaign aimed directly at trying to get Windows users to join the still-thin ranks of Macophiles (see BW Online 6/19/02, "Converting the PC Sinners").

Kevin Browne, Microsoft's chief in charge of Apple products, has responded by implying that the Colossus of Redmond might discontinue upgrading Office software in a few years if Apple can't convert more of its faithful to its Unix-based OS X operating system, for which Office X is expressly designed. In turn, Jobs & Co. has told Microsoft that Office X's tab is too steep -- now $500 off-the-shelf and $400 for new Mac buyers -- and to cut it.

WHY BOTHER? Both Microsoft and Apple are correct. The princely price tag has thus far prevented me from investing in Office X (that plus an annoying trial version, but I've mainly forgotten about the sad encounter documented earlier in this space). On the other hand, very few of the Macheads I know -- aside from the serious techies -- have converted from OS 9 to OS X. Thus far, Apple hasn't given them a real reason for doing so. Worse, I've found OS X to be a nice system but still glitchy and actually a slower performer than OS 9.

My humble recommendation: Apple should fix OS X, and Jobs should push his faithful to adopt it -- and forget sticking his finger in Bill Gates's eye. And Microsoft should drop the price of its new Office software. Otherwise, its customers will likely to continue cobbling together all sorts of solutions to avoid using it.

After all, bigger forces are at play here than a spat over Office X's price. Apple has staked its future on OS X. Intricately tied to the operating system's future is the quality and quantity of software offered for it. Apple has made a big deal, both in ad campaigns and in displays at its retail stores, of highlighting all the OS X titles now available. That's fine. But if more Apple users don't convert, fewer software companies will bother dedicating serious resources to OS X.

SPEED IT UP. So Apple needs to sell the heck out of OS X. It should stop trying to lure Windows users to the Mac side and start trying to convert its own faithful. Give us a splashy ad campaign. Convince people like my father, who still uses OS 9 and sees no reason to switch, that OS X is the future. Even better, pick up the pace and give us snappier performance on the new platform.

While Microsoft has traditionally made a mint selling Apple-compatible products -- rumor has it that these are some of the most profitable in Redmond's stable -- low-volume sales of OS X can only mean low-volume sales of Office X. Make no mistake, Office X is the underpinning that Apple needs to support all other software offerings. It's the most popular and most indispensable piece of PC software for nontechies. Without Office X to drive OS X sales, OS X is relegated to marginal status.

As for the cost of Office X, Apple is on-target with its criticism. The price is nearly obscene, verging on what pros pay for high-end graphics programs. Worse yet, while Office X still blows doors off other options, the competition is catching up.

NEW OPTIONS. Netscape's new beta release for OS X has a mail program that does much of what Microsoft's Entourage piece of Office X offers. Yes, it's unstable for now. But when it hits prime time, a big reason for me to buy Office X will be gone, especially since Netscape's offering is about $500 cheaper -- it's free.

And when it comes to word processing, sure, I would love a better option than Apple Works. Thankfully, several smaller players are furiously working on a new version of it for OS X and will offer it at a fraction of the cost of Microsoft Word for OS X.

Would I buy Office X if it cost what Office XP costs, meaning less than $300 for a new copy? You bet. Office X is a superior product. The calendar integration in Entourage is excellent. The new offering of synchronization with Palm handhelds is a Godsend.

A WIN-WIN. And Office X is much easier to use than anything I've described above when you're talking about integrated office suites. I imagine Microsoft could easily make up on volume what it would lose on profit margins. At the same time, it might very well have a salutary effect on OS X sales, since a new operating system is often tied to sales of a matching productivity suite.

Until Microsoft cuts the price, though, thousands if not millions (including me) likely will continue to putter along on jerry-built packages of software. And until OS X gets noticeably faster and is marketed properly, I imagine folks like my father won't come aboard. Here's a clear opportunity for Apple and Microsoft to make beautiful music together -- and lots of money to boot. Salkever is Technology editor for BusinessWeek Online


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