Apple Still Cares More About Living Room Than Office

Probably not.

By using standard Intel chips in its computers, Apple is assured of an abundant supply of state-of-the-art silicon at commodity prices. It also means that its Macintosh computers can keep pace with Windows machines as Intel keeps improving processor performance. And by rolling out Intel-based computers last week, six months ahead of schedule, Apple avoids a slowdown in sales, as customers won't be waiting around for the new models.

For Apple users, the news is all good: The new computers using Intel's Core Duo dual-core chips offer two to five times the performance of previous Apple computers. And Apple is selling the PCs for the same price as its older, slower computers. Retooled iMacs, available now, go for $1,299 and $1,699, depending on processor speed, and new MacBook Pros, successors to the PowerBook G4 and due next month, will run $1,999 and $2,499.

The new iMac has the same design, the same size, the same features, and the same price; the big change is speed, Apple CEO Steve Jobs told attendees at the Macworld conference in San Francisco last week. By the end of the year, the company's remaining desktop computers, consumer portables, and servers also will have Intel inside, abandoning the Power PC chip from IBM and Freescale Semiconductor Inc.

But for companies that mainly use Windows computers, the faster Intel-based Macs don't provide many reasons to make a quick switch to new hardware and a new operating system. The reasons most businesses don't use Macs--insufficient software availability, compatibility, and interoperability--won't disappear simply because Apple switched processors.

David Frederickson, program director for defense contractor Northrop Grumman Corp., has long used Apple computers at home. But the company's move to Intel processors probably won't change the computer systems Northrop buys, mostly because government contracts generally require the use of Windows.

"The current version of the Mac OS is far superior to the Windows OS as far as the user interface and the security you can set up," he says. "But the type of chip in the system isn't the deciding factor. It's basically the operating system and functionality they wrap around it."

That means Apple is unlikely to increase its share of the business market any time soon. But the "halo effect" of the spectacularly popular iPod and Apple's easy-to-use digital-lifestyle computer software, along with the move to Intel chips, may help the company grab more of the consumer market. Apple's share of the worldwide PC market hovers at 2% to 3%.

Increased Sales

Apple is starting to gain some ground. It sold 1.25 million Macs during the last three months of 2005, up from 1.05 million a year earlier. That increase helped fuel record quarterly revenue of $5.7 billion, though most of the growth came from sales of 14 million iPods, up 10 million units from the same period a year ago.

Apple continues to care a lot more about consumers than businesses. Last week, Jobs also revealed upgrades to Apple's consumer content-creation suite, iLife '06, and its presentation and productivity package, iWork '06. ILife '06 includes new versions of iPhoto, iMovie, iDVD, and GarageBand, along with a new app, iWeb, a Web-site creation, blogging, and podcasting program tied to Apple's .Mac Internet hosting service.

While the business market isn't high on Apple's priority list, the company has an indirect influence on business computing as its sleek hardware designs, simple user interfaces, and easy integration of consumer applications have become the standard by which other Intel-based hardware and software products are measured.

Will those strengths help Apple make greater inroads in the business marketplace it abandoned years ago? "It will take years," says Rob Enderle, an analyst with the Enderle Group, "but this could be a foundation."

The key, as usual, will be software. Most Mac application vendors have or soon will have rewritten their software to run on the Intel-based machines, Jobs says. But no new major business applications have been promised for the new Macs.

One piece of good news is a five-year extension of a pact with Microsoft ensuring that crucial productivity applications from the Windows Office suite will be available on Macs. And Intel has released a suite of software-development products for the Mac OS, including compilers and libraries intended to reduce the need for hand coding, aimed at improving the performance of applications.

But that may not make much of a difference for businesses. A Web survey by InformationWeek Research of 299 business-technology professionals, three-quarters of whom work for companies that use Apple computers, found that 82% use them for content design and editing, 68% for multimedia, and 53% for general business applications. Their top reason for not using Macs, or more of them, is software compatibility and interoperability issues, cited by 58% of those who use Apple computers, 81% of those who plan to use them in the next 12 months, and 85% of those who don't use them or plan to use them. Only 8% of those not using Apple computers said the shift to Intel chips will cause them to reconsider using the computers.

They're making a mistake, says Eric Seiden, a VP at wholesale distributor and importer Interstate Screw Corp., which has five Macs and two Windows computers. "It's not necessarily a pro-Mac thing, but it's an anti-Microsoft and -Windows thing," he says. "Windows is prone to viruses and security flaws. My whole goal is I want the computer to work for me, and I don't want to spend my whole life fixing the damn things."

As an Apple advocate, Seiden says he's emotionally "crushed" by the move to Intel processors. "But honestly, for Apple it's a good thing," he says. "There will be some transition pain, but the PC world had the same thing when they switched over to Pentium. I will be one of the last ones to switch. I'll wait six months to a year."

Cost Prohibitive

Some IT managers can't find a good reason to switch. The Montgomery Cancer Centers has about 250 Wintel computers and only three Macs, two to run a radiation software program that requires the Mac OS and one for a physician who refuses to use Windows. "I can see no benefit of adding any more Apple computers," says Matt Adcock, director of IT. "If you keep tight control of your desktops and what users are allowed to do, you don't have issues with viruses and crashes" on Windows computers. A change to Macs would be costly once you factor in training and transition of applications, he says.

Many Mac users hope the Intel shift will result in lower prices. Businesses that use Macs pay a premium for the hardware, says Christian Weidelman, systems administrator for commercial printer MWM Dexter Inc. A G5 from Apple costs between $1,300 and $1,500, while a similar computer from Dell or Hewlett-Packard costs $800 to $1,200, he says. "More competitive pricing would increase the amount of equipment we could purchase annually," he says.

Steve Jobs may not care. His focus is on home entertainment and the mobile digital lifestyle that made iPods such a popular device and produced record financial results for his company. But he can't resist tweaking the competition. Jobs showed a commercial suggesting that for years the Intel chip has been trapped inside boring PCs doing mundane number crunching: "Starting today, the Intel chip will be set free and get to live life inside a Mac."

But that new life inside a Mac still isn't all that appealing to tech managers. As long as crucial business apps from vendors such as Oracle and SAP aren't available on the Mac, Apple's computers--regardless of which chip is inside--won't be a serious option for many businesses.