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A 50% Solution At Apple

News: Analysis & Commentary: STRATEGIES


Its planned operating system may not run old Mac software

Since Ellen Hancock joined Apple Computer Inc. as chief technology officer last July, Silicon Valley has waited to see what the former IBM executive would do about Apple's flailing software strategy. Her first move: a decision to put the brakes on development of Copland, Apple's five-year-old effort to create a new Macintosh operating software. The decision was gutsy, but it didn't bring her any closer to having a strategy for Apple's software future.

Hancock has one now--although it may not be a real crowd pleaser. Insiders say she quietly gave new marching orders to Apple's software engineers on Nov. 15. The plan: to resurrect pieces of Copland, combine it with other Apple software and technology developed outside the company, and cobble together a new operating system by 1998, while continuing to upgrade the current Mac system. The result is expected to give the Mac such features as a customizable interface and a true multitasking application environment.

But the new software, dubbed MacOS 8, has a huge potential snag: It may not be compatible with all of today's Mac software. That means users might have to junk some or all of the programs they use now, if they want to adopt the new technology. At a Nov. 19 gathering at the Comdex trade show in Las Vegas, Hancock refused to give a clear thumbs-up on compatibility. "It's a user requirement," she said, "but I'm not ready to say for sure if we can do it."

But other Apple executives vow they will not leave their loyal Mac users in the lurch. "You don't just wake up one day and say, `I think we'll do something totally different,"' says Heidi Roizen, an Apple vice-president.

Still, the fact that Apple hasn't clearly laid out the compatibility path has developers in a twist. Mac's market share has been in a tailspin for the past year, causing Mac software sales to fall 12.5% in the first half of the year. A compatibility glitch could send sales further south, spurring developers to abandon the Mac. "Sure, it would be hard to keep compatibility," says Adobe Systems Inc. CEO John E. Warnock. "But a lot of things in life are hard--and not doing it could be harder for Apple."

Hancock has promised to map out the new software strategy in mid-January at the MacWorld trade show. By then, negotiations with Be Inc. may be resolved. Insiders say Apple is eyeing Be, a small Silicon Valley software maker, for its operating system, which could be adapted for the Mac. The two have been in takeover talks for the past five months. Negotiations, however, stalled on Nov. 13 over price. Insiders say Apple offered less than $100 million while Be executives are seeking at least twice that. As the pressure mounts to come up with a viable system fast, Apple may find it's in no position to dicker.By Peter Burrows in San Francisco and Andy Reinhardt in Las VegasReturn to top

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