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Apple Reclaims the Innovation Lead

Until a few months ago, Adam Singer had little use for anything Apple. "I always thought highly of Apple products," says Singer, a New York City Web developer who mainly used Windows machines. "But they didn't do what I needed them to."

Singer changed his tune, however, when Apple (AAPL) came out with the iPod for Windows this fall. "It was the first MP3 player that I thought was worth the price," he says. "To make something that can hold a couple thousand songs in way that you can easily navigate to them on a small screen, that's pretty amazing."

Singer's experience illustrates a perception that PC and electronics industry experts are starting to express more frequently. Simply put, Apple and its CEO, Steve Jobs, are regaining the PC industry's lead in innovation that they lost five years ago. In a bid to improve the Mac's lowly 5% market share, Apple's product developers are the ones pushing the envelope -- and the competition, too.

SYMBIOTIC RELATIONSHIP. These advances aren't just wrinkles on Apple's intuitive software and interface design. Ditching the creaky OS 9 operating system, Apple based the guts of its OS X generation -- including the recent "Jaguar" -- on the Unix operating system common throughout Corporate America. This transformation has yielded significant improvements, the ability to hook Macs to corporate networks and configure them to work better with peripherals such as printers and wireless modems.

Equally important is the way Apple has tweaked the development path of its flagship Jaguar operating system software to create a proprietary product, while at the same time nourishing a symbiotic relationship with the open-source (nonproprietary) software movement. Taken together, these developments are reestablishing Apple's role as a leading innovator.

The Macheads have suffered a long drought. Since the late 1990s, they were stuck with only evolutionary changes to an operating system first built a decade ago. That shifted with the introduction of the original iMac in 1998, though cynical observers noted Apple was mainly delivering a pretty box while doing little new on the software side.

HARDER TO WRITE FOR. Worse, a significant percentage of otherwise loyal Apple users hadn't bothered to upgrade from 1998's OS 8 to OS 9, first released in October 1999. With its market share shrinking, Apple looked less and less attractive to outside software developers, who generally had to work harder to code products for Macs that sold in much smaller volumes than Windows counterparts.

However, with the introduction of OS X in March, 2001, and the subsequent release of the current Jaguar version of OS X, Apple has returned to its innovative roots and given credence to its claims that Macs aren't just different but often better.

Take the case of Mark Rolston, a vice-president at frog design, the firm that helped design the Apple IIc back in the 1980s. He appreciates the nifty packaging of the latest iMac, with its small footprint and 17-inch flat-panel monitor that seemingly floats in mid-air. But more important, OS X has changed the way Rolston thinks of his computer.

"I had never bought a digital camera even though I had been in this industry since 1987," he says. "I think the reason was that it looked like a dead end. You put the picture in the computer, but you had no way to get it back."

REDEFINING THE PC. Apple's unveiling in January, 2002 of iPhoto, with its easy cropping and printing of photos, persuaded Rolston to buy his first digital camera. What's more, his mother decided to buy a Mac so she could send, receive, and manipulate photos of her grandchildren. "She didn't go through a litany of checklists. She looked at the one feature that means everything in the world to her. It redefines your idea of the PC," says Rolston.

And Apple has more where iPhoto came from, including, iTunes, iMovie, and iDVD. While Apple didn't introduce these concepts, Rolston notes, it did distill existing applications into a system that makes them far more usable than before. "They picked concepts that had life but weren't living up to their promise," says Rolston. "There were lots of players, but none of them were igniting anyone's imagination."

Beyond making such functions friendlier, Apple is starting to come up with innovative uses of Unix. The kernel (the most basic part of an operating system's software) of OS X and Jaguar is open-source (nonproprietary, and available for manipulation by programmers everywhere) code that began life as part of the FreeBSD project, one of many Unix variations built during the late 1960s by AT&T Bell Labs programmers. Apple has already started tapping other FreeBSD code to help deliver no-cost innovation.

HERE, TAKE THIS. For example, behind Apple's newfound ability to easily share files with Windows machines lies some key bits of FreeBSD code that Apple programmers were able to painlessly incorporate into Jaguar. And when Apple had problems with its proprietary printer-control system in OS X version 1.5, it simply grabbed a comparable Unix system called CUPS (common Unix printing system) and dropped it into Jaguar.

"The open-source community has worked on drivers for hundreds and hundreds of different legacy printer models. We would have had to do that all ourselves," says Ken Bereskin, Mac OS X marketing director. "Every line of code you don't have to write means higher quality and faster time to market."

The combination of open-source code and Apple's powerful homegrown OS X development tools has made building new applications for Macs a relative dream for outside developers. "Things that are very difficult to do in a Unix or Windows system, such as add cryptography software for smart cards, almost fall out for free in OS X," says Robert Watson, a key developer on the FreeBSD project, and a senior researcher at computer-security software firm Network Associates.

IMPORTANT ALLIES. Open-source code "makes things easy to develop for Jaguar and Apple," adds Rick Spillers, product manager for Hewlett-Packard's (HPQ) Macintosh unit, which oversees efforts to make HP's printers and other peripherals Apple-compatible. That's a cultural sea change from the days when Apple was known as a secretive company. "We clearly understood from Day One that standards was the key to fit into increasingly complex networking environment," says Ken Bereskin, Mac OS X marketing director.

At the same time, Jobs & Co. has won allies in the FreeBSD community by contributing to the party. Watson says when features of FreeBSD are incorporated into updates of OS X, voluminous feedback from Apple users provides valuable information about software bugs and how to fix them, which leads to more rigorous and rapid testing of the improvements than the FreeBSD community could previously manage.

Plus, it allows FreeBSD developers to upgrade that software more quickly, as well. The Apple desktop interface has won over many FreeBSD diehards who love the Mac's easy graphical navigation vs. the typed Unix commands needed for earlier FreeBSD systems.

STRIDES IN STANDARDS. At long last, Apple has pulled ahead of Microsoft in its drive to incorporate industrywide technology standards, such as IPv6, a new system of numbering devices on the Internet that's the equivalent of adding extra area codes to the phone network. Apple has already incorporated support for IPv6 into its software, something the Windows crew has generally not done. What's more, Apple is even making strides in setting industry technology standards itself.

Apple's Rendezvous data-networking standard creates true plug-and-play networking of PC and Mac devices, and hardware manufacturers are quickly embracing it as the wave of the future. Apple is also the first PC company to adopt a type of memory-chip technology called DDR333 -- something that rarely happened in the past when Apple often fell behind the rest of its competitors in incorporating advanced technologies.

No one claims that all of Apple's innovations are perfect. Annoying bugs persist in Jaguar, often leaving users staring at a spinning rainbow icon while the machine ponders what to do next. Many designers argue that Jaguar's core interface, known as Aqua, is inferior to Windows XP. "If I compare Aqua to Windows XP, ignoring what's under the hood, I tend to think XP is ahead of the Aqua interface in terms of usability," says Marion Buchenau, a senior designer with San Francisco industrial design firm Smart Design.

HIGHER FRUIT NEEDED. Then there's Web browsing, long an Achilles' heel for Apple, since browser software for Macs often has trouble displaying complex pages that look fine on Windows PCs. Apple browsers are "a complete disaster," says frog design's Rolston, who creates specially altered, less complex pages for Macs. Since Apple doesn't create its own browser software, it hardly bears responsibility for the problem.

Yet Rolston also argues that Apple has already picked the low-hanging fruit among consumer applications and its next round of innovations will be harder to pull off. Still, he won't bet against the folks at One Infinite Loop as they pull the stodgy PC business along with them. Now and then, in fact, he may cheer Apple on just a little. By Alex Salkever, Technology editor for BusinessWeek Online

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