Apple's Sexy Software Upgrades

In the past couple of years, software companies from Google (GOOG) to (CRM) have been racing to move traditional computer programs "into the cloud." In other words, the programs become Web-based applications that run in a browser, with all the data stored on network servers rather than on your PC. Even Microsoft (MSFT), the king of the desktop, has been focused on building a suite of Web services under the Windows Live brand. So it came as a surprise when the big product announcement at Apple's (AAPL) Jan. 6 Macworld Expo presentation concerned good old-fashioned desktop applications—what techies call "native" apps.

Apple announced major improvements to iLife, its collection of media programs that includes iPhoto, iMovie, and GarageBand, and to iWork, a suite of productivity programs that is gradually becoming a real competitor to Microsoft Office for home, school, and small businesses. Why put effort into the desktop when everyone else is talking about cloud computing? "Customers don't think about native apps vs. cloud apps," says Philip Schiller, Apple's senior vice-president for worldwide marketing. "Customers think about what the programs can do. And it's important to be native for performance and the best user experience."

That's true, but not the whole truth. These programs, which are exclusive to the Mac, are also a potent competitive weapon. Apple's systems may be better-looking and better-designed than those on most computers, but beneath the skin they're built with the same components used by Dell (DELL), Hewlett-Packard (HPQ), and the others. Apple buyers have to accept premium prices and a limited product line, so it's mainly software (along with design) that makes Apple products worth the money. Cloud programs that run in a browser on any platform don't do Apple any good.

So Apple has to keep improving its native applications, which is a good thing for consumers. Some of the new features look compelling indeed. The new iPhoto, for example, can detect and identify faces in pictures and group together all the shots that contain a particular face. It also recognizes the GPS location data generated by many cameras, including those on cell phones. Among other things, that lets iPhoto show the map location where a picture was shot, a trick called geotagging. And iMovie includes professional editing features, such as a simple way to splice footage shot from a different angle into an existing scene without disrupting the soundtrack. There's also image-stabilization technology that can make shaky, handheld video look as if it were shot using a professional Steadicam. All new Macs include iLife '09; current Mac owners can upgrade for $79, or $99 for a family pack that can be used on up to five computers.

Word processing and spreadsheets in iWork also get new capabilities, such as dozens of built-in mathematical functions. This makes them a bit more like Microsoft Word and Excel—except you can't program these functions. So corporations may keep using Office, but individuals could easily switch.

Finally, there's Keynote, Apple's answer to PowerPoint, with a real winner of an improvement in the form of an iPhone app. A 99¢ download turns an iPhone or iPod Touch into a remote for controlling a PowerPoint-type presentation. The genius of this is that you can read your speaker's notes right on the phone's display—a feat that's so difficult when running PowerPoint on a laptop that many users still resort to printing out their notes.

Apple may make most of its money on hardware, but it's software features such as these that explain the steady rise in Mac's market share. There's nothing like these programs in the Windows world, and that's a pity.

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