Whats the Buzz?

Mac OS X is coming. Partners are ready. But some Apple divisions will be late to the big launch.

Steve Jobs loves to play the hero. And once again, his damsel in distress is Apple Computer.

The original Apple turnaround story is now a distant memory. Apples sales fell 57 percent in the quarter ended Dec. 31, and the company reported a $195 million loss during the period.

Critics point to three key problems: Many devoted customers have all of the iMacs they could ever want; newer products like the Titanium PowerBook are suffering from manufacturing delays; and the economic slowdown could take a big bite out of Apples current quarter, which ends March 31.

Even so, Apples partners say todays business climate is far better than the dark days under former CEOs Michael Spindler and Gil Amelio. Apple lost a combined $1.85 billion in 1996 and 1997, and nearly closed its doors forever.

Apples 1998 turnaround under CEO Jobs is now part of Silicon Valley lore. But with Apple slipping back into the red, the companys one-time savior needs to deliver another miracle.

Slick Production Enter Mac OS X, a major upgrade that ships March 24. Think of it as a robust, reliable Unix engine with snazzy, ease-of-use enhancements. Sources say Jobs stepped away from his other CEO gig at Pixar—the animation studio behind Toy Story and A Bugs Life—to polish Mac OS Xs design and its user interface.

The early reaction from Apples partners is quite upbeat. "Personally, I think that Mac OS X will do for Apple operating systems what the translucent iMac and PowerMac computers did for the hardware," says Chris Tarnowieckyi, owner of Tarny Network Consulting and Training in Fairfield, Ohio. "It will sell not just because of its great features and capabilities, but because of its style."

No Hollywood Ending Nobody is suggesting that Mac OS X will push Windows off the desktop. And only Apples staunchest supporters predict that Mac OS X will give Linux a run for its money on the Internet.

But before you write off Apple (again), consider the companys position in the partner ecosystem. In some cases, the fastest way for an integrator to target lucrative vertical markets—including education, health care, creative media, digital entertainment and small business—is to partner with an Apple Solutions Expert (http://experts.apple.com).

"Apple is never going to get the typical business user," concedes Howard Goldstein, VP of The Center for Digital Imaging (www.cdiny.com). "But our business is digital imaging. And I know Mac OS X is going to succeed in that market."

Mac OS X should prove to be far more scalable and reliable than previous releases. It offers protected memory, preemptive multitasking, multithreading and symmetric multiprocessing (SMP) support. From a purely technical standpoint, the upgrades engine is everything Mac OS should have been eight years ago, when Microsoft first delivered Windows NT, and Unix sparked the client/server revolution.

Tragic Plot Twists Apple made several vain attempts in the 1990s to deliver a modern operating system. A lengthy list of projects—including Copland, Pink, Taligent, and a secret initiative with Intel and Novell—all died on the vine (see "Apples Missteps," p. 41).

In many ways, Mac OS X is another Unix variant. Apple built the operating systems kernel, known as Darwin, on open-source software like Mach 3.0 from Carnegie Mellon University and FreeBSD 3.2. In theory, that means developers can quickly move Unix and open-source applications to Apples new operating system.

"Porting from Unix is very easy because of the kernel, so Mac OS X will open up a lot of new avenues for Apple and the developer community" asserts Peter Lock, founder of Cyber 3, a Westlake Village, Calif., consulting firm.

Adds Cheryl Schneider, owner of The Mac Works, a consulting firm in Bloomington, N.Y., "The vast amount of freeware and shareware tools for Unix will now be available to us. Its a brilliant move by Jobs."

Actually, its an old strategy with a fresh coat of paint. Mac OS X leverages considerable development work from Jobs previous endeavor, NeXT Software Inc. The companys defunct operating system, known as NextStep, was a Unix variant with a slick interface that could run Mac OS applications under emulation mode. NeXT never did achieve critical mass and sold out to Apple—under former CEO Amelio—in December 1996. Jobs went on to oust Amelio and led Apples comeback (see timeline below).

Hypnotic Hippie Still, its difficult to gauge just how big a splash Mac OS X will make. Jobs infamous "reality distortion field" once again has captivated Apples partners, causing some of those allies to downplay Apples challenges.

Some partners believe that Jobs has flawless vision, but history proves otherwise. Many people forget about his failed Lisa project and the Macintoshs early struggles. Few pundits realize that Pixar was a money-losing imaging company until employees convinced Jobs to bet on computer animation. And the idea for the Apple/NeXT combo came from a senior NeXT staff member; Jobs wasnt even aware of the early Apple/NeXT negotiations, according to "The Second Coming of Steve Jobs," by Alan Deutschman.

Even before Mac OS X arrives, Apple is having problems on the software and hardware fronts. Despite its high-end capabilities, Mac OS X lacks some rather basic features like DVD support. And Apple isnt expected to ship the operating system with new hardware until Macworld this July in New York.

Native application support also is lacking. All of the usual suspects—Adobe, Microsoft, Quark>> and the like—are developing Mac OS X applications, but many wont arrive until late this year or sometime in 2002.

Backward compatibility with existing Macintosh applications requires Mac OS X customers to run Mac OS 9.1 under the new operating system.

Apples hardware business faces challenges, too. Several sources say the companys supply of 733MHz G4 desktops has been spotty, and the wildly popular Titanium notebook computers are in very short supply.

"Apples biggest problem is filling back orders," says Lock from Cyber 3. "Weve got 70 people waiting for the 733MHz G4s, and other customers are on back order for the Titanium. One Titanium PowerBook just arrived today. The Web designer who ordered it broke the speed barrier to come and get it."

Whats behind the supply problems? Apple wont say. The Mac OS X team has invited technology journalists to visit Apples corporate campus on March 21. But the company declined to comment for this story, citing last-minute deadlines related to delivering the new operating system. Apple also declined to let our Techno team test Mac OS X.

Most technology companies are far more vocal as major product releases approach. When Microsoft prepared Windows 95 and Windows 2000, the company opened its doors—repeatedly—to business and technology journalists.

Think Different As if you didnt know, Apples corporate culture is quite different. Apple, after all, takes its cue from Jobs, who often snaps at journalists during brief interviews and would rather spend his time searching for the next industry trend.

Journalists may not like that approach, but it serves the company well. In recent weeks, hundreds of Apple Solutions Experts and Apple Specialists have flooded training classes for Mac OS X.

"Apple is listening," says Tarnowieckyi. "They have provided courses to prepare consultants and partners both in the classroom setting and online. There have been seminars geared toward sales as well as hands-on technical workshops."

More workshops and road shows are imminent. In late March and early April, Apple will hold Mac OS X seminars in San Diego, San Francisco, Seattle and St. Louis. The "BioSciTech" events will evangelize the new operating system to biological scientists and medical students. Thats not exactly mainstream America, but the medical industry and health-care markets are big business for Apple partners.

Just ask Organize-It, an Apple partner in Roxbury, Mass., that develops financial-management systems for the medical community. Organize-Its custom software is a lower-cost alternative to pricey ERP systems from PeopleSoft and SAP. Company founder T.J. Roberts says his business remains quite strong—despite the current economic slowdown—and he has high hopes for Mac OS X.

Roberts isnt alone. Many early Mac OS X converts claim that the economic slowdown isnt choking their revenue streams. "Our consulting business has continued to double year over year," says Adam Schechter, president of Precision Consulting, in Fairfield, Conn. "Business has been extremely robust, and we continue to see new clients each day."

Apple also has moved back onto the honor roll with some schools. Wintel PCs, led by companies like Dell Computer, have largely overtaken Apple in K-12 classrooms. But many universities arent ready to give up their Macs. "Higher Education has suddenly rediscovered Apple," says Tarnowieckyi. "I understand that the Darwin open-source project is a big hit with universities and colleges."

Even if Mac OS X doesnt become a mainstream hit, partners are confident that Apples future is assured. "As far as were concerned, Mac OS X gives our company a 10-year lease on life," says John Thorsen, president and founder of TECSoft, an Apple ally in Amagansett, N.Y.

In the era of Internet time, 10 years could be forever.