Tuesday, July 22, 1997

Apple hopes to reassure faithful with update to operating system

By CATALINA ORTIZ

AP Business Writer

SAN JOSE, Calif. (AP) - Apple Computer Inc. calls the latest version of the Macintosh operating system its most important software upgrade yet. Industry observers call that claim mostly hype.

But the release of Mac OS 8 on Tuesday could help Macintosh users keep the faith as Apple struggles to restore its battered bottom line and shrunken market share, Mac fans and analysts believe.

"It's not going to be a major change," said James Staten, an analyst with Dataquest Inc. in San Jose. "But it's a reminder that there's something new in the Mac market - another reason to take another look at the Mac."

Mac OS 8 is a new version of the software that controls the Macintosh's basic functions. It contains several improvements, primarily greater stability and ability to handle more than one task at a time.

Many Macintosh users, longing for such improvements and heartened by favorable reviews, are eager to get their hands on the program.

"I plan to buy the upgrade this week when it hits the stores," said Steve Zerkie, an aficionado in Southern California. "Most of us longtime Mac people have been waiting for a substantial upgrade."

Apple is counting on the operating system to help give it a boost after a spate of bad news and renewed speculation of a takeover. Two weeks ago, the Cupertino, Calif., company ousted chief executive officer Gil Amelio. Last week, it reported another money-losing quarter.

The company has had no choice but to revamp its aging operating software. Apple has lost much of its market share as Microsoft Corp.'s Windows 95 operating software for rival PCs largely erased the Mac's traditional ease-of-use advantage.

Apple is renewing its software two different ways. In addition to Mac OS 8 and future upgrades, the company is developing a more advanced program with technology from its acquisition of Next Software Inc. earlier this year. That operating system, known as Rhapsody, is due out next year.

While Mac OS 8 isn't as important an advance as Rhapsody is expected to be, it still is significant, analysts said.

"Windows 95 really caught up, and there are definitely people who have been looking for Apple to reassert some leadership," said Kevin Hause, an analyst with International Data Corp. in Mountain View., Calif. "This is not a huge leap ... but at least it's going somewhere."

The operating system, according to analysts and users who have tested the system, was designed to work with - and take advantage of - the Power PC microprocessor, which has been the brain of new Macintosh computers for the past three years. It also simplifies Internet access.

The new software program also is less prone to crash than the current version. In addition, it enhances the Macintosh's ability to carry out more than one task at a time.

Mac users said those two features were why the new program is worth buying.

"I think it's an excellent operating system. It's much more stable than any Mac OS I've ever run," said George Graves, an independent technical writer in Mountain View, Calif., who has used the program for the past week. "I haven't had one freeze or crash on it."

Apple watcher Tim Bajarin, president of Creative Strategies Research International in San Jose, thinks that it could help Apple return to the black as Macintosh users buy the new software - and spiffy new Macs to take advantage of it.

"I think every serious Mac user is going to want (Mac OS) 8," he said. "And in a lot of cases, people who are going to buy it are also going to be interested in buying a new Mac."

But users and analysts don't think the new software will bring back onetime Mac fans who've switched to Windows out of that program's pervasiveness and concerns about Apple's future. Rhapsody, however, has a chance of doing that, they said.

Rhapsody will be even more "multitasking" and will allow software developers to write programs that can be used on different kinds of computers. Fans hope Mac OS 8 could help Apple hang on until that program is available.

"I believe that when Rhapsody ships, it will change a lot of things," Graves said. "I think if Apple can hold onto what market share it has - and maybe build a little of it back - and become profitable for a couple of quarters, then if people see what Rhapsody can do, it could mean a real turnaround for Apple."