Apple: the real crunch is the OS

Steve Jobs, Apple's charismatic CEO, was at it again last week, unveiling sleek new products. But the company's future will be determined not by hardware, but by its operating system.

Now, give this to Steve Jobs: he knows how to put on a good show. The faithful had started queuing at 4.30am for the Apple CEO's 9am keynote speech at the Macworld expo in New York; so you might have expected him to begin with fireworks, unveiling a new this or that.

Now, give this to Steve Jobs: he knows how to put on a good show. The faithful had started queuing at 4.30am for the Apple CEO's 9am keynote speech at the Macworld expo in New York; so you might have expected him to begin with fireworks, unveiling a new this or that.

Not a bit of it: instead, Jobs began with the hockey-puck mouse that has been standard on Apple machines for the past two years. "Some people haven't liked it," Jobs said, flashing up a slide of a ZDNet review which said bluntly: "This is simply the worst mouse ever made." (No disagreement from the crowd, by the way.)

"Well, we listen," said Jobs, and announced a new mouse - an oval creation, optically driven so it has no moving parts and no need for a mouse mat. Apple is also abandoning its dreadful tiny keyboards, and will sell its new machines with full-size keyboards and the optical mouse. That's that problem sorted then: we can now give our old iMacs to the children, whose hands do fit the keyboards and mouse.

In short order Jobs unveiled dual-processor G4 machines, running a demo to show how much faster two 500MHz chips were than a single 1-gigahertz (1,000MHz) Pentium chip. The extra processor effectively comes free: prices were unchanged from the single-chip G4s.

A brief demo of OS X followed, the next-generation operating system whose schedule has slipped by more than a year - from release early this year, to a public beta release ("September - I think early", to quote Jobs last week) and a formal release next year ("early, I think"). Then came more iMacs with new colours, and notably a new bottom-end one for $799 (£650, including VAT, in the UK). Next, a demo of iMovie 2, an improved version of the software bundled with the iMac for editing digital home videos.

And then, under the heading "one more thing", the rabbit-out-of-a-hat unveiling of Apple's latest computer shape: a small white cube about the size of a toaster, packed so solid that when Jobs pulled the innards out by its pop-up handle it looked "like a nuclear reactor core" (as one observer put it). It's not the sort of thing you would carry around, however, since it's essentially a normal-sized computer with all the air taken out.

"We've been working on this for quite some time," Jobs said. How long, I asked David Moody, the head of desktop systems, afterwards? "About a year," he said. "It was an intensive design project." But, he insisted, it wasn't just some flight of fancy: "We had customers coming to us and saying that they wanted a class of product that nobody was offering. They wanted to have professional power but didn't want the baggage of the slots and big box on their desk."

Quite a keynote, all in all. Yet one was left wondering: where is Apple really going? For all the pizzazz - "Steve loves to do ta-daa," as the head of the ad agency TWBD, Chiat Day, commented - there are some real problems up ahead.

First, market research suggests that consumers are looking to other products than the iMac. Apple execs said that in the latest quarter it sold 10 per cent fewer than Apple had anticipated (450,000 rather than 500,000), while separate market research by Media Metrix showed the number of US households with an Apple machine fell 6 per cent, from 4.9 million in January 1999 to 4.6 million in January 2000. Hence, obviously, the new low-cost iMacs to spur demand.

But it's hard to see normal consumers going for the Cube. You need a separate screen, and the prices (at $1,800 upwards) are not normal consumer range. Similarly, it might sound smart to have two processors in one machine, but you don't get double the speed: the demo in the keynote showed that for a Photoshop task, the single processor did the job in 100 seconds, while the dual did it in 61 seconds. OK, so the pricing means the second processor is free, but Apple would surely have been happier if it could have just sold two faster chips separately: that would make it profits on two computers rather than one. But production troubles at Motorola, which makes the PowerPC chips, leaves it stuck with the 500MHz chips, and no promise of an improvement until next January.

So with consumers turning away and hassles at the top end, where is Apple's saviour?

"OS X is Apple's future and direction," said Mitch Mandich, the company's vice-president of worldwide sales, when we spoke afterwards. "The feedback we're getting is really strong. And it's going to be a graceful transition, not as extreme as the shift from the 68000 chip architecture to the PowerPC." The latter change, about five years ago, effectively meant that some programs couldn't run on old machines, and others ran slower on new ones. It was hellish.

By contrast, in comparison to the present operating system, OS X is more solid and better-written from the ground up. After seeing it close up doing things I wanted done (rather than demonstrations), it became clear that this is going to improve life for Apple users much more than a new casing colour, 50MHz extra chip speed or a few additional gigabytes on a disc.

OS X really will make it easier to get stuff done, and a number of software companies are already rewriting their programs to run "native" (and any lingering user interface annoyances will get dealt with either by Apple or the growing army of shareware writers, as has happened on the existing Mac OS). It runs just as fast, if not faster, than the present one. And at the end of the day, it's just software. You can wipe it off and put something else on if you really, really hate it. You can't do that with a chip architecture.

More important for Apple, OS X will be better for running big networking systems and Web applications because of its Unix core; and by adding the Apple interface, it can make itself attractive even to big corporations which otherwise might have gone for Linux. Whether it can woo clients considering Windows 2000 is another question, but without OS X the game really would be up for Apple. That Jobs mentioned it in his speech when he had no real news - only more delays - indicates how significant he knows it to be.

But of course a Jobs speech is a piece of showmanship, essentially aimed at persuading you that how something looks right now is really more important than what it does or costs. This is the famous "reality distortion field", and it was going full pelt last week. The only moment when it seemed about to fall away came after he had hoisted the Cube. What could he say now, I wondered? "OK, that's it, er, I'm off"? No.

"I started with the mouse, and I'm ending with the mouse," he said.

The audience looked confused.

"We think it's so great we want you all to have one!"

People perked up.

"And all you need is this card."

Puzzlement.

"And if you look under your seat, you'll find one. Present it at the exits and you'll get a..." His voice was almost lost in the cheers - and the stampede. For people who had been so keen to get in, you never saw such a bunch so eager to get out again.

And you know what? The mouse really works. And it's a million times better than the hockey puck. So keep your fingers crossed for OS X.

carthur@independent.co.uk