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Apple's High-Water Mark?
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Performance Problems?

Apple faces other challenges. Macworld magazine's recent independent benchmark testing of the new Macs concluded that the new desktop Macs are not as fast as Apple claims. (Benchmarks for the MacBook Pro laptops should be available after their release.)

Apple also released a Power PC emulator, called Rosetta, that allows Mac OS X programs written for the Power architecture to run on the new Core Duo systems. Benchmarks show some Photoshop functions run about 50 percent slower under Rosetta than they do natively; this makes Rosetta a utility unsuitable for most professional-level Photoshop work. For other applications, Rosetta results are mixed.

Apple has also provided a certification program, called Universal Binary, that software manufacturers can use to offer versions of their products guaranteed to run natively on both the Power and Core Duo architectures; they basically will provide two copies of a program in each box. Apple hopes independent software vendors will adopt this approach, to avoid angering customers who are not ready to buy the new computers but who need to buy software now and don't want to pay again when they step up to the new hardware. Adobe Creative Suite Production Studio (a software bundle of Photoshop and several other Adobe titles) sells for $1,700, so paying twice for it is an expensive proposition. That was a problem for Apple when it transitioned from OS 9 to Mac OS X, and it hopes to avoid similar trouble this time around.

So far, software vendors such as Adobe have balked at producing Universal Binary-certified applications for their latest versions. Doing so will incur additional expense and lead to inventory complications in the distribution channel. The software vendors are more likely to offer upgrade versions, a more palatable option for them. Whether future versions will be Universal Binary compliant is the subject of much speculation.

Apple's relationship with software developers has been a bit tense lately. Apple has been developing new applications that it either bundles with Mac OS X or sells separately. A photo-processing program called Aperture received prominent display at Macworld. Aperture is a powerful photo-management program that lets users easily organize large amounts of photographs. It also performs many of the basic photo editing functions found in programs like Adobe Photoshop. Apple describes Aperture as a program "Designed for Professional Photographers."

Feature for feature, Aperture doesn't compete with Photoshop directly, but Adobe has to be concerned with the direction Apple is headed. At Macworld, Adobe released the beta version of a program called Lightroom, which is essentially identical to Apple's Aperture. Did Aperture force Adobe to release a product still in beta stage, in an effort to salvage its development? Some of the new Apple software bundled with the Mac provides features that users previously had to purchase elsewhere.

Apple's new software strategy may have the independent software developers thinking about new ways to hedge. Of course, the best hedge would be to start offering versions for a higher-performance competitor, such as the Cell. The Cell also gives upstarts an opportunity to enter the graphics software market, usurping established players such as Adobe. If the established software companies don't port their products to Linux, IBM has the option of creating an emulator, such as Apple's Rosetta, to allow Mac OS X and Windows software to run on Linux. Given the Cell's quickness, software operated in emulation mode may perform at acceptable levels.

There is already a Windows emulator for Linux, called Wine (an acronym for Windows Emulator or Wine Is Not an Emulator, depending on whom you believe). Wine is far enough along in development to be finished and pressed into service. Early indicators imply many software companies are working on Cell ports or at least investigating the platform. Sony reports distribution of 4,000 Cell software development kits.

Retail Risks

Apple's recent investment in retail outlets is similar to the move toward application software self-sufficiency. Apple now has 130 retail stores, many in upscale locations such as Tokyo's Ginza district and San Francisco's Union Square. This approach, while giving Apple more control (and potentially more profit), also incurs large overhead. Market saturation is a risk, or demand for Apple products may hit a threshold, with Apple then committed to maintaining the retail infrastructure. Apple's retail strategy requires it to maintain a certain level of continuous sales. Traditionally, Apple's reseller network has weathered periods of slow Apple sales by offering a varied selection of third-party products. The resellers also have latitude to experiment with new third-party products. Apple's new outlets have affected the resellers. Some of Apple's old-line resellers have gone out of business. Several have filed a class-action suit against Apple.

In what promises to be a challenging year for Apple, an additional complication has occurred. Walt Disney Co. has agreed to purchase Pixar Animation studio, a move that makes Steve Jobs Disney's largest shareholder and gives him a seat on Disney's board of directors. Jobs has been able to manage both Apple and Pixar. The question now is whether his new Disney role will prove a distraction from his work at Apple. Jobs is very image conscious, and many consider him a business icon. Now that he finds himself on a much grander stage, he may well become preoccupied with it. This possibility could impact Apple's success. The Disney relationship does offer some positives: Apple can offer Disney content--and co-branding possibilities now exist.

Ironically, the Cell processor should enjoy huge success with animation studios, as the new workhorse for their render farms.

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