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Does Apple Still Need Microsoft?

Nearly six years have passed since Microsoft agreed to invest US$150 million in Apple Computer and continue developing Mac versions of its Office application suite for at least five years.

In the intervening period, both companies have experienced many changes. Apple has transformed from a moribund entity whose doom was foretold by countless pundits into an innovative niche player — the high-tech equivalent of a luxury carmaker. And Microsoft has weathered several years of antitrust litigation, maintaining its operating system and business application hegemony while simultaneously evolving into a dominant player in the nascent Web services space.

After the agreement between the two companies expired in August 2002, a new pact was not signed. Microsoft continues to produce Office software for the Mac OS, but Apple recently has released products that could indicate it is trying to free itself from the software giant’s occupation of much of its prime desktop real estate.

Is Apple seeking independence from the Redmond, Washington-based superpower?

Safari Keynote

Earlier this year, Apple introduced two applications for its Jaguar (OS X version 10.2) operating system: Safari, a Web browser that has received plaudits despite its beta status; and Keynote, a stand-alone presentation application that offers an elegant alternative to Microsoft’s own PowerPoint product.

Adam Engst, the publisher of Mac community newsletter TidBits, told the E-Commerce Times there is no question that Apple is targeting Microsoft’s weaker offerings with its new software.

“Neither Internet Explorer nor PowerPoint had been significantly improved in quite some time, and both stand alone more than Word and Excel,” Engst said. “Frankly, it makes a lot of sense for Apple, because it’s extremely awkward for a company to be reliant on its primary competitor for key pieces of application software.”

Finding a New Office

Engst explained that he believes Apple is on track to provide a substitute for Microsoft Office, and that Keynote is the first piece in this puzzle. He noted, however, that this strategy existed even before Keynote’s introduction. Apple’s “Mail” e-mail application, introduced for OS X and radically upgraded in the Jaguar update, replaced Microsoft’s Outlook Express as the default Mac e-mail client.

Whether Apple can provide its users with a viable business productivity suite is another matter. Michael Silver, vice president and research director of hardware and operating systems at Gartner, told the E-Commerce Times that compatibility issues hamper development of an Office alternative.

“Making something that offers 100 percent compatibility with Microsoft Office is nearly impossible because of the proprietary code embedded in so much of it,” Silver said. Because compatibility is such a key concern in today’s Windows-centric world, any Mac productivity software will need to integrate seamlessly with its Windows counterpart in order to succeed.

“If Apple could achieve 100 percent compatibility with Microsoft, it could be very interesting,” Silver said. “I bet there are many people who would love to find an alternative.”

Independence vs. Reliance

Bryan Chaffin, editor of Web site The Mac Observer told the E-Commerce Times that it remains to be seen whether or not Apple will release a supercharged version of AppleWorks, or some sort of “iOffice” product, as part of an overall strategy to go head-to-head with Microsoft in the productivity market.

“My gut feeling is that Apple doesn’t so much … want independence from Microsoft, but rather to end reliance on Microsoft,” Chaffin said. “The former isn’t all that realistic considering Microsoft’s monopoly power, but the latter will turn Microsoft into a competitor on the Mac platform that has to earn its money.”

Does Microsoft Still Need Apple?

Chaffin added that even though a new agreement between the two companies is improbable, Microsoft still has incentive to continue developing Office for Mac OS.

The Redmond, Washington-based software giant “makes a lot of money on the product, and it is one of the few things they can sell to non-Windows-using Mac users,” he said. “For a company seeking to perpetually increase revenues and profits, cutting off a revenue stream … that Office offers just doesn’t make sense, unless it is done in retribution. The same goes for Virtual PC for Mac and Microsoft’s other Mac offerings.”

Gartner analyst Silver noted that in addition to the profit incentive, Microsoft still wants to avoid doing things that appear to stifle competition. Its continued support of Office for Macintosh is a means to help deflect future accusations of this nature.

So, the cords that connect Microsoft and Apple, though tenuous, appear to be holding steady. Whether they will weaken in the future remains to be seen, but whatever the outcome, signs point toward a changing dynamic between the two sometime allies.

8 Comments

  • I haven’t read any other responses, nor do I know if this idea has already been picked up… but what about OpenOffice.org? (http://www.openoffice.org/)
    I mean, it has nearly the same functions as Micro$oft’s Office Suite, and can save as any of them (without being illegal). It’s Open Source and under the GPL, ported for OS X.2

    • "The quality of their software is leaps and bounds ahead of them." tazznb you must be kidding me and the rest of the readers of these posts. Look, I am no lover of Bill and the gang and I have just ended support for MS Office at our school, however, to say that AppleWorks is better than MS Office is simply wrong.
      The only way you are going to push Mac OS X forward is to be honest with people. AppleWorks is a nice product when you consider it as a bundled solution. However, loving Mac does not mean not being honest. The time for Mac-in-love is over. Steve is back and pushing the company forward, be as honest as Steve is. AppleWorks is a good software solution that needs work.
      -G

      • ggreen_az said "…to say that AppleWorks is better than MS Office is simply wrong."
        You mistakenly thought I was talking of Office when I was making a general statement.
        Office is presently years ahead of Appleworks. I was actually taking about the OS, and iApps.
        I have no love for Microsoft, but am not an Apple zealot; My home system is a Dell Precision.
        Windows 2K which is my favorite system (the best windows system they produced to date) but, can be a pain in the @$$.
        My brother owns OSX, and uses his computer blissfully unaware of how much of a headache it can be, due to Apple taking time to see to its customers’ needs; Apple has OS problems, but not nearly as problematic as windows.

        • unfortunately for apple, even though they have some nice software, its hardware despite looking pretty is far behind the PC in most areas. And so it’s hard to take the niche luxury car statement seriously. It might be a new VW bug with a pretty exterior, fair reliability but not much get up and go, unfortunately 🙁 they also lack many of the nice features that even low-end PC systems favor at a fraction of the price of apple’s aging components that are as much as 2 years behind the latest PC innovations (nothing to do with Microsoft). And although microsoft’s software is far from perfect, you can do a lot more with it, and it generally gives a trouble-free experience on par with what apple offers, only with a far more diverse and interesting range of hardware and software.
          Apple will always sell ok to the few, and they are welcome to it, but these days even people like adobe have been admitting that their software runs better on the PC. apart from a couple of music apps and final cut pro, there is little with which to commend apple.

          • PS, No apple doesn’t need Microsoft’s software, But it needs microsoft in more subtle, indirect ways. As the majority of cutting-edge hardware is designed for mainly win-based PCs, it’s useful to have them around because Apple don’t get anywhere near the same industry support, and for the most part introduce these new technologies somewhere down the line. About the best thing apple has given the PC is firewire and not an awful lot else. The PC has given apple a hell of a lot more (but this has nothing to do with Microsoft).

  • Apple does not need Microsoft. they are in a different market. why does everyone think that if Microsoft stops making Office for the mac that Apple will dive into oblivion?
    Apple makes better software then microsoft and Apple is a hardware company.
    The world does not evolve around Office software or didn’t anyone tell you?
    One last thing, OpenOffice is free, pass it on.

  • I’ve left Micro$oft years ago for Linux. Then I left Linux this past year for Mac OS X. I use AppleWorks and so far I haven’t had any problems. Apple needs to take the inventive road and redo AppleWorks for Mac OS X, not just a Carbonized Version, and create something that uses an XML file format. The Open Sourcers would love that and they could gain compatibility with a lot of Linux users. Become dominant and force M$ to open its file formats to XML to compete. But do it before M$ does and tries to corrupt XML.

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