Microsoft moved a lot of install disks, but hardware makers got a bigger bump two years ago

Photo: Philip Elmer-DeWitt

When Microsoft (MSFT) launches a new operating system, as it did two weeks ago, PC manufacturers like Hewlett Packard (HPQ), Dell (DELL) and Acer are supposed to reap the benefits. And everything seemed to be in place on Thursday Oct. 22 for that to happen.

"Never before has the industry launched such a variety of new form factors, price points, technology upgrades, and design innovations at one time," wrote NPD's Stephen Baker just before Windows 7's release. "This past weekend I happened by a Best Buy store and there was not one single PC for sale with Vista on it. Lots of Windows 7 machines, however, all of which were marked 'not for sale until October 22.' Someone did a great job in the supply chain making this happen. This will give Win 7 a tremendous boost out of the gate." (link)

Two weeks later, Baker is singing a different tune. Microsoft got a big boost according to NPD's weekly tracking data, racking up sales of Windows 7 that were 234% higher than Vista's during its first few days of sales. (More on that below the fold.)

But PC makers didn't make out quite as well. Although they had a relatively strong week, with unit sales up 49% year over year and 95% from the week before, it was nothing like Vista's launch in Feb. 2007. Then, sales soared 68% year over year and 170% from the week before.

In a press release issued Thursday, Baker explained what happened:

“A combination of factors impacted Windows 7 PC sales at the outset,” Baker wrote.  “Vista had a slight advantage at launch, as January traditionally has a bigger sales footprint than October.  The other hurdle Windows 7 faced was sales of PCs with older operating systems (XP and Vista) were high, making up 20 percent of sales during the Windows 7 launch, compared to just 6 percent of older operating sales during Vista’s launch week.”

Another thing to remember about that Vista launch week is that it set a relatively low bar. Retail Vista sales were considerably below Microsoft's forecast — almost 60% lower than sales of Windows XP during its first week in 2001.

Ironically, it was the computer manufacturers who did best in Feb. 2007. Sales of new PCs with Vista pre-installed were up 67% the week that Vista launched compared with the same week in 2006.

Apple (AAPL), of course, sells both OS X and the Macs that run it, so when it launched Snow Leopard in August, it made money on both sides of the deal.

See also:

• PC sales spike with Windows 7 debut
• Apple pays Google for Windows 7 hits
• Mac share grew after Windows 7 launch

[Follow Philip Elmer-DeWitt on Twitter @philiped]

Apple's Fifth Ave. store

As of 8 a.m., there was no queue of eager customers lining up outside Apple's (AAPL) flagship Fifth Avenue store in Manhattan to buy the sixth major update of the Macintosh operating system, Snow Leopard, which went on sale Friday morning.

The relatively low-key launch was in striking contrast to the Oct. 26, 2007 unveiling of its predecessor, Leopard, which drew crowds that began at the store's big glass cube and wound around the block.

It's also in keeping with the nature of the new system, which for a new Apple OS boasts relatively few new features. As most reviewers have noted, Mac OS 10.6 is a faster, slimmer "refinement" of Leopard whose improvements are largely hidden from users.

UPDATE: Reader David Emery reports that there were 30 people waiting outside the new Reston, Va., Apple store when it opened at 10 a.m. Friday morning. And reader Mike in New York City reports that there were approximately 100 people outside Manhattan's 24-hour Fifth Ave. store when Snow Leopard went on sale at midnight the night before. It was raining in New York Friday morning, which may have discouraged early buyers.

See also:

• Snow Leopard: The reviews are in
• Snow Leopard warning: Your apps may crash
• Snow Leopard: Apple's $66 million OS
• Snow Leopard vs. Windows 7: The War of the Wallpapers

Photo: Apple Inc.

Mac OS X Snow Leopard, the sixth major upgrade of Apple's (AAPL) flagship operating system, is scheduled for release Friday, and the reviews hit the stands — and the blogs — overnight.

How many ways can you say "the important changes are under the hood"?

Read on.

Walt Mossberg. Wall Street Journal. Apple Changes Leopard’s Spots

For a company known for breakthrough products with cool features, Apple this week is doing something unusual: It is introducing a key product with very few new features that are visible to its users. This new release, the latest major version of the Macintosh operating system, looks and works almost exactly the same as its predecessor, but has been heavily re-engineered under the covers for greater speed and efficiency, and to add future-oriented core technologies.

David Pogue. New York Times. Apple's Sleek Upgrade.

Snow Leopard truly is an optimized version of Leopard. It starts up faster (72 seconds on a MacBook Air, versus 100 seconds in Leopard). It opens programs faster (Web browser, 3 seconds; calendar, 5 seconds; iTunes, 7 seconds), and the second time you open the same program, the time is halved.

“Optimized” doesn’t just mean faster; it also means smaller. Incredibly, Snow Leopard is only half the size of its predecessor; following the speedy installation (15 minutes), you wind up with 7 gigabytes more free space on your hard drive. That, ladies and gents, is a first.

Edward C. Baig. USA Today. Many of Snow Leopard's 100s of refinements are subtle.

Apple doesn't need to make a vista-sized leap on Friday, when it migrates from its Mac OS X Leopard operating system to Snow Leopard.

In the nearly two years since Leopard pounced onto the scene, it has elicited a far different reaction from the Mac faithful than Windows Vista has with the PC crowd. So, while Snow Leopard brings solid technological enhancements to Mac OS X, including built-in support for Microsoft Exchange, there was no need for the kind of major overhaul Microsoft (MSFT) will unleash with Windows 7 on Oct. 22.

Andy Ihnatko. Chicago Sun Times. A speedy no brainer upgrade.

It’s like this. You’ve bought an old house and [are] settling in for months of renovation. You have goals for every month and many of them give you immediate and intense gratification. The cramped Avocado Green kitchen is now open and airy, doused in natural light, and filled with modern appliances. The rickety back porch is now a full deck, with a six-person hot tub.

Other renovation landmarks include a new roof, upgraded electrical service, and a new heating system with multiple zones. Boring. But nonetheless essential. These are the things that keep a house functional and livable, and ensure that it’ll still be a fun place to live in twenty years’ time.

That’s my overall take on Snow Leopard, aka Mac OS X 10.6.

Joshua Topolsky. Engadget. Snow Leopard review.

Underneath the customary OS X fit and finish there's a lot of new plumbing at work here. The entire OS is now 64-bit, meaning apps can address massive amounts of RAM and other tasks go much faster. The Finder has been entirely re-written in Cocoa, which Mac fans have been clamoring for since 10.0. There's a new version of QuickTime, which affects media playback on almost every level of the system. And on top of all that, there's now Exchange support in Mail, iCal, and Address Book, making OS X finally play nice with corporate networks out of the box.

Brian Lam. Gizmodo. Lightened and Enlightened.

On deeper inspection, Snow Leopard's inconspicuous aspects—performance squeezed from underused CPU multicores/GPUs and basic UI tweaks—are found to be the kind of refinement generally reserved for virtuosity. These speed optimizations are deep, reminding me of when a master martial artist puts the entirety of his weight behind a strike (while a neophyte would flails his limbs like a henchman in a Bruce Lee movie). The little UI tweaks are no different than when a great sculptor's chisel works to remove everything non-essential during the final steps on a statue. Challenging 30 years of ever more bloated software tradition, the changes here are about becoming a more effective middleware between the media and the hardware, reducing friction while becoming more useful by, well, being lighter, less visible.

Michael DeAgonia. Computerworld. Snow Leopard opens door to a fab future.

The Finder — Mac OS X's file manager — has been rewritten in the Cocoa development language. It still looks the same and behaves the same, but it is not the same. The new Finder supports all of the core technologies in Snow Leopard, including full 64-bit support, better live preview of files, and Grand Central Dispatch. The result is a Finder that is much more fluid with animations and much more responsive, and doesn't become hung up if, for example, network shares inadvertently become disconnected.

Jason Snell. Macworld. Review: Snow Leopard.

System Preferences is also where you’ll see the ugliest evidence of Apple’s conversion to 64-bit applications throughout the system. If you’re using Apple’s stock preference panes only, everything will work just fine. But if you click on a third-party preference pane that hasn’t yet been upgraded to a 64-bit version, System Preferences will tell you that it has to quit and reopen itself in 32-bit mode in order to open that preference pane. While it’s nice of System Preferences to go to that trouble, it gets frustrating after you do the launch-quit-launch dance a few times.

Galen Gruman. InfoWorld. The 7 Best Features in OS X Snow Leopard.

When you travel, it's easy to get mixed up as to when your appointments are, since your computer is still in your "home" time zone, and you have to mentally calculate the current time when looking at the calendar or clock. Sure, you can change the time zone in the Date & Time system preference, but it's easy to forget. So Snow Leopard changes the time zone for you automatically (if you set that as the default behavior), using Wi-Fi mapping to figure out where you are — you will need to be connected to a Wi-Fi access point or router. iCal can also be set to adjust the times to the current time zone automatically, so your calendar always reflects the current times.

There's plenty more where that came from. But for a rundown of the Snow Leopard's refinements, you can't do much better than Apple's own lavishly illustrated What's New pages.

See also:

• Snow Leopard warning: Your apps may crash
• Snow Leopard: Apple's $66 million OS
• Snow Leopard vs. Windows 7: The War of the Wallpapers

snowleopard.wikidot.com

One day before the scheduled launch of Mac OS X Snow Leopard — the latest update of Apple's (AAPL) flagship operating system — developers are still scrambling to make sure their applications will work with the new version.

Of the Macintosh apps than have been tested on the gold master of OS X v.10.6 as of Wednesday morning, more than 60 either don't work or have major problems, according to snowleopard.wikidot.com, a collaborative project that is collating independent test results.

Most of the major productivity apps — Microsoft (MSFT) Office 2008, Adobe (ADBE) CS4 Suite and QuarkXPress — are OK.

But there are some big exceptions, including Adobe Photoshop Elements (No. 6 on Amazon's Mac bestseller list) and Google Gears, a Web browser extension that allows offline access to a number of popular online applications.

And users of early versions of some important programs — Parallels version 3.0, for example, or Adobe CS2 — will find they need to update their software.

Snow Leopard: The reviews are in

Among the apps on our hard drive known to have problems with Snow Leopard are Boxee, Reunion, Times Reader and Vuze. Many more, including TurboTax and SlingPlayer, are not listed as tested.

If you're worried about your computer, you can search for your key apps on the wikidot page here (be patient, the server may be busy). Or you can follow the first rule in computer software: wait until the kinks have been worked out before installing a new OS.

UPDATE: The snowleopard.wikidot.com page is working again and has been updated. Among other changes, SlingPlayer has been tested (it works) and there's a version of Reunion (6.0a) in development that is said to be Snow Leopard ready.

UPDATE 2: Apple has posted a support page that includes a partial list of software known not to work with Snow Leopard. Click here.

Apple Inc.

After a hiatus of three and a half months without a new TV ad, Apple (AAPL) broke out a pair of fresh "Get a Mac" spots Monday night to soften the ground for the next operating system war with Microsoft (MSFT).

Earlier that day, Apple had announced that it was shipping the newest version of its flagship Macintosh OS — Snow Leopard — on Friday, nearly two months before the scheduled release of Windows 7.

"Top of the Line" and "Surprise" zero in on one of the main differences between the two systems — the profusion of viruses and other malware in Windows and the lack thereof in Mac OS X.

Both Apple spots feature women vaguely reminiscent of Lauren, the red-headed star of Microsoft's Laptop Hunters advertising campaign. That series was notable for never actually mentioning Windows, focusing instead on low-prices and hardware specs.

How Microsoft put Apple owners on the defensive

Like Lauren, Apple's everywomen are shopping for a new computer. Rather than starting out with set price point, however, these shoppers are looking for a computer that "just works," without "thousands of viruses and tons of headaches."

Apple's answer to Lauren's punchline — "I'm just not cool enough to be a Mac person" — is delivered in "Top of the Line" by the journeyman comic actor Patrick Warburton, best known for his portrayal of David Puddy, Elaine Benes' faux-suave boyfriend in 10 episodes of Seinfeld.

After charming the shopper but failing to persuade her that any PC she gets is going to have those problems, he hands her his card. "When you're ready to compromise," he says, "you call me."

The ad is getting mixed reviews from the tech press. The Chicago Sun Times' Andy Ihnatko loved it, in part because it featured what he claims is his usual pickup line.

Cult of Mac's Leader Kahney declared the ad an unfunny dud and a waste of Warburton's comic talents. "This joke has definitely run its course," he writes. "Like Seinfield itself, it’s time for Apple to pull the plug."

You can watch the ads and decide for yourself. Both are available in high res and HD at Apple's website. The YouTube versions are pasted below.

Photo: Apple Inc.

As expected, the latest update to Apple's (AAPL) flagship Macintosh operating system — Mac OS X Snow Leopard — is going on sale Aug. 28 for the previously announced price of $29. (Press release here.)

Piper Jaffray's Gene Munster has done some quick back-of-the-envelope calculations and concluded Apple is in it less for the money than for the strategic advantage it hopes to gain over Microsoft's (MSFT) Windows 7, schedule to ship in October.

According to Munster, Apple is likely to sell 5 million copies of Mac OS X v10.6 in the remaining month of its fiscal fourth quarter for an average selling price of of $22 — less than $29 and more than the $9.95 Up-to-Date price Apple has offered customers who bought MacBook Pros after June 8.

At 60% gross margin, that comes out to $66 million, or $.05 per share — a bump that Munster believes has already been baked into the Street's Q4 estimates.

So what's really going on here, he asks rhetorically?

Despite the long list of improvements Apple is touting — it claims to have "refined" 90% of the more than 1,000 "projects" that make up the OS X — Munster describes Snow Leopard as "a minor upgrade … without many significant new features."

In Munster's view, Apple is using Snow Leopard as

"an opportunity to sell it at a lower price ($29 vs. $129 previously) and market the new OS as a selling point for the Mac platform over the Windows platform. In other words, Apple is promoting the Mac platform as a superior alternative to Windows in terms of newer technology, more frequently, for less money. The release of Snow Leopard is not about new features; rather, it is about keeping Mac users up to date with the latest technology vs. Windows XP and Vista users on antiquated technology."

You can learn more about Snow Leopard — including what's new, compatibility and tech specs — at Apple's website here.

"We just met with Apple executives at the company’s headquarters in Cupertino, CA, including Peter Oppenheimer, Greg Joswiak, and Eddy Cue."

Thus begins a note to clients sent Thursday by Barclays Capital analyst Ben Reitzes. The note ends with Reitzes raising his Apple price target to $208 from $188 — one of the sparks that sent Apple (AAPL) shares up 1.88% to close at $168.42 for the day.

In between, Reitzes rattles off a list of new products he expects Apple to introduce in the months ahead. Although he insists the Apple execs he met didn't divulge any major secrets, Reitzes sounded pretty sure of himself. Among the coming attractions, as he sees them:

• New iPods with cameras (likely September). He expects a launch, possibly before the end of August, of iPod touches with cameras and video capabilities and perhaps even an iPod nano with a still camera — prompting another round of iPod upgrades. "We believe that imaging ties in well with Apple's strengths in software and can help drive more Mac sales over time."
• A new tablet computer (likely in first half 2010, but possibly before the end of the year). He sees it priced between $399 and $999, and eventually becoming the fourth leg of Apple's business model. "We believe this type of product would open Apple up to more opportunities in mobile gaming, navigation services and other content related growth – which could all be distributed through iTunes."
• New low-end MacBooks (Q4 2009) He believes the MacBook line needs to be revamped (there is only one MacBook available now, an old white model). He expects to see new MacBooks before the end of the year that are priced below the low-end MacBook Pro.
• An upgrade for Apple TV (Q1 2010). "We believe Apple TV can eventually become a platform that integrates gaming and other new features."
• An iPhone for China (by year end). But as early as this September, according to his sources, with China Unicom as the most likely partner.
• A new iPhone upgrade cycle (2010) "We believe more can be done with product width, battery life, speakers, gaming controls and more. Also, many developers realize that Apps may need to be recompiled for new screen sizes and Apple may be taking steps behind the scenes to ease any transition."

Meanwhile, in other Apple news, buzz is growing for an early launch of Snow Leopard, perhaps on Friday, Aug. 28, which would put the latest major upgrade of Apple's flagship operating system in stores nearly two months ahead of the scheduled Oct. 22. launch of Microsoft's (MSFT) Windows 7. See here and here.

And leaks from the music industry suggest that there may be an Apple event scheduled for the week of Sept. 7, the usual time frame for new iPod introductions. See here.

It's starting to shape up as a busy fall.

Image: Microsoft Corp.

Image: Apple Inc.

"I would give a lot to have Steve’s taste."

Bill Gates said that of Steve Jobs at the D5 conference two years ago, and we knew exactly what he meant.

Take, for example, the two images above. They are samples of the new desktop images offered by this fall's big operating system updates: Microsoft's (MSFT) Windows 7, scheduled for release in October, and Apple's (AAPL) Snow Leopard, due in September.

Can you guess which is which?

Gates may have retired as CEO and Jobs may have spent much of 2009 on medical leave, but the taste gap persists.

To see the full sets of wallpapers, obtained by Creative Bits, click here for Windows 7 and here for Snow Leopard.

For those who couldn't make it to San Francisco Monday — or who couldn't get into the event (it sold out in record time) — Apple (AAPL) has posted a 2-hour streaming video of the entire keynote. Click here to watch it.

If you want to learn more about the iPhone 3G S without watching the video, the same link offers a 13-minute guided tour that can be played on a computer or an iPod. It also offers links to videos about Snow Leopard and the new MacBook Pros.

See also:

• Live from Apple WWDC 2009: New iPhone, new MacBooks, no Steve Jobs
• Analyst: The $99 iPhone will increase sales twofold

The price cuts Apple (AAPL) announced Monday on the MacBook and iPhone lines are "significant" and surprisingly aggressive, writes Piper Jaffray's Gene Munster in a note to clients issued after the WWDC keynote was over.

Historically, he writes, a 50% cut in iPhone pricing has increased demand twofold.

He's referring to the last year's cut to $199 from $399. That price reduction was actually accompanied by a tripling of global unit sales (from 4.7 million to 15 million), but some of those sales were in overseas markets. U.S. sales in that period, he estimates, increased twofold.

The MacBook price cuts were more modest — between 5% and 15% — but make Munster "increasingly confident" in his near-term Mac estimates (2.2 million Macs in the third fiscal quarter; 2.4 million in fourth quarter, which ends in September).

The pricing on OS X Snow Leopard was even more aggressive; it's scheduled to ship in September for $29 (for current Leopard users), as opposed to the typical $129 operating system upgrade.

Munster says he's not worried about the impact on Apple's bottom line, however. He notes that when Leopard shipped in 2007, the Mac user base was about 23 million. Today Apple announced that its user base has grown to 75 million active OS X users.

Munster, having predicted that Jobs would return to Apple by the end of June and not before, claims he is not surprised that the CEO was a no-show Monday.

Apple's World Wide Developers Conference runs until Friday.

See also:

• Live from Apple WWDC 2009: New iPhone, new MacBooks, no Steve Jobs