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The Honolulu Advertiser
Posted on: Monday, October 26, 2009

Microsoft takes on Apple


By Dina Bass
Bloomberg News Service

Hawaii news photo - The Honolulu Advertiser

With his daughter Aimee in his arms and his wife on the other end of the phone, Prentice Southwell looks over Microsoft's Windows 7.

SETH PERLMAN | Associated Press

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Microsoft Corp. began selling the Windows 7 operating system last week in an effort to reverse three quarters of declining Windows sales and fend off Apple Inc.'s gains in personal computers.

Windows 7 is Microsoft's best shot to undercut Apple, which has grabbed its biggest share of the home-computer market since the 1990s, said Roger Kay, an analyst at Endpoint Technologies Associates in Wayland, Mass.

The program is Microsoft's first "worthy competitor" to Apple's OS X, he said.

Microsoft, the world's largest software maker, gets about 25 percent of its $58.4 billion in annual revenue from Windows.

"Right now, there's a lot of good karma for Windows 7 — that will help Microsoft stem some of the movement to Mac, but that's only part of the story," said Al Gillen, an analyst at market research firm IDC.

"The other dimension that's made Mac attractive is the surrounding ecosystem of iPods and iPhones. They've done a good job putting together a sexy and interesting story for consumers."

The rebound in the economy may also help Apple, which lost some market share during the recession as customers avoided pricier Macs in favor of Windows PCs, according to research firm Gartner Inc.

Apple will end this year with 8.1 percent of the U.S. home-computer market, down from 10.3 percent in 2008, according to Stamford, Conn.-based Gartner. By the end of 2010, Apple will rise to 9.9 percent, Gartner predicts. The rest of the market is almost all Windows.

The global picture for Windows is brighter, because Apple doesn't sell in many developing markets, Gartner said. The Mac will have 4.4 percent share at homes globally by the end of 2009, according to the research firm.

Customers switching from Windows are a "major part of our growth," Apple Chief Operating Officer Tim Cook said in an interview last week. The company's Mac vs. PC ads, featuring John Hodgman as the bespectacled face of the Windows personal computer, mocked Vista as being prone to crash and vulnerable to computer viruses.

"Whether it's Windows 7 or Windows 10 or Windows 95 or 2000 or all the Windows, people are just sick of all the headaches that go along with it," Cook said. "And so I look at their Windows 7 announcement as just another fantastic opportunity to grab more share."

But Microsoft is also using Windows 7 to boost its links with popular devices.

The company said last week www.Amazon.com Inc., maker of the Kindle digital reader, will create a program for Windows PCs. The program lets users read books on the PC and switch to a Kindle device without losing the spot. The program, available as a test next month, can be controlled by touching the PC screen.

Microsoft can put a new shine on the Windows brand, which was tarnished because of Vista's shortcomings, said Al Ries, chairman of Ries & Ries, a marketing strategy firm in Atlanta.

"Can they rehab the brand? Sure," he said. "Look at Bill Clinton or Martha Stewart. David Letterman is going to be fine. When you're the leader, you can make a mistake and come back."

Trina Gratrix, of Covington, Wash., says she can't afford the Mac she'd like to buy. Windows 7 is making her feel better about the PC in her price range, she said. She plans to buy a new machine in the next few months.

"I feel good about what I hear," said Gratrix, 35. "I don't feel like I'll be settling."

Customers report that Windows runs faster and starts up and shuts down more quickly. Users can more easily organize, clean up and find the files they're looking for. They can, for example, permanently pin items to the task bar at the bottom of the screen. Users can also grab the title bar of a window and shake it to minimize all the other windows.

Windows 7 may also make it harder for Apple to target the software in its ads, said Michael Silver, a Gartner analyst, who says he's hearing positive feedback on Windows 7 from Mac enthusiasts.

"If Windows 7 is successful, it's going to be hard to make fun of that," he said. "They won't have Vista to kick around anymore."