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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Dave who wrote (34975)	9/19/2002 5:28:42 PM
From: Don Green	Read Replies (2) \| Respond to of 213172

Is Apple's Innovation Only Skin-Deep? By Jay Lyman NewsFactor Network September 19, 2002 newsfactor.com Gartner analyst Martin Reynolds credited Apple with delivering the innovative GUI interface to mainstream computer users. "When it comes to something great, it's 5 percent original idea and 95 percent making it reality," he said. Apple (Nasdaq: AAPL) is well known for bringing new styles and form factors to the world of computing, but is the fruit inside as tasty as the shiny Apple exterior might imply? After all, the company's groundbreaking original Macintosh GUI was based on an interface in use at the Xerox PARC research center years earlier, and many of its newer products are heralded more for their innovative design than for great leaps in technological capability. According to experts, however, Apple is a true innovator. They cited the company's introduction of the FireWire standard, video editing technology, the iPod MP3 player and the newest version of Mac OS X, known as Jaguar. But even though Apple has produced many new technologies that lead the industry, the company still needs to sell its story more effectively to corporate markets, analysts said. If it cannot do so, it will be unable to reclaim market share from rival Microsoft, which now rules the operating system space with Windows. "Every company out there right now is struggling to innovate," Yankee Group senior analyst Laura DiDio told NewsFactor. "It's tough because things have changed a lot. Apple has something really good to work on [with OS X]. Now they have to get people to think about them in a different way." Reality First Although Gartner analyst Martin Reynolds acknowledged that some of Apple's original Mac GUI originated at Xerox PARC, he credited Apple with delivering the innovative interface to mainstream computer users. "When it comes to something great, it's 5 percent original idea and 95 percent making it reality," he told NewsFactor. "Apple did a really good job of that." He added that while he expects the new USB (universal serial bus) 2 standard for high-speed peripheral connections to eclipse Apple's FireWire technology, Apple "was there before everybody else and making it work." Reynolds noted that Apple benefits from its proprietary control of the design environment. "Everything is the same, so they don't have a problem with hundreds or thousands of manufacturers like Microsoft does," he said. "That enables them to innovate in user interface and how it works." He credited Apple with a fair share of breakthroughs within this proprietary environment, including the iPod, Mac video editing and wide screens, which "they've driven into the consumer space and will continue to do." Jaguar Jumps Ahead The Yankee Group's DiDio said Apple's Mac OS X also represents true -- though tempered -- innovation. While it provides advantages for users, such as high manageability, stability and software openness, it does not throw too much change at them. "This is what I like to call innovation by emulation," DiDio said. "What people don't want is to be disrupted." However, while she praised OS X for its device management and built-in networking support, DiDio noted that Apple needs to open its OS to more hardware makers and stimulate third-party developer support. "They've taken away a lot of the third-party aftermarket," she said. "They need that to spur demand." Uphill Climb DiDio added that Apple, like Linux, now has an opportunity to gain market share as dissatisfaction and disaffection for Microsoft continues. But to do so, the company must innovate on price and hardware openness. "From a feature standpoint, they'll continue to innovate," DiDio noted. "However, they need to translate that into a compelling, business case justification -- not in the treadmills, but to a mainstream corporate environment. "To really innovate, they've got to have a killer app for Mac," she said. "It's a very, very steep uphill climb for them."