Microsoft starting to push new Office for Apple

REDMOND, Washington (Reuters) - Apple Computer Corp.'s(AAPL.
Written by Scott Hillis, Contributor

REDMOND, Washington (Reuters) - Apple Computer Corp.'s (AAPL.O) new OS X operating system is now in stores, with company loyalists praising its beefy multimedia features and gee-whiz graphical effects.

But success of OS X (pronounced "OS Ten ") largely hinges on one-time Apple rival Microsoft Corp. (MSFT.O), which makes the Office software suite that is crucial to Apple's survival.

Following Apple's mass-market launch of the system last weekend, Microsoft is building steam behind a new version of Office tailored to tap the platform's power.

Office v.X won't go on sale until November, but Microsoft has now fired up a $6 million marketing campaign that was put on hold after the Sept. 11 hijack attacks.

OS X represents a massive overhaul for Apple's Macintosh computers, and the company is banking on fresh styling, crisp graphics and rich audio and video features to win hearts.

However, analysts say it is up to Office to transform the new platform from a toy for graphics professionals to a tool for mainstream users like small businesses and students.

"It's always been a cart and horse issue because applications make the OS (operating system). Without this, Apple would have heck of a time moving OS X at all, " said Rob Enderle, an analyst with Giga Information Group.

Office consists of the Word word processor, Outlook e-mail and calendar program, Excel spreadsheet and PowerPoint presentation software. The Mac version also contains a Mac-only application called Entourage that combines contacts, calendar and email.

Office dominates the market for business productivity software and is Microsoft's biggest money maker, even ahead of its Windows operating system.

A famous 1997 deal saw Microsoft invest $150 million in its ailing rival, ensuring that the company would continue to make versions of Office for Apple.

The previous Mac edition of Office released last year marked a new strategy by Microsoft to get Apple users to buy the product not because they had to, but because they actually liked it. Everything from the software's interface to packaging to advertising was geared to appeal to Mac users.

Aqua, Genie and Quartz
The same strategy has guided Office v.X development.

At front and center is a new look based on OS X's blue-themed Aqua interface, which creates a water-like atmosphere.

"Everything inside Office X has been completely redesigned. The interface has been ripped off and replaced with an Aqua interface. No expense has been spared, " said Mike Connolly, group program manager for Office in Microsoft's Macintosh Business Unit.

Office v.X also uses OS X features like Genie, which causes menus and windows to vanish as if sucked into a bottle when closed or minimized.

Another OS X technology called Quartz can draw lines and circles sharper than ever, resulting in crisp charts, graphs and presentations.

The result is a product that is very different from -- some say even superior to -- Office XP, the Windows version that is Microsoft's biggest money spinner.

"It's actually pretty impressive, the fact that they are able to use Aqua as well as they do, " Enderle said. "It doesn't feel like a Microsoft product on top of the Mac. "

Said Office v.X product manager Erik Ryan: "We wanted to prove to people once again that we are indeed Mac-like. We're not Office XP for Mac, we're Office X for OS X. "

High demand already
Office v.X will sell for $499 for the full version, $299 for an upgrade, and $399 for the standalone applications of Word, Excel and PowerPoint.

In an indication of demand for the new software, Microsoft said a test version of Word for OS X had been downloaded more than 50,000 times in its first week of availability.

There are an estimated 15 million Mac users worldwide and executives have been quoted as saying they expect to sell 750,000 copies of the new Office by next June.

"What the community is waiting for is to get it (Office) out there and give people a product suite to run on this OS. It will give people a reason to go to the platform, " Ryan said.

It remains to be seen how Office for Mac will fit in with Microsoft's long-term .NET strategy to put the Internet at the heart of its products and turn software into Web-based subscription services.

"We'll definitely be looking at what the Mac platform needs in the product space over the next few years. We're going to be continually investing in the Mac, " Connolly said.

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