Apple to go slow with new operating system Average user's version to come out in mid-1998; stock continues decline

THE BALTIMORE SUN

SAN FRANCISCO -- Apple Computer Inc. unveiled its plans for a new operating system yesterday, but said it would be 18 months before the software would show up on most Apple machines.

Gilbert F. Amelio, chairman and chief executive officer, detailed the company's strategy at MacWorld, where some of Apple's largest business customers said they were losing confidence in the world's No. 3 personal computer maker. About 80,000 people are attending the San Francisco trade show.

Apple plans to release early versions of the operating system in the middle of this year and early next year, but the version targeted to the average consumer would not be ready until the middle of 1998, Amelio said.

The software will run about 85 percent of programs designed for Apple's current Macintosh computers. It also will run on all computers being sold by Apple today, including its PowerPC and Performa models.

The new operating system, which controls the logic functions of the computer, is critical to Apple. The company has been losing market share because its customers are switching to computers that run the popular Windows 95 operating system from Microsoft Corp. Apple computers run on their own operating system.

"Without a compelling operating system, they don't have a compelling story for the company," said Daniel Kunstler, an analyst who follows the company for J. P. Morgan Securities.

Chief Technology Officer Ellen Hancock said Apple would pursue a "dual operating system strategy" for five to 10 years. That would put both the new operating system, based on technology acquired from NeXT Software Inc., and Apple's current System 7 operating system on its new machines beginning in mid-1998.

The company will release twice-yearly upgrades for its existing Macintosh system. The next upgrade is due out Jan. 31 and will cost $69 to current Mac customers.

As with its current system, the new operating system will be supported with software applications from Microsoft, making it possible for someone using a Macintosh to run the same software as co-workers using other types of computers.

Apple's market share has fallen to less than 6 percent from about 8 percent a year ago. The Cupertino, Calif., company led the computer industry with a market share of about 12 percent just two years ago.

Apple said Dec. 20 that it was acquiring NeXT, a company led by Apple co-founder Steve Jobs, for $400 million in cash, stock and debt.

Amelio said Friday that the company expects to report an operating loss of $100 million to $150 million for the quarter that ended Dec. 27, largely due to sluggish sales of its PowerBook portable computers and its Performa computers, which are targeted to retail consumers.

Apple shares, which traded at a 52-week high of $35.50 a year ago, closed down 37.5 cents at $17.50 in trading of about 7 million shares, compared with a three-month daily average of 1.9 million. The stock has lost more than one-fifth of its value since the NeXT acquisition and the expected losses were unveiled.

Pub Date: 1/08/97

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