Microsoft to Exit Mac Market If Sales Continue to Lag

On the eve of Apple Computer's semiannual MacWorld event, Microsoft dropped a bombshell on the company: Work harder to accelerate Mac OS X sales or Microsoft will exit the Mac market forever. Many Mac developers share this sentiment; Mac OS X has not sold well, as reported recently in WinInfo Daily UPDATE. Currently, Apple estimates that as few as 1 to 2 million people have switched to its most recent OS, despite the fact that OS X has shipped for free on several million computers. But a more telling figure from Microsoft might put things in perspective: Sales of Microsoft's OS X-specific Office version, Office v. X, have been just 300,000 units since the suite went on sale last year. Microsoft had expected to sell more than 750,000 copies in the first year.

"There hasn't been a concerted effort \[on Apple's part\] to promote Mac OS X, even though the opportunity is there and our willingness is there," said Kevin Browne, who runs Microsoft's Macintosh Business Unit (MBU). Browne said that his company is committed to developing one more Office version for the Mac but will exit the market if that version also sells poorly. "\[After the next version,\] it's harder to predict," he said. "If things don't dramatically turn around, we'll be evaluating this business with Apple."

Recently, Apple launched a "Switch" ad campaign aimed at garnering new Mac OS X users from the Windows camp. But Microsoft--and, tellingly, many other Mac OS developers--say Apple would be better off moving its existing users to Mac OS X first. For example, Corel launched seven OS X-specific applications earlier this year, citing the "great opportunity." But Corel says that its customer feedback corroborates Microsoft's experience: Mac users just haven't switched to Mac OS X yet. A Corel representative described Apple's response to its concerns as "muted."

Predictably, Apple blames Microsoft for the Office v. X sales problems. Phil Schiller, Apple's senior vice president of worldwide product marketing, told The Wall Street Journal that "Microsoft's anxieties about OS X's progress are very, very misplaced" and that the company should "look inward." Schiller says that the price of Office v. X--about $400--is too expensive, although Microsoft heavily advertised steep discounts to existing Mac Office users when the company launched Office v. X. Schiller is also upbeat about OS X's prospects, stating that the number of users making the switch to the new system will hit a "steep climb" later this year. The company expects about 5 million people to be using OS X by year's end.

Schiller and Apple had better be right. If Microsoft and other major software developers bail from the OS X bandwagon, the fledgling platform might not survive, let alone flourish.

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