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4/13/2007
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Apple's Leopard-Release Delay A Sign Of Growing Pains

Company cites lack of resources for both Leopard and iPhone development as explanation for delaying release of new OS to October.

Apple's four-month delay of Leopard is a sign that the computer maker's resources can't quite keep up with its ambition of becoming a bigger consumer electronics maker.

The company on Thursday delayed shipping the next major release of its Macintosh operating system until October. In dropping the release from the agenda of its Worldwide Developers Conference in early June, Apple said it didn't have the engineering or quality assurance resources to devote to both Leopard and the iPhone, which is also due in June.

Apple said the iPhone contained the "most sophisticated software ever shipped on a mobile device, and finishing it on time has not come without a price." That price, however, was delaying a core product, which is an indication of the importance Apple has placed on its next major consumer electronics gadget.

Apple is hoping the iPhone will have as big an impact on the mobile-phone market as its iPod digital player had on the music industry. The latter device, which is tightly integrated with Apple's iTunes store, accounts for more than three quarters of the market for portable players and has redefined online music.

Apple is known for hitting its mark on OS releases, so its stumbling on Leopard reflects the impact of trying to be a maker of computers, digital music players, and mobile phones all at the same time. While it's not unusual for companies to have diverse product lines, Apple hasn't yet reached the size needed to juggle so many balls. "Obviously, they're not big enough, or experienced enough yet, to properly manage multiple operating systems," said Richard Shim, analyst for IDC, referring to the OS for the iPhone and the Mac.

The Leopard delay is not the only sign that Apple is feeling the strain of its growth, which has taken off over the last few years with the success of the iPod. The AppleTV, for example, has not wowed the industry for design and function. "AppleTV isn't getting quite the reception that you would expect from an Apple product," Shim said.

Rescheduling Leopard is an embarrassment for Apple, given that it has poked fun of Microsoft for being about two years late on it latest OS, Vista. In addition, Apple will miss the back-to-school season that runs from mid-July to mid-September.

In terms of computer sales, only the holiday season, which starts the Friday after Thanksgiving and runs through the end of the year, is bigger. "(The delay) is going to affect Apple's appeal during the back-to-school season," Toni Duboise, analyst for Current Analysis, said. "People will probably push back their purchases."

As a result, Apple will see a delay in any Leopard-driven revenue boost. "I suspect that it's just going to be a time shift in their OS upgrade revenues," John Lynch, financial analyst for Needham & Co. LLC, said. "In addition to that, some customers may delay purchases of the Mac, as well, but my suspicion is that won't be a particularly powerful phenomenon."

The reason is a Mac bought today can easily handle the OS upgrade, unlike Microsoft Vista, which requires more powerful computers than what most consumers have for running XP, the last version of Windows. "It's a lot less painful to upgrade the Mac OS than Windows," Lynch said.

Long term, however, it remains to be seen whether Apple will be able to keep pace with the growing popularity of its products. If the iPhone is successful, for example, Apple will have to get the additional resources it needs to manage another successful product line. "They're going to have to manage the development of these OSes more closely," Shim said.

In the meantime, developers at the June conference will have to make do with a beta copy of Leopard, and trade disappointment for a bit of Apple philosophy. "Life often presents tradeoffs, and in this case, we're sure we've made the right ones," Apple said Thursday.

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