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Apple Enables Intel-Based Macs to Run Windows

Apple Computer Inc. (AAPL), the maker of the Macintosh computer and iPod music player, on Wednesday rolled out a first-ever software patch to run Microsoft's dominant Windows XP operating system on its PCs, a move that could draw millions of new buyers.

Apple shares surged 9 percent on Nasdaq, where it was the second most active issue.

By allowing Macs to run Microsoft Corp.'s (MSFT) Windows, the operating system found on more than 90 percent of the world's personal computers, Apple could woo people who want Macs, which are considered by many as easier to use and more stylish, but prefer the Windows operating system.

In June 2005, Apple said it would switch to Intel Corp. (INTC) chips from those made by International Business Machines Corp. (IBM) and Freescale Semiconductor (FSL), citing the performance advantages of Intel processors.

"Ever since we introduced Macs using Intel chips, we've had some customers asking, 'Hey, can you run Windows on these Macs as well?"' said Phil Schiller, head of worldwide product marketing for Apple, in an interview.

Apple, which celebrated its 30th birthday on April 1, will move its entire Mac line to Intel chips by the end of 2007.

Schiller said company research showed two groups of potential Mac customers, what it called "switchers," or those likely to switch from Windows to Apple's OS X operating system.

The first group included those who are open to using a Mac but want to run programs that work only on Windows, such as Microsoft's Outlook calendar program, which isn't supported on Mac OS X, or popular video games.

The second group, Schiller said, included those open to using OS X, but wanting a "safety net" if they choose to run Windows.

"Most of them will switch and find they never need to run Windows," Schiller said.

Apple, with about 3 percent of the worldwide PC market, said the "Boot Camp" software, available immediately as a download, enables Macs to run either Windows XP or the Mac OS X operating software.

Apple rivals Dell Inc. (DELL) and Hewlett-Packard Co. (HPQ) and other PC makers use Windows as the operating system for their vast majority of their desktop and notebook PCs.

BIGGER BITE OF THE MARKET?

In addition, with the patch Macintosh users will now be able to run games and other programs on their Intel-based machines without buying a separate Windows-based computer.

"We view this as positive for Apple as it opens a new market to the company and greatly expands the [potential market] for Intel-based Macs," said Deutsche Bank analyst Chris Whitmore in a note to clients. "This will be a particular benefit for business applications where users need to run Windows for certain applications."

Apple plans to preview the next major version of its Mac OS X operating system software in August — which will include a Windows option.

Whitmore said with the test release, Apple could grab market share during the critical Christmas holiday period since the consumer debut of Microsoft's new Vista software system is delayed until 2007.

JP Morgan analyst Chris Shope estimated that each additional percentage point of PC market share would give Apple another $2 billion in revenues and more than 30 cents per share in earnings.

The final version of Boot Camp will be available as a feature in Mac OS X version 10.5, code-named "Leopard."

Schiller said Apple "absolutely has no plans to sell or support Windows. We're just helping our customers with Boot Camp to install Windows if they want to."

If sufficient numbers of customers convinced Apple to give away software for the easy installation of Windows on Intel-powered Macs, it stands to reason, analysts said, that it would support the use of Vista on future Macs, too.

Shares of Apple rose $5.53 to $66.70. The stock is down some 6 percent year to date, after more than doubling in 2005 and tripling in 2004.