Despite Raves for IBook, Tide Still Turns Against Apple

Students and colleges are shifting to Windows

By GOLDIE BLUMENSTYK

It's cute. Sexy even, say some. Still, even many of the biggest fans of Apple Computer's new iBook

ALSO SEE: Colloquy: Join an online discussion on whether Apple's new iBook will restore the company's influence in the higher-education market.

say they doubt that the company's latest laptop will be enough to revive Apple's fortunes in the college market.

True, laptops increasingly are becoming the computer of choice for college students. And Apple's new laptop model is smaller, lighter, more durable, and less expensive than the company's first iBook and most other laptops. It features, among other things, built-in equipment that allows it to connect easily with the wireless computer networks that are becoming more and more prevalent on college campuses.

A new operating system, known as OS X and soon to come standard on iBooks and other Macintosh computers, is also winning raves for its stability (the X stands for 10). And Apple executives say the iBook is part of their renewed commitment to the college market.

Nevertheless, Apple remains haunted by a big "but" -- the same sort of "Gee, this is cool, but" heard after Apple introduced the curvy and colorful iMac desktop computers three years ago.

College technology officers say they still worry about the availability of software for Apple computers. They say most of the big commercial software systems they use for payroll, course scheduling, student record-keeping, and other operations work more reliably on computers that use the Microsoft Windows operating system.

What's more, many college leaders say they've become frustrated with what seems like Apple's on-again-off-again interest in the higher-education market.

At the same time, other computer vendors are pursuing the academic market more actively than ever. These other vendors, especially Compaq, Dell, and Gateway, are winning a growing share of the college market by competing aggressively with pricing discounts, sometimes under statewide and region-wide contracts.

Florida's two-year colleges, for instance, established such a relationship with Dell in September 1998 and later extended it to the state universities and private colleges there. It offers discounts of about 22 percent off retail prices on hardware preselected by the colleges, and in some cases, discounts of up to 30 percent. Colleges have bought more than $200-million worth of computer equipment from Dell since the contract began.

"Dell has put a serious hurt onto everyone else," says Paul O. Harris, director of purchasing at Pensacola Junior College. Mr. Harris, one of the originators of the deal, estimates that Florida colleges have saved $50-million in the process.

Dell, which has some panache with students as well, according to some college officials, has made no secret of its interest in the higher-education market. The company now sells more desktop computers, laptops, and servers to all education customers than any other vendor. Its share of the market was about 35 percent in the first quarter of 2001, the most recent data available, up from 27 percent in the first quarter of 2000 and about 16 percent in the first quarter of 1999, according to IDC, a technology-research company. Apple's share for the corresponding quarter in 2001 was just under 23 percent.

IDC's education statistics are based on shipments of PC's, laptops, and servers to schools and colleges, and do not include computers purchased by individual students. IDC estimates that about two-thirds of Apple's education sales go to schools; for the other venders, the split is about even between shipments to schools and colleges. Compaq, Gateway, and the International Business Machines Corporation are the other top vendors in education, according to IDC.

The Windows-based PC vendors -- Dell, Compaq, Gateway and I.B.M. -- are gaining market share with a number of strategies. For one, they are forming partnerships with other kinds of companies, such as Blackboard and WebCT, and are offering reduced prices to colleges that buy their bundled products. Blackboard and WebCT make platforms for delivering courses online.

Led by I.B.M., the companies are also presenting themselves as full-service technology providers, selling not only laptops and desktop computers but also bigger-ticket items, such as network servers, switches, and most important, the teams of consultants that help install and maintain the operations.

It's that kind of multi-pronged strategy that companies need to succeed these days, says Greg J. Baroni, senior vice president at KPMG Peat Marwick, a management-consulting company.

KPMG, for example, works with colleges that are installing new administrative-software systems. Both Dell and Compaq, he says, have approached him about offering discounts of up to 50 percent to KPMG clients who buy new computers as part of those installations. The successful companies "have deep relationships with channels into the clientele," says Mr. Baroni, who adds: "I never see Apple." (A spokesman for Apple says he did not know of any marketing strategies of that sort at Apple.)

Like many others, though, Mr. Baroni admires the new iBook. "They definitely have got the sexiest little thing," he says.

But Mr. Baroni says the welldesigned product is not nearly enough to drive a comeback for Apple in higher education: "Honestly, I don't see it."

Martin Ringle, the chief technology officer at Reed College, an Apple-heavy campus, says he wishes the new iBook was even a pound lighter. Then students could plop it into their backpacks without a thought. Nonetheless, he says, "students who have seen the iBook have been glowing."

Although Apple computers can be costlier than comparable Windows-based machines, Mr. Ringle says that they can save colleges money over all because they are less difficult to support. He notes that in a survey of 25 liberal-arts colleges in 1994, Reed ranked 17th in spending per student on overall computing costs, while earning high marks for service. In 1999, only four other institutions were spending less. About 85 percent of Reed's college-owned computers are Macintoshes -- a higher proportion than at the other colleges in the survey.

Yet some institutions with longstanding ties to Apple say the company's weakness at sustaining relationships with colleges is forcing them to move away from the Apple platform.

One of the latest to do so is Sonoma State University. Located just a few hours' drive from Apple's Cupertino, Calif., headquarters, Sonoma State was about 95-percent Macintosh-based in the early 1990's and still 80-percent Macintosh as recently as 1998.

"Apple is like a cousin to us," says Samuel G. Scalise, chief information officer there. Yet today, Mr. Scalise says ruefully, the campus is about 50-50 Mac versus Windows.

The big shift has come in the past two years, as Sonoma has been gearing up to install a new administrative-software system from PeopleSoft. The PeopleSoft package can be run on Macintosh computers, but needs special software to do so, which makes running it more complex. Mr. Scalise wanted to try it. Indeed, he had even proposed using the project as the impetus for a plan to make Sonoma State nearly 100-percent Apple.

In May 1999, he took the university's president, its provost, and a crew of vice presidents to Apple headquarters to discuss making Sonoma a model Apple campus.

Company officials were supportive, but showed little follow-through, Mr. Scalise says. And with a project like this, he says, "a person with passion from each camp has to be directly involved." He didn't see enough of that passion from Apple. Rather than commit to a more complex situation, the institution decided it would be simpler just to start replacing the Macs with Windows-based machines for staff members who would be using the PeopleSoft system. Sonoma State now buys about $300,000 worth of Macintosh computers a year; a few years ago, it was buying about $1-million worth.

Turnover at Apple in the higher-education division has also made it hard to maintain good relations with the company, Mr. Scalise says.

Nonetheless, Mr. Scalise says he sees some positive signs, particularly in the new OS X operating system. Because it is based on the Unix operating system, he says, the new Apple operating system should be able to run some programs for engineering and music composition that are now available only for Unix-based computers.

He says he is also impressed with the attention that the company is again giving to the Apple University Executive Forum, a consortium of two dozen technology officers from colleges. The forum meets twice a year with Apple officials, including, sometimes, with Steve Jobs, the founder of Apple who was ousted from the company in 1985 and returned in 1998.

Apple had first reinstated the forum in mid-1998, shortly after Mr. Jobs returned to run Apple and the company began making a big to-do about its desire to revive its historic ties to higher education. At that time, Apple also brought in a new team of marketing leaders who promised they would re-establish the company as a player in higher education.

The forum floundered for a while, Mr. Scalise and other members say. But in the past year, they say, under yet another new team of marketing and sales executives, the sessions have become more relevant. Mr. Scalise cites the forum's latest project, aimed at seeing how best to deploy the new OS X operating system in college computing laboratories, as an example of a project that could be as useful to colleges as to the company.

Cheryl Vedoe, who for the past eight months has been Apple's vice president of educational marketing solutions, acknowledges past problems. "There have clearly been some issues with support" for Apple's higher-education customers, she says. But she also notes that turnover in technology companies is not uncommon, and points out that many of the PC manufacturers are now undergoing major layoffs.

Apple remains confident, she says, because its products are appealing, particularly to traditional-aged college students "who want the digital lifestyle" that a laptop like the iBook allows. The laptop, which weighs 4.9 pounds and is available to students and educators for as little as $1,199, comes equipped with software that, among other things, allows users to edit digital video easily.

Apple is hoping to strengthen its position with academics working in the creative arts, computer science, and the hard sciences with a new line of Power Mac G4 desktop computers. And Ms. Vedoe says it is also hoping to win contracts at colleges becoming "laptop campuses."

Ms. Vedoe says colleges should also be assured that companies will develop software for OS X. Apple doesn't subsidize such efforts, she says. "We make a business case" to the companies. Microsoft has promised a version of Office for OS X this fall. She says she doesn't have details about other software.

Developers of the SPSS software, a popular statistics program used in psychology and other fields, say they plan to create a version to run with OS X, but it won't be available until at least early 2002. SPSS has a version of its software that runs on Apple's existing operating system, but in the past, SPSS has not always kept up with upgrades of the Apple operating system, and as a result, many users of SPSS have switched over the years to Windows-based computers.

Just recently, in fact, the psychology department at Oberlin College decided to switch from Macs to machines that use Windows. "Eighteen Macs came out, 18 Windows came in," says Cynthia A. Murnan, director of client services at the college's Center for Information Technology. She says faculty members felt that the SPSS software for Windows worked better.

John E. Bucher, director of information technology at Oberlin, says he's hoping the iBook will be appealing enough to cause students to think twice about switching to Windows-based computers. "It is such a cool machine," he says. About two-thirds of the machines Oberlin owns are Macs, as are about half the machines its students bring to the campus. "We still find that the Mac is easier to support," he adds.

Mr. Bucher says he expects the college will sell a lot of iBooks this summer and fall.

But if Dartmouth College, another longtime Apple stronghold, is any indication, he may be in for a surprise. The first deadline for entering Dartmouth freshman to order their computers was mid-July, and according to those early counts, orders for Dell machines were outrunning Apple orders by about three to one. Dell is the college's primary vendor of Windows-based PC's.

The figures surprised Lawrence M. Levine, Dartmouth's director of computing, who had expected a rush on iBooks because of their price and their wireless features. The new model, he notes, looks a lot less like a toilet seat than the first iBook, which the company described as clamshell-shaped.

Though he realizes it's not a scientific survey, Mr. Levine says the initial orders do show that "the pull of Windows is taking precedence" over the design and features of Apple computers for students. He adds: "I don't think it bodes well for Apple."

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