Apple Delays Launch of Operating System

Apple Inc. said it won't be shipping its next-generation operating system in June as planned, saying it had to divert resources from the project so that it could launch its highly anticipated iPhone on time.

The new shipment date for Mac OS X "Leopard" will be in October, the company said Thursday. The iPhone will make its debut in June as planned.

Apple shares dropped $1.75, or nearly 2 percent, to $90.44 in extended-session trading after the announcement. Earlier, they had closed at $92.19, down 40 cents, on the Nasdaq Stock Market.

The "iPhone contains the most sophisticated software ever shipped on a mobile device, and finishing it on time has not come without a price -- we had to borrow some key software engineering and (quality assurance) resources from our Mac OS X team," Apple said in a statement.

Apple announced the iPhone -- a smart phone that also serves as an iPod media player -- in January to much fanfare. The Cupertino-based company said Thursday the iPhone is still on track to be shipped in late June and has passed several of the required certification tests.

Apple, which had previously said Leopard would be available in the spring, had hoped to release the Mac operating system upgrade at its Worldwide Developers Conference, a five-day event in San Francisco that starts June 11.

Instead, a "near-final version" of Leopard will be ready for the developers at the conference to take home, Apple said. Though Leopard's features will be complete by then, Apple said the company won't be ready to ship what it considers a "quality release."

"We think it'll be worth the wait," Apple said. "Life often presents trade-offs, and in this case we're sure we've made the right ones."

Analysts agreed.

"If it came down to one product or the other slipping, they made the right choice for iPhone to be on time --where consumer demand and anticipation is already running high," said Michael Gartenberg, an industry analyst at JupiterResearch.

Apple plans to ship two versions of the iPhone -- a 4-gigabyte model for $499 and an 8-gigabyte one for $599. It will be available in the U.S. exclusively through AT&T Inc.'s Cingular Wireless network. It will be sold in Europe later this year and in Asia next year.

Apple has said it hopes to sell 10 million units in 2008, representing about 1 percent of the market.

The iPhone is a new foray for the iPod and Macintosh maker, and analysts predict it could be yet another hit product that could boost the company's growing fortunes.

Leopard is Apple's sixth major upgrade to Mac OS X since the desktop operating system debuted in 2001.

In fact, Apple has ribbed its larger rival Microsoft Corp. for its repeated delays of Vista. The overhauled Windows platform was released in January after five years of development and is often seen as playing catch-up on features found in Apple's existing operating system.

Product delays -- which are a fact of life in the high-tech world -- are uncharacteristic for Apple partly because the company usually avoids announcing expected shipment dates.

The Leopard delay, however, is the second Apple product to have its release pushed back this year. Apple TV, a set-top box for streaming video and other content from computers, was originally slated for a February launch but did not ship until March 21.

The four-month delay of Leopard "is a little embarrassing," Gartenberg said, but he doesn't think it will harm Apple.

In addition, unlike the situation for Microsoft, which dominates the personal computing market, other PC makers are not relying on Apple to deliver an operating system for their machines.

"The only company this affects is Apple," Gartenberg said.

The delay will push down the typical bump Apple would see in software sales by just a quarter, said John Lynch, analyst at Needham & Co. LLC. "But I don't see this as putting a big damper on Mac demand."

Apple issues its next quarterly report for the March quarter on April 25. Company officials did not disclose any financial guidance Thursday.


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