UPDATE 3-Apple takes on Microsoft with Windows Web browser
(Recasts, adds analyst comment)
By Scott Hillis
SAN FRANCISCO, June 11 (Reuters) - Apple Inc. (AAPL.O) is introducing a version of its Safari Internet browser for Windows, Chief Executive Steve Jobs said on Monday, taking on Microsoft Corp. (MSFT.O) in its key stronghold of Web access software.
The move by Apple, which has expanded beyond its Macintosh computer core with iPod media players and the upcoming iPhone, could let the company control how large numbers of people use the Web at a time when services and programs are increasingly Internet-based.
Jobs also said Apple would let outside developers create applications for the iPhone by tapping Safari, softening the company's previous position that the device would not support other software due to security concerns.
But investors were disappointed that Jobs -- known for his surprise announcements -- did not have bigger news to unveil -- and Apple shares sank nearly 3.5 percent, their biggest one-day fall in about four months.
"Apple always hits a home run, and when they hit a triple, it's a disappointment," said Gene Munster, an analyst at Piper Jaffray & Co. who has an "outperform" rating on Apple stock.
Consumers and investors have been particularly hungry for any iPhone news ahead of the product's June 29 launch for use on AT&T's (T.N) wireless network.
Apple shares fell $4.30 to close at $120.19 on Nasdaq. The stock has doubled over the past year and has risen 10 percent in the last month.
Speaking at Apple's annual developers' conference in San Francisco, Jobs put Microsoft's dominant Internet Explorer browser squarely in his sights, saying that test versions of the new Safari 3 were twice as fast at loading Web pages.
"We would love for Safari's market share to grow substantially," Jobs said. Safari has 5 percent of the browser market compared to 78 percent for Internet Explorer.
A free test version of Safari 3 is available to the public now as a download and the final version will be available as a free download to users of both Mac OS X and Windows in October, the company said.
The focus on Safari sets the stage for a new browser war nearly a decade after Microsoft knocked off pioneering rival Netscape by including Internet Explorer for free in Windows.
Analysts said Apple clearly hopes to replicate its success in making a Windows version of its iTunes media program, a move that helped drive sales of its iPod media players as well as Mac computers.
Soleil Equity Research analyst Shannon Cross said the availability of Safari on Windows would boost popularity of the software and encourage Web site creators to make their sites compatible with the browser.
"It should also help increase Apple's exposure to the Windows community and potentially attract a larger audience of switchers," Cross wrote in a research note.
Addressing concerns that the iPhone would not support programs not created by Apple, Jobs said independent developers could write application software for Safari, which is included in the multimedia device.
"It's an innovative new way to create apps for mobile devices ... and it gives us tremendous capability, more than has ever been in a mobile device," Jobs said.
ThinkEquity analyst Jonathan Hoopes said developers writing applications to run on Safari could have their software run on either a Mac or Windows-based computer. "That same app should be able to run on the iPhone," he said.
The bulk of Jobs' speech was dedicated to showing off new bells and whistles in the updated operating system, such as the inclusion of a program to let Mac users run Windows.
"It helps with market share and helps with customers that are on the fence trying to move to the Mac," Phil Schiller, head of Apple's product marketing, said in an interview.
After the event, Goldman Sachs raised its 12-month price target on Apple stock to $135 from $120, saying the company was poised to outperform expectations.
"Software remains Apple's biggest competitive advantage," analyst David Bailey said in a report.
