Local company parts ways with Apple

“It’s a little like losing your religion.”

That’s Kai Staats, CEO of Loveland-based Terra Soft Solutions Inc., speaking about Apple Computer switching from PowerPC to Intel processors.

Staats explained that in the tech world, people who used Apple’s old system did so zealously.

“When your religious leader (changes directions), you question your religion,” he said.

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For Terra Soft, the announcement that Apple was switching to Intel came as quite a shock. The company, founded in 1999, had largely been dedicated to developing Linux software for the PowerPC processors.

When Apple made the announcement in the summer of 2005, Staats had just arrived in Barcelona for a conference on the Power architecture. He received a call from the office as he was settling into his hotel room, and e-mails were already streaming in from concerned customers.

Although it came as a shock to Terra Soft and many others, the switch to Intel was one Apple had been planning for a while.

“It wasn’t an overnight deal, it was something they’d been working hard on,´ said Hugh Gyetvai, owner of MacOrbit in Boulder.

Gyetval has been consulting on Macintosh computers for 10 years and formed MacOrbit five years ago.

The story goes that Apple has been secretly developing the Intel Mac for at least the past six years – some conspiracy theorists say it dates back even further. Previous generations of the Mac ran on PowerPC processors, developed by a consortium of Apple, Motorola and IBM, which continues to support the Power architecture.

All of that hard work must have made Apple anxious to unveil its new product. Gyetval said the company announced the first machines about six months early, before the software companies had finished writing applications for them. But not all were even trying.

The switch threatened to fold Terra Soft, which has been a staunch Mac devotee since the beginning.

“This company is a Mac company because I wanted to work on Macs,” he said.

Changing public perception

Staats admits that Apple’s switch to Intel made sense. He explained that it was less about what IBM didn’t do than it was about what Intel did do for Apple.

Intel is an inexpensive processor option because the company produces such a high volume of chips.

Gyetval said that the public perception of Macs is that they are expensive and work best for artists. As a result, Apple captured only 3 percent of the worldwide PC market share last year.

More important to increasing that share than changing the price was changing the public perception.

A major selling point of the Intel Macs is that they can run dual operating systems – in other words, Windows on a Mac. Previously, Macs could run Windows applications through a process called emulation. Emulation basically imitated the Windows operating system in order to run applications, but it would run at full speed. (Some true believers are quick to point out that Windows was originally developed to make PCs look and feel more like the more user-friendly Macs.)

Gyetval said that while there are some applications that are available only for Windows – such as Microsoft Access for businesses and most computer games – what’s more important is the power of creating a comfort zone. By allowing users to access Windows easily, Apple will be able to wean consumers off of PCs eventually, he explained.

It’s worked well so far. Apple shipped 1.3 million Macs during its fiscal third quarter ending July 1. That represents 12 percent growth compared to the same period last year.

“We’re thrilled with the growth of our Mac business, and especially that over 75 percent of the Macs sold during the quarter used Intel processors,´ said CEO Steve Jobs in a company press release. “This is the smoothest and most successful transition that any of us have ever experienced.”

Coming full circle

For Staats and Terra Soft, the immediate decision was not to make the transition at all.

“We remain a Linux development company with 100 percent focus on the Power architecture. We will not transition to support an x86/ia64 architecture,” he wrote to customers from the 2005 conference in Spain.

“We have a core competency in Power architecture,” Staats explained in a recent Business Report interview. “If we switched to Intel, we’d have been a ‘me too’ company.”

He also assured customers that the company would continue to support Apple’s PowerPC hardware, while it is still available, as well as all non-Apple offerings using Power architecture.

“If we had not moved instantly to reinvent our company, we would have died,” Staats said. “We know the direction we’re going in now.”

Because the company is small – only nine full-time employees – it could be nimble. And the reinvention of TerraSoft has brought it full circle.

The company started in 1999 selling its Linux-based operating system, Yellow Dog Linux. Linux is a free, open-source operating system, based on Unix, that is one of the fastest growing desktop operating system today.

For all of the resources that went into developing the Yellow Dog operating system, it didn’t produce enough revenue to push the company forward. Staats knew that would be the case, but decided to maintain it for the service contracts it generated.

The company soon expanded into hardware sales, offering products that contained the Power architecture such as Apple computers and servers. The hardware sales led the company back to a surge in service contracts, this time for both the operating system and the hardware itself.

The Apple switch to Intel brought Terra Soft back to software development.

The company has released two software products – Y-Bio and Y-HPC. The first is a bioinformatics program designed to assist in gene sequence analysis. Y-HPC is largely used to smooth the operations of computing clusters, linked groups of computers that perform a common function.

Major project ahead

As part of the reinvention, the company is now gearing up for a major project – creating one of the nation’s most powerful supercomputing clusters.

“It’s the second largest project we’ve ever done,” Staats said, the first being a 2003 sonar imaging project with Lockheed Martin and the U.S. Navy.

“We’re in the process now of inviting key universities and Department of Energy laboratories (to the cluster),” Staats said.

Terra Soft is already teamed up with a large, international company that Staats declined to name. The cluster will have a bioinformatics focus.

The center will initially be a 480-computer node with the ability to expand to 2,400. The Terra Soft facility in Loveland recently underwent a 3,000-square-foot renovation in preparation. When launched, Staats estimates the electricity bill will jump to more than $6,000 monthly.

The computers will run using Terra Soft’s Yellow Dog Linux operating system, and Y-HPC and Y-Bio applications.

Terra Soft will showcase the cluster at the IBM booth at SC06, an international high-power computing conference in November.

Again, Terra Soft benefits from its ability to move quickly. Staats first met with the company for this project last fall.

“It actually happened very rapidly,” he said.

It’s a project that might not have happened if Terra Soft hadn’t been jolted into changing the company’s focus.

“If Apple hadn’t switched to Intel, we wouldn’t have looked at our company this way,” Staats said. “It was a blessing in disguise.”

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