Apple is turning to software to help it ride-out the slump in hardware sales, a report by the Gartner Group confirms.

The report comes in the wake of last week's Macworld Expo, in which Apple presented only two pieces of hardware – a 17-inch iMac and a 10GB iPod, focusing its announcements on software and services.

The Gartner report suggests that many of Apple's software moves will help integrate Macs in small-to-medium enterprises but don't signal its re-entry into the corporate market. "They don't remove all the barriers to getting Macs onto corporate networks, because iCal does not link up with Microsoft Exchange, for example", the report states.

Gartner vice president and research director, Michael Silver said: “In a slumping hardware market, Apple is looking to software, services and peripherals to generate incremental profits.”

Looking at iPod, the Gartner report stated: “The Windows iPod drastically broadens the potential market for iPod devices and is a good way for Apple to expand the market for its profitable peripherals.”

The report also encourages Mac-using enterprises to adopt Mac OS X as soon as their key applications run natively on the OS.

“Enterprises should plan to reduce their dependency on OS 9 by 2004 or 2005 at the latest,” the report concludes.