by , 8:00 AM EDT, July 29th, 2002

You could see people mouthing the word Watson when Sherlock 3 was demonstrated at MACWORLD New York on July 17. Watson, an Internet services application, was originally released by Karelia Software back in November of 2001 as a complement to Apple's Sherlock search software. However, when Sherlock 3 was first shown at the World Wide Developers' Conference in May and then again two weeks ago, it was hard to deny the similarities between the "new" features of Sherlock 3 and the functionality that Watson provided.

Sherlock has a long history, dating back to the Mac OS 8 days. Originally a new, glorified version of the old Mac OS Find application, Sherlock 1.0 was a simple, yet effective hard drive search tool that included a new Internet search capability. With it, a user could access multiple search engines and pages simultaneously with a single query. Mac OS 9 brought the release of Sherlock 2 with new search "channels". These channels group plug-ins of similar purpose, such as shopping or reference, to streamline searching.

Watson, developed by Alameda, CA based Karelia Software, was created as an Internet services tool that was seen by its creator Dan Wood as a complement to Apple's Sherlock. The philosophy behind Watson was to have one application be a front end to many Internet services that before could only be found separately. Features like movie info, package tracking, eBay auction tracking and plane tracking are presented in a browser-like interface. "My thought was to build a general toolkit to help do the Web access, and then present them as a single program, sort of a swiss army knife," said Wood in an interview with TMO.

The demonstration of Sherlock 3 at MACWORLD surprised many with respect to the extent of the similarities to Watson. According to Wood, many functions are the same. "Looking at Apple's Sherlock page, you'll see that 9 out of 11 of their tools (all but the general Sherlock 2-style searching and AppleCare) are counterparts to Watson tools. Out of the hundreds of possible services that Sherlock 3 could have provided -- I know, I've been collecting ideas for a while -- Apple had to overlap Watson completely?"

Watson's movie tool (left), and Sherlock 3's Movie channel (right)
Screenshots from Karelia Software

When the two applications' movie tools are compared, it's easy to see that they share a similar look and feel as well as function. Many suspected this to be evidence of an Apple buy-out of Watson. To publicly counter that rumor, Karelia posted an addition to its FAQ:

Many users have contacted Karelia, congratulating us on Apple "buying out" Watson. However, Karelia Software was not involved in any aspect of Sherlock 3, other than serving as... shall we say... inspiration.

Dan Wood feels that Apple has infringed on his ideas and his profits without his permission, or adequate compensation. What he got instead was an offer of a position on the Sherlock team, which he refused, and the Apple Design Award for Most Innovative Mac OS X Software. Apple described Watson as "an innovative tool for viewing Internet-based information, with an auto-updating feature." Interestingly enough, the award was given to Karelia Software on the same day that Sherlock 3 was announced at May's WWDC. Says Wood, "...I find it incredibly ironic. On one hand, Apple recognizes Watson as the most innovative product of the year. On the other, Apple seems to be claiming that Watson wasn't such a big deal, that Sherlock was a multi-channel application connecting to the Web long before Watson came out. I don't dispute Watson's heritage, but what was innovative about Watson wasn't only the concept, but also the specific tools, and how those tools work."

In a recent BusinessWeek interview, Phil Schiller was asked to respond to these concerns:

Apple did Sherlock as an Internet search-and-channels tool before Watson. I would point out that Apple has always been a software developer, from the original Apple II to MacPaint to Claris E-mailer to Filemaker. That is a part of our business. Still, on Mac OS X alone there are over 3,500 applications. We make about 10. We're not exactly getting into a lot of other peoples' software businesses.

Mr. Schiller implied that the features in question were merely logical extensions of the Sherlock theme, asserting that Sherlock supposedly did the same thing Watson does long before its release.

"Obviously Apple is going to feel justified in what they are doing," said Wood. "I can understand their position; they want to build a solution that continues to shame the Wintel world. But competing with their own developers -- even if it's 10 out of 3500 applications -- that's just sleazy."

Despite the the obvious similarities in Sherlock 3, Wood is hesitant to pursue legal action. "I don't know if what Apple has done was technically illegal. But even if it were, I don't want to devote my time with a lawsuit; I want to build cool software. I really just want to move on and build the next killer App, and release it, and hopefully not get bitten next time."

While he hopes to prevent himself and other developers from "being bitten" by Apple in the future, the fact remains that Sherlock 3 will likely be a big setback in terms of revenue. "Watson is a ... full-time endeavor, and our first product," he told TMO. "Sales are slightly down, but I think people are still buying it because it provides this functionality now, not after a future upgrade. I'm sure sales will drop significantly once Jaguar hits the streets..."

With Sherlock 3 being released with MacOS X 10.2 in a matter of weeks, Karelia Software is left searching for ways to differentiate Watson from the Apple-developed application. "We're really proud of our latest addition, the Weather tool, and there are many other modules (VersionTracker, TV listings, Yahoo browsing, etc.) that Sherlock might never replace." It remains to be seen if Watson can be successful on the Macintosh while in direct competition with a free, Apple-provided tool.

"What I would have liked would have been some minor compensation and public recognition, or even for them to have asked me if it was OK if they used the specific tools and layouts for those tools in Sherlock," he explained. "Hiring one person -- paying them for work yet to be performed -- is no adequate compensation for existing intellectual property." After speaking with several people he classifies as "higher-ups" at Apple since the WWDC and MACWORLD, Wood abandoned his efforts, stating that "At this point, I've all but given up on Apple correcting the issue."

Throughout the whole ordeal, user reaction has been strong. "E-mail letters of support have been flowing in from users upset that Apple would do something like this to one of its small developers," he said. Despite the overwhelming and supportive response, he was forced to start widening the focus for financial reasons. "I am planning on getting Watson ported to Windows as soon as possible to try to recoup lost revenue. I never would have considered this before; it's quite possible to have a successful Mac-only business if left alone! And I'm not inclined to show Apple the next product that I'm working on until the product is ready to release."

As of press time, Apple has not responded to our requests for comment. More information on Watson can be found at Karelia Software's Web page, while more information on Sherlock 3 can be found on Apple's Mac OS X Web page.

TMO's Raena Armitage and Daniel Miller also contributed to this report.