Fast-Selling iMac Model Is a Singular Sensation for Apple

While the sensational new iMac has doubled Apple Computer’s share of the consumer PC market to about 10%, according to the latest data, so far the popular machine has no coattails. Sales of Apple’s more costly and capable G3 desktop computers have remained sluggish, and the company has not been able to get a boost in the business market, analysts say.

“Without the iMac, Apple would have lost further market share,” said Roger Lanctot of PC Data in Reston, Va.

So Macintosh fans and analysts alike wonder what Apple will do to maintain the iMac’s momentum and extend its popularity to other products.

Apple’s 10% market share, while a dramatic improvement, still trailed market leaders Compaq Computer, at 27.3%; Packard Bell-NEC, at 22%; Hewlett-Packard, at 19.9%; and IBM, at 11.8%. Those companies have enjoyed strong sales in the fast-growing sub-$1,000 PC market.

The most anticipated product due from Apple--which the company plans to introduce in the first half of 1999--is a low-cost notebook computer rumored to sport a stylish, translucent look modeled on the iMac. The notebook reportedly would have limited expansion capability, like the iMac, but would satisfy the Web-surfing and basic computing needs of most students and consumers.

Apple is rumored to have new models based on the G3 processor ready for release in January and a new iMac that should feature a faster processor and a larger storage drive. Currently, the iMac has a much less capacious disk drive and fewer options for expansion than competing Windows-based PCs. It also lacks a floppy drive, and its central processor, the machine’s brain, runs at 233 megahertz compared with 350 MHz or faster for competing models in its price range.

So analysts view some improvements as critical to continuing the iMac’s impressive run.

But the machine’s price could stay where it is, because it fits right into what marketers call the “sweet spot”--the target price for most buyers. “The $1,299 price point is competitive for an Apple product,” Lanctot said.

In November, Apple held about 10% of the consumer market--measured in sales via large retail stores and mail order--according to PC Data. The numbers continue a trend that began with the introduction of the iMac in August.

“It’s not too many PCs that see four months of accelerating sales,” especially at the top spot, said Lanctot.

ZD Market Intelligence of San Diego showed similar figures. The 33,500 iMacs sold in November grabbed about 7% of consumer-market sales, driving Apple’s overall consumer sales to 10.3%, including other Apple models.

The iMac has also helped generate demand for peripheral devices such as printers and floppy disk drives. “It gave Apple something to talk about. Before the iMac, there was no hot box to get people into the stores or onto the Web sites,” Lanctot said.

The iMac buzz has also helped boost Apple’s stock. Shares in the Cupertino, Calif.-based company rose $1.81 Wednesday to close at $39.81 on Nasdaq, a far cry from its low of $12.75 early this year.

The rising share price is one measure of the improvement that has occurred in the last 18 months since Steve Jobs became interim chief executive of a company that was widely considered moribund. Jobs cut costs dramatically, streamlined Apple’s convoluted product line and launched the well-received “Think different” and iMac promotional campaigns. The turnaround resulted in profit of $309 million for the fiscal year ending in September, contrasted with a loss of $1 billion a year earlier.