New Computer Line May Make Inroads for Lagging Apple


With Wednesday's announcement of Apple Computer's new iMac machines, interim Chief Executive Steve Jobs delivered what appears to be a credible bid to move new buyers--perhaps even some Windows users--into the Apple camp.

If the company's internal test results are independently validated, the $1,299 iMac, shorthand for Internet Mac, will offer the performance of Windows-based PCs that sell for much higher prices.

Analysts view the product as a potential landmark for Apple, which had suffered massive losses until regaining modest profitability in the last two quarters.

"They've turned the corner," said Tim Bajarin of Creative Strategies, a San Jose research firm. "The iMac is a product that they are actually going to have people standing in line at midnight to buy."

The iMac demonstrates a novel look for a PC. The design, which houses the computer and monitor in a single package, is a rounded, translucent blue-and-white shell.

The new machine is targeted at the home and education markets, traditional Apple strongholds where the company has lost considerable ground to competitors.

"We're going to try to take customers away from the other guys," Jobs said.

The iMac will go on sale in August but will not be available in volume until the Christmas buying season, said Mitch Mandich, Apple's senior vice president of worldwide sales.

Unlike the approach of the G3 line, for which Apple offers build-to-order customization, the iMac "is very appliance-like," Mandich said. This could help Apple ramp up production quickly.

In another move that reflects a more aggressive posture, Jobs announced a new series of notebook computers aimed at executives and design professionals. Apple claims that its testing shows them to be far faster than Intel Pentium II-based competitors--at least in the graphics and multimedia applications the Macintosh specializes in.

But in a departure from Apple's premium pricing of the past, the new notebooks will start as low as $2,299. Jobs added that a much-lower-cost portable device would be released in the first half of next year.

Pieter Hartsook, a Mac analyst in Los Gatos, Calif., said the new machines "exceeded expectations."

"This clearly locks Apple into three more quarters of profit," he said.

To achieve sustained profitability, Apple needs to prevent a lull in sales of its flagship G3 computers, which could occur if some customers delay purchases until the iMac appears. Normally, Apple shuns announcements of products months ahead of their release dates for this very reason.

But Mandich said that because Apple lacks a true home-oriented machine, the company doesn't view sales of the more expensive G3s--targeted at hobbyists as well as publishing and media professionals--as being at risk.

Given the mounting concerns of industry partners, software developers and others about Apple's future, advance warning became essential, Mandich said. "We wanted to tell our whole strategy now, not 90 days from now."

Apple learned the dangers of keeping its strategy too close to the vest last month, when Intuit Inc. decided to stop producing Macintosh versions of its industry-leading Quicken personal-finance software. The company blamed Apple's failure to compete in the home PC market for declining sales of Quicken.

Because Intuit's chief executive, William Campbell, sits on Apple's board of directors, the move proved acutely embarrassing for the computer maker. Campbell reversed the decision this week after getting a look at the iMac.

Overall, since Jobs took the helm at Apple 10 months ago, the company has sharpened its focus on its core products, simplified a convoluted range of offerings and showed a profit for two consecutive quarters. Apple also demonstrated evidence that its market share may be on the rebound after a long and precipitous decline.

Apple's stock rose 63 cents to $30.31 on Nasdaq.

Jobs "has already accomplished his biggest task--giving people the idea that Apple's not going away," Bajarin said. But going forward, "Apple needs to produce products the market wants."

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