Struggling Apple Rolls Out Line of New Products for the Mac Faithful
Staggered by declining sales and a financial loss in the last three months of 2000, Apple Computer Inc. on Tuesday announced new high-end machines in hopes of bringing the Mac faithful back into stores.
Chief Executive Steve Jobs demonstrated a skinny, 1-inch-thick titanium laptop computer with a wide screen that will sell for about $2,500, plus a lineup of faster desktop computers, including one model that will allow consumers to record their own digital videodiscs.
For the 5,000 people attending the semiannual MacWorld trade show, Jobs also gave a spirited defense of the role of the home computer at a time when some rival companies are turning to hand-held devices and other products as their salvation.
“The Mac can become the digital hub” of the home, Jobs said, as families juggle digital phones, cameras, video and music. “We don’t think the PC is dying at all. We think it’s evolving.”
But his sales pitch met with a mixed response from Wall Street.
“I didn’t see anything that’s going to be a catalyst for the stock,” said Wit Soundview analyst Jason Wells.
Apple shares rose 63 cents to $17.19 in regular trading on Nasdaq on Tuesday. Last March, the stock traded as high as $75.19.
Jobs’ effort comes at a crucial time for the company and the computer industry as a whole. U.S. computer shipments dropped 24% in December from the year before, while Apple’s plunged 40%, said Salomon Smith Barney analyst Richard Gardner.
Apple said last month it expects to report a loss of $225 million or more in the quarter just ended, and some analysts believe it will lose money this quarter as well as it slashes prices to move old products out of stores.
The company’s share of the U.S. personal computer market has grown to nearly 6% in the three years since Jobs returned to the company he co-founded. But much of that gain has been from new users who bought colorful, less-expensive iMacs to get on the Internet.
With that market saturated, Apple now has the harder task of persuading its existing customers, including loyal professionals who work in graphics and education, to keep upgrading.
And since Napster has powered insatiable demand for free music off the Internet, Jobs concedes that Apple blundered last year by emphasizing video capabilities on its computers instead of audio. Soon, most of Apple’s computers will include rewritable compact disc drives that allow the recording of music.
And Apple’s free new jukebox software for setting music playlists, called iTunes, appears easier to use than current systems from Real Networks and others, attendees and analysts said.
Jobs also plunged ahead with his vision for video, announcing what he said was an industry first--rewritable DVD drives to let users create their own high-quality films, available next month on the highest-end PowerMac professional desktops, selling for about $3,500.
“It strikes me as a fairly low-volume product,” Gardner said.
And Apple already has competition in the DVD market.
Last week, No. 1. PC maker Compaq said, to far less notice, that it would be including a similar software and DVD package in its $2,400 Presario computers this March.
Consumers with these machines will be able to copy a DVD movie onto their hard drives, then load it onto a blank DVD. Copyrighted DVDs could be duplicated much more easily if the new kits become popular.
But Rich Taylor, spokesman for the Motion Picture Assn. of America, said there was no immediate cause for alarm. “You cannot make a direct digital copy of a DVD without a hacking program that’s available illegally” on the Internet, Taylor said.
In any case, it will take awhile for these DVD applications to work their way into the mainstream. Analyst Gardner said computers costing $3,500 or more make up fewer than 2% of the machines shipped in the U.S.
Still, DVD rewriting could become more affordable, and Apple Marketing Vice President Phil Schiller said between 15% and 50% of iMac buyers already intend to make home movies.
“One of our jobs over the year ahead is to create a market” for the DVD system, he said.
Jobs also said Apple’s delayed new operating system, OS X, will be released on March 24. Jobs said the visually appealing new system will be more powerful and easier to use, with improvements in menus, toolbars and other functions.
