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May 7, 1998
Apple Rolls Out Bold Answer
To the Sub-$1,000 PC Market
By JIM CARLTON
Staff Reporter of THE WALL STREET JOURNAL
CUPERTINO, Calif. -- Apple Computer Inc. unveiled a translucent,
one-piece computer that finally lives up to the company's "Think
Different" slogan.
The $1,299 iMac machine, Apple's long-awaited answer to the sub-$1,000
computer, was a surprise development at an event hosted by interim Chief
Executive Officer Steve Jobs. Although priced somewhat higher, the
machine is competitive because the price includes a monitor and its
PowerPC G3 microprocessor displays graphics at a faster speed than rival
computers based on Intel Corp.'s Pentium II chip.
Company Profile: Apple Computer
Join the Discussion: What other moves do you expect Apple to make as it
tries to rebound?
But the machine is most likely to make waves because of its unusual
design, which combines Jetsons-style aesthetics with the original
one-piece concept of the first Macintosh. All of the computer's
circuitry and monitor are contained inside a turquoise and gray,
see-through case. The keyboard keys are also translucent, and a
redesigned mouse lights up when the machine is in use.
"It looks like it's from another planet -- a good planet," Mr. Jobs
said. "One with better designers."
Grabbing Eyeballs
Some analysts immediately began comparing the iMac to the new Volkswagen
Beetle, both for its ability to attract attention and prospects that
Apple might finally begin to win some sales outside of longtime
Macintosh users.
"This really embodies the spirit of Apple being a revolutionary, cool
company," said Pieter Hartsook, an industry analyst in Saratoga, Calif.
"I think there is an opportunity here for Apple not only to sell to its
existing customers, but to bring in some new ones."
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ÿÿ Jobs on New Products
Apple's Steve Jobs discusses the firm's new products.
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The machine also marks the first real attempt by Mr. Jobs, co-founder of
Apple, to again put his stamp on Apple's product design. In a speech
before the media and employees here Wednesday to unveil Apple's new
product strategy, Mr. Jobs predicted the iMac and other new computers
will help the company continue a reversal in market share that began six
months ago. The company's share of the global PC market stood at 4% in
the first quarter, up from 3.4% in the prior period. Apple's revenue is
continuing a slide of more than two years, although company executives
have predicted that growth will resume later this year.
"This company can be great again and I think we're on the way to it,"
Mr. Jobs said on the same auditorium stage where he introduced the
Macintosh in 1984.
Apple Computers interim chief executive Steve Jobs unveils the new iMac
computer in Cupertino, Calif., Wednesday.
Breaking from conventional styling, of course, is no guarantee of
success. Other manufacturers, including Taiwan's Acer Inc., have
experimented with sleek PC designs without attaining any major boost in
sales. Most have since focused their efforts mostly on pushing PC prices
below $800.
One Step in a Long Haul
"This iMac is not the panacea," said Seymour Merrin, an industry analyst
in Menlo Park, Calif. "What Steve loves, not everybody does."
Indeed, the iMac features one gaping omission that some analysts fear
could impair sales: The lack of an internal floppy disk drive to make
backups of files. The computer also lacks the same expandability of
comparably configured PCs, and features a slower 33.6
kilobytes-per-second modem than the 56K modems used in many other
low-end models. "This is a radical step, a gamble by Apple," said Eric
Lewis, analyst at International Data Corp., a market-research firm in
Framingham, Mass. "There will be customers who love it and those who are
turned off."
Apple desperately needs to boost unit sales to attract software
developers to continue writing programs for the Macintosh. Mr. Jobs
recently managed to persuade Intuit Inc. to reverse its recent decision
to quit developing its Quicken personal-finance program for the Mac, and
he is scheduled to outline Apple's software strategy before a gathering
of Macintosh developers next week.
In any case, the iMac should at least give Apple a psychological boost
as it prepares for the rest of the year. When the machine starts
shipping in August, as planned, company officials say they will target
sales to existing Mac customers as well as schools and new users. "I
can't imagine anyone going into a computer store and not being drawn
like a magnet to this computer to check it out," said Phil Schiller,
Apple's vice president of product marketing. "We certainly believe there
will be more demand for it than we'll ever meet initially."
To underscore iMac's strategic importance to Apple, Mr. Jobs unveiled
the machine amid some of the same theatrics he used to roll out the
first Macintosh. Speaking from that same auditorium stage, at a local
college, and uncharacteristically wearing a suit, as he did back then,
Mr. Jobs pulled away a cloth concealing the computer to reveal its
screen saying, "Hello Again." The original Mac had "Hello" written on
its screen. To loud applause from about 2,000 assembled employees, he
put the machine through a series of demonstrations, and ran a video of
industry testimonials.
"We're going to sell tons of "em," James Halpin, chief executive officer
of the CompUSA Inc. superstore chain, predicted in the video.
Also Wednesday, Mr. Jobs introduced a more-powerful laptop machine based
on the powerful G3 chip, starting at $2,299, and outlined a strategy for
the company to compete in just four product categories rather than the
dozens before he took over last year. The categories include desktop and
portable Macs for the professional market, such as desktop publishing,
and desktops and laptops for the consumer market, including home and
schools. Mr. Jobs said Apple will introduce a low-cost portable consumer
model next year. Apple is backing the new products with a $50 million
advertising blitz over the next six months.
Apple's shares continued an upward roll on the announcements, closing up
62.5 cents to a 52-week high of $30.3125 in Nasdaq Stock Market trading
Wednesday.
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