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.
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."
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.
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. |
