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Jobs says IMac = comeback in consumer market


July 10, 1998
Web posted at: 11:01 AM ET

by Marc Ferranti

NEW YORK (IDG) -- Announcing that Apple would show a profit for its third fiscal quarter, an upbeat Steve Jobs told an audience of Macintosh faithful that the company's new focused product line and re-emergence in the consumer market will ensure future growth and viability of the company for all Mac users.

Steve Jobs, cofounder and interim chief executive officer of Apple, said during his keynote speech opening Macworld that for the third fiscal quarter, ending June 30, the company would show a profit. Full results will be announced next Wednesday, he said, but noted that the quarterly profit makes three quarters in a row that the company has shown net earnings.

The issue of growth is really a crucial piece of the puzzle that Apple has to put in place to answer the questions surrounding its viability, Jobs said.

While over the last year Apple has maintained that it has been a dominant force in the design, publishing and education markets, the company "didn't say that the Mac declined in the consolidated market," Jobs acknowledged in his keynote.

Much of the future growth for Apple will come from the consumer market, with the re-entrance of Apple into the market with the iMac the "Internet Mac" that comes bundled with Microsoft's Internet Explorer.

The iMac will be shipped on Aug. 15, Jobs announced. As previously announced by Apple, the price of the iMac will be kept low, and it will be offered for $1,299 even though it integrates a 233MHz G3 processor, which according to Apple is faster than professional PCs based on the fastest Intel Pentium II chips.

Jobs also announced Wednesday that after getting feedback from users, the iMac would feature a 56K-bit-per-second modem, rather than a 33.6K-bps modem, as previously announced. Other specs discussed by Jobs today appeared to be the same as those originally announced for the machine: 32M bytes of RAM (expandable to 128M bytes), 10/100BaseT Ethernet, a built-in 15-inch backlit display, and USB and infrared ports.

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Jobs' appearance here was unexpected for most of the audience, since Macworld organizers had announced that he would be participating in the keynote address via video linkup. Trotting out onto stage, he mentioned that he had just flown in on the "red-eye" overnight flight from the West Coast.

After taking over the reins as interim CEO last year, Jobs said, "it was very clear after the first month that Apple did not have a compelling product for under $2,000 and [Apple] immediately began a program to build the most kick-ass consumer product" on the market.

A strong consumer product is of interest to business users, since it means that Apple has a better chance of growth and therefore viability for all users, said Scott Klein, an attendee here who works as a project manager for The New York Times Electronic Media Co.

"A strong consumer product will help the company, and this helps people like me who want to continue using Macs, especially for Web content developers and all the other areas where the Mac has been strong. Management has asked me why we're continuing to test for and use Macs. They've stopped saying that."

Jobs noted that Apple also hopes to reach another product milestone by the end of the third calendar quarter by releasing Mac OS 8.5, dubbed Allegro. New search and network file copy features were demonstrated during the keynote by Phil Schiller, vice president of worldwide product marketing.

The new search feature, called Sherlock, lets users search for files on the hard drive and on the Internet using a natural-language search interface. By typing in the expression "cool USB products for iMac, especially printers and floppies," Schiller showed how Sherlock can find all relevant files on the hard drive and rank them according to relevance.

Users can also click on a pull-down control panel to create a summary of documents.

Sherlock can also search the Internet using the same type of natural language interface, and allows users to click on the search engine or engines that they want to implement to get results. Users can save search results using a pop-up folder, and jump right to the document where it is contained on the Web site without going through the site where the search engine (for example, Excite) is located.

Jobs and Schiller also performed a network file copy performance test, using a 300MHz G3 PowerMac connected to another PowerMac running AppleShare over a dedicated 100M-byte Ethernet connection. This was matched against a Compaq Corp. DeskPro running a 400MHz Pentium II, connected to a Dell Computer Corp. server running Windows NT 4.0. While the Apple executives were attempting to show that the Macs would beat the Intel-based machines in copying a 150M-byte image file, the Mac file transfer froze on the first attempt, at which point Schiller cracked, "good thing it's a beta copy."

On a second try, the Macs beat the Intel machines, and Schiller noted that network file transfer is three times faster in the Allegro OS upgrade.

Jobs spent most of the two-hour long keynote referring to Apple's product and growth strategy in a joking reference to U.S. thinker Abraham Maslow's concept of the "human hierarchy of needs," which states that human needs are, in priority of immediacy: physiology, safety, love, esteem and self-actualization.

Jobs' version, applied to the IT market's questions about Apple, was "the Apple hierarchy of skepticism," where questions regarding Apple are ranked in priority: survival, stable business, strategy, applications and growth.

In the last year, Apple has answered issues surrounding survival, business stability and strategy, Jobs said. Apple did this by, respectively, bringing in a new management team and cutting costs; showing several profitable quarters; and simplifying product strategy to center around four basic hardware categories: two basic models, desktop and notebook, in professional and consumer categories.

On the applications side, Jobs noted that since the iMac was introduced 63 days ago, some 177 applications had been announced for the platform.

Ben Waldman, general manager of Mac business at Microsoft, took the stage to promise that "Microsoft has finally understood how to write good Mac software ... products built for the Mac are not Windows applications ported to the Mac but built from the ground up for the Mac."

As far as growth is concerned, Jobs said, the reinvigorated consumer line that the iMac represents is a key factor. Ten million Mac consumer users have aging machines, two to five years old, and this represents a first, big target audience for the new machines.

Marc Ferranti is New York bureau chief for the IDG News Service.
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