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iMac sales boost Apple now, but longevity still uncertain

August 14, 1998
Web posted at: 3:40 PM EDT

by Rebecca Sykes


(IDG) -- Apple said this week it received 150,000 orders for its new iMac consumer desktop PC, which goes on sale in retail stores Saturday. The company also maintained that more than 460 new or upgraded software applications, and 35 new hardware products, have been announced for the Mac since iMac's introduction in May.

Those numbers are good news for Apple's customer base -- and for Apple in the short term -- but do not necessarily herald the winning over of new customers to the Macintosh, which Apple must achieve in order to succeed in the long term, analysts said Tuesday.

The iMac's here, but where's Apple?
The iMac is priced at $1,299 and includes a 233-MHz PowerPC G3 processor, a 4GB hard disk drive, and a built-in 56Kbps modem, and analysts said that Mac users will be well-served by the machine.

"This is fundamentally meeting the needs of existing users, (which) is a viable game plan for the short term," said Tim Bajarin, president of Creative Strategies, in San Jose, Calif.

Another analyst agreed.

"I expect that among the Mac customer base (the iMac) will be extremely popular," said James Staten, an analyst with market researcher Dataquest, also in San Jose.

Apple anticipates selling around 800,000 of the new PCs between now and December, which analysts said was a perfectly realistic, and impressive, goal.

"Our sense is that they will sell all that they can make in calendar year 1998," said Creative Strategies' Bajarin. "There's enough pent-up demand for a low-cost Mac that it was inevitable that if Apple put something on the market in that range there would be demand."

Apple will begin taking orders for the iMac on its Web site, The Apple Store beginning Oct. 1, the company said in a statement.

Dataquest's Staten said the iMac is a return to Apple's roots in terms of its all-in-one design. The monitor is built in, the case is unique, and Apple engineers, no doubt directed by acting chief executive officer Steve Jobs, have paid attention to ease-of-use issues such as replacing the keyboard connector in the back of the machine with Universal Serial Bus ports in the front, Staten said.

The new Macintosh hardware devices announced since May include "numerous Universal Serial Bus (USB)-based printers, digital cameras, floppy drives, and scanners," Apple said in a statement.

The company on Tuesday did not return phone calls seeking more specific information.

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However, the iMac may not have what it takes to convince people buying a computer for the first time to buy a Macintosh instead of a PC, analysts said.

New users care about price and the availability of software, and Apple's very real success with bringing down the cost of a Mac and keeping its developer base alive nonetheless pales in comparison to the sub-$1,000 PC and the software available for it, analysts said.

At $1,299 the iMac isn't really expensive, but it will be sitting next to $999 PCs in the store, Staten said.

"The price is a little bit high for that space" of consumers making their first PC purchase, he said.

Creative Strategies' Bajarin agreed.

"The bargain prices you get in the sub-$1,000 PC category are exceptional," Bajarin said. "A new user is going to be much more easily swayed to the IBM world than they are to the Mac world."

Moreover, the same design features which endear Macs to Mac loyalists may discourage new users from buying a Mac, according to Staten. Apple's all-in-one design could scare off someone who enters a store with a set of specs the guy down the street told them to make sure to buy, Staten said. For example, the iMac has a built-in 15-inch monitor, no floppy drive, and links only via the new USB port to peripherals such as printers, which could be problematic for some users, he said.

The absence of a serial port on the iMac "kind of forces people to upgrade" to USB printers, Staten said.

Still, if it remains to be seen whether the iMac can pull in new users, the new Mac sends an important and much-needed signal that Apple is not yet out of the game, analysts said.

Apple needed to show that the Mac market is real, that they're committed to it, and that developers should still develop for it, and the iMac does that, Staten said.

"What Apple's biggest problem has been is that people have not had faith in the company (and) for this product to be a big hit ... that's like a booster shot for the company," Staten said.

Rebecca Sykes is a Boston correspondent for the IDG News Service. Torsten Busse in San Francisco contributed to this story.

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