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Beleaguered Apple

For the believers, there's reason for Apple to be freed of the "beleaguered" tag.

"When are you going to stop using 'beleaguered' in your [Apple] stories?" Apple vice president of worldwide marketing Phil Schiller asked NEWS.COM reporter Jim Davis at a press conference held this Wednesday to announce the iMac consumer system and also new PowerBook notebooks.

Schiller's point: Why tag the company with a negative connotation when it is posting positive results?

A quick search in our database revealed that Jim actually has not used the word in nearly a year. But his colleagues at NEWS.COM have been using it frequently--as recently as this week. And they are not alone. A search for "beleaguered Apple" in AltaVista comes up with 1,219,985 responses. Excite and Inktomi bring up 454,331 and 65,677 responses, respectively, for the same query.

So, at what point does a company deserve to rid itself of that label? When does the Cupertino firm quit seeing sentences like: "Apple's rise in stock price comes amid a number of positive developments for the beleaguered computer maker."?

Apple fans--and executives--obviously believe the time is now.

To be sure, Apple has made strides on several fronts. This week's announcement of the iMac and its otherworldly design appears to have been well received.

Meanwhile, the Macintosh G3 has been a hot seller, and just two weeks ago International Data Corporation put out a report stating that the company has reversed a downward slide in market share. According to IDC, Apple grew its share in the United States to 4 percent in the first quarter of 1998, up from 3.4 percent in the fourth quarter of 1997. It was the first sign of sequential growth since the second quarter of 1997.

Just as important, Apple has posted profits for two consecutive quarters--a feat it hadn't achieved in quite a while--and this week its stock price hit a 52-week high.

For the believers, these are reasons enough for Apple to be freed from the "beleaguered" tag.

But is it really beleaguered no more? For the fact is that revenue growth is not keeping pace. Apple revenues were $1.4 billion in Q2 '98 compared to $1.6 billion for the same period last year.

True, market share has inched up a bit, but Apple is still having a hard time winning users from the Wintel camp. And then there is the question of how Apple reached profitability. By all measures, it has been deep cost-cutting that has helped it attain the numbers. As they say, any idiot can cut costs, but it takes a genius to grow revenues.

Perhaps most important, Apple still has to pull out nearly all the stops to convince software makers to stick with the Mac platform. The latest example of this is Intuit, which announced it was going to stop making a version of its popular Quicken software. Steve Jobs apparently had to use his considerable charm and power of persuasion--not to mention incentives--to convince Intuit to change its mind. Will Apple continue to face this problem if its market share does not grow? I, for one, think Apple is not really out of the woods yet, which means it's still "beleaguered."

But how do you see it? I ask this fully aware of the "passion" some of you Apple fans show in your letters to the editor. But one can always hope for less vitriol and more rational discourse, even from Mac fanatics.

Jai Singh is editor of NEWS.COM.