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Despite woes, Jobs promises faster chips, cheaper Cubes

Although Apple Computer warns that sales could stay relatively flat in the coming year, chief executive Steve Jobs says the company has no shortage of products in the pipeline.

Although Apple Computer warned Wednesday that sales could stay relatively flat in the coming year, chief executive Steve Jobs said the company has no shortage of new products in the pipeline.

In a conference call with analysts following a disappointing earnings report, Jobs promised that Apple will offer a lower-priced Cube next year and narrow the "megahertz gap" with Intel-based PCs by delivering PowerMacs with faster G4 processors over the next six months.

Jobs also promised that other software and hardware innovations are under development, possibly including an Internet appliance. But Jobs said he couldn't talk about its plans just yet.

"It's the best product lineup I've seen in my career," Jobs pledged.

While calling the PowerMac G4 Cube the "ultimate Macintosh," Jobs acknowledged that looks are not everything and said that many Mac fans found the machine too expensive. In response, Apple is offering rebates, and Jobs promised a lower-cost model in the spring.

Jobs also said he is aware that Apple's computers will either have to perform functions that others cannot or make tasks dramatically simpler if Apple's products are to succeed. He pointed to Apple's iMovie software as an example of the company doing that and said efforts to produce a similarly successful product are under way.

Apple is also clearly counting on its new operating system, OS X, to drive sales. Jobs said the company has sold 60,000 copies of the public beta, or test, version of the system. OS X has a new user interface and is based on an open-source core known as Darwin.

"While no operating system transition can be painless, things are looking very, very good," Jobs said. "Most of the feedback has been overwhelmingly positive."

The new operating system due out early next year was originally supposed to be commercially available by now, but the timetable has been revised several times.

The company will also take advantage of a boost in speed of the G4 processor. Motorola has said that it will release a new generation of G4 chips that will close the speed gap with the processors in the PC world. A 700-MHz G4 is due from Motorola toward the first part of 2001, sources close to the company have said, with a 1-GHz G4 following two to three quarters later.

The G4-based PowerMacs have been topped out at 500 MHz because Motorola and IBM have been unable to supply faster chips, Jobs said.

Apple Power Mac G4 Cube
Apple said its revenue will drop in the current quarter--Apple's fiscal first quarter--as the company looks to burn off excess inventory. But chief financial officer Fred Anderson said that the company could see unit and revenue growth of close to 10 percent in the remainder of fiscal 2001.

For now, Apple is hoping rebates will spur sales and allow it to burn off some of the eight weeks worth of inventory it has in the hands of retailers and distributors.

Gerard Klauer Mattison analyst David Bailey said it is too soon to tell whether the rebates will be enough to give Apple the December quarter sales it seeks.

"We were kind of looking for a sign of how sales were in the weeks since the preannouncement," Bailey said after Apple's conference call with analysts Wednesday. "It doesn't appear those (sales) were much stronger than what they had seen in the first weeks of September."

Jobs also admitted that some customers have been disappointed by early problems with the PowerMac G4 Cube but said the company has worked to minimize the issues, which include blemishes in the clear plastic case and glitches with the power button that led some machines to spontaneously shut down.

"Some customers have mistaken small plastic flow lines in the enclosures for cracks," Jobs said. "None of them are cracks."

However, Jobs said the company did replace some units on which the flow lines were most visible and has worked to make the lines less visible on the machines coming off the production line.

The Internet appliance market is of interest to Apple, Jobs said, but he added that with Internet standards changing so fast, it is hard to make a low-cost appliance that will still be able to surf the Web sites of tomorrow.

"Clearly we're doing some work in this area," Jobs said. "(But) it's a tough challenge."