Anticipating the iMac

Since it was unveiled in April, the iMac has captured the imagination of the Apple faithful. With its two-toned casing and built-in monitor, the iMac is being touted as the next "insanely great" thing so characteristic of Steve Jobs's Apple of old. Between the hype and its price of $1,299, the iMac, sans floppy drive, is expected to be one of the company's most popular computers in years once it hits the retail shelves Saturday. See CNET?s review of the iMac. But in spite of its purchase incentives, teal accents, and cutting-edge design, industry analysts say the iMac will likely be a tough sell beyond the aficionados in any large numbers. They note that Apple still faces the traditional concerns of fending off the gigantic Microsoft-Intel juggernaut and its cadre of fiercely competitive computer makers offering feature-rich but low-cost computers. "You can get a PC and a monitor in the $800 range. You can get a PC, monitor, and printer for $899," said David Goldstein, president of Channel Marketing Corporation, a retail consultancy. He said new consumers can well see the logic in those numbers. For now, however, Apple is doing its best to overcome that perception with a cutting-edge industrial design, a reasonably low price, and a full panoply of hardware. Announcing huge preorders is helping to build a buyers' psychology for the launch, while news of hundreds of new and upgraded software titles is designed to dispel beliefs that the Mac market lacks enough programs compared with Windows-based PCs. Earlier this week, the Cupertino, California, company 2.8M said that there are more than 150,000 advance orders for the iMac. Apple also touted the availability of 460 new or upgraded software titles for the Mac operating system that have been introduced since the unveiling of the iMac. "It's a big deal. We've put a tremendous amount of energy into this launch," said Paul Ramirez, vice president of marketing for ComputerWare, which operates ten stores in California and claims to be the largest Mac-only dealer in America. "To have 700 back orders with a computer that hasn't been demoed--that's amazing." Apple says it has an installed base in the consumer market of around 10 million customers, and demand from this user base alone should keep Apple profitable for some time. Demand among buyers hoping to upgrade current Macintoshes is expected to lead to sales of 500,000 to 800,000 units in the first six months, according to various estimates, which would make it one of the hottest-selling Apple models in history. In response, ComputerWare is running a trade-in incentive program, where customers can have their old Macintosh Performas appraised for resale value (including peripheral devices) and have added $150 to the total value of the trade-in. The vendor is also bundling extra software and specially designed T-shirts. "Our belief is that with the iMac there is a large upgrade and replacement constituency," Ramirez said. At $1,299, the iMac does represent one of the better Macintosh deals in a long time. But the new unit is facing a market that has seen PC prices plummet drastically in the past 18 months because of component price drops, high inventories, and fierce competition. A scan for PCs among electronic resellers such as MicroWarehouse and CompUSA turned up name-brand systems with 233-MHz and 266-MHz Pentium II-based processors for $719 to $949. More than a few had everything the iMac offers, and at least one from Compaq Computer comes with extras like a printer for less than the iMac (see chart). Less powerful processors brought even better buys. For example, a Compaq Deskpro 4000 desktop with a 166-MHz MMX Pentium sells for $499 at resellers such as MicroWarehouse. The all-in-one pricing also will affect 2M Senior reporter Michael Kanellos on Apple's manufacturing problems sales. Because the iMac will only sell for $1,299, Apple is effectively blocking itself out of the $799, $999, and $1,100 markets. "The broader the price points, the broader the market," Goldstein noted. "There will be tremendous demand for the iMac. They will sell every unit they make...but I don't see anything there, especially based on the price, to entice the PC customer to the platform," added Tim Bajarin, president of Creative Strategies. Outside of the consumer market, there does seem to be a place for the iMac among style-conscious PC owners and at trendy small businesses looking for an attractive desktop computer. Seattle, Washington-based Westwind Computing, which sells mainly to businesses, expects to sell a number of iMacs. Cisco de la Vega, a corporate accounts manager at Westwind, said with a sense of irony that several iMacs have been ordered by ex-Microsoft employees who have started up a new multimedia company. The iMacs also will find a niche on receptionists' desks, he noted. Others say the iMac's new look could backfire. "The challenge with an interesting design is that 50 percent of the people will love it and 50 percent of the people will hate it," said James Staten, hardware analyst with Dataquest. "Because these are Apple customers, and Apple customers are more interested in new designs, it will be more like 70-30, but a lot of people do not want an all-in-one device or a glowing green thing in their living room." Go to: Dark side of the iMac

Anticipating the iMac

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