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Apple's new consumer Macintosh

The so-called iMac sports a radical design and a panoply of features, all for $1,299.

CUPERTINO, California--Apple Computer announced its first product in the spirit of its "Think different" campaign: a desktop system that comes in a translucent case and is stuffed to the gills with features at a low price.

The iMac, harking back to the design of the original Macintosh, Apple's new iMac has a built-in monitor. Otherwise, it's radically different in design and price. At $1,299, the iMac will anchor Apple's reentry into the consumer market, acting CEO Steve Jobs said today at a media briefing here.

"We believe we have an incredibly great shot of coming back in the consumer market...We're going to try to take customers away from the other [PC] guys, but we're also going after the installed base [of Mac users]," Jobs noted.

The interim chief executive estimated that there are 16 million customers that could potentially buy new Macs but have been reluctant to do so because of questions about the company's viability and the lack of a compelling product.

The iMac will fill a big hole in Apple's PC lineup: This is the first new full-blown Macintosh consumer system in over a year. The box comes with a 233-MHz 750 PowerPC processor, a two-toned see-through case that's blue and white, a 4GB hard disk drive, 32MB of memory, built-in networking, an internal modem, and a CD-ROM drive. It also features 512K of high-speed "secondary cache" memory, which boosts performance.

Further, the iMac is the first Mac to feature USB (Universal Serial Bus) technology, which allows "plug-and-play" attachment of peripherals. The technology is being widely used in Intel-based computers. The iMac's keyboard and mouse, for instance, are based on USB.

The USB inclusion is significant because in the past users had to buy printers and other peripherals that could connect to special ports on the Macintosh. With USB, Mac users will be able to plug into the same low-cost infrastructure that makes Windows-based PCs so cost competitive, resulting in lower-priced peripherals.

The initial reaction to the system seems to be positive. Jim Halpin, CEO of CompUSA, one of the largest retailers of personal computers, said: "I think this is the first product that will make [Intel-based] PC buyers buy a Mac."

"They definitely have a product that will get 'mind share.' From a price-performance perspective, it basically beats any competition in [the consumer PC] space," said Tim Bajarin, president of Creative Strategies.

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"Not only will this stem attrition from the education market, but it will help them to start building up the consumer market," said Pieter Hartsook, an independent industry consultant.

Jobs also demonstrated the system against a brand-new Compaq Computer Presario with 400-MHz Pentium II processor by playing a large video file. Predictably, the $1,299 iMac finished before the $2,599 Compaq system.

"When you see one, you are going to want one," enthused Lou Mazzucchelli, an analyst with Gerard Klauer Mattison. "Just think of it as the new Volkswagen. It is unbelievably priced for what you can get.

"The new PowerBooks aren't bad either," Mazzucchelli added, referring to today's unveiling of Apple's fastest notebooks yet.

On Wall Street today, Apple stock climbed further into record territory as it broke the $30 per share mark. Yesterday, it broke past its 52-week high--something it hasn't done in about eight months--climbing to 29.88 and closing at a year high of 29.69.

"It makes me feel like my $35 price target might look conservative sooner rather than later," Mazzuchelli noted. "It [the iMac]is going to be a screaming success."

The system is slated to ship in August, which would be just in time for the critical education selling season.