Apple reaching out to Web for visibility and profit

For years Apple computer has claimed its computers can provide a superior digital experience, and now the company is going to try to prove it on the Web.

Michael Kanellos Staff Writer, CNET News.com
Michael Kanellos is editor at large at CNET News.com, where he covers hardware, research and development, start-ups and the tech industry overseas.
Michael Kanellos
4 min read
For years Apple Computer has claimed its computers can provide a superior digital experience, and now the company is going to try to prove it on the Web.

The Cupertino, Calif.-based computer maker is kicking off a number of portal-like services as part of a broad marketing effort that shows off the Macintosh platform.

Free email, e-greeting cards, remote Web storage and personal Web page hosting will be run on company-owned servers and accessed through Apple's corporate site, according to company executives. Apple's new alliance with EarthLink will cross-promote these offerings, and the company may begin to try to squeeze revenue out of its portal-like services.

Apple has tried to leverage the Internet before, most notably with the ill-fated e-World, a proprietary online service, but this time the results could be different. The initiatives don't exactly break new ground, which could turn out to be a positive, analysts said.

"By creating a portal with unique features, Apple hopes to drive consumers to Mac hardware purchases," Gillian Munson, an analyst at MSDW, wrote in a report. "Additionally, while not much detail was provided, the agreement with EarthLink should create a new revenue stream. (That's) not unlike some of the ISP deals we have seen."

Apple won't create a parallel Mac universe with the gamut of sport scores, weather updates and chat rooms that established portals or ISPs provide. Instead, the company will offer select services that will show off its graphics technology or other features of the Mac operating system, according to Peter Lowe, director of Mac OS worldwide product marketing.

An Apple-branded ISP service isn't very likely, for instance, "because there isn't a lot we can do in the access space that is unique," he said. "We're focusing on places where we've got some unique capabilities or the OS has some unique capabilities," he said.

Apple's forthcoming iCard service is grounded in the company's history in catchy graphics and advertising, for example. Other companies produce electronic greeting cards, "but none of them have really great image quality or aesthetic sensibilities," Lowe said. "There is lots of dissatisfaction."

To avoid fashion don'ts, Apple is carefully limiting the number of greeting card images its service will have. Some of the images will come from its successful, if ungrammatical, "Think Different" campaign. Web designer USWeb/CKS worked on some of the images as well, he said.

Operating system advantages will also be touted. The HomePage service, for example, will allow Apple users to set up a personalized Web page in a few steps, Lowe said. KidSafe, a blocking service, will allow Apple users to screen out sites not suitable for kids. Because both the back-end servers running these services and most of the clients will be using Apple software and hardware, the experience is expected to be smoother because few compatibility problems should exist.

"We can marry then together in a way that no one else can do," Lowe said.

Many of the services will require Mac OS 9 or X, providing some incentive to upgrade. Although most are for Mac users only, some, such as the iCard service, can be used by anyone, Lowe added. Further services will follow.

As a side note, Lowe stated that the company has been beefing up its back-end capabilities to handle the new services, announced earlier this week at the Macworld trade show in San Francisco.

The new Internet strategy can be viewed as a showcase of Apple's strengths, one long-time Apple observer said. "Apple never got respect for its innovations with the user interface. Steve (Jobs) wants to win some of that back," Rob Levitus, who has authored several Apple books, earlier told CNET News.com. "These (announcements) are plays to show Apple is an innovator."

While the strategy exists mostly to market Macintosh, profit lies underneath the cause.

Apple isn't selling ad space now on these services because of the touchy nature of customer reaction, but could in the future. "Advertising obviously is always an issue and we'll figure out whether it is appropriate or not," said Lowe.

In addition, premium services may appear. "People may pay additional money for more storage," he hypothesized.

As part of its alliance with EarthLink, Apple invested $200 million in the company and made the ISP the exclusive access provider in its Internet set-up. In turn, "Apple will profit from each new Mac customer that subscribes to EarthLink's ISP service," the company said in a statement.

Will Apple begin to offer $400 rebates or even free ISP service? Lowe wouldn't comment, but said that the company "will work with EarthLink to figure out the best competitive offering."