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Apple reshuffles lineup

Apple is set to revamp its Performa and Power Mac lines against a backdrop of competition from Mac clone makers and sagging sales of consumer systems.

In the wake of lackluster Christmas sales, Apple (AAPL) is set to refresh its Performa and Power Macintosh lines against a backdrop of increasing competition from Mac clone vendors.

In early February, the entire Power Mac line will get increases in processor speeds while prices will remain the same, say sources close to the company. At the top of the line, the 9500 that is used in medical, scientific and publishing markets will be replaced by the 9600. The 9600 will be offered in single and dual-processor versions with the 200-MHz 604e and will be upgradable to faster processors as they become available.

Both the 9600 and 8600 models will be housed in a new chassis that has been designed for easier access to components such as memory and drive bays, according to sources. Apple is still investigating whether or not they will offer Zip drives from Iomega in appropriate markets but hasn't made a final decision yet.

Apple is also expected to refresh its consumer line starting sometime in the second quarter. The Performas will reportedly get a new desktop unit with a motherboard designed by Apple and Motorola that will offer increased expandability and the ability to use PC-compatible keyboards and mouse controllers. Other models will get 3D graphics accelerators and DVD-ROM drives as well as 12X CD-ROM drives.

Sluggish sales of Performas were singled out by Apple as being the driving reason behind a $120 million dollar loss for its most recently completed quarter. It's not clear whether incremental increases to processor speed can stir up interest again on the consumer side.

"The main thing Apple has to respond to is its Performa line. Apple, along with other PC vendors, all figured on second-time buyers coming into stores in the Christmas season and put the majority of their product into the $2,000 and $3,000 range. When people came into the stores, they wanted machines for $1,500," said James Staten, an analyst with the market research firm Dataquest.

That miscalculation cost Apple dearly, because even though it had product at the right price point, it didn't have enough of them, Staten noted.

Another other issue Staten feels Apple needs to address is the popularity of such PCs as Toshiba's Infinia and IBM's S-series Aptiva, which offered features such as push-button control panels and unique case designs. On the inside, the Performas will need to have multimedia acceleration to counter Intel's MMX technology.

What Apple did do right is match processor speeds with those on the IBM PC-compatible side, Staten said. "From a comparison versus other Mac clone vendors, it was behind, but we don't see this as critical," he added. As long as they are ahead of Intel systems on retail shelves, consumers will perceive a performance advantage for the Apple systems.

Relative to other clone vendors such as Motorola and Power Computing, Apple's Power Mac systems are indeed lagging behind in markets that perhaps are the most performance-sensitive. Recently, Power Computing introduced two new multiprocessing systems. The PowerTower Pro 250MP features dual PowerPC 604e 250-MHz processors while the PowerTower Pro 225 MP has dual 604e 225-MHz processors. Apple's 9500MP has dual 180-MHz 604e PowerPC processors.

But while Apple may be following clone makers in the clock-speed race in order to remain price competitive, Apple has plans to become more competitive in other areas as well.

For instance, in late 1997 the company is planning a high-end graphics accelerator card for use in media authoring that uses two 100-MHz Trimedia processors from Philips Semiconductors. The card will also have a FireWire connection for moving video in and out of the system in real time for professional-quality video manipulation.

According to Apple, other performance enhancements will come later this year in the form of higher bus speeds and improvements to the processor's cache, which helps to ensure a steady diet of information for fast processors.