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Apple harbors high hopes for iMac

Apple has harsh words for its PC rivals, arguing its own record of innovation will carry it through the consumer slump.

With the launch this week of the new flat-panel iMac computer, Apple says it showed its strategy for riding out the current slump in PC sales and general consumer confidence: release compelling products, and the buyers will come.

Apple believes the combination of new iMac and iBook computers, along with recent refinements to the new Mac OS X operating system and new software, will keep the company competitive even as the big PC makers are slashing prices and making massive layoffs.

"On the PC side, there has been no new innovation to the platform in a considerable length of time," said Apple UK's managing director, Mark Rogers. "The only real reason to upgrade is for the faster processor, and you can get to the point where a faster processor doesn't bring much benefit. People aren't using the speed they have already."

Apple's real innovation, the company argues, is not just striking industrial design; it is creating a "digital hub" for a variety of consumer products, something also talked about by the likes of Intel and Microsoft. The idea is that your iMac or iBook brings together all the pieces of a digital lifestyle, like video cameras, digital still cameras and digital music players, with features such as video editing, DVD and CD burning, photo editing and music playing.

"If you turn the Mac into the center of that digital hub, we see that as a real reason to upgrade your machine," Rogers said.

The four keys to this strategy in terms of software are iMovie, iTunes, iDVD and finally iPhoto, which made its debut this week at Macworld. Apple also says that the addition of the SuperDrive CD- and DVD-burner to the iMac range is the first time any hardware company has made DVD creation affordable for a mass market. The industrial design aspect fits into this strategy, because Apple wants consumers to feel comfortable displaying their computer in the living room.

Rogers is quick to point out that the new iMac isn't just a style upgrade, but also includes a boost to raw processor power, adding the G4 chip to the line for the first time and adding the Velocity Engine accelerator.

That power boost may create a new problem, however, since buyers could choose the high-end iMac, with its 800MHz processor, over the more expensive Power Mac G4 line. Rogers said that professionals would still choose the Power Mac because of its greater expandability -- the iMac is basically restricted to adding memory or an AirPort wireless network. He said Apple would widen the gap between the two lines again sometime this year with new Power Macs.

Apple also introduced iBook laptops with larger 14-inch screens at Macworld.

The decision to make OS X the default operating system on all new Macs has also drawn controversy, since many consider the software not yet up to scratch. OS X, which has been completely re-engineered on a Unix base, has been available on new Macs for several months, but only as an option. Microsoft has released its Office suite for OS X, but other key applications, notably Adobe's Photoshop, are not yet on the shelves. (Adobe has committed to bringing Photoshop to Mac OS X, but there is not yet a release date.)

Apple emphasizes that some glitches are inevitable in a major OS rollout -- including the recently-launched Windows XP -- but says the software is now at a point where consumers shouldn't need to switch back to earlier versions of the OS. "At this point the software is in a situation where it is very, very stable and solid. We've introduced some of the features not in the original product, like CD burning, and it can now compete as effectively as Windows XP," Rogers said. "If you look at XP, there are a lot more applications that don't work. At some point you've got to take the plunge."

Rogers said Apple is optimistic about the economic situation in the UK, particularly after a strong Christmas season and reports of improving consumer confidence. "We are reasonably comfortable that things are stable. We don't expect things to deteriorate," he said. "In any case, new products for us are key. We have shown that we are able to buck trends when we introduce new products that are revolutionary."