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Gartner: Mixed marks for Apple's new iMacs

Apple is stressing its new iMac's industrial design and fashion as its primary competitive advantages. But Gartner Group has some concerns regarding price and upgradability.

    COMMENTARY--The new iMac from Apple Computer is the company's latest attempt to bring back focus to the PC industry by positioning the iMac as the "digital hub" for interactions with digital content.

    Most noteworthy is the new iMac's stylish design, which focuses on the half-sphere CPU base and pivoting flat-panel display. As it did with the first iMac, the iPod and the Cube, Apple is stressing the new iMac's industrial design and fashion as its primary competitive advantages.

    Gartner considers this new iMac introduction to be good news, because a product update was long overdue. iMac sales initially reinvigorated the company, but peaked in 1999. However, Gartner has some concerns regarding price and upgradability, and the applicability for education and large enterprise customers.

    The 15-inch, flat-panel display, while gaining traction in the market, is still considerably more expensive than a comparable 17-inch CRT (cathode-ray tube) monitor. During tougher economic times, consumers naturally desire to stretch their PC expenditures farther. While such thin film transistor (TFT) displays are desirable, they are not yet necessarily affordable.

    Although the new design will play well with the Apple faithful and consumers looking for a stylish PC, the announcement does not mark Apple's re-entry to the broader corporate market.

    Moreover, Gartner believes that if Apple offers only a TFT-display version of the new iMac, it will face a sales challenge with the system in the niche education market, in particular the K-12 sector. Schools typically have less money to spend on new PCs than other segments. With x86/Windows-based PCs pricing between $400 and $600 less than an iMac, and without significant discounts from Apple, schools would be hard pressed to justify the additional cost of an iMac. Therefore, it seems that Apple would be motivated to offer a CRT version of the new iMac for the education market or significant education market discounts.

    Another potential problem with the new iMac display is that it is tightly coupled to the CPU, making reuse of the display with a new CPU in the future impossible, and maintenance difficult.

    For large enterprises using Power Mac G4, the new iMac is a lower-cost alternative, but iMac comes with a limited one-year warranty.

    For mainstream corporate Mac customers, the iMac is a reasonable option. Engineering and graphics arts customers may still prefer the expandability and availability of dual processors in the G4 models. Education customers will have to consider whether they can still afford to buy Macs.

    (For a related commentary on Apple's challenges in the education market, see Gartner.com.)

    Entire contents, Copyright © 2002 Gartner, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.