Apple's New Crop

By David S. Jackson/Cupertino

Depending on your point of view, the translucent blue iMac computer introduced by Apple last week is either the coolest or the weirdest-looking personal computer ever made. It's fast, it's cheap, and if you're looking for a cute little PC to go with one of those new Volkswagen Beetles, this is the one.

The only question is, Will the iMac be good enough to save the company? The stakes are that high for Apple, and no one knows better than Apple co-founder and semipermanent "interim" CEO Steve Jobs. "We're the last company left that can bet the company on a new idea," he says. "This is Apple's future."

That Apple even had a future was debatable last year. The company's market share had plummeted to around 3%, and even die-hard Mac fans were defecting to Windows machines. Morale was terrible, and employee attrition was heading toward 33%. But things changed quickly last July, after Jobs rejoined the firm as an adviser, a decade after he was forced out as chairman. CEO Gil Amelio, who had slashed the payroll and reduced operating costs, needed Jobs to add the one thing he couldn't provide: a little excitement.

Which Jobs promptly did, by ousting Amelio.

Jobs had never been known as a great manager, but he's proving better at it the second time around, pruning the product line and simplifying the marketing. Apple was churning out 15 different computers with such forgettable names as the 3400 and 4400, but not one was aimed at the fastest-growing segment of the market: buyers looking for a cheap machine for the home.

So Jobs halted production and cut the line to just two categories: consumer and professional. Then he ordered his technicians to come up with one desktop and one portable computer for each.

The first entry in the professional line, aimed at maintaining Apple's traditional strength in the desktop publishing and design markets, came out in November. It was an immediate hit. The new Power Mac G3 has sold more than 500,000 units, making it Apple's fastest-selling computer ever. The laptop version, called the PowerBook G3, was released last week to rave reviews. It features optional enlarged screens and Apple PowerPC G3 microprocessors, which computer magazines have rated at up to twice the speed of comparable Pentiums.

The iMac is for the rest of us, or so Jobs hopes. Apple desperately needs a new model that will retain the company's loyal users in the education market as well as appeal to all those first-time buyers looking for an easy way to get on the Internet. "We decided," Jobs says, "that we were going to get back into the consumer market with a vengeance."

An eye-catching vengeance it is. The one-piece iMac will hit the shelves in August, and Jobs plans to spend a big chunk of his $100 million marketing budget to give it a good kickoff. The iMac will include a speedy 233-MHz G3 chip, a 24X CD-ROM drive, a 15-in. monitor and Apple's famously user-friendly operating system, Mac OS, which will be compatible with existing Macintosh software. Its 32MB of memory should keep most users from having to upgrade anytime soon (although easy-to-access innards will make it easy to do so), and the 4-GB hard drive is big enough to hold years of even the most bloated software and games.

Since the iMac is being billed as the easiest way to get up and running on the Internet, it will come with an improved America Online program for Macs that AOL will release in time for the iMac's debut. "Having a revitalized, aggressive Apple in the marketplace is terrific for us," says Robert Pittman, president and CEO of AOL Networks. "More interest generated by computers helps us, more focus on consumers helps us, and easier-to-use, consumer-friendly computers help us. The new iMac is all that wrapped into one."

The biggest drawback for some buyers may be the lack of a floppy-disk drive (most software comes on CDs now anyway) and the 33.6-Kbps modem is poky even for a low-end machine. But many analysts think the iMac will be a winner. "It's a spectacular machine," says independent market analyst Pieter Hartsook. "Apple has been living off its user base for years, but this is going to attract people who don't even own a computer." Eric Lewis, an analyst for International Data Corp., agrees: "It will give consumers a reason at least to take a look at Macs, which they haven't done for some time."

Apple's style-conscious designers spent weeks refining everything from the color (they call it Bondi blue, after an Australian beach) to the size of the translucent baffles on the front (they wanted to give it the illusion of depth but not be too transparent). They even consulted an expert in candy making to learn how to reliably reproduce its tricky color on production lines. If the final result strikes some users as looking more like a beach toy than a computer, that's just fine with design chief Jonathan Ive. "Steve said, 'Don't make it look like a computer,'" Ive says with a smile.

Why didn't Apple do something this bold before? Apple board member William Campbell, CEO of Intuit, says the answer is simple: "They didn't have Steve." Jobs is for once uncharacteristically modest. "A crisis," he says with a shrug, "is a wonderful time to make some changes."

That might also include the CEO's chair. Jobs still insists he's only keeping it warm until a full-time boss is hired, which would allow him to return to Pixar, his software-animation company. But finding someone who is willing to work in his shadow is proving difficult.

Still, whoever gets the job will find the mood inside Apple considerably improved. Last month Jobs announced the company's first back-to-back profitable quarters since 1995, and employees are buzzing about the new ad campaign tweaking Intel's Pentium chips. Executives are talking hopefully of wooing back the software developers who gave up on the Mac market, and everybody hopes that the consumers who shied away from buying Macs because of concerns about the company's health will now give them another look. "Apple is back," insists senior vice president Mitchell Mandich. "Morale's up, and people are excited again. They know what we're focused on." He says the new iMac will even "help us be cool again." Cool is good. But having a double-digit market share again would be even better.