Apple Debuts iMac

With so many of the nation's kindergarten through 12th-grade schools and many colleges holding a large installed base of Macintosh technology, Apple Computer Inc. is hoping to score big among school administrators with its new iMac desktop computer.

The iMac is priced at $1,299 and includes a 233 MHz PowerPC G3 processor, a 4G hard disk drive and a built-in 56 kilobits/sec modem. More than 460 new or upgraded software applications and 35 new hardware products have been announced for the Mac since iMac's introduction in May, Apple said.

Some schools are already sending in orders. The Virtual School project in Winona, Minn., ordered 500 iMacs for a project to connect the homes of students at nine area schools. "The iMac is a good, solid decision for us," said Joan Bernard, project director at the school. "We think that Apple is not only going to make a splash in the market with the new product but [that it] will stay around. It's not just for Mac fanatics."

Winona decided on the iMac in part because Virtual School participants already had an installed Macintosh base. "All of our schools are Macintosh-based, and we wanted to support those schools' existing curriculum," Bernard said.

Market watchers have been impressed with initial sales figures Apple is purporting. However, there is no indication yet that iMac will necessarily herald the winning over of new customers to the Macintosh-a feat Apple must achieve in order to succeed in the long term, several analysts said.

"This is fundamentally meeting the needs of existing users, [which] is a viable game plan for the short term," said Tim Bajarin, president of Creative Strategies Inc., San Jose, Calif.

James Staten, an analyst with market researcher Dataquest Inc., also in San Jose, said, "I expect that among the Mac customer base, [the iMac] will be extremely popular."

Apple anticipates selling around 800,000 of the new computers between now and December, which analysts said is a realistic goal. "Our sense is that they will sell all that they can make in calendar year 1998," Bajarin said. "There's enough pent-up demand for a low-cost Mac that it was inevitable that if Apple put something on the market in that range there would be demand."

Dataquest's Staten said the iMac is a return to Apple's roots in terms of its all-in-one design. The monitor is built-in, and the case is unique. Apple engineers, no doubt directed by acting chief executive officer Steve Jobs, have also paid attention to ease-of-use issues such as replacing the keyboard connector in the back of the machine with Universal Serial Bus (USB) ports in the front, Staten said.

But the fact that the iMac has no floppy drive might be a problem. "It was a big decision to choose the iMac to put in every home of all our students," Bernard said. "It comes without a floppy drive. How do you explain that to moms and dads who have vintage Apple games and who often want to back up their work? Our solution to that is that we will have a server [that] they will be able to access via the World Wide Web, where they can back up information in a secure family file.

"Winona plans to back up files on a remote server. "That has eased the fear and will help wean them from the floppy drive," Bernard said. "The truth of the matter is that those drives don't really get used, and they are real dust collectors. They can be expensive to replace, and we wanted to make our investments elsewhere."

There are other decisions users must make when selecting the iMac. The absence of a serial port on the iMac "kind of forces people to upgrade" to USB printers, Staten said.

And Apple may have trouble convincing educators who are buying a computer for the first time to buy a Macintosh instead of a PC. While new users care about price and the availability of software, Apple's success in bringing down the cost of a Mac and keeping its developer base alive nonetheless pales in comparison to the sub-$1,000 PC and the software available for it, analysts said. At $1,299, the iMac isn't really expensive, but it will be sitting next to $999 PCs in the store, Staten said.

Still, while it remains to be seen whether the iMac can pull in new users, the new Mac sends an important and much-needed signal that Apple is not yet out of the game, analysts said.

Apple needed to show that the Mac market is real, that the company is committed to it and that developers should still develop for it, and the iMac does all that. "What Apple's biggest problem has been is that people have not had faith in the company, [and] for this product to be a big hit...that's like a booster shot for the company," Staten said.