Apple ushers in new Mac generation

Apple ushers in new Mac generation
By Kevin Allison
Copyright The Financial Times Limited 2007
Published: August 13 2007 03:00 | Last updated: August 13 2007 03:00


The introduction of the iPhone and the success of the iPod may have led Apple to drop the word computer from its company name, but for Steve Jobs, the Macintosh is as important as ever.

That was the message delivered last week by Apple's co-founder and chief executive as he unveiled the company's latest generation of Macintosh computers before a gaggle of reporters and analysts at Apple's Cupertino, California headquarters.

In a world where customers can browse the internet on an iPhone - Apple's new mobile handset - and upload digital photos and home videos directly to the web, Apple is betting that the future for the personal computer lies in becoming a digital media hub. "Just like the personal computer was originally a productivity software machine, and as that played out the internet came along and it was an internet access machine, we saw the next growth as being the centre of your digital life," Mr Jobs says.

"You take all these pictures - you need to be able to do something with them. You need a digital shoebox."

It is a bet that appears to be paying off. As other PC makers have struggled against fierce price competition and a sluggish US consumer market, Mac sales have been growing at about three times the rate of the broader market over the past four quarters.

With its lowest-priced iMac desktop priced higher than average at $1,199, and with its sleek new designs, Apple is betting that it can continue to grow by targeting the middle and top end of the style-conscious consumer market.

Asked how Apple can continue to compete against rivals offering far less expensive PCs, Mr Jobs scoffs.

"We try to do things at the lowest price we can, but I have to tell you, there is some stuff in our industry that we wouldn't be proud to ship. We can't do it, we can't ship junk," he says. "There's a threshold we can't cross because of who we are. We don't offer stripped-down, lousy products."

While new gadgets such as the iPhone and the iPod have come to dominate Apple's brand image, Macs still account for a majority of Apple's revenues. Last quarter, Apple's Mac revenues were $2.5bn, while sales of iPods totalled $1.6bn, according to company filings.

In spite of its recent growth, Apple remains a niche player in the PC market, largely because it has chosen to ignore the high-volume business customers that account for a majority of PC sales. Recent data from Gartner, the market research group, show that Apple accounted for just under 4 per cent of the overall PC market at the end of the first quarter.

In the consumer market, however, the picture is different. Taking desktops and laptops together, Apple accounted for about 16 per cent of computers sold in retail stores last quarter, according to NPD, the market research firm, up from 13 per cent a year ago. Apple hopes to capitalise on its growing profile in the consumer PC business by continuing to invest in new form factors and software, including Leopard, its new operating system, which is set to ship in October.

That investment was in evidence last week as Mr Jobs demonstrated the new iMac's ability to seamlessly share videos and photos between the web and a growing array of peripheral devices such as the iPod, iPhone, and the Apple TV media player.

"You've seen us bring tremendous investment in new products and software," says Phil Schiller, Apple's head of product marketing.

"We haven't let up one bit in our investment in the Mac. We've been able to make things work together so well. You can have an iPhone without a Mac, but if you have one you can do so much more. It makes the Mac's appeal even greater."