With a new iMac drawing
inspiration from Pixar's credit sequence, Steve has reintroduced the
midrange desktop that died with the
Cube. As the three models are sensibly and competitively priced
($1,299-$1,799) against Wintel PCs and stunningly designed, they should
reinvigorate the iMac market.
However, although Apple is committed to phasing out the old iMacs,
it will need to keep selling that design at the low end until it can
hit the $799 and $999 price points with a flat screen. Help for this
may be on it's way, as Samsung has just reduced the price of TFTs and
Taiwanese producers are worried about a new price war.
As iMac sales dipped below 300,000 in Q4 (and many of those went to
education), the line was in much need of 
a change in order to attract a higher percentage of the
consumer market. Despite all the hype, with commitments reported by
Morgan Stanley analysts of only 100,000 flat screens a month, a home
run is hoped for rather than expected. Part of this is natural caution
after the failure of the Cube; the other part is the huge question mark
hanging over the global economy.
However, with the current softness in the flat screen market, Apple
should be able to gear up production quickly if the demand is
there.
The other factor which has affected other new product launches is
Motorola's (in)ability to get sufficient G4s out the door. Even if
Apple only sells 100,000 per month of these new models, it will be more
than doubling its requirements for G4s. Releasing a new iMac model a
month will help with the G4s and flat screens, but as IBM also has a G4
production license, Apple may have wisely hedged its bets.
With the continued production of the CRT iMacs at the low end for
education and consumers who want a basic computer, it is easy to see
combined sales for the ranges passing 500,000 per quarter again.
According to the Taipei Times, Quanta will produce up to 1 million new
iMacs and 600,000 of the LCD screens. Hon Hai, which provides CRTs for
the old iMac, is contracted for up to 800,000 monitors.
Against this expected surge in iMac sales, Power Mac sales will drop
considerably. Current Power Mac single processor versions offer little
more than iMacs, don't have the screen, and are higher priced.
Professional users will wait for the line to be refreshed later this
quarter before deciding what to buy.
The New 
iBook
The 14" iBook fills an obvious
gap, particularly when compared to the Wintel lineups. The new model
would be even more attractive if it offered higher resolution. However,
it is the TiBook that my Wintel
using friends want, so a price cut or a new base model might have been
more effective.
OS X/iPhoto
PowerBooks, Power Macs, and the new iMacs all have G4s, so systems
optimised for OS X will soon be over 50% of new sales. It's
therefore a good time to make OS X the default. New users are
unlikely to even try OS 9.2, and anyone upgrading their system will try
out OS X. There should soon be some serious momentum behind
OS X, and makers of those 2,500 available applications will start
to see a return on their investment.
iPhoto has generally received good reviews and adds to the
attractive bundle of software on each machine. It is also another
carrot to tempt Mac users into paying $129 and upgrading to OS X.
With a few more products like this, most of them won't resist
temptation.
iPod
Now that the iPod has sold 125,000 in under 60 days, it is well on
the way to being at least a modest hit. Sales of these quantities
should start to drive down the component prices and allow Apple to cut
the retail price before competitive products reach the marketplace.
However, sales will need to reach at least 500,000 per quarter to add
substantially to turnover and hence to the bottom line in their own
right.
iPod can be seen as a great demonstrator of Apple technology. To
this end it makes sense to encourage companies like Mediafour to put
out Windows programs which interface with iPod and MP3 programs. This
will increase adoption of FireWire and get more Wintel users enjoying
Apple kit. Then when they buy their next computer they will seriously
consider moving to Macs and iTunes.
For iPod to become a breakout product, it needs to be more than an
MP3 player and a backup drive for Macs. Making it easy to use with
camcorders/iMovie and digital cameras/iPhoto would take iPod into a new
and rapidly growing market and reinforce Apple's digital hub
strategy.
Other thoughts on iPod can be seen in iPod: More than an MP3 player.
Apple Retail
With over 800,00 visitors in the pre-Christmas period and 40% of
customers not owning a Mac, the stores are clearly helping to grow
Apple's market share. As the web site traffic reportedly was also up by
70% in December (to over 1.7M), all these visitors haven't come at the
expense of online sales. Let's hope that this encouraging trend
continues and the stores break even as forecast for the next three
quarters.
Previous thoughts on this are in Apple's Retail Grab: What Risk?, Apple's Retail Grab: Crunch Time, and Apple's Retail Grab: The Future.
It was an encouraging keynote, but not worth the hype - except for
upstaging Gates and Perlman and their digital hub
strategies.
The share price has followed the saw "buy on rumor, sell on news"
and ended lower all week. It also hasn't been helped by the Merrill
Lynch cautionary note suggesting Q1 sales were at most 1.4bn.
Next week we will see the Q1 financials and know what is really
underpinning the share price. 
