Apple Unveils Radical Design For the IMac; New Model Comes Out As Sales Have Slumped

     Apple Computer Inc. chief executive Steve Jobs today unveiled a radically new iMac desktop computer that the company hopes will do for sales what the distinctive machine does for computer design.
     The new iMac looks nothing like what Apple has been selling for the past three years, or just about any other desktop computer. It consists of a smooth white base about the size and shape of half a basketball, with a pivoting metal arm holding up a 15-inch flat- panel liquid-crystal display.
     "It has a beauty and a grace that is going to last the next decade," Jobs said as he showed off the machine at the Macworld Expo trade show here.
     The introduction of the new computer comes as sales have begun to slump for the iMac in its original, bulbous configuration. The iMac is Apple's consumer offering for the masses; 6 million have been sold since the product was launched in 1998. In more recent times, though, sales have dropped from 571,000 in Apple's fourth fiscal quarter of 2000 to 294,000 in the same quarter of last year.
     Industry analysts say the company needs to reverse that trend if it is going to expand its tiny share of the desktop computer market, which most estimates place at 4 to 5 percent in the United States. 
     "It looks pretty good," said Daniel Kunstler, a senior analyst with J.P. Morgan in San Francisco. "I do think there is a market- share opportunity."
     The Macworld audience, primed by a week of teasers at Apple's Web site ("Count on being blown away"), reacted with cheers, oohs and aahs as Apple's $1-a-year chief executive touted the new model's features.
     "I think it's gorgeous," said Pat Fauquet, director of Washington Apple Pi, a local Mac user group. "I wish I could buy it today."
She can -- Apple is already taking orders. The machines come with a fast G4 processor and, in its most expensive version, a "Super- Drive" that can record DVDs as well as CDs. A $1,799, SuperDrive- equipped model ships at the end of the month, with $1,499 and $1,299 versions due in February and March.
     The design calls to mind the Power Mac Cube, an earlier, unsuccessful attempt to sell a computer in a small, stylish case. But the new iMac sells for a lot less than the Cube ever did and comes as an all-in-one bundle.
     The iMac does, however, cost more than many Windows-based computers. 
     Analyst David C. Bailey, with New York-based Gerard Klauer Mattison & Co., cited the "relatively high entry price" of the new iMac, saying, "We would expect the demand for the new iMac by non- Apple users to be relatively modest for the next six months."
     On the other hand, Bailey said most PC users aren't shopping for computers at all now -- so Apple can focus on owners of older Macs. Predicting there is enough money to be made that way, Bailey recently raised his forecast for Apple from "hold" to "outperform," going against most other analysts' predictions.
     Jobs's two-hour keynote also included demonstrations of software for Mac OS X, Apple's replacement for the two-decade-old classic Mac operating system, and news that Mac OS X will be the default operating system on new Macs. He also announced lower prices on the iBook laptop and showed off a new iBook with a larger, 14-inch screen.
     But his presentation's core theme was Apple's "digital hub" strategy of turning the Mac into an essential tool to view, create and share digital pictures, music and movies.
     This has become a popular theme in the computer and consumer- electronics industry. The Consumer Electronics Show, running this week in Las Vegas, will feature several other companies' visions of this concept.
     For instance, WebTV founder Steve Perlman is unveiling his new company Moxi Digital's set-top box, which combines cable and satellite TV tuners, a digital-music jukebox, cable-modem Internet access, a personal video recorder for TV broadcasts and a DVD player. The Washington Post Co. is an investor in Perlman's firm.
     And tonight Microsoft Corp. Chairman Bill Gates was scheduled to demonstrate software for Windows XP that lets it control a home- theater system.
     Jobs's contention, though, is that Apple can better deliver what other companies promise because it makes the hardware and software and can tune both to work together elegantly.
     As evidence, Jobs offered Apple's new iPhoto program. Available now as a free download off Apple's site, iPhoto lets Mac OS X users easily import, organize and share photos taken with digital cameras. The program includes online links to order reprints and, for $30, a 10-page hardbound book of their photos.
     The trick for Apple will be to persuade Windows users that they're missing something. Jupiter Media Metrix Inc. analyst Billy Pidgeon expressed skepticism about Apple's ability to convert PC owners; at most, he said, Apple's new products "may help when people are trying to decide one way or another."
     To refute that sort of view, Jobs offered up a crop of numbers in his keynote to show Apple's think-different strategy is working: 125,000 iPod MP3 players sold in the first 60 days, a sale of 36,000 iBooks to the state of Maine for every seventh- and eighth-grader, and the observation that 40 percent of computer sales in Apple's stores are going to non-Mac owners.
Jobs did not talk about updates to Apple's Power Mac desktops, which have seen little change this year. For now, the desktop line continues to top out with the dual-processor 800 MHz machine Apple announced last July -- a speed limit that's begun to nag many Mac users.
     But Fauquet, with Washington Apple Pi, said she could live with that for now, considering everything else that Jobs unveiled. "Was it enough to make us happy today? Yes."