Apple

Adam L. Beberg beberg@mithral.com
Sun, 6 Jan 2002 22:57:24 -0800 (PST)


Well, the press completely screwed over Steve Jobs and Apple yet again -
even Bin Laden gets more respect. Time Canada published all the Mac World
Expo news on the web ahead of time, so may as well FoRK it.

iMac ... on a stick!

Now if the stick was a 100' optical link to the keyboard/mouse/LCD.. mmmm...

- Adam L. "Duncan" Beberg
  http://www.mithral.com/~beberg/
  beberg@mithral.com

Apple's New Core

Exclusive: How Steve Jobs made a sleek machine that could be the
home-digital hub of the future

BY JOSH QUITTNER

Remember when computers used to be cool? Deep inside One Infinite Loop, the
Silicon Valley address of Apple Computer's Industrial Design Lab, they still
are. Never mind that the Valley is a grim place these days and that the gold
rush has given way to the deep funk. Forget that the Internet bubble has
burst, and that Ma and Pa investors are wearing a what-were-we-thinking?
grimace of fiscal remorse. Right here, right now, sitting on a butcher-block
table, bathed in the sunlight that pours in through spyproof frosted-glass
windows, is-repeat after Steve Jobs now-the quintessence of computational
coolness, the most fabulous desktop machine that you or anyone anywhere has
ever seen.

O.K., maybe that's overstating it somewhat. Maybe that's overstating it a
lot. But it's hard to remain impassive when you're sitting within the
reality-distortion field that surrounds Apple's evangelical CEO when he's
obsessing about the dazzling, never-seen-anything-like-it, ultra-top secret
computer perched before him. This is the new iMac, the long-awaited
successor to the best-selling, candy-colored, all-in-one computer that
revived Apple's consumer sales and signaled that the boss and co-founder was
back and badder than ever. This new iMac, Jobs says, "is the best thing
we've ever done."

Of course, this is Steve Jobs talking, and he says that about every new
product when it's ready to launch. With him, it's always a revolution. But
even when he's wrong, you can be pretty sure that whatever he and Apple are
doing will quickly be copied by the rest of the PC world. So what if you
don't have a Mac? Pay attention: what Jobs does is often the shape of things
to come.

Besides, this time he really means it. This time we need a revolution. This
time the computer industry is in free fall and, all around, the makers of
desktops and laptops are frantically cutting one another's throats even as
they cut costs, vying to be the cheapest box on the block.

Not Apple, though.

Jobs is betting the company that what consumers most want from technology is
control of their digital lives. And what better way to do that than with the
smartest-looking, easiest-to-use, best-engineered computer there is? The
time is right, he says. We are wallowing in digital cameras and camcorders
and MP3 players that get harder to use, not easier. The thing that will
connect us to our gadgets needs to be a digital hub, a computer designed to
simplify our lives. This, Jobs says, is what Apple was meant to do-and it's
what no one else in the PC world is doing.

So damn the recession! Build it, and they will come. "Victory in our
industry is spelled survival," says Jobs. "The way we're going to survive is
to innovate our way out of this."

Now before you leap to your feet and shout amen, consider this: Apple, which
has been innovating and rebounding since Jobs' return in 1997, has
nevertheless been struggling to retain the small market share it still
enjoys. This time Jobs and the company he built and nurtured and adores
really, truly need a hit.

The new iMac, which Time took for an exclusive test run recently and which
will be unveiled at the annual Macworld convention in San Francisco this
week, could be just the thing. Like many PCs today, the new iMac is built
around a flat-panel display. But instead of taking up precious desk space
like a typical flat monitor, the iMac's screen floats in the air, attached
to a jointed, chrome-pipe neck. It's also rimmed by a "halo," a translucent
plastic frame that makes you want to pull it toward you-or push it out of
the way. Jonathan Ive, chief of Apple's ID lab, says he designed it so that
you would want to touch it, want to "violate the sacred plane of the
monitor." The chrome neck is articulated and bends while maintaining the
angle of the screen; it connects to the computer, an improbably small
hemisphere at 26.4 cm in diameter-somewhat bigger than a halved cantaloupe.
The machine bears an uncanny resemblance to Luxo Jr.-the fun-loving,
computer-animated swing-arm lamp that starred in a short film by Pixar, the
fabled computer-animation studio that Jobs runs. (Pixar creative chief John
Lasseter has also made the first new iMac ad.) "It looks a little cheeky,"
says Ive. It looks alive.

Can it make Apple's fortunes grow, though? The original iMac, which was
launched in May 1998, sparked a 400% Apple-stock surge during the next two
years, and has sold more than 6 million units. It was also Jobs' first home
run since his return to the company the previous year after 12 years in
exile. Now that Apple's stock has fallen back to earth and retail stores are
clamoring for something new to stimulate sales, Jobs needs to swing for the
fences again.

The situation is far from dire. Apple has more than $4 billion in the
bank-enough to wait out the recession-comparatively little debt and millions
of fanatically loyal users who will give up their Macs only when you pry
their one-button mice from their cold, dead fingers. But Apple's annual
revenues have dropped from $8 billion to less than $6 billion, and the
company continues to lose market share to the Microsoft-Intel-dominated
world. A little more than 4% of new PCs sold in the U.S. are Macs. (Don't
ask about worldwide sales, where Apple has actually slipped to less than 3%
of the market, from 5.2% five years ago.) With Microsoft's antitrust
troubles tabled for now and a new operating system, Windows XP, that's
stabler and simpler to use than ever, Apple will be hard pressed to attract
converts.

A misstep can be fatal in the fast-moving computer business. And Jobs, a
perfectionist when he settles on a project, tends to get his ideas from his
gut rather than, say, focus groups. Some analysts argue that Apple should
abandon innovation in favor of building a cheaper box; a $500 iMac would fit
the bill. Others say the company should have pursued the post-PC dream and
started turning out Internet appliances, tablet PCs or personal digital
assistants, as competitors have done. Instead, Jobs' gut tells him that the
PC isn't dead at all. It tells him, in fact, that what people really want is
a better PC. That what they really want is a Mac.

There comes a time in every important Jobs project, usually when the thing
appears to be finished, that he sends it back to the drawing board and asks
that it be completely redone. Some people say this trait is pathological, a
sign of his control-freak perfectionism or his inability to let go. "It's
happened on every Pixar movie," Jobs confesses. It's also what he did when
Ive presented him with a plastic model of what was to be the new iMac. It
looked like the old iMac on a no-carb diet, a leaner iMac in the Zone.
"There was nothing wrong with it," recalls Jobs. "It was fine. Really, it
was fine." He hated it.

Rather than give his O.K., he went home from work early that day and
summoned Ive, the amiable genius who also designed the original iMac, the
other-worldly iPod music player, the lightweight but heavy-duty titanium
PowerBook and the ice-cube-inspired Cube desktop, to name but a few of his
greatest hits. As they walked through the 1,000-sq-m vegetable garden and
apricot grove of Jobs' wife Laurene, Jobs sketched out the Platonic ideal
for the new machine. "Each element has to be true to itself," Jobs told Ive.
"Why have a flat display if you're going to glom all this stuff on its back?
Why stand a computer on its side when it really wants to be horizontal and
on the ground? Let each element be what it is, be true to itself." Instead
of looking like the old iMac, the thing should look more like the flowers in
the garden. Jobs said, "It should look like a sunflower."

This might have irritated some people. But Ive synchs with Jobs, readily
playing Sullivan to his Gilbert. Ive, the son of a silversmith, likes to
talk about industrial design "as product narrative. My view is that surfaces
and materials and finishes and product architecture are about telling a
bigger story." The story the new iMac wanted to tell, he says, was about a
flat display so light, fluid and free that it could almost fly away.

He had a good working sketch of the new design within a day. But engineering
the machine-squeezing all the gear into the little box that Jobs wanted-took
nearly two years.

There are some things in the world of Jobs that you can rely on. On warm
days, he will always appear at work shoeless and in hiking shorts. The rest
of the time, he will always wear Levi's jeans, no belt and one of the
hundreds of black, mock-turtleneck shirts a clothing-designer chum made for
him many years ago. (Not having to worry about what to wear to work every
day allows him to concentrate more on work, he says.) And he will always
take any opportunity he can to lay out the wider context, the framework-and
how Apple fits in. Pull up a chair, because Jobs is about to paint you the
big picture.

The way Jobs sees it, the world is entering the third phase of personal
computing. (For those of you who haven't been following along, the first era
was all about utility-folks using their thinking machines to do word
processing, run spreadsheets, create desktop graphics and the like. The
second phase was about wiring all those machines together on the Internet.)
Now that we're all interconnected and productive, we're ready for the next
great era: people using computers to orchestrate all the new digital gear
that has steadily crept into their lives.

At this point, Jobs likes to draw a diagram, which begins with an outer
ring; he draws gadgets on that ring. "We are surrounded by camcorders,
digital cameras, MP3 players, Palms, cell phones, DVD players," he says.
Then he draws a computer in the center of the ring. "Some of these things
are plenty useful without a personal computer. But a personal computer
definitely enhances their value. And several are completely unusable without
a PC-a PC meaning a Mac, in our case."

Now he fixes you with his famous pay-attention-here stare and furrows his
Salman Rushdie eyebrows: "We believe the next great era is for the personal
computer to be the digital hub of all these devices."

Here's how it works. Take digital cameras, which sold even better than
retailers expected in 2001, despite the recession. "The problem is," says
Jobs, "the minute you plug them into your computer, you fall off a cliff.
It's just a complete mess on the computer. We decided that this was our
calling-a place where we can really make a difference."

If the new iMac functions as well as it's supposed to, it will simplify your
digital life like no other machine can. You can buy a PC with a flat-panel
display and a built-in DVD burner for around $1,800, the same as the
equivalent iMac. But it won't work as well. In part, that's because Apple
gives away a number of core programs (iTunes, iMovie, iDVD and, starting
this week, iPhoto) that allow you to control your creative life. They do
what other PC software does. But they do it better.

Apple's secret, which doubtless comes from Jobs' early flirtation with Zen
Buddhism, is knowing what to leave out, understanding that in the complex
world of computers, less is way more.

For instance, iPhoto, a program for handling those digital pictures, is
superior to anything else out there for the amateur. How? When you connect
your camera to the iMac, archiving pictures happens automatically-the
pictures are uploaded and organized by "roll" and archived together as
thumbnail images laid out on one endlessly scrolling digital contact sheet.
A slider on the side of the contact sheet lets you instantly enlarge and
examine hundreds of pictures at a glance, the better to find the one you're
hunting for. This works far better than the PC alternative, which would have
you manually labeling each picture you archive ("Joe at the Beach") or
accepting a meaningless default name, like A2393745. (Best feature of the
new program: point-and-click together a 10-page photo album of your favorite
pics, pay $30 and an online publisher will print and mail you your own
hardcover book.)

Manipulating video-distilling those 90-min. tapes of mind-numbing music
recitals and awards banquets into amusing, fast-moving 3-min. shorts-is
almost as simple on the new iMac, which features a fast G4 chip, just like
Apple's top-of-the-line machines. When you're done creating your masterpiece
(with iMovie), you can copy it onto a DVD (with iDVD, of course). A DVD
burner is squeezed into the high-end $1,800 model. While it's hard to come
up with a perfect Apple-to-PC comparison, a top-of-the-line Dell Dimension
8200, with a flat-panel monitor and DVD burner (plus a faster Pentium 4
processor and much larger hard drive), costs $2,200 and will occupy much of
your desktop and part of the floor.

But if PCs are clunkier than Macs, they have the great virtue of being
ubiquitous. While Jobs' Apple may indeed make the most innovative, easy and
fun-to-use computers, most consumers want what everyone else uses-big, cheap
PCs that run Windows. A case in point: the ice-cool-looking Cube, introduced
in July 2000, was a disaster for Apple, partly because no one, not even the
Mac faithful, wanted to spend $1,799 on it (monitor not included), no matter
how gorgeous and cutting-edge it was. That was probably a pricing mistake as
much as anything else-Apple's gross profit margins (the difference between
what it costs to make and market a thing vs. how much you charge) have been
huge under Jobs. This time, however, with the new iMac, Apple is really
keeping the costs down-something it can do because it controls much more of
what goes in the box than the typical PC competitor, which buys virtually
all its components from third-party sellers.

Still, at $1,299 for the entry-level iMac, the product could be priced too
dearly to attract many converts from the PC world. "It's unlikely that any
specific product announcement by Apple will have any immediate impact on the
company's position in the market," says Al Gillen, an analyst who tracks
Apple for IDC. While he hadn't yet seen the new iMac, in Gillen's view, the
battle over the desktop standard was won long ago by the Windows-Intel
forces.

And Apple's operating systems aren't helping. In fact, they are steadily
losing market share, he says, pointing to recent data that suggest Apple
OS's accounted for only 3.6% of new license revenue in 2000. Worse, IDC
projects that they will amount to even less in 2001. By contrast,
Microsoft's share of Windows licenses has increased during the same period.

Forget innovation, some analysts tell Apple. The most important thing Jobs
can do is embrace the Dark Side and find other bridges to the Windows-Intel
world. Says Gillen: "It's no longer a matter of which product is better but
rather which world do you need to work in." That is, if you use Windows at
work, you will use it at home. Instead of packaging cool, creative
applications in each iMac, critics say, Apple should give people a Windows
emulator so they can run PC programs if needed.

Yet the Internet, which was engineered so that every kind of computer could
connect, has gone a long way toward making Apple computers compatible with
everyone else's. And while it's true that most computer programs come out
for Windows machines first and Macs second (if at all), that's not so
important as it once was. All bread-and-butter programs, such as Microsoft
Office, are available for the Mac. And in the entertainment category, the
trend is to do one's video gaming on dedicated consoles like the GameCube,
Xbox and PlayStation2, not on the computer.

Indeed, Carl Howe of Forrester Research believes the Internet has helped
Apple make headway in the platform wars. "I think Apple doubling its market
share is entirely possible," he says, citing a Forrester report that shows
Apple had the highest satisfaction and buying index among large companies in
North America. The premium they paid to own an Apple (one that is now
shrinking) didn't seem to matter much. "Price is the last refuge of the
marketer. It's what you sell when you don't have anything else to
differentiate you," says Howe. "If prices were all that we cared about, we'd
all be driving Hyundais." As Jobs likes to point out, BMW and Mercedes-Benz
occupy a similar niche in the automobile market, but no one dismisses them
as niche players.

"Every time we've brought innovation into the marketplace, our customers
have responded-strongly," Jobs says, claiming that it might not be so hard
as it sounds. "We only have to attract 5 out of the other 95 people who use
PCs to switch, and Apple doubles its market share." That, of course, would
buy the company that much more breathing room.

The original iMac did bring converts into the Apple tent. Besides, if all
goes according to plan, merely by surviving Apple could grow into other
areas. Jobs believes the shake-out in the computer industry will result in
Apple's being one of four computer makers left standing. The other three?
Compaq and/or Hewlett Packard, Dell and Sony. The rival he's pursuing most
aggressively is Sony, which not only makes stylish computers ("They copy us
like crazy!") but also makes plenty of digital lifestyle products. "I would
rather compete with Sony than compete in another product category with
Microsoft," he says. That's because Sony has to rely on other companies to
make its software. "We're the only company that owns the whole widget-the
hardware, the software and the operating system," he says. "We can take full
responsibility for the user experience. We can do things that the other guy
can't do."

One example is the iPod, Apple's stylish music player and its most recent
foray into the consumer-electronics business. Jobs says Apple is on track to
break analysts' best estimates and sell $50 million worth in the last
quarter of 2001 alone. The cigarette-pack-size MP3 player is so popular that
people have been coming into Apple stores to buy their first Macs, just to
use the iPod, he says. (The company launched its own retail stores last
year-Jobs redesigned the floor plan at the last minute, of course.)

Are other noncomputer appliances on the horizon? "We have some ideas," says
Jobs, adding that Apple would enter the marketplace "where we think we can
make a contribution." For instance? Jobs sits back, smiles and declines to
elaborate. Clearly, he's already working on something new. You can bet it's
the best thing that Apple has ever done. -With reporting by Rebecca
Winters/New York

iDVD

FEATURE Create your own DVDs, just like the pros. Copy movies or slide shows
of pictures onto a disc, and mail it off to Grandma. Any DVD player can play
it

ADVANTAGE A DVD burner is built into the high-end iMac. That and the iDVD
software make the whole process push-button simple

iPhoto

FEATURE Organize your digital pictures, and easily crop and edit them. Or
create a 10-page photo album, which Apple will turn into a hardcover book
for $30

ADVANTAGE Takes the pain out of archiving photos. Scalable thumbnail
pictures are organized by "roll" during each upload. Find what you want at a
glance

iTunes

FEATURE Play your CDs, or quickly convert them to MP3s, which are cleverly
organized. Comes with an excellent, built-in selection of Net radio stations
too

ADVANTAGE Automatically synchs with the iPod, the stylish portable music
player that holds more than 1,000 songs

iMovie

FEATURE Turn a 90-min. home videotape of tedious music recitals and birthday
parties into a dazzling 3-min. film. The software makes anyone a Spielberg

ADVANTAGE "Firewire" connection ports and the G4 chip work with the software
to let you manipulate video clips as easily as pushing peas around on your
plate

THE MAN AND HIS MACHINES

>From the beginning, Jobs tried to bring computer power to the people. Even
when exiled from Apple, he was obsessed with finding ways to make technology
friendlier and easier to use

1976 Steve Wozniak builds the Apple I, a circuit board that Jobs sells for
$666.66

1983 The first low-cost mouse appears on a personal computer, Apple's Lisa.
While Lisa is an expensive flop, the mouse survives

1984 The first Macintosh, at $2,495, has a mouse, a keyboard and a small
beige case

1985 Jobs, ousted from Apple, founds NeXT, a maker of Unix machines known
for their sleek cubic design. But the company fares poorly and is purchased
by Apple in 1996

1986 Bailing out a brilliant band of computer animators who worked for
George Lucas, Jobs buys Pixar, makers of Toy Story and Monsters, Inc.

1997 Jobs is brought back to a shriveled Apple as "interim CEO." He cleans
house, streamlines the product line and jumps on the Internet bandwagon

1998 The low-cost computer for the masses called iMac is launched. The i is
for Internet. More than 6 million are sold, making Jobs a hero and boosting
Apple's stock price 400%

1999 The iBook arrives, a bulletproof laptop for the school market. Critics
say it looks like a toilet seat

2000 The PowerMac G4 Cube sets a new high-water mark for cool. But at
$1,799, not including the monitor, Cube sales sink

2001 The introduction of the iPod, an elegantly simple digital music player,
signals Apple's move into consumer electronics