The iMac's first year? Sudden impact

The iMac made Apple cool again, not to mention consistently profitable. But design may be where the machine makes its biggest contribution.

To some, it's just a purple computer. Or maybe yours is tangerine or blueberry.

But to iMac fans, designers and Apple Computer Inc. (Nasdaq:AAPL) developers, the translucent, all-in-one machine has ended Apple's blues -- and may have spawned a new way of designing PCs for consumers.

"Apple's sort of reinvented itself, and probably the best example of that is the iMac," said Phil Schiller, head of product marketing at Apple.

How do you count success?
Aug. 15 is the iMac's first anniversary, and Apple executives said their 1-year-old baby has brought the company more accolades -- and sales -- than they ever expected.

So far, about 2 million iMacs have been sold. It's been the top-selling desktop computer in the retail market, according to PC Data.

And the iMac has doubled Apple's share of the retail market to 11.2 percent. In addition, Apple's stock price has vaulted to record levels.

"It's basically put them back on the map, given the kind of high profile that Steve Jobs loves, and helped their profitability," said longtime Apple watcher and Creative Strategies Inc. President Tim Bajarin.

Breaking new ground
The iMac's biggest impact has been on PC design. While consumer computers were already changing before the iMac appeared -- witness Sony Corp.'s (NYSE:SNE) snazzy Vaio -- the iMac broke new ground.

"I don't think it's changed computing at a fundamental level," Bajarin said. "But it has changed the idea of what a consumer computer's expected to look like."

That look includes sleeker, more rounded lines, and a move away from the boring beige box -- a move that has designers cheering.

"The beauty for us designers is, design is starting to be an important part of technology," said David Kelly, president of product development firm IDEO, which designed the Palm V, and a professor of mechanical engineering at Stanford University. "The design has been a large part of the iMac's success."

As for the big names in the industry, designers and analysts don't expect the likes of Compaq Computer Corp. (NYSE:CPQ) or Dell Computer Corp. (Nasdaq:DELL) to trade in their beige boxes for magenta or chartreuse ones.

While those companies may sell plenty of computers for household use, businesses make up their primary market, and colors don't hold a lot of appeal to businesses. Plus, making PCs in different colors raises their price --- a no-no in the price-conscious PC market.

However, you may see sleeker forms on company desktops, even if they are beige and black, Kelly said.

Instead, Kelly expects the new design standards set by the iMac to have the most impact on portable computers.

"They're more personal. There's a fashion part of it: People want something that says something about me," he said.

iMac's design has inspired some desktop companies to follow suit, including Future Power, Daewoo and eMachines. But Apple has sued both Future Power and Daewoo, claiming the companies illegally stole its ideas.

At retail stores, demand for the iMac is still high, partly because the machine is touted as being easy to use.

"It's hard to keep in stock," said Chris McDermott, manager of Macadam Computing in San Francisco, though he thinks sales are starting to flatten out.

Of the customers who buy a new iMac, McDermott said, about half come into the store specifically asking for one. The rest are eventually won over by the iMac's all-in-one design and choice of colors.

But, he said, some potential customers are turned off by the lack of a floppy drive -- a cost-saving measure that many have criticized -- and the fact that they need to get new USB peripherals or adapters to work with the computer.

Apple: No changes
Still, Apple said it wouldn't make any major alterations if it had to design the iMac all over again. The only significant changes to the machine since its debut have been the addition of faster processors and an upgrade to a 56Kbps modem.

But a next-generation iMac -- and whether it will break new design ground -- may soon be on the horizon, as Apple is widely rumored to be close to announcing a follow-up product.

But significantly lower prices -- such as an entry into the sub-$1,000 PC market -- don't appear likely. Apple's Schiller said his company is leaving the "Yugo market" to other players.


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