January is traditionally the month the computer industry focuses on Apple Computer. For the past 12 years its users have flocked to San Francisco for what is the biggest expo of its own and third party offerings.
Just a couple of years ago attendance was down, third party suppliers were dwindling and the general opinion was that Apple was irrelevant to the PC industry.
Much has happened since Steve Jobs again assumed command in 1997. The company has once again changed the PC world with its colourful iMac machines. Following this month's Macworld Expo, however, the big question industry observers are asking is how will the company maintain the momentum. Most agree that Apple cannot take a breather.
"Apple clearly showed the industry how to change the marketing emphasis from technology to design. The competitive landscape is changing in 2000 and Apple needs to take its strategy a stage further to continue to be successful," said Charles Smulders, a Dataquest analyst.
While Jobs' presentation could have fizzled because he did not introduce new hardware, he successfully diverted attention by dropping the word 'Interim' from his CEO title.
X marks the spot
He also disclosed a new release date, January 2001, for the company's next generation operating system, MacOS X. MacOS X is a new implementation of the Mac operating system and features a new user interface called 'Aqua'. And to demonstrate that software companies are again taking notice of the Apple platform, more than 100 developers have pledged their support including Adobe and Microsoft.
Microsoft's Kevin Browne vowed to release MacOS X versions of Internet Explorer and Outlook Express at the same time the new OS is released. Macromedia's Rob Burgess praised the ease with which his company was able to port Flash to MacOS X and promised to deliver all Macromedia's applications to it.
The new operating system must be a drastic revision, said Gartner Group analyst, Chris Le Tocq. Apple has focused effectively on its target markets, publishing, education and retail, but it needs to make a consumer statement with its OS, such as 'we're here, we're different and we're better.'
Le Tocq explained said the new Mac kernel, called Darwin, will bring the operating system up to the standards of modern operating systems. He said the MacOS has fallen far behind Windows in its ability to run multiple applications simultaneously.
Upgrades to the operating system too were touted by Jobs as a way to promote the Mac line once again to business users. Jobs said he hoped professional users would look at its new products, including a specially powerful laptop due out in the summer, and say: "This takes me to places I never knew I could go."
Most analysts are positive on Apple's future. For instance, Donaldson, Luftkin & Jenrette analyst Kevin McCarthy said in a report that he expects Apple shares to reach $140 from around $100 now in the next 12 months.
McCarthy said Apple is shipping more iBook portable PCs than expected. "There's a strong product flow and they've negotiated the manufacturing slowdown."
That slowdown was caused by the fact that Motorola could not deliver enough high-end G4 chips for Apple's most powerful machines. The company has since negotiated with IBM which will become a second source for the semiconductors.
Despite the lack of product, Jobs, at Macworld, recapped Apple's success in selling more Mac computers, 1.35 million, in the fourth quarter as well as the success of The Apple Store which has reached a run rate of more than $1 billion in annual sales.
Apple captured a considerable number of users, 17 per cent, who switched from Wintel systems. A stunning 66 percent of iMac buyers didn't seriously consider any other product or platform, Jobs said.
Those kind of sales figures have led to a stunning turnaround in Apple's financial picture. Apple ended its fiscal year in September 1997 with a loss of $1.04 billion. The company ended its 1999 fiscal year with profits of $601 million on sales of $6.1 billion.
Making up lost ground
And more importantly the company is once again growing. Apple is predicting it will grow revenue up to 25 per cent this year and ship between 35 per cent and 40 per cent more computers than last.
There is plenty of scope for growth. Apple's market share of worldwide PC sales for last year's third quarter was at 2.5 per cent (down because of the supply problems). As a benchmark Dell and Compaq have market share that are in the mid-teens.
But do not expect any major changes in strategy from Apple. At Macworld Jobs dismissed arguments that Apple should change its focus from providing vertically integrated systems based on proprietary hardware and software.
He emphasised that Apple's business model for the near term was the integration of hardware and software. He stressed that the company would continue to be a leader in innovation.
"We're the last guys left in this industry who can do it, and that's what we're about," he said.
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