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
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
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
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
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