November 10, 1997 1:50 PM PST
Power Macs, sales plan unveiled
In front of a packed auditorium here, Steve Jobs, Apple's cofounder and interim CEO, introduced the company's first desktop systems with the new PowerPC 750 processor and the company's plans for selling these and other computers directly to customers.
But will these latest initiatives make significant progress toward shoring up Apple's bottom line, given that the struggling computer maker has been hit with multimillion-dollar losses, declining revenues, and shrinking market share? Analysts on hand for today's much-hyped press conference here were somewhat skeptical.
At a recent industry conference, Dell revealed what he'd do were he in charge of Apple: "I'd shut it down and give the money back to shareholders," he was quoted as saying. Today, Jobs singled out Dell--posting a picture of him with a bull's-eye superimposed on his face--and said, "With our new products, our new store, and built-to-order manufacturing, we're coming after you, buddy."
Jobs claimed that, with the new plan for direct sales in place, Apple will be "second in operations and logistics and buying experience to nobody." (See related story)
The targeting of Dell as the new nemesis was amusing to a number of observers, for Apple appeared to be taking a page from the direct PC vendor's handbook with the introduction of the Apple Store, an online site that directly sells computers to consumers across the Web and through a toll-free hotline.
The new G3 systems will be offered on a build-to-order basis, meaning that a customer can configure a system in any number of ways with different hard drives, memory, graphics cards, and other components. All other Mac systems sold on the Web will be in standardized configurations.
Selling direct to customers may provide a boost to Apple's prospects, but the company doesn't expect more than 15 percent of sales to be conducted over the Web.
The computer maker will still sell the bulk of its equipment through distributors and resellers, which generally mark up the cost of equipment to make their profits. In recent years, direct marketers such as Dell have gained market share by cutting out this cost and selling computers directly to consumers for three percent or more below competitors selling through the indirect route.
As expected, Apple won't try to undercut dealers on price but instead pitch direct sales as a way of delivering custom-configured systems not available from retailers.
"We will sell systems at list price. We will be cautious with allocation [of product] that biases product allocation to our Web site," said Mitch Manditch, senior vice president of worldwide sales said in a press conference following the event. "We want to make sure we don't do anything that biases customer choice in any direction," he said.
As previously reported by CNET's NEWS.COM, the entry-level Power Mac G3 system with a 233-MHz PowerPC 750 processor, 32MB of memory, a 24X CD-ROM drive, and a 4GB hard disk drive is being advertised for $1,977. The midline G3 will come with 266-MHz PowerPC 750, 32MB of memory, a 24X CD-ROM drive, a 4GB hard disk drive, and 100MB Zip drive from Iomega. It's priced at $2,377.
A top-line G3 system with 266-MHz PowerPC 750, a 24X CD-ROM drive, a 6GB hard disk drive, and a 100MB Zip drive is being priced at $2,977. It will ship in a new mini-tower enclosure and offer more expansion slots for peripherals and graphics cards, but graphic designers and video producers will likely still use the existing high-end 8600 and 9600 systems because they offer better expansion options.
Apple's first notebook with the new PowerPC 750 processor is advertised as the PowerBook G3. It will have a 250-MHz PowerPC 750, 32MB of memory, a 5GB hard disk drive, a 20X CD-ROM, and built-in Ethernet networking for $5,649. Although the processor's clock speed is barely higher than that of the current 3400/240 with its 240-MHz 603e processor, the 750's new architecture should allow it to handily outperform the older model.
All of the day's announcements were expected, but there was no mention of a network computer (NC) strategy. Prior to the much-anticipated meeting, sources close to Oracle--one of the leading promoters of the NC and a company that Apple is rumored to be working with--said recently that they expect the NC to be a major product push for Apple in 1998.