Ten years ago, Apple released a product that marked the start of its remarkable turnaround under Steve Jobs. The product was the iMac. The candy-colored, self-contained desktop computers was an eye-opener for people who were accustomed to beige PC towers that had all of the sex appeal of a Soviet apartment block. The iMac was an instant hit.
Reading the reviews of the first-generation iMacs, you can't help but chuckle. "The iMac's 233-megahertz G3 chip is astonishingly fast. We got the 56k modem up to 44k on our trials," gushed one CNN writer. At this speed, the iMac's "graphics and sound fairly screamed."
In addition to having a unique design, the "Internet Macintosh" had a few other innovations. There was no 3.5" floppy disk drive, just a CD-ROM drive. A newfangled USB port was included. Even at that early date, it was understood that a new Apple operating system, OS X, was planned for the iMac, although one of the analysts quoted in the CNN story recommended Apple developing an iMac that ran Windows.
Ten years later, the iMac has cemented itself in the Apple product lineup. In recent years, it's been the only hot seller in Apple's desktop lineup (which includes the iMac, Mac mini, Mac Pro, Power Mac, and Xserve product lines), according to Apple's 2008 10-K filing with the SEC. OS X and iLife are the iMac's software underpinnings, and enable it to work with Apple's other blockbuster products, the iPod and the iPhone. The prediction of a Mac that could run Windows seemed silly ten years ago (Windows 98 had just been released) but not anymore. iMacs can now run Windows, and many owners do just that to use Windows-only apps or play PC games.
There has been innovation in other areas as well. Gone is the CRT monitor, replaced by a large LCD screen. The iMac's exterior design has been completely reworked several times (remember the half-dome?). Under the hood, the iMac is driven by an Intel multicore processor and a robust ATI GPU for graphics and video. This thing really screams now.
However, while Apple has been able to keep the iMac on the leading edge of design and consumer demand, its future doesn't look so bright. This may seem like an unusual statement considering the iMac has been in the leading product in its desktop lineup. Nevertheless, the iMac can't outrun trends taking place in the marketplace.
Even before the economic crisis hit, there had been an ongoing shift to notebook computers. Apple's 2008 10-K reflects this -- overall Apple notebook sales more than doubled from 2006 to 2008, compared to a 70% rise in Apple's desktop sales.
The other trend to consider is the erosion in desktop hardware prices. The iMac dropped below the $2,000 price point in the early part of this decade, but current models still start at $1,200. PCs dropped below $1,000 years ago. Higher-end desktop PCs from Lenovo, Dell and other well-known manufacturers handily beat the base iMac's hardware specs, yet cost less than $800.
Of course, Macs have always been a little pricier than PC equivalents, and people have been willing to pay for the sexy brand and the rock-solid OS X/iLife software bundle. But that premium is harder to swallow when the economy is in the toilet, people are losing jobs, and customers have to accept cheaper options. PC makers' chip orders for the first quarter of 2009 are reportedly half of what they were earlier this year. There has been a huge rush to netbooks, cheap laptops that use Intel's low-powered Atom processor.
Apple has been trying to hold the line on iMac pricing, but it won't be able to sustain $1,000+ levels in a recession. That doesn't leave Apple with many options. It could cut prices to maintain sales volume, but doing so would kill its
Comments
This article makes the future seem so dim and hopeless. I love my iMac! Long live the iMac!
I believe you are right. On this past Black Friday, I bought the new 13" MacBook paired with the new 24" Cinema Display. I wanted an iMac, but was waiting for an updated model. When it didn't arrive, I decided the better long-term move was spending an extra $500 or so for mobility and screen size at home.
"At this speed, the iMac's "graphics and sound fairly screamed.""
Truth be told, for the time, native apps running in OS 9 were pretty snappy on the iMac. And, frankly, IE on the Mac was a decent browser at the time, UI-wise.
It wasn't until you double-clicked that Adobe Illustrator icon that you really started to wait (or loaded the OS), but that was true on the PCs, too. Still is today! So come on, show some love to the machine that saved Apple (and, you can run OS X on it, too).
AppleInsider: "...analyst Ben Reitzes of Barclays Capital expects Apple to make the iMac one of its first updates in the new year as part of an effort to revitalize its lineup that will likely include the rest of its Mac desktops as well."
Maybe rather than kill it, they'll do some sort of 10th anniversary rebuild?
Pete,
Agreed. I'm in the process of making the same move myself. The convenience of having only one computer - a laptop - along with a monitor/keyboard/mouse is hard to argue, especially for just a few hundred bucks more.
Wondering if Apple will release any more monitors at Macworld?
Having said that, I personally would be pretty surprised if Apple announced the end of the iMac by Sept. next year. I think the market will move in this direction but not quite that quickly.
"Author's note: I have created a prediction in the Industry Standard's prediction market that asks whether Apple will publicly announce the iMac product line is being discontinued by September 30, 2009. What do you think? Leave comments below, or put your money where your mouth is -- the prediction market gives new users 100,000 Standard Dollars, and lets you make "bets" with it."
Lan, I think we will see the end of thestandard.com before the IMac moves on to the greener pastures. It appears you are doing nothing more than going after something to cause a controversy and sadly not doing a good job of it.
I own both a 15" Mac Pro and a 24" IMac, I do 90% of my work and surfing on the IMac, the Mac Pro is used when I am out, or at work on occasions. I find the speed and the capabilities of this machine "the IMac" more than meet my needs and should for the foreseeable future.
I would hope that on September 30, 2009, that you are a man and step up to the plate when your dire prediction falls to its butt.
David: Thanks for your comment.
I agree that the iMac is a solid machine that meets users' needs. I own one.
But my argument is about Apple's business. Assuming sales will decline drastically in the current recession, putting enormous pricing pressure on Apple, under what circumstances or reasoning do you suppose the company will keep the iMac going?
Ian Lamont
Managing Editor
The Industry Standard
So what do you think will happen to MacBooks and MacBook Pros which cost far more than the iMac? Will they disappear before the iMacs?
If there is recession, people don't buy MacBook Pros.....
Garrick, looks like I was wrong (in joining the prediction). But I'm still very happy with my selection of a MacBook/24" Display pair.
Jack: Some MacBooks are actually cheaper than an iMac, and all offer flexibility that desktop computers simply do not have. And while MacBook Pros are expensive, they are powerful machines that rival desktops' processing power, and can even serve as desktop computers with the addition of a monitor and keyboard. I've encountered photographers and programmers who swear by them -- they are must-have tools.
New Apple customers who are interested in an iMac (and probably would have bought one before the recession really took hold) can probably be convinced to buy something else -- either a MacBook or a more powerful PC desktop -- which cost less, and, in the case of the MacBook, offer portability. Those are big selling points.
Certainly, a recession will bite into Mac laptop sales but I don't believe they are as vulnerable as the iMac.
Ian Lamont
Managing Editor
The Industry Standard
I have waited to upgrade to an intel iMac (from my G5 iMac) -- hoping for a newer chip. These words are discouraging to me. I do not need or want a new MacBook. I have an older G4 that I use for presentations, but do not like to work much on it -- I put out newsletters for several small groups. I even got a usb keyboard, but still the smaller screen and setup does not compare to my iMac.
The iMac is perfect for my needs. Some of the newer apps are beginning to tax my G5 and I would like the power of the newer machines.
Unless we get a new iMac this spring, I guess will have to settle for a refurbished one.
Honestly, Ian, this article is a load of rubbish.
What are schools going to do with their desktop terminals? Drop desktops and go with laptops? I don't know if you've ever see how some students treat these portables. At least when some agro student decides to bash a keyboard, none of the internals will be interfered with and the down time on the desktop in this event is the time it takes to unplug the USB keyboard. With a MacBook, it takes DAYS! If that?! Technician work loads are over the roof, the last thing they're concerned about are Student Laptops, with students who don't appreciate the privileges they've been given.
Furthermore, have you ever seen a MacBook Pro run out of storage space? It's a funny sight watching something portable and simple become a tangled mess with external storage. You could always sticky-tape 2 LaCie Rugged 500GB hard drives to the back of the thing and have the cables permanently plugged in, which allows it to retain some form of elegance, but it's ridiculous! Plus the overhead on battery wear.
And don't let me go into the ridiculous new "integrated" battery design of the new MacBook Pro's. When the battery dies, you may as well carry around a Mac Mini!!!
Bottom-line - Nothing beats a directly connected Ethernet Cable for Large Scale networks and streaming large quantities of HD Video. Having a permanently fixed computer allows for more cheaper, self-powered external storage of 2 TB +, which can also be permanently fixed to the computer, that is more faster and more reliable. The simplicity of 1 machine and large num-pad keyboard is a must for anyone who games or uses Blender, the clutter of an additional monitor, plus the overhead of the laptop base makes a workstation, almost unworkable. Plus the additional power required by many multimedia devices, so you'd need to carry around a power board with you. External input devices are exceptionally useful for Graphic Designers such as tablets and mouses, sure you can lug them around as well, but your portable computer is not looking so portable now is it?
send2elbert: Apple is a publicly traded company, and ultimately responds to the demands of its shareholders. When it comes to hardware, its strategy seems to be obvious: Rapid iteration and improvement of existing models (such as the iPod) and killing off products that don't sell and/or don't fit its long-term strategic vision (such as the Mac cube). Even models that do sell well are occasionally replaced, such as the iBook.
Apple's desktop strategy worked well five years ago, but I can't see how the company can justify keeping the iMac line going at its current price point in the face of a deep recession, strong pricing competition from laptops and lower-priced desktops, and the trend toward mobile computing. You bring up an interesting example regarding education, but do you think most school districts these days would be willing to populate their classrooms with the BMW of desktops?
Ian Lamont
Managing Editor
The Industry Standard
twitter.com/the_standard
Hi Ian, it's funny how you side step a lot of my points. A lot of the points you make are very vague, such as a generic Dell Desktop and generic Lenovo Desktop. I'm sure you're well aware of the latest rumours of refreshing the iMac desktop line. Which has really placed a dent on the credibility you hold as you simply just don't get it.
Could you justify your claims on the "Cheaper" alternatives that will meet this criteria:
2.6GHz Intel Core 2 Duo
2GB RAM
320GB HDD
DVD Burner
Intel GMA 4500 / Nvidia 9400M Video
20" LCD Display
1GBit LAN
802.11N
Firewire
Web Cam
Speakers
Keyboard
Mouse
and more importantly...
Microsoft Windows Vista Ultimate 64bit Edition
A brand name and model number would do, but if you could post a link and the build / configuration options, it would be greatly preferred.
Because the closest thing I could find from your claims has been the Dell Studio One 19
18.9" LCD
100MBit LAN
Windows Home Premium 64 Bit
and when you add WiFi and everything it comes closer to $900USD rather than the stated sub $800 price point you claimed.
Purchasing an Upgrade of Vista Ultimate comes to an additional $200 currently, and for the extra $100, I'd rather have a computer with 10x the networking capabilities and that extra 1.1" of screen real estate not to mention the addition of FireWire 800.
Yes, I understand that Apple is publicly traded and responds to market trends.
But my school has just put in for an upgrade for it's Multimedia faculty, we are in the process of purchasing several classrooms worth of iMacs, as with many other secondary and tertiary institutions. Which is probably a sign that the market still wants to use iMacs.
I know that you in the U.S. are feeling the "Global Recession" harder than we are in Australia. But I guess you still have the "Old" mindset of U.S.A. being the centre of the universe. With a Globalized economy it's quite neglectful and ignorant of you not to take into consideration Global influences. At one point, in Australia, to simply purchase Windows Vista Ultimate 64 Bit Full Version, we'd have to fork out 50% of the price of an iMac, at about AU$800 for an operating system, Apple was the hands down winner, hence my conversion to the iMac!
We in Australia did not enter a recession, unlike the rest of the world, we're able to enjoy our good fortune. Sorry mate, I'd hate to say I told you so... but hey, best of luck next time!
Elbert: I don't mind debating readers, but the nasty tone -- particularly the accusation that I am "ignorant" -- is uncalled for.
For desktops that meet or beat the basic iMac configuration, you don't have to look far. I don't know why you insist on going through the Dell store or insist on the "premium" version of Vista, because retailers and wholesale channels (i.e., the outfits that sell to companies and universities) have package deals that handily beat the price and configuration you have, and most people will happily run a lesser version of Vista over even Linux.
But you asked for it, so here you go:
http://www.bestbuy.com/site/olspage.jsp?skuId=9999116500050005&type=prod...
Even before the rebate, it's hundreds less than what an iMac costs, yet comes with Windows Vista Home Premium 64-bit, a faster Intel Core Duo processor, 2x storage and 3x RAM compared to the iMac configuration you have listed. I doubt it has firewire, but even Apple is moving away from that standard.
As for your "global" comment, it's interesting you should mention that. I was actually in Taiwan last month, and made a point of checking out several local electronics retailers. PC prices were basically the same as what you would find here for well-known brands (Acer is big over there) but people desiring Apple gear pay a premium, depending on the device (iPod Touches seemed to be especially pricey, nearing the equivalent of $300 for the 2G 8GB model, more than $50 over the price here at the time).
Ian Lamont
Managing Editor
The Industry Standard
twitter.com/the_standard
twitter.com/ilamont
Hi Ian, sorry about the comment before, poor choice of words on my behalf...
What I meant to say it was an oversight...
I've checked out your link, it doesn't exist as of this time... 01/10/2009 ...
The reason why I insist on pushing ultimate is simply the features it offers, I'm sure you are aware of Apple's Snow Leopard, it has amazing features which is something that I've come to expect from an operating system since my conversion. The fact that all Mac's come with iLife is a very appealing feature. At work we have a mixture of Home Basic and Home Premium machines, Home Basic is what was offered to me as a Boot Camp install, and I HATED IT! I'm sorry, but the sheer lack of features simply put me off the overall Vista appeal. I instantly switched back to my XP Pro.
This is the thing about comparing Apples and Oranges... With Apple, you are given the Best Operating System Apple has to offer, whereas Oranges give you, as usually the only choice, 4 or 5 tiers lower than it's best. This combined with iLife makes me wonder why ANYONE ever compares Apple with the one higher than basic operating system PC prices...
I'm sorry, but if you wouldn't mind, could you copy and paste the PC information that you had into your post, obviously the expired link has yet to convince me, but remember what you're comparing. Built in webcams and microphones simply makes the iMac the computer of choice for the PODcasting era, especially since the "education revolution" is going down this pathway.
Like you said in a previous post, iMac's are the BMW's of the PC world... But just like BMW's, they have their purpose, they have their needs and people will continue to purchase and support the innovation they provide. BMW is not going to water down their M3, nor will Apple want to water down their iMac line!
Elbert: The Best Buy ad was probably a weekly special. There is a similar one up there now, but no monitor (see http://www.bestbuy.com/site/olspage.jsp?skuId=9361166&st=intel+core+2+du...).
In any case, the basic specs were 2.8 GHz Core 2 Duo, 6 GB RAM, 750GB HDD, and an 18.9" monitor. The price was $600 after $100 rebate. I don't remember the other details, but even if it didn't include a webcam, that's not going to cost more than $50 extra.
The monitorless setup I linked to above is $529 for the following specs:
What's Included
Dell Inspiron Desktop with Intel® Core™2 Duo Processor E7400
USB keyboard and USB optical mouse
Software: Roxio Creator 10 Dell Edition, Adobe Reader, Microsoft Works
Owner's manual
Product Features
Intel® Core™2 Duo desktop processor E7400
With 2 processing cores, 1066MHz system bus, 3MB L2 cache and 2.8GHz processor speed per core.
Two high-performance processing cores
To run multiple demanding applications simultaneously without hesitation.
6GB DDR2 SDRAM
For multitasking power; expandable to 16GB.
Multiformat DVD±RW/CD-RW drive with double-layer support
Records up to 8.5GB of data or 4 hours of video using compatible DVD+R DL and DVD-R DL media.
750GB Serial ATA hard drive (7200 rpm)
Offers fast read/write times and plenty of storage.
Integrated Intel® Graphics Media Accelerator 3100
With 256MB shared video memory for improved graphics performance.
Built-in digital media reader
Supports miniSD, microSD, Secure Digital High Capacity, MultiMediaCard, Reduced-Size MultiMediaCard, MultiMediaCard Plus, Reduced-Size MultiMediaCard Plus, MultiMediaCard micro and Memory Stick formats.
Also supports Memory Stick Duo, Memory Stick PRO, Memory Stick PRO Duo, Memory Stick micro, Compact Flash I, Compact Flash II, SmartMedia, xD-Picture Card and Microdrive formats.
6 high-speed USB 2.0 ports
Both front and rear accessible for fast digital data transfer and easy peripheral connectivity.
Built-in 10/100 Mbps Ethernet networking interface
With high-speed 56 Kbps modem for easy connection to the Internet.
Realtek ALC888 speakers
Integrated support for 7.1-channel audio.
Microsoft Windows Vista Home Premium Edition 64-bit operating system
With Service Pack 1 (SP1) preinstalled for a stable platform from which to launch games, programs and other applications.
Software package included
With Microsoft Works, Adobe Reader and Roxio Creator 10 Dell edition.
Ian Lamont
Managing Editor
The Industry Standard
twitter.com/the_standard
twitter.com/ilamont
Additional food for thought, regarding pricing:
http://www.thestandard.com/news/2009/09/25/new-imacs-and-cheapening-appl...
Ian Lamont
Managing Editor
The Industry Standard
twitter.com/the_standard
twitter.com/ilamont
Hi Ian,
I think you're still missing the point, this simply isn't a comparable computer.
1. You're comparing the Intel GMA X3100 with an Nvidia 9400M which is approx. 5x faster
2. You're comparing the slower DDR2 with faster DDR3
3. 3.5" HDD vs 2.5" HDD
4. 19" LCD vs 20" LCD
5. Matte Screen vs Glossy Screen
6. Nothing vs 802.11N
7. Nothing vs Bluetooth
8. 10/100 Ethernet vs 10/100/1000 Ethernet
9. Electrical Audio vs Optical Audio
10. Nothing vs Built in Microphone
11. Nothing vs Built in Camera
12. Nothing vs Firewire 800
last but not least:
13. Windows Vista Home Premium vs Mac OS X Snow Leopard + iLife '09
I'm sorry, but if you want really cheap and cut down computers, I could get you a 3.4GHz Core 2 with better specs than your Dell for a third of the price you quoted here in Australia... No warranty though, parts are mostly cheap Chinese and Taiwanese sweatshop ones.
I'm sorry mate, you've yet to convince me that the iMac is overpriced for what it is.
I don't know what it's like up there in the US but here an extra 1" of screen realestate is costly and to find anything in High Gloss will easily make up the difference in price that you've just quoted me.
Sorry Ian, but you are again comparing Apples with Oranges. Doesn't matter how cheap Oranges get, sometimes you just want to have a bite of an Apple!
Elbert: The first three things you highlighted in your first post were CPU type and speed, RAM, and storage space. I showed you a cheaper and more powerful Windows configuration. Now you are arguing about a one-inch difference in the width of the HDD platter and screen size? Well, bump those up on the PC, slot in a new GPU, wireless card, and webcam, and recalculate the cost -- but be sure to do the same for the CPU, hard drive, and memory on the iMac.
But that's a moot point, anyway. You go on to admit that a beefier stock PC setup can be had for a third of the price that I cited ("I could get you a 3.4GHz Core 2 with better specs than your Dell for a third of the price you quoted here in Australia") which I suppose translates to under US$200. That's less than 1/5th of the price of a new iMac with a less powerful CPU. Well, isn't price one of the main factors that I have been talking about all along? A few weeks ago you even questioned my credibility on pricing comparisons. Now you suddenly agree that yes, the PC hardware is fact far cheaper?
As for software, you seem to be equate any comparison of Macs and PCs with a defense of Windows. I never said Windows was better -- in fact, I clearly referenced "the rock-solid OS X/iLife software bundle" (which I have been personally using for more than 6 years) in the article at the top of this page.
So, on the point of pricing and OS quality, we are apparently in full agreement -- PC hardware is cheaper and OS X is better. You haven't really addressed the other points I brought up, such as my statement that the Mac premium "is harder to swallow when the economy is in the toilet, people are losing jobs, and customers have to accept cheaper options." Do you think that's false, or are we also in agreement?
Ian Lamont
Managing Editor
The Industry Standard
twitter.com/the_standard
twitter.com/ilamont
Analysts get Mac estimates wrong:
Mac sales 'defy all logic,' says analyst
But my question for Apple and the analysts is, where are the sustained sales coming from, in terms of portable/desktop and high-end/low-end Macs?
Ian Lamont
Managing Editor
The Industry Standard
twitter.com/the_standard
twitter.com/ilamont
Hi Ian,
You've been banging on about price this whole time, you should know by now that consumers are looking for much more than that. In your other topic mentioned that if the iMac does not fall below $999 price point it'll be phased out in 2010. Again only time will tell.
My point in the previous posts were that people are usually willing to fork out extra for stuff they want and the iMacs are very affordable for what they offer. I would've been very surprised if they did drop the price of their iMacs and here in Australia, the cost of a base model has actually risen by AU$100.
Again, it just seems like you don't get it when it comes to consumer electronics. The iPod should've been a flop, it offered the WORST digital signal processing for audio, lower quality audio options, lower buck for space ratio and a proprietary audio standard which most MP3 players stayed away from. Even Sony, they more over priced MP3's were offering better value for money than the iPods ever did plus the fact that the audio quality was superb in comparison.
The iPhone was again an over priced smart phone, with minimal features, no tethering, no mms and probably the worst network coverage from AT&T, and yet it became among the best selling products in the world.
For Apple, price does not matter and in all honesty, I don't think we'll be seeing any dramatic price drops from their products any time soon.
I do believe that for Apple to stay in the game they do need to do more to stay competitive, however it's got nothing to do with price and more to do with lack of innovation. They need to do more than just a mouse to win over the PC world.
B.T.W. following from the previous point, instead of upgrading the iMac try down-grading the PC to iMac spec, running with the same hardware, e.g. DDR3 etc. You'll find the price-point becomes very, very similar. e.g. the Dell One and all the other PC All-in-Ones.
It's the Apple Package that sells it, the extremely friendly customer service, the hassle free troubleshooting and free training and help sessions. It's just the Genius of them!
Like I said Ian, you've yet to convince me, neither of your arguments have come true of Apple's price drop or retirement and I'm yet to see evidence of phasing out, which we will see about in a year's time.
Especially in hard times, Apple's Premium is easier to swallow because when you have to scrimp and save, you want to spend that little bit more on assurance and friendly service. There many be more hesitation for PC users to convert, but same will be for the Apple users.
Why scrimp and settle with a Zune, when everyone's got an iPod and happy with them... In hard times, will people really take that gamble?
B.T.W. Sorry about the atrocious spelling and grammar, I'm very tired at the moment.
"Mac sales can't keep pace with cheap PCs, Apple slips to No. 5"
Story here:
http://www.thestandard.com/news/2010/01/14/mac-sales-cant-keep-pace-chea...
Ian Lamont
Managing Editor
The Industry Standard
twitter.com/the_standard
twitter.com/ilamont
Post new comment