Mac Scope

Apple, New iMac Under the Microscope

Stephen Van Esch - 2002.04.17

So far, the iMac has received a truckload of positive press and is a resounding success for Apple by any measure.

Or is it?

Today's quarterly report will tell the tale for most investors and computer industry watchers. No matter how successful the computer is in print or on someone's desktop, most people will be looking at the Apple's bottom line to measure the machine's true success. The Cube received great reviews but lackluster sales performance quickly slated it for the computer museum.

Most sales figures show robust demand for the new iMac, and that's a good sign. Apple now has to translate strong sales into bottom line dollar signs. Companies that have strong sales don't always have excellent profits. (Amazon, anyone?)

If past performance is any indication, Apple will be in a strong position. Costs have been kept in check, while products, for the most part, are being delivered efficiently. These efficiencies all have an impact on the bottom line.

A weak report today, however, may allow the more naive industry "experts" to look for problems where none exist. For example, a weak quarter may allow some to claim that the iMac is not the panacea that will help haul Apple through the current computer industry slump. The headlines will scream something like "Weak iMac Demand Sinks Apple Shares."

There's some hope that saner heads are finally cropping up in the press. A weak quarter for Apple likely won't push the company to the brink, and the word "beleaguered" has all but disappeared from the lexicon. Positive reviews of the iMac have only bolstered Apple's standing in the press' good books.

But I'm still certain that Apple hasn't shaken the bad vibe it projects to a large number of investors. "Niche player" and "small market share" have replaced the word "beleaguered" and still taint Apple's stock price.

The iMac's true measure of success is how well it's been able to check the effect of the sluggish PC industry. How effective has it been in protecting Apple in a market that has been in a slump for quite awhile? Has it managed to keep Apple from sliding into the red? Most likely it has, but by how big a margin? Today's report will tell at least part of the tale.

By any measure, Apple has fared much better than most of its competitors in the PC industry. Dell has stayed ahead of the pack by mauling its competitors in a vicious price war that left Gateway on the sidelines and others struggling. Where will Apple land this quarter?

On the flip side, the iMac may be judged on how far it fell short of expectations. Some people may be expecting a massive profit because of high iMac demand. Falling short of unrealistic expectations (not uncommon with Apple) might have the same effect as falling short of achievable expectations.

Whichever way the chips fall today, Apple's flagship product will be under the microscope.

Stephen Van Esch is the founder and president of the E-learning Foundry, an online training resource for Mac users. Steve loves the Mac and is doubly bilingual, since he's also fluent in Windows and French.

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