New iMAC sales
still HOT
When Apple Computer's interim CEO Steve Jobs offered an update on iMac sales at the Macintosh Seybold conference in early September it was greeted with loud applause by die hard Mac supporters and industry observers alike. Many felt it marked a new turning point for the Macintosh as it sets up the new G3 platform as a serious rival for the immensely popular IBM based personal computers.
Jobs noted that up to mid November, the company hasn't yet caught up with U.S. demand and due to immense back orders, the curvy computer can't even be found on store shelves in Japan.
He noted that although the iMac was launched in August, it had
been sold out for the quarter ending September 26 and there was
still strong demand.
Lou Mazzuchelli, a financial analyst with Gerard Klauer Mattison,
said he has even revised his sales forecast up to 450,000 units
from 350,000 by the end of the next quarter (Apple's first fiscal
quarter of 1999), and expects the company to sell 250,000 units
for the current quarter. And, despite increasing competition from
other PC makers, this puts the iMac on pace to be Apple's most
successful product launch ever.
Imac has also made its impact in the Caribbean. CCS Technology,
one of the larger distributor of Apple Products in the region
with operations in several islands, says more than half of its
shipment of iMacs were pre-sold before the product even landed.
The remainder was completely sold out by mid November except for
the display model in the showroom. Another shipment was expected
before December in time for Christmas, says Rosanna Galy a Senior
Sales representative at CCS.
"The real surprise has been the number of first time buyers
as well as persons replacing their previous IBM based system with
iMac. Caribbean buyers were also concerned about the availability
of peripherals and accessories which use the new Universal Serial
Bus (USB) interface used on iMacs.
Already more than 100 accessories like printers, scanners and
mice, are equipped to use the new standard. The new USB standard
is becoming increasingly popular for both Mac and IBM compatible
Pcs. Big sellers, particularly to the home computing market is
the HP 692C and Epson 740 printers as well as some storage devices.
"Apple took an entirely different approach with this system.
It is geared towards home users and for this sector, the main
issues were ease of use, speed and the 4GB hard-drive which held
more than enough storage space.
"For business users interested in 'commuting' their work
between the office and home, the 120MB Superdisk drive, which
could also read normal floppy disks was the major accessory. The
iMac is also Ethernet ready making the need for floppies obsolete
on networks.
Putting aside the technical issues, the design of "the box"
won over the other buyers who did not see the absence of a floppy
as a major setback. For the home user as well, not having a floppy
drive was not as daunting.
More evidence of a surge in the appeal of Apple computers: Paul
Ramirez, vice president of marketing at Computerware, Miami, said
the company sold 1,240 iMacs from August 15 through August 31,
and sold 1,837 units for the whole month. This compares with 500
units sold all of August, 1997.
While most content publishers in attendance at the seminar at
Seybold, were more interested in the high-powered G3 notebooks
Apple launched, the iMac is a key product in the company's attempt
to maintain profitability and expand on its comparatively small
base of Macintosh users.
"We have had a phenomenal response to this product. We've
not been able to keep up with demand; we're shipping tens of
thousands [of iMacs] a week," Jobs said.
However, it's not surprising that supply in Japan is quite constrained-even
more so than in the United States-because systems are reportedly
being shipped there only after American demand has been fulfilled.
It may not be such a stirring victory to have sold out already.
Nevertheless, the market is Apple's second largest, and strong
demand should shore up Apple's sagging Asian sales figures.
The new iMac went on sale in the United States on August 15 and
has been a hot-selling item at retail stores and catalog vendors,
which have been reporting they are selling out systems as soon
as new inventory comes in. Two weeks after the product's launch,
the initial flurry of iMac sales are starting to taper off somewhat,
but resellers are still basking in the afterglow of a positive
attitude toward the Mac maker's viability.
Switchover signs
"We've seen sales growth across Apple's product line because of interest behind the iMac," said Mike France, president of MacCenter, Florida's largest Mac-only retailer. He added store traffic is still up 60 percent over the previous month.
A large CompUSA dealer in Sunnyvale, California, said that it
gets 20 to 30 systems in every other day and it still sells out
quickly. Apple could be closing in on filling the nearly 150,000
back orders it said it had. Some large resellers have nearly cleared
out their list of back orders and are close to the point where
they will have systems in stock. Also, some smaller, lesser-known
retailers and resellers have significant iMac stock.
To sustain its rapid sales rate, Apple will have to ensure that
USB peripherals for the iMac start to show up in force. After
the initial wave of highly enthusiastic customers, prospective
buyers have been hesitant to buy an iMac because they are having
a hard time finding devices such as USB-ready printers, according
to industry sources.
If trends at a California retailer bear out nationwide, the iMac
may be succeeding in an area that far overshadows the machine
itself: the defection of PC users to the Apple camp.
ComputerWare, America's largest Mac-only retailer, conducted a
survey of 500 new iMac customers and found that 13 percent of
the customers were replacing a Windows-based computer.
Additionally, Apple may have hit the mark with first-time buyers.
The survey, which was conducted by Los Gatos, California, market
research firm Market Metrics, said the iMac was the first computer
for nearly 15 percent of the customers.
Analysts have postulated that the iMac was going to be a tough
sell beyond the Mac's aficionados in any large numbers. But the
survey, although based on a relatively small sample, provides
a hint that Apple has a good chance to expand its user base by
selling to new customers in addition to its current installed
base.
Indeed, assuming this trend continues and the percentages hold
up, if Apple sells 400,000 iMacs by the end of the year-which
is at the lower end of analyst estimates-that would translate
into about 50,000 units shipped to "converted" Windows
users. If first-time buyers are included, that would jump to 120,000
users who have been won over to the Macintosh.
By contrast, Apple's fastest selling system was the G3 Macintosh,
which shipped 133,000 units in just under two months, mostly to
its installed base. Such growth in new markets is essential for
the long-term health of the Macintosh platform.
So far, the system is selling briskly. Many retailers reported
complete sell-outs of the iMac, and many took orders for iMacs
scheduled for delivery this weekend and beyond.
National computer retailer CompUSA has reportedly sold "thousands"
of iMacs since last week's launch, although the company has not
offered specific sales numbers.
Despite this good showing, the company has to produce more iMacs
to make the same amount of money it could generate by selling
fewer of the more expensive G3 desktop and notebook systems. If
iMac sales taper off too quickly and there is simultaneously a
lack of high-end products, revenues could be negatively impacted.
DataVision, a reseller with stores in Long Island and New York,
had its highest single day sales total in the company's history,
according to a representative. Its inventory of iMacs sold out,
and the company reported brisk sales of other Mac desktop and
notebook computers as well.
Jobs estimates that there are 16 million customers that could
potentially buy new Macs but have been reluctant to do so because
of questions about the company's viability and the lack of a compelling
product.
The $1,299 iMac is the company's response to such concerns, and
also fills a big hole in Apple's PC lineup: This is the first
new full-blown Macintosh consumer system in over a year.
To help buyers make up their minds, Apple Computer says it will
spend a whopping $100 million on the iMac ad parade up to till
Dec. 31.
The budget will make this the largest marketing campaign in the
company's history. As to the content of the commercials, Lou Mazzucchelli,
an analyst with Gerard Klauer Mattison, says there may be a clue
on the Apple Web site.
A video clip called the "Simplicity Shootout" pits a
26-year-old MBA student with a Hewlett-Packard Pavilion 8250 against
a 7-year-old, assisted by a dog, with an iMac. The contest is
to see who can set up and get on the Internet fastest. Guess who
wins.
Mazzucchelli said he expects the TV ads to play up the theme that
the iMac is "the fastest way out of the box and onto the
Internet." He also praised the radio ads saying, "If
the rest of (the campaign) is as good as the radio campaign, then
we can expect a tremendous ride."
The radio adds preceeded the campaign with a five day count-down
with a nationwide, 20-station U.S. radio promotion featuring iMac
giveaways on each day.
"We're launching this campaign because we want the world
to know that iMac is the computer for the tens of millions of
consumers who want to get on the Internet easily, quickly and
affordably," says Jobs.
Analysts expect Apple to sell about 400,000 iMacs by the end of
the year, which means the huge ad budget breaks down to about
$250 per machine.
"We have a big message that we want to get out to a lot of
people," said Phil Schiller, vice president of worldwide
marketing at Apple. "It is definitely the largest campaign
we have ever had, just as the pre-orders are the largest we have
ever had."
On Monday, Apple said it had received orders for more than 150,000
iMacs. Apple started accepting pre-orders on August 3.
Apple's iMac campaign includes TV advertising that focus on the
iMac's key features, including easy setup and internet access
speed. Magazine ads: A new 12-page iMac insert will be distributed
in leading consumer magazines beginning this week, including Time,
Newsweek, BusinessWeek, People, Sports Illustrated and Rolling
Stone. More than 15 million copies of the insert will be distributed
in major magazines this quarter, more than double the amount of
inserts Apple has distributed in the past. Apple's "think
different" ads will continue to appear on the back covers
of national magazines.
Billboards in major US cities featuring a large photo of iMac
and one of the following headlines: "I think, therefore iMac,"
"Chic. Not geek," "Sorry, no beige," or "Mental
floss."
The grammatically novel "Think Different" campaign,
a brainchild of Jobs, started running late last year. It was the
first new TV ad campaign the computer maker produced since fall
1996, when it created a campaign for the education market called
"Bring Learning Home."
Bradley Johnson, a columnist for Advertising Age, said that Apple
spent about $85 million on that campaign.
"Apple spent $85 million to launch a revolution, and they
are spending $100 million to launch an evolution," Johnson
said. He also pointed out that Compaq Computer doubled its U.S.
consumer advertising budget to about $50 million this year.
"This means that Apple appears to be on track to do the biggest,
most concentrated consumer computer campaign in history,"
Johnson said.
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