Tech Issues: Apple bites back.

Can the computer maker's latest offerings stall the wolf at the Gates?

Apple's bumper crop of new products has generated a level of attention and optimism that has eluded the computer maker for several years. At the core of a new line of desktop, minitower and laptop Apple computers is the new G3 PowerPC chip. Research shows that the new G3 architecture is up to twice as fast as the latest Intel chip, promising faster and more efficient computing at lower costs than previous models. "The new G3 is an amazingly fast chip," says Steve Abrahamson, CEO of Ascending Technologies in Chicago.

The redesigned Macintosh Powerbook G3 line boasts features that enable these machines to approach the power of desktop computers. Among them are a 233-292 MHz processor, a large screen, plenty of RAM, interchangeable storage devices and Internet capabilities. These Powerbooks start at $2,299. In response to the ever-growing sub-$1,000 PC market, Apple has introduced the iMac. This entry-level Mac includes everything needed for basic computing and Internet access. Although the device doesn't include a floppy disk drive, it's a welcome alternative for the many Mac enthusiasts who've recently considered purchasing a PC. "The G3 Powerbook is an incredible machine that reaches desktop functionality, and the iMac is going to be a dream come true for many consumers," says Abrahamson.

The iMac is a sight to behold with its see-through, Jetsons-like case. This is the kind of innovative design that has been missing from Macs for the past few years, and the $1,299 price should help move it off the shelves: in August, Apple reported 150,000 advance orders for the unit. To spur interest in its new products, Apple has also inundated the airwaves with its claim that the G3 processor (also used in the iMac) is much faster than the corresponding Intel processor. But that depends on how you look at it.

"The raw G3 PowerPC processor is faster than any of the mainstream Intel chips," says James Staten, an industry analyst for Dataquest in San Jose, California. "But the Mac OS is less efficient than the Windows or Unix operating systems and it slows the chip down." The G3 chip gives the best performance with programs designed specifically for the Mac platform, Staten says, but not everyone uses high-end graphics programs on a regular basis.

"When compared with programs like Microsoft Word, there isn't much noticeable difference in performance," Staten says. "The G3 processor is a little bit faster than Intel in most cases, but depending on the application, a case can be made on both sides."

Aside from the new G3 chip, Apple has taken other measures to shore up the farm in recent months. Steve Jobs, interim CEO and original co-founder of Apple, made tough pruning decisions and planted new seeds of change that include: dumping the Newton personal digital assistants; ending Mac clone licensing agreements that ate away Apple's profits; and restricting sales of Apple products to CompUSA and 3,500 authorized U.S. dealers and resellers. Jobs embarked on a new relationship with Microsoft, which invested $150 million in Apple and then developed a unique Mac version of Microsoft Office 98--even before the PC version was released. Apple developed an online store (www.apple.com) where customers can build custom Macintosh products. To get the news out, an aggressive marketing campaign attacking Intel's business let customers know Apple isn't licked yet.

All the work helped the company post a profit earlier this year, after losing almost $2 billion the two previous years. Since January, Apple's share price has more than doubled to the low $40s. Analysts agree that Apple is making strong moves, but the company has just begun the work of improving market share. Quarterly profits and stock prices aren't the only indicators that count, Staten says. Apple's growth rate must surpass industry averages for the company to increase market share, Staten says. Currently, the company maintains only 4% of the market.

While consumers may not be concerned specifically with market share, it does affect the amount of support products get. More market share translates to more support from software and peripheral developers and manufacturers. As PC prices continue to drop, even the iMac won't be able to compete for customers concerned about price when the lowest cost computer will average $700 by the end of the year. It'll take more than one good crop for Apple to have a winning season.