Apple: Back to the iMac

Desktops lag laptops in PC sales, but Steve Jobs sees the latest iMac as the headquarters of an Apple product, Web service, and content universe

Apple CEO Steve Jobs shows off the new wireless keyboard as he introduces new versions of the iMac and iLife applications Aug. 7 in Cupertino, Calif. David Paul Norris/Getty Images

by Cliff Edwards and Peter Burrows

People check out the new iMac after Apple CEO Steve Jobs introduces new versions of the iMac and iLife applications Aug. 7 in Cupertino, Calif. David Paul Norris/Getty Images

Tim Cook (left), Apple chief operating officer, CEO Steve Jobs, and Phil Schiller, executive vice-president product marketing, answer questions after Jobs introduced new versions of the iMac and iLife applications Aug. 7 in Cupertino, Calif. David Paul Norris/Getty Images

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It didn't take long for Apple (AAPL) Chief Executive Officer Steve Jobs to get to the point Tuesday at the company's Silicon Valley headquarters. Returning to the device that helped kick off the company's remarkable resurgence, Apple gave its iconic iMac desktop computers a product refresh, and they now sport a slimmer design, glossy screens, and updated entertainment-oriented software.

Calling his presentation before journalists and company employees at Apple's Cupertino (Calif.) headquarters "a more intimate gathering," Jobs took the stage in his usual outfit of mock turtleneck and blue jeans and quickly unveiled the first iMac face-lift in three years. The new 20-inch and 24-in. iMacs eschew an all-white polycarbonate finish for a slightly more streamlined aluminum enclosure and glossy glass displays offering screen resolutions of 1680 by 1050 pixels and 1920 by 1200 pixels, respectively. The company eliminated its 17-in. display, a staple of the lineup, and introduced a sleek, redesigned Bluetooth and traditional wired keyboard. Prices for the new models start at $1,199.

Home Base for the World of Apple

Jobs also announced new software that ties closely to its Macs. Apple's tightly integrated as well as easy-to-use software and hardware products have been an essential ingredient in the company's growing acceptance with consumers. "The iMac has been very successful for us and we want to make it even better," Jobs said.

At first blush, one might wonder why Jobs even bothered. He noted that about two-thirds of the company's computer sales come from its MacBook and MacBook Pro notebook computers, bearing out an industry trend away from desktops. What's more, the 90-minute presentation seemed to highlight the computer business that Jobs took pains to drop from the company's name when introducing the iPhone at MacWorld in January (see BusinessWeek.com, 1/11/07 "Apple's iPhone Rings a lot of Bells").

But the subtext of Tuesday's announcement was Jobs' belief that Apple is best equipped to deliver great content and a great consumer entertainment experience both within and outside the home. The iMac continues to play an essential role in that strategy, serving as a home server and repository for personal digital content. "We think PCs are more important than they were five years ago," Jobs said in comments to BusinessWeek after the presentation (see BusinessWeek.com, 1/10/07, "The Future of Apple").

Tie-Ins with Google

Indeed, the new iMacs and software suites announced Aug. 7 move Apple closer to a vision of managing much of that content across a host of consumer devices, including notebooks, iPods, iPhones, and Apple TV. As part of that, Apple execs expect big growth from its Internet service, .Mac, which Jobs said currently has 1.7 million subscribers. Online storage for the $99.95 annual subscription service has been increased to 10 gigabytes from 1GB.

The increased storage may be necessary if consumers flock to an updated application suite called iLife '08, available for $79 when purchased separately. (It's included in the price of the new Mac products.) A new feature called Web Gallery lets users store digital photos and video on the .Mac subscription site, and mark them for sharing or uploading to other devices or Google's (GOOG) YouTube video site. Jobs suggested the one-touch ability to post videos on YouTube could help cement Apple's tie-in to the Web in general. "This stuff is going to be really interesting on YouTube," he said. "We are working closely with Google. They have a lot of great technologies that we want to tie in with our applications."