TV-PGOctober 14, 1998: That black ink keeps flowing-- and flowing stronger than Wall Street expected. Meanwhile, it turns out that the iMac is snaring even more first-time computer buyers than originally thought, and Best Buy returns to the Mac fold next month, at least as far as the iMac is concerned...
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365 Days of Black (10/14/98)

So by now you've almost certainly heard the good news: Apple not only posted its fourth consecutive quarterly profit and their first annual profit since 1995, but they once again blew away analysts' expectations. Steve Jobs announced that Apple's Q4 profits came in at $106 million, about $30 million more than the First Call analyst consensus. And the really good news is that this quarter's profit comes not from cutting deadwood projects and products with no return, but from real, honest-to-goodness sales; the Q4 revenues rose to $1.6 billion, up from $1.4 billion the previous quarter and even with the same quarter from last year. On top of that, thanks in part to the iMac, Apple's unit shipments jumped 28% year over year, which bodes well for the expansion of the installed base. For a complete rundown of the major points revealed in the big Apple event, we recommend MacCentral's summary.

As pleased as we are that Apple continues to improve its financial standing, we're a little amused by articles like this ZDII one which proclaims Apple's street-beating results to be a "shocker." After all, we wouldn't expect too many people to be shocked when the same thing happens four times in a row, but hey, whatever. We're just happy that Apple made about $1.3 billion more in fiscal '98 than in fiscal '97, and that we can start looking forward to growth again. Even Apple's harshest critics seem to be admitting that the death watch is over, but now it's up to Apple to convince the whole world that the Mac platform is still relevant. There are plenty of challenges ahead.

As for the Beat the Analysts contest, six AtAT viewers correctly guessed the $106 million profit on the nose. Congratulations to Rich Lapka, Art Collins, Paul Spitsen, Matthew Johnson, Chad Krause, and Rafi Goldberg for hitting the nail on the head; since there was a six-way tie, a random drawing has determined Rich Lapka to be the "official" winner of a prize chosen from the Baffling Vault of Antiquity™. For details on the guesses, head over to the contest page. Thanks to all who entered, and start working now on those estimates for next quarter!

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...But Who's Buying? (10/14/98)

Apple's Q4 profit wasn't the only bit of good news Steve revealed in the big event; finally, we have some more data about the kinds of people who are buying the iMac, Apple's funky blue consumer system that is largely responsible for the healthy quarterly results. 278,000 of the lovable little things were sold in the first six weeks since the August 15th introduction, and Apple hired a research firm to find out who was buying them. The results are better than we expected-- and almost better than we could have hoped.

According to the study that Apple commissioned, a whopping 29.4% of people buying iMacs are first-time computer buyers. That means 3 of every 10 iMacs sold are sitting in previously computer-free homes, introducing families to the Macintosh; that could mean fantastic things for the growth of the Mac's market share. After all, it's pretty well known that Macintosh customer loyalty is incredibly strong, so these families that start with an iMac are likely to keep buying from Apple as their computer needs grow. These iMacs are like "market share seeds," and in several years, they may yield some mighty numbers. Better than that, though, is the fact that 12.5% of iMac buyers were getting their iMac to replace a Wintel PC. That shows that the door swings both ways; just as many people ditched their Macs to move to Wintel in the past few years, there are people who are crossing back over to the Mac side. And Apple can win plenty more converts if it keeps releasing compelling products and fostering Mac software development.

And it doesn't hurt that Apple's trying really hard to treat its iMac customers like first-class citizens. You may have noticed the almost alarming regularity with which Apple released software updates for the iMac-- to improve modem connections, fix printer bugs, alleviate CD-ROM vibrations, etc. Well, that tradition of looking out for the consumers now continues, as Apple announced that when Mac OS 8.5, the system software formerly known as Allegro, hits the stores in a few days, it'll cost $99-- but iMac owners can get it for $19.95. That's all iMac owners, not just the ones who bought one in the past thirty days. Good move, Apple.

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Buying Best (10/14/98)

Of course, all the great iMac press in the world doesn't help a bit if customers who want to buy one can't find one anywhere. We're not talking so much about availability problems; Apple's done a commendable job of keeping the supply flowing. We're talking more about retail presence. Remember when Apple yanked its Macs out of a slew of national retail chains, like Sears, Computer City, and Best Buy? Those stores were hurting Apple more than helping them; the few Macs they had on display were typically so neglected and screwed up, they probably hurt sales more than helping them. Unable to wrangle a commitment from the stores to do things right, Apple pulled the plug. And those national retailers happily waved goodbye, since Macs weren't making them any money, anyway.

But that was before the iMac. Back when Apple's idea of a compelling consumer system was the Performa 6400, we could see how big consumer-oriented retailers wouldn't be too concerned about a lack of Macs on their shelves. Now that the iMac has hit it big in the consumer space, though, surely those retailers are a little more interested. And since CompUSA stores aren't everywhere, it's in Apple's best interests to make sure that consumers looking for a new computer can pick up an iMac if they want to. That's why it's such great news that Best Buy will start selling iMacs on November 8th-- in time for the Christmas rush. An Apple press release reveals that there are almost 300 Best Buy locations across the nation, and they sell one out of every three home computers sold in cities with a Best Buy store. We bet a lot of those computers are going to first-time buyers. In our opinion, Best Buy was absolutely the best choice Apple could have made when choosing a national consumer retail chain to carry the iMac.

We don't have Best Buy stores over here in New England just yet, but they've just started to advertise on TV and the first stores will be opening soon. We'll be interested to see what the stores turn out like, and we're particularly interested in how the iMac holiday sales numbers will look...

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