After hovering on the brink of disaster, Apple is harvesting record-breaking results

It was just over a year ago, in my September 1997 column for The Lane Report, that I appealed to readers not to write off Apple Computer, Inc., even though many thought it was down for the count. At the time, I noted that there were some reasons for optimism, including lower than expected losses in the previous quarter (of all things!), and the fact that Steve Jobs, the founder of the company, had returned to take the helm. I pointed out the beautiful simplicity of the operating system and quoted research that demonstrated the Mac’s higher level of productivity (compared to a PC), especially in the world of media production and various forms of publishing.

Now, I want you to realize that I make no claims to be in the same league with the most prominent seers, prophets and prognosticators of our time, such as Nostradamus, Jean Dixon, the Psychic Connection and my mother (I told you that would happen!), but I can’t help but indulge myself in a little gratuitous self-satisfaction. In the year since I wrote that column, Apple’s stock has increased in value by over 150 percent, the company has turned in three straight profitable quarters, sales of machines with G3 chips have been brisk, and the launch of the iMac, Apple’s highly-touted new desktop machine, has been successful beyond all expectation. Mac users, and they are a dedicated bunch, have reason to be happy again.

And there are some reasons to be optimistic about the future as well. Industry analysts agree that Apple is the computer success story of the second half of 1998. They predict that the company will enjoy the biggest share gain of the industry in the third quarter, surpassing even the Dell corporation. Without a doubt, it is the best performer at this time. Sales of the iMac, which debuted on August 15, were propelled by advance orders of 150,000 machines. Even though it was not released until halfway through the month, it was tops in retail sales in August, reaching that status in only 15 days. The market research firm PC Data released a report stating that the iMac may break the all-time record for PC sales, and spokespersons for Comp-USA, Apple’s largest retailer, say that the iMac was the most successful product launch in their 14-year history.

Perhaps more importantly, Apple has demonstrated with the iMac that it can bring in new business. Polls of iMac buyers indicate that one out of every six new iMac owners is a first-time computer buyer. Additionally, about 12 percent of the buyers who are replacing older machines say that they are replacing Windows machines. In other words, Apple is building market share by assailing the ranks of the uncomputered and by adding converts from the competing platform. And sales of the iMac do little, if any, damage to sales of their G3 machines, since these are designed for the media production specialists, while the iMac is designed for the home user.

Speaking of home users, there are about 10 million Macs out there in the homes of America. The owners of these machines also have cause for celebration. With the resurgence of Apple, software developers are renewing their commitment to the Mac platform. Sales of Mac-only software rose 12 percent in the first half of this year, to 21.4 million dollars, and that was before the iMac was released. And major publishers such as Symantec (Norton Utilities), Adobe, Macromedia and Quark already have software in development running on prototypes of Apple’s next two versions of its operating system.

What a difference a year makes!