Apple Computer Inc - Internet Strategy

INTERNET STRATEGY

The iMac, a PC designed to make Internet access as straightforward as possible, was launched in 1998. Available in a variety of bright colors, the iMac housed its monitor and hard drive in a single unit. The new machine's popularity boosted the performance of Apple, which earned $309 million in its first profitable year since 1995. According to a March 1999 article in Microprocessor Report, the iMac's "box-to-Internet" approach did two things for Apple. "It rekindled the public's love for Apple, and it delivered the most approachable, friendly personal computer yet." In 1999, Apple released a laptop version of the iMac called the iBook.

The iMac was a key component of Jobs's strategy to gain Internet dominance by offering an easy-touse machine along with a series of free Internet services known as iTools. These iTools included 20MB of online storage space, content filters for parents, e-mail and greeting card services, and a World Wide Web site rating system called iReview. In additional to the new machines and free services, Apple also released a new operating system, Mac OS X, in 2001. As stated by Charles Haddad in BusinessWeek Online, "Based on Unix, OS X has supercharged Internet and networking capabilities. It could be the thread that ties together all the other pieces of Jobs's plan." However, deteriorating PC sales and a weak North American economy began to undercut sales and earnings at Apple in 2001. The firm's lackluster performance, along with its steadily dwindling market share, led many analysts to question Apple's future performance.