Commentary: Come On, Steve--Think beyond the Mac

By Cliff Edwards

When Apple Computer Inc.'s (AAPL ) Web site proclaimed "Count the days, count the minutes, count on being blown away" in anticipation of the annual Macworld Conference & Expo that started on Jan. 7 in San Francisco, rumor had it Chief Executive Steven P. Jobs was about to announce the Next Big Thing. Industry watchers hoped Jobs would unveil a home media management center or handheld device that would help catapult Apple beyond the slow-growth desktop computing world and into dazzling new digital devices for the home.

That turned out to be wishful thinking. Instead, the highlight of Jobs's keynote was the debut of a revamped iMac. The sleek new PC offers a 15-inch flat-panel monitor connected by a swivel arm to a compact and curvy base that holds the brains of the computer. It's a beautiful design. And, in an only-too-familiar refrain, Jobs called it "the best thing we have ever done."

Steve, it's time to admit the Mac-centric strategy can only go so far. To boost its long-term prospects, Apple needs to reexamine its belief that the Macintosh will become the hub in most homes for coordinating digital devices such as cameras, music players, and handhelds. Last year, Jobs announced Apple's digital hub strategy and Apple unveiled whizzy, easy-to-use software to manage home movies and digital music. In mid-November, it brought out its card-deck-sized iPod digital music player capable of storing 1,000 songs. Problem is, all of these products work just with Macs. Sure, 125,000 iPods were sold in six weeks. But Apple could have sold four times the number if iPod also worked with Windows machines, says UBS Warburg analyst Don M. Young.

Apple shouldn't give up on the Mac, but it could open vast new markets for itself if the company applied its design prowess to other products. Mac fans have been clamoring for an Apple handheld organizer--similar to the Palm--that works with both PCs and Macs. The company could create a sleek Apple media center that wirelessly networks any kind of computer, handheld, or other digital equipment. Or it could team up with consumer electronics companies to create Apple-branded digital gizmos with Apple's unique look and feel. So far, though, Apple hasn't signaled that it's planning on branching out beyond its Mac technology.

Apple needs to grow roots in new soil in a hurry. The company's worldwide market share fell to 2.9% on Oct. 1, from 3.3% a year earlier, according to market researcher IDC Corp. What's more, a slew of companies is racing to offer similar digital products for the home. Microsoft Corp. (MSFT ) is trying to morph the PC into the hub of the digital home. And a Palo Alto (Calif.) startup called Moxi Digital Inc. is working with cable and satellite providers to offer a media center that would not only control Mac and PC software but include a personal video recorder that wirelessly connects all the TVs in a home.

Apple has shown time and again that it can break the mold and make computers fun and easy to use. But that hasn't reversed its gradual slide into irrelevance. Now it needs to break out of its all-Mac, all-the-time rut. And unless it does so soon, the company's Web site might as well post this message: "Count on being underwhelmed."

Edwards covers Apple from Silicon Valley.

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