Facing Shortages, Apple Hikes iMac G4 Production, Prices

Apple

At the Macworld Expo in Tokyo this week, CEO Steve Jobs said Apple has begun "volume production" of its new flat-panel iMac G4. The table lamp-shaped desktop computer, unveiled with great fanfare in January, was hailed industrywide as an innovative, much-needed redesign of the popular iMac line, whose sales had faded. To date, Apple has shipped more than 125,000 of the iMac G4s, but the strong demand has left many customers on a waiting list, with some Macintosh users, resellers and retailers complaining of delays ranging from weeks to months.

"Customer demand for the new iMac has been off the charts, and we have simply been unable to keep up with it," Jobs said in a keynote on Thursday at Macworld Tokyo. "We are now in volume production, shipping over 5,000 new iMacs per day, and hope to catch up with demand soon. We appreciate our customers' and resellers' patience during this ramp-up period."

Along with the production ramp-up, Apple announced a $100 price hike for all three iMac G4 models, citing escalating component costs. Since the new iMac's debut, memory costs have tripled, and costs for LCD flat-panel displays have jumped 25 percent, according to Philip Schiller, senior vice president of worldwide product marketing at Apple. Some industry analysts reported that Apple and other computer makers have been forced to reassess system pricing, in part, because of a recent shortage in flat-panel display technology.

The iMac G4's new retail list prices are $1,399 for the 700MHz model with CD-RW drive, $1,599 for the 700MHz unit with Combo (DVD-ROM/CD-RW) drive, and $1,899 for the 800MHz version with SuperDrive (DVD-R/CD-RW). Apple said it will honor all orders as of March 21 at the original pricing.

Over the long term, the price hikes aren't likely to squelch customer demand for the flat-panel iMac, but the supply shortfalls could bite into Apple's second-quarter 2002 financial results, according to Wall Street analysts. Thomson Financial/First Call projects the Cupertino-based computer maker to post earnings per share of between 6 cents and 12 cents when it reports second-quarter results on April 17. The consensus estimate is 10 cents per share.

The iMac situation, however, didn't stop Apple from unveiling new three products at Macworld Tokyo: the Apple Cinema HD Display, a 23-inch, all-digital flat-panel with HDTV-level resolution; Bluetooth software for Mac OS X, enabling wireless connectivity between a Mac and portable digital devices; and a 10-Gbyte version of its iPod MP3 player, which doubles the storage capacity of the initial 5-Gbyte version.

The Apple Cinema HD Display is slated to ship next month for a retail list price of $3,499. Apple said it's now offering Bluetooth preview software as a free download at www.apple.com/bluetooth and that a USB adapter for the software--needed to Bluetooth-enable Mac computers--will be available for $49 starting in early April. The 10-Gbyte iPod is available now for $499.

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