Hardware

Apple delays new iMac

All-new machine won't be available until September, well after stock of current model runs out.

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By Ina Fried
CNET News.com

Apple Computer confirmed Thursday that it is working on an all-new iMac but that the machine won't be ready until September, well after the Mac maker runs out of stock on the old model.

The Cupertino, Calif., company said it has stopped taking orders for the current iMac models and had hoped to have the new iMac available by the time the supply of current iMacs dries up. The delay means that Apple stores and resellers will be without an iMac model to sell for all of July and August and some portion of September.

"We planned to have our next-generation iMac ready by the time the inventory of current iMacs runs out in the next few weeks, but our planning was obviously less than perfect," Apple said in a statement.

The company said the new model will be announced and made available in September. "We apologize for any inconvenience to our customers," Apple said.

Apple of flat-panel iMacs in January 2002.

An Apple representative said the issue will not affect earnings for the third quarter, which ended Wednesday, but declined to comment on the effect for the current quarter, which runs from July through September.

Apple's stock, which had been trading at multiyear highs ahead of this week's developer conference, dropped Monday after CEO Steve Jobs failed to introduce any new Macs. Shares slipped another 6 percent in after-hours trading Thursday as word of the iMac delay hit Wall Street.

The iMac is Apple's mainstream consumer desktop model, although its share of the company's overall sales has been declining amid a shift to notebooks and the popularity of the iPod music player. Last quarter, Apple sold 217,000 iMac and eMac models (it doesn't break out sales between the two models), accounting for $252 million of the company's $1.9 billion in revenue.

It is not clear exactly what type of problem is behind the delay. "One possibility is they had a supplier in the critical path that was unable to perform," said IDC analyst Roger Kay. "Maybe they found a design flaw late in the cycle."

Chipmaker IBM has had trouble meeting demand for the G5 processor that is used in the Power Mac and Xserve lines. It is not clear whether this new iMac design is to use the G5. An IBM representative was not immediately available for comment.

Kay said he could not think of a time when a major computer maker stopped shipping its mainstream desktop line.

"It's a big deal," Kay said.

He said he is somewhat surprised Apple didn't try to stretch out the life of the old iMac once it encountered problems with the new one.

"Why don't they build a few extra old ones in the meantime?" Kay asked. "It sort of seems odd."

Independent technology analyst Peter Glaskowsky said if it came to restarting production of the old model, Apple might find it hard to quickly get hold of one component, the custom core logic chip that helps shuttle data to and from the iMac's CPU (central processing unit).

Not having any computers to sell is a relatively unusual challenge, NPD analyst Stephen Baker said.

"I can't ever remember a point in time where a computer maker ran out of the old (models) before they had the new," Baker said. "Transition problems are almost always: 'I've got way too much of the old thing, and I don't know where to put it.'"

The delay could mean the iMac will miss out on the back-to-school shopping season, traditionally the second-busiest computer buying season next to the winter holidays.

Creative Strategies analyst Tim Bajarin said the extent of the hit to Apple's bottom line will depend on when in September the new model ships.

"If it ships in early September, they probably won't have as many problems on the bottom line as if it ships at the end of September," Bajarin said.

While it will indeed pose a marketing challenge for Apple, Bajarin said the company does have an opportunity to convince buyers the new model is worth waiting for.

"This is one of the only companies that will get away with that one," Bajarin said. "A lot depends on how Apple positions this and how much information they give to customers to entice them to wait."

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