When it comes to the ascent of Apple Inc. (NASDAQ:AAPL) and the spectacular performance of AAPL stock, one device usually gets the the credit: the iPhone. But there’s another product in Apple’s line-up that may be even more critical. The iMac tuned 20 on May 6, and it’s this iconic computer that kicked off an Apple turnaround that led to the iPhone and everything since.
The iMac Turns 20
Last year, Apple celebrated the 10th anniversary of the iPhone. The smartphone set AAPL stock on fire soon after its 2007 debut, transforming the AAPL from an $80 billon computer company to a $900 billion consumer electronics giant.
This year the iMac turns 20. Computers don’t get nearly the same attention as smartphones these days. But Mac sales are still an important part of Apple’s revenue stream. And in 1998, when the iMac was first introduced? The all-in-one computer may have saved the company and helped set it on a new path.
In the mid-90s, Apple was in trouble. According to Steve Jobs — who was brought back to the company he founded to help save it — at one point AAPL was just 90 days from bankruptcy. A $150 million cash infusion from Microsoft Corporation (NASDAQ:MSFT) in 1997 helped to keep the company afloat, but the true beginning of the Apple turnaround was the introduction of the iMac on May 6, 1998.
At that point, AAPL stock was trading in the $1.00 range…
The iMac Kicks Off an Unlikely Apple Turnaround
The original Apple iMac was an all-in one PC, with a translucent “Bondi Blue” case. Priced at $1,299 it reportedly sold 800,000 units in 1998, making it a hit for AAPL. 278,000 of those iMac sales came in its first six weeks. With iMac sales humming, Apple reported earnings of $106 million in October, en route to 1998 being the company’s first profitable year since 1995. AAPL stock started off 1999 at $1.47, up 47% since the introduction of the iMac just six months earlier.
From there, Apple introduced new case colors and improved specs, and never looked back.
The iMac didn’t just help to revitalize Apple. It set precedents that the helped determine the company’s product strategies going forward. Apple’s new all-in-one also helped to popularized technologies like the CD-ROM and USB, and went on to help push internet adoption mainstream in the home.
The iMac’s Legacy
The “i” in the iMac has carried forward with all the company’s most critical products, including the iPod, iPhone and iPad. Jony Ive designed the iMac’s unique shape, and the success of the desktop computer helped tremendously to boost Ive’s importance within the company –which in turn has helped to dictate how Apple products look ever since.
The strategy of introducing new case colors to help boost sales is a strategy that AAPL has used repeatedly since it proved so successful with the iMac. And of course the iMac’s success cemented the return of Steve Jobs to Apple. Arriving as “interim CEO” in 1997, the role was finally made permanent in 2000.
Last year, Apple re-committed to its iMac business, introducing new models that were updated after several years of languishing, along with an all-new iMac Pro. In AAPL’s latest quarterly earnings, the Mac division pulled in $6.9 billion in revenue making it the third largest in the company –and not all of that was MacBook sales.
APPL stock is currently over $186, a far cry from the $1.00 it was trading at when the iMac was first shown off on stage. And while the iPhone has been responsible for most of that phenomenal growth, as the iMac turns 20, Apple’s iconic all-in-one PC deserves credit for kickstarting that Apple turnaround and continuing to contribute to the company’s success two decades later.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
