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Cheaper iMac? Who Cares?

With the International Consumer Electronics Show (CES) 2005 wrapping up yesterday, many members of the technical press are turning their attention to this week's MacWorld Expo, an annual event held in San Francisco that highlights the rabid nature of the Apple Computer fan base. As usual, rumors are swirling around this year's MacWorld event, and many observers expect to see a $500 iMac based on outdated PowerPC G4 processor technology. But anyone who's interested in such a device is missing the point: Apple conceded the PC market years ago, and its line of Macintosh computers now constitute little more than a niche market. No, the news from MacWorld this year will be all about consumer electronics and whether Apple can do anything to build on the iPod's success before Microsoft's PlaysForSure cabal crushes it like a bug.
Although Apple's historically secretive approach to new products has served the company well and driven excitement for its trade shows, the company will have to do something particularly impressive to thwart the momentum that's now building for Microsoft's Windows Media-compatible digital media platforms. At last week's CES 2005 show, an amazing array of companies showed off software, online services, portable devices, set-top boxes, and other products that build on Microsoft's platforms. Despite being a leading player in the MP3 market with its successful iPod, Apple wasn't at the show. And the only products at CES that were even remotely related to Apple were a few white iPod add-ons that got buried in a sea of Microsoft-compatible products.
If CES is any indication of trends in the consumer electronics market--and quite obviously it is--Apple has a lot of work to do. Instead of partnering with a host of other companies the way Microsoft has, Apple has partially opened the gates to its proprietary technology only to select companies such as HP and Motorola. By going it alone, Apple has guaranteed that it will reap the short-term rewards of the iPod's success, but questions remain about the company's long-term viability, especially given the similarities between Apple's iPod strategy and its failed Mac strategy. 
Meanwhile, Microsoft has even started to court its competition. At CES 2005, the software giant announced a partnership with TiVo, the leading digital video recording (DVR) company, which makes a product that competes with Microsoft's Media Center PCs and Windows XP Media Center Edition (XP MCE). In addition, Microsoft is partnering with a variety of online music and video stores that compete with its own services.
Will Apple announce similar partnerships this week and extend the iPod's reach? Perhaps. Either strategy change would certainly have farther-reaching consequences than yet another iMac. And given Apple's past MacWorld performances, I think it's safe to say that we can expect something a lot more exciting than an underpowered computer.

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