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The new iMac, which TIME took for an exclusive test run recently and which will be unveiled at the annual Macworld convention in San Francisco this week, could be just the thing. Like many PCs today, the new iMac is built around a flat-panel display. But instead of taking up precious desk space like a typical flat monitor, the iMac's 15-in. screen floats in the air, attached to a jointed, chrome-pipe neck. It's also rimmed by a "halo," a translucent plastic frame that makes you want to pull it toward you--or push it out of the way. Jonathan Ive, chief of Apple's ID lab, says he designed it so that you would want to touch it, want to "violate the sacred plane of the monitor." The chrome neck is articulated and bends while maintaining the angle of the screen; it connects to the computer, an improbably small hemisphere at 10.4 in. in diameter--somewhat bigger than a halved cantaloupe. The machine bears an uncanny resemblance to Luxo Jr.--the fun-loving, computer-animated swing-arm lamp that starred in a short film by Pixar, the fabled computer-animation studio that Jobs runs. (Pixar creative chief John Lasseter has also made the first new iMac ad.) "It looks a little cheeky," says Ive. It looks alive.
But can it make Apple's fortunes grow? The original iMac, which launched in May 1998, sparked a 400% Apple-stock surge during the next two years, and has sold more than 6 million units. It was also Jobs' first home run since his return to the company the previous year after 12 years in exile. Now that Apple's stock has fallen back to earth and retail stores are clamoring for something new to stimulate sales, Jobs needs to swing for the fences again.
The situation is far from dire. Apple has more than $4 billion in the bank--enough to wait out the recession--comparatively little debt and millions of fanatically loyal users who will give up their Macs only when you pry their one-button mice from their cold, dead fingers. But Apple's annual revenues have dropped from $8 billion to less than $6 billion, and the company continues to lose market share to the Microsoft-Intel-dominated world. A little more than 4% of new PCs sold in the U.S. are Macs. (Don't ask about worldwide sales, where Apple has actually slipped to less than 3% of the market, from 5.2% five years ago.) With Microsoft's antitrust troubles tabled for now and a new operating system, Windows XP, that's stabler and simpler to use than ever, Apple will be hard pressed to attract converts.
A misstep can be fatal in the fast-moving computer business. And Jobs, a perfectionist when he settles on a project, tends to get his ideas from his gut rather than, say, focus groups. Some analysts argue that Apple should abandon innovation in favor of building a cheaper box; a $500 iMac would fit the bill. Others say the company should have pursued the post-PC dream and started turning out Internet appliances, tablet PCs or personal digital assistants, as competitors have done. Instead, Jobs' gut tells him that the PC isn't dead at all. It tells him, in fact, that what people really want is a better PC. That what they really want is a Mac.