Industry Watchers Say Apple Plans Desktop Upgrade

Apple Inc. plans to upgrade its iMac desktop PC line on Tuesday with a flashier design and thinner keyboard, according to comments and photos on industry blogs. Apple did not return calls for comment, but has already announced that it will hold a news conference that day at its Cupertino, California, headquarters.

The company is expected to announce a new generation of iMac desktops with a slimmer design than the current family, which now use Intel Corp.'s Core 2 Duo processors and a choice of monitors at 17 inches, 20 inches or 24 inches.

The new desktop line will offer only the 20-inch and 24-inch monitors, putting a greater emphasis on the visual impact of applications like digital photos and movies, as well as the three-dimensional graphics used in the latest video games in Microsoft Corp.'s Windows Vista OS, according to postings at a number of blogs that are focused on Apple products and at more general IT blogs.

In another change, the new family of PCs will come with a sleek keyboard, built to be much thinner than current models and use lower-profile keys, according to photos published on several blogs.

Global desktop sales have been sinking in relation to notebook sales in recent years. In the second quarter, U.S. retail desktop sales were down 10 percent compared to the same period last year, while notebook sales rose 43 percent over the same period, according to figures published in July by Current Analysis West. The decline pushed the share of desktops for the total U.S. PC market down to an all-time low of 31 percent, with notebooks holding the remaining 69 percent.

Still, vendors can make a good profit on desktop sales, so Apple's move could be a smart way to wring revenues from that market before it shrinks even more, one analyst said.

"As far as putting effort into desktops, there is still some demand there, in most segments. Specifically, in education and the SMB space, which is where Apple focuses much of their attention," said Doug Bell, an analyst with IDC. Neither Bell nor two other analysts contacted for this story had been briefed on Apple's specific plans. Apple has a reputation for being far more secretive than other hardware vendors when it comes to briefing analysts on new products before they launch.

Upgrading the desktop line could help Apple improve its ranking in the PC market, where it is the fourth-largest vendor in the U.S., in a virtual tie with competitors Gateway Inc., Toshiba Corp. and Acer Inc., according to IDC. All four companies lag far behind market leaders Hewlett-Packard Co. and Dell Inc.

The desktop upgrade would also represent a return to its roots for Apple, although the company has generated far more attention in recent years for its iPod and iPhone mobile products and its iTunes Web site, which sells music, movies and television shows. In March, Apple made a move toward another new market when it launched the AppleTV, a set-top box that can pull media content off a computer and play it on a television.

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