21st: Apple's profit and gloss

The soccer-fan chant of Chumbawamba's upbeat hit "Tubthumping" greeted the crowds at Macworld Expo Tuesday morning as they filed in to hear Steve Jobs' keynote address. Maybe the lyrics were meant as a cheery backslap for Mac devotees who, like the computer they love and the company that makes it, have taken more than their share of lumps in recent years.

More likely, it was just a coincidence. Because Jobs' speech, though it had its share of pep-talk pizzazz, didn't land any knockout blows on Apple's behalf. It was less a manifesto than a progress report -- an attempt to show that Apple is fixing its problems and slowly returning to some semblance of business as usual. Going in, everyone knew that Apple would not announce a new CEO or any other major new initiative. Jobs had only one bombshell: an early announcement that Apple had, for now at least, clawed its way back to profitability, earning $45 million on $1.575 billion in revenues for the most recent quarter.

That's certainly heartening for a company that has so often seen its rainbow logo awash in red ink. But it doesn't mean much in the bigger picture: Don't forget that Apple's last CEO, Gil Amelio, had a quarter or two in the black -- yet it didn't help him reverse the company's decline.

Last year at Macworld, Amelio rambled for nearly three hours, touting the importance of Apple's next-generation operating system, Rhapsody -- to be based on Jobs' NeXT system, which Apple bought for some $400 million. One of the many guests Amelio trotted out then was Jobs himself, who extolled the wonders of NeXT as Macintosh fans cheered his return to the Apple fold.

A year later, Jobs -- now standing in Amelio's place as Apple's "interim" leader -- paced the stage in jeans and a dark turtleneck, peered out over his beard and ran down a long list of positive signs in the Mac universe. Strangely, he did not utter the word Rhapsody once -- not even to say, "Rhapsody is on schedule, we'll tell you more down the road." Rhapsody -- and the whole complex "blue box/yellow box" development scheme that Amelio unveiled so clumsily last year -- might as well have disappeared into a black hole. Apple may still be gestating its advanced operating system, but it certainly isn't advertising the fact.

Of course, there's some good sense in this. Even if Rhapsody turns out to be the neatest, coolest new software ever, there's no way millions of Mac users are going to find their lives transformed overnight by it: New operating systems take time to mature and become useful. Jobs concentrated on more pragmatic, short-term goals, and in a vaporware-ridden industry, that's always welcome. But the way he wrote Rhapsody completely out of the Apple picture was a little unnerving (and ironic, since it was Apple's purchase of NeXT to be Rhapsody's foundation that had brought Jobs back into Apple's executive suite in the first place).

Jobs sang the praises of the fast new G3 chip that Apple's newest Macs are built around ("The thing's a screamer -- it will toast Pentium") and announced that Apple shipped 133,000 of the new systems in the couple of months since they were introduced. He declared Apple's new online store and its new build-to-order manufacturing system a success. Apple is selling more Macs at CompUSA outlets now that the chain has begun building separate in-store Apple shops. Nearly 3 million copies of Mac OS 8 sold since its introduction last summer (and it's a good guess that those sales, at $100 a pop, may have been what pushed Apple into the black ). A new, less ambitious upgrade, System 8.1, is due soon -- with bug fixes, faster Java, a new file system and DVD support -- and will be available free to OS 8 users.

A demo of the new QuickTime 3.0 upgrade of Apple's multimedia software had jaws dropping around the packed auditorium. The new video and audio compression standard offers pretty impressive quality in itself. But the surprise announcement was that it "streams" automatically across the Internet: Users don't need to install plug-ins to begin viewing and listening to audio and video files, and publishers don't need to buy special server software to offer sound and video on their sites. That sets the new QuickTime apart from the existing standard, RealAudio and RealVideo, and makes it a potentially important breakthrough for Net-based multimedia.

Aside from QuickTime, the most significant new-product roll-out here was Microsoft's unveiling of its new Office 98 for Mac. The last Office upgrade alienated Mac users with its Windows-style look and crummy performance; the new product, with careful Mac integration and some fancy new features, looks like an about-face for Microsoft (a company that has always learned from its mistakes). The guy from Microsoft who ran the demo even won a round of cheers from the Mac-biased crowd.

The Macworld Expo floor was jammed as always, but the mood felt subdued. Gone were the obnoxious but spirited "Fight Back for the Mac!" banners flown by Mac clone builder Power Computing (Apple killed off its clone market last summer). This year's ubiquitous exhibitor was Iomega -- which introduced a new product called the Clik Drive by distributing little clickers for free to thousands of attendees, who proceeded to fill the Moscone Center with an unendurable staccato din. Click back for the Mac? It just doesn't sound the same.

Meanwhile, Apple's fans are still waiting for a sense of the company's direction and leadership, and Jobs uttered not a single word about the CEO search or the much-rumored plans for an Apple "network computer." Jobs reported progress, but the crowds want inspiration. "Think Different," Apple's new ad slogan, sounds stirring. But the world is still waiting to know just what Jobs and Apple think it means.