A Long, Dry Summer

Late last month HP released its quarterly earnings. Thanks to the recent HP-Compaq merger, the world’s largest PC maker recorded a $2 billion loss, mostly from extraordinary charges relating to the largest PC industry combination in history. Apart from the extraordinary charges, the company made about $420 million including a profit of more than $800 million from its flagship printer division. How did the printer division make more than $800 million but the company report a net profit from operations only of $420 million? You guessed it! HP’s PC division continues to lose lots of money. Still, HP will most likely be around next year.

Our friends at Dell (we use the term “friends” quite loosely) have seen over the past twelve months or so about $3 billion disappear from the company’s balance sheet. Where did the money go? Over the past year Dell has been aggressively repurchasing the company’s stock as a way to invest its corporate bankroll at a time of extraordinarily low interest rates and prop up the company’s earnings per share. The fewer shares outstanding, the more earnings attributable to the remaining shares.

Mac users may not be fans of Dell Computer or its products, but we must give the entity often derided as the “anti-technology” company credit for its consistent profitability and uncanny ability to gain market share. Dell lost the worldwide PC sales crown to HP following the merger with Compaq, but the Texas-based company is on the verge of regaining the PC sales top spot as the executives at HP continue to focus their time and attention on merger-related issues. Dell is one of only two of the major PC companies with profitable PC sales. The other company that has been able to report a profit from PC sales in a very challenging market is…Apple Computer.

That’s right. The Mac maker, despite its challenges, is one of the most efficient PC makers on the planet. In mid-August, to comply with new SEC regulations and anti-corruption corporate legislation, Apple certified its financial statements from last year’s annual report to the present time more than four months early. Apparently Apple can do things quickly (when it chooses to do so)!

Over the summer Apple earned the ire of its customers with the conversion of the free iTools service to the subscription-based .Mac service. Further, the company decided to charge its customers for the Mac OS X 10.2 upgrade. Apple stated at the end of the last fiscal quarter that the three-month accounting period to end in September might result in a loss. The reason for the loss is that Apple must write-down the sale of its investments in EarthLink and Akamai due to the long-term drop in the share prices of the two companies.

Apple will be taking an extraordinary charge for layoffs at its Sacramento manufacturing facility and job cuts at its Cupertino headquarters. Despite the layoffs Apple’s employee head count continues to grow. The extraordinary charges should total in the area of $30 million to $40 million. The revenues generated from the sales of Mac OS X 10.2 and sales of .Mac subscriptions may compensate for the extraordinary charges. Apple, Dell, and HP should all be around next year.

So who is left? Actually who won’t be left next year? Gateway, which has ceased its overseas operations and recently closed several money-losing Gateway Country Stores, may have trouble remaining in business for another twelve months. The company entered the calendar year with well over $1 billion in cash but has yet to figure out a way to return to profitability. In an unusual move, Gateway has chosen to take on Apple in an expensive media campaign comparing its all-in-one PC to Apple’s iMac.

Gateway is a Windows PC maker and was beginning to hold its own in battling Dell and HP in the enterprise market. Now Gateway wishes to challenge Apple in the consumer sales arena. Gateway’s new ad campaign is both expensive and risky. If the campaign fails to revive Gateway’s slumping consumer sales, the expense of the campaign and the diversion of the company’s scant resources to a consumer push, at a time when most consumers aren’t considering a new PC, may accelerate the company’s demise. Apple already outsells Gateway in the worldwide market and is gradually gaining ground on Gateway in US sales.

While the PC industry plays its own game of “Survivor,” please take a look through our September issue. It’s full of news, views, and reviews about products for the Mac. No matter the travails of the PC industry, please rest assured that 12 months from now Apple Computer and the Macintosh platform will still be standing.

The Candy Apple: Home Is Where the Heart Is

Ellyn Ritterskamp takes on some high points and low points of being a member of an online community.

The Personal Computing Paradigm: Mac OS X 10.2—First Impressions

Michael Tsai looks at Jaguar, covering installation, a Radeon incompatibility, the improved Finder, and the new font smoothing options.

Profiles in Networking: The Audio/Video Quadras (660av, 840av)

Jaguar and Rendezvous are here, but we still have not forgotten that some older Macs still want to talk to each other. Matthew Glidden explains the networking options for the A/V Quadras, the first Macs with special hardware for multimedia processing.

Roll Your Own: Charting Your Success

An algorithm is not a new Latin beat. Chuck Ross continues his series by explaining what such a beast really is, and how you can use it to create your own software.

How To: What’s Under the Hood

Mac users are renowned for wanting to customize their computers, either for efficiency or for fun. This month, Robert Lewis tells us what he uses in Mac OS X and Mac OS 9.2.2. This may help you discover some software to improve your computing experience.

Cortland

Deadlines, you say? Matt Johnson’s Cortland cartoon gives us his take on how some bosses “delegate.” A second Cortland shows how the design and sales departments interact.

Desktop Pictures

Anthony Peelen sure gets around! He sends us snaps of his recent trips to Croatia, Mexico, and Andalusia.

Review: Anonymizer Ultimate Security Suite

Gregory Tetrault reviews Anonymizer, a security suite (software and service) that not only keeps your identity secret while you’re browsing, but also encrypts your network activity, preventing others from eavesdropping on you.

Review: Auto Charger for iPod

The Auto Charger for iPod gets tested out by Ellyn Ritterskamp. This piece of hardware allows you to use your iPod to recharge your car battery if you find you need a jump. Or maybe it’s the other way around.

Review: Forma 2.0.7

Forma 2.0.7 may look like Tetris, but as Brooke Smith found, it’s far from it. Actually more complicated and challenging, Forma is also less addictive than Tetris, so you can play the game and still get some sleep at night.

Review: LeatherPod

Chris Lawson checks out the LeatherPod, a simple and stylish case for your iPod. If your iPod is scratched up, it may be too late for a case to be much help; but if your iPod is relatively new, consider protecting it before it’s too late.

Review: The Missing Sync 3.0

If you have a Sony CLIÉ and need to sync it up with your Mac, Chris Lawson will tell you that what you need is The Missing Sync 3.0. Now the most stylish PDA and the most stylish computer can work together.

Review: Optical Elite

Eric Blair reviews Kensington’s Optical Elite mouse, which goes well beyond the Pro Mouse that comes with new G4s. It offers four well-placed buttons and a scroll wheel, as well as an illuminated optical sensor.