Apple's announcement this week of new iMacs, software, and services strikes at the Windows platform's core strengths. The new generation of iMacs, priced starting at $1,199, compete on price/performance with midrange PCs. And Apple rounded out its iWork suite with the Numbers spreadsheet software and other capabilities, making it a head-to-head competitor with Microsoft Office.

It's getting hard to find reasons to buy a Windows PC, aside from sheer inertia. Windows PCs used to be far more cost-effective than Macs, but no longer. Macs can now compete hard with PCs on cost, for all but the very cheapest, sub-$600 Windows machines.

This is especially true when you factor software into the price. The Mac comes bundled with iLife software, offering sophisticated video, photo, and audio editing. You have to pay hundreds of dollars to find equivalent software for the PC.

But while Apple is entrenching its position in the midpriced and high-end desktops, it's accelerating its retreat from the bargain basement. Apple is discontinuing the $999 17-inch iMac; the entry-level iMac is now $200 more expensive: $1,199 for the cheapest of the new line.

Even the Mac Mini, priced under $800 without a display, keyboard, or any external components, is an afterthought for Apple. Although the Mini received an upgrade Tuesday, it didn't get any of the love lavished in the iMac and applications.

Apple's retreat from the low end is intentional -- Apple just isn't interested in shipping el cheapo PCs, said Apple CEO Steve Jobs: We "just can't do it. We can't ship junk. There are thresholds we can’t cross because of who we are," Jobs said Tuesday.

Mac fans will see that as a declaration of Apple's superiority. Mac haters will see it as ridiculous snobbery. I don't see it as either -- just a simple statement of fact. Apple is competing in the midrange and high-end PC market, it's not interested in the low end of the market.

iWork: iWork is a main area where Apple is bringing the battle to Microsoft. Apple added a spreadsheet to iWork, called "Numbers," making it more of a head-to-head competitor with Office. John Gruber, author of the blog Daring Fireball, writes: "This is the 'bring it on' release of iWork."

MacUser writes:

Numbers is a spreadsheet done in the style of Keynote and Pages, featuring intelligent tables that allow sorting and filtering by clicking on headers; a flexible canvas that allows multiple sheets on a single canvas, meaning you can use formulas to tie them together, but format them separately; interactive printing that lets you scale content so that you get exactly what you see; and drag-and-drop formulas.

The point of Numbers, as with the other elements of the iWork suite, is to be able to make beautiful spreadsheets very quickly. Best of all, it'll allow you to import and export almost all Excel documents.

Gruber describes Numbers as:

a total ground-up re-imagining of what a "spreadsheet" app is. The fundamental element is not the spreadsheet; it's a canvas on which you can place elements, which elements can be tables (which are spreadsheets), charts, and graphics.

Look at the "Intelligent Tables" features. What Numbers really is is a way for people to create their own table-based software. Numbers might be as much a new Hypercard as it is a new Excel.

Apple upgraded Pages, its page-layout software, to make it function better as a word processor, including the ability to import documents with change-tracking from Microsoft Word.

Microsoft is going to be facing some tough times with its Microsoft Office monopoly. The monopoly is currently riding on fear -- everybody else uses Office, so if I don't I might not be able to share critical documents -- and the needs of a few Excel and PowerPoint power-users. For the rest of us, there are plenty of good alternatives to Office. Office costs $300 for most people -- although student discounts can bring the price down to about $150. OpenOffice.org and its Mac port, NeoOffice, does almost everything that Microsoft Office does, and it's free. Now, iWork is another alternative for Mac users, priced at $79.

iLife: Apple upgraded iLife, with changes to iMovie to speed up the movie-making process, GarageBand for creating audio and podcasts, and iPhoto. AppleInsider has details, with screenshots.

iPhoto has features that make it easier to organize photos.. It addresses a problem that I face: Thousands and thousands and thousands of photos occupying the hard disk, almost completely disorganized. Are you looking for the particular photo you took four years ago of Great-Aunt Gertie dancing the cha-cha at your son's Bar Mitzvah? Good luck with that -- it's buried under a vast pile of digital mulch.

The new iPhoto organizes photos that were taken at the same time into Events.

You also can hide photos in iPhoto. That's great for people like me -- I hate to delete a single photo, but I don't want to look at all of them every time I flip through an album.

iPhoto automatically exports your photos into a Web Gallery, which is a new feature of the .Mac service.

Apple incorporated Web Gallery into the iPhone, updating the smartphone's software through some magical means that didn't involve user intervention. That's unusual; until now, updates to iPhone software were delivered over the Internet, through iTunes, when iPhone owners synched their devices to the desktop. iPhone Atlas speculates that the updates were delivered wirelessly over the EDGE network. Either that, or the Web Gallery was included in the iPhone software update 1.01, released July 31, and timed to go live Tuesday.

iMovie '08 isn't just a movie editor -- it also works as a library of all your online video. MacUser writes:

Music, sound effects, photos, titles, and transitions can all be added with ease, and the Share options make it a snap to export video to a variety of sources: iTunes, ipod, iPhone, Apple TV, or in a .Mac Web Gallery. You can encode in multiple resolutions for different quality downloads, even going higher than DVD if you want. And if you want to share it immediately, there's a Share option that lets you send your movie directly to YouTube.

iMovie requires a G5 or Intel processor, so owners of older Macs need not apply.

You can get video tutorials of the new iLife and iWork applications. While you're there, catch a video of Jobs's presentation, and see the new Mac commercial, which will give you good idea what the new iMacs look like.

Not the least of Tuesday's announcements: Apple upgraded its .Mac service.. I mentioned the online photo gallery earlier; Apple also added additional storage capabilities, bringing the maximum online storage to 10 Gbytes.

The added capacity actually makes .Mac practical as an online backup service. Apple really needs to add an unlimited-storage option to make .Mac competitive with online backup services like Amazon S3 and Mozy.

Mac Mini: The Mac Mini got upgrades as well.

The new version still comes in two models, $599 and $799, but features Core 2 Duo processors versus the previous Core Duos -- now 1.83 GHz and 2.0 GHz instead of 1.67 GHz and 1.83 GHz (supposedly "up to 39% faster than the previous generation"). Apart from that, 1 Gbyte of RAM is now standard, and the hard drives got a modest increase, now up to 80 Gbytes and 120 Gbytes. Amazingly, it seems the new model does not include 802.11n, which is surprising and disappointing. No cosmetic change, no mention on Apple's homepage....

Jobs hates the Mac Mini, says Gruber on Daring Fireball. "[T]think about [Jobs's] comments during the event making fun of Dell machines because of the all the cables you need to hook them up to displays and Web cams. That all applies equally to the Mini," Gruber said.

New keyboard: The change to the iMac extended to the keyboard, which is now a sleek, silvery device. You can get a closer look at the new keyboard on the Apple Web site.

One change to the keyboard: No Apple logo on the Command key. Instead, you just have the cloverleaf symbol, and a new addition, the word "Command." This will be useful for new Mac users, who often have trouble finding the Command key because it doesn't say "Command" on it. As an interesting aside, Apple pioneer Andy Hertzfeld, part of the origianl Mac development team more than 20 years ago, explains how that cloverleaf symbol came into being.

Apple opened up the floor to Q&A with Jobs at the end of the news conference. MacWorld writes:

One question that came from the audience wondered why Apple doesn't participate in the "Intel Inside" program, in which PC manufacturers affix the well-known labels to their computers.

"We like our own stickers better," Jobs said. "Don't get me wrong. We love working with Intel. We're proud to ship Intel products in Macs. They're screamers, and combined with our OS, we've tuned them well. It's just that everyone knows we use Intel processors. We'd rather not tell them about the product that's inside the box."

Gruber responds on Daring Fireball:

Jobs offers a rare chance for a public Q&A and someone asks why they don't booger up their computers with horrid stickers? Will someone please tell me who asked this question so I can name him jackass of the week?