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For Apple, smaller and cheaper is suddenly better.
After years of catering to the high-end market, Apple last Tuesday introduced a US$499 lunchbox-sized computer and a $99 digital music player that is smaller than some packs of chewing gum.
"We're really serious about this," Apple co-founder and Chief Executive Steve Jobs said in introducing the new iPod Shuffle music player.
Apple already dominates the digital music business. In December, it sold its 10 millionth iPod, Jobs said, and according to outside research firms it now has nearly 90 percent of the music player market.
Flash Memory
Now Apple is trying to take over the rest of the market for cheaper players, which use "flash memory" storage based on chips instead of the tiny and more expensive hard drives in current iPods.
Along with the smaller price and design, Apple is banking on simplicity.
The new iPod Shuffles have no screen, connect through a computer's USB port and have only a few buttons. The $99 version has 512 MB of storage, enough to hold about 120 songs. A $149 version has 1 GB of storage space and can hold twice as many songs. Both also can store other data, such as computer documents.
The new flash-memory-based devices "will make iPod more accessible to so many more people," Jobs said. "We can't wait to see the reaction."
Adding a flash-based music player to its repertoire also will help keep Apple from cannibalizing sales of its more expensive players, said Steve Baker, an analyst at tech research firm NPD Group.
Stripped-Down Machine
But Baker said Apple is moving into a highly competitive market with a design that traditionally hasn't sold well.
"People have tried to do these without screens before, and consumers haven't really liked them," he said.
Apple's new computer, appropriately called the Mac Mini, is a stripped-down machine that comes without a monitor, keyboard or mouse.
The new computer is 2 inches tall and 6.5 inches square. At less than 3 pounds, it can be held in one hand.
The cheapest version comes with a 1.25 GHz processor and a 40 GB hard drive.
A $599 version comes with a faster processor and an 80 GB hard drive.
The Mac Mini is targeted mainly at current Macintosh
owners who want or need a second PC in their home. But Jobs said it's also designed to try to lure more users from Windows-based machines -- something that's been a constant struggle for Apple.
'No More Excuses'
"We want to price this Mac so people who are thinking of switching will have no more excuses," he said. "This is the most affordable Mac ever."
Apple's push into the lower-priced consumer market was widely anticipated by industry analysts and the company's devoted customers, and feared by many in the computer and music player business.
Hewlett-Packard may have the most to worry about, according to Morgan Stanley analyst Rebecca Runkle.
has the majority of the market for consumer desktops, and also produces a lower-priced, HP-branded version of Apple's iPod.
"If Apple does release a sub-$500 Mac that can capitalize on its large iPod customer base this year, HP is most at risk -- with 55 percent market share in the U.S. consumer desktop market," Runkle wrote in a research note.
Baker, the NPD Group analyst, said he doubted that the new Mac Mini would make much of a dent in the PC market, however. Apple has only about 2 percent market share in the Windows-dominated computer business.
Second or Third Computer
"This isn't the [computer] that's going to turn [Apple] into the next HP," Baker said. "But it's a great second or third computer for people who already have one."
Jobs showed off the new products and a host of new or improved software packages during a two-hour keynote speech kicking off the company's Macworld Conference and Expo.
As in past years, the Mac faithful cheered each new product introduction like spectators at a fireworks display.
Investors, however, apparently were less impressed with the company's new goods.
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