Best buy computer monitor

Byline: Rob Pegoraro

SAN FRANCISCO, Jan. 11 -- Apple is going where it has never gone before -- the discount end of the price scale.

Chief executive Steve Jobs opened the Macworld Expo trade show here Tuesday by unveiling a new desktop computer and a new music player, both priced far below its other Macs and iPods.

"We want to price this Mac so that people who are thinking of switching will have no more excuses," said Jobs in the two-hour keynote address as he showed off the new Mac mini, a small rectangular device smaller than some laptops. It will go on sale Jan. 22 for $499 and $599, depending on processor speed and hard drive size.

"This is the most affordable Mac ever; in fact, it's the cheapest computer Apple has ever offered," Jobs said.

Neither model will include a keyboard, mouse or display. Apple expects customers to bring their own, possibly by using whatever came with the PC already at home.

To go with that baby-sized computer, Jobs introduced an even tinier music player, the iPod shuffle. "It is smaller than most packs of gum," said Jobs, clad in his usual black mock turtleneck and jeans.

"It weighs about four quarters."

The iPod shuffle will sell for $99 and $149, less than many competing players with less memory than the 512 megabytes and 1 gigabyte of flash memory Apple will include.

Unlike other iPods, the shuffle lacks a display to show what song is playing, but it connects to Apple's iTunes software just like its larger, pricier siblings. (The shuffle's name refers to its ability to play through a set of music at random, a popular feature on Apple's music players).

Both the Mac mini and the iPod shuffle sell for two-thirds or half the price of the next cheapest Apple model in each category. That represents a departure from its oft-invoked goal of being the BMW of the computing market, selling precision-engineered, artfully designed machines at a slightly higher price than most.

"This Macworld is going to be remembered not just for the products that were introduced . . . but for Apple's recognition that there is a mass market out there," said Jupiter Research analyst Michael Gartenberg.

He described the Mac mini as Apple's "first opportunity in about 15 years to become a mass-market item" and suggested that the shuffle's just-under-$100 price would leave little room for competing players: "There's going to be a lot of folks in that business right now reaching for the Maalox," said Adam Engst, editor of the influential Mac newsletter Tidbits. "I think it's a good thing and I think they're going to sell an absolute ton of them," Engst said.

"These things are almost an impulse buy at the register."

He noted, however, that the computer-only marketing of the Mac mini would make it less of a bargain to customers who don't have a spare keyboard, mouse and monitor to plug into one: "The price isn't that much lower than an eMac or an iMac by the time you buy everything else."

Apple has made earlier attempts at discount-priced Macs -- for example, the Mac LC line in the early 1990's -- but the Mac mini undercuts those prices substantially even without factoring in inflation.

But it's also the first Mac to be sold with the express expectation that customers will complete a computer setup by using other companies' hardware; Apple hasn't even sold an entry-level monitor in years.

"That's not the PC for the masses . . . . I don't see it as being a competitive product to those $499 eMachines at Best Buy," said Stephen Baker, NPD Group analyst. "To me, it's another attack on the $700 to $1,100 market."

In the rest of the keynote at the Moscone Center here, Jobs showed off Mac OS X Tiger, an update due in the first half of this year that will bring a new integrated search capability, updated iChat AV software that will allow video-conferencing online among up to four people, a faster e-mail program and "Dashboard," a set of quick-lookup programs that people can use for such tasks as tracking a flight, getting a dictionary definition, or checking the status of an eBay auction.

Jobs also demonstrated an update to its iLife suite of music, photo, movie and DVD applications. The new iLife '05 bundle will add new picture-editing tools, additional DVD themes and the option to make high-definition movies (with the right camcorder).

Lastly, Jobs introduced iWork, which packages an updated version of Apple's Keynote presentation program and a new application called Pages. The latter lets users create detailed, picture-heavy newsletters, posters and other layouts without needing to use separate desktop-publishing software.

Both iLife and iWork will sell for $79, starting Jan. 22; iLife will also be included on all new Macs.

A key question for Apple is if all this new hardware and software can extend its winning streak in digital music -- Jobs noted that Apple has sold over 10 million iPods to date and 230 million songs online at its iTunes Music Store -- to the desktop and laptop markets. Its market-share numbers there, as low as 2 percent in some estimates, fall far short of what Apple has accomplished in the music business.

Despite not even offering an MP3 program until four years ago, Apple says it now owns 65 percent of the digital-music-player market and 70 percent of the music-download business.

Gartenberg said Apple's best time is now, and the Mac mini (cheaper than the most expensive iPod) may be the computer to do it: "It comes at a time in the market when Apple has such a strongly reinvigorated brand in the minds of consumers, thanks to the iPod."

But Baker said Apple is ignoring its biggest potential selling point: "The opportunity in computers is something they're not addressing -- viruses and spyware and stuff like that," Baker said. "They don't talk about that."