Apple enters value market with cheap iPod, Mac

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San Francisco, Jan 12: Apple Computer Inc on Tuesday moved to make its products more affordable for the masses, unveiling its cheapest Macintosh computer ever and a version of its iPod digital music player for under $100.

Apple co-founder and chief executive Steve Jobs, announcing the new products at the Macworld show in San Francisco, also said Apple had sold 4.5 million units of the various models of its blockbuster iPod in the 2004 holiday quarter.

Apple has traditionally aimed for high-end markets both for its Mac computers and the iPod, eschewing discount models. But the company reversed that course in one fell swoop on Tuesday with the $99 “iPod shuffle” and the $499 “Mac mini.”

The new products expand Apple’s four-year-old “digital hub” and could broaden Apple’s market considerably, analysts said.

But rumour sites had anticipated the new products, and Apple shares fell nearly 4%.

“I think that the expectations were about as high as they could get for it,” said Marc Pado, US market strategist at Cantor Fitzgerald & Co.

The iPod sales were also in the range of Wall Street expectations.

The “iPod shuffle,” is shaped like a pack of gum with no display screen. The smaller one, with 512 megabyte of memory, holds about 120 songs and costs $99. The larger one holds 1 gigabyte, or about 240 songs, and costs $149.

The lack of a screen may discourage some consumers, but it is too soon to tell, said Tim Bajarin, an analyst with Creative Strategies. “It’s designed for use with the PC and the assumption that people will use their personal computer to manage their music anyway.”

The new iPod falls into a category of music players that use “flash memory,” chips like those found in digital cameras and some portable media players, rather than the hard drives used in current iPods.

Jobs said the iPod holds a 65% share of the entire market for portable digital music players, up from only 31% a year earlier.

Given that sort of consumer support, Jobs said a number of car companies like Mercedes-Benz USA, Volvo and Ferrari would integrate the iPod line into their car stereo systems.

The “Mac mini” will come in $499 and $599 models, depending on processor speed and hard-drive size. Weighing less than 3 pounds and under 2 inches tall, the mini connects to televisions as well as PC monitors.