Lower-priced iMac in '05?

[V. Barbarino]

Lower-priced iMac in '05?
Analyst says model may come out to attract iPod-loving consumers weary of Windows security issues.
December 31, 2004: 8:22 AM EST

SAN FRANCISCO (Reuters) - Apple Computer Inc. could decide to sell a lower-priced version of its Macintosh computer to attract consumers already enamored of its iPod music player and annoyed by security problems with Windows PCs, according to an analyst at Piper Jaffray.

"We believe that it is not out of the question that Apple would try to capitalize on this opportunity with a more widely accessible product," analyst Gene Munster said Thursday.

He noted that Apple has made no comments related to market speculation the company may harbor plans to sell a $500 iMac.

Munster, who rates Apple as an "outperform," cited market speculation that Apple may announce the introduction of a basic, inexpensive iMac at the company's Macworld conference in San Francisco in early January.

Cupertino, Calif.-based Apple (Research), whose shares closed up 36 cents on Thursday at $64.80 on the Nasdaq, was not available to comment.

Munster said he believed Windows iPod owners and personal computer users irritated by security concerns are more inclined to buy a Mac now than in the recent past.

He also said the discount iMac could add to a "halo effect" surrounding the iPod and the growing comfort of PC users in switching to the Mac.

[trancepriest]

Headless emac is the rumor so far. I'm definitely for a cheaper emac that would increase the market share. My own thoughts are that apple will dominate 10% of the computer industry in the next 5 years. Largely thriving on the security woes of Microsoft and the general elite trendiness of Apple products. a lower priced emac is a good start.. and I'm sure they will come out with such a product.. Steve is pretty smart.

[trancepriest]

EXCLUSIVE: Apple to drop sub-$500 Mac bomb at Expo

December 28, 2004 - With iPod-savvy Windows users clearly in its sights, Apple is expected to announce a bare bones, G4-based iMac without a display at Macworld Expo on January 11 that will retail for $499, highly reliable sources have confirmed to Think Secret.

The new Mac, code-named Q88, will be part of the iMac family and is expected to sport a PowerPC G4 processor at a speed around 1.25GHz. The new Mac is said to be incredibly small and will be housed in a flat enclosure with a height similar to the 1.73 inches of Apple's Xserve. Its size benefits will include the ability to stand the Mac on its side or put it below a display or monitor.

Along with lowering costs by forgoing a display (Apple's entry-level eMac sells for $799 with a built-in 17-inch CRT display), the so-called "headless" iMac will allow Apple's target audience -- Windows users looking for a cheap, second PC -- to keep their current peripherals or decide on their own what to pair with the system, be it a high-priced LCD display or an inexpensive display. Sources expect the device to feature both DVI and VGA connectivity, although whether this will be provided through dual ports or through a single DVI port with a VGA adapter remains to be seen.

The new Mac is expected to have a Combo drive only, but will possibly have an upgrade path to a SuperDrive at a higher price. It is unclear how big the hard drive capacity will be, although sources indicate it will be between 40GB and 80GB.

Other expected features of the iMac include:
256MB of RAM
USB 2.0
FireWire 400
10/100 BASE-T Ethernet
56K V.92 modem
AirPort Extreme support


In terms of software, Apple will include a special iLife suite (minus iDVD) as well as AppleWorks, sources believe.

The new Mac is expected to be introduced by Apple CEO Steve Jobs at his keynote address on Tuesday, January 11, but is not expected to be available until later in the first quarter. Sources indicate "issues" have arisen in production of the new Mac, but that Apple never planned on shipping the new device immediately upon introduction. The plan is to air freight the new model from its manufacturing plants in Asia for at least the first three months of shipments, sources report.

The announcement of the new, inexpensive Mac will be a dream come true for Mac aficionados who have begged and pleaded for years to see just such a PC. Until now, the company has downplayed speculation that it would get into the low-end PC market. "In terms of our pricing, I feel very good about where each of our product lines are priced," Peter Oppenheimer, Apple's CFO, said in October. "To date, we have chosen not to compete in the sub-$800 desktop market and have put that R&D investment in expanding our products in the music area, in software, and in hardware."

So what has changed to motivate Apple in producing a low-cost Mac? In a word, iPod.

"Think of your traditional iPod owner," said a source. "This new product will be for a Windows user who has experienced the iPod, the ease of use of the iTunes software, and has played around with a Mac at an Apple retail store just long enough to know he'd buy one if it were a little cheaper."

Apple executives announced on October 13 that 45% to 50% of its retail store customers bought a Mac as their first PC or were new to the platform in the fiscal fourth-quarter. The company has refused to divulge more exacting figures on iPod buyers who also buy a Mac, for competitive reasons.

According to sources, internal Apple surveys of its retail store customers and those buying iPods showed a large number of PC users would be willing to buy a Mac if it were cheap enough, less of a virus carrier than PCs (which all Macs already are), and offered easier to use software solutions not available on Windows-based PCs. Now, Apple feels it has the answer.

Apple has been working on the low-end Mac for almost a year, sources report. Indications are Apple has been working mostly on finding the right mix of price, performance and features that would motivate Windows users to consider a Mac, and less on the actual engineering of the product. "It doesn't take a rocket scientist to design a bare-bones PC," said one source familiar with the project. "What it takes is a team of marketing and software experts to find the right mix to convince Windows users to buy a Mac at a price that is not much more than the cost of an iPod."

Sources familiar with the product cautioned that the low-end Mac will be marketed towards a totally different audience than those who traditionally buy even a $799 eMac. "This product is not going to be about performance," said a source close to Apple. "This is going to be the basics, but with just as much of a focus on software as any Mac could ever be."