Latest Mac shrinks to swell sales

Apple CEO Steve Jobs shows off the Mac mini at Macworld. Picture / Reuters

Apple has finally entered the low-cost PC market, with its Mac mini offering giving it the best chance in years to boost market share above the 3 per cent mark.

"It is priced so people who are thinking of switching will have no more excuses," Apple chief executive Steve Jobs told the audience at the Macworld trade show in San Francisco.

The base cost is US$499 (or $949 including GST). That is comparable with entry-level offerings from PC manufacturers such as Dell and Hewlett-Packard.

Almost two-thirds of PCs sold in the US are under US$899, and a third are under US$599.

As is usual in the PC market, Apple's sticker price is for the box. Screens and keyboards are extra.

Any industry-standard screen and USB keyboard or mouse can be used, meaning buyers can take advantage of PC economics and shop around for cheap deals, rather than be locked into more expensive Apple equipment. They can also retire their current PC and use its screen.

Apple has been challenged for years to offer a stripped-down Mac which is more affordable.

Instead it chose to miniaturise, taking a 40GB laptop hard drive and a PowerPC 2.3GHz G4 processor and putting them in a box 5cm high and 16.5cm wide.

It has a slot-load optical drive which can play DVDs and burn CDs, and it has outlets for Firewire, Ethernet and USB 2.

Buyers can select an 80GB hard drive for an extra $100 and may also opt for a SuperDrive, more memory (it comes with 256 Mb RAM as standard) and wireless or Bluetooth cards.

The Mac mini has Apple's current Mac OSX 10.3 Panther operating system and its iLife applications, including iPhoto, iMovie and Garageband.

That means Apple can pitch it at the domestic market, where people are increasingly using their computers to manage the digital assets they are building up: images, home movies and music files.

The price and size of the Mac mini mean it will appeal to the education market, where Apple still enjoys double-digit market share.

Combined with the inroads Apple has made in recent quarters into the corporate market with its Xserve rack servers and RAID storage, the Mac mini could also find its way on to business desktops.

Apple certainly needed to re-emphasise its computing side, with so much of the focus on the runaway success of its iPod music player.

iPod sales helped the company post a net profit of US$295 million for its quarter ending December 25, compared with $63 million in the corresponding quarter in 2003.

Revenue jumped 74 per cent to US$3.49 billion, as it shipped more than 1 million Macintosh units and 4.5 million iPods. Sales of the new iMac, which puts the CPU and drives behind the screen, helped increase Mac unit sales by 26 per cent.

Jobs said it was the highest quarterly revenue and net income in Apple's history.

Chief financial officer Peter Oppenheimer said Apple expected the second quarter to come in at about US$2.9 billion.