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Apple unveils $499 PC

update Apple Computer chief Steve Jobs delivers the goods, showing off budget PC and new flash memory-based iPod Shuffle. Photo: Mac Mini

SAN FRANCISCO--After decades of being criticized for producing luxury items, Apple Computer is aiming squarely at the mass market with a new budget PC unveiled Tuesday.

Apple CEO Steve Jobs introduced the new Mac Mini during his keynote address at the Macworld Expo here, promising the machine would help further expand Apple's audience beyond the Mac faithful.

Jobs also confirmed several other high-profile debuts--including a tiny flash memory iPod--that have been grinding through the Mac rumor mills, prompting the secretive company to sue the alleged source of several information leaks.

Many of the reports turned out to be true, with Jobs beginning the cavalcade of products by announcing the Mac Mini and the flash memory-based iPod.

The Mac Mini is a tiny machine with a processor, hard drive and optical drive--you supply the monitor, mouse and keyboard. Jobs said the package will settle long-standing complaints that Apple extracts too high a premium for its products. "This is the most affordable Mac ever," Jobs said. "People who are thinking of switching will have no more excuses."

The new Mac Mini will go on sale Jan. 22 and will cost $499 for the base model, or $599 for one with a bigger hard drive. The device marks one of Apple's boldest moves yet to expand PC sales beyond a loyal but limited market of Mac addicts. The iPod and Apple's iTunes music store have been responsible for a dramatic surge in Apple revenue, but to date there has been little evidence that those products have done anything for Apple's PC business.

The Mac Mini will come with Panther, the latest version of Apple's OS X operating system, plus the iLife collection of digital media applications. Like almost all Mac products, it's designed for style as well as function. "This is a very robust computer, but it's very, very tiny," Jobs said.

The new breed of iPod went on sale Tuesday in two versions--a 512MB model (enough memory for about 120 songs) for $99 and a 1GB version for $149.

Both models work with a Mac or PC and have no display screen for navigating through a music library. Instead, Apple expects the players largely will be used in "shuffle" mode that serves up songs in random order.

"iPod users discovered a new way to listen to their music...shuffle," Jobs said. "With shuffle you don't have to find your music; it's shuffled up for you."

The new flash memory-based iPod Shuffle is Apple's latest bid to expand its portable music player business to more downscale consumers, following the wildly successful launch of the iPod Mini early last year.


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Jobs earlier derided flash-based music players as toys with limited functionality, but plunging prices for flash memory will allow Apple to produce a capable player at a suitable price.

"We've taken a look at this market, and it's a zoo," Jobs said. "There's a zillion little flash players out there...and the products are all pretty much the same. They're trying to be as easy to use as an iPod, but they have these very tiny displays and a really tortured interface."

Jobs took credit for dramatically reducing the market for flash-based music players by pushing hard-drive models downstream. "The iPod Mini worked," he said. But there's still an opportunity to grab digital music newcomers with inexpensive models, he said. "We'd like to go after the remaining mainstream flash market," Jobs said.

In other iPod news, Jobs said Apple sold 4.5 million of the players during the final quarter of 2004, and he announced that Mercedes, Volvo, Nissan and others will follow BMW's lead in offering iPod adapters in new cars.

"We believe we have just begun this era of digital music," Jobs said. "We're going to see some very healthy progress in the next year."

In addition, Jobs confirmed iWork, a new software package that will take on Microsoft's Office in the Mac software market.

The package will include Pages, a new word processing program developed by Apple, and an updated version of Keynote, a slideshow application Apple introduced two years ago.

Like other Apple products, Jobs said one of the major advantages of iWork will be its integration with the Mac OS X operating system. "iWork is a product we've created from the ground up to take advantage of OS X," he said.

The release of iWork marks another chapter in Apple's on-and-off partnership with Microsoft, whose Mac version of Office has long been the standard productivity package for the operating system, partly out of necessity. Apple's own AppleWorks package has achieved only modest market share, mostly in educational settings, and the company's FileMaker database software has never posed a significant threat to Microsoft's similar Access.

Demonstrating Pages, Jobs and Apple Vice President Phil Schiller made it clear the application isn't counting on business letters and school reports as its sweet spot. Pages includes numerous tools for adding photos to documents and creating complex documents that look like professionally made brochures.

"It's word processing with a sense of style," Jobs said. The iWork package will sell for $79 starting Jan. 22.

Jobs also had more details on "Tiger," the next version of the OS X operating system, but he stopped short of setting a release date more specific than the first half of 2005. However, that will still be well before the next version of Microsoft's Windows, Jobs said as he revealed the slogan, "Long before Longhorn."

Major additions to the new OS, officially known as Mac OS X v10.4 Tiger, include Spotlight, Apple's entry into the growing desktop search market. Jobs said Spotlight will best new desktop search offerings from Google and Microsoft, thanks to the benefits of being integrated into OS X, which can automatically update search results as the contents of a Mac hard drive change.

"When you build it into the core OS, you can do things you can't do with a tool sitting on the side," Jobs said. "You can find things on your system you didn't even know were there."

Tiger will also include a new version 7 of the QuickTime video player, and Dashboard, a new interface that will allow Mac users to quickly switch between small applications such as a calculator, language translator or weather forecasts.

"It's a place for widgets to live...to get your stuff, get in and get out," Jobs said before demonstrating a stock ticker applet displaying Apple shares. "Oh, we're down a little bit today," he said. "Well, we've still got a lot more to go in the keynote."

Jobs also touted growing support for high-definition video in an array of Mac products, including the new QuickTime and an HD-ready version of Final Cut Express, Apple's hobbyist video editing application. "2005 is going to be the year of high-definition video," Jobs said.

Kunitake Ando, president of electronics giant Sony, joined Jobs onstage to promote the HD push, including a new Sony HD camcorder. "Steve said he is a great fan of Sony products--not all of them," said Ando, whose company competes with Apple in markets such as PCs and portable music players. "Together, we can really revolutionize the way we enjoy video at home."

Rumored products that didn't appear in Jobs speech included "Asteroid," a supposed music instrument interface meant to hook into Apple's GarageBand software and the inspiration for several of Apple's suits against Mac rumor sites.

Jobs also suffered a brief technical glitch when trying to demonstrate new OS X search features, but he recovered much more quickly and gracefully than Microsoft Chair Bill Gates did during his error-riddled Consumer Electronics Show presentation last week. "That's why we have backup systems here," Jobs quipped.

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