January 11, 2005 12:22 PM PST

Apple unveils $499 PC

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

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