Commentary: iPod Shuffle rocks, Mac Mini balks

By Josh Bernoff and Ted Schadler, analysts

Highlighting Apple Computer's new product announcements at Macworld Expo this week were a lightweight flash memory-based music player called the iPod Shuffle and a tiny $499 computer called the Mac Mini.

Apple is riding the technology wave here with small, inexpensive, well-designed products. While the iPod Shuffle will take off, the Mac Mini won't until Apple and its partners market it as an iLife appliance for music, photos and high-definition video.

		Related story Mac Mini a maxi deal? Depends what you want When it comes to new Mac Mini, beauty is in the eye of the person holding the wallet.

Of the new products that Apple announced this week:

• The iPod Shuffle will unlock the music player market. By dumping the screen, Apple has created some of the smallest, lightest, cheapest music players available--the new device is small enough to plug directly into a PC's USB port and costs $99 for the 120-song version or $149 for twice that capacity. As usual, Apple has nailed the usability and design elements--iTunes software automatically fills the iPod Shuffle with songs based on the user's preferences; the songs can then be played back either in order or randomly.

At these prices, the iPod Shuffle will rapidly spread among the 30 percent of consumers who use digital music (fewer than one out of five of them already has an MP3 player), and Apple will eat the heart out of the flash MP3 player market. The new iPod will have to shift further down-market in the coming two years as mobile phones become equipped with ample memory and music playback software.

• The Mac Mini will win over some Windows users. The new computer is tiny--6.5 inches square by 2 inches tall--but it requires consumers to supply a monitor (or HDTV), a keyboard and a mouse. Apple has aimed the Mini at upgraders and PC switchers. Our data shows that 57 percent of U.S. PC households are running a version of Windows older than Windows XP, and half of the Windows XP users have a second PC, many of those also older. When those aging PCs get upgraded, many consumers will consider a machine that isn't susceptible to Windows viruses.

• The Mini could do even better as an iLife appliance. Just as consumers have one large TV and several smaller ones in the kitchen, bedroom or den, we believe that consumers would buy a well-designed computer appliance tailored for their digital activities: music playing, music composition, photos or video.

Instead of focusing on switchers, Apple should market the Mac Mini as an iLife appliance. And with the right partners, such as Sony for high-definition video, Kodak for photos, Bose for music playing and Griffin Technology for music composition, Apple could persuade consumers to buy multiple units, one for every room in the house.

© 2005, Forrester Research, Inc. All rights reserved. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.