Company to sell stripped down computer to broaden appeal, saw iPod sales hit 4.5 million.
January 11, 2005: 3:08 PM EST
Apple will begin selling a stripped down Macintosh computer without monitor or keyboard for $499.
SAN FRANCISCO (Reuters) - Apple Computer Inc. Tuesday said it would begin selling a stripped-down Macintosh computer without monitor, keyboard or mouse for $499 and new iPod digital music players costing as little as $99.
Chief Executive Steve Jobs, announcing the new products at the MacWorld exposition, also said that Apple had sold 4.5 million units of its blockbuster iPod in the 2004 holiday quarter.
Apple shares fell nearly 4 percent, as some suggested that the news had been priced into the stock, thanks to widespread rumors ahead of the show.
"There was so much expectation built in for the stock ... I think that the expectations were about as high as they could get for it," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. "I think it was a case of buy on the rumor and sell on the news."
The iPod sales figure was also slightly below some Wall Street forecasts. Banc of America Securities had predicted iPod sales of 4.6 million units in a note Tuesday. Prudential had predicted 4.25 million units.
Apple said the new "iPod shuffle" was smaller and lighter than a pack of gum and would come in 512 megabyte ($99) and 1 gigabyte ($149) capacities. The smaller one would hold about 120 songs, Jobs said.
The new iPod falls into a category of music players that use "flash memory," like that found in digital cameras and some portable disk drives, rather than hard drives like the other iPod models.
"We'd like to go after the remaining mainstream flash market," Jobs said, noting that the flash memory-based digital player market is currently highly fragmented. "The products are all pretty much the same."
He also claimed the iPod holds a 65 percent share of the entire market for portable digital music players, up from only 31 percent a year earlier.
The iPod Shuffle, above, is smaller than most packs of gum, weighing less than an ounce.
Apple said a number of car companies like Mercedes-Benz USA, Volvo, Nissan and Ferrari were working to integrate the iPod line into their car stereo systems.
The "Mac mini" will come in $499 and $599 models. Weighing in at less than 3 pounds and 2 inches tall, the box has digital media ports that let it connect to televisions as well as traditional PC monitors.
Jobs' announcements were awaited eagerly by the Mac faithful worldwide, though they offered no real surprises, unlike in previous years. The new iPod and the smaller Mac were telegraphed by the many online Mac rumor sites in recent weeks, some of which are being sued by Apple for those leaks.
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