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Apple (Nasdaq: AAPL) CEO Steve Jobs today introduced several new products during his much anticipated keynote address at the Macworld Expo in San Francisco. Analysts said the new products demonstrate Apple's new mass market strategy that could help it compete with rival Microsoft (Nasdaq: MSFT).
While Final Cut Express HD, a major upgrade in Apple's video editing application, iLife '05, the suite of digital lifestyle applications, and iWork '05, new presentation software, got their share of oohs and ahs, the new iPod shuffle and the Mac mini took the lion's share of the applause.
New Era
These two products usher in a new, lower-priced era for Mac enthusiasts. The iPod shuffle weighs about an ounce with a price tag of US$99. And the Mac mini is the most affordable and compact Mac ever at $499. The miniature computer is just two inches tall and weighs only 2.9 pounds.
"Starting at just $499, Mac mini is the most affordable way to enjoy Mac OS X and iLife," Jobs said. "Just plug in your display, keyboard and mouse and you've got an incredibly compact Mac for a price that almost anyone can afford."
Mac mini comes standard with a 1.25 GHz PowerPC G4 processor and ATI (Nasdaq: ATYT) Radeon 9200 graphics with 32 MB of dedicated DDR memory. The new Mac also features a slot-load combo drive for watching DVD movies and burning CDs, and a 40 GB hard drive for storing digital media creations.
Attracting Windows Users
"Apple is doing what would have been unbelievable even 12 months ago -- going mass market," Jupiter Research analyst Joe Wilcox told MacNewsWorld. "This will appeal to three different candidates: iPod users who use Windows and wonder if the Mac life would be better, Windows users who have always wondered what all the Mac hype is about and would be willing to find out for $500, and existing Mac owners who wouldn't mind having an additional Mac in the living room or bedroom."
Wilcox said the new Mac mini would not cheapen Apple's image or cannibalize more expensive Mac sales. It's an affordable Mac, he said, but it only has a G4 processor, it's small and there's no super drive. Mac enthusiasts, Wilcox said, want the G5 processor with the big display, but might still consider the miniaturized version as a second or third option.
Apple's Challenge
Despite the warm welcome, Apple might find new challenges with its new marketing strategy, according to Wilcox. He said the hurdle to success 
is distribution. If Apple's primary target is migrating users from Windows, then the Mac mini needs to find shelf space wherever Windows is sold. That means the Apple Store and CompUSA might not be enough exposure for these little computers.
"Apple needs to put the Mac mini where Windows users shop and make sure its displayed next to the iPod," Wilcox said. "These products need to be sold side by side, and the advantages of the mini need to be clear to Windows users. I see great potential here if someone shopping for an iPod sees this cute little Mac mini. They could buy both products."
The Mac mini is pre-installed with Mac OS X version 10.3 "Panther" and will be available in the U.S. on January 22 through the Apple Store online, Apple's retail stores and Apple Authorized Resellers. A $599 version amps up the mini up to 1.42GHz and 80 GB.
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