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An Apple a Day

By Cynthia L. Webb
washingtonpost.com Staff Writer
Monday, January 10, 2005; 10:05 AM

Inquiring minds, of course, want to know ... no, not why Hollywood royalty Brad and Jen are on the outs, but whether the tech rumor mill has some truth: Will Apple unveil an under-$500 iMac? And is a flash-media based iPod player in the works?

After a week of gadget frenzy in Las Vegas over the Consumer Electronics Show, all eyes will be on San Francisco this week as the company toots its own horn at the Macworld conference starting today.

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CES 2005: Form, Function and Stylin' (washingtonpost.com, Jan 4, 2005)
More Past Issues

Business Week takes a look at what's in store. "Every year around this time, a great debate breaks out in one particularly colorful corner of tech land. That's because early January is when Apple CEO Steven P. Jobs takes the stage at Macworld," the magazine says. "Often, the ensuing controversies that follow are of interest primarily to die-hard Macolytes -- should Apple have added an extra USB connector to this product or offered a faster chip in that one. But when he appears on Jan. 11, the stakes could be considerably higher. That's because rumor Web sites have been buzzing with talk of a sharp shift in strategy for the Cupertino [Calif.] computer maker. First, the word is that Apple will field a cheaper version of its hugely successful iPod digital-music player, one that uses lower-capacity flash memory to store songs, rather than a hard drive, as in current models. Even more worthy of note, many expect Apple to unveil a $500 Mac. Even without a monitor, that would be far more affordable than the $800 eMate machine sold mostly to schools or the $1,300 consumer iMac. Of course, secretive Apple isn't showing any cards prior to the keynote --- even suing Thinksecret.com, the site that has broken much of the news. But from a distance, such moves make sense. As anyone awake at some point over the past year knows, Apple has been on a tear." The magazine concludes that "this should be one of the most fascinating Macworlds in memory."
Business Week: MacWorld 'O5: A New Direction?

Gene Munster, a senior analyst at Piper Jaffray and oft-quoted Apple watcher, prognosticated on CNBC's "Squawk Box" this morning. He expects a flash memory iPod to be in the offing as well as a spruced-up iPod Mini with more storage. As for the $500 iMac, he said it will be announced "not necessarily tomorrow" (that's when Jobs is slated to speak), but sometime in 2005. "It's going to be a significant product," Munster said. (See a Macworld UK dispatch for more on the flash iPod.)

But the New York Times today places more stock in the much-ballyhooed $500 iMac rumor. "In what might be the next episode in Silicon Valley's longest-running soap opera, ... [Jobs] is planning to surrender to the computer industry's received wisdom and introduce a sub-$500 Macintosh, according to several published reports. So much for 'Think Different,'" reported the paper. "In the past Apple has stood alone, insisting that its software and industrial design continue to command a premium from computer users willing to stray from the Windows and Intel computing standard. Is that era about to end? The answer will come during Mr. Jobs's keynote presentation at Macworld. ... And in what has become a tradition for Mr. Jobs, speculation has heightened expectations far beyond what surrounds any other technology industry executive." Meantime, the New York Post yesterday noted that online rumor reports "say the new G4 machines will cost about $500, but will lack a monitor."

The Mac Observer had more from Munster, who ticked off Macworld predictions before the New Year. "Listing a bumped-up iPod mini, a flash-based iPod and an iTunes-capable cell phone from Motorola as 'likely' products to be announced, Munster dismisses a G5 PowerBook and 80 GB iPod as 'unlikely,'" a Dec. 27 article reported.
The New York Times: Observers Wonder if Apple Plans Low-Cost Macintosh (Registration required)
The New York Post: Out the Windows
The Mac Observer: Piper Jaffray Sees Bigger iPod Mini, Flash iPod, Moto Phone

Munster is bullish on Apple, pegging the company's stock with a $100 price target and telling CNBC it's riding a "halo effect." Apple has surged in both market value and brand popularity, thanks to healthy iPod sales. Apple shares closed at $69.25 on Friday. Apple will give Wall Street the rundown on its holiday sales, which are expected to be brisk (again, thanks to the iPod) when it releases its quarterly earnings Wednesday.

A Change in Apple's Core?

The New York Times wrote more about Apple's possible lower-priced computer plan. "Mr. Jobs is now actually preparing to plunge into the Best Buy and Circuit City world of razor-thin consumer electronics margins, he would finally be paying heed to the industry pundits who have repeatedly claimed during the seven years since he returned to run Apple Computer that the company was doomed by its higher-priced computers," the article said. "It would be a nifty jujitsu move that would finally lure the millions of PC owners who have lusted for a Mac, but have until now stuck with the Chevrolet-like price tags of Windows-based PCs."

USA Today said that for Apple, "a low-cost computer 'could be a play for all those new Windows iPod users, who just started using Apple products,' says Jason Snell, editorial director of Macworld magazine. 'Maybe they resisted before because Apple computers were more expensive. Now Apple would have a story for them. If even a sliver of them bought a new Mac computer, the dynamics could really change.' Apple has a 3.5 percent share of the U.S. computer market. Its market cap is $27 billion, compared with No. 1 PC-maker Dell's $100 billion. But Apple has been on a tear, transforming itself into a digital entertainment company fueled by sales of the ultra-hot iPod. In the last two quarters, iPod sales jumped from 860,000 units to 2 million. Gene Munster ... predicts iPod sales for the holiday quarter could hit nearly 5 million."
USA Today: Apple Peels Off Product Plans at Macworld This Week

And the iPod sales trends could offer a hint at what Apple has planned for its iMacs. The San Francisco Chronicle's advance Macworld coverage noted, "Analysts say Apple is selling more of the $249, 4-GB portable [iPod Minis] than the white iPods, which are more expensive but come with bigger storage capacity."

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