Apple aims for new market with 'mini' macs and ipods

Apple will create a basic Macintosh at the dramatically reduced price of less than $500 (£266) to make its sleek products available to the mass market.

Apple will create a basic Macintosh at the dramatically reduced price of less than $500 (£266) to make its sleek products available to the mass market.

The move, which will shave $300 off the cost of the cheapest Mac, has been hailed as one of Apple's most dramatic shifts in strategy in recent years.

Apple's chief executive Steve Jobs yesterday said the new computers, called the Mac mini, were "the most important Mac ever", marking the company's departure from the luxury computer market to a wider section of the population. The products will sell for $499 and launch on 22 January. The machines have been the subject of rumours for weeks since Apple sued a website claiming to have the specifications of the new machines.

They have been nicknamed "headless Macs", because they will be sold without a monitor, keyboard and mouse. A second version with a larger hard drive will also be sold for $599.

Apple also said it would release a new version of its iPod digital music player for as little as $99. Apple said the "iPod shuffle" was smaller and lighter than a pack of chewing gum.

Mr Jobs laid out Apple's plans to several rounds of applause from fans at the company's annual Macworld trade show in San Francisco.

The company has in a couple of years accomplished an astonishing revitalisation of its business. In 2004, it underlined its superstar status in the IT world by partnering with U2 to bring out a limited edition iPod programmed with the pop group's latest album.

But its latest plans may be risky. By offering a basic Mac, Apple will be entering a particularly cut-throat segment of the market where margins are wafer-thin and where it has no experience of competing. It is possible the launch of the stripped-down computer could also cut into the market of those who would otherwise pay about $800 for the most basic model on the market.

But many analysts say the company should act quickly to take advantage of the popularity of iPods and its brand generally to try to attract a wider section of users.

The announcement came on the eve of Apple's first-quarter results, which are expected to highlight the company's pre-eminence as the most desirable brand in the hi-tech world.

Christmas sales of Apple's iPods are thought to have been strong, and could have made a third of its quarterly revenues, up from just under a quarter in the previous period.

Apple is also expected to have benefited from the demand for iPods driving more consumers into its 102 stores, where sales are expected to be strong.