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Apple to sell $99 iPod, $499 Mac
Company CEO unveils stripped down computer to broaden appeal, says iPod sales hit 4.5 million.
January 11, 2005: 5:50 PM EST

The iPod Shuffle, above, is smaller than most packs of gum, weighing less than an ounce.  
The iPod Shuffle, above, is smaller than most packs of gum, weighing less than an ounce.

NEW YORK (CNN/Money) - Apple Computer Inc. on Tuesday introduced a stripped-down Macintosh computer and cheaper versions of its popular digital music player, iPod.

Apple chief executive Steve Jobs, unveiling the new products at the MacWorld exposition, said the Mini Mac computers, without monitor, mouse and keyboard, will go on sale Jan. 22. The 40-gigabyte Mac will cost $499, and the 80-gigabyte model would cost $599.

The company also plans to sell two versions of the iPod Shuffle, according to Jobs. The smallest version will have 512 megabytes of storage and cost $99. A one-gigabyte version, which holds 240 songs, will sell for $149.

Apple said on its Web site that the new "iPod shuffle" would be smaller and lighter than a pack of gum.

Jobs said that his company had sold 4.5 million units of its blockbuster iPod in the 2004 holiday quarter. Currently, the cheapest version of iPod is the iPod Mini, which costs $249 for 4 gigabytes and stores about 1,000 songs.

But the announcement failed to push Apple (Research) stock higher, as some said the news had already been priced into the stock, thanks to widespread rumors ahead of the show. Shares fell more than 6 percent on Tuesday.

"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," Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co., told Reuters. "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.

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, according to Reuters.

Apple will begin selling a stripped down Macintosh computer without monitor or keyboard for $499.  
Apple will begin selling a stripped down Macintosh computer without monitor or keyboard for $499.

"We'd like to go after the remaining mainstream flash market," Jobs said at the MacWorld expo, 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.

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, according to Reuters.

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.  Top of page


-- Reuters contributed to the story




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