Apple Set to Launch $500 Mac

In a bid to take advantage of the success of the iPod music player, Apple Computer Inc. is set to release a Mac retailing at under $500.

A report on Mac news site Think Secret claimed that the product, code-named Q88, is expected to be announced on January 11 during Apple CEO Steve Jobs keynote speech at Macworld Expo in San Francisco. The new Mac will utilize a 1.25GHz G4 processor and will come in a small, flat enclosure similar to that of the popular LC series of Macs from the 1990s. Although the product will be priced at under $500, this will not include a monitor or DVD-R drive, and hard drive capacity will be between 40GB and 80GB.

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Apple has traditionally eschewed the low-end PC market in favor of high-margin, higher-priced computers. However, according to sources cited by Think Secret, the runaway success of the iPod has persuaded the company that a low-cost Mac could be a winner—a view supported by some analysts.

In a note to clients, Piper Jaffray senior research analyst Gene Munster said that since "Windows iPod owners and PC users irritated by security concerns are more apt to buy a Mac now than in the recent past, we believe that it is not out of the question that Apple would try to capitalize on this opportunity with a more widely accessible product. We would view the introduction of a $500 iMac positively, as we believe it would appeal to many potential switchers that would likely not make the move at a $1,299 price point, but would consider a $500 product."

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