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SAN FRANCISCO—Following Apple Computer Inc.s announcement Tuesday of a sub-$500 Macintosh, analysts, vendors and customers are upbeat about its prospects. While consumers are expected to take advantage of this new entry-point to a “digital lifestyle,” questions remain on whether the forthcoming pint-sized Mac mini can beckon Microsoft Windows users and generate market pull with IT managers.
“The Mac mini is exactly what Apple has needed to capture Windows users to the [Mac] platform,” said analyst Charlie Wolf with investment bank Needham & Co., of New York. He said the low-priced box combined with the “secret sauce”—Apples easy-to-use iLife content-creation tools, such a iMove and iDVD—were a compelling story. “Theres nothing like it for Windows,” he said.
“The Mac mini will create switchers: There are a lot of Windows users in the $500 to $600 range who want to buy a new machine without investing in a whole new system,” said longtime Mac developer Rich Siegel, CEO of Bare Bones Software Inc., of Bedford, Mass.
“Its sure to generate more Apple customers, and thats a good thing for Mac developers, Apple shareholders, everybody.”
At the same time, Peter Glaskowsky, an analyst with the Envisioneering Group in Seaford, N.Y., said thered be little traction for the Mac mini in the enterprise world. “Its hard to imagine an enterprise-level corporation thatd want a Mac but not prefer the power of an iMac or the portability of a PowerBook,” he said.
Still, he predicted the new, small Mac would be a hit product. “Its the Mac half-cube,” he said, referring to a previous compact Mac model that saw disastrous sales due to a combination of limited expansion and high price. “But Apple will sell 10 times what it sold of the Cube because people can afford the Mac mini.”
“Im tempted to buy one for my dad to get him off Windows,” Glaskowsky said, adding that his fathers Web browsing experience was nearly crippled by Windows-specific spyware and viruses.
Some analysts, however, said the security considerations may influence IT managers as well as home users in favor of the new Mac mini.
“IT shops may become more interested in the Mac mini and OS X,” said analyst Bob ODonnell, director of personal technology at IDC, of Framingham, Mass.
“It can save enterprises a lot of money on support costs and the security issues. Before, viruses and spyware were [considered] annoyances, but now the whole enterprise can go down. The stakes are higher. The Mac is a more secure choice.”
“The Mac has the Microsoft Office productivity suite, browser, e-mail and even a Lotus Notes client,” ODonnell added. “Most enterprise needs are covered [by the Mac platform] except for custom apps—thats always the trip-up. For sites that dont rely on custom apps, the Mac may become an acceptable choice.”
Next Page: Spreading the message of low TCO.
Low TCO
The genesis of this acceptance may start in the home and migrate toward the enterprise, suggested some longtime Apple watchers.
“We havent seen the low TCO [total cost of ownership] message from Apple,” said John Gallaugher, associate professor of information systems at the Wallace E. Carroll School of Management at Boston College,. He also consults at corporations with large computing installations, advising them on strategic use, and had chaperoned a group of his students to the Macworld keynote.
He suggested that this message, which hinges on Mac OS Xs security and relative immunity to spyware and viruses, “may come up from the home.”
“There are a lot of executives who have kids who bring home Macs,” Gallaugher said. “And as a father, I want to document my life,” he said, adding that this made Jobs presentation of the iLife “digital lifestyle” suite more attractive.
Overall, he was sanguine about Apples prospects. “Weve seen the unveiling today of a case that will be studied for years to come: Lead with low-price-point products, generate foot traffic and make customers move upstream” to more expensive products, or at least to ones with better margins.
For example, Gallaugher pointed to the new, low-cost iPod shuffle and the accessories Apple is selling alongside it. The new iPod model, he said, likely has a low margin, but the accessories could represent up to a 70 percent margin for Apple.
“Its the strategy everyone was saying would fail,” Gallaugher said. “I was a skeptic.”
Claude French III, the manager for desktop services at a graduate-level academic lab in Lexington, Mass., agreed that there was nothing new in Steve Jobs Tuesdays speech specifically for the enterprise market, but he still saw “potential” for the Mac mini in large computing environments such as corporations and, specifically, his lab.
“We have one of everything ever made,” he said, stating that this means he has to support all platforms at once.
French said his primary curiosity about the Mac mini was its potential to drive interactive kiosks, but he later thought the compact units could serve as cheap upgrades for some older desktop models in labs, at least for locations that didnt require high-end computational power.
“In the past 18 months, weve been buying more Apple products,” he said, including Xserves for where computation power was crucial, plus “a lot” of laptops.
Editors Note: David Morgenstern contributed to this story.
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