New cheaper Apple products on the way?

SAN FRANCISCO - Apple Computer is widely expected to unveil cheaper portable music players and Macintosh computers next week at its annual trade show as it seeks to change from a niche technology player to the mainstream champion of the "digital life".

Apple rumour websites and analysts have been buzzing in recent weeks about an iPod digital music player that uses a relatively inexpensive flash memory microchip to store songs, rather than the more commodious and expensive hard disk drives currently used in the devices, which cost US$250 to US$600 ($356 to $855).

Opinions are divided on whether Chief Executive Steve Jobs will also unveil a Macintosh computer for less than US$500, excluding a monitor.

An Apple spokesman declined to comment.

Apple now sells more iPods than Macs, with analysts forecasting 4 million or more iPods to be sold in the December quarter, double the number in the prior period for the device, which debuted in 2001.

"A flash-based iPod would be going after what we'd call the low end of the market and could certainly bring more people into the Apple experience," said analyst Tim Bajarin of market research firm Creative Strategies.

That is something that Apple has largely failed to do for years, as its high-design computers have garnered less than 5 per cent of global PC sales.

Extremely strong sales of the iPod as well as strong demand for its highly profitable PowerBook notebook PCs have not only been a boon for Apple, but also for its shareholders.

JPMorgan analyst Bill Shope estimates that Apple could double its market with the introduction of an iPod device costing about US$150 or less. He cited research firm IDC's forecast that flash-based digital music players will account for nearly 51 per cent of the worldwide market in 2008.

Jobs often uses the annual gathering of the Mac faithful for its biggest product introductions and advances to its iLife suite of photo, music and video software and the Macintosh.

rumour sites dedicated to all things Apple such as Think Secret and Apple Insider have recently said Apple would introduce a "headless" iMac computer -- without a display -- at Macworld, costing US$499, citing sources. Analysts are divided about whether the rumour will pan out.

Bajarin said he was somewhat dubious about the introduction of an iMac costing US$500, unless it was designed for uses other than just a traditional PC.

"They could have done that at almost any point in their history," he said.

But in a note to clients, Merrill Lynch analyst Steve Milunovich said such a lower-cost PC, a market that Apple has until now conspicuously avoided, would make sense and could encourage more consumers to switch from Windows-based PCs to the Macintosh.

"Selling just the system unit would cut significantly the cost to switch," Milunovich wrote, adding that such a device would expand Apple's "digital living room" strategy, which it kicked off with its AirPort Express gizmo, which transmits songs from an iPod to a home stereo system.

"Apple needs to build a strong digital consumer franchise based on more than iPod but using iPod as the lever," Milunovich wrote.

- REUTERS