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Apple reveals minimachines geared for slimmer wallets

Apple Computer Inc. chief executive Steve Jobs introduced a cut-rate computer the size of a paperback on Tuesday and a tiny iPod that starts at $99 but holds far fewer songs than Apple's hard drive-based music players.

The new products seek to make inroads in the traditionally more affordable PC market and against lower-cost competitors to Apple's wildly popular iPod.

The Mac mini computers will go on sale Jan. 22 and represent Apple's first foray into the budget desktop PC arena, which has been largely confined to personal computers that rely on Microsoft Corp.'s Windows operating system.

Smaller than even some standalone external computer drives, they lack a monitor, mouse and keyboard. The 40-gigabyte Mac mini will cost $499, an 80-gigabyte model $599.

They ship with Apple's latest operating system, Mac OS X Panther, as well as the newest version of its iLife suite of digital media software programs, also unveiled Tuesday.

"People who are thinking of switching will have no more excuses," Jobs told devotees during a keynote speech at MacWorld Expo. "It's the newest and most affordable Mac ever."

Apple has just a 3 percent share of the U.S. computer market, and company executives say they're aiming with the Mac mini to woo PC users who may have felt Apple products were too high-priced.

The iPod shuffle, on the other hand, seeks to build on Apple's heady success in the portable music business while appealing to people seeking flash memory-based players, which are more durable and lightweight than those using hard drives for storage _ and thus better suited as exercise partners.

The player is smaller than most packs of chewing gum, weighs less than an ounce and is a third of an inch thick.

Unlike its larger cousin, the iPod mini, the iPod shuffle lacks a display. There's a scroll wheel for the controls so stored songs can either be played sequentially or automatically shuffled in random order.

Apple is selling two versions.

The smaller-capacity model will have 512 megabytes of storage, which holds up to 120 songs, and cost $99. A 1-gigabyte version, which holds up to 240 songs, will sell for $149.

Until Tuesday, the lowest cost iPod was the mini, which costs $249 for 4 gigabytes, enough to store about 1,000 songs.

Like other iPod models, the new players are designed not to play songs purchased from online music stores that compete with Apple's iTunes.

Analysts expect the new iPods will help Apple hold its lead in the MP3 market.

Investors seemed unimpressed.

Apple shares fell $3.88, or 5.6 percent, to $65.08 in late afternoon trading on the Nasdaq Stock Market.

Analysts were expecting about 4.5-million iPods to be sold in the fourth quarter _ so the fact that the company didn't outperform expectations disappointed Wall Street.

"Apple suffers a lot because the expectations for the company around their announcements are so high," said Shannon Cross, a financial analyst at Cross Research of Short Hills, N.J. "With Apple more than others, it's always buy on rumor, sell on news. It's impossible for them to meet everyone's expectations."

ENVIRONMENTALISTS PROTEST: Environmentalists with the Computer TakeBack Campaign are planning a yearlong campaign to protest Apple's lackluster recycling efforts. Despite drizzle on Tuesday at the annual MacWorld Conference & Expo, activists passed out leaflets and erected a giant banner proclaiming, "from iPod to iWaste."

The advocacy group, which last year badgered Dell Inc. until it significantly bolstered its recycling initiatives, plans protests at Apple's Cupertino, Calif., headquarters throughout 2005, a letter-writing and e-mail campaign, and other attacks against the maker of Macintosh computers.

Environmentalists said they're targeting Apple because the hardware and software company makes it difficult to replace batteries in its digital music players, and it charges many consumers $30 to recycle their unused or broken computers and laptops.

Apple spokesman Steve Dowling said Tuesday that the company would not comment on the environmental crusade. On Thursday, Apple promised to join eBay Inc. and Intel Corp., which launched an informational Web site to help motivate Americans to resell, donate or recycle used gadgets.

Windows fixes

Microsoft Corp. released two security fixes Tuesday that carry its most severe threat rating, including one that applies even to computers that have downloaded the company's massive security update for the Windows XP operating system.

Both flaws affect versions of the company's dominant operating system going back to Windows 98, and both could allow an attacker to take control of another person's computer.

One of the flaws also leaves vulnerable users who have downloaded Service Pack 2, a major security upgrade for Windows XP that was released last summer.

Microsoft CFO

Microsoft Corp. said Tuesday that its chief financial officer, John Connors, was leaving after 16 years with the software giant to join a Seattle-area venture capital firm.

A replacement for Connors, 45, was not immediately named. The company said it planned to consider both internal and external candidates.

The announcement was unexpected. Matt Rosoff, with independent analysts Directions on Microsoft, said Connors is well-regarded and saw no indication that upper management was unhappy with Connor's performance.

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