Low Cost iMac Generates Buzz on Street

Low Cost iMac Generates Buzz on Street



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By Bill Snyder - TheStreet.com Staff Reporter, The Street.com

Apple watchers are buzzing about a rumored cut-rate iMac that could encourage users of Windows-based computers to switch.

On Thursday, Piper Jaffray analyst Gene Munster published a note suggesting that a $500 iMac -- not including a display -- may be unveiled at January's MacWorld Conference and Expo. If so, he wrote, "we believe it would appeal to many potential 'switchers' who would likely not make the move at a $1,299 price point, but would consider a $500 product."

Munster and other analysts say that some purchasers of Apple's wildly popular iPod music player are so happy with their purchase that they will switch from Windows-based computers to Macs. Within the industry, that trend is called "the halo effect."

As a matter of policy, Apple does not comment about unreleased products, and as recently as October a company executive threw cold water on the cheap iMac rumor. "To date, we have chosen to not compete in the sub-$800 desktop market, and have put that R&D investment into expanding our products in the music area, in software, and in hardware," said CFO Peter Oppenheimer.

Moreover, part of the appeal of the existing iMac line is its sleek, all-in-one design, making the "headless iMac," as one site calls it, quite a departure.

Several sites, including ThinkSecret.com and MacRumors.com, have published a remarkably detailed account of the rumored product, and speculation about a cheap product aimed at users of Microsoft's Windows has been in the air for some time.

"Based on our belief that 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," Munster wrote.

(Piper Jaffray does not have a current investment banking relationship with Apple.)

In recent trading, shares of Apple were up 6 cents to $64.50 on light volume.