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SAN FRANCISCO -- The IPod now has a sibling. Apple Computer has unveiled a slimmed-down companion to its IPod portable music player as part of the Macworld Conference and Expo here this week.

Apple Chief Executive Officer Steve Jobs announced the IPod Mini at the end of a wide-ranging, two-hour keynote in which he covered Apple's broadening range of commercial ventures in the realms of online music, digital media editing software, and even supercomputing.

Shrinking IPod

The IPod Mini, scheduled for release in February priced at $249, will be about a half-inch thick and about the length and width of a business card. With a tiny 4GB hard drive, it will be able to hold about 1000 songs, or about one-tenth as many as Apple's current top-of-the-line IPod, which ships with a 40GB hard drive, Jobs said. The IPod is now available in four models.

Apple IPod Mini.
The IPod Mini will target the 31 percent of the digital music player market that is now dominated by flash memory player vendors like Digital Media Networks' Rio audio player, Jobs said.

"We looked at this high-end flash market and we want to go after that," Jobs said. He noted that Apple sold 730,000 IPods during its most recent quarter, and that it shipped its two millionth IPod sometime in December. The IPod Mini will be available in five colors.

Apple's CEO began his keynote by playing Apple's famous "1984" television commercial, which launched the Apple Macintosh, and saying that Apple's current transition to the Unix-based Mac OS X was a similarly important milestone in the company's history. With 40 percent of Apple's installed base of 9.3 million users now running OS X, he said, this transition is "now over," he said.

Jobs also touted new software for Mac OS X, such as Microsoft Office 2004, Macromedia's Director MX, and Bakbone Software's NetVault as proof of the success of this transition. The Mac OS X platform now boasts approximately 10,000 applications, according to Jobs.

New Applications

Jobs unveiled some of Apple's new software onstage, including a new version of Final Cut Express video editing software, called Final Cut Express 2. Jobs also demonstrated the latest version of Apple's ILife multimedia editing suite, ILife '04. It will begin shipping free with the Macintosh, or sold for $49 separately, effective January 16.

The suite is designed to be as essential to the management of multimedia files as Microsoft Office has become for business documents, Jobs said. "ILife '04 is like Microsoft Office for the rest of your life," he said.

ILife '04 will include a new music editing application called GarageBand, which Jobs demonstrated onstage with the help of musician John Mayer.

GarageBand can be used to digitally mix up to 64 music tracks that can either be recorded live or created with the 50 software "instruments" included in the program. "It turns your Mac into a professional-quality musical instrument and complete recording studio," Jobs said. "One half of all households have at least one person who currently plays a musical instrument," he added. "This is a really big market and we think GarageBand is going to appeal to these folks."

On the music consumer side of things, Jobs announced that Apple's ITunes music service has now sold its 30 millionth song, and is now distributing close to 1.9 million songs per week, out of a total catalog of half a million songs.

"The ITunes Music Store has 70 percent of the legal downloads," Jobs said, citing figures from research firm Nielsen SoundScan. "It feels great to get above that 5 percent, doesn't it?" he said, referring to Apple's personal computer market share.

Apparently, some ITunes customers are rabid users of the service. "The top spender on the ITunes Music Store has spent $29,500," said Jobs. "You think someone would have noticed that on their credit card by now."

Other Ventures

Jobs announced a promotional contest Apple will kick off in partnership with PepsiCo in February. One-third of Pepsi's bottle caps will contain code numbers that can be redeemed for a 99-cent credit to buy an ITunes song, Jobs said. "Pepsi and Apple are going to give away 100 million songs, legally, starting February 1," he said.

Not completely ignoring his company's computer roots, Jobs also unveiled a new dual-processor, 1.75-inch-high Xserve server. The Xserve is based on a 2.0-GHz PowerPC processor; pricing will start at $2999 for single-processor and cluster-optimized configurations when it begins shipping in February.

Apple expects the cluster-optimized servers to be used in high-performance computing deployments like the 2200-node Macintosh supercomputer recently built by Virginia Polytechnic Institute and State University, in Blacksburg, Virginia.

The system is "sending ripples throughout the supercomputer world," according to Jobs. "People don't know what to make of it," he said. "People are making pilgrimages to Blacksburg to find out what's going on."

Attendees at the show reacted with their usual level of religious fervor, erupting into applause after virtually every new product announcement. One attendee took this as a sign that Apple is on the right track.

"They're getting more in touch with the market," says Ian Johnson, a Mac user attending the show from Reno, Nevada.

But Johnson cautions that Apple's moves into supercomputing and music distribution could also have a downside. "The only thing I hope is that it doesn't cause a 'big head' company, where they become so big and spread out that they forget about support," he says.

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