The Mac mini, Price Reductions, and the Road Ahead

Despite the nay-sayers, the Mac mini is a runaway success. Apple can't make them fast enough, and the backlog is now measured in weeks. The US$499 price point, compact size, and barely compromised design - which also looks just great - have caught the public's interest.

A lot of us are patting ourselves on the back. After all, we've been saying it for years. "Apple, if you make a low-end Mac that's price competitive with cheap PCs, you'll sell a boatload and really increase market share."

And that finally happened. I suspect the Mac mini will be the top selling computer this month and for several months to come, just as the US$1,299 iMac was for most of the year following its introduction. (For the record, back in 1998, when the iMac was introduced, a "cheap" PC system sold for about US$1,000, so the iMac was as competitive with the Dells and Gateways of that era as the mini is against today's name brand PCs.)

It Gets Better

In an unexpected turnabout, Apple has already reduced the price of several accessories, peripherals, and upgrades for the Mac mini. Remember the Apple USB mouse and keyboard? They once sold for US$59 each; today you can buy the pair for US$58 (US$29 each). Want AirPort Extreme and Bluetooth installed? That's just US$99 for both now.

On the entry-level mini, it originally cost $80 upgrade to an 80 GB hard drive. Now you can order the larger drive for just $50 more. And the biggest news of all - the 1 GB memory upgrade, which sold for $425 when the Mac mini was first on sale, now sells for $325. That's still a 100% premium over mail order prices (as low as $165 shipped as I write this), but it includes installation by Apple.

Bill Palmer is completely confused by this. He speculates that Apple may be doing this to boost lackluster Mac mini sales, but based on reports of backorders everywhere, that can't be the case. His second speculation is that perhaps Apple isn't selling enough profitable upgraded build-to-order minis, which just might be the case.

Palmer's third speculation, that Apple intended "to milk the early eager buyers by charging them inflated prices for the upgrade packages" makes no sense at all, especially in light of Apple's announcement that they will refund the difference between original and new prices for those who ordered through the Apple Store.

My guess is that a few things are happening. First, the Mac mini is selling like gangbusters, and Apple is realizing enough additional sales of mice, keyboard, AirPort cards, and Bluetooth modules that the increased sales volume will more than offset the reduced prices.

Second, there are economies of scale. If Apple is producing twice as many mice and keyboard or buying twice as many wireless modules, they probably get a better price, which allows them to reduce the end price to the consumer.

Third, there are the historical trends of the entire consumer electronics industry toward lower prices over time. Where a 20 MB hard drive once cost several hundred dollars, today you can barely find a 20 GB hard drive. Much of the R&C behind 802.11g, Bluetooth, and so forth has already been amortized, so today's unit sales no longer have to be concerned with recovering development costs.

If you look at the broader PC market, prices of mice, keyboards, hard drives, wireless cards, and memory keep dropping. I'm sure that's the biggest factor in Apple being able to offer an 80 GB drive upgrade for $30 less and a 1 GB RAM upgrade for $100 less than they announced just weeks ago.

Now if Apple would just make a nice 15" megawide 1280 x 854 pixel flat panel display to complement the mini, they could have a really cost-effective completely Apple-branded solution.

The mini Future

Apple could have made the Mac mini cheaper. A lot of the technology inside there comes from iBooks. That's the primary reason Apple could make the mini so, well, mini. There's just not room inside there for a power supply or 3.5" hard drive.

I work with a 1.25 GHz eMac, so I'm familiar with the performance we can expect from the Mac mini. At 1.25 GHz, the eMac is a comfortably fast machine most of the time. The biggest exception is hard drive access, because Apple uses lower-cost 5400 rpm hard drives in the eMac. My solution is to use 7200 rpm drives, one inside my newer eMac and the other still in a FireWire enclosure connected to my older eMac. (I'll transplant it into the eMac some day, but that's a tedious process.)

The biggest bottleneck on the Mac mini is the laptop hard drive. At 4200 rpm, it's slower than the 5400 rpm drive Apple puts in the eMac. Faster 3.5" hard drives are very affordable, but faster laptop drives aren't.

Apple could address this by offering faster drives for the Mac mini, but even then they'll be limited to 100 GB drives. At present, there's nothing bigger in the 2.5" form factor.

I'd love to see Apple create a Mac mini Plus, a computer with the same 6.5" square footprint, a somewhat more robust power supply, and room for a 3.5" hard drive. To allow for the larger drive, the mini Plus wouldn't have to be even 3" high, and suddenly those who are willing to sacrifice a bit of size and weight for a bit more storage space or drive performance would have a great option.

At the same time, Apple could use the extra space on the back of the mini Plus to add some much-needed ports: one more FireWire, two more USB, and the one I'd really love to see - a Disk Mode button that would allow the mini Plus to function as a FireWire or USB 2.0 hard drive. (I'd love to see this on the mini, too. Maybe the next revision....)

The extra space might allow Apple to use faster G4s inside the mini Plus, perhaps 1.33 GHz and 1.5 GHz (same as current PowerBooks). Add a better graphics subsystem - or at least more video memory - and you've got a tiny Mac a power user could love.

The mini Meets the Past

The other thing I'm hoping for is the first Mac mini compact Mac merger. Someone out there has to be planning to gut an old Mac SE, cut a 6.5" x 2" opening in the front, install a shelf or brackets for the mini, and create an incredibly retro Frankemac.

I just know the Colour Classic Corps has to be at work on this one as well, figuring out how to put a mini inside a Colour Classic case without ruining the cosmetics. Some of these people have already created G3-powered Frankenmacs from their old Colour Classics, so this is inevitable.

And then someone out there has to get the clever idea of producing a new compact Mac design that combines a Mac mini and a small (10" or so) flat panel display in a rack or enclosure reminiscent of the compact Macs of yesteryear, either in transparent plastics (reminiscent of the Transparent SE) or in a modern aluminum look that would reflect the Power Mac G5.

Tip of the Iceberg

The Mac mini itself is just the tip of the iceberg. People are already finding ways to put them in cars, turn them into entertainment centers, and set them up as tiny network servers. They've only begun to imagine the possibilities such a small computer holds.

The Mac mini redefines the Macintosh as an affordable, friendly, flexible computing platform. It's going to continue as a runaway success.