Macworld The rumour sites got it completely right. Steve Jobs on Tuesday morning unveiled both a stripped-down Macintosh, the Mac mini, for $499 (£339 in the UK) - sans display, keyboard, mouse - and a Flash-based iPod, the iPod shuffle, with 512MB or 1GB of storage, priced at $99 and $149 (£69 and £99 inc VAT).

He also unveiled new version of the iLife consumer media packages, and another package called iWork.

In his speech to the Mac faithful at Macworld Expo San Francisco, Jobs said that the Mac mini was "the cheapest Mac we've ever made," and that it was specifically aimed at those people who had previously thought Apple computers were too expensive - which would be about 97 per cent of the market.

"'Why doesn't Apple offer a stripped-down iMac that's more affordable?' If I had a nickel for every time I've heard that," said the billionaire Mr Jobs. "This is what they want. Stripped down, no display. We think people understood the iPod mini and we think they'll understand the Mac mini."

The machine is tiny, about the size of a square white book, 5cm high and weighs just 1.3kg (2.9lbs). Inside are a 1.25GHz or 1.42GHz G4-class processor, 256 MB RAM (expandable to 1GB), 40 or 80 GB hard drive, combo DVD-ROM/CD-RW drive, and ATI Radeon 9200 graphics processor with 32MB video memory. The machines can be fitted with Apple's Airport Extreme (802.11g) Wi-Fi and/or Bluetooth.

They have two USB 2 and one Firewire 400 ports, Ethernet, 56Kbps modem, built-in speaker, headphone/line out, and DVI or VGA display output. The models will retail for $499 and $599 in the US (£339 and £399 in the UK), and be available from 22 and 29 January, respectively. Almost all of those details - most importantly the price and configuration - were revealed by the rumour website Think Secret two weeks ago. Apple is now suing Think Secret.

Pascal Cagni, head of Apple's European operations, told The Register that launching the Mac mini was a risk - but one that Apple was happy to take. "I'm taking a lot of these," he said. "But what I've learnt is that smalll rivers lead to big rivers."

Apple hopes to benefit from what analysts call the 'halo effect' - that satisfaction with the iPod and iTunes products will tempt them to an affordable Apple machine. Before the speech, Cagni revealed that 2004 was the best year for Apple Europe since 1999, with revenues of $1.8bn, up 37 per cent on 2003, while Jobs said later that the London Apple Store, opened in November, is now the second highest-grossing of the company's 101 stores worldwide.

The other, widely-anticipated launch was a cheaper version of the world-dominating iPod music player. Jobs showed data suggesting that in the past 12 months the iPod had more than doubled its market share, from 31 per cent to 65 per cent, while Flash memory-based rivals had fallen from 62 per cent to 28 per cent, even in an expanding market. But having dismissed Flash-based machines last year, Jobs now intends to mop up the rest of the resistance there, with the display-free iPod shuffle, which can hold up to 250 songs and uses a USB interface to connect to the computer. Smaller than most packets of chewing gum (and about the size of a tongue depressor, or any USB memory stick), the iPod shuffle has a rechargeable battery, and either plays songs at random or sequentially from its contents.

Jobs said this would solve the "tortured user interface" that has dogged such players since their inception. Whether not being able to find out the name of the song that's playing will torture the user but just in a different way remains to be seen.

Also announced in the keynote speech was a new low-end page layout and writing program, Pages, which will be sold boxed with an updated version of Apple's presentation package Keynote 2 in a boxed set called iWork. That will cost $79 (£49 in the UK) and be avaialble from 22 January in the US and 29th elsewhere. The iLife suite of products was also updated to iLife 05 with newer versions of iPhoto, iDVD, Garageband and iMovie, and the existing version of iTunes. That will be available from 22 Janaury for $79 in the US, and £49 in the UK from the 29th. The suite will be included on the Mac mini.

One more thing: Apple also updated its Final Cut Express "prosumer" video editing package to incorporate editing of High Definition Video. Bet you're glad we didn't leave that off. ®

Related stories

Whatever happened to... the Apple Mac?
Apple confirms MacWorld rumors with fresh lawsuit
Apple iPod Flash said to ship January
Apple ships Xsan 64-bit cluster file system
Apple preps sub-$500 iMac - report
Apple 'readies' 5GB iPod Mini