John G. Spooner
Staff Writer, CNET News.com
Apple Computer isn't the only company with big hopes for small computers.
Rival PC makers are hoping Apple's newly minted Mac Mini, which went on sale last Saturday, helps shift consumer tastes to smaller desktops at a time when most people associate "little" with laptops.
"I love the product. I think it's beautiful," said Tom Anderson, vice president of marketing for the Consumer PC Global Business Unit at Hewlett-Packard. "If it started a trend of small (desktops)...I'd be very happy about that. It would be a reason for someone to consider a desktop."
Big-name PC makers such as HP have so far had little success with small desktops, but the tiny Apple could well create enough buzz to spark new interest among consumers, some executives said.
Anderson and others said they believe miniature desktops will eventually take off in the United States and Europe, as they have in Asia.
Though mini PCs have primarily caught on at business call centers and among enthusiasts who build their own machines, buyers have opened their wallets for small desktops from companies such as Shuttle and Little PC. Touchdown Industries even appeals to sports fans with a tiny machine that fits inside a football helmet. Meanwhile, some consumers have reported interest in using the Mac Mini for home entertainment, while others envision it providing Internet access in living rooms and kitchens.
CNET News.com reader Doran Else said he wants to purchase a Mac Mini to eliminate the need for regular Windows updates. If the first Mini serves him well, he said, he'd like to add a second one so he can access the Internet in his kitchen.
But minis will face a formidable challenge in the thriving portable market.
Although the trend isn't expected to last forever, growth in unit sales of notebook PCs at retail has outpaced that of desktops for some time. During the 2004 holiday season alone, retail sales of notebooks in the United States leaped 26 percent, preliminary data from The NPD Group shows. Moreover, unit sales growth in the $1,000 notebook category corresponded with slower sales in the $600 to $1,000 desktop PC category, said Steve Baker, an analyst with NPD.
"People who are adding to their home inventory (of PCs) are going to want something different," Baker said. "Most people don't have two great big TVs. They've usually got one big one and the kids might have one and maybe there's a 13-inch in the kitchen. People try to fit the value to the task that product is going to perform. I think more and more you'll see PCs have that effect."
The diminutive Mac arrives at a time when most Windows-based desktop machines offer the same basic elements, including at least two 5.25-inch bays for CD or DVD drives, a floppy drive, a series of front-mounted ports for headphones and other peripherals, as well as a memory card reader. Currently, designing a desktop has more to do with choosing parts to hit a specific price than creating a thing of beauty.
But a movement to miniature desktops would elevate the importance of design as a factor in a model's success or failure, compelling PC makers to rely on elements other than price to make their machines stand out amid rival miniature PCs and inexpensive notebooks.
Large manufacturers have already been studying the role of the small desktop. HP, for example, has been considering taking another shot at offering a small desktop, Anderson said.
"We've made no commitments to do it again, but we're looking at it," Anderson said.
Dell already offers a small desktop for consumers. The company's Dimension 4700C, which came out last fall, is significantly smaller than Dell's standard Dimension 4700 mini tower. The 4700C offers the same basic components, including a Pentium 4 processor and a CD burner or DVD burner. It costs about $85 to $100 more than the full-size Dimension 4700, which starts at about $749 before rebates and special offers, without a monitor.
Although Dell will continue to offer different PCs in different sizes, the company said small machines come with a catch. Most customers are still looking for something big.
"We've been making small PCs and offering them for quite some time," said Joe Curley, director of product marketing for Dell's Dimension PC line. But "the vast majority of customers—consumers and small and medium businesses—are choosing to buy PCs the way they perceive a PC to be." That, he said, is "a desktop or mini tower that has a couple of industry-standard 5.25-inch bays."
"What we found was, at least at that time (before HP bought Compaq), that people were still concerned about expandability," Anderson said. "It's been an important feature of the PC for the last 20 years, but as the PC has gone mainstream, it's been something that people liked but that they haven't used."
Indeed, people seem to expect their new desktop to offer them the features they want for the lowest possible price. They also expect it to be upgradeable, even if they never actually upgrade. With price and upgradeability at issue, PC makers will have their work cut out for them when launching miniature PCs.
Though the three PC makers would likely take slightly different approaches to future small PCs, they would probably agree on using standard parts. A tinier machine that uses a widely available motherboard, a 3.5-inch hard drive and a full-size 5.25-inch optical drive can be offered for a lower price compared with a standard desktop, they said.
HP found that pricing its small PCs even as little as $50 more than standard machines turned buyers off, Anderson said.
Miniature PCs must also leave out certain things, such as a second optical drive, a floppy drive or the absolute fastest processor. Instead, they might come with a combination CD-burner/DVD drive, memory card readers and midrange processors, making them capable of easily performing tasks such as Internet access or showing video.
Still, PC makers should also be careful to strike the right balance between performance and size, Anderson said. Building in 120GB, 160GB or higher capacity drives, for example, will mean miniature PCs able to match larger machines in storing large numbers of MP3 files or even digital photos.
"We're continuously looking at small form factor (desktops) as a possibility," said Gary Elsasser, vice president of product development at Gateway. But, as a PC maker, "you've got to look at the marketplace and decide what's going to drive the highest amount of volume...and what's going to meet customers' needs. It takes time for customers' perceptions to change, and I don't think (they're) going to change anytime in the immediate future."
Changing consumer taste will amount to a monumental task for the tiny Mini. To date, the vast majority of consumers purchasing Windows desktops have shown little desire for anything other than a standard mini tower. Even stylish, all-in-one machines such as the iMac and the Gateway Profile have sold in small numbers compared with the tens of millions of standard desktops purchased by consumers annually.
But Apple has paved the way before. Take the company's iPod music player, which has changed the way many people listen to music. Although it has yet to be determined whether the Mini will be the product that turns around the entire desktop computer market, the machine has arrived at what could be an opportune time.