Merrill’s Milunovich: Mac mini at Best Buy a "Logical" Step

January 27th, 2005 at 2:00 PM - TMO Scoop by Brad Gibson

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Best Buy and Apple (AAPL) teaming up to sell the US$599 Mac mini is a "logical" step that "could accelerate the halo effect", Merrill Lynch analyst Steven Milunovich said Friday.

The Wall Street analyst told clients in a commentary released Friday that news of an agreement between Apple and electronics retailer Best Buy to sell the Mac mini could do nothing but help Apple.

Mr. Milunovich said a pilot program to sell selected Mac CPUs and 48 Best Buy stores ended last year for "undisclosed reasons," but that "the introduction of the new Mac Mini could be the catalyst for Best Buy and Apple to team up." He wrote that the success of Mac mini sales in Best Buy stores will depend on "showing how the Mac Mini connects to peripherals" and being demonstrated by experienced "Apple-badged or knowledgeable Best Buy reps."

He also wrote that "pushing Macs through Best Buy could accelerate the halo effect." Many analysts believe the iPod may be producing a "halo effect" on Appleis core Mac business, in which customers are lured to stores for the iPod but end up also buying Apple computers. Apple has given no definitive marketing evidence that a "halo effect" exists.

Mr. Milunovich said he could not confirm how many Best Buy stores would stock the Mac mini or when it would be available, as representatives of neither Best Buy or Apple would confirm or deny a marketing agreement had been finalized.

The Mac Observer reported earlier Friday that reliable sources had confirmed a deal had been made between the two companies and that all of Best Buyis 780-plus stores would be stocking the $599 Mac mini and $99 iPod shuffle sometime in the next 30 days.

Mr. Milunovich reiterated his "buy" rating on Apple stock "with a price objective of $85 per share."