Analyst: Best Buy to Carry Mac Mini Soon

Mass market retailer Best Buy will soon begin selling the entry level Mac mini, Merrill Lynch analyst Steven Milunovich said Monday.

Mr. Milunovich said sources at various Best Buy locations have informed him that Apple Computer will soon begin selling the US$499 mini, but did not disclose a start date or if they would sell both the entry level model and the $599 model.

"Last week, one Best Buy showed us Mac mini accessories; Mac minis are coming later," he told clients in a commentary obtained by The Mac Observer. "The delay (in their availability) may be tied to the release of the new OS (X Tiger). Buyers would not be pleased if they had to plunk down an extra $129 after their $499 Mac mini purchase.

Mr. Milunovich wrote that by selling the Mac mini together with the iPod at Best Buy, the combination "will help provide evidence of the halo effect," which is thought by many to be the marketing phenomenon of consumers buying an iPod and then soon after buying a Macintosh PC. "Although we see plenty of anecdotal evidence of Mac sales benefiting from iPod success, the numbers will tell the tale. We look for consistent 15-20% (year-to-year) Mac revenue growth.

The Merrill Lynch analyst said "Tiger is close to shipping" and should be available "by the end of April" to benefit third-quarter earnings.

Mr. Milunovich said typical slow sales after the Easter holiday and slowed sales at Apple retail stores.

"For the first time we can recall since the iPod craze kicked off, store employees outnumbered customers and there was less than an hour wait for the genius bar at some of the stores we visited.," he reported."

In addition, he said Apple component suppliers had also reported a slowdown in iPod orders from Apple.

ML is still recommending a "Buy" on Apple stock (AAPL), with a price objective of $51 per share.

"Beyond making near-term estimates, Apple must show it can build a sustainable consumer franchise. All the speculation about potential products sets a high bar, but owning Apple is like having a call option on Steve Jobsi inventiveness," he wrote.