Apple Computer plans to attack the low end of its primary markets this year with smaller versions of the Macintosh computer and its popular iPod music player, CEO Steve Jobs said yesterday at Macworld.

During a keynote address to the rapt audience of Apple fans in San Francisco, Jobs unveiled the company's Mac Mini computer and the flash-based iPod Shuffle music player, along with several enhancements to the forthcoming "Tiger" version of Mac OS X operating system.

Both the Mac Mini and the iPod Shuffle are designed to attract mainstream users who may be familiar with Apple's other products, but are unwilling to spend the money on the full-featured versions, Jobs said.

The Mac Mini is a complete Macintosh system not much wider than a compact disc and only 2in high. It features Apple's G4 processor, a generation behind the G5 processor currently shipping in Power Macs and iMacs.

Apple will release two versions of the Mac Mini on 22 January. The least expensive model will cost £339 with a 1.25GHz G4 processor, 256MB of PC2700 (333MHz) DDR SDRAM, a 40GB hard drive, a DVD-ROM/CD-RW optical drive, and a Radeon 9200 graphics processor from ATI Technologies. A second model costs $399 with a 1.42GHz processor and an 80GB hard drive.

The iPod Shuffle is Apple's vision of a low-cost music player that is extremely easy to use, Jobs said. The earlier versions of the iPod came with hard disk drives ranging from 4GB for the iPod Mini to a 60GB iPod Photo. The iPod Shuffle can store either 512MB or 1GB of data on flash memory.

Most users will put music on the iPod Shuffle, but it can also be used as a portable USB device to carry non-music files, Jobs said. The bottom of the iPod Shuffle snaps off to reveal a USB attachment which can plug directly into a PC or a Macintosh, he said.

The iPod Shuffle digital music player is Apple's first to use flash memory to store files, instead of a hard drive. The tiny player uses no screen, but measures a scant 3.3x0.98x0.33in. It weighs 22g.

The iPod Shuffle's face sports a control pad interface reminiscent of the Click Wheel found on larger IPod models, which lets users increase or decrease volume, fast-forward, play and pause their music. On the flip side is a three-position slider: Off, Play in order and Shuffle songs. A battery indicator light rests below it.

On the top of one end of the tiny iPod is a headphone jack and on the other is the cap covering the USB 2.0 port. The device holds a rechargeable battery that is good for up to 12 hours of play and takes roughly four hours to charge, according to Apple. It has a standby time of one month when fully charged.

The iPod Shuffle includes earbud headphones and a lanyard that enables users to wear the player around their neck. Apple also will introduce in the coming weeks a set of peripherals designed especially for the iPod Shuffle, including a dock, armband, external battery pack and sport case.

Coming off a fourth quarter in which the company sold 4.5m iPods, Apple now holds 65 percent of the market for digital music players, Jobs said. The remaining chunk of that market is held by a variety of flash-based players that will now compete with the iPod Shuffle. The 512MB version of the iPod Shuffle will cost £79 while the 1GB version will cost £99. Both are available immediately.

"We've just begun the era of digital music," Jobs said. Apple now takes in more revenue from iPod sales than it does from selling computers, according to the company's third-quarter earnings release.

The Dashboard feature was probably the most well-received addition to Mac OS X. Dashboard integrates a number of helpful applications that Jobs called "widgets" into the bottom of a Mac's screen, such as a weather report window, a currency converter, a dictionary, and countless others.

Keynote attendees greeted the Mac Mini and iPod Shuffle with sustained applause and cheers, as they did just about every new feature or product shown during Jobs' two-hour presentation. Most attendees had already got wind of the new products through leaks posted on various Apple-enthusiast websites over the past month, which prompted a lawsuit from Apple.

But that couldn't put a damper on the enthusiasm of the attendees at the San Francisco show. While awaiting Jobs' arrival, conference goers danced on chairs to music played over the sound system by Apple-friendly artists such as U2 and the Black-Eyed Peas. Audience members whooped and whistled at some of the new features in the Tiger operating system, which is expected to ship in the first half of this year.