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Headless iMac is next step in digital living room for Apple

In a research note to clients today, Merrill Lynch analyst Steven Milunovich provided his thoughts on reports of a headless (without monitor) sub-$500 iMac. “Why require a PC owner to buy a new monitor to get a Mac?” stated Milunovich. “Selling just the system unit would cut significantly the cost to switch.” He said that the proposed iMac could cannibalize sales of the eMac, but the impact “should be modest” as eMacs are targeted at the education market. Milunovich also said that a headless iMac could be “the second step for Apple moving into the digital living room (the first was the AirPort Express).” The analyst noted that Merrill Lynch released a report last year that argued Apple could be well positioned for building such an entertainment server.

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