Friday, January 28, 2005, 09:00 am

Merrill Lynch: Best Buy may sell Mac mini at select stores

By Katie Marsal

Best Buy may begin selling Macs again, which in turn could accelerate the iPod halo affect, according to a report released by Merrill Lynch.

In a research note sent to clients this week, Merrill Lynch analyst Steve Milunovich said his firm believes Best Buy may begin to sell Mac minis in at least some of its stores. The analyst based his report on information elicited from a retail manager at a Best Buy store, who said he expects to have Apple computers in the store by the end of February.

Milunovich also says Best Buy’s website at one time indicated that the Mac mini was “coming soon” to its retail stores, though AppleInsider was not able to confirm this bit of information, and neither Apple or Best Buy would comment on the subject.

And while the two companies had previously decided not move forward following a pilot program in 48 different US stores, the firm claims Mac mini's lower $500 price point would make the program more successful a second time around.

"Half the 48 stores had Apple-badged employees, which we think resulted in higher sales and made clear that Apple-savvy sales people would be a requirement. We venture that the additional cost of dedicated sales people combined with Apple's lower volume of $1,300+ computers made a deal unworkable at that time."

In the report, Merrill Lynch cites the introduction of the Mac mini as the catalyst that could spawn a renewed partnership between Best Buy and Apple. "The new Mac Mini has moved the price point down to $499. We believe a limited roll out to select Best Buy stores is logical," the firm said. "Because showing how the Mac Mini connects to peripherals is so important, either Apple-badged or knowledgeable Best Buy reps must be involved."

A partnership between Apple and Best Buy on Mac mini sales could further accelerate the halo effect of the iPod by providing yet another outlet for Apple to reach out to the larger consumer market, Milunovich said.

Merrill Lynch reiterated a "Buy" rating on Apple with a price target of $85 per share.