I think having a small, sexy and inexpensive Mac to compete with lowend PCs is a smart move. There’s a target market there and this could very well gain additional market share for Apple.

The Apple rumor site claims that Steve Jobs & Co. are planning to announce a sub-$500 G4-based iMac at the Macworld Expo in January. Code named “Q88,” the new Mac is rumored to be small, portable and “headless,” that is, it comes solo, with no display. ThinkSecret says the 1.75-inch-tall device will be targeted at Windows users looking for a second PC and who may have a new affection for the company after using its iPod music player.

Alas, it is only a rumour at this point, so all you fellow Applelites (yeah, I guess I’m sort of one myself) anybody get too excited yet.