Would a smaller monitor make it dramatically cheaper? Decapitating the iMac (mini) hasn't done it; keeping any screen seems unlikely to help either. Not because it's impossible; simply because Apple won't go there unless they have something different to offer.
The mini is the smallest energy efficient desktop they offer, its size was the difference. I don't know that this has made it a popular machine or not. It's still in the line-up, but the value proposition is a bit weak - by design? - to move customers to an entry level iMac.
The conventional solution may be to simply offer a better/cheaper entry level iMac - one that makes an even stronger relative case for new Mac desktop customers. Do I get the mini when for 200 more I get a nice screen and keyboard and faster CPU, more storage, etc etc...
Current mini costs 749 Canadian. A 999 iMac would do the trick. The dual HDD mini costs 1099 - perhaps not really a machine for entry level customers, but rather a specific subset of customers.
A less conventional solution could be to make a small-ish/cheap-ish "Lion" Mac. Maybe with a 17" 5:4 screen with touch input. Basically a screen with an easle type foot on the back - so the whole machine can squat down to a comfortable touch-interface height and angle. Make it cheap, but still a mac, not an iOS device. Machine tilts up and with a wireless keyboard and mouse it's just like a mac, machine tilts back and it's a completely different interface - full screen, touch based control of iApps etc...
The whole thing is small, no chin, minimal bezel, minimal desktop footprint. It either stands up and out of the way, or down and out of site. It doesn't rotate either, hence the "almost square" 5:4 screen. Standard I/O, SD cards, USB, FW, and wireless, but no optical. SDD optional, large 2.5" HDD for now. Side profile: slightly of wedge shaped, so that the bottom lip gets real close to the desk surface and it keeps a comfortable angle.
A new kind of computer, yours for 999... happens to double as a small desktop mac...
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