>> It would compete with the IMac then, and with their notebooks too.
Companies that try to avoid competing with themselves often fail quickly and spectacularly (after this approach appearing to work well for an extended time).
Apple historically hasn't had a problem competing with itself - iPod mini - iPod nano - iPhone, each of these completely destroyed an existing product or product line.
Apple probably is an exception rather than a rule here; their products are so overpriced that any new product success easily makes up for previous products losses.
It might be a bit different for "normal" companies though.
It would compete with the IMac then, and with their notebooks too. Maybe Apple should charge enough of a premium for the mini to justify that loss.