The paper presents three new aspects to the design and analysis of electrical machines in general, and the manufacture of small electrical machines which utilize new powder-metallurgical, soft-magnetic-core material in particular. First, a comparison of the Maxwell-stress and Poynting-vector methods of determining power-flow conditions in electrical machines is made. Calculations are based on three-dimensional (3D) field data, which include the full harmonic spectra due to excitation and load conditions, conductor slotting, and winding factors. The method employed to obtain the 3D field data is based on a new computed tomography technique in which the spatial distribution of the fields are accurately obtained in the air gap of the machine. The machines studied in the investigation are characterized by the use of soft magnetic powder-metallurgical core materials used in their construction. A detailed appraisal of the properties of these new powder-metallurgical materials and examples of their use in small electrical drives will be given in the paper. The method of force calculation adopted, together with the use of new soft magnetic materials, has resulted in a significant advance for the manufacture of small electrical machines.