MACWORLD EXPO - Product rumors swirling

Ellen Lee
San Francisco Chronicle
Jan 8, 2007

Although much of the technology throng may be in Las Vegas for the Consumer Electronics Show this week, all eyes Tuesday will be on Apple Computer Inc. and its leader, Steve Jobs.

Jobs kicks off the Macworld Conference & Expo in San Francisco, which is being held at the same time as the electronics show, with a two-hour keynote speech. Although the CEO has been embroiled in the company's stock-option backdating scandal of late, the cloud has not dampened the rumors and anticipation that surround the Cupertino technology company's next new thing. Or things.

Five years ago, the iPod music player and the accompanying iTunes service helped transform the digital music industry, luring the masses to download music legally onto their computers and carry it with them in a portable player.

A year and a half ago, Apple expanded its vision to include television shows and movies, spurring people to turn to the Web for what they traditionally found on their TV sets.

This year, the attention is focused on two products Apple is expected to unveil: the iTV, a set-top box that will allow you to transfer content between your computer and your television, and the iPod cell phone, which has been gossiped about for years.

Either one could propel the digital lifestyle -- and Apple's role in it -- further, shifting the way people get entertainment.

"The time is right," said Michael Gartenberg, vice president and research director for JupiterResearch. "Their products are mature. That's when Apple decides it's time to do something different -- when their products are at their peak."

In an unusual move, Jobs unveiled a prototype of the iTV last fall and said it could hit stores early this year.

Although many people like to download movies and shows from the Internet and watch them on their computers and iPods, they also want to enjoy them on their flat-screen televisions, Jobs said. But so far, it's been difficult to connect computers to TVs without extra cables and know-how. Most folks haven't bothered to try.

The iTV is expected to simplify the process. The slim box acts as a bridge between the computer and television, beaming the movies and shows wirelessly.

Other hardwaremakers such as D-Link already sell a box that promises to stream content live to the television. But Apple could help make the practice mainstream and make downloading content more popular. Apple hopes the iTV will make it the core of home entertainment centers.

"I think there are a lot of products similar to the iTV," said Stephen Baker, an analyst with market research firm NPD Group. "But what is Apple going to put in theirs ... so that it'll kick-start a segment that hasn't resonated with consumers?"

If the iTV is meant to be the central component in the home, the iPod cell phone should guarantee that people need only one mobile device when they leave.

Popular Apple rumor sites such as Think Secret and MacRumors, as well as Digg.com's Kevin Rose, have been reporting on details of the phone: a candy bar design, a slide-out keyboard and anywhere from 2 GB to 8 GB of memory. Of course, it won't be called the iPhone: That name belongs to Cisco Systems, which last month introduced a set of mobile phones with that moniker using wireless Internet access to make calls.

Gene Munster, an analyst with Piper Jaffray, gave 9 out of 10 odds for an iPod phone going into production within six months. He cited reports of a Taiwanese manufacturer receiving a contract for 12 million iPod phones.

But Gartenberg of JupiterResearch said there are pros and cons of developing an iPod phone: The pro is that the cell phone has become a ubiquitous device that most people carry everywhere; the con is the cutthroat competition and, by working with cell phone carriers, having to give up some degree of control.

So far, cell phones that store and play digital music haven't caught on. Apple's challenge is to develop the right combination of features that will make people reconsider the way they use a portable device.

If the iPod phone were just about marrying the iPod with a cell phone, people could just "glue" an iPod Nano "to a (Motorola) Razr and make an iPhone," Gartenberg said.

Even without many details, people are already clamoring for it. About 40 million people age 12 and older in the United States said that the iPod phone is a "great idea," according to a survey by the Solutions Research Group. It also said the phone could substantially boost Apple's place in the market. The iPod's halo effect -- the idea that iPod owners will buy other Apple products -- has already helped boost Macintosh sales. For instance, Apple's laptop sales have been outpacing overall notebook sales.

The iTV and iPod phone aren't the only rumors making the circuit. Jobs is also expected to address the latest Mac operating system, Leopard, which will be released this year.

The video iPod is also due for a change. Apple upgraded it last year with longer battery life and better picture quality, but enthusiasts have been hoping for a touch-screen iPod with a larger viewing area.

Separately, Axiotron Inc. and Other World Computing plan to introduce the ModBook, a tablet computer that works on the Mac operating system. But what if Apple came out with a mini portable Mac of its own?

Palo Alto's VMware also will be showcasing its program that runs both the Mac operating system and Microsoft's Windows operating system at the same time on Intel-based Macs. Apple's Boot Camp program requires users to shut one down before using the other, but that could change with the Leopard operating system.



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