Apple expected to unveil cell phone or TV set-top box

SAN FRANCISCO -- Technophiles are eagerly waiting to learn whether the king of digital music can colonize an entirely new category of consumer electronics.

Steve Jobs, chief executive of Apple Computer Inc., is expected to launch at least one revolutionary product Tuesday at the Macworld Conference & Expo in San Francisco. Speculation has focused mainly on an Apple-branded cellular phone and a set-top box that allows people to send video from their computers to their televisions.

Although Apple spokeswoman Natalie Kerris declined to comment on "rumors and speculation," bloggers, enthusiasts and investors have been continually guessing whether Jobs will unveil a "smart phone" (which some are calling iPhone), iTV or both.

Apple's iPod music player wasn't the first on the market when it launched in 2001. But its sleek design and intuitive user interface quickly made it a hit.

Industry analysts believe another well-designed product from Apple could seriously threaten major tech companies such as Motorola Inc., Nokia Corp., Samsung Electronics Co., Verizon Wireless and TiVo Inc.

Expectations for Macworld are so lofty that a failure to launch an earth-shattering product this week could dent Apple's already volatile stock price, investors say. The stock has traded in a 52-week range of $50.16 to $93.16. It closed Thursday at $85.66, up 2 percent from Wednesday.

Wall Street's confidence in Apple has wavered slightly because of the possibility that improper handling of employee stock options would erase some of Apple's record profits. The scandal threatened to plunge Jobs into a legal morass, if not cost him his job.

Still, anticipation is so breathless in the blogosphere that some pundits have already credited Apple with changing the global telecommunications sector -- even though the iPhone is technically still "vaporware," or nonexistent.

The mere suggestion that Apple might make a glamorous, simple cell phone that downloads, plays and shares digital music has intimidated competitors, said Avi Greengart, an analyst with Current Analysis.

"Even if Apple does not announce a phone, just the threat of Apple's entry could spur innovation," Greengart wrote in a research note Thursday. "If Apple builds a phone that is easy and genuinely pleasurable to use, the company will have a winner no matter how it is priced or sold."

Apple also is expected to unveil a set-top box designed to bridge computers and television sets so users can more easily watch their downloaded movies on a big screen.

The move would complement Apple's entry into online movies -- it began selling titles through its iTunes store in September.

As Apple launched online movies, Jobs showed off a gadget that records and plays high-definition videos, selling for $299 starting sometime in the first quarter. Analysts believe the demo was of the prerelease version of the iTV that could be introduced at Macworld, venue for many of Apple's monumental product launches over the years.

The demo, which looked like a flatter but wider version of the Mac Mini computer, worked with computers running Apple's Macintosh or Microsoft Corp.'s Windows systems and used Apple's iTunes software to manage multimedia files. A small hard drive was expected to be included with iTV.

The product could be as revolutionary to digital movies as the iPod was to digital music. Both devices would be seen as liberating media from the computer, allowing people to enjoy digital files without being chained to a desktop or laptop.

The iTV could generate millions of new customers -- not just iPod-wearing hipsters but garden variety couch potatoes and big spenders on home entertainment systems, said principal analyst Josh Bernoff of Cambridge, Mass.-based Forrester Research.

"There are a whole lot more people who watch TV than listen to digital music," Bernoff said. "This could be a great edge for Apple."

Apple needs a hit next week to keep employees focused on products, not scandal. But hype over iPhone and iTV has become so deafening on blogs and Web sites that disappointment may result, said Mike Gartenberg, research director of New York-based JupiterResearch.

"The key isn't whether Apple introduces a phone or new iPod or iTV but whether over time the company keeps launching new products that capture consumers' imaginations," Gartenberg said. "That's their continuing challenge going forward, and it's a tough one."