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Originally published December 22, 2007 at 12:00 AM | Page modified December 22, 2007 at 12:44 AM

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Steve Jobs might unveil Slim Mac, mightier iPhone at Macworld

Apple Chief Executive Officer Steve Jobs's annual Macworld surprise may be a slimmed-down laptop and a higher-capacity model of the iPhone...

Bloomberg News

Apple Chief Executive Officer Steve Jobs's annual Macworld surprise may be a slimmed-down laptop and a higher-capacity model of the iPhone.

Jobs traditionally uses next month's Macworld Expo to showcase new products. Last time, it was the iPhone and Apple TV; the year before, faster Macs with Intel chips.

Piper Jaffray analyst Gene Munster and UBS's Benjamin Reitzes expect Jobs to capitalize on demand for the Mac by introducing a smaller, lighter version of Apple's MacBook notebooks. Goldman Sachs analyst David Bailey anticipates a version of the iPhone with 16 gigabytes of storage, double the capacity of the current $399 device.

"There's always a possibility they'll announce something that no one has thought of yet," Bailey said. He recommends investors buy Apple shares.

Speculation about what Apple might introduce contributed to an average 5 percent rise in the shares between Dec. 17 and the first day of Macworld Expo in each of the past three years, Munster said.

The five-day conference in San Francisco drew 45,000 Apple enthusiasts this year. Apple spokesman Steve Dowling declined to comment on the plans.

Apple, which also makes the iPod music player, rose $6.70 to $193.91 Friday. The shares have more than doubled this year, making them the fifth-best performers on the Standard & Poor's 500 index.

"Subnotebook" possible

Analysts speculated that Apple would add a "subnotebook" or "ultraportable" personal computer. The machine would be smaller than the smallest Mac notebook today, which has a 13-inch screen. Apple also sells the MacBook Pro, which have 15-inch or 17-inch displays.

While subnotebooks accounted for less than 8 percent of portable PCs sold in each of the past two years, shipments may rise 20 percent to 9 million units in 2008, said research firm IDC. The machines typically have 12-inch or smaller screens and weigh less than 4 pounds.

"Ultraportables don't sell a ton," said Andy Hargreaves of Pacific Crest Securities, who expects Apple to introduce one next month. "Then again, music players didn't sell a ton until Apple came out with the iPod."

The company last introduced a subnotebook in 1997.

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A slimmed-down Apple notebook will cost less than the $1,999 MacBook Pro and have a screen between 11 inches and 13 inches, Munster said this week in a note, citing unidentified Asian component suppliers.

Hewlett-Packard and Dell, the world's top PC makers, dominate the market for notebook PCs and offer ultralight designs. Still, Apple's reputation may help lure customers.

"It's a segment they could dominate because of their ability to create stylish products," said Goldman's Bailey, who doesn't expect a smaller notebook until the second half of 2008. "It's 10 percent of the market they didn't have access to previously."

Apple may increase the capacity of the iPhone to 16 gigabytes while keeping the price at $399, Munster said. The company will probably introduce a version that works on high-speed networks in 2008, he said.

Larger-screen handheld

Jobs, 52, also may introduce a larger-screen handheld device for playing music and video and surfing the Web, said Andy Neff, an analyst at Bear Stearns.

Apple may also unveil a new version of Apple TV, a $299 device that connects to TVs and lets people watch movies and shows stored on their PCs.

Apple needs to add more movies to its iTunes store to spur demand for Apple TV, which hasn't been a big seller for the company, Neff said. There are more than 500 movies and 550 TV shows available through iTunes.

Munster and Reitzes haven't ruled out a movie-rental service on iTunes. Apple doesn't have distribution agreements with Sony Pictures, Universal Studios, Fox and Warner Bros., Reitzes said.

"There are some hard-core fans that no matter what Jobs announces, that won't be enough," said technology commentator Scott Bourne, who hosts a weekly podcast called the Apple Phone Show. "And there are some people for who, no matter what he says, are words from God's mouth."

Copyright © 2007 The Seattle Times Company

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