Awaiting Apple's iPod Phone, Just Hours to Go

You probably don't realize it, but today might just be the beginning of something new for your pocket or purse.

Rumors are flying in cyberspace that Apple Computer is set to introduce a new iPod that won't just deliver music and videos, but will take phone calls as well.

For months, blogs and technology analysts have been buzzing that Steve Jobs will unveil a phone/video/music device in early 2007. With the company's annual expo set to begin, anticipation is high.

"We will definitely see an Apple wireless phone product introduced this year," said Kaan Yigit, president of Solutions Research Group, a Toronto-based technology consulting firm. "Whether it's introduced [this]Tuesday or not is a big question. If I were guessing, I'd be very surprised if they didn't introduce it then, because there's no new frontier that they could break with their existing product lines."

The device is believed to be part iPod, part cell phone and the newest must-have portable gadget.

It seems to most Apple-watchers that this month's Macworld Expo, scheduled to run from Jan. 8 to Jan. 12 in San Francisco, would be the perfect stage on which to introduce the device. The conclave has nearly always delivered an innovation at the annual event.

Macworld: Birthplace of Innovations

Tim Bajarin, principal analyst at Creative Strategies, has been going to Macworld since the event began in 1985, and knows the Apple Computer buzz machine as well as anyone outside the company.

Bajarin was there when a bow-tied Jobs introduced the revolutionary Macintosh computer in 1984 -- the computer actually said "hello" when the sheet was removed, astounding the audience.

He says the iconic CEO is a master of using his conference keynote address to electrify the tech world.

"He uses the Macworld stage to create great interest because he's become such a force in the industry for driving future plans," Bajarin said. "There's no question that phones are becoming more important as music platforms. At this point, Apple has to address that competitive challenge, but it's really to hard to tell until Jobs gets up there whether this is a part of their strategy in the short term."

And analysts are unwilling to bet on an iPod phone introduction -- and the company won't comment on rumors -- but that hasn't stopped the blogging community from dreaming about what the phone might look like or how much it would cost.

Tech pundits, like Digg's Kevin Rose and This Week in Tech's Leo Laporte, have been saying for weeks that they have the inside scoop on what the phantom device might be like.

Rose said in a December video blog that the phone would be announced in January (presumably at the Macworld event), and that he expected it to be extremely small, use two batteries (one for the phone and one for the music/video player), have a slide-out keyboard for easy texting, and come in two sizes (4GB and 8GB).

Rose said he was told by a source that the phone would work on both GSM and CDMA networks, and that it would sell for between $249 to $449 with a phone service contract.

And those phone contracts have yielded the latest hint that Macworld might see the birth of an iPod phone. The tech blog Gizmodo says that Jobs has scheduled meetings with European mobile phone company executives to discuss, among other things, the now-secret "iPhone."

Of course, some people believe that instead of an iPhone, Jobs could announce the iTV, which would establish a link between the computer and television.

Why All the Hype?

No matter what the specifics, many people are wondering what all the hype is about.

If announced, it would just be a phone that plays music files -- a technology that's already available from most of the major mobile phone manufacturers. But some think Apple could do for cell phone design what the company did for mp3 players with the iPod.

"Apple has evolved in the last two years, I think, from a technology company to a consumer experience company," Yigit said. "So that's why there's interest from the consumer perspective."

Yigit said that current phones had clunky, inconsistent menus and functions that kept most users from actually trying advanced features.

Apple's renowned design prowess could change all that, making cell phones easier to use while opening up new features to users who might be intimidated by the buttons and menus that plague the current generation of mobile handsets.

"The reason why Apple can create so much buzz and excitement is that their consumers love their products, and they create great products," said Gene Munster, an analyst at Piper Jaffray. "If Apple couldn't create the quality of products they do they wouldn't have this buzz."

That might explain why a Solutions Research Group survey found that 16 percent of Americans older than 12 said that an iPod phone was a great idea for them personally.

The positive consumer results from Yigit's survey indicate an Apple phone could grab between 6 percent to 8 percent of the U.S. handset market in the first year after its launch. That's between 10 million to 15 million units in its first 12 months and would make the iPhone more common than RIM's popular BlackBerry smart phones.

That's a vote of confidence that is not just based on blog buzz, but the company's track record of making things that people want to buy. The iPod -- introduced to the world just five years ago -- has been sold more than 67 million times and is helping bolster sales of other Apple products.

"If they ever did announce an iPhone, if Apple puts their industrial design magic behind it, he could end up with another top seller," Bajarin said. "While we have no idea what he's going to say on Tuesday, those of us who follow him are going to be watching quite closely because we know what he says can be game changers for the industry and cause significant pain to competitors."

Neal Karlinsky also contributed to this report.