High expectations await this year's Macworld Expo keynote

A year ago, Steve Jobs strode onto the stage at Macworld Expo, pulled an iPhone out of his pocket, and set the tone in the tech industry for the next 12 months.

So with Jobs set to kick off yet another Expo with a keynote at the Moscone West convention hall this Tuesday, what will Apple do for an encore? Whatever it turns out to be, analysts say, it will be difficult to top the impact made by the Apple CEO at last year’s Expo Keynote.

“The cell market is the largest in the world so it’s difficult to upstage that,” said Ross Rubin, director of analysis at market-research firm NPD Group. “It’s hard to conceive what could be announced that would as anticipated as the iPhone was.”

Michael Gartenberg, vice president and research director at JupiterResearch agreed: “I don’t think we’ll see something on the order of the iPhone," Gartenberg said. "Those are things that we see every few years, not every year.”

But the safest bet heading into this week’s Macworld Conference & Expo in San Francisco is that Apple will announce something. With an auditorium full of Mac enthusiasts and the industry press elbowing each other out of the way for a better view of whatever Jobs might have up his sleeve, the Apple CEO is unlikely to let his annual moment in the spotlight come and go without a headline-worthy announcement or two.

But what will it be? That’s the question on the minds of every Expo attendee in San Francisco this week.

Potential candidates

A rundown of Apple’s existing product lines finds few potential candidates to make a big splash at Expo. The product in most need of an update—the high-end Mac Pro desktop—was revamped last week, theoretically so that it wouldn’t steal the thunder from other Expo unveilings. Other Mac hardware, including the iMac or MacBook Pro, have seen updates of their own in the last six months. As for Apple’s iPod offerings, the company overhauled the entire product line in September to take advantage of holiday shopping.

That’s not to say, however, that Apple couldn’t add a new product to one of its existing lines, which is why you hear so many rumors about a flash-based portable computer heading into Expo. Laptops remain a key part of Apple’s business—the company sold more than 1.3 million laptops in its fiscal fourth quarter, which helped drive a second-consecutive quarter of record Mac sales. What’s more, Apple has been without a small, lightweight portable targeted at high-end users since discontinuing the 12-inch PowerBook G4 upon its switch to Intel-built processors.

A slimmed-down laptop, analysts say, might appeal to executives or road warriors that need a powerful system, but don’t need the features a full-fledged notebook has to offer.

“Ever since [Apple] stopped building the PowerBook 2400 there have been people begging Apple to return to the market,” Gartenberg said. “They have resisted because they focus on products they can sell to the mass market. If they were to introduce this there would be some level of detail that we don’t know about that would differentiate it from other products in this space.”

Rubin agrees and says that Apple will need to overcome the problems that other manufacturers in this market have faced over the years—price, battery life and poor design.

A new portable isn’t the only product that could see an upgrade at Macworld. Gartenberg said he expects to see the evolution of existing products this week. For instance, Gartenberg points to the Apple TV—previewed in September 2006 and introduced in its final form at last year’s Expo—as a device that got overshadowed by the iPhone last year.

“Apple TV got lost in the shuffle, but Apple hasn’t abandoned that device,” Gartenberg said.

To that end, reports have emerged that Apple and News Corp. have signed an agreement to offer Twentieth Century Fox movies for rent through the iTunes Music Store—other studios are rumored to be part of the negotiations as well.

Such a deal between Apple and any movie studio would immediately pump new life into the Apple TV. If the rental deal goes through, an update to Apple TV allowing the user to rent movies directly through the device could potentially make the device more appealing to some users.

Of course, rumors of iTunes-based movie rentals come at an interesting time for the digital media market. Last month, retail giant Wal-Mart discontinued its online movie download service after less than a year. At the same time, rent-by-mail service Netflix is stepping up its efforts, lifting limits on how long its customers can watch streaming movies. Some speculate that Netflix made the announcement this week to steal some of Apple’s Expo thunder.

There’s also the possibility that Tuesday’s keynote could deliver more news about the product that caused all the hubbub a year ago. Reports of a forthcoming iPhone update that includes Google’s My Location feature and the ability for users to control the icons on their home screen see very plausible.

Some Mac users have not been too keen on Apple using Expo to focus on devices like the iPod or iPhone, saying the show should be reserved for Macintosh products. However, NPD’s Rubin doesn’t think that should be the case.

“A lot of the focus last year was on the iPhone, which runs the Mac OS,” he said. “If a Mac has been defined by its operating system in the past, we now have Macs called iPhone, Apple TV and iPod.”

Third-party companies

Apple certainly controls the tempo of Macworld Expo with its product announcements and glimpses into the future of the company. But Apple isn’t the only company here — there are hundreds of third-party developers in San Francisco showing off their wares for the Mac, iPhone and iPod as well.

Developers big and small dot the list of 400 or so exhibitors, from soundtrack software maker Abaltat to open-source messaging software developer Zimbra.

Already, several larger developers have already unveiled products they plan to promote at Macworld Expo. Last week, Adobe took the wraps off its new version of Photoshop Elements for the Mac while FileMaker shipped its Bento personal database. Microsoft hopes to make the biggest splash by using Expo to officially launch its long-awaited update to its business productivity suite, Office 2008.

Still, Apple retains the spotlight at Expo. And while it seems that expectations are running as high as usual, few would be disappointed if Steve Jobs ends his keynote without an iPhone-like blockbuster.

“Apple has a really good Macworld track record,” said JupiterResearch’s Gartenberg. “I haven’t seen an audience leave a keynote being anything other than satisfied in years.”

Macworld will have live coverage of Steve Jobs’ Expo keynote beginning at 9 a.m. PT on Tuesday, January 15.

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