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Posted: 6:32 AM- Apple Computer Inc. Chief Executive Officer Steven Jobs conquered the market for digital music players with the iPod. Now he may take aim at the mobile phone business.

Jobs probably will introduce an iPod phone when he gives the keynote speech today at the annual Macworld Expo conference in San Francisco, said analysts including Keith Bachman at Banc of America Securities and Benjamin Reitzes at UBS AG. Jobs also may show a device that relays digital videos from computers to television screens.

Apple already has expanded the iPod music player, released in 2001, into a product that plays television shows and movies. Analysts and investors say he can win consumers over again with a gadget they've dubbed the iPhone to capture a share of the $127 billion cell-phone market.

"It makes sense for them to go into the market," said Romeo Dator, a fund manager at U.S. Global Investors in San Antonio, which has $4.6 billion under management including Apple shares. "The market wants more things on one device and if music moves to the cell phone, then they're basically shut out."

Jobs's presentation at 9 a.m. California time will mark his first public appearance since Apple's board cleared him last month of wrongdoing over a stock-options scandal. While Jobs didn't benefit financially from any backdating of stock options, Apple said Dec. 29 that he knew of some grants and recommended some awards be backdated on grants other than this own.

Federal prosecutors in San Francisco are investigating Apple's backdating of stock options, a person familiar with the matter said.

Makes Sense

Banc of America's Bachman predicted Jobs will release an all-white phone with no keypad and two batteries, one for powering phone features and the other for music. Apple may start selling the device in March or early April and may sell as many as 4.9 million this year, New York-based Bachman said in a Jan. 5 report.

Apple may partner with Atlanta-based Cingular Wireless to provide its own service for the iPhone, the Wall Street Journal reported last night, citing people familiar with the plans.

UBS's Reitzes, based in New York, estimates Apple may sell 5 million units, at $300 each, adding $1.5 billion in sales. Apple had sales of $19.3 billion for the year that ended Sept. 30.

"The iPhone would be a very exciting product and it's one that makes a great deal of sense for Apple," said David Garrity, director of research at New York-based Dinosaur Securities. "You have well over a billion installed base in terms of existing cell phone handsets that are available that could potentially upgrade into an iPhone."

Calling Plan

Apple may sell contracts for the service through its 170 retail stores, Reitzes, the second-ranked computer analyst by Institutional Investor magazine, said in a Dec. 12 report.

Shares of Cupertino, California-based Apple rose $1.03 to $86.50 at 7:14 a.m. in early Nasdaq Stock Market composite trading. They gained 18 percent last year after more than doubling in 2005.

The iPod accounts for 75 percent of the $4 billion U.S. market for digital music players, according to NPD Group Inc. in Port Washington, New York. Speculation about an iPod-based phone escalated in July after Chief Financial Officer Peter Oppenheimer told analysts that Apple was aware consumers might want a single portable device for handling calls, messaging and music.

Jobs first experimented with cell phones by teaming with Motorola Inc. in 2005 to create handsets that used Apple's iTunes software. That phone, the Rokr, had the ability to hold 100 songs, a relatively small number that limited sales. The iPod with the smallest capacity can store 240 songs.

New Competition

Apple's iPod phone would represent new competition in a market already under pressure. Schaumburg, Illinois-based Motorola, the second-largest mobile-phone maker, last week said profit missed its estimates last quarter amid competition from its larger competitor, Nokia Oyj, based in Espoo, Finland.

Apple's device would compete with models from Motorola, LG Electronics Inc. and Sony Ericsson Mobile Communications Ltd., makers of the five most popular music phones in the U.S., according to Telephia Inc. Almost 20 percent of all new phones purchased by U.S. consumers in the third quarter of 2006 were able to play music, the San Francisco-based researcher said.

Bachman and Piper Jaffray & Co.'s Gene Munster in Minneapolis said Jobs probably will also unveil a $299 set-top box that will allow content to be transmitted wirelessly from a Mac or other personal computer running iTunes to a TV set. Jobs announced plans for the box in September.

Jobs may also give iPod and Mac holiday-sales figures. The company may have had a record quarter for iPod and Mac shipments, selling 17 million music players and 1.75 computers, said Merrill Lynch & Co. analyst Richard Farmer in New York.

Apple plans to report results on Jan. 17 for the fiscal first quarter ended Dec. 30.