Continuing a Macworld Expo tradition, speculation grew this week in the Mac community about Apple Computer Inc.'s forthcoming announcements at next week's show in San Francisco. While Apple-centric IT professionals hope for news of an updated Xserve platform, consumers and resellers expect a low-cost iPod media player is in the works.

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On the consumer front, industry insiders wondered what the introduction of a smaller, less-expensive iPod line would mean for the marketplace, consumers and Apple's bottom line. Although Apple declined to confirm the rumors, some Apple watchers predicted another success for the Cupertino, Calif., company, as others feared that a less-expensive music player could take sales away from Apple's current offerings, which range in price from $300 to $500.

Cyril Borgomano, editor of the iPod-Zone enthusiast Web site, pointed to the iPod's success as a high-end MP3 player and said that cheaper iPods could expand Apple's market leadership.

"With a $100 to $150, low-end, 2GB iPod, Apple could also become the leader in the low-end MP3 player and USB keychain markets," he said. "Who would buy a 256MB USB keychain if, for almost the same price, they could have a 2GB iPod that plays music and stores data as well?"

Borgomano also observed that inexpensive iPods could be a hit with younger buyers who can't afford today's lineup. "In the short term, it will mean more hardware and music sales for Apple," he said. "In the long term, it might mean more Apple computers sold. The hundred-dollar iPod is a [marketing] Trojan horse."

Other resellers agreed that a mini-iPod could help bring new consumer customers to the Mac platform.

According to Bob Dilley, general manager of the Odyssey Tek store in Coeur d'Alene, Idaho, a number of PC users have come to his store seeking to purchase the player. While the iPod is compatible with Windows, Dilley said many PC owners learn that their computers may first need upgrades and often opt to buy a new Mac instead.

"We've already seen dramatic sales increases," Dilley said. He predicted that if Apple uses mini-iPods to target the consumer-electronics market, "Apple, and the rest of us who work in the [Mac] industry, stand to make a lot of new customers."

In addition, Dilley said that a lower-cost iPod would not cannibalize sales from its more-expensive counterpart, and instead saw the expected device as an effort to tackle a market where Apple is underrepresented. "Think of Sony: It sells cheap $19 Walkmans up to Wega televisions," he said.

On the other hand, some observers aren't so sure of the benefits of a low-cost spread.

Fred Evans from reseller First Tech in Minneapolis, Minn. said that his store didn't have any trouble selling iPods this holiday season, even at the current price. "iPods were the runaway hit for the holiday season," he said. "We sold absolutely every unit we could get our hands on. Very few people asked for cheaper options."

Evans said that lower-capacity iPods would command more of the music-player market, but he doesn't believe it's what consumers are looking for. "A $199, 5GB model would only cannibalize the sales on the 10GB model," he said. However, if Apple's offerings were in the $100 price range, Evans said, they would "knock out the low end" of the market. "If the 2GB to 4GB models were cheap enough, they would open a new market segment for Apple." Still, Evans said he isn't sure Apple could make a profit at such a low price.

"It would definitely cannibalize sales of the current lineup, and Apple is not about cheaper prices," said Dennis Lloyd, publisher and editor-in-chief of the iPodlounge Web site. "Mini-iPods, while great for consumers, wouldn't be the best move for Apple."

Until Apple CEO Steve Jobs takes the stage next week for his keynote address, the Mac faithful will continue to debate the anticipated announcements, much as it did in October 2001; in the week before Apple announced the iPod, fans discussed rumors of a music device.

A spokeswoman for Apple declined to comment on the pre-Expo reports.