New iPhones, expected next week, are likely to be overshadowed by the triumphal return of Steve Jobs as chief executive of the technology group.

No company and its products are more inseparable from its leader than Apple and Steve Jobs. His obsession with sleek design and an always hard to define “cool factor” has produced an unmatched string of hit computers, music players and, recently, phones.    

Lower prices rather that lots of fancy new features should headline the launch of new iPhone models at Apple’s World Wide Developer Conference in San Francisco on Monday.

What we do know is that Apple plans to introduce a new version of its software, iPhone 3.0, with 100 new features.

But Apple needs to give iPhone early adopters fresh reasons to buy another iPhone. Two-year contracts users signed when the iPhone was first introduced in June 2007 will begin to expire next month and new models will keep these most loyal of Apple customers happy.

Apple hasn’t said when new iPhone models may be coming. It could concentrate on software announcements it was planning to make and hold off a few for a separate iPhone product announcement. But show-biz is show-biz and Jobs can’t miss the big event.

Look for a higher-capacity phone capable of holding 32-gigabytes of data (10,000 songs, or several feature-length movies). Existing models force users to be more selective about what songs, photos, videos and software they can store in 8- or 16-gigabyte models. The next frontier for the iPhone is a video camera, and on-board video-editing software. Thirty-two gigabytes of memory would allow users to create their own media, as well as storing purchased media. 

The show-stopper would be for Apple to unveil an entry-level, $99 iPhone. It would sacrifice memory, offering, say, 4-gigabytes of data. This lower-priced model could double sales of iPhones, Morgan Stanley estimates.  This would strike deeply into the heart of the market for rival smartphones that have tried to compete on price with the iPhone. And it would go some part of the way to answering questions about how to drive iPhones from the 20-million unit level into the mass market of more than 1 billion phones sold each year.

(Photos: Phone 3G launch 2008)

It used to be that Apple could do little wrong, if the unrelenting mania among the masses for the iPod and iPhone is any indication. Now, the company may have made an unusual and embarassing mis-step in selling a 99-cent “Baby Shaker” application for the iPhone.

Designed by Sikalosoft, the program encourages users to silence an incessantly crying baby by shaking their iPhone until the infant desists, and two red crosses replace the baby’s eyes.

On Wednesday, the Sarah Jane Brain Foundation, whose mission is to spread awareness of infant brain injury incurred through abuse or disease, condemned Apple for hosting the application.

“As the father of a 3-year-old who was shaken by her baby nurse when she was only 5 days old, breaking 3 ribs, both collarbones and causing a severe brain injury, words cannot describe my reaction,” Patrick Donohue, Founder of the Sarah Jane Brain Foundation, stated in an open e-mail to Apple CEO Steve Jobs and several of his executives, demanding a personal apology.

“You have no idea the number of children your actions have put at risk by your careless, thoughtless and reckless behavior! We will do everything we can to expose your reckless actions and reverse the horrific impact it will have on the innocent children throughout the United States.”

Apple, which expects to sell its one-billionth app download this week, says it vets every program for sale on iTunes. The app was pulled as of Wednesday afternoon, a spokeswoman said without elaborating.

According to the Sarah Jane Brain Foundation’s communications director, Jennipher Dickens, whose 2-year-old son has irreversible brain damage as a victim of Shaken Baby Syndrome, the app is most likely to be downloaded by the very same young male demographic statistically most likely to shake infants.

Perhaps most controversial was the sales pitch for the app: “See how long you can endure his or her adorable cries before you just have to find a way to quiet the baby down!”

Krapps, a website that writes about apps for iPhone, Twitter, Facebook and MySpace, first shed light on the Baby Shaker controversy.

With the Apple’s developers conference now formally on the schedule for June 8-12, that leaves more than two full months for the rumor mill to really crank up.

With updates of Mac laptops, desktops and iPod shuffles already on the books, whispers, speculation and conjecture abound about what — if anything — the company has in store for the gathering, to be held at the Moscone Center in San Francisco.

A new iPhone is a distinct possibility, analysts say. Apple released the 3G version at the event last year.

There is also the matter of that much-buzzed-about device that no one seems to be able to quite pin down — a touchscreen of some sort, possibly a netbook or a tablet or a larger iPod.

Of course, many wonder whether Steve Jobs will make an appearance. When he announced his medical leave in January, he said he would return at the “end” of June, although the Apple faithful would certainly be thrilled if he pushed that timeline up a week or two and turned up at the conference. Jobs did not appear at the Macworld expo in early January, the Apple annual meeting in February, or the iPhone software event last week.

As Apple events go, Tuesday’s iPhone 3.0 operating system preview at the company’s Cupertino, Calif., headquarters lacked some of the panache of past Apple gatherings. Although the iPhone’s software update and new kit for application developers are undoubtedly important and closely-watched, they don’t quite stir the imagination in the same way as the launch of a new gadget or computer.

The event did provide a showcase for plenty of nifty new iPhone features, and the company trotted out a number of developers to demonstrate the remarkable applications being designed for the smartphone.

One of the highlights was a musical interlude by Ge Wang, an assistant professor at Stanford and the co-founder of Smule, which makes the Ocarina app for the iPhone. The hugely popular program allows users to “play” the iPhone like a musical instrument by blowing in the device’s microphone. Dr. Ge gave a brief demonstraton on stage to a healthy round of applause.

“It is fair to say that without the iPhone and the SDK [software development kit] there would literally be no Smule,” he said.

Apple held a brief Q&A after the main presentation. During the media session, the company was asked why it took so long to add cut-and-paste functionality to the iPhone, as the company is doing for version 3.0.  Scott Forstall, senior vice president for iPhone software, said it wasn’t as easy as it looks.

“It’s not obvious exactly how to do it… there’s a lot of pieces there that we really cared about and … we wanted to nail it and get it perfect as opposed to send out something that didn’t quite work right.”

The company was also asked about so-called “tethering,” or the ability to share your mobile phone’s Internet connection with your laptop. Apple was rumored to be adding a tethering capability to its next-generation iPhone software, and according to Forstall, they basically are.

“There’s two pieces needed to support that. One is client side … and the second is working with carriers and making sure you get on to their carrier network. So we’re absolutely supporting tethering in the client side in iPhone 3.0. We’re building that support in. We’re also working with our carriers around the world to figure out when they can add tethering support on their networks. So stay tuned for that.”

Apple was queried about performance issues and reported lag time on the current iPhone operating system, and what the company plans to do about it. Forstall said only that “we absolutely care about performance and are addressing it in a number of ways.”

Some developers have reported difficulty in getting their iPhone apps through the Apple approval process. Phil Schiller, senior vice president of product marketing, downplayed any problems, noting the the blockbuster growth rate in the App Store, which now has more than 25,000 offerings. He said 96 percent of apps are approved.

“We want developers to have a lot of apps and be super successful in the store, we also want a store where customers feel great about the quality of what they get and comfortable with what’s available. And so the numbers speak for themselves. We’ve done a great job improving the turnaround time.”

Economy, schmeconomy.

In the midst of the worst U.S. recession in 27 years, Apple — ever the trailblazer — unveiled a new line of its aesthetically pleasing and — quite frankly — financially-straitening Mac desktop computers, canvassing the entire market spectrum starting from Mac Minis at under $600 to an all-singing, all-dancing, 8-core space-shuttle-launch-capable Mac Pro for a cool $3,299.

At first glance, it would seem Apple’s caved in to pressure and finally lowered prices on its flagship computers: the company says its new top-of-the-line Mac Pro comes $300 cheaper than predecessors, while still boasting cutting-edge performance with two of Intel’s quad-core Xeon processors and 6 GB of memory upgradeable to 32 GB. Apple’s reluctance to sacrifice margins — because it makes it that much harder to rebound once the economy does — has been legendary.

But for perspective — that sort of money can get you Dell’s latest, next-to-most-powerful gaming engine — albeit sans display — a high-performance, fully tricked-out machine capable of running Crysis with all video options maxed out and still find time to pick up the groceries on the side. (Specifications: www.dell.com).

Why is Apple choosing to unveil new products in the depths of a recession? Perhaps because the company has been under pressure for months since investors’ and consumers’ attention shifted from the company’s innovative offerings to CEO Steve Jobs’ health problems. Lifting the lid on a bunch of new desktops might not have the same cachet as, say, introducing the iPhone, but it sends a strong signal to a consumer market used by now to fielding sales calls and discounting bonanzas.

(Photo: Reuters)

It is certainly not your average annual meeting that sees shareholders burst into a spontaneous round of “Happy Birthday” for an absent CEO.

That “could only happen at an Apple shareholder meeting, you’re not going to get that anywhere else, that’s why these meetings are so fun,” said Matthew Rafat, a lawyer and shareholder. Still, he acknowledged, “this year it was less lively with the absence of Steve Jobs.”

It was up to COO Tim Cook to rouse the faithful. While much of the attention at the annual meeting Wednesday was focused on Jobs - who is on medical leave - Cook found plenty of time to tout the company’s products. And although consumer electronics companies around the world have been struggling with a paralyzing economic slowdown, Cook sounded anything but pessimistic.

“We’re very confident in the strategy we have, we’re very confident in our product pipeline and the future of the company.”

He ticked off the Apple’s now familiar successes - Mac PCs, the iPod - along with its more recent ones such as the 3G iPhone and the App store, which he called the “envy of the industry.”

He also noted that iTunes has become the top music reseller in the U.S., besting a certain retailing behemoth. “Can you believe that Apple sold more of something than Wal-Mart?”

(File picture of Steve Jobs: Reuters)

(Writing and Reporting by Sue Zeidler)

Apple Inc's Steve Jobs has commanded a leading role in Hollywood for years with his clout and influence in the digital entertainment arena, including Apple's position as a leading provider of downloads for music and video at its iTunes Web site. 

Jobs also sits on the board and is the largest individual shareholder of the Walt Disney Co., having sold his Pixar Animation Studios for stock in the venerable film and TV studio. Now, his exit from the limelight at Apple has left Hollywood abuzz.

The 53-year-old tech icon and pancreatic cancer survivor recently said he was stepping aside temporarily at Apple due to health problems "more complex" than previously thought, leaving studio execs to wonder if negotiating with Apple, famous for its tight control on pricing, could become easier. Or, has Hollywood lost a powerful visionary and advocate for change at a time when it needs to move fast in the shifting digital landscape?

"Jobs' role was crucial to online music and his role with movie studios could serve as a similar force, in terms of change and their push into the digital living room," said Gartner Inc analyst Mike McGuire, referring to Hollywood's ongoing efforts to provide content from the Web to television. For a full story, click here.

It’s a tale of two companies in the technology world on Thursday. There’s Apple, whose quarterly profit beat expectations on strong iPod and Mac computer sales. And then there’s Microsoft, whose dismal earnings sent shockwaves through financial markets.

There should be plenty of interesting questions for CEO Steve Ballmer on the company’s conference call this morning — some of which he likely wouldn’t answer if asked.

Why didn’t Microsoft give investors a warning if the results were going to look so lousy? Why release the results Thursday morning rather than when it was supposed to, later this afternoon? What’s going on with Yahoo? Will 5,000 jobs cuts — the biggest ever by Microsoft — be sufficient? And, seriously, why is Apple doing such so much better?

Already, there is no shortage of opinions on what’s happening over at Microsoft, and more will tumble out after the conference call. For now, check out this Instant View by Reuters, which gives a pretty good idea of what Wall Street is thinking.

Or just read this comment by Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago: “This is not good news for Microsoft, there’s nothing here to inspire buying, not even buying on weakness at this point.”

Keep an eye on:

• Sony Corp warned it would post a record $2.9 billion annual operating loss due to sliding demand and a stronger yen, and unveiled fresh restructuring steps to revive its ailing electronics operations (Reuters)
• “The Curious Case of Benjamin Button,” a drama in which Brad Pitt plays a man who ages backward, led the field of Oscar contenders with 13 nominations (Reuters)
• Meredith posted a lower quarterly profit on Thursday, and forecast a bleak advertising market for the rest of the year in its magazine publishing and broadcasting businesses (Reuters)

(Photo: Reuters)

It’s just like vacation — except that you don’t get paid and really don’t have any choice in the matter and will likely spend the days worrying this could be a hint of (bad) things to come.

Some staffers at Gannett Co, the largest U.S. newspaper publisher, will be forced to take a week off without pay in its latest move to cut costs. Already, it has cut thousands of jobs, says this furlough will help it avoid more layoffs.

Here’s what Reuters reported:

“This means that most of our U.S. employees — including myself and all other top executives — will be furloughed for the equivalent of one week in the first quarter,” Dubow wrote.

Gannett, which publishes USA Today, the largest U.S. newspaper by circulation, is instituting the furlough after cutting thousands of employees from its payroll to deal with a severe decline in advertising revenue.

“We have made some very difficult decisions this past year, all with the goal of keeping Gannett strong and preparing for the future,” Dubow wrote. “I understand I have asked a great deal of you, and I regret adding to your burden with this program.”

With so many companies firing workers, perhaps staffers at Gannett should feel some sense of relief. But, frankly, it’s hard to feel anything but dread in the newspaper business these days. 

Keep an eye on:

• “American Idol” launched its latest run with 10 percent fewer viewers than watched last year’s season opener, ratings showed on Wednesday, despite hoopla surrounding a new judge for the hit talent contest (Reuters)
• Investors fear a change at the top of Apple will chill a product line-up struggling to come up with the next big thing (Reuters)
• AOL will rebrand its long-running sports channel as FanHouse, which is the current name of a blog/community-centric section within AOL Sports (AdWeek)

(Photo: Reuters)

Apple Chief Executive Steve Jobs told the world Wednesday that he discovered that his health issues are more complex than he had previously thought, so he’s taking a medical leave of absence. Jobs, who earlier this month said his recent weight loss was caused by a hormonal imbalance that was relatively easy to treat, plans to be off until the end of June. Apple Chief Operating Officer Tim Cook will mind the shop in the interim. Once Apple shares resumed trading after-hours, investors knocked off about 10 percent of their value.

Here’s a quick roundup of what we found online about these latest developments (And of course, here’s the Reuters story before we get to the other ones):

Silicon Alley Insider:

Tim Cook should do fine as Apple’s interim day-to-day leader. He took control of the company last time Steve went on a leave of absence to treat his pancreatic cancer. Steve says he plans to “remain involved in major strategic decisions” while he is out.

Gizmodo (saying it was right all along for posting a rumor on its blog about this very subject in recent weeks, a blog that other reporters chopped into a million itty bitty pieces):

What’s interesting is that while we broke the rumor of Steve being sick a few weeks ago, and speculated that he was resigning months ago, peers at CNBC and All Things D and others were not convinced, because it was hinging on one particular source. Apparently, they believe the story now and are both moving quickly to report it. The letter above clearly notes that his health issues are more complex than previously thought, but his reasons for stepping down include the fact that stories about his health distract the company from doing its core work.

The Wall Street Journal (providing background):

Last week’s disclosure came on the eve of the Macworld trade show, which he had attended every year since 1997. Last month, Mr. Jobs said he wouldn’t give the keynote speech at the conference and Apple would no longer participate after this year. At the time, Apple said he wouldn’t appear because it was cutting down on trade show activities, but the decision spurred new speculation about Mr. Jobs’s health.

Bloomberg (providing way-back background on why Jobs and Apple are intertwined from many investors’ points of view):

Jobs, who co-founded Apple in 1976, returned as CEO in 1997 and transformed the money-losing maker of Macintosh computers. His focus on stylish design and simple-to-use gadgets won over millions of buyers, turning Apple’s iPod media player and iPhone into best sellers. Jobs, who had successful surgery for pancreatic cancer in 2004, appeared thinner at Apple events last year.

And finally, a Paul Chapel commenting on the Engadget blog about Jobs’s importance to the world:

Get well, Steve, and thank you for the MacBook Pro I got over Christmas. That thing has helped me meet more girls at Starbucks than what would have been possible otherwise. Look forward to seeing what you have prepared for us in June.