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Apple ponders portable strategy

The company won't develop its own handheld, but may sell one under its brand, interim CEO Steve Jobs says at the annual shareholders meeting.

    CUPERTINO, California--Interim chief executive Steve Jobs today left open the possibility of selling a handheld computer under the Apple brand, though he said the company would not develop one of its own.

    Portability was a major theme of the annual shareholders' meeting, held here. Jobs confirmed that the company had earlier talked to 3Com buying its Palm Computing division, maker of the popular PalmPilot, and hinted that Apple will come out with a consumer notebook for under $2,000 toward the middle of the year.

    Yesterday, board member Larry Ellison said Apple was poised to become "the great provider of digital appliances," including portable appliances. (See related story.)

    But the closest thing to a concrete announcement was the news that Apple will unveil a small business program next month.

    The shareholders meeting, which in years past has served as a hotbed for shareholder discontent, was marked by an upbeat tone reflecting the company's continued growth in market share and profits. This year, the message from management was that Apple would continue to incrementally improve on that track.

    During the meeting, a shareholder asked if Apple was considering selling a branded version of the PalmPilot. Jobs and other executives did not comment, yet neither did they close the door on any such arrangement.

    On the topic of portables, another shareholder asked when Apple was going to make something that's not a "shoulder breaker?"

    The question prompted Jobs to break down his vision of the notebook market. Apple's notebook customers are "digital road warriors" he said, corporate users who want their notebooks packed with features, including large screens, dual battery capabilities, CD-ROM, and more. In other words, they want the power of the desktop on a notebook.

    But for consumers, notebooks priced over $2,000 are "out of the reach," Jobs admitted, without giving any details on how Apple plans to attack that market.

    Apple did reveal that next month it will launch an effort to increase sales in the small-business market. Apple, which is already selling computers to graphics professionals in small businesses, will concentrate on programs to attract customers beyond this market.

    This could prove a lucrative move, because one of the company's main selling points is that its computers are easy to use, and small businesses typically don't have information technology departments to maintain their systems. On the other hand, about every major PC maker has openly targeted small businesses since 1998.

    "We have some real opportunities in the small business market," Jobs said. "We are going to put some energy in that later this year."

    The initiative will kick off April 20 with promotional events sponsored by Apple and Kinko's, said Mitch Manditch, senior vice president of worldwide sales. More strategies and programs will follow toward the middle of the year, he added.

    Targeting small business will be a large order, analysts say. Steve Baker, senior analyst with market research firm PC Data, notes that the market is more price sensitive than the overall corporate market. And Apple needs to make sure that it will be easy to blend Macs into environments with Windows NT-based servers--something that isn't always easy considering the small IT departments those companies typically have, Baker said.

    Although neither Jobs nor Manditch specified any new products, it is likely that some form of small-business Macintoshes will appear. Nearly every other PC maker that has answered the siren call of small business has come out with computers targeted at this market.

    In another initiative this year, Apple is improving its inventory management systems. The new systems are coming in to help Apple deal with "flavor management," or the science of preventing surpluses, or shortages, with the different colors of the iMac.

    "We are going to have a new set of things in the next six months for regulating inventory management and inventory management in the channel that will put us ahead of the industry," Jobs said.

    The lack of fireworks at the stockholder meetings of the past two years contrasts with those from earlier days. In 1996, angry shareholders derailed the slated itinerary of the meeting with pointed questions for management. Then CEO Michael Spindler left the company shortly afterward.

    In 1997, his replacement Gil Amelio made a convincing speech on his plans for the company's future. Unfortunately, the speech at the shareholder meeting followed his notorious, lengthy keynote at Macworld weeks earlier. He left the company in the summer of 1997, to be replaced by Jobs. The board was also changed at that time.

    On other topics, Jobs declined to commit to whether he would accept the CEO position on a permanent basis.

    "I don't think about it much," said Jobs, who has been Apple's interim CEO since 1997. "Management is working better together and it is trickling down to the rest of the company."

    News.com's Michael Kanellos contributed to this story.