INEXPENSIVE IPHONE?

There is also speculation Apple could bow to a cellphone industry practice and offer a subsidized iPhone, an arrangement where AT&T could kick in a couple hundred dollars to make the devices more affordable. AT&T already gives Apple a slice of the monthly service fees it gets from iPhone subscribers.

"We think that actually Apple could talk about a very disruptive business model, or a change in their business model, embracing subsidies where necessary, multiple carriers to help get the iPhone into more hands," Lehman Brothers analyst Ben Reitzes told a conference call last week.

But more important than the actual hardware will be new services and programs that can tap the increased power.

Some reckon that will include the ability to download songs from iTunes using the cellular network. IPhone users now have to be connected to a Wi-Fi network to get music from Apple's online store.

Apple will also roll out its highly anticipated support for corporate e-mail, a capability it showed off earlier this year and that is expected to give iPhone a push into business, which now overwhelmingly use Research In Motion Ltd's Blackberry devices.

Apple will also launch its iPhone "applications store" that will sell programs made by developers outside of Apple. The service marks an about-face for Jobs, who initially blocked third-party software from the device.

"That's important for developers who can now build this out as a critical platform for Apple," said Michael Gartenberg, an analyst with Jupiter Research. "The potential here is sort of unlimited."

(Additional reporting by Sinead Carew in New York; Editing by Andre Grenon)

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