Apple looks at cutting costs in search for the next big thing

What comes after the iMac and iPod? According to fevered speculation, the answer is "Q88" - a new low-cost computer that Apple Computer's chief executive, Steve Jobs, is expected to unveil next week.

Detailed information posted anonymously on the internet suggests the new machine, codename "Q88", will be aggressively priced at around $500 (£260) to tempt people who own a Windows computer, but have had their interest in Apple's products raised by its iPod digital music player.

Gene Munster, a senior research analyst with the American investment firm Piper Jaffrey, said a low-cost computer from the Californian firm could work because many of the people who come into its shops buy iPods - but not the more expensive computers, which are priced from £550 for the desktop eMac.

"It is not out of the question that they do something like this," Mr Munster said. "The problem this would solve is that the good traffic through the [Apple] stores could be converted into new Mac users."

For Apple, which has struggled for years with a minimal market share of the home computer market, being able to tap into the millions of Windows users who have snapped up iPods in the past two years could revive its position, and give Mr Jobs a new reason to brag.

It would also mark a technology and price breakthrough to rank with the launch of the first iPod itself in 2001 (followed by the Windows version in 2002), and other milestones in the computer age - such as the release of the Sinclair Spectrum in 1982, which inspired a generation of British children to write computer games (many of whom are still doing it, but for money) or the launch of Microsoft's Windows 95 in August 1995, when home computer and internet use took off.

Yet the launch next week at the Macworld exhibition in San Francisco on 11 January - where Mr Jobs is the keynote speaker and where he has for years announced new products and initiatives - could turn out to be a damb squib because online rumours sometimes run away from the facts.

In January 2001, excited speculation built around a product codenamed "Ginger" being built by an inventor called Dean Kamen, which Mr Jobs and Jeff Bezos, founder of Amazon.com, had reputedly said could "revolutionise cities". In December that year, Mr Kamen unveiled the "Segway" personal transporter - to widespread derision. Sales have been disappointing, at least compared to the hype before its launch. Some industry analysts also feel that the rumours swirling around the "Q88" project may be overblown - or that the machine will not be used strictly for computing. Instead, it might work as a "media server" to transmit music around the house, in conjunction with the iPod.