Apple is expected to announce a hardware development at this morning's keynote, but executives said it won't be a big surprise -- certainly not relating to a handheld computer. On Internet message boards and rumor sites, industry-watchers have speculated that Apple is joining with Santa Clara-based Palm Inc. to develop a handheld computer.

Apple, notoriously tight-lipped about its product plans, on Monday called the handheld rumors totally unfounded.

``We are focused on the personal computer space, not the handheld space, and that's that,'' said Phil Schiller, Apple's vice president of worldwide product marketing. ``I hate to use these words, but there's nothing going on.''