from CNN money: SAN FRANCISCO (Reuters) - When Apple Computer Inc. chief executive Steve Jobs takes the stage at MacWorld next month, analysts expect him to unveil smaller, cheaper iPods and hope he will detail the company's strategy to move into the digital living room. The lower-end iPods, which are expected to carry a price tag of about $100 and will hold 400 to 800 songs, are a necessary answer to the bevy of MP3 digital music players now on the market that cost $100 or less, analysts said. "Odds are it's a flash-memory-based player, something to position Apple against the low-cost offerings from Creative and Rio," said Rob Enderle, principal of market search firm the Enderle Group. An Apple (APPL: Research, Estimates) spokesman declined to comment on its plans for MacWorld, traditionally a forum for the company to unveil its plans for new products. Apple's iPod and its iTunes Online Music Store has been a huge hit since their debut earlier this year. Apple has sold more than 25 million songs since it launched the online service and it sold 336,000 iPods in its fourth quarter ended Sept. 27, up 140 percent from a year-ago. But Creative Technology Ltd. and Rio make less expensive players and others are popular models are made by Panasonic, Samsung Corp., Archos, iRover, RCA and Dell Inc. (DELL: Research, Estimates) Related Stories Apple faces the music Gifts for the obscenely rich Pay. Mix. Burn. In addition to the lower-cost iPods, the Cupertino, California-based Apple is also expected to unveil them with different colors and even in stripes, as well as variously colored cases for Apple's traditional iPods, according to Enderle and Mac rumor Web siteThinksecret.com. For the past two years, Jobs has been steering Apple toward a vision of the convergence of home computing and entertainment, rolling out the iPod and easy-to-use software programs such as the iTunes jukebox, as well as picture and movie editing software. "He's been proven basically correct that the Mac has evolved to become much more important as a productivity and creativity tool," said Tim Bajarin, an analyst with market research firm Creative Strategies. What Apple needs to do now, he and Enderle said, was give a detailed response to the likes of Microsoft Corp. (MSFT: Research, Estimates), which plans to launch software for a new portable music device, called the Portable Media Center, next year, and how Apple plans to move the Mac into the digital living room. Personal computer makers such as Dell, Gateway Inc. (GTW: Research, Estimates),Hewlett-Packard Co. (HPQ: Research, Estimates) and companies such as Prismiq already sell media center PCs or adapters to link the PC, the television and high-speed Internet access. The digital living room, which ties together a home entertainment system, the PC, digital photos, home movies and high-speed Internet access, will be a central theme of the upcoming Consumer Electronics Show in January, held the same week that Apple hosts the Mac confab in San Francisco. YOUR E-MAIL ALERTS Follow the news that matters to you. Create your own alert to be notified on topics you're interested in. Or, visit Popular Alerts for suggestions. Manage alerts | What is this? "One of the things we'll be looking for is how does Steve embellish on and extend the Mac into the living room, because Microsoft is already there with the Media Center PC," Bajarin said, adding that he's anxious to see how Apple builds upon iPods' functionality, expanding beyond storing music, photographs and voice recordings. "While Steve has done a great job with music, one of the things we'll be looking for is what does he do next," Bajarin said of the iPod, prices for which range from $299 to $499 and store 2,500 ton 10,000 songs. Jobs will also announce a total revamping of its iLife software, according to Enderle and Thinksecret.com. Apple's iLife software includes iPhoto, iMovie, iDVD and iTunes, which sports the popular online music store. "iLife is likely to be enhanced," Enderle said, adding that he hopes Apple shores up its digital rights management solution, which he said had been hacked recently. But, overall, in addition to building on Apple's success with iTunes and the iPod, Apple must provide a detailed strategy on the so-called digital living room, where all the major PC players and myriad others are placing big bets. "Apple is going to have to respond to that challenge pretty quickly," Bajarin said.