During a record-setting 2007, Apple (AAPL) rewrote its history with the success of the iPhone and continuing strong sales of the iPod line. This week, the company is expected to turn the focus to its roots: computers.

On Tuesday at the Macworld conference in San Francisco, Apple will show its new wares, with expectations running high among bloggers, fan sites and Apple analysts that the company will unveil a subcompact notebook computer.

"What will make this unique is its thinness, a good 50% thinner than existing Mac laptops," says Gene Munster, an analyst at Piper Jaffray. "Notebooks are the fastest-growing segment of the computer market. More people are bringing their computers everywhere with them."

He expects the notebook to skip the traditional hard drive and have built-in flash memory instead, which will help to make it ultra small.

The iPhone was introduced in June. Apple officially pegs sales at 1.4 million units through the third quarter. Munster projects that sales topped 3 million by the end of the year.

Apple CEO Steve Jobs is expected to introduce only "minor" upgrades to the iPhone, says Jason Snell, editorial director of Macworld magazine (whose corporate owner IDG stages the Macworld conference).

Snell thinks the iPhone, currently available with 8 gigabytes of storage, could expand to 16 GB. Apple in February will introduce specifications for outside developers to add applications to the iPhone, and Jobs is expected to offer a preview in his Tuesday address.

Jobs is also expected to announce the introduction of movie rentals via Apple's iTunes store, says Munster. Currently, movies from Disney and Paramount are offered for sale at prices from $9.99 to $12.99.

Munster and others expect movie rentals priced in the $2-to-$3 range.

The popularity of iPods and iPhones translated to record sales for Apple computers in its last two quarters. Apple's share of U.S. consumer computer sales jumped to 9.8% in the third quarter, from 7.6% in the same 2006 quarter.

"Two years ago, if you bought a Mac, you had to explain to your friends what you were doing," says Munster. "Not anymore. There's been a real change in people's perception."

Traffic to the Macworld website has risen 25% from last year, says Snell. "Apple used to be this weirdo computer brand, but not anymore. Now Apple means cool and easy to use, and it's not abstract anymore."

Some 50,000 people are expected to attend Macworld, up from 40,000 in 2007.