He hinted at it at Macworld Expo 2000 in San Francisco, and rumour has it that Apple CEO Steve Jobs is ready to announce a more formal relationship between Apple and 3Com's Palm Computing division.

Sources at a Taiwan manufacturing plant report that prototypes of the Mac-ready Palm PDAs are already rolling off production lines. Those same sources say the prototype is a hybrid of the Palm V and the Handspring Visor (pictured), with the Palm V's form factor, a colour screen, and an expansion slot. The Palm Pilot VII's wireless technology is similar to Apple's AirPort networking capabilities, so it seems likely that the Apple-Palm handheld will be compatible with the AirPort wireless-networking hub, and will integrate seamlessly with the Mac OS.

Secret handshakes Steve Jobs hardly stemmed the rumours when, during his Macworld Expo keynote address, he introduced new Palm CEO Carl Yankowski. Jobs told the audience that Apple had been "doing a lot of work with these guys lately".

Mac OS X allows a Palm handheld connected to a Mac to appear as an external disk on the desktop - making drag-&-drop transfer of data, files, and applications possible. The new application's code-name at Apple is Palm Manager. Palm Computing's Mac version of the Palm Desktop application (previously known as Claris Organizer) will also be fully compatible with OS X.

Jobs killed off Apple’s pioneering Newton handheld computer in 1998, as its initially groundbreaking technology never recovered from the bad publicity that followed its too-early introduction.

According to the reports in Wired News online, Apple's handheld could be announced by mid-year - most likely at the Worldwide Developer's Conference (15-18 May) or possibly at the next Macworld Expo (18-21 July) in New York.

Apple and Palm declined to comment.