Hans-Gerd Bode, a spokesperson for Volkswagen, said that the meeting took place in California and that lots of ideas were discussed, but noted that the project is still in the early stages. Apple has declined comment, but observers are already calling the new project the iCar.

Computer and Car Companies

Hookups between computer companies and car companies are in the air. VW is already working with Google and graphics card maker nVidia for a 3D in-car navigation system , for which it has demonstrated a prototype. Frank Weith, a technical strategy manager for Volkswagen of America, told CNET that the company is working on new approaches to navigation and human interface.

Apple has worked with other carmakers for smooth iPod integration , including announced collaborations with Ford, GM, and Mazda. BMW has already begun integrating the iPod into some models, allowing it to be plugged into a glove box and enabling the device's music library to be controlled from the car's controls.

Ford will reportedly launch this fall a new, optional media system for its cars, called Sync, that allows users to employ voice or steering wheel controls to listen to music players or to have cell phone text messages read aloud.

For its part, Apple is beginning the next evolution of the iPod. Next week, Apple will reportedly release new iPods with more features but about the same price. A media event already has been scheduled for Wednesday in San Francisco. Some observers speculate that a multitouch screen, such as in the iPhone, is coming to the iPod.

Jokes Aplenty for iCar

Joshua Topolsky, writing on Engadget, noted that the Apple-VW report is reminiscent of an old joke about how a Microsoft car might work. The joke goes that a Microsoft car "crashes twice a day." Topolsky quoted fellow staffers as speculating that an iCar might take only one kind of gas and wouldn't have 3G either. Autoblog.com joked that it would work on only 5 percent of the roads.

But Yankee Group analyst Laura DiDio said that if the report is true, it's "intriguing" and is exactly the kind of collaboration she would expect Apple to undertake.

Like Microsoft, Google, Oracle, and others, she said, Apple is trying to reinvent itself. First it moved into consumer electronics from computers, reinventing itself with the iPod music player and, more recently, the iPhone. And now it's looking at other areas where it can redefine a product.

She added that Apple and Volkswagen still must have "the right product, at the right time, for the right market," but said the possibilities for an iCar are "infinite." She mentioned such ideas as integrating Apple's multitouch interfaces, new approaches to GPS, a more elaborate media experience, and other efforts that could remake a car into what would become, essentially, "a moving living room."