The tech world is abuzz with expectation that Apple Inc. will soon release a so-called “tablet” – a laptop-style computer with a touch screen instead of a keyboard.

But the device, which is expected to hit store shelves in a matter of months, could torpedo a promising startup in El Segundo that already makes one.

Axiotron Inc. offers a novel service: It converts Apple laptops into tablet computers by using customized kits. It then markets the devices to creative professionals such as artists, photographers and filmmakers who want to manipulate images on their Mac computers with a touch screen. While Axiotron’s founder and chief executive is a former Apple employee, the company has no relationship with the Cupertino-based tech juggernaut.

Since it was founded in 2005, Axiotron has enjoyed steady revenue growth. Last year, the privately held company had $1.4 million in sales, and has been booming since then: Year-to-date sales are $3.3 million.

Its success has come in part because Apple doesn’t have a tablet on the market. Now, trouble may loom for the startup.

“If I were this company, I’d be worried about it,” said Bob Foster, a professor of entrepreneurship at the UCLA Anderson School of Management. “If I were an investor in this company, I’d be worried about it.”

But Andreas Haas, Axiotron’s chief executive, said he isn’t concerned. He predicts Apple’s new tablet will be more like a souped-up iPod than a personal computer. And his core clientele will still need to run sophisticated programs such as Photoshop, and he doesn’t think that they’ll be able to do so with the Apple device.

“I’ve created the creative professional’s best friend,” said Haas, a cheerful, fast-talking engineer whose conversation occasionally lapses into his native German vocabulary. “It’s for a special niche. Apple’s tablet, or whatever it is they’re going to call it, will be for everyone else, the mass market.”

Axiotron builds the tablet conversion kits and sends them to authorized Apple resellers around the world. The resellers then assemble the tablets when a customer brings in a laptop for conversion.

Apple, a notoriously secretive company that almost never discusses its plans, has refused to confirm that it is working on a tablet. Last week, the company unveiled a new line of its popular iPods, but didn’t drop any hints about coming products.

But analysts who track the company said an Apple tablet is practically a certainty. Gene Munster, an analyst at Piper Jaffray Co. in Minneapolis, expects the tablet to hit the market in early 2010 and net $1.2 billion in its first year, with a retail price of about $600.

At that price, Apple’s tablet would dramatically undercut Axiotron, which markets its tablet kits for around $2,000. But if Apple’s tablet can’t run complex software, and Axiotron can hold on to its user base – high-end customers looking for an advanced tablet that can do everything a computer can – the startup should be fine, said Bryan Chaffin, news editor of trade publication Mac Observer in San Jose.

“A lot of Axiotron’s customers are graphic artists, and they aren’t going to be happy or satisfied with an iPod supertouch,” Chaffin said.

Common problem

Chaffin said it is unlikely Apple would introduce a tablet with capabilities on par with a laptop computer, because doing so could cut into Apple’s own laptop sales.

But if Apple’s tablet is successful, the company might decide to build a more advanced model regardless, said Kathleen Allen, a professor of entrepreneurship at the USC Marshall School of Business.

“This is Apple’s first entry into the market with it, and they’ll continue to innovate,” Allen said.

Axiotron’s predicament is a common one for startups that build their businesses in the shadow of giants such as Apple, Google Inc. and Microsoft Corp.

On the one hand, startups can create products that exploit opportunities tied to large companies. But if the startups are successful, they’ll likely draw the attention of the large corporations.

At that point, they could be acquired. But a danger is that the big boys roll out their own products and crush them. That’s the situation that Axiotron could face depending on what kind of tablet Apple unveils.

Haas, who spent three years helping to oversee Apple’s divisions in Europe, is well acquainted with the risk faced by a startup that rides the coattails of a larger corporation’s product. While at Apple, he saw the company embrace some startups that piggybacked on Apple’s technology while it gave others the cold shoulder.

“Apple is a bit like a woman,” he said. “One day they love you and the next day they kick you to the curb and you have no freaking clue why.”

Accordingly, Haas has avoided direct competition with Apple. He rejected the idea of making a small tablet – Axiotron’s current model has a 13-inch screen – because he didn’t want Apple to think he was trying to cut in on the iPod market. And when a customer gets a laptop converted into a tablet, Axiotron takes over the computer’s original warranty from Apple. That way, if the device fails, Apple won’t have to fix it.

Founder on board

Without angering Apple, Haas has made a promising start.

Two years ago at Macworld, the Apple convention where the company debuts new products, Axiotron won the Best of Show award for its tablet conversion. Earlier this year, Axiotron netted Steve Wozniak, one of the original founders of Apple; he joined its board of advisers. (Wozniak no longer works at Apple.) And now, Axiotron is on the verge of announcing it has raised $2.6 million from investors.

Axiotron’s 13 employees work out of a rented office on the top floor of an El Segundo building with sprawling views of Los Angeles International Airport and the Glenn Anderson (105) Freeway. Haas keeps a Spartan office with just an Apple laptop and an iPhone on his desk.

A big fan of Apple, Haas said he actually couldn’t wait for an Apple tablet to come out. “I’ll be the first one in line to buy it,” he said.

While Haas insists Axiotron’s position is strong, the buzz about the Apple tablet has served as a wake-up call. Axiotron executives are exploring a push into the PC tablet market to diversify.

“I don’t want to be thought of as a PC guy or as a Mac guy,” Haas said. “I just want to build the best graphics tool for the creative professional that you can get.”