UPDATE 2-Apple's Jobs was open to making smaller iPad-exec
* Schiller takes stand, latest marquee witness
* Apple reveals billion dollar ad-spend for iPhone, iPad
* Judge warns attorneys against 'theatrics'
By Poornima Gupta and Dan Levine
SAN JOSE, Calif., Aug 3 (Reuters) - Steve Jobs was receptive to Apple Inc making a smaller tablet, a senior executive said in a 2011 email revealed on Friday, fanning speculation that Apple plans to make a mini-iPad and take on Google and Amazon products.
Vice President Eddy Cue urged then-chief operating officer Tim Cook in January 2011 to build a 7-inch tablet, according to an email from Cue that Samsung Electronics introduced as evidence in a U.S. patent trial.
In an email addressed also to software chief Scott Forstall and marketing head Phil Schiller, Cue said he believed there was a market for a 7-inch tablet and that "we should do one".
Speculation intensified in 2012 that Apple is preparing to launch a 7-inch version of the market-dominating 10-inch iPad, to counter increasing inroads made by smaller tablets such as the Kindle Fire, and most recently, Google's Nexus 7. But the company has never confirmed such talk.
The email was introduced on Friday as an exhibit in a high-wattage trial being played out in San Jose this summer before much of the technology industry. Apple and Samsung are going toe-to-toe in a patent dispute that mirrors a global struggle for industry supremacy between two rivals that together control more than half of worldwide smartphone sales.
Apple accuses Samsung of copying the design and some features of its iPad and iPhone, and is asking for billions of dollars in damages and a sales ban. The Korean company, which is trying to expand in the U.S. market, accuses Apple of infringing on some of its key wireless technology patents.
Cue, who rose to prominence overseeing the iTunes and Apps stores, became the company's senior vice president of Internet software and services in September.
Cue said in an email dated Jan. 24, 2011 he had broached the idea of a smaller tablet to Jobs several times since Thanksgiving, and the co-founder was receptive "the last time."
That appeared to run counter to Jobs' publicly expressed dislike of smaller tablets. In late 2010, Jobs told analysts on a conference call that 7-inch tablets should come with sandpaper, so users could file their fingers down to a quarter of their size.
"There are clear limits of how close you can physically place elements on a touch screen before users cannot reliably tap, flick, or pinch them," Jobs, who died in October after a years-long battle with cancer, said at the time.
"This is one of the key reasons we think the 10-inch screen size is the minimum size required to create great tablet Apps."
Earlier on Friday, marketing chief Phil Schiller told a jam-packed courtroom on Friday that Apple's strategy in maintaining its market momentum is to "make the product the biggest and clearest thing in advertising."
The 15-year Apple veteran told the jury the company has spent a total of about $647 million on advertising for the iPhone, launched in 2007, and over $457 million for the two-year-old iPad.
Dressed in a dark suit and yellow tie, Schiller - who favors blue jeans and is one of a handful of executives reporting directly to CEO Tim Cook - said Samsung's copying of Apple's designs has hurt its sales and disrupted its marketing.
"I was pretty shocked at the appearance of the Galaxy S phone and the extent it appeared to copy Apple products," he told the jury, adding that he was even more shocked when he saw the Galaxy tab. "I thought they've done it again, they're just going to copy our whole product line."
Apple fans, investors and rivals are getting a rare glimpse into the zealously guarded internal processes at a company that has won respect in the industry not just for its products but also its marketing savvy and streamline supply chain operation.
This week, 17-year industrial design veteran Christopher Stringer also gave a behind-the-scenes look at the hardware design process behind some of the world's most celebrated consumer electronics, such as the iPhone.
NO 'THEATRICS', JUDGE WARNS
Before Schiller took the stand on Friday, U.S. District Judge Lucy Koh rejected Apple's request for severe sanctions against Samsung over the conduct of one of Samsung's attorneys, even as the judge said that conduct risked tainting the jury.
A Samsung press statement earlier this week contained links to documents that Koh had ruled could not be admitted at trial, along with a statement that "fundamental fairness requires that the jury decide the case based on all the evidence."
Samsung attorney John Quinn, of the law firm Quinn Emanuel Urquhart & Sullivan, acknowledged in a court filing that he authorized the press statement but said it was not designed to influence the jury.
Apple had asked Koh to punish Samsung by ruling that Apple's phone design patents were valid, and infringed. In court on Friday, Koh rejected that request, but said there may be more investigation of the events after the trial.
"I will not let any theatrics or any sideshows distract us from what we are here to do," Koh said.
Koh then brought in members of the nine-member jury, one at a time, to ask if they had read anything about the case since Tuesday. One juror said he had read Internet headlines but not the articles, and all said they could still be impartial.
The case in U.S. District Court, Northern District of California, is Apple Inc v. Samsung Electronics Co Ltd et al, No. 11-1846.
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