Apple announces iPhone

SAN FRANCISCO (AP) -- Apple Computer (NASDAQ:AAPL) CEO Steve Jobs confirmed months of speculation Tuesday by unveiling a new mobile phone that plays and downloads music and a set-top box that allows people to stream video from their computers to their televisions.
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Steve Jobs, Apple's chief executive, said the iPhone would "reinvent" the telecommunications sector.
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Steve Jobs introduced AppleTV at the MacWorld Conference & Expo in San Francisco today.

Jobs said Apple's iPhone would "reinvent" the telecommunications sector and "leapfrog" past the current generation of hard-to-use smart phones.

"Every once in a while a revolutionary product comes along that changes everything," he said during his keynote address at the annual Macworld Conference and Expo. "It's very fortunate if you can work on just one of these in your career. ... Apple's been very fortunate in that it's introduced a few of these."

Jobs demonstrated the phone's music capabilities by playing "Lovely Rita, Meter Maid, " from the Beatles' Sergeant Peppers Lonely Hearts Club Band.

iPhone uses a patented technology Apple is calling "multi-touch," and is essentially a computer with a blank screen that users configure with easy-to-use software so they can touch the monitor with their fingers.

"We're going to use a pointing device that we're all born with," Jobs said. "It works like magic. ... It's far more accurate than any touch display ever shipped. It ignores unintended touches. It's super smart."

The phone automatically synchs your media -- movies, movies, photos -- through Apple's iTunes digital content store. The device also synchs e-mail content, Web bookmarks and nearly any type of digital content stored on your computer.

"It's just like an iPod," Jobs said, "charge and synch."

iPhone is 11.6 millimeters thin, thinner than almost any phone on the market today. It comes with a 2-megapixel digital camera built into the back, as well as a slot for headphones and a SIM card.

Apple will begin taking order Tuesday for $299 video box, called Apple TV, and the devices will be available in February.

The gadget is designed to bridge computers and television sets so users can more easily watch their downloaded movies on a big screen. A prototype of the gadget was introduced by Jobs in September when Apple announced it would sell TV shows and movies through its iTunes online store.

The product could be as revolutionary to digital movies as Apple's iPod music player was to digital music. Both devices liberate media from the computer, allowing people to enjoy digital files without being chained to a desktop or laptop.

"It's really, really easy to use," Jobs told the crowd at San Francisco's Moscone Center before demonstrating the system with a video clip of "The Good Shepherd." "It's got the processing horsepower to do the kinds of things we like to do."

AppleTV will come with a 40-gigabyte hard drive that stores up to 50 hours of video. It features an Intel (NASDAQ:INTC) processor and can handle videos, photos and music streamed from up to five computers within the wireless range.

Jobs also said Apple has sold more than 2 billion songs on its popular iTunes music download site, catapulting the company into the top ranks of music sellers worldwide. Apple, which sells 58 songs per second, or 5 million songs a day, sells more songs than Amazon.com (NASDAQ:AMZN) and ranks behind only WalMart, Best Buy and Target as a music retailer.

"We couldn't be happier with the growth rate of iTunes," Jobs said.

He said Apple will sell digital movies from Paramount. Apple has partnered with Disney for several months, offering about 100 movies on iTunes. With Paramount's selection, it will have 250 movies available for downloading on the site.

It remains to be seen whether the king of digital music can colonize an entirely new category of gadgets. Apple could use a megahit along the lines of its iconic iPod to divert investors' attention from the stock options-backdating scandal that has tainted its reputation.

The backdating of stock options, which has been widespread among Silicon Valley companies, involves pegging stock options to favorable grant dates in the past to boost the recipients' award. It isn't necessarily illegal, but securities laws require companies to properly disclose the practice in their accounting and settle any charges that may result.

In a December filing with the Securities and Exchange Commission, Apple said Jobs was aware of, or recommended the selection of, some favorable grant dates but he neither benefited financially from them nor "appreciated the accounting implications."

Apple shares were up 95 cents, or 1.11 percent, to $86.42 in midday trading on the NASDAQ stock exchange. The stock has traded in a 52-week range of $50.16 to $93.16.