Apple unveils cell phone, Apple TV

updated 6:48 p.m. ET Jan. 9, 2007

Apple Computer CEO Steve Jobs on Tuesday announced the iPod maker's long-awaited leap into the mobile phone business and renamed the company just "Apple Inc.," reflecting its increased focus on consumer electronics.

The iPhone, which will start at $499 when it launches in June, is controlled by touch, plays music, surfs the Internet and runs the Macintosh computer operating system. Jobs said it will "reinvent" wireless communications and "leapfrog" past the current generation of 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."

Name change reflects shift
He said the company's name change is meant to reflect Apple's transformation from a computer manufacturer to a full-fledged consumer electronics company.

During his speech, Jobs also unveiled a TV set-top box that allows people to send video from their computers and announced the number of songs sold on its iTunes Music Store has topped 2 billion.

Apple shares jumped more than 8 percent on the announcements, while the stock of rival smart-phone makers plunged. The run on Apple stock created about $6 billion in shareholder wealth.

While Jobs noted the explosive growth of the cell phone market, it's not clear that a device as alluring as the iPhone poses a threat to mainstream handset makers due to the price, said Avi Greengart, mobile device analyst for the research firm Current Analysis.

"My initial reaction is that this product actually lives up to the extensive hype, and I'm not easily impressed," he said. "But the vast majority of phones sold cost way less than $500." Instead, the rivals most likely to face new competition from Apple's handset are makers of higher-end smart phones such as Palm Inc.

'Goes beyond smart phones'
Tim Bajarin, principal analyst with Creative Strategies, said the iPhone could revolutionize the way cell phones are designed and sold.

"This goes beyond smart phones and should be given its own category called 'brilliant' phones," he said. "Cell phones are on track to become the largest platform for digital music playback and Apple needed to make this move to help defend their iPod franchise as well as extend it beyond a dedicated music environment."

Apple currently commands about 75 percent of the market for downloaded music and portable music players. But it's expected to lose market share on both fronts as rivals introduce their own gadgets and music stores.

Jobs said Apple expects to sell 10 million iPhones in 2008, the first full year in which they'll be available. That's about 1 percent of the global market for mobile phones; 957 million were sold worldwide in 2006.

Hefty price tag
The Apple phones, which will operate exclusively on AT&T Inc.'s Cingular Wireless network, will start shipping in June. A 4-gigabyte model will cost $499, while an 8-gigabyte iPhone will be $599. While wireless carriers typically offer discounts and rebates on new devices when they agree to sign a two-year service contact, Cingular said it was unclear whether this would be the case with the iPhone.

Cingular declined to comment on its financial arrangement with Apple.

IPhone is less than a half-inch thin — less 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.

The phone automatically synchs the user's media — movies, music, photos — through iTunes on computers running either Mac OS X or Microsoft Corp.'s Windows. The device also synchs e-mail, Web bookmarks and nearly any type of digital content stored on a PC.

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

MORE FROM WIRELESS

Wireless Section Front

Can’t telecommute? Watch this! ConsumerMan: Get a cheap cell headset California's hands-free cell law in effect Secrets of the super-connected Police wnt u to fight crime w/txt msgs AT&T offers new iPhone without contract Tools of the road for going hands-free Listen up iTunes — Rhapsody ready to rumble Smartphone wars and hype heat up MetroPCS says: Bring your own phone Wireless Section Front   Add Wireless headlines to your news reader: