"This is a day I've been looking forward to for two and a half years," Jobs said. "Every once in a while a revolutionary product comes along that changes everything."
In 1984, said Jobs, Apple introduced the Macintosh and changed the computer industry. In 2001, the company introduced the iPod and changed the entire music industry. (For more about Apple, see Computerworld's .)
"Well, today we're introducing three revolutionary products of this class," Jobs said. "The first one is a widescreen iPod with touch controls. The second is a revolutionary mobile phone. The third is a breakthrough Internet communications device."
But, he added, "these are not three separate devices. This is one device. And we are calling it iPhone. Today Apple is going to reinvent the phone."
The device, which will be sold by Apple and Cingular Wireless LLC, is priced at US$499 for a 4GB model and $599 for an 8GB model. It will be available in June and requires approval from the U.S. Federal Communications Commission, Jobs said.
The entire front of the quad-band GSM phone serves as the screen, Jobs told attendees at the MacWorld Expo here this morning. He also noted that the operating system behind the phone's various features is Mac OS X and said that it will sync up with a user's iTunes, plus mail, notes and bookmarks. It will also display visual voice mails.
The phone, whose screen measures 3.5 in. diagonally, plays video and includes a 2-megapixel camera. The screen offers a higher-than-normal resolution of 160 pixels per inch, Jobs said. He also said that the iPhone has a proximity sensor so that when it's held up to a user's ear during a call, the user interface is turned off.
Jobs pointed out that the phone will offer Wi-Fi and Bluetooth wireless connectivity, comes with the company's Safari Web browser and displays Google maps.
The iPhone features a small "Home" button on it. It's also remarkably thin -- at less than half an inch, it's thinner than any smart phone out there, according to Jobs.
On one side, it sports a ring/silent switch and volume up-and-down controls. On its silver back is the digital camera. The bottom features a speaker, microphone and iPod dock connector.
According to Jobs, the phone offers five hours of talk/video time and 16 hours when playing music.
The announcement that had been swirling around the company for months. Earlier Tuesday, The Wall Street Journal had reported that Apple would announce a cell phone with wireless service from Cingular.
But in something of a break from past keynote talks, Jobs offered no updates on the company's plans for its next operating system update. Mac OS X 10.5, Leopard, is due out by midyear.
In introducing the new phone, Jobs explained that smart phones provide phone and e-mail and what he called "the baby Internet. They're not so smart and not so easy to use."
"We don't want to do these," he said. "We want to do a leapfrog product that's way smarter than these phones and much easier to use. So we're going to reinvent the phone."
The iPhone does not use a keyboard, nor does it use a stylus, as many smart phones do today. The device uses new technology, called Multitouch.
"We're going to use the best pointing device in our world," said Jobs. "We're born with 10 of them, our fingers."
Multitouch is far more accurate than any touch display, according to Jobs. It ignores unintended touches and supports multifinger gestures. "And boy, have we patented it," he added.
In addition to the phone announcement, Jobs also reintroduced the iTV, now called Apple TV. The device, which sells for $299 and will be available next month, allows a user to stream music, movies and photos from a computer wirelessly to a TV, using the Apple TV.
It includes a 40GB hard drive, wireless networking using 802.11b/g/n, 720p high-definition playback and Ethernet and HDMI connections. The Apple TV will also play or display content from other users' computers, Jobs told those on hand for his speech.
Before unveiling the new hardware, Jobs noted that the company's move to Intel Corp. processors in its laptops and desktops in 2006 went smoothly. "It was just a year ago that I announced we were going to switch to Intel processors. I said we'd do it in the coming 12 months. We did it in seven months.
"It's been the smoothest and most successful transition that we have seen in our industry," he said.
Half of all Macs in the U.S. are now being sold to people who are first-time Mac users, said Jobs.
He also stressed that music sales through the company's iTunes Store remain strong. Apple has sold more than 2 billion songs via its iTunes Store to date. And the iPod is the world's most popular music player.
"There was an article recently that said iTunes sales have slowed dramatically. I don't know what data they're looking at," said Jobs. "What we see is iTunes sales were really up this year. We doubled the number of songs we sold in 2006. We are selling over 5 million songs a day. Isn't that unbelievable? 58 songs every second."
He also poked fun at rival Microsoft's Zune music player, noting that the Zune has a 2% market share. "So no matter how you try to spin this, what can you say?" Jobs said. Behind him, an image of the Zune on the screen burst into flames and faded away.
Jobs said that the iTunes Store has sold 50 million TV shows, and within four months, the service has sold 1.3 million movies. "Which I think has exceeded all of our expectations," he added.
Jobs then revealed that Apple has struck a deal with Paramount to offer its films.
Two hundred fifty movies are now offered on iTunes, said Jobs. "We're getting them up as fast as we can in the next week or so," he said. "We hope to add more movies as other studios throw in with us in 2007."
Peter Cohen of Macworld contributed to this report.