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.