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Apple Seeks To Muscle Into Telecom With iPod Phone
Firm Also Unveils Device To Stream Video to TV

By Mike Musgrove
Washington Post Staff Writer
Wednesday, January 10, 2007; D01

Apple chief executive Steve Jobs confirmed yesterday that the company has created an iPod smart phone, a device that will make calls, surf the Internet, send and receive e-mail, and -- naturally -- play music and video downloaded from Apple's iTunes Store.

Jobs made a flurry of announcements during a speech at the Macworld Conference and Expo in San Francisco. He said that the Hollywood studio Paramount would add its films to the iTunes Store and that the firm had developed a device called Apple TV that streams video files from iTunes to a television set wirelessly.

There was even a surprise name change for the company. Effective immediately, Apple Computer Inc. is dropping the "Computer" from its name and will simply go by Apple Inc., a sign that the Mac computer line is no longer the flagship product of a company that is increasingly a trendsetter in music, video and wireless networking.

The phone, however, was the main event. "After today, I don't think anyone is going to look at these phones in the same way," Jobs said of the increasingly popular smart-phone category. Jobs's speech was broadcast on the Web.

The iPhone, which should be available through Cingular Wireless in June, pending approval by the Federal Communications Commission, would be priced at $499 for a 4-gigabyte model and $599 for an 8-gigabyte model. The device will run the Mac OS X operating system and a full version of Apple's Web browser, Safari.

Usually, Apple announces products only when they are nearly ready to ship, but Greg Joswiak, the company's vice president for hardware marketing, said yesterday that the company wanted to introduce the device before submitting to the approval process.

"We'd rather be in a position of explaining what it is and what it does instead of having information leak out as FCC paperwork starts to get filed," he said.

Cingular has a multiyear agreement to be the exclusive carrier for the phone, he said, adding that it would be available at both Apple and Cingular stores.

During his address, Jobs said Apple's goal was to take a 1 percent slice of the cellphone market. A recent report by M:Metrics, a research firm, found that there were slightly more than 6 million smart phones -- devices that offer phone calls and e-mail or Web access -- in use in the United States.

For Apple, the smart-phone market is new turf. Companies have tried for years to build a slick, intuitive device that does everything Apple is promising with the iPhone. But this gadget class is still largely the realm of early adopters -- consumers who latch on to new technologies.

Jobs said the iPhone is smarter than the average smart phone, pointing out three built-in sensors. One sensor shuts off the display and touch screen when a user lifts it to an ear to make a phone call. Another can read the available light and adjust the display's brightness to save power. The third sensor can tell whether the screen is oriented horizontally or vertically and adjust the image accordingly.

The device's battery, Jobs said, is durable enough for five hours of talk time, video playback or Web browsing and 16 hours of audio playback. The iPhone weighs 4.8 ounces and is slightly less than half an inch thick, the company said.

Jobs contended that Apple's smart phone is more flexible than its competitors because it uses a touch screen instead of a built-in keyboard. He demonstrated the device's functions by swiping his fingers across it and making a pinching gesture to zoom in and out of Web pages.

Dave Hamilton, co-publisher of an Apple news Web site called the Mac Observer, said most of the functions Jobs displayed are available on other products.

"I'd say about 80 percent of the features that were talked about today are available on a Treo," he said, "but Jobs is so good at standing on a stage and making you think he invented it."

Still, Hamilton said he would trade in his Treo smart phone, made by Palm, "on day one" of the iPhone's release. Typically, he said, Apple makes a user interface that is so simple that "you don't have to wonder what your device can do."

Apple said iTunes has sold 2 billion songs. The iTunes movie section, with a collection of 250 films, has sold 1.3 million movies in its first four months. Apple also announced that Paramount was now a partner in the iTunes Store and would offer such movies as "The Italian Job," "Chinatown" and "School of Rock" through the service.

The announcements drove Apple's stock up $7.10, or 8.3 percent, to an all-time-high close, $92.57. Shares continued to climb in after-hours trading.

Meanwhile, shares of Research in Motion, which makes the BlackBerry smart phone, and Palm both fell. Palm was down 84 cents, or 5.7 percent, to $13.92. Research in Motion was down $11.16, or 7.9 percent, to $131.

© 2007 The Washington Post Company