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New Mobile Phone Signals Apple’s Ambition

Published: January 9, 2007

SAN FRANCISCO, Jan. 9 — Steven P. Jobs introduced an Apple wireless phone today that he said would lead to a new synthesis of communications, video, music and computing.

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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.

In an exclusive partnership with Cingular, the nation’s largest cellular phone carrier, Mr. Jobs brought his legendary product design sense to bear on one of the world’s most ubiquitous products. He said Apple had set the goal of taking 1 percent of the world market for cell phones, or 10 million phones per year, by the end of 2008.

Underscoring the transformation of a quirky computer maker that during the past half decade has come to dominate the world of digital music, and signaling his ambition to become a force in new markets, Mr. Jobs announced that the Apple was dropping the “computer” from its name and would henceforth become Apple Inc.

Repeatedly during his two-hour presentation before an audience of journalists, analysts, Apple employees and customers, Mr. Jobs drew parallels between the Macintosh personal computer, which had a vast impact on the computer industry when it was introduced in 1984, and the new phone.

Noting that there are occasionally new products that change everything, Mr. Jobs noted, “Apple has been able to introduce a few of these into the world.”

Apple’s stock price rose more than 7 percent after the announcement, climbing over $92. Shares of two companies that make competing smart wireless devices, Palm Inc. and Research in Motion, fell more than 5 percent.

Touting the fact that the new iPhone is powered by the same core OS X operating system that runs Macintosh computers, Mr. Jobs showed a series of applications including e-mail, advanced voice mail, photo collections and visually appealing Web searching all on a device that will be priced beginning at $499. That model will have four gigabytes of storage, and an eight-gigabyte model will be available for $599.

The iPhone will offer five hours of operating time and 16 hours of audio playback, Mr. Jobs said. The phone will be compatible with Cingular’s digital EDGE data network as well as Wi-Fi and Bluetooth networks.

Mr. Jobs defended the higher price of the new phone in a market where smartphone prices are rapidly plunging to $200 and below. He compared the iPhone, which has only one mechanical button on its surface, to smartphones from Motorola, Research In Motion and Palm. Rather than what he called “small plastic keyboards,” the iPhone will have a display that becomes both the keyboard and control panel, morphing to suit the current application.

“After today I don’t think anyone is going to look at these phones in the same way,” he said.

In addition to the Apple relationship with Cingular, which Mr. Jobs said was forged without offering even a peek at an early prototype, the iPhone will offer special applications from both Google and Yahoo. Users will be able to search use both services, receive mail from both Yahoo and Gmail as well as use a custom version of Google Maps.

Both Eric E. Schmidt, who is chief executive of Google as well as a member of Apple’s board, and Jerry Yang, co-founder of Yahoo, came on stage to endorse the new handheld.

“I’m not a board member of Apple, but I would like one of these, too,” Mr. Yang said.

Regis McKenna, the veteran public relations specialist and corporate strategist who originally tutored Mr. Jobs in the art of high-tech marketing beginning in the late 1970s, said: “This compares favorably with the launch of the Macintosh. The price is high, but it will come down.”

The new phone will not go on sale at Apple and Cingular stores in the United States until June of this year, Mr. Jobs said, noting that he had chosen to avoid early public disclosure on a Federal Communications Commission Web site.

The iPhone will be introduced in Europe during the fourth quarter and in Asia in 2008.The user interface of the iPhone rests heavily on a high-resolution touch screen that makes it possible to use a finger to control the phone. It also has several more subtle features, including sensors that track light and movement to prompt the phone to control screen brightness and physical orientation and other aspects of its operation. For example, when the phone is placed next to the user’s face, the keyboard is automatically turned off.

One of the immediate questions that analysts and industry executives posed about Apple’s new product was why the designers eschewed the higher-speed Cingular digital cellular 3-G network. Mr. Jobs said later models would support additional networking standards.

Apple chose to name the new phone iPhone despite the fact that Cisco Systems, the network and consumer wireless company, has recently introduced a Wi-Fi-based phone with the same name. Mr. Jobs had been negotiating with Cisco executives over the trademark in recent days. Both companies claim the name.

Before he introduced his new phone, Mr. Jobs said that Apple TV, the digital video system that he announced as iTV last year, would be available for $299 in February. The device will store up to 50 hours of video and permit wireless streaming of digital content from a computer to a television.


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