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Instead of the usual venue in Moscone's South Hall, Apple has shifted today's keynote address to Moscone West, a newer facility next door to the Moscone Convention Center that Apple has used to house WWDC and other special events.
Greenpeace activists, trying to draw attention to claims that Apple uses hazardous chemicals in its products and lacks a worldwide computer and iPod recycling program, staged a protest on the street outside the venue.
Following a recording of James Brown singing, "I Feel Good," the lights of the keynote hall dimmed and Apple CEO Steve Jobs took the stage to thunderous applause from the crowd.
"Thank you for coming. We're going to make some history today," he said.
"It was just a year ago that I announced we were going to switch to Intel processors," said Jobs. "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."
Half of all Macs in the United States are now being sold to people who are first time Mac users, said Jobs.
"2007 is going to be a great year for the Mac, but this is all we're going to talk about the Mac today," he added.
The iPod is the world's most popular music player, and the iPod nano is the world's most popular MP3 player, said Jobs. Apple has sold more than 2 billion songs on its iTunes Store to date.
The iTunes Store and movies
"There was an article recently that said iTunes sales have slowed dramatically. I don't know what date 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."
Jobs said that the iTunes Store has sold 50 million TV shows through the iTunes Store. 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. "We're thrilled because they have some awesome movies: Tomb Raider, Patriot Games, Star Trek, Red October, School of Rock," he said.
250 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 studious throw in with us in 2007."
The newest iPod competitor on the block in Microsoft's Zune, which launched this past holiday season. Jobs said that Zune had a 2 percent 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 then revealed the final name of the product he first revealed during a special event in September, 2006 -- then named "iTV." The final product is called Apple TV.
The Apple TV wireless connects your digital media to your widescreen TV, said Jobs. The device includes power, USB 2.0, Ethernet, built-in Wi-Fi, HDMI, component video, audio and optical audio ports on its back.
The Apple TV is capable of displaying 720p HD video, and incorporates its own 40GB hard drive, said Jobs -- capable of storing up to 50 hours of video.
The Apple TV uses the new 802.11n draft standard, said Jobs -- a faster wireless networking technology. "And it has an Intel processor in it, so it's got processing horsepower to do the kinds of UI we like to do," he added.
The Apple TV auto-syncs content from one computer and can stream content from up to five computers, said Jobs. "Just like you can set up an iPod, you can set up an Apple TV," he explained. It works directly from iTunes. Computers that stream content to the Apple TV don't store their content on the drive, but users can watch it live via the network.
Jobs then demonstrated the Apple TV, showing the interface, playing movie trailers and clips from television shows. He added that the Apple TV can also be used for digital still images and music. "When it's playing a song, the album art appears and there's an iTunes-like interface. Every ten seconds or so it flips the positions so it doesn't burn in your LCD TV," he said.
Apple senior vice president of worldwide product marketing Phil Schiller then took the stage with Jobs, MacBook in hand, to demonstrate how the Apple TV works with someone else's computer. Jobs went to the Sources menu, chose Connect to New iTunes and put in a PIN number. Schiller then entered that number on his copy of iTunes, and connected. Then Schiller streamed a clip from television shows stored locally on his MacBook.
The Apple TV is priced at $299, and is shipping in February, 2007. Jobs said that Apple is taking orders starting today.
"This is a day I've been looking forward to for two and a half years," said Jobs. "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, Apple introduced the iPod, and changed the entire music industry.
"Well, today, we're introducing three revolutionary products of this class," said Jobs. "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."
"These are not three separate devices," said Jobs. "This is one device. And we are calling it iPhone. Today Apple is going to reinvent the phone."
Jobs explained that smartphones 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 smartphones 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, supports multi-fingers gesture. "And boy, have we patented it," he added.
The iPhone runs Mac OS X, said Jobs. "We start with a solid foundation," he explained.
"Why would we run such a sophisticated operating system on a mobile device? It's got everything we need," he said. "It's got multitasking, networking, power management, awesome security and the right apps. It's got all the stuff we want. And it's built right in to iPhone. And has let us create desktop-class applications and networking.
iPhone also synchronizes through iTunes. It syncs media, contact information, calendars, photos, notes, bookmarks, e-mail accounts. "All that stuff can be moved over the iPhone completely automatically," said Jobs.
The iPhone features a 3.5-inch, 160 dot-per-inch color screen. There's a small "Home" button it. It's also remarkably thin -- 11.6 millimeters, thinner than any smartphone out there, according to Jobs.
On one side, the iPhone sports a ring/silent switch, volume up and down controls. On its silver back side is a 2 megapixel digital camera. The bottom features a speaker, microphone and iPod dock connector.
The iPhone also incorporates a proximity sensor that automatically deactivates the screen and turns off the touch sensor when you raise the device to your face. An ambient light sensor will sense lighting conditions and adjust brightness levels accordingly. And an accelerometer can tell when you switch from portrait to landscape mode.
Jobs' demonstration of the iPhone began with iPod-related features. An iPod icon along the bottom of the screen brings up a list of music, and Jobs flicked his finger to scroll up and down. He flipped the iPhone on its side and it reoriented to landscape mode, displaying album art in iTunes' "Cover Flow" mode. Jobs also showed video on the device.
"We want to reinvent the phone," he reiterated. "What's the killer app? The killer app is making calls! It's amazing how hard it is to make calls on phones. We want you to use contacts like never before."
The iPhone can synchronize contacts from a PC or Mac, and features "Visual Voicemail." He described it as "random access voicemail" that lets you navigate directly to the voice messages you're interested in.
iPhone is a quad-band phone that operated on GSM and EDGE networks. That's the most popular international standard, said Jobs, though Apple plans to make 3G phones in the future. It also integrates Wi-Fi and Bluetooth 2.0 connectivity, and will automatically switch from a cell phone data network to Wi-Fi when it gets in range.
Demonstrating the phone's ability to make calls, he touched the screen's phone icon and scrolled through his contact list, pulling up Jonathan Ive, senior vice president of industrial design. Phil Schiller then called Jobs -- visible through call waiting. Jobs pressed a "merge calls" button and then created a three way conference calling.
The iPhone's text messaging interface looks similar to iChat -- user dialogue is encased in bubbles, and a touch keyboard appears below. And the phone's photo management software enables you to use a "pinching" motion to zoom in and out of pictures.
The iPhone's Internet connectivity includes HTML-capable e-mail that works with any IMAP or POP-based e-mail service. Apple has also included its Safari Web browser. Jobs called it the "first fully usable HTML browser on a phone."
The same finger-pinching trick also works with Safari, to zoom in and out of images on Web pages.
Jobs said that Yahoo will offer free "push" e-mail capabilities using IMAP to all Yahoo! Mail users. "When you get a message, it'll push it right out to the phone for you," he said.
The iPhone also supports Dashboard widgets, starting off with weather and stocks.
"This a breakthrough Internet communicator," said Jobs. "It's the Internet in your pocket."
Following Jobs' demonstration of how the iPhone works with Google Maps -- he searched for Starbucks, zoomed in to a location and called, then jokingly ordered 4,000 lattes to go -- Google CEO Eric Schmidt joined him on stage, congratulating Jobs and Apple for the iPhone's introduction.
Schmidt said that the iPhone lets companies like Apple and Google "merge without merging," combining the "brain trust" of Apple's development team and companies like google to create a "seamless environment."
Jerry Yang, co-founder and CEO of Yahoo, expressed similar sentiments, and stated his hope that Yahoo's OneSearch feature will be supported on the iPhone soon. "Just think," said Yang. "It's basically like having a BlackBerry without the Exchange server."
Apple is also introducing accessories for the iPhone, including stereo headphones that include a microphone and switch and a Bluetooth headset.
The iPhone features a battery that lasts for five hours of talk time, video or Web page browsing, or 16 hours of audio playback.
"So what should we price it at?" Jobs mused. The price will be $499 with a two year contract for a 4GB model, or an 8GB model for $599. And it will be released in the United States in June. Jobs said Apple anticipates bringing the iPhone to Europe in the fourth calendar quarter of 2007, and Asia in 2008.
Cingular, the North American cell service provider that has sold iTunes-equipped phones from Motorola, will be Apple's exclusive service partner. "They are the best and most popular network in the country," said Jobs, adding that Cingular worked with Apple to develop the Visual Voicemail technology -- "the first fruit" of their collaboration, which required the development of technology both for the phone and network.
Stan Sigman, CEO of Cingular, joined Jobs on stage and said that his company is pleased to distribute "one of the most eagerly anticipated wireless products ever."
"This is not an MVNO," said Sigman, referring to a Mobile Virtual Network Operation, such as Virgin Wireless, Disney Mobile, Helio and others -- companies that buy bandwidth capacity on cell service provider networks and offer added value, such as exclusive handsets or content. "It's a unique relationship that lets Apple be Apple and Cingular be Cingular."
Jobs showed a slide that estimated the market for phones to be in the vicinity of 957 million units. "In 2008 we are going to try to grab 1 percent marketshare," he said. "We think we're going to have the best product in the world."
"The Mac, iPod, Apple TV and iPhone. Only one of those is a computer. So we're changing the name," said Jobs. "We're announcing today that we're dropping the 'Computer' from our name, and from this day forward we're going to be known as Apple Inc."
"The iPod changed everything in 2001," he said. "and we're going to do it again with the iPhone in 2007."
Jobs then asked the audience to applaud for "these folks who worked on these products," asking the Apple employees to stand up. "Thank the families," he added. "They haven't seen a lot of us, especially in the last six months."
Closing the proceedings, pop singer John Mayer -- who has stood on stage with Jobs several times over the past few years -- played his hit songs "Gravity" and "Waiting On the World to Change."
"Steve Jobs and Apple Inc. just make life more fun," said Mayer in between songs. "It's the exact opposite of terrorism."
After Mayer finished, Jobs thanked Macworld Expo attendees for coming, and added, "We'll see you all soon."
This story, "Macworld Expo Keynote Live Update" was originally published by PCWorld.