Apple introduces svelte multimedia iPhone

By Duncan Martell

SAN FRANCISCO (Reuters) - Apple on Tuesday debuted its much-anticipated take on the smart phone, a sleek device with a large screen that combines a phone, an iPod and instant messaging, sending its shares to a record high.

Steve Jobs, Apple's CEO and chief showman, pulled an iPhone from his jeans pocket at the annual Macworld conference and drew a standing ovation at the end of his speech.

Investors also cheered, pushing Apple shares 8 percent higher, while those of rival high-end phone makers Palm Inc. and Research In Motion Ltd. fell.

Lacking the diminutive keypads found on other smart phones, Apple's iPhone has a single button and a 3.5-inch (9-cm) touch screen to navigate between playing songs and videos, displaying pictures, typing instant messages or making phone calls.

In a nod to Apple's widening influence in consumer electronics, Jobs said it would drop "Computer" from its name.

Most of what Apple Inc. sells now is mobile technology, whether it be iPods or notebooks, which now outsell desktop Macs.

The iPhone is thinner than some of the cell phone industry's sleekest devices, such as Motorola Inc.'s

RAZR.

It will cost $499 to $599 when it debuts in the United States in June. Sales are expected to start in Europe in the fourth quarter and in Asia in 2008.

Cingular Wireless, the No. 1 U.S. wireless network and a unit of AT&T Inc., has a multiyear, exclusive agreement to provide U.S. service for the iPhone.

HUGE MARKET

Jobs said that in 2008 Apple could sell 10 million iPhones, representing roughly 1 percent of the current annual mobile phone market of 1 billion units a year.

Last year, the consumer electronics market globally was worth $145 billion.

"This is a huge market right here," Jobs said in an interview, calling the iPhone "a natural extension of what we've been doing."

Gartner analyst Mike McGuire said Apple seems to have backed up Jobs' claim that the company had "reinvented" the mobile phone.