Apple chief executive officer Steve Jobs unveiled the highly anticipated iPhone during his opening keynote speech at the annual Macworld Conference & Expo in San Francisco today.

"This is a day I've been looking forward to for two and a half years," Jobs said. "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," Jobs said. "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."

But he added: "These are not three separate devices. 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 email and what he called "the baby internet". They're not so smart and not so easy to use, he claimed.

"We don't want to do these," Jobs 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 and supports multi-finger gestures. "And boy, have we patented it," he added.

The iPhone runs Mac OS X, said Jobs. "Why would we run such a sophisticated OS [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 into iPhone. And has let us create desktop-class applications and networking."

iPhone also synchronises through iTunes. It synchs media, contact information, calendars, photos, notes, bookmarks and email accounts. "All that stuff can be moved over the iPhone completely automatically," Jobs said.

The iPhone features a 3.5in, 160 dot-per-inch colour screen. There's a small Home button on it. It's also remarkably thin – 11.6mm, 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 2Mp (megapixel) digital camera. The bottom features a speaker, microphone and iPod dock connector.

Those attending the keynote had to wait a bit for the iPhone news, as Jobs first gave an update on Mac sales and iTunes downloads.

"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 US 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 two billion songs on its iTunes Store to date.

"There was an article recently that said iTunes sales have slowed dramatically. I don't know what data they're looking at," said Jobs. "What we see is that iTunes sales were really up this year. We doubled the number of songs we sold in 2006. We are selling more than five million songs a day. Isn't that unbelievable? That's 58 songs every second."

Jobs said 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.

Some 250 films 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."

The newest iPod competitor on the block in Microsoft's Zune, which launched in 2006's festive season. Jobs said 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, 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 [user interface] we like to do," he added.

The Apple TV auto-synchs 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 product 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 the US February, 2007. Jobs said that Apple is taking orders starting today.