Phil Schiller, Apple's senior vice president for worldwide marketing, said Apple isn't getting out of the computer business, despite the name change. It's simply broadening its business.
"We sell Macintoshes and will continue to do so and are very happy with that business," he said.
The phones, which will operate exclusively on AT&T Inc.'s Cingular Wireless network, will start shipping in June. The 4-gigabyte model will cost $499, while an 8-gigabyte iPhone will be $599.
Cingular would not provide details of its financial arrangement with Apple. But Glenn Lurie, president of national distribution for Atlanta-based Cingular Wireless, said Cingular's board agreed to the collaboration without even seeing a prototype, based on Apple's reputation for innovation.
"We looked at this and said, `Apple is so good at what they do,'" he said.
It's not Cingular's first foray into music-playing phones. In 2005, the company teamed with Motorola on an iTunes-enabled phone called ROKR. But the product was widely considered a flop because it only held 100 songs and required users to buy songs through a computer and download the songs to the phone - deficiencies the new Apple phone would remedy.
IPhone is less than a half-inch thin - slimmer than almost every other phone on the market. It comes with a built-in, 2-megapixel digital camera, as well as a slot for headphones and a SIM card.
The phone automatically synchs the user's media - movies, music, photos - through iTunes on computers running either Mac OS X or Microsoft Corp.'s Windows. The device also synchs e-mail, Web bookmarks and nearly any type of digital content stored on a PC.
The phone supports Wi-Fi and Bluetooth wireless technology and can detect location from Global Positioning System satellites. It also can send and display e-mail and text messages. Apple is partnering with Yahoo Inc. on Web-based e-mail and Google Inc. on maps.
To make a call, users can tap out the number on an on-screen keypad or scroll through their contacts and dial with a single touch. To zoom in on a photo or Web site, tap twice. To zoom out, tap once with two fingers.
"It works like magic," Jobs said. "It's far more accurate than any touch display ever shipped. It ignores unintended touches. It's super smart."
AP Business Writers Jordan Robertson in San Francisco and Harry R. Weber in Atlanta contributed to this report.
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