Apple Goes Beyond Mac

The iPhone illustrates the company's evolution from being simply a computer maker.

SAN FRANCISCO—In the weeks leading up to the Macworld Conference & Expo, rumors abounded about a full-screen iPod, an Apple Computer-branded phone or some other Internet-aware mobile device.

During a 2-hour keynote address here Jan. 9, Apple CEO Steve Jobs revealed a single device that subsumes all three descriptions. Now with the iPhone to complement a slate of consumer-driven products that includes a television and multimedia offering, the iPod music player and iTunes stores, Jobs also used this keynote to signal that Apple has now moved far beyond being a mere computer maker. Indeed, none of the announcements Jan. 9 involved the companys once-signature product, the Macintosh. The focus, instead, was on the iPhone.

"Current smart phones are not so smart and not so easy to use," Jobs said, adding that Apple spent years developing a phone that offers both advanced features and ease of use. The iPhone, which will be 11.6 millimeters thin, will not use a keypad but instead will function through a feature Jobs dubbed a "multi-touch" display. The device will also use Apples own Mac OS X operating system.

Not everyone greeted the announcement of Apples iPhone with joy. A day after the launch, Cisco Systems filed a copyright and trademark lawsuit against Apple in U.S. District Court.

Cisco said it owns the name "iPhone," after acquiring a company called Infogear in 2000, which is now part of Ciscos Linksys division. On Dec. 18, Cisco expanded its existing iPhone line. The lawsuit seeks to stop Apple from copying the iPhone trademark.

Apples iPhone will feature a 3.5-inch, 160-dot-per-inch color-screen display. It will work with iTunes and let users synchronize content, such as calendars, photos and e-mail, from a Mac or PC to the device.

For Web browsing, the iPhone will use Apples Safari browser rather than the WAP (Wireless Application Protocol) browsers featured on most smart phones. Jobs said that this is a full version of Safari, demonstrating how various Web sites load the same way on the iPhone as they do on a full-size computer. Jobs also showed the audience how the iPhone works with Google Maps, complete with live direction finding.

The iPhone will come bundled with several widgets similar to those in Mac OS Xs Dashboard, providing, for example, live sports scores and weather.

The iPhone is built with quad-band technology and can be operated on either a GSM or EDGE (Enhanced Data for Global Evolution) network—Jobs said the company plans to make a third-generation phone in the future—and will have Bluetooth 2.0 and built-in Wi-Fi.

Jobs also announced a partnership with Yahoo to use its search engine and e-mail capabilities. In addition, he confirmed that Cingular Wireless will partner with Apple to provide service. The iPhone will be sold at both Apple and Cingular retail stores but not at third-party Apple retailers.

Jobs stressed the value of the Cingular partnership, saying that some iPhone features, such as Virtual Voicemail, which allows listening to voice mail calls out of order, would not have been possible otherwise.

The first of the iPhones will start shipping in June, after a review by the Federal Communications Commission. The 4GB model, with a two-year contract, will sell for $499, and the 8GB model, also with a two-year agreement, will cost $599, Jobs said.

Although Jobs sent a strong signal that Apple is moving beyond its computer roots, Gene Munster, an analyst at Piper Jaffray, wrote in a Jan. 9 report that Apples new multimedia direction will continue to have a "halo" effect for the Mac. During the release of its fiscal-fourth-quarter financial statements on Oct. 18, Apple officials claimed to have sold a record 1.6 million Macs.

"Apple is clearly becoming a consumer digital lifestyle company versus just a computer and music device company," Munster wrote in the report. "Ironically, however, these added non-Mac products should only further accelerate the halo effect and increase Mac market share as well."