The maker of the popular iPod portable music player has introduced a cellphone that plays music and has a touch screen instead of the multiple buttons used on other mobile devices.

The new phone, to be called iPhone, will run on Apple's operating system, Apple CEO and chairman Steve Jobs said Tuesday as he unveiled the phone in a speech that opened MacWorld, Apple's annual conference and product show in San Francisco.

Apple CEO Steve Jobs shows off the new iPhone during his keynote address at MacWorld Conference and Expo in San Francisco on Tuesday.
(Paul Sakuma/Associated Press)

He predicted Apple's phone would "leapfrog" past the current generation of hard-to-use smart phones.

Jobs also introduced a set-top box called Apple TV to play movies downloaded from a computer onto a television.

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

He said Apple would be changing its name to Apple Inc. from Apple Computer to underscore the company's new emphasis on consumer electronics.

iPhone to start shipping in June

The iPhone operates using a patented touch-screen technology Apple is calling "multi-touch."

The phone will operate exclusively on AT&T Inc.'s Cingular wireless network and start shipping in June.

A four-gigabyte model will cost $499 US and an eight-gigabyte version will be $599, Jobs said.

Apple's shares jumped more than six per cent after the announcements.

The new mobile phone product was one of the worst-kept secrets in the technology world. For months, industry analysts have been speculating on when, and not if, Apple would be introducing a music-playing cellphone.

The proposed product was known in industry circles as the "iPhone," though a division of Cisco Systems recently came out with their own product — a wireless Voice over Internet Protocol or VoIP phone — that goes by the name iPhone.

Cisco owns the trademark to the name iPhone. Cisco said on Tuesday it assumed that by announcing the name of its new mobile phone product, Apple intends to abide the terms of a final agreement Cisco sent Apple.

"It is our belief that with their announcement today, Apple intends to agree to the final document and public statement that were distributed to them last night and that addressed a few remaining items," the company said in a statement.

"We expect to receive a signed agreement today."

Apple TV

Jobs also used his speech to introduce a new digital video product called Apple TV. Previously known as iTV, Apple TV will allow users to wirelessly transmit downloaded movies from a PC or Mac to their television.

Jobs said Apple TV will have 720 pixel high-definition video, a 40 GB hard drive to hold up to 50 hours of video. Apple TV will also use 802.11n, the new wireless draft standard. The product will sell for $299 US.

"Just like you set up an iPod, set up a TV," he said.

The news of the mobile phone drew some of the attention away from the Consumer Electronics Show running in Las Vegas. It is the first time that the two shows have overlapped.

Apple has often used MacWorld as a launching pad for new products. Last year they introduced the first Macs featuring Intel chips. The MacBook Pro and iMac also made their debut at the conference.

With files from the Associated Press