Saying the goal was "to reinvent the phone," Apple CEO Steve Jobs delivered on all expectations today by introducing the much anticipated iPhone -- one part touchscreen video iPod, one part mobile phone, and one part "Internet communicator."

As an iPod, the device functions much like that of previous iPods, except for the user interface. There is no direct connection to the iTunes music store, prohibiting users from being able to browse, buy or download music directly from the phone.

The iPhone will be available exclusively through wireless operator Cingular in the U.S. sometime in June. It will be offered in Europe in the fourth quarter and Asia by 2008. The 4 GB version costs $500 while the 8 GB is $600, both requiring two-year service plans.

Positioned in the same category of competing smartphones, it has no dialpad keys or keyboard. Instead, it features a 3.5 inch patented touchscreen interface called "MultiTouch," which rotates between a phone dialpad, Qwerty keyboard, menu options along with a few additional scrolling commands on the side.

The ultra-thin device also contains a 2 megapixel camera, runs Apple's OS X operating system with the Safari Internet browser, and supports both Yahoo mail and Google's search and maps functions.

Interestingly, it is not a 3G phone, despite Cingular's ongoing rollout of high-speed wireless networks. It instead uses WiFi for high-bandwidth needs. It also features a Bluetooth connection, but it is unclear for what purpose. Most of the iPhone innovation is focused on smartphone functions. Users can download their entire contacts list, calendar, etc. using the iTunes interface, as well as music, photos, video and more.

As a phone, it has many innovations, such as pulling phone numbers out of stored e-mails and Google maps for one-click dialing and a visual voicemail feature that lets users see their entire queue of voicemails and play them in any order.

Jobs told the MacWorld Keynote audience -- where the device was unveiled -- that his goal is to sell 10 million device by 2008, which would give Apple 1% of the worldwide mobile phone market. Analysts called the forecast "realistic."

Industry Reaction:

Rio Caraeff, GM Universal Music Mobile

"It far exceeded my personal and professional expectations. From a music perspective, it adds value to music that you've purchased from iTunes. Both the iPhone and Apple TV adds lots of utility to entertainment. You can do things with it you couldn't do before at the same price."

Caraeff voiced some concerns, specifically over the price of the phone and that it won't allow for songs purchased over the air, but said those were minor issues for now.

"The biggest impact will be the influence it has on other manufacturers who are all driving to create music-enabled devices. It will force LG, Samsung, Motorola Nokia to step their game, because Apple's in town. They're going to have to do better than they have before because they have a higher bar of comparison. Ultimately that will help consumers enjoy more digital music because there'll be better devices as a result."

Gene Munster, analyst, Piper Jaffray
"As evidenced by the fact that Apple officially removed the word 'computer' from its name and has added mobile devices and the digital living room to the two existing product categories of computers and digital music, Apple is clearly becoming a consumer digital lifestyle company versus just a computer and music device company. Critical to Apple's past and future success has been that the company control both the software and hardware for its products; this continues with the iPhone and we expect that this will provide a competitive advantage in this market and other future markets that the company may tap into. Apple is now a provider of content anywhere and has a constantly growing addressable market.?

Mike McGuire, analyst, Gartner G2
"Apple can now deliver to all three screens, and that's not trivial. By virtue of the fact that they're controlling the hardware, the software and the distribution, it makes it a relatively safe place to distribute your content."

He added that Apple is unlikely to offer over the air downloads until it can do so for 99 cents and still make money. However there's plenty more ways for content companies to take advantage of the device, something they are only now starting to consider following its unveiling.

"Media companies need to look very carefully at not only how Apple designs products, but also how they look at the experience. There's a whole lot of imagination to be applied to this. How do you work with Apple to redistribute and market your content? It's going to be very hard to ignore now."

Additionally, McGuire expects other phone manufacturers to ramp up their innovations in order to compete. "The influence they've exerted on UI design and design in general is a given for this space now. It'll be interesting to see how many people try to recreate that."

Glenn Lurie, president of national distribution, Cingular
Part of the exclusive deal with Cingular means that the two will work together on developing network-based services, such as the visual voicemail product. Without such exclusivity, there's no incentive for Cingular to help Apple develop new network services for the device that it would just offer to other carriers as well.

While the WiFi connection will result in content accessed and delivered off the Cingular network. Since most Cingular data plans are for unlimited usage, directing traffic off the Cingular network actually is cheaper for Cingular.

"We see it as another benefit to the customer, not as a detriment to us."

Additionally, while there are no details on pricing plans yet, Lurie hinted that there may be a special data plan specific to the iPhone that's different than that of all other phones.

The WiFi and Bluetooth connections won't let users share tracks, at least for now.

Plans are to develop a 3G-compatible device "down the line."

John Jackson with M:Metrics
"They could have pushed the easy button and welded a phone into the back of an iPod which everybody was expecting, and instead they went for a more broadly focused multimedia-centric high-end device."

This pits it against Nokia's N series, most Windows Mobile devices, Samsung and Research In Motion, among other high-end smartphones. But the price still "severely limits" its volume potential. However, it is assured to be a profitable one. Apple will make money on each device sold.

Other phone manufacturers are dependent on subsidies, but would love to get away with charging what Apple is going to charge for the iPhone. Apple's strategy may be the thing that more fully launches mobile phones out of the "other" category and into a consumer electronic device in its own right.

"That means people are going to associate value with a phone far beyond a simple voice call. It's a handheld computer in the truest sense and not just an iPod phone."