Apple unleashes Leopard operating system

SAN JOSE, Calif. - Apple Inc.'s delayed update to the Mac OS X operating system is hitting store shelves as consumers are increasingly snapping up Macintosh computers to complement their iPods and iPhones.

Dubbed Leopard, the upgrade went on sale at 6 p.m. local time Friday at stores around the world. It offers improvements to an operating system that already was widely praised for its ease-of-use and slick interface.

Leopard boasts more than 300 new features, including one called "Boot Camp" that lets users install Windows on Macs, though both operating systems can't run at the same time. "Time Machine," an automated data backup system, and "Spaces," a way to simultaneously view open applications, are among the other highlighted features.

Macs have reached record sale levels, and the launch of Leopard is expected to bolster a continuing rise.

At Apple's flagship 5th Avenue store in New York City, a line of about 500 people snaked around the block before Leopard went on sale. The anxious, some of whom queued up more than four hours beforehand, included not only the longtime Apple faithful but new converts.

Patrick van Rosendaal, 31, visiting from Columbus, Ohio, stood in line for an hour and a half before he got his hands on a shrink-wrapped copy of Leopard. He bought his first Mac two months ago.

"Macs are still rather new to me," he said. "But I'm completely addicted."

Dennis Huang, 18, of New York City, was third in line. He became a Mac owner in August after finding the computer "a lot easier to use." While in the store, he was among many giving Leopard's snazzy-looking "Time Machine" feature a whirl.

Computers with Microsoft Corp.'s Windows platform still dominate the PC market, but Apple has made significant gains over the past year, outstripping the worldwide 15 percent growth rate in the rest of the industry. Apple, which for years hovered at a 2 percent to 3 percent share of the U.S. market, now claims an 8 percent slice, according to market researcher Gartner Inc.

As Apple's iPod players became a cultural phenomenon, they introduced millions of Windows users to Apple's software and design. And the iPhone, Apple's new hybrid cell phone and iPod, is spreading that halo effect.

Also, Apple's 197 shiny retail outlets have become magnets, while Best Buy Co. Inc. started carrying Macs at some of its stores this fall. Apple says more than half of the customers buying computers at Apple stores are new to the Mac platform.

Existing Mac users can buy the Leopard operating system update separately, and it is being built into all new Macs. It costs $129 for a single user or $199 for a license for up to five machines.

Leopard is the sixth major upgrade Apple has made to Mac OS X since the computer operating system debuted in 2001. The previous major upgrade, Tiger, was released in April 2005.

By comparison, it took Microsoft five years to complete its major Windows upgrade, Vista, which went on sale in January and has been since dogged by complaints of incompatibility problems. Vista comes in different consumer editions, depending how many features are included, and ranges in price from $100 to $400.

Leopard was originally due in June, but Apple said in April it needed to divert resources to accomplish the summer launch of the much-anticipated iPhone and would delay Leopard to do that.

Product delays are rare for the Cupertino-based company, but Apple CEO Steve Jobs — with his typical hubris — promised it would be worth the wait. Now, consumers get to see for themselves whether it will have been.

"That's a common question, and I think the answer will be an emphatic yes," said Phil Schiller, Apple's senior vice president of worldwide marketing.

Shares of Apple, which have more than doubled since January, were up $1.92, or 1.1 percent, to close at $184.70 Friday.

Unlocked iphones make to indian market

Unlocked iPhones have already made its way into Indian market through online shopping portals such as Reddif and Indiatimes Shopping. An 8GB unlocked iPhone goes for a whooping price of 35,000 Indian Rupees, which comes to around $879. Resellers claim that they purchase iPhones off eBay and then get it shipped to India, where it is unlocked and sold for a heavy price.

According to resellers, these phones have been upgraded to the latest firmware (version 1.02), before being software unlocked. Estimated delivery time is 7 to 10 days, and the phone works with all available networks in India.

Visual Voicemail feature doesn’t work in the unlocked version of iPhone (it’s is a network dependent feature). Another drawback, naturally, is that upgrading the firmware in future might lock the phone again.

The actual price of the iPhone is $399, which means you’ll have to pay almost twice the amount to get it here in India. Not a bad deal for those who want to be the first ones to carry the JesusPhone in their pockets? So, will you wait until next year for the iPhone to become officially available in Asia, or will you buy it now?

The eight secrets that make Apple No 1

Secret 1: Engineering supports design -- no exceptions

Most companies bring designers in late in the product development process to create an experience "wrapper" around all the features and technologies the engineers and marketing people created.

At Apple, designers rule. Apple's brilliant designers figure out in detail how the product will look, feel and work, and then the engineers are tasked to make it happen.

Years ago, Jeff Hawkins changed the world by creating the Palm Pilot. He designed it by walking around with a Palm Pilot-size block of wood, pretending to use the device. He took notes about what he wanted to do with the device and how he wanted to use it. He refused to be influenced by existing organizers.

By the time he gave the engineers their marching orders, the Palm Pilot was conceptually complete. He got massive push-back on it from his engineering team -- "If we add six more buttons, we can make it faster..." -- but the original conception prevailed, and an awesome product was born.

Palm seems to have lost this visionary approach to product design and is paying the price in the marketplace. Apple still has it.

Secret 2: Fewer is better

Far too many companies give too much power to market analysts as a substitute for product vision. One result is product oversegmentation that reflects the finely tailored targeting of a product to a specific market segment.

Sony, for example, just unveiled four new Blu-ray HDD recorders -- four! -- each with minor, largely irrelevant differences. The company obviously thinks consumers will dedicate an hour of their time just to consider Sony's various Blu-ray options. In reality, eyes will glaze, and people will wander away, confused. Imagine if Sony poured all its energy into just one Blue-ray HDD recorder. You'd probably want it.

That's what Apple does. It tries to develop the fewest possible number of products, each with the broadest possible appeal. Yes, there are multiple iPods, but feature overlap is close to zero, and it's super easy to learn which product does what.

Look at the iPhone. Or OS X. Or any other product area. The experience of going into an Apple store provides a relief from product variation overload. You can pretty much try every product in the store in 30 minutes, not including content and accessories.

Microsoft should have learned this secret in January. Vista came in so many versions that online experts had to publish tables to explain what was for sale. Consumers still have no clue about the differences between the various versions. Buying Vista isn't a thrill. It's a homework assignment.

Let me make this extremely clear for all you companies out there that still don't get it: All these subtle product variations create anxiety. And anxiety makes people not want your product. Fewer is better.

Secret 3: The experience is the product

Everyone knows this secret, but few actually employ it. But Apple is dead serious about this secret, even to the point of offering US$35,000 to the city of Montreal to remove three parking meters in front of the Apple store there. The city refused, but this is how seriously Apple takes the Apple "experience."

Another example is Apple's packaging. The company's products come in beautifully designed packaging with obviously expensive packaging materials and manuals. Compare that with Apple's competitors, which see packaging as a place to save money or as an afterthought that doesn't matter.

Why raise the price a few dollars and sell something in a better box? Because the box is part of the experience, and the experience is the product.

Secret 4: The product is the product

The bigger companies get, the less energy they seem to spend on creating great products. Instead, whenever the CEOs of most computer and consumer electronics companies speak in public, they blather on about alliances, services, improvements in the sales channel and other things buyers don't care about. Apple CEO Steve Jobs talks about the actual products above all.

One of the weird things about buying a cell phone is carriers are clearly more interested in selling you plans, options and reliability. The physical handsets seem to be an afterthought. But consumers are crying out for better handsets, and the carriers don't seem to notice. Apple does notice.

Secret 5: You can't please everyone, so please people with good taste

Every major company performs many kinds of market research to find out who the buyers are and what they want. But one problem with market research is that people are inaccurate sources of information about their own buying behavior. And that is often reflected in the products these companies offer.

Say you offer survey respondents a choice between Product A and Product B. Both have identical functionality, but Product A looks a lot better and costs more. People are likely to tell you they would choose A, but they'll buy B.

What you do learn from market research is what you already know: People vary. You can go after the high end of the market, the midrange or the low end.

Targeting the low end cheapens the brand. Going after the "average" consumer shrinks margins. Only the high end creates the pixie-dust intangible quality of buzz, brand affinity and, ultimately, brand loyalty, which can be converted into higher margins and higher sales.

Secret 6: Leave the past behind

Some analysts slam Apple and praise Microsoft for, respectively, abandoning or supporting legacy versions of their operating systems and other products. All things being equal, it's better for users to be able to run all their old stuff on new systems.

However, all things are not equal. Legacy support comes at a great cost to the company, which is eventually paid for by the customer.

I think one of the reasons Vista is such a mess is that it tries to sell the same OS to businesses as it does to consumers. Legacy support is absolutely essential in enterprises. However, with Windows, consumers are burdened with all that legacy support code, but they don't have IT departments to sort it all out.

If Microsoft created a consumer OS as a blank-slate exercise, starting from scratch and refusing to support anything older than Windows XP, it might be able to offer a faster, easier-to-use and more stable environment.

It's a tough decision. But in the consumer electronics marketplace, it's better to drop legacy support if it's slowing the pace of innovation or degrading product quality.

Secret 7: Product names are important. Really important

One of Apple's few competitors in the cell phone handset market is the LG KU990 Viewty.

Wait, what?

What sounds better: The "iPhone" or the "KU990 Viewty." Which is easier to remember? So many products are so badly named, and for such bad reasons. Companies should agonize over product names and ban ugly non-word strings of letters and numbers designed to make it easy to categorize products internally. It's the easiest and cheapest way to improve brand appeal and loyalty. Why do so many companies fail to do it?

Secret 8: Group affiliation is the driver

And now we get to the mother of all Apple secrets, the secret that explains why people buy its products.

If you monitor (or participate in) the ongoing religious wars between Apple fans and Apple critics, you'll notice a curious phenomenon: Apple fans are the most rabidly active, fiercely loyal group in the industry. Why do Apple fans spend so much time and energy fighting for the honor and glory of a consumer electronics company?

The answer is that identity is a primary human motivation. One of the major components of self-identity is group affiliation. People want to belong to a group that immediately identifies them as being superior to other people in other groups. That's just how human beings are wired. It's the same aspect of human nature that drives all fandom as well as nationalism and religious zealotry.

Buying a laptop, media player or cell phone is more like buying clothes or a car than buying a dishwasher or a vacuum cleaner. It's less about functionality and more about what it tells other people about who you are and what group you belong to.

This is what's so great about Apple: Its products get a "B" on features and functionality -- they're almost best in class in most of their respective categories. But they're an "A+" on what really matters -- coolness, which translates into both boosted self-identity and appealing group affiliation.

I'll get slammed on this last point by readers who hold features and functionality above self-identity. And I'll also get slammed by Apple fans who believe their product choices are driven by more substantive concerns than boosting their self-image.

But Apple executives will read this rule and say, "Well, yeah. Obviously." That's why their "Choose a Mac" ads are so effective. They're fun and highlight actual product differences between PCs running Windows and Macs. But they also clearly emphasize the idea that PC and Mac users are different kinds of people. Your choice is really about what kind of person you want to be or which group you want to belong to.

Most surviving consumer electronics companies know and use at least one of these secrets. But Apple is the only major company I can think of that employs all of them. And that's why Apple is No. 1.

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Now playing: Akon - Once In A While
via FoxyTunes

Steve Jobs live -- Apple's "The beat goes on" special event

A time by time narration of the intro the Apples new toys ..........

9:20AM PDT - They kept everyone outside a little longer than we would have liked, but they're finally admitting. This is the Moscone West -- we're assuming the huge hall Steve launched the iPhone in back in January.

9:23 - We're in and headed up!

Hold me closer, tiny dancer

9:32 - We're upstairs, the press is gathering. All the usual suspects are here; Mossberg just cruised up. This event space seats thousands, so we're a little surprised Steve's doing an event here for just a few hundred journalists. We're expecting a lot of empty seats... or a Cirque du Soleil performance on the open floor.

9:48am - So we're in and seated, and yeah, the event is far smaller than it could be given the amount of space. Usual Apple soundtrack, Coldplay's on the speakers.

9:55am - It's pretty well full up, but definitely not crowded to the brim. White Stripes, Alicia Keys, cameras on cranes and booms to film the event, all the familiar sights and sounds.

9:57am - "Good morning ladies and gentlemen, welcome to this special Apple event. We'd like everyone to take a moment to turn off ALL electronic devices." Apparently this special privilege is reserved for Stevie, and Stevie alone. Well, this isn't an airplane, and if they think we're NOT going to liveblog this, they've got another thing coming. But yeah, we'll def switch off our ringers.

10:01am - Lights are dimming, here we go! Music's over, lights go up, Steve takes the stage!

10:02am - Rounds of applause and cheering. And more. "Thank you." He's grinning. "Today we get to talk about music, so let's start with iTunes." "iTunes is a pretty amazing phenomenon." Facts and figures: 600 million copies of iTunes distributed. Over 3 billion songs bought on iTunes. "We're pretty amazed at this." Giggles. "This is the number one music store in all 21 countries we operate in."

10:04am - "We started with just 200k songs, but we have over 6m songs in every single one of those stores. Millions ahead of anyone else. We've become the number 3 music retailer in the US -- behind Wal-Mart and Best Buy, ahead of Amazon and Target." Over 550 shows, sold over 95m shows, 125k podcasts. "This is amazing material, it's free, and over 25k are video podcasts."

10:05am - "This last statistic blew my mind: in the US of all the music releases in 2006, 32% were digital-only releases. They weren't released on a CD. Live concerts, independents. Look how far we've come. A THIRD of the music released in this country was digital only."

"iTunes is clearly leading the way. We're going to ship a new version of iTunes tonight to support some new products. The biggest new feature: ringtones."

10:06am - Big applause. "We're going to do ringtones in our own special way. Of course these are for the iPhone. What we want: rather than let someone else make ringtones, we people to be able to make their own." Build your own from songs bought in iTunes, 500k participating songs...

10:07am - "Our ringtones are going to cost just $.99 in addition to the song." Psh! You have to pay a second time to use a purchased song as a ringtone?!

10:08am - "Here's how it works... when you plug in your iPhone a new column will pop up with bells -- that shows how many songs you can make ringtones out of." Any segment up to 30s long, fade ins/outs. "When you're ready to buy, push the buy button and for 99c you have a ringtone." Demo time.

10:09am - "I like Aretha Frankin's Respect -- I can just tell this is going to make a great ringtone. I can put it on my iPhone, make it my default ringtone. I'm going to assign this one for when my wife calls..." laughter.

10:10am - Steve's grooving to R-E-S-P-E-C-T on stage. "There we go, that's what I want, and I'm going to just buy this ringtone right now." The clip appears in the ringtones folder along with other clips of music Steve didn't mind buying twice.

10:11am - Gonna Make You Sweat by C+C Music Factory? Damn Steve. "Isn't this great? Pick the exact section of the song you like, make a ringtone out of it!" Uh oh, he's playing the Beatles... Give Peace a Chance... "That's when NBC calls." Uproarious laughter.

10:12am - "You can assign it as your default ringtone, or to your favorite people when they call... custom ringtone maker built in, over half a million participating songs, sync 'em right on your iPhone. We're going to turn this on next week. You'll need the new version of iTunes we're going to ship tonight. So that's the first thing today." Applause.

"Now let's talk about the iPod. It's doing really well. They're... rather strong." Teehee. "We've sold over 110m to date... and you'll notice the place where the sales curve is strongest is during the holiday season... today we're going to refresh or replace EVERY single product in this lineup to get ready for this holiday season."

10:13am - "Let's start out easy... iPod shuffle. Refresh for this product. Holiday 2007 we're going to give it some new colors, when you see these in person you're going to love them. We also have something called the PRODUCT(RED) nano..."

10:14am - He's explaining the RED thing. "We are adding a RED shuffle -- if you want to do something about these diseases in Africa. Same 1GB of storage, $79, shipping today, available shortly. Now let's move on to something more substantial, the iPod nano."

10:15am - "It's the most popular music player in history. People just love it. We want to make it better, and customers have told us how we can make it better. Customers want to watch video on their nanos on an even larger, brighter display. We'd like to put Cover Flow in, we think it's a great way to browse your music library."

"Games. More storage, and a full metal design. We're introducing a new nano here today... let me show it to you." It's the fatty!

10:16am - "It's incredibly tiny, this is the new nano, it's incredibly thin. It's REALLY nice." Huge applause. "Let me show you some bigger pictures of it... comes in beautiful colors. So what's the video like? New nano: larger 2-inch screen, it's going to look the same as it did on the iPod video, it's the same QVGA resolution. We've achieved this with a screen with the highest pixel density we've ever shipped."

10:17am - "We've also got an enhanced UI. It's going to show you album artwork floating by. When you're on videos... photos... it will even show you what you're going to get when going to extras. And we've got Cover Flow. Take your thumb, roll it around the wheel, it looks really nice. It's pretty stunning, all in such a tiny device. We're really, really happy with this."

10:18am - "We're also including 3 games bundled in with the nano. Let me show you one now, it's called Vortex." Demo time -- it's basically Arkanoid made circular. "We've also done some other games we're selling on iTunes."

Demoing EA's Sudoku game.

10:20am - "Isn't that incredible? All in a product this big. Video, new UI with Cover Flow, games... let's take a look at the new iPod nano." Demo time again, Beatles album artwork in screen. He does this every time!

He's scrolling in Cover Flow -- it looks decent, but a bit choppy and slow. Not super surprising considering the nano doesn't exactly have a lot of horsepower under the hood. Don't expect the iPhone Cover Flow experience, people!

10:21am - "It's that simple to browse your music collection." Doing video now. "I love Jon Stewart, I hope all of you watch his show. It's the best place to get the news every day." Showing the John Hodgman clip on net neutrality, trying to get Hodgman to admit to being a PC. Highlarious.

10:23am - Podcasts now, showing G4's Freestyle. Now photos... "I can just scroll through these photos here." iPhone-like motion... oh no, a photo montage to Green Day's Time of your Life song.

10:24am - "When we went about replacing the most popular music player in the world we took this really seriously. We think we've nailed it with the new nano. The battery life is awesome: 24 hours audio, 5 hours video playback." Applause and cheers.

10:25am - "Let's talk about storage: a 4GB and an 8GB version. The 4GB version will come in silver, the 8GB will come in all the colors. The 4GB will be priced at just $149. The 8GB version will be just $199." Applause.

"These new nanos have left our factories, they've shipped and will be in our stores by this weekend."

"Our line for it: A little video for everyone." Showing the ad for the new nano.

10:27am - "A little video for everyone, that's what we set out to do with the new nano. We hope you love it as much as we do... That brings us to the iPod. The iPod... it's got a... it's got a funny name. It's got a funny name. It's time to give it a name: we're calling it the iPod Classic because it's the original iPod." Ha!

10:28am - "We've got new iPod Classics: full metal design, even thinner than their predecessors. The new classic is starting at 80GB audio 30 hours, video 6 hours. And we've got the whole enhanced UI on the new iPod classic." Sorry, iPod touch is a no go! Unless it's a one last thing...

10:29am - We're going to offer a slightly thicker one as well... and it's going to have 160GB." applause. "This BOGGLES the mind! This new 160GB, which is far smaller than the original iPod, puts 40k songs in your pocket. Even better: battery life. 40 hours audio, 7 hours video."

10:30am - "The 80GB used to sell for 350, now it's 250.The 160GB is $350." Applause. "They're both available today, they're shipping and be in stores by this weekend. We think you're gonna love 'em, and the enclosure is just gorgeous. So let's take a look at the iPod lineup for this holiday season..." review time.

10:31am - "This is an incredibly iPod lineup for this holiday season." Applause. But he's not done. "But... we're not done yet. Far from it."

"When we introduced the iPhone in Jan, we said it was the best iPod ever. and iPhone owners agree with us, it's incredible with its multi-touch interface, it is the best iPod ever. People have been asking us when we're going to bring this technology to the iPod. The answer is we're going to do it today. And this is what the product looks like." It's a friggin iPhone!

It's called the iPod Touch.

10:32am - "It's the same size screen as the iPhone, but it's even thinner. It's 8mm thin. Unbelievable. The new iPod touch. It's one of the 7 wonders of the world." Laughter.

10:33am - "It features our revolutionary multi-touch interface that you've come to know and love on the iPhone. If you've used an iPhone you'll feel at home, it's exactly the same. Scroll through the artists with a flick of your finger. Turn it into a landscape position, it goes into Cover Flow, it's just magical."

10:34am - "All on this 8mm device. Let's look at video... all on this gorgeous 3.5-inch widescreen display. And photos... just like the iPhone this is the best way to share photos on a portable device. Ever. Flick through them, pinch them to make them larger or smaller."

Demo time!

10:35am - "Let me go ahead and show you the new iPod touch. Again, slide to unlock. Here we are -- let's go into music." The icons look really strange and sparse on that huge screen. It's freaking us out!

Steve's browsing by Cover Flow -- note: it has WiFi! The WiFi meter is up at the top where it would be on the iPhone.

10:37am - Steve's watching, um, Wild Hogs. He's not having a mid-life crisis, too, is he?

10:38am - "Let's take a look at photos here... it's great, let's go into an album... I can just go like this, flick through these photos. There's just never been a better way to share photos with friends on the go. It's sooo nice. Turn it back. Boom." Icons: calendar, contacts, clock, calc, settings, music, videos, photo..."I showed you the clean side... I was keeping a secret. We've built in WiFi to the iPod touch." The antenna looks, um, bad.

10:39am - 802.11b/g -- "Others have done this and it's failed. We understand why it's failed, and we know what to do make it successful. Well, what's the problem with WiFi? Well, part of the problem is getting onto WiFi... you may be fine at home and the office, but anywhere in between can be challenging."

10:40am - "You may log in but you'll get a screen. Even walking through Stanford University you get a login page... so you can build in the hardware but you can't get the network [without the page]. So what do you do about that? We're going to add an application to the touch: the Safari web browser."

10:41am - This really is the phone-less iPhone. "But besides being able to log into WiFi, you get an incredible web browser! It is the best web browser on any mobile device, and it's built in to the iPod touch."

10:42am - "We're very, very excited about this. First time EVER on a music player to have a browser built in." Uh, totally not true: look at Archos. "Why stop there?" YouTube's on the Touch as well.

10:43am - "Watch millions of free videos streaming over WiFi to the iPod touch. Let me show you these things..." Demo time! The hidden icons are now apparent -- the two missing were Safari and YouTube. Still looks a little sparse though!

Looking on the NYT. "We can go over here... boom." Aw, it was a little boom that time.

10:44am - Steve's now browsing Facebook. "We're pretty excited about this." Applause.

10:45am - Bookmarked videos... "You get the idea, this gives you a feeling for what Safari and YouTube are like on the new iPod touch. We've built WiFi in and we've made it USABLE. We're REALLY excited about this."

10:46am - Connector on the bottom, but no speakers. "This is a worldwide product, the first touch product Apple's going to ship outside the US, it's going to be shipping all around the world."

"The battery life is fantastic: 22 hours audio, 5 hours video playback. All in something this thin. It's... it's... amazing to me. The new iPod touch."

10:47am - Review time: multi touch, widescreen iPhone display, Cover Flow, WiFi, Safari / YouTube... "We're going to offer it in two configurations, the first is 8GB, the second is 16GB of storage. Again, how do you fit all this in here?"

10:48am - So, 8GB is $299... the price for the 16GB is $399." Less applause on the second one. "Both models are available in just a few weeks... they'll be shipping this month."

He's gonna show the iPod touch ad now.

10:49am - Not shabby -- and thankfully no more Orba Squara iPhone music. But there is one more thing... if you'll bear with us for a few more minutes.

10:50am - "You might have noticed there's an empty spot there on that dock. What could that possibly be for, you might ask? It's for a new application we've written for the iPod touch, it's called the iTunes WiFi music store." Huge applause. "FINALLY, some of you are saying. Let's take a look at what it is."

Four buttons: featured, top tens, search, downloads... "If you see something you like, tap it, free preview of the song." "You are now downloading the song... when it's done you can listen to it on your iPod touch, and it syncs back up to iTunes." Applause.

10:52am - "You can search for anything in the entire iTunes store. You can search for any artist, any song name, any album name, preview it, and if you love it go buy it. This is the new iTunes WiFi music store. Let me show it to you now."

10:53am - "Demo time: This is live coming over WiFi. I love John Lennon... so I'm going to buy this. It's now downloading... it takes a few seconds and once it's downloaded I can go to the downloads playlist and I can play it with album art and everything else. This is all live."

"Isn't this incredible?" Applause and cheers.

10:54am - He plays a wacky R&B track: "Ooook." Chuckles. Now he's listening to Coco -- "That's now being bought, as you can see. I want to search for something, so of course I'm going to search for Dylan. Live search comes back from the store...

10:55am - "WiFi, as you may know, is faster than any 3G cellular network, so it's really fast." Zing!

10:56am - "So, not so bad for the new iTunes WiFi music store." Applause. "The new music store will be available internationally in every one of those 22 countries Apple operates in. We're gonna do something else, too: we're gonna bring it to the iPhone." Big applause.

10:57am - "It's going to come later this month with a free iPhone update -- everyone with an iPhone is going to get this too. We're really, really excited about this. There's even ONE MORE incredible part of this. We've been working on this for two years."

10:58am - "I can't tell you how much pleasure it brings me... we have a GREAT partnership with Starbucks we're announcing today. We love Starbucks. It's an incredible phenomenon in our culture. We want to combine our great iPods and our love of music and their great coffee and their great love of music."

10:59am - "When you get near a Starbucks a fifth button will come up in the WiFi music store -- you may have been in a Starbucks wondering what song is that playing? Now you can buy it with a tap of your finger. And if you just missed it, you can still find it..." Is anyone else underwhelmed by this "feature"?

Demo time. "So they just built a Starbucks back stage." Laughter. "They're playing a KT Tunstall song... I can go in here and preview it."

11:01am - "It will be right on my iPod touch, and sync right back to iTunes when I get home. We're really, really excited about this partnership. It's my great pleasure now to welcome Howard Schultz, founder and chairman of Starbucks." Big applause -- but why? Pretty weak, if you ask us.

"Thanks Steve, I was NOT back stage visiting the store, but I was waiting for you." Har. "Let me provide you a snapshot into the global reach and ubiquity of Starbucks." Yeah, we get it, Starbucks is like air for their customers.

11:02am - "We open 7 stores every single day." The room sounds like someone just hit everyone in the gut. Over 14k stores, 50m customers per week, 18 visits per month per customer. Yowza.

11:03am - "Who would have thought that a coffee company could win a Grammy? Let alone 8, when we co-produced with Concord Ray Charles's last album."

11:04am - He's going on about how this is going to transform the marketplace. Dude, let's not delude ourselves here. It's big, but it's not that big.

11:05am - Free access to the store while at Starbucks.

11:07am - It's exclusive with iTunes -- we wonder how T-Mobile feels about partnering indirectly with Apple. Ok, rollout plan: 5800 WiFi-enabled stores nationwide. Starting October 2nd: New York and Seattle. 600 stores, followed up in November with 350 stores in SF.

11:08am - ...then LA and Chicago in '08. By 2009 they hope to have all WiFi Starbucks completed. [Our customers] are really going to respond to this." Oh really?

Ok, Steve's back on. Big, big applause.

11:10am - "We know a lot of people that are going to be happy with this new combination of coffee and iPods." Heh. "It's one of the three apps using WiFi built into the new iPod touch. So let's look at our lineup for this holiday season: the iPod shuffle in 5 great new colors. The iPod nano. The renewed iPod classic with up to 40k songs in your pocket. The revolutionary iPod touch that you've seen here today."

"We think this is going to set a lot of peoples' worlds on fire. And I'm going to include the iPhone, because as we've said, it's the best iPod ever."

11:12am - "But we want to get even more aggressive with this. Take a look at the iPhone. You know, the surveys are in: the customer satisfaction numbers on the iPhone are off the charts. They're higher from iPhone owners than any Apple product. Ever. They LOVE them. We want to make the iPhone even MORE affordable for even more people."

"So we're going to do something about that today. We're on track to ship our 1 millionth iPhone this month -- to get ready for the holidays here's what we're going to do. It's clear customers want the 8GB model -- it's not going to sell for 599 anymore.

"Starting today effective immediately, we're pricing it at just $399." HUGE applause.

"We want to put iPhones in a lot of stockings." But what about the 4GB? Does that mean it's being discontinued?

"Thank you very, very much."

11:13am - Applause... "A lot of people at Apple have worked on these products. Some are here today, some are watching from our campus in Cupertino. I'd like those folks to stand up..." Wow, this is like half the audience.

11:15am - "One of the traditions we have at our music events is to remind ourselves of why we do all this. We all love music too. There's nothing better to remind us of that than to have a musician come perform for us: a really talented young musician, flew in from across the pond, KT Tunstall. She's very hot." Chuckles.