It's great to be here. Thank you very much for the welcome. Thanks, I think. Okay, well listen, we have got a great conference for you guys this week. We've really worked super hard to put this together. We've got over 5,200 attendees. We're packed to the gills. Folks from 57 different countries are here this week.

And we sold out in eight days. So it's taken us a little over a month before, but this year, eight days we were completely sold out. And we apologize to all those folks who wanted to be here. We didn't have room. And this is the biggest place we can get. So anyway.

Over 120 sessions this week and over 120 hands-on labs. And there are over a thousand Apple engineers that will be here this week. So we're rolling out everything for you, some great sessions on Mac, iPhone, iPad, and just about everything you'd want to know. There's somebody here that can answer your questions and sessions on almost everything. So we're very excited about this year's conference and we're thrilled to have you here for it. Now, I'd like to give you a few updates to start with. And I'd like to start with the iPad. The iPad's this incredible device.

Really changing the way we're experiencing the web, things like email. photos You know maps video you name it it is a whole new way to interact with the internet with apps with a cup with our content media and It's going over really well, and it is magical. I know it because I got this email I I was sitting in a cafe with my iPad and it got a girl interested in me.

There's proof. We have sold over 2 million iPads. We sold 2 million in the first 59 days. That's one every three seconds. So we are in... iPads now in 10 countries. We just started shipping in 9 of those 10 countries in the last 2 weeks and I put together a little video reel with some of the press coverage we got.

So could we run that now? Today the Apple iPad is on sale here in Britain. The German iPad is on sale. It's on sale since this morning in France. The iPad is this tactile tablet signed Apple. It's the iPad of the American Apple company. Oh, this man. People queuing indeed last night to get their hands on one of these.

"Hundreds of fans met early this morning in Paris" "Like here in Munich, hundreds of iPad fans were thinking about..." This is how Apple employees welcome their customers. from Apple virus infizier. Moi si j'avais ça à la maison, je ne ferais pas souvent mon ménage. C'est fantastique. Beau jugement, j'ai l'impression d'être en bas du sapin. Uns gats tip top. Wir sind sehr glücklich, dass wir jetzt endlich das iPad haben.

today. We're gonna be in 19 by the end of July and we thank everybody for their patience. We're making iPads as fast as we possibly can. So, there are now 8,500 native iPad apps in the app store, which is really great and of course the iPad can run over 200,000 of the iPhone apps that are there as well.

And these 8,500 native apps have been downloaded over 35 million times. And so if you divide that by those 2 million iPads out there, that's about 17 apps per iPad that have already been downloaded. That's a great number. That's a great number. So we're really thrilled with that. And again, let me just show you some of the, you know, the latest apps that have been out. Pulse, which is a wonderful RSS reader if you haven't seen it. Guala.

WebMD for finding out all sorts of things about procedures in your local pharmacy Ebay's got a great application out on the iPad some wonderful education applications anatomy here, isn't this cool? There's some wonderful stuff that's coming out. A lot of great games, Iron Man, Avatar, Field Runners, Golf, A really cool DJ app, flight tracker, a lot of newspapers and magazines.

This is the Financial Times. We've seen tremendous interest from publishers of all kinds. A lot of great stuff that's out. And this is an app that's really cool. It's called Elements and the Elements. And you can just peruse the periodic table and learn about the things that we're all made of.

It's from Wolfram. And a friend of mine named Tao Gray wrote this and he sent me an email and said that I could use it. I earn more on the sales of the Elements for iPad in the first day than from the past five years of Google ads on PeriodicTable.com.

This is what we love to hear from you guys. So we're doing our best to get iPads out there like crazy and I know a lot of you are doing your best to get your apps out on the iPad and I think it's a really fantastic combination. I'd like to tell you about one of our apps that we're updating today which is iBooks on the iPad. You all know iBooks. Many people think it's the best eBook reader in the world. It's got this great bookshelf for keeping your books and of course the iBook store for buying books online.

I've got a few stats today for you. In the first 65 days users have downloaded over 5 million books and that is about 2.5 books per iPad which is terrific. The other interesting thing is the five of the six biggest publishers in the US who have their books on the iBook store.

The iBook store tells us that the share of eBooks now that are going through the iBook store is about 22%. So iBooks market share now of eBooks from these five of these six major publishers is up to 22% in just about eight weeks. And as we ship more iPads that number is just going to keep going up and up and up and we're really thrilled with it.

So, we've got some enhancements to iBooks today. The first is, as you know, you can create highlights and highlight the things you want. You can also now make notes. So you can make notes right there and you can post them. You can see them posted right on the right over there. In addition to that, we've added a control in the upper right-hand corner. You can just tap and bookmark the page and you can see that bookmark whether or not the controls are up there.

And when you go to the table of contents and look under bookmarks, you'll see all the pages that are bookmarked and all the notes that you've created as well as the highlights. So that's pretty nice. It's an oft-requested feature now in iBooks. We've added another big enhancement too. One of the biggest requests we've gotten for the iPad is the ability to view and read PDFs. So we've built that now.

In addition to books, you can now view PDFs. And what we've done is we've put a little selector right up on the top, and so you can select between books and PDFs. When you select PDFs, you get a whole new bookshelf just for PDFs. And when you select one, they just look gorgeous.

And you can navigate through them, you can flick through them, and they're just gorgeous on the iPad. So PDF viewing built right into iBooks and that's what we've done to enhance it today and that enhancement will be out just a little bit later this month. So that is my update for the iPad.

Next, I'd like to talk about the App Store, something near and dear to all of us. Now, before I get into the App Store, I want to make something really clear. We support two platforms at Apple. Two. The first one is HTML5. HTML5 is a fully open, uncontrolled platform that is forged and defined by widely respected standards bodies.

Apple is a member of some of these standards bodies along with lots of other companies and we fully support HTML5. A lot of the technology in it has come from Apple and Apple's browsers are in the lead in terms of supporting the full HTML5 standard. So we are behind this 100% and it's fully open.

Anyone can write HTML5 apps and have them on the iPad, the the iPhone, the iPod Touch, and of course the Mac. The second platform we support is the App Store. The App Store is a curated platform with over now 225,000 apps and it is the most vibrant app community on the planet.

There's nowhere else you can go and find 225,000 apps. And some of them are just terrific apps. So we have these two platforms that we support. And what I'd like to do now is talk about the App Store. Now, you've read a lot about our process of approving apps. Let me give you some of the facts behind this. Might be interesting to you. We get about 15,000 apps submitted every week. That's new apps. That's updates to apps. Everything. About 15,000 a week. And they come in in up to 30 different languages that we support.

15,000 apps a week up to 30 languages. Guess what? 95% of all the apps we get submitted are approved within seven days. 95% of them approve within seven days. Well, what about the 5% that aren't? Why don't we approve these apps? Well, let me give you the three top reasons. There's more, but these are the three top ones.

The number one reason: The app doesn't function as advertised. It doesn't do what the developer says it does. So we reject it. We say, "You said it did this, it does this. Change your description or change your app, but it doesn't do what you told us it did." The second reason is use of private APIs. We're very clear on this. Developers can't use private APIs. Why not? Because when we change the OS, those private APIs are not guaranteed not to change, and if they change, the app will break.

And we'll have a very unhappy customer. Right? If they upgrade their OS and half their apps break, they're not going to be happy campers. So you can't use private APIs. And developers that use private APIs, of course, know exactly what they're doing. So... And the third reason we reject apps, the third most frequent reason, they crash.

So I think if you were in our shoes, you would be rejecting these apps for the same three reasons. Even with all of this, 95% of these apps are approved within seven days. So I just wanted to give you those facts. Sometimes when you read some of these articles, you think something different was going on. But 95% of these apps get approved within seven days.

Now, I'd like to highlight one of them for a moment, eBay. eBay came out with a great app on the iPhone last year. And eBay's CEO, John Donahoe, made this statement last week at the D conference. We launched the eBay application on the iPhone last year, 10 million downloads. It did $600 million of volume its first year. It's going to do 1.5 billion to 2 billion this year. year.

Wow. Would we all be this successful? This is fantastic. Well, it's my pleasure now to show you three new apps that are going to be on the App Store soon. They're all in the entertainment category, and I'm sure they're all aspiring to this kind of success as well. The first one is Netflix. Netflix on the iPhone, and it's my pleasure to introduce Netflix CEO, Reed Hastings.

That's great. Next up, Zinnia. Zinnia is a remarkable phenomenon. And, well, let me have them explain it to you. It's amazing. Mark Pincus, CEO of Zinnia. Thank you Steve and Apple for having us here today. We're really honored and excited. Today we'll be introducing farming for the iPhone.

FarmVille is our most popular game and we're excited to be finally bringing it to the most popular mobile gaming platform in the world. Every day, 35 million people play Zynga's games. That's more than the combined audiences for the season finales of Lost and 24. And my wife and I were two of those people. And she's here today, but I won't embarrass her any more than I have.

In the year since we launched FarmVille, it's grown to over 70 million monthly active users, and they're very active users. We're proud that they've raised over $2 million to help Haiti. But anyway, I'll turn it over to my colleague Jen Herman, who's going to show you farming on the fly. Thanks, Mark. This is the same farm that I've spent many, many hours creating and perfecting on Facebook, except now it's in the palm of my hand. I've got the same decorations, same friends, and more. Let's zoom in and have a look.

I'm going to go over and check out my pasture. I've got my San Francisco style groovy barn. And now, let's go into the marketplace. I can use in-app purchases to add cash and coins, which I can then use to go into the market and buy things like animals. Is that a snow leopard? It sure is, and it's only on the iPhone. Let's jump in and do some farming. I can plow.

Say goodbye to harvests and say goodbye to withering crops. We now have push notifications. And I want to mention for those of you who don't regularly farm that you should. Plug. Millions of our Farmville players set their alarm clocks for 2am in the morning. They bring their laptops to bars and other strange places just so that they won't miss a key harvest.

With Farmville on the iPhone they're going to be able to farm anytime and anywhere. But what I'm most excited about is how much cooler Tractorink just got. With a simple tap and hold, I can fire up my harvester, quickly select multiple plots for fast and efficient farming. With another tap and hold, it will automatically select my hot rod tractor.

Here we go. about being social. These are my same friends from Facebook. I can visit their farms, fertilize their crops, and send them gifts. And also you may not know or many of you do know that Farming Farmville is all about gifting and our players send each other over 200 million gifts every day. It's a lot more than Hallmark sends out. Oh, looks like Jen has a new gift now. Let's chat.

I do. I've got a few of my gift box. Looks like one of my iPhone friends just sent me a white apple tree. Thanks. And that's our game.

All right. Number three, Activision. Really happy to welcome the Senior Vice President, Karthik Bala, to tell us about Guitar Hero.

With over 40 million units sold worldwide, Guitar Hero is a pop culture phenomenon. So our team at Vicarious Visions have spent significant effort and time to develop a brand new Guitar Hero experience exclusively for the iPhone and iPod touch that lives up to its name. Guitar Hero is about being connected. Connected to your rock star persona, to your friends, and of course to the music. Going backstage, you can customize the look of your rock star any way you want. you can hop into the photo booth to share that look with your friends.

At its core, Guitar Hero is about connecting with your favorite rock music. The game comes with classic rock from Queen and the Rolling Stones, as well as new favorites from Vampire Weekend and Rise Against. We've gotten great feedback and support from our music industry partners, allowing us to deliver rich downloadable content with new music to discover, like this one from the Band of Skulls, one of Jason's favorite new bands.

The gameplay riffs off classic Guitar Hero, perfectly tuned for your iPhone. Our team of musicians have handcrafted note tracks to deliver an authentic, deeper connection with your music experience. As you can see, we have the obvious tapping mechanics that get you into the rhythm, but we wanted to deliver a richer guitar experience.

With the introduction of a new strumming mechanic and use of the multi-touch display, our team has tweaked and polished Guitar Hero to make the gameplay perfect. We have sustain notes that can be whammy to juice up for star power and slide gems that let you master these tricky hammer on and pull off combos. Of course, if you really want to score big and show off, be sure to activate star power.

on leaderboards over to Facebook. And he scored enough skill points to level up his rock rank. This is just the beginning. I'm proud to say you guys can all start rocking out today. Guitar Hero is available in the App Store for $2.99. Go download it. You know, he was playing that guitar lead real time right there. It's very cool.

So, three great entertainment apps and they're going to join the over 225,000 apps on the App Store. And I've got a few great pieces of information to share with you this morning. The first is just last week we crossed 5 billion downloads on the App Store. Isn't that incredible? 5 billion! This next thing is my favorite stat of the whole show today.

So as you know, When we get revenue from the app store, 70% of it goes to the developer, right? 70%. So how much have we paid developers? Our 70% that we've paid you. How much have we paid you to date? Just a few days ago, we crossed a billion dollars. A billion dollars.

And it is one of the greatest things we get to do. So let's go do it again. All right. And that's what makes the App Store the most vibrant app community on the planet. Over 5 billion downloads and a really healthy ecosystem, not only for users but for developers as well. And we're thrilled with it. So that's the App Store. Now I'd like to talk about the iPhone.

There have been a lot of statistics floating around, market research, market share studies, and some of them are okay and some of them are questionable. And I'd like to just give you two pieces of data that can help you make your own judgments about market share. The first one is a report that just came out by Nielsen, highly respected firm. And this is for Q1 of 2010, this just came out. And they said, "What is the smartphone market share in the US?" And here's what they reported. RIM number one with 35%.

iPhone number 2 with 28% Windows mobile number 3 with 19% Android number 4 with 9% and other tied at 9% And so what Nielsen said was in Q1 of 2010 The iPhone's market share was over 3 times that of Android Let me give you another study. This is US mobile browser usage, net applications. Comes out with this. And this is for May. It's the most recent data that they've published.

This is mobile browser usage in the US and you can see iPhone has 58.2% of the entire mobile browser usage in the country. That's over two and a half times as much as number two which is Android at just 22.7%. So very recent data, this may help you put things in perspective. So let's get back to iPhone.

In 2007, iPhone reinvented what we think of as a phone. It's hard to remember what it was like before iPhone. Carriers controlled what was on the phone. There were a few apps, but nothing like we think about apps today. There was no free market for apps. There was no app store. It was really different before the iPhone.

And the iPhone started to change all of that in 2007. It was a revolution. In 2008, we added 3G networking and the App Store. In 2009, the iPhone 3GS was twice as fast, and we added some other cool features, like video recording. For 2010, we're going to take the biggest leap since the original iPhone. And so today, Introducing iPhone 4, the fourth generation iPhone.

This is really hot. And there are well over 100 new features and we don't have time to cover all of them today, so I get to cover eight of them with you. Eight new features of the iPhone 4. The first one, an all new design. Now, stop me if you've already seen this.

I ain't seen it. You've got to see this thing in person. It is one of the most beautiful designs you've ever seen. This is beyond a doubt the most precise thing, one of the most beautiful things we've ever made. Glass on the front and the rear and stainless steel running around and the precision of which this is made is beyond any consumer product we've ever seen. Its closest kin is like a beautiful old Leica camera. It's unheard of in consumer products today. Just gorgeous.

and it's really thin this is the new iPhone 4 It is just 9.3 millimeters thick, that is 24% thinner than the iPhone GS. Again, a quarter thinner in something you didn't think could get any thinner. As a matter of fact, it is the thinnest smartphone on the planet.

I'm going to point out a few of the external things on it. Here are the volume controls, volume up, volume down, and mute. On the front, we have a front-facing camera. We have the receiver. We have the home button. We have the micro SIM tray. We have a camera and an LED flash on the back. If we look at the bottom, we've got the microphone, the 30 pin connector in the speaker. And if we look on the top, we've got the headset jack, we've got a second mic for noise cancellation, and the sweet sleep/wake button.

Because there have been a few photos of this around, people have asked, "What's this?" Some have even said, "This doesn't seem like Apple." What are these lines in this beautiful stainless steel band? Well, it turns out there's not just one of them, there's three of them. And they are part of the entire structure of this phone. That stainless steel band that runs around is the primary structural element of the phone.

And there are these three slits in it. It turns out this is part of some brilliant engineering, which actually uses the stainless steel band as part of the antenna system. And so one piece is Bluetooth, Wi-Fi, and GPS. and the other is UMTS and GSM. So it's got these integrated antennas right in the structure of the phone. It's never been done before. And it's really cool engineering. It's the thinnest smartphone ever. It uses stainless steel for strength.

It uses glass on the front and the back for optical quality and scratch resistance. It's got integrated antennas and extraordinary build quality. Again, I don't think there's another consumer product like this. When you hold this in your hands, it's unbelievable. So this is our all new design for the iPhone 4. That's the first one.

Second one, this is a biggie. Something we call the retina display. What's that? Well, in any display there are pixels. Here's four of them. We start off with the retina display by dramatically increasing the pixel density. Four times as many pixels in the same amount of space. Now why is that important? Well let's make more pixels and let's say we want to draw the letter A. And this is the outside boundary of one of the strokes of a letter, the letter A. Well as you can see, we turn on pixels inside that stroke, we can get far more precision the more pixels we have.

and we play all sorts of tricks by putting different levels of gray pixels on that line as well to try to fuzz it for our eye. But when we zoom out of this, what you can see is that because we have four times as many pixels, we get really, really sharp text compared to what we normally get on displays of lesser resolution. Now the retina display has 326 per inch.

There's never been a display like this on a phone. People haven't even dreamed about a display like this on a phone. But it's more than that. It turns out that there's a magic number right around 300 pixels per inch that when you hold something around 10 or 12 inches away from your eyes is the limit of the human retina to differentiate the pixels. And so they're so close together when you get at this 300 pixels per inch threshold that all of a sudden things start to look like continuous curves. Like text looks like you've seen it in a fine printed book.

Unlike you've ever seen on an electronic display before. And at 326 pixels per inch, we are comfortably over that limit. And it's extraordinary. So let me give you an example of a normal display on the left and the retina display on the right. Look at the difference. Can you see it? Here's some more text of different sizes and different weights. You can really, really see this stuff. Once you use a retina display, you can't go back.

When you get to character-based languages, kanji in this case, it's also striking. And it's not just text, it's images and video as well. Look at the difference. This is the same image on a normal display and a retina display. Here's another one. Pretty amazing, isn't it? So what I'd like to do now is show this to you live. I've got an iPhone 3GS, which has got a widely praised display on it, and I've got a new iPhone 4.

Let me get them both fired up here. There we go. And I can ask them to blow these up. What's that difference now? This is pixel. We had to get special projectors for this because most projectors can't display as many dots as are on a retina display. This is pixel for pixel accurate right off these two displays. And you can really see it. Look at that folder there. And let me go inside. Look at the icon of the folder.

Compare them. Look at the text. Look at the linen. Look at the icon of the compass. The icon of the clock. Isn't that amazing? So now, let me go ahead. I'm going to go to some websites. I'm going to go to the New York Times today. And let's just compare these websites.

Our networks in here are always unpredictable, so I have no idea what we're going to find. They are slow today. You know, you could help me out if you're on Wi-Fi, if you could just get off. I'd appreciate it. We're having a little problem here. I don't know what's wrong with our networks.

I'm afraid I have a problem and I'm not going to be able to show you much here today. I can show you some pictures in the camera roll. Let's just go take a look at some photos here. Take a look at that. Same photos. Pretty different. Again, same photo. See the difference? You can really see it around the eyes, the teeth.

It kind of just comes down to what do you want to be looking at all day long? So, the retina display. 3.5 inches, the same size as the iPhone 3GS, yet with 960 by 640 pixels. That's four times more pixels than the iPhone 3GS. 326 pixels per inch.

800:1 contrast ratio, which is again four times better than the 3GS. We're using IPS technology. This is a very advanced LCD technology, which is quite a bit, in our opinion, quite a bit better than the OLED technology for these types of products. And provides much more accurate color and much higher resolution.

You can't make an OLED display with this type of resolution right now. And so we think the IPS technology is really quite superior. And it results in incredibly sharp text, images and video. Now, again, the retina display has got 78% of the pixels on an iPad right in the palm of your hand.

iPhone OS 4 makes it so your apps automatically run on the retina display, full size. but they look even better because what we do is iPhone OS automatically renders your text in the higher resolution and all your controls in the higher resolution. So you get that automatically and your apps look even better without you doing any work. But if you do a little bit of work and open up the hood of your app and put in higher resolution artwork, then they will look stunning. So we'd suggest that you do that.

So that is the retina display. Awesome text.

We think this is going to set the standard for displays for the next several years. We don't think anybody's going to come close. And you know, the display is your window into the internet, into your apps, into your media, into your software. We think it's maybe the most important single component of the hardware. And we've got something here now that's like the best window on the planet. So that's the retina display.

The iPhone 4 is powered by the A4 chip. Apple's A4 chip. This is a chip designed by our own team. They are really good and this is wonderful to have in an iPhone. Now let me show it to you. This is the back of the iPhone. You take the back off. First thing you notice is the iPhone 4 is packed to the gills. There's a tremendous amount of functionality in not such a big space. And so you have to kind of hunt to find the A4 chip but it's right there.

and let me just point out some of the other things. There's the micro SIM. We went to the micro SIM because it's smaller. We need the space. The radios, the connectors. You can see that the biggest single component in the phone is the battery. We've been able to make the battery a little bit bigger. And so that's where everything is, inside the phone.

Now, because we've been able to make the battery a little bit bigger and because the A4 is so good with power management, we've been able to improve the battery life as well. So we have up to 40% more talk time on 3G from 5 hours to 7 hours now. Six hours of 3G browsing, 10 hours of Wi-Fi browsing. 10 hours of video, 40 hours of music, and 300 hours of standby. So we're very pleased with this.

Our environmental report card is strong. Arsenic free, BFR free, mercury free, PVC free, and stainless steel and glass are highly recyclable materials. So we're doing great there. So the A4 chip. A4 chip up to 32 gigabytes of storage Quad-band HSDPA and HSUPA for 7.2 megabits per second down 5.8 megabits per second up that's theoretical because the carriers don't support that yet, but as they do will welcome it and dual mics for noise cancellation 802.11n Wi-Fi And of course GPS plus accelerometer plus compass so we've got some great hardware in the iPhone 4 the A4 chip Number four, we've got another really cool piece of hardware. Remember when we added the accelerometer and how that opened up a whole new vista of gaming? Well, we're taking it even further with the iPhone 4 because we're adding a gyroscope.

A three axis gyro, which is fantastic. Pitch rolling yaw, also rotation around gravity. And we've tied the gyro and the accelerometer and even the compass together to provide six axis motion sensing. We've got some new core motion APIs that you can call that give you extremely precise position information.

And it's perfect for gaming. And one of the reasons it's perfect is because it's built into every iPhone 4, so you know it's there. So what I'd love to do now is give you a demo of this. And since this demo does not require the network, I should be okay.

This is the little app that we wrote and this is being run with the accelerometer now and as you see with the accelerometer I can tilt it from side to side or backwards and forwards. But I can't, it doesn't move when I rotate around gravity and the positioning is good but not super precise. So now by tapping the word accelerometer it's going to change to the gyro and now I get much more precise movement here and as you see it rotates around gravity.

I'll play this game here. And I think I'll take this one off. Alright. And... maybe I'll take this one out.

Some of our amazing engineers cobbled that together for me to show you the gyro, but I can't wait to see what you guys are going to do. I think it's going to be pretty amazing.

So the gyro joins our four other sensors in every phone. We now have the gyro, the accelerometer, the compass, proximity sensor, and the ambient light sensor. These phones are getting more and more intelligent about the world around them. It's very exciting, and I can't wait to see what you guys do with the gyro built into every iPhone 4. So that's number four. Number five.

This is a great one. A whole new camera system built into iPhone 4. Everybody loves to talk about things that are very tangible when it comes to photography, like megapixels. But we tend to ask the question, how do we make better pictures? And they're different things. Megapixels are nice, but what cell phone cameras are really about is capturing photons. Because the cameras are so small, the sensors are so small, the lenses are so small, that it's all about capturing photons and low light photography. So what we've done is we've gone from a 3 megapixel to a 5 megapixel sensor.

But we're using something that has been shipping for a while in larger cameras, but is fairly new to smartphones, and that is what's called a backside illuminated sensor. It's a way of getting a lot more photons to the sensor by getting some of the wiring and stuff out of the way.

In addition to that, when most people increase their megapixels, they make those pixels smaller. When you make pixels smaller, they capture less photons. What we've done is as we've gone from 3 to 5 megapixels, we've kept the pixels the same size, 1.75 microns. And so they don't capture less photons per pixel, and we have more pixels.

We've got a 5X digital zoom built into the camera app. Of course, what we pioneered, tap to focus. And we've got an LED flash built in. And the pictures that we're taking off this are pretty remarkable. Of course, you can do portrait and landscape. You can see the digital zoom right there. And these are pictures that are taken right off the iPhone 4. They haven't been touched in any way.

It shows you what kind of quality we're able to get. Again, these are completely unretouched. These were all taken by our employees, just called some of the better ones that I saw. So this gives you an example. That low light photograph is hard to take with any camera, much less a phone. So we're really happy with the photos we're taking with the iPhone 4. We think we've got a great camera built in. But that's not all. because the camera also records HD video.

HD video at full 720p at 30 frames per second. So it's real HD video. Now, we pioneered tap to focus for still photos. We now have tap to focus video. And we have built in video editing for trimming your clips right on the phone. And one click sharing to share your photos. and the LED flash also will stay on to illuminate scenes for video recording.

And so you can actually record HD video right on your phone, edit it right on your phone, and then with a few taps email it, send it in an MMS, send it to MobileMe, send it to YouTube. It's pretty remarkable. But we're going even further than that. Because what we've done is we've written an application ourselves.

I want to tell you about this. I want to show it to you and to show it to you it's my great pleasure to invite Randy Ubelos. He's one of our incredible engineers. He's the chief architect for all our video apps. I'd like Randy to come up and show this to you himself. Randy.

Thanks very much. I've been working on video editing software for a long time on some pretty groundbreaking products. 15 years ago it was Final Cut Pro. Three years ago it was the new iMovie. This year I had the opportunity to work on another one, iMovie for iPhone, and it's one of the most exciting things I've ever worked on. You can now record HD video, edit with beautiful theme transitions and titles, and share your finished movies all on the device that you carry in your pocket every day. It's really amazing. Let me show it to you.

Go ahead and bring this up. And you can see the icon there. I'll go ahead and tap on that. So once we bring up the application, you get a list of all the projects that you have. And I'm going to go ahead and just tap on this project. And now I get my editing environment. I can see the clips that I have edited into this project down here along the bottom. I'm going to go ahead and rotate the phone over so we can go to landscape. You see I got the same view here.

And let's go ahead and do a little bit of editing on this. I can record directly into the timeline if I want. Or I can choose from existing clips and photos that are on the device. I'm going to go to my video bin here. And I'll just scroll down. Let's pick this clip.

And Put this in and I can pinch and change the scale of the timeline down here. And we'll go ahead and select this clip and now I can just grab the pin and drag this to trim the beginning portion of the clip to set the length to be whatever I'd like. I can zoom that in a little bit if I like.

Now let's go ahead and add a photo. So what I'm going to do is go back to my bin, go to my photos, then I'll scroll down here a little bit and we've got this weekend and SF event. Got a nice picture here that's got the whole group. So I'll go ahead and choose that.

Now once I've got that in there I can tap on it and photos automatically get a Ken Burns effect on them. So I can go ahead and adjust that. I'll go back to the beginning and I can pan around, I can zoom in and you'll see that as we go from the beginning to the end I'll get a nice Ken Burns effect on them. I can also use theme transitions.

So I'm going to go ahead to this title and I'm going to switch it from across dissolve to a theme transition. And when I do that I get this nice theme transition that'll come across on here. We can go ahead and put a title on the first clip. I'll just double tap on it. I'll select title and I'll choose an opening title. I'll just go ahead and tap and I'll give it a nice title here. So I'll go ahead and just type in our California vacation. application.

And once I put that in there, one of the things you'll notice is that it's put San Francisco on there. The camera records geolocation information into the video that's been recorded, and we pick that up automatically, and it gets put into the theme as you see there on the screen.

Now I'm going to go ahead and add some music. So I'll go ahead and I'll bring up the audio bin. I could bring in music from my iTunes library, or we also have some theme music that comes with the product. So I'll go ahead and choose this playful track. Let's go ahead and just play this back.

Now we have five different themes with iMovie. So I'll go ahead and tap the gear here and I can switch to a different theme. So I'll switch to the travel theme and select that I'd like to use the theme music. And what you can see here is that for this theme the geolocation data has actually been put on a pin on a map and that map slides around and the pin moves around based on the location that you have on the map.

And if I scroll over here a little bit you'll see the transition has been replaced with this nice theme transition with some stamps and things. So that happens automatically when you switch from one theme to another. So I can come back to the project list and I can tap the export button and I have three different sizes that I can choose to export all the way up to HD 720p. And what I'm going to do now is I'm going to show you a version of this project that was exported out at 720p HD and what you're going to see was produced entirely on the phone. Recorded, edited, rendered all completely on the phone.

00:05:00:00 - 00:05:18:00 Speaker 1 So I'm going to go ahead and click on export. And I'm going to go ahead and click export. And I'm going to go ahead and click export. And I'm going to go ahead and click export. And I'll go ahead and show you that.

iMovie for iPhone 4. Thanks very much. Thanks. Isn't that awesome? So iMovie for iPhone. And you'll be able to buy this right on your phone for $4.99, if we approve it. And so this is, again, part of this amazing new camera system on the iPhone 4. And we're really proud of it, and I think you're going to like it a lot. Now, before I begin number six, I, uh, our guys were running around like crazy backstage as you might imagine.

We figured out why my demo crashed. Because there are 570 Wi-Fi base stations operating in this room. Okay? We can't deal with that. So we have two choices. Either I've got some more demos that are really great that I'd like to show you. So we either turn off all the stuff and see the demos or we give up and I don't show you the demos. Would you like to see the demos or not? Here's the deal. Let's turn up the lights in the hall.

Several hundred of these are these MiFi things too, by the way. So all you bloggers need to turn off your base stations, turn off your Wi-Fi. Every notebook, I'd like them to put them down on the floor. And all of you look around, I'd like you to police each other. If you want to see the demos, shut all your laptops, turn off all these MiFi base stations, and put them on the floor, please. Come on, look around you.

I mean, I'm not, you know, I think bloggers have a right to blog, but if we want to see the demos, we're not going to be able to do it. Unless we turn off all these MiFi base stations and laptops, set them on the floor, and then This is a testament to how far we've come, isn't it? It's incredible.

570 Wi-Fi base stations in this room. Are we done? Yeah, I really appreciate it. I'm sorry to inconvenience you, but if we want to see the demos, this is what we have to do. All right. So number six. iPhone OS 4, the most advanced mobile operating system in the world.

The first new feature is that we're going to rename it. We're going to take away the phone because it's on iPads and iPod touches and iPhones. So we're going to rename it iOS 4, or iOS, and this is the fourth version. And we're going to go even further, we're going to give it some metal.

iOS 4. Rolls off the tongue. Now, iOS 4 is our most ambitious release to date. It has over 1500 new developer APIs. I'm sure most of you have been playing with this. There's some great stuff in there. And we're aware of a lot of great apps being developed that use a lot of these new APIs. And we're thrilled by that.

There's over 100 new user features as well. The biggest being multitasking. Now, you know, some people have said, well, you weren't first with multitasking, and they're right, just like we weren't first with cut, copy, and paste. Took us a little while to figure out how to do it just right. And the same is true of multitasking.

If you don't do it right, you're going to burn battery life. And it's nice to see some people agreeing with us. This is a statement that Larry Page made just a few weeks ago. Software running in the background, that just sort of exhausts the battery quickly. Yes, it does.

unless you do it right. And so we've taken a little longer, but we think we've come up with a good architecture for multitasking along with an awesome user interface that is just the best in the industry for finding your apps and instantly switching between them. We're also using it to control all the audio that you might be playing as well as the locking the rotation into the portrait position. In addition to that, we've added folders. Just got a great folder implementation and a whole bunch of other things that I'm not going to have time to demo today, but I would like to demo these few things for you if that's okay.

All right. So first thing I'm going to do, let's get it big there. There we go. I'm going Play some Jack Johnson. And I'm going to go launch mail here. And again, you can see the quality of the text here is just extraordinary with this retina display. And summertime in Yosemite. Now I'm going to go to a web page and find out if we really did turn off our Wi-Fi devices.

And so again, look at the quality of this text and graphics. And I'm going to go ahead and just go back to Mail just by double tapping the Home button, seeing all the apps that are running here and just scrolling through them all. I'm going to go back to Mail here. And now I'm back in Mail.

And I can also, if I want to, again, just go back here and I can swipe to the right. And there's the audio controls for whatever audio app I'm using. In this case, Pandora. I'm just going to pause it right here. And I'm in mail right now. Let me show you a few things in mail real quick.

I can go to my inboxes and as you can see I have the unified inbox, which is all inboxes. I've got so I can switch really fast between all my inboxes if I want to. And I've also got threading. So you can see the number there next to the arrow and I can see all of the email messages from a single conversation in one place here.

makes it really easy to follow a conversation, delete a whole conversation at once, et cetera. Okay, now what I'd like to do is go back to the home screen and I'm going to create a folder. And we've got this great new folder system for being able to help you organize and manage your apps. And all I have to do is just hold my finger on an icon until it starts to jiggle and drag it on top of another icon. So I will drag this sports app on top of another sports app.

And it automatically makes a folder and it names it based on the category of apps. Now I can rename it at any time if I want to. And I can go back and drag other apps in as well. I can drag my ESPN app in there. And I can drag a sports game in there if I want to. Oops. And so now when I go in there, boom, there's my four apps. I can drag one out if I'd like.

And I can also take an app out of the dock and I can even drag a folder in the dock if And so now I've got my folder with me wherever I am in the system, and I can just tap it and see all my sports apps. And it's really, really helpful. So that gives you -- I provided you a brief view of just a few of the new features of iOS 4, but there are just tons of new features everywhere.

So, iOS 4, multitasking, folders, Retina display integration. Again, we've enhanced every app we ship on the iPhone to work perfectly with the retina display, super high resolution artwork, etc. And put in all the work so that your apps automatically work beautifully with it as well, even if you don't update your artwork. Mail, a lot of new things in mail, the biggest two being the unified inbox and threading. Lot of enhancements in the camera and the photo apps to take advantage of our whole new camera system. Much deeper enterprise integration and just again tons of new features everywhere.

I wanted to hit for just a second on the enterprise integration. We got a lot of requests and our enterprise customers are thrilled because we got all of that stuff in to iOS 4. Much better data protection, device management, they can wirelessly distribute apps around the enterprise, multiple exchange support, deeper VPN support. Our enterprise customers seem really, really excited about iOS 4. Another thing we're adding on the consumer side is today we have Google search and we have Yahoo as an option that you can select. We're adding a third option which is Bing.

Google will stay the default, but now you'll have one more choice if you'd like. And so instead of just having one choice or two choices, you have three choices. You can search with Google or Yahoo or Bing. Each one takes a unique approach to how they search and how they format their results.

So again, we're going to give you the choice. You decide, but you have one more choice now. And Microsoft's done a really nice job on this. It's an HTML5 presentation. They've done a great job. So check it out. It's kind of cool. All righty. So iOS 4. And we're going to put a Golden Master candidate in developer's hands today.

For those of you that have been following the releases, they've gotten really good lately, and we now have our final release candidate, our golden master candidate. It's going to be in your hands today if you're a developer, and it will be out soon. Now there's another major milestone we're about to hit with iOS. This month, this month we will sell our hundred millionth iOS device.

That's iPhones, iPod touches and iPads. A hundred million. There is definitely a market for your applications. So, no one even comes close to this. So that is iOS 4. That's number 6. Number 7. iBooks we talked about iBooks with its enhancements on the iPad we are bringing it to the iPhone with iPhone 4 Just gorgeous, as you know. Same controls, the same highlighting, the same bookmarking, the same notes, as you see on the iPad. It's done really, really well. Same bookshelf to keep your books.

the same PDF reading right on your iPhone so you can get a PDF in a mail message tap on it, it goes right to iBooks to the PDF shelf and you can have it store it Click through it whenever you like. So we're really excited about this. And of course, the iBook store right on your iPhone.

Now, we've got iBooks now. We'll have it on the iPad, the iPhone, and the iPod Touch. This gets interesting. What can we do with all these products together? Well, I'd like to outline just a few things, and please keep in mind that they work across all three of these products and all wirelessly.

The first is, of course, you can purchase and download a book with the iBook store to any one of these products on your iPhone, on your iPad, or on your iPod. And it'll wirelessly be downloaded right to the device. You don't have to go through a computer or anything like that. Buy your book right on the device. It's downloaded right to the device. Now, you can download the same book to all your devices at no extra charge.

Buy a book on your iPad, download it to your iPhone. Buy a book on your iPhone, download it to your iPod and your iPad. You only have to buy it once. And iBooks will automatically and wirelessly and from no charge, Sync your current place, all your bookmarks, and all your notes across all your devices.

So you can start reading a book on your iPad, need to run out with your iPhone in your pocket, pick up right where you left off with all your bookmarks, all your notes, right on your iPhone. Just all works. And so that is iBooks on the iPhone, and I'd love to give you a Partly because I just want you to see how beautiful it looks on this amazing retina display.

So I'm going to open one of my favorite books, Winnie the Pooh. And look at that gorgeous text. It doesn't get any better than that. And again, you can just flip through the book. And you can make a selection here. And you can say I want to highlight that. You could select it again and say I'd like to maybe change the color of that highlight. And I could make a note if I want.

And so I could say, you know, I love Who? And I've got myself a note right now, and I could bookmark the page if I wanted to. Put away the control -- oops, go back, sorry. Put away the controls. And now if I go back to the table of contents, and there's my bookmarks and my note and my highlight. So it all just kind of works.

And let me go back now to the library. And I'm going to switch to PDFs. And here's my PDF bookshelf with my PDFs on it. So let me open one of And I can use the just thumb along the bottom if I want to, or I can just flip pages like this by tapping them. Isn't this cool? And again, I can just zoom into text, pinch and zoom any way I want to.

It's just really, really nice. Look at that. Pretty cool, huh? So that is iBooks. Now, iBooks, as you know, has the iBookstore on the iPhone, and the iBookstore joins the iTunes store and the App Store as the third store on the iPhone. Now we've gotten over 150 million accounts for these stores with credit cards, ready to buy your apps.

Over 150 million. We believe this is the most of any store on the web. We believe we're now number one. And these stores have had over 16 billion downloads. Again, number one on the web. So, the iBook store joining the iTunes store and the App Store, now on the iPhone. And that is number seven.

Why are we doing IADs? We're doing it for one simple reason. to help our developers earn money so they continue to create free and low-cost apps for users. That's why we're doing this. So this is what iAds look like. Here's an app, a Wall Street Journal app, and you'll see banners pop into the app at various places, depending on where you, the developer, say you want them to show up. And they'll pop up. And as you know, what we're trying to do with iAds is we're trying to combine the emotion of video with the interactivity of the web. This is what advertisers have been after in the digital advertising medium.

They want to get some of the emotion that they use television for today onto these digital platforms, and we think we've figured out how to do that. Now, IADs keep you in your app. The worst thing you want as a user is to tap on a banner, be hijacked out of your app to a browser, taken to some random website, and decide you're not even interested in the product or the service they're offering. Then you've got to find your app again and hopefully get back to where you left off.

People don't click on the ads. If people don't click on the ads, they don't get the benefit of the ads and you don't make any money. So by making sure that our users know what an iAd is with the little branding in the corner, they'll know that iAds don't hijack them out of their apps.

It's built right into iOS 4. You can add IADs to your app in an afternoon. Simply tell us where you want us to place them. Everything else is done automatically because it's built right into the operating system. You don't have to, in essence, write an app to put an ad like this into your app. it's all done in iOS 4. Apple sells and hosts the ads so all you have to do is tell us where to put them and make money.

You get 60% of the revenues and you get paid via iTunes Connect the same way you get paid for your apps and as you know we pay very frequently. So, that's what iAds are. Now, we've only been selling ads for eight weeks. We started selling ads about eight weeks ago, and I'd like to just tell you about some of the brands that are going to be advertising with us during the second half of this year.

These folks are the ones that have committed so far, and let me just run through them now for you. Starting off with Nissan. Unilever, the second largest consumer products company in the world. AT&T

State Farm and Geico, they want you guys to have some insurance. Campbell's Soup, Sears, some great retailers, Sears, JCPenney, Target, Best Buy.

DirecTV, the TBS network, and Disney. and those are some of the brands that have signed us up with us for the second half of this year. We couldn't be happier. I'm really excited about this. Now, I pulled, all these folks are working on their iAds, none of them are quite done yet, but I pulled one in process, which was a Nissan ad.

Nissan is going to use iAds to advertise their new fully electric car, the LEAP. And so I pulled their ad and I just want to show it to you now. Again, it's a work in process and they were a little hesitant to have me show you, but I wanted to show you, so I convinced them.

So, this is a news reader app and as you can see their banner popped in on the bottom and I as a user can just tap on it, it takes over the screen and loads in. And anytime I want to go, I didn't want to watch this ad, I just push this button up at the top and I'm back in the app, right? So I can get back to the app instantly. Let me go back into the ad in this case. So they're loading up a little bit of video and here we go.

This is the Peace Bomb. Instead of destroying things, it makes them better. It was invented in the year 2411, thanks to the anti-matter chip. which was made possible by a new form of helium discovered on the moon in 2236. We got there by teleportation, which replaced the space elevator, which was built by the electric spacecraft, and it all started with the greatest invention of the year 2010. The 100% electric Nissan LEAF.

It's amazing how, you know, 15 seconds of video, how compelling it can be. So now we've got this really cool navigator on the bottom that as I spin it around, it spins around the car. And so let me show you a few things here. I can say, oh, a new driver. The only way you're going to be able to register to get one of these initially is with this ad right on the iPhone. So if you're interested in the Leaf, you have to get an iPhone. and register in this ad.

So let me show you a few things they've done. This is very cool. They want to show how efficient the leaf is. And they came up with this really cool way. The new miles per gallon. And so you just tap on this, and it shows you that a leaf goes 38 miles on a dollar, for a dollar, right? A dollar's worth of electricity in this case takes you 38 miles. How much will a dollar's worth of fuel take you in some of these other cars? So you just push on the car, and you can see. Well, a Hummer doesn't take you very far.

Corvette takes you a little further, a Ford Taurus a little further, a Mini Cooper, it's kind of a cool car, that takes you about 10 miles, a Civic, they're not so good. Here's a Prius, that's probably a little further. So this is a pretty doggone compelling way to get their point across, and it's fun. And so this is what IADs are all about.

So, and then one other very cool thing they're putting in here is the new prize. They are going to actually give away a car. And so you enter through the ad. So I can just shake my phone and change the color, you know. I want a red one. I enter to win a red one. And it pulls my name up, my contact information, and I can just submit it. And now I have entered this contest to win a car. Pretty cool, huh? So that is an IAD.

I think a lot of people are going to try to win the car. It's a great idea. iAds. iAds start, we're going to turn it on July 1st for all iOS 4 devices. So July 1st, less than a month from now. Now how successful have we been in selling iAds? Well we're new at this, we've never done this before and we don't know what we're doing. But we've attracted some pretty exciting brands and they have committed over $60 million for the second half of this year in the last eight weeks.

How much is that? Well, you know, JP Morgan just revised their study of U.S. mobile display advertising in the year 2010. They just came out with it a few days ago, and they reiterated their number that they think the mobile display advertising market in the U.S. for the whole year is going to be $250 million. Well, $60 million of that is about that much.

But it's actually a little more, because we're only talking about the second half of the year. And so we're looking at IADS now with just the commitments we've gotten in the last eight weeks to be 48 percent of the second half 2010 entire U.S. mobile display advertising market.

We've only been at this for eight weeks, and we're not stopping selling. So we think we're off to a pretty great start. And we'll report back to you on how we do. But I would encourage you, if you're interested, to sign up for IADS, get the necessary stuff into your app, and let's go put some ads out there and help you make some money, because that's our goal in this, to help you earn money so you can continue to create free and low-cost apps to delight users. And we think this is going to work, and we're really excited about it.

So those are the eight things I want to share with you on iPhone 4. What do you think so far? You like it? It's, it's a, I think it's a lot more than people thought it was. I don't know, what do you think? Is it more than you thought? We're really pleased with it. But there is one more thing. And I think it's best that I just show you.

I really want your wifi devices off. Are they off? Please turn them off if you've turned them back on. In 2007, when we launched the iPhone, it was my privilege to make the first public call on stage to one of my best friends in the whole world, Johnny Arve, the head of our design team. And I'd like to do the same on this occasion. So I'm going to go ahead and call Johnny now.

Hey, Johnny. This never freezes up, so you guys haven't turned off all your Wi-Fi. Come on, let's get it off, please. Hey, Johnny, how you doing?

You know, this is amazing. I grew up here in the U.S. with the Jetsons and with Star Trek and communicators and just dreaming about this.

You know, dreaming about video calling. And it's real now. Did you have this kind of stuff in England? I grew up watching exactly the same TV shows. I used to love that sort of wonderful, optimistic view of the future. And it's real now, isn't it? It's real. Especially when people turn their Wi-Fi stuff off.

Oh, isn't it? Because as you know, the idea of communicating this way, it's an old idea. It's one that we're familiar with. We've just had to wait. We've had to wait an awfully long time for it to become real, haven't we? Yeah. Well listen, let's have lunch later on. All right, I'll see you soon. Thanks, Johnny. All right, see you soon.

It's great. It's iPhone 4 to iPhone 4. Anywhere there is Wi-Fi, and there is no setup required you don't have to find a server you don't have to type in anything you don't need a special code you don't need a buddy list nothing you just make a phone call You can use the front or the rear camera. You can switch to the rear camera so the person on the other end can see what you're seeing.

You just switch back and forth real easy. Portrait or landscape. You turn your phone, it automatically does the right thing on the other side. So if you have two people wanting to talk to somebody, you can just go into landscape and get a little bit wider aspect ratio. and the video and the audio quality is great.

Now, FaceTime is going to be Wi-Fi only in 2010. Need to work a little bit with the cellular providers. Get ready for the future. So we're Wi-Fi only in 2010. And Apple will ship tens of millions of FaceTime devices this year. Tens of millions of FaceTime devices this calendar year. So there's going to be a lot of people to talk to. So FaceTime, video calling. We're really happy with this. We made a little video to just show some of the ways that we hope people will use FaceTime and I'd like to run that for you now.

that reminds us why we do what we do. So FaceTime. iPhone 4 to iPhone 4, anywhere there's Wi-Fi, zero setup, portrait or landscape, front or rear camera, and amazing video and audio quality. Now, FaceTime is based on a lot of open standards. H264 video, AAC audio, and a bunch of alphabet soup acronyms. We're going to take it all the way. We're going to the standards bodies starting tomorrow and we're going to make FaceTime an open industry standard.

So that is the iPhone 4. And we think it's the biggest leap we've taken since the original iPhone. We're really proud of it. And I think you'll agree there's more to it than met the eye. So price and availability. Well, first of all, the iPhone 4 comes in two colors, black They are both gorgeous. And the price with the normal qualifications and two year contract, $199 in the US for the 16 gigabyte model, same price as the 3GS, and $299 for the 32 gigabyte model.

to also announce that AT&T is going to make an incredibly generous upgrade offer. The offer is going to be if your contract expires any time during 2010, you are immediately eligible for a new iPhone 4 at the same $199, $299 prices if you top up your contract to two years.

So you can get up to six months early eligibility for an iPhone 4. If your contract expires any time this calendar year, you top up your contract to two years and you can buy an iPhone 4 for the same price, $199 or $299. So we're thrilled about that.

Now, what's our lineup look like? Well, today, or yesterday, it was the iPhone 3G at 8 gigabytes for $99, the 3GS, 16 for $199. Well, we're going to just add iOS 4 to the 3GS and slide it on over. And an 8-gigabyte 3GS for $99, 16-gigabyte iPhone 4 for $199, and of course, the 32 for $299. This is our new lineup. And these go on sale June 24th.

Pre-orders start a week from tomorrow, June 15th. Now, on June 24th, we're going to be shipping in five countries. The US, France, Germany, the UK, and Japan. But in July, we're going to be shipping in 18 more countries. Australia, Austria, Belgium, Canada, Denmark, Finland, Hong Kong, Ireland, Italy, Luxembourg, Netherlands, Norway, New Zealand, Singapore, South Korea, Spain, Sweden, and Switzerland. In August, we're going to add 24 more countries, and in September we're going to add 40 more, so that by the end of September we are shipping in 88 countries. This will be our fastest rollout ever.

A few accessories that I'd like to tell you about. The first, very simple one, a dock. Real nice dock for the iPhone 4, $29. The other is just like we did with the iPad. We took a crack at doing a case ourselves. We're pretty happy with the results. We call it a bumper.

And it goes around the iPhone 4. It's got these really nice metal controls so they pass through the plastic. The back is open so you have the camera and you can see our logo. And they protect the phone very well. And they come in colors. And so they are real nice, and they are $29 as well.

And I'd like to talk for a minute about iOS 4 upgrades. We will be offering iOS 4 upgrades for the iPhone 3GS, the iPhone 3G, but again, not all the features are supported. The hardware just won't support the kind of experience for multitasking that we would like to see, so that will not be supported on the 3G.

But many things will be. And the iPod Touch, again, not all the features will be supported on every model, and it excludes the first generation, because again, the hardware will just not support it. And the great news here is that upgrades for all these products will be free on June 21st.

We finally found a way to get these upgrades for free to our iPod Touch customers and we couldn't be happier about that. So that is iOS 4 and of course the new iPhone 4. Now we put together a video to kind of try to summarize all the features of the iPhone 4 and I'd like to run that now.

iPhone 4 is so much more than just another new product. I mean, this will have a lasting impact on the way that we actually connect with each other. In 2007, the iPhone reinvented the phone. In 2008, the iPhone 3G brought faster 3G networking and the revolutionary App Store.

In 2009, the iPhone 3GS was twice as fast and brought out new features like video recording. For 2010, the iPhone 4 is the biggest leap forward since the original iPhone. We're introducing the amazing Retina display and we're bringing video calling to the world. And we call it FaceTime. It's going to change the way we communicate forever.

The very first time I had a FaceTime call, I was blown away. Because it is amazingly engaging, personal. It's all about connecting people. I think of my own children, like seven, eight years, they'll be off at college. And I can imagine being able to call them and see them, but also look into their eyes and see how are they really doing.

What makes it even better is that it switches from the front camera to the back camera. So you can show someone what you're seeing. And because it's so mobile as your phone, you'll be able to chat anywhere there's Wi-Fi. But what's amazing is every time I've been using it, you can't help but smile and go, "I can't believe this is real.

This is actually happening." Another thing we're really excited about on the new iPhone 4 is the retina display. It's the highest resolution display ever built into a phone. At 326 pixels per inch, you get four times the pixels as before. So instead of the fuzziness of individual pixels, you get smooth, continuous shapes and tone.

You have something that looks to your eye like you're holding a printed page in your hand. And the level of fine detail in images is just incredible. Another thing that adds to the sharpness and clarity is optical lamination. That's a very precise technical process that laminates the cover glass to the display and eliminates light refraction.

So all of the hard work that's been put into this ultra high resolution display is presented with the most visual clarity. On top of that we use IPS technology and LED backlight so you get the most vivid experience in everything you do. The display on the iPhone is blow away.

can show more detail than you've ever seen on any device before. The text is just perfect. iPhone 4 enables multitasking for all apps. You can now quickly switch between applications and everything is exactly as you left it. If you're like me and you have lots of apps on your phone, you'd love a way to easily organize them and find them. And that's exactly what folders does for you. Take an app and drag it onto another app and it automatically creates a folder intelligently named with the type of apps you're grouping.

Mail on iPhone 4 is incredibly efficient. You can see all the messages from multiple accounts in a single unified inbox. And it allows you to organize all of the messages in your inbox by thread. So you can deal with a single topic altogether. Pictures taken with a five megapixel camera look amazing. And we even have an LED flash so you can take photos in low light. Plus the camera captures full 720p high-resolution images. video at up to 30 frames per second.

Not only can you record great video, but you can also edit your video right on your iPhone with iMovie. The iPhone, for a user, it is simplicity, it is easy to use. Behind it is intense technology. What's running all this incredible software is our A4 chip. It's custom designed silicon, and what that gets you is remarkable speed and efficiency in a really small chip. The one thing we made larger was the battery. In fact, iPhone 4 delivers up to 40% more talk time.

We started with completely opposing goals. We wanted to make this iPhone more capable. We wanted to add more features. And yet at the same time, we wanted to make it smaller and even thinner. And that led to some really surprising innovation. We developed an entirely new grade of stainless steel that after machining is incredibly strong, but also remarkably precise. The steel frame functions as the antenna, but also the primary structure, giving us more internal volume.

We also developed a custom glass that's comparable in strength to sapphire crystal, but about 30 times harder than plastic. This glass is not only used on the front of the phone, but also on the back. The quality of the materials, the manufacturing precision, the advanced technology, ultimately all of this becomes relevant when you just hold it in your hand.

Even if FaceTime were the only new feature we're delivering, this would be an amazing new iPhone. But it's the fact that we've got the Retina display, 5 megapixel camera, high def video recording, A4 chip, bigger battery, all in a thinner product. This is going to change everything. All over again.

I put up this slide a little earlier this year, and to me it represents what Apple's all about. Apple's not just a technology company. Even though we have and invent some of the highest technology in our industry, it's more than that. It's the marriage of that plus, if you will, the humanities or the liberal arts that distinguishes Apple.

It's the hardware and the software working together. Coming up with A4 chips that work with the software to give us these incredible battery lives. It's not just a great new camera system built into the iPhone 4, but it's the video editing software built in and iMovie for iPhone that really takes it the distance and gives you a complete solution. It's not just a front-facing camera. It's a front-facing camera and 18 months worth of work to come up with software that you'll never even notice when you want to place a video call. It's the complete solution.

So that all of us don't have to be system integrators. And I am so proud of the teams that have made this product. It's really extraordinary. And I urge you to get your hands on one and see for yourself. So before we end today, I'd like to just say thanks to the teams that have worked their tails off for the last 18 months to create the iPhone 4.

Mark Papermaster and his hardware team, Can you guys please stand up?

Scott Forrestal and our remarkable iOS software team. All of this wouldn't make any difference if we couldn't build a ton of them. Tim and our operations team, Jeff, stand up please.

This is our new baby. I hope you love it as much as we do. Thank you very much.