The iPhone does not use a keyboard, nor does it use a stylus, as many smart phones do today. The device uses new technology, called Multitouch.

"We're going to use the best pointing device in our world," said Jobs. "We're born with 10 of them, our fingers."

Multitouch is far more accurate than any touch display, according to Jobs. It ignores unintended touches and supports multifinger gestures. "And boy, have we patented it," he added.

In addition to the phone announcement, Jobs also reintroduced the iTV, now called Apple TV. The device, which sells for $299 and will be available next month, allows a user to stream music, movies and photos from a computer wirelessly to a TV, using the Apple TV.

It includes a 40GB hard drive, wireless networking using 802.11b/g/n, 720p high-definition playback and Ethernet and HDMI connections. The Apple TV will also play or display content from other users' computers, Jobs told those on hand for his speech.