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.

Before unveiling the new hardware, Jobs noted that the company's move to Intel Corp. processors in its laptops and desktops in 2006 went smoothly. "It was just a year ago that I announced we were going to switch to Intel processors. I said we'd do it in the coming 12 months. We did it in seven months.

"It's been the smoothest and most successful transition that we have seen in our industry," he said.

Half of all Macs in the U.S. are now being sold to people who are first-time Mac users, said Jobs.

He also stressed that music sales through the company's iTunes Store remain strong. Apple has sold more than 2 billion songs via its iTunes Store to date. And the iPod is the world's most popular music player.

"There was an article recently that said iTunes sales have slowed dramatically. I don't know what data they're looking at," said Jobs. "What we see is iTunes sales were really up this year. We doubled the number of songs we sold in 2006. We are selling over 5 million songs a day. Isn't that unbelievable? 58 songs every second."

He also poked fun at rival Microsoft's Zune music player, noting that the Zune has a 2% market share. "So no matter how you try to spin this, what can you say?" Jobs said. Behind him, an image of the Zune on the screen burst into flames and faded away.

Jobs said that the iTunes Store has sold 50 million TV shows, and within four months, the service has sold 1.3 million movies. "Which I think has exceeded all of our expectations," he added.

Jobs then revealed that Apple has struck a deal with Paramount to offer its films.

Two hundred fifty movies are now offered on iTunes, said Jobs. "We're getting them up as fast as we can in the next week or so," he said. "We hope to add more movies as other studios throw in with us in 2007."

(Peter Cohen of Macworld contributed to this report.)