The new iPod touch features all of the same functionality of the iPhone -- including the multitouch interface, full Web browsing via Safari, and a custom YouTube player.

The iPod touch also includes 802.11b/g Wi-Fi, a version of wireless networking slower than 802.11n, which is included in many new notebook PCs. The iPod touch comes in two models: an 8-GB version for $299 and a 16-GB version for $399. The touch will be available later this month.

"The iPod touch is a landmark iPod, ushering in a whole new generation of features based on its revolutionary multitouch interface and built-in Wi-Fi wireless networking," Jobs said. "People are going to be amazed at how thin it is and how much it does."

Price Cut for 8-GB iPhone

The 8-GB iPhone now will cost $399, a 33 percent price cut, and will essentially replace the 4-GB model. There was no news about upgrading the phone's capabilities to 3G network speeds; many users have complained that AT&T 's 2.5G EDGE network is too slow.

"This is very, very aggressive for the technology they're delivering," Michael Gartenberg, an analyst with Jupiter Research said in a telephone interview from the event, "The fact they made this cut early on shows that Apple is being quite aggressive in terms of bringing new consumers in the purchase funnel," he said.

In addition to announcing the iPod touch and reducing the price of the 8-GB iPhone, Jobs introduced several upgrades to other iPods, including a video version of the Nano and capacity upgrades for the standard iPod, relabeled the iPod Classic. Apple's iPod lineup includes a range of music players from the bargain-basement Shuffle all the way up through the iPhone.

Apple now offers a device for a full range of consumers' "purchase drivers," Gartenberg said, whether fashion, coolness, capacity, or size. "It's a very deep and complete product lineup. Their competitors will have a hard time matching up," Gartenberg said. (continued...)

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