Apple CEO Steve Jobs announced at the company's Macworld conference that it will ship a new product called iPhone with phone capabilities, touch controls and widescreen video.
Apple shares immediately jumped on the announcement.
CNBC's Jim Goldman reported from Macworld that the new iPhone will run on Apple's OSX operating system and have a touch screen controller called "multi-touch" that replaces all buttons on the phone's face. The iPhone will sync with the company's iTunes store.
Apple's iPhone will work exclusively on Cingular's wireless network. It is priced in the United States at $499 for 4GB and $599 for 8GB. Apple said the iPhone will be available in the U.S. in June, reaching Europe late in the year and Asia next year.
Jobs said Apple is going after Microsoft and Palm with new mobile software "that's at least five years ahead of anything out there."
Jobs boasted that Apple's phone would "reinvent" the telecommunications sector and "leapfrog" past the current generation of hard-to-use smart phones.
"Every once in a while a revolutionary product comes along that changes everything," he said during his keynote address at the annual Macworld Conference and Expo. "It's very fortunate if you can work on just one of these in your career. ... Apple's been very fortunate in that it's introduced a few of these."