By AppleInsider Staff

Published: 02:00 PM EST (11:00 AM PST)

John Mayer invited back on stage for live entertainment.

Jobs thanks Apple employees for all the new products and hard work. Jobs also thanks the families and spouses of Apple employees.

iPod shuffle: Apple introduces iPod shuffle, its flash based player. Its maller than most packs of gum and weighs the same as 4 quarters (less than 1 ounce). iPod shuffle features volume up/down controls, a simple LED to provide feedback, but no display. The player offers both shuffle or album-based playback. It uses a USB 2.0 transfer connector at its base to interface with computers and sports12-hour rechargeable battery. Available for both Mac and PC. iPod shuffle ships with a lanyard that connects directly to bottom connector for easy carrying. Jobs shows new Apple commercial for iPod shuffle.

Jobs talks iPod market share. Flash Market sales cut in half from Jan 2003 to Jan 2004. A new iPod mini will double iPod market share and cut the Flash market share in half, jobs says. He says the current market offers players powered by non-rechargeable batteries with tiny displays, no click wheel, making for a "totured interface."

New iTunes-enabled phones are due this Spring from Motorola, Jobs says.

iPod: Apple sold 733,000 iPods in 2003 holiday quarter, compared to more than 4.5 million iPods sold this past holiday quarter, representing a 500% growth from 2003. To date, Apple has sold over 10 million iPods, including over 8M sold in 2004 alone. Jobs shows video of the 10 millionth iPod made, stating that the company kept this symbolic iPod and did not sell it. Jobs also remarks that Apple accounted for 3 of the top 5 consumer electronics products at Amazon.com this holiday (iPod, iPod mini, and Prepaid iTunes card). There are now over 400 accessories available for the iPod. Apple is working with BMW on the a next-generation adapter. Mercedes, Volvo, Scion, and Nissan will also offer iPod adapters in 2005, jobs says. Alpha-Romero and Ferrari will offer direct iPod integration. Meanwhile, Mercedes will show CLK and CLS on the show floor.

iTunes: iTunes has sold more than 230 million songs to date, with Apple selling approximately 1.25M songs per day (a rate of half a billion per year.) iTunes is available in 15 countries, represents 70% of music market. Since thanksgiving, Apple has sold 1 million Pre-Paid songs and retooled its iTunes Essential section.

Jobs introduces Mac mini. New member of Mac family including a slot-load Combo optical drive, FireWire, ethernet, USB 2.o, both DVI/VGA output. It [lays DVDs, burn CDs, and is very quiet and tiny. Its height is half the size of an iPod mini. Jobs calls it "BYODKM" -- Bring Your Own Display, Keyboard, Mouse. Will come in two models: 1.25GHz 256MB/40GB for $499. A second model with a 1.4GHz, more memory and larger hard drive will sell for $599. Mac mini will ship on January 22. Ships in a box smaller than the regular iPod box.

iWork is the next-generation AppleWorks. It will also ship on January 22 for $79.

Pages. Apple has created its own word processor, which it is calling "Pages." Pages offers footnotes, 40 Apple designed templates, drag & drop rearrangement of templates, and more. The application presents a very simple starting point. Phil Schiller is invited on stage by Jobs to demo the new app. Pages was developed by the Keynote team and support PDF and AppleWorks docs.

Keynote 2 delivers cinema-quality presentations, animated text, powerful animated builds, presenter display, self-running kiosks. Jobs claims he uses Keynote for everything.

iWork. Jobs introduces the successor to AppleWorks, iWork. The productivity suite is built with Mac OS X and iLife in mind, he says. It will include two applications: Keynote and Pages.

iLife '05 works seamlessly together, Jobs says. It will be priced at $79 and go onsale January 22. It will be bundled for free on all new Macs.

GarageBand has been updated with realtime music notation, 8 track recording, pit & timing fixing, and more. The application will also let users create their own loops. Jobs invites musician John Mayer on stage. [...you can see some mysterious and unannounced Apple application icons in Steve Jobs' dock as Mayer performs a demo of loop creation...]

iDVD will gain animated drop zones, one-step DVD creation, and support for all DVD formats (R, +R, -RW, +RW). Jobs performs demo that is met with applause.

iMovie HD being introduced. iMovie now edits HD video, offers Magic iMovie, MPEG-4 video, new transition & effects, and more. Jobs proclaims 2005 the year of HD video as he begins talking about HDTV camcorders. Jobs invites the president of Sony onstage. Reiteration that 2005 will be year of HD in the home.

iPhoto has gained project folder subfolders, support for MPEG-4 movies, and new editing tools, including quick thumbnail view of photos in library. A new Calendar view allows searching by day/month/year. The new version of iPhoto also supports RAW, a feature found in high-end digital cameras. iPhoto also now integrated with Dashboard for quick, easy editing of both JPEG and RAW photos. Jobs performs demo. He shows off impressive editing tools for rotate/zoom. Demo shows how users can view/organize MPEG movies. Dashboard integration instantly offers more advanced tools. Additionally, iPhoto sports advanced slideshows and new way to create photo books: soft cover, four different sizes, double the number of pages, ranging $4-$30. Jobs also announces that Apple will cut price of iPhoto prints to $0.29 per print, half the current price.

iLife '05 features major upgrades for each application.

Jobs introduces Final Cut Express HD video editing suite. The video editing software adds LiveType for animated tiling, and the recently discontinued Sountrack technology for custom music. The application seamlessly integrates with iMovie files and Motion files. Final Cut Express HD is priced at $299 and will be available in February. $99 upgrades will be offered for Final Cut Express owners.

Tiger is on track for delivery in first half of this year, Jobs says... "Long before Longhorn."

iChat 3.0 demo. Jobs reiterates that iChat 3 will allow up to 10 simultaneous audio conference. Using H.264, multiparty video conferencing supports up to four people. Jobs offers demo of video conference with Danika (from Paris -- and boy do our forum readers love her!), Phill Schiller, and Scott. Full screen view of all four parties. You can see realtime reflections around table.

Dashboard will contain widgets for Calculator, Stickies, Address Book, iTunes Controller and more. Jobs announces some new widgets: Unit Converter, Discitonary & Thesarus, Stock tracker (Laughter as Jobs displays increases in AAPL and a drop in MSFT), weather, yellow pages. Jobs quickly displays various widgets (Shows AAPL stock quote). "We're down today," he says. "We still have a lot to go in the keynote." Jobs now demos Unit conversion widget, which draws more laughter as the Euro->Dollar and Dollar->Yen conversions are displayed. Jobs demos Weather Widget, which cycles through various weather scenarios, and notes the open architecture for Widget creation.

QuickTime 6.6 has been renamed QuickTime 7. It represents the largest upgrade to the technology in the last 7 years and will ship with Tiger. To date, users have downloaded over 30 million copies of QuickTime 6. 98% of the downloads have been by Windows users. Some features expected in QuickTime 7 include live resizing, full-screen overlay, and complete MPEG-4 compliance. The most impressive feature, however, is support of the H.264 codec, which is expected to be used as basis of next-generation DVDs. Brief demo performed. QT is scalable from cell phones to HD.

Jobs moves on to overview of Mail 2.0. The application has seen a complete overhaul. Its been integrated with Spotlight search. Mail 2.0 can perform instant search in over 100,000 different mailboxes. "Smart Mailboxes" watch for keywords and automatically creates alias links to incoming emails that meet the keyword criteria. Mail will also deliver an on-screen interface for managing incoming photos (adding to iPhoto, viewing thumbnails, etc.)

Spotlight being previewed. Jobs says Spotlight is superior to google because its built into the Mac OS at the core. It also has a better interface, because its 'built by Apple,' he says. Jobs encounters bug in Tiger OS while performing the Spotlight demo. "That's why we have backup systems here."

"No time for all of them," says Jobs. "...Will discuss a few."

Mac OS X. Tiger on track to ship in first half of this year, sporting 200 new features. Feautres include improved Windows connectivity, .Mac sync, Safari RSS detection, Automator.

Jobs claims Mac OS X 10.3 Panther has been phenomenally successful, with over 14 million active users.

Jobs begins overview of iMac G5 line, boasts about positive press reviews surrounding the product line.

Jobs showcases London Apple Store on Regents St., showing photos from the store. It has become 2nd highest grossing store. More stores expected to launch in England later.

Over 1 million visitors a week to Apple's stores.

This is the first keynote to use HD projection.

Steve Jobs takes the stage and begins discussing the company's retail strategy.

Loud applause.

The lights have dimmed.

Attendees have been instructed to shut off their cell phones.

U2's Vertigo is being played inside the hall.

9:06 A line of attendees still extends outside the keynote hall. The keynote should begin when all are seated.

9:05 We'd like to take this opportunity to thank all our readers who e-mailed us regarding KFC's Chicken Little situation. Those who remember Chicken Littles know they sure are scrumptious.

9:00 Attendees are still filling the keynote hall.

8:45 Keynote set to begin shortly.