Apple offers new iPhone

SAN FRANCISCO — Apple Chief Executive Steve Jobs made a big splash by jumping into the wireless communications business with iPhone, a touch-screen device that plays music, surfs the Internet and delivers voice mail and e-mail differently than any other cell phone.

But it remains to be seen whether the $500 gadget and other products announced Tuesday will allow the company to remain a Wall Street darling and sustain the market dominance enjoyed by iPod, Apple's iconic digital music player. Some industry veterans wonder whether the phone — despite its slim elegance and wide-screen display — is priced competitively.

Reflecting the company's new emphasis on phones, TV devices and the iPod music player lineup, the company announced Tuesday that it would strip the word "computer" from its name — from Apple Computer Inc. to simply Apple Inc.

But business experts worry that Apple — a Silicon Valley institution that began selling desktop computers in the 1970s — will struggle with the herculean task of reinventing itself as a full-fledged consumer electronics retailer.

"Prospects for the new device are positive, but it is not a given that Apple can win against a slew of wireless providers, phone manufacturers and Microsoft, all of whom are similarly motivated to raise their flag on the same territory," said James L. McQuivey, a communications technology professor at Boston University.

Even the phone's name is in contention.

Linksys, a division of Cisco Systems Inc. that makes networking equipment for the home and small businesses, unveiled the new iPhone line of Internet-enabled phones last month. Cisco has owned the trademark on the name "iPhone" since 2000. Although Cisco is agitating for Apple to make a public statement clarifying use of the name, Apple executives say their cellular phone doesn't compete with Cisco's Internet phone.

Despite that uncertainty — and despite the fact that Apple's phone won't be available until June — Wall Street has initially blessed it. Apple shares jumped $7.10 to close at $92.57 on the Nasdaq Stock Market, creating about $6 billion in new shareholder wealth. The stock has traded in a 52-week range of $50.16 to $93.16.

Nearly 120 million Apple shares changed hands Tuesday, more than 4 times the average daily volume.

Meanwhile, shares of other smart-phone makers slid: Treo-maker Palm dropped 5.7 percent, BlackBerry's Research In Motion Ltd. lost 7.9 percent and Motorola Inc. shed 1.8 percent.