Chief Executive Steve Jobs unveiled the US$499 media centre type device, internally code-named iTV. It comes in silver and will receive programs wirelessly from a home computer to play on television screens. It will go on sale in the first quarter of next year.

"Apple's in your living room with iTV, driving your big, flat-screen TV," Jobs said. The move puts the company even more squarely in competition with Microsoft, which has been trying to move into the home-entertainment business with products like its Windows Media Center line of computer operating systems.

The new iPod will have a 60 percent brighter screen and have an increased video playback time of 3.5 hours, which is roughly 1.5 hours more than the current iPod. Apple will also be releasing a bigger capacity iPod that sports an internal 80GB hard drive that can play video for 6.5 hours.

The iPod Nano will also receive a refresh. Apple today announced that the iPod Nano will now be all aluminum and available in various colors. Currently, the iPod Nano is made of plastic and was previously reported to be easily scratched. Available colors for the new iPod Nano are green, silver, black, blue and pink. Apple will be making the new iPod Nano in three flavors: 2GB, 4GB and 8GB. The 2GB iPod Nano will only be available in silver color.

2GB: $219 - Silver only
4GB: $299 - All colors except black
8GB: $380 - Black only

The new iPod Nanos will come with a new charger, armband and new lanyard. Apple claims that the new Nano will be able to play for roughly 24 hours non stop.

Along with new iPods, Apple will be introducing new software for the small players as well. New generation software will include such features as gapless playback, searching, and a host of new games: Bejeweled, Pac Man, Texas Holdem, Tetris, Mahjong and others. Users will also be able to purchase games for their iPods off of iTunes for $7.49 per game.

Apple's iPod Shuffle will also receive a revamp. The Shuffle has been reduced in size to roughly the size of the iPod radio remote. The iPod Shuffle's body is now metal and comes in only a 1GB version for $119. Apple said that the new Shuffle will ship in October of this year.

"I hope this gives you a little bit of an idea of where we're going," Jobs said.

As expected, Jobs also said that Apple will begin selling digital downloads of movies in its iTunes Store, but this will be available in the US only. The company will sell 75 movies from the four movie studios owned by The Walt Disney Company, starting today.

The store will sell movies at the same time they become available on DVD, and will sell the two highest grossing movies of the year, "Cars" and "Pirates of the Caribbean: Curse of the Black Pearl," when they are released.

Apple will only sell films, and not make any available for rent. Apple will sell movies cheaper than many online competitors, with new releases priced at US$12.99 for the first week, and moving to US$14.99 after that. Older titles, such as "Shakespeare in Love," will generally sell for US$9.99. They will not be available in Australia at this stage.

A movie can be downloaded in 30 minutes with a fast broadband connection of 5 megabits per second, Jobs said, and a user can begin watching it one minute after it starts downloading.  Apple's announcement comes less than a week after Amazon unveiled its Unbox movie downloading service. But the two companies' strategies - and results - could not be more different.

Apple, already skilled at engineering buzz for its announcements, simply e-mailed an invitation to the media with the words, "It's Showtime." Amazon put on a big show.

That was enough to raise expectations that Apple might be able to nudge Hollywood on licensing terms that could change the way movies are sold and distributed.

After all, Apple did just that with the recording industry, selling more than 1 million songs in the week after it debuted its iTunes online music store in May 2003. The store has since become the top-selling store for music downloads.

While Apple was able to make some progress in terms of loosening Hollywood restrictions, it still has only one partner - Disney - and Jobs sits on that company's board. Amazon, on the other hand, was able to strike deals with several movie companies.