During his MacWorld 2007 keynote address in San Francisco yesterday, Apple CEO Steve Jobs did the unthinkable: He didn't discuss the Mac even once, other than to note early on that this year's MacWorld would be about other products. He then went on to devote almost the entirety of his two-hour speech to an expensive, high-end smart phone that won't ship for at least six months.

Onlookers who were looking forward to the "secret" new features in Mac OS X 10.5 "Leopard" that Jobs promised back in August will have to wait: The upcoming OS wasn't even mentioned. There was no talk of new Mac hardware, no new iLife or iWork application suites. Jobs didn't discuss whether the Mac had gained market share in the PC industry, and didn't provide any sort of counterpunch to the upcoming launch of Windows Vista, which is expected to further distance Apple from the mainstream computing market.

No, Jobs has clearly sensed that there are changes brewing in the market. While Apple's yearly revenues for Macintosh computers have barely edged up in over five years, the company's revenues of iPods and related products and services have skyrocketed. In 2006, in fact, iPod-related revenues will almost certainly match those of the Mac for the first time. Apple, it seems, is becoming a consumer electronics company.

Jobs admitted as much indirectly. First, he announced that the company was changing its name from Apple Computer Inc. to Apple, Inc., a tacit admission that Macintosh is no longer the focus. Second, he said after his keynote that the company now has four major product categories: Mac, iPod, Apple TV, and iPhone. Two of those products were formally announced in the past six months, one yesterday.

The Apple TV is, by far, the least interesting. Due in late February and costing $299, the Apple TV is an expensive set-top box that streams music, TV, and movie content from Apple's iTunes software on a PC or Mac. As Microsoft's David Caulton sarcastically (but accurately) put it in a blog entry, "It's a $299 device that lets you watch TV in your living room!" The point here is that the Apple TV doesn't offer much value over existing solutions, and it certainly doesn't offer any of the storage or backup features of Microsoft's Windows Home Server or the digital video recording (DVR) functionality of Windows Media Center. In short, it's not very compelling.

The iPhone, however, will get a lot of press, despite its amazingly high price: At $499 and $599 for the two iPhone models, plus a two year commitment to Cingular, the iPhone may just be the highest-price phone on the market. It does, however, offer the indefinable "something" that graces so many Apple products: A beautiful (if large, for a phone) form factor, an elegant user interface, and more technology per square inch than perhaps any device on the planet.

The iPhone features a beautiful 320 x 480 pixel widescreen display with touch controls, a gorgeous user interface, multimedia and remote email capabilities, and numerous high-end features. It can function as an iPod, a smart phone, or an Internet communicator, and it runs an embedded version of Mac OS X, the operating system at the heart of Apple's Mac computers. (Microsoft has created embedded versions of Windows for several years.)

Jobs says that Apple's goal is to seize just 1 percent of cell phone sales this year, which requires the company to sell 10 million iPhone units. That's certainly possible, as Apple will pass the 200 million mark for iPods sold this year. But success in this market isn't guaranteed. Apple's phone design won't run on Sprint or Verizon networks, which together account for almost twice as many customers as Cingular, the network for which the iPhone is exclusively made. Even the iPhone name is contested, since Cisco trademarked the term previously and never game Apple permission to use it. Apple says it's negotiating with Cisco for rights to the name. And it's unclear how big the market is for a device that's that expensive: Most cell phone carriers give away or heavily discount smart phones to customers that sign two-year agreements.

Whatever happens, give Jobs credit for having the courage to reinvent Apple yet again. Mr. Jobs has been at the helm for most Apple's biggest historic shifts, including the Macintosh in 1984, Mac OS X in 2001, the iPod in 2001, and the shift to the Intel platform in 2006. If Jobs pulls off this transition, Apple could very well become the next Sony: A consumer electronics super-giant with a valuable brand, lust-worthy products, and a presence in numerous lucrative markets. That would be quite a feat.