US firm Apple has confirmed its move into the telecoms industry, unveiling the long-awaited iPhone.
Users will be able to download music and videos with the phone, demonstrated by Apple boss Steve Jobs at the annual Macworld Expo in San Francisco.
Mr Jobs praised the phone's design and told the audience the "magical device" would "revolutionise the industry".
The phone, which will cost from $499 (£257) to $599, will be launched in the US in June and Europe later this year.
Apple is not yet saying how much the iPhone will cost in the UK, but using the comparison of a Mac mini computer the 4 gigabyte (GB) model would be about £335.
Also revealed at the Macworld Expo was Apple TV, a device to stream music and movies from a computer to the living room.
The announcement ended months of speculation about the iPhone, which has no conventional buttons but instead uses a large touch-screen.
The firm has patented keyboard technology on the 11.6mm thick phone, calling it "multi-touch".
It is essentially a computer with a blank screen that users configure so they can operate the monitor with their fingers.
"We are all born with the ultimate pointing device - our fingers - and iPhone uses them to create the most revolutionary user interface since the mouse," said Mr Jobs.
A full touch keyboard is available for text messaging and there is a built-in two megapixel camera.
Mr Jobs said the iPhone was a "revolutionary and magical product that is literally five years ahead of any other mobile phone".
"It works like magic... It's far more accurate than any touch display ever shipped. It ignores unintended touches. It's super-smart."
He demonstrated the phone by playing the Beatles' Lovely Rita, Meter Maid.
He added: "The iPod changed everything in 2001. We're going to do it again with the iPhone in 2007."
The phone will be available on the network of US mobile firm Cingular and will run Apple's OS X operating system.
It will come in two versions - one with 4GB of storage space, the other with 8GB.
Apple shares closed around 8% up after the announcement.