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Hey everybody. Tim Cook is on stage.

This room, the Town Hall, has quite a history at Apple. Just 10 years ago, we launched the original iPod here, and it went on to revolutionize music. Just one year ago, we launched the new MacBook Air, which has fundamentally changed the way people think about notebook computers. Today will remind you of the uniqueness of this company, as we announce innovations from our mobile operating system to applications to services to hardware—and, more importantly, the integration of all of these into a powerful, integrated experience. It’s an extraordinary time to be at Apple.

A few updates: Apple has enormous momentum, evident no place more than retail stores. Just last weekend opened two stores in China: Hong Kong and Shanghai. Both are amazing and both have set new records. The Shanghai store is largest in Asia. Set a record for welcoming 100,000 visitors for opening weekend. By comparison, top store in LA did 100,000 visitors in one month, and they thought that was good. Amazing momentum here.

First store in Hong Kong.

One of the best opening days of our retail history. Tim showed a short video, illustrating the energy. “I think I’ve watched that 100 times.” Now six stores in China and are going to do lots more. Total is 357 stores in 11 countries and will continue to invest in more and more stores and raise the bar in retail.

“Our products are at the core of everything we do and responsible for the momentum we have.”

The Mac: Can’t talk about the Mac without talking about Lion. Walt Mossberg said it’s the best computer opearting system out there. “I don’t think I could have said it better.” For the first time, Lion was digital download only. Incredible. Results have been staggering: over 6 million copies of Lion have been downloaded. 80% more than Snow Leopard. Another metric, user adoption. Percentage of people that upgrade to new software. Took Windows 7 about 20 weeks to reach 10 percent of their installed base. Lion did it in two weeks—one tenth of the time.

At the same they announced Lion, they announced the new MacBook Air. Customers love it and competitors have been trying to copy it, but finding it’s not so simple. Wired magazine said “After years of hoping and searching, I’ve finally found laptop nirvana.”

MacBook Air is just a portion of line-up of Macintoshes, the best they’ve ever shipped. Customers have really responded. MacBook Pro and iMac are the #1 best-selling notebook and desktop in the U.S. Momentum is not limited to a model. Year-over-year growth for the PC industry, Mac outgrew PC market by almost 6 times. (23% to 4%). Every single quarter for 5 years, the Mac has outgrown the PC market. Now approaching 60 million users around the world (they have 58 million).

Market share has steadily increased, and in US retail, Macs now sell roughly 1 out of 4 PCs sold in store. For those who’ve followed Apple for a while, this number was in the mid-single digits a while ago. But, still 77% of people buying something else. Incredibly high ceiling, and a lot of room to go. That’s the Mac. Very very pleased with how it’s going.

Music. iTunes+iPod. Only 10 years ago that iPod launched, and it not only revolutionized the way people listened to music, but also the whole music industry. Reminded all of us how much we love music. Became a part of our lives. Across that period of time, iPod became the #1 music player in the world. Market share has been above 70% for a very long time. Over that time, have cumulatively sold over 300 million iPods around the world. To put it in context, it took Sony 30 years to sell 220,000 Walkman.

Now the MP3 market is a mature market. But iPod is still a large and important market for Apple. Have sold 45 million iPods in the last year, ending in June. What’s more encouraging, is that half of them are going to people who are buying their first iPod. Many are going to people who are just being introduced to Apple through the iPod. This remains a very important business for us.

Can’t talk about music without talking about iTunes. Started about 8 years ago. Started with 200,000 songs, now have 100 times that many. 20 million songs for sale. Features of the store are absolutely incredible. Nobody could dream of this back in 2003. Number one music store in the world, and have now had more than 16 billion downloads. Mind-boggling, says Tim. That’s our music business. Very happy.

iPhone. “This could be a reason why the room is full today.” iPhone 4 in a very short period of time has sold over half of the total iPhones sold the entire time Apple’s been making them. #1 smartphone in the world. That momentum continued in the second calendar quarter, far outpacing the industry (125% growth vs 74% for smartphones). Not just in one type of markets. 93% of Fortune 500 companies are testing or deploying the iPhone. More important is that customers love iPhone. Consistently rated #1 in every customer satisfaction rating. Not #1 by a small amount; “in fact, the iPhone is pummeling the competition.” If you include satisfied AND very satisfied, iPhone goes to 96%.

Also, JD Powers has rated iPhone #1 in customer satisfaction number one for six consecutive times. Despite all this, iPhone has 5% share of worldwide handsets—not smartphones. Look at overall handset market because they believe that over time all phones will become smartphones. Enormous opportunity for Apple. That’s the iPhone. “More coming up on iPhone.”

Next up is youngest product category: iPad. People have been thrilled with original iPad and iPad 2 announced earlier this year. Customer satisfaction rating show a lot of love. 95% score in most recent survey. Showing up everywhere: iPads in schools help kids learn in amazing new ways. Believe iPads can change the way teachers teach and kids learn. Many educators agree. In fact, every state in the US now has an iPad pilot program or deployment in place today or going in place. Almost 1000 K12 schools have a 1:1 program so a kid can enjoy the iPad for the entire day. Not just in K12. Higher ed is also doing this. About 1000 universities in the US, including Stanford, Notre Dame, UPenn, U Chicago, all have iPads. In the cockpit, pilots are replacing 40 lb. flight bags with paper manuals and logbooks and nav charts and checklists, making the pilot more efficient and the plane more fuel efficient. “Yes, it’s true!”

Also showing up in hospitals, where medical professionals are using them to access patient records, review images, administer bedside care. Over 80 percent of the top hospitals in US are testing or piloting iPads.

From the boardroom to the backroom and everywhere in between, iPad is showing up. And at this point—and this is a stunning number—92% of the Fortune 500 are testing iPad. 3 out of four tablets sold are iPads. All Things D: “Consumers don’t want tablets, they want iPads.”

Scott Forstall: iOS accounts for 61% of mobile web market. iOS users love the Web and apps. Already more than 500,000 apps in the App Store, and more than 140,000 are made specifically for the iPad.

Customers have downloaded more than 18 billion apps. Customers are downloading apps at more than 1 billion a month. Apple has already paid more than $3 billion to developers on the App Store. Apple makes its own apps on the App Store. Here’s one brand new one: Cards.

Now you can create and mail beautiful cards from your iPhone or iPod touch. They can print it out on high quality paper and you can see the quality of the letterpress cards. 21 different designs in 6 different categories. All you do is create the card on your iPhone, and Apple will do the rest: print out card, put it an envelope, and mail it for you. If you mail it to an address in US, Apple will print US postal code on bottom, so you can get a push notification on the day it’s delivered. They’ll put Apple-designed postage on it. Mail it anywhere in the US and it’s $2.99 for the whoel shebang, and only $4.99 anywhere in the world. Cards will be a free download on Oct. 12.

Cards joins Apple’s other apps and more than half million other apps in App Store.

Now, on to iOS 5. It was just a few months ago that Apple introduced iOS 5 and have already seeded more than 100,00 developers. Such positive feedback that they can’t wait to get it in everybody’s new hands. Here’s a quick recap of the top 10 features.

1) Notifications: Notifications don’t block you. They come up at the top of the screen. Notifications show up on lock screen; swipe any it’ll take you directly to the app.

2) iMessage: New messaging service between iOS users. Supports iPhone, iPad, and iPod touch. Delivery and optional read receipts. Messages securely encrypted end-to-end.

3) Reminders. Location-based reminders: sets up a geo-fence for when you arrive at or leave places. All reminders sync with Exchange and iCloud.

4) Twitter integration: Have integrated Twitter deeply in the OS. Go into Settings and enter your Twitter login, and that’s the only time you have to do it. Integrated with Photos, Safari, YouTube, Maps, and more.

5) Newsstand. Makes it even better to experience newspapers and magazines on your iPad. Especially subscriptions. New Yorker, Martha Stewart Living, Esquaire, GQ, and more. Newspapers like the New York Times. New location in App Store that gathers all of the subscriptions together, so it’s easy to find them. Single location on your Home screen. And new issues are downloaded in the background. Icon gets set to new cover page, and it’s ready for you to read.

6) Camera. The camera on the iPhone is popular, so they’re making it even better. Now if you double-click on Home button, and if you tap on that you’re taken directly to Camera app. And you can use the Volume-up button to take the photo. Add optional grid lines, pinch to zoom, put your finger down and hold it on a given location and it’ll set auto-exposure/auto-focus lock. Once you’ve taken a photo, you can edit them on iOS device as well. There’s red-eye removal and one-tap enhance, which should make your photo look better.

7) Game Center. Already have more than 67 million people signed up using Game Center. Adding photos to see your friends, achievements points, friend recommendations, and game recommendations.

8) Safari. Showed you the stats earlier on how popular Safari is. New features: Reader. Reformats web page you’re on to work perfectly for device. Everything nice and easy for you to read. If you don’t have time to read the story right now, there’s the Reading List, which syncs between devices. Also, full-tabbed browsing to the iPad. Quickly switch between websites.

9) Mail. Added rich-text formatting, control indenatation, drag addresses, full-text search, flag messages, and for iPad you can swipe to get to inbox in portrait orientation.

10) PC Free. Used to have to own a computer to own an iOS devices. But customers want to use iOS device as their only device. Take it out of box, set it up, and you’re good to go. Gone beyond that to add support for wireless software updates. Do it all wirelessly.

Those are just 10 of the more than 200 new features that comes with iOS 5. Supports iPhone 3GS, iPhone 4, iPad and iPad 2, third- and fourth-generation iPod touch. Available on October 12, next week, and it’s a free update.

To walk you through iCloud, here’s Eddy Cue.

So, iCloud stores your content and wirelessly pushes it to all your devices. Integrated into apps so everything happens automatically. Take a picture on your iPhone, iCloud saves it to your cloud and automatically pushes it to all your devices. And iCloud is free.

iTunes in the Cloud: Over a third of the music sold on iTunes Store is purchased directly on iOS devices. Music is now on multiple devices. Keeping it sync can be frustrating. By album on iPad, but at the same time it also downloads to iPhone and iTunes on Mac and PC. No syncing, it’s that simple.

What if you want to listen to song on iPhone that’s not on that device? New Purchased area gives you a list of all albums and songs you’ve already downloaded. Tap a few buttons and you can download them at no additional cost. Works for TV shows too, and works on Apple TV.

Photo Stream: A lot of us are taking all of our photos on our iPhone. Photos are on Camera Roll, but you wish they were on all your devices. Take photo on your iPhone and it’s pushed to all your devices. Built right into Photos app in a new album called Photo Stream. And it downloads to iPhoto on my Mac, and see it on Apple TV.

Documents in the Cloud: iOS revolutionized documents because we don’t have to manage them. Now when you create new document in Pages on your iPad, it shows up on iPhone automatically. Documents updated across devices. Also a set of APIs so apps can store their own documents in the cloud. Pages, Numbers, and Keynote integrate this feature, as a free update. Available October 12th.

Books do the same things.

iCloud does a daily backup of your most important date from your devices, so you can easily restore data from iCloud. Contacts sync, as do Calendars. Everything updates across all devices. Even share calendars with other iCloud users. You get an ad-free Mail account that pushes mail to all devices. Find My iPhone is also a free part. And now you can locate your Mac as well.

Find My iPhone is really great, but what if you could find your family and friends. Today a new app called Find My Friends. See a list of family and friends sharing their location with you.

Sometimes you just want to share your location for a few hours or a day. Can create a Temporary Event. Invite friends to share location with you, but ends at a certain time: Saturday at 7pm, for example. Simple privacy controls let you turn off location sharing. Also, there are parental controls to prevent kids from disabling. All part of iCloud.

iCloud is free for iOS devices and Lion users. 5GB for Mail, Documents, and Backup, and free storage for purchased media from iTunes. Upgrade storage options available right on device.

iTunes Match: We used to acquire music on CDs, for example. What if we could give all the same benefits as purchased music to these? The music you bought is probably already there. Rather than upload all songs to iCloud, which would take weeks, they scan and match against iTunes. Upload the few tracks that aren’t in iTunes.

Go to your iPad, which has no music on it, turn on iTunes Match, and you can see all your music, playlists, etc. Edit or create a new playlists and it’s updated everywhere. Just tap a song to stream.

iCloud will ship on October 12th and iTunes Match will be available in US by end of October, and trying to get it to other countries before end of year.

Phil Schiller is up to talk about the iPod. Started the iPod because we loved music, and that hasn’t stopped—we still love music, and we’re stil making iPods. Here’s updates to two of the iPod lines.

First: iPod nano. Just last year introduced an all-new iPod nano. Customers love its compact design, multitouch display, volume buttons, integrated clip, pedometer, built-in radio.

Even easier to navigate, by showing one icon at a time and swipe to switch. Fitness is one of the most popular uses. Can use it when you go to the gym, or go on a walk. A lot of people like to run with iPod nano. Improved fitness experience. You can go on a run as well as a walk, right out of the box. Track all of your runs over time.

Created accessories as watchband. “We thought that was really fun.” So they added more clock faces, including working with Disney to bring you a Mickey Mouse or Minnie Mouse watch. Now it’s $149 for 16GB, and $129 8GB. Most affordable nano ever. That’s available today.

Next, iPod touch. iPod touch is most popular iPod and it’s no surprise. Ultra thin, retina display, FaceTime, HD video recording, gyroscope. It’s now the #1 portable game player. It’s a great device. And it’s now going to run iOS 5, so it’ll get all those featuers. For example, iMessage makes great sense, but now you can communicate with friends or family. Parents like it because it’s free & unlimited over Wi-Fi. And since it’s the most popular portable gaming device, so the Game Center features make perfect sense. iOS 5 is a tremendous update for iPod touch, and so is iCloud.

Now, wherever you are this iPod can have access to all of your music, books, documents, TV shows, all of them. So the iPod touch. It now comes in white as well. It’s been $229 for 8GB has dropped to $199. 32GB is $299 and 64GB is $399. Available October 12.

This is the line-up: shuffle at $49; iPod nano at $129 and $149; iPod touch at $199, $299, and $399. No mention of the classic.

Now, the iPhone. Last year, introduced the iPhone 4 and it’s a breakthrough phone. Despite comptetitors trying to copy it, they haven’t come close. #1 smartphone in the world and #1 in customer satisfaction.

How do you followup a hit product like the iPhone 4. Well, it’s the iPhone 4S. Retina display, glass on front and back, stainless steel band. Inside it is all new. New chip: A5 launched in the iPad 2 is now in the iPhone. Apple designed chip that’s dual core, delivers CPU performance up to twice as fast. Dual core graphics, up to 7x faster than previous iPhone. Looks great on games.

Mike Capps from Epic Games. Next iOS inclusive, Infinity Blade 2. Some graphics techniques not even seen on high-end consoles.

You’d think you’re trading off on battery life, so, for the first time in an iPhone, 8 hours of talk time on 3G. 14 hours of 2G talk time. 6 hours of 3G browsing, 9 hours of Wi-Fi, 10 hours of video, and 40 hours of listening to music.

2nd new features. Wireless system. Engineering has something new. “Intelligently switch between two antennas to transmit and receive.” Works even while your on a call. Makes even better call quality. It’s also faster. Can download data 2x fast. Previously could 5.8Mbps up. 7.2Mbps down. iPhone 4S 5.8Mbps up, 14.4Mbps down. This is what competitors claim for 4G performance. “We’re not going to get into a debate about what’s 4G and what isn’t.” iPhone 4S is as fast, if not faster. Next a world phone.

iPhone 4 came in GSM and CDMA. GSM works around the world, CDMA doesn’t. iPhone 4S is a world phone has both GSM and CDMA. Roam on GSM networks around the world. That’s the new antenna system.

3. The camera system. Know how great the pictures. iPhone 4 has already surpassed cameras and phones to post to Flickr. Set out to create an all new camera. Have already made it better than every other phone, so now challenging point-and-shoots. What’s the new camera like?

8 megapixel sensor. 3264×2448 resolution. Print out an 8×10 glossy photo that’s pixel perfect. 60 percent more pixels than in iPhone 4’s camera sensor. More pixels doesn’t make a picture better, makes it worse. The new sensor is a state of the art CMOS backside illumination sensor. 73% more light per pixel, giving richer colors and better lowlight performance. 33% faster capture. Hybrid IR filter on top of sensor. Better color accuracy. Usually a high-end DSLR feature. More uniform colors. The optics have a five-element custom-designed Apple lenses. 30% sharper, and f/2.4 aperture. Compared to most point and shoots it’s very wide. More light, better low-light performance.

A5 chip has an Apple-designed image signal processor does advanced face detection. It can tell if there’s up to 10 people into it and get auto exposure. 26% better auto-white balance. Really fast for super fast photos.

Other phones with 8MP cameras. Droid Bionic to take first picture: 3.7 seconds. Galaxy SII HTC Senstation 2 seconds. iPhone 4s 1.1 seconds, half a second longer to take a second pic.

Phil’s showing off some pictures, demonstrating how great the pictures are even untouched.

4. Video recording. Use that same camera to take stunning HD video. 1080p HD video. Image signal processor does real-time video image stabilization. Temporal noise reduction to improve video quality in real time.

5. One of the best kept secrets of features on the iPhone is AirPlay. iPhone 4S will do AirPlay mirroring, like iPad 2. Everything on screen can show up on your Apple TV. And if you don’t have an Apple TV, you can use HDMI cable to do mirroring over wire as well.

But the best feature of the iPhone 4S is yet to come. All about our voice. For decades, technologists have teased us with ability to talk to our devices. But so far, very limited. We really just want to talk to our device: “What’s the weather like today?” We want to ask whatever we want.

Feature is Siri. Your intelligent assistant that helps you get things done just by asking. Massive disclaimers.

Scott asks the phone what the weather is like today. Phone gets to meaning behind the words. Different words, same meaning.

“What time is it in Paris?” Comes back with a live clock.

“Wake me up at 6 am.” It sets an alarm clock for 6am.

Partnered with Yelp, so you can say “Find me a great Greek restaurant in Palo Alto.” It shows a list of 5 in Palo Alto, ranked by Yelp ordering.

“Give me directions to Hoover Tower.”

With Siri, you can ask Siri to read your messages to you, even use it to reply. Then use it to check calendar, schedule meeting.

“Remind me to call my wife when I leave work.” Knows who his wife is, puts up geographic reference to give alert when leaving work.

Web searches. “Search Wikipedia for Neil Armstrong.” Wikipedia, Wolfram Alpha can do dictionary definitions or convert currencies.

“How many days are there until Christmas.” 82 days until Christmas.

Tap and hold and tap the “i” button and it’ll tell you all the things you can do. Plays songs, genres, messages, manage calendar, reminders, get directions, email people, weather, stocks, alarms and timers, contacts, notes, search the web, Wikipedia, Woflram Alpha.

“Who are you?” “I am a humble personal assistant.”

Back to Phil. In addition to controlling with your voice. Does dictation. Anywhere you see a keyboard, you can tap the microphone button. Tap on it and get a simple user interface. Start to talk to it, tap done, and then it’s done.

Works on Wi-Fi and 3G. It’ll be built into iPhone 4s, in English, French, and German. Beta at the start. By beta they mean they’ll add more languages and more services over time.

Here’s a video about the iPhone 4S.

Apparently it’s the most amazing new iPhone EVER. Comes in black and white. 16GB for $199, 32GB for $299, 64GB for $399. With two year contract.

iPhone 3GS is still there, and iPhone 4. iPhone 4 is 8GB for $99. iPhone 3GS with 8GB free with contract. Pre-orders start on the 7th. Available on October 14th.

Oct. 14th. US, Canada, Australia, UK, France, Germany, Japan. On AT&T, Verizon, and Sprint. Japan on SoftBanka nd KDDI. 22 more countries on Oct. 28. By end of year, it will be in over 70 countries, over 100 carrier partners. Fastest rollout they’ve ever had for an iPhone. That’s the iPhone 4S.

Tim is back on the stage. Here’s a review of today’s announcements: iOS 5, iCloud, iPhone 4S.

“Now, when you look at each of these, they’re great and fantastic and industry-leading in and of themselves. But what sets them apart, and what puts Apple way out front, is how they’re engineered to work together so well. When you think about it, only Apple could make such amazing software, hardware, and services, and bring them together into such a powerful, yet integrated experience. I am so incredibly proud of this company and all of the teams that work so hard to bring all of the innovations that you’ve seen today to reality. I want to thank you for joining us this morning.”

And that’s it.

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