9:56 A.M. (PDT)
The Apple store is down in anticipation of today’s event–always a good sign at an Apple affair. Inside the theater, there’s little decoration aside from the white Apple logo onstage.

10:00 A.M.
Lights dim. And it’s showtime! Jobs takes the stage; not looking like he’s won any competitive eating contests lately, he offers up the obligatory “reports of My Death Have Been Greatly Exaggerated” joke and then quickly moves on to the topic of the day: music.

10:02 A.M.
Jobs notes that there are now 65 million iTunes accounts with credit cards and that iTunes is the number one music distributor in the world.

“We’re adding something to iTunes today,” says Jobs. The first addition: HDTV shows. The second…wait for it: NBC is coming back to iTunes and bringing all its shows with them. And in HD.

10:10 A.M.
Jobs announces iTunes 8 and as expected, it includes HD support, an iPhoto-style browsing feature and the rumored “Genius” feature, which automatically creates playlists from songs in users’ iTunes libraries. Genius is an opt-in service. It collects media preferences from all participating iTunes users and algorithmically analyzes them to generate “Genius” playlists. The more you participate, the smarter Genius gets, says Jobs. It works with movies and TV too.

Jobs gives the audience a quick demonstration of the Genius feature and moves on to the iPod. He notes that the iPod has a 73.4 percent market share in the U.S. and that 90 percent of all cars in the U.S. offer iPod integration. Cumulative sales of the iPod since it was first announced are over 160 million.

10:15 A.M.
First iPod announcement: The 80GB iPod Classic has been upgraded to 120GB at the same $229 price point. Second: The new iPod nano–it’s the vertical device that’s been rumored. Very slick. “It’s the thinnest iPod we’ve ever made,” says Jobs. It’s got a new curved aluminum design, enhanced user interface, an accelerometer to put images into landscape mode, built-in Genius support, 24-hour battery life for music or four hours for video and a “shake-to-shuffle” feature that does what you’d expect. Jobs shakes his nano to demonstrate as it shuffles to a Dean Martin song. “Uh-oh. Now you guys know I listen to Dean Martin.”

10:24 A.M.
The new nano is apparently far more environmentally friendly than its predecessors. Jobs says it is the cleanest, most toxin-free iPod Apple has ever built. It comes in eight colors, in 8GB and 16GB models, and they’re shipping today.

10:30 A.M.
Jobs announces two new pairs of Apple headphones. The first features a robust cable controller that allows users to control volume, etc. The second is a better set of in-ear headphones. He quickly moves on to Apple’s new iPod Touch. It’s similar to its predecessor, but thinner, and features a better speaker, a better UI, Genius-support and built-in Nike+iPod support. It also features App Store–100 million apps have been downloaded from the App Store in the two months since it was launched.

10:39 A.M.
After a quick demo of the iPod Touch, Jobs invites Phil Shiller to the stage to demonstrate some new games. First up: “Spore Origins,” which truly looks just incredible. “My creature has eyes … but no brain,” says Schiller. The game uses the device’s accelerometer to steer spore creatures through the universe as they eat and get eaten.

10:43 A.M.
The next demo: Gameloft;s Real Soccer 2009. With an instant-replay feature, it seems pretty robust. Last up: EA’s “Need for Speed.” Also quite impressive from a graphics and game-play standpoint.

10:45 A.M.
Jobs returns to the stage and notes that the new iPod Touch’s environmental footprint is similar to the Nano’s. It’s got great battery life, App Store support, tons of games, 8GB, 16GB and 32GB models and starts shipping today,” he notes, adding that “we think it’s the funnest iPod ever” before introducing Apple’s newest iPod Touch commercial.

10:47 A.M.
Jobs announces iPod Touch 2.1 and iPhone 2.1. iPhone 2.1 resolves a number of issues that have been troubling the device. Reception issues, dropped calls, overlong backups–2.1 should remedy all these things. “iPhone 2.1 is a big update,” he says. “It fixes lots of bugs. You’ll get fewer call drops. You will get significantly improved battery life, for most customers. We have fixed a lot of bugs where if you have a lot of apps on the phone, you’re not going to get some of the crashes and other things that we’ve seen. Backing up to iTunes is dramatically faster. And so just a lot of bugs have been fixed.”

iPod Touch 2.1 available today. iPhone 2.1 available Friday. “This is our strongest iPod line-up ever,” says Jobs as he does at every event like this. He then welcome’s Jack Johnson to the stage.

10:57 A.M.
Jobs returns to the stage to thank Johnson. Seeing the two onstage together, it’s hard not to think about how thin Jobs looks next to the singer. He certainly seems healthy, though.

And … one more thing?

Apparently not. “Go out and buy some of these great products. Thanks for coming.” And that’s it. Time to download “Spore” for iPhone, I guess.

For the record, Apple (AAPL) is trading lower today, as of this writing.

New rule: stop bitching that Apple cut the price of the iPhone. Early adopters always pay a premium. Early adopters being a business term meaning dips***s who stand in line for six hours for a freaking phone. It’s not a price cut, it’s a repeal on the nerd tax. If you didn’t have to be the first on your block to have the latest gizmo, you’d now have an extra $200 to spend on your imaginary girlfriend.”

–Bill Maher on the iPhone price cut

Apple co-founder Steve Wozniak is as peeved as anyone about the iPhone’s recent price cut–more so because he’s apparently purchased upward of 20 of them for friends (friends like Kathy Griffin?).

During a Q&A session this past weekend at the ConnectWise Partner Summit in Tampa, Fla., Wozniak lambasted Apple for dropping the iPhone’s price by $200 just 68 days after bringing it to market. “Nobody expects a product to drop that much in price in such a short time,” Wozniak told CRN. “Steve Jobs and everyone expects technology to drop in price. The first adopters always pay a premium. I am one of them. I am used to that. But that one was too soon, too harsh.”

Wozniak was critical of Apple’s $100 iPhone credit plan as well, noting that it’s not exactly worth $100. “Why don’t you just take my receipt and give me the money back? And of course it always comes back to Apple Store credit. So instead of getting $100 back you are getting $50 back, sort of. It is very optimal to the company. I feel badly about the situation for everyone. I don’t think Apple should have even done it. Maybe a very much more gradual price reduction, $50 at first, or find ways to bundle it into a savings on your account.”

Which makes it not just good public relations, but a shrewd effort to drive more business at Apple’s stores as well. Because many of those $100 credits (which cannot be used on iTunes) will likely be used toward the purchase of products costing more than $100. And those that are used on products costing less probably have higher margins.

“If they spend less than $100, they get less out of the credit,” Ezra Gottheil, an analyst at Technology Business Research, told PC World earlier this week. “I suspect some of Apple’s lowest-price items, like the Shuffle and accessories-like cases, have much higher margins than say, the MacBook. And if they spend more than $100 [at the store], Apple is getting the profit on the purchase beyond $100. Long term, this is a big win for them. With the unqualified apology enhancing the effect of respecting the customers, it’s well worth [the $25 million]. It may be the best screw-up since ‘New Coke.’ “

Clearly, the move is having the effect Apple CEO Steve Jobs intended. It’s tempered a major sales objection and expanded the market for the device. Question is, can Apple maintain those kind of sales numbers? Munster doesn’t think so. He believes this initial surge will eventually scale down, leveling off at a solid 50% increase in sales compared with the pre-price-cut number. Munster reckons Apple will have sold a total of 1.28 million iPhones by the end of the quarter.

A lot more customers. Especially if Apple’s to hit Jobs’s target of selling 10 million iPhones by the end of 2008. Because, as Silicon Valley Insider notes, that’s a daunting goal, even for a company that hit the one million mark in 74 days. “Is 1 million a good number or not?” Dan Frommer asks. “It’s not–not even by Apple’s own low-ball public sales goals. Jobs has announced plans to sell 10 million iPhones by the end of 2008–a year and a half after launch. But a million iPhones in 74 days works out to a little less than 5 million iPhones per year–if you’re selling them at a consistent rate. Apple sold 270,000 machines in the first two frenzied days it was on sale, which means it took 72 more days to sell another 700,000 phones. That’s a 3.6 million annual run rate, which would give Jobs a total of 5.8 million by the end of 2008.”

And today, many observers are describing the $100 credit as an admission by the company of a rare marketing misstep. Buried in a firestorm of hate mail from betrayed loyalists who stood in line June 29 to be the first to pay as much as $599 for the viciously hyped device and fearing that Apple had tainted its integrity, CEO Steve Jobs blinked.

Or did he?

Because let’s face it, Apple’s $100 mea culpa and the events that preceded it conjured up untold millions of dollars in publicity. The company, its products and the emotional investment some consumers have in them have been in the headlines all week. Think people would get this worked up over a Razr price cut? … And Apple isn’t exactly going to suffer from those $100 credits that probably cost it half that sum to issue and will drive consumers back into its stores. Think about the iPhone price cut that way, and the “fiasco” begins to look more like an ingeniously scripted marketing stunt.

“So why did [Jobs] do it,” asks PBS columnist Robert Cringely. “Why did he cut the price? I have no inside information here, but it seems pretty obvious to me: Apple introduced the iPhone at $599 to milk the early adopters and somewhat limit demand, then dropped the price to $399 (the REAL price) to stimulate demand now that the product is a critical success and relatively bug-free. At least 500,000 iPhones went out at the old price, which means Apple made $100 million in extra profit.

“Had nobody complained, Apple would have left it at that. But Jobs expected complaints and had an answer waiting–the $100 Apple store credit. This was no knee-jerk reaction, either. It was already there just waiting if needed. Apple keeps an undeserved $50 million and customers get $50 million back. Or do they? Some customers will never use their store credit. Those who do use it will nearly all buy something that costs more than $100. And, most importantly, those who bought their iPhones at an AT&T store will have to make what might be their first of many visits to an Apple Store. That is alone worth the $50 per customer this escapade will eventually cost Apple, taking into account unused credits and Apple Store wholesale costs.”