Apple's Phil Schiller speaks at Macworld 2009. Source: Reuters

SAN FRANCISCO, Calif. -- Despite the threat of being overshadowed by the absence of its iconic CEO, Steve Jobs, and the parting of ways with the Macworld Conference and Expo, Apple mustered up a major announcement for its last appearance at the annual event.

The company said it is stripping the controversial digital rights management (DRM) restrictions from music sold through its popular iTunes online store.

Apple had faced criticism over the limitations since the debut of the iTunes Music Store. The DRM software tied most iTunes purchases to a user's iPod and PC and restricted their ability to share music or burn it to a CD.

Now, according to Phil Schiller, Apple's (NASDAQ: AAPL) senior vice president of worldwide marketing, the company is removing the DRM from eight million of the 10 million tracks on iTunes, with the final two million to follow by the end of the quarter.

During his keynote address here at San Francisco's Moscone Convention Center, Schiller also said that Apple would introduce new price points for iTunes music, expanding the $0.99 per-track pricing to also include songs for $0.69 and $1.29.

Schiller's news capped long rumors of changes ahead for the hugely successful iTunes digital music store. Jobs had acknowledged the criticism over DRM in 2007, when he penned an open letter defending Apple's policies while placing the blame on the music industry. In his missive, Jobs called on the labels to license their music without requiring it to be locked down by DRM.

And while iTunes has proven an unqualified success, with more than 75 million accounts, the store's $0.99 price tag per song -- whether it's the latest Britney Spears hit or a forgotten moldy oldy -- had been one of the major complaints against it. Now, pricing will be determined by the record labels, Schiller said.

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This year's event, which runs through Friday, marks more than a dramatic shift in Apple's iTunes policy. It also will be Apple's final participation in the Macworld events. And it's become one of the few Macworlds at which Jobs did not deliver the keynote address.

Apple said last month that its CEO wouldn't be making his traditional appearance at the show, sparking a fresh round of speculation about the health of its most famous employee, who earlier in the year had appeared noticeably thinner. Jobs, who underwent surgery in 2004 for pancreatic cancer, yesterday addressed rumors about his condition, revealing that he suffers from a treatable hormone imbalance -- rather than a recurrence of his cancer, complications from his surgery or other ailments.

The announcement aimed to quell concerns over Jobs' ability to continue at Apple's helm while clearing the air around a subject that threatened to overshadow Shiller's presentation at Macworld.

Rumors fail to materialize

During today's presentation, Schiller also said other aspects of iTunes would be changing as well. He said it would begin selling music on the iPhone and iPod Touch using either the AT&T 3G network or a Wi-Fi connection. At present, users of either device must sync them with their PCs to buy and transfer music.

In addition to highlighting the changes in store for iTunes, Schiller also detailed several software enhancements and validated a string of recent rumors about a new entrant in its MacBook Pro line.

But industry observers had also been expecting the introduction of a new line of Mac Minis and iMacs. Both are widely believed due for a refresh to include new graphics chips from nVidia, which Apple is currently using in its MacBooks.

Rumors had also swirled around an appearance of the next generation of the Mac operating system -- Mac OS X 10.6, nicknamed "Snow Leopard" -- an update believed to be due in the first quarter of this year. Also expected had been the unveiling of an "iPhone Nano," a smaller version of the hot-selling Apple phone. Speculation about such a device had been driven by images of compatible cases for such a device and analyst reports.

Instead, Schiller's presentation culminated in the DRM announcement, which he introduced with the phrase "One last thing," putting his own spin on Jobs' traditional "One more thing" tease before revealing the most important news of the day.

Page 2: iLife updates and the MacBook Pro goes big

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