Apple Inc CEO Steve Jobs took the wraps off the highly anticipated iPad tablet and pitched it at a surprisingly low price, aiming to bridge the gap between smartphones and laptops.

Jobs, who returned to the helm last year after a much-scrutinized liver transplant, took the stage at a packed theater on Wednesday and showed off a sleek, half-inch thick tablet computer with a 9.7-inch touchscreen.

The iPad can run movies, games and a gamut of applications. And taking on e-readers like Amazon's Kindle, Apple announced a digital bookstore called iBooks that will let users buy from publishers including Pearson Plc's Penguin, News Corp's HarperCollins, and Hachette Book Group.

What once occupied half your living room can now be dropped in a bag, said Outsell Inc analyst Ned May. It's pulling together a variety of needs (in) a universal entertainment device.

The iPad will sell from late March for as low as $499 for 16 gigabytes of storage. An extra $130 is needed to equip it with third-generation wireless capability.

Pricing is very aggressive, so it's pretty positive from a mass adoption perspective. It was about $200 lower than what I was expecting, said Brian Marshall, an analyst with Broadpoint Amtech. Other analysts had speculated that the tablet may cost as much as $1,000.

Shares of Apple rose to as high as $210.58 after the pricing news, up 5.5 percent from their session low. The stock closed up 0.94 percent at $207.88 on Nasdaq, within reach of its all-time high of $215.59 logged on Jan 5.

Apple announced a data plan with AT&T Inc, which appeared to have beaten out Verizon Wireless for the deal. Shares of AT&T, Apple's carrier partner on the iPhone, rose 1.14 percent while Verizon Communications Inc fell about 1 percent.

IPHONE-LIKE ANTICIPATION

The iPad is Apple's biggest product launch since the iPhone three years ago, and arguably rivals the smartphone as the most anticipated in the company's history. Wednesday's event follows months of feverish speculation on the Web and on Wall Street.

Apple hopes to sell consumers on the value of tablets after other technology companies, including Microsoft Corp and Toshiba Corp, have failed in recent years. As iPod sales wane, Apple is looking for another growth engine.

Jobs said there was a need for a new type of device that would sit between a smartphone and laptop computer, and that can perform tasks like browse the Web and play games.

If there's going to be a third category of device, it's going to have to be better at these kinds of tasks, said the chief executive, dressed in his trademark black turtleneck and blue jeans.

The iPad has a near life-sized touch keyboard and supports Web browsing. It comes with a built-in calendar and address book, Jobs said, calling it awesome.

Some analysts said the iPad, with its multimedia bells and whistles, is a tough competitor for Amazon's Kindle. But others noted that the Kindle costs less -- $259 for the cheapest version -- and was more tailored for long-form reading.

This is not an e-reader -- this is a device that can be used to read books, Cowen & Co analyst James Friedland said of the iPad. This doesn't change the game -- at the same time, Apple is a formidable competitor and our view is that over time, Apple and Amazon will emerge as the two largest players in e-books.

Shares of Amazon took a brief hit but recovered to end 2.7 percent higher at $122.75 on Nasdaq.

In an online poll on reuters.com before Wednesday's media event, 37 percent of more than 1,000 respondents said they would pay $500-$699 for the tablet. Nearly 30 percent weren't interested, while 20 percent said they would pay $700-$899.

(Reporting by Gabriel Madway, Alexei Oreskovic; Writing by Edwin Chan; Editing by Richard Chang and Tiffany Wu)

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