The Mac was back at Apple in 2006.

A generation of technology buffs has come to know Apple Computer as a music company, but Apple spent most of this year overhauling its core lineup of desktops and notebooks with Intel's processors, to favorable results. The company logged perhaps its best financial year in its 30-year history, with record revenue and profits and a hefty stock price by the end of the year.

But that news was tempered by the warning that past financial results might have to be restated as Apple works its way through an investigation of its stock option award process, part of the wider re-examination of stock option backdating that tripped up dozens of Silicon Valley companies this year (including CNET Networks, publisher of CNET News.com). CEO Steve Jobs has managed to avoid any fallout from the investigation, but longtime executive and board member Fred Anderson stepped down from Apple's board in October as part of the inquiry.

The historic shift to Intel's processors got rolling at Macworld Expo in January with the introduction of the MacBook Pro and iMac with Intel's Core Duo processor. In May, the MacBook launch brought a much-needed update to Apple's consumer notebook lineup, which had essentially sat stagnant for more than a year as Apple searched for a lower-power alternative to the G5 processor found in its PowerMac desktops.

Apple's new MacBooks caught the attention of consumers and helped boost the company's share of the PC market by year's end. However, some users reported problems with the new systems, including overly hot case temperatures and mysterious blotches that began to appear on new machines, as well as a random shutdown glitch on some MacBooks that prompted Apple to issue a fix later in the year. A new ad campaign tweaking Windows also helped Apple draw more attention to its revamped Mac lineup.

Before Apple set the MacBooks on the market, however, it introduced a piece of software that got many Windows users thinking differently about Macs. Boot Camp allowed Intel-based Mac users to run both Mac OS X and Windows XP on their systems--not at the same time, but a full version of Windows nonetheless. The company plans to make Boot Camp, currently in beta form, part of the upcoming release of Mac OS X 10.5, code-named Leopard.

Even with all the attention on Macs, Apple did not neglect the now 5-year-old iPod franchise. The iPod Nano was updated in September with new colors and new prices, and Apple also shrank the iPod Shuffle to a tiny clip-on device sure to get lost by absent-minded music lovers. The company closed the year with no signs of giving up its huge lead in the market for music players, despite the launch of Microsoft's Zune.

The next target for the iTunes/iPod juggernaut appears to be video. At its September "Showtime" event, Apple announced plans to make full-length movies available from several Disney-owned studios on the iTunes store. It also dramatically expanded the number of television programs available via iTunes, and, in a rare move, publicly discussed a product that has yet to become available: iTV. Apple is planning to launch iTV--an internal code name--in early 2007 as a wireless link between a television and a PC that would let users watch movies or television shows stored on their Mac or PC on their digital television.

Of course, no Apple retrospective is complete without some of the ever-present rumors surrounding the company. Looking back at the year, the iPhone rumors proved the most persistent, with several industry analysts willing to go on record predicting the introduction of a combination smart phone/iPod-like device in 2007. Cisco burst that bubble--in name, at least--in December with the announcement of its own iPhone device. Apple watchers also pondered patent applications that hinted at a new touch-screen capability for the iPod, as well as wireless capabilities similar to what Microsoft installed in the Zune player.

--Tom Krazit

2006 Highlights

Jobs: New Intel Macs are 'screamers'

Apple CEO Steve Jobs introduces the first Intel-based Macs, almost a half a year ahead of schedule.

Apple celebrates 30 years

From the Apple II to the Mac to the iPod, Steve Jobs and company have kept on innovating--and gaining rabid fans along the way.

Windows on a Mac is here

Apple says Boot Camp enables Intel-based Macs to run XP natively. Beta's ready for download.

New Macintosh ad campaign kicks off

With Microsoft's Vista operating system suffering setbacks, Apple Computer seizes an opportunity.

Apple releases 13-inch MacBook

Final member of Intel-based laptop family comes in three models, starting at $1,099 for a 1.83GHz processor.

Apple, CA wrestle with stock option irregularities

Internal probes at both companies reveal possible problems in past employee stock options policies.

Macs see growth spurt

A slow quarter for PC makers has no effect on Apple, as consumers snap up new MacBooks with Intel chips.

Apple shows Leopard's spots

At developers' conference, company previews first Intel-based desktop and offers a taste of new OS features.

Apple forges path to digital living room

At event in S.F., company unveils new iPods, movies on iTunes, and device that links PCs to TVs.

A peek at the iTV wireless router

In rare advance look at an unreleased product, company shows device that will stream movies from a computer to a TV.

Apple board member resigns in options probe

Former chief financial officer steps down from company's board amid an investigation into stock option grants.

Apple results beat the Street

Buoyed by strong Mac and iPod sales, results sail past expectations. But company's holiday outlook is less rosy than some analysts had hoped.

The iPod at 5: The little gadget that could

The ubiquitous white earbuds revolutionized digital music and consumer electronics in October 2001, and Apple shows no signs of letting up.

What the 'iPhone' should do

News.com's Scott Ard says if Apple makes a smart phone, there's a way to make it stand out from the pack.