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Can the iPhone be Apple's next big thing?

Apple’s excellent April financial report — revenue up 43% and year over year and profits up 36% — masked the disturbing news that Apple’s iPod business has basically stopped growing. iPod units were up only one percent year over year. Most of Apple’s growth came from the Macintosh business.
Although Macs are on a roll at the moment, it’s risky for Apple to rely only on the relatively mature personal computer market for all of its growth. With the iPod now saturating, Apple needs its new iPhone business to provide a second growth engine.
Rubicon’s recent survey of current iPhone users showed that they’re mostly technophile early adopters. Although they are enthusiastic about the product and are using it heavily, there are not enough of these early adopters to produce the sustained demand Apple needs. The iPhone’s long-term success may depend on its upcoming software upgrades, and new iPhone products that are rumored to be coming later this year. If Apple can hit lower price points, if the 3G version of the iPhone ignites demand in Europe (something that has been lacking), if the planned enterprise e-mail solution works, and if the eagerly-anticipated third party software store is appealing, then Apple may be able to build the iPhone into its second growth engine. But the mobile market can be fickle, and Apple’s success is not by any means guaranteed.

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