I think the iPhone will meet its one and only sales projection of 10 million units by end of 2008, especially if they sell $299 and $399 versions, and continue to upgrade the radio, the storage and the software. But that isn't going to make Apple a 50 billion $ company, and I'm talking about 2010+.
I couldn't quite figure out why Jobs was hyping it this much. It's not just a usable and fun to use phone to him, but it seems like its the way forward to the next 30 years, and with all the iPhone news, Otellini's comments on Silverthorne, the Palm Foleo, Jobs/Gates' talk about the "Cloud" at Mossberg's conference, and finally the seeming fact that no one is excited about personal computers anymore, it finally dawned on me that, yup, the handheld computer is the way forward (for Apple).
I don't know about you guys, but personal computers have more computing power then 95% of the market's needs. Most especially the consumer market. The usage model for today's users is Internet stuff, and we have ample horsepower for that. Even gamers seem satiated. The hardware vendors seem desperate for MS to make Windows slower so that there is a good reason to upgrade!
I mean, were most people really excited to see the Mac Pro go from a 2-socket 4-core 2.66 GHz machine to a 2-socket 8-core 3 GHz machine? Were people excited about the MacBook upgrades? Really, if the MacBook goes from 2 GHz to 2.4 GHz, I don't think it'll make people very excited anymore. It seems that a 2 GHz Core 2 Duo will serve the needs of 95% of the users out there. That's just not good news to PC makers.
The path does seem to be the "Cloud".
The cloud is a wireless internet infrastructure. It really needs to be 100 mbit/s (probably 1000 mbit/s) before it becomes the "Cloud", but once that happens, I think it finally spells a sea change in the market. The telcos will be victorious over cable companies (unless the cable companies go wireless) in the long war between the two for providing Internet access. Why? You just buy a TV with a wireless built-in and you can view any kind of content you want.
So, why do I think a handheld computer will replace a personal computer? Primarily because of the problems with syncing. It's far easier, if you just had one device. All assuming that we reject putting our data on some server somewhere. So, if there is choice between the two, the Cloud will dictate that it'll be your hand held one because all of your vital computing stuff can then be with you at all times.
The stars are aligned. Usage models for computing isn't compute-bound anymore, its network-bound. It's amazing, but the software has to catch up to today's hardware. It never will (software design cycles are longer than hardware ones), so the hardware guys will slow down and concentrate elsewhere. The elsewhere is in the ultra-mobile space.
Today's cell phones contain hardware about equivalent to a laptop circa 2000, maybe 2001. In 3 or 4 years, they will be as powerful as today's laptops with ~1.5 GHz dual cores. In 3 or 4 years, I don't think I'd be needing a more powerful personal computer than what I could get today. I don't think I'd need a 24+ inch monitor either. (Where does a personal computer go from today? Other than replacements and incremental penetration into the population?)
So, all I'd do is dock the hand held computer to a 24 inch monitor with keyboard and mouse or a laptop cradle with 15" monitor and keyboard & trackpad, and away I go. (There could be the wireless dock option too). Perhaps the caveat is the need for terabytes of storage presuming I have a video library, but that could come with the TV or your home data server.
So, this is where the iPhone (and AppleTV) comes in. In 2010, when the iPhone has a few 1 GHz processors and 64 GB of flash (or 250 GB of disk if Apple intends to make a disk based one) operating over 50+ Mbit/s WiMAX, will you really need to have a separate computer?
If the answer is no, then you have to ask the same question in the business world full of cubicle farms. If you have your work computer/cell phone with you 24/7, I'm sure the managers won't mind. Heck, they may even be doing something Green by letting you telecommute more often as long as you are still productive, wherever you may be. If that answer is no, than oh boy.
The cell phone market is one where 90+% penetration into the population is possible, with a big fraction having more than one. PC penetration? I'm not sure if it has broken 50%, what is it, 40%?
This is where iPhone is going, and I think Jobs wants to ship 50+ maybe 100+ million units a year eventually.
A note about AppleTV. It's an "iPod" with a TV as screen. Apple knows that the living room is a big market, but I don't think they quite know how to do it yet, hence Jobs states that AppleTV is a hobby. I'm beginning to think that Apple indeed has to make an actual "Apple TV" that is in essence a immobile iPhone - an OS X computer TV. One with a wireless capabilities. This is assuming they can convince the content makers to go electrons only. I presume AT&T would be a willing partner.