How Apple's iPhone Can Keep Kicking Butt

The strongest statement Apple’s (AAPL) earnings report made yesterday: The iPhone is crushing it. And while the market is only going to get more competitive this year — with the Palm Pre and other smartphone launches — it should be easy for Apple to keep its strong growth going.

Despite the crappy economy, Apple’s mobile products are still delighting consumers and developers. Apple announced that it sold 3.8 million iPhones during the March quarter, only a slight downtick from the Christmas-fuelled quarter before it. Combined with the iPod touch — about 3 million shipments — the company shipped 7 million iPhone OS devices last quarter. It’s also close to “shipping” its 1 billionth iPhone app, a very impressive milestone in less than a year.

In short, very strong performance. How can Apple keep this up?

  • Keep its iPhone software platform ahead of the competition. This is already happening via the iPhone 3.0 software Apple announced last month, which will roll out this summer.
  • Keep making better iPhones. That’s going to happen this summer, too. Apple will likely unveil a new iPhone (or multiple) in June at its Worldwide Developers Conference. It’s probably not going to be insanely different than the current iPhone, but will be faster and better.
  • Keep lowering iPhone prices. The $199 iPhone is selling more than twice as well as the $399 iPhone. How about a $99 model? We think we’ll see one this year.
  • Keep expanding iPhone distribution. Apple says China will happen this year. More U.S. carriers would be nice, too, but that’s not going to happen for a while.
  • Keep expanding the iPhone OS platform. The iPod touch is awesome. How about a bigger tablet-like device that’ll sit between our iPhone and iMac?

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