Apple Retests Its Consumer IQ

"Part of it is being a small company," said Munster, who doesn't hold Apple shares but is generally bullish. "I don't know when that's going be solved." (Piper Jaffray has not done recent investment banking for Apple.) The company currently has a backlog on two of its new products, after facing supply shortages of its iPod digital music-player line over the holidays.

Likewise, the company has at times fallen out of step with demand either because it slowed product development or because it came out with flops, such as the G4 Cube desktop of several years ago.

"That's why people are so passionate about Apple's products, because they innovate. That to me is [also] the real risk," Munster said.

Right now, of course, everything appears to be clicking with the iPod. In its fiscal first quarter for instance, Apple shipped 4.58 million of the devices, up from just 733,000 a year earlier. Thanks to that kind of growth rate, the company claims that it now has some 65% of the market for digital music players, up from 31% a year ago.

Meanwhile, the company has seen a pickup in sales of its bread and butter: the Macintosh computer line. Revenue from Mac sales increased 26% in the recently completed quarter, a rate about double that of the PC industry as a whole.

And Apple is clearly not standing still. At the MacWorld conference in San Francisco last month, the company rolled out two new cut-price products: an iPod Shuffle and the Mac mini, a bargain-priced computer.

Early indications are that both products, which are targeted at the low end of both markets, will be successes. Not only does Apple have a backlog of orders for the iPod Shuffle and the Mac mini on its Web site, but a recent Wall Street report found that the company's U.S. stores were all but sold out of both products.