Apple Draws Strength From Mac

Conservative figures peg iPhone shipments between 2 million and 5 million this year and more than 10 million in 2008. That's well below the nearly 100 million phones that No. 1 handset maker Nokia (NOK Quote) sells each quarter, but that could match or exceed Research In Motion's (RIM Quote) BlackBerry sales.

Some of these predictions are based on the fanciful notion that the $500 and $600 iPhones will be swept up in the luxury-goods craze along with ritzy handbags from Coach and jewelry from Tiffany.

Apple has tried to manage investors' stratospheric expectations for the iPhone. In April, the company said it had shifted engineers from its Leopard project to the iPhone development team to ensure that the iPhone's launch wouldn't be delayed.

But investors' true skittishness surfaced in May when Apple's stock plunged 3% after a Web site floated a rumor that technical glitches would hinder the device's debut.

Even if the iPhone hits store shelves on time, there's still the risk that consumers won't pay breakup fees to ditch their current cellular service contracts to sign up with AT&T (T Quote), which has exclusive rights to sell iPhone service for five years.

What's more, there are always risks that users will experience problems in the device's functionality, which could deter others from paying Apple's premium price.