The third year is a charm. The fourth year will wear thin. Apple's 4th version of the iPhone -- not to be confused with a 4G iPhone -- is due this summer, and it's not likely to be any different than the past three. Meanwhile, thinner phones have arrived like Google's ( GOOG) Nexus One, and bigger, brighter screens from the Motorola ( MOT) Droid have beaten Apple at its own game. No wonder why Apple fought back last week, charging Android phone maker HTC with patent violations.
Current speculation holds that the new iPhone will have a user-facing camera for video calls. One thing it won't have: Verizon ( VZ), the nation's biggest wireless camp with some 91.2 million customers. AT&T ( T) seems to have extended its exclusive iPhone selling agreement through the end of the year, delaying the liftoff of the Verizon iPhone.
Apple says it has sold 40 million iPhones and analysts estimate the company enjoys lavish 58% gross margins on the device. In comparison, Research In Motion ( RIMM) sees 43% margin on its BlackBerries. The iPhone is a lucrative franchise for Apple and its strongest growth engine. But without a new market -- like the one Verizon would open up -- or a striking redesign, holding these peak levels will be a challenge.