Apple's

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long-awaited cell phone is ready for production, says a Wall Street analyst.

Though there's no confirmation from Apple and no leaked photos of the official prototype, American Technology Research analyst Albert Lin released a report Tuesday saying, "The kinks have been worked out of the new phone and that it is set for production."

Lin, a wireless technology analyst who has been tracking the Apple phone developments, says the device will be a "smartphone." Typically these are converged devices with operating systems that manage features like music collections, call lists, Web access and cameras.

The design, says Lin, will be an "iPod nano-like candy bar form factor and come in three colors."

"We believe this smart phone has been in development for over 12 months and has overcome substantial challenges including design, interference, battery life, and other technical glitches. As we have seen in the smart phone space, it is very difficult to produce a converged product of high quality," Lin writes.

Speculation had been brewing for the past two years that the iPod maker was working on a music phone. Earlier this year, Morgan Stanley analysts said two Taiwanese contract manufacturers were vying for the job to assemble the so-called iPhone.

Investors and industry observers have been watching these developments closely to see if Apple can repeat the runaway success it has had with the iPod digital music player. The sky-high expectations are built on the assumption that Apple can exert its design power and craft a hugely compelling phone.

Consumers have proven to be responsive to new phone fashions. No. 2 phone maker

Motorola

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, for example, revitalized its business largely through the worldwide popularity of its sleek Razr phone. Handset leader

Nokia

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continues to sell the most cell phones, but has failed to create an iconic design of late.

Lin expects Apple will start selling the phone early next year and he has raised his price target for Apple to $91 from $75, on the assumption that the iPhone will be a hit.

If the phone fetches $200 apiece and manages to capture about 1% of the market, or sell 10 million phones, Lin sees the iPhone contributing $2 billion in annual revenue to Apple.

Apple shares were up $1.41 to $69.78 in afternoon trading Tuesday.