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Entry-level iPhone could boost sales to 25m in 2008

Although everyone's eyes are on the launch of a top-tier 3G iPhone next week, the release of a lower-cost entry phone could push Apple to ship more than twice as many phones as originally forecast this year, says RBC Capital Markets.

In a research note to investors, analyst Mike Abramsky of RBC estimates that either a secondary, entry iPhone model or an unusually low price for the near-certain 3G model could accelerate Apple's sales growth between 50 to 100 percent — enough to boost the financial institution's earlier forecasts of 14 million units in calendar 2008 to between 20 and 25 million, doubling again in 2009 to as many as 40 to 50 million phones.

Such a climb could lead to between $2.7 billion and $5.4 billion in extra revenue for Apple over its fiscal 2009, Abramsky says.

In exchange, however, Apple also presents a short-term risk to investors, particularly if the Cupertino, Calif.-based company doesn't release expected products or disappoints its audience with high pricing or a lengthy delay between announcements and actual ship dates.

These concerns are softened by Apple's skill at maintaining demand, according to the analyst. North American demand for a new iPhone is particularly high, with roughly 70 percent of those in an RBC poll who are interested in the device describing themselves as potential first-time buyers rather than existing users.

Apple chief Steve Jobs is also expected to play a significant role by himself: rather than simply announce an updated iPhone, the company co-founder is predicted to fully flesh out iPhone 2.0's new features in his WWDC keynote speech, which Abramsky speculates could include video chat, GPS navigation, and browsing enhancements made possible through the faster 3G Internet connection of the touchscreen device.

The combined attention should also contribute to Mac marketshare outside of North America, the analyst says, as additional iPhone demand should further aid the "halo effect" created by exposure to Apple's lineup.