What will Apple do for its iPhone encore?

Macworld 2008 is now officially underway in San Francisco, and the question on everyone's minds heading into CEO Steve Jobs' annual keynote is how--or even if--the computing giant can top itself yet again. After all, at Macworld 2006 Jobs unveiled the first Intel-based Macs, galvanizing a sales upswing that nearly doubled Apple's market share, and a year ago, he finally unwrapped the iPhone. Speculation this time around runs the gamut from an iTunes-branded movie rental service to a MacBook skinnier than Nicole Richie--chances are also good that Apple will at least preview its promised iPhone SDK, and buzz suggests the device will grow in capacity from 8GB to 16GB, or even as much as 32GB. (A quick look into FierceDeveloper's crystal ball also reveals Jobs will take the stage in a black turtleneck and faded blue jeans--you heard it here first!)

But whatever Jobs reveals at Macworld, it's hard to imagine Apple topping the iPhone: Roughly six months after its retail release, the shadow it casts over the mobile landscape continues to grow. On Monday, search giant Google announced a series of improvements to its Grand Prix integrated iPhone software suite, debuting an improved user interface alongside revamped Search, Gmail, Calendar and Reader mobile applications. According to a New York Times feature published the same day, traffic to Google from iPhones surged at Christmastime, surpassing incoming traffic from rival mobile devices despite representing just 2 percent of the global smartphone population. Google debuted the first iteration of Grand Prix about six weeks ago--it admits this kind of accelerated developmental turnaround was not possible pre-iPhone. The NYT article goes on to note that iPhones now account for a disproportionate percentage of Yahoo mobile traffic, and mobile advertising firm AdMob saw its iPhone traffic spike around the holidays as well.

So it's all the more remarkable to consider that iPhone almost failed to make its Macworld 2007 debut at all. A must-read feature in the new issue of Wired recounts the device's troubled birth, culminating in a malfunction-plagued fall 2006 demo that left the tantrum-prone Jobs almost mute--an experience so unnerving, a source said, "It was one of the few times at Apple when I got a chill." Three months of employee shouting matches, resignations and meltdowns later, in mid-December 2006 Jobs presented an iPhone prototype to then-AT&T CEO Stan Sigman, who reportedly dubbed it "the best device I have ever seen." According to Wired, a year later about 40 percent of all iPhone buyers are new AT&T subscribers, and the device has tripled the operator's volume of data traffic in cities including New York and San Francisco. No way does Macworld 2008 top that--after all, you can't revolutionize a revolution that's still taking place. -Jason

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