Apple has reportedly begun production of the iPhone, according to a research note provided to Barron's by Prudential analyst Jesse Tortora. The researcher notes that "the production ramp has already begun" on a small scale and should be ready for a full launch late in the first quarter of 2007 or early in the second. A music phone is likely to mark the launch with a more full-featured smartphone following one or two quarters later, Tortora said. The analyst further anticipates the release of a widescreen iPod in the same time frame and claims evidence that the company is hiring game designers. "Apple may have interest in entering the video game market longer-term," he said.

Accordingly, Tortora has raised his valuation of Apple stock from $74 to $87 based on sales estimates for the iPhone, which could sell between 7 to 8 million units in 2007, according to predictions. The introduction is also likely to benefit Broadcom and Intel, both of whom have been singled out as potential part suppliers for Apple's cellular device.