I predict that the iphone will do very well initially with early adopters and Apple fan-boys (and girls).

After initial demand has been met (6-12 months) there will be down swing as people realize that the competition offerings are pretty comparable. Initial limitations of the iphone primarily limited battery life and the lack of a replaceable battery will also be a factor.

Version 2 of the iphone (plus a non-phone ipod version) will fix some of the problems and sales will rebound. Also prices will start to decrease.

After a couple of years, Apple will reap a healthy percentage of new sales but not dominate the way that the ipod has. I think a market share of 5-10% in the medium to long term is likely.