Tom your concerns have been or will be addressed in the next two months. The App Store is the "killer app" you are looking for. It won't make much itself, but turning the iPhone into a pocket computer (which is exactly what the iPhone does offering over 1000 apps with many of them free) it will sell iPhone galore (just like iPods sold very well after iTunes caught on). Apple is also addressing the the "we sell at a premium" perception though it isn't essential. Given that they knocked the cover off the ball the last two quarters so-called "soft economy" price obviously has not been a primary drawback.
But they are moving into 50 new markets this year, and most of those markets are not as developed and do beg for a lower end product line. Apple said in this Q's conference call this would be addressed, that they were moving a bit more toward lower margin/higher volume to accommodate the new environment.
IMO Apple is a no-brainer buy for at least the next year. And as far as the "doooom scenario" Michael puts forth above the economy could indeed tank hard and could take AAPL back to 130 or so (lower is highly unlikely considering zero debt/growth/earnings). If you are going to be in the market with a moderate risk profile AAPL should be a core holding.
