Apple's iPhone seems set to become a market success with sales reaching close to the company's stated ten million target.

Morgan Stanley analyst Kathryn Huberty repeated her 'buy' rating on Apple stock, warning that analysts have been underestimating the impact of the iPhone when it ships.

For her part, the analyst raised her sales forecast by 33 per cent to eight million units, citing a survey of 2,500 US customers.

She also believes the product will boost retail store sales, reduce component costs by introducing new economies of scale and will exploit falling flash memory prices.

This bullish prediction follows Apple chief operating officer Tim Cook's talk with analysts at a Goldman Sach technology symposium this week

Cook aggressively talked up Apple's new touchscreen mobile phone-cum iPod. He dismissed criticism that the $500 price tag on the iPhone is too high, countering with his own observation.

"A lot of people pay zero for the mobile phone. Guess why? That's what it's worth," he told analysts. “iPhone will be a big piece of the Apple story for years to come," he added.

Apple CEO Steve Jobs has predicted that Apple will grab ten million iPhone sales in the coming year.

Cook agrees, telling analysts: "If we offer something that has tremendous value, that is sort of this thing people didn’t have in their consciousness, it wasn't imaginable, then I think there’s a whole bunch of people that will pay $499, $599," for iPhone, he said.

"The iPhone is a revolutionary product," he stressed. "Revolutionary products only come along so often: the Mac in 1984 re-invented the computer industry. The iPod in 2001 re-invented the music industry. And we think the iPhone is that class of product for the mobile phone industry," he said.