Apple’s newly announced iPhone has been described as sexy, revolutionary, and extremely cool. How about “inevitable”? Don’t all of us want our portable electronic devices combined and simplified? Based on past successes, Apple (AAPL $97) was the supplier most likely to scope out what consumers want, and produce a product that not only meets those needs, but does so in an elegant and exciting way.

Analysts that cover technology and wireless phone providers were up all Tuesday night trying to divine the impact of Apple’s announcement on competing wireless providers and phone manufacturers, not to mention the future of communications, entertainment, and computer technology. Well, that’s a bit of an exaggeration, but the iPhone certainly does stir all those pots.

Investors, meanwhile, voted with their gut, running Apple’s stock up 13% in the past two days, and punishing stocks like Research in Motion (RIMM $135), viewed as likely to suffer a loss of market share. Apple buyers are hoping that the iPhone will deliver the kind of incremental sales and earnings that the company has gained from the phenomenally successful iPod. Wall Street gave optimists plenty of ammunition, with many analysts raising their earnings estimates for Apple yesterday and boosting their target price for the stock.

Keith Bachman at Bank of America titled his note on the product introduction “Apple Phone Rocks,” and reiterated his buy rating on the shares. He may want to revise his 12-month price target of $93, which was topped on Tuesday, to reflect his enthusiasm. Mr. Bachman had anticipated (as had many others) a phone introduction by Apple, but was “extremely impressed” with the touch screen design and specs. He describes the phone as a “major evolutionary step” and thinks the company’s sales projection of 10 million units in calendar year 2008 could be low.

Richard Gardner at Citigroup had a more tempered reaction to the announcement since he considers much of the probable earnings impact to already be reflected in consensus estimates. He rates the stock a “hold”. Not to be a party-pooper, he did raise his projected price target to $98, but cautioned that the high initial price point of $499 to $599 may well limit the unit’s sales potential.

Both analysts raised the concern that the iPhone’s prospective launch could dampen sales of iPods. Since the new phones will have the capability of downloading and playing music as well as other functions, those looking for a music player could postpone purchases. This seems a credible concern, since one of the main selling points of the new phone is that it can take the place of not two, but at least three competing products. An unforeseen risk was presented last night when Cisco Systems Inc. filed suit against Apple, seeking to prevent the company from using the iPhone name, which Cisco has owned for six years.

Bill Whyman from ISI Group describes the iPhone introduction as a “landmark event,” and the product itself as meeting the “innovation test.” However, he cautions “The harder question is whether Apple can take on the Big Four — Motorola, Nokia, Sony/Eriksson, and Samsung.” He points out that the bulk of the growth in wireless phones is coming from emerging markets, where the iPhone is not likely to be a contender because of its high price. He is comfortable with Apple’s ambition of capturing 1% of the one billion-unit cell phone market, but questions whether the bulls on the shares will be satisfied with such a modest share. However, Mr. Whyman admits that the product in effect establishes a whole new category, and that a later, less expensive model could well expand its potential.

The analysts will no doubt gyrate back and forth for months on the details of future unit sales and whether anyone can make decent margins on hand-held phones. In our view, they will be missing the forest.

Here’s the important point: many, if not most people these days are walking around with a cell phone, a Blackberry, an iPod, and occasionally a digital camera. Travelers not only have to lug all these devices along, they also have to carry all the appropriate chargers, and try to remember to plug all these gadgets in every night. If your hotel room doesn’t have adequate electrical outlets you find yourself sacrificing lighting, for example, for a re-juiced cell phone. In short, it’s a pain.

Which is why, in our view, the Apple launch was not only inevitable but is also sure to be a huge hit. There probably is a risk that iPod sales will be cannibalized and there may also be difficulties in manufacturing these items in large quantities, since some of the technology is quite new. Also, the current product is unlikely to seriously infringe on the Blackberry space, since we cannot imagine businesses stepping up to buy the high-priced units. Finally, the stock, which is selling at over 29 times fiscal 2008 consensus earnings of $3.29, appears to be no great bargain.

However, the company has again launched a product which meets a need, and which combines attractive aesthetics with seeming brilliant functionality. What we really mean is that the audience which will make or break the iPhone — that is, people under 25 — is already completely hooked. We know this because we have spoken to several people in that category who were online last night for hours reading the specs, reading the stories, and talking to their friends about the iPhone. If this excitement is inconceivable to you, you are simply too old to get it.

This comment from a highschool junior pretty much sums it up. “Everyone was talking about it at school. It is probably the most promising attempt at combining a Blackberry, a camera, an mp3 player, and a phone, and its price makes sense when you think about the cost of all those things individually.” That message, by the way, was sent by Blackberry.

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