A while back NBEHTM postulated, and I wrote, that perhaps the iPhone is a trojan horse, an attempt by Apple to move the “iPod Halo” out of the dorm and into the board room. It now appears that getting the iPhone ready has cost Apple their ability to deliver OS X 10.5 on time, raising the question: what use is a halo when it causes problems with the core product of a company? Of course, the question above presupposes that the halo is indeed Apples goal with the iPhone. If there’s something else going on I can’t fathom it so I’m going to continue assuming that a boardroom halo is the real goal here.

In pursuing the iPhone Apple has delayed their OS delivery but is that really a problem? Won’t they get something more valuable in the long term if they do make inroads in the board room? Some would argue that there is no problem – Windows Vista has by most accounts been very slow taking off and at any rate failed to deliver any really advanced features not already available in Mac OS X 10.4. That leaves Mac fanatics with a lot to brag about, even with a slipping delivery schedule. Same with a delayed full-screen iPod (to give focus and a spotlight to the iPhone for a while)? Again, some would argue that the Zune and other media player sales numbers have been weak, no threat to the dominance of the iPod.

As you might have guessed I don’t quite see it that way. In shutting down their OS and iPod development for the sake of the iPhone Apple is undermining the two things that have been driving growth at the company. Mac computer sales reach new records every quarter, it seems, and giving consumers a reason to hold off on purchases for what is essentially a vanity product can’t be wise. Also iPod sales have been strong but the percentage of the market that Apple owns is declining, not growing. A declining share of a growing market isn’t the end of the world, but it’s a warning sign point out that other manufacturers are producing better products than the iPod, and with competing music stores becoming more flourishing this is going to put big pressure on iTunes.

And there’s the rub. All this is going to hurt iTunes and whether or not you want to believe it, that’s where Apple’s future will be made or destroyed. I’ve said this before and this Cult of Mac article over at Wired shows very clearly how important iTunes is.

I don’t think that an iPhone, produced in some relatively small number of units, will have as profound an effect on iTunes sales growth as a cheaper, updated iPod and AppleTV would. The halo that Apple will earn for themselves in the board room will have to be pretty extraordinary in order to compensate for the lost potential in iTunes growth that Apple will be giving up.