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The question isn't whether Apple will survive but how it will evolve. Jobs declined to speak with us for this story, but on the eve of the iPhone's debut, he deployed a simple metaphor to chart Apple's future: "We've got two strong legs on our chair today," he told USA Today. "We have the Mac business, which is a $10 billion business, and music--our iPod and iTunes business--which is $10 billion. We hope the iPhone is the third leg on our chair, and maybe one day, Apple TV will be the fourth leg."

In essence, Jobs was describing a hermetically sealed system, the central premise of Apple's business model: If a customer buys one Apple device, she'll buy two, three, even four more--at a premium price--rather than dilute the experience with other brands. In an age increasingly defined by interoperability and technical collaboration, Jobs still refuses to license Apple's operating system. He won't allow music and videos downloaded from iTunes to be played on other MP3 players. He won't permit music downloaded from competing stores to play on the iPod. And in enforcing his exclusive deal with AT&T for the iPhone, he went so far as to disable or "brick" the device of anyone who dared "jailbreak" it for use with another carrier, or who downloaded third-party applications for features Apple hadn't built in. Today, there are an estimated 250,000 iPhones that haven't been hooked up with AT&T, and even Apple's COO, Timothy Cook, assumes they have been unlocked and attached to ­another carrier. That means almost 20% of iPhone customers want the hardware but not the closed ecosystem built around it.

Apple has thus far ridden this exclusionary strategy to riches, power, and glory. But what does Steve Jobs know that Albert Einstein didn't? Einstein posited that a closed system would become stagnant over time. Indeed, Apple, back in the 1980s when it was still Apple Computer, experienced as much when its closed-software approach for personal computing doomed it to tiny market share. Today, the question looms: Has Jobs hit upon a formula that insulates Apple from stagnation? Or will the road ahead unmask a vulnerability in Apple's business model?

Asking Forgiveness

Gorgeous as Apple's products are, people aren't buying them for their inherent technological superiority. For half the price of a Mac, you can pick up a PC that does pretty much the same thing. There are MP3 players that produce superior audio to the iPod. The iPhone has Wi-Fi and a beautiful touch screen, but the phone itself is middling, as is its cellular network. Even the security of Apple's operating system, a theme the company returns to frequently, is overstated: As most hackers will tell you, it's security-by-obscurity, a function of tiny market share, not inherent uncrackability. The CIO at one major Silicon Valley company told us that Apple's vulnerability on this front made it unlikely that he would ever switch. (See "iPhone Insecurity" for one security expert's sobering experience with the iPhone.)

No, it's the interface--the user's interaction with the devices--and the exquisite wrapping that have separated Apple products from the great unwashed. And give Jobs his due: He brought the personal computer to market, after all. He has an unerring eye for design and functionality. There's an intuitive humanity to his machines, and that has helped Apple forge an enviable bond with its legions of fans.

But when you get down to it, the Apple phenomenon is as much about fashion as it is about technology. You might say that Steve Jobs is the Marc Jacobs of computers (minus the heroin), betting the house his products will be, season after season, cooler than anyone else's. Yet fashion is, by definition, fickle. Lose the buzz, and you've got trouble. And for the first time in years, there are signs that Apple is not infallible and that Jobs's reservoir of goodwill with his followers is not bottomless.

When he unveiled the iPhone last January, Jobs predicted he'd sell 10 million of them by the end of 2008. And he sold 270,000 in the first two days. But it took 72 days to unload the next 700,000, according to Silicon Alley Insider--a rate that would have left him about 40% short of his target a year from now. To prime the pump, Jobs sliced $200 from the phone's sticker price only two months after it went on sale, a cut so large and so early that, along with the Apple cultists who'd stood in line for hours to get theirs, even Steve Wozniak criticized his Apple cofounder in public. Jobs quickly issued an "iPology," along with the offer of a $100 Apple Store credit. (The chit can't be used for iTunes.)