Research operation Needham raised its price target for Apple (AAPL) to $135 from $115.

The firms said the sales for the iPhone may be modest at first, but that the cost of the phone would drop about 20% a year as component prices fall.

It is very hard to see how a falling price for the iPhone does much for Apple even it the costs of the guts of the phone fall lower.

Needham also thinks that Apple will have 7% of the cell phone market by 2016. It is a bit like saying oil will be $300 a barrel by then. Pure guess work.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.