Katy Huberty, in a research note first reported in Fortune magazine, also said iPad sales could be as high as six million when the tablet computer is unleashed this spring. That's higher than Wall Street estimates of between three million and four million.

Bullish Scenarios

Letting new wireless carriers sell iPhones at current prices would bump the device's already soaring share of the global handset market from the current four percent to 10 percent, Huberty said. In that scenario, Apple's stock price could soar up to $435.

Cheaper iPhones with lower-cost service plans could boost the market share even higher, to 15 percent, which would mean a bump to $358 a share. The lower retail cost would be subsidized by carriers paying $200 of the iPhone cost.

In another scenario, an unlocked iPhone could grab a staggering 33 percent of the handset market, which would translate to a $325 stock price.

Morgan Stanley's research shows that hardware cost is the biggest barrier to iPhone ownership. Huberty did not speculate on the price of any cheaper phones.

Gesture-Based Technology

Huberty's projection of cheaper iPhones mentions "new functionality, potentially including gesture-based technology." Not currently in widespread use, such technology involves recognition of hand or finger movements without direct contact with the device, as Tom Cruise did with electronic devices in the sci-fi film Minority Report.

Such technology could add even more value to the iPhone, but Kirk Parsons, a senior telecommunications analyst at JD Power and Associates, said, "If it's going to be a popular feature, it must be easy to use and intuitive enough to understand."

Our attempt to interview Huberty about her research was not successful.

Parsons also said the idea of a cheaper iPhone coming straight into the market would contradict Apple's previous practices.

"Apple's MO is to offer new product at a higher price point, then lower it when the next generation replacement comes out," he said.

Apple lowered the price of the iPhone 3G to $99 from a range of $399-$499 after the faster iPhone 3GS came out in the middle of last year. The older version, however, was far less popular.

Whither AT&T?

Essential to Morgan Stanley's analysis is the idea of Apple ending its exclusive relationship with AT&T as its U.S. carrier.

Despite widespread complaints from users about 3G connectivity, Apple shows no sign that it will not continue that arrangement when the contract expires in June.

"There's nothing to indicate that they won't, given the exclusivity deal with the iPad," Parsons said.

At the Mobile World Congress in Barcelona earlier this month, AT&T Mobility CEO Ralph de la Vega detailed how the company is extending its 3G network to reach more cities and provide faster data speeds.