"It's by far the porn-friendliest phone," Devan Cypher, representative for San Francisco-based Sin City Entertainment, told Time magazine.
Research has shown that around a third of iPhone users watch video on their handsets, nearly ten times the number that watches video on other brands of mobile phone.
In addition iPhone users typically spent five times as much on entertainment and three quarters of iPhone owners are men with above average income, a traditional market for the pornography industry.
Apple has traditionally taken a firm line on pornography; banning adult content from its online stores. It will also be doing what it can with the iPhone.
"Our iPhone 2.0 software will give customers the opportunity to turn on parental controls," says Apple spokeswoman Jennifer Bowcock
However, given the increasing technical sophistication of the pornography industry there may be little that can be done to stop it and the new Iphone’s fast streaming capabilities and large screen make it a prime target for the industry.
"There are a few hundred iPhone porn sites now in use," says Farley Cahen, vice president of business development for AVN Media Network, the adult industry's trade body.
"A huge portion of the US$13 billion adult market has been reliant on physical distribution. That business model is shifting to downloadable and streaming content."