Hargreaves writes that based on data from privately held Internet measurement firm Net Applications, of Viejo, Calif., the Safari Web browser shipped on the iPhone accounts for .3 percent of all world-wide Web surfing in August so far, double its share in June, prior to the introduction of the iPhone 3G. “iPhone’s rapid share gains in Internet usage suggest potential upside to current estimates,” writes Hargreaves, “and are a strong indicator of what we believe are lasting competitive advantages.” He goes on: “As Web-based software and services become more ingrained in our every-day working and personal lives, Apple’s emerging advantage in the mobile Internet will, in our view, become increasingly valuable.”

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Hargreaves contends the new business model for the phone improves near-term cash flow, but does change the overall profitability of the device. He says the initial subsidy–which he puts at $350 per unit, higher than the $325 estimate calculated by Oppenheimer’s Yair Reiner–will roughly offset the net present value of monthly payments the company received from AT&T under the model used for the first version of the phone.

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