Greg Joswiak, Apple's Product Marketing Manager for iPod and iPhone spoke with Fortune and looked back on the events leading to the development of the iPod, how Apple innovated out of the industry doldrums in 2001, and how Apple, like Wayne Gretzky, skates to where the puck will be, not where it is.

Mr. Joswiak pointed to one of Apple's major advantages in the current market place. "Apple is in a pretty unique position because we’re a world-class hardware designer and a world-class software designer," he said. "It’s rare enough to be on one of those lists, and we’re the only company I can think of that’s on both of those lists. So whenever we design a product, we try to take advantage of that capability that we have, to engineer the hardware and the software together so we can take full advantage of each.

That expertise compbined with the courage to innovate out of the tech market problems in 2001-2002 period, when other companies were belt-tightening and laying off, put Apple in a unique position to emerge as a leader in the music industry.

Now, Apple faces some new challenges, namely managing the explosion of their iPod and iPhone product lines as well as reaching a compromise between the security of the iPhone and the developers who want to build apps for it.

"If you remember, I think I used to say that we never wanted to forget that first and foremost, the iPod was a great portable music player. And a lot of times people will have a hit product and kind of lose their way, forget what the product was about," Mr. Joswiak noted. So even though iPod is all about innovation and has, for example, calendars and video out, Apple has never forgotten what the product is all about.

Regarding the new iPhone SDK, Mr Joswiak was enthusiastic. "One of the things Steve [Jobs] talked about in his open letter is something Nokia’s doing, which is requiring a digital signature," he noted. "That way if there’s something wrong with an application, you have a way to track it back to where it came from. So one of the things we want to do, again, is create a development environment that is going to maintain the security and reliability of the iPhone yet at the same time offer developers some really cool things that we can do.

"And it is hard. Again, Steve commented on this in his letter, those two things can run in opposition to each other, and that’s why it takes some time to figure out how to do it correctly. That’s important to us, and I think we’re on a good path to that."

Regarding the competition, Mr. Joswiak said that he's fond of the famous Wayne Gretzky quote. " ... you skate to where the puck is going to be. We try to understand as we develop our product road map, what’s going to be exciting in the future. And that’s one of the advantages we have over our competitors. Our competitors tend to put the cross hairs on where we are now, and by the time they come up with a product that tries to match where we are now, we’re beyond them. We’re one or two generations beyond, moving faster than they are."