What if the iPhone were an iPod?

It drives Turley Muller crazy when analysts downgrade Apple (AAPL) because the iPod, once the company’s primary engine of growth — generating roughly 58% of revenue growth in fiscal years 2005 and 2006 — seems to have saturated the market and may now be sputtering toward the end of its product life cycle.

So on Monday Muller — one of the leading blogger-analysts covering Apple — conducted a thought experiment on his blog Financial Alchemist.

What if Apple, he asked, accounted for the iPhone as if it were an iPod — which in a way it is. (Steve Jobs calls it “the best iPod Apple we’ve ever made.”) And what if Apple reported iPhone sales revenue in the quarter in which it was earned, rather than spreading it out over 24 months?

The results are summarized in Muller’s tables below.

Bottom line: rather than dwindling into single digits over the past eight quarters, iPod revenue growth explodes into triple digits. For example, sales revenue for iPods alone grew 3% year-to-year last quarter. When combined with actual iPhone revenue, it grew 184%.

“With the iPhone’s $199 price tag and Apple’s plans to be in over 70 countries by the end of the year,” writes Muller, “we should expect to see growth figures like the 184% (4Q08) going forward. See the tables below.” (link)

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