I am not picking sides here but...
Apple does have the power, considering all updates must be signed by their servers, to tailor build a software for said specific hardware and then destroy all traces of that software once it has been used to extract the data from the phone(s) in question.
Yes, if not for the world outside this specific case. This case sets a precedent. It in fact relies on precedents set in previous cases and incidents of cooperation. Once this precedent is set, Apple has no argument to challenge any similar court orders.
It was shockingly, shamefully, and horrifyingly easy for the FBI to get the original order. They went to the judge with an assertion that they had no other way into this phone and the owners did not object to it, but they needed this "one small thing" from Apple to get into it. The judge signed the order without even asking Apple if the assertions of the FBI were correct. Apple can always ask for a vacation of the order as they did here, but doing so when a clear precedent has already been set is just throwing lawyer money into a fire because there is no way that they can possibly win. Precedent trumps rational argument in such cases, every single time.
So, we know from public statements that there a number of DAs who have said publicly they have each 150, 90, 75, etc, phones that will be asked to be opened the minute this precedent is set. By Apple's estimate, there are tens of thousands of iPhones in federal custody which have not been able to be opened for ongoing investigations, so it is reasonable to expect that a large portion of those will apply for the same AWA conscripted relief.
Okay, last bit. By Apple's estimation, just developing the software will cost about 30 engineer-weeks (ie, one engineer could do it in about 30 weeks; the minimal wall-clock time is 10 engineers working for 3 weeks).
Now. Talking about 10,000 requests, if Apple follows the FBI's request to the letter, they have been conscripted by this one event and future events to which they can not object to not just 30 engineer-weeks, but 300,000 engineer-weeks. That is, one engineer could do all of those in about 6,000 years (allowing only two weeks of vacation per year, which is well below average for Apple engineers, especially with 6,000 years' tenure in the company!). That one 10-man engineering team already has 600 years of work lined up for it. To get it done in the next six years, Apple would need to devote
100 10-man engineering teams just to fulfilling FBI requests. I'm not positive about this, but I believe that this would amount to about
ten percent of Apples entire software engineering team dedicated to recreating the same software thousands of times per year.
Moreover, those 1,000 employees would be themselves targets of extortion and espionage, as what they are creating over and over and over again is highly valuable and highly mobile. And I can't imagine any of them would be happy with their work, leading to much higher likelihood of them being bought off.
So, yeah, Apple can comply with the order. But in order for Apple to comply with this order, the cost of complying must necessarily be seen as much, much larger than the government is saying. And the security risk associated with this is nowhere near zero and increases exponentially with the number of applications of it.
The doomsday scenario Apple gives - they write the software once and repeatedly apply it to new phones by plugging in the phone ID and recompiling - is actually more secure than the FBI approach in aggregate, along with being much cheaper. However, the security risk there is also far too high, as this special code and the process to plug in a new phone id and recompile and re-sign it would be highly sought-after and any breach would not be easily detected. This is something that keeps security professionals up at night. It is not something which should be created just on a whim or a "maybe there is something useful" without clear and convincing evidence of a benefit.