Leader: iTunes mobiles - is this the death of the iPod?

Apple and Motorola's announcement that the phone maker's new handsets will come equipped with iTunes may raise a few eyebrows. Is Apple shooting itself in the foot by encouraging users to turn away from the iPod cash cow?

As Jobs and others have publicly stated on several occasions, iTunes doesn't make the company a huge amount of money. The commercial strategy behind the song shop is to drive the sales of the iPod, which it has certainly been doing. So why would Apple want users to shun one of its most lucrative products?

One theory is that if MP3 mobiles are going to happen anyway and it looks like they are - O2 and Sony have already teamed up on a similar device - it's a sound move for Apple to be the first to get a foot in the door and boost its brand.

Promoting acceptance of Apple's digital format and DRM (digital rights management) system as the mobile standard could also serve the company well in the future.

But could the mobile union come back to haunt Apple by challenging the iPod? The Motorola iTunes phones can't compete with the iPod on storage capacity - they hold several hours' worth of music, not much compared to the iPod's 10,000 tracks or even the iPod Mini's 1,000 songs.

Yet those several hours may be enough, given that most people use their iPods on relatively short train journeys, during daily commutes or while exercising.

Looking at pre-teens in particular - one of the largest music-buying and mobile-mad segments out there - the idea of a phone with music functionality will be highly tempting for those on a pocket money budget.

Getting consumers loyal to iTunes at an early age could boost the song-shop's revenue as well as remove the need for the pre-teens - or, let's face it, their parents - to splash out on the more expensive iPod.

For the music fans and pop-culture worshippers alike, such mobiles will never compete with the desirable iPod for storage, functionality or, in all honesty, cool.

Perhaps one way for Jobs and co. to secure their lead in the digital music market is to launch an iPod-phone combo. Analysts have been speculating for some time that Apple is gearing up to take on the PDA space - and it's only a small jump to create a smart phone or music mobile.

Stranger things have happened.