Photos: O2's 'iPhone rival' unveiled

O2 claims the imminent launch of Apple's much-hyped iPhone in the US and later in Europe will not be a threat to the Cocoon device.

An O2 Cocoon product manager said at the preview this week: "The iPhone is a different market - it is a PDA or MP3 player first. It is aimed at a different type of customer."

Based on extensive market research O2 says the Cocoon is targeted at the music-obsessed youth market, with a slightly male bias.

The handset uses Windows Media Player 11 and is compatible with most music formats, including AAC, AAC+, MP3, WAV and WMA.

The price of the Cocoon will range from nothing to £129, depending on the tariff, and will also be available for pre-pay customers for £299.

Photo credit: O2