Analysts continue to see mobile-phone-cum-music-player as the biggest threat to iPod sales – but also think Apple threatens mobile phones.

A Reuters report discusses the threat handsets pose to the iPod. It claims that next-generation multimedia phones may threaten Apple's low-capacity products, such as the iPod shuffle or nano, but not its higher-capacity music players.

"Music phones may never kill off the market for standalone music players but they could dent the market's potential," the report states.

IDC analyst Claudio Checchia thinks mobile music phones could attract the most attention in Asia, saying: "In Asia, there is a huge status symbol with the mobile phone where folks don't really think twice about spending $500 or $600 to buy the latest mobile phone but are not willing to spend $200 or $300 for an MP3 player."

Kirk Yang, managing director and technology analyst at Citigroup Asia Pacific told Reuters that he believes Apple will release an iPod mobile phone later this year, in an attempt to counter the threat from mobile makers.

He believes: "The iPod with phone functionality is going to be a category killer."