The iPod has changed way the IT industry considers data storage, reports claim.

According to Forbes, Apple has proven that "with a small hard drive designed into a clever product you can make big changes in the consumer electronics industry".

Companies such as Toshiba and Hitachi are now creating smaller drives, and, Forbes suggests, these could start showing up in mobile phones and PDAs, replacing flash memory chips that currently store pictures or music files on a mobile phone.

Chipmaker Agere Systems has already announced new technology for chips that go inside hard drives. Agere is hoping that high-end mobile phones will start containing small hard drives that can stream video and music files and store digital photos.

Agere executive vice president Ron Black told Forbes: "We're on the verge of doubling the addressable market for hard drives."

But Gartner vice president of research John Monroe isn't convinced: "Every teenager is going to have a hard-drive-based portable music player. But mobile phones with hard drives are a bit further out."

He does however expect hard drives to start cropping up in the automotive market. "What I'm hearing is that most major automotive manufacturers plan to include hard-disk-based integrated GPS and entertainment systems in every single car and small truck priced above $20,000."

He added: "Getting the wireless-phone industry to adopt hard drives is a bit more complicated. It all comes down to the cost of the drive. In order for hard drives to take hold in cell phones, the drive has to cost less than $30.

" I think we may see a few high-end cell phones with drives, and that may mean a market of a few million units a year. But getting under that $30 price may be largest challenge the storage industry faces and it may not be solved by 2008. If the price does come down under $30, we're talking about a market of 150 million to 200 million units."