One of the biggest threats to the iPod is mobile, so Apple did the right thing in agreeing to allow iTunes to be played on Motorola phones, according to an industry analyst.

Ovum analyst Dario Betti told the International Herald Tribune: "Apple is showing proper levels of paranoia about threats to its iPod-centric model. The iPod business is going very well, but the threat is everywhere, and one of the big threats is mobile."

Ovum predicts that mobile music downloads will grow more slowly but reach a global market value of $1 billion annually by the end of 2008. Mobile operators in at least six countries currently offer the ability to download music, according to Ovum.

Betti said: "In Europe, mobile operators are being more active and aggressive. The interest in wireless music may be a result of the European mobile operators failure to foresee and sufficiently exploit the growth of the $3.5 billion global ring-tone industry."

Mobile music

Despite agreeing to make iTunes compatible with Motorola phones, Apple is not willing to allow Motorola customers to download music direct from the iTunes store, however.

According to the IHT, an Apple spokeswoman said the company would not address the possibility of eventually providing direct wireless access to the iTunes music store.

But although the Apple/Motorola announcement was based on connecting a mobile to a PC by cable or Bluetooth, it is still seen an important first step by industry observers. First International Digital VP Randy Cavaiani said: "Hooking a cable up to a phone seems like step backward, but it's the kind of thing that's necessary to pull us forward."

However, Mobile Entertainment Forum chairman Patrick Parodi said: "Just putting iTunes music content on the phone was not enough for the mobile industry because it did not play to the premium that cellphone users have put on personalization. Sony's StreamMan service can adjust the types of songs that are streamed to handsets according to the user's song preferences."