Research firm Strategy Analytics on Tuesday issued a new report in which it saw "trouble brewing for iTunes" in the form of Verizon's new Wireless V Cast Music Service. The company estimated that global shipments of music-capable cell phones will skyrocket to one billion by the year 2010 while portable music players will see a modest increase to around 100 million.

"As a strategy to bring it into mobile, Apple's partnership with Motorola has failed," senior analyst Martin Olausson said in a statement. "Its lack of a subscription payment model, as well as the fact that it is currently limited to iPod music players, will increasingly put Apple at a disadvantage to services such as V Cast Music.

"The speed with which sales of music player enabled mobile phones will overtake dedicated music players will accelerate this trend."

Philip Taylor, Director of Strategy Analytics' Wireless Internet Applications service, added: "We believe that Apple's experience with Motorola rules out any quick launch of an iPod with built in cellular radio, and that Apple will continue to build resources towards bringing a wireless enabled product to market in 24 to 36 months.

"As a result," he continued, "Microsoft will gain strength as the most viable immediate alternative for manufacturers and service providers seeking to gain share for themselves."

Strategy Analytics also projected that by 2010, US$8.2 billion worth of music will be delivered digitally on an annual basis, accounting for almost 30% of the total music sales in Western Europe and North America.