Analyst Kirk Yang, who covers technology for Citigroup in Asia Pacific, said during the Reuters Global Technology, Media and Telecoms Summit in Hong Kong that the fabled "iPod with phone functionality is going to be a category killer." Nathan Layne reported on his comments for Reuters, noting that the convergence of cell phones and MP3 players was a hot topic during the conference.

Mr. Layne said that while "music phones may never kill off the market for standalone music players, they could dent the market's potential." In particular, low-end devices like the iPod shuffle are vulnerable.

Strategy Analytics' Peter King said: "The music phone is not going to significantly impact the high-end, high-capacity hard disk market but it will certainly have a major impact on the low-end flash market." Mr. King believes that cell phone/MP3 players will sell 796 million units in 2010, accounting for three-fourths of all cell phones sold and up significantly from the 94 million he expects will be sold this year.

Claudio Cheechia, who works for IDC Asia Pacific, added that the impact will be felt the most in Asia. "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," he said.

Thanks to Macworld UK for the link.