Softbank denies iPhone report

But many industry insiders say an Apple-branded music phone makes sense, as long as it doesn't cannibalize low-end iPod sales.

	Will the iPhone turn out to be something like this?

The buzz surrounding a music-playing iPhone skyrocketed this weekend following a Nikkei report that Apple and Softbank are teaming up on a phone, and although Softbank denied the report today, many industry insiders say an iPhone is a sure thing.

The report said that Softbank, the fast-growing Japanese Internet and telecommunications group, will work with Apple Computer to jointly develop iPod-like mobile phones. The report said that Softbank president Masayoshi Son and Apple chief executive officer Steve Jobs met recently and reached a basic agreement on this partnership in cell phone handset operations.

The report indicated that Softbank will be the service provider for the new mobile phone joint venture through its acquisition of the Japanese unit of British mobile phone company Vodafone Group. It said that the phones would carry both the Softbank and Apple brands and would first hit the market in Japan and would not immediately include over-the-air (OTA) download capabilities offered by the likes of the Sprint Music Store.

Softbank denied the report today in a statement.

In a column last week, acclaimed Wall Street Journal technology columnist Walt Mossberg added to the furor when he wrote, "Now, Apple is working on other projects built on the same end-to-end model as the iPod: A media-playing cellphone and a home-media hub."

Apple has faced a near constant drone of speculation about an iPhone since sales of Motorola's iTunes-loaded Rokr phone fell flat last year. The Rokr suffered from disappointing reviews for its design and its limited 100-song capacity.

When word spread earlier this year that Apple was seeking to trademark the term "Mobile Me," many industry analysts said that Apple would be looking to make its own music phone and that an iPhone was on the way.

American Technology Research analyst Shaw Wu said at the time: "We believe this is further indication of (Apple's) strategic direction to extend its iPod + iTunes and Mac franchises into new business areas including smart phones, value-added mobile content services, and the broader consumer electronics space."

In a recent research note, Piper Jaffray analyst Gene Munster said that while he expects an iPhone to hit the market within a year, Apple's focus will remain on stand-alone music products, fearing a cannibalization of its low-end iPods, much like camera phones have done to low-end digital cameras.

"The company has indicated that it does not want to see the low end of the iPod market get cannibalized by music-enabled phones," Munster wrote. "While we continue to believe there is a high chance that Apple will launch an iPhone in the next 12 months, the company says that the right path for Apple is to continue to pursue devices with one primary feature and not focus on multiple functions in one device."