While the possibility might exist that the iPhone will cannibalize iPod sales, Tim Deal, a senior analyst with Pike & Fischer, said he believes that the iPhone will occupy its own position in Apple’s product portfolio. The iPhone’s high price, along with its limited storage capacity, will probably prevent cannibalization of iPods, he predicted.

As the engine of iPhone hype gears up for its final power thrust, discussions about the new device range from how many units it will sell to how developers can cash in with widgets to how its iPod-like features might cannibalize iPod sales.

Apple reported sales of 10.5 million iPods last month, and, according to most estimates, owned over 75 percent of the media-player market as of the first quarter of 2007. For all the talk of a Google online advertising monopoly, Apple has all but cornered the market on digital-media players.

If Apple reaches its stated goal of the iPhone winning 1 percent of the market by the end of 2008, its launch on June 29 might end up being the most successful in history. Or it could be a flop that cannibalizes the iPod in the process.

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