Hot Game: Musical Cell Phones

Next year, cell phones will learn how to carry a tune.

Picture phones with pretty screens certainly caught the fancy of the mobile phone shopper in 2004, sending handset sales surging a projected record 20% over a year ago. But cell-phone makers have a couple of new tricks in store next year to keep the beat going.

By far the biggest feature coming to handsets in 2005 will be music. Yes, the long-awaited union of cell phones and digital music players, like Apple's(AAPL) iPod, will soon be upon us. Like heat added to hotness, the fast-growing popularity of portable MP3 players figures to be a major component of the already-strong mobile phone market.

Analysts and gadget lovers alike are enraptured by the promise of this divine gift from the tech gods.

"MP3 phones are going to be much bigger than camera phones," says Charter Research analyst Ed Snyder.

Korean phone makers like No. 2 Samsung and LG are expected to introduce music phones in the U.S. in the coming months. And handset king Nokia (NOK), which has dabbled in MP3 phones, recently partnered with music software developer Loudeye (LOUD), signaling a bigger push toward tunes.

But the greatest anticipation is centered on Motorola's (MOT) joint development with Apple. Motorola signed an agreement in July to use Apple's iTunes software in a line of digital music phones that is expected to be unveiled sometime next year.

Speculation has also cranked up on the possibility that Apple will lend some of its design skills to fashion an iPod phone with Motorola.

So why will the curtain rise on music phones in 2005?