iTunes on Hold at Motorola

Then there's Motorola. As the No. 2 cell phone maker, having sold 108 million handsets last year, Motorola would love to add another hot model to its lineup and make a run at No. 1 Nokia (NOK Quote). The risk for Motorola is that Apple could severely restrict the music storage capacity on phones to limit Rokr's threat to iPod.

And finally there are the telcos like Sprint (FON Quote), Cingular and Verizon Wireless, which look at music as one of the big revenue engines set to drive data service sales over newly upgraded networks.

The phone companies, which saw little or no revenue benefits from the camera phone craze, are leery of being left on the sidelines of another big trend. For example, phone makers like Kyocera introduced phones recently that have slots for flash memory cards designed to give users the freedom to pack their home music libraries into their phones.

But obviously Apple, Motorola and the telcos each have a key role in the iTunes drama, if only they could agree on the price of admission, say analysts.

"Melding products is easier than melding business models," says Yankee Group analyst John Jackson. "This is particularly true in the wireless space where, in this case, differences between Apple and Motorola's launch strategies are also subject to the whim of the operator."

An official with one of the bigger U.S. telcos says no matter what happens, the phone companies will not be left out.

"Sure, there's friction and competition between the two sides, but there will be ample, unique business for both," says the unnamed official.

One scenario, according to the telco insider, is that music phones could allow customers to make impulse song purchases. With new features like "song identification," users could hear a tune in a bar or mall and the phone would name the song and offer to download it.