Apple iPod's Biggest Threat: the iPhone

The Walkman has overtaken the iPod in sales in Japan. The real culprit: the iPhone.
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CUPERTINO, Calif., (

TheStreet

) -- It's now clear what has been gnawing at

Apple's

(AAPL) - Get Report

iPod sales -- it's the iPhone.

Tokyo research shop BCN says

Sony's

(SNE) - Get Report

Walkman has

overtaken the iPod

in Japan for the first time in nearly five years, according to a

Bloomberg

report.

As it turns out, the Walkman hasn't actually staggered back into vogue with the masses. Rather -- as the report points out -- the iPhone has cannibalized Japanese iPod sales.

The news comes as Apple prepares for a big refresh of its iPod lineup Wednesday. The new crop of music players are expected to have cameras, to help breathe new life into the aging iconic device.

Tech watchers will recall that outfits like Nintendo added cameras to their aging GameBoy devices in hopes of squeezing more life out of the franchise.

The move may not thwart the cannibalistic impact of the iPhone, however, since it already packs a camera with video capabilities.

Apple shares were largely unchanged in early trading Friday.

Written by Scott Moritz in New York.