OK, I'll just come right out and say it: I have it on good authority that Motorola and Apple are about to release the first cell phone to run iTunes, marking a massive milestone in the race to sell digital music on the cell phone platform. The announcement could come as early as tonight, at the opening night of the CeBIT conference in Hannover, Germany. The other possibility is that the two partners will spring it on us at the CTIA conference, which starts this Sunday (March 13).

Surprise!
I first heard about this at the Digital Living Room conference earlier this week; as I chowed down on truffle-infused risotto, I started debating the future of music cell phones with a guy sitting at my table. He said we could expect the iTunes-running Motorola phone to come out in the next two weeks. I was subsequently able to confirm this and flesh out some of the details with another source. Although there have been articles claiming that the phone has been announced, those were later proven to be incorrect. The Motorola E1060 was used to demo iTunes at the 3GSM conference in Cannes on February 14, but it is not the phone Motorola plans to ship with iTunes. This, however, looks like the real deal. So, what will the "iPod phone" be like? According to Engadget, which sort of stole my thunder on breaking this story (thanks, guys!), the model number will be E399. Other publications are calling it the ROKR. My own source indicated that the phone will have dedicated buttons to control music playback, not a scrollwheel, such as the one found on hard drive-based Apple iPods. I would have liked to see a scrollwheel and maybe even a dedicated display on the back of the phone since that's one of the biggest advantages of the iPod. But at least E399/ROKR users won't be stuck with pushing 6 for fast-forward, 4 for rewind, 2 for volume up, and so on.

Your choice: Bluetooth or USB
The UMPs (ultra-low-power media processor) handsets will not acquire music via the third-generation Internet connection since, as I mentioned here, that would be expensive enough to erode the slim margin Apple ekes out selling music inside the iTunes Music Store. Instead, users will connect the device to their Macs or PCs using either Bluetooth or USB to move MP3s and songs purchased from iTunes Music Store onto the E399/ROKR's flash memory, most likely a SanDisk TransFlash card, which has an upper limit of 128MB, for $39.

There are those who claim that iPods and other MP3 players will disappear once consumers are introduced to this phone and others like it, such as the Sony Ericsson Walkman phone that's coming out this summer. I say that's hogwash. Wireless execs and analysts are so bowled over by the success of cell phone/camera integration that they think the addition of other multimedia features to phones will be similarly popular.

Uproarious predictions
I had an MP3-playing phone back in 2001: the Samsung Uproar. It was available before the iPod was, and it didn't rule out the iPod's success, obviously. Likewise, the Motorola E399/ROKR and the Sony Ericsson Walkman will not eclipse the MP3 player category because people need two portable devices: one for fun (music, movies, and games) and the other for responsibility-related activities (keeping in touch, making appointments, and storing contacts). The reason for this is battery; people don't want to entertain themselves to the point of losing their cell phone. Think about it: Would you listen to music if you knew that meant you'd lose all cell phone functionality after a few hours?

In addition, the TransFlash memory cards that the E399/ROKR will use to store music are available only in capacities of up to 128MB. Even the low-end iPod Shuffle has four times that, costs $99, and takes up almost no pocket real estate.

Don't get me wrong. I think these phones are going to be a hit. Why not carry around a few songs for random moments when you find yourself underentertained during the course of your day? That makes sense to me, but replacing your 40GB dedicated portable music machine with a cell phone does not.

Note: Rumor has it (on Engadget) that the launch has been called off at the last minute--stay tuned (on News.com).

What do you think? Will MP3-playing cell phones such as the iTunes-running Motorola E399/ROKR take over the MP3 player category, or will people keep their MP3 players as phones evolve? TalkBack to me below.