Apple Computer is expected to unveil an Apple-branded mobile phone with direct access to the iTunes Music Store in the next 12 months, securities analysts at Morgan Stanley said in a research note.

Apple Computer is expected to unveil an Apple-branded mobile phone with direct access to the iTunes Music Store in the next 12 months, securities analysts at Morgan Stanley said in a research note.

"Apple hasn't confirmed its phone strategy (or even acknowledged that one exists), but at our recent meeting management did suggest a) handset makers will eventually get an MP3 offering right and b) Apple's strategy is to be an innovation leader," wrote analyst Rebecca Runkle.

Runkle last year said an Apple-branded iPhone could generate as much as $1.2 billion for Apple should it pursue the strategy.

Morgan Stanley Taiwan analyst Johnny Chan told Barron's Online that Apple may tap Taiwanese electronics OEM Hon Hai Precision -- which manufacturers components for the iPod Nano -- to create the iPhone, rather that partner with another existing manufacturer. Apple's collaboration with Motorola resulted in the much-derided ROKR iTunes-compatible music phone.

Additionally, it is believed that Apple will opt to lease airtime from existing carriers and operate the mobile phone service on its own, rather than attempt to sell the device through wireless operators, as is the norm.

The iPhone rumors began back in 2002, when Apple registered the Internet domain name "iPhone.org" and trademarked the "iPhone" name in the United Kingdom.

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