By Katie Marsal

Published: 12:00 PM EST

New research carried out by the independent research provider, Generator, illustrates that Apple's iPod business could soon give second-tier mobile phone makers a run for their money.

"A lot of people don't realise that Apple's iPod business is already bigger than Sony Ericsson. What's more, Apple is the market leader in a growth market while Sony Ericsson is a second-tier player in a mature industry," said Andrew Sheehy, Research Director at the firm.

According to Sheehy, Apple's scale now means that the company can go out and negotiate deals with suppliers of miniature cameras, video recorders and wireless modems -- items normally used in mobile phones -- that are competitive with what many mobile handset makers can secure.

"Things change when you're buying in that sort of volume. A lot of people who supply components for use in mobile handsets are licking their chops right now: there's lots of new business up for grabs and we know that people are talking to Apple right now about doing this," said Sheehy.

Although Wi-Fi modems could be used instead, the report explains that the best way to implement a wireless iPod would be via wholesale data agreements with one mobile operator in each iTunes market.

Apart from being able to take pictures and shoot movies with their wireless iPods, users could wirelessly publish their self-generated digital content on iTunes, the firm speculates.

"The mobile content side is interesting but you could also offer knock-out voice service with this approach -- Apple could offer free WiPod to WiPod calls, using a Skype-like software application. A lot of people in the mobile industry will be worried when this starts happening," Sheehy added.

Last month, iPod chipmaker PortalPlayer said it had teamed with wireless solutions provider CRS to deliver Wi-Fi and Bluetooth connectivity on its next-generation system-on-chip scheduled to make its debut in the second half of the year.

The San Jose, Calif.-based PortalPlayer, whose system-on-chip audio controllers have been a fixture in the iPod since its inception, currently supplies Apple with chips for all varieties of the digital music player with the exception of the low-end iPod shuffle.

This news has brought on industry speculation that Apple could launch its first wireless iPods in late 2006 or early 2007.