Late last year, patents the company "led for a "wireless communications device" were made public, fuelling further expectant buzz. The company will also launch iTV, a device that will allow downloaded video to be played on a regular television set.

Gene Munster, analyst at research "rm Piper Jaffray, predicted in reports that Apple would begin production of 12 million units in the next two to six months. In 2005 Jobs launched the Motorola ROKR handset (pictured left) which uses iTunes software to play music. Apple will compete with Motorola if it launches its own phone as expected.

Apple's iTV is seen as a signi"cant step towards encroaching on the home entertainment market dominated by satellite, cable and DVD retailers.

"With the release of the iTV. . . Apple will continue its slow but steady push into the living room, " Munster said. Other Hollywood studios have been reluctant to let Apple sell movies via iTunes but last September Apple said it would start selling 75 full-length Walt Disney "lms.

Separately, Disney will launch a social networking website for kids to rival MySpace and Bebo at the Consumer Electronics Show in Las Vegas tomorrow.

Disney's site will allow users to watch video clips, listen to music, chat with each other and play videogames simultaneously. Some analysts feared that parental control features might be too strict to make Disney's offering popular with web-savvy children.