Apple has serious competition and it comes from cell phone manufacturers. Seagate and cornice manufacture hard drives for cell phones that can store a person's entire music library. Why buy an iPod when you can have one device that makes phone calls AND stores and plays your entire music library?

Seagate offers 12GB 1 inch hard drives for cell phones. That's sufficient storage for 12,000 songs, a thousand short videos, or a dozen full length movies.

The tiny drives features a drop sensor and perpendicular storage technology for a 23 percent smaller footprint and 30 percent less power consumption than previous models.

Cornice focuses on size not storage. Their latest mobile drives offer slightly less storage at 8 and 10 GB but are even smaller, about the size of a matchbook.