With their iPods dominating the portable audio market, and iTunes growing in popularity among music downloaders, it seems like Apple is on top of the world. In an effort to expand, it comes as no surprise that rumours are abound of Apple attempting to penetrate the incredibly lucrative mobile phone industry.

Of course, Apple’s iTunes software has already found itself in Motorola’s ROKR and RAZR models, but what about an Apple-manufactured iTunes phone? Industry insider Gene Munster predicts a number of future innovations. The Piper Jaffray analyst says, “Despite a lack of hints from the company, we believe it is useful to hypothesize on new initiatives Apple may have in the works and take a look at which initiatives, if any, make sense for the company.”

Could an Apple iPhone be on the horizon? Time will tell.