Apple holds something like seventy percent of the music player market and is the company most likely to end it.
The device that threatens the iPod is the iPhone, and the same logic applies to every handset now shipping with storage and a headphone socket. Nobody carries two objects when one will do. The music player was never a category anyone was attached to, it was a solution to the problem of not being able to carry a thousand songs, and once the phone in your pocket carries them the separate device has no argument left.
Apple appears to understand this, which is why the touch model exists. It is a phone without the phone, and it reads as a company positioning itself to be the one that eats its own product rather than watching somebody else do it.
The more interesting pressure is on the other half of the business.
Selling songs for a fixed price per track works because people are used to buying music as objects, and a download is close enough to an object to be understood. That model assumes ownership is what people want, and I am no longer confident it is. What most people want is for the song to play when they think of it, and ownership is one way of arranging that.
The subscription services offering everything for a monthly fee are the other way, and they keep almost working. The catalogue is incomplete, the software is poor, and the music stops if you stop paying, which is the objection everyone raises and I think the least important one, since nobody complains about that arrangement for television.
Nokia is about to bundle unlimited music into the price of a handset, which is the most interesting version of this idea I have seen, because it hides the subscription inside something people already buy.
What all of it requires is a connection good enough to fetch a song at the moment you want it, and that does not exist yet on a mobile network at a price anyone will pay. Until it does, the download keeps winning by default rather than by merit.
When it arrives, the company holding seventy percent of a hardware market will discover that the hardware was never the position.