The long-awaited phone will be made by Motorola and marketed by Cingular Wireless, the New York Times reported, citing a telecommunications analyst who has been briefed on the announcement.
The newspaper said the new phone brings together two of the most popular digital devices today - the cell phone and Apple's iPod, which has popularized the practice of downloading songs from the Internet.
The report said having iTunes software on the phone would allow people to transfer songs from their personal computer to the phone and listen to them.
"It's a deluxe music player now on your cell phone," Roger Entner, the telecommunications analyst briefed on the announcement, told the Times. Entner works for market research firm Ovum and said an industry executive told him about the new product, reports CNN.
According to San Francisco Chronicle, the video iPod is an idea that Apple Chief Executive Officer Steve Jobs has disparaged in the past, arguing that there's a lack of content for a portable video player and that consumers the wouldn't flock to it as they did with the portable music player. However, rumors that Apple might be working on an iPod that plays video picked up in recent weeks with reports that the firm has been talking with music labels about licensing their music videos.
Also, the prices of components that are required to build such a player have come down, said Ross Rubin, an analyst at industry research firm NPD Group.
"Right now, a lot of the challenges are around content acquisition," he said. "If Apple does launch a video iPod, it shows that they have been able to move forward with (Hollywood)."
But not everyone thinks next week's event will be about such a device.