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The world's number two PC manufacturer had contributed around five per cent of total iPod sales, which met their expectations, but is not thought to have made much money from the deal, which was weighted heavily in Apple's favour according to the Wall Street Journal.

An Apple spokeswoman said that the partnership had been terminated because HP 'decided that reselling iPods doesn't fit with the company's digital media strategy'.

In addition to selling iPods through its US online store and retail partners, HP also pre-installed

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iTunes on all its PCs and plans to continue doing so for the immediate future.

Observers believe that HP's decision will have little impact on iPod sales or on Apple, bar the possibility of a few negative headlines, but Apple is well used to those. No-one is likely to not buy an iPod simply because HP is no longer selling them - they will just get one from Apple.

The deal was announced in January 2004, when Fiorina showed off an HP-branded, blue iPod. However when the company finally began selling the players, they were in the classic white colouring and almost indistinguishable from Apple's original. HP began selling the players in August 2004, later adding iPod minis, photos and shuffles to their line-up. At the time one analyst even suggested that HP would soon be selling more players than Apple.

Dropping the iPod leaves HP in a hiatus; under the terms of its agreement with Apple it is neither permitted to sell another manufacturer's player nor develop its own until August 2006. HP is prominent in a number of digital-entertainment markets, not least Media Center PCs, but now lacks a key component in any company's digital media strategy.