Will the next iPhone have iVideo?

The new iPhone hardware expected to ship this summer from Apple Inc. is rumored to have a video chat capability supported by MMS, among other new features.

Today's roundup of rumors and speculation about the upcoming iPhone hardware also suggest that there will be a 32GB model, a boost from the current 8GB and 16GB models.

But the reports raise questions about why the iPhone doesn't have an expansion card slot for unlimited storage capability, especially if users will be storing massive amounts of video from video chats, video streams off YouTube or other places.

Whether the iPhone will support video chat, or some version of real-time videoconferencing, was a big concern of some developers and analysts at Apple's Worldwide Developers Conference last year. Some expressed disappointment that various video features were not included in the iPhone 3G.

In March, Apple said the new iPhone 3.0 software would support MMS, or Multimedia Messaging Service, along with 100 other new features such as cut-and-paste and stereo Bluetooth.

The MMS software reports indicate to some observers that the next iPhone (due out July 17, according to some speculation) could support iPhone video chat, which would be possible with a good camera and microphone and a fast wireless connection.

Kevin Burden, an analyst at ABI Research, said the question of the camera for video chat is not a trivial one, since Apple might need to have two cameras, one to face the user and one to face what a user might want to record in the distance. That issue has been a major concern of some manufacturers, including Nokia and Samsung, which have installed two camera lenses on a single phone, one on either side.

But it is questionable how high a priority video chat will be for Apple. “Our research shows that use of video chatting on existing devices is pretty darn small,” said Ramon Llamos, an analyst at research firm IDC.

“Certainly video chat will be big for certain groups, but for the majority of people, that's not something you seek out and buy with a new phone,” Burden said. “For the most part, that feature goes unused.” He added that the next iPhone could, at least, use a flash to go with the camera.

While video chat usage on phones is not that popular, that doesn't mean Apple couldn't start a fad, just as it turned the MP3 player into a huge phenomenon with the iPod, the analysts admitted.

“Apple could take video chat and make it so friendly that it takes off,” Burden added. “Yes, that's Apple's heritage, as with iPod. What works is all about delivering a personality to the device.”

Video chat as the new killer app

Major communications equipment vendors seem to think mobile videoconferencing is coming, not just for younger users willing to try the latest fad, but also for business users.

“We envision the capability to have videoconferencing on mobile devices such as iPhone and BlackBerry,” said Richard McLeod, director of collaboration solutions for channel partners at Cisco Systems Inc.

“Just as today people are looking at YouTube videos on mobile phones, we believe that you will use the camera on a phone to have the same video communications two ways,” he added. “We think video is the killer app and will reinvent how business is conducted.”

McLeod said call centers are already interested in having mobile users see a video while waiting on hold, perhaps one that will show an advertisement or deliver content based on the customer's profile. That one-way streaming from customer service could conceivably become two-way, analysts have noted.

Cisco recently purchased Pure Digital, maker of the popular Flip handheld video camera. “Our purchase of Flip video is one more step toward where we think video is going,” McLeod added.

Earlier this year, Polycom Inc. CEO Robert Hagerty also discussed the potential uses and value of videoconferencing on handhelds.

Why stop at 32GB?

Meanwhile, Apple's rumored plans to include 32GB of storage raise the question of why Apple needs to stop there, and why it doesn't add an expansion slot so users can increase the storage limit to whatever they want.

Clearly, Apple controls what applications are used on the iPhone by not allowing sideloading through an expansion slot, the analysts noted.

“Internal storage keeps you beholden to the iPhone,” Burden said. “It doesn't have an expansion slot, but that could be a great addition.” Apple probably could add an expansion slot and still restrict what applications could be imported through an expansion card, he said.

But Llamos said Apple is likely to stick with no expansion slot for a while, restricting downloading of applications through the App Store in iTunes. Expanding to 32GB of storage would principally support the App Store concept, which has had more than 1 billion downloads in less than one year, he noted.

“The App Store is a runaway hit,” Llamos said. “Why threaten that?”