Is the iPhone ready for video chat?

Editor’s Note: This story is excerpted from Computerworld. For more Mac coverage, visit Computerworld’s Macintosh Knowledge Center.

Apple is expected to announce its fourth-generation iPhone hardware on Monday that will include a forward-facing camera that can be used for video chat, allowing real-time wireless videoconferencing.

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The expectation for video chat is based on two prototypes of the next-generation iPhone, including one found in a bar and reviewed by Gizmodo that included a new forward-facing camera as well as the rear-facing one used for taking snapshots.

With news about iPhone hardware and its new mobile operating system (iPhone OS 4) expected Monday at Apple’s Worldwide Developers Conference (WWDC), it’s possible that software enabling video chat could also be announced. While just about anything Apple introduces seems to catch on with consumers and even business customers, will video chat also prove popular?

Several analysts were dubious about the value of video chat for business for many reasons, including what they called the “ugly” factor. However, they conceded there might be a sweet spot for the technology among young consumers.

The ugly factor refers to a worker’s appearance during a spur of the moment video chat with a client or a boss whom a worker is trying to impress. A boss seeing an employee with hair tussled and wearing a T-shirt could give an unprofessional impression that would be enough to make video chat unappealing for most workplaces.

Some workers are accustomed to videoconferencing from a desktop computer while working at home, but making videoconferencing mobile and on a small screen could lead to more casual and even reckless uses, with workers talking while driving or rushing to a plane, they said.

Do you need to see your employees that much?

Given such negative examples, several analysts questioned what the business value of video chat could be.

“Seeing [another worker’s] face in real time does not really add that much to the level of productivity over just hearing a voice and perhaps sharing a document people are working on,” said Jack Gold, an analyst at J. Gold Associates.

However, Ezra Gottheil, an analyst at Technology Business Research, disagreed. “Seeing someone's face increases the communications bandwidth and the data bandwidth, too,” he said. “You know whether you’re being listened to and understood. You form a stronger relationship. It’s not like being there, but it’s a lot better than just voice.”

Gottheil said his consulting organization is looking into inexpensive videoconferencing technology for doing presentations. “We want to be better known by our clients. That’s what will drive video chat into the enterprise: Salespeople using the phone will insist on it and not for cold calling. That’s too intrusive. But once a relationship starts to form, you want to strengthen it.”

But another naysayer, Kevin Burden of ABI Research concluded, “for the most part, most people will say no to video chat.” Burden noted that video phone calls from desk phones and expensive executive desktop computers and monitors have never taken off after years of attempts.

“You could say things are different now, and some will say it's possibly the right time for video chat, since I get to see nonverbal cues. But I could also get to see my boss get angry, which is why I might not want to use it,” Burden said.

The predominant philosophy that “Apple can do whatever it wants” might not apply to video chat on the iPhone, Burden reasoned. “Even though Apple has got a way of taking apps people only think they want and making them work, I don’t think video chat will be one of them.”

Gartner analyst Ken Dulaney said many businesses will find that still photographs, rather than stored video and video chat, are all they need. “And photos are a lot easier to store and move around wirelessly,” he said.

The bandwidth problem

Meanwhile, questions remain whether AT&T, the exclusive carrier of the iPhone in the U.S., can support a network to handle video chat. But AT&T’s announcement last week to cap data use and lower monthly fees in time for Monday’s Apple announcement seems to be a hedge against too much iPhone next-generation data use for whatever application, including video chat.

Burden said that a single video chat will take longer than a typical instant message text conversation and will consume many times more bandwidth. “AT&T had to get this data cap before the LTE handsets start hitting,” Burden said, referring to the next generation of LTE (Long Term Evolution) technology that will make wireless networks faster. “Video chat on LTE would be an absolute mess” for networks without data caps, he said.

Gottheil added that “bandwidth must be an issue” with video chat, and that AT&T’s data cap pricing plan was a result of that reality. “AT&T’s been pining for usage-based pricing for a while, so the imminence of video chat seems to have brought the issue to a head, leading to [last Wednesday’s] announcement.”

Mixed views abroad

Video chat is used in other countries, especially in Asian nations and mostly by younger consumers, but that’s not a clear indication of how it might catch on in the U.S. For one, face-to-face communication is traditionally more important in China than in the U.S., Gold said. And since Chinese and Japanese characters are nearly impossible to use easily in text chat via a mobile device, video chat becomes more useful by comparison, Burden noted.

Burden added that some video chat applications on mobile devices seem to have fallen flat, citing some Nokia phones built for years with both front and rear-facing cameras, including the recently announced N900. Going back to 2007, with a video chat application based on Symbian software running on early versions of N-series Nokia phones, Burden recalled, “the experience was painful as hell ... the image was low resolution, the video was choppy and overall just hokey.” Even more recently, Burden said that Nokia still adds a forward-facing camera to models despite the additional cost of $3 to $5 to the average $170 materials cost of an average smartphone.

“Video chat has been unsuccessful for [Nokia], and I don’t think they’ve increased any device sales because of the added second camera or that any buyers have gone to buy a new phone to upgrade for video chat capabilities,” Burden noted.

A Nokia spokesman conceded via e-mail that video chat is not viewed as one of the major uses for its smartphones and mobile computers, although video chat is popular with users of some phones, including the N95, N70 and Nokia 6680. The newer N900 supports video chat through popular software applications allowing video calls over the Internet, he noted.

Adding a popular Skype-type video chat software, now commonly available on desktop computers, to a next-generation iPhone with two cameras wouldn’t be hard for users to do, if the cost is reasonable and if Apple and AT&T allow it, Gold said.

But Apple could be up to something much bigger involving video chat and video streaming or related applications, Gottheil and others have said, with the use of Apple’s giant data center under construction in Maiden, N.C.

Using the data center to support a future online services business, Apple could design a video platform for both iPhone and iPad applications with the data center as a kind of switching center to route music and video data traffic to users for a fee, Gottheil postulated in April.

This week, Gottheil said Apple will “almost certainly” use its acquisition of music-streaming service company LaLa to also provide streaming video. Atop that, Apple could add video chat as a service in some fashion.

“Face-to-face video ... is an opportunity we think Apple will not miss,” Gotteil said. “It must provide video chat to make the front-facing iPhone camera useful, but the opportunity to build videoconferencing, video social networking and video games is too [good] to pass up. By providing a subscription-based infrastructure for video communications and an API enabling its developer community, Apple gets a recurrent revenue stream with a lot of stickiness.”

Burden said everyone agrees that if Apple installs a forward-facing camera in the next iPhone, it will be primarily for video chat, but also, possibly, for an augmented reality application. Under that scenario, a user could launch a multi-player gaming application, then use the front-facing camera to project his or her face or body onto the avatar used in the game that would be shared with others wirelessly in real time.

Even if Apple’s iPhone video chat concept initially is more modest than such visions, Gottheil said consumers will want video chat for the iPhone as they have wanted it for Facebook, which has a video application to help old friends reunite and for new friends to meet and flirt. Families will love it, much as they have favored desktop video chats over Skype using a laptop or desktop computer. “My first grandchild was born about a month ago, and he has singlehandedly introduced video chat to at least half a dozen homes,” Gottheil said.

Dulaney said despite some workforce reservations, he is certain that Apple will make iPhone video chat viable, given its marketing prowess and understanding of consumer needs. “And Apple has a good working relationship with Cisco who talks about videoconferencing anytime they can, so I expect something to happen on this [Apple-Cisco] front,” he said.

In summary, analysts admit there will be some, if not great, value in video chat for a wide range of consumers, but far less for business users. And they don't foresee huge networking problems that would lead to video chat's early demise, although they believe wide area cellular networks commonly called 3G will certainly pose bandwidth constraints that Wi-Fi will not.

The most lingering worry, especially for workers, could ultimately come down to a personal one, Burden said. “With video chat, you really do expose yourself for who you are at any given time,” he explained. “Technology is not the barrier. It’s how we look physically at any given time.”

Burden recalled how characters in The Jetsons, a 1960s TV cartoon series set far in the future, adjusted to having a video phone at home, doing things that wouldn't be practical with mobile video chat.

“Jane Jetson would wake up one morning with her hair all over the place,” Burden recalled, ”and when she had a video call, she’d put on a kind of mask with her hair perfectly in place to take care of the call,” he said.

[Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld.]

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