There is not enough Apple rumor mongering. The iPhone 4G is just weeks away yet minutes pass with nary a blurry image appearing on the Web. Hours pass sans stories about a missing prototype. Afternoons slip by without a single anonymous source divulging more secrets.
I wanted to confront this problem head by getting the ball rolling on the next, next iPhone. What we know for sure is it's nearly certain to launch in June 2011, it may or may not be on Verizon and it may be called iPhone HD2GS. While applications have ruled the roost for the last few upgrade cycles there was an age when multimedia was core to the iPhone value proposition. Perhaps the iPhone 5G (a vanilla alternative name) upgrade will usher in an era of multimedia centric upgrades which will enhance the iPhone's value to consumers, the utility of iTunes, and expand the market for mobile media.
1. Video Output. Despite the high quality screen on the iPhone there are instances where a 3.5- 4" display is simply not adequate. Thus, Apple should embrace non iPhone screens because doing so embeds the iPhone as central to a consumer's multimedia experience at home and on the go. There are three primary ways to accomplish this:
- Pico Projector. By 2011, everyone will know about these tiny projectors which are already embedded in some Samsung phones. However their cost, battery consumption, and component size prevent widescale embedding today. By 2011 these gating factors will be minimized and embedding a Pico Projector will not only offer a large screen size on demand but it further opens the gaming market to Apple.
- Wireless HDMI. There have been competing standards for this technology over the years but most TV manufacturers now seem to have opted for Wireless HDMI. By embedding the Wireless HDMI technology into the handset, Apple would enable easy viewing of content on HDTVs without any need for additional wires.
- Apple TV. The oft cited "hobby" category for Apple could be made ever more compelling if Apple allowed Apple TV owners to stream content from an iPhone on the same network as the device even if the iPhone and the Apple TV were on different iTunes accounts.
By offering these different ways to view content not only does Apple make the iPhone more valuable but it makes buying more expensive content such as HD movies and TV shows in the iTunes store more palatable because there is less concern about their portability. Today, a DVD can be viewed pretty much anywhere because penetration rates are so high, but a digital download from iTunes is less portable and thus less valuable. Selling more movies could lead to better pricing, more interesting business models, and the long rumored iTunes subscription video service.
2. One video file to rule them all. Today, iTunes optimizes large photos for the iPhone. More recently it began doing the same for music to free up additional space. However, movies have failed to follow suit resulting in users having multiple copies of the same file on their computer--an HD version and a portable version. This not only uses extra space on a user's PC it makes navigating one's library confusing as well. Instead of multiple files, Apple should downres video files from higher to lower quality--either on the fly or in the background so users only need one file. The alternative is to make all devices HD capable with enough storage for the larger files. This approach would enable viewing on a Pico Projector or HDTV with little quality degradation.
3. On-deck content delivery. Synching is an antiquated notion. Instead of forcing users of subscriptions (such as season passes of a TV show or podcasts) to continue to manage all their content on their computer, Apple absolutely must offer direct to iPhone (and iPad for that matter) downloading. To limit 3G usage Apple can deliver large pieces of content during off-peak hours or via WiFi. However, with more users regularly on the go, subscribers cannot be beholden to their PCs. Instead content should be delivered to their various devices without requiring ala carte downloads or preventing a user who paid for content on their PC from downloading it for free to their iPhone.
4. 3D. I hate to admit that 3D is seemingly here to stay. As more content becomes 3D, iTune's content will be once again rivaled by physical formats such as Blu-ray discs and pay TV. Therefore, Apple will have to make the iPhone G5 a 3D capable device as well. This opens a world of opportunity for Apple which can sell 3D content at a higher price than standard definition content while not being outpaced by physical distribution. 3D will also make iPhone more compelling for gaming as rivals such as Nintendo are rumored to be entering the market.
5. Kickstand, baby. This is a pretty simple one--make it easier to watch content by adding a horizontal kickstand. For less than $.10 Apple can wholly usher in a new way of consuming content without third-party accessories. However since they'll also be adding a Pico Projector they'll probably need a vertical one as well. So, combined it will set Apple back two bits.
6. iTunes Sharing. The iPad and iPhone are frequently used in the home so why should these devices not be able to access a local iTunes library. Other computers can engage in home sharing as can Apple TV. By offering either a Pico Projector, wireless HDMI, or standard HDMI with access to content stored on a library Apple again makes content more flexible and thus more valuable. While Apple may never make billions on the content it sells every dollar a consumer spends in iTunes is another dollar needed to be re-spent if a user opts out of the Apple ecosystem thus perpetually locking users into Apple products.
Josh Martin is a senior analyst for wireless media services in the Global Wireless Practice of Strategy Analytics.