Next From Apple: Video Cellphone?

Jan 8, 2007  •  Post A Comment

The man whose iPod dragged the television industry onto the Web may be spoiling to ignite the U.S. cellphone-TV market.

Apple Computer CEO Steve Jobs is expected to unveil details on a new device that melds video and mobile phones on Tuesday at the company’s annual MacWorld Expo, analysts who cover the company said.

Merrill Lynch analyst Richard Farmer last week raised his target price on the company’s stock in part because of the expected preview of a wide-screen video iPod, the Apple cellphone and other products. Apple declined to comment on Mr. Jobs’ speech.

It wouldn’t be the first mobile phone to let users watch TV. About 5.1 million U.S. consumers subscribed to services that provide cell-phone video at the end of the third quarter. But Mr. Jobs’ talent for creating easy-to-use gadgets that catch fire with consumers has potential to spur U.S. demand for mobile-phone TV the same way Asia and Europe are embracing the technology.

“The potential is there for Apple to break the market open, and Apple has distribution with a lot of the content providers,” said Greg Sterling, principal with Sterling Market Intelligence.

Apple’s brand power is phenomenal. About 20 percent of Americans currently own one of the company’s products such as an iPod or Apple computer. That could grow to 30 percent in 18 months with the introduction of an Apple phone, said Kaan Yigit, analyst with Solutions Research Group.

An Apple video phone would have to overcome stumbling blocks. It’s not a virgin market, with existing competition from Motorola’s V CAST Razr and other handsets. Last week, Samsung said it’s developed technology that lets cellphones get local station signals.

Mr. Jobs also would have to partner with mobile-service providers who may not cooperate, Mr. Sterling said.

A rollout in the U.S. couldn’t take place until later this year since Apple hasn’t registered a wireless device with the Federal Communications Commission yet, said Adam Guy, managing director of the wireless practice at the Compete research firm.

Apple’s track record suggests it can clear those hurdles, Mr. Guy said.

“Usability is the magic word,” he said. “If you think about it, that is really Apple’s secret sauce-iPods are very easy to use and usability is the most important critical success factor for mass-market adoption of mobile TV.”

But the level of interest in what Mr. Jobs will or won’t showcase this week underscores the importance Apple has assumed in the television industry. Two years ago, Apple wasn’t even a player in TV. Now, it’s become one of the game-changing forces in the business through iTunes, a service that now accounts for 90 percent of the legal downloads for video content on the Internet, according to NPD Group. The question is whether Mr. Jobs can pull off the same sort of coup in cellular business, creating a bigger market for the content that TV studios and networks produce, and new space for advertisers to place their spots.

Analysts also expect Mr. Jobs to share new details on Apple’s “ITV” product that brings iTunes content from the computer to the TV.